ABSTRACT
The foregoing inquiry leads directly to J. S. Mill’s conclusion in his first and soundest exposition of his theory. The ratio of exchange, in the case of commodities which are the subject of international trade, depends on the comparative intensity of demand on each side, always, of course, operating within the limits set by comparative cost. This “first elementary principle of international values,” important as it is, stands in need of large developments and additions before it can be applied to actual cases. The actual rate established will depend on the play of reciprocal demand; but it cannot be overlooked that the introduction of several commodities on each side will give a steadying effect, in addition to that exerted by the presence of a large number of dealers and consumers. To rightly understand the nature of international trade, it is, above all things, necessary to constantly bear in mind its great complexity.
