STABILITY IN VALUE.

That stability in value is the essential requisite of the monetary standard, seems incontestable. But what shall constitute stability? Since the word means ability to resist disturbing forces, and since the ability to resist depends on the nature of disturbing force, what kind of force does it most concern us to resist? Value itself, too, is essentially a relative quality, which a thing has not independently, but only with reference to something else; and what is that something with reference to which the standard of values should be stable? Neither of these questions should be neglected in a complete consideration of the subject.

The disturbing forces which the value of the monetary standard ought to have ability to resist, are those which interfere with its functions as money. Taking up the uses with which money has been credited, and inquiring what interferences with those uses are to be avoided, we have no difficulty in deciding (1) that, as a medium of exchange, it is sufficient if a stability of value is maintained until the exchange is completed, so that the only fluctuations we have to fear are the violent ones which derange prices during the short interval between our sales and our purchases, the more gradual changes, extending over years or even over months, being practically indifferent ; (2) that as a common denominator or measure of value, it is the rapid and not the gradual changes that prove real obstacles to the money function, for to the latter the mind can accustom itself, practically, as well as to perfect constancy-particularly in view of the fact that subjective values, the uses which the same objects have for us, in course of our own growth and maturity and senescence, themselves change far more widely than the money metals have ever changed; (3) that as a standard for deferred payments, the constancy required is for the period, longer or shorter, between the time when the payment is promised, and the time when it is made; (4) that as a store or hoard or convenient form of dormant capital, money should hold a constant value for the timeusually short-during which it remains stored. With all uses of money except the third, therefore, slow changes in value, requiring years to become perceptible, do not injuriously interfere, and need hardly be considered. With regard to its use as a stand. ard for deferred payments, any changes in its value, not contemplated by the contract. ing parties, must of course be injurious to one of them and unfairly favorable to the other, whether the change be slow or speedy. But the case is different with gradual changes in process when the contract is made. Any factor which is to affect the value of an anticipated payment is naturally taken into account in estimating the present worth of that payment. Adjustments of this kind are made in fixing the rate of interest, which is necessarily higher when the unit of value is depreciating, and lower when it is relatively increasing, since interest is, as precisely as the word can be defined, the difference between the value of present money and the present value of future money. The general conclusion is that for all purposes except that of discharging a very small proportion of the obligations in force (a proportion which, it ought in justice to be admitted, is not quite so small in respect to total amount as in respect to number, for some of those obligations are for large sums) a gradual change in the monetary unit is of slight importance, and the only serious changes are the short, sharp, sudden ones. Stability is here like seaworthiness in the ship, of which very little is required to ride the slow tidal waves, and hardly more to withstand the great swells, but which is called into full exercise in bearing up against the chopping sea. Our unit of value should steadily ride the chopping seas of ebbing and flowing commerce.

AN APPRECIATING STANDARD.

The direction in which these disturbing forces act is a question of some importance, and is thought to have more importance than it has. Is there a foundation for the doc trine so zealously taught, that a change in one direction is hurtful or dangerous, and a change in the other harmless or even salutary? It is quite true that more complaint has been made of falling prices and appreciating currency, said and believed to be scarcer, than of advancing prices and baser currency, credited with being plentier and "easier"—or at least that the former kind of complaint is always favored with a louder popular echo-because the debtor has readier access to the sympathy of his fellows than the creditor can ever hope for; but what reason can be given in its support, apart from the appeal to prevalent partiality? The public interest, we are reminded, is more with the debtor, because social progress is largely due to his hopefulness and enterprise. We are even told that "a market that is constantly falling as a result of an appreciating currency is perhaps the most deadening and benumbing influence that can touch the enterprise of a nation." Capital is discouraged from production of goods whose price is falling, drawn out of businesses in which the community is served and into idle hoarding. Nor is this the final clause in the chapter of ills, for in a growing scarcity of money we are to read the doom of civilization itself; the good old Tory historian Alison being drawn upon for sonorous

