Value of Money Theory

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T H E V A L U E O F M O N E Y

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oi the Luawig von Mises Institute

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TH E MACMILLAN COMPANYN E W Y O R K B O ST O N C H I C A G O D A L L A SA T L A N T A SA N F R A N C I SC O

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THEVALUE OF MONEY

BYB. M. ANDERSON; JR., PH. D

ASSISTANT PROFESSOR Oif ECONOMICS, BAm^R!) OTVERSITiTAUTHOR OF " SOCIAL VALUE '* *

forkTHE MACMILLAN COMPANY

1917All rights reserved


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C0PYRS6HT, 1D17B Y THE MACMILLfN "COMPANY

Set up and electrotyoed.6 Published May, 1917.


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B. M. A., IllA N D

J. C. A.WHO OFTEN INTERRUPTED THE WORKBUT NONE THE LESS INSPIRED IT


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PREFACEThe following pages have as their central problem thevalue of money. But the value of money cannot be studiedsuccessfully as an isolated problem, and in order to reachconclusions upon this topic, it has been necessary to con-

sider virtually the whole range of economic theory; thegeneral theory of value; the role of money in economictheory and the functions of money in economic life; thetheory of the values of stocks and bonds, of "good will,"established trade connections, trade-marks, and other"intangibles"; the theory of credit; the causes governingthe volume of trade, and particularly the place of specula-tion in the volume of trade; the relation of "static" eco-nomic theory to "dynamic" economic theory.

"Dynamic economics" is concerned with change andreadjustm ent in economic life. A distinctive doctrine ofthe present book is that the great bulk of exchanging growsout of dynamic change, and that speculation, in particular,cons titutes by far the major pa rt of all trad e. From thisit follows th a t the main work of money and credit, as instru-m ents of exchange, is done in the process of dynam ic read-justment, and, consequently, that the theory of money andcredit must be a dynamic theory. It follows, further, that atheory like the "q uan tity theory of mon ey," which rests inthe notions of "static equilibrium" and "normal adjust-ment," abstracting from the "transitional process of read-justment," touches the real problems of money and creditnot at all.

This thesis has seemed to require statistical verification,and the effort has been made to measure the elements invii


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V l l l P R E F A C Etrade , to assign proportions for re tail trade and for wholesaletrade, to obtain indicia of the extent and variation ofspeculation in securities, grain, and other things on theorganized exchanges, and to indicate something of theextent of less organized speculation running through thewhole of business. The ratio of foreign to domestic tradehas been studied, for the years, 1890-1916.The effort has also been made to determine the magni-tudes of banking transactions, and the relation of bankingtransactions to the volume of trade. The conclusion hasbeen reached that the overwhelming bulk of bankingtransactions occur in connection with speculation. Th eeffort has been made to interpret bank clearings, both inNew York and in the country outside, with a view todetermining quantitatively the major factors that give riseto them.

In general, the inductive study would show that modernbusiness and banking centre about the stock market to amuch greater degree than most students have recognized.The analysis of banking assets would go to show that themain function of modern bank credit is in the direct orindirect financing of corporate and unincorporated industry."Commercial paper" is no longer the chief banking asset.It is not concluded from this, however, that commercein the ordinary sense is being robbed by modern tendenciesof its proper banking accomm odation, or th a t the banks areengaged in dangerous practices. On the con trary it ismaintained that the ability of the banks to aid ordinarycommerce is increased by the intimate connection of thebanks with the stock m ark et. The thesis is advancedthough with a recognition of the political difficulties in-volvedthat the Federal Reserve Banks should not beforbidden to rediscount loans on stock exchange collateral,if they are to perform their best services for the country.


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P R E F A C E I XThe quantity theory of money is examined in detail, invarious formulations, and the conclusion is reached that the

quantity theory is utterly invalid.The theory of value set forth in Chapter I, and pre-supposed in the positive argument of the book, is thatfirst set forth in an earlier book by the present writer, SocialValue, published in 1911. T ha t book grew out of earlierstudies in the theory of money, in the course of which thewriter reached the conclusion that the problem of moneycould not be solved until an adequate general theory of valueshould be developed. Th e presen t book thus representsinvestigations which run through a good many years, andto which the major part of the past six years has beengiven. On the basis of this general theory of value, and adynamic theory of money and exchange, our positive con-clusions regarding the value of money are reached. On thesame basis, a psychological theory of credit is developed, inwhich the laws of credit are assimilated to the general lawsof value. *

In a final section, the constructive theory of the book ismade the basis for a "reconciliation" of "statics" and"dynamics" in economic theoryan effort to bring to-gether the abstract theory of price {i. e., "statics") whichhas hitherto chiefly busied economists, and the more realis-tic studies of economic change (i. e., "dy nam ics") to which asmaller number of economists have given their attention.These two bodies of doctrine have hitherto had little con-nection, and the science of economics has suffered as aconsequence.This book was not written with the college student pri-marily in mind. None the less, I incline to the view th atthe book, with the exception of the chapter on "MarginalU tili ty ," is suitable for use as a text with juniors and seniorsin money and banking, if supplemented by some general


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X PREFACEdescriptive and historical book on the subject, and that thewhole book may very well be used with such students inadvanced courses in economic theory. I think tha t bankers,brokers, and other business men who are interested in thegeneral problems of money, trade, speculation and credit,will find the book of use. N atu rally , however, it is m y hopethat the special student of money and banking, and thespecial student of economic theory will find the book ofinterest. The book may interest also certain students ofphilosophy and sociology, who are concerned with theapplications of philosophy and social philosophy to concreteproblems.

My obligations to others, running through a good manyyears, are very great. W ith Professor E. E. Agger, I talkedover very many of the problems here discussed, in thecourse of two years of close association a t Columbia Univer-sity, and gained very much from his suggestions and crit-icisms. Professor E. R . A. Seligman has read portions ofthe manuscript, and given valuable advice. Professor H . J.Davenport has given the first draft an exceedingly carefulreading, and his criticisms have been especially helpful.Professor Jesse E. Pope supervised my investigations in thequantity theory of money in 1904-5, in his seminar at theUniversity of M issouri, and gave me invaluable guidance inthe general theory of money and credit then. More re-cently, his intimate first hand knowledge of European andAmerican conditions, both in agricultural credit and ingeneral banking, has been of grea t service to me. M r. N . J.Silberling, of the Department of Economics at HarvardUniversity, has been helpful in various ways, particularlyby making certain statistical investigations, to whichreference will be made in the tex t, a t my request. Variousbankers, brokers, and others closely in touch with the sub-jects here discussed have been m ore than generous in supp ly-


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P R E F A C E X Iing needed information. Among these may be especiallymentioned Mr. Byron W. Holt, of New York, Mr. OsmundPhillips, Editor of the Annalist and Financial Editor of theNew York Times, Messrs. L. H. P arkh urst and W. B. Don-ham, of the Old Colony Trust Company in Boston, variousgentlemen in the offices of Charles Head & Co., and Pear-main and Brooks, in Boston, Mr. B. F. Smith, of the Cam-bridge Trust Company, Mr. W. H. Aborn, Coffee Broker,New York, M r. Bu rton Thom pson, Real Es tate Broker, NewYork, Mr. Jas. H. Taylor, Treasurer of the New YorkCoffee Exchange, Mr. J. C. T. Merrill, Secretary of theChicago Board of Trade, DeCoppet and Doremus, NewYork, and Mr. F. I. Kent, Vice President of the BankersTrust Com pany, New York. M y greatest obligations areto two colleagues at Ha rva rd University. Professor F . W.Taussig has given the manuscript very careful considera-tion, from the stan dpoin t of style as well as of doctrine, andhas discussed many problems with me in deta il. Professor0. M. W. Sprague has placed freely at my service his richstore of practical knowledge of virtually every phase ofmodern money and banking, and has read critically everypage of the manuscrip t. None of these gentlemen, of course,is to be held responsible for my mistakes. I also makegrateful acknowledgment of the aid and sympathy of mywife.

