these variations were so huge as to constitute a most formidable
embarrassment and to contribute, more perhaps than any other single
factor, to the unrest and instability by which the industry has been
afflicted. But they are always with us, if usually upon a more modest
scale.

What, then, is the normal relation between price and cost in the case
of coal? Should we direct our attention to the average costs over the
whole industry, or the costs incurred by the richer and better
situated mines, or, lastly, that of the poorer and worse situated?
Now, as things are, it is clear enough that no concern will continue
indefinitely producing at a loss. It may do so for a time, rather than
close down altogether, hoping to recoup itself later when the market
has taken a more favorable turn. But, in the long run, taking good
years with bad, it must expect to obtain receipts sufficient not only
to cover its necessary expenditure, but to provide also a reasonable
profit on the capital employed. Of course, once the capital has been
sunk and embodied in plant and buildings, which are of little use for
any other purpose, a business may continue for many years, with a rate
of profit far below what it had anticipated. But plant and buildings
gradually wear out, and need to be replaced; the course of technical
improvement calls continually for fresh capital outlay, which a
business in a bad way is reluctant to undertake. The tendency,
therefore, when profits rule low over a considerable period, is for
the plant to fall gradually into disrepair and obsolescence, and
finally for the business to disappear. We can thus include an
ordinary rate of profit under the head of cost of production, and say
with substantial accuracy that for no business can this cost for long
exceed the price if the business is to continue to exist. If then the
relatively poor and badly situated mines are to be worked, the price