or _vice
versa_. But my exchange of gold for the wheat is a separate
transaction of itself: it stands entirely on its own bottom.

It is perfectly true that if my neighbour in Threadneedle Street does
succeed in selling Ј2000 worth of cutlery to the New Englander, there
is another distinct national profit to England and to America.
[Footnote: I am assuming for simplicity throughout that every
exchange made by private merchants in this foreign trade is a
successful speculation; if in any particular speculation a merchant
loses, his country loses the same amount. As foreign trade, on the
whole, is an enormous national profit, I am justified in sinking the
particular cases of loss. It may be said, "But perhaps all your
exchange of gold for wheat is a national loss": it is evident that
when the trade takes this form the merchants who import foreign corn
stop their operations instantly; in practice they stop them with
prescient instinct.] But whether he succeeds in making a bargain or
not, I object to being interfered with by Government, and prevented
making my own little profit. If my neighbour is practically deprived
of his profitable bargain by Government action on the part of the
Americans--if they are Protectionists and believe that gold is the
only National Wealth, and put a heavy duty on cutlery--if by doing
this they prevent an exchange profitable to both nations--they stop
TWO merchants from a profitable stroke of business. Whether they
injure the English merchant or the Bostonian would-be purchaser of
cutlery MOST is (as above explained) very difficult to prove in any
well-ascertained instance, but it is quite certain that the
interference of the American import duty causes a loss to each
merchant and to each nation.

Where now is Reciprocity and where Retaliation? We can no doubt say
to the Americans, "As you have injured us in the matter of cutlery,
so will we injure you by putting a duty on wheat." But it is merely
cutting off one's nose to spite one's face. In the exchange of gold
for wheat the division of the profit on one transaction is uncertain,
but in the long run it is probably about equal between the English
and the American merchants, i.e. between the English and the American
nations. (I am not overlooking the fact that the ultimate benefit to
England is cheap bread; but it is unnecessary in the present argument
to follow the food down the throats of the consumers: the wheat is
really worth to the corn merchants what they can get for it from the
consumers.) We cannot stop the corn trade with America by a duty (or
diminish it) without as great a loss to ourselves (probably a
greater) than to them; the retaliation in putting a duty on corn
because the Americans put a duty on cutlery would be (with our
lights) mere spite: it would be as though a farmer who took one
sample of wheat to market and one of barley, should meet a factor who
offered him his price for the wheat, but would not spring to his
price for the barley, and the farmer should thereupon sulkily carry
both his samples home again.

The ideas of Reciprocity and Retaliation are pure relics of the old
Protectionist commercial theory, viz. that there is always a national
loss in parting with gold--that the foreign trade can only be
profitable to England so long as the value of the exports exceeds
that of the imports, so that a continual accumulation of gold may go
on.

Now, first, we may meet this with the abstract scientific argument
that there is no character by which gold can be diagnosed as wealth
from steel or broadcloth. Our merchant who buys wheat for gold could
buy from the Americans wheat for cutlery or wheat for broadcloth. The
reason he gives gold for the wheat is merely because he makes a
better profit by giving gold than by giving anything else in exchange
for the wheat. The nation therefore gets a better profit that way
too.

Descending a little from this abstract argument,