The laws of supply and demand, with special reference to their influence on over-production and unemployment

Preface

Ir may be considered a mild achievement in these tempestuous times to write a work on political economy from which all discussion of tariff and free trade is rigorously excluded. In the following pages free trade is, I believe, nowhere specifically mentioned and where the word tariff occurs it is either in some passage purely descriptive or else accompanied by a statement excluding such parts of the topic as would lead on to the discussion of an unnecessarily vexed question. The operation of tariffs is of course controlled by the laws of supply and demand, but not peeuliarly so and not in any way exhibiting a difference of principle with the conduct of unrestricted commerce. It was therefore quite legitimate not to take this young cuckoo-bird of political economy into our nest, where he would infallibly have encroached on space, until there was room for nothing else.

The present study commences with a reference to a dinner-table conversation in December, 1910, which is only worth mentioning in order to give the assurance that it is no rhetorical device to introduce cut-and-dried theories previously formed, but that it is the true starting-point of the inquiry. The only part of this book written out of order was the determination of the theory of value in Chapter IV. and that is necessarily the preliminary of all economic discussion. For the rest, the argument was discovered and written in the order which is followed in the text and the method is a progressive one from point to

Vili PREFACE point. Some of the deductions came to the author himself rather as a surprise and, what one may call the nett conclusion of the book, requires some courage to face. The position developed by the argument is nothing less than a direct assault on the orthodox theory of political economy, as established by the early English economists. So widely sweeping a condemnation of the old school is nowhere directly stated, but it must be logically and I hope not intolerantly inferred from minor and cumulative criticism of its various doctrines. I believe that this body of doctrine has entirely seen the close of its last period of usefulness and that it must be replaced. It has been maintained upright only so long by its logical coherence in spite of a mistaken or irrelevant social philosophy on which it was founded, in spite of preliminary assumptions always declared to be provisional, but accepted as actual by many followers, in spite of its condemnation by experience and of its demonstrated inapplicability in many ways to real life. Many of its outworks have been shot away without rendering it weak or ridiculous. Infinite and reverent modifications of obvious errors have been used to buttress it up, but they were unnecessary and they ought not to save it now. It has been held together by its own consistency and completeness and this completeness is the justification I feel for my belief that it ought to be swept away.

Some of the conclusions stated in the text, which are to be found in Chapters X., XI. and XII., where the argument proper ends and subsidiary discussions begin, are sufficiently new to deserve a preliminary consideration by those economists who are not fanatically devoted to the orthodox form of current theories. But it was not for economists that this discussion was primarily undertaken. It is rather to be described as a practical investigation of principles underlying the habits of business men. The starting-point

PREFACE 1x in every case has been the examination of the use of terms current in business, and where, as happens sufficiently often, there is some irreconcilable difference between economic definition and practical use, it is not the latter that is allowed to give way. No doubt this is partly due to my own weakness in the later theory of the subject and particularly in knowledge of its mathematical developments, which have increased more rapidly than their readers. But perhaps a more valid justification for my practice may be that, where theoretical knowledge has been divorced from business experience, as it too frequently has been, it is difficult for economists to be aware of the full context of common terms, which are often the condensation of layers of practical knowledge. These terms are, after all, not originated by economists, but adopted by them from complicated current use. It thus happens that their definitions lack richness as well as reality.

The issue involved is one on which we shall all clearly be bound more and more to take sides in the future, and therefore I feel constrained to throw in my lot with the practical men and to confess that my present study is not founded so much on a rather limited reading as on twenty years of reflection and of experience in more than one kind of business in three countries. The result is unfortunately a certain amount of unfairness on my part in delivering apparently random criticisms on a body of economic doctrines rather vaguely indicated, as the orthodox English school, without selecting any particular author or book or even any precise argument, except in the case of Mill’s law of value. It is equally true that the later defenders and modifiers of these doctrines have been neglected in these pages, and no notice has been taken of the number of cases where criticisms have been accepted and embodied and attacks have been skilfully parried. If this work were put x PREFACE forward as primarily scientific, such omissions would be indefensible, yet since its object is practical, and, as in order to be practical one must be brief, concentrated and concerned chiefly with exposition rather than with criticism or controversy, I have been obliged to neglect the unessential. I consider the modern modifications of the old school unessential. The old school stands unreplaced. Its original language is still current and the men between forty and fifty, who guide the actual currents of business, know no other. We are too old to learn the higher mathematics and we doubt its usefulness in this field.

