The Crown of Wild Olive
Hence the price of anything depends on four variables.
(1.) Its cost.
(2.) Its attainable quantity at that cost.
(3.) The number and power of the persons who want it.
(4.) The estimate they have formed of its desirableness.
Its value only affects its price so far as it is contemplated in this
estimate; perhaps, therefore, not at all.
63. Now, in order to show the manner in which price is expressed in
terms of a currency, we must assume these four quantities to be known,
and the "estimate of desirableness," commonly called the Demand, to be
certain. We will take the number of persons at the lowest. Let A and B
be two labourers who "demand," that is to say, have resolved to labour
for, two articles, _a_ and _b_. Their demand for these articles (if the
reader likes better, he may say their need) is to be conceived as
absolute, their existence depending on the getting these two things.
Suppose, for instance, that they are bread and fuel, in a cold country,
and let a represent the least quantity of bread, and _b_ the least
quantity of fuel, which will support a man's life for a day. Let _a_ be
producible by an hour's labour, but _b_ only by two hours' labour.
Then the _cost of a_ is one hour, and of _b_ two (cost, by our
definition, being expressible in terms of time). If, therefore, each man
worked both for his corn and fuel, each would have to work three hours a
day. But they divide the labour for its greater ease.[30] Then if A
works three hours, he produces 3 _a_, which is one a more than both the
men want. And if B works three hours, he produces only 1-1/2 _b_, or
half of _b_ less than both want. But if A work three hours and B six, A
has 3 _a_, and B has 3 _b_, a maintenance in the right proportion for
both for a day and half; so that each might take half a day's rest. But
as B has worked double time, the whole of this day's rest belongs in
equity to him. Therefore the just exchange should be, A giving two _a_
for one _b_, has one _a_ and one _b_;--maintenance for a day. B giving
one _b_ for two _a_, has two _a_ and two _b_; maintenance for two days.
But B cannot rest on the second day, or A would be left without the
article which B produces. Nor is there any means of making the exchange
just, unless a third labourer is called in. Then one workman, A,
produces _a_, and two, B and C, produce _b_:--A, working three hours,
has three _a_;--B, three hours, 1-1/2 _b_;--C, three hours, 1-1/2 _b_. B
and C each give half of _b_ for _a_, and all have their equal daily
maintenance for equal daily work.
To carry the example a single step farther, let three articles, _a_,
_b_, and _c_ be needed.
Let _a_ need one hour's work, _b_ two, and _c_ four; then the day's work
must be seven hours, and one man in a day's work can make 7 _a_, or
3-1/2 _b_, or 1-3/4 _c_.
Therefore one A works for _a_, producing 7 _a_; two B's work for _b_,
producing 7 _b_; four C's work for _c_, producing 7 _c_.
A has six _a_ to spare, and gives two _a_ for one _b_, and four _a_ for
one _c_. Each B has 2-1/2 _b_ to spare, and gives 1/2 _b_ for one _a_,
and two _b_ for one _c_.
Each C has 3/4 of _c_ to spare, and gives 1/2 _c_ for one _b_, and 1/4
of _c_ for one _a_.
And all have their day's maintenance.
Generally, therefore, it follows that if the demand is constant,[31] the
relative prices of things are as their costs, or as the quantities of
labour involved in production.
64. Then, in order to express their prices in terms of a currency, we
have only to put the currency into the form of orders for a certain
quantity of any given article (with us it is in the form of orders for
gold), and all quantities of other articles are priced by the relation
they bear to the article which the currency claims.
But the worth of the currency itself is not in the slightest degree
founded more on the worth of the article which it either claims or
consists in (as gold) than on the worth of every other article for which
the gold is exchangeable. It is just as accurate to say, "so many pounds
are worth an acre of land," as "an acre of land is worth so many
pounds." The worth of gold, of land, of houses, and of food, and of all
other things, depends at any moment on the existing quantities and
relative demands for all and each; and a change in the worth of, or
demand for, any one, involves an instantaneously correspondent change in
the worth of, and demand for, all the rest;--a change as inevitable and
as accurately balanced (though often in its process as untraceable) as
the change in volume of the outflowing river from some vast lake, caused
by change in the volume of the inflowing streams, though no eye can
trace, nor instrument detect, motion, either on its surface, or in the
depth.
65. Thus, then, the real working power or worth of the currency is
founded on the entire sum of the relative estimates formed by the
population of its possessions; a change in this estimate in any
direction (and therefore every change in the national character),
instantly alters the value of money, in its second great function of
commanding labour. But we must always carefully and sternly distinguish
between this worth of currency, dependent on the conceived or
appreciated value of what it represents, and the worth of it, dependent
on the _existence_ of what it represents. A currency is _true, or
false_, in proportion to the security with which it gives claim to the
possession of land, house, horse, or picture; but a currency is _strong
or weak_,[32] worth much, or worth little, in proportion to the degree
of estimate in which the nation holds the house, horse, or picture which
is claimed. Thus the power of the English currency has been, till of
late, largely based on the national estimate of horses and of wine: so
that a man might always give any price to furnish choicely his stable,
or his cellar; and receive public approval therefor: but if he gave the
same sum to furnish his library, he was called mad or a biblio-maniac.
