cted,
but often still it is assumed to be true of international trade.
The starting point for the consideration of this subject is in
this proposition: Foreign trade is carried on by individuals, for
individual gain, with the same motives and for the same benefits as
are found in other trade.

The advantages of international trade are indeed but those of division
of labor in general, in the particular case where it happens to cross
political boundaries. The great territorial divisions of industry are
determined first and mainly by natural differences of climate, soil,
and material resources. Thus trade arises easily between North and
South, between warm and frigid climates, between new countries and
old, between regions sparsely and regions densely populated.[3]

Territorial divisions of industry are determined secondly by social
and economic differences such as those with respect to accumulation
of wealth, amount of loanable capital, invention, organization and
intelligence of the workers, and the grade of civilization.

Foreign trade normally imparts increased efficiency to the productive
forces of each country. In most cases it is apparent that labor is
more effective and gets a larger product when it is applied in those
ways for which the country is best fitted and for which it offers the
best and most bountiful materials; and that, further, when special
branches of industry have developed at one place, they make possible
the advantages of large production and of high specialization.

Certain erroneous explanations of the advantages of foreign trade may
be dismissed with brief mention. It is said to give vent for surplus
production and to give a wider market to what would otherwise go to
waste. This involves the same fallacy as the "lump of labor notion,"
the destruction of machinery, and the praise of waste and luxury.[4]
If it were true that sale to backward nations were now necessary
to give an outlet for products which would otherwise rot in the
warehouses, a time would come at length when the world would have
an enormous surplus unless neighboring planets could be successively
annexed. Again it is said that the great purpose of foreign trade is
to keep exports in excess of imports so that the money of the country
may constantly increase in amount. The ideal of such theorists is an
impossible condition where the country would constantly sell and never
buy.[5] In the narrow commercial view of the subject the