Among the most notable creations of this venerable school, which has been so little injured by the criticism of half a century, is the economic man. He is the standard popinjay of science. As a working man he has been long ago abolished by the attacks of the Socialists. As an employer he has been given up since we learned that competition in eliminating the inefficient during a crisis is apt to gather a large number of others into its net of destruction. But as a consumer, the economic man still survives undisturbed. In the books the markets are still hungry, or ought to be so, and a glut is considered to be an exceptional case outside all laws. The most solid contribution to economics which I hope to afford in the following pages is the total destruction of the economic consumer. He is more essentially a fraud than the adaptable workman or the ever-provident employer. If anyone would thoroughly realize what phantoms these hungry buyers are, let him start a manufacturing business with the newest and most economical production but without selling connections. Let him turn out the goods cheaply, lower his prices and wait for customers.

But, as everyone knows, it is in the moral sphere that the assumption of an economic man has been most fatal. Theoretically, economic science is no worse than unmoral,

PREFACE xl but in its proper sphere moral considerations are so much interlaced with it that true impartiality is impossible and in practice has never been attempted. The idealization of selfishness was quite a sound practical deduction from the theoretical postulate of universal efficiency. It was not slow in coming. In its time it made industrial England a treadmill and speculative America a slaughterhouse. Whatever we may now say or do to subvert it, it will still be dominant as a cheap philosophy in business for another hundred years. But, happily, although it will be hard to wipe out entirely, its influence has long been less than the outward respect paid toit. Many men gave it lip-service, who observed it little in their practice. Take all that business called the “‘higgling of the market”’; it has very little place in the stream of great commercial transactions. To over-estimate your own share in a transaction of exchange is probably in the end to effect a good bargain and to lose further opportunities of making a second. The chief requirement of modern commerce is to satisfy your customers and to keep round you as large a ring of them as possible. So selfishness in exchanges is discounted as a wise weapon and with further effort and better education we may come to see its equal futility in transactions of employment, in international commercial dealings and in the conduct of monopolies.

There is a peculiar function still exercised by the old English school, which has not received due attention, in furnishing the intellectual buttresses to the doctrines of some of its chief opponents. The theoretical edifice of the early Socialists, not yet discarded, was founded directly on one of Ricardo’s most celebrated mistakes, and their economic equipment, such as it is, is supported by little of anything more substantial than the weaknesses and omissions in current doctrines. The one original mind among their xii PREFACE leaders was too much absorbed in practical life and polities to be able to develop his own fruitful ideas, while he accepted too readily an infusion from other theories less well-balanced than his own. When the theory of demand has been properly established, collectivist ideals will need to be subversively modified to meet it.

The study of consumption and the formulation of the theory of demand must be the starting-point of the new political economy. The practical counterpart of theory on these questions is the subject of our daily preoccupation in business and economists would find some profit in this matter by laying their minds beside ours. It is my earnest hope that my present study may be accepted as the second step in this direction. The first was taken by Jevons in 1879 in the celebrated preface to his second edition of the ‘Theory of Political Economy,” where he couples with himself Gossen as being the first to assert for economic science, that it is founded on the requirements of our human nature, on our personal estimates of them and on an account of the received civilized methods of exchanging personal sacrifices for personal requirements. That is not quite the way in which he puts the theorem, because he chooses to adopt the words, pleasure and pain, which do not at all cover the whole field of human requirements. But I see no breach of principle in choosing wider terms to express the whole field, which from the economic point of view is essentially one and the same. Unfortunately, in my judgment, Jevons after assuming psychological data hoped to get valuable results by putting them into mathematical mechanisms and obtained solutions which are entirely shrouded from my vision and whose utility I question. As a mathematical friend of mine, Mr. Mark Barr, with whom I have often discussed this problem, maintains, if mathematics could really be made useful in business and conse-

PREFACE xii quently in economics, there would be no difficulty in constructing a machine to measure the change in the rate of change of prices in cotton, sugar, wheat, &c., which would rapidly make anyone’s fortune. I have to thank Mr. Barr for much valuable assistance and criticism and much useful illustration from practical life, by which the following pages benefit not a little. I desire also to thank my friend Mr. Frank Pember for his kindness in giving an elegant and classical form to a tribute of gratitude towards * another old and valued friend, mentioned elsewhere.

G. BINNEY DIBBLEE.

IMPORTANT.—JSor the convenience of readers all the laws and definitions quoted or formulated in the text are collected in a handy table at the end of the book (see p. 276), for purposes of easy reference.

