STUDIES

IN

POLITICAL ECONOMY.

A PLEA FOR SOME FACTS.

WHAT I conceive to be the root error, from which a plentiful crop of fallacies springs in modern economical doctrines, consists in ignoring the fact-as hard a fact as any in science-that gold and silver are a medium of exchange' only in so far as, and because, they are eminently articles-and, from their peculiar value and characteristics, pre-eminently the articles of exchange. They do not become valuable because they are money, but are money because they are specially valuable. Many other articles besides gold and silver have at times been used as money, but did not therefore lose their specific value. Adam Smith tells us that dried cod-fish served this purpose in Newfoundland not long ago, as did tobacco in Virginia, and sugar in the West Indies. in the West Indies. And I have been informed on good authority that less than twenty years ago, in a

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district in Mexico, round Acapulco, pieces of soap, stamped by the Alcalde, served as small change for a dollar. It is impossible to deny that a lump of gold, which you can have parcelled out into bits of a certain weight and fineness called sovereigns, is just as much an article of exchange as, and much more readily exchangeable than a bale of Manchester cotton, which cannot be used except as clothing, and being by no means absolutely necessary to anybody, even for clothing, has not any intrinsic worth which gold does not possess. Professor Fawcett, in his Manual of Political Economy, speaks of its being 'evident that exchangeable value is the characteristic which stamps a commodity with the attribute of wealth.' Plain men would therefore think that, according to this definition, gold, being very readily exchangeable, is certainly wealth as far as it goes; but in the next page we are told to pay careful attention to an erroneous conception of wealth, universal until the appearance of Adam Smith's work about eighty years since,' the essence of which error, as embodied in the mercantile system, was to identify wealth with money. Now, no one would pretend that all the wealth of the world is gold and silver; but they are demonstrably as much part of it as parcels of Manchester goods, Birmingham wares, or Sheffield cutlery. To say otherwise is not more reasonable than to assert that because all horses are not mares, therefore mares are not horses; but this is really what is done. Because gold and silver are used as standards of exchange, it is assumed

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they are nothing more and have no value; while, in fact, many other things may be and are media of exchange which are not gold or silver. Suppose that I have a black horse and a white one, and wish to change the white one for another black, as a match for the first. I know a friend who has a black, which will suit me; but he wants a brown horse, not a white one. I find another person who has such a brown animal, and who takes my white in exchange for him. I then change my brown with my friend for the black which I want, and we both are suited. The intermediate person would not sell his horse for money, because he wanted a beast of burden; but colour was unimportant to him. Surely in this case the white horse was as truly a medium in exchanging the brown for the black as money would have been if I had sold him for 100l., and bought the other with that sum. But he was more than a medium-he was an article of exchange; he still represented a third value, again exchangeable. If a hundred sovereigns had been the articles of exchange, they also would represent a third value again exchangeable-with this addition, that they are practically imperishable, while the horse must die in a few years.

The aggregate 'realized' wealth of the world consists of an unknown quantity of more or less perishable commodities which we will call x; to which is to be added an unknown value in precious metals, which do not perish, which we will call y. The whole is x+y. But x is very