62 
INTERNATIONAL TRADE 
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Rent, let it be briefly noted, is also to be brushed aside. In 
accord with the commonly accepted procedure in economics, we 
shall treat it as merely a differential element. It stands for the 
differences in the expenses of production under varying natural 
conditions, and serves to equalize them. Some relations between 
rent and international trade deserve attention and will receive it 
in the next chapter. For the present we shall disregard them. 
We proceed then to consider the influence on international trade 
of an interest charge as one among the expenses of production. It 
will be convenient for this phase of the inquiry to revert to the 
second of the three original cases: that, namely, in which there 
are equal differences in cost and in which international trade will 
not arise. It appeared that trade could not be expected to arise, 
if regard were paid solely to labor and to wages — to quantity 
of labor and to the wages of labor. How if the additional factor 
of an interest charge is introduced ? 
Recall the former figures: 
In the U. S. 10 days’ labor 
)) bh UU. S. 10 » » 
” Germany 10 ” 2 
” Germany 10 3 
WAGES TorAL DowmEesTIC 
PER Day Wages PropucE SuppLY PRICE 
$2.00 $20 30 copper ~~ $0.662 
$2.00 $20 15 linen $1.33 
$1.33 $13.33 20 copper $0.66% 
$1.33 $13.33 10 linen $1.33 
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There are equal differences in cost; money wages are adjusted 
to those differences; the price of each article is the same in the 
two countries; no trade takes place. 
If now we suppose a flat addition to be made, at the same rate, 
to the expenses of production all around, the possibilities of trade 
will be no greater. Add 10 per cent or 50 per cent (according as 
there is little expense, or much, in addition to the outlay for labor) 
to the wages bill in each case, to stand for interest. The figures 
then are all enhanced by the same amount, prices remain the same 
in the two countries, and no trade will arise. The mere circum- 
stance that there is a return to capital leads to no modification of 
the analysis based on labor costs and wages alone. 
Now change the situation by making the rates of interest not 
uniform thruout. but higher in one country than in the other.