given for it."* So then, labor is the real price of the necessaries and conveniences of life, and the necessaries and conveniences of life are the real price of labor! We shall hardly gain any vantage-ground by definition in a circle like this.

Price is distinguished into natural price and market or current price by Smith, Say, and others. What Smith means by natural price is, I am inclined to believe, neither more nor less than the cost of production; though his confused and varying statements will not allow certainty on this point. He says that when a commodity is sold at its natural price," it is sold cisely for what it is worth, or for what it really costs the person who brings it to market." He includes, however, in this cost all the labor expended, either by others or by the person himself, in producing the commodity and bringing it to market.

pre

It is apparent from what we have said, that he makes value, cost, and price all one. They are all measured, according to him, by the amount of labor involved. It is an indisputable corollary from his positions, that no increase of value ever took place on this earth, or is within the limits of possibility. According to him, the natural price of anything is the same as its cost, its cost is the same as its value, its value the same as the value of the labor expended in its production; and the natural price, cost, or value of labor is what is consumed in its performance, or the subsistence of the laborer, which has been accumulated by former labor. Clearly, then, as much value is always consumed on one side as is created on the other. Nor will it make any difference if we consider cases in which prices vary from what Smith calls the natural price. For the value created by the labor will still be the same; and what is gained by one party from the variation in price, must be lost by another.

It is astonishing that Adam Smith should not have been struck with at least some of the absurdities arising from his positions. He gravely asserts that labor never varies in value; that when a man supposes labor to be of higher value at one time or place than at another, "in reality it is goods which are cheap in the one case and dear in the other." He does not, however, appear to be aware of an inference to which this statement, at least in connection with his other positions, obviously leads, namely, that all products on which the same amount of labor has been bestowed must be of equal value. Is it of no consequence to inquire whether the labor was or was not wisely bestowed?

In these remarkable opinions concerning labor and value Smith has been followed generally by Ricardo and others, in England and in the United States.

That there is a valid distinction between natural price and market price is undoubtedly true. It is a distinction, however, of a somewhat abstruse nature. Let us make another attempt to ascertain it.

I have said that all additional value is created by the operation of previously existing values on each other. These previously existing values have become property, so far as it was possible to make them so. Thus a man's mental and physical energy constitutes a value which is his own property. So, too, the material substances which possess principles of energy themselves,

* Wealth of Nations, Book i. c. 5. Wealth of Nations, Book i. c. 7. Wealth of Nations, Book i. c. 5.

and on which human and other energy is exerted, are values which have been appropriated, so far as possible. There is no occasion for inquiry here in regard to the justice or injustice of the manner in which that appropriation has been made. It is sufficient that it exists, and that its validity is generally acknowledged. On all these values thus becoming the objects of property a price has been set.

Now, in my opinion, a proper definition of natural price is such amount of value in any product as may be fairly referred to the exchangeable value that procured the article to which the price is affixed. It is that price which an article would bear, independently of what is called the principle of supply and demand-i. e. supposing the supply to be neither greater nor less than the demand, but just correspondent with it. In one sense the market price is a natural price-i. e. it follows natural laws; but still there is reason for the distinction we have set up. The natural price, of which we have been speaking, is not the same as cost. It may be either above or below cost. Labor, for example, may be so employed upon an article as either to increase its value, or to diminish it, or to leave it unaltered. If the labor has been so directed as to diminish the original value, the natural price of the result must be less than the original value; if so as not to alter it at all, the same as that value; if, as is commonly the case, so as to increase the value, the natural price must rise above it.

In most, if not all, cases of actual occurrence it is impossible to ascertain this natural price with precision. Who can, with unerring discernment, refer the different component parts of any value to the different agencies which originated them? Who can tell where the principle of supply and demand begins to operate, and what is the exact extent of its influence? The circumstances of the case are in a great degree intricate and inappreciable.

We come now to market or current price. The signification of these terms is evident. They denote that price which is or can be obtained for a thing from buyers generally-its actual common price. The laws which regulate market price are very different from those which regulate what I have denominated natural price; and accordingly the two almost always differ.

As to market price, we may observe a universal distinction between cash price and credit price. The latter is always higher than the former, in part on account of the risk which credit involves; and in part, moreover, on account of the actual loss of value to the seller, from the delay to which he is subjected before he can enjoy the use of the price.

