AdamSmithfanciedthatthereweretwocommoditiespeculiarly
　　fittedtoserveasameasureofvalue:corn，andlabour。Ofcorn，
　　hesaidthatalthoughitsvaluefluctuatesmuchfromyearto
　　year，itdoesnotvarygreatlyfromcenturytocentury。Thiswe
　　nowknowtobeanerror:corntendstoriseincostofproduction
　　witheveryincreaseofpopulation，andtofallwithevery
　　improvementinagriculture，eitherinthecountryitself，orin
　　anyforeigncountryfromwhichitdrawsaportionofits
　　supplies。Thesupposedconstancyofthecostoftheproductionof
　　corndependsonthemaintenanceofacompleteequipoisebetween
　　theseantagonizingforces，anequipoisewhich，ifeverrealized，
　　canonlybeaccidental。Withrespecttolabourasameasureof
　　value，thelanguageofAdamSmithisnotuniform。Hesometimes
　　speaksofitasagoodmeasureonlyforshortperiods，saying
　　thatthevalueoflabour（orwages）doesnotvarymuchfromyear
　　toyear，thoughitdoesfromgenerationtogeneration。Onother
　　occasionshespeaksasiflabourwereintrinsicallythemost
　　propermeasureofvalue，onthegroundthatoneday’sordinary
　　muscularexertionofoneman，maybelookeduponasalways，to
　　him，thesameamountofeffortorsacrifice。Butthis
　　proposition，whetherinitselfadmissibleornot，discardsthe
　　ideaofexchangevaluealtogether，substitutingatotally
　　differentidea，moreanalogoustovalueinuse。Ifaday’slabour
　　willpurchaseinAmericatwiceasmuchofordinaryconsumable
　　articlesasinEngland，itseemsavainsubtletytoinsiston
　　sayingthatlabourisofthesamevalueinbothcountries，and
　　thatitisthevalueoftheotherthingswhichisdifferent。
　　Labour，inthiscase，maybecorrectlysaidtobetwiceas
　　valuable，bothinthemarketandtothelabourerhimself，in
　　AmericaasinEngland。
　　Iftheobjectweretoobtainanapproximatemeasurebywhich
　　toestimatevalueinuse，perhapsnothingbettercouldbechosen
　　thanoneday’ssubsistenceofanaverageman，reckonedinthe
　　ordinaryfoodconsumedbytheclassofunskilledlabourers。Ifin
　　anycountryapoundofmaizeflourwillsupportalabouringman
　　foraday，athingmightbedeemedmoreorlessvaluablein
　　proportiontothenumberofpoundsofmaizeflouritexchanged
　　for。Ifonething，eitherbyitselforbywhatitwouldpurchase，
　　couldmaintainalabouringmanforaday，andanothercould
　　maintainhimforaweek，therewouldbesomereasoninsaying
　　thattheonewasworth，forordinaryhumanuses，seventimesas
　　muchastheother。Butthiswouldnotmeasuretheworthofthe
　　thingtoitspossessorforhisownpurposes，whichmightbe
　　greatertoanyamount，thoughitcouldnotbeless，thanthe
　　worthofthefoodwhichthethingwouldpurchase。
　　TheideaofaMeasureofValuemustnotbeconfoundedwith
　　theideaoftheregulator，ordeterminingprinciple，ofvalue。
　　WhenitissaidbyRicardoandothers，thatthevalueofathing
　　isregulatedbyquantityoflabour，theydonotmeanthequantity
　　oflabourforwhichthethingwillexchange，butthequantity
　　requiredforproducingit。This，theymeantoaffirm，determines
　　itsvalue;causesittobeofthevalueitis，andofnoother。
　　ButwhenAdamSmithandMalthussaythatlabourisameasureof
　　value，theydonotmeanthelabourbywhichthethingwasorcan
　　bemade，butthequantityoflabourwhichitwillexchangefor，
　　orpurchase;inotherwordsthevalueofthething，estimatedin
　　labour。Andtheydonotmeanthatthisregulatesthegeneral
　　exchangevalueofthething，orhasanyeffectindetermining
　　whatthatvalueshallbe，butonlyascertainswhatitis，and
　　whetherandhowmuchitvariesfromtimetotimeandfromplace
　　toplace。Toconfoundthesetwoideas，wouldbemuchthesame
　　thingastooverlookthedistinctionbetweenthethermometerand
　　thefire。
　　ThePrinciplesofPoliticalEconomy
　　byJohnStuartMill
　　Book3:Distribution
　　Chapter16
　　OfSomePeculiarCasesofValue
　　1。Thegenerallawsofvalue，inallthemoreimportant
　　casesoftheinterchangeofcommoditiesinthesamecountry，have
　　nowbeeninvestigated。Weexamined，first，thecaseofmonopoly，
　　inwhichthevalueisdeterminedbyeitheranaturaloran
　　artificiallimitationofquantity，thatis，bydemandandsupply;
　　secondly，thecaseoffreecompetition，whenthearticlecanbe
　　producedinindefinitequantityatthesamecost;inwhichcase
　　thepermanentvalueisdeterminedbythecostofproduction，and
　　onlythefluctuationsbysupplyanddemand;thirdly，amixed
　　case，thatofthearticleswhichcanbeproducedinindefinite
　　quantity，butnotatthesamecost;inwhichcasethepermanent
　　valueisdeterminedbythegreatestcostwhichitisnecessaryto
　　incurinordertoobtaintherequiredsupply。Andlastly，wehave
　　foundthatmoneyitselfisacommodityofthethirdclass;that
　　itsvalue，inastateoffreedom，isgovernedbythesamelawsas
　　thevaluesofothercommoditiesofitsclass;andthatprices，
　　therefore，followthesamelawsasvalues。
　　Fromthisitappearsthatdemandandsupplygovernthe
　　fluctuationsofvaluesandpricesinallcases，andthepermanent
　　valuesandpricesofallthingsofwhichthesupplyisdetermined
　　byanyagencyotherthanthatoffreecompetition:butthat，
　　undertheregimeofcompetition，thingsare，ontheaverage，
　　exchangedforeachotheratsuchvalues，andsoldatsuchprices，
　　asaffordequalexpectationofadvantagetoallclassesof
　　producers;whichcanonlybewhenthingsexchangeforoneanother
　　intheratiooftheircostofproduction。
　　Itisnow，however，necessarytotakenoticeofcertain
　　cases，towhich，fromtheirpeculiarnature，thislawofexchange
　　valueisinapplicable。
　　Itsometimeshappensthattwodifferentcommoditieshavewhat
