CHAPTER III 

 THE COST OF LIVING AND THE FOOD SUPPLY 



" Prices are fixed by the law of demand and sup- 

 ply," the speculators say. "If the demand is in 

 excess of the supply prices rise; if the supply is in 

 excess of the demand prices fall. We do not make 

 high prices. The laws of political economy do. 

 You must suspend her laws, not punish us, if you 

 do not get enough to eat or have to pay more than 

 you like for food." 



That prices are fixed by demand and supply is a 

 principle of general application when competition is 

 free and no obstacles prevent the free play of com- 

 petition. Moreover, if the supply of some article 

 of general consumption is only a httle below the 

 demand prices tend to rise far above the prices 

 which should otherwise prevail. Then as prices ad- 

 vance the demand slackens and a new equilibrium 

 is estabHshed. This was the condition which pre- 

 vailed in our food supply up to a few years ago when 

 the local market established prices. The farmers 

 made a comfortable living, and the cost of food was 

 not an item of serious consideration to any save the 

 very poor. Food was abundant and prices were 

 low, as they should be in this countr}^ For food 



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