4 FOREST VALUATION 



competition among producers, prices tend frequently to fall 

 below the cost of production. But where the supply of an 

 article of wealth is limited, and no satisfactory substitutes are 

 available, the owner may demand and receive exorbitant prices, 

 profiting by the needs of the consumers. In such cases there 

 is no relation between prices and cost of production. Famine 

 prices for food are obtained in times of flood or temporary 

 scarcity. Elements which tend to increase the advantage of 

 the owner and the margin between costs and value are: first, 

 absence or monopoly of transportation facilities; second, the 

 elimination of competition, by monopoly of the sources of supply 

 or manufacture; and third, monopoly of markets. In some 

 lines of production this control, through the power incidental to 

 ownership, has curtailed production and has had a marked effect 

 upon prices. Combinations or trade agreements may bring 

 about this result. This condition is manifested in the lumber 

 trade chiefly by the maintenance of local retail prices regard- 

 less of the fluctuations of the general lumber market. Rail 

 competition will prevent the possibility of combination on 

 the part of manufacturers of lumber for an indefinite 

 period. 



8. Prices of Finished Products. Since the immediate 

 needs of persons and their satisfaction from material sources 

 create value, it follows ( 4) that the prices established for goods 

 ready for immediate consumption or use are the basis or source 

 of value for all forms of wealth. Both needs and prices are a 

 matter of to-day. The element of cost, in so far as it affects 

 prices, is completed in the final product. Purchasers and venders 

 are separated into two classes with sharply divided interests, 

 the one obliged to buy, the other with no recourse but even- 

 tually to sell. Under such circumstances prices absolutely 

 determine value. The price of lumber, ties, cordwood and other 

 forest products depends to as great an extent upon the demand 

 and markets as upon the cost of production, and in periods of 

 depression, lumber frequently sells for less than this cost. But 

 whatever the conditions, these market prices determine the 

 value of forest products. 