In the course of the discussion, frequent criticisms aredirected against the doctrines of Professors E. W . Kemmererand Irving Fisher, particularly the latter, as the chiefrepresentatives of the present day formulation of thequan tity theory. Both their theories and their statisticsare fundamentally criticised. I find myself in radical dis-sent on all the main theses of Professor Fisher's PurchasingPower of Money, and at very m any points of detail. To aless degree, I find myself unable to concur with Professor


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Xli PREFACEKemmerer. But I should be sorry if the reader should feelthat I fail to recognize the distinguished services whichbo th of these writers have performed for the scientific studyof money and banking, or should feel that dissent precludes'adm iration . I acknowledge my own indebtedness to bo th,no t alone for the gain which comes from having an opposingview clearly denned and ably presented, but also for muchinformation and many new ideas. M y general doctrinalobligations in the theory of money and credit are far toonumerous to mention in a preface. M y greatest debt ingeneral economic theory is to Professor J . B . Clark.

B. M. ANDERSON, JR.HARVARD UNIVERSITY, M arch 31 , 1917.


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ANALYTICAL TABLE OF CONTENTSPART I. THE VALUE OF MONEY AND THE GENERAL

THEORY OF VALUE

CHAPTER IECONOMIC VALUE

PA G EProblem of value of money special case of general theory ofvalue; present chapter concerned with general t h e o r y . . . iFormal and logical aspects of value: value as quality; valueas qu an tity ; value and wealth 5-6Absolute vs. relative conceptions of value: value of money vs."reciprocal of price-level"; value prior to exchange;value and exchangeability; do prices correctly expressvalues? 6-12Doctrine so far in accord with main current of economicopinion 12-14Causal theory of value new: marginal utility, labor theory,etc., rejected 14-16Social explanation required: "individual" a social product,

bo th in history of individu al and in history of race 16-19And above individual impersonal psychic forces, law, publicopinion, m ora lity, economic value s 19-20Thre e typ es of theory ha ve dealt with th ese: theory of extra-human objective forces; extreme individualism; socialvalue theory 20-21Il lustrated in jurisprudence, ethics , and economic t h e o r y . . . . 21-26Law , mo rals, an d economic value s generically alike, bu t h av e

differentia 26-28But not differentiated on basis of states of consciousness ofindividual immediately moved by them, because manym inds in organic interp lay involved 28-33xiii


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XIV ANALY TICAL TABL E OF CON TEN TSPAGEEconomic social value (a) of consumers' goods and services:"uti l i ty" and scarcity; "marginal uti l i ty": social ex-

planation of marginal utility; marginal utilities the con-scious focus of economic values of consu me rs' goods; bu tonly minor part of these values; individuals, classes andinstitutions heavily weighted by legal, moral, and othersocial values, in power over economic values of con-sum ers' goods 33-38Economic social value (b) of labor, land, stocks, bonds,"good will," etc.; based only in part on values of con-

sum ers' goods; par tially ind epen dent, directly influencedby contagion, and centers of power and prestige 38-41Prag ma tic character of theory '. 41-43Re latio n of social valu es to indiv idua l value s 43~45C H A P T E R I I

SUPPLY AND DEMAND, AND THE VALUE OF MONEYHiatus between gen eral theory of valu e and theory of value of

money 46-47Partly because former has been developed by different writ-ers from those who hav e developed la tte r 47~49But chiefly because supply and demand, cost of production,etc. , assume fixed value of money, and are theories ofprice, rather than value 49Supply and demand useful but superficial formula, commonpro pe rty of m an y value theories 49~5oCrude and unanalyzed in Smith and Ricardo; first madeprecise by J. S. Mill, who gives essentials of moderndoctrine 49-51Bohm-Bawerk's pseudo-psychology spoils Mill's clean-cutdoctrine 51-52Supply and demand assumes fixed value of money-unit, andhence inap plicab le to money itself 52-56But supply and demand does not assume fixed price-level. .. 56-57Cairnes vs. Mill 57-58Mill's unsuccessful effort to apply supply and demand tomoney 59-62W alker 's at te m pt 62Supply and demand in the "m oney m ar ke t" 62-63


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ANALYTICAL TABLE OF CONTENTS XV

CHAPTER IIICOST OF PRODUCTION AND THE VALUE OF MONEY P A G ETyp es of cost theory: modern cost doctrine is "mo ney co sts "doctrine, and inapplicable to value of mon ey 64Labor cost: Smith; Ricardo; Ricardo's confession of failure;"real costs" in Senior and Cairnes; Mill 's "money-outlay" cost doctrine, and Cairnes' crit icism; but"m one y-co st" has survived 64-67

Because " real co st " doctrine does no t square w ith facts 67-69"M on ey- cos t" of producing money-metal 69-70Austrian cost doctrine runs still in money terms, assumingva lue, mo ney , and fixed valu e of m oney 70-71"N egativ e social va lue s" as "re al co sts" note, 71C H A P T E R I V

THE CAPITALIZATION THEORY AND THE VALUE OF M ONEYMoney as "cap i tal good," and "m on ey -ra tes" as rentals. . . 72-73Capitalization theory; formula; capital value passive re-su ltan t of ann ual income and rat e of discount 73~74But in case of money, rental and rate of discount not in-de pe nd en t va riab les 7476And in case of money, capital value not passive shadow, butactiv e cause of income 76Capitalization theory assumes money, and fixed value ofmoney 76-77Assumed fixed va lue of m oney abs olu te, and no t relative 7778Capitalization theory, in current formulation, inapplicableto value of mo ney 78-79

C H A P T E R VMARGINAL UTILITY AND THE VALUE OF MONEY

Marginal utility theory usually thinly disguised version ofsupply and dem and, and hence inapplicable to m oney . . 80View that money is unique in having no utility per se 81-83


