VALUE. 



777 



lute monopolies : their supply cannot be increased, 

 and their price must, therefore, depend entirely on 

 the competition of those who may wish to buy them, 

 without being, in the slightest degree, influenced 

 by the cost of their production. Monopolies are 

 sometimes established by law ; as when the power 

 to supply the market with a particular article is 

 made over to one individual, or society of individ- 

 uals, without any limitation of the price at which it 

 may be sold ; which, of course, enables those pos- 

 sessed of the monopoly to exact the highest price 

 for it that the competition of the buyers will afford, 

 though such price may exceed the cost of produc- 

 tion in any conceivable degree. The rights con- 

 veyed by patents sometimes establish a valuable 

 monopoly; for they enable the inventors of im- 

 proved methods of production to maintain, during 

 the continuance of the patent, the price of the article 

 at a level which may be much higher than is re- 

 quired to afford them the ordinary rate of profit. 

 This advantage, however, by stimulating invention, 

 and exciting to new discoveries, of which it is the 

 natural and appropriate reward, instead of being in- 

 jurious, is beneficial to the public. (See Patents.) 

 There are also partial monopolies, depending upon 

 situation, connexion, fashion, &c. These, and 

 other inappreciable circumstances, sometimes occa- 

 sion a difference of thirty per cent, or more, in the 

 price of the same article, in shops not very distant 

 from each other. The effects on prices produced 

 by the opening of new markets, or new sources of 

 supply, and the effect of war in obstructing the 

 ordinary channels of commercial intercourse, and 

 occasioning extreme fluctuations in the supply and 

 price of commodities, are well known. When a 

 tax is laid on a commodity, its price necessarily 

 rises in a corresponding proportion ; for otherwise 

 the producers would not obtain the ordinary rate 

 of profit, and would, of course, withdraw from the 

 business. Speculation has also a great influence 

 on prices. It very rarely happens that either the 

 actual supply of any species of produce in extensive 

 demand, or the intensity of that demand, can be 

 exactly measured. Every transaction in which an 

 individual buys produce in order to sell it again, is, 

 in fact, a speculation. The buyer anticipates that 

 the demand for the article he has purchased will be 

 such, at some future period, either more or less 

 distant, that he will be able to dispose of it with a 

 profit ; and the success of the speculation depends, 

 it is evident, on the skill with which he has esti- 

 mated the circumstances that must determine the 

 future price of the commodity. It. follows, there- 

 fore, that in all highly commercial countries, where 

 merchants are possessed of large capitals, and where 

 they are left to be guided in the use of them by 

 their own discretion and foresight, the prices of 

 commodities will frequently be very much influ- 

 enced, not merely by the actual occurrence of 

 changes in the accustomed relation of the supply 

 and demand, but by the anticipation of such changes. 

 It is the business of the merchant to acquaint him- 

 self with every circumstance affecting the particular 

 description of commodities in which he deals. He 

 endeavours to obtain, by means of an extensive 

 correspondence, the earliest and most authentic in- 

 formation with respect to every thing that may 

 affect their supply or demand, or the cost of their 

 production ; and if he learned that the supply of an 

 article has failed, or that, owing to changes of 

 fashion, or to the opening of new channels of com- 

 merce, the demand for it has been increased, he 



would most likely be disposed to become a buyer, 

 in anticipation of profiting by the rise of price, 

 which, under the circumstances of the case, could 

 hardly fail of taking place ; or, if he were a holder 

 of the article, he would refuse to part with it, un. 

 less for a higher price than he would previously 

 have accepted. If the intelligence received by the 

 merchant had been of a contrary description ; if, 

 for example, he had learned that the article was 

 now produced with greater facility, or that there 

 was a falling off in the demand for it, caused by a 

 change of fashion, or by the shutting up of some of 

 the markets to which it had previously been ad- 

 mitted, he would have acted differently: in this 

 case, he would have anticipated a fall of prices, and 

 would either have declined purchasing the article, 

 except at a reduced rate, or have endeavoured to 

 get rid of it, supposing him to be a holder, by of- 

 fering it at a lower price. In consequence of these 

 operations, the prices of commodities, in different 

 places and periods, are brought comparatively near 

 to equality. All abrupt transitions from scarcity 

 to abundance, and from abundance to scarcity, are 

 avoided ; an excess in one case is made to balance 

 a deficiency in another, and the supply is distributed 

 with a degree of steadiness and regularity that could 

 hardly have been deemed attainable. The risk to 

 which merchants are exposed, when they either sell 

 off any commodity at a reduced price, in anticipa- 

 tion of a fall, or buy at an advanced price, in anti- 

 cipation of a future rise, is a consequence princi- 

 pally of the extreme difficulty of ascertaining with 

 accuracy the grounds on which an abundant or a 

 deficient supply, or an increasing or decreasing de- 

 mand, may be expected. Rules can here be of no 

 service ; every thing depends upon the talent, tact 

 and knowledge of the party. Priority, but, above 

 all, accuracy of intelligence, is, in such cases, of the 

 utmost consequence. Without well authenticated 

 data to go upon, every step taken may only lead to 

 error. The instances, indeed, in which specula- 

 tions, apparently contrived with the greatest judg- 

 ment, have ended in bankruptcy and ruin, from a 

 deficiency in this essential requisite, are so very 

 numerous that every one must be acquainted with 

 them. When a few leading merchants purchase in 

 anticipation of an advance, or sell in anticipation of 

 a fall, the speculation is often pushed beyond all 

 reasonable limits, by the operations of those who 

 are influenced by imitation only, and who have 

 never, perhaps, reflected for a moment on the 

 grounds on which a variation of price is anticipated. 

 In speculation, as in most other things, one indi- 

 vidual derives confidence from another. One pur- 

 chases or sells, not because he has any really accu- 

 rate information as to the state of the demand and 

 supply, but because some one else has done so be- 

 fore him. The original impulse is thus rapidly ex- 

 tended ; and even those who are satisfied that a 

 speculation, in anticipation of a rise of prices, is 

 unsafe, and that there will be a recoil, not un- 

 frequently adventure, in the expectation that they 

 shall be able to withdraw before the recoil has be- 

 gun. It may, we believe, speaking generally, be 

 laid down as a sound practical rule, to avoid having 

 any thing to do with a speculation in which many 

 have already engaged. The competition of the 

 speculators seldom fail^ speedily to render an ad- 

 venture that might have been originally safe, ex- 

 tremely hazardous. If a commodity happen to be at 

 an unusually reduced price in any particular market, 

 it will rise the moment that different buyers appear 