　　maybetermedajointcostofproduction。Theyarebothproducts
　　ofthesameoperation，orsetofoperations，andtheoutlayis
　　incurredforthesakeofbothtogether，notpartforoneandpart
　　fortheother。Thesameoutlaywouldhavetobeincurredfor
　　eitherofthetwo，iftheotherwerenotwantedorusedatall。
　　Therearenotafewinstancesofcommoditiesthusassociatedin
　　theirproduction。Forexample，cokeandcoal—gasareboth
　　producedfromthesamematerial，andbythesameoperation。Ina
　　morepartialsense，muttonandwoolareanexample:beef，hides，
　　andtallow:calvesanddairyproduce:chickensandeggs。Costof
　　productioncanhavenothingtodowithdecidingthevalueofthe
　　associatedcommoditiesrelativelytoeachother。Itonlydecides
　　theirjointvalue。Thegasandthecoketogetherhavetorepay
　　theexpensesoftheirproduction，withtheordinaryprofit。Todo
　　this，agivenquantityofgas，togetherwiththecokewhichis
　　theresiduumofitsmanufacture，mustexchangeforotherthings
　　intheratiooftheirjointcostofproduction。Buthowmuchof
　　theremunerationoftheproducershallbederivedfromthecoke，
　　andhowmuchfromthegas，remainstobedecided。Costof
　　productiondoesnotdeterminetheirprices，hutthesumoftheir
　　prices。Aprincipleiswantingtoapportiontheexpensesof
　　productionbetweenthetwo。
　　Sincecostofproductionherefailsus，wemustreverttoa
　　lawofvalueanteriortocostofproduction，andmore
　　fundamental，thelawofdemandandsupply。Thelawis，thatthe
　　demandforacommodityvarieswithitsvalue，andthatthevalue
　　adjustsitselfsothatthedemandshallbeequaltothesupply。
　　Thissuppliestheprincipleofrepartitionwhichweareinquest
　　of。
　　Supposethatacertainquantityofgasisproducedandsold
　　atacertainprice，andthattheresiduumofcokeisofferedata
　　pricewhich，togetherwiththatofthegas，repaystheexpenses
　　withtheordinaryrateofprofit。Suppose，too，thatattheprice
　　putuponthegasandcokerespectively，thewholeofthegas
　　findsaneasymarket，withouteithersurplusordeficiency，but
　　thatpurchaserscannotbefoundforallthecokecorrespondingto
　　it。Thecokewillbeofferedatalowerpriceinordertoforcea
　　market。Butthislowerprice，togetherwiththepriceofthegas，
　　willnotberemunerating:themanufacture，asawhole，willnot
　　payitsexpenseswiththeordinaryprofit，andwillnot，onthese
　　terms，continuetobecarriedon。Thegas，therefore，mustbe
　　soldatahigherprice，tomakeupforthedeficiencyonthe
　　coke。Thedemandconsequentlycontracting，theproductionwillbe
　　somewhatreduced;andpriceswillbecomestationarywhen，bythe
　　jointeffectoftheriseofgasandthefallofcoke，somuch
　　lessofthefirstissold，andsomuchmoreofthesecond，that
　　thereisnowamarketforallthecokewhichresultsfromthe
　　existingextentofthegasmanufacture。Orsupposethereverse
　　case;thatmorecokeiswantedatthepresentprices，thancanbe
　　suppliedbytheoperationsrequiredbytheexistingdemandfor
　　gas。Coke，beingnowindeficiency，willriseinprice。Thewhole
　　operationwillyieldmorethantheusualrateofprofit，and
　　additionalcapitalwillheattractedtothemanufacture。The
　　unsatisfieddemandforcokewillhesupplied;butthiscannotbe
　　donewithoutincreasingthesupplyofgastoo;andasthe
　　existingdemandwasfullysuppliedalready，anincreasedquantity
　　canonlyfindamarketbyloweringtheprice。Theresultwillbe
　　thatthetwotogetherwillyieldthereturnrequiredbytheir
　　jointcostofproduction，butthatmoreofthisreturnthan
　　beforewillbefurnishedbythecoke，andlessbythegas。
　　Equilibriumwillbeattainedwhenthedemandforeacharticle
　　fitssowellwiththedemandfortheother，thatthequantity
　　requiredofeachisexactlyasmuchasisgeneratedinproducing
　　thequantityrequiredoftheother。Ifthereisanysurplusor
　　deficiencyoneitherside;ifthereisademandforcoke，andnot
　　ademandforallthegasproducedalongwithit，orviceversa;
　　thevaluesandpricesofthetwothingswillsoreadjust
　　themselvesthatbothshallfindamarket。
　　When，therefore，twoormorecommoditieshaveajointcostof
　　production，theirnaturalvaluesrelativelytoeachotherare
　　thosewhichwillcreateademandforeach，intheratioofthe
　　quantitiesinwhichtheyaresentforthbytheproductive
　　process。Thistheoremisnotinitselfofanygreatimportance:
　　buttheillustrationitaffordsofthelawofdemand，andofthe
　　modeinwhich，whencostofproductionfailstobeapplicable，
　　theotherprinciplestepsintosupplythevacancy，isworthyof
　　particularattention，asweshallfindinthenextchapterbut
　　onethatsomethingverysimilartakesplaceincasesofmuch
　　greatermoment。
　　2。Anothercaseofvalueswhichmeritsattention，isthatof
　　thedifferentkindsofagriculturalproduce。Thisisrathera
　　morecomplexquestionthatthelast，andrequiresthatattention
　　shouldbepaidtoagreaternumberofinfluencingcircumstances。
　　Thecasewouldpresentnothingpeculiar，ifdifferent
　　agriculturalproductswereeithergrownindiscriminatelyandwith
　　equaladvantageonthesamesoils，orwhollyondifferentsoils。
　　Thedifficultyarisesfromtwothings:first，thatmostsoilsare
　　fitterforonekindofproducethananother，withoutbeing
　　absolutelyunfitforany;andsecondly，therotationofcrops。
　　Forsimplicity，wewillconfineoursuppositiontotwokinds
　　ofagriculturalproduce;forinstance，wheatandoats。Ifall
　　soilswereequallyadaptedforwheatandforoats，bothwouldbe
　　grownindiscriminatelyonallsoils，andtheirrelativecostof
　　production，beingthesameeverywhere，wouldgoverntheir
