that they are not applied to intrinsic qualities. That though Money is the apparent or proximate measure, the ultimate measure to which not only things, but their price, is referred is man himself. Nothing has Value where there are no men, and the very things which have a low price where men are few, have a very high price where there are many people.

"Men however do not give Value to things or services, unless they want them. Hence our wants are the first source of the Value of all things, and Price is the power to satisfy our wants." He says that the wants of men are the first source of the Value of everything, and of all Labour: and that Value is the child of Demand.

So Beccaria says—“ Value is a substance which measures the estimation in which men hold things."

Condillac is also very clear on this point-" This esteem is what is called Value.". "Since the Value of things is founded on the want of them, or the Demand, it is natural that a want more strongly felt gives things a greater value: and a want less felt gives them less Value. The Value of things increases with their scarcity, and decreases with their abundance. It may even, on account of this abundance, decrease to nothing. A superfluity, for example, will be without Value whenever we can make no use of it."

The Physiocrates, or first school of Economists, made all Value proceed or arise from Demand: and they shewed that things which remain without Demand (Consommation) are without Value.

Anything has Value when it is Exchangeable; when it is not Exchangeable it has no Value. It is often supposed that Smith proved that Labour is the source of all Value and of all Wealth. But Smith's doctrines are quite contradictory on this subject, as we have fully pointed out in our Principles of Economical Philosophy, and Theory and Practice of Banking, and Smith himself says that if a guinea would exchange for nothing it I would have no Value. It is well known that a considerable number of writers have asserted that Labour is the CAUSE of all Value. But any one who reflects on this assertion must see its utter fallacy. The simple observation that however much a

THE GENERAL LAW OF VALUE.

49

person may labour on producing a thing, if no one will buy it, it has no Value, must at once shew the fallacy of it. Moreover there are abundance of things which have Value upon which no Labour was ever bestowed.

It is this doctrine that Labour is the CAUSE of all Value, and that all Wealth is produced from the earth, which has done so much to obscure and confuse the Theory of Credit. Whereas when we consider EXCHANGEABILITY as the sole essence and principle of Value, the whole subject becomes perfectly clear and simple. A Bank Note or a Bill of Exchange has Value because it can be exchanged for Money; and Money has Value solely because it can be exchanged for other things. "An order or note of hand," says Mill, 66 or bill payable at sight for an ounce of gold, while the credit of the giver is unimpaired, is worth neither more nor less than the gold itself," i.e. of exactly the same Value as gold. And it is for this reason that JURA, Rights, are termed Wealth in Roman Law. They are Pecunia, Res, Bona, Merz, because they can be bought and sold. And it is the commerce in this species of Merchandise which is the subjectmatter of this work.

On the GENERAL LAW of VALUE: or the GENERAL

EQUATION of ECONOMICS.

9. Having in the preceding sections given the Definition of Value, and found that its Form or Cause resides exclusively in the Human Mind, the last branch of our inquiry is to determine the General Law of Value: or the General Equation of Economics: that is to discover a single General Law which governs the exchangeable relations of ALL Quantities, whatever their nature, at all times, and under all circumstances.

The acknowledged principles of Inductive Science shew us that there can be but one General Law of Value. We have seen in the preceding chapter that there are three distinct species of Economic Quantities, and we have generalised the fundamental Conceptions of the science so as to grasp all these Quantities. Now these three species of Quantities can be ex

E

changed in Six different ways. Our present object is to investigate a General Equation which shall be applicable to all the Six species of exchanges indifferently. The Law which governs the exchangeable relations of material products, must equally govern the exchangeable relations of DEBTS.

Suppose we make £ the general symbol of an Economic Quantity that is to say anything whatever whose Value may be measured and representing these various species of Quantities under the general symbol £, we may affirm that there can be but one Cause of Value for them all; which we have shewn to be DEMAND: and there can be but one General Law which governs their exchangeable relations.

Now let A and B be any two Economic Quantities of any form whatever, then supposing that A remains the same while B varies with respect to A-then B or the value of A, will vary from four causes :—

It will Increase

1: From a Diminution in Quantity. 2. From an Increase of Demand. It would Diminish

1. From an Increase of Quantity.

2. From a Diminution of Demand.

Now as the variations of Value of the other Quantity are influenced by exactly the same four causes, it is quite clear that the variations of both Quantities will be influenced by eight independent causes: and if these be connected in the form of an Algebraical Equation, that will manifestly be the true General Equation of Economics.

The above is the full expression of what is commonly called the Law of Supply and Demand. It means this that no change can take place in the Exchangeable relations of any two Economic Quantities unless there is some change in the Intensity of Demand or the Limitation of Supply, of one, or both of the two Quantities.

ON THE COINAGE.

51

CHAPTER III.

ON THE COINAGE.

1. In the first chapter we explained the circumstances which gave rise to the use of Money, and showed that many substances have been used to fulfil that function. But a metal of some sort has been found to possess the greatest advantages: and of these, gold, silver, and copper have been chiefly preferred.

Gold and silver, however, in a perfectly pure state are too soft to be used for this purpose, and it is necessary to mix some other metal with them to harden them, which is called alloy. By a chemical law, whenever two metals are mixed together, the compound is harder than either of them in a pure state.

Gold and silver in the mass are called BULLION, and as the laws of all countries in which bullion is coined into money define the quantity of alloy to be mixed with the pure metal, we shall use the word Bullion to mean gold or silver in the mass, mixed with such a proportion of alloy as is ordered by law, so as to be fit to be coined.

Some nations have used Bullion as money; but the merchants of these nations were obliged to carry about with them scales and weights, to weigh out the Bullion on each occasion.

Other nations adopt a more convenient practice. They divide the bullion into pieces of a certain definite weight, and affix some public stamp upon it to certify to the public that these pieces are of a certain weight and fineness, and they give them certain names by which they are commonly known. These pieces of bullion, with a public stamp upon them to certify their weight and fineness, and called by a publicly recognised name,

and intended to be used for the purposes of commerce without further examination are called COINS.

This stamp, or certificate, of course, in no way affects the Value of the metal, or the quantity of things it will exchange for. Its only object is to save the trouble of weighing and assaying the bullion in commercial transactions. Nor can the Name of the Coin in any way affect its Value. estimated in the number of these pieces of bullion, or coins: but it is necessarily implied in the bargain that these coins contain a certain definite quantity of bullion.

Values, it is true, are

It is also perfectly evident that if this process of stamping Bullion, and so turning it into Coin, is done free of all expense, at the will of any one who chooses to present bullion and demand to have it stamped, and also without any delay, the value of the metal as bullion must be exactly the same as the value of the metal as Coin.

If, however, a charge is made for the workmanship, or if any tax is levied on changing the metal from one form into another, or if a delay takes place in doing so, there will be a difference between the value of the metal as bullion and as coin, and this difference will manifestly be the charge for the workmanship, the amount of the tax, and the amount of interest accruing during the period of delay.

These however are all fixed, or constant, quantities, which may be ascertained, and they form the limits of the variation of the metal in one form from its value in the other.

In the following remarks we shall assume that there is no charge for the workmanship, no tax upon it, and no delay in doing it, no obstruction, in short, of any sort to changing the metal from one form into the other.

Upon these assumptions, then, we have this fundamental principle of the Coinage—

Any quantity of Metal in the form of Bullion must be of exactly the same Value as the same quantity of Metal in the form of Coin.

In the case of the coinage of England no charge of any sort is made for coining Gold Bullion: but as a considerable delay may take place before any one who brings Bullion to the Mint