40 
INTERNATIONAL TRADE 
wages vary. They do not go together as regards domestic goods; 
these vary from country to country, but do not necessarily vary 
in accord with money wages. 
Nevertheless, there is a sense in which high wages and high 
prices do go together. Money wages and domestic prices run 
parallel; changes in money wages tend to accompany changes in 
domestic prices. If anything should occur which served to raise 
money wages — for example, altered and more favorable terms of 
international trade — a corresponding change would take place 
in domestic prices: they would rise to the same extent. Import 
prices, under the action of this factor, would not rise; they would 
fall. But domestic prices would adjust themselves to the higher 
level brought about by the new international conditions. Money 
wages would rise first in the export industries; the rise would 
then spread; eventually prices of goods and money wages in the 
purely domestic industries would be such as to render them as 
attractive as the export industries. This assumes, of course, that 
other things remain the same; that, for example, the technical 
methods of production remain unchanged — that no inventions 
or improvements are made which serve to increase the effectiveness 
of labor in the domestic industries. Such changes may operate to 
lower the price of a domestic article or series of articles at the same 
time in which international conditions are tending to lower them. 
We should then have the familiar case of interacting causes, in 
which the effect of the particular cause under inquiry is modified 
but not wiped out by others. Setting aside qualifications of this 
sort, which obviously do not affect the essentials of the conclusions, 
we may say that the relations of money wages and domestic prices, 
once they are established, remain the same. Domestic prices in 
the United States may be higher or lower than domestic prices in 
Germany; if higher, then a rise in United States money wages will 
carry them still higher; if lower, such a rise will make them less 
low. 
It has already been intimated — to return to the main argument 
of this chapter — that the distinction between domestic and 
international commodities is an important one. How important