　　relativevalue。Ifthesamelabourwhichgrowsthreequartersof
　　wheatonanygivensoil，wouldalwaysgrowonthatsoilfive
　　quartersofoats，thethreeandthefivequarterswouldbeofthe
　　samevalue。Ifagain，wheatandoatscouldnotbegrownonthe
　　samesoilatall，thevalueofeachwouldbedeterminedbyits
　　peculiarcostofproductionontheleastfavourableofthesoils
　　adaptedforitwhichtheexistingdemandrequiredarecourseto。
　　Thefact，however，isthatbothwheatandoatscanbegrownon
　　almostanysoilwhichiscapableofproducingeither:butsome
　　soils，suchasthestiffclays，arebetteradaptedforwheat，
　　whileothers（thelightsandysoils）aremoresuitableforoats。
　　Theremightbesomesoilswhichwouldyield，tothesamequantity
　　oflabour，onlyfourquartersofoatstothreeofwheat;others
　　perhapslessthanthreeofwheattofivequartersofoats。Among
　　thesediversities，whatdeterminestherelativevalueofthetwo
　　things？
　　Itisevidentthateachgrainwillbecultivatedin
　　preference，onthesoilswhicharebetteradaptedforitthanfor
　　theother;andifthedemandissuppliedfromthesealone，the
　　valuesofthetwograinswillhavenoreferencetooneanother。
　　Butwhenthedemandforbothissuchastorequirethateach
　　shouldbegrownnotonlyonthesoilspeculiarlyfittedforit，
　　butonthemediumsoilswhich，withoutbeingspecificallyadapted
　　toeither，areaboutequallysuitedforboth，thecostof
　　productiononthosemediumsoilswilldeterminetherelative
　　valueofthetwograins;whiletherentofthesoilsspecifically
　　adaptedtoeach，willberegulatedbytheirproductivepower，
　　consideredwithreferencetothatonealonetowhichtheyare
　　peculiarlyapplicable。Thusfarthequestionpresentsno
　　difficulty，toanyonetowhomthegeneralprinciplesofvalue
　　arefamiliar。
　　Itmayhappen，however，thatthedemandforoneofthetwo，
　　asforexamplewheat，maysooutstripthedemandfortheother，
　　asnotonlytooccupythesoilsspeciallysuitedforwheat，but
　　toengrossentirelythoseequallysuitabletoboth，andeven
　　encroachuponthosewhicharebetteradaptedtooats。Tocreate
　　aninducementforthisunequalapportionmentofthecultivation，
　　wheatmustberelativelydearer，andoatscheaper，thanaccording
　　tothecostoftheirproductiononthemediumland。Their
　　relativevaluemustbeinproportiontothecostonthatquality
　　ofland，whateveritmaybe，onwhichthecomparativedemandfor
　　thetwogrinsrequiresthatbothofthemshouldbegrown。If，
　　fromthestateofthedemand，thetwocultivationsmeetonland
　　morefavourabletoonethantotheother，thatonewillbe
　　cheaperandtheotherdearer，inrelationtoeachotherandto
　　thingsingeneral，thaniftheproportionaldemandwereasweat
　　firstsupposed。
　　Here，then，weobtainafreshillustration，inasomewhat
　　differentmanner，oftheoperationofdemand，notasan
　　occasionaldisturberofvalue，butasapermanentregulatorof
　　it，conjoinedwith，orsupplementaryto，costofproduction。
　　Thecaseofrotationofcropsdoesnotrequireseparate
　　analysis，beingacaseofjointcostofproduction，likethatof
　　gasandcoke。Ifitwerethepracticetogrowwhiteandgreen
　　cropsonalllandsinalternateyears，theonebeingnecessaryas
　　muchforthesakeoftheotherasforitsownsake;thefarmer
　　wouldderivehisremunerationfortwoyears’expensesfromone
　　whiteandonegreencrop，andthepricesofthetwowouldso
　　adjustthemselvesastocreateademandwhichwouldcarryoffan
　　equalbreadthofwhiteandofgreencrops。
　　Therewouldbelittledifficultyinfindingotheranomalous
　　casesofvalue，whichitmightbeausefulexercisetoresolve:
　　hutitisneitherdesirablenorpossible，inaworklikethe
　　present，toentermoreintodetailsthanisnecessaryforthe
　　elucidationofprinciples。Inowthereforeproceedtotheonly
　　partofthegeneraltheoryofexchangewhichhasnotyetbeen
　　touchedupon，thatofInternationalExchanges，ortospeakmore
　　generally，exchangesbetweendistantplaces。
　　ThePrinciplesofPoliticalEconomy
　　byJohnStuartMill
　　Book3:Distribution
　　Chapter17
　　OfInternationalTrade
　　1。Thecauseswhichoccasionacommoditytobebroughtfroma
　　distance，insteadofbeingproduced，asconveniencewouldseemto
　　dictate，asnearaspossibletothemarketwhereitistobesold
　　forconsumption，areusuallyconceivedinarathersuperficial
　　manner。Somethingsitisphysicallyimpossibletoproduce，
　　exceptinparticularcircumstancesofheat，soil，water，or
　　atmosphere。Buttherearemanythingswhich，thoughtheycouldbe
　　producedathomewithoutdifficulty，andinanyquantity，areyet
　　importedfromadistance。Theexplanationwhichwouldbe
　　popularlygivenofthiswouldbe，thatitischeapertoimport
　　thantoproducethem:andthisisthetruereason。Butthis
　　reasonitselfrequiresthatareasonbegivenforit。Oftwo
　　thingsproducedinthesameplace，ifoneischeaperthanthe
　　other，thereasonisthatitcanbeproducedwithlesslabourand
　　capital，or，inaword，atlesscost。Isthisalsothereasonas
　　betweenthingsproducedindifferentplaces？Arethingsnever
　　importedbutfromplaceswheretheycanbeproducedwithless
　　labour（orlessoftheotherelementofcost，time）thaninthe
　　placetowhichtheyarebrought？Doesthelaw，thatpermanent
　　valueisproportionedtocostofproduction，holdgoodbetween
　　commoditiesproducedindistantplaces，asitdoesbetweenthose
　　producedinadjacentplaces？
　　Weshallfindthatitdoesnot。Athingmaysometimesbesold
　　cheapest，bybeingproducedinsomeotherplacethanthatat
　　whichitcanbeproducedwiththesmallestamountoflabourand
