1. The Concept of the Commodity in Its Popular and Scientific Meanings

In an isolated household economy the productive activity of each economizing unit is directed solely to the production of goods necessary for its own consumption. The very nature of such an economy precludes the production of goods for the purpose of exchange. But the various tasks that must be performed to meet the requirements of the household could be assigned by the head of the family to the various members of the family and to any servants he has, with due regard to their special faculties and skills. Hence the characteristic feature of the isolated household economy is not the absence of any division of labor but its self-sufficiency, production being concerned exclusively with goods destined for the consumption of the household itself, and not at all with goods destined to be exchanged for other goods.

It is, of course, quite evident that the division of labor remains very narrowly limited in the confines of an isolated household economy. The requirements of a family for any single good are usually much too small to permit an individual to occupy himself fully with its production, much less with a single manual operation. The available food supplies, moreover, are in most cases much too small to feed any considerable number of laborers. Societies in the lower stages of development, therefore, furnish us with examples of a complex division of labor only in the household economies of a few nobles, while the other economizing individuals continue to have little division of labor and narrowly limited wants.

A people can be considered to have taken its first step in economic development when persons who have acquired a certain skill offer their services to society and work up the raw materials of other persons for compensation. The Thetes of Ancient Greece appear to have been artisans of this kind, and even today, in many regions of eastern Europe, there are still no other artisans. Yarn spun in the home of the consumer is worked into cloth by the weaver; grain grown by the consumer is milled into flour by the miller; and even the carpenter and the smith are supplied with the raw materials for products ordered from them by their larger customers.

A further step in the path of economic development to higher levels of well-being can be regarded as having been taken when the artisans themselves begin to procure the raw materials for their products, even though they still produce these products for the consumers only on order. This state of affairs can still, with few exceptions, be observed in small towns, and to some extent even in larger places in some trades. The artisan does not yet manufacture products for later, and hence uncertain, sale. But he is already, to the extent of his labor power, in a position to meet the needs of his customers by making it unnecessary for them to expend efforts on purchasing or producing raw materials in a frequently highly uneconomic manner.⁷⁸

This method of providing society with goods already signifies a considerable forward step in economy and comfort for consumers as well as producers. But for both groups it is a step that involves several serious disadvantages. The consumer must still wait some time for his product, and is never quite certain of its properties in advance. The producer is sometimes wholly unengaged and at other times overburdened with orders, with the result that he is sometimes forced to be idle while at other times he cannot meet the demand. These drawbacks have led to the production of goods for uncertain future sale, the producer keeping them in stock in order to be able to meet requirements at once as they arise. It is this method of supplying society that leads, with continuing economic development, to factories (mass production) on the one side and to the purchase of ready-made (standardized) commodities by consumers on the other side. Hence it offers the highest degree of economy to the producer because of the possibility of full exploitation of the division of labor and the employment of machines, and the highest degree of safety (inspection before purchase) and comfort to the consumer.

Products that the producers or middlemen hold in readiness for sale are called commodities. In ordinary usage the term is limited in its application to movable tangible goods (with the exception of money).⁷⁹ Since the fact that a person keeps a portion of his wealth ready for exchange is not always obvious to other persons, it is understandable that the commodity concept was narrowed down still more in ordinary life. In popular language, the term "commodities" came quite generally to refer only to goods that are so plainly destined for sale by their owner that his intention is obvious even to other persons. An owner can express his intention in very different ways. Most commonly he expresses it by displaying his commodities at places where purchasers are accustomed to assemble — such as markets, fairs, organized exchanges, or other special places that either are well known as sites at which commodities are concentrated or give evidence of being points of concentration by their external appearance or by prominently visible characteristic markings (e.g. shops, stores, warehouses, etc.). In popular usage, therefore, the commodity concept is narrowed down to a designation for those economic goods that are in such external circumstances that the intention of their owner to sell them can be easily discerned by anyone.