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XVI ANALYTICAL TABLE OF CONTENTSP A G EM arginal util i ty and " comm odity theory " of mo ney-value. . 81-82Q uan tity theorists and marginal util i ty of m one y. . . 81-82Money an instrumental good, and marginal util i ty no lessapplicable here than elsewhere; marginal utility invalidas general theory of value , hence invalid w hen applied tomoney 82-120W ieser's theory of value of m on ey . 83-8 8A circle in reason ing 88- 90Schum pe ter's similar circle 100B ut S chum peter 's general util i ty theory, though inapplicable

to valu e of m one y, in form avo ids a causal circle 90 -98Schumpeter 's conspectus; different from Bohm-Bawerk andm ost utilit y theo rists 90-9 2, 113-120Defects and l imitat ions of Schum peter 's general t h e o r y . . . . 90-98Sc hum peter's su bs titute s for social value concept 98-99Von M ises sees circle of W ieser and Sc hum peter 100Seeks to avoid it by construing utility theory as historical,instead of sta tic, theory 101But this departs from fundamentals of util i ty theory; otherdifficulties 101-110K inley's doc trine 110-111Gen eral criticism of utility theo ry 111-115D ave npo rt, W icksteed, Fisher, Per ry 113-120

PART II. THE QUAN TITY TH EORYC H A P T E R V I

THE QUANTITY THEORY OF PR ICES . INTRODUCTIONPreliminary statement of quantity theory, and of crit icaltheses to be developed in following chap ters . V irtuallyevery contention and every assumption of quantitytheo ry to be challenged 123-129

C H A P T E R V I IDODO-BONES

Quantity theory doctrine that valueless objects can serve asmoney; Nicholson's assumption: money made of dodo-bones


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A N A L Y T I C A L TAB LE OF CO NT EN TS XV11P A G EFish er's view als o. 130And Ric ardo 's 131-132

W ill dodo-bones circulate? Dod o-bones and poker chips;circular reasoning 132Both medium of exchange and standard of value must bevaluable 133Is inconve rtible pap er an exception? 133-134D octri ne th a t mo ney gives legal claim to things in ge ner al. 134Kemmerer 's assumptions; money made of commodity, oncevalua ble, now used only as m oney 135Com mo dity theory requires present comm odity value 135Historical vs. cross-section view: possibility that such moneywould circulate 135-136Value not tied up with marginal utility or commodities:social value theory; derived values often become in-dependent of original presuppositions, in economic aswell as legal and mo ral spheres 136-139But this no basis for quantity theory: social psychology, notmechanics 139"Banker ' s psychology" vs. psychology of blind habit: India,Austria, United States; monetary phenomena of wartime s; "cr ed it th eo ry " of Greenbacks 139-142Qu estion-begging definitions 142-143Assum ptions of qua ntity theo ry: blind habit and fluid prices 143-144Extreme commodity theory denies that money-use adds tovalue of money; usually not true; analysis of money-functions 144-150H yp oth etic al case in which whole value of mone y com es fromcomm odity valu e 150-152M oney mus t have value apa rt from m onetary employments,but, in general, gains additional value from employ-m ent as money 152-153

CHAPTER VIIIT H E " E Q U A T I O N O F E X C H A N G E "

Fisher leading, most consistent, most uncompromisingqu an tity the oris t: wide acce ptance of his views 154Taussig vs. Fisher 155


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XV111 ANALYTICAL T A B L E O F C O N T E N T SPAGEFisher and dodo-bone doctrine: logical part of quantitytheory; Fisher's value concept 155-156"Equation of exchange ": analysis of Fisher's version, typicalof all 156-171In w hat sense equality between tw o sides of equation? M ean-ing of " T " 158-161No "goods s ide" to equation; both s ides sums of money;equa l because iden tical; equ ation mean ingless 161-162All factors in equation highly ab stra ct 162-163" P " and " T " cannot both be given independent defini tions:

P denned as weighted average, with T in denominator;and m ust be changed from yea r to yea r, as elem ents in Tchange, even thoug h no prices change 164-166This makes circular theory: problem denned in terms of ex-planation 165-166Cau sal theory associated with equ ation of exchange 166Equation amplified to include credit; not acceptable toNicholson or Walker, and caricature of conditions inGerm any and France 166-170Bo ok-cred it, bills of exchange, etc ., excluded 167-170W hy a one-year period? 170-171

CHAPTER IXTHE VOLUME OF MO NE Y AND THE VOLUME OF CREDIT

Mill thought credit acts on prices like money, and that thisreduces quanti ty theory tendency to indeterminatedegre e; Fisher holds volum e of mon ey in circulation gov-erns volume of credit, so tha t qu anti ty theory s ta n d s. . . . 172Fisher's a rgum ents for fixed ratio, money to ban k-d ep osits. . . 172-173Argument a non-sequitur, even if conten tions tru e 173-177Contentions untrue: no fixed ratio between reserves and de-posits, or reserves and demand liabilities, either inAm erica or Eu rop e 177-182Taussig's views; virtually surrender of quantity theory inmo dern conditions 182-185Bulk of quantity theorists in between Fisher and Taussig,bu t nearer to Fishe r's view tha n to Taussig's 185


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ANALYTICAL TAB LE OF CONTE NTS XIX

C H A P T E R X" N O R M A L " V S . " T R A N S I T I O N A L " T E N D EN C IE S P A G EQuantity theory qualified by distinction between "normal"and "transitional" effects of change in quantity ofmon ey, etc 186Meaning of distinction, and extent of qualification hard todetermine: is "normal period" real period in time?How long is "tran sition al peri od" ? Is it realistic, orhypo thetica l? Is equa tion of exchange realistic? Con-

crete vs. hyp othe tical price-levels 186-189Leg itima te and illegitimate abs tractio n 189-190Cau sation and tem poral order 190-191Fisher ad m its very slight qualification of "n or m al th e o ry ". 192Mill 's quantity theory "short run" theory; Taussig 's " longr u n " the ory ; radically different logic in the two 192-193Fisher 's theory sometimes "long run" and sometimes "shortrun " 194-195

CHAPTER XIBARTER

Quantity theory spoiled if resort to barter possible and im-portant 196Extent of barter and other flexible substitutes for money andbank-credit; simple barter; different methods of corpo-rate consolidations; flexibility, with state of money-market; clearing-house arrangements in speculative ex-chan ges; offsetting boo k-cred its 197-200Barter made easier under money economy, by measure ofva lue function of money 201Bills of exch ang e; foreign tr ad e 201

C H A P T E R X I IVELOCITY OF CIRCULATION .