demonstrations that the night of the Dark Ages, following the fall of the Western Empire, was brought about by a failure of the money supply, and that the modern revival of culture is a direct outcome of the quickening of Europe by silver from Potosi. The list of arguments of opposite tendency, favoring appreciating money and the creditor's side. is very much shorter. The most important of them is the interest of the laboring man, which is unquestionably, though too many people fail to realize it, altogether that of the creditor. The creditor class," so often portrayed in appeals to imaginative sympathy, is made up of corpulent capitalists, clipping coupons in lazy luxury, swarming the multifarious pleasure resorts along the Atlantic coast, whenever not in prosecution of their unblessed machinations in Wall street-the creditor class of sober fact includes as its most numerous and practically most important element, the scores of thousands of manual laborers whose wages are in arrears-toiling men and women whose compensation has been postponed, or who voluntarily leave funds in the hands of their employers because believing them safest there.

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To this briefer showing of arguments the reply may be in like manner briefer it is enough to say that arrears of wages, though the amount of them may reach a huge figure in the aggregate, are rarely large in any individual instance; and that the times for which they rem in due are measured usually by fractions of a month, rarely prolonged to many months, so that the suffering that would be caused in any case by a depreciating unit of value must be, unless the depreciation were violent, inconsider able. To advocate an appreciating unit of value as a measure of deliberate policy, for the sake of the advantage that would accrue from it to the great body of wageearners, would be, moreover, practically futile. Any movement of this kind, by which the working man could be benefited, would infallibly be discounted to ins disadvantage beforehand, by the same management that great manufacturing firms now use, when they cut off the profits which more economical applications of machinery would otherwise bring to their piece-workmen, through successive reductions of their rate of compensation per piece. We may depend upon it, the first benefits of social changes of any kind are going to come always to those most and not to those least able to foresee them.

A DEPRECIATING STANDARD.

But how about the supposed reasons for preferring a currency whose value is gradually sinking? The advocates of such a currency do not usually, it is true, lay stress so much on the depreciation as on the greater abundance of the material forming the measure of values. This is what they delight in calling a stimulus, and its effects are indeed analogous to those of the stimulus physiological. It gives not strength, but a feeling of strength; it brings out energy for present expenditure by drafts on the reserve, which drafts must some time be met in full without default; it may be very useful in tiding over a season of low vitality, but is reckless folly when there is no abnormal demand to be met. Very little attention need be paid to the instances from history, adduced to prove a high civilization the result of an abundant gold and silver supply, simply because in this supposed proof, like so many others which the economical inquirer is called on to examine, the relation of cause and effect is reversed. It is indubitably true that a higher stage of civilization will bring to light and find use for more of the precious metals than will a lower, and in that truth we have all the explanation we need for the coincidences exploited by Alison.

The question of business enterprise may be treated with somewhat more gravity; for enterprise is a blessing not to be decried, still less to be sacrificed, or even needlessly endangered. But so far as this blessing depends on the reward awaiting it, we must admit that a gradually depreciating currency will not certainly insure it if the depreciation can be foreseen and allowed for; since the fact is well established, that interest is higuer on a depreciating and lower on an appreciating capital, so that the enterpriser must pay out in that way what he makes in the other. Then how far is it true that a moderate tendency to depreciate will have the effect of keeping capital active that would otherwise be hoarded, thus providing more work for willing hands and more efficiently serving the community? This is an argument of high plausibility; in fact it might even be admitted to have a considerable share of truth in it, but that it fails to take proper account of the real causes and conditions of hoarding money; for is it not a fact of experience that money is kept idle, rather from a fear of losing it altogether than because the return from its investment is thought too low? We all know that investments believed to be unimpeachably safe, such as the bonds of a solvent government, never fail to draw out money that remains hidden from others of far fairer promise but of less security. Can there be any doubt that the tend ency appealed to in this very argument, the attraction of money to better-paying investments, would be effective in drawing it to even a low paying enterprise in preference to no interest at all, if entire safety were assured? Otherwise expressed: "The greatest part of the evil of a diminishing money supply is wrought through the discouragement

