VALUES IN INTERNATIONAL TRADE 213

with risk and loss, but the latter are, on the whole, more
than outweighed by the former.
A problem of no little interest in this connection is
presented by the case of a change in the facilities for
production of important commodities which are exported
from a country. For simplicity of statement, the exports
may be represented by a single commodity, and the imports
similarly represented by a single commodity, and all the
countries supplying these imports and taking the exports,
that is all external countries, may be referred to as if they
were but one. The export is, then, cheapened by improvements
 in the methods of its production. Its value falling,
the home and foreign demand for it both increase, that is to
say, more of it is demanded. But, at the new value, the
total foreign demand for it may be represented by the offer
either of more, or of less, or of an unchanged amount, of
imports in exchange. Take the last of these three cases
first. The demand for foreign goods is here supposed to be
such as to call for as large an amount of them as before, and,
the exports which purchase them being reduced in value, a
larger amount of exports must be offered in exchange for
these imports. Hence the foreign purchasers of the exports
gain by the change. Will the rate of exchange of exports
for imports fall so much as to call for the product of as
much producing power as formerly went into that field, or
for more or for less? If the last be the case, the country
will gain in its foreign trade, as well as in its production for
itself, by the improved facilities in question. If the first of
the three cases be that found, the exchanges with other
countries will leave it where it was, and its only gain will be
in increased efficiency in domestic production. But the
third possibility remains, namely, that, to procure the old
volume of imports, it must offer exports on terms which
mean devoting a larger amount of productive power to
producing exports, that is a larger amount of its energy is
absorbed in getting its imports than before the improvement
took place. This implies that the greater supplies of goods,
which the improvement causes to flow from its resources,
make the foreign goods appear more desirable by comparison