article in the different trading countries. In this example, for instance, it is the difference in the comparative costs in England of both cotton and iron (not the different costs of cotton in England and Sweden) which gives the reason for the existence of the foreign trade.
To illustrate the cases in which interchange of commodities will not, and those in which it will, take place between two countries, the supposition may be made that the United States has an advantage over England in the production both of iron and of corn. It may first be supposed that the advantage is of equal amount in both commodities; the iron and the corn, each of which required 100 days' labor in the United States, requiring each 150 days' labor in England. It would follow that the iron of 150 days' labor in England, if sent to the United States, would be equal to the iron of 100 days' labor in the United States; if exchanged for corn, therefore, it would exchange for the corn of only 100 days' labor. But the corn of 100 days' labor in the United States was supposed to be the same quantity with that of 150 days' labor in England. With 150 days' labor in iron, therefore, England would only get as much corn in the United States as she could raise with 150 days' labor at home; and she would, in importing it, have the cost of carriage besides. In these circumstances no exchange would take place. In this case the comparative costs of the two articles in England and in the United States were supposed to be the same, though the absolute costs were different; on which supposition we see that there would be no labor saved to either country by confining its industry to one of the two productions and importing the other.
It is otherwise when the comparative and not merely [pg 382] the absolute costs of the two articles are different in the two