If the supply cannot be increased, that fact alone would raise the price ; and it is probable that the supply would not have been so great without the extraor dinary activity of the capitalist who had been able to secure for his country the whole accessible supply to be collected from the markets of the world.
A monopoly, properly so called, is of a totally different character: for however abundant the supply of an article may be, it may, nevertheless, be inaccessible to the consumer. [MONOPOLY.] Such mo nopolies were properly condemned so far back as the reign of James I. (21 James I. c. 3), although vast monopolies are still indirectly maintained by our fiscal laws. [TAX, TAXATION.] The legislature of this country, however, did not observe any distinction between a legal monopoly and the great specula tive enterprises of commerce, miscalled monopolies ; and severe penalties were inflicted both by the common and sta tute laws against offences called " badger ing, forestalling, regrating and engross ing." The impolicy of such laws was gradually perceived. If prices were oc casionally raised by speculations of this kind, yet the restraints upon commerce, which resulted from these laws, were in finitely more injurious to the consumer. Many of the statutes were therefore re pealed by act 12 Geo. HI. c. 71; but the common law, and all the statutes relating to the offences of forestalling, regrating, and engrossing, were not erased from our commercial code until the year 1844 (act 7 & 8 Viet c. 24).
When prices are high by reason of the demand exceeding the supply, it is by no means necessary that the profits of those who sell the dear commodities should always be greater than the profits in other branches of trade. It must always be recollected, that where scarcity is the cause of the high price, the sellers who demand it have the less to sell. Where scarcity is not the cause, but the demand is great because the supply, notwithstand ing the exertions of producers, cannot keep pace with it, the profits are un doubtedly greater than usual, until the supply has been increased.
II. It is now time to consider the effects of a supply exceeding the demand, and this division of the inquiry will re quire less elucidation, as the effects of such a condition of the market may be stated to be the very reverse of those which we have just been examining. When there is more of a commodity than people are prepared to buy, its price must fall. Its sellers must offer it for sale at the price at which they can induce people to purchase. All is now in favour of
consumers. They are no longer bidding against each other : but the sellers are competing among themselves to get rid of their goods. The price falls generally in proportion to the excess of the quan tity, but this result is very much qualified by the nature of the article. If there be an excess of supply in perishable goods, there is nothing to prevent the natural fall of prices. When fish is unusually abundant, it must be cheap, or a great part of it will be destroyed : it must be eaten at once, or not at all ; and to induce people to eat it, it must be offered to them at a low price. But with articles which may be held back, in expectation of higher prices, their value may be par tially sustained. Production may be re duced, and the stock gradually brought into the market, until the supply has been equalized with the demand; and wherever the article is such as to admit of volun tary increase or diminution, the natural result of an excessive supply is to reduce production, until the balance of supply and demand has been restored. This mutual adjustment is in perpetual opera tion, and is ordinarily effected with such precision, that it may be said, without exaggeration, that a large city is supplied exactly with everything its inhabitants require—even down to an egg or a pint of milk. There is always enough of everything, and rarely too much.
Whenever there is an excessive pro duction of any commodity, it is an evil almost as great as scarcity. It is true that the consumer derives benefit from it, but the producing classes are most injuriously affected. In order to raise the value of the produce of their labour, they must cease to produce, or must produce in less quantities. The workmen are thus either deprived of em ploymeut altogether for a time, or are employed for a portion of their time only, at reduced wages ; while their employers are disposing of their goods at low prices, which scarcely repay the outlay of their capital. Nor does the penalty of over production fall exclusively upon those engaged in the trade in which supply has exceeded the demand. Their distresses extend to other classes. It has been shown already that it is to production we must look as the cause of sustained con sumption, and thus the pressure upon any considerable branch of productive industry must be sensibly felt by those who have the produce of their own labour to sell. Production has failed, and consumption must therefore be diminished.