Aside from this distinction, the chief influences which cause market price to vary from natural price are comprehended under the general principles termed by writers on political economy, the principles of supply and demand. "While the natural price continues the same, the operation of these principles is as follows: Whatever increases the proportion of the supply of any article to the demand for it, diminishes its market price; whatever increases the proportion of the demand to the supply, increases its market price. The causes which operate to increase or diminish the intensity of demand or of supply are very various. To try to trace them here would occasion too long an investigation. The different proportions of supply and demand effect alterations in the market price through competition. When the supply is greater than the demand, the competition of sellers lowers prices; when the demand is greater than the supply the competition of buyers raises it. The competition of sellers often reduces the market price below what we have

called the natural price; the competition of buyers often raises it above the natural price. This reduction or elevation, however, will be but temporary; for when the market price is high there is an inducement to effort, for the purpose of increasing the supply; and when it is low the supply will gradually diminish, productive agency being directed to some more profitable result.

There are cases in which the free operation of these principles is restricted, as e. g. the case of monopolies, whether natural, legal, customary, or other. The prices of certain French and Spanish wines, for instance, are very exorbitant, because they can be produced only in particular vineyards or districts, the ownership of which may, perhaps, be called a natural monopoly. Were it not for this, the price would be very speedily reduced by competition. Legal and other monopolies of every description-the number of which, in most civilized countries, is enormous, have an analagous tendency. The price which, as we have before said, is sometimes paid for air, water, or light, is a monopoly price. The tendency of all monopolies to elevate price is counteracted, to a greater or less extent, by other influence.

Thus a me

There is one important fact which may seem inexplicable on the principles I have stated respecting demand and supply, and which seems to me really inexplicable in consistency with the statements of Smith, Say, and other writers. It is well known that increased demand for any article often reduces its price; and this, though the proportion of the supply to the demand may remain exactly the same, and though, therefore, on the principles of the writers referred to, the price also should remain the same. chanic in a populous village, who enjoys what is vulgarly called a good run of custom, will sell the articles which he manufactures at a considerably lower price than his brother-mechanic does in a less thriving village, where there is less demand for them. How can we account for this fact? On recurring to my remarks concerning the operation of supply and demand it may be seen that I threw in a preliminary restriction as to the universal application of the principles I was about to state, by saying-" while the natural price continues the same the operation of these principles is as follows:"It is this clause of restriction which permits a consistent explanation of the fact just noticed; a fact which, so far as I can see, is inexplicable on the unlimited principles of Smith, Say, and others, who represent that increased demand, when the supply is proportionally increased, produces no effect at all upon price. I have described price as being the value demanded in exchange for other value, and natural price as that amount of value which may be fairly referred to the exchangeable value employed in procuring the article to which the price is affixed. Since natural price is based only on productive agency which is appropriable, (appropriable value and exchangeable value being the same thing,) it necessarily follows that if the appropriable agency in the production of any article is diminished by the use of productive agency not appropriable, the natural price of that article is diminished in proportion. Such a diminution of appropriable agency is effected, for example, by the very important arrangement denominated division of labor. The exchangeable value termed labor remaining the same, a much greater product is effected by the agency of mere classification. The natural price of the product therefore falls. The case is the same as to all improvements in the mere modes of applying productive agency. When any principle whatever, be it a principle of mind or a principle of matter, which is not appropriable, or in other words possesses no exchangeable value, is made use of

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in production, to the diminution of necessary appropriable agency, natural price is proportionately diminished. The instance which I adduced relative to the mechanic may therefore be explained, in part, at least, by the consideration that oftentimes the greater the number of articles which he manufactures the less appropriable productive agency is consumed in the manufacture of any one. This fact, which is familiarly known by all classes of people, arises from various causes. An important one is, that practice makes the same powers more efficient. I might designate several others, but it is not necessary to do so. In this way, then, the natural price is diminished; and, if the influences which create the variation between the natural and market price remain the same, the market price must be likewise diminished. It is clear, too, that even though additional influence is exerted to elevate the market price, it will still be diminished if that influence is more than counterbalanced by the influence which reduces the natural price.

It is important to observe, however, that even when an improvement in production is effected, the market price sometimes continues the same, because the improvement is kept secret by the producer. For example, he who discovers some important chemical principle may apply it to production and refuse to share his discovery with any one.

