from one individual or bank or town or city or country to another, a temporary increase of need at one point will generally be coincident with and be supplied from a temporary superfluity at another. In this way actual scarcity would be prevented to a great extent, and the effect of an apprehension of scarcity would be reduced to the minimum.

It follows that periods of stringency are less likely to occur in proportion as the area and population under one monetary system become enlarged, and hence it may be inferred that if the whole world were under a uniform monetary system, such occurrences would be reduced to the minimum, if they were not rendered impossible.

The great majority of people are led to favor the per capita theory of money, not because they believe in it as a theory, but because it affords ground for increased issues of money by the Government, and they think that such increased issues will promote prosperity by "making money plentiful."

Let us therefore examine this latter proposition.

If one tries to think out the details of any conceivable process by which the mere plentifulness of money benefits any individual, he will find that he has to suppose certain conditions of means, opportunities, abilities and purposes, all of which must be combined before such an individual can appropriate any advantage to himself from the plentifulness of money, and then upon a close analysis it will be found that the advantage arises out of that combination, and not out of the plentifulness of money.

The fundamental fallacy of this whole notion, that the government should make money plentiful, lurks probably in a confusion of ideas about the effect of an abundant supply of money.

The dearness or cheapness of money must depend primarily upon the relation between the supply of loanable funds and the demand for the use of such funds. The term loanable funds is by no means restricted to actual money. Nearly all loans are made by credits entered on the books of a bank, or by checks or drafts or acceptances, and these pass into the general clearings of the community, of which only the resulting balances are settled in money; hence the mere plentifulness of money is only remotely connected with the supply of loanable funds. The state of trade, the prosperity of the community, the degree of confidence in the immediate future, and the general state of credit, immediately and directly, influence both lending and borrowing. Whatever tends to depress these, tends to raise the price of money by decreasing the supply of loans and increasing the demand for them; and, vice versa, whatever tends to improve trade and augment prosperity, whatever increases general confidence and strengthens credit, tends to make money cheaper by encouraging lenders and rendering borrowers less eager.

Now unnecessary, unwise, or ill-considered augmentations in the volume of the currency tend to produce the conditions that inevitably make money scarce and raise the rate of interest.

1st. They tend to unsettle values, and in that way to disturb trade adjustments, which disturbance in turn impairs confidence and abridges credit. Consequently lenders of money become timid and borrowers become more eager, money is held out of circulation and people say it is scarce.

2d. A government that assumes to itself the function of continually increasing the volume of money never reaches a point at which it can stop, because each augmentation tends to make money dearer, and since the object is to make money cheaper, there will always be a clamor to increase the scale of annual augmentations, A government so situated is like a horse going down hill in a wagon without brakes; he must ever be going faster and faster, and yet at each stride he augments the momentum of the mass that is pushing him to destruction.

Simply making money plentiful cannot exercise the least influence to increase the demand for any man's labor or products. A tradesman may have millionaires passing his shop every day without selling them anything, while he drives a good trade with boot-blacks and others whose means are limited and precarious, but who desire the goods he deals in, while the millionaire does not want them. If the money in the pockets of the passer-by brings no increase of trade to a shop, how can such increase come to it because of money lying in bank or held in the National Treasury?

It follows from this that it is no part of the duty of the government, in providing money for its people, to attempt to create supplies of money to any amount, arbitrarily or hypothetically determined upon in advance. The laws can and should be so framed as that the quantity of money in circulation will be determined, from day to day, by the demand for it. It is the demand for money, the extent of the need for its use, that should regulate its quantity.

Since money performs its functions as a medium of exchange by passing from

hand to hand, its effectiveness depends upon the number of exchanges effected by the same money in a given time. Rapidity and smoothness of circulation, not greatness of volume give effectiveness to a currency. To attempt to stimulate trade and so to increase general prosperity by creating a volume of money greater than can be used effectively, is not only futile but pernicious, because it inflicts, either upon the government or the people, the expense of carrying so much dead capital.

XVII.-VALUE.