The higher the level of civilization attained by a people and the more specialized the production of each economizing individual becomes, the wider become the foundations for economic exchanges and the larger become the absolute and relative amounts of those goods that at any time have commodity character, until finally the economic gains that can be derived from the exploitation of the above relationship become sufficiently large to call forth a special class of economizing individuals who take care of the intellectual and mechanical parts of exchange operations for society and who are reimbursed for this with a part of the gains from trade. When this has occurred, economic goods no longer, for the most part, pass directly from producers to consumers but often follow very complex paths through the hands of more or less numerous middlemen. By occupation these persons are accustomed to treat certain economic goods as commodities and to keep special places open to the public for the purpose of selling them. Popular usage has now limited the term “commodity” to goods that are in the hands of these traders and in the hands of producers who produce them with the obvious intention of selling them. This usage doubtless arose because the intention of the owners of selling these goods (merchandise, marchandises, Kaufmannsgüter, mercanzie, etc.) is especially easy for anyone to discern.

But in scientific discourse a need was felt for a term designating all economic goods held ready for sale without regard to their tangibility, mobility, or character as products of labor, and without regard to the persons offering them for sale. A large number of economists, especially German economists, therefore defined commodities as (economic) goods of any kind that are intended for sale.

The commodity concept in the popular sense is nevertheless of importance not only because law-givers⁸⁰ and a large number of economists employ the term in the popular sense, but also because some of those who are aware of the wider, scientific, sense of the term sometimes employ this or that element of the narrower, popular, meaning in their definitions.⁸¹

From the definition just given of a commodity in the scientific sense of the term, it appears that commodity-character is nothing inherent in a good, no property of it, but merely a specific relationship of a good to the person who has command of it. With the disappearance of this relationship the commodity-character of the good comes to an end. A good ceases to be a commodity, therefore, if the economizing individual possessing it gives up his intention of disposing of it, or if it comes into the hands of persons who do not intend to exchange it further but to consume it. The hat that a hatter, and the silk cloth that a silk merchant, exhibit for sale in their shops are examples of commodities, but they immediately cease to be commodities if the hatter decides to use the hat himself and the silk merchant decides to give the silk cloth as a present to his wife. Packages of sugar and oranges are commodities in the hands of a grocer, but they lose their commodity-character as soon as they have passed into the hands of consumers. Coined metal also immediately ceases to be a "commodity" if its possessor intends to use it, not for exchange, but for some consumption purpose — if he hands his Thalers to a silversmith for the purpose of making silver plate, for instance.

Commodity-character is therefore not only no property of goods but usually only a transitory relationship between goods and economizing individuals. Certain goods are intended by their owners to be exchanged for the goods of other economizing individuals. During their passage, sometimes through several hands, from the possession of the first into the possession of the last owner, we call them "commodities," but as soon as they have reached their economic destination (that is, as soon as they are in the hands of the ultimate consumer) they obviously cease to be commodities and become “consumption goods” in the narrow sense in which this term is opposed to the concept of “commodity.” But where this does not happen, as is the case very frequently, for example, with gold, silver, etc., especially in the form of coins, they naturally continue to be “commodities” as long as they continue in the relationship responsible for their commodity-character.⁸²

Two things are evident from this: (1) the frequently-stated proposition that money is a “commodity” contributes nothing at all toward explaining the unique position of money among commodities; (2) the view of those who deny the commodity character of money because “money as such, especially in the form of coin, does not serve any consumption purpose” is untenable simply because the same argument can be advanced against the commodity-character of all other goods — even if we were to ignore the fact that there is a misconception of the important function of money in the assumption that it is not consumed. For no “commodities” as such serve a consumption purpose, and least of all in the forms in which they are traded (i.e., in the form of ingots and bales, and in cases, packages, etc.). To be consumed a good must cease to be a “commodity” and relinquish the form in which it has been traded (i.e., it must be melted down, divided, unpacked, etc.). The coin and the ingot are the most common forms in which the precious metals are traded, and the fact that these forms must be abandoned before the precious metals can be brought into consumption is therefore nothing that justifies doubting their commodity-character.

