g the
natural price, not the natural value at which commodities can be
produced in those countries, and that is effected by altering the
distribution of the precious metals. This explanation confirms the
opinion which I have elsewhere given, that there is not a tax, a bounty,
or a prohibition on the importation or exportation commodities which
does not occasion a different distribution of the precious metals, and
which does not therefore every where alter both the natural and the
market price of commodities.

It is evident then, that the trade with a colony may be so regulated,
that it shall at the same time be less beneficial to the colony, and
more beneficial to the mother country, than a perfectly free trade. As
it is disadvantageous to a single consumer to be restricted in his
dealings to one particular shop, so is it disadvantageous for a nation
of consumers to be obliged to purchase of one particular country. If the
shop or the country afforded the goods required the cheapest, they would
be secure of selling them without any such exclusive privilege; and if
they did not sell cheaper, the general interest would require that they
should not be encouraged to continue a trade which they could not carry
on at an equal advantage with others. The shop, or the selling country,
might lose by the change of employments, but the general benefit is
never so fully secured, as by the most productive distribution of the
general capital; that is to say, by an universally free trade.

An increase in the cost of production of a commodity, if it be an
article of the first necessity, will not necessarily diminish its
consumption; for although the general power of the purchasers to
consume, is diminished by the rise of any one commodity, yet they may
relinquish the consumption of some other commodity whose cost of
production has not risen. In that case, the quantity supplied will be in
the same proportion to the demand as before; the cost of production only
will have increased, and yet the price will rise, and must rise, to
place the profits of the producer of the enhanced commodity on a level
with the profits derived from other trades.

M. Say acknowledges that the cost of production is the foundation of
price, and yet in various parts of his book he maintains that price is
regulated by the proportion which demand bears to supply. The real and
ultimate regulator of the relative value of any two commodities, is the
cost of their pro