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dealer must deliver his wheat there at that price, if he wishes to sell it there. He pays his transportation out of the price he gets, whether he gains or loses by it.

The retailer who buys goods in the principal markets, transports them to his place of sale and adds the cost to the price charged the consumer.

The law of cost of transportation may then be stated as follows: The producer delivers the goods in the principal market; the consumer takes them from the principal market. The line of dealers between the producer and the principal market on the one side, and between the principal market and the consumer on the other, are to be counted only as the agents of the producer and the consumer. If the principal market price covers the full cost of transportation, as well as of production, then this cost is transferred to the side of the consumer.

CHAPTER XXI.

TRADE.

234. Forms of trade.-Trade, in its fullest sense, is the exchange of values. The possible forms of exchange, fully stated, are as follows:

1. Goods for goods, or barter.

2. Goods for money, or sale.

3. Money for goods, or purchase.

4. Use for money, or leasing, letting, or giving for rent.

5. Money for use, renting, or taking for rent.

6. Use for use, exchange of uses.

7. Service for goods or money, or hiring out.

8. Money or goods for service, hiring, or employing.

9. Service for service, or exchange of services.

The last three are not usually known as trade, but may come under that term in its largest sense of exchange for advantage or profit.

All these forms of exchange may be reduced to three principal classes:

1. Barter, or the exchange of goods for goods, as when the farmer exchanges his butter or hay for clothes or groceries, or trades horses with his neighbor.

2. Sale, or the exchange of goods for a price, usually in money. Every sale is also a purchase, on the other side.

3. Hire, or the exchange of use or service for goods, wages,

or rent.

In the end, all exchanges are exchanges of goods or services.

Exchange for money is only one link in the chain. Money is desired, in this case, only as a convenient means of effecting further exchanges.

235. Comparison of values in trade.-All trade exchanges involve a comparison of the values exchanged in barter. This comparison is of that of a present estimate made by the two parties to the exchange. When the comparison is of the prices fixed upon the articles exchanged, the barter becomes a double sale.

The comparison, as shown in Chapter V, involves four desires, since each article is supposed to affect the desires of both parties; and four utilities, as each of the articles has a separate utility for each of the parties to the trade.

In sales, both parties estimate in money the value of the article offered, and, as the money is supposed to have the same value to both parties, the comparison becomes simpler and easier. But, in truth, each one compares his need of money, or of other things which money might buy, with his need of the article offered for sale, so that the four desires and utilities are always in question.

Both parties to an exchange will be benefited if the utility which each one gains is larger to him than the utility which he parts with. All fair exchanges, intelligently made, will give a balance of profit to each trader. Mistakes or misrepresentations made by either party may destroy this just condition of mutual gains, and make the gain of the one the loss of the other; but the expectation of a real gain by the exchange is the motive which impels both parties to trade.

It is frequently assumed that simple exchange can create no values, and that, therefore, every exchange, except of things precisely equal in worth, must entail a loss upon one of the parties. It is true that two horses, after being exchanged, are, to the general market, of precisely the same value which they had before the trade. Nothing has been added to the market value of either by the exchange. But if one was

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desired because he was a racer, and the other because he was a good family nag, the trade may have given to each owner a larger amount of value than he let go. All values, it must be remembered, are, in the last analysis, individual and personal, because all desires are so. The market value is but a general estimate of value based upon the supposed desires of all the persons who may want the article valued. It is but the estimated average of actual values. Thus, the market value of any horse is the estimated average of the prices which the persons desiring such a horse will give. It is well known that the horse will not be of precisely the same value to any two men; but the seller seeks to find what the average purchaser will be likely to give.

Goods bought for sale and goods bought for use will have different estimates. A man purchasing for use, asks after the actual value to himself; but purchasing for sale, he asks after the market value or the price which the average buyer, in his market, will probably give him. The purchaser for use usually accepts market value as actual value.

236. Hiring and rent.-Hiring differs from trade and barter in the fact that the two latter transfer ownership, while the former transfers only temporary use.

Hiring includes both property and persons. Property is hired for its uses. Persons are hired for their labor and services. The former is usually called renting, letting, or leasing; the latter is called hiring or employing.

The hiring of houses and lands is a temporary purchase of all property rights, excepting the right of sale, and of alteration. All the utilities of the property belong, for the time, to the lessee or person renting, and all the profits he can make out of the houses or lands, while holding them, are accounted as his own. The owner forgoes the use and profit, and receives the rent in lieu thereof. The renter is saved the labor and expense of building, or from buying a house and land for himself, and pays his rent in place of the year's saving.

In the rent of houses, whether for dwelling or for business, the renter pays his money in exchange for a valuable use, a use which satisfies a want and saves a labor; and which also, in general, contributes to a new value, in the labor force renewed, or in the goods produced. The owner parts with a value in exchange, since he loses the use and also the value used up in the wear and deterioration of the house.

The money paid for the rent of farm lands is exchanged for the use of these lands as an instrument of production. The owner receives the money rent in place of the products which the land would have brought him, less the expense of working it.

The renting of land differs from that of houses in the fact that the land yields its use only on condition of a large expenditure of labor and capital. The profits are in part from the land; but in still larger part they are usually from the labor and capital expended in the cultivation. The rent is counted as coming out of the production, and in the so-called metayer system in France, and frequently in this country, is a stipulated share of the products.

237. Domestic and foreign trade.-Trade has been commonly divided into domestic and foreign. Domestic trade is between the citizens of the same country; foreign trade takes place between citizens of different countries. The economic differences between the two are chiefly the following:

1. In the goods exchanged.-Commonly, the goods imported from foreign lands differ in kind or quality from those produced at home. Such goods do not come into direct competition with home products. This remains true in such productions as are peculiar to the foreign climate; but the progress of modern manufactures has brought a large list of common products into direct competition between the great manufacturing nations. In this competition, the questions of differences in civilization, in governments, and in the cost of labor and capital among the two peoples are involved. The people which

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