134 WHEAT PRODUCTION IN NEW ZEALAND 



wide field, nor consumed so universally for such varying 

 purposes as this cereal. On this account a study of the 

 determination of the price of wheat is interesting to the 

 economist, for the reason that it offers many illustrations 

 of conclusions arrived at in abstract expositions of 

 market and normal price. In the first place the in- 

 fluence of supply and demand as determining factors in 

 market value is clearly illustrated. Then again, the 

 study affords a typical example of the operation of the 

 forces which affect the transition from market price to 

 normal price. Further, a good illustration of price 

 steadiness resulting from a wide range of production 

 will be found in such a discussion. Finally, an excellent 

 opportunity is given for a study of the operation of 

 speculation ; for on the market for wheat modern specu- 

 lation is found in its most highly developed phase. 



2. The Wheat Market. 



Before commencing the main topic of our exposition, 

 it is necessary to give a provisional account of markets, 

 and discuss briefly the nature of the market for wheat. 

 The question of the forces tending to bring about equi- 

 librium between demand and supply is fundamentally 

 concerned with the general question of markets. 



If we suppose a community where each family or 

 group is self-sufficing, little or no exchange takes place 

 between the families, and there is no market. Such a 

 state of affairs has probably never existed, for however 

 primitive a community might be, some bartering is 

 highly probable. As the division of labour begins to 

 develop, as it did in the English manor in early medieval 

 times, the volume of bartering increases. Progress in 

 the economic world is ever in the nature of specialisation 

 both by product and by process. Every step in special- 

 isation by product increases the necessity of markets, 

 while specialisation by process increases the need for the 



