HOW CHEAPLY CAN THINGS BE MADE?
No one will deny that if prices are sufficiently low, buyers will always be found, no matter what are supposed to be the business conditions. That is one of the elemental facts of business. Sometimes raw materials will not move, no matter how low the price. We have seen something of that during the last year, but that is because the manufacturers and the distributors were trying to dispose of high-cost stocks before making new engagements. The markets were stagnant, but not "saturated" with goods. What is called a "saturated" market is only one in which the prices are above the purchasing power.
Unduly high prices are always a sign of unsound business, because they are always due to some abnormal condition. A healthy patient has a normal temperature; a healthy market has normal prices. High prices come about commonly by reason of speculation following the report of a shortage. Although there is never a shortage in everything, a shortage in just a few important commodities, or even in one, serves to start speculation. Or again, goods may not be short at all. An inflation of currency or credit will cause a quick bulge in apparent buying power and the consequent opportunity to speculate. There may be a combination of actual shortages and a currency inflation—as frequently happens during war. But in any condition of unduly high prices, no matter what the real cause, the people pay the high prices because they think there is going to be a shortage. They may buy bread ahead of their own needs, so as not to be left later in the lurch, or they may buy in the hope of reselling at a profit. When there was talk of a sugar shortage, housewives who had never in their lives bought more than ten pounds of sugar at once tried to get stocks of one hundred or two hundred pounds, and