MONEY AND VALUE. MONEY AND VALUE AN INQUIRY INTO THE MEANS AND ENDS OF ECONOMIC PRODUCTION WITH AN APPENDIX ON THE DEPRECIATION OF SILVER AND INDIAN CURRENCY BY ROWLAND HAMILTON f ^!L I BRAKY UNIVERSITY OK MACMILLAN AND CO 1878. [The Right of Translation and Reproduction is Reserved.} LONDON : R. CLAY, SONS, AND TAYLOR, BREAD STREET HILL, E.G. '30 CONTENTS. PAGE INTRODUCTION . ... xiii CHAPTEE I. (Money.) THE PRIMARY USES OF METALLIC MONET. 1. Money 1 2. Scope of the inquiry 3 3. The nature and basis of value 4 4. Money is that which confers a special power of choice . 6 5. The value of the precious metals rests chiefly on their specific use as money rather than as ornaments ... 8 6. Metals which are more suited for general purposes are less fitted for money 10 7. The precious metals have a highly generalised value, and serve to generalise the values of all other commodities 13 8. " Law " of demand and supply : irregularity of it ... 14 9. How the precious metals come into use as money ... 15 10. Dangers of waste arising from superfluity, to which the precious metals are not exposed 17 11. The value of money correlated with the uncertainties of natural production 18 12. The primary uses of metallic money 19 13. Why a " purchasing power" is held in reserve .... 19 Why it should be vested in a costly substance .... 20 14. Limit of the primary uses of money 21 15. Money represents general rather than special interests . . 22 16. tl Buying cheap and selling dear " 24 17. Extended uses of the precious metals 26 18. How they become a general " common measure '' of value 27 vi CONTENTS. 19. How metallic money further specially aids enterpris jewels 28 20. The need for such aid to commercial experiment ... 30 21. Stability of value indirectly arising from indestructibility of the precious metals 32 22. Increased quantity leads to decreased value of money . . 34 23. Limit to the transmission of metallic money 36 24. The several kinds of uses of metallic money 38 25. Difficulty of speedily monetising treasure : Spain ... 39 26. The " law of average " 41 27. High degree of security attained under it 43 28. Illustration " loading " on the premium of insurance . . 45 29. The " limit of perfect recovery " 46 30. The limited scope of authoritative control over the uses of the precious metals 47 CHAPTER II. (Money.) EXTENDED USES OF METALLIC MONEY AND OF SUBSTITUTES FOR IT. 1. Contrasted theories regarding metallic money .... 51 2. Apparent permanence of ancient weights used for money (note 1) 55 3. Confusion and instability of artificial standards of value . 61 4. Secondary uses of the precious metals as money. ... 63 Kecognisibility an important factor in purchasing power . 65 5. Modified use of money in aiding subdivided labour . . 66 6. The value of substitutes or " tallies " for money depends solely on local demand and supply 69 7. As long as metallic money circulates with its " tallies " the value of the whole is maintained 72 8. Undue export of the precious metals (if not arising from actual poverty) quickly readjusted . . . . . . . 73 9. Consequences of a rise in the value of metallic money . . 76 10. Illustration : supposed change in a measure of length . . 80 11. Difficulty of determining the value of money because it is itself taken as the general measure of value .... 83 12. Conditions which conduce to the issue of substitutes for money .... 84 CONTENTS. vii PAGE 13. Direct effect of an over-issue of substitutes 86 Substitutes and metallic money contrasted 88 14. Substitutes once issued will not " flow out " of circula- tion 88 15. How substitutes, though of no intrinsic value, are costly in use 91 16. Abuses to which the optional issue of substitutes is liable 93 17. Effects of rising and falling prices contrasted . .... 95 18. Aggravated fluctuations of an isolated standard .... 98 Their ill effects on local industry 100 19. The relative cost of production in different countries is not governed by money 101 20. The potency of the effects of forced issues of substitutes for money 103 21. Illustrations of the dislocating effects of sudden changes in the value of money 106 22. Recent experiences in the United States 109 And in France Ill 23. Definite weights of the precious inetals afford the best practical basis for comparing values at different epochs 112 24. Application to the apprehended increase in the supplies of the precious metals 113 25. Supply as affecting the value of the precious metals . . 115 26. Prospective augmentation of supplies 117 Natural mitigation of their effects 118 27. General observations on the production of gold .... 119 28. silver ... 122 29. The comparative yield in the mine must govern ultimately the relative value of gold and silver 124 30. Gold and silver stand in no fixed ratio of relative value . 124 31. Special and " intrinsic " value of metallic money . . . 128 " Friction " opposed to the exact adjustment of their value . 132 32. Summary of Chap. I. and II 133 33. Limits of the theorem 139 "Status" 141 Commercial monopolies and commercial wars 142 viii CONTENTS. CHAPTER III. (Value.