　　abstinence。EnglandmightimportcornfromPolandandpayforit
　　incloth，eventhoughEnglandhadadecidedadvantageoverPoland
　　intheproductionofboththeoneandtheother。Englandmight
　　sendcottonstoPortugalinexchangeforwine，althoughPortugal
　　mightbeabletoproducecottonswithalessamountoflabourand
　　capitalthanEnglandcould。
　　Thiscouldnothappenbetweenadjacentplaces。Ifthenorth
　　bankoftheThamespossessedanadvantageoverthesouthbankin
　　theproductionofshoes，noshoeswouldbeproducedonthesouth
　　side;theshoemakerswouldremovethemselvesandtheircapitals
　　tothenorthbank，orwouldhaveestablishedthemselvesthere
　　originally。forbeingcompetitorsinthesamemarketwiththose
　　onthenorthside，theycouldnotcompensatethemselvesfortheir
　　disadvantageattheexpenseoftheconsumer:themountofit
　　wouldfallentirelyontheirprofits;andtheywouldnotlong
　　contentthemselveswithasmallerprofit，when，bysimply
　　crossingariver，theycouldincreaseit。Butbetweendistant
　　places，andespeciallybetweendifferentcountries，profitsmay
　　continuedifferent;becausepersonsdonotusuallyremove
　　themselvesortheircapitalstoadistantplace，withoutavery
　　strongmotive。Ifcapitalremovedtoremotepartsoftheworldas
　　readily，andforassmallaninducement，asitmovestoanother
　　quarterofthesametown;ifpeoplewouldtransporttheir
　　manufactoriestoAmericaorChinawhenevertheycouldsavea
　　smallpercentageintheirexpensesbyit;profitswouldbealike
　　（orequivalent）allovertheworld，andallthingswouldhe
　　producedintheplaceswherethesamelabourandcapitalwould
　　producethemingreatestquantityandofbestquality。Atendency
　　may，evennow，beobservedtowardssuchastateofthings;
　　capitalisbecomingmoreandmorecosmopolitan;thereissomuch
　　greatersimilarityofmannersandinstitutionsthanformerly，and
　　somuchlessalienationoffeeling，amongthemorecivilized
　　countries，thatbothpopulationandcapitalnowmovefromoneof
　　thosecountriestoanotheronmuchlesstemptationthan
　　heretofore。Buttherearestillextraordinarydifferences，both
　　ofwagesandofprofits，betweendifferentpartsoftheworld。It
　　needsbutasmallmotivetotransplantcapital，orevenpersons，
　　fromWarwickshiretoYorkshire;butamuchgreatertomakethem
　　removetoIndia，thecolonies，orIreland。ToFrance，Germany，or
　　Switzerland，capitalmovesperhapsalmostasreadilyastothe
　　colonies;thedifferenceoflanguageandgovernmentbeing
　　scarcelysogreatahindranceasclimateanddistance。To
　　countriesstillbarbarous，or，likeRussiaorTurkey，only
　　beginningtobecivilized，capitalwillnotmigrate，unlessunder
　　theinducementofaverygreatextraprofit。
　　Betweenalldistantplacesthereforeinsomedegree，but
　　especiallybetweendifferentcountries（whetherunderthesame
　　supremegovernmentornot，）theremayexistgreatinequalitiesin
　　thereturntolabourandcapital，withoutcausingthemtomove
　　fromoneplacetotheotherinsuchquantityastolevelthose
　　inequalities。Thecapitalbelongingtoacountrywill，toagreat
　　extent，remaininthecountry，eveniftherebenomodeof
　　employingitinwhichitwouldnotbemoreproductiveelsewhere。
　　Yetevenacountrythuscircumstancedmight，andprobablywould，
　　carryontradewithothercountries。Itwouldexportarticlesof
　　somesort，eventoplaceswhichcouldmakethemwithlesslabour
　　thanitself;becausethosecountries，supposingthemtohavean
　　advantageoveritinallproductions，wouldhaveagreater
　　advantageinsomethingsthaninothers，andwouldfindittheir
　　interesttoimportthearticlesinwhichtheiradvantagewas
　　smallest，thattheymightemploymoreoftheirlabourandcapital
　　onthoseinwhichitwasgreatest。
　　2。AsIhavesaidelsewhere（1*）afterRicardo（thethinker
　　whohasdonemosttowardsclearingupthissubject）（2*）"itis
　　notadifferenceintheabsolutecostofproduction，which
　　determinestheinterchange，butadifferenceinthecomparative
　　cost。ItmaybetoouradvantagetoprocureironfromSwedenin
　　exchangeforcottons，evenalthoughtheminesofEnglandaswell
　　ashermanufactoriesshouldbemoreproductivethanthoseof
　　Sweden;forifwehaveanadvantageofone—halfincottons，and
　　onlyanadvantageofaquarteriniron，andcouldsellour
　　cottonstoSwedenatthepricewhichSwedenmustpayforthemif
　　sheproducedthemherself，weshouldobtainourironwithan
　　advantageofone—halfaswellasourcottons。Wemayoften，by
　　tradingwithforeigners，obtaintheircommoditiesatasmaller
　　expenseoflabourandcapitalthantheycosttotheforeigners
　　themselves。Thebargainisstilladvantageoustotheforeigner，
　　becausethecommoditywhichhereceivesinexchange，thoughit
　　hascostusless，wouldhavecosthimmore。"Toillustratethe
　　casesinwhichinterchangeofcommoditieswillnot，andthosein
　　whichitwill，takeplacebetweentwocountries，Mr。Mill，inhis
　　ElementsofPoliticalEconomy，（3*）makesthesuppositionthat
　　PolandhasanadvantageoverEnglandintheproductionbothof
　　clothandofcorn。Hefirstsupposestheadvantagetobeofequal
　　amountinbothcommodities;theclothandthecorn，eachofwhich
　　required100days’labourinPoland，requiringeach150days’
　　labourinEngland。"Itwouldfollow，thattheclothof150days’
　　labourinEngland，ifsenttoPoland，wouldbeequaltothecloth
　　of100days’labourinPoland;ifexchangedforcorn，therefore，
　　itwouldexchangeforthecornofonly100days’labour。Butthe
　　cornof100days’labourinPoland，wassupposedtobethesame
　　quantitywiththatof150days’labourinEngland。With150days’
