Chapter 17

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"You speak of raising the price of costly articles," I said. "How can prices be regulated in a country where there is no competition between buyers or sellers?"

"Just as they were with you," replied Dr. Leete. "You think that needs explaining," he added, as I looked incredulous, "but the explanation need not be long; the cost of the labor which produced it was recognized as the legitimate basis of the price of an article in your day, and so it is in ours. In your day, it was the difference in wages that made the difference in the cost of labor; now it is the relative number of hours constituting a day's work in different trades, the maintenance of the worker being equal in all cases. The cost of a man's work in a trade so difficult that in order to attract volunteers the hours have to be fixed at four a day is twice as great as that in a trade where the men work eight hours. The result as to the cost of labor, you see, is just the same as if the man working four hours were paid, under your system, twice the wages the others get. This calculation applied to the labor employed in the various processes of a manufactured article gives its price relatively to other articles. Besides the cost of production and transportation, the factor of scarcity affects the prices of some commodities. As regards the great staples of life, of which an abundance can always be secured, scarcity is eliminated as a factor. There is always a large surplus kept on hand from which any fluctuations of demand or supply can be corrected, even in most cases of bad crops. The prices of the staples grow less year by year, but rarely, if ever, rise. There are, however, certain classes of articles permanently, and others temporarily, unequal to the demand, as, for example, fresh fish or dairy products in the latter category, and the products of high skill and rare materials in the other. All that can be done here is to equalize the inconvenience of the scarcity. This is done by temporarily raising the price if the scarcity be temporary, or fixing it high if it be permanent. High prices in your day meant restriction of the articles affected to the rich, but nowadays, when the means of all are the same, the effect is only that those to whom the articles seem most desirable are the ones who purchase them. Of course the nation, as any other caterer for the public needs must be, is frequently left with small lots of goods on its hands by changes in taste, unseasonable weather and various other causes. These it has to dispose of at a sacrifice just as merchants often did in your day, charging up the loss to the expenses of the business. Owing, however, to the vast body of consumers to which such lots can be simultaneously offered, there is rarely any difficulty in getting rid of them at trifling loss. I have given you now some general notion of our system of production; as well as distribution. Do you find it as complex as you expected?"

I admitted that nothing could be much simpler.

"I am sure," said Dr. Leete, "that it is within the truth to say that the head of one of the myriad private businesses of your day, who had to maintain sleepless vigilance against the fluctuations of the market, the machinations of his rivals, and the failure of his debtors, had a far more trying task than the group of men at Washington who nowadays direct the industries of the entire nation. All this merely shows, my dear fellow, how much easier it is to do things the right way than the wrong. It is easier for a general up in a balloon, with perfect survey of the field, to manoeuvre a million men to victory than for a sergeant to manage a platoon in a thicket."