Chapter I The Law Of Supply And Demand

General use of the term ‘‘ the law of supply and demand”—Vagueness of its meaning—Mill’s law of value—Its reversal in two directions—Monopoly and glut—Marshall’s theory of the equilibrium of supply and demand—lIts limitations—Discussion on the meaning and scope of a market—Law of final bargaining . Pty ed

Chapter II Supply And Demand

Analysis of supply and demand—Are they quantities ?—Supply usually assumed for practical purposes to be a quantity or quantities—Demand mistakenly assumed to be a quantity— Break of continuity in demand—Common and inaccurate use of supply and demand curves—Analysisiof a transaction of sale and purchase — Exchange of sacrifices — Supply is crystallized, demand is uncrystallized sacrifice—Time-difference is the essential distinction—Supply can be roughly and usefully expressed in quantities—Demand has an element of futurity in it, which makes this impossible—Demand isa group of values » p.12

Chapter III Wants And Sacrifices

Psychological analysis of sale and purchase by means of medium of exchange—Its superior simplicity to barter—Doctrine of alternative wants—Successive stages of the wants of an individual for

XV1

SYNOPSIS necessaries, variable alternatives and superfluities—Futility of most wants—Most wants prescribed by habits of vulgar imitation —Banfield’s law restated—Wants develop from simplicity towards sophistication—Self-development, self-assertion and desire for distinction—The chief object of economic imitation is dictated on the whole by the lowest standards—Universal difficulty of avoiding vulgarity at second or third hand—Necessity of the reasoned study of consumption—Habits of consumption determine values as the sacrifices of the seller determine price . . p. 20

Chapter IV

Analysis of the distinction between value and price—Who are the true buyers and sellers, when so many are mere intermediaries ? Every buyer is the agent of the consumer and every seller is the agent of the producer—Definition of yvalue—Market values— Can values remain above price ?—Qualifications of value in current use—Strong attitude of the seller—Hit-and-miss nature of his naming of price—Definition of price—Its essential character is that it must be quoted or stated — Apparently exceptional cases—Definitions of supply and demand—Both of them essentially aggregates of self-values, but while supply can be easily and conveniently measured in quantities and prices demand cannot . : ‘ : ; ; : : mth og FE

Chapter V

General rise in values quite possible in spite of Mill—Analysis of the buyer’s sacrifice—Buying for services—Buying for trade— Buying for cash—The buyer has to replace out of future sacrifice his disbursement in the present—Balance of interests between present enjoyment and future sacrifice—Description of a supposed general rise in values, commonly called a boom—Time-difference between the sacrifices of the buyer and the sacrifices of the seller—Chief problem of modern industry—World’s productive capacity—Difficulty of marketing immense output— Necessity of maintaining the suction of demand ‘ . p. 40

SYNOPSIS XVil

Chapter VI Cost

Predominance in wealth of the mercantile over the, manufacturing cities—Huge population and small manufacturing product of London—Greater wealth goes to the selling community than to mere manufacture—Analysis of selling cost—Extreme complication of the process of selling—High value of a goodwill or trade connection—Cost and difficulty of creating such goodwill—Perils of starting business without one—Comparative wholesale and retail prices of food in U.S. America—Cost of a carcase of beef— Cost of milk, vegetables and fruit in U.S. America—Given away with a pound of tea—Comparison with German and English conditions—Manufacturing and selling costs of a yard of calico in Lancashire—Superior position of the retailer in the selling chain—Obligation on the retailer of meeting the vanity of the customer—Strong position of the great retail stores all over the world —Curious case of the value of retail selling agencies . . p. 50

Chapter VII Analysis Of Cost

Impossibility of pursuing inductive method in economics or of verifying facts—Refutation of economic dictum ‘that price tends in the long run to approximate to the cost of production ’’—An instance from the boot trade analysed—Another instance from the machine-tool trade—Important instance taken from the electrical industry—Mr. Cowan’s analysis of the cost and profit of supplying electrical current for light, heat and power both on equal-priced schedules and under a classified scale of charges— Criticism of the expression ‘‘in the long run’”’—Constituent elements of cost are all of them variables, some of them being mutually interdependent—General picture of selling operations and of the parts taken by producer, middleman and retailer—Definition of selling costs—Demand the chief determinant of price—Fluctuations of demand, both seasonal and accidental—Extravagant selling cost of professional services— Function of advertising—Humbug and imposture . pba

