Economy of Machinery and Manufactures · Part IX

184. In the Irish flax trade, a similar example of the high price paid for verification occurs. It is stated in the report of the committee, "That the natural excellent quality of Irish flax, as contrasted with foreign or British, has been admitted." Yet from the evidence before that committee it appears that Irish flax sells, in the market, from 1d. to 2d. per pound less than other flax of equal or inferior quality. Part of this difference of price arises from negligence in its preparation, but a part also from the expense of ascertaining that each parcel is free from useless matter to add to its weight: this appears from the evidence of Mr J. Corry, who was, during twenty-seven years, Secretary to the Irish Linen-Board:--

"The owners of the flax, who are almost always people in the lower classes of life, believe that they can best advance their own interests by imposing on the buyers. Flax being sold by weight, various expedients are used to increase it; and every expedient is injurious, particularly the damping of it; a very common practice, which makes the flax afterwards heat. The inside of every bundle (and the bundles all vary in bulk) is often full of pebbles, or dirt of various kinds, to increase the weight. In this state it is purchased, and exported to Great Britain. The natural quality of Irish flax is admitted to be not inferior to that produced by any foreign country; and yet the flax of every foreign country, imported into Great Britain, obtains a preference amongst the purchasers, because the foreign flax is brought to the British market in a cleaner and more regular state. The extent and value of the sales of foreign flax in Great Britain can be seen by reference to the public accounts; and I am induced to believe, that Ireland, by an adequate extension of her flax tillage, and having her flax markets brought under good regulations, could, without encroaching in the least degree upon the quantity necessary for her home consumption, supply the whole of the demand of the British market, to the exclusion of the foreigners."

185. The lace trade affords other examples; and, in enquiring into the complaints made to the House of Commons by the framework knitters, the committee observe, that, "It is singular that the grievance most complained of one hundred and fifty years ago, should, in the present improved state of the trade, be the same grievance which is now most complained of: for it appears, by the evidence given before your committee, that all the witnesses attribute the decay of the trade more to the making of fraudulent and bad articles, than to the war, or to any other cause." And it is shewn by the evidence, that a kind of lace called "single-press" was manufactured, which, although good to the eye, became nearly spoiled in washing by the slipping of the threads; that not one person in a thousand could distinguish the difference between "single-press" and "double-press" lace; and that, even workmen and manufacturers were obliged to employ a magnifying glass for that purpose; and that, in another similar article, called "warp lace," such aid was essential. It was also stated by one witness, that

"The trade had not yet ceased, excepting in those places where the fraud had been discovered; and from those places no orders are now sent for any sort of Nottingham lace, the credit being totally ruined."

186. In the stocking trade similar frauds have been practised. It appeared in evidence, that stockings were made of uniform width from the knee down to the ankle, and being wetted and stretched on frames at the calf, they retained their shape when dry, but that the purchaser could not discover the fraud until, after the first washing, the stockings hung like bags about his ankles.

187. In the watch trade the practice of deceit, in forging the marks and names of respectable makers, has been carried to a great extent both by natives and foreigners; and the effect upon our export trade has been most injurious, as the following extract from the evidence before a committee of the House of Commons will prove:--

"Question. How long have you been in the trade? Answer. Nearly thirty years. Question. The trade is at present much depressed? Answer. Yes, sadly. Question. What is your opinion of the cause of that distress? Answer. I think it is owing to a number of watches that have been made so exceedingly bad that they will hardly look at them in the foreign markets; all with a handsome outside show, and the works hardly fit for anything. Question. Do you mean to say, that all the watches made in this country are of that description? Answer. No; only a number which are made up by some of the Jews, and other low manufacturers. I recollect something of the sort years ago, of a falloff of the East India work, owing to there being a number of handsome-looking watches sent out, for instance, with hands on and figures, as if they shewed seconds, and had not any work regular to shew the seconds: the hand went round, but it was not regular. Question. They had no perfect movements? Answer. No, they had not; that was a long time since, and we had not any East India work for a long time afterwards."

In the home market, inferior but showy watches are made at a cheap rate, which are not warranted by the maker to go above half an hour; about the time occupied by the Jew pedlar in deluding his country customer.

188. The practice, in retail linen-drapers' shops, of calling certain articles yard wide when the real width is perhaps, only seven-eighths or three-quarters, arose at first from fraud, which being detected, custom was pleaded in its defence: but the result is, that the vender is constantly obliged to measure the width of his goods in the customer's presence. In all these instances the object of the seller is to get a higher price than his goods would really produce if their quality were known; and the purchaser, if not himself a skilful judge (which rarely happens to be the case), must pay some person, in the shape of an additional money price, who has skill to distinguish, and integrity to furnish, articles of the quality agreed on. But as the confidence of persons in their own judgement is usually great, large numbers will always flock to the cheap dealer, who thus, attracting many customers from the honest tradesman, obliges him to charge a higher price for his judgement and character than, without such competition, he could afford to do.