} ON THE NATURE OF EXCHANGE VALUES PROPERTY AND CAPITAL. PAGE 1. The British pound 146 2. Differences between value expressed in money and that in- herent in money itself. 147 3. Fallacies arising from confounding the nature of these several kinds of value 150 4. The nature of the exchange value of different kinds of property 153 5. Why certain kinds of valuable property are not a fit basis for money 156 6. On the nature of property yielding a periodical income . 158 7. On the risks to which such property and the securities based on it are severally exposed 161 8. " Value " and " capital" 164 9. A just system of interchange needful for all forms of civi- lisation 165 Economic rent 166 Qualification as regards labour 167 10. Value in use, and value in exchange 168 11. The physical basis of the value of utilities of various kinds 171 1 2. The aggregate of money value is made up by manifold inter- changes 174 13. The exchange value of superfluities 175 14. Contrasted nature of related values in exchange . . . 177 15. Capital. Capital consists generally of the requisites neces- sary to support life. Mr. Mill's definition discussed . 179 16. "Fixed" and " circulating " capital : objections to these terms 182 17. " Labour " and " capital" are factors constantly variable 184 18. Only well-directed labour can make capital reproductive 186 19. The relative efficiency of labour the chief source of wealth and power 188 20. Difficulty of applying capital beneficially to a new country 189 21. Commercial use of the word u capital" 192 22. Summary of the foregoing propositions 193 CONTENTS. CHAPTER IV. (Value.) CONDITIONAL OWNERSHIP CREDIT AND BANKING. PAGE 1 . Credit : a further generalisation of Capital 200 2. The nature of the relative rights arising through credit. Jus in rem, and jus in personam 203 3. The nature of the rights and duties associated with loans : risks 207 4. The " profits " of productive industry 211 5. Profits specially associated with the risks of final adjust- ment 213 6. Interest considered as a charge on productive industry . 216 7. The distinctive function of bankers 222 8. The nature of the security which should be conveyed in a bank-note 227 Scotch banks . 228 Notes should be the final reserve 230 9. " Cash," " cash deposits," and cheques 234 Bills not the efficient cause of a rise in prices 239 10. The distribution of credit 240 And its recompense 243 11. General demand governs production though it is not the efficient cause of it 246 12. The Bankers' clearing-house 247 Magnitude of the amounts passed through it 248 The nature of the adjustments effected ....... 249 13. The inferences to be drawn from its operations .... 256 Adequacy of existing resources of capital 257 14. The increment of capital 259 Made only by gradual savings 263 15. The " creation " of capital 263 Foreign loans 264 And banking agency 265 16. Foreign exchanges 267 How regulated by bullion 269 The more extended interchanges of capital thus effected . 272 17. The uses of metallic money thus shown to be the same as those first theoretically indicated 274 CONTENTS. General Conclusions : PAGE Necessary and " optional " production 279 Economic conditions of our own country 282 Concurrent wealth and destitution 286 Distribution 288 Radical fallacy of monopoly 288 The efficient adaptation of labour 294 Thrift 297 Economic aspects of " sanitation " 298 national education 301 leisure 305 Administration 307 Pauperism and population 309 APPENDIX I. SOME FURTHER REMARKS ON LOCAL AND GENERAL CURRENCY. 1. The currency of the United Kingdom 318 2. Fluctuations in the amount of circulation 321 3. The cost of a metallic currency 323 4. Silver and bronze currency tokens 324 5. The bank's reserve of gold fittingly held in common both for home and foreign trade 326 6. An excess of gold an uncertain banking asset 328 7. The rate of interest as affecting the transit of bullion . . 330 8. The charge of seignorage on coinage . . 332 9. The cost of maintaining reserves of bullion 334 10. Silver as a medium of international exchange .... 335 11. The abuses of credit 336 12. Manias and panics 341 APPENDIX II. THE DEPRECIATION OF SILVER AND THE INDIAN CURRENCY. 1. Changes in the relative value of silver no new phenomenon 346 2. The total stock or present supply of gold and silver throughout the world cannot be estimated .... 347 3. Changes in the currencies of the United States and of Fra *ce 348 4. Natural changes affecting the supply and the general uses of gold and silver 351 CONTENTS. xi 5. Considerations which govern the transport of coin or bullion from one country to another 254 6. Exceptional causes of demand for Asiatic products in Europe since 1848 355 7. The consequent movements of bullion 356 8. Exaggerated enhancement of prices 357 9. Costs of transit as affecting the relative values of gold and silver 358 10. Commercial excitement and consequent reaction since 1870 360 11. Introduction cf a gold currency in Germany : and conse- quent increased supply of silver 361 12. The practical lesson taught by the " scare " in silver in 1876 362 13. No apparent reason to anticipate a falling-off of Asiatic demand 363 14. Natural mitigations of a decline in the value of metallic money 365 15. The ratio of value of the precious metals may be antici- pated and declared, but cannot be fixed by a govern- ment 367 16. Indian coinage 370 17. The proposed introduction of gold into the currency . . 