Velocity conceived by quantity theory as causal entity, in-dependent of quantity of money and prices; necessaryassum ption for law of propo rtiona lity 203


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XX ANALYTICAL TABLE O F CONTENTSPAGE

" C o i n - t r a n s f e r " vs. " pe r son - tu r nov e r " concep t s 203-204Veloci ty real ly non-essent ia l by-p rod uct , meaningless average 204-205Doct r ine tha t ve loc i ty independent of money; hab i t and con-ven ience ; hoard ing ; hoard ing b y banks 205-209Velocity a n d vo lume of t r a de ; va ry toge ther 209-214Value of mo ney causal ly gove rns veloci ty 214-215

CHAPTER XIIITHE VOLUME OF MO NEY AND THE VOLUME OF TRA DE TRA DE AND

SPECULATION

Quanti ty theory doctrine that volume of trade, and volumeof money (and credit), are independent; trade governedby physical and technical conditions, not mon ey 216-219View that quantity of money vitally affects production andtrade 219W alker, So m bart, W ithers, Price, H olt 219-222Increase of money increases trade, even on static theory:increase of money increase of capital; lowered margin inexchanges; money-rates and interest; money tool ofexchange; elasticity of demand for money-service; inArizona and New York City 222-225Trade distinguished from production and from stock 225-226Trade chiefly speculation; Fisher's $387,000,000,000 of tradein U. S. in 1909 analyzed; index of variation in trade;figure based on Kinley's returns from 12,000 banks;double-counting 227-230Figure largely represents speculation; statistics of totalwealth of U. S.; small role of wholesale and retail de-posits; "all other deposits" bunched in speculative cen-ters, especially N ew Y ork ; trifling "d ep o si ts" in countrybanks; evidence of bank-clearings: clearings and stock

spec ulatio n; clearings and ord inary business 230-241M easurement of "ord inary tr a d e " 241-248Volume of stock speculation 248-251Com mo dity speculation 251-252Uno rganized speculation 252-254Bill and note speculation 255


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ANALY TICAL TABLE OF CON TENTS XXIP A G EFisher's and Kemmerer's indicia of trade variation wholly

misleading 255-257Production waits on trade; selling costs vs. "cost of produc-tio n" ; "goo d w ill"; are bank s useless? 257-262" N o r m a l vs. t ransi t ional": stat ics vs. dynamics; money andcredit ma ke static assum ptions possible; very li t tle trad ein "no rm al equil ibrium" or stat ic state ; volume of t radedepends on transitions and dy nam ic changes; functionaltheory of money and credit must be dynamic theory;abstraction from money by static theory; no statictheory of money and credit possible; quantity theorymisses whole poin t of mone y-functions 262-266

A P P E N D I X T O C H A P T E R X I I ITHE RELATION OF FOREIGN TO DOMESTIC TRADE IN THE UNITED STATESAmbiguity of "domestic trade": figures comparable with

export and import figures cannot include turnovers; netincome of United States, minus imports on retail basis,counted as domestic trade; exports on retail basiscounted as foreign trade; net income for 1910; index ofvariation for other years; cautions and qualifications;ratio of foreign to dom estic tra de , 1890-1916 267-278

C H A P T E R X I VTHE VOL UME OF TRADE AND T HE VO LUM E OF MONE Y AND CREDIT

Interdepende nce of trade , and money (and cred it); increasingtra de causes increase of mo ney an d credit 279-281Qu anti ty theory doc tr ine: Fisher vs. Laughlin 281-282Quantity theory has no explanation of elastic bank credit:"C urren cy T he or y" of deposits 282-285

Loa ns and deposits 285-288Bills of exchange 288-29 0Sum ma ry of qu an tity theory doctrine 290-291


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XX11 A N A L Y T I C A L T A B L E O F C O N T E N T S

C H A P T E R X VT H E Q U A N T I T Y T H E O R Y : T H E " P A S S I V E N E S S O F P R I C E S "

PAGEHeart of quantity theory: price-level cannot change withoutprior change in money, deposits, trade, or velocities:independently rising price-level, unable to alter trade orvelocities, would drive mo ney aw ay, and so be unable tosustain itself; individual prices can rise independently,bu t othe r prices m ust fall to com pensate 292-295Criticism: argument impressive only because it assumes anuncaused rise in general price-level; when causes assigned,prices can independently rise, compelling modificationin other factors in "equation of exchange"; "transi-tio na l" and " n o rm a l" effects: instances 295-299Quantity theory conflicts with supply and demand: supplyand demand holds good: particular prices and price-level 299-300Generalization of conflict to include cost of production,

capitalization theory, imp utation theory 300Capitalization theory vs. quantity theory; different psycho-logical assum ptions of the two theories 300-306Cost of production vs. quant i ty theory; money-income vs.qu antit y of money 306-308Q uan tity theory false, grantin g all its assumptions 308-310Doctrine that price-level independent of particular prices,and presupposed by the m , false; absolute value of m oney,not price-level, presupposed; price-level may changewith value of money constant, through changes in abso-lu te valu es of good s . . . 310- 314

CHAPTER XVITHE QUANTITY THEORY AND INTERNATIONAL GOLD MOVEMENTS

Quantity theory holds that gold movements depend onprice-lwels; but price-level mere average, cause of noth-in g . . . . . . 315-3 16Some prices, rising, tend to repel gold, but most prices haveno such effect 316-317


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A N A L Y T I C A L T A B L E OF C O N T E N T S XX111PAGESome prices, rising, bring in gold 3i7~3 I9Gold mo vements and money-rates 319-320

CHAPTER XVIITHE QUANTITY THEORY VS. GRESHAMS LAW 321-323

CHAPTER XVIIITHE QUANTITY THEORY AND "WORLD PRICES"

Types of qua nti ty theory: world 's volume of gold vs. quant i tyof money in given country; s tandard vs. token money;abandonment of dodo-bone theory and "equat ion ofexchange" 324~326Credit does not rest on money: m easure of values vs. reserves;loans and we alth; value of money vs. price-level 326-328Loose relation of reserves and credit in world as whole; noproportionality of quan t i ty of gold to value of gold; noquantity theory needed to assert that value of gold re-lated to its quanti ty 328-330

C H A P T E R XIXSTATISTICAL DEMONSTRATIONS OF THE QUANTITY THEORYTHE RE-

DISCOVERY OF A BURIED CITYCriticism of quantity theory statistics yields constructiveconclusions; Mitchell and Greenbacks; Kemm erer 's andFisher's statistics of "equat ion of exchange"; Kem-m erer's criticism of earlier statistics 33i~335Kemmerer ' s and Fish er's figures all wrong except for volumeof money and deposits, and prices in base year; if cor-rect, would not prove qu an tity theory 33S~337Fisher's statistics, resting on Kemmerer's, chiefly studied:their relation to K inle y's "d e p o si ts " figures 337~~338M ' V calculated: errors in calculation; New Y ork very incom-plete in Kinley's figures; private banks and t rus t com-

panies; clearings and "depos i ts , " in New York andoutside ; " to ta l t ransa c t ions" and clearings; Fisher exag-gerates country checks by at least 116 billions, for 1909;major part of all " check dep osits " in New York C i t y . . . 48-3 53


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XXIV ANALYTICAL TABLE OF CONTENTSPAGENew York as "c lea r ing house" fo r United S ta tes : ex ten t of,and influence of on New York clearings, much overesti-

mated ; bu lk of New York clearings a n d N e w York"de pos i t s " grow ou t of N ew Yo rk business 353~36iIndex of varia t ion for M ' V wrongly weighted; V wrongly-calculated for all ye ar s; which upset s calculation of V . . . 361-363Volume of t rade: greatly exaggerated b y bank transactions ,which include vast deal of duplicat ions in checks, loansand repayments , e tc 363-368Fisher 's reply; undercounting offsets 0?;m:ounting 368 -36 9Main i tems of undercount ing in clearing houses of specula-t ive exchanges; measurement of, in New York StockExchange , an d Chicago Board of Trade ; swamped b ycall loan tra nsa cti on s, which exceed secu rity sales 369 -381Price-indexes of K e m m e r e r a n d Fisher, dom inated b y whole-sale prices, have n o relevance to the i r "equa t ions of ex-change" 381-383In general, their figures bury speculation a n d N e w York Ci ty 383

