Of the truths with which political economy has been enriched by Mr.
Ricardo, none has contributed more to give to that branch of knowledge
the comparatively precise and scientific character which it at present
bears, than the more accurate analysis which he performed of the nature
of the advantage which nations derive from a mutual interchange of their
productions. Previously to his time, the benefits of foreign trade were
deemed, even by the most philosophical enquirers, to consist in
affording a vent for surplus produce, or in enabling a portion of the
national capital to replace itself with a profit. The futility of the
theory implied in these and similar phrases, was an obvious consequence
from the speculations of writers even anterior to Mr. Ricardo. But it
was he who first, in the chapter on Foreign Trade, of his immortal
_Principles of Political Economy and Taxation_, substituted for the
former vague and unscientific, if not positively false, conceptions with
regard to the advantage of trade, a philosophical exposition which
explains, with strict precision, the nature of that advantage, and
affords an accurate measure of its amount.

He shewed, that the advantage of an interchange of commodities between
nations consists simply and solely in this, that it enables each to
obtain, with a given amount of labour and capital, a greater quantity of
all commodities taken together. This it accomplishes by enabling each,
with a quantity of one commodity which has cost it so much labour and
capital, to purchase a quantity of another commodity which, if produced
at home, would have required labour and capital to a greater amount.
To render the importation of an article more advantageous than its
production, it is not necessary that the foreign country should be able
to produce it with less labour and capital than ourselves. We may even
have a positive advantage in its production: but, if we are so far
favoured by circumstances as to have a still greater positive advantage