189. There are few things which the public are less able to judge of than the quality of drugs; and when these are compounded into medicines it is scarcely possible, even for medical men, to decide whether pure or adulterated ingredients have been employed. This circumstance, concurring with the present injudicious mode of paying for medical assistance, has produced a curious effect on the price of medicines. Apothecaries, instead of being paid for their services and skill, are remunerated by being allowed to place a high charge upon their medicines, which are confessedly of very small pecuniary value. The effect of such a system is an inducement to prescribe more medicine than is necessary; and in fact, even with the present charges, the apothecary, in ninety-nine cases out of a hundred, cannot be fairly remunerated unless the patient either takes, or pays for, more physic than he really requires. The apparent extravagance of the charge of eighteen pence for a two-ounce phial(1*) of medicine, is obvious to many who do not reflect on the fact that a great part of the charge is, in reality, payment for the exercise of professional skill. As the same charge is made by the apothecary, whether he attends the patient or merely prepares the prescription of a physician, the chemist and druggist soon offered to furnish the same commodity at a greatly diminished price. But the eighteen pence charged by the apothecary might have been fairly divided into two parts, three pence for medicine and bottle, and fifteen pence for attendance. The chemist, therefore, who never attends his customers, if he charges only a shilling for the same medicine, realizes a profit of 200 or 300 per cent upon its value. This enormous profit has called into existence a multitude of competitors; and in this instance the impossibility of verifying has, in a great measure, counteracted the beneficial effects of competition. The general adulteration of drugs, even at the extremely high price at which they are retailed as medicine, enables those who are supposed to sell them in an unadulterated state to make large profits, whilst the same evil frequently disappoints the expectation, and defeats the skill, of the most eminent physician.

It is difficult to point out a remedy for this evil without suggesting an almost total change in the system of medical practice. If the apothecary were to charge for his visits, and to reduce his medicines to one-fourth or one-fifth of their present price, he would still have an interest in procuring the best drugs, for the sake of his own reputation or skill. Or if the medical attendant, who is paid more highly for his time, were to have several pupils, he might himself supply the medicines without a specific charge, and his pupils would derive improvement from compounding them, as well as from examining the purity of the drugs he would purchase. The public would gain several advantages by this arrangement. In the first place, it would be greatly for the interest of the medical practitioner to have the best drugs; it would be in his interest also not to give more physic than needful; and it would enable him, through some of his more advanced pupils, to watch more frequently the changes of any malady.

190. There are many articles of hardware which it is impossible for the purchaser to verify at the time of purchase, or even afterwards, without defacing them. Plated harness and coach furniture may be adduced as examples: these are usually of wrought iron covered with silver, owing their strength to the one and a certain degree of permanent beauty to the other metal. Both qualities are, occasionally, much impaired by substituting cast- for wrought-iron, and by plating with soft solder (tin and lead) instead of with hard solder (silver and brass). The loss of strength is the greatest evil in this case; for cast iron, though made for this purpose more tough than usual by careful annealing, is still much weaker than wrought-iron, and serious accidents often arise from harness giving way. In plating with soft solder, a very thin plate of silver is made to cover the iron, but it is easily detached, particularly by a low degree of heat. Hard soldering gives a better coat of silver, which is very firmly attached, and is not easily injured unless by a very high degree of heat. The inferior can be made to look nearly as well as the better article, and the purchaser can scarcely discover the difference without cutting into it.

191. The principle that price, at any moment, is dependent on the relation of the supply to the demand, is true to the full extent only when the whole supply is in the hands of a very large number of small holders, and the demand is caused by the wants of another set of persons, each of whom requires only a very small quantity. And the reason appears to be, that it is only in such circumstances that a uniform average can be struck between the feelings, the passions, the prejudices, the opinions, and the knowledge, of both parties. If the supply, or present stock in hand, be entirely in the possession of one person, he will naturally endeavour to put such a price upon it as shall produce by its sale the greatest quantity of money; but he will be guided in this estimate of the price at which he will sell, both by the knowledge that increased price will cause a diminished consumption, and by the desire to realize his profit before a new supply shall reach the market from some other quarter. If, however, the same stock is in the hands of several dealers, there will be an immediate competition between them, arising partly from their different views of the duration of the present state of supply, and partly from their own peculiar circumstances with respect to the employment of their capital.

