the Western states, and even between neighboring countries
of the same state. The differences between two countries, however, are
likely to be more marked, the circulation of factors being so active
within a country that it is allowable to speak broadly of prevailing
national rates of wages and of interest. Altho, as Adam Smith said, "a
man is of all sorts of luggage the most difficult to be transported,"
the higher wages in a new country attract constantly from the older
lands a portion of their laborers. The higher rate of interest in new
countries constantly attracts investments from abroad; yet, despite
these forces working toward equalization, the inequality may remain
and, through the working of other influences, may even increase in the
course of years.

Sec. 5. #Doctrine of comparative advantages.# It may be that two
countries both possess the necessary technical conditions for making
both articles that are to be traded for each other. It may even be
that the people in one country would be able to make not only one of
the two objects of trade, but both of them, more easily and with less
sacrifice and effort than the people in the other. If, for example,
American labor can produce two bushels of wheat in a day and English
labor but one bushel a day; and American labor can produce just as
much iron in a day as English labor--or more--the question always
arises: Is it not foolish and wasteful not to produce both the wheat
and the iron?

Now, exactly the same case is presented in almost every simple
neighborhood trade. The proprietor may be able to keep his books
better than does the bookkeeper whom he employs. The merchant may be
able to sweep out the store better than the cheap boy does it. The
carpenter may be able to raise better vegetables than can the gardener
from whom he purchases. Yet the merchant does not turn to sweeping and
the carpenter to raising vegetables, because if they did they would
have to quit or limit by so much their present better-paying work, and
would lose far more than they would gain.

So whenever the people in one country have a greater advantage in one
article than in another, relative to another country, the foreigners,
like the low-paid man, will be willing to exchange at a ratio that
will make it profitable to specialize in the product wherein the
greater superiority lies.[7]

But this is always hard doctrine for the popular mind, and
particularly for the commercial mind endeav