INTERNATIONAL TRADE 
10 or less than 15 cloth) that at which the countries are bartering 
in fact is 12. 
Suppose now a change in the conditions of demand. Assume 
that at the price of $0.83 for cloth, more cloth than the 15 million 
yards can be sold in the United States and Russia. The increase in 
quantity demanded at that price may come from Russia alone, or 
from the United States alone, or partly from each of them. What- 
ever the region whence the increased demand appears, the result is 
that England sells more cloth. Her exports then exceed her 
imports in money value, and specie flows to her from the other 
countries. The consequences are familiar; prices and money 
wages rise in England, fall in the countries with which she is trading, 
and changes of this kind go on until a new equilibrium is established. 
The new states of wages and prices may be exemplified thus: 
[n the U. S. 10 days’ labor 
’gthe U. S..10 7 ” 
” England 10 ” » 
” England 10 ” 2 
PdRussia 10 7’ ” 
” Russia 10 ” 2 
Wages 
PER DAY 
$1.90 
$1.90 
$1.35 
$1.35 
$0.95 
$0.95 
Dial, 
ToTAL 
WaGEs 
$19.00 
$19.00 
$13.50 
313.50 
$ 9.50 
$ 9.50 
Domestic 
DUC 
Propucn SueppLy PricE 
20 wheat $0.95 
20 cloth $0.95 
i0 wheat $1.35 
15 cloth $0.90 
10 wheat $0.95 
10 cloth $0.95 
Money wages have fallen both in the United States and Russia; 
from $2.00 to $1.90 in the United States, from $1.00 to $0.95 in 
Russia. As purchasers of cloth, both Russians and Americans are 
worse off than before; their money incomes are lower, the price of 
cloth is higher. Money wages in England on the other hand have 
risen, and the English are better off as purchasers of wheat. 
The readjusted equilibrium of international payments may then 
be exemplified thus: 
Russia and the United States (between them) buy from England 
20 million cloth at $0.90 = $18,000,000 
Russia and the United States (between them) sell to England 
19 million wheat at $0.95 = $18,000,000 
It now appears that 19 million bushels of wheat are exchanged by 
Russia and the United States for 20 million yards of English cloth. 
1 To be exact, $18.050,000.