800 times seventeen yards; it is evident that, at the rate supposed, this would not have sufficed to pay for the 1,000 times [pg 398] ten yards of cloth which we have supposed Germany to require at the assumed value. Germany would be able to procure no more than 800 times ten yards at that price. To procure the remaining 200, which she would have no means of doing but by bidding higher for them, she would offer more than seventeen yards of linen in exchange for ten yards of cloth; let us suppose her to offer eighteen. At this price, perhaps, England would be inclined to purchase a greater quantity of linen. She would consume, possibly, at that price, 900 times eighteen yards. On the other hand, cloth having risen in price, the demand of Germany for it would probably have diminished. If, instead of 1,000 times ten yards, she is now contented with 900 times ten yards, these will exactly pay for the 900 times eighteen yards of linen which England is willing to take at the altered price; the demand on each side will again exactly suffice to take off the corresponding supply; and ten yards for eighteen will be the rate at which, in both countries, cloth will exchange for linen.
“The converse of all this would have happened if, instead of 800 times seventeen yards, we had supposed that England, at the rate of ten for seventeen, would have taken 1,200 times seventeen yards of linen. In this case, it is England whose demand is not fully supplied; it is England who, by bidding for more linen, will alter the rate of interchange to her own disadvantage; and ten yards of cloth will fall, in both countries, below the value of seventeen yards of linen. By this fall of cloth, or, what is the same thing, this rise of linen, the demand of Germany for cloth will increase, and the demand of England for linen will diminish, till