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Chapter II.

Value is a Numerical Relation. Legał use of the words “ unit of value ”—Their importance—They are not defined in the law—Unit a synonym for measure—Evolution of the word “ value ”—Its classical meaning related to the power of numbers—During the Dark Ages it became associated with labour—In the Renaissance ft acąuired the meaning of an attribute of matter—Fallacy of this last view—The correct naturę of value rediscovered by Montesquieu and Bastiat Yalue shown to be a numerical ratio between all exchanged things— Value measurable by the whole numbers of money—The existing mint laws practically make the whole numbers of money (or the unit or measure of value) to consist of an indefinite sum, whose only limits fluctuate between illimitable demand and uncertain supply…

CHAPTER II.

VALUE IS A NUMERICAL RELATION.

Legał use of the words “ unit of value ”—Their importance—They are not defined in the law—Unit a synonym for measure—Evolution of the word “ value ”—Its classical meaning related to the power of numbers— During the Dark Ages it became associated with labour—In the Renaissance it acquired the meaning of an attribute of matter— Fallacy of this last view—The correct naturę of value rediscovered by Montesquieu and Bastiat—Yalue shown to be a numerical ratio between all exchanged things—Yalue measurable by the whole numbers of money —The existing mint laws practically make the whole numbers of money (or the unit or measure of value) to consist of an indefinite sum, whose only limits fluctuate between illimitable demand and uncertain supply.

The laws of certain States ordain that either one of several different coins weighing so many grains, or of pieces of paper of such a size, each called a pound, a dollar or franc, shall be “ the unit of value Important as they are, neither of these words, “ unit,” or “ value,” is defined in the law. Reasoning from its use in analogous cases, “ unit ” is a synonym for measure; but the meaning of “ value ” is not to be determined by analogy, for there is no analogous use of it in the statutes.

When it is remembered that the ablest logicians of all countries, from Aristotle to Mili, have vainly endeavoured to give it form, it will begin to be seen how complex and obscure the naturę of value must be, and therefore in what great uncertainty the statutes have involved all commercial relations, by using, without defining, this intricate term.

Nor is its use a mere matter of speech, of interest alone to pedants or grammarians. The existing law treats the value as a thing and measures our affairs and fortunes by means

of assumed relations to this thing, which, we shall see as we go on, is not a thing at all.

The law ordains that each one of its plural and numberless units of value called dollars, etc., shall be the measure of value in every exchange; and it compels these so-called units of value to be accepted in lieu of commodities and services, and for taxes, fines, and judicial awards. The law says, practically, “ You shall pay a unit of something which Aristotle never discovered; you shall be taxed ten units of something which Mili could not define; you shall be awarded a hundred units of something which is not described in the present law, and of which everybody at the present time has a different conception

Words are subject to an evolution which marks the course of ideas, just as—going a step further back—ideas follow the materiał progress of man. Thus, with the growth of the social organism words are created, refined, and specialised. With its decay they lose their special meanings and refinement; they become attached to grosser and grosser conceptions, and finally, are absorbed into other words, and lost. If a societary revival occurs, and the old word is resuscitated to grow anew, the new growth may be of quite a different character from the old.

Bearing in mind the numerical character of the ancient Greek and Roman monetary systems, the word“ value,” whose root is “ valeo,” or “ power,” appears to have originally become attached to the power of numbers employed as a common denominator for services and commodities. This, again, by metonym, came to mean purchasing power. In later times, when money of limited numberS had been supplanted by a coinage whose limits were controlled by the sovereign pontiff, when the Roman commonwealth had become an empire, and the public weal was supplanted by the interests of favoured classes, the original refined meaning of value was lost, and the term became associated with grosser conceptions, until, in the Dark Ages, it was attached only to individual services, and their produce ; it became a thing;

and it is in this erroneous sense that it is used in some existing laws.

With the Renaissance—the revival of commerce and the study of commercial facts and phenomena—the term “ value ” revived and aeąuired a new growth. From being a thing, or the associate of things, it rosę to be classed with the attributes of things. It is in this sense that it is viewed by the Economists, who successively imagined that they had discovered value in the attributes of materiality, durability, difficulty or cost of production or of reproduction, utility, desirability, scarcity, eta

Upon applying certain crucial facts to these last-named views, they are seen to be erroneous. Services have neither materiality nor durability, yet the fact that they are paid for proves that they are valuable. Ideas that are not difficult to evolve often fetch a valuable consideration. Neither buyer nor seller consults the cost of production or reproduction, else there would be no great variance of value, no sudden and widespread rise or fall of prices. It would be difficult to find morę than the merest traces of utility in those works of art and luxury which possess the highest value. If we look for value in desirability, both land and water, and a myriad of other things which form the first objects of man’s desires, but which naturę has supplied to him gratuitously, arise in view to defeat the search. As for scarcity, nothing is scarcer than a correct definition of value; but who is willing to pay for one, and how much is he willing to pay?

