164 WHEAT PRODUCTION IN NEW ZEALAND 
and those affecting the rise and fall of a particular price 
with respect to that level.’’ 
(ii) Explanation of the Position in the Period. — 
What, then, under normal conditions would be the 
position with regard to wheat on the occasion of a fall 
in general prices, such as took place from 1850-73? The 
demand for wheat is comparatively inelastic, and there- 
fore it would be one of those commodities which would 
fall in price less than the fall in the general level, 
and certainly less than the fall in most commodities, for 
the demand for wheat is less elastic than that for other 
goods. But the fall in the price of wheat was vastly 
greater than the fall in general prices, and there must, 
therefore, have been other influences in operation. Had 
incomes decreased, then a slight reduction in wheat 
prices might be expected, @ priori. But incomes did not 
decrease, and furthermore, such a deerease would be 
manifested in a slackening in demand for commodities 
other than necessaries, rather than in such commodities 
as wheat. From the data available, the only sound 
explanation of this phenomena, apparently contradictory 
to our @ priori reasoning, lies in an increase in supply. 
Such, indeed, is the true explanation, and the validity 
of our contention at the outset that increased supply 
exerted an influence because wheat prices fell more than 
general prices is established, for normally wheat prices 
would fall less than the average. 
(iii) Expansion in Production. — Stimulated by the 
high prices of the two decades ending in 1870, agriculture 
throughout the world had reached a stage of relatively 
high prosperity. Many new fields of production had 
attracted the attention of pioneering farmers, and a 
general movement in favour of developing certain new 
fields had set in. The United States, India, Argentina, 
Canada, Australia, New Zealand, all offered profitable 
fields to the enterprising farmer, and during the ‘‘seven- 
