form the basis of charge for all the local rates and the domestic water rental; and as all these charges fall upon the occupier he is not quite so disinterested a party as is suggested on p. 288. With regard to appeals, the statement on page 328 that the general commissioners never issue precepts for detailed accounts and information is somewhat too absolute. The notices of assessment issued by the clerks to the commissioners usually contain an instruction to intending appellants which is in the nature of a general precept; and in some important districts special precepts are issued to particular appellants at the request of the surveyors when considered necessary, or by the Surveyors on behalf of the commissioners. It is moreover quite unusual, for the commissioners to make any sort of reference to their power of requiring the verification of appellants' statements and accounts on oath. The bar to the employment of solicitors in Income Tax appeals, referred to on page 330, has recently been removed. The commissioners "may" permit lawyers to appear for clients, and usually do so when requested. But such requests are not yet very numerous. Finally, it may be worth while to point out that the pensions of the surveyors of taxes are not fixed at one half of the salary annually received in the two years immediately preceding their retirement (p. 356). In common with those of other civil servants, their pensions bear a variable proportion to the salary according to the length of service of the pensioner; rising, according to a statutory scale, to a maximum of two-thirds.

The discovery of a few mistakes in matters of detail scarcely at all diminishes our admiration of the book as a whole. Such slips are inevitable when so intricate and technical a subject is approached from the outside. They do not affect the value of any of the author's generalisations, which appear to display his possession of a penetrating mind and a well-balanced judgment. We find ourselves in almost complete agreement with his conclusions, and, not less for English than for American readers, consider the work a highly illuminating one within the regions traversed. G. H. BLUNDEN

The Theory of International Trade, with some of its Applications to Economic Policy. By C. F. BASTABLE. Third edition, revised. (London: Macmillan and Co. 1900.)

La Théorie du Commerce International. Par C. F. BASTABLE. Traduit sur la 2de edition Anglaise, revue par l'auteur et précedé d'une introduction par SAUVAIRE-JOURDAN. (Paris: Giard et Brière. 1900.)

In the successive editions of this work Professor Bastable not only maintains his reputation as author of the best text book on the subject, but also obtains new distinction by displaying in his replies to criticisms a candour and courtesy which are rare in economic literature. In the

vicissitudes of a prolonged controversy he has shown how to retract with dignity and to triumph with moderation. The questions debated in this Journal1 have now been reduced by mutual concessions to such narrow dimensions as hardly to merit public attention. There remains only some difference of view as to the possible action of Free Trade in causing a displacement of population under circumstances admittedly hypothetical. For our part we are ready to admit that our statements must have been inapt, since they have been misinterpreted by Prof. Bastable. In the country A, which was supposed to pass from Protection to Free Trade, we

"imagined a landed interest employing the portion of the agricultural produce not consumed by the owners and cultivators in the purchase of manufactures from a landless class. On the opening of the trade the landed interest transfer their custom to the manufacturers in B, and the manufacturers in A are left to starve or emigrate."

On this Professor Bastable remarks:

"The obvious comment on this definite statement is, that it describes a conception of economic organisation very different from that adopted in the present work. In place of a landed and a landless class it appears more in accordance with the conditions of the case to imagine a society composed of landlords, capitalists and labourers, some of the two latter sections engaged in agriculture, others in manufactures."

But that was the very organisation which our statement was designed to indicate, excluding the possible supposition of a socialistic division of the land among all the inhabitants of A; as in that case no doubt the greater demand in B for the agricultural produce in A would be an advantage to all parties in A. "If we lived in Mr. Owen's parallelograms," as Ricardo would say, an improvement in production could not be a detriment to any party. But in the existing conditions of exchange it might happen that the possessors of the land might benefit by the opening of the trade, while the workers who could not find employment in agriculture would be in an evil case. It was not denied it was expressly asserted in the immediate context of the sentence which Professor Bastable quotes-that some of the displaced manufacturers in A might "transfer their labour and capital to agriculture." But the conditions of "comparative cost" might be such as not to permit a large influx of new workers into agriculture in A.

At this point we hope that Professor Bastable will reconsider with his usual candour the following statement made by him:

"Under the assumed conditions rent in A will rise, and so will the cost of agricultural production, until the point at which there is no difference in the comparative costs in the two countries is attained. At this point, again, the view of the situation taken in the present work differs from that of Professor Edgeworth; for if, as has been stated above (p. 15), a difference in comparative

1 See ECONOMIC JOURNAL, Vol. VII. p. 402.

1

cost is the essential condition for the maintenance of foreign trade, the absence of that condition involves the cessation of the trade which is dependent on it (this is certainly the doctrine of Ricardo, J. S. Mill, and Cairnes) 1 otherwise it would be impossible to understand how the export of agricultural products change, as under a further development it would do into the export of manufactures." 2

