sending good beef and mutton from Australia to England, what effect would it have on my butcher's bills?

7. Suppose meat were cheaper, and my butcher's bills were consequently reduced one-third, should I be permanently any better off, if about the same time I had nine people to keep instead of six?

CHAPTER IV. On the Value of Money.

It is not at all an uncommon thing to hear people talk about the price of money. This expression is very often used respecting the rate of interest; when those who borrow money have to pay for the loan a large sum over and above the amount they receive, the price of money, or the rate of interest, is said to be high. When borrowers only pay a small sum for the use of the loan the price of money, or the rate of interest, is said to be low. It will, however, be shewn that, apart from its commercial signification, the expression "the price of money" has no meaning whatever. It has been said in a former chapter that the value of a commodity is its exchange power, or the number of other commodities for which it will exchange. It was then explained that price is a particular case of value, that is, the value of a commodity estimated in money. When therefore the price of money is spoken of, in any other sense than that indicated above, it is equivalent to mentioning the value of money estimated in money. This is, of course, a foolish expression; it might as well be said that the price of ten pounds was ten sovereigns, or that the price of a shilling was two sixpences. It is impossible to measure the value of a commodity by comparing it with itself.

The value of Money. The value of money is its exchange power: when money exchanges for a large quantity of other commodities, or in other words, when prices are low,

the value of money is high; when money exchanges for a small amount of other commodities, or in other words, when prices are high, the value of money is low.

The value of Money is regulated by the same laws as those which determine the value of other mineral produce. It is sometimes erroneously supposed that the value of money is invariable, because an ounce of gold can always be exchanged for the same amount of money. Whether prices are high, or whether they are low, an ounce of gold can always be exchanged at the Mint for £3. 175. 10§d. Those who think that this fact proves the value of gold to be unalterable would also be likely to believe that the value of land is unchangeable, because an acre of land can always be divided into four plots of a quarter of an acre each. The fact that an ounce of gold will always exchange for £3. 175. 10d. only shews that an ounce of gold will divide into three sovereigns and that part of a sovereign which is represented by 17s. 10d.

It must be borne in mind that the value of the precious metals is regulated in the same manner as the value of other mineral products. The value therefore of the precious metals is adjusted by an equalisation of the demand with the supply. As the demand increases the value rises, and the production of an increased supply is also stimulated. If this increased supply is obtained from less productive sources, the cost of production will be increased and the value of the precious metals will be augmented. If however the increased supply is obtained by the discovery of more productive mines, the cost of production will be reduced and the value of the precious metals will diminish. The yield of silver from America has of recent years been enormously increased owing to the discovery of very productive mines. From the years 1849 to 1858, the yield of silver from American mines was of the value of £10,000 per annum. About the year 1861

the yield began largely to increase, and in the year 1873 it had reached the enormous value of £7,150,000. This and some other circumstances have caused a serious fall in the value or purchasing power of silver, and is occasioning great anxiety and inconvenience to those countries which, like India, have silver for their standard currency. It does not affect the value of the English currency, because our silver coins are merely tokens; twenty shillings have never contained a value of silver equivalent to the value of the gold contained in a sovereign. Gold is our standard currency, and is the only legal tender for the payment of debts of more than 40s. in amount. The value of silver has already declined or nearly 17 per cent. That is to say that 6 rupees can now only purchase the same amount of commodities as could formerly be purchased for 5 rupees. The inconvenience to the government of India arises from the fact that while their expenditure for stores etc. must be largely increased, the principal item of their revenue, the rent of land, is fixed by law in pecuniary amount and cannot be increased.

The circumstances which influence the Demand for Gold and Silver. It has been previously explained that the demand for a commodity is regulated by its value. To this rule money is no exception. To carry on a given amount of business about fifteen times more silver would be needed than gold: and why? Because silver is fifteen times less valuable. The quantity of money required in any country will depend partly on the cost of its production, and partly on the rapidity of its circulation. The principal use to which gold and silver are devoted is the formation of money; but they are also used in many processes of art and manufacture. The demand which each country has for gold and silver therefore depends on their value; on the national wealth and population; the number of times commodities are bought and sold for money; and the

activity of the arts and manufactures in which gold and silver are required.

When it is said that the demand for money depends on the national wealth, it must not be supposed that the wealth of a nation can be accurately measured by the amount of gold and silver which it keeps in circulation. The wealth of an individual is not measured by the quantity of money which passes through his hands. He uses various substitutes for money, such as cheques and bank-notes, for nearly all his larger payments; but he is obliged to use money for his smaller payments; for paying servants and labourers, and for defraying daily expenses, such as cab fares and hotel bills. It is therefore seen that, though the amount of money used by an individual is not by any means a measure of his wealth, still his demand for money generally bears some proportion to his wealth; as his wealth increases he employs more servants, or more labourers, he takes longer and more expensive journeys, and his daily expenses probably increase.

As it is with an individual so is it with a nation. The demand for money is not an accurate measure of national wealth, but it always bears some proportion to the wealth and population of a country. Thus, in a country of 20,000,000 inhabitants, a very far larger number of persons are in receipt of money wages than in a country containing 10,000,000 inhabitants. The increased demand for money has not however been proportionate to the increase of population and wealth in this country during the last twenty years. This is doubtless owing to the facilities of banking which now so largely prevail. Formerly large business payments were made by means of money. Farmers who came to market to buy or sell corn or stock always expected to pay and to be paid in money. Formerly on a market-day in a country town thousands

of pounds would change hands. But in these large transactions the use of money is now entirely dispensed. with. Farmers bring their cheque-books to market; the use of money is not required except for the purpose of paying the expenses incurred by the journey. Although therefore the demand for money bears some proportion to the wealth and population of a country, yet the proportion is not fixed and definite, for it is liable to alterations with every extension of the credit system.

The demand for the precious metals is also influenced, to a very great degree, by the number of times commodities are bought and sold for money. If for instance a piece of linen after it is manufactured is sold for money to a wholesale dealer, who in his turn sells it again for money to a retail shopman, who sells it to a lady to make shirts for a missionary basket, the same piece. of linen is exchanged for money four times before it is put to its ultimate purpose. It is evident that such a series of transactions must require a far greater quantity of money than would be used if the cloth were sold by the manufacturer to the consumer. It may here be remarked that it has become customary to dispense with the use of money in large trade transactions. The wholesale dealer would in all probability now pay the manufac turer with a cheque or with a bill of exchange, and the retail tradesman would pay the wholesale dealer in the same way; by these means the quantity of money in circulation is greatly economised. The example, however, shews how the demand for gold and silver in each country is partly regulated by the number of times commodities are bought and sold before they are used.

It is hardly necessary to enter into an explanation of the manner in which the demand for gold and silver is affected by the quantity of those metals used in arts and manufactures. It has been said that the value of gold