Unable to resolve value as a whole, the Economists attempted to manage it in parts. 1 They split it into pieces, calling them variously temporary, permanent, positive,

1 “ When the Turks had conQuered Greece and occupied Athens, after demolishing it, they attempted to rebuild it; but the stones of which the public buildings were madę, and which the ancients had handled with ease, this (then) half-civilised race found too large to lift back to their places. They were therefore compelled to break them up; and thus perished most of the beautiful and symmetrical architectural triumphs of antiquity.”—Leake’s Topography of Athens, p. cvii. London, 1821. 8vo.

negative, relative, intrinsic, market, monopoly, natural, exchange, cost, and speculative, value, until each fragment was small enough for their purpose. But in vain; there always remained an element of value which neither their mechanics nor their alchemy could dispose of, and which constituted the enigma of the science. 1 Such was the importance of this element that Bastiat afterwards said of it: “ Every truth or error which this word ‘ value ’ introduces into men’s minds is a social one

Some approach was madę to the solution of value when its normal variations were observed to coincide with rarity or scarcity; these conditions being merely the rude forms of a numerical relation.

That the naturę of value was, indeed, numerical, was somewhat confusedly indicated by the illustrious Montesąuieu, whose familiarity with both the monetary history of Romę and John Law s recent experiments in France enabled him to declare that, “ fundamentally, price depends entirely upon the numerical proportion of commodities to monetary symbols ”; and “ as the total sum of money is to the total sum of commodities in trade, so is a fraction of the one to a like fraction of the other” This does not explain value, but price; nevertheless, an attempt to explain value through the medium of price indirectly points to the numerical character of the former. 2

To the gifted Bastiat was left the task of successfully demonstrating that value did not reside in any object, and therefore could not be an intrinsic attribute of matter; that it was a relation between different objects; and that this relation only appeared during the act of exchange. Hence followed his definition that “ Value is the relation of two services exchanged ”. 3

1 Bastiat has a chapter on this subject in his Harmonies of Political Economy.

2 See, on this subject, Wallace and Smith, in Chap. XIV.

3 Harmonie$, p. 108. Jevons appears to have approached eąually near to the true solution of value when he regards it as a “ proportion Primer of Political Economy and Money.

But, as Jean Baptiste Say very truły remarked: “ It is not given to anyone to reach the confines of science: philosophers mount on each other’s shoulders to explore a morę and morę extended horizon”. When Bastiat discovered the generał naturę of value, he stopped. He found that it was a relation and that it only appeared in exchange. Beyond this point, he did not venture.

Yet no man was ever nearer to the whole discoverable truth without discovering it. He proved that “value does not residę in matter ”; “ naturę has nothing to do with value”; “value is a relation”; “value implies measure”; and “value is to political economy what enumeration is to arithmetic n . 1 Had he taken another step forward he could scarcely have failed to perceive that value was itself an arithmetical relation; for it can only be expressed Jn \r*numbers. But death took him away before his immortal treatise was completed.

Not only is his explanation of value incomplete, it is not broad enough. Why should value be restricted to an exchange between two services? Why does it not exist— as Montesąuieu suspected—between all services (and commodities) which are being exchanged, or liable to be exchanged?

The edifice which shelters us, for example, is not exchanged, nor being exchanged: yet it is valuable; and although that value cannot be definitely ascertained without offering to exchange the edifice for something else, it may be determined in a rude way by referring to the value of similar edifices which have been exchanged at the same place and at nearly the same time. Value, therefore, exists not merely between two commodities or services, but between | all of such; it exists not only between things which are | being exchanged but, by analogy, between all things exchangeable.

