THE INFLUENCE OF COMMERCIAL CAPITAL ON PRICES
(Extracted from vol. III, part 1, ch. 18, German ed.)
IF the price of production of 1 lb. of sugar be $5, the tradesman could for $500 buy 100 lbs. of that article. If he buys and sells this quantity in the course of a year, and if the yearly average rate of profit be 15%, he would add $75 to the sum of $500, and to the sum of $5 the price of production of $5.75. He would thus sell the lb. of sugar for $5.75. But if the price of production of 1 lb. of sugar were to fall to 25 cents the tradesman could buy for $500 2000 lbs., and sell the lb. for 28.3 cents. The yearly profit, after as before, on the capital of $500 invested in the sugar trade would be $75. Only in the one case he must sell 100 lbs., in the other 2000 lbs.
(We make abstraction here of the costs of circulation, such as storage, forwarding, etc. Only the actual buying and selling are the objects of our investigation.)
The high or low level of the price of production would have nothing to do with the rate of profit; but it would play an important, nay decisive, part in determining the size of that fraction of the selling price of every lb. of sugar which dissolves itself in commercial profit--i. e. the supplementary price added by the tradesman to a definite quantity of commodities
If we except the cases in which the tradesman has a commercial monopoly, and simultaneously monopolises production, as e. g. in former days the Dutch East India Company; then can nothing be sillier than the common belief that it depends on the tradesman to sell, at his option, a large quantity of commodities at a small profit on each one, or else a small quantity of commodities at a large profit on each one. The limits to his selling price are two in number: on the one hand, the price of production of the commodity, which he does not control; on the other, the average rate of profit, which he does not control either. (It is question here only of commerce in the ordinary sense, not of speculation.)
Consequently the difference between productive and com-