　　labourincloth，therefore，Englandwouldonlygetasmuchcorn
　　inPoland，asshecouldraisewith150days’labourathome;and
　　shewould，inimportingit，havethecostofcarriagebesides。In
　　thesecircumstancesnoexchangewouldtakeplace。"Inthiscase
　　thecomparativecostsofthetwoarticlesinEnglandandin
　　Polandweresupposedtobethesame，thoughtheabsolutecosts
　　weredifferent;onwhichsuppositionweseethattherewouldbe
　　nolaboursavedtoeithercountry，byconfiningitsindustryto
　　oneofthetwoproductions，andimportingtheother。
　　Itisotherwisewhenthecomparative，andnotmerelythe
　　absolutecostsofthetwoarticlesaredifferentinthetwo
　　countries。"If，"continuesthesameauthor，"whilethecloth
　　producedwith100days’labourinPolandwasproducedwith150
　　days’labourinEngland，thecornwhichwasproducedinPoland
　　with100days’labourcouldnotbeproducedinEnglandwithless
　　than200days’labour;anadequatemotivetoexchangewould
　　immediatelyarise。WithaquantityofclothwhichEngland
　　producedwith150days’labour，shewouldbeabletopurchaseas
　　muchcorninPolandaswasthereproducedwith100days’labour;
　　butthequantitywhichwasthereproducedwith100days’labour，
　　wouldbeasgreatasthequantityproducedinEnglandwith200
　　days’labour。"Byimportingcorn，therefore，fromPoland，and
　　payingforitwithcloth，Englandwouldobtainfor150days’
　　labourwhatwouldotherwisecosther200;beingasavingof50
　　days’labouroneachrepetitionofthetransaction:andnot
　　merelyasavingto，foritisnotobtainedattheexpenseof
　　England，butasavingabsolutely。Poland，who，withcornthat
　　costsher100days’labour，haspurchasedclothwhich，if
　　producedathome，wouldhavecostherthesame。Poland，
　　therefore，onthissupposition，losesnothing;butalsoshe
　　derivesnoadvantagefromthetrade，theimportedclothcosting
　　herasmuchasifitweremadeathome。ToenablePolandtogain
　　anythingbytheinterchange，somethingmustbeabatedfromthe
　　gainofEngland:thecornproducedinPolandby100days’
　　labour，mustbeabletopurchasefromEnglandmorecloththan
　　Polandcouldproducebythatamountoflabour;moretherefore
　　thanEnglandcouldproduceby150days’labour，Englandthus
　　obtainingthecornwhichwouldhavecosther200days，atacost
　　exceeding150，thoughshortof200。Englandthereforenolonger
　　gainsthewholeofthelabourwhichissavedtothetwojointly
　　bytradingwithoneanother。
　　3。Fromthisexpositionweperceiveinwhatconsiststhe
　　benefitofinternationalexchange，orinotherwords，foreign
　　commerce。SettingasideitsenabLingcountriestoobtain
　　commoditieswhichtheycouldnotthemselvesproduceatall;its
　　advantageconsistsinamoreefficientemploymentofthe
　　productiveforcesoftheworld。Iftwocountrieswhichtrade
　　togetherattempted，asfaraswasphysicallypossible，toproduce
　　forthemselveswhattheynowimportfromoneanother，thelabour
　　andcapitalofthetwocountrieswouldnotbesoproductive，the
　　twotogetherwouldnotobtainfromtheirindustrysogreata
　　quantityofcommodities，aswheneachemploysitselfin
　　producing，bothforitselfandfortheother，thethingsinwhich
　　itslabourisrelativelymostefficient。Theadditionthusmade
　　totheproduceofthetwocombined，constitutestheadvantageof
　　thetrade。Itispossiblethatoneofthetwocountriesmaybe
　　altogetherinferiortotheotherinproductivecapacities，and
　　thatitslabourandcapitalcouldbeemployedtogreatest
　　advantagebybeingremovedbodilytotheother。Thelabourand
　　capitalwhichhavebeensunkinrenderingHollandhabitable，
　　wouldhaveproducedamuchgreaterreturniftransportedto
　　AmericaorIreland。Theproduceofthewholeworldwouldbe
　　greater，orthelabourless，thanitis，ifeverythingwere
　　producedwherethereisthegreatestabsolutefacilityforits
　　production。Butnationsdonot，atleastinmoderntimes，
　　emigrateenmasse;andwhilethelabourandcapitalofacountry
　　remaininthecountry，theyaremostbeneficiallyemployedin
　　producing，forforeignmarketsaswellasforitsown，thethings
　　inwhichitliesundertheleastdisadvantage，iftherebenone
　　inwhichitpossessesanadvantage。
　　4。Beforeproceedingfurther，letuscontrastthisviewof
　　thebenefitsofinternationalcommercewithothertheorieswhich
　　haveprevailed，andwhichtoacertainextentstillprevail，on
　　thesamesubject。Accordingtothedoctrinenowstated，theonly
　　directadvantageofforeigncommerceconsistsintheimports。A
　　countryobtainsthingswhichiteithercouldnothaveproducedat
　　all，orwhichitmusthaveproducedatagreaterexpenseof
　　capitalandlabourthanthecostofthethingswhichitexports
　　topayforthem。Itthusobtainsamoreamplesupplyofthe
　　commoditiesitwants，forthesamelabourandcapital;orthe
　　samesupply，forlesslabourandcapital，leavingthesurplus
　　disposabletoproduceotherthings。Thevulgartheorydisregards
　　thisbenefit，anddeemstheadvantageofcommercetoresidein
　　theexports:asifnotwhatacountryobtains，butwhatitparts
　　with，byitsforeigntrade，wassupposedtoconstitutethegain
　　toit。Anextendedmarketforitsproduce——anabundant
　　consumptionforitsgoods——aventforitssurplus——arethe
　　phrasesbywhichithasbeencustomarytodesignatetheusesand
　　recommendationsofcommercewithforeigncountries。Thisnotion
　　isintelligible，whenweconsiderthattheauthorsandleadersof
　　opiniononmercantilequestionshavealwayshithertobeenthe
　　sellingclass。ItisintruthasurvivingrelicoftheMercantile
　　Theory，accordingtowhich，moneybeingtheonlywealth，selling，
