CHAPTER VI 
INTERNATIONAL TRADE 
The theory of international trade is another 
section of Economics which one may be 
tempted to represent as something apart 
from the general theory of value. It is a 
commonplace to say that value in the home 
trade is settled by cost of production ; and the 
statement is broadly accurate, because value in 
the home trade is determined by the marginal 
costs of different quantities of a thing in 
relation to the demand for different quantities. 
On the other hand, it is equally a common 
place to affirm that international values 
are not settled by the principle of cost of 
production, or at any rate not directly, but 
by the principle of comparative cost. Ricardo 
seems to have been the first to propound 
this fruitful doctrine; but it was left for 
later writers to make fully explicit that 
the doctrine of comparative costs is an 
integral part of the theory of home values. 
This latter is one of the ideas that I 
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