THE PRICE OF WHEAT 141 
crops or the breakdown of transportation facilities. The 
influence emanates from the supply side but operates 
through the demand side. 
4, Reaction of Price. Normal Price. 
The transition from the market price to the normal 
price of wheat is essentially the result of forces operating 
on the supply. In the determination of normal price 
supply is the predominating factor. The essence of the 
idea of normal price is that it is an approximation to 
the cost of production. If wheat prices fall so low 
that its production becomes unprofitable, there will be 
a tendency to withdraw capital from the production of 
this cereal. The same capital and labour which before 
were engaged in producing wheat will ultimately be 
devoted to the production of other crops which yield 
a larger return. In the event of a rise in the price of 
wheat, capital and labour are attracted to the industry, 
and further supplies are put on the market until demand 
and supply reach a new equilibrium, at which the price 
is a fair remuneration for cost of production. 
To go back again to market price we found that 
market values were governed by the relation of demand 
to stocks actually in the market, with more or less 
reference to future supplies, and not without some in- 
fluence of trade combinations. Any increase in demand 
causes a temporary increase in price, the degree of the 
intensity of the demand and the probability of meeting 
the demand with existing appliances, settling the magni- 
tude of the rise. In short periods the stock of appliances 
for production is practically fixed. Then, if demand 
changes, the supply of specialised skill and ability, of 
suitable machinery and other material capital, and of 
the appropriate industrial organisation has not time to 
be fully adapted to demand. The producers have to 
