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Show .G32 SUMMARY • PAGE The prices of comn1oditics depend upon the causes which call forth, or render unnecessary, a great or intense de-mand. 66 An increase in the number of the purchasers of an article, or its diminished supply, will raise its price; a diminution in the number of purchasers, or its abundant supply, will lower it price . ib. The first class of causes calls forth a greater intensity of de-mand, the second a le s . 67 Whatever 1nay be the state of the supply, compared with the wants of the purchasers, if they have not the power and will to make a more intense demand, the price cannot rise ib. If the cost of production be increased, those only can be supplied who will submit to a greater acrifice to obtain wLat they want, and 1nake a more inten e demand . ib. If a commodity be abundant con1pared with the number of purchasers, the same intensity of demand or sacrifice be-comes unnecessary 68 If the cost of production be dimini ·hed, a usele s exce ·s of supply will always be contingent upon the price not falling proportionably . 69 Whenevel' an advance of price takes place, it is because such advance is neces ary to the supply of the consumer ; and whenever a fall takes place, it is because it is necessary to prevent the supply from being greater than the consump-tioo ro In this discussion, no new meaning has been given to the terms, demand and supply. It is intended that they should be understood in the sense in which they have always ' hitherto been understood, when applied to market prices . 71 SEcT. III.-Of the Cost qf P-roduction as it ojfects Exchangeable Value. The system which determines pric s by demand and supply, is essentially different from the system which refers to the costs of production, though they touch each other in many points . . . 72 In all transactions of bargain and sale, there is obviously a S Ul\Il\fARY. .533 1 PAG. princip e which determines prices, quite independently of the costs of their production . . . . . . . . . . 73 Thi~ ~s acknowledged with regard to all monopolized commod1t1es ; and is strikingly true in reference to the market prices of raw products . . . . . . . . . . . ib. Of comn1odities which are the least varjable, the cost of production will be fo~nd only to influence their prices as it is the nece sary condition of their supply . . . . . . . 7 4 The principle of demand and supply determines what Adam Smith calls natural prices as well as :market prices 7 5 This is proved by attending to the immediate and specific cause which alters price _,upon an alteration in the costs of production . . . ~ ib. The costs of production appear to be of no avail, but in subordination to the dominant principle of supply and demand 7 6 This position may be illustrated by the effects upon prices of all sorts of bounties ib. The value given to Bank paper by limiting its quantity, shews that the cost of producing gold only influences its price as it influences its supply . 77 The true way of viewing the costs of production, in their effects upon prices, is as the necessary conditions of the sup-ply of the objects wanted 78 The first necessary condition of this supply is, the payment of the labour employed . 79 'I:he second condition is the p'ayment of the ordinary profits of stock . 80 The third condition is_, that the price of the commodity should be such as to pay rent on all but the very w-orst lands in cultivation . , 81 The price which fulfils these conditions is the natural price of Adam Smith, which it might be better to call necessary price, as susceptible of a more simple definition . 83 The natural or necessary price of a commodity is the price necessary to bring it regularly to market . ib. Natural and necessary prices are determined by demand and supply, as well as market prices . 84 M I.., |
