4. The general law of exchange is _value for value_. This will be obvious if we recur to one of our statements concerning the nature of value, namely, that is the quantity of one commodity that may be equitably exchanged for a given quantity of another. It will be still more obvious if we recall the complete definition: value is our estimate of the sacrifice requisite to secure possession of a desired object. Thus, if it require the labor of one day to produce a pair of shoes, and the labor also of a day to produce three bushels of oats, then the rule of exchange would be three bushels of oats for a pair of shoes, because the required labor in the one case is precisely equal to that in the other. This is the fundamental law, but it is modified in its operation by certain other facts and principles. Chief among these is the law of _supply and demand_. By supply is meant the quantity of any commodity which is in the market. Demand signifies the quantity which is desired at a given price. The definitions are sometimes erroneously given of supply as the quantity which exists, and demand as the quantity desired. But a man may offer for sale a load of wheat, provided the price is a dollar a bushel, but withdraw it from the market if the price is but ninety cents. A thousand people in a certain town may desire diamond necklaces, but not half a dozen may be able to purchase them. Hence supply is all that is offered in the market; and demand is desire with ability to purchase. Demand and supply affect prices in this way. Suppose a community has been exclusively using wood for fuel, and their wood can be had at a certain price. After a time a coal mine is discovered in the vicinity, and coal can be furnished much cheaper than wood. This would lessen the demand for wood. As there would be the same amount for sale as before, the seller would be in competition, and the price would fall. So if for any reason before the discovery of the coal the supply of wood had been diminished one half, the demand being the same, the price would rise. Thus we have the general principle that other things being equal, the greater the supply, the less the price; the smaller the supply, the greater the price; the greater the demand, the greater the price; and the smaller the demand, the less the price. In other words, the price varies directly as the demand, and inversely as the supply. In general price varies as the cost of production plus or minus the effect of supply and demand. These principles are affected again in many ways which we can not here explain. Yet the variations are always temporary, and the price or market value always tends to seek the level of cost of production.