PRINCIPLES OF VALUE AND PRICE 429 



larger period usually is fixed. Take, as a typical case, the price of 

 cotton, which fluctuates on the exchanges from day to day in response 

 to the ever-changing play of offer and demand. The total amount 

 of cotton available for the season is not a variable quantity. It is 

 so much and no more, depending on the crop of that season. The 

 price at which the whole will be disposed of depends on its marginal 

 utility or on the equation of supply and demand (whichever mode of 

 statement be preferred) and is the outcome of a total supply which is 

 fixed. The fluctuations in price from day to day oscillate about this 

 seasonal equilibrium price. 



Still using the cotton market and cotton prices for examples, we 

 may note that, while the supply for the season is fixed, no one knows 

 in advance with certainty just how great that supply is; still less at 

 what price the supply, even if accurately known, would be disposed 

 of. Hence a period of uncertainty, of rumors and guesses, of selling 

 and buying by brokers and dealers and manufacturers, by anyone 

 who chooses to operate on trie cotton market in short, all the 

 phenomena of speculation. Cotton hi the United States (the crop in 

 this country dominates the world-markets) is picked in the autumn 

 and the amount harvested is known by December i. But throughout 

 the summer months there are reports of the condition of the growing 

 plants, which foreshadow, though with uncertainty, the amount of 

 the coming crop. During the picking season more and more certainty 

 is reached. Finally, under modern methods of gathering such 

 information, the amount comes to be accurately known. Then arises 

 the question to what degree the price will be affected by the amount. 

 It is certain that a small crop will command a higher price, a large 

 crop a smaller price. But the conditions of demand or consumption 

 are fluctuating from year to year, no less than the supply from the 

 crops. Just what will be the seasonal equilibrium price for a crop 

 of a given size no one can say in advance. It is reached by a succes- 

 sion of tentative market prices. From day to day, and from month 

 to month, the market price is settled by the adjustment of variable 

 amounts offered in the market by dealers. For the season, it is 

 settled by the adjustment of a fixed supply to the marginal price at 

 which the whole will be disposed of. 



It is not to be supposed that even on a single day is there one 

 price rigidly settled by the equilibrium of demand and supply. Even 

 in the most highly organized markets there may be simultaneous sales 

 at different prices; and, where there are newly discovered conditions 