PART III. THE VALUE OF MONEYCHAPTER XX

RECAPITULATION O F POSITIV E DOCTRINERecapitulation of constructive theses of Parts I and II, and

program of Pa rts II I and IV 387-396CHAPTER XXI

THE ORIGIN OF MONEY, AND THE VALUE OF GOLDProblem stated 397-401Value vs. saleability: degrees of saleability; theory of saleabil-

i ty ; "buying pr ice" vs. " selling price "; indirect exchangein barter economy; development of commodity of supe-rior saleability into mo ney 401-406Mon ey never unique 406-407


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ANALYTICAL TABLE OF CON TENT S XXVPAGEOrigin of gold money: ornament; store of value; social pres-tige of prod igality and of orn am en t; love of app rob ation ,sex-impulse, and com petitive disp lay; elastic value-curv eof gold; indu strial em ploym ents of gold 407-413Distribution of wealth and power, and value of gold 413-416

CHAPTER XXIITHE FUNCTIONS OF MONEY AND THE VALUE OF MONEY

Classification 417-418Measure of values (standard of value) distinguished frommedium of exchange; former does not add value tomoney m etal, latter does 418-424Reserv e function 424Money as "bearer of options"; distinguished from store ofvalue; the dynamic function of money par excellence; ex -plan ation of low rate s on call loans, and sh ort loan s, an dlow yield of high grade bonds, which share "bearer ofoptions" function; "pure rate" of interest vs. "mo n e yr a t e s " : Au stria; the New York money m ark et 424-432Legal tender; the Staatliche Theorie 432-436Sta nda rd of deferred pa ym ents ; which functions ad d to valueof mo ney m etal? 436Rela tion of mo ney rate s to cap ital valu e of mo ney 436-442Agio when coinage is restricted: I nd ia vs. Weste rn W o r l d . . . . 442-450Equilibrium of gold in arts and gold as money: difficulties ofmarginal analysis; the mo ney-m arket phenom ena 450-458

C H A P T E R X X I I ICREDIT

Analysis rathe r tha n definition: " fu tu ri ty " no t essence ofcredit; credit part of general value system; stocks ascredit instrum ents; juridical and accounting p h a s e s . . . . 459-462Confidence; involved in general value phenomena as well ascredit; social psychology of confidence; contagions; in-fluence of centers of prestige; nothing unique in credit;selling vs. borrowing 462-469


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XXVI ANALYTICAL TABL E OF CON TENT SPAGEDefinition of credit; credit vs. credit transaction; credit andexchange; bulk of credit grows out of dynamic condi-tions 469-474Functions of credit; increasing saleability of non-pecuniarywealth; corporate organization; limits of credit expan-sion 475-478Consideration of objections: that personal loans do not reston wealth; public loans; that value behind loan wouldno t exist if loan were no t m ad e 478-48 4Schumpeter's "heresies"; his view of the function of the

banker : "dynamic credi t" ; America vs. ContinentalEurope 484-488Peculiarities and functions of bank credit; technique ofbanking: capital ; assets ; reserves; "l iquidity"; moneymarket 488-496C H A P T E R X X I V

CRE DIT BANK ASSE T S AND BANK RE SE RVE STraditional view that liquid commercial loans normal anddominant type of bank asset disproved; cannot exceedn> per cent of assets of American banks; analysis ofbank assets: "other loans and discounts"; stock col-lateral loans; loans on "other collateral security";stocks and bonds held by banks; classes of banks; va-rious combinations; excluding real estate loans, morethan half of credit extended by State and nationalbanks and trust companies is to stock market; rapiddevelopment of stock collateral loans: New York;Europe 498-512Activity of different types of loans: banking assets getliquidity chiefly from stock market, and from producespeculators 512-516Credit extended to Wall Street not at expense of ordinarycomm erce; coun try ban ks and W all Street 516-518Federal Reserve Banks should rediscount stock collateralloans; "M on ey T ru s t" a trust in financing corporations,not ordinary commerce; panics and P'ederal ReserveSystem 520


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ANALYTICAL TABLE OF CONTENTS XXV11PAGEQuantity theory, putt ing all exchanges on a par, grotesque:volume of t rade and prices in the stock m arket 520-523Direct and indirect financing of corporations by banks ;"margin dealer" as "banker" 523-526Adam Smith's view of banker's functions, and of safe bankloans 526Correct on basis of facts of his day, but corporate organiza-tion and organized stock market have made smeltinghouse as liquid as consumers' goods 527Division of labor in bank ing: America vs. Germany 527-528

Agriculture in money m arket 528-529Reserve problem: special case of problem of liquid assets;many flexible substitutes for cash 529-532Causal relation runs from deposits to reserves; gold produc-tion and reserve-ratio 532~535No static law or "normal ratio" possible; reserve functionentirely dynamic function; reserve not needed in "s ta t ics t a t e " ; illustrated by London money market; " idealcredit economy " 536-544

PART IV. THE RECO NCILIATION OF STATICS AND DY-NAMICSCHAPTER XXV

THE RECONCILIATION OF STATICS AND DYNAMICSTheory of money as focus of general economic theory, ex-hibiting interdependence of doctrines; basis of furtherunification of statics and dynamics in higher sy nth es is. . 547-548Statics vs. dynamics, normal vs. transitional, and related con-t ras ts ; illustrations; divergent lines of doctrine: tariffs,wars, overproduction, extravagance, etc 548-552Statics qu an titati ve; dynamics qualitative 552-553Statics and dynam ics bo th ab stra ct 553~554Dynamics and "friction" 554555"Theory of prosper i ty" and dynamics 555~556Statics and cross-section analysis; statics as price-theory;dynamics as value-theory 556-560


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XXV111 AN ALY TICA L TA BL E O F C O N T E N T SPAGEGeneralization of statics: price-theory applied to dynamic

phenomena: capi tal izat ion; costs; " taxonomy;" "dis-counting" dynamic changes; money the stat ic measur-ing-rod: wide scope of m oney-m easure; m easureme nt ofnon-economic values 560-569Generalization of dynamics: all values, whether of wheat or"good will," have social psychological explanation;technological and biological factors, and the staticequilibrium ; business cycles 569-575Business man vs. economic theorist , and value-theory;m anipu lation of values and prices 675-678Statics and .time 578-580Im m aterial capital 580-582Statics and dynam ics hav e no t different subject-m atter 583-586Equilibrium of all social values: statics and dynamics of thelaw : social forces an d social con trol 586-589Sum ma ry of P a rt IV 589-591