of enterprise, through the diminution of legitimate profits, through the preference given to all investments of capital which result in a fixed charge upon production, over those which involve a participation in the gains or losses of active business." This sentence is quoted from one of the ablest and most celebrated economic writers our country has produced, but even the respect commanded by his name, standing and work are insufficient to give it practic l justification. The returns of investments resulting in a fixed charge on production depend inseparably on the returns of the production, and must necessarily rise or fall with them. The law of demand and supply suffices to prevent too attractive investments from becoming disproportionally profitable. As a matter of observation, business enterprise is subject like animal spirits" to ebbs and floods, all uninfluenced by the state of the currency-or rather, indeed, moulding for itself a currency in accordance with its own unrestrained caprices-and the stronger the floods the lower will be the ebbs. Each in its own way, our sad collapses of 1837 and 1857 and 1873 are all traceable to over-stimulated business enterprise, and warn us unmistakably that even so good a thing can sometimes be redundant.

ness.

It may well be doubted whether an avowed and deliberate encouragement of debtors as a class is good policy, notwithstanding their enterprise and progressiveThe objection that too much encouragement may make them too enterpris ing and too progressive, is not less well-founded than obvious; but a more serious objection arises from inquiry at whose expense the encouragement must be had -what important section of the creditor class there is, gifted with neither the power nor the skill nor the knowledge to escape the consequences of money depreciation. Plainly the laborer must bear the expense of it, because he alone is unable to contrive to avoid it. The capitalist can refuse to lend, or to extend loans, except at higher interest; the working man must enter the market with his only merchandise, the toil of his hands, which must be disposed of for what it will bring, at once, or else be jost. The necessity that the laborer must suffer in his earnings when money depreciates is all but self-evident. The fact that he does suffer is clearly proved by Mr. Atkinson's investigations, and can also be read from the accompanying chart, where values in wartime are reduced from paper to specie. Finally, the difference does not seem to be vitally important, whether a currency depreciates as a direct result of its greater abundance, or from any other cause whatsoever. An increased abundance to which the limits have become evident, as from the opening of mines whose production has begun to fall off, is less hurtful as a source of depreciation than one to which no one knows where to set a limit; but the difference is of quantity rather than quality. The value of money could be destroyed as hopelessly, and essentially in the same way, by unlimited increase in quantity as by unlimited debasement in composition.

This assumption, that the good of society might be advanced by money growing cheaper, has called for a much more elaborate refutation than the rival assumption that benefit is to be had from money growing dearer. The reason is merely that the one assumption is more frequently made than the other; not that there is any essential difference in point of demerit between the two. Whether it be appreciation or depreciation, every change in the standard by which values are reckoned is more hurtful than helpful, and the chief consideration determining the degree of hurtfulness is that it is greater the more sudden, and less the more gradual the change. But the important question, what is to constitute a change, and how we are to estimate the degree of it, or even the existence of it, yet remains unanswered. It need hardly be confessed that if we are without means of satisfying ourselves whether a change has occurred, or what kind of a change it is that has occurred, the discussion of this subject must be lacking in prac tical interest.

STANDARDS OF VALUE.

A change in value, like change of every kind, is unmeaning except in relation to something which is understood not to change. What, in the case of values, is or ought to be that something? This is a question to which we give a practical answer every day, in terms of our customary currency. Precisely the same inquiry, over which we thus puzzle, is every hour receiving its hundred thousand answers, wherever a commercial transaction is conducted or any estimate of worth or price made. And are those hundred thousand answers as satisfactory as the best answers to which our closest reflection can lead us? In all but a small minority of cases, yes. In all but a very few of that minority-perhaps a few dozen out of the hundred thousand--the answer, in terms of customary currency, is seriously unsatisfactory only when the fluctuations of that currency are abrupt and violent. But of course the true measure for which we are seeking ought to suffice for these few exceptional cases also, as well as the great mass of cases for which any accepted measure suffices. Thus there was a decided contradiction in our estimates of the natural unit of value, in the war and reconstruction days whet there were widest changes in the factor that we knew as "the price of gold." As this price rose or fell, other prices rose or fell with it, and this had in many ways the effect