372 18. The expedient of coining both metals independently . . 376 19. Present uncertainties 376 20. On the proposal for a general fixed ratio 378 21. Independence of Asiatic traffic in the precious metals . . 379 22. Movements of bullion in India , 381 23. The ratios of value will best be worked out by free competition 382 24. Relative cost of production must ultimately govern the relative value of gold and silver 384 Postscriptum : The "Bland Bill" : Indirect adjustments of traffic . 387 Lin u I MYK I.'SITY '! INTRODUCTION! 'A Li K< LA.- THE activity of our varied industries and the vast extent of our commerce have always been a source of reasonable pride in this country : and now more than ever justly so : for without these aids to the support of our population these little islands could hardly expect to maintain their position as one of the great powers which influence the destinies of the world. It is strange that notwithstanding this sentiment so little is generally understood of the conditions and principles which govern the true organisation of industry. Many works have been written of late years, some very superficial, but some with very great ability, showing " how things are done in the City ; " indeed during the recent period of spurious financial excitement an amazingly intimate acquaint- ance with the mere forms of business was to be met with in society which could not be supposed to have a very discriminating interest in productive undertakings. By an error very characteristic of the time, purely technical knowledge was taken to be pre-eminently practical. Instruments which INTRODUCTION. can only be safely used by those who know how to use them, and why and when they should be em- ployed, were perverted in a way which led to much loss, misery, and demoralisation, and with an equal want of wisdom and discrimination, the blame was thrown upon the forms or instruments, rather than upon those who had misused them through ignorance, recklessness, or flagrant dishonesty of purpose. One of the main objects of the present work is to explain something of the true nature of that which has to be done, and the responsibilities which must be incurred, by those who would earn a share in the gains of beneficial industry. It does not so much concern me to show how interest can be obtained by putting money in a bank, as to afford some insight into the nature of the varied kinds of work which must be successfully carried out before any return can be secured at all, or apportioned to those who have severally contributed to its pro- duction. I do not by any means disparage the services of those who have lucidly explained the mechanism of finance, but it is well sometimes to direct popular attention from forms to the realities which lie behind them. This is, in its degree, nothing more than the old alternation between the realistic and the nominal conceptions of things which have in turn done so much to extend and duly to define the range of our knowledge. It would be vain to attempt to make this subject popular in the common acceptation of the term, but I have spared no pains in the endeavour to make INTRODUCTION. my exposition as clear, as concise, and as free from technical language as is consistent with the due consideration of all its manifold bearings. The subject is necessarily somewhat dry and complex ; as far as possible 1 have avoided overlaying it with details except where it seemed well to introduce them for the purpose of illustration, or where ques- tions of permanent interest turned upon the points thus specifically referred to. It may seem needless to the reader, as indeed it did at one time to myself, to combine the notice of metallic money so fully with the inquiry into the actual work of production ; but so many fallacies, so many truths half expressed and wholly misunderstood, are associated with the precious metals, that I found my task could be more thoroughly accomplished by keeping this branch of the subject in mind throughout. For it may thus most clearly be shown both what such money can and what it can not do ; and this is at present of the more consequence because the large increase in the supply of it, which is now attracting so much attention, will cause perturbations that will more or less affect many branches of industry, and ques- tions regarding it are sure to be intruded with an exaggerated sense of their importance into regions far beyond and other than those which are actually affected by changes of this description. I have