must consequently be lower in all other countries, and higher with us,
than before the opening of the new branch of trade; and we therefore
obtain the commodities of other countries at a less cost, both as we pay
less money for them, and as that money is lower in value.

8. Another obvious application of the same principle will enable us to
explain, and to bring within the dominion of strict science, the
rivality of one exporting nation and another, or what is called, in the
language of the mercantile system, _underselling_: a subject which
political economists have taken little trouble to elucidate, from the
habit before alluded to of disregarding almost entirely, in their purely
scientific inquiries, those circumstances which affect the trade of a
country by operating immediately upon the exports.

Let us revert to our old example, and to our old figures. Suppose that
the trade between England and Germany in cloth and linen is established,
and that the rate of interchange is 10 yards of cloth for 17 of linen.
Now suppose that there arises in another country, in Flanders, for
example, a linen manufacture; and that the same causes, the working of
which in England and Germany has made 10 yards exchange for 17, would in
England and Flanders, putting Germany out of the question, have made the
rate of interchange 10 for 18. It is evident that Germany also must give
18 yards of linen for 10 of cloth, and so carry on the trade with a
diminished share of the advantage, or lose it altogether. If the play of
demand in England and Flanders had made the rate of interchange not 10
for 18 but 10 for 21, (10 to 20 being in Germany the comparative cost of
production,) it is evident that Germany could not have maintained the
competition, and would have lost, not part of her share of the
advantage, but all advantage, and the trade itself.