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PAR T I . TH E VALUE OF MONEY AND TH EGENERAL THEORY OF VALUE


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THE VALUE OF MONEYCHAPTER I

ECONOMIC VALUETHE problem of the value of money is a special case ofthe general problem of economic value. The present chap-ter is concerned with the general theory of value, while therest of the book will consider the numerous peculiaritiesand complications which make money a special case. Themain proof of the theory here presented is to be found in aprevious book* by the present writer. A num ber of period-

ical articles by several writers which have since appeared,in criticism or in further development of the theory, haveat various points led to shifting emphasis and clearer under-standing on the author's part, and the present exposition,without seeking explicitly to meet many of these criticisms,or to embody the new developments, will none the less bedifferent because of them . To one writer in particu lar,Professor C. H. Cooley, the theory is indebted for restate-ment, amplification, and important additions.2 On thewhole, however, the theory presented in this chapter is sub-

1 Social Value, Houghton Mifflin, Boston, 1911.2 Cooley, C. H., "Valuation as a Social Process ," Psych. Bull., Dec. 15,1912; "The Ins t i tu t ional Character of Pecuniary Valuat ion," AmericanJournal of Sociology, Jan . 1913; " T h e Sphere of Pecuniary Valuat ion,"Ibid., Sept. 1913; " T h e P rogress of Pecuniary V aluation ," Quart. Jour, ofEcon., No v. 1915. Clark, J . M ., " T h e Concept of Va lue," "and " A Rejoin-der ," Qua rt. Jour, of Econ., Aug. 1915. Anderson, B . M ., Jr . , "T h e C on-cept of Value Further Considered," Ibid.; " Schump eter 's D ynam ic Eco-nomics ," Pol. Sci. Quart., Dec . 1915. Pe rry, R. B., "Ec ono m ic Value andMoral Value," Quart. Jour, of Econ., M ay, 1916. Bi lgram, Hug o, "T h eEquivalent Concept of Value," Ibid., No v. 1915. Han ey, L . H. , " T h e

3


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4 THE VALUE OF MONEYstantially the theory presented in the earlier book. Thetheory is set forth in the present chapter with sufficientfullness to make the present volume independent of theearlier book.Value has long been recognized as the fundamentaleconomic concept. There have been m any and divergentdefinitions of value, and many different theories as to itsorigin. I t is the belief of the present writer not sharedby all his critics!that the definition of value which fol-lows, and the conception of the function of value in eco-nomic theory involved in it, conform to the actual use of theterm in the main body of economic literature. The theoryof the causes of value here advanced is new, but the defini-tion of value, and the conception of the relation of valueto wealth, to price, to exchange, and to other economicideas, seem to the present writer to conform to what isimplied, and often expressed, in the general usage of econ-omists.1Social Point of View in Economics," Ibid., Nov. 1913 and Feb . 1914. John-son, A. S., in American Economic Review, Jun e, 1912, pp . 320 et seq. Carver,T. N., in Jour, of Pol. Econ., June, 1912. Mead, G. H., in Psych. Bull,Dec. 1911. Ellwood, C. A., in American Jour, of Sociology, 1913. Ansiaux,M., in Archives Sociologiques, Bulletin de VInstitut de Sociologie SolvayyMay 25, 1912, pp . 949-55-Professor Cooley's articles, which I have listed first in this note, have incertain important particulars shifted the emphasis and changed the methodof approach. He is more interested in the general sociological aspects of th evalue problem than in the technical economic aspects. In considering eco-nomic value, he is more interested in its general social functions than in itsfunction as a tool of thought for the economic theorist. He has , therefore,been less bound by schemata than I have in the discussion. Th is differentmethod of approach, coupled with a singular charm in exposition whichcharacterizes everything Professor Cooley writes, makes it seem probableto me that readers who may find the doctrine as I set it forth unconvincing,will be convinced by Professor Cooley's exposition. I hope, too, that Pro-fessor Cooley's articles, which have been scattered among three periodicals,may soon appear together under one cover.1 Including many whose formal definitions are quite different, and whowould repudiate the contentions here advanced! Cf. my article, "T he Con-cept of Value Further Considered," Quarterly Journal of Economics, Aug.1915, and Social Value, chs. 2 and 11.


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ECONOMIC VALUE It is important to separate sharply two questions: one,the theory of the causes of value, and the other, the defini-

tion of value, or the question of the formal and logicalaspects of the value concept. Th e two questions cannotbe wholly divorced, but clarity is promoted by consideringthem separately. We shall take up the formal and logicalaspects of the matter first.Value is the common qua lity of wealth. W ealth inmost of its aspects is highly heterogeneous: hay and milk,iron and corn-land, cows and calico, human services andgold watches, dollars and doughnuts, pig-pens and pearlsall these things, diverse though they be in their physicalattributes, have one quality in common: Economic Value.1By virtue of this common or generic quality, it is possibleto add wealth together to get a sum, to compare items ofwealth with one another, to see which is greater, to getratios of exchange between items of wealth, to speak ofone item of wealth, say a crop of wheat, as being a percent-age of another, say the land which produced it, etc. Thiscommon quality, value, is also a quantity. It belongs tothat class of qualities which can be greater or less, canmount or descend a scale, without ceasing to be the samequality,like heat or weight or length. Such qualitiesare quantities. There is nothing novel in the statement

1 Definitions of wealth differ, and there are few if any definitions of wealthbroad enough to make it true th at only items of wealth have value. Allwealth has value, but not all value is embodied in wealth. Th us, stocksand bonds, and "good wil l" have value. Few writers would classify themas wealth. The distinction between wealth and property is employed bymany writers to meet the difficulty here presented, and it is held that theseintangibles have only the value of the wealth to which they give title . In alogical schema, on the assumption of a fluid, static equilibrium, this mayserve. It is true in fact, however, that many of these intangibles have valueapart from the wealth to which they give title. Bu t these are complicationswhich I reserve for a later part of this chapter, for the chapter on "Staticsand Dynamics," and (in the case of irredeemable paper money) for thechapter on "Dodo Bones."


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6 THE VALUE OF MONEYth a t a qua lity is also a quan tity. I t is implied in everyday speech. We say tha t a man is tall, or heavy, or th atthe room is hotqualitative statements; or we may sayexactly how tall, or how heavy, or how hotquantitativestatem ents . Th e distinction between qua litative analysisand quantitative analysis in chemistry implies the sameidea. Th us we m ay speak of a piece of wealth as havinga definite quantity of value, or say that the value of thepiece of wealth is a definite qua ntity. We may then workout mathematical relations among the different quantitiesof value, sums, ratios, percentages, etc.

Ratios of Exchange are ratios between two quantities ofvalue, the values of the units of the two kinds of wealthexchanged.1 A good many economists, particularly intheir chapters on definition, have defined value as a ratioof exchange. Th is is inaccurate . Th e ratio of exchangepresupposes tw o values, which are the terms of the ratio.The ratio is not between milk and wheat in all their attri-butes. It is between milk and wheat with respect to oneparticular attr ibu te. Compare them on the basis of weight,or cubic contents, and you would get ratios quite differentfrom the ratio which actually is the ratio of exchange.The ratio is between their values.

