VALUES IN INTERNATIONAL TRADE 207

possible were uses less remunerative to the owners of land
than the former employment in wheat-growing, in the main,
though not less remunerative than continued employment in
wheat-growing under the new conditions. If the total value
of the products of the country’s industry was increased by
the redistribution among employments, resulting in the
transfer to manufacture of a proportion of the powers of
production formerly employed in agriculture, the rural
landowner’s share in the product of industry was decreased.
The effect of such a change, in the distribution of
productive energy among different employments, is not
merely a change in the marginal utilities of the goods
imported and exported, but also a change in their relative
costs of production corresponding to this change in relative
marginal utility. The value of woollen goods, estimated in
wheat, is reduced in Canada, and raised in England, as the
result of the exchange. The measure of the change in
relative values is dependent on the kind and degree of the
change in cost of production which results from the limitation
 of the one industry within narrower bounds, and the
extension of the other. If the industry which expands is
affected but little by a tendency to decreasing returns, or is
even subject to conditions of increasing return, the enlargement
 of its output, to provide an exportable surplus, will be
accompanied by but little increase in cost, or even by a
decrease. In the illustration selected, these conditions are
characteristic of the exports on either side. The extension
of wheat production in Canada or of the woollen manufacture
of England will be likely to reduce rather than increase the
cost of production of the commodities produced. On the
other hand, the restriction of wheat-growing in England has
considerably reduced the marginal expenses of growing
wheat, so that the new cost of production of wheat, relative
to the cost of production of woollens, has probably fallen.
The operation of decreasing returns in the industry restricted,
and of increasing (or constant) returns in the industry expanded,
 results in this change in relative cost of production,
a change parallel to the change in marginal utilities of the
goods concerned. It need not have been shown that this is