But sometimes the demand for a com modity is diminished, if the supply fall short of it for any considerable time. There are various articles useful and agreeable to mankind but not essential to their existence, which they are eager to enjoy as far as they can, but for which they are not prepared to make great sacrifices. When the price of an article of this description is raised by a deficient supply, continuing for some length of time, it is placed beyond the reach of many persons who learn to regard it with indifference. They would buy it if it were cheap ; but as it is dear, they go without it or are satisfied with a substi tute. In this manner the number of consumers is diminished. Others again, who will not be deprived of an accus tomed luxury, enjoy it more sparingly, and consume it in less quantities. But so long as the supply is not increased, the price will continue high, because the con sumers who still purchase the article, notwithstanding its price, keep up an effective demand equal to the whole supply ; while there is still a dormant demand, only awaiting a reduction of price to become effective.
For the same reasons a demand for articles is diminished when their price is artificially raised by taxation. The de mand is gradually confined to a smaller number of persons, and many consume more sparingly. [Tex, TAXATION.] In these various ways demand an sup ply become adjusted through the medium of price, whenever the one exceeds the other. This is the result of natural laws, the operation of which is of the highest value to mankind. If the supply be in capable of increase, it economises con sumption: if the supply can be increased, it encourages production. In either case it is of great benefit to the consumer. To revert, for a moment, to the example of a bad harvest in a country excluded from all foreign supply. Suppose that prices did not rise, but remained precisely the same as if the harvest had been abundant, what would be the consequence ? Tho whole population would consume as much bread as usual, and use flour in every way that luxury points out, unconscious of any scarcity. Farmers might even feed their cattle with wheat. By reason of this im providence the whole of the corn would be consumed before the next harvest, and the horrors of famine would burst, with out any warning, upon a people living as if they were in the midst of plenty. This evil is prevented by a rise of prices, which is a symptom of scarcity, just as pain is a symptom of disease. By timely precau tion the danger is averted. A high price renders economy and providence compul sory, and thus limits consumption. The
supply, therefore, instead of being ex hausted before the next harvest, is spread over the whole year. In the case of food it is true that such economy is painful and presses heavily upon the poor : but this evil is a mercy compared with famine, If no privation had been endured before scarcity became alarming, none tat rich men could buy a loaf: for every one who bad a loaf to sell would be risking his own life if he sold it.
These observations are also applicable in some measure to cases in which prices are raised by the supply being confined to one or to a few persons, who have con trived to buy up the whole or nearly the whole of any commodity. But such ex clusive possession (sometimes improperly called a monopoly) cannot exist, for any length of time, in articles of which the sup ply is capable of increase. The extreme case has been put of a besieged town in which the whole supply of corn was mono polized by one man. Under those circum stances of course be would demand a high price ; but unless his exclusive supply were upheld by law, it does not follow that the inhabitants would suffer ou that account. A most provident consumption of food is absolutely necessary for the defence of a town, and no organization could distribute provisions according to the wants of the people so well as a system of purchase restrained by a high price. It must also be recollected that, without any such ex clusive possession, the factof the siege alone most raise prices by cutting off fresh sup plies. If the siege continue, provisions are more likely to last out by the instrumen tality of prices than by any other means. At the same time the sole possessor of the corn would be restrained from keeping back the supply beyond the actual neces sity of the occasion by many considera tions. He would know that if a popular tumult arose, if the town were relieved, the siege raised—a capitulation agreed to or the ,place suddenly carried by assault —the value of his exclusive property would be destroyed. His own interest, therefore, is coincident with that of the people. It is better N. both that the supply should be meted out with parsi mony ; it is dangerous to both that it should be immoderately stinted.
In circumstances less peculiar than these, very little evil can arise from an exclusive possession of any commodity not protected directly or indirectly by law. If the supply be capable of increase, and the demand be sufficient to enable the owner to secure a high price, for rea sons already explained, the market would rapidly be supplied from other quarters.