　　orinotherwords，exchanginggoodsformoney，was（tocountries
　　withoutminesoftheirown）theonlywayofgrowingrich——and
　　importationofgoods，thatistosay，partingwithmoney，wasso
　　muchsubtractedfromthebenefit。
　　Thenotionthatmoneyaloneiswealth，hasbeenlongdefunct，
　　butithasleftmanyofitsprogenybehindit;andevenits
　　destroyer，AdamSmith，retainedsomeopinionswhichitis
　　impossibletotracetoanyotherorigin。AdamSmith’stheoryof
　　thebenefitofforeigntrade，wasthatitaffordedanoutletfor
　　thesurplusproduceofacountry，andenabledaportionofthe
　　capitalofthecountrytoreplaceitselfwithaprofit。These
　　expressionssuggestideasinconsistentwithaclearconceptionof
　　thephenomena。Theexpression，surplusproduce，seemstoimply
　　thatacountryisundersomekindofnecessityofproducingthe
　　cornorclothwhichitexports;sothattheportionwhichitdoes
　　notitselfconsume，ifnotwantedandconsumedelsewhere，would
　　eitherbeproducedinsheerwaste，orifitwerenotproduced，
　　thecorrespondingportionofcapitalwouldremainidle，andthe
　　massofproductionsinthecountrywouldbediminishedbyso
　　much。Eitherofthesesuppositionswouldbeentirelyerroneous。
　　Thecountryproducesanexportablearticleinexcessofitsown
　　wants，fromnoinherentnecessity，butasthecheapestmodeof
　　supplyingitselfwithotherthings。Ifpreventedfromexporting
　　thissurplus，itwouldceasetoproduceit，andwouldnolonger
　　importanything，beingunabletogiveanequivalent;butthe
　　labourandcapitalwhichhadbeenemployedinproducingwitha
　　viewtoexportation，wouldfindemploymentinproducingthose
　　desirableobjectswhichwerepreviouslybroughtfromabroad:or，
　　ifsomeofthemcouldnotbeproduced，inproducingsubstitutes
　　forthem。Thesearticleswouldofcoursebeproducedatagreater
　　costthanthatofthethingswithwhichtheyhadpreviouslybeen
　　purchasedfromforeigncountries。Butthevalueandpriceofthe
　　articleswouldriseinproportion;andthecapitalwouldjustas
　　muchbereplaced，withtheordinaryprofitfromthereturns，as
　　itwaswhenemployedinproducingfortheforeignmarket。The
　　onlylosers（afterthetemporaryinconvenienceofthechange）
　　wouldbetheconsumersoftheheretoforeimportedarticles;who
　　wouldbeobligedeithertodowithoutthem，consuminginlieuof
　　themsomethingwhichtheydidnotlikeaswell，ortopaya
　　higherpriceforthemthanbefore。
　　Thereismuchmisconceptioninthecommonnotionofwhat
　　commercedoesforacountry。Whencommerceisspokenofasa
　　sourceofnationalwealth，theimaginationfixesitselfuponthe
　　largefortunesacquiredbymerchants，ratherthanuponthesaving
　　ofpricetoconsumers。Butthegainsofmerchants，whenthey
　　enjoynoexclusiveprivilege，arenogreaterthantheprofits
　　obtainedbytheemploymentofcapitalinthecountryitself。If
　　itbesaidthatthecapitalnowemployedinforeigntradecould
　　notfindemploymentinsupplyingthehomemarket，Imightreply，
　　thatthisisthefallacyofgeneralover—production，discussedin
　　aformerchapter:butthethingisinthisparticularcasetoo
　　evident，torequireanappealtoanygeneraltheory。Wenotonly
　　seethatthecapitalofthemerchantwouldfindemployment，but
　　weseewhatemployment。Therewouldbeemploymentcreated，equal
　　tothatwhichwouldbetakenaway。Exportationceasing，
　　importationtoanequalvaluewouldceasealso，andallthatpart
　　oftheincomeofthecountrywhichhadbeenexpendedinimported
　　commodities，wouldbereadytoexpenditselfonthesamethings
　　producedathome，oronothersinsteadofthem。Commerceis
　　virtuallyamodeofcheapeningproduction;andinallsuchcases
　　theconsumeristhepersonultimatelybenefited;thedealer，in
　　theend，issuretogethisprofit，whetherthebuyerobtains
　　muchorlittleforhismoney。Thisissaidwithoutprejudiceto
　　theeffect（alreadytouchedupon，andtobehereafterfully
　　discussed）whichthecheapeningofcommoditiesmayhavein
　　raisingprofits;inthecasewhenthecommoditycheapened，being
　　oneofthoseconsumedbylabourers，entersintothecostof
　　labour，bywhichtherateofprofitsisdetermined。
　　5。Such，then，isthedirecteconomicaladvantageofforeign
　　trade。Butthereare，besides，indirecteffects，whichmustbe
　　countedasbenefitsofahighorder。Oneis，thetendencyof
　　everyextensionofthemarkettoimprovetheprocessesof
　　production。Acountrywhichproducesforalargermarketthanits
　　own，canintroduceamoreextendeddivisionoflabour，canmake
　　greateruseofmachinery，andismorelikelytomakeinventions
　　andimprovementsintheprocessesofproduction。Whatevercauses
　　agreaterquantityofanythingtobeproducedinthesameplace，
　　tendstothegeneralincreaseoftheproductivepowersofthe
　　world。（4*）Thereisanotherconsideration，principallyapplicable
　　toanearlystageofindustrialadvancement。Apeoplemaybeina
　　quiescent，indolent，uncultivatedstate，withalltheirtastes
　　eitherfullysatisfiedorentirelyundeveloped，andtheymayfail
　　toputforththewholeoftheirproductiveenergiesforwantof
　　anysufficientobjectofdesire。Theopeningofaforeigntrade，
　　bymakingthemacquaintedwithnewobjects，ortemptingthemby
　　theeasieracquisitionofthingswhichtheyhadnotpreviously
　　thoughtattainable，sometimesworksasortofindustrial
　　revolutioninacountrywhoseresourceswerepreviously
　　undevelopedforwantofenergyandambitioninthepeople:
　　inducingthosewhoweresatisfiedwithscantycomfortsandlittle
　　work，toworkharderforthegratificationoftheirnewtastes，