XV1li SYNOPSIS

Chapter VIII The Laws Of Supply

Tremendous development of productive power in modern times— Sudden improvement in communications opened world markets —Revolution in markets also effected by the telegraph and telephone—Resulting influence of this change on economic theory —Laws of diminishing and increasing return—Their spheres of operation—Their frequent alternate operation in the same industry —Their limitations—Both laws are really contained in larger laws —Law of contracting facilities of production—Law of expanding facilities of production—Illustration from an imaginary case of the alternate influence of these two laws given in the agricultural town of Dilberg and its supposed successive prosperity and decadence—New wheat lands being opened up in North and South America—Complicated case of interlacing action of these two laws in the rubber trade—Competition between plantation rubber and Brazilian wild rubber ; : ; e poits

Chapter IX Monopoly And Glut

Unfortunate lack of words denoting degrees of stringency and plethora —Monopoly and glut both unsatisfactory, but the best available— Tendency of markets to run from glut to monopoly—Theory of the fluidity of markets—Situation of an isolated undeveloped agricultural community—Change wrought in markets by immense increase of productivity—Present necessity of maintaining a costly commercial mechanism to secure adequate reward for the producer—The old economic view tended to regard monopoly and glut as abnormal—tThe central point of my theory is that some measure of them is normal and that the maintenance of prices at equilibrium points between them is artificial—Three constituents of value—Natural monopolies generally restricted by the state— In other cases encouraged and protected by the state—Exaction of the full profits of an artificial monopoly is rare and difficult— Successful control of the supply of American refined oil by Mr. Rockefeller — History of the Standard Oil Trust — Glut followed by monopoly—The main profits go to the selling end

SYNOPSIS x1x of a business—Special cases of partial monopoly—Land the most common subject of monopoly—Ricardo’s law of rent only part of wider generalization—Land subject to both primary and secondary demand—Special partial monopoly in saleable talents offers very similar case to rent—-Law of graduated returns on partial monopoly—Apparent inequality of rewards for talents due to action of this law—No intrinsic value in talents or services. . 3 : ; Me. 86

Chapter X

Three main conclusions already reached—Demand is chief determinant of price—Demand is a group of values—Economics and the science of exchange are a part of or are founded on psychology and ethics—The chief object of economic effort—Law of rising demand or law of monopoly—Monopoly restrained or modified by satisfaction of alternative wants—Hxtreme cases of monopoly— Law of substituted demand—‘‘ The next best” or ‘‘the just as good”’—Law of vanishing demand or law of glut— Law of recurring demand—Law of anticipated recurrence of demand —Periodicity-agio in value of goods—Law of stratification of demand . ; , ; ‘ : ; : See Pan NY

Chapter XI Intermediate And Secondary Demand

Distinction between the intermediate buyer and the final buyer or consumer—Distinction between demand for consumption and demand for instruments or tools, which are secondary to the demand for ultimate consumption—Question of terms—Illustration of passing baskets of strawberries—-Instance of passing beef through several hands to the ultimate consumer—All intermediate demand is affected by any check in ultimate demand— Law of intermediate demand — Chain of buyers and sellers required for every commodity— Secondary demand — Law of secondary demand — Direct operation of the laws of simple demand confined to a small number of transactions—Its indirect effect wide-reaching—Complication of the adjusting machinery

XX

SYNOPSIS

Chapter XII The Law Of The Equation Of Supply And Demand

The great selling machinery of the world—lts field of operation—

Its necessity—Its function— Evolution of mutual facilities in bargaining by development of mechanical complexity—Stability of our system is not absolute nor natural, but the result of enormous effort—Comparison of our system with a rocking-stone —Mill’s law of value re-stated—Its limitations—Instances of reversal of Mill’s law when prices fall owing to a glut and when prices are forced up owing to a monopoly—Practical maxim that commodities must not be offered too cheaply—Failure of Mill’s law . ; : : : 2 i : Pee oe OY

Chapter XIII

Definition of economic meaning of legitimate and illegitimate control of supply—Co-operation to control supply among a linked chain of intermediate buyers and sellers—A trade can be regarded as a group or a series, or again as a series of groups or else as a group of series—Special function of the strong links in each series— Historical survey of mercantile development—Fluctuations of trade—Function of the selling organism as a whole in controlling supplies—Theory of the ‘“‘ great exchange ’’—Critical limitations of legitimate control of supply—Instance from the Lancashire cotton trade of controlling supply by working short time through co-operation of masters and men—Brazilian valorization of coffee

