process by which such market prices are evolved by assuming conditions of complete dissemination of information and mobility of goods, in brief "perfect competition." The result has been that what was described was not an actual price, but a highly conventionalized price such as would exist if our markets were brought from their actual abnormalities of supply and demand to a normal adjustment of stocks to market demands.

Such a procedure has often been followed, no doubt, with the laudable intention of making the matter more simple for the student. But it is the writer's experience that, on the contrary, the student finds unreal and confusing this description of a market situation admitted by the expositor to exist only in the mind's eye. It seems better practice to take actual prices from real markets and give a practical worth to their analysis by seeing what is the individual peculiarity of their situation either as concerns supply or demand conditions, which causes the price at which goods change hands to be different from those in other markets dealing in the same wares. In other words, taking the actual price at which some units of supply are equilibrated with some units of demand, we proceed to test the normality of that price equation by examining its relation on both the supply and demand side to the whole supply situation and the whole demand situation to which it is connected through the mechanism of our market system.

price"; and J. S. Mill, "The temporary, or market value of a thing, depends on the demand and the supply; . . . and the value always adjusts itself in such a manner that the demand is equal to the supply. . . . The values and prices, therefore, to which our conclusions apply are mercantile values and prices; such as are quoted in prices-current; prices in the wholesale markets, in which buying as well as selling is a matter of business; in which the buyers take pains to know, and generally do know, the lowest price at which an article of a given quality can be obtained; and in which, therefore, the axiom is true, that there cannot be for the same article, of the same quality, two prices in the same markets." Many more recent writers have failed to impose equally discreet limitations upon themselves and hence have created the impression that their discussion of a conventionalized market price is supposed to apply to all prices actually arrived at in buying and selling operations.

Such an exposition of prices as market actualities which, however, may and should be tested as to the normality of their adjustment one to another in a great distributive system has been hindered rather than helped by some of the definitions of "market" which have been developed to take account of the expansion of our trading spheres. Much has been said about central markets and national markets and world markets, but a good deal of confusion exists among different writers as to whether we shall say that the world market means, for instance, in the cotton trade, Liverpool — a place where local bargains are made under the influence of world-wide forces. If such be the meaning of the term, Camden, Arkansas, is also a world market, since cotton is there bought and sold upon the basis of telegraphic reports from the nearby spot and future markets of the United States, which in turn are, through constant exchange of news and the making of transactions, kept in market contact with foreign trading centers. If, on the other hand, the word market means the whole "field within which the forces determining the price of a particular commodity operate," then, in the case of goods widely traded in, the old dictum "only one price in the same market at a given time" cannot possibly remain true except in the theoretically possible but highly improbable event that all trading points at some moment struck a range of mutually consistent prices (which would constitute for each of them the market-distribution normal at the moment). As a matter of fact, all actual markets, i. e., trading places, are inevitably local, and every market price partakes more or less of local characters, whether they be those of the great metropolis or of the most remote hamlet. But these local transaction centers are, furthermore, subtly fused into price-influencing relationships with each

other throughout the commercial sphere within which the commodity is dealt in. Just how perfectly this is done depends upon the perfection with which our market system does its work of equilibrating market demands and producers' stocks.

However much the exchange machinery be oiled, it is not humanly possible for friction to be entirely eliminated. Time and distance make it impossible that all the buyers and all the sellers can ever get together in that complete and perfect competition which is necessary to secure" one price 2 in a market." Obviously, the statement is true enough as applied to prices on the Liverpool and New York Exchanges. But, be this price in

