CHAPTER 3

EQuaL DirFrFereENCES IN CosT

THE figures representing Case II, it will be remembered,
are *

In the U. S. 10 days’ labor produce 30 copper
Pu. ? U.S. 10." 3 fi 15 linen
” Germany 10 ” n 2 20 copper
" Germany 10 ” D a 10 linen

Cost in terms of labor is lower in the United States for both articles ;
labor 1s more effective all around by 50 per cent. Then we have:

In the U. S. 15 linen = 30 copper
10 linen = 20 copper
In Germany { 15 linen = 30 copper |

It is obvious that no gain can accrue to either country from a
direct exchange of goods for goods. In both, linen and copper, if
produced within their respective limits, would exchange on the
same terms. The labor that would produce 15 linen in the United
States would produce in that country 30 of copper. Precisely the
same 1s the case in Germany. If Germany were to take the
product of 10 days’ labor in linen (10 of linen) and carry this amount
to the United States, she would there get, at the American terms of
trade, 20 of copper; and that amount of copper the same 10 days
of labor will enable Germany to produce. Similarly, the United
States could gain nothing by sending copper to Germany for
exchange against linen.
It is further obvious that the people of Germany would presumably
 find it to their advantage to transfer themselves en masse
to the United States. I say presumably; the advantage would
not necessarily be realized. True, Germany is the less prosperous
country ; labor is less effective all around than in the United States;
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