therefore given a somewhat unusual prominence to the discussion of specific money, even in matters which otherwise might as well have been considered without any direct reference to it, although my xvi INTRODUCTION. object has rather been to demonstrate how special and limited are its functions in that work of pro- duction which is of real importance to the welfare of mankind. The abuses to which our industrial system is subject have only been very casually touched upon. To elucidate the true uses of money and of credit will afford the most effectual remedy for those perversions and hallucinations which have so repeatedly led to the most lamentable waste of our national resources. If those who are capable of taking an intelligent interest in the subject, and who are in their degree the leaders of public opinion, can more adequately realise what are the essentials necessary for the success of any under- taking, the conspicuous absence of these essentials will afford the best warning both to themselves and those who are guided by their judgment. Forms, however well devised, will be constantly simulated, and indeed rather afford a cover to the aggressor than any protection to those whose interests may be attacked. It is only by some discriminating knowledge of the principles which lie behind them that security can be attained. Those indeed who are fairly carrying on the work which the country requires may be much em- barrassed and straightened by precautionary re- strictions entailing losses and expenses which the ordinary profits of industry can ill afford to bear, but such formalities are no obstacle to an unscrupulous adventurer, with whom such minor considerations INTRODUCTION. of cost or convenience can have but little weight. Frauds there always will be ; but if those who are now so often the subjects of them would look a little more closely, and inquire a little more closely, into the work which has actually to be done, the law would soon be able to come to very definite issues with the Spoilers, whether the suggestio falsi or the suppressio veri has been the means of the deception attempted. Either they have obtained money under false pretences or they have not. If they have, a properly chosen jury of their country- men, or a court taking evidence as a jury, should best be able to deal appropriately with their criminality. If not, what more is to be said than that those who attempt to get the gains of produc- tion without incurring the risks or the labour rightly associated with them are justly doomed to disappointment ? I have nothing to say to those whose real object is to get some one else's money by any means which shall not place them within the clutches of the law. Their own hands are not clean. Let them take what the law gives them. But they are altogether outside of the circle of productive and self-sustaining industry with which I am now concerned. When its conditions are better understood and more honestly acted upon the field of their operations will be very greatly curtailed. The most complete and outspoken fidelity, " liber rima fides " should beyond all doubt be rigidly required of those who assume the responsibility of xviii INTRODUCTION. employing other people's money. It is not enough that Promoters or Directors refrain from deception. They are bound to use due care and diligence that the nature of the schemes which they undertake should be rightly understood. But nothing is to be gained by rashly bringing forward charges of fraud or falsehood. For when it comes to the point, a natural sense of justice recoils from holding any man guilty of such flagrant offences unless clear proof of ill intention can be adduced. What is specially required in dealing with such matters is, that " recklessness " and "negligence" should be recognised as very grave faults, involving a liability to an appropriate penalty, both in law and in public estimation. But there are two sides to this question. Upright and capable men will neither claim prescience nor put themselves in a position to be held answerable for the want of it by the operation of any one-sided law which ignores the fact that risks and reverses are in- separable from all industrial enterprizes. But while thus avoiding the consideration of palpable and acknowledged perversions of the industrial system, I have not set forth any trans- cendental theory of morals. On the contrary, men in their dealings with each other must be taken .for what they are, not for what they ought to be. The sole aid which the theory of value may render to a higher morality is by unmasking the vain pretence of virtue, and showing how with the INTRODUCTION. x ix means of making good their choice in their own hands, men wilfully give effect to far other prefer- ences than those which they affect to desire. If we all as " consumers " are not well served, we may depend upon it that some portion of the blame rests with "ourselves. More generally my intention has been to set forth the basis of facts which