The legislator must regard the needs of man, the abundance or scarcity of things, the difficulty, labour, and risks of production.  When all these things are carefully considered the legislator is in a position to fix a just price.[2] According to Endemann, the labour of production, the cost and risk of transport, and the condition of the markets had all to be kept in mind when a fair price was being fixed.[3] We may mention in passing that the power of fixing the just price might be delegated; prices were frequently fixed by the town authorities, the guilds, and the Church.[4]

[Footnote 1:  Roscher, Geschichte, p. 19.]

[Footnote 2:  Op. cit., IV. xv. 10.]

[Footnote 3:  Studien, vol. ii. p. 43.]

[Footnote 4:  Endemann, Studien, vol. i. p. 40; Roscher, Political Economy, s. 114.]

The passage from Gerson which we quoted above shows that, when a just price had been fixed by the competent authority, the parties to a contract were bound to keep to it.  In other words, the pretium legitimum was ipso facto the justum pretium.  On this point there is complete agreement among the writers of the period.  Caepolla says, ’When the price is fixed by law or statute, that is the just price, and nobody can receive anything, however small, in excess of it, because the law must be observed’;[1] and Biel, ’When a price has been fixed, the contracting parties have sufficient certainty about the equality of value and the justice of the price.’[2] Cossa draws attention to the necessity of the fixed price corresponding with the real price in order that it should maintain its validity.  ’The schoolmen talk of the legitimate and irreducible price of a thing which was fixed by authority, and was for obvious reasons of special importance in the case of the necessaries of life....  The legitimate price of a thing as fixed by authority had to be based upon the natural price, and therefore lost its validity and became a dead letter the moment any change of circumstances made it unfair.’[3]

[Footnote 1:  De Contractibus Simulatis, 69.]

[Footnote 2:  Op. cit., IV. xv. 10.]

[Footnote 3:  Op. cit., p. 143.]

Sec. 3. The Just Price when Price not fixed by Law.

When the just price was not fixed by any outside authority, the buyer and seller had to arrive at it themselves.  The problem before them was to equalise their respective burdens, so that there would be equality of burden between them, or, in other words, to reduce the value of the article sold to terms of money.  In order that we may understand how this equality was arrived at, it is important to know the factors which were held to enter into the determination of value.