ABSOLUTE DIFFERENCES IN COST 15 
will arise. And the converse applies, of course, to Germany. 
If German wages are twice as high as in the United States — 
$2.00 there against $1.00 here — the price of linen will be as 
low in the United States as in Germany, and copper alone 
will move between the two countries. With German wages less 
than $2.00 — less than twice as high — linen will move from 
Germany, and an exchange of goods for goods will begin. 
In analyzing the possibilities of exchange under the supposition 
of barter, we have seen that the terms on which the barter of goods 
for goods will take place may vary between wide limits. It is 
easily shown that the same possibility of wide variation in these 
terms exists under a money régime also. 
Let us suppose money wages to be higher in the United States 
than in Germany, but not as much higher as they might possibly 
be. Let wages in the United States be $1.50, wages in Germany 
$1.00: not twice as high, but 50 per cent higher. Then we have: 
In the U. S. 10 days’ labor 
”» » U. S. 10 » ¥» 
” Germany 10 
" Germany 10 
WAGES 
PER Day 
£1.50 
‘1.59 
£1.00 
21.00 
ToraL 
WAGES 
. 
Propuce Ser SE 
30 copper $0.50 
1% linen $1.00 
15 copper 80.66% 
30 linen $0.33% 
Linen is produced more cheaply (in money) in Germany, and 
flows thence to the United States; copper more cheaply in the 
United States, and flows thence to Germany; linen obviously 
being relatively the cheaper of the two. 
The barter terms of trade are 15 of copper for 22% of linen. At 
the price of copper which rules in both countries ($0.50) the sum of 
$7.50 will buy 15 of copper; while at the ruling price of $0.33} for 
linen, that same sum will buy 22} of linen. In other words, 15 of 
copper sent from the United States to Germany will procure 
221 of linen. And these barter terms of trade are, of course, in 
accord with the money wages in the two countries. Money wages 
in the United States are 150 per cent of those in Germany, and 
the product of ten days of American labor (30 of copper) ex- 
changes for the product of 15 days of German labor (45 of 
linen).