[18 
INTERNATIONAL TRADE 
Rar 
CY. 
Fn 
Re 
are ready to pay a higher price for a given quantity, simply be- 
cause they get greater satisfaction from that same quantity than 
they got before. True, they give more of their income for each unit 
of the commodity than they gave before, and in that sense may be 
said to buy it on less favorable terms. But there is no hedonistic 
loss; merely the registration of a different state of mind. And 
similarly when the people of one country choose to give more of 
their own goods in exchange for those of another country, the barter 
terms, stated as physical equivalents, become less favorable; but 
they do so merely because wants have changed and are now 
satisfied in a different way. 
The case of a tribute is different. Tho the demand schedule in 
the tribute-paying country remains unaltered (as was assumed in 
the first part of this chapter) the barter terms become less favor- 
able. Whether we look at the gross or the net terms, the tribute 
causes it to give more of its own goods, unit for unit, in the 
exchange for the goods of the other country. It can not console 
itself, as in the other case, by the reflection that after all this 1s 
precisely what its own changed state of mind has brought about. 
The only consolation is that it still gains from the trade. The 
goods which it sends out in payment for its imports still cost it less 
labor than would be needed for producing the imported goods at 
home. True, less of the imports are got in this exchange than 
would have been got if there were not the extra payment. But 
to continue the trade is the best way out of a bad business. 
The case of a tribute is extreme ; and for that very reason it has here 
been examined. It stands for a pure payment without quid pro quo. 
At the opposite extreme are payments, also standing for “ invisible” 
items, where the country to which the payments are made and to 
which the additional goods flow does give in exchange something, 
even tho not visible goods; where there us clearly a quid pro quo. 
Commonly enough, in the discussion of this aspect of international 
trade, all the invisible items are lumped together, as if all had the 
same meaning and the same effects. Not so; they differ. To take 
a case analogous to a tribute, and nowadays familiar, reparation or 
indemnity payments stand for one sort of effect ; whereas payments