The opinion that money measures the value of only

1 Bastiat, Harmonies of Political Economy, pp. 104,107, 125, 127, 133.

those things which are in the market, up for sale, or being exchanged, is evidently derived from contemplating the disparity between the number or magnitude of all commodities and available services and the littleness of the measure—the sum of money—which marks their nominał equivalent. But the sum of money is of its present magnitude simply because it was so chosen to be, or so left to become; it can be madę larger or smaller at mans pleasure, whenever he chooses to exercise over it the same dominion that he has chosen to exercise over yard-sticks and pint pots; that is, whenever he chooses to define and limit by law the magnitude of the measuring unit, which, in the case of money, is, and can only be, from the naturę of things, the whole sum in use. Such increase or diminution of the sum of money will not change the value of other things one to the other; 1 it will only change the expression of it in the fractions of money, such expression being called price. Nevertheless, this price, or value expressed in money, can only be determined by the act of exchange.

In the same manner, the pint-pot is of its present size because it was so chosen to be; it would answer the same purposes and prove equally efficient, no matter what its size was madę; only in case of alteration, the expression of liquid measure in total pints would be different. The numerical relations between all other things would remain the same as before.

Whatever may be the origin of the notion that value only exists between things that are being exchanged, it is evidently erroneous. The fact is that nothing is being exchanged. It never can be truły said to be twelve o’clock, for time passes eternally, and whilst we speak, nay, whilst we observe the clock, time has elapsed and escaped fixture. The act of exchange, indeed all actions, are equally unfixable; and if value pertained to objects only during the act of exchange, it would practically not pertain to them at all.

1 MilLs Political Economy, III., 7, 2, p. 298,’ says: “ Causes which affect all commodities alike do not act upon values ”.

Value must, therefore, relate to things exchangeable as well as to those which are regarded as being exchanged; in other words, to all commodities and services.

The soundness of this conclusion is proved by the fact that when an exchange is being madę, the value of all things is held in view through the medium of price. No man will sell a horse, for example, until after he ascertains not merely what the intended buyer but what all other men, within reach, will give for it. This, the latter determines, not with direct reference to the cost of production of horses, nor to the degree of their utility, nor to their lastingness nor desirability, nor to the prices of the corn, land, and labour which have contributed toward their cost, nor even to the supply and demand for horses; but simply to their price, which means their value in money. This price connects the horse, in a rude way, with all other exchangeable things at hand, and, by means of commerce and intercourse, with all exchangeable things in the commercial world. It does not follow from these premises that the price of a similar horse would be the same everywhere, because the money of each country consists of a sum by itself, a sum which is only remotely connected (if at all) with somewhat similarly constituted sums in other countries, and also because the relation between the local supply and demand for horses may not be the same in any two places.

Thus far we have seen that value is a term of the highest commercial and political importance, yet one whose definition is nowhere to be found in the law; that the term has passed through many meanings, due to its long-time use and the vicissitudes of European civilisation; that the economists of the Renaissance regarded it as an attribute of matter; that Bastiat proved it to be a relation between two services exchanged ; and that further reasoning shows it to be a numerical relation, which in a rude way exists between all exchangeable things, as well as services, appears with precision during the act of exchange, and is to be measured most readily by means of money.

If it be asked: What is the essential character of this numerical relation called value? the reply must be, that although it depends upon many uncertain and incalculable elements, as human necessity, desire, passion, speculation, and caprice; yet that, as shown in another part of this work, it is essentially an eąuitable relation or one that between equal parties has a tendency to become eąuitable; that it is extremely variable (1) that it is extrinsic to and not connected with the physical properties of, nor difficulty of producing, commodities; and that it is susceptible of precise expression in numbers; and in numbers only.

Being thus susceptible of expression, it is sufficient for the purpose of dealing with it practically if value be for the present regarded as a numerical relation which involves the unknown ratio between the demand and supply of a service or commodity at a given place and time, as opposed to the unknown ratio between the demand and supply of another service or commodity at the same place and time; and that by comparison and analogy it extends to and between all services and all commodities.

