also contributed to the law magazines, articles on Law and Fact, German Jurists and Roman Law, Legal Fictions, &c., several of which are embodied in the later editions of the Elements. He was made D.C.L. of Oxford in 1879, and K.C.I.E. in 1889.
MARKET (Lat. mercatus, trade or place of trade). This
term is used in two well-defined senses. (1) It means a definite
place where (a) traders who are retail sellers of a specific class
of commodity or commodities are in the habit of awaiting buyers
every day in shops or stalls; or whither (b) they are in the habit
of proceeding on specified days at more or less frequent regular
intervals. Covent Garden market for fruit and flowers, and
Leadenhall market for meat and poultry, are good examples
in London of the kind of institution included in class (a). They
are a very ancient economic phenomenon, dating from the
earliest period of the development of organized communities
of human beings, and in general characteristics have changed
little since they began to exist. Markets of the type of class
(b) are also of very ancient origin (see Fairs), but inasmuch
as they are constituted essentially by the presence of persons,
many of whom assemble from various places outside the place
of meeting, they were capable of a little more development
than those belonging to class (a), owing to increased facilities
for locomotion. The nature of an ancient market of class
(a), whither a citizen, say of Athens, or his chief slave, proceeded
daily to make household purchases, differs little from
the group of shops visited by the wives of the less wealthy
citizens of modern states. In many places abroad, and not
a few in England, actual markets still exist. It may be said
that the huge collections of shops, such as the various co-operative
stores, are only a revival of the old “market-place,”
with its shops or booths gathered round a central area, adapted
to the needs of modern big cities. (2) The term “market”
has come to be used in another and more general sense in modern
times. According to Jevons, a market is “any body of persons
who are in intimate business relations, and carry on extensive
transactions in any commodity.” He adds that “these markets
may or may not be localized,” and he instances the money
market as a case in which the term “market” denotes no
special locality. As a rule, however, most of the business
of a market is transacted at some particular place, such as
the London Stock Exchange, the Baltic, the Bourse of Paris,
the Chicago “Wheat-pit.” Even in the case of the London
money market, merchants still meet twice a week at the Royal
Exchange to deal in foreign bills, although a considerable part
of the dealings in these securities is arranged daily at offices
and counting-houses by personal visits or by telegraphic or
telephonic communication. The markets in any important
article are all closely interconnected. The submarine cable
has long ago made Chicago as important an influence on the
London corn market as Liverpool, or rather both London and
Liverpool affect and are simultaneously affected by Chicago
and other foreign markets. In like manner the Liverpool
cotton market is influenced by the markets in New Orleans
and other American cities separated from it widely in space.
In a minor degree the dealers in all places where a cotton market
exists affect the bigger markets to some extent. What is
true of the cotton market is also true to some extent of all
markets, though few markets are so highly organized or show
such large transactions as that for cotton. Among other
markets of the first class may be mentioned those for pig-iron,
wheat, copper, coffee, and sugar. There are many articles
the markets for which are of considerable dimensions at times,
but are of an intermittent character, such as the London Wool
Sales, which take place now in five “series” during the year.
Formerly the number of “series” was four. (For “market
overt,” see Sale of Goods and Stolen Goods.)
Characteristics of Markets.—The conditions required in order that the operations of a trading body may display the fully-developed features of a modern market, whether for commodities or securities, are:—
(1) A large number of parties dealing.
(2) A large amount of the commodities or securities to be dealt with.
(3) An organization by which all persons interested in the commodity or security can rapidly communicate with one another.
(4) Existence and frequent publication of statistical and other information as to the present and probable future supply of the commodity or security.
The movements which take place in prices in any market,
whether fully organized or not, depend largely on changes
of opinion among buyers and sellers. The changes
of opinion may be caused by erroneous as well
as by correct information. They may also be
Movements
of Prices.
the result of wrong inferences drawn from correct information.
In markets for commodities of the first importance, such as
wheat, cotton, iron, and other articles which are dealt in daily,
the state of opinion may vary much during a few hours. The
broad characteristics of markets of this class are similar. There
is a tendency in all of them to show phenomena of annual
periodicity, due partly to the seasons, the activity of certain
months being in normal years greater in the case of any given
market than that of other months. This tendency was always
liable to be interfered with by the special forces at work in
particular years; and the great increase in the facilities of
communication between dealers by telegraph, and of transportation
of commodities between widely distant points, which
was one of the marked features of the development of the
economic organism in all actively commercial countries during
the last thirty years of the 19th century, has still further interfered
with it. Nevertheless, a tendency to annual periodicity
is still perceptible, especially in markets for produce of the
soil, the supply of which largely depends on the meteorological
conditions of the areas where they are grown on a scale sufficient
to furnish an appreciable proportion of the total produce.
Periodicity of another kind known as “cyclic,” and due to a different set of causes, is believed to exist by many persons competent to form a judgment; but although the evidence for this view is very strong, the theory expounding it is not yet in a Cycles.sufficiently advanced state to admit of its being regarded as established.
Phenomena of Markets.—Bagehot said of the money market that it is “often very dull and sometimes extremely excited.” This classical description of the market for “money” applies to a large extent to all markets.
Every market is at every moment tending to an equilibrium between the quantity of commodities offered and that of commodities desired; supposing equilibrium to have been attained in a given market, and that for some appreciable period it is not disturbed, the price Tendency to Equilibrium. for the commodity dealt in, in the market, will remain practically unchanged during that period. Not that there will be no transactions going on, but that the amounts offered daily will be approximately equal to the amounts demanded daily.
We have briefly described the statical condition of a market; we must now briefly examine its dynamics. Disturbance may take place through a change Disturbance of Equilibrium.in—
(1) Supply, or opinion as to future probable supply.
(2) Demand, or opinion as to future probable demand.
(3) In both simultaneously, but such a change that demand is increased or decreased more than the supply, or vice versa.
A moderate disturbance caused by one of the above changes, or a combination of them, will produce an immediate effect on the price of the commodity, which again will tend to react on both the supply and the demand by altering the opinions of sellers and buyers. If no further change tending to disturb the market takes place, the market will gradually settle down again to a state of equilibrium. But if the disturbance has been considerable, a relatively long time may elapse before the market becomes quiet; and very likely the level of price at which the new equilibrium is established will be very different from that ruling before the disturbance set in. Further scientific