Value is an abstract term expressing a relation-it does not exist in things said to possess it, but is imputed to them by human intelligence-it is not a quality of objects, but only an attribute with which they become invested. Value is very different from utility, though utility is generally, but not always, the basis of value. Utility is a physical relation, whereas value is an abstract relation. Brute animals have a perception of utility; they have no conception of value. Value is a purely human conception. Value may be primarily and generically defined as the relation between human desire and proximate objects of human pursuit. Those things with which nature supplies us gratuitously are not objects of pursuit, and therefore they are not invested with value; value comes wholly from unsatisfied desire. It is true this desire is excited by our knowledge of the qualities of the thing, and by our opinion that those qualities render the thing desirable; but this knowledge and this opinion are in our minds, they are not in the thing. Value being a relation, it must vary by degrees, not by quantities; and degrees of value, since value is the correlative of desire, must vary with the intensity of the desires to which they are related. But since value attaches only to that which, though desired, is as yet withheld from our possession, then value must vary also with the resistance to appropriation.

We may, therefore, measure the intensity of such desires by money or else by human exertion, say by hours or days of labor or of pursuit. Under civilization, cost, outside of civilization, intensity and duration of exertion, measure the obstacles to appropriating any desired object. Value, therefore, is measured by money or by human exertion during certain intervals of time.

But, it will be said, things already possessed have value. This is true, for their possession by one man is an obstacle to their appropriation by others; but it is only the desire of others to appropriate them that gives then value when in the hands of their possessor.

As an attribute only, value is potential, indefinite, undetermined, conditional, and only becomes actual, definite and determined when it is conditioned, and has assumed the aspect of a relation between the thing desired and one or more persons desiring it.

The force of gravitation produces relations somewhat like those expressed by the term "value." We are accustomed to speak of the weight of bodies as we speak of the value of commodities, but weight is not a quality of such bodies; it is merely an attribute expressive of a relation between its mass and the earth's

mass.

Ordinarily, value varies according to demand and supply, as the phrase goes, and ordinarily demand is assumed to be as constant as the earth's mass is, while supply, being visibly variable, is represented by the mass and density of the lesser body.

While all matter is subject to the force of gravity, and under ordinary conditions that is a constant force, certain substances are subject to other forces which, because they tend to modify the influence of gravity, are habitually measured by the degrees in which they effect such modification. Motion is one of these forces; magnetism is another.

As weight is the relation between the earth's mass and any body suspended ponderably within the scope of the earth's attraction, so value, in a general sense, is the relation between the world's demand and any commodity suspended commercially within the scope of the world's attainment. Again, as motion is a relation between, on the one hand, the body moving and, on the other hand, definite points in time and space, so “value in exchange" (money or its equivalents) is the relation between the commodities serving as money, on the one hand, and definite standards or fixed points of value, on the other. Finally, as magnetism is a simple relation of elective affinity, so the intrinsic value of precious stones and objects of art seems to express that intensity of desire which distinguishes the pursuit of gratifications from the pursuit of objects of mere utility.

In the light of this conception, it may clarify our views of money to regard it as a value in action. It does exhibit some of the characteristics of force. It is a

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debt-paying force under statute law; a labor-compelling force, and a purchasing force under industrial laws. Now, forces to be utilized must be measured, and their measurement is expressed in degrees of force, while the mode or scale of measurement depends upon a fixed standard, in like manner, money, to be useful, even as a debt-paying force, must be permanently related to some fixed standard of value.

Commerce deals in commodities; finance deals in values. Commodities are things classified according to their substance, their utility and their distribution; values are things classified according to their value, without regard to substance, utility, or distribution.

Regarded as a whole, commerce is really reducible to a complicated system of barter, of which finance is employed in keeping an account. The commodities exchanged in bulk by commerce are here measured by value, regardless of their substance. Every invoice is represented by a bill of lading describing its substance (commercial force) and a bill of exchange specifying its value (financial force). Bankers deal in these, and when balances arise between individuals, cities, sections, or countries, bankers (who are merchants of money) transfer the "boot" that "evens the trade." Banks perform this office for individual traders, cities, and. sections; clearing houses perform it for banks; the body of foreign bankers perform it for the foreign commerce of the country considered as a whole.

This being the case, it follows that the principles of barter, of simple trade, must apply to all commercial and financial operations; that the ciphers which in notation distinguish 1,000,000 from 1, merely change the degree of whatever force the integer possesses-1,000,000 dollars is simply one dollar raised to the millionth power, as a million bushels of wheat means one bushel repeated a million times. The commerce of the country, though expressed in hundreds of millions of dollars, is made up wholly of transactions conducted by individuals; all of these are reducible, as we have seen, to a common denominator, value; hence in the aggregate they are subject to the laws and influences that apply to each separate transaction, and to none others.