1 Clearly we are somewhat handicapped here by the limitations of our vocabulary, being distinctly in need of two words, one to indicate the local trading point which is, except in the unusually isolated case, part of a larger perhaps even international trading sphere; and another to indicate this whole market compass, of which the local trading centers are component parts. In the absence of two such distinctive terms, we must be careful not to confuse our idea of market sphere and market center. Such confusion is no more necessary than it would be to allow our idea of a circle to be dominated by the center and neglectful of the circumference and intervening area. In the making of world prices the peripheral transactions of local producers' markets are no less significant and effective than the central trading at Liverpool, New York, and Chicago. While it is true that, through the dissemination of their quotations, a tide of influence moves downward from these larger markets to the most remote scenes of buying and selling activity all over the world, it is equally true that all these remote trading spots send their own tide of influence upward to constitute the sum total of the supply situation out of which the Liverpool, New York, or Chicago price must be made. The local cotton buyer brings a certain demand to expression in his market through the offer of a price adjusted by suitable differentials to the quotations of Liverpool, New York, and New Orleans. But this demand price is endowed with no power to requisition the stocks of local producers. The supply which comes forward at this price level may not be sufficient to keep the necessary stream of cotton moving toward the great market centers, and thus the local market, by drying up the source of supplies, forces the revision of bids and a new set of quotations at the world center of trade. The desire of a small group of wilful men in the New York cotton market to dictate a world price for cotton in the fall of 1914 and in 1915 was repudiated in the little Texas towns along the Brazos quite as effectually as the autocratic presumption of Prussia to make the world's maps was checked along the Marne at about the same time. But if the international trading center fails of bringing prices throughout the whole producing and marketing area into harmony with its own ideas of value, then we must be very cautious of the way in which we apply the older concept of market price to the newly attained realities of a world trade.

* The writer does not, of course, mean in such an expression that prices to be one over a wide marketing area would have to be the same in dollars and cents. Equivalence, after allowing for cost of handling, is what is meant. We even assume the propriety or competitive equalization of these charges — a matter which in practice we can by no means afford to pass unchallenged.

Europe equalized never so well to this price in America, it by no means gives us one price for the markets of the world. What of disparities among local markets and between them and the central market? Has the price been so neatly adjusted in Baroda, Che-Kiang, Assouan, and Cabin Creek, Mississippi? It comes down to the point, strictly speaking, that such a formula matches concrete reality only if the word market be defined as meaning one buyer and one seller or a compact group which, by the method of auction or otherwise, are enabled to bargain as one. Only so can we guarantee that there will be but one point for the meeting of the minds of the parties to make a price contract. With every enlargement of the scope of our market which weakens the perfect solidarity of the buying or selling group, there results a multiplication of equilibrium points at which parts of the stock of goods are likely to change hands, as a diversity of marketing circumstances and arrangements cause different effective supplies to come forward out of the total available stock to strike an equilibrium with certain discrete fragments out of the total demand schedule. The "one price " becomes increasingly a theoretical ideal which, to be sure, may be attained to by accident or good design, but from which actual market prices ordinarily depart by a wider or narrower margin.

Only relatively few of our price exchanges are mediated by such centralized, public, and competitive agencies as the stockyards, produce exchange, fruit auction, or similar highly organized mechanisms of trade. But such a situation is the only one expounded in much modern as well as nearly all classical discussion of market price. Herein is manifest the poverty of our theory, if it fails to set forth the persistently dual nature of the price-making process, consisting as it does of

local, actual, and in varying degrees, abnormal market prices, and of ideal or normalized market price concepts, in which producers' stocks are adjusted to consumers demands through the mediation of a perfectly functioning distributing mechanism. The market price which one finds in many economic textbooks is one already considerably normalized as compared with the widely varying prices in remote, ill-informed, and imperfectly competitive trading spots where many, if not most, primary exchanges are made. But these are just the market prices which business men are dealing with, and the economist can hardly be content to leave so large and significant a part of the exchange field outside the ministrations of his value theory.

We are concerned to test the normality of the prices which scattered producers are receiving or which local buyers are paying, and this both theoretically as a means of appraising our marketing system and practically as a means of making dealers' profits or of gauging our operations as private buyers or sellers. In the case of commodities (here farm products) whose market is not fed from a flowing stream but must draw from a reservoir periodically replenished with varying degrees of fullness, the test of normality at a given moment is not so much that of the adjustment of the rate of flow of the commodity from a producing plant as it is the distributive adjustment of that fixed volume of goods uniformly in proportion to market needs so that equivalent effective demand meets equivalent supply.

If market price "is a momentary or cross-section view" of the economic process, we should see to it that our section is complete and accurate, since we are concerned to see upon this crosscut surface the relation of one part to another at a moment, just as we wish in the longitudinal section to see the relation of one to another