CHAPTER 5 
WAGES AND Prices IN DirreRENT COUNTRIES 
Domestic PRICES AND INTERNATIONAL PRICES 
In the preceding chapters the subject has been treated as if 
each and every commodity were within the range of international 
trade ; or rather, as if there existed no other commodity than those 
within its range. Wheat and linen (or copper and linen) have 
alone been considered. Assuming that the conditions found for 
these are representative — that other commodities are in the same 
general situation as they — we reach the conclusion that some 
things, such as wheat, will be produced solely in the United States, 
while others, such as linen, will be produced solely in Germany. 
The price of each article will be the same thruout the trading areas 
(barring of course the differences that may result from cost of 
transportation). The purchasing power of money in terms of goods 
will be the same in the two countries. Money wages, however, 
will not be the same. In the case se'ected as illustrative they 
were found to be higher in the United States. The extent to which 
they may be higher — the maximum divergence — depends on 
the extent of the advantage possessed by the United States in the 
commodity which she exports. Within this maximum, the actual 
excess of American wages depends on the play of demand between 
the two bodies of consumers. The fundamental features of the 
situation, so far as its analysis has been carried hitherto, are that 
prices are the same in the two countries. while money wages 
vary. 
But the supposition that all goods come within the range of 
international trade is not at all in accord with the facts. The 
scope of international trade is by no means all-embracing. So far 
from its being the case that each and every article is made solely 
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