"Der Begriff des Geldes in seiner historisch-ökonomischen Entwickelung," ibid., VI (1866), 15; Gustav Schmoller, Zur Geschichte der deutschen Kleingewerbe im 19. Jahrhundert, Halle, 1870, pp. 165, 180, 511ff.

2. The Marketability⁸³ of Commodities

A. The outer limits of the marketability of commodities

The problem of explaining the causes of the different and changing proportions in which quantities of goods are exchanged for each other has always been given special attention by scholars in the field of economics. There have been as many attempts to solve this problem as there have been independent economic treatises. In fact some writers have actually turned their treatises into theories of prices. But the fact that different goods cannot be exchanged for each other with equal facility was given only scant attention until now. Yet the obvious differences in the marketability of commodities is a phenomenon of such far-reaching practical importance, the success of the economic activity of producers and merchants depending to a very great extent on a correct understanding of the influences here operative, that science cannot, in the long run, avoid an exact investigation of its nature and causes. Indeed, it is also clear that a complete and satisfactory solution to the still controversial problem of the origin of money, the most liquid of all goods, can emerge only from an investigation of this topic.

As far as I have been able to observe, the marketability of commodities is limited in four directions:

(1) Their marketability is limited with respect to the persons to whom they can be sold. The owner of a commodity does not have the power to sell it to any person of his choice. On the contrary, there is always only a definite number of economizing individuals to whom it can be sold. He has no chance of selling his commodity to persons (a) who have no requirements for it, (b) who are prevented, by legal or physical circumstances, from purchasing it, or (c) who have no knowledge of the exchange opportunity offered them, or finally (d) to anyone to whom a given quantity of the commodity in question is not the equivalent of a larger quantity of the good that is tendered in exchange for it than is the case with the initial owner of the commodity.⁸⁴

If we observe the numbers of persons to whom the marketability of different commodities is restricted, we are confronted with a picture of vast differences. Compare only the number of persons to whom bread and meat can be sold with the number to whom astronomical instruments can be sold. Or compare the number of persons who purchase wine and tobacco with the number who purchase works in Sanskrit. Similar differences can be observed, in perhaps a still more striking manner, in the marketability of goods of different subcategories but of the same general type or kind. Dealers in optical goods have glasses for all degrees of long- and short-sightedness ready for sale. Hat and glove merchants, shoemakers, and furriers, have hats, gloves, shoes, and furs of different sizes and qualities. But how great is the difference between the number of persons to whom the marketability of the most powerful glasses is limited and the number to whom glasses of medium strength can be sold! How great is the difference between the number of persons to whom the marketability of gloves or hats of medium sizes extends and the number of persons purchasing gloves and hats of very large sizes!

(2) The marketability of commodities is limited with respect to the area within which they can be sold. For a commodity to be sold in any one place, it is necessary, in addition to the previous requirement that there must be a number of persons to whom it can be sold, that (a) there be no physical or legal barrier to its transportation to that place or to its being offered there for sale, and that (b) the costs and expenses of transportation shall not exhaust the gain that can be derived from the expected exchange opportunity (p. 189).

The differences between different commodities are not less great with respect to the geographical extent of the areas in which they can be sold than the differences we have just observed with respect to the numbers of persons to whom they can be sold. There are commodities which, as a result of spatially limited requirements for them, can be sold only in a single town or village, others that can be sold only in a few provinces, some only in a certain country, others in all civilized countries, and still others that can be sold in all the inhabited parts of the world. The peculiar hats worn by the rural population in some of the valleys of the Tyrol can be sold only in a particular valley; the hats of Swabian or Hungarian peasants cannot easily be sold elsewhere than in Swabia or Hungary; but the markets of the entire civilized world stand open to hats of the newest French fashion. For the same reason, the marketability of heavy furs is restricted to northern regions, and the marketability of heavy woollens to regions in the northern and temperate zones, while light cotton goods can be sold almost anywhere in the entire world.

