Mill, John Stuart, 1806-1873 / 2008-11-23 00:00:00
So real and extensive is this influence, that every new market which is
opened for any of our goods, and every increase in the demand for our
commodities in foreign countries, enables us to supply ourselves with
foreign commodities at a smaller cost.
Let us revert to our earliest and simplest example, but which displays
the real law of interchange more luminously than any formula into which
money enters; the case of simple barter. We showed, that if at the rate
of 10 yards of cloth for 17 of linen, the demand of Germany amounted to
1000 times 10 yards of cloth, the two nations will trade together at
that rate of interchange, provided that the linen required in England be
exactly 1000 times 17 yards, neither more nor less. For the cloth and
the linen will then exactly pay for one another, and nobody on either
side will be obliged to offer what he has to sell at a lower rate, in
order to procure what he wants to buy.
Now if the increase of wealth and population in Germany should greatly
increase the demand in that country for cloth, the demand for linen in
England not increasing in the same ratio,--if, for instance, Germany
became willing, at the above rate, to take 1500 times 10 yards; is it
not evident, that to induce England to take in exchange for this the
only article which Germany by supposition has to give, the latter must
offer it at a rate more advantageous to England--at 18, or perhaps 19
yards, for 10 of cloth? So that the division of the advantage becomes
more and more favourable to a country, in proportion as the demand for
its commodities increases in foreign countries.
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