The price of an article is its value estimated in money, or the quantity of money it will command. It is by price, which denotes the value of things in relation to money, that we compare the money-value of one thing with another, and thus determine the relative value of each. Practically, there is only this kind of value, and this kind of price, known in the estimation of things. Commodities are exchanged for each other at their relative values, and they are exchanged for money at their actual prices. To the possessor, the utility of an article depends upon his own use of it, and its value and price depend upon the want which others may have for it, and what they are willing to give for it. Between want and supply arises demand, and according as want or supply may predominate, demand will increase or diminish, and the value of things rise or fall proportionately. Wants multiply with the means of satisfying them; wherefore, in the general increase of commodities, which supply these means, the demand for any one kind, which may remain stationary, will be augmented, and the value of it consequently enhanced. The variations in the demand for consumable commodities are according as the present and prospective production may exceed, or fall short of the quantities required for the supply of the present and prospective consumption. And the variations in the demand for things of an unconsumable nature, as land, houses, money, &c. are according as the quantities, which come into the market, may exceed or fall short of their present and prospective uses. The value and price of a commodity rise or fall with demand, which will be, as before observed, according as the quantities of other commodities, including money, increase or diminish, while the quantity of this commodity remains unchanged. If the quantity of money be increased, while the quantities of all other commodities remain stationary, more money must be given in exchange for each of them. In this case, the demand for money is reduced, while the demand for every other commodity is augmented. In other words, money is of less value, and all other commodities of greater. If the quantity of wheat be increased, while that of all other commodities remains the same, more wheat must be given in exchange for each of them; that is, wheat is reduced both in value and price, while all other commodities are augmented in value, though not in price for the proportion between the quantities of these and of money remains unchanged. If in consequence of a short crop of grain throughout the country the price of it should be doubled, the value of all other articles in relation to grain will : be diminished one half. That is, twice as much of every thing must be given in exchange for grain. So far, the national wealth remains the same in value. What the consumer loses by the enhancement of the price, the producer gains. But should the nation import grain from abroad to supply the deficiency for necessary consumption, as much in amount as the quantity imported costs, so much in amount will the general wealth be reduced by the deficiency of the harvest. In proportion to the aggregate increase of production may any single product be increased, without any diminution of its demand or its value. And in proportion as products are multiplied and accumulated, so will the value of lands, buildings, and all other objects of which the quantity is fixed or stationary, be increased. Public measures, therefore, which, by protecting industry, lead to a multiplication of its products, and thereby to an augmentation of the general circulating capital, are measures which, in doing this, do as a consequence cause an augmentation of the income, and with that an increase of the value, of all real estate. IV. DISTINCTION BETWEEN WEALTH AND VALUE. Wealth is positive, value is relative. Wealth as distinguished from value, consists in the positive quantities of material objects of necessity or desire, which have exchangeable value, or which possess utility conferred by labor, without exchangeable value. Value consists only in the relative quantities of things, and of those only which are objects of exchange. If the quantities of all objects having exchangeable value be diminished in equal proportions, wealth, so far as it consists in these objects, would be diminished thereby in the average proportion; but the exchangeable value of each object would remain the same and undiminished; for each object would still command the same quantity of every other object, that it did before the proportionate diminution. The aggregate, however, of the diminished quantities of these objects would not support the same quantity of labor, or the same number of individuals as before; and in either circumstance the diminution of wealth plainly appears. V. METALLIC MONEY. Money is chiefly of gold and silver. It is in coin circulating by tale, or in mass circulating by weight. It is introduced by foreign commerce, in exchange for the products of native industry. It is one of the constituents of wealth, and is its universal representative. Like wealth, it gives its possessor, in all places within the sphere of civilization, a command of all objects of necessity or enjoyment, which are of an exchangeable nature. It is, by the common consent of nations, the medium through which one thing is exchanged for another, and the standard by which the relative values of things in exchange are measured. Less money is required to facilitate the exchange of commodities when their circulation is rapid, than when it is slow. The variations in the value of money are caused by the greater or less demand there may be for it compared with the supply. The value of money is greater in proportion as the actual supply is less than the present demand; and its value is less, in proportion as the actual supply of it is greater than the present demand. The increase of money, if it be employed to promote industry is beneficial; it increases property. But if it merely beget speculation and augment expenditure, it is injurious; it diminishes property. The interest of money, while it is held on hand, being lost, people will not hold a greater quantity by them, than what their occasions require. More than this, therefore, will not be retained in circulation; and any surplus, which may arise, will from time to time go off to the public benefit by its employment in foreign commerce. To prohibit by law the exportation of money, increases its value in relation to the products of the country, which prohibits it; and diminishes its value in relation to all imported commodities. In other words, it causes native products to fall in price, and foreign commodities to rise in price. The foreign commodities will rise in price, in consequence of the hazard and expense incurred in getting out of the country the money which may be given in payment for them; and the native products will fall, in consequence of the increasing scarcity of money caused by its constant departure; for in spite of the law to prevent it, it will find its way out, to seek for more profitable employment in countries where it has more extensive uses, and from which it will not be likely to return again. Money will never leave countries, where its employment is free and unlimited, to take up its abode in those, where its movements are limited, and its employment restricted. The effect of this prohibiton, therefore, seems to be to produce a scarcity of money, to lower the price of native products, and as a consequence of this, to check the progress of industry and wealth. VI. BANK CURRENCY. Bank Paper is used as a substitute for metallic money. It car ries with it a bank promise to pay on demand the sum of money which it represents, and while this promise is observed with good faith, it performs all the functions of metallic currency. The banks issue their notes by loans on interest; and as the more they issue the greater their profit, they are tempted to loan out more than circulation can retain. They soon learn however, by experience, what quantity they can keep out without its return for specie. But if nevertheless, greedy of gain, they issue more than they can redeem, and suspend payment, they commit a deliberate fraud upon the holders of their paper, to the amount of the depreciation which will consequently take place. A legislative check to banks discounting on their own stocks would render them more safe, as well to a portion of the stockholders as to the community at large, and tend to prevent the unnecessary multiplication of them. Most of the losses, which the public have sustained from bank failures, have been owing to the means, which discounting on their own stocks have afforded to speculating and unprincipled individuals to obtain their direction. And the needless multiplication of banks is also owing to the facility, with which, by this kind of discount, they can be got up, with the advance of little or no capital. The increase of banks, when the supply of their paper is already equal to the demand, is a loss to the community, in as far as it is an increase of expenditure, without any increase of utility. The banks cannot together force into circulation over a limited amount of their bills; and for this reason, that, as there is a loss of interest on all money kept on hand, people will not keep more by them than their immediate occasions require, and the surplus there may be will consequently be returned to the banks for specie. When one bank forces more than its proportion of bills into circulation, it is by crowding out in the same proportion the bills of other banks. When a bank at one place is established with the capital of another place, the money, as it is loaned out, goes off in exchange for commodities which come in, or for things already there, but owned or owed for elsewhere; and, after a short period, the amount retained in circulation will be about the same as it was before. In as far as the multiplication of banks has a tendency to increase expenditure without in a corresponding degree increasing industry, it leads to great embarrassment, as has been the case throughout the interior of the Union. When banks, however, are controlled by judicious checks, the use of their paper is a saving to the community, to the amount of the interest of the metallic money, which it releases from circulation, and which, being then set at liberty, goes to increase the capital employed in foreign commerce. ORIGINAL POETRY. SONNET. O! thou sole-sitting Spirit of Loneliness, P. MOUNT WASHINGTON, The loftiest peak of the White Mountains, N. H. And spirits from the skies come down at night, H. C. |