　　andeventosave，andaccumulatecapital，forthestillmore
　　completesatisfactionofthosetastesatafuturetime。
　　Buttheeconomicaladvantagesofcommercearesurpassedin
　　importancebythoseofitseffectswhichareintellectualand
　　moral。Itishardypossibletooverratethevalue，inthepresent
　　lowstateofhumanimprovement，ofplacinghumanbeingsin
　　contactwithpersonsdissimilartothemselves，andwithmodesof
　　thoughtandactionunlikethosewithwhichtheyarefamiliar。
　　Commerceisnowwhatwaroncewas，theprincipalsourceofthis
　　contact。Commercialadventurersfrommoreadvancedcountrieshave
　　generallybeenthefirstcivilizersofbarbarians。Andcommerce
　　isthepurposeofthefargreaterpartofthecommunicationwhich
　　takesplacebetweencivilizednations。Suchcommunicationhas
　　alwaysbeen，andispeculiarlyinthepresentage，oneofthe
　　primarysourcesofprogress。Tohumanbeings，who，ashitherto
　　educated，canscarcelycultivateevenagoodqualitywithout
　　runningitintoafault，itisindispensabletobeperpetually
　　comparingtheirownnotionsandcustomswiththeexperienceand
　　exampleofpersonsindifferentcircumstancesfromthemselves:
　　andthereisnonationwhichdoesnotneedtoborrowfromothers，
　　notmerelyparticularartsorpractices，butessentialpointsof
　　characterinwhichitsowntypeisinferior。Finally，commerce
　　firsttaughtnationstoseewithgoodwillthewealthand
　　prosperityofoneanother。Before，thepatriot，unless
　　sufficientlyadvancedinculturetofeeltheworldhiscountry，
　　wishedallcountriesweak，poor，andill—governed，buthisown:
　　henowseesintheirwealthandprogressadirectsourceof
　　wealthandprogresstohisowncountry。Itiscommercewhichis
　　rapidlyrenderingwarobsolete，bystrengtheningandmultiplying
　　thepersonalinterestswhichareinnaturaloppositiontoit。And
　　itmaybesaidwithoutexaggerationthatthegreatextentand
　　rapidincreaseofinternationaltrade，inbeingtheprincipal
　　guaranteeofthepeaceoftheworld，isthegreatpermanent
　　securityfortheuninterruptedprogressoftheideas，the
　　institutions，andthecharacterofthehumanrace。
　　NOTES:
　　1。EssaysonSomeUnsettledQuestionsofPoliticalEconomy，Essay
　　I。
　　2。IatonetimebelievedMrRicardotohavebeenthesoleauthor
　　ofthedoctrinenowuniversallyreceivedbypoliticaleconomists，
　　onthenatureandmeasureofthebenefitwhichacountryderives
　　fromforeigntrade。ButColonelTorrens，bytherepublicationof
　　oneofhisearlywritings，"TheEconomistsRefuted，"has
　　establishedatleastajointclaimwithMrRicardotothe
　　originationofthedoctrine，andanexclusiveonetoitsearliest
　　publication。
　　3。Thirded。p。120。
　　4。Videsupra，booki。chap。ix，sect。1。
　　ThePrinciplesofPoliticalEconomybyJohnStuartMillBook3:DistributionChapter18
　　OfInternationalTrade1。Thevaluesofcommoditiesproducedatthesameplace，orinplacessufficientlyadjacentforcapitaltomovefreelybetweenthem——letussay，forsimplicity，ofcommoditiesproducedinthesamecountry——depend（temporaryfluctuationsapart）upontheircostofproduction。Butthevalueofacommoditybroughtfromadistantplace，especiallyfromaforeigncountry，doesnotdependonitscostofproductionintheplacefromwhenceitcomes。Onwhat，then，doesitdepend？Thevalueofathinginanyplace，dependsonthecostofitsacquisitioninthatplace;whichinthecaseofanimportedarticle，meansthecostofproductionofthethingwhichisexportedtopayforit。
　　Sincealltradeisinrealitybarter，moneybeingamereinstrumentforexchangingthingsagainstoneanother，wewill，forsimplicity，beginbysupposingtheinternationaltradetobeinform，whatitalwaysisinreality，anactualtruckingofonecommodityagainstanother。Asfaraswehavehithertoproceeded，wehavefoundallthelawsofinterchangetobeessentiallythesame，whethermoneyisusedornot;moneynevergoverning，butalwaysobeying，thosegenerallaws。
　　If，then，EnglandimportswinefromSpain，givingforeverypipeofwineabaleofcloth，theexchangevalueofapipeofwineinEnglandwillnotdependuponwhattheproductionofthewinemayhavecostinSpain，butuponwhattheproductionoftheclothhascostinEngland。ThoughthewinemayhavecostinSpaintheequivalentofonlytendays’labour，yet，iftheclothcostsinEnglandtwentydays’labour，thewine，whenbroughttoEngland，willexchangefortheproduceoftwentydays’Englishlabour，plusthecostofcarriage;includingtheusualprofitontheimporter’scapital，duringthetimeitislockedup，andwithheldfromotheremployment。
　　Thevalue，then，inanycountry，ofaforeigncommodity，dependsonthequantityofhomeproducewhichmustbegiventotheforeigncountryinexchangeforit。Inotherwords，thevaluesofforeigncommoditiesdependonthetermsofinternationalexchange。What，then，dothesedependupon？Whatisit，which，inthecasesupposed，causesapipeofwinefromSpaintobeexchangedwithEnglandforexactLythatquantityofcloth？
　　Wehaveseenthatitisnottheircostofproduction。IftheclothandthewinewerebothmadeinSpain，theywouldexchangeattheircostofproductioninSpain;iftheywerebothmadeinEngland，theywouldexchangeattheircostofproductioninEngland:butalltheclothbeingmadeinEngland，andallthewineinSpain，theyareincircumstancestowhichwehavealreadydeterminedthatthelawofcostofproductionisnotapplicable。
　　Wemustaccordingly，aswehavedonebeforeinasimilarembarrassment，fallbackuponanantecedentlaw，thatofsupplyanddemand:andinthisweshallagainfindthesolutionofourdifficulty。