XVIII. THE STANDARD OF Value.

Ephron the Hittite, dwelling among the children of Heth, owned a field which Abraham, who had come to Hebron to bury Sarah, his wife, desired to buy for a sepulchre. Ephron pressed it upon him as a gift; Abraham insisted upon paying "the full money it is worth." Whereupon Ephron said, "The land is worth 400 shekels of silver."

We feel as much confidence as Ephron expressed as to the money our property is worth; yet statesmen, financiers, and economists have been for a hundred years debating what is the standard of value, and are to-day undecided whether the labor that produces values is also the basis of their measurement, or whether values and labor, too, are measured by gold and silver. In recent years another question has arisen, viz., whether gold alone should or should not be made by law the sole

standard of value.

The existence of trade creates the need of a standard of value, and since trade at the present day is world-wide, there is now a necessity, not existing even a hundred years ago, for a world-wide standard of value. Millions of us buy and sell things by yards and pounds, bushels and gallons, and are content with the implements kept in the shop or those sold to us for use at home. We assume that they are correct, and make them the standards for all our measurements-without recalling, even if we know, that the laws require implements of measurement to conform to certain standards carefully and accurately constructed, which are kept under lock and key at the National Museum at Washington.

So it is with our value-scales; we use dollars, etc., as measures of value, without reflecting that their usefulness for this purpose depends wholly upon their correspondence with the standard of value fixed by law, just as the usefulness of footrules, quart measures, and pound weights depends upon their conformity with the legal standards of dimension and weight.

We have seen how in each country the monetary unit serves as a standard by which local money is maintained at uniform value, so that any of it may serve as a measure of value in the daily traffic of the people; and the same principle requires that all nations that trade together must have a standard of value common to all.

It has been established in Chapter XV. of this treatise, that whatever settles balances at any focus of exchanges is alone competent to serve all the purposes of money throughout the area traversed by the transactions settled at that focus; hence, so far as the purely commercial aspect of the question is concerned, it

would appear that all countries able to do so should make their monetary unit of gold, because gold alone settles balances in London, which, being at the focus of the world's exchanges, is the world's clearing-house. It is idle for us in the United States, or for any other nation, or set of nations to rebel against this requirement of commerce, because resistance is futile.

No particular nation or people can separate itself from others in respect to the medium for settling international balances, except under the penalty of commercial inferiority, if not isolation; for the condition of commercial fellowship among civilized nations is that each shall conform to the general practice of all. This principle asserts itself whenever communities, nations, races or still greater aggregations of men are animated by a common purpose or seek an end desired by all.

In our age, finance rules the world, and London is its throne; finance holds supreme sway over values; hence its empire includes every man, woman and child on the face of the earth who is engaged in industry, or who is remotely dependent upon those so engaged, because industry must be ever producing values, and it is ever dependent upon finance for effecting the exchanges by which alone its products are distributed and its productive forces nourished. Lombard street is the focus of those exchanges, and whatever measures values in Lombard street must necessarily determine and control values wherever industry plies the plough the pick, the hammer, the shuttle, or the yardstick.

Whether we consent or not, therefore, whether we approve or not, as long as the world has Lombard street for its clearing-house, just so long must we conform to the standard of value there.

The fact that London is to-day measuring values in gold, although values were once measured there in silver, suggests an inquiry as to whether formerly silver and now gold are ultimate standards, or whether these are merely implements of value-measurement based upon and conformed to some higher, broader, and more permanent standard, as the French standards or units of physical measurement are based upon geometrical data.

This opens up the question as to what is the true scientific standard of value.

No object will serve that purpose unless it fulfils the oecumenical conditions, Semper, ubique, ab omnibus; that is, it must "always, everywhere, and by all men "have been regarded as of prime value. Evidently, if such values exist, it is among them that we will find the standard we want.

Quite a system of political economy has been constructed upon the dictum that human labor is the ultimate standard by which all values are determined. This is an attractive notion; but it is not true and it would be unfortunate if it were true, because human labor itself is by no means a constant force, for it is affected by precisely those qualities, physical, intellectual, and moral, which distinguish individuals from each other.

There is no kind or amount of human labor that will produce, in the same time and under like conditions, at Calcutta what the same kind and amount produces in New York, whether measured in wages or in any other way. How, then, could any given modicum of labor be used in either of these places to measure the value there of the products of the same modicum of labor performed at the other place?

Again, almost every man can earn more and do better for himself in one place, or in one employment, than in any other. This truth is the foundation of Adam Smith's practical exposition of what he termed the division of labor; it is the keystone to the philosophical doctrine of free trade, but it utterly excludes from possibility of verity the theory that human labor is the ultimate standard of value. Since neither human life nor human labor can be used as a standard of value, we must look for that standard among the various forms of property, and especially among the substances to which mankind has everywhere and always attributed the highest value as objects both of possession and of pursuit.

