This hard to find short essay by John Locke is very surprising in its brief yet sophisticated thinking with respect to market prices and morality. I put it here mostly as a reference for others who may struggle to find it online.
Upon demand what is the measure that ought to regulate the price for which anyone sells so as to keep it within the bounds of equity and justice, I suppose it in short to be this: the market price at the place where he sells. Whosoever keeps to that in whatever he sells I think is free from cheat, extortion and oppression, or any guilt in whatever he sells, supposing no fallacy in his wares.
To explain this a little: A man will not sell the same wheat this year under 10 S(hillings) per bushel which the last year he sold for 5S. This is no extortion by the above said rule, because it is this year the market price, and if he should sell under that rate he would not do a beneficial thing to the consumers, because others then would buy up his corn at this low rate and sell it again to others at the market rate, and so they make profit off his weakness and share a part of his money. If to prevent this he will sell his wheat only to the poor at this under rate, this indeed is charity, but not what strict justice requires. For that only requires that we should sell to all buyers at the same market rate, for if it be unjust to sell it to a poor man at 10S per bushel it is also unjust to sell it to the rich for 10S, for justice has but one measure for all men. If you think him bound to sell it to the rich too, who is the consumer, under the market rate, but not to a jobber or engrosser, to this I answer he cannot know whether the rich buyer will not sell it again and so gain the money which he loses. But if it be said ’tis unlawful to sell the same corn for 10S this week which I sold the last year for week for 5s because it is worth no more now than it was then, having no new qualities put into it to make it better, I answer it is worth no more, ’tis true, in its natural value, because it will not feed more men nor better feed them than it did last year, but yet it is worth more in its political or marchand value, as I may so call it which lies in the proportion of the quantity of wheat to the proportion of money in that place and the need of one and the other. This same market rate governs too in things sold in shops or private houses, and is known by this, that a man sells not dearer to one than he would to another. He that makes use of another’s ignorance, fancy, or necessity to sell ribbon or cloth, etc. dearer to him than to another man at the same time, cheats him. But in things that a man does not set to sale, this market price is not regulated by that of the next market, but by the value that the owner puts on it himself: v.g. α has an horse that pleases him and is for his turn; this β would buy of him; α tells him he has no mind to sell; β presses him to set him a price, and thereupon α demands and takes £4o for his horse, which in a market or fair would not yield above twenty. But supposing β refusing to give £40, γ comes the next day and desires to buy this horse, having such a necessity to have it that if he should fail of it, it would make him lose a business of much greater consequence, and thus necessity α knows. If in this case he make γ pay £50 for the horse which he would have sold to β for £40, he oppresses him and is guilty of extortion whereby he robs him of £10, because he does not sell the horse to him, as he would to another, at his own market rate, which was£40, but makes use of γ‘s necessity to extort £10 from him above what in his own account was the just value, the one man’s money being as good as the other’s. But yet he had done no injury to β in taking his £40 for an horse which at the next market would not have yielded above £20 because he sold it at the market rate of the place where the horse was sold, viz. his own house, where he would not have sold it to any other at a cheaper rate than he did to β. For if by any artifice he had raised β’s longing for that horse, or because of his great fancy sold it dearer to him than he would to another man, he had cheated him too. But what anyone has he may value at what rate he will, and transgresses not against justice if he sells it at any price, provided he makes no distinction of buyers, but parts with it as cheap to this as he would to any other buyer. I say he transgresses not against justice. What he may do against charity is another case.
To have a fuller view of this matter, let us suppose a merchant of Danzig sends two ships laden with corn, whereof the one puts into Dunkirk, where there is almost a famine for want of corn, and there he sells his wheat for 20S a bushel, whilst the other ship sells his at Ostend just by for 5s. Here it will be demanded whether it be not oppression and injustice to make such an advantage of their necessity at Dunkirk as to sell to them the same commodity at 20s per bushel which he sells for a quarter the price but twenty miles off? I answer no, because he sells at the market rate at the place where he is, but sells there no dearer to Thomas than he would to Richard. And if there he should sell for less than his corn would yield, he would only throw his profit into other men’s hands, who buying of him under the market rate would sell it again to others at the full rate it would yield. Besides, as there can be no other measure set to a merchant’s gain but the market price where he comes, so if there were any other measure, as 5 or 10 per cent as the utmost justifiable profit, there would be no commerce in the world, and mankind would be deprived of the supply of foreign mutual conveniences of life. For the buyer, not knowing what the commodity cost the merchant to purchase and bring thither, could be under no tie of giving him the profit of 5 or 10 per cent, and so can have no other rule but of buying as cheap as he can, which turning often to the merchant’s downright loss when he comes to a bad market, if he has not the liberty on his side to sell as dear as he can when he comes to a good market. This obligation to certain loss often, without any certainty of reparation, will quickly put an end to merchandising. The measure that is common to buyer and seller is just that if one should buy as cheap as he could in the market, the other should sell as dear as he could there, everyone running his venture and taking his chance, which by the mutual and perpetually changing wants of money and commodities in buyer and seller comes to a pretty equal and fair account.
But though he that sells his corn a town pressed with famine at the utmost rate he can get for it does no injustice against the common rule of traffic, yet if he carry it away unless they will give him more than they are able, or extorts so much from their present necessity as not to leave them the means of subsistence afterwards, he offends against the common rule of charity as a man, and if they perish any of them by reason of his extortion is no doubt guilty of murder. For though all the selling merchant’s gain arises only from the advantage he makes of the buyer’s want, whether it be a want of necessity or fancy that’s all one, yet he must not make use of his necessity to his destruction, and enrich himself so as to make another perish. He is so far from being permitted to gain to that degree, that he is bound to be at some loss, and impart of his own to save another from perishing.
Dunkirk is the market which the English merchant has carried his corn, and by reason of their necessity it proves a good one, and there he may sell his corn as it will yield at the market rate, for 20s per bushel. But if a Dunkirker should at the same time come to England to buy corn, not to sell to him at the market rate, but to make him, because of the necessity of his country, pay 10S per bushel when you sold to others for five, would be extortion.
A ship at sea that has an anchor to spare meets another which has lost all her anchors. What here shall be the just price that she shall sell her anchor to the distressed ship? To this I answer the same price that she would sell the same anchor to a ship that was not in that distress. For that still is the market rate for which one would part with anything to anybody who was not in distress and absolute want of it. And in this case the master of the vessel must make his estimate by the length of his voyage, the season and seas he sails in, and so what risk he shall run himself by parting with his anchor, which all put together perhaps he would not part with it at any rate, but if he would, he must then take no more for it from a ship in distress than he would from any other. And here we see, the price which the anchor cost him, which is the market price at another place, makes no part of the measure of the price which he fairly sells it for at sea. And therefore I put in ‘the place where the thing is sold’: i.e. the measure of rating anything in selling is the market price where the thing is sold. Whereby it is evident that a thing may be lawfully sold for 10, 20, nay cent per cent, and ten times more in one place than is the market price in another place perhaps not far off. These are my extemporary thouht[s] concerning this matter.