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Rh Contents. xxiii without their becoming more expensive — Articles of virtu, agricultural produce, and manufactured produce, are representatives of these three classes — The laws of pnce which apply to the first class illus- trated by considering how the price of one of Turner's pictures is determined ; it would be usually said that the price of such a picture is regulated by a ratio between the demand and the supply— This is erroneous ; the price must be such as to equalise the demand to the supply — 'Effectual Demand* defined — Value is composed of two elements; represented by value in use, and by the difficulty of obtaining an article — These elements symbolised by letters U and D— No article can have an exchange value unless u and D are both present — The price of almost every commodity depends upon D, the element U being only partially operative— U exerts its full influence with regard to those commodities which are comprised in the first class above enumerated pages 325— 332 Chapter III. On the Price of Agricultural and Mineral Produce, The price of agricultural produce must be such as to give the farmer the ordinary profit for his capital and for his labour of superintendence — If, therefore, the rent of land increases without a dimmution in the farmer's other expenses, the price of agricultural produce must rise in order that the farmer may be compensated— Ricardo's theory proves that rents must rise if, as population increases, worse land has to be cultivated ; but if rents rise, the price of agricultural produce must rise — The land which is on the margin of cultivation only pays a nominal rent ; and the price of agricultural produce must be always such as to ffive the ordinary rate of profit for cultivating this land — From this last proposition it follows that the price of agricultural produce is not affected by the payment of rent, but by the demand for agricultural produce, since the demand determines how far the margin of cultivation must descend— The rise in the price of agri- cultural produce consequent on an increase in population may be counteracted either by agricultural improvements or by the importa- tion of com— The price of mineral produce is resulated by laws similar to those which determine the price of agricultural produce — A commodity is said to be at its natural price, when its price is such as to equalise the supply to the demand — The natural pnce denotes a position of equilibrium — A parallel drawn between this position and the elliptic planetary orbits— An increase or decrease in the demand does not necessarily produce a proportiontUe increase or decrease in price — Under certain circumstances an increase in the demand, say of 10 per cent., may produce a rise in price of 50 per cent. — This cir- cumstance explains the great rise in the price of coal — The extremely heavy burden cast upon the community by this rise in the price of coal — The proprietors and lessees of coal-mines probably gained not less than 40,000,000/. a year at the expense of the general consumer— Increased economy in the use of coal is the only compensation which the nation can derive from this rise in the price of coal — The great rise in the price of coal was succeeded by a fall — The causes of this fall examined — The fall was partly due to a general depression of trade, and partly to the increased production of coal, stimulated by exceptional^ high profits and wages 333—344 Digitized by LjOOQIC