If the peculiarities of the case do not permit the demand to be equal to the supply, leaving it only the alternative of being greater or less, greater or less it will be; and all that can be affirmed is, that it will keep as near to the point of equality as it can. Instead of conflicting with the law, this is the extreme case which proves the law. The law is, that the price will be that which equalises the demand with the supply; and the example proves that this only fails to be the case when there is no price that would fulfil the condition, and that even then, the same causes, still operating, keep the price at the point which will most nearly fulfil it. Is it possible to have any more complete confirmation of the law, than that in order to find a case in which the price does not conform to the law, it is necessary to find one in which there is no price that can conform to it?
Again:--When a tradesman has placed upon his goods the highest price which any one will pay for them, the price cannot, of course, rise higher, yet the supply may be below the demand. A glover in a country town, on the eve of an assize bail, having only a dozen pairs of white gloves in store, might possibly be able to get ten shillings a pair for them. He would be able to get this if twelve persons were willing to pay that price rather than not go to the bail, or than go ungloved. But he could not get more than this, even though, while he was still higgling with his first batch of customers, a second batch, equally numerous and neither more nor less eager, should enter his shop, and offer to pay the same but not a higher price. The demand for gloves, which at first had been just equal to the supply, would now be exactly doubled, yet the price would not rise above ten shillings a pair. Such abundance of proof is surely decisive against the supposition that price must rise when demand exceeds supply. (pp. 51-2.)
Here, again, the author is obliged to suppose that the whole body of customers (twenty-four in number) place the extreme limit of what they are willing to pay rather than go without the article, exactly at the same point--an exact repetition of the hypothesis about the horse who is estimated at £50, and not a farthing more, by every one who is willing to buy him. The case is just possible in a very small market -- practically impossible in the great market of the community. But, were it ever so frequent, it would not impugn the truth of the law, but only its all-comprehensiveness.
It would show that the law is only fulfilled when its fulfilment is, in the nature of things, possible, and that there are cases in which it is impossible; but that even there the law takes effect, up to the limit of possibility.
Mr. Thornton's next position is, that if the equalisation theory were literally true, it would be a truth of small significance, because-- Even if it were true that the price ultimately resulting from competition is always one at which supply and demand are equalised, still only a small proportion of the goods offered for sale would actually be sold at any such price, since a dealer will dispose of as much of his stock as he can at a higher price, before he will lower the price in order to get rid of the remainder. (p. 53.)
This is only saying that the law in question resembles other economical laws in producing its effects not suddenly, but gradually. Though a dealer may keep up his price until buyers actually fall off, or until he is met by the competition of rival dealers, still if there is a larger supply in the market than can be sold on these terms, his price will go down until it reaches the point which will call forth buyers for his entire stock; and when that point is reached it will not descend further. A law which determines that the price of the commodity shall fall, and fixes the exact point which the fall will reach, is not justly described as "a truth of small significance" merely because the dealers, not being dead matter, but voluntary agents, may resist for a time the force to which they at last succumb. Limitations such as these affect all economical laws, but are never considered to destroy their value. As well might it be called an insignificant truth that there is a market price of a commodity, because a customer who is ignorant, or in a hurry, may pay twice as much for the thing as he could get it for at another shop a few doors farther off.
