Mill, John Stuart, 1806-1873 / 2008-11-23 00:00:00
At
this point prices would remain, because money would then cease to move
out of England into Germany. What this point might be, would entirely
depend upon the circumstances and inclinations of the purchasers on both
sides. If the fall of cloth did not much increase the demand for it in
Germany, and the rise of linen did not diminish very rapidly the demand
for it in England, much money must pass before the equilibrium is
restored; cloth would fall very much, and linen would rise, until
England, perhaps, had to pay nearly as much for it as when she produced
it for herself. But if, on the contrary, the fall of cloth caused a very
rapid increase of the demand for it in Germany, and the rise of linen in
Germany reduced very rapidly the demand in England from what it was
under the influence of the first cheapness produced by the opening of
the trade; the cloth would very soon suffice to pay for the linen,
little money would pass between the two countries, and England would
derive a large portion of the benefit of the trade. We have thus arrived
at precisely the same conclusion, in supposing the employment of money,
which we found to hold under the supposition of barter.
In what shape the benefit accrues to the two nations from the trade, is
clear enough. Germany, before the commencement of the trade, paid six
shillings per yard for broad-cloth.
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