Chapter XIV

Nature of combinations—Test of their legitimate operation—Futility of the Sherman law—Initial difficulty of forming combinations— Distinction between stability of prices and stable equilibrium of a market—Possibility of extortion by monopolies makes them an

SYNOPSIS XX1 object of universal suspicion—Various forms of combinations— Assignment of trade areas—Maintenance of prices—Regulation of output—Shipping conferences—Nomenclature of combinations —Name of Judge Gary’s world steel combination not yet settled —French syndicats—German kartels—Stahl-Verband—Russian Prodameta—English combinations—J. & P. Coats—Lancashire and Yorkshire combines—Bank amalgamations—American combinations—Pools, mergers and trusts—Flexibility and power of modern American trust -— Obloquy attached to the term — Mr. Schwab on the term ‘‘trust’’—History of formation of United States Steel Corporation—Mr. H. K. Smith’s report—Two movements, one a defensive manufacturing pool to maintain prices, the other a combination to monopolize raw material, united together to form the United States Steel Corporation—Its weakness as a manufacturing concern—Judge Gary’s dinners— Its attempt to monopolize supplies of ore, coke and fluxing material — The “act of God to relieve the independents’ — Tennessee Coal and Iron Co.’s deal—General weakness of mere manufacturing combinations—Strength and weakness of combinations of all kinds—Their special danger to the community through draining off money in acrisis . : Wn Her boa

Chapter XV The Manipulation Of Demand

In exchange initiative has to be taken by the seller—Appearances often the reverse—Solicitation of demand—Relative advantages of small and large trading—High value of good selling ability— Three methods of getting customers — Personal connection — Commercial travelling—Advertising—Enormous expenditure on advertising—Hstimated to be £100,000,000 annually in the United Kingdom—Probably from £500,000,000 to £600,000,000 annually in the world—Mysterious commodity of publicity—Philosophy of publicity—History of hungry markets succeeded by surfeited markets — Necessary element of misrepresentation in much advertising—Customers desire to be flattered and deceived — What is ‘“‘the best” ’—Analysis of the utility of advertising— Modern developments. : ; ‘ Ry el be

Xx SYNOPSIS

Chapter XVI Over-production

Economic dictum that general over-production is impossible—Also that goods in the long run are exchanged for goods—Both these theories are wrong, because they take no account of the time-element in value—Illustration of the loss due to delay in exchanges —Criticism of Mr. Beveridge—Analysis of the doctrine that time is an element of value—Illustrations from the case of a fortnight’s delay in the sale of 5,000 pairs of boots—Devaluation of the boots —Definition of over-production—General over-production possible but unusual except from financial causes—Causes of local over-production—Sometimes but rarely due to reckless capitalization — Capital on the whole nowadays is too cautious — Present difficulty of financing industry—Pressure of over-production in industry comes generally from inside the trade itself—Contrast of different types of mind in industry—Hnergetic and inventive type with a tendency to produce recklessly—Cautious and conservative type, which generally controls all the best selling connections— Deadlock between the two often produces prolonged depression in trades—Deceptive paradox that all industries are carried on somewhere at a loss—Consideration of seasonal fluctuations of trade—Question whether general over-production is due to specific trade causes or financial causes generated by outside accident—Inclination to accept latter theory—Over-production an entirely modern problem due to cheap manufacture— Is this tendency an increasing one ? . ; ; on De Ae

Chapter XVII Trade Crises

Financial crises involve trade crises—English crisis 1901-3, and American crisis 1907-8—How does financial stringency produce a trade crisis >—Quantitative theory of money—Supposed effects of withdrawal of £50,000,000 of gold from world currency—It might involve a shrinkage of real money equal to £7,000,000,000 Drain on credit alone is not so bad as a drain on gold—Analysis of the quantitative theory of money—Hffects of rapidly rising and falling prices— Two causes of financial stringency— Accidental physical cause—Bad banking or financial management

SYNOPSIS Xx

—Two other causes are industrial—Over-production or under-demand—Phenomenon of general rise in prices—Present rise in prices analysed—Not due to plethora of gold—More probably due to temporary predominance of selling agencies—Preyailing high prices lead to general unrest and political agitation spe 210

