Observe the working of this principle. Take watches. At one time they were made by hand, slowly, laboriously, in stances being not uncommon of a craftsman spending half his lifetime to make a very fine one. Under these conditions watches are rare and costly. Only the very rich can buy them. Suddenly they began to be made by machines. A very good watch can be made for fifty dollars. There are a million people who want watches at that price. This is an original demand, a kind of vacuum, represented by a million people who have never had watches and now for the first time may possess them. Watches cannot be made fast enough to meet this want. The industry, for that reason, expands very fast. Then all at once the demand is satisfied. The million have watches. The vacuum has been filled. Hereafter the demand will tend to be static: it will increase slowly as the population increases or as people in general grow richer, little by little. The watch-making industry, therefore, is depressed. It has to limit production. Now comes someone with the idea that by carrying the machine method further a watch can be made for ten dollars. There are twenty million people who can afford to buy watches at that price. The ten-dollar watch appears. The demand again is like a vacuum, twenty times greater than the first. For a while ten-dollar watches cannot be made fast enough. The makers of fifty-dollar watches throw away their old machines, install new ones, increase their production, reduce their costs, and not only make what was a fifty dollar watch for twenty-five but contribute also, in a competitive manner, to the supply of ten-dollar watches. Suddenly what happened before happens again. The twenty million have watches. The vacuum is filled. Then someone says: “But there are one hundred million who would buy watches at two dollars”. So the process is repeated, still lower in the pyramid. The two-dollar watch is not a fine watch, but it will keep time; and as you would know, with the improvement that has taken place in machine practice the cost of making any kind of watch, even the finest, has been greatly reduced. A watch ceases to be a luxury or a token of caste. It is a necessary part of man’s personal equipment, all the way down to the base of the pyramid. There you have the cycle. The use of the machine is to cheapen the cost of production. The sign is quantity. When the supply at a given price has overtaken the effective demand you have either to idle your machinery, in which case your cost of production will rise, or open a wider demand at a lower price. To lower the price and keep a profit you have to cheapen the cost of production still more. This you can do only by increasing the quantity, which again overtakes the demand, creating again the same necessity to cheapen the cost by increasing the quantity in order to be able to make a lower price for greater demand. Thus supply pursues demand, downward through the social structure.