72 
Lia 
INTERNATIONAL TRADE 
machines had been carried far — doubtless farther than in any 
other parts of the world. In both, the effectiveness of labor was 
made greater by the capital-using method of production. Prob- 
ably the United States was somewhat in the van. Hence in those 
industries which were specially suitable for this method of produc- 
tion she had a comparative advantage. Doubtless she had in this 
regard an advantage in all industries, since her people thruout 
devised better tools than other peoples and used them better; but 
international trade was influenced only in so far as there was a 
peculiar — a comparative — advantage in some among her indus- 
tries; that is, in so far as United States used capital better in some 
directions than in others. England also used tools and machines 
with large effect, even tho not with all-around effect as great as the 
United States. In England, however, the other side of the capital 
factor entered, giving a comparative advantage in certain direc- 
tions; namely, the return which had to be paid in the way of 
interest on the needed capital was lower. So far as all of her 
industries shared in the lower interest rate alike, no influence of 
international trade could emerge. But so far as the technical 
development of a particular industry called for large capital —a 
large amount of previous labor allied with a moderate amount 
of current labor — the lower return on the capital embodying the 
previous labor gave that industry a comparative advantage. 
The iron industry was typical: larger plant, larger outlay for 
materials, comparatively small current-labor account. Here a 
low interest charge had a greater effect on prices, and thru prices 
a greater effect on international trade, than in industries where 
capital charge was a less important item. The United States, 
on the other hand, at this later stage, had an advantage in those 
industries when the use of tools and implements made the effective- 
ness of labor especially great. England had an advantage in those 
industries where much capital was used and where the lower interest 
rate enabled the commodities to be put on the market at a price 
especially low. 
This contrast, noticeable in the last third of the 19th century, 
tended to diminish in the era which opened with the 20th century.