EQUAL DIFFERENCES IN COST 21
The prices of both goods are lower in Germany than in the
United States. Copper and linen alike would be exported from
Germany. Specie would flow from the United States to Germany ;
prices would fall in the United States and would rise in Germany.
Suppose now that wages are still $2.00 in the United States,
but are at the same rate in Germany — $2.00. Then we have
prices in the United States as before. But now —
WAGES TorAL DoMmEesTIC
PER Day WAGES Propuce SuppLy Price
In Germany 10 days’ labor $2.00 $20 20 copper $1.00
” Germany 10 ” 2 $2.00 $20 10 linen $2.00
All prices now are higher in Germany than in the United States.
Both copper and linen would be sent from the United States to
Germany, specie would flow from Germany to the United States,
prices would fall in Germany and rise in the United States.
Lastly, suppose wages in the United States to be $2.00, in
Germany $1.33%. Then we have (for ready comparison the
United States figures are presented again)
In the U. S. 10 days’ labor
pe U.S. 10 7
” Germany 10 ” ?
” Germany 10 7” 3
WaGEs
PER Dar
£2 00
29 (1)
$..23
21.33!
Tora
EXT »
PRODUCE
~nmN
Hnen
DomesTIC
‘UPPLY PRICE
1663
1
2 lL
An2
> il
-
The price of each commodity is the same in the two countries.
Copper sells for $0.663 in the United States and in Germany too.
Linen sells for $1.33% in Germany and in the United States too.
Neither article will move from one country to the other. There
1s no trade between them.
In other words, under the conditions of equal differences in cost,
money wages will adjust themselves exactly to these differences.
The effectiveness of labor in the United States is to that in Germany
as 3 to 2; money wages in the United States are to those in Ger-
many as 3 to 2. Prices of goods are the same in the two countries.
The people of the United States, with their higher money wages,
will be able to buy more goods for the wages of a given amount of
labor — one day’s or ten days’ — than the Germans can buy with
