38 SEVENTEENTH REPORT. 



after agreeing' to meet one week later for the delivery of their work 

 and a fair and, ^<o far as poj^sible, accurate report of the saving in 

 cost or profit, if any, effected by this round-about method involv- 

 ing an exchange of work or services, each departed for his home. 



Promptly at the appointed time they met, each with the com- 

 pleted work in hand. Unwrapping his package, S presented T with 

 a pair of shoes showing workmanship of a high order. In the mean- 

 time T had opened his package and was prepared to deliver a pair 

 of trousers equally well made and finished. 



Then came their reports. As each had furnished the material for 

 the products secured, their reports covered only the saving in cost, 

 that by right would accrue to each as a consequence of his rela- 

 tively superior capacity in the production of the product parted 

 with, when compared with his capacity to produce the product 

 acquired through the exchange of services. 



A surprise was in store for both. For while S, much to his satis- 

 faction, had produced the shoes that compensated T for his ser- 

 vices in producing his trousers in two-thirds of the time, and conse- 

 quently at substantially two-thirds of the cost, that would have 

 attended his labors had he undertaken the task of producing the 

 trousers, thus affording him a net profit of 50%, he found also that 

 he had secured a much better fitting and workmanlike product than 

 he could have turned out. 



T's experience, though affording him less profit than had 

 fallen to S, seemed equally satisfactory. Not only had he, too, 

 secured a better fitting and more workmanlike product, but he had 

 produced the trousers that compensated S for his labors in his be- 

 half, in three-fourths of the time it would have taken him to produce 

 the shoes secured through the exchange, thus aff'ording him a net 

 profit of 331/3%. 



No sooner had S learned that T's profit was but 33i/}%, whereas 

 his had been 50% , than he generously offered to make up the dif- 

 ference, so that they might share alike in the profits. 



T refused to consider this offer, sajing: 



''Your excessive profit is undoubtedly due either to your ex- 

 tremely high capacity to produce shoes or to your extremely low- 

 capacity to produce trousers. In either case your profit is legiti- 

 mate." 



For T could clearly see that this profit represented only the sav- 

 ing in cost that would rightfully accrue to any one who exchanges 

 an article for which his ]iroductive capacity is high and its lal)or 

 cost relatively low, for an article for which his productive capacity 

 is low and its labor cost relatively high. In this profit alone do 