Again, since values differ among themselves by degrees, since they rise and fall by gradation, a standard of value must be capable of systematic and accurate subdivision, without loss of value. Such adaptability to subdivision must apply not only to the mass, but also to those qualities of the substance in which its value inheres, so that, of any two equal quantities of the substance selected as a standard of value, either will be worth as much as the other, and any fraction of one of these quantities will be equal in value to a like fraction of the other. This property of continuous divisibility, without loss of characteristics or value is the distinguishing quality of all metals which are capable of being brought into a state of uniform purity.

We have already seen that many different substances have been used as money, and that all have been forsaken for metals, as communities advanced in

industrial development. Even under present conditions, it is conceivable that the world might get on with a standard of value based on one of the grosser metals, such as iron, tin, or copper, because those metals possess value and also the property of accurate subdivision; but since the number of metals affords a choice among them, that choice has fallen finally upon silver and gold. It s obvious that, in fixing upon silver and gold to be standards of value, modern nations have simply followed a natural law, because these metals have always been, and are everywhere, regarded by all men with the highest degree of estimation, i. e., they have been more constantly and more universally than all other metals, objects of that relation which is designated by the term value, and hence are the best fitted to be exponents of value.

Without reference, therefore, to the questions raised by the bi-metallists, let us proceed to inquire how it has come about that the world is now gravitating toward the single gold standard. We have already seen that universal industry produces universal commerce; universal commerce requires a world's clearing-house; London is the clearing-house; in London gold is the money of ultimate settlement, and all the advanced countries of the world seem to be under compulsion to adopt the same usage. Now, why does London insist on gold?

XIX. THE GOLD STANDARD.

The gold standard has not been established by measures designed to bring about that result, but it has come into use under the influence of commercial forces, which in their origin, nature, and effect were altogether independent of any rea soning or theorizing as to the material of money or the measurement of values.

The adoption of gold as the sole standard of value, wherever these changes have occurred, is just as natural, as inevitable, and as final an outcome of such changes as are the substitution of steam-power for horses in land transportation and for sails in navigation; the substitution of gas and electricity for whale-oil and candles in illumination; and the substitution of iron and steel for wood in shipbuilding. None of these substitutions occurred suddenly. They were at first proposed by theorists, and were long contended for in argument; but in all cases they worked their own way slowly, by experiment at obscure initial points, widely apart, and are established now only because they are the best things of their several kinds that the world has had any knowledge of, and they are destined, no doubt, in their turn to be supplanted by other things now unknown and undreamed of.

The communities that earliest adopted these improvements have longest enjoyed their benefits, and have thereby become recognized as among the advanced communities of the world. Those that have not yet adopted them are laggards in civilization.

To understand how the adoption of the single gold standard is related to all these other substitutions of the new and better for the old and worse, will be found easy enough if one bears in mind the principles which have been set out and illustrated in the preceding chapters of this treatise. 1. The principle that progress in respect to the material of money has always been, and must always be, from less valuable to more valuable substances. (Chap. IV.) 2. The principle that confidence is a sine qua non of the monetary efficiency of any circulating medium. (Chap. VI.) 3. The principle that definiteness and stability of value are indispensable qualities of money. (Chap. VIII.) 4. The principle that only money, good everywhere within a given area of industry or trade, is available in the settlements of balances at the point upon which the exchanges of that area are centred. (Chap. XV.) 5. The principle that there can be but one standard of value in any such area. (Chap. XVIII.)

While it is evident that "the nature of things" is responsible for the use of gold as the sole medium of settlement in London, it may be interesting to follow the process by which the transition from silver to gold has been effected.

The changes mentioned above as having been wrought during the present century, have reduced all values except the value of human endeavor, but this last has never before been so well compensated as it is now. And since, simultaneously, all other things have been cheapened, the earnings of men bring them in vastly more in all articles of need, of comfort, and of luxury than could have been acquired by the same effort at any previous time.

In early days obstructions to transportation were so great that values in any one place maintained a degree of stability impossible under present conditions. Areas of reciprocal trade were circumscribed and the barriers of nature were so effective that commerce could break through them at only a few points and by methods both tedious and costly. Robbers infested the overland routes, pirates roamed the seas; hence overland transportation was dependent upon caravans