420 AGRICULTURAL ECONOMICS 



value which, in that market, gives a demand just sufficient to carry 

 off the existing or expected supply. 



Again, though there are few commodities which are at all times 

 and forever unsusceptible of increase of supply, any commodity what- 

 ever may be temporarily so; and with some commodities this is 

 habitually the case. Agricultural produce, for example, cannot be 

 increased in quantity before the next harvest; the quantity of corn 

 already existing in the world is all that can be had for sometimes a 

 year to come. During that interval, corn is practically assimilated 

 to things of which the quantity cannot be increased. In the case of 

 most commodities it requires a certain time to increase their quantity; 

 and if the demand increases, then, until a corresponding supply can 

 be brought forward that is, until the supply can accommodate itself 

 to the demand the value will so rise as to accommodate the demand 

 to the supply. 



When the production of a commodity is the effect of labour and 

 expenditure, whether the commodity is susceptible of unlimited mul- 

 tiplication or not, there is a minimum value which is the essential 

 condition of its being permanently produced. The value at any par- 

 ticular time is the result of supply and demand; and is always that 

 which is necessary to create a market for the existing supply. But 

 unless that value is sufficient to repay the cost of production, and to 

 afford, besides, the ordinary expectation of profit, the commodity will 

 not continue to be produced. The cost of production, together with 

 the ordinary profit, may therefore be called the necessary price, or 

 value, of all things made by labour and capital. Nobody willingly 

 produces in the prospect of loss. Whoever does so, does it under a 

 miscalculation, which he corrects as fast as he is able. 



When a commodity is not only made by labour and capital, but 

 can be made by them in indefinite quantity, this necessary value, the 

 minimum with which the producers will be content, is also, if compe- 

 tition is free and active, the maximum which they can expect. If the 

 value of a commodity is such that it repays the cost of production not 

 only with the customary but with a higher rate of profit, capital 

 rushes to share in this extra gain, and by increasing the supply of the 

 article reduces its value. This is not a mere supposition or surmise, 

 but a fact familiar to. those conversant with commercial operations. 



Adam Smith and Ricardo have called that value of a thing which 

 is proportional to its cost of production its natural value (or its natural 

 price). They meant by this the point about which the value oscil- 