　　IhavediscussedthisquestioninaseparateEssay，alreadyoncereferredto;andaquotationofpartoftheexpositionthengiven，willshethebestintroductiontomypresentviewofthesubjects。Imustgivenoticethatwearenowintheregionofthemostcomplicatedquestionswhichpoliticaleconomyaffords;thatthesubjectisonewhichcannotpossibly，andthatamorecontinuouseffortofattentionthanbemadeelementary;hasyetbeenrequired，willbenecessarytofollowtheseriesofdeductions。Thethread，however，whichweareabouttotakeinhand，isinitselfverysimpleandmanageable;theonlydifficultyisinfollowingitthroughthewindingsandentanglementsofcomplexinternationaltransactions。
　　2。"Whenthetradeisestablishedbetweenthetwocountries，thetwocommoditieswillexchangeforeachotheratthesamerateofinterchangeinbothcountries——batingthecostofcarriage，ofwhich，forthepresent，itwillbemoreconvenienttoomittheconsideration。Supposing，therefore，forthesakeofargument，thatthecarriageofthecommoditiesfromonecountrytotheothercouldbeeffectedwithoutlabourandwithoutcost，nosoonerwouldthetradebeopenedthanthevalueofthetwocommodities，estimatedineachother，wouldcometoalevelinbothcountries。
　　"Supposethat10yardsofbroadclothcostinEnglandasmuchlabouras15yardsoflinen，andinGermanyasmuchas20。"Incommonwithmostofmypredecessors，Ifinditadvisable，intheseintricateinvestigations，togivedistinctnessandfixitytotheconceptionbynumericalexamples。Theseexamplesmustsometimes，asinthepresentcase，bepurelysupposititious。I
　　shouldhavepreferredrealones;butallthatisessentialis，thatthenumbersshouldbesuchasadmitofbeingeasilyfollowedthroughthesubsequentcombinationsintowhichtheyenter。
　　Thissuppositionthenbeingmade，itwouldbetheinterestofEnglandtoimportlinenfromGermany，andofGermanytoimportclothfromEngland。"Wheneachcountryproducedbothcommoditiesforitself，10yardsofclothexchangedfor15yardsoflineninEngland，andfor20inGermany。Theywillnowexchangeforthesamenumberofyardsoflineninboth。Forwhatnumber？Iffor15yards，Englandwillbejustasshewas，andGermanywillgainall。Iffor20yards，Germanywillbeasbefore，andEnglandwillderivethewholeofthebenefit。Ifforanynumberintermediatebetween15and20，theadvantagewillbesharedbetweenthetwocountries。If，forexample，10yardsofclothexchangefor18oflinen，Englandwillgainanadvantageof3yardsonevery15，Germanywillsave2outofevery20。Theproblemis，whatarethecauseswhichdeterminetheproportioninwhichtheclothofEnglandandthelinenofGermanywillexchangeforeachother。
　　"Asexchangevalue，inthiscaseasineveryother，isproverbiallyfluctuating，itdoesnotmatterwhatwesupposeittobewhenwebegin:weshallsoonseewhethertherebeanyfixedpointaboutwhichitoscillates，whichithasatendencyalwaystoapproachto，andtoremainat。Letussuppose，then，thatbytheeffectofwhatAdamSmithcallsthehigglingofthemarket，10yardsofclothinbothcountries，exchangefor17yardsoflinen。
　　"Thedemandforacommodity，thatis，thequantityofitwhichcanfindapurchaser，variesaswehavebeforeremarked，accordingtotheprice。InGermanythepriceof10yardsofclothisnow17yardsoflinen，orwhateverquantityofmoneyisequivalentinGermanyto17yardsoflinen。Now，thatbeingtheprice，thereissomeparticularnumberofyardsofcloth，whichwillbeindemand，orwillfindpurchasers，atthatprice。Thereissomegivenquantityofcloth，morethanwhichcouldnotbedisposedofatthatprice;lessthanwhich，atthatprice，wouldnotfullysatisfythedemand。Letussupposethisquantitytobe1000times10yards。
　　"LetusnowturnourattentiontoEngland。There，thepriceof17yardsoflinenis10yardsofcloth，orwhateverquantityofmoneyisequivalentinEnglandto10yardsofcloth。Thereissomeparticularnumberofyardsoflinenwhich，atthatprice，willexactlysatisfythedemand，andnomore。Letussupposethatthisnumberis1000times17yards。
　　"As17yardsoflinenareto10yardsofcloth，soare1000
　　times17yardsto1000times10yards。Attheexistingexchangevalue，thelinenwhichEnglandrequireswillexactlypayforthequantityofclothwhich，onthesametermsofinterchange，Germanyrequires。Thedemandoneachsideispreciselysufficienttocarryoffthesupplyontheother。Theconditionsrequiredbytheprincipleofdemandandsupplyarefulfilled，andthetwocommoditieswillcontinuetobeinterchanged，aswesupposedthemtobe，intheratioof17yardsoflinenfor10yardsofcloth。
　　"Butoursuppositionsmighthavebeendifferent。Supposethat，attheassumedrateofinterchange，Englandhasbeendisposedtoconsumenogreaterquantityoflinenthan800times17yards:itisevidentthat，attheratesupposed，thiswouldnothavesufficedtopayforthe1000times10yardsofclothwhichwehavesupposedGermanytorequireattheassumedvalue。
　　Germanywouldbeabletoprocurenomorethan800times10yardsatthatprice。Toprocuretheremaining200，whichshewouldhavenomeansofdoingbutbybiddinghigherforthem，shewouldoffermorethan17yardsoflineninexchangefor10yardsofcloth:
　　letussupposehertooffer18。Atthisprice，perhaps，Englandwouldbeinclinedtopurchaseagreaterquantityoflinen。Shewouldconsume，possibly，atthatprice，900times18yards。Ontheotherhand，clothhavingriseninprice，thedemandofGermanyforitwouldprobablyhavediminished。If，insteadof1000times10yards，sheisnowcontentedwith900times10
　　yards，thesewillexactlypayforthe900times18yardsoflinenwhichEnglandiswillingtotakeatthealteredprice:thedemandoneachsidewillagainexactlysufficetotakeoffthecorrespondingsupply;and10yardsfor18willbetherateatwhich，inbothcountries，clothwillexchangeforlinen。