In other words, value, though difficult to define, is not immeasurable. In this respect, it resembles time, space, gravity, and the other primordial conditions or relations of matter. The human measure each of time, of space, of gravity, is an arbitrary standard, adopted by human law; and so must be the measure of value. It is physically

(1)During the American Civil War a member of the New York Stock Exchange madę a profit of several thousand dollars by accepting both of two offers which were madę by different persons at almost the same instant of time, the one offering to sell certain railway shares at a lower price than the other offered to buy them at. This variation of value and double bargain must all have taken place within a half-second of time. The writer has known mining shares in San Francisco in 1878 to double and at other times to diminish one-half in value within a few hours. He has heard of an instance in the “ early days ” of California when the price of a common hay-scythe rosę in value from 25 cents (one shilling) to 100 dollars (£20) in the course of a few days; and of another instance when plug tobacco fell from a dollar (4s.) a pound to nothing, and was cast into the street-hollows -as valueless.

impossible to correctly measure value with gold, silver, or any other substance, as such. Value is not matter, but a condition or relation of matter: like distance. The distance between two objects is not intrinsic to either of them: it is not a thing nor an attribute of things; it is merely a relation between things, a relation measured by miles. So value is not intrinsic to services or commodities ; it does not inhere in matter, it is not a thing nor an attribute of things ; it is merely a relation between things—to wit, a relation which can only be precisely measured by money, and which cannot be so measured by gold or any other commodity as such.

There is no source of value, any morę than there is a source of distance. There is no cause of value, any morę than there is a cause of distance. The only way in which distance can be perceived and correctly measured is by means of comparison,—not a comparison between two or morę objects, but between two or morę distances. It is the same with value: the only way in which value can be perceived and correctly measured is by means of comparison,—not a comparison between two or morę objects, but between two or morę values. An attempt to measure one distance without reference to another distance could only end in failure: the thing is physically impossible. Yet an analogous attempt to accomplish a physical impossibility has ruled the world ever sińce 1666, when the numerical limits of money were sold by Charles II. to the goldsmiths of England and Flanders. This attempt consists of endeavouring to measure value with precision by means of metal as metal. It cannot be done.

Value is not merely a relation between services; it occurs between commodities. If it related only to services, or to the services employed in producing or reproducing commodities, then the cost of production or of reproduction would be a correct measure of value: but this is not true, e.g. y of silver at present. Of this metal there is a superfluous stock on hand, and its present value must be below that of

reproduction. So with the tobacco thrown into the street-hollows of San Francisco. If, instead of the cost of reproduction, we say the cost of obtaining a like service or commodity, this only shifts the inąuiry without answering it. What determines the value of a service or commodity? Answer: a like service or commodity; and so on ad infinitum. The truth is that there is no source of value. It does not arise from labour, any morę than it does from crime or delusion. Several years ago a swindler imposed upon the British Museum a forged MS., for which it paid a high price. Upon what basis was this price paid? Labour? There are a million of books in the British Museum which cost morę labour, but far less price. Scarcity? There are even scarcer books. Crime? Had the crime been known, the price would certainly not have been paid. The Museum authorities paid this price while labouring under a delusion,—the delusion of supposing that it was a very ancient copy of an “inspired” book. So Louis IX. paid to the Latin “emperor” Baldwin £100,000 for what he believed was the true Cross; so the Mormon Church recently offered 100,000 dollars for what they believed was the original Book of Mormon, so tens of thousands of deluded votaries annually pay sums of money to see or touch the Holy Coat of Treves. Is delusion, then, to be taken as the source of value? To state the proposition is to negative it.

Although the law at present declares that the measure of value shall consist of one single coin, it really and in point of fact consists of all coins and notes circulating within scope of the law. The law can, indeed, render one single coin the measure of value; but it can only do so by prohibiting and banishing all other coins. This it does not do. On the contrary, after declaring a single coin of a certain description to be the measure of value, it orders several hundred millions of similar coins to be fabricated; it makes them each and all payable for taxes and fines, and exchangeable for commodities, services, and each other,

and thus renders them altogether, in lump, one measure of value; because, as money relates to all things, and value is usually expressed in money, so value relates to all things, and not to any one thing by itself. In other words, such is the nature of value, such the law, and such the operation of the system of exchange, that the pieces of money cannot be used separately; they must be, and in fact always are, used collectively; so that the actual unit or measure of value is the whole legał or tale sum of circulating money, of whatever materiał or materials it may be composed.

We know already that the law has not specifically łimited this measure. But has it no limits whatever? Is the measure of value a mere abstraction? No. Under existing laws it has certain rude and indefinite limits, which have been left to chance, commerce, caprice, war, intrigue, legislation, etc. These limits are roughly known as the supply of money. By rendering so much money as may be found by experiment to express the value of any object of mans desire an effective offer in exchange for such object, the law has madę the demand for money illimitable. On the other hand, the supply of money in existing monetary systems is left to be determined by the march of conąuest, the progress of slavery, the vicissitudes of mining discovery, the development of mining economy, the social affairs of distant nations, the happening of war, the currents of trade, the progress of the arts, the course of legislation in various countries, the plots of financiers and speculators, the melting of coins, the wear, tear, and loss of coins, the profits of banking, the emissions of State and banknotes, and numerous other events and conditions, both uncertain and unstable.

