TWO COUNTRIES COMPETING IN A THIRD 101 
The barter terms of trade, that is, become 19 wheat for 20 cloth, or 
10 wheat for 10 cloth — very nearly 10 for 105. Before the 
increase in demand for cloth set in, the barter terms of trade had 
been 10 wheat for 12 cloth ; they are now 10 for 103. The English 
get the same quantity of wheat for a less quantity of cloth; they 
get a larger share than before of the possible gain from the trade. 
It matters not, to repeat, whether the change in demand takes 
place solely in the United States, solely in Russia, or partly in one 
and partly in the other. An increase of Russian demand operates 
to make the terms less favorable to the Americans, even tho in the 
United States alone nothing has happened that would change the 
situation. 
This sort of case, in the two possible phases here worked out, 
serves to illustrate a general proposition which played its part in the 
exposition of the classic doctrine. “There are two senses in which 
a country obtains its commodities cheaper by foreign trade; in the 
sense of value and in the sense of cost.” ! In the sense of cost, the 
United States thruout is getting its linen cheaper than Russia. In 
the sense of value, both the United States and Russia get the 
English linen on the same terms. Cheapness in the sense of costs 
depends on the amount of labor given to the exported commodities ; 
this is less in the United States than in Russia. Cheapness in the 
sense of value depends on the barter terms of trade between 
the exports and the imports; at any one time this is the same 
for the United States and for Russia, but varies at different times 
according to the conditions of demand for wheat on the one hand, 
for linen on the other. 
Obviously it is more probable that the barter terms of trade will 
be favorable to England and that she will get her imports (wheat) 
cheaper in the sense of value, if there be not one country buying 
cloth from her but two or more. The greater the number of pur- 
chasers of her cloth, the larger the quantity that will be taken at a 
given price. If the other two countries, United States and Russia, 
have the same population and are alike in the demand of their 
peoples (in their demand schedules) for cloth, then the two of them 
1 Mill, Principles. Bk. 3. Ch. 18.