As explained by James Mill in his Elements of Political Economy (2^nd Edition, London: Baldwin, Cradock, and Joy, 1824, pp. 120 and 122):

“The benefit which is derived from exchanging one commodity for another, arises, in all cases, from the commodity received, not from the commodity given. When one country exchanges, in other words, when one country traffics with another, the whole of its advantage consists in the commodities imported. It benefits by importation, and by nothing else.

“This seems to be so very nearly a self-evident proposition, as to be hardly Continue reading →

“When both countries can produce both commodities, it is not greater absolute, but greater relative, facility, that induces one of them to confine itself to the production of one of the commodities, and to import the other.

“When a country can either import a commodity, or produce it at home, it compares the cost of producing at home with the cost of procuring it from abroad; if the latter cost is less than the first, it imports.

“The cost at which a country can import from abroad depends, not upon the cost Continue reading →