of a real movement in values, for people acted and felt, when the currency price was higher, as though they were receiving a larger return for their merchandise, and when it fell off, as though they suffered a real loss. But for those who dealt with other countries where there were no such fluctuations, there was no such reality. Among the more reflecting of our people, even without the evidence of foreign trade to remind them, there was all the time a sense that values were not changing as prices changed; and yet, so strong is the tendency to look upon the nominal unit as a true unit, few of us who have had anything to do with statistical investigations can have failed to see more than one interesting and promising inquiry, dealing with values, sadly vitiated by a naive use of the census figures for 1870 as if the "dollars" in its tables had the same meaning as those for 1860 and 1880, and as if any conclusions worth considering could be reached with regard to the variations in business and consumption in the two decades before twenty per centum had been struck off from all the returns for 1870. In making this correction we are practically accepting the gold standard as uniform; and it has never been doubted that gold is a better standard than a mere promise of gold, a probability of gold, whose value has not only all the uncertainties attaching to gold itself, but in addition to these the greater uncertainties attaching to the power and disposition of the government to make good its promise.

To assume gold as intrinsically the uniform measure of values, without further reflection than is founded on seeing it accepted in the coinage of sundry countries, a distinction which it owes to the physical properties that make it convenient, while the difficulty of procuring it insures us against a glut of it; this is only one step in advance of assuming that the word "dollar" always denotes the same value. It is convenient rather than convincing. Undoubtedly we can, if we please, arbitrarily define uniform value as gold value, and logically draw all manner of conclusions as necessary con sequences from that definition; but that method is scholastic rather than scientific. Value is based on demand, and a demand so essentially conventional as that for gold would not form a natural foundation of value.

COMMODITY AND LABOR STANDARDS.

It seems eminently reasonable that the unit of value should be that which meets a unit demand; and two ways of estimating this latter unit--each of them a species with varieties--have been advocated. The first of these is by the composite or tabular standard: a number of articles of general consumption is taken to form a mean price; this mean being either a simple average, or one with its components weighted according to estimated consumption; the demand for a fixed amount of this average commodity is assumed as a uniform demand, and therefore as answering to a uniform value. By this reckoning, if the gold price of the adopted average commodity falls, this is accepted as proof that the demand for gold has relatively increased, and that therefore we ought more properly to say that the value of gold has risen. In the second way of estimating, demand enters with a negative instead of a positive sign. We deal no longer with the good things of this life which man seeks to acquire, but with the hardships he seeks to escape. The typical negative demand is the curse of Adam, and so in the amounts of labor that this or that commodity can command, we are to read its true value. The value unit is thus, like the great Joule unit of physics, based on energy. By this reckon. ing, if the gold price of the adopted unit of human effort--the average of several modes of applying it being used, to avoid variations merely casual-if that price rises, this is accepted as proof that the gold unit has lost part of its power to command human energy, and that therefore we ought more properly to say the value of gold has

fallen.

Which of these two reckonings is the true one? Each of them in turn is again and again assumed as though no cloud rested upon its title. In one popular treatise on political economy-a work of many excellent points, by the way-the tabular standard, obtained by averaging carefully chosen proportions of some twenty widely consumed commodities, receives the name of the absolute" unit; and there is no lack of examples equally decided on the other side.1 A thoughtful and skillful comparison of the two has been made in a paper on The Standard of Deferred Payments" by Prof. Edward A. Ross, where the question was divided into two: “(1) as to the ultimate standard of value, (2) as to the destination of the benefits of industrial progress"-of which the second may safely be dismissed, because its answer is logically involved in the first. According to Professor Ross, it is not difficult to show that the labor value theory rests upon a faulty analysis. A good possesses value or impor tance not on account of its past but on account of its future; not because it embodies past sacrifices, but because it promises future satisfactions. As is evidenced by the course of trade between nations at different economic stages, values are deter mined not by cost but by utility." It is true, value is something that looks forward and not backward, and so regards not the cost at which the good has been attained in appraising it; but however effective this now generally admitted truth may be in over

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1 The question "Has Gold Appreciated?" is discussed in a recent pamphlet by Mr. C. C. Jackson, and answered on the labor-value principle in the negative.