A no less important difference in the size of the sales area is founded on the economic sacrifices involved in transporting commodities to distant markets. Where there are no railroads, the sales area of common building stone taken from a quarry not situated on a waterway, and the sales areas of ordinary sand, clay, and manure, do not often extend farther than two or three miles. Even where railroads do exist, it is only in the rarest instances that the sales areas of these commodities exceed 15 or 20 miles. The sales areas of coal, peat, and firewood are, under the same conditions, more extended but still narrowly restricted. The sales areas of pig iron and wheat are considerably wider; those of steel and wheat flour are still wider; and the sales area of precious metals, precious stones, and pearls, comprises practically all parts of the globe where requirements for these goods exist and where the means of payment for them are at hand.

The economic sacrifices involved in transportation must be recovered from the difference between the price at the point of origin and the price at the destination. For commodities of low value this difference can evidently never be significant. Firewood can be purchased at infinitesimally low prices in the virgin forests of Brazil and even in some regions of eastern Europe. In many cases it can be obtained entirely free of charge. But the price of a hundredweight of firewood is nowhere high enough that the difference between it and the price at the place of origin, even if the latter were equal to zero, would suffice to cover the costs of a long overland haul. In the case of commodities of high value (watches, for example), on the other hand, the difference between the price of a hundredweight of the commodity at the place of production and at the most distant markets (at Geneva, and at New York or Rio de Janeiro, for instance) may easily, in spite of the already considerable price in the market of origin, be sufficiently high to compensate for the expense of transporting the commodity to the distant regions of sale. Hence the more valuable a commodity the greater, other things being equal, is its sales area.

(3) Commodities are limited quantitatively in their marketability. The marketability of a commodity is restricted quantitatively to the requirements for it that have still to be met, even further, it is restricted to those quantities with respect to which the foundations for economic exchange operations are present. However large the requirements of a single individual for a commodity, purchases of quantities exceeding this amount cannot be expected during a given time period. Even within the limits of his requirements, an individual will be prepared to take in exchange only those quantities of the commodity with respect to which the foundations for economic exchange operations are present for him. The demand for a commodity in general is composed of the demands of the various economizing individuals desiring it. The total quantity of a commodity that can be sold to the members of a society is, therefore, in any given economic situation, strictly limited, and sales beyond this limit are inconceivable.

The quantitative limits of marketability are remarkably different for different goods. There are commodities that can never be sold, at given points in time, except in narrowly limited quantities because of narrowly limited requirements for them. There are others for which requirements are larger, and for which, in consequence, the quantitative limits of marketability extend considerably further. And there are still others that can be sold in almost any practically conceivable amounts.

The publisher of a work on the language of the Tupi Indians could count on a sale of perhaps 300 copies at a moderate price for the work. But even at the lowest price, he could not count on a sale of more than 600 copies. A scholarly work in which only a narrow group of specialists is interested, and which is intended for the needs of several generations of scholars, often attains its sales only with the increasing fame of its author, and can be sold only over a long period of time. But a work about a science that is attracting general interest may, in spite of its scholarly character, attain sales of several thousand copies. Popular scientific publications may attain sales of 20,000 to 30,000 copies or more. Important works of fiction may, under favorable circumstances, sell in editions of several hundred thousand copies. Consider the differences in the quantitative limits of the marketability of a work on Peruvian archeology and the poems of Friedrich Schiller, or of a work on Sanskrit and the plays of Shakespeare! But the differences in the quantitative limits of the marketability of commodities are still greater if we consider bread and meat on the one hand, and quinine or castoreum on the other, or cotton and woollen goods on the one hand, and astronomical instruments and anatomical specimens on the other. Finally, compare the quantitative limits of the marketability of hats and gloves of medium and of extra large sizes.

(4) Finally, commodities are also limited in their marketability with respect to the time periods in which they can be sold. There are goods for which requirements exist only in winter; others for which they exist only in summer; and still others for which a demand exists only during some other more or less fleeting period. Programs for coming festivals or fine art exhibits, and even, in a certain sense, newspapers and articles of fashion, are goods of this sort. In fact, all perishable goods are, by their very nature, restricted in their marketability to a narrow time period.

