demands for the goods of this greater number of persons. If France, Germany, and England all want our corn, we must have some demand for the goods of France, Germany, and England also; and the same law of reciprocal demand gives the ratio of interchange. That this explanation is consistent with the facts is to be seen when we notice how eagerly the exporters of American staples watch the conditions which increase or diminish the foreign demand for these commodities, looking at them as the causes which directly affect their exchange value, or price.
When cost of carriage is added, it will increase the price of corn to England and of iron to the United States. But, as every one knows, an increase of price affects the demand; and, as the demand on each side is affected, a new ratio of exchange will finally be reached consistent with the strength of desires on each side. Who, therefore, will pay the most of the cost of carriage England or the United States? That will, again, depend on whether England has the greatest relative demand for American goods, as compared with the demand of the United States for English goods.
No absolute rule, therefore, can be laid down for the division of the cost, no more than for the division of the advantage; and it does not follow that, in whatever ratio the one is divided, the other will be divided in the same. It is impossible to say, if the cost of carriage could be annihilated, whether the producing or the importing country would be most benefited. This would depend on the play of international demand.
Cost of carriage has one effect more. But for it, every commodity would (if trade be supposed free) be either regularly imported or regularly exported. A country would make nothing for itself which it did not also make for other countries. But in consequence of cost of carriage there are many things, especially bulky articles, which every, or