Hence we have for value a complex numerical ratio of exchange, but precisely measurable by money; and for money, a measure susceptible of precise limitation, but, as the case now stands, actually left to vary between illimitable demand and morę or less uncertain supply.

Value, being a definite relation, cannot with propriety

be coupled with an indefinite article. “ A value,” for example, is erroneous. So are the expressions “ great value,” “marvellous value,” etc., so commonly used by tradesmen. The substitution of “ value ” for “ price,” and the use of “value” as a noun or substantive, are other forms of error in the use of this term. Graham, in his excellent work on “ Synonyms,” also notices its confusion with the term “ worth”. “ Value,” he says, has an active; “ worth,” a passive meaning. The quality “ worth ” is what | a thing has in itself; its “ value ” is determined by what it does for you. Worth is intrinsic; value depends on circumstances. It may be added that these circumstances relate exclusively to exchange.

Says a recent commentator on this subject: “ A relation existing between two things cannot be an ‘intrinsic’ quality of either. Value is such a relation, just as is marriage. There is no such thing as ‘intrinsic’ marriage, or ‘intrinsic’ value because both value and marriage refer to the relation between two or more persons or things, and not to a thing by itself. There can be no marriage without a bride and groom. There can be no value unless one thing or one service is compared, or considered in relation to other things. Were value an ‘intrinsic’ characteristic of gold, or diamonds, or anything else, there would have to be a new word coined to express the connection between the article so endowed by nature, and the other articles for which it is exchanged or exchangeable. Marriage is that which shows the relation of husband to wife. Value is that which shows the exchange relation of one or morę things or services to others. Both marriage and value are by virtue of this fact ‘ extrinsic,’ not ‘ intrinsic,’ characteristics. A man is not endowed by nature with the relation of marriage, as he is with the ‘ intrinsic ’ qualities which form his personal being; and neither is any product endowed with value, as it is with the ‘intrinsic’ characteristics of its composition. Value being ‘extrinsic’ may fall or rise without affecting the

VALUE IS A NUMERICAL RELATION.

valued substance. Were the value of a metal ‘ intrinsic’, it could not be altered without the application to the metal itself, of fire, or water, or a hammer, or some other physical agent. Being ‘extrinsic/ being simply the relation in which the metal in ąuestion stands in relation to other exchangeable commodities, it may be altered and modified without the application of any of these physical agencies. ‘ Intrinsic ’ value is the same contradiction in terms as ‘intrinsic’ marriage. It is an absurdity, a misleading phrase, a finger-post pointing to economic error.” (1)

Value only appears in the social state, and merely applies to exchangeable things. When used with respect to health, religion, etc., or anything connected with man in an isolated state, it is a metonym for worth, as when we say a man keeps a good table, meaning that he keeps good viands. The value of money is also used to mean the ratę of interest thereon at a given time and place; but this is a merely technical expression, into the merits of which it is not necessary to enter in this place.

(1) peoria Journal editorial, 1895.

CONTENTS.

Exchange. Exchange is a social act—The Greek, Roman, and French philosophers deemed exchange and money as part of the structure of society—Barter—Distinction between barter and selling for money—Essential characteristics of money—It constitutes a public measure—Barter leads to slavery ; money to freedom—Effigy of Liber Pater on ancient coins —Its significance—Enslavement of the Frisians —The dangers of metallism have given rise in modern times to an increasing proportion of paper promises to serve as money—Dangers arising from their assumed convertibility.1

Chapter II.

Chapter III.

Price. It is the expression of value in money—Price implies precision—It is intended to be a precise expression of value—But this it cannot be unless the whole sum of money is limited and known— Harris, Smith, Mili, Locke, Hume—Price cannot be definitely expressed in a single coin independently of others—Prices of commodities tend to fall; of services to rise—This tendency defeated by private coinage and the monopolisation of gold—Price not due to cost of production; it expresses a dynamical or kinetic relation between money and exchanges in time ..20

Chapter IV.