192. The expense of ascertaining that the price charged is that which is legally due is sometimes considerable. The inconvenience which this verification produces in the case of parcels sent by coaches is very great. The time lost in recovering an overcharge generally amounts to so many times the value of the sum recovered, that it is but rarely resorted to. It seems worthy of consideration whether it would not be a convenience to the public if government were to undertake the general conveyance of parcels somewhat on the same system with that on which the post is now conducted. The certainty of their delivery, and the absence of all attempt at overcharge, would render the prohibition of rival carriers unnecessary. Perhaps an experiment might be made on this subject by enlarging the weight allowed to be sent by the two-penny post, and by conveying works in sheets by the general post.

This latter suggestion would be of great importance to literature, and consequently to the circulation of knowledge. As the post-office regulations stand at present, it constantly happens that persons who have an extensive reputation for science, receive by post, from foreign countries, works, or parts of works, for which they are obliged to pay a most extravagant rate of postage, or else refuse to take in some interesting communication. In France and Germany, printed sheets of paper are forwarded by post at a very moderate expense, and it is fit that the science and literature of England should be equally favoured.

193. It is important, if possible, always to connect the name of the workman with the work he has executed: this secures for him the credit or the blame he may justly deserve; and diminishes, in some cases, the necessity of verification. The extent to which this is carried in literary works, published in America, is remarkable. In the translation of the Mecanique Celeste by Mr Bowditch, not merely the name of the printer, but also those of the compositors, are mentioned in the work.

194. Again, if the commodity itself is of a perishable nature, such, for example, as a cargo of ice imported into the port of London from Norway a few summers since, then time will supply the place of competition; and, whether the article is in the possession of one or of many persons, it will scarcely reach a monopoly price. The history of cajeput oil during the last few months, offers a curious illustration of the effect of opinion upon price. In July of last year, 1831, cajeput oil was sold, exclusive of duty, at 7 d. per ounce. The disease which had ravaged the East was then supposed to be approaching our shores, and its proximity created alarm. At this period, the oil in question began to be much talked of, as a powerful remedy in that dreadful disorder; and in September it rose to the price of 3s. and 4s. the ounce. In October there were few or no sales: but in the early part of November, the speculations in this substance reached their height, and between the 1st and the 15th it realized the following prices: 3s. 9d., 5s., 6s. 6d., 7s. 6d., 8s., 9s., 10s., 10s. 6d., 11s. After 15 November, the holders of cajeput oil were anxious to sell at much lower rates; and in December a fresh arrival was offered by public sale at 5s., and withdrawn, being sold afterwards, as it was understood, by private contract, at 4s. or 4s. 6d. per oz. Since that time, 1s. 6d. and 1s. have been realized; and a fresh arrival, which is daily expected (March, 1832) will probably reduce it below the price of July. Now it is important to notice, that in November, the time of greatest speculation, the quantity in the market was held by few persons, and that it frequently changed hands, each holder being desirous to realize his profit. The quantity imported since that time has also been considerable.(2*)

195. The effect of the equalization of price by an increased number of dealers, may be observed in the price of the various securities sold at the Stock Exchange. The number of persons who deal in the 3 per cent stock being large, any one desirous of selling can always dispose of his stock at one-eighth per cent under the market price; but those who wish to dispose of bank stock, or of any other securities of more limited circulation, are obliged to make a sacrifice of eight or ten times this amount upon each hundred pounds value.

196. The frequent speculations in oil, tallow, and other commodities, which must occur to the memory of most of my readers, were always founded on the principle of purchasing up all the stock on hand, and agreeing for the purchase of the expected arrivals; thus proving the opinion of capitalists to be, that a larger average price may be procured by the stock being held by few persons.

NOTES:

1. Apothecaries frequently purchase these phials at the old bottle warehouses at ten shillings per gross; so that when their servant has washed them, the cost of the phial is nearly one penny.

2. I have understood that the price of camphor, at the same time, suffered similar changes.

Chapter 16

On the Influence of Durability on Price

197. Having now considered the circumstances that modify what may be called the momentary amount of price, we must next examine a principle which seems to have an effect on its permanent average. The durability of any commodity influences its cost in a permanent manner. We have already stated that what may be called the momentary price of any commodity depends upon the proportion existing between the supply and demand, and also upon the cost of verification. The average price, during a long period, will depend upon the labour required for producing and bringing it to market, as well as upon the average supply and demand; but it will also be influenced by the durability of the article manufactured.

