gold-that is, money-is held to be merely the outward and visible sign of an invisible and mysterious gift or benefaction, which is imparted to the true believer by the transfer of the money, but is not perceptible, except in the beneficial effects of future labour. All this may be poetry, but it is not economical science.

103

SOME THOUGHTS ON VALUE.

Our of the erroneous doctrine that money is only a medium of exchange, and from disregard of the fact that, to be a true medium of exchange, it must itself possess intrinsic value, has arisen the obscurity which surrounds the teaching of so many writers on the subject of value. It is admitted that value is a relative term; and it is the fact that value has no more existence as an entity than height or breadth; it can only be measured or conceived of by comparison: yet there have been attempts to establish that there is such a thing as natural value pertaining to an article of exchange or production. Some writers, as Ricardo, have endeavoured to show that the value of a thing not only is measured by, but is constituted of, the quantity of labour necessary to produce or obtain it. Others, among whom was Malthus, have contended that value consists in, as well as is measured by, the quantity of labour that the thing can command as an article of exchange. The latter is much the nearer to the truth of these two theories, but neither is a satisfactory explanation. Both are among the generalisations

so common in political economy which involve the error in reasoning known to logicians as arguing a dicto secundum quid, ad dictum simpliciter;' that is, taking for granted that what is true under particular circumstances will also be true on all occasions. While there are cases in which either explanation will seem to suit the circumstances, the exceptions are so numerous that it seems impossible to accept the generalisation as a law.

In truth the exchangeable value of any article will not depend upon the labour expended upon obtaining it, nor upon the labour which it will, as a general rule, command; but upon the cost of production—that is, upon the amount of property of exchangeable value which has been given for the labour and materials necessary to obtain or produce the article on an average. Unless this can be recovered with a fair amount of profit on the transaction, the article will cease to be sought for or produced, no matter whether the labour required be much or little. As an affair of convenience exchanges may be made without profits, but in commerce the expectation of profits is of the essence of the proceeding, and profits can only be accumulated in some third article, and eventually must be embodied in money. It is commonly forgotten that the value of any article in exchange must be largely determined by the degree of possibility of exchanging it, and of exchanging it with profit. Abundance of food in a country without local demand or easy transport-as has happened in the Western States of America and other

new countries with respect to grain-has rendered the greater part of the production almost valueless. If in these cases exchange had been possible, but only for articles likewise of perishable character, as milk and butter, although the convenience and comfort of the community would have been served by having abundance of milk and butter instead of a wasted surplus of wheat, yet still it would have been impossible, in the mercantile sense, to make any profit on the exchange. Comfort would be increased, but thrift or saving would be impracticable. Eventual profits and permanent savings can only be made in money-and the fact that money is an article of exchange and the article in which savings must be accumulated, affects the whole theory of value.

Almost all the writers on political economy seem to fail to grasp this idea, though it dimly presented itself to Malthus. He, however, stops short of apprehending the full force of the consequences from what he perceived. He says, in a note to the chapter on the progress of wealth in his Principles of Political Economy: Theoretical writers in political economy, from the fear of appearing to attach too much importance to money, have perhaps been to apt to throw it out of their consideration in their reasoning. It is an abstract truth that we want commodities, not money. But, in reality, no commodity for which it is possible to sell our goods at once, can be an adequate substitute for a circulating medium, and enable us in the same manner to provide for children,

to purchase an estate, or to command labour and provisions a year or two hence. A circulating medium is absolutely necessary to any considerable saving; and even the manufacturer would get on but slowly if he were obliged to accumulate in kind all the wages of his workmen. We cannot, therefore, be surprised at his wanting money rather than other goods; and in civilised countries, we may be quite sure that if the farmer or manufacturer cannot sell his products so as to give him a profit estimated in money, his industry will immediately slacken. The circulating medium bears so important a part in the distribution of wealth, and the encouragement of industry, that it is hardly ever safe to set it aside in our reasonings; and all attempts at illustration, by supposing advances of a certain quantity of corn and clothing, instead of a certain quantity of money, which every year practically represents a variable quantity of corn, cannot fail to lead us wrong.'.

Now it is for the reason that profits not only, as Malthus says, must be estimated in money, but do absolutely in the end consist of money and of nothing else, that the theory of value, so far as there can be any natural value at all, depends upon the cost of production in money, and not upon the amount of labour. It matters nothing to the manufacturer, or agriculturist, or proprietor of mines, whether he employs ten labourers or twenty, or whether he pays them ten shillings a week or twenty shillings; the question for his consideration is,