CHAMBERS'S INFORMATION FOR THE PEOPLE. 



that we inquire into the laws according to which 

 this system of exchange operates. 



An act of exchange implies at least two persons, 

 each owning certain commodities, each willing 

 to part with them for a consideration, and each 

 desiring to possess something owned by the other. 

 It matters not in the first instance whether the 

 commodities are simple products of nature inde- 

 pendent of the agency of man, or are the products 

 of man's labour ; it suffices that they arc owned 

 by some one, and that they are offered and desired 

 for exchange. 



The exchangeable value of any one of these 

 commodities is expressed in the quantity and 

 quality of the thing for which it is exchanged. If 

 a horse is exchanged for ten quarters of wheat, 

 the marketable value of the horse is that measure 

 of wheat, and the marketable value of ten quarters 

 of wheat is one horse of a quality like to that in 

 the case supposed. That ten quarters were given 

 for such a horse, and not twenty quarters, depends 

 proximately on the tastes and wants of the 

 traffickers. The one wanted a horse, and could 

 spare ten quarters of wheat, but perhaps could 

 spare no more, and therefore offered that measure 

 of wheat for the horse ; the other wished to part 

 with the horse, and was in want of ten quarters 

 of corn perhaps less would not supply his wants. 

 In a word, each of the traffickers, in view of his 

 particular wants and abilities, was willing to 

 make that exchange, though the one might not 

 have been willing to offer more, nor the other to 

 take less, than what they bargained for. 



The case is varied if more than one person 

 desire to possess the commodity offered for 

 exchange. If the owner of a horse expose it for 

 sale to the highest bidder, one may offer eight 

 quarters of wheat for it ; another, nine quarters ; 

 and a third, ten quarters. Of course, the seller 

 will take the highest offer. Or there may be 

 many persons owning horses, and anxious to sell, 

 in which case the competition will take an opposite 

 direction the buyers endeavouring to bid down 

 the sellers. This mutual bidding of purchasers 

 and sellers is called competition the object on 

 either side being to part with as little as possible 

 by way of consideration for the commodities to 

 be received in exchange ; and to secure as much 

 as possible in exchange for what is given. 



It must be recollected that, owing to the com- 

 plex structure of society, it is not a matter of 

 indifference to the owner of a commodity whether 

 he be able to find a purchaser or not, for he is 

 dependent on the exchange as the means of 

 purchasing for himself in turn the various other 

 commodities of which he stands in need. In a 

 word, within a very limited time, it is in general 

 absolutely necessary for a man to sell whatever 

 goods he may have produced for the market. 

 The competition, therefore, among owners to 

 effect a sale, is an agency as important as the 

 competition among buyers to effect a purchase. 

 In truth, buyers and sellers are just persons 

 desirous to exchange commodities with each other ; 

 they are under the same necessity of exchanging 

 within a limited period, and are anxious to effect 

 the exchange on terms as advantageous as 

 possible. 



Let us consider further the action of these 

 motives. Suppose that horses are reared only by 

 one person in a district shut off from other 



474 



districts, and that they are eagerly sought after for 

 purchase. Suppose this person can rear twenty 

 horses a year, and that the limits of his capital 

 compel him to sell within the year. Suppose 

 there are ten purchasers willing, if better cannot 

 be done, to give thirty quarters of wheat for each 

 horse, and twenty purchasers willing to give ten 

 quarters of wheat for each horse. In these cir- 

 cumstances it is clearly for the interest of the 

 seller that he restrict his breeding to ten horses 

 annually, and sell to the ten persons who are 

 each willing to give thirty quarters of wheat ; for 

 were he to attempt to dispose of more than ten, 

 he could only effect that object by reducing his 

 price to ten quarters, a reduction of which even 

 those purchasers willing, if need be, to give thirty 

 quarters, would avail themselves ; and the profits 

 of the breeder would consequently be lower than 

 if he restricted his sales to the higher purchasers 

 only. If, on the other hand, he could find twenty 

 purchasers willing each to give twenty quarters, 

 it would be better for him to sell his twenty 

 horses to these, and abandon all attempts to 

 obtain a higher price for a smaller number. Vary 

 the case, and suppose a second breeder having 

 an equal motive to sell, and each of the two able 

 to breed twenty horses. If, in these circum- 

 stances, there be a demand for twenty horses at 

 thirty quarters of wheat of price, or of forty horses 

 at ten quarters, it is, as before, for the interest 

 of the two sellers to combine, and each rear only 

 ten horses each. Sometimes, as a matter of fact, 

 such combinations take place ; at other times, 

 however, each of the two breeders tries to supply 

 the high-price demand to its full extent, and a 

 competition takes place between them, resulting 

 very likely in the forty horses being all sold at the 

 lower price of ten quarters of wheat. 



It is by such a process that the exchangeable 

 values of different commodities adjust themselves. 

 Certain quantities of a commodity, possessed by 

 different individuals, are exposed in the market, 

 and must be sold within a limited period ; and 

 according to a diminishing scale of price there is 

 an increasing number of buyers. The exchange- 

 able value of the commodity tends to that figure 

 at which the demand exactly corresponds to the 

 supply. There are a million quarters of wheat 

 for sale, and suppose that at 6os. per quarter 

 there would be purchasers to buy half a million 

 quarters ; that at 503. per quarter there would be 

 purchasers to buy three-fourths of a million ; that 

 at 405. per quarter there would be purchasers to 

 buy the whole stock for sale ; that at 303. per 

 quarter there would be purchasers to buy two 

 million quarters ; and that at 203. per quarter, 

 the purchasers would take five million. The 

 market price, in these circumstances, would be 

 that at which the demand and supply are equal ; 

 or, more properly, competition between buyers 

 and sellers constantly tends to bring prices to 

 that point. 



Of Exchangeable Value. 



Where the supply of a commodity is absolutely 

 limited for example, the frontage of a particular 

 street, the acreage of a particular vineyard, the 

 number of diamonds in the world there is no 

 limit to the exchangeable value of the commodity, 

 except what is implied in the desire of a purchaser 

 to obtain it, and his ability to offer such a price 



