7. In commodities, the value of which arises from the scarcity, that value is determined by the offers of rival competitors. Of this character are those articles which cannot, like those of the first class, be indefinitely multiplied, or, perchance, be increased at all, as paintings by old masters, antique sculptures, coins, medals, or manuscripts; and so, of any other rare product of art or nature.

8. Of such articles, the owner has the monopoly, or sole right of sale, which is more or less exclusive, according to the scarcity. Monopolies of articles liberally consumed, and susceptible of an abundant production, are sometimes granted by arbitrary governments, and sometimes they may be, in any country, the result of fortunate accident. The exclusive rights which are, for a time, conferred on authors and inventors, are monopolies created by law. In all these cases, the monopolist having the power of fixing his own price, and knowing that the extent of his sales will be inversely as the price, will choose between the alternatives of selling a less quantity at a high price, or a large quantity at a low price. The demand he has no means of influencing except by the price.

9. In both classes of commodities, whatever may be the price at any one time or place, that price is liable to fluctuation by reason of an alteration in the supply or the demand, that is to say, in the relation between them; for if the same alterations take place both in the supply and the demand, whether by increase or diminution, then the price will not be affected.

10. By the supply of a commodity is meant, not the whole quantity of it in the community, but only that portion which is offered for sale in the market, or ready to be so offered: such are the shoes in the shops of the shoemakers and others; the hats and other fabrics in the appropriate places of sale; the provisions of different kinds in the stores of their respective dealers.

11. By the demand of a commodity is meant the desire to possess it, combined with the means of purchasing it, to which may be added the will to use the means. The desire of a poor man for a costly luxury has no influence on its price, and the desire of a rich miser may be as unavailing as that of a beggar.

12. Every addition to the supply - the demand continuing the same - tends to lower the price, since it is only by a reduction of price that the additional quantity can be generally sold. A diminished demand, producing the same relative change as an increased supply, has the same lowering effect.

13. A diminished supply, on the other hand, or an increased demand, tends to raise the price, since it is only by giving a higher price that the quantity desired can be certainly obtained. The rise of price is sometimes the effect of competition among the buyers, and sometimes the result of the sagacity of the sellers, who raise the price in anticipation of the increased competition of the buyers.

14. It must not, however, be supposed, as sometimes has been clone, that a change in the supply or demand of an article produces a proportional change of price. The alteration of the price is always in a less ratio than that of the supply or demand. Thus, let it be assumed that the supply of a commodity has been doubled, the demand being unchanged - the natural consequence of this addition to the supply is a fall of price; but the consequence as natural and certain of such fall of price is an increased demand for the commodity, which, we have seen, tends to raise the price; so that before the price has fallen to one-half, which would be in proportion to the double supply, the demand and supply are equal, and the price is, of course, stationary. In this way the addition to the supply is met partly by a reduction of price, and partly by an increased demand. Hence, the great increase of gold and silver, consequent on the discovery of America, and which was estimated at ten times their previous amount, did not reduce the value of those metals to one-tenth, but only to one-third or one-fourth - the additional supply being counterbalanced partly by the fall of price, and partly by the increased demand* for those metals, in consequence of their reduced value.

15. In like manner, a diminished supply, by raising the price, lessens the demand, and to that extent prevents a rise of price equivalent to the diminution of the supply.

* M. Say, whose views on political economy are commonly clear as well as just, has fallen into a singular error on this subject. He estimates the increased demand of the precious metals at twenty-five times the amount before the discovery of America. Had this been the case, the value of those metals must have been raised instead of lowered by the product of the American mines. Had the demand been only ten times as great - equal to the increase of the supply - the value would have been unchanged. It gives almost as much surprise that so palpable an error should have been unnoticed, both by the English translator and the American editor of Say.

16. It thus appears that every alteration, either in the demand or the supply of a commodity, produces not only a change of price, but that, by reason of this change of price, an increase or diminution of the one produces, in a less degree, a correspondent increase or diminution of the other.

17. There is, in every community, a precise and certain demand for every commodity, - comprehending its different kinds, - according to the desirableness of each article, and the difficulty of obtaining it; which difficulty is chiefly its price. Thus, in the case of hats, we will suppose, by way of illustration, the demand for that article of apparel to be as follows, according to the price:

For hats whose price was five dollars, the demand to be 1000.

" " four dollars, " " 2000.

" " three dollars, " " 6000.

" " two dollars, " " 10,000.

" " one dollars, " " 20,000.

18. This may be called the natural demand, founded on the existing tastes and means of the community; and to this demand the makers of hats must conform, or incur a loss; for if they make the supply exceed this natural demand, as if they were to make 2000 hats whose cost of production or natural price was five dollars, the natural demand for which was only 1000, they could not sell the extra thousand without a reduction of price. If, on the other hand, they made but 500 hats of that quality, although for them they might obtain a higher price, the profits thus obtained would be less than would be afforded by the sale of a thousand hats at five dollars, according to the laws of value previously stated.

19. Value, being a feeling of the mind, is as various as the diversified and ever-changing wants and tastes of men. It is different in different objects, in the same object at different times and places, with different individuals, and with the same individual, on different occasions. On a dreary journey, a draught of water may be more valuable than a gallon of wine.

20. As value can be known only by its manifestations in acts of exchange, its different degrees must be estimated by comparing the values thus exchanged; but as all of such values are liable to alteration, there cannot be that uniform measure of value which is afforded to portions of matter, space, or time. Although, therefore, such a precise and unvarying standard is unattainable, certain objects, which, under particular circumstances, make the nearest approaches to uniformity, have been selected as qualified measures of value.

21. Of these measures, one is best for one purpose and another for another. The precious metals, so highly and so universally prized, and otherwise strongly recommended, afford the best measure for the same time and place. For most objects of exchangeable value, they then and there furnish, for all practical purposes, an exact measure. Thus, if an ounce of silver exchange in the market for a bushel of wheat, weighing sixty pounds, and also for two bushels of maize, or for ten pounds of beef, it follows that one bushel of wheat is equal in value to two bushels of maize, and one pound of beef to six pounds of wheat. But these metals vary greatly in value in different countries, according to their respective distances from the most productive mines of the world. They are thus more valuable in Asia than in Europe, and in Europe than America. Their value has varied yet more in different ages of the world.

22. Labor, which regulates the value of so many articles useful to man, has also been deemed a fit measure of value in different countries, from the similarity of mankind in their ruling propensities and desires, and their obedience to the laws of their common nature; yet we find that human labor is far more willing and efficient in the Temperate than in either the Torrid or the Frigid Zones. Its value varies, too, from moral causes.

23. Corn, some species of which constitute a chief article of subsistence to civilized man, and which is so readily converted into human labor, has also been regarded as a fit measure of value. It has, however, no more uniformity than labor; and, from the diversity of human aliment, has a less extensive application. Besides, it has been found that, in the progressive increase of population, corn gradually increases in value, from its greater difficulty of attainment; and that labor gradually falls in value, from its greater abundance, as will be hereafter more fully explained.

24. On this account, a combination of corn and labor has been suggested as affording the best measure for comparing values at different periods, and between countries in different stages of advancement. The plan is plausible in theory, but it has as yet furnished no rules of practical application.

25. But notwithstanding these inherent disadvantages, human reason has, by numerous comparisons, been able to deduce the values of objects, at any time or place, in their countless diversity, with an approximation to the truth which is sufficient for any purpose of practical utility, or the gratification of a liberal curiosity.