Milk Q , - Ratio of Exchange

Social MindIn the diagram above, something of what is to follow is1 The notion of ratio of exchange as a ratio between values is strictlyaccurate only under static assumptions. Goods, in actual life, are not always


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ECONOMIC VALUE 7anticipated , since the cause of value is indicated. W heatis shown to be exerting an influence on milk, and milkexerts an influence on wheat. The com parative streng thof these two influences determines the ratio of exchangebetween them . B ut these two influences are no t ultima te.The ratio of exchange is a relation, a reciprocal relation. Itworks bo th ways. B ut behind this relativity, this schemeof relations between values, there lie two values which areabsolute. These values rest in the pull exerted on wheatand on milk by the human factor which is fundamental,which in our diagram we have called the "social mind."Values lie behind ratios of exchange, and causally deter-mine them . The im portan t thing for present purposesis merely to note that value is prior to exchange relations,that it is an absolute quantity, and not, as many economistshave put it, purely relative. The ratio of exchange isrelative, but there must be absolutes behind relations.

A price is merely one particular kind of ratio of exchange,namely, a ratio of exchange in which one of the terms isthe value of the money unit. 1 In modern life, prices areexchanged strictly in accordance with their values. Cf. my article, "TheConcept of Value Further Considered," Q. J. E., Aug. 1915, pp. 698-702.In cases where prices, or exchange relations, are not in accord with values,the term "ratio of exchange" is inapplicable, since there are no quantitiesto be terms of the ratioexcept the pure abstract numbers of the com-modities, each measured in its own unit, exchanged.1 In chapter 17 of Social Value, I have followed the German usage inbroadening the term, price, to cover all exchange relations. This has ledto misunderstanding on the part of some readers, and it has seemed best tome to return to w hat appears to be the more familiar usage. It is purely aquestion of convenience. Practically, ratios of exchange which are notmoney-prices rarely come in for discussion, outside the preliminary chapteron definition! Professor Fetter , in his article on the "D efinition of Price ,"in the American Economic Review, Dec. 1912, proposes to broaden the termprice in the manner which I am here abandoning, and his count of economistswould seem to leave usage about equally divided between the broader andnarrower uses of the term . It does not seem to me to be a point wortharguing about, however, and since I am practically convinced that causeof misunderstanding will be removed by using price to mean "m oney-price,"


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8 THE VALUE OF MONEYthe chief form of ratio of exchange, but it is importantfor some purposes to remember that they are not the onlyform.Values may simultaneously rise and fall. The re ma ybe an increase or decrease in the sum total of values. Ratiosof exchange cannot all rise or fall. A rise in the ratio ofthe value of wheat to the value of milk means a fall inthe ratio of the value of milk to the value of whea t. Bothmay have fallen in absolute value, but both cannot simul-taneously rise or fall with reference to one another. Th isis the truism regarding ratios of exchange which manyeconomists have inaccurately applied to value itself inthe doctrine that there cannot be a simultaneous rise orfall" of values. There can be a simultaneous rise or fall ofvalues, but not a simultaneous rise or fall of ratios of ex-change.There can be a general rise or fall of prices. Goods ingeneral, other than money, may rise in value, while moneyremains constant in value. This would mean a rise inprices. Or, money ma y fall in value while goods in generalare stationary in value. This would also mean a rise inprices. In either case, more money would be given forother goods, and the ratio between the value of the moneyunit and the value of other goods would have alteredadversely to money. There are writers to whom the term,value of money, means merely the average of prices (orthe reciprocal of the average of prices). For them , a rise inthe average of prices is, ipso facto, a fall in the value ofmoney. Th is view will receive repeated a ttention in laterchapters. Th e view maintained in the presen t book isthat the value of money is a quality of money, that qualitywhich money shares with other forms of wealth, which liesI shall so use the term in this book, using ratio of exchange, or exchangerelation, to express the broader concept.


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ECONOMIC VALUE 9behind, and causally explains, the exchange relations intowhich money enters. Every price implies tw o values, thevalue of the money-unit and the value of the unit of thegood in question.Value is prior to exchange. Value is not to be denned as"power in exchange." Certain writers l who see the needof a quantitative value, which can be attributed to goodsas a quality, still cling to the notion that value is relative,that two goods must exist before one value can exist, andth at value is "power in exchange," or "purchasing pow er."The power is conceived of as something more than the factof exchange, and as a cause of the exchange relations, butis, none the less, denned in terms of exchange. Th is posi-tion, however, does no t really advance the analysis. I t isa verbal solution of difficulties merely. To say th at goodscommand a price because they have power in exchange islike saying that opium puts men to sleep because it has adorm itive power. Physicians now recognize th a t this is nosolution of difficulties, that it is merely a repetition of theproblem in other words. If we wish to explain exchange,we must seek the explanation in something anterior toexchange. If value is to be distinguished from ratio ofexchange at all, it cannot be denned as "power in ex-change."

To seek to confine value to exchange relations, moreover,makes it impossible to speak of the value of such thingsas the Capitol at Washington City, or the value of an en-tailed estate, or of values as existing between exchanges.Nor can we make the price which a good would commandat a given moment the test of its value, except in the caseof the highly organized, fluid marke t. Land , a t forced1 E. g., Bohm-Bawerk, Grundzuge der Theorie des wirtschaftlichen Gtiter-werts, Conrad ' s Jahrbiicher, 1886, p. 478, n.; Carver, "Concept of an Eco-nomic Quant i ty , " Qua rterly Journal of Econom ics, 1907.


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IO THE VALUE OF MONEYsale, notoriously often brings prices which do not correctlyexpress its value. Moreover, even for wheat in the grainpit, the exchange test is valid only on the assumptionth at a comparatively small am ount is to be sold. If verymuch is put on the market, the situation is changed, andthe value falls. In other words, if "b ul ls '7 cease to be"bulls ," and shift to the other side of the market, the veryelements which were sustaining the value of the wheathave been weakened, and of course its value falls. "P ow erin exchange" is a function of two factors, (i) value and (2)saleability. A copper cent has high saleability, with littlevalue, while land has high value with little saleability.1Some things have value with no saleability at all. In asocialistic community, where all lands, houses, tools, ma-chines, etc., are owned by the state, and w here such "pric es "as exist are authoritatively prescribed, value and exchangewould have no necessary connection. Values would remain,however, guiding the economic activity of the socialisticcommunity, directing labor now here, now there, determin-ing the employment of lands now in this sort of production,now in th at . Exchange is only one of the manifestationsof value . M ore fundam ental, and more general, including"power in exchange," but not exhausted by it, is the powerwhich objects of value have over the economic activitiesof men. Th is is the fundam ental function of values. Theentailed estate, which cannot be sold, still has power overthe actions of men . The care which is take n of it, th eamount of insurance which an insurance company willwrite on it, etc., are manifestations and measures of itsvalue. Th e same m ay be said of the Capitol at W ashing-ton.2

^ h i s distinction is elaborated infra, in the chapter on the "Origin ofMoney."2 It is a matter of high importance that the value notion should be ex-tended beyond exchange, if the economist is to be able to apply his theory