To this must be added the fact that keeping commodities "in stock" usually involves not inconsiderable economic sacrifices on the part of the owner. The effect of storage fees, costs of safekeeping, and loss of interest, on the limits of the marketability of commodities in time is similar to the effect of freight charges and other transportation costs on the spatial limits of their marketability. A cattle trader in our civilization who has a herd of cattle ready for slaughter and sale must necessarily exercise care to sell them within certain time limits because they will otherwise not be in prime condition, because of loss of interest, and in general because of the other economic sacrifices unavoidably associated with the possession of these animals as "commodities." A wool merchant or an iron merchant also has commodities whose marketability is restricted to certain time periods partly for physical and partly for economic reasons (storage costs, loss of interest).

Very great differences can be observed in the time periods during which different commodities must be sold. The time limits within which, for example, oysters, fresh meat, many prepared foods and beverages, cut flowers, programs for coming festivals, political tracts, and so forth, must be sold are, on the whole, restricted to a few days and often to but a few hours. The period within which most fresh fruit, game, potted plants, many articles of fashion, etc., must be sold is limited to a few weeks, and a few months in the case of other similar commodities, while the period within which still other commodities can be sold, provided they can be preserved long enough and requirements for them continue, extends to years, decades, and even centuries.

The economic sacrifices involved in the preservation and storage of commodities vary considerably. From this fact arises a further, very important, factor responsible for differences in the time limits of the marketability of commodities. A person with building stones or firewood for sale has commodities that can be stored in an open field. He will not ordinarily be forced to make his sales as quickly, therefore, as a furniture dealer, and the latter is again under less compulsion to sell quickly than a horse trader. The owner of gold, silver, precious stones, or other commodities that can be stored almost without cost (if we omit consideration of the loss of interest), has goods whose marketability extends much further in time than that of all the abovementioned commodities.

B. The different degrees of marketability of commodities.

In the previous section, we saw that the marketability of commodities is restricted sometimes to greater and sometimes to smaller numbers of persons, and within sometimes narrower and sometimes wider spatial, temporal, and quantitative limits. In all this, however, I have described only the outside limits within which, in any given economic situation, commodities can be sold. The causes determining the greater or less facility with which commodities can be sold within these limits of marketability remain still to be examined.

It is necessary, for this purpose, to begin with a few words about the nature of commodities and the intentions of their possessors. A commodity is an economic good intended for sale. But it is not intended for sale unconditionally. The owner of a commodity intends to sell it, but by no means at any price. A jeweller with a stock of watches could sell off his entire stock, in almost any situation imaginable, if he were willing to sell his watches at one Thaler each. A leather merchant could clear out his stock too if he were prepared to sell his leather at similar ruinous prices. Both merchants may nevertheless be justified if they complain of sluggish sales, since although their commodities are intended for sale, as has been stated, they are intended for sale, not at any price, but at prices that correspond to the general economic situation.

The prices that become effective are always the product of existing competitive conditions (p. 218), and correspond more closely to the general economic situation the more complete the competition on both sides. If there are any circumstances that restrain a number of those who have requirements for a commodity from competing for it, its price will fall below the level corresponding to the general economic situation. If there are any restraints upon competition on the supply side, the price of the commodity will rise above this level.

If the competition for one commodity is poorly organized and there is danger therefore that the owners will be unable to sell their holdings of the commodity at economic prices, at a time when this danger does not exist at all, or not in the same degree, for the owners of other commodities, it is clear that this circumstance will be responsible for a very important difference between the marketability of that commodity and all others. The other commodities can be brought to their final destinations easily and safely, but the commodity whose market is poorly organized can be brought to its final destination only with economic sacrifices, and in some cases not at all.