underlies the appearances presented both by the currency and the various forms by which value is expressed in the terms of it. There is little of novelty to be expected in going over ground which has already been so frequently traversed, but the views which I have presented are from a somewhat different standpoint from that which has been usually taken. I have sought to go back to the reasons which in the course of ages have led to that universally acknowledged consensus of opinion which has made the precious metals the common measure of value throughout the world : for these reasons still exist in the order of Nature, and so effectually govern the limits of their use and of their value that any attempt to control or regulate the one or the other by artificial means can end only in failure and confusion. Further, I have constantly endeavoured to con- vey the idea of the great work of material pro- duction as it moves in unceasing and ever-changing activity around us : to exhibit capital as main- tained only by continuous reproduction, and the conditions under which its consumption is implied INTRODUCTION. by the various obligations expressing the use of credit ; keeping before the mind continually the cardinal truth that though labour is the basis of all value in exchange, that value must ever depend upon the intelligent adaptation and adjustment of natural resources to the felt and acknowledged wants of mankind. The conclusions deduced are little in accordance with that common desire to acquire sudden wealth by some dazzling speculation which has given birth to a system of " financing " that has earned for the word a sinister signification peculiarly its own. On the other hand, a wider field is thus opened up to the view of those who do not shrink from the labour and self-denial which wins success by a rational obedience to natural law. The task may not be an easy one Pater ipse colendi , Hand facilem esse viam voluit : but the toil is lightened by the hope of ample recompense. For the sake of precision it may be needful to assume the fixity of conditions which have to be made the subject of careful analysis, but it is not the less true that, even during the time taken to complete every work of production, these conditions have been modified for better or worse according to the measure of success with which that work has been carried out. We are not living under any dead law of rigid necessity. It would indeed be a dismal Science INTRODUCTION. xxi which taught that the faithful use of man's best faculties of mind and body could avail nothing for the relief of man's estate. On some points, especially regarding value and production, I have disregarded the limits usually assigned to the scope of Political Economy, though I trust I have made my argument sufficiently clear to avoid any confusion as to the commonly received meaning of the terms used. But why is it, I may ask, that a science which has done so much for humanity has made so little progress even among men whose capacity and disposition well qualify them to deal with the subjects of which it treats ? Its utility seems, as it were, arrested within certain narrow and partial bounds. Is it not that it has clung too long to restrictions which are useful only as an expedient by which a new and untried field of inquiry may be more thoroughly investigated ? The reasonableness, indeed the necessity of this method in the early stages of every new science may be freely admitted. Adam Smith in his great work on the Wealth of Nations fittingly confined himself to the investigation of material considera- tions, the just recognition of which must form the basis of every stable civilisation and especially that of a race of free men. Nor can objection be taken to any one who may deduce logically to the utmost the effects of the desire of wealth as the great motive power of any supposed society, nor does the exclusive assumption made imply any incapacity to give due weight to all the other considerations INTRODUCTION. which together form the bases of State polity. But surely work such as this, however useful it may be within its own range, is essentially technical. The designation of Political Economy assumed broader grounds, and the results of investigations in a field thus limited are surely rather adapted to aid in the construction of an enlarged Science which should be presented for the use of those who are not special- ists, developed with a due regard to the relative importance of other correlated truths, and thus claim and take its fitting place in the hierarchy of Sciences designed to subserve all the varied needs of concrete humanity. How these manifold needs can best be satisfied, how they should be regulated, and what ought to be the ends and objects to which men should devote that balance of energy which is not required to maintain their straggle for life, are questions coming rather within the range of Physics, Physiology, and the Moral Sciences. But admitting that the special function of