VERIFICATION. INTRODUCTORY 157 
in the production of its own special commodities; it produces 
them with less labor than they would entail in Great Britain. 
And Great Britain — taking this in turn as the representative 
European country — produces its manufactures with less labor 
than would be needed to produce them in India. The relation is 
one in which an exchange of goods is obviously advantageous to 
both countries, but also — what is less often seen — one in which 
there is a wide range within which the barter terms of trade may 
vary. Those terms might bring to England the lion’s share of the 
possible gain, or might bring it to India. It is the relation of 
money incomes in the two countries that gives the indication — 
constitutes the mechanism — of the more or less advantageous 
positions of the parties. The country which has the higher 
range of money incomes gains most from the trade; that having 
the lower range gains least. In the actual case evidently England 
(Europe) has the greater gain, while India (the Orient) is in the 
less advantageous position. 
Presumably this difference in favor of England, to continue 
the explanation suggested by theory, is due to the play of inter- 
national demand. The Orient wants the goods of Europe more 
than Europe wants those of the Orient. To put the same thing 
in more technical terms, the make-up of the demand schedules in 
the two countries, reflecting the elasticity of demand for the 
several commodities, is such as to bring about terms of exchange 
under which much of Oriental goods is exchanged for a given 
quantum of European goods. And this result is in turn brought 
about by the distribution of specie. The higher range of European 
wages, prices, monetary standards, it is to be supposed, results 
from a steady tendency of specie to be gathered there. As changes 
take place in the total of specie that constitutes the medium of 
change thru the world at large, it is to be expected that a larger 
proportion will make its way to the countries of the West. The 
general tendency of the flow of specie might then be expected to 
be away from the East and toward the West. 
This generalization from the theoretic reasoning may well cause 
the reader to pause. The actual flow of specie. as we all know. is