Tuesday, January 3, 2012

On the Origins of Money- Carl Menger

 V. Concerning the Causes of the Different Degrees of Saleableness in Commodities.

The degree to which a commodity is found by experience to command a sale, at a given market, at any time, at prices corresponding to the economic situation (economic prices), depends upon the following circumstances.
1. Upon the number of persons who are still in want of the commodity in question, and upon the extent and intensity of that want, which is unsupplied, or is constantly recurring.
2. Upon the purchasing power of those persons.
3. Upon the available quantity of the commodity in relation to the yet unsupplied (total) want of it.
4. Upon the divisibility of the commodity, and any other ways in which it may be adjusted to the needs of individual customers.
5. Upon the development of the market, and of speculation in particular. And finally.
6. Upon the number and nature of the limitations imposed politically and socially upon exchange and consumption with respect to the commodity in question.
We may proceed, in the same way in which we considered the degree of the saleableness in commodities at definite markets and definite points of time,to set out the spatial and temporal limits of their saleableness. In these respects also we observe in our markets some commodities, the saleableness of which is almost unlimited by place or time, and others the sale of which is more or less limited.
The spatial limits of the saleableness of commodities are mainly conditioned --
1. By the degree to which the want of the commodities is disturbed in space.
2. By the degree to which the goods lend themselves to transport,and the cost of transport incurred in proportion to their value.
3. By the extent to which the means of transport and of commerce generally are developed with respect to different classes of commodities.
4. By the local extension of organised markets and their inter-communication by 'arbitrage'.
5. By the differences in the restrictions imposed upon commercial inter-communication with respect to different goods, to interlocal and, in particular, in international trade.
The time limits to the saleableness of commodities are mainly conditioned --
1. By permanence in the need of them (their independence of fluctuation in the same).
2. Their durability, i.e. their suitableness for preservation.
3. The cost of preserving and storing them.
4. The rate of interest.
5. The periodicity of a market for the same.
6. The development of speculation and in particular of time-bargains in connection with the same.
7. The restrictions imposed politically and socially on their being transferred from one period of time to another.
All these circumstances, on which depend the different degrees of, and the different local and temporal limits to, the saleableness of commodities, explain why it is that certain commodities can be disposed of with ease and certainty in definite markets, i.e. within local and temporal limits, at any time and in practically any quantities, at prices corresponding to the general economic situation, while the saleableness of other commodities is confined within narrow spatial, and again, temporal, limits: and even within these the disposal of the commodities in question is difficult, and, in so far as the demand cannot be waited for, is not to be brought about without a more or less sensible diminution in price.

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