Many things in common use are substantially consumed in using: a phosphorus match, articles of food, and a cigar, are examples of this description. Some things after use become inapplicable to their former purposes, as paper which has been printed upon: but it is yet available for the cheesemonger or the trunk-maker. Some articles, as pens, are quickly worn out by use; and some are still valuable after a long continued wear. There are others, few perhaps in number, which never wear out; the harder precious stones, when well cut and polished, are of this later class: the fashion of the gold or silver mounting in which they are set may vary with the taste of the age, and such ornaments are constantly exposed for sale as second-hand, but the gems themselves, when removed from their supports, are never so considered. A brilliant which has successively graced the necks of a hundred beauties, or glittered for a century upon patrician brows, is weighed by the diamond merchant in the same scale with another which has just escaped from the wheel of the lapidary, and will be purchased or sold by him at the same price per carat. The great mass of commodities is intermediate in its character between these two extremes, and the periods of respective duration are very various. It is evident that the average price of those things which are consumed in the act of using them, can never be less than that of the labour of bringing them to market. They may for a short time be sold for less, but under such circumstances their production must soon cease altogether. On the other hand, if an article never wears out, its price may continue permanently below the cost of the labour expended in producing it; and the only consequence will be, that no further production will take place: its price will continue to be regulated by the relation of the supply to the demand; and should that at any aftertime rise, for a considerable period, above the cost of production, it will be again produced.

198. Articles become old from actual decay, or the wearing out of their parts; from improved modes of constructing them; or from changes in their form and fashion, required by the varying taste of the age. In the two latter cases, their utility is but little diminished; and, being less sought after by those who have hitherto employed them, they are sold at a reduced price to a class of society rather below that of their former possessors. Many articles of furniture, such as well-made tables and chairs, are thus found in the rooms of those who would have been quite unable to have purchased them when new; and we find constantly, even in the houses of the more opulent, large looking-glasses which have passed successively through the hands of several possessors, changing only the fashion of their frames; and in some instances even this alteration is omitted, an additional coat of gilding saving them from the character of being second-hand. Thus a taste for luxuries is propagated downwards in society', and, after a short period, the numbers who have acquired new wants become sufficient to excite the ingenuity of the manufacturer to reduce the cost of supplying them, whilst he is himself benefited by the extended scale of demand.

199. There is a peculiarity in looking-glasses with reference to the principle just mentioned. The most frequent occasion of injury to them arises from accidental violence; and the peculiarity is, that, unlike most other articles, when broken they are still of some value. If a large mirror is accidentally cracked, it is immediately cut into two or more smaller ones, each of which may be perfect. If the degree of violence is so great as to break it into many fragments, these smaller pieces may be cut into squares for dressing-glasses; and if the silvering is injured, it can either be resilvered or used as plate-glass for glazing windows. The addition from our manufactories to the stock of plate-glass in the country is annually about two hundred and fifty thousand square feet. It would be very difficult to estimate the quantity annually destroyed or exported, but it is probably small; and the effect of these continual additions is seen in the diminished price and increased consumption of the article. Almost all the better order of shop fronts are now glazed with it. If it were quite indestructible, the price would continually diminish; and unless an increased demand arose from new uses, or from a greater number of customers, a single manufactory, unchecked by competition, would ultimately be compelled to shut up, driven out of the market by the permanance of its own productions.

200. The metals are in some degree permanent, although several of them are employed in such forms that they are ultimately lost.

Copper is a metal of which a great proportion returns to use: a part of that employed in sheathing ships and covering houses is lost from corrosion; but the rest is generally remelted. Some is lost in small brass articles, and some is consumed in the formation of salts, Roman vitriol (sulphate of copper), verdigris (acetate of copper), and verditer.

Gold is wasted in gilding and in embroidering; but a portion of this is recovered by burning the old articles. Some portion is lost by the wear of gold, but, upon the whole, it possesses considerable permanence.

Iron. A proportion of this metal is wasted by oxidation, in small nails, in fine wire; by the wear of tools, and of the tire of wheels, and by the formation of some dyes: but much, both of cast- and of wrought-iron, returns to use.

Lead is wasted in great quantities. Some portion of that which is used in pipes and in sheets for covering roofs returns to the melting-pot; but large quantities are consumed in the form of small shot, or sometimes in that of musket balls, litharge, and red lead, for white and red paints, for glass-making, for glazing pottery, and for sugar of lead (acetate of lead).

Silver is rather a permanent metal. Some portion is consumed in the wear of coin, in that of silver plate, and a portion in silvering and embroidering.

Tin. The chief waste of this metal arises from tinned iron; some is lost in solder and in solutions for the dyers.

Chapter 17

Of Price as Measured by Money

201. The money price at which an article sells furnishes us with comparatively little information respecting its value, if we compare distant intervals of time and different countries; for gold and silver, in which price is usually measured, are themselves subject, like all other commodities, to changes in value; nor is there any standard to which these variations can be referred. The average price of a certain quality of different manufactured articles, or of raw produce, has been suggested as a standard; but a new difficulty then presents itself; for the improved methods of producing such articles render their money price extremely variable within very limited periods. The annexed table will afford a striking instance of this kind of change within a period of only twelve years.