Political Economy is not to decide upon the higher problems of utility, but rather to set forth the law of justice and of necessity as regards the voluntary interchange of services as between man and man, it surely should not be considered beyond its province to show how far the quantity of labour devoted to material production is governed by laws of physical necessity ; how far a change of " will" can modify the existing conditions of indus- trial organisation; and finally, how far material considerations may be dispensed with or made INTRODUCTION. xxiii altogether subordinate in determining the objects to which men may devote their energies and their aspirations. A theorem obstructed by the notion of the accumulation of wealth as the limit of its inquiries does not readily rise to these higher pur- poses. There is no due place for life to be found within its borders. Nevertheless it must be remembered also, that it has to declare with rigid fidelity the facts which come within its province. It cannot recognise in- choate intentions which have not strength enough to influence acts. The fruits of the earth are not yielded to our good intentions or to our fervent desires, but to our serviceable toil, and this rigid law and its analogies are the bases of all true' economic science. Hence it is that its teaching will ever be obnoxious to all those whose ambition is greater than their power to those who undervalue labour, the fruits of which they willingly appropriate to all, in short, who dream of attaining great ends by feeble sacrifices and with inadequate means. It is in accordance with these views that I have ventured to submit a few remarks, after the conclu- sion of my more special subject, on the economic side of some of the fundamental social questions of the day. An influential school of economists hold that over-population is already the necessary cause of the poverty which weighs down so large a portion of the community. I contend rather that our manifold resources, rightly applied, are as yet fully adequate, and for many years to come may be xxiv INTRODUCTION. adequate, to make increasing numbers a source of just pride and of strength to our country. #** Various accidents have somewhat delayed the issue of this volume. It was planned and com- menced before I knew of the publication of Professor Stanley Jevons's book on Money and the Mechanism of Exchange, in the International Science Series. I abstained from reading his work until my own treatise was completed for the press. Such minor coincidences as there are in matters of detail, whether of agreement or dissent, are -therefore altogether fortuitous. The Professor, in dealing with the mechanism of exchange, approaches the general subject of Money from a different direc- tion, and is, for the most part, on different ground from that which I have traversed. His intimate acquaintance with the whole literature of the subject makes his work most valuable for refer- ence, and will suggest many subjects of reflection to the student. On a few of the points, however, of which he has treated I will venture to submit some very brief comments. The questions of decimal coinage and interna- tional money may well be left with those who have devoted so much time and ability to these subjects. All that I would deprecate in the move- ment is that an over eager desire for uniformity should accept coins as international when the bases on which their values rested were not thoroughly INTRODUCTION. identical. This would merely remove a difficulty from statistical tables at the expense of the accu- racy of the facts recorded. Moreover, it will surely be a very small and doubtful gain to adjust the small differences in monetary units while systems of weights and measures are not assimilated. For the value of statistical tables de- pends much on their continuity, and repeated corrections for changes brought about in detail would only make confusion worse confounded. The construction of a "tabular standard of value" is 'a subject of peculiar interest at the present time. I have referred to it casually in the Appendix on the Depreciation of Silver. The Professor proposes that such a standard should be deduced from an average of prices of a large and well selected number of commodities, on the as- sumption that the true price of gold must at all times vary inversely with that of "all commo- dities," and apparently that such variation is in fact the cause of any general change in prices. There are no doubt temporary conditions which affect the purchasing power of gold used as money at different times and in different places. It does not attain to its world- wdde average of relative value without many casual fluctuations above and below the mean to which it inevitably tends. But in a still larger degree does the elastic machinery of credit admit of a very general expausion or contraction of prices within any limited period or area. The varying temper of commercial enter- prize in its most generalized form, deals