The Wise Investor
In the earliest days of the valley, trading was
done between individuals on a ad-hoc basis. The
population was small, and the trading of food and
goods was done whenever two people happened to
have something that was useful to the other.
Price was negotiated between the two parties
until both people were satisfied.
As the population increased, however, a new
system was developed for buying and selling food.
Once a week, all the valley people would gather
together to buy and sell food.
By now there were many farmers, so each
buyer had a choice of several people from which to
buy their goods. The natural laws of supply and
demand operated, so that if pumpkins were in
demand, for example, then the farmers would
charge a high price for their pumpkins.
Since the demand was high, all the farmers
would sell their pumpkins, even though they were
charging a high price. Other foods, however, might
be out of fashion. Beans, for example, may be tough
and stringy at a particular time of year and there
may be little demand for them.
The farmers would be willing to sell their beans
at a low price, as this was their only hope of selling
them at all. When demand is high, the sellers tended
to set the price. When demand for an item was low,
however, the buyers tended to set the price.
Whichever the case, the buyers and sellers
bargained until both were prepared to complete the
This, Kate, is the basic operation of a market.
Some markets take place at a particular time and
place, whereas other markets are distributed across
Any time there is a large number of similar
things for sale, the nature of markets comes into