And although he might lose his fortune by his horses, and his health or
life by his cellar, and rarely lost either by his books, he was yet
never called a Hippo-maniac nor an Oino-maniac; but only Biblio-maniac,
because the current worth of money was understood to be legitimately
founded on cattle and wine, but not on literature. The prices lately
given at sales for pictures and MSS. indicate some tendency to change in
the national character in this respect, so that the worth of the
currency may even come in time to rest, in an acknowledged manner,
somewhat on the state and keeping of the Bedford missal, as well as on
the health of Caractacus or Blink Bonny; and old pictures be considered
property, no less than old port. They might have been so before now, but
that it is more difficult to choose the one than the other.
66. Now, observe, all these sources of variation in the power of the
currency exist, wholly irrespective of the influences of vice,
indolence, and improvidence. We have hitherto supposed, throughout the
analysis, every professing labourer to labour honestly, heartily, and in
harmony with his fellows. We have now to bring farther into the
calculation the effects of relative industry, honour, and forethought;
and thus to follow out the bearings of our second inquiry: Who are the
holders of the Store and Currency, and in what proportions?
This, however, we must reserve for our next paper--noticing here only
that, however distinct the several branches of the subject are,
radically, they are so interwoven in their issues that we cannot rightly
treat any one, till we have taken cognizance of all. Thus the need of
the currency in proportion to number of population is materially
influenced by the probable number of the holders in proportion to the
non-holders; and this again, by the number of holders of goods, or
wealth, in proportion to the non-holders of goods. For as, by
definition, the currency is a claim to goods which are not possessed,
its quantity indicates the number of claimants in proportion to the
number of holders; and the force and complexity of claim. For if the
claims be not complex, currency as a means of exchange may be very small
in quantity. A sells some corn to B, receiving a promise from B to pay
in cattle, which A then hands over to C, to get some wine. C in due time
claims the cattle from B; and B takes back his promise. These exchanges
have, or might have been, all effected with a single coin or promise;
and the proportion of the currency to the store would in such
circumstances indicate only the circulating vitality of it--that is to
say, the quantity and convenient divisibility of that part of the store
which the _habits_ of the nation keep in circulation. If a cattle
breeder is content to live with his household chiefly on meat and milk,
and does not want rich furniture, or jewels, or books--if a wine and
corn grower maintains himself and his men chiefly on grapes and
bread;--if the wives and daughters of families weave and spin the
clothing of the household, and the nation, as a whole, remains content
with the produce of its own soil and the work of its own hands, it has
little occasion for circulating media. It pledges and promises little
and seldom; exchanges only so far as exchange is necessary for life. The
store belongs to the people in whose hands it is found, and money is
little needed either as an expression of right, or practical means of
division and exchange.
67. But in proportion as the habits of the nation become complex and
fantastic (and they may be both, without therefore being civilized), its
circulating medium must increase in proportion to its store. If every
one wants a little of everything,--if food must be of many kinds, and
dress of many fashions,--if multitudes live by work which, ministering
to fancy, has its pay measured by fancy, so that large prices will be
given by one person for what is valueless to another,--if there are
great inequalities of knowledge, causing great inequalities of
estimate,--and, finally, and worst of all, if the currency itself, from
its largeness, and the power which the possession of it implies, becomes
the sole object of desire with large numbers of the nation, so that the
holding of it is disputed among them as the main object of life:--in
each and all of these cases, the currency necessarily enlarges in
proportion to the store; and as a means of exchange and division, as a
bond of right, and as an object of passion, has a more and more
important and malignant power over the nation's dealings, character, and
life.
Against which power, when, as a bond of Right, it becomes too
conspicuous and too burdensome, the popular voice is apt to be raised in
a violent and irrational manner, leading to revolution instead of
remedy. Whereas all possibility of Economy depends on the clear
assertion and maintenance of this bond of right, however burdensome. The
first necessity of all economical government is to secure the
unquestioned and unquestionable working of the great law of
Property--that a man who works for a thing shall be allowed to get it,
keep it, and consume it, in peace; and that he who does not eat his cake
to-day, shall be seen, without grudging, to have his cake to-morrow.
This, I say, is the first point to be secured by social law; without
this, no political advance, nay, no political existence, is in any sort
possible. Whatever evil, luxury, iniquity, may seem to result from it,
this is nevertheless the first of all Equities; and to the enforcement
of this, by law and by police-truncheon, the nation must always
primarily set its mind--that the cupboard door may have a firm lock to
it, and no man's dinner be carried off by the mob, on its way home from