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For sports, for pageantry, and plays,
Sweet sleep, that makes more short the night.-HERRICK. The last poet who has described Harvest-Home was Bloomfield, the “Farmer's Boy.” Even this solitary festival belongs, we fear, to the things that were before the flood.
Here once a year distinction lowers her crest;
And warm'd with gratitude he quits his place,
202.—THE LAW OF PRICES.
CHALMERS. The first thing to be attended to is the way in which the price of any article brought to market is affected by the variations of its supply on the one hand, and of the demand for it on the other. The holders of sugar, for example, after having reserved what they need for their own use, bring the whole surplus to market, where they dispose of it in return for those other things which they do need. It must be quite obvious, that if there be more of this sugar exposed than there is a demand for, the great force of the competition will be among the sellers, to get it off their hands. Each will try to outstrip the others, by holding out a greater inducement for purchasers to buy from him—and this he can only do by holding it out to them on cheaper terms. It is thus that each tries to undersell the rest—or, in other words, the great supply of any article of exchange is always sure to bring down the price of it.
On the other hand, let the same article have been sparingly brought into the market, insomuch that, among the buyers, there is a demand for it to a greater extent than it is to be had. The force of the competition now changes place. It is among the purchasers, instead of the sellers. Each will try to outstrip his neighbours, by holding out a larger inducement to the holders of a commodity now rare, and, therefore, in more urgent request than usual. This he can only do by offering a greater price for it. It is thus that each tries to overbid the other—or, in other words, the small supply of any article of exchange is always sure to bring up the price of it.
The price, then, of a commodity falls with the increase of the supply, and rises with the diminution of it; a law of political economy,
which is expressed still more shortly thus—that the price of every article of commerce is inversely in proportion to its supply.
But it is conceivable, that there might be no variation whatever in the supply—that, from one week to another, the same quantity of sugar, or corn, or any other commodity, may be brought to market, and yet, for all this, may there be a great weekly variation in the price of them. The truth is, that not only may the holders of an article have not always the same quantity on hand for sale, but the buyers may not always have the same need of it. There may be a fluctuation in the demand for an article, as well as in the supply of it; and it is quite evident that the price just rises and falls with the demand, instead of rising and falling inversely to it. Hence the more extended aphorism in political economy, that the price of any commodity is directly in proportion to the demand, and inversely in proportion to the supply—a doctrine that is somewhat more loosely and generally expressed, by saying that the price of an article depends upon the proportion which the demand and the supply bear to each other.
There is nought in the interposition of money to affect this process. Its office is merely to facilitate the exchange of commodities. But the proportion of their quantities in the exchange is just the same, when made to pass through such an intermedium, as when brought closely and directly into barter. The vendors of so much corn may, with the price of it, buy so much sugar. It is not convenient to bring both these articles, or perhaps either of them, in bulk and body, to the scene of the negotiation; and so the money that is received for the one is given for the other. This, however, does not affect the proportion between the number of quarters of the one commodity, which, in the then state of the market, is held as equivalent to the number of hundredweights of the other commodity. This depends on the two elements of demand and supply alone; and is the same as if the expedient of money for carrying into effect the contracts of merchandise had never been devised.
The mere intervention, then, of money, will not perplex the reader out of a right estimation upon this subject. He has only to remember, that either by adding to the supply of any article, or lessening the demand for it, the price of it is diminished; and that either by lessening the supply, or adding to the demand, the price of it is increased.
Now there are certain articles, that, in this respect, are far more. tremulous than others, or that more readily vibrate in price, and with a much wider range too of fluctuation. All are aware of the fluctuations of the corn market; and how, in consequence, the heart, and often the phrensy, of deep and desperate adventure, are associated with the temptations and the losses of such a trade. The truth is, that, generally speaking, the necessaries of life are far more powerfully affected in the price of them by a variation in their quantity, than are the luxuries of life. Let the crop of grain be deficient by one-third in its usual amount, or rather, let the supply of grain in the market, whether from the home produce or by importation, be curtailed to the same extent, and this will create a much greater addition than of one-third to the price of it. It is not an unlikely prediction, that its cost would be more than doubled by the short coming of one-third or one-fourth in the supply. Not so with an article of luxury, and more especially if something else can be purchased for it in the way of substitution. For example, let such be the failure of West India produce, in any particular year, that rum is deficient by one-third from its usual supply. There will be a consequent rise in the price of it, but nothing at all like the rise which an equal deficiency would create in the price of grain.
Such is the fact; and there can be no difficulty in apprehending the cause of it. Men can more easily suffer the deprivation or the diminution of a luxury; and, when its price offers to rise extravagantly, they can limit their demand for it. I can commute the use of rum for the use of another and a cheaper substitute; or, failing this, I can restrain my consumption, or abandon it altogether. Its scarcity will enhance its cost on the one hand; and this, on the other hand, can be met or counteracted, to any extent, by a slackening of the demand. The point of equilibrium between the sellers and the buyers of rum will be shifted; and its price will become higher than before, but not so high as it would have been had rum been an indispensable of human comfort, and therefore given all the more of urgency to the applications of purchasers. This is not the case with rum; but it is so with grain. The mass of our families could not, without distress or great inconvenience, limit their use of it to two-thirds of their wonted consumption. Each will press forward to obtain a larger share of the general stock than his neighbour; and it is just this earnest compe
tition among the buyers that raises the price of necessaries greatly beyond the proportion by which the supply of them is deficient. Men can live without luxuries; and will be content to put up with a smaller allowance of them for a season, rather than pay that price to which they would be elevated by a demand as intense as all must have for the necessaries of existence. Men cannot live without necessaries, and will not be so content to put up with a reduced allowance of them, as they would of the mere comforts or expensive gratifications of luxury. It is thus that the same proportional lack in each class of commodities gives rise to such a difference of effect in augmenting the price of each of them; and it is just the more earnest demand, in the one case than in the other, that explains the difference.
A failure in the general supply of esculents to the extent of one-half would more than quadruple the price of the first necessaries of life, and would fall with very aggravated pressure on the lower orders. A failure to the same extent in all the vineyards of the world would most assuredly not raise the price of wine to any thing near this proportion. Rather than pay four times the wonted price for Burgundy, there would be a general descent, on the part of its consumers in high life, to claret, or from that to port, or from that to the home-made wines of our own country, or from that to its spirituous, or from that to its fermented liquors. And the facility of thus substituting one indulgence for another, is not the only refuge against an enormous charge upon these articles. There is also the facility of limiting the amount of the indulgence, or of withdrawing from it altogether—a refuge that is not so open to the population under a famine of the first necessaries of existence. There is much of shifting and of substitution certainly among families when such a calamity visits them-as from animal to vegetable food, from flour to meal, from meal to potatoes. But, on the supposition of a general short-coming in the yearly produce of the land, the price of each of these articles rises successively with the run of purchasers towards them. On the one hand, the eagerness of demand after all the varieties of food will enhance the price of all, and greatly beyond the proportion of the deficiency in the supply of them; and, on the other hand, this enhanced price is necessary so to restrain the consumption of the families as to make the deficient stock of provisions stand out till the coming of the next harvest. It is thus, by the way, that a population survive so well those years of famine, when the prices,