Chapter XVIII The Sale Of Labour

Is human exertion a commodity >—Paradoxes of labour sold and given away side by side—Oase of underpaid women—Case of starving authors—Sale of the higher kinds of services—Professional services—Salaried middle classes—Working classes— Skilled labour and trade unions—Growing solidarity between skilled and unskilled labour—Rise of trade unions is the most important industrial fact in the modern world next to the general development of communications—Their double function as bargainers for sale of labour and maintainers of reserves of labour—Their enormous power is rooted in the latter capacity— Great mistake of early Victorian masters not to maintain their own reserves of skilled labour—Pretentious ineptitude of laissez faire theories of those days—Political advantage accruing to trade unions from being both benetit societies and fighting organizations—Advantage of this dual position in the case of the Trades Disputes Act-—Question of security of the person in trade disputes—Peaceful picketing—Sinister power in the terrorism of unknown men—Real services of trade unions—Problem of unskilled labour—Oonstructive work of trade unions is probably at an end—Their policy is now self-seeking, shortsighted and destructive—Right to strike—Futility of a general strike— Demoralization resulting from general breach of contracts

Chapter XIX The Right To Work

Reserves of unemployed constitute most difficult moral and political problem of modern times—State help required to solve it—Right to work—Experiment of universal industrial control by the state—Doctrine of intrinsic value—Doctrine of time-element in value—Right to work implies right to have your product sold for

XXIV SYNOPSIS you—Difficulty of helping unskilled unemployed lies in fact that economic value of this labour is very low—Its independence also destroys half its value—Comparison of British, French and German labour—Resistance to adaptation makes demoralization certain—Unemployable and occasionally employable class— Casual labour— Minimum wage —Theoretical justification — Practical justification—Habits of continuous labour must not be broken down so as to become discontinuous — Hypothetical concrete case—Danger of collusive evasion—Case of women’s labour—Minimum wage would certainly break down by collusion —Privation of casual employment for women would be nota boon but a penalty—State notoriously a bad seller—-Socialist solution of trade waste—Criticism of Ramsay Macdonald—State incompetence to sell goods at home will be redoubled in foreign trade—Socialist state necessarily an isolated and poor state

Chapter XX Conclusion

Theory of selfishness in business quite absurd but still prevalent— Laws of supply and demand are the habits of our commercial system—The ‘great exchange’”—Apparent injustice of the exchange in crucial instances—Our commercial system aims at a pedestrian kind of justice—The chief obstacles to the smooth working of the ‘‘ great exchange” are place and time—The first is easy to surmount because it is a question of distribution— The second is more difficult because it is a question of value— Protection of state necessary to value—State limits forms of property by regulating contracts—State fails when it leaves questions of principle and tries to interfere in details—Failure of U.S. government against the American trusts—The American Tobacco Co. and its successful evasion of the Sherman law— State property— Wealth of the state—Economic value of personal talents, habits of industry and high character ‘ . p. 264

HANDY TABLE OF THE LAWS, DEFINITIONS, TERMS, KO, : p. 276 eee WS OF SUPPLY AND DEMAND

Chapter I

On a recent visit to America, which occurred in the autumn of last year just after the Congressional Elections, I happened to be in a household in New Jersey where we were discussing the reasons for the immediate fall of retail prices in the district on the day after the Democratic victory was declared. There was of course a tendency to take party sides on the question, some maintaining that the fall in prices was due to expected changes in the tariff, and others the contrary. One of our number, an eminent lawyer in New York and presumably a Republican in politics, asserted sagely that the tariff had nothing to do with it, but that the fall in prices was due to the operation of the law of supply and demand. This ex cathedra judgment indirectly brought the discussion to an end, because I found myself asking him with more seriousness than he observed whether he could help me to understand what the law of supply and demand was, and how he defined supply and demand, because I had had difficulties about it. As he seemed to scent a political discussion arising out of my question, he courteously evaded it in order to spare the company and [ was aware of having perhaps exceeded the limits imposed on general conversation.

But I remained intensely curious as to the proper meaning of this most frequent expression, so much so, that it seemed to me an object for more extended study. I noted that the term is freely used in the plural, when some economic meaning can be attached to if as representing Mill’s law of value together with the law of the equilibrium of supply and demand, the two chief laws of supply, and perhaps Bamfield’s theory of wants and the laws of demand as formulated by Professor Marshall and others. But as it is more commonly used, in the singular, the expression lacks definition, and it is difficult to attach to it any specific meaning whatever.

When used in conversation and more glibly in the columns of the press, if seems to be accepted in any discussion as necessarily terminating the argument, like some appeal to a bourgeois Cesar. The word, law, carries weight and the sanction which accompanies it by implication is the predominant force of selfishness, as the sole arbiter of economic problems. It represents a rather brutal assertion of common-sense against the intrusion of sentiment into business.