• If each of numerous like articles were put up for sale separately and each were supposed by buyers to be the last, there would result a succession of prices. Each price would be lower than the preceding, each just high enough to exclude the next to the highest remaining bidder. If, however, it was known that there were several like articles but not just how many, there might result a succession of price levels. The dotted curve connects the maximum valuation of the several buyers; successive prices form a curve somewhat lower. A tenth unit would sell only at a price between zero and 20. common incident at auctions, to the chagrin of the earlier buyers; but the opposite is possible, and bidding may become more spirited and the price rise as the last article is put up for sale.

§ 10. Auctions with reserve valuations. An auction is advertised to be "without reserve" when everything is to be sold for the highest bid, no matter how low it is. The seller agrees in advance to have no minimum selling valuation. Price in such a case may be abnormally low, much lower than in a trade where a lower limit is set by the ability and readiness of each would-be seller to keep all or part of the supply if the price is not as high as his valuations. Buyers' bids alone then determine the price at anything above zero. In most cases of trade, each trader virtually stands ready "to bid in" his own goods at his valuations rather than to sacrifice them; and even in some auctions the right is expressly reserved of withdrawing articles for which the bids remain unduly low. In some cases friends or confederates," cappers," make pretended bids, or sometimes bid in the goods if the price is too low.

§ 11. Origin of markets. We have in the auction sale, with its gathering of buyers, something near to the idea of a market. In all parts of the world, civilized or uncivilized, are found places where both buyers and sellers of various kinds of goods come together to trade. These meeting places (or meetings) were called markets because they were first found on the border (mark) between tribes, villages, or clans, as a common ground where strangers met to trade. The notion of trade did not develop within the family and the tribe. There the idea of common ownership seems to have ruled, and the communities seem to have been led to trade by the abundance or the want of certain natural resources in their environment; thus shore tribes had a surplus of salt and fish, forest tribes had meat and skins, tribes living near good mineral deposits had flints and bronze, while each wanted what the other had. Markets developed on neutral ground whither came buyers and sellers, some of whom became regular merchants. Buyers found a better selection of goods, both as to kind and as to quality, and merchants found many would-be purchasers for what they had to sell. Throughout the Middle Ages purchases were made by the more prosperous husbandmen in great quantities once or twice a year at the fairs or markets. As both buyers and sellers came from widely separated places, the feature of combination (or monopoly) was not common and the conditions of a competitive market were present.

In America as towns or villages appeared where some men could give most of their time to producing something besides food, local markets sprang up whither farmers came to exchange with village artisans. Every little country store in America is in some measure a market, where the merchant trades with the farmer, the townpeople with the merchant, and neighbors with each other. The larger cities become the great markets, toward which are sent all the surplus products of farms and of the mills in smaller cities to be distributed to the consumers.

§ 12. Transportation and the extent of markets. Markets are limited by the means of transportation enabling goods to be brought from the place of their origin and delivered to the place of their use. A dense population engaged mainly in commerce and manufactures can be maintained only at points where there are means of bringing in a large supply of food, and of carrying back manufactured goods. The remarkable growth in the means of commerce since the application of steam to water traffic, and the invention of the railroad, have made it possible for goods to be gathered from more distant points.

§ 13. Communication and markets. Buyers and sellers need not be physically present at one place, but they must be in communication, so that there can be a common understanding between them. In earlier times, however, there were no easy means of gathering information such as trade bulletins, newspapers, special commercial agencies, and no rapid means of transmitting intelligence, such as the steamship, the railroad, the postal service, the land telegraph, the ocean cable, and the wireless telegraph. The traders once had to be together at one place in order that each should know what the others were willing to do. All this is now changed and for many purposes men in Paris, in New York, in London, and in Calcutta are separated by only a few moments for trading.

As a result of these changes, the old periodical fairs and markets have almost disappeared, and there has been a widening of the village-market to the markets of the province, of the nation, and finally of the world. While a part of every one's purchases continues to be made in the neighborhood, a greater and greater portion of the total business is done by traders that are widely separated and that are members of a world-market. Various products produced in the same locality may seek different markets. While the market for fruit and eggs may be in the village near the farmhouse, that for most of the wheat of the same farm may be in Liverpool.

§ 14. One price in a market. If the many buyers and sellers coming together at a market-place were to meet as isolated couples, without knowledge of the others, the trades would be made at a great variety of ratios, possibly no two trades at the same. But the coming together of buyers and sellers into a single trading group has a remarkable effect on the ratio at which the trades take place between individual buyers and sellers. So far as there is truly a meeting of minds, all the trades taking place at any one time are at the same ratio. It is the essential proof of a true market that there is but one price at any moment. A complete or typical market may therefore be defined as a group of closely communicating traders whose valuations, however diverse before they meet, unite for a moment into a single price (as regards the goods actually traded). A typical market exists and a market price results when there is: (a) a group of buyers and sellers; (b) a judgment by each trader of both groups, as to the conditions of the market; (c) free bidding on both sides.

§ 15. Imperfect market conditions. When, however, these conditions are not fulfilled perfectly, different prices may exist at the same moment near each other. Retail and wholesale merchants may be purchasing goods in the same room at the same time at very different prices, but there are here two distinct and well recognized markets. Even within what is ordinarily the same market, differences may for brief times exist. On the occasion of a break in stocks, excited traders within ten feet of each other make bids that differ by thousands of dollars; but the expression used to describe this explains the cause: "the market has all gone to pieces." The very essence of the idea of market is the meeting of minds in agreement on a price. Within a group of buyers and sellers thus meeting, one price prevails at least for the moment. The more nearly the actual conditions approach to the ideal of a market, the less are prices fixed by individual higgling, and the more impersonal they become, the buyers and sellers being compelled to adjust their bids to the needs of the market, and being unable to vary them greatly one way or the other.