throwing the doctrines of David Ricardo, it does not yet take the life out of the laborvalue theory, for the simple reason that that theory, or the form of it which concerns us at present, really rests, not on the faulty analysis" which Professor Ross so easily exposes, but as essentially as the commodity-value theory on utility. It reckons value not by the labor a good has cost, but by the labor that that good will command, in exactly the same way that the rival theory considers the commodity that will be rather than that has been paid, in the same reckoning; and utility enters the equation with a negative sign, because labor is precisely negative utility. There is of course a real foundation for the contrast between "past sacrifices and future satisfactions," since when we regard the case of money in the hands of a wage earner the labor represented by it belongs undoubtedly to the past and the commodity to the futurethis being a consequence of the law by which men must earn before they can spend. But this is not the whole of the matter; the prudent wage earner always looks on beyond the satisfaction promised from the commodity he would have, to the cost of replacing the money expended-if I buy this article, he says, I must do a day's or a week's work before I can regain an equal power to supply my wants. Plainly then, the order in which money payments are made should not be regarded a vital point, in fixing on a standard of values or of deferred payments. Professor Ross rightly treats this question, affecting as it does the equity between debtor and creditor, as mainly ethical; but there is as little equity in paying the working man for less labor than he expended, as in exacting of the debtor more commodity than he gave. Negative utility is ethically no less important than positive.

If it has been thought worth while to meet the attacks made upon the labor-value theory by those committed to its rival, this has not been from any notion that labor of any kind, or even of a great many kinds cleverly averaged, gives us the infallibly true standard of values. In truth, either of the two proposed scientific measures of value, if applied with logical thoroughness-if subjected, in other words, to conditions that really test it,-leads to a glaring absurdity. It is needless here to reiterate the familiar distinction between value in use and value in exchange, or the demonstration that one of these is not at all proportional to the other. The commodity theory substitutes usevalue for exchange-value, where the latter is manifestly the thing sought. It pays close attention to demand in its estimates, and none at all to supply. The obligation that might equitably have been discharged with thirty-six pounds of sugar at 14 cents is not equitably discharged with the same quantity at 4 cents, unless sugar is specifically named in it; nor can we pay it with a pound of aluminum at 60 cents, though the same pound might very properly have paid it when the price was $5. If this is true of sugar or aluminum, why should it be untrue of the average of twenty articles, all subject in greater or less measure to the same conditions of cheapening production? An effective reductio ad absurdum of the other theory has already been indicated in one of the quotations from the paper of Professor Ross, where he insists on the important difference in the value of the same amount of labor "between nations at different economic stages." The principle which is neglected in the proposed measure, is that the value of labor depends on the way in which it is applied, to a perhaps greater degree than on the amount of it. So far from being economically the same thing as labor directed by high intelligence, labor directed by crude intelligence is something so different that it seems almost absurd to call it by the same name. If labor in general is now better paid than it was thirty years ago, this is largely-perhaps altogether because in so many trades, enough to beneficially affect the whole, men have learned to give it that better direction on which its higher value depends.

Unsatisfactory as are all the solutions hitherto proposed, there seems to be no other direction in which we can look. The uses to which the customary measure of value is most largely applied are in the purchase of commodities, and in the requital of services. It is in those relations that we most want it constant ; and how, then, can we more suitably judge its constancy than by seeing that it shall bring the same amount of commodity or the same amount of service? Making exception of cases admitted to be extreme, and acknowledging the approximate and relative character of any results we may reach, that is about the best that can be done. Averages may be used to reconcile minor irregularities, where the quantities averaged are not too discordant; and wages may fairly be admitted on equal terms with prices, in making our estimate. There seems to be no valid ground for giving wages the greater weight, and it has already been shown that they should be allowed no less. In one form the money comes in and in the other it goes out; its goings and comings are equal in importance as in amount. But it is not worth while to combine wages and prices into a composite, by which all values are to be measured, for the absolute unit is a chimera. We can get along without one, however, after a fashion, by applying the simple principle that when two articles change in relative value, the change is to be charged to the one whose demand or facility of production has varied. Accordingly, we can at least be certain that aluminum, or petroleum, or steel rails will not do as a general measure of values, even without determining precisely what will do. In this way, under all reservations, we may set about the consideration of the question whether gold or silver has proved better adapted for the functions of a standard since