Market places, fairs, exchanges, public auctions that are held periodically (as is the case in large sea‐ports, for example), and other public institutions of a similar nature, are for the purpose of bringing all persons interested in the pricing of a commodity together at a particular place either permanently or periodically to ensure the establishment of an economic price. Commodities for which an organized market exists can be sold without difficulty by their owners at prices corresponding to the general economic situation. But commodities for which there are poorly organized markets change hands at inconsistent prices, and sometimes cannot be disposed of at all. The institution of an organized market for an article makes it possible for the producers, or other economizing individuals trading in it, to sell their commodities at any time at economic prices. Thus the opening of a wool or grain market in a city increases considerably the marketability of wool or grain in neighboring regions where these articles are produced. Similarly, the admission of a security to trade on a stock exchange (so‐called "listing") contributes to the establishment of economic prices in the selling of that security and also, in an outstanding fashion, to increasing its marketability since the listing of the security assures the owners of sales at economic prices.

If every consumer knows where to find the owners of a commodity, this fact alone increases to a high degree the probability that the commodity will, at any time, be sold at an economic price. This is best achieved in wholesale trade because of the practice, quite commonly observed, of the dealers in a commodity locating their warehouses as near to each other as possible in order to evoke, by their concentration, a similar concentration of customers. The absence of such concentration in retail trade constitutes the major cause of less economic prices being established in this branch of commerce, even though the deficiency arises naturally from the desire of consumers for convenience and economy of time in making their purchases.

But the selling of a commodity at economic prices is not the only result of the existence of points of concentration of trading and price formation. The prices established in these centers of trade are continuously made public, thus making it possible for interested persons whose establishments are outside the trading centers also to do business at any time at prices corresponding to the economic situation. Large sellers or buyers of a commodity will very seldom, of course, adopt this method of doing business since their transactions have a determining influence on price formation. But small businessmen whose scales of operation are too insignificant to have any appreciable effect on prices are placed by these public announcements in a position to execute their transactions in an economic fashion even outside the trade center, and thus to participate in the advantages of a market they do not even visit. In the countryside surrounding London it may happen that a tenant farmer will do business with a miller on the basis of a quotation in The Times for the price of grain on Mark Lane. In Vienna small sales of kerosene are often concluded on the basis of the price quotation in the Neue Freie Presse or some other reliable newspaper. Thus points of concentration of trade in a commodity have the quite general result of placing the owners in a position to sell their holdings at economic prices to any economizing individual wishing to obtain them.

The first cause of differences in the marketability of commodities we have thus seen to be the fact that the number of persons to whom they can be sold is sometimes larger and sometimes smaller, and that the points of concentration of the persons interested in their pricing are sometimes better and sometimes less well organized.

Secondly, there are commodities that can be sold almost anywhere within the spatial limits of their marketability. Domestic animals, grains, metals, and similar goods in common use, have markets almost everywhere that trade exists. Every small town and even the smallest village becomes a market for these goods at certain times. There are other commodities (furs, tea, indigo) for which only a few widely separated markets exist.

These markets are not independent of each other in the formation of prices. If a market is of decisive importance, reports of transactions made there are transmitted to all other major markets. A special class of economizing individuals, speculators, takes care that the differences in price between the various markets do not significantly exceed the costs of transportation.

The second cause of differences in the marketability of commodities is thus the fact that the geographical areas within which their sale is confined are sometimes wider and sometimes narrower, and that while there are many trading points within this area at which some commodities can be sold at economic prices, there are only a few such points in the case of other commodities. Owners of commodities of the first category can sell them at will in many places over a wide trading area at economic prices, while owners of commodities of the second category can sell them only in a few places over a narrow trading area.

Thirdly, there are commodities for which a lively and well organized speculation exists that absorbs every portion of the available quantity of the commodities coming to market at any time, even though in excess of current requirements. There are other commodity markets in which speculation is not carried on, or at least not to the same extent, and in which, if they become oversupplied with commodities, either prices fall rapidly, or the commodities brought to market must be taken away unsold. Goods of the first kind can generally be sold in any quantity actually available at a given time with little sacrifice in price, while the owner of a commodity for which no speculation exists can sell quantities exceeding current requirements only with very severe losses or not at all.

