12 W. G. Langworthy Taylor 



A specific example of the old method will serve to give point by 

 contrast. In his chapter "Of the competition of different countries 

 in the same market," Mill shows that if a country be undersold 

 it will simply reduce the general level of its prices and so enable 

 itself to regain its former market ; however, the falling off in 

 foreign demand for a particular article may cause the production 

 of it to be accompanied with loss : "The loss which the country 

 will incur will not fall upon the exporters, but upon those who 

 consume imported commodities ; who, with money incomes re- 

 duced in amount, will have to pay the same or even an increased 

 price for all things produced in foreign countries.'' 1 To the prac- 

 tical man the statement that exporters will not lose money in losing 

 their market seems preposterous. Anyone knows that a business 

 man loses money when he loses his market, as Professor Laughlin 

 points out in his edition of Mill. What Mill really meant was 

 that the business of exporting would continue just the same, but 

 that the consumers of foreign goods would find no compensation 

 for the fall in their own incomes and the rise in the price of for- 

 eign goods. Mill's mind was so fixed on a final and permanent 

 state of affairs that the temporary losses of a few exporters did 

 not seem to form a part of the proper subject of discussion. We 

 could excuse this omission did not the static method of thought 

 lead him into a graver error ; for the consumers of imported com- 

 modities are left permanently consenting to pay' a high price for 

 foreign goods upon a small income. Now, of course, Mill's 

 premise was that the country was undersold ; therefore the results 

 of underselling must last only so long as the cause lasts. We 

 obtain a vivid picture of the possible ultimate effects of under- 

 selling, but only a very partial and one-sided view of the real 

 course of foreign trade relations. Probably the balance of trade 

 will turn in so short a time and to such an extent that the loss 

 which the consumers of foreign goods suffer will be no greater 

 than that which the producers or exporters of domestic goods 

 will have suffered. Mill, however, by supposing the adjustment 

 of the capital, prices, etc., of the exporters to be instantaneous, 

 and by again supposing the losses of the consumers to be perma- 



% Principles of Political Economy, bk. Ill, ch. 20, sec. 1. 



12 



