520 Transactions. 



Art. XL VI. — The Struggle for Foreign Trade. 

 By H. W. Segar, M.A. 

 [Bead before the Auckland Institute, 2\st October, 1!»07.] 



Part I. 



[This part is considerably condensed.] 



Though in the same community the operation of supply and 

 demand brings it about that at any given time price is for most 

 goods more or less proportional to real cost of production., it 

 is necessary to distinguish carefully between the two, and neither 

 should be taken as necessarily the measure of the other. The 

 price of an article is its exchange value expressed in terms of 

 money ; the real cost of production is measured by the amount 

 of labour and capital required in its production. In different 

 communities prices are less intimately related to the real costs 

 of production. As one person may produce certain goods only 

 with much greater labour or effort than is required by another, 

 so one nation's productions may cost it far more in labour and 

 capital than is required for similar productions by some other 

 nation. Yet any particular product may sell at about the same 

 price all the world over. The distinction here indicated is of 

 the greatest importance in considering the essential character 

 of foreign trade. 



The utility of foreign trade, like that of domestic trade, 

 is generally acknowledged. No one claims that trade should 

 cease at the national frontier. The advantage consists in the 

 increase of utility arising from exchange. In the case of every 

 nation there are goods which could only be produced within 

 its borders at a real cost of production greatly in excess of what 

 is required to produce the goods which are exchanged for them. 

 Rather than insist on being self-sufficing, it is better for a nation 

 to produce an excess of those goods in the production of which 

 she has an advantage, and to exchange a portion for those in 

 the production of which she is at a disadvantage. 



It must not be thought, however, that when goods are im- 

 ported they are necessarily produced with less expenditure 

 of labour and capital in the country of their origin than that 

 with which they could be produced in the importing country. 

 A nation may obtain goods by exchange at a smaller^cost even 