I gave an example of this last class of commodities earlier when I cited the marketability of books written for specific groups of scholars. More important in this regard are commodities that have no independent use and are wanted only as parts of other commodities. Whatever the price of watch springs or the price of pressure gauges for steam engines may be, requirements for them are determined almost exactly by the number of watches or steam engines to be produced, and a considerably larger quantity of the former goods could not be sold at any price. On the other hand, gold and silver, and several other commodities whose narrowly limited available quantities stand opposite almost unlimited requirements, can be sold in any quantity whatsoever. There is no doubt that a quantity of gold a thousand times as large as that presently available, and a quantity of silver a hundred times as large, would still find buyers if brought to market. Such increases in the available quantities of these metals would cause them to fall severely in price, and they would then doubtless be used by persons of little wealth for utensils and ordinary plate, and even by poorer people for adornment. But even if they were brought to market in such enormously increased quantities, it would not be in vain. They could still be sold. A similar increase, however, of the best scholarly work, of the most excellent optical instruments, or even of such important commodities as bread and meat, would make them literally unsaleable. From these considerations, it follows that a possessor of gold and silver can very readily sell any portion of the quantity of these goods available at any time, in the worst case with a small loss in price. But the sudden accumulation of most commodities usually leads to a much greater fall in price, and there is always the possibility that they cannot be sold at all under such conditions.

The third cause of differences in the marketability of commodities, then, is the fact that the quantitative limits of the amounts of them that can be sold are sometimes wider and sometimes narrower, and that within these limits the quantities of some commodities brought to market can easily be sold at economic prices, while this is not true of other commodities, or at least not in the same degree.

Finally, there are commodities for which almost continuous markets exist. Securities and a number of raw materials, in places where there are commodity exchanges, can be marketed every day. There are other commodities that are traded on two or three days of the week. There are usually weekly markets for grains and other legumes, quarterly fairs for the products of industry, and two or more so-called annual fairs a year for horses and other domestic animals, etc.

The fourth cause of differences in the marketability of commodities is thus the fact that the time limits within which commodities can be sold are sometimes wider and sometimes narrower, and that within these limits some commodities can be sold at economic prices at any time, while others can be sold only at more or less distant points in time.

If we now turn briefly to the actual phenomena of economic life and observe the extraordinary differences in the marketability of the various commodities, it will not be difficult for us to reduce these differences to one or more of the causes explained above.

A person who owns a quantity of grain has in his possession a commodity he can dispose of at almost any moment he desires wherever there are grain exchanges. Where there are only weekly markets he can still sell it every week at prices that are in accord with the economic situation. He thus has a commodity which, to use a very significant mercantile term, is almost “liquid cash.” The causes of this lie in the large number of persons who have requirements for grain, in the wide spatial, temporal, and quantitative limits of its marketability, in the usually efficient organization of grain markets, and in the lively speculation in this commodity.

A person who has a stock of furs will find himself in many ways in a somewhat more unfavorable situation. The quantitative limits of the marketability of this article are much narrower and the markets less well organized than those for grain. In addition, fur markets are frequently very distant from each other in space and time, and speculation in this article is much less lively than in grain. A person with wheat will be able to unload his holdings under almost any circumstances if he is willing to sell at a fraction of a penny below the current market quotation. This will not always be true of furs, and it may happen much more easily that the owner can sell his holdings only at relatively large losses or perhaps sometimes not at all, and that he may therefore be compelled to wait a considerable time before selling. We would obtain even greater contrasts if we were to compare the marketability of grain with the marketability of such articles as telescopes, meerschaum ornaments, and potted plants in general, or with the less marketable varieties of these commodities!

