[A2-5-3] Compare v. Mangoldt, Grundriss der V. W. L., 185 ff. By the English, the discovery of this truth is attributed to Ricardo, Principles, ch. 7. Compare the further development in J. Mill, Elements (1821), III, 4, 13 seq.; Torrens, The Budget (1844) and J. S. Mill, Essays on some unsettled Principles of Political Economy (1844), No. 1, and Principles, III, ch. 18 ff. But even Jacob, Grundsätze der Polizeigesetzgebung (1809, p. 546 ff.), was acquainted with the truth that generally both sides gained, but the one party, possibly more than the other. According to Lotz, Revision (1811), I, 161, the gain and loss of each party rises and falls in proportion to the difference between the degrees of value which each party, so far as he is himself concerned, attaches to the goods given and the goods received. And even Cantillon, Nature du Commerce (1155), p. 226, 369 ff., had a presentiment of the reason why countries having a low value in exchange of money can continue notwithstanding to sell in foreign countries. And so, too, Hume, Essays (1752), On Interest, who, without looking through the spectacles of the mercantile system, perceived that countries with a flourishing trade must necessarily draw much gold and silver to themselves. Recently, Cairnes has shown by practical examples that Australia imports Irish butter and Norwegian wood, and the Barbadians meat and flour from New York, although both might themselves produce such articles cheaper. (Essays, etc., 1873. Leading Principles, 1874, p. 379.)
[A2-5-4] Thus a Kaulbach might more expertly ornament his own door and window frames than an ordinary room-painter, but does not do so, because he can employ his time to better advantage.
[A2-5-5] Even Law, Money and Trade, p. 31, was of opinion, that when a nation consumes its imports which are greater than its exports, it grows poorer, not in consequence of the importation, but of the consumption. Quesnay calls attention to the plus on moins de profit qui résulte des marchandises mêmes que l'on a vendues et de celles que l'on a achetées. Souvent la perte est pour la nation qui reçoit un surplus en argent, et cette perte se trouve au[TN 128] préjudice de la distribution et de réproduction des revenus. (Max. génér., 24.)
[A2-5-6] Rau distinguishes principally whether importation brings articles of luxury or means of acquisition (Erwerbstamm) into the country. (Ansichten der V. W., 163.) Similarly, de Cazcaux, Eléments d'Economie privée et publique (1825), p. 188 ff. Schmitthenner, Zwölf Bücher vom Staate (1839), I, 497. "A favorable balance of trade does not make a people richer because they receive the metals for other values, but because they produce and sell more than they purchase and consume; the result of which naturally is that the difference must consist in values capable of being capitalized." Kaufmann draws a distinction according as the imported goods come into the country in the form of dead or interest-bearing capital. He illustrates his view by the case of a peasant who sells his seed-corn in order to purchase a finer hat with the proceeds. (Untersuchungen, I, 96, 81 seq.)
[A2-5-7] International trade makes imported commodities cheaper and exported commodities dearer, but the aggregate of consumers gain more in the former case than they lose in the latter, because they now enjoy the blessings of the international division of labor. But, even with this general enrichment, single classes of the people, and even the majority, may have to suffer; as, for instance, when in the exchange of corn against iron, the cheapening of the iron profits the people less than the consequent dearness of corn injures them. (Fawcett, Manual, 391.)
[A2-5-8] "Gold and silver are by the competition of commerce distributed in such proportions amongst the different countries of the world as to accommodate themselves to the natural traffic which would take place if no such metals existed and the trade between countries were purely a trade of barter." (Ricardo, Principles, ch. 7.) In most direct opposition to the mercantile system, he represents the distribution of the precious metals to be not the cause but the effect of national wealth. A nation rapidly growing in wealth will obtain and keep a larger quota of the general supply of gold and silver. (The high Price of Bullion, 1810.) On the other hand, it depends on the one-sided abstraction with which Ricardo loves to pursue certain assumptions, that every exportation of money is made to signify a peculiar cheapness of money, and vice versa. (Opposed by Malthus, Edinb. Rev., Febr., 1811.) Carey's frequently repeated assertion, that gold and silver always flow towards those markets where they are cheapest (Principles of S. Science, I, 150, and passim), confounds cause and effect.
[A2-5-9] Compare § 126, and even Kaufmann, Untersuchungen, I, 75 seq.
[A2-5-10] Let us suppose that, hitherto, the English had supplied their demand for wine from France, and paid therefor in commodities made of steel; and that now France prohibits the importation of the latter and requires gold instead. If the English take this gold out of their own circulation, the value in exchange of the gold which remains to them rises; the prices of all commodities fall, state debts and private debts become more oppressive, etc. If, to avoid this, they send their steel wares, which France has rejected, to California, to obtain gold there in exchange, they find that California has as much of steel wares as it requires, and that it can be induced to extend its consumption of them only by a corresponding lowering of their price. But if, on the other hand, the gold which has flowed towards France has produced a rise in the price of commodities, and a decrease in the exportation of commodities; and has then flowed out of the country, to Germany for instance; England may in consequence be placed in a position to effect its payments for French wine with the gold which its manufactured articles have been exchanged against in Germany. But all this always supposes that the prices of commodities have fallen in England and risen in other countries; that is, a changed and, so far as England is concerned, an unfavorable distribution of the precious metals—which is found in connection with a relatively decreased productiveness of English labor. The English cost of production may yet continue to be covered, notwithstanding; but, when it has been diminished by a lowering of wages, interest, etc., the national wealth suffers in consequence. Compare Torrens, Budget, p. 50 ff., who precisely on this bases the greater security of trade between the mother country and its colonies; and which also found expression in the Peel reform plan of 1842 ff. Adam Smith approximated to this view when he ascribed a more favorable balance to the country which paid for its imports with its own instead of with foreign products. (W. of N., IV, ch. 3-2, p. 329, Bas.)
[A2-5-11] Compare § 141. Strongly emphasized by List, Werke II, 31, 36 seq. 48, 137.
[A2-5-12] Torrens imagines an English manufacturer who employs raw material = 100 quarters of corn and manufactured wares = 100 bales of cloth (the quarter of corn and the bale of cloth supposed to be of equal value) and whose product = 240 bales in value; and compares him with an American agriculturist who, by means of the same outlay of capital, harvests 240 quarters of corn. The trade between them restores to each not only his outlay, with twenty per cent. profit, but puts them in a position to repeat their production on a larger scale. Only the quantity of fertile land can put a limit to this growth; for corn and cloth help produce each other, and the cheapness of the one promotes the cheapness of the other, which can not, by any means, be said, for instance, of the exchange between vanilla and satin. (Budget, p. 268 ff.) Compare Roscher, Colonien, p. 277 ff.