Real price and money price are not always the same. Money price depends on the proportion of money to business. The amount of money in a community may be augmented or diminished, and yet the increase or diminution may only keep pace with the increase or diminution of business. In that case, prices will not be changed by the change in the quantity of money. Money prices may sometimes be higher, and yet real prices remain the same from the special abundance of money.

Say employs a whole chapter in elucidating a valid (and in truth valuable) distinction between what he calls real and relative variation in price." By the principles which have been laid down respecting natural and market price, we may be enabled to condense his prolix explanation into a very brief and simple statement. What he calls real variation in price is a variation in market price on account of a variation in what I have termed natural price; what he calls relative variation in price is a variation in market price, while the natural price remains the same. As I have said, I consider this distinction a valuable one; but I cannot regard the terms by which it is designated as appropriate. The variation in market price which Say terms real is as truly relative as that which he calls relative by way of distinction; and that which he calls relative as truly real as that to which he confines the term real. Both are real and both relative variations in price-i. e. in estimate of exchangeable value. The distinction would be better denoted, I think, by applying to these variations the same epithet that I have applied to price itself that is, by calling one natural and the other market variation. By natural decrease of price human welfare is positively augmented, no party suffering loss; by natural increase of price, if that ever occurs, human welfare is diminished; the effect of market increase or decrease of price is merely to transfer benefit from one party to another.

In particular instances price is affected by a multitude of influences, which it would perhaps be of little use for us to consider at length. These influences may be comprised mostly under one head-that of confessedly undue advantage on the side of one party over the other; such as the seller's pro

*Pol. Econ., Book II. c. 8.

fiting from the buyer's ignorance of the market price, or of the actual character of the article sold, &c.; or, vice versa, the buyer's taking the same advantage over the seller. The price thus occasioned is certainly not natural price, nor is it properly market or current price.

There is, of course, a distinction between the price of anything outright and the price of its use. This price of use is generally denoted by distinct terms such as wages, rent, &c. Wages are the price paid for the use of a man's ability, mental or physical. Rent is the price paid for the use of land, or of a house, &c. Horse-hire is the price paid for the use of a horse. This catalogue might be extended much further.

I have considered the subject of price somewhat minutely, because a comprehension of the principles which influence price generally cannot but be highly serviceable in the investigation of that species of price denominated interest, which will engage our attention in the next paper of this series.

Art. III.-COMMERCIAL CITIES AND TOWNS OF THE UNITED STATES.

NUMBER XX.

THE CITY OF CHARLESTON.

THE city of Charleston (South Carolina) is situated in 32° 46′ 33′′ north latitude, and 79° 57' 27" west longitude from Greenwich, and 2° 56′ 3′′ west longitude from Washington-118 miles north-east of Savannah, in the State of Georgia, 580 miles south-south-west of Baltimore, 540 miles from Washington, D. C., and 765 miles south-south-west from the city of New York. It is delightfully located on a peninsula formed by the confluence of the Ashley and Cooper Rivers, which here enter the harbor, which is two miles wide, extending seven miles south-east to the Atlantic below Sullivan's Island. Cooper and Ashley Rivers are from 30 to 40 feet deep, the former being 1,400, and the latter 2,100 yards wide. The ground on which Charleston is built is elevated some eight or nine feet above the level of the harbor at high tide, which rises about six feet, flowing by the city with a strong current, and thus contributing to its salubrity.

In 1680 Charleston was built on the spot, says Bancroft, "where opulence now crowds the most prosperous mart of our southern seaboard, among ancient groves that swept down to the rivers' bank, and where, covered with the yellow jesamine which bordered the vernal zephyrs with its perfume, the cabin of graziers began the queen city of the south.'" Long after, the splendid vegetation which environs Charleston, especially the vine, the cedar, and cypress trees along the broad road which is now Meeting-street, delighted the observer by its perpetual verdure. "In 1731," says another historian, "there were 600 houses in Charleston, five handsome churches, and out of the city were to be found courtly buildings, noble castles," &c. Charleston is considered more healthy than any other part of the low country in the Southern States, and is much resorted to by the planters in the sickly months. Its inhabitants have long and deservedly been celebrated for their polished manners and unaffected hospitality. It was chartered as a city in 1783. The city is divided into four wards, and is governed by a mayor and twelve aldermen. In 1690 a colony of French refugees, exiled in consequence of the revocation of the Edict of Nantes, settled in Carolina,