C. The facility with which commodities circulate.

In the preceding sections, I have explained the general and specific causes of differences in the marketability of commodities. In other words, I have shown the causes of the greater or less facility with which an owner of commodities can expect to sell them at economic prices. At this point one might be inclined to consider the problem of the greater or less facility with which commodities can circulate through several hands as also solved, since the circulation of a commodity through several hands simply consists of a number of single transactions, and to think that a commodity that can be passed without difficulty from the hands of its owner to some other economizing individual should find its way just as easily from the hands of the second owner into those of a third, and so on. But experience shows that this is not true of all commodities. In what follows, it will be our task to investigate the special causes responsible for the fact that some commodities can be observed to circulate easily from hand to hand while others, even some that have a high degree of marketability, do not.

Some commodities have almost the same marketability in the hands of every economizing individual. Gold nuggets extracted from the sands of the Aranyos River by a dirty Transylvanian gypsy are just as saleable in his hands as in the hands of the owner of a gold mine, provided the gypsy knows where to find the right market for his commodity. Gold nuggets can pass through any number of hands without any decrease whatsoever in marketability. But articles of clothing, bedding, prepared foods, etc., would be suspect and almost unsaleable, or at any rate of greatly depreciated value, in the hands of the gypsy, even if they had not been used by him, and even if he had, from the beginning, acquired them only with the intention of passing them on in exchange. However saleable commodities of this kind may be in the hands of their producers or certain merchants, they lose their marketability altogether, or at any rate in part, if even a suspicion arises that they have already been used or only been in unclean hands. They are therefore not suited in economic exchange to circulation from hand to hand.

Other commodities require special knowledge, skills, permits, or governmental licenses, privileges, etc., for their sale, and are not at all, or only with difficulty, saleable in the hands of an individual who cannot acquire these requisites. In any case they lose value in his hands. Commodities destined for trade with India or South America, pharmaceutical preparations, patented articles, etc., may be extremely saleable in the hands of certain persons, but lose a large part of their marketability in the hands of other persons. Hence they are as little suited as the commodities of the previous paragraph to free circulation from hand to hand.

Moreover, commodities that must be specially fitted to the needs of the consumer to be useable at all are not saleable in an equal degree in the hands of every owner. Shoes, hats, and similar articles, of all sizes, are always fairly saleable in the hands of a shoe merchant or a hatter in whose shops or stores large numbers of customers assemble, especially since these businessmen generally have facilities for fitting the commodities to the special needs of their customers. In the hands of another person, these commodities can be sold only with difficulty and almost always only at a heavy loss. These commodities too are not suited to free circulation from hand to hand.

Commodities whose prices are not well known or subject to considerable fluctuations also do not pass easily from hand to hand. A purchaser of such commodities faces the danger of "overpaying" for them, or of suffering a loss before he has passed them on due to a fall in price. A "lot" of grain on a grain exchange, or a parcel of popular securities on a stock exchange, can easily change hands ten times in a few hours, but farms and factories, whose value can be determined only after a careful investigation of all the relevant circumstances, are entirely unsuited to rapid circulation. Even people who are not members of a stock exchange will readily accept securities whose prices are not subject to any considerable fluctuation in place of cash payment. But commodities that are subject to violent price fluctuations can circulate easily only "below the market," since all persons who are not willing to speculate will want to protect themselves against loss. Thus commodities whose prices are uncertain or fluctuate severely are also not well suited to free circulation from hand to hand.

Finally, it is clear that the several factors limiting the marketability of commodities will have a multiple weight wherever commodities are transferred from hand to hand, from place to place, and from one time period to another. Commodities whose marketability is restricted to a small number of persons, whose area of sale is limited, which can be preserved only for a short time, whose preservation involves considerable economic sacrifices, which can be brought to market only in strictly limited quantities at any one time, or whose prices are subject to fluctuations, etc. may all retain some degree of marketability within certain (even though very narrow) limits, but they are not capable of circulating freely.

Thus we find that for a commodity to be capable of circulating freely it must be saleable in the widest sense of the term to every economizing individual through whose hands it may pass, and to each of these persons it must be saleable, not in one respect alone, but in all four of the senses discussed above.