54 
INTERNATIONAL TRADE 
PN Pog 
purely domestic, in the sense that they rest on the standards of 
living in the groups, which are the outcome of historical and social 
forces in the given country. 
But the causal sequence — still speaking of the domestic situa- 
tion by itself — may not be so simple. It may be that the rates 
of pay in the several groups are settled by the mere conditions 
of demand; or, if not absolutely settled, affected or modified 
by those conditions for periods so long that they cannot be 
ignored even in inquiries that disregard short time phenomena. 
As is well known to the reader conversant with the history of 
doctrine on this topic, Cairnes treated the relations between non- 
competing groups as dependent solely on demand. The principle 
of the play of reciprocal demand, to which Mill had turned for 
the explanation of the barter terms in international trade, was 
applied by Cairnes to the explanation of exchange between groups 
within a country. That group whose services (goods) were much 
wanted by other groups, and which itself wanted little of the 
services of other groups, was able to secure the greatest advantage 
from the exchange; it had the highest scale of earnings. Cairnes 
did not proceed to the apparently obvious corollary that numbers 
played a part in those relations. Any group whose numbers are 
small, confronted by another whose numbers are larger and ex- 
changing products with that other, is likely to secure advantageous 
terms in the play of reciprocal demand. And the question of 
numbers raises that of the increase of numbers — the marriage- 
rate and birth-rate, and the standard of living. But this series of 
questions, to repeat, was never raised by Cairnes; the problem was 
treated by him as one solely of demand. And it may well be that 
we are not in a position to say much of the other side of the prob- 
lem — the conditions of supply. The standard of living, as 
between different groups, can hardly be said to be well defined, 
still less to be well settled. Of necessity it acts very slowly in its 
effect on numbers. During the course of the period which must 
elapse before it can operate with effect — one or two generations — 
the impact of demand may shift. The relative rates of pay may 
shift accordingly, rising here, falling there; and the effects of a