64 
INTERNATIONAL TRADE 
is produced with the aid of very much capital, the other (linen) 
with none at all. Suppose that the American capital investment 
for copper is $100, and that during the period over which $20 is paid 
for wages, 10 per cent on $100, or the sum of $10 in all, is payable 
to capital for interest. In Germany suppose the copper situa- 
tion to be of the same sort. Then the German capital investment 
for copper will be $66.66, because the same quantity of labor ap- 
plied to making that capital, paid at the German rate and having 
the German effectiveness, will bring the investment to that sum, as 
against $100 in the United States. The German interest charge 
for copper, at 10 per cent, will then be $6.66. For linen, be it 
remembered, there is no interest charge. Then we have: 
, WAGES DoMmEsTIC 
Days ToTAL INTEREST TorAL 
LABOR ph WAGE CHARGE EXPENSE SurFLy 
Day AGES 5 2 PRICE 
U.S. 10 $2.00 $20 10% on $100 = $10 $30 30 copper $1.00 
U. S. 10 $2.00 $20 nil $20 15 linen $1.33 
Germany 10 $1.33 $13.33 10% on $66.66 = $6.66 $20 20 copper $1.00 
Germany 10 £1.33 $13.33 nil $13.33 10 linen $1.33 
PropUCE 
Both in the United States and in Germany copper is now higher 
in price than it was before the interest item was added. It was 
$0.66% in both countries before the interest charge was added ; it 
is now $1.00 in both. Being the same in both, copper moves 
neither way. The price of linen remains unchanged, still at the 
old figure and still the same in either country. Trade between the 
countries still will not arise. 
Suppose now, however, that there is an interest charge for copper 
(and still for copper only — none for linen), but not at the same 
rate in the two countries. Suppose the rate to be 5 per cent 
in the United States, while it remains at 10 per cent in Germany. 
Then we have: 
, WAGES 
Days 
LABOR wn 
Day 
U.S. 10 $2.00 
U.S. 10 $2.00 
Germany 10 $1.33 
Germany 10 $1.33 
ToTAL INTEREST ToTAL 
WAGES CHARGE EXPENSES 
$20 5% on $100 = $5.00 
$20 nil 
$13.33 109% on $66.66 = $6.66 
213 33 nil 
$25 
$20 
$20 
$13.33 
DoMESTIC 
SuppPLY 
Price 
30 copper $0.83 
15 linen $1.33 
20 copper $1.00 
10 linen $1.33 
The situation has changed. The price conditions are such that 
copper will move from the United States to Germany. Tho linen