Money is a Mechanism. Money is a mechanism designed to measure value with precision—The law alone can determine what is and what is not money—The function of money correctly understood by Aristotle—During, or shortly previous to, the sera of that philosopher, the volume of money in each country was limited, and it

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formed a definite measure of value therein—It is now everywhere unlimited, and has lost its character of an exact measure—Money at present is not defined in the laws. For this reason it is unlike all other measures—Money is intended, but not now fitted, for a measure —The size or weight of a dollar or pound sterling furnishes no guide to the whole number of dollars or pounds: yet it is this which constitutes the measure of value—The measuring function of money is altered with every change in the whole number of so-called units of value—Not so with the units of weight, length, volume or area . . 25

Chapter Y.

Constituents of a Monetary Mechanism. Control over the precious metals—Mines royal—Treasure trove—Control of the coinage —Use of two or morę metals for coins—Coins as numerical symbols— Size, weight, fineness and shape—Mark of authority—Denominations —Compulsory use—Legal-tender—Restrictions upon hoarding, melting, or exporting—Counterfeiting—Interdict of private coinage—Taxes on mining, etc.—Most of these regulations are now overthrown— Private coinage has degraded money to metal—The use of metal in place of money reduces all commerce to the basis of barter—

—The numerous States have avoided this by resorting to paper systems, and this tendency is increasing—The demonetisation of silver is promoting that of gold.57

Chapter VI.

History of Monetary Mechanisms. Evolution of money— Barter—Valuing commodity—Barter—Coins—Their defects—Nomisma —Its downfall—Coins subjected to legał and sacerdotal regulations— Monetary systems of the Roman Empire and of European States— Coinage Acts of the sixteenth century—Origin and progress of private coinage—Private money, or metallism—This is the present phase of monetary mechanisms—It is virtually a return to barter—Its conseąuences have been the enrichment of money-lenders and the impoverishment of States—The remedy adopted in many States has been paper systems …. -.60

Chapter VII.

The Law of Money. The Greek law—The Roman law—The Common law—Philip LeBel—Decision under English law—Corn rents—

The Codę Napoleon—The Court of Cassation—Decisions of the United States Supreme Court—Metallic theory—Black Laws of James III. of Scotland—Special Contract Law of 1878—Disastrous effects of this legislation—Imperative demand for its repeal—The Law of Nations relative to money.95

Chapter VIII.

The Unit of Money is all Money. Origin of the word “ money ” —Its employment with reference to any period before b.c. 273 an anachronism—Money, or nomisma, meant originally the whole numbers of money—This was its classical meaning—During the Empire and the Dark Ages money came to mean one or morę coins—This is the meaning attached to it in the laws of modern nations, because these laws originated in the Dark Ages—During the Renaissance it meant the

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whole quantity, not numbers, of money—This is the meaning sometimes attached to it by the Economists, because their systems datę from the Renaissance— Incongruous naturę of this definition—In speaking with precision, money can only mean all the numbers of money of a given country—Teleologically, the unit of money is all money ..109

Chapter IX.

Moneys Contrasted with other Measures. Differences between moneys and other measures, even when both are limited—

1. Money is used to determine the value of numberless things at the same time; a yard-stick to determine the length of one thing at a time—2. Money determines a dynamical and variable relation; other measures, a statical and fixed one—3. Money determines a numerical and extrinsic relation; other measures determine quantitative or qualitative attributes—4. Money determines an equitable relation; other measures determine quantities which have no connection with equity—5. Moneys have a tendency to instantly amalgamate, and two or morę moneys will merge into one money of the combined volume of both, which is not the case with other measures . . . 123

Chapter X.

Limitation is the Essence of Moneys. Resemblances between money and other measures—All measures of precision are of artificial dimensions—To become a precise measure money must also be of artificial dimensions—All other measures are susceptible of exact numerical expression—To become a just measure money must be defined numerically—The efficiency of all measures, money included, depends upon the exactness of their limits, not the substance of which they may be composed—The limits of other measures are not left to be determined by supply or demand, nor should be those of money . 127

Chapter XI.

Limitation: a Prerogative of State. The limitation of the monetary measure was anciently a prerogative of State—Its surrender by the State in the sixteenth century—Since that period money has been in a chaotic condition—The “ automatic system ” is no system at all—Neither individuals nor corporations can regulate money—

The State alone can do this—Nor may the State do it arbitrarily— Circumstances and considerations that should control State action on the subject.130

Chapter XII.