The anti-thesis that the identity of comparative cost is the essential condition of a steady foreign trade is supported in the critique 3 which the reader is requested to consult before pronouncing judgment on the present issue. Of course if, with the classical writers, we suppose costs of production irrespective of the quantity produced, it is proper to suppose these fixed comparative costs costs unequal. But in general it is legitimate to conceive the margin of production varying— a circumstance to which Professor Bastable himself was among the first to call attention. Consider two countries, P and Q, interchanging commodities of this sort. P might both produce and import corn, as the United Kingdom does. For the export of P let us take a commodity of which the exportation from the United Kingdom has been instanced by a high authority as exemplifying the principle of comparative cost-namely flax. Let Q then both produce flax and import it from P-And, to avoid the complications of cost of transport, let these imaginary countries be separated not by the "dissociable ocean," but by a mere mathematical frontier line. In order that the trade should begin there certainly must be a difference in the comparative costs of corn and flax in the two countries. But, as P goes on increasing her production of flax and Q her production of corn, there will be reached theoretically a point at which the cost of producing flax is so great that it would cease to pay to produce flax rather than corn in P, and likewise corn rather than flax in Q. The ideal entrepreneur in either country seeking to invest an increment of capital would hesitate between the two industries. At this point the expansion of the trade would cease, but there would not be a "cessation of trade" in the ordinary sense of the term; the trade would not stop, but become steady.

The distinction is familiar to those who are conversant with the modern theory of economic equilibrium. It is thus that the consumer will not be a regular purchaser of tea unless he is a gainer in respect of utility by the first pound of tea per week or month which he purchases. But because this condition holds for initial or intramarginal purchases, it does not follow that it holds at the margin. On the contrary, the "final utility" of the last pound of tea minus the price paid for it is zero. At that stage the householder ceases to vary his family budget, but he does not therefore cease to be a consumer of

1 This parenthesis forms a note in the original.

2 Theory of International Trade, third edition, p. 192.

3 ECONOMIC JOURNAL, Vol. VII., p. 401.

4 International Trade, p. 29.

Professor Taussig in Quarterly Journal of Economics, Vol. III., p. 260.

No. 39.-VOL. X.

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tea. So in the production of goods for foreign use, there would be no motive for the trade unless there was initially a difference, there would be no limit to the trade unless there was finally an equality, between comparative costs.1 The difference and the equality are opposite sides of the same shield; and the whole dispute is as if one party should only insist that a body could not begin to fall through a fluid-a grain of shot in air, for instance-unless the attraction of gravitation was greater than the resistance offered by the medium, while the other party also pointed out that the equality of those opposite forces is the condition of steady motion. The fulfilment of that condition determines the cessation not of motion, but of acceleration.

These considerations are very abstract, but so is the problem to which they are applied. Enough has been said to show that under the circumstances described in Professor Bastable's volume, or the critique already referred to, the sudden introduction of Free Trade might reduce the working classes to beggary. Agricultural produce in A would now be more valuable than before, in that it would exchange for more manufactures, cheap importations from B. There would be a flow from manufacturing industry in A to agriculture. But this flow might very soon come to a stop, if the law of decreasing returns acted sharply in A. The point might very soon be reached at which the "marginal shepherd" added to the total produce only just the amount of his wages, even though that amount in the new conditions of the labour market might be only the barest minimum of subsistence. Thus only a small proportion of the displaced artisans would be taken on as agricultural labourers. The statement that the manufacturers, both entrepreneurs and workmen, who cannot find employment in agriculture "are left to starve or emigrate" errs on the side of moderation, as it leaves out of sight the depression which even those who are employed in agriculture suffer owing to the competition of the unemployed.

So minute a point in so hypothetical a case might seem undeserving of attention, if it were not advisable to test every joint in the armour of reason now that we are threatened by sagacious prophets 2 with a

1 Mathematically the condition that comparative costs should be finally equal is represented by Jevons's Equation of Exchange (Theory, Chap. IV.), or by its geometrical equivalent the contract-curve (adduced by Professor Marshall in Note XII. bis of his Principles of Economics); the functions being understood to involve the disutility of labour as well as the utility of consumption. The condition that comparative costs should be initially different is represented by the existence of a positive area contained between the contract-curve and the indifference-curves (cp. ECONOMIC JOURNAL, Vol. IV., p. 425). It is very intelligible that with altered conditions this space should become less and less, that the indifference curves should approach nearer and nearer, and ultimately pass each other. For instance, if the margin of flax culti vations rise in our hypothetical country Q, the stage at which it ceased to be profitable to import flax would be reached sooner, it might ultimately become profitable to export flax. On this principle it does not seem to us "impossible to understand how the export agricultural product changes, as under a further development it would do into the export of manufactures" (Professor Bastable, of country A., loc. cit). 2 Cf. above.

renewal of the Protectionist movement in the British Empire. As to prospects of Protectionism we have an interesting sample of enlightened foreign opinion in the introduction which Professor SauvaireJourdan has prefixed to his translation of Professor Bastable's manual. The French economist holds fast to the English doctrine of international trade; yet he seems to assimilate with special aptitude those passages in Professor Bastable's broad-minded exposition which show most allowance for the at least temporary retention of a protective system. Professor Sauvaire-Jourdan thus sums up :

"Free trade as the end, the ideal that is not to be left out of sight (no one has expressed this idea more eloquently than Frederic List); but as long as national divisions (les divisions en nations) subsist, Protection in a certain number of exceptional and well-defined cases; these are conclusions which from the theoretical point of view seem hardly to admit of discussion."

By his acute and learned introduction Professor Sauvaire-Jourdan has much enhanced the value of his accurate and spirited translation. F. Y. EDGEWORTH