3. We have hitherto supposed the carriage to be performed without labour
or expense. If we abandon this supposition, we must correct the
statement of the case in a slight degree. The prices of the two articles
will no longer, when the trade is opened, be the same in both countries,
nor will the articles exchange for one another at the same rate in both.
Ten yards of cloth will purchase in Germany a quantity of linen greater
than in England by a per-centage equal to the entire cost of conveyance
both of the cloth to Germany and of the linen to England. The
money-price of linen will be higher in England than in Germany, by the
cost of carriage of the linen. The money-price of cloth will be higher
in Germany than in England, by the cost of carriage of the cloth.

The expense of the carriage is evidently a deduction _pro tanto_ from
the saving of labour produced by the establishment of the trade. The two
countries together, therefore, have their gains by the trade diminished,
by the amount of the cost of carriage of both commodities. But here the
question arises, which of the two countries bears this deduction, or in
what proportion it is divided between them.

At the first inspection it would appear that each country bears its own
cost of carriage, that is, that each country pays the carriage of the
commodity which it imports. Upon this supposition, each country would
gain whatever share of the joint saving of labour would otherwise fall
to its lot, _minus_ the cost of bringing from the other country the
commodity which it imports. This solution is rendered plausible by the
circumstance just now mentioned, that the price of the commodity will be
higher in the country which imports it, than in the country which
exports it, by the amount of the cost of carriage. If linen is sold in
England at a higher price than in Germany, by a per-centage equal to the