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MARKET (Lat. mercatus, trade or place...

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Originally appearing in Volume V17, Page 732 of the 1911 Encyclopedia Britannica.
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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: (I) A large number of parties dealing. investigation of the dynamics of a market is in any case very difficult, and is impossible without a complete analysis of the statical condition, such as is found at length in the textbooks of mathematical economics; but it is possible to describe briefly certain dynamical phenomena of markets which are of a comparatively simple character, and are also of practical interest. Every great market is organized with a view not merely to the purchase and sale of a commodity at once, or " on the spot," but also with a view to the future require- Future ments of buyers and • sellers. This organization Delivery. arises naturally from the necessities of business, since modern industry and commerce are carried on continuously, and provision has to be made for the requirements, say, of a spinning-mill, by arranging for the delivery of successive quantities of cotton, wool or silk over a period of months " ahead." In the case of cotton, " forward deliveries " can be purchased six or seven months in advance, and the person who undertakes to deliver the cotton at the times stated is said in the language of the market to " sell forward." If the quantity of cotton produced each year were always the same, no very remarkable results would follow from this mode of doing business, except the economy resulting to the spinner from not being compelled to lock up part of his capital in raw material before he could use it. But as the cotton and other crops vary considerably from year to year, some curious consequences follow from the practice of " selling forward." The seller, of course, makes his bargain in the belief that he will be able to " cover " the sale he has made at a profit—that is, he hopes to be able to buy the cotton he has to deliver at a lower price than he undertook to deliver it at. If so, all is well for both parties, for the buyer has had the advantage of having insured a supply of cotton. But supposing something has happened to raise the price considerably, such as a great " shortage " of the crop, the seller May lose. If a great many other persons have. taken the same mistaken view of the probabilities of the market, a condition of things may arise in which they may be "cornered." (See
End of Article: MARKET (Lat. mercatus, trade or place of trade)
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