largely xxvi INTRODUCTION. with mere transfers in estimated terms of value, and the validity of the prices thus assumed are not proved till the final aggregate results of many com- paratively long operations are tested by experience. When, as has always been the case, a commercial crisis discloses a large amount of long pre-existing insolvency, the inference surely is rather that general prices have been unduly inflated by a misuse of credit than that they have been enhanced by any change in the value of gold itself. The utility of gold as a common measure and standard rests, as I maintain, on the fact that its value is governed by a far wider range of causes, and is comparatively exempt from (though of course in degree influenced by) such casual elements of perturbation. I must demur, moreover, to the conclusion that the value of gold was more than doubled during the first half of the century, at least in so far as it is based only upon the corresponding fall in the average of general prices. For this allows nothing for the immense development of industry which led to so large an increase in individual productive power. This power is indeed the most important element in the question. If we suppose class A to provide food and class B all other necessaries, it follows that each produces twice as much as it requires for its own uses, and the consumption of A and B may alike be represented as \a + b. But if they can so far increase their production as to be able to admit C into the association, each will require ^ only of its own production for its own use, and, as the common measure of labour shows the same INTRODUCTION. xxvii value in exchange for the increased production, that of the several items of it must be expressed by ^ instead of -. But this local development does not affect the value of gold, the supply of which is derived from so many different regions, and its stability, rather than its depreciation, is to be in- ferred from a marked fall in local prices under such conditions. This principle will hold good, though the fractions which would represent the actual results may be infinitely complex and variable. During the subsequent period there is much reason to suppose that causes very much the converse of these have come into operation. I by no means say that gold has not risen and fallen, but I do submit that the fact cannot be positively inferred, and, d fortiori that the extent of any change in value cannot be measured merely by a comparison with general prices, however ably deduced. It would be very deceptive so to mani- pulate the standard as needlessly to hide or obscure such important factors as an increase or decrease in the actual cost of production. Professor Jevons further contemplates the ex- pediency of using this tabular standard of value for money debts " say of more than three months' standing." The essential point involved here was noticed by anticipation in Ch. II, 23. If such current debts were payable in weights of gold varying according to the proposed standard as its indications were published from time to time, prices would be fixed according to the anticipated require- ment to find a greater or less amount of the metal xxviii INTRODUCTION. or coin in which the debts were actually to be discharged. The effect of this would be to counter- act the natural ebb and flow of bullion by means of which its value is made to depend on a world- wide average of demand and supply. Our currency would be practically so far isolated while the prices on which the proposed average is to be deduced would be settled with reference to a constantly varying weight of metal. We should, I fear, ere long, be landed in utter confusion : the more so as there would be an uncertain gap between the money in which all importers and wholesale dealers had to pay their longer obligations and that in which their transac- tions had to be carried out to the end by retailers and consumers. But while I consider this proposal altogether un- tenable, I should be glad if any word of mine could add weight to Professor Jevons's recom- mendations in favour of organising our national statistics by the most efficient methods possible. Public money might well be expended on a matter of so much general importance. The objections to the use of such a standard for current transac- tions do not apply to its application to many obligations extending over lengthened periods of time, which indeed in not a few cases might quite as conveniently be made to depend upon the actual purchasing power of current money, as upon any direct reference to the value of gold. E. H. FEBRUARY, 1878. L J B I? A , UNIVKUSITY UK CALIF< MONEY AND VALUE. CHAPTER I. (Money.) T>T>T-&JT A T\r ERRATA. Page 80, line 8, for "unexceptional" read " exceptional." ,, 278, line 3, note, for " alieno ne " rend " alienum non." 320, line 33, for " elapse " read " lapse." ,, 351, note, /or " A.D. 1847, 5/2H" <* " V^TT-" 371, line 3 from bottom, note, for "108'* " read " 106' 4 ." , , 385, line 25, /