annual cotton crop in the United States of, let us
say, 10 million tons of seed cotton. This crop will yield roughly
6-2/3 million tons of cotton-seed, and 3-1/3 million tons (or rather
more than 13 million bales) of lint. The combined price received by
the planter of (let us say) 14.4 cents for 1 pound of lint plus 2
pounds of seed should correspond roughly to the marginal joint costs
of production. But the factor of cost has no influence at all in
determining that this combined price is made up of a price of 12 cents
per pound for lint, and only 1.2 cents per pound (or $24 per ton) for
cotton-seed. To account for this we must rely entirely upon demand. We
can say, shortly, that the respective prices must be such as will
enable the demand to carry off 6-2/3 million tons of seed, and 3-1/3
million tons of raw cotton. Or we can go further and say that the
marginal utility of a pound of raw cotton, when 3-1/3 million tons are
supplied, is ten times as great as that of a pound of seed when 6-2/3
million tons are supplied.

If accordingly the demand for cotton-seed were to expand considerably
owing, say, to the discovery of some new use for the oil, which is its
most valuable constituent; the effect would be first a rise in the
price of cotton-seed, and, subsequently, by stimulating cotton
growing, a more plentiful supply and a lower price for raw cotton. And
so far at least as the increased supply is concerned, this must
necessarily be the effect, "other things being equal"; though, to be
sure, it might be outweighed and obscured by other influences such as
the boll-weevil. But it is _not_ the case that an increased demand for
mutton must necessarily increase the supply or lower the price of
wool; and it is most unlikely to do so in any similar degree. For,
here, the separate marginal costs of the two things exert their
influence. An increased demand for mutton will stimulate sheep
farming, but it will also stimulate the substitution of crossbred for
merino breeds; and the resultant of these two opposite tendencies upon
the supply of wool is logically indeterminate. As a matter of history
we know that the development of cold storage in the eighties (which we
may regard for the present purpose as equivalent to an increased
demand for Australian mutton) caused considerable perturbation in the
woollen and worsted industries of Yorkshire. They were faced with a
dwindling supply and a soaring price of merino wool; and the
adap