PRICE AND VALUE 239 



were created in producing coffee. Doubtless the temporary high 

 price for coffee caused many consumers to seek substitutes for 

 this drink, of which there are many on the market. The valoriza- 

 tion scheme led to a severe collision with the legal authorities of 

 the United States. Evidently the chief advantage of the scheme 

 accrued to the bankers who managed it. These bankers were 

 beyond the reach of our legal machinery. As Wm. T. Chantland, 

 Special Assistant to the United States Attorney General, says in 

 his detailed report on valorization: 



"Of a violation of this law (United States Anti-trust Act) the members 

 of the so-called valorization Committee, who are among the best-posted coffee 

 men in the world, were and are guilty, but of them we can deal only with the 

 American member, Mr. Herman Sielcken, who is now, and has been since 

 before this investigation was begun, living out of the United States, to wit, 

 on his estates in Baden-Baden." 



That a state may corner the market and raise prices ("valor- 

 ize") is a doctrine that has a certain glamor about it among 

 law-makers in the United States. As evidence of this, the cotton 

 situation in 1917 is an example. Texas seriously considered 

 valorizing its cotton crop or attempting to do it. The Houston 

 Chronicle of February 8, 1917, contains this news item: 



"The house committee on constitutional amendments met last night and 

 reported favorably the Clark resolution for a constitutional amendment 

 authorizing the Legislature to create a governmental agency with powers to 

 fix a minimum price for cotton each year. The resolution also provides an 

 additional State tax of 10 per cent to raise a fund which would enable the 

 State to buy cotton or lend money on the staple in order to maintain the mini- 

 mum price determined upon." 



Price and Value. Price is value expressed in terms of money. 

 Values fluctuate from two sets of causes, those affecting the supply 

 side and those affecting the demand side. Utility4s the power to 

 satisfy a want. Value does not depend on utility, but on utility- 

 plus-scarcity, or what is generally called marginal utility. Water 

 has high utility, is in fact indispensable to life. Yet in most places 

 drinking water is so plentiful as to be free that is, has no value, 

 no price, no marginal utility. But just to that degree that the 

 want for water is unsatisfied, to that degree its value increases. 

 No principle of economics has wider acceptance than this marginal 

 utility theory of value. This being true, it is obvious that value 

 does not depend on cost of production. But it is related to it. 

 Value does not depend on demand, but is related to it. The true 

 conception of value is that of the keystone of an arch, the keystone 

 being labeled value or marginal utility, and one side of the arch 

 being labeled " Supply" and the other side "Demand." 



