PRINCIPLES OF VALUE AND PRICE 419 



what point, then, will the rise be arrested ? At the point, whatever 

 it be, which equalizes the demand and the supply: at the price which 

 cuts off the extra third from the demand, or brings forward additional 

 sellers sufficient to supply it. When, in either of these ways, or by a 

 combination of both, the demand becomes equal and no more than 

 equal to the supply, the rise of value will stop. 



The converse case is equally simple. Instead of a demand beyond 

 the supply, let us suppose a supply exceeding the demand. The 

 competition will now be on the side of the sellers : the extra quantity 

 can only find a market by calling forth an additional demand equal 

 to itself. This is accomplished by means of cheapness; the value 

 falls, and brings the article within the reach of more numerous cus- 

 tomers, or induces those who were already consumers to make 

 increased purchases. The fall of value required to re-establish equality 

 is different in different cases. The kinds of things in which it is com- 

 monly greatest are at the two extremities of the scale absolute 

 necessaries, or those peculiar luxuries the taste for which is confined 

 to a small class. In the case of food, as those who have already enough 

 do not require more on account of its cheapness; but rather expend 

 in other things what they save in food, the increased consumption 

 occasioned by cheapness carries off, as experience shows, only a small 

 part of the extra supply caused by an abundant harvest; and the fall 

 is practically arrested only when the farmers withdraw their corn, end 

 hold it back in hopes of a higher price; or by the operations of specu- 

 lators who buy corn when it is cheap and store it up to be brought 

 out when more urgently wanted. Whether the demand and supply 

 are equalized by an increased demand, the result of cheapness, or 

 by withdrawing a part of the supply, equalized they are in either 

 case. 



Thus we see that the idea of a ratio, as between demand and 

 supply, is out of place, and has no concern in the matter: the proper 

 mathematical analogy is that of an equation. Demand and supply, 

 the quantity demanded and the quantity supplied, will be made 

 equal. If unequal at any moment, competition equalizes them, and 

 the manner in which this is done is by an adjustment of the value. 

 If the demand increases, the value rises; if the demand diminishes, the 

 value falls: again, if the supply falls off, the value rises; and falls, if 

 the supply is increased. The rise or the fall continues until the 

 demand and supply are again equal to one another: and the value 

 which a commodity will bring, in any market, is no other than the 