Universal Money a Chimera. This project was born with the legislation which permitted private coinage—Its progress down to the present time—Its agency in elevating and enriching the moneyed class—Their advantages threatened by the growing use of government paper money—Universal money is a scheme to enable these advantages to be retained by the money-lenders—Its impracticable character— Universal money impossible without moneyers all government—Evils and dangers of national metallism—These are now local—With universal metallism they would become generał—It threatens the autonomy of the State—It tends to degrade Europę to the level of India—Absolute measures of value—The basis of “universal money” is the cupidity of the money-lenders ……. 134

b*

Chapter XIII.

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Causes and Analysis of a Ratę of Interest. Causes of a ratę of interest—Temporary supply of money—Ratę of profit in trade—

Ratę of profit in production—Ratę at which animals, plants and minerals increase—Ratę at which the means of subsistence increase— Subsistence ultimately governs the ratę of interest—Subsistence also governs the growth of population ; so that population and the ratę of interest are related—When to the ratę of interest, arising from increase of subsistence, there are added allowances for risk, taxes, and the cost of superintending loans, the market ratę of interest follows— Present tendency of the market ratę—Ignorance of American ministers of finance—Usury laws.142

Chapter XIV.

Velocity of Circulation. Opinions of Locke, Thornton, Mili, and Fawcett—Elements of the calculation—Money used for paying labour—Money and credits used for commerce—Transportation— Finance—Real estate transactions—Money used for insurance—Savings—Taxes—Summary—Comparison with actual circulation and reserves—Deduced ratę of velocity—Unwarranted conclusions of Mr. Horr and others—Coincidence of the sum of exchanges with that of money and credits, when reduced to a like velocity …. 148

Chapter XV.

Relation of Money to Prices. Given the level of prices and the sum of exchanges in time, the sum and velocity of the circulation are deducible—Prices have nothing to do with the materiał of money—

Nor value with the names of coins—Blunder of trying to maintain metallic Systems with private coinage—Voice of authority—Logic of events—Nearly every modern State has been obliged to abandon such systems—Example of Russia— False principles deduced from metallism —Different influences on prices and trade, of metallism and numerical money.164

Chapter XVI.

Increasing and Diminishing Moneys. The fallacy that value flows from labour—Dr. Smith and Bastiat—Error of supposing that the currency of a State cannot be artificially increased—Historical examples to the contrary—Milan—Spanish America—The United States during the Civil War—Crescendo and diminuendo moneys . 170

Chapter XVII.

Effects of Expansion and Contraction. Conseąuences of increasing and decreasing moneys—Their influence upon trade, upon social and domestic relations, upon character, upon genius and invention, upon morality, upon crime, upon political affairs—Opinion of the Monetary Commission—Social conseąuences of contraction—Opinion of Mr. Tooke—Influence of expansion upon enterprise and art—Money and civilisation—The halcyon age of Europę.177

Chapter XVIII.

PAGE

The Precession of Prices. Explanation of price—It cannot be expressed in a given coin or sum of coins independent of other coins—

It varies directly with the whole numbers of money—Logically a doubling of money will instantly effect a doubling of all prices—In point of fact, this doubling occurs in time, and the time varies in various States and with different commodities—This variance subject to natural law—Such law called the Precession of Prices, or Movement of Prices in Time—Results of practical observations on the working of this law—Danger of employing a money without fixed limits—Other practical observations concerning moneys . . . 184

Chapter XIX.

Regulations of Prices. Coins are madę of gold and silver not because of the intrinsic ąualities of these metals—The practice arose from the superior constancy of their ąuantity as compared with other substances, and during eras when artificial moneys of fixed quantity were politically impracticable—Historical examples—The precious metals were never permanently used for coins until the conąuest of Spain by Romę—When the first effects of this conquest subsided, the precious metals were less used as materials for coins, until the Spanish conąuest of America—The effects of the conąuest of America and its great supplies of gold and silver to Europę upon prices have been sustained by means of convertible paper notes—This system incapable of further safe extension—Necessity for reform in money—Fluctuations of prices which have resulted from the failure of “ convertible ” notę systems—Their disastrous and baneful effects.190

Chapter XX.

Regulation of Moneys. Fluctuations of price which do not belong to the domain of science—Variations which do—Practical considerations for the regulation of money—effect in the United States of an absolutely fixed sum—Influence of a fixed sum per capita of population—Actual movement of population and money during the past century—Had money been regulated instead of being left to commerce, chance, and political contention, the great panics of 1815, 1821, 1837,

1861,1873, and 1893 might have been averted.197