30 
INTERNATIONAL TRADE 
gr 
Lt 
icans get for the day’s labor more linen than before — 1{% linen 
instead of 13. But they also get less wheat — 8; instead of 1. 
The gain in linen is considerable, the loss in wheat comparatively 
small. But are wheat and linen commensurable? And is it 
certain that the Americans secure a net gain from having more of 
linen when they also have less of wheat? The Germans, on the 
other hand, while they have less of linen — only % linen instead 
of 2 — have a bit more of wheat: they have +2 instead of 2. For 
them, also, 1s it certain that the loss in linen over-balances the gain 
in wheat? Their loss in linen is considerable, the gain in wheat is 
slight ; but the question for them, also, is how can these changes 
in the quantities of different commodities be reduced to common 
terms ? 
The only answer is that in terms of “utilities” (satisfactions, 
enjoyments, gratifications) both Germans and Americans have 
gained. In ultimate income, in terms of the psychological out- 
come, all are better off than before. This is shown by the simple 
fact of choice. As is assumed in the entire hedonistic calculus, 
it is choice between alternatives which alone shows whether we 
“like” or “enjoy” one source of satisfaction more than another. 
The Americans get less of wheat than they got before; but they 
have been led to accept that less amount because they have been 
tempted by the cheapness of linen. The fact that they give up 
some wheat in order to get more linen proves that the rearrange- 
ment suits them better, that their income in terms of satisfactions 
is greater than before. The Germans, too, while they have less 
linen than before, have more of wheat. Had it not been for their 
desire to have more wheat, they would not have parted with so 
much of their own product in order to get so small an addition of 
the American product. Given their changed demand, they are 
better off than before; they must like the present situation 
better than the earlier one or it would never have developed. 
The sense in which it can be said. then. that the new conditions 
1 This is no more than an illustration of the general principle that under complete 
freedom the terms on which the trading parties exchange can not alter unless there 
be an advantage to both sides from the altered terms.