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ECONOMIC VALU E IIIn the fluid market, prices correctly express values.Assuming that the money-unit is fixed in value, variations

in prices in the fluid market correctly indicate variationsin values. The great bulk of our economic theory, thelaws of supply and demand, cost of production, the capitali-zation theory, etc., do assume the fluid market, and a fixedvalue of the dollar.1 Our economic theory is static theory,in general, and abstracts from the time factor and from"fric tion ." In fact, values change first, and then, moreor less rapidly, and more or less completely, prices respond.In the active wholesale and speculative markets, wherethe overwhelming bulk of exchanging takes place, theprices respond quickly. Sta tic theory is thus adequatefor the explanation of these prices, for most practical pur-poses, so long as the changes in prices are due to changingvalues of goods, rath er than to changing value of the money-un it. Moreover, the distinction between value and priceis, in a fluid market, where the value of money is changingslowly, often no t im portan t. In the assumption of money,and of a fixed value of money, the absolute value conceptis already assumed. No harm is done, however; if theeconomist does not explicitly refer to this, but goes onmerely talking about money-prices. Very m any economicproblems indeed m ay be solved tha t way. Th is is whythe inadequate character of the conceptions of value as"ratio of exchange" or "purchasing power" has not pre-vented these notions from being serviceable tools in thehands of m any writers. B ut there are m any problems forwhich these conceptions are not adequate, because theimplicit assumption of a fixed value of money cannot beto such highly important economic problems as socialism. Cf. SchafSe,Quintessence of Socialism, and Clark, J . M., Quart. Jour, of Econ., Aug.1915, p. 710.1 As shown, infra, in the chapters on "Supply and Demand," "Cost ofProduction," "Capitalization Theory," etc.


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12 THE VALUE OF MONEYm ade. Among these problems is the problem of the valueof money itself, which constitutes the subject of this book.For that problem, an absolute value concept is vital.If, in our diagram above, we substitute for "social mind"the more general expression, "human factor," we shouldfind that our value concept is the common property ofm any writers. W e should find it fitting in with the absolutevalue notion of Adam Smith and of Ricardo.1 The " hu-man factor" which explains the absolute value is, for them,labor. We should find it fitting in with the " socially neces-sary labor time" of Marx: the value of a bushel of wheatis the amount of labor time which, on the average, is re-quired to produce a bushel of wheat. I t is an absolutevalue. I t is a causal coefficient with the absolute value,similarly explained, of the bushel of corn, in explainingthe wheat-price of corn. Our concept will fit in exactlywith the "social use-value" of Carl Knies, according towhom the economic value of a good in society is an averageof its varying use-values to different individuals in them arke t. Th is average is an absolute qu an tity. The abso-lute values of units of two goods, thus explained, causallyfix the exchange ratio between the goods. K nies' value-theory, it may be noticed, is explicitly modeled on thatof Marx, to whom he refers, the difference being that Kniestakes an average of individual use-values, while Marxtakes an average of individual labor-times, as the causalexplanation.2 Our value concept will fit perfectly withProfessor J. B. Clark's "social marginal utility" theoryof value. Indeed, the present writer gratefully acknowl-edges that the concept is Professor Clark's rather thanhis own, and that all that is necessary for its explanation

1 Vide Social Value, p. 176, n. Cf. Davenpor t , Value and Distribution,chap te r on "Ricardo . "2 Knies , Das Geld, vol. I of Geld und Credit, Berlin, 1873, PP- I I 3 ~ I 2 5 ,esp. 124.


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ECONOMIC VALUE 13has been set forth by Professor Clark.1 Professor Clark'scausal theory of value, his explanation of this absolutequantity of value as a sum of individual marginal utilities,we have elsewhere 2 criticised as involving circular reason-ing, like all marginal utility theories, in so far as they offercausal explanations. B ut his statem ent of the logicalcharacter of value, of the relation of value to wealth, ofvalue to price, of value to exchange, of the functions of thevalue concept in economic theory, and of the functionsof value in economic life,Clark's doctrines on thesepoin ts we hav e accepted bodily, and in so far as the presentwriter has added anything to them it has been by way ofelaboration and defence.

Th e concept of value here developed is explicitly adoptedby T. S. Adams, David Kinley, W. A. Scott, W. G. L.Taylor, L. S. M erriam, and A. S. Johnson , among Am ericanwriters, to name no others. All of these writers wouldconcur in the formal and logical considerations 3 as to thenature of value here presented, whatever differences mightappear among them as to the causal explanation of value.The value concept here presented performs the samelogical functions as the "inner objective value" of KarlChapter on "Value" in the Philosophy of Wealth, and ch. 24 of theDistribution of Wealth.2 Social Value, ch. 7.3 T. S. Adams, " Index Numbers and the Standard of Value," Jour, of Pol.Econ., vol. x, 1901-02, pp . 11 and 18-19; Kinley, "Money", p. 62; W. G. L.Taylor, "Values, Relative and Positive," Anna ls of the Amer. Acad., vol. ix;Merriam, L. S., "T he Theory of Final U tility in its Relation to M oney andthe Standard of Deferred Payments," Annals of the American Acad., vol. iiland "Money as a Measure of Value," Ibid., vol. iv; Scott, W. A., "Moneyand Banking", 1903 ed., ch. II I. Professor Scott, in a letter to the writer,expresses the opinion tha t a value concept which makes the value of a gooda quantity, socially valid, regardless of the particular holder of the coin orcommodity in question, and regardless of the particular exchange ratio

into which the value quantity enters as a term, "is absolutely essential tothe working out of economic problems." Johnson, A. S., "Davenpor t'sEconomics and the Present Problems of Theory," Quarterly Journal ofEconomics, May, 1914, and American Econ. Rev., June , 1912, p. 320.


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14 THE VALUE OF MONEYMenger, Ludwig von Mises, and Karl Helfferich, discussedin our chapter on "Marginal Utility," below, and is, in itsformal and logical aspects, to be identified with that no-tion. I t is essentially like W ieser's "p ubl ic economicvalue," discussed in the same chapter.1 That there shouldremain critics 2 who consider the present writer a daringinnovator, who is thrusting a personal idiosyncracy interminology upon economic theory, is striking evidencethat men often talk about books which they have not read!The reader who accepts, provisionally, the doctrine sofar presented, as a tool of thought which will aid us in thefurther progress of the argument, may do so with the fullassurance that he is accepting a tried and tested concept,which has seemed necessary to very many indeed of thegreat masters of the science.3

So far, the writer feels himself in accord with the maincurren t of economic thoug ht. W hen we come to a causalexplanation of the value quantity, however, earlier theoriesappear unsatisfactory. Th e labor theory of value haslong since broken down, and has been generally abandoned.The reasons for this will appear in the chapter on "Costof Prod uc tion ." Th e effort to explain value by marginalutility, by the satisfactions which individuals derive fromthe last increment consumed of a commodity, has likewise

1 Cf. also Wieser's Natural Value, p . 53, n. Sen ior's " intrinsic causes ofvalue " comes to the same thing.2 Cf. Quarterly Journal of Economics, Aug. 1915, pp. 681-82, esp.681, n .3 Among the leading figures in economics to whom this doctrine is un-acceptable, I would mention especially Professor H. J. Davenport, Valueaud Distribution and The Economics of Enterprise. A writer who seeksto minimize the importance of the issue between the relative and the absoluteconceptions of value is Professor J. M. Clark, in Quarterly Journal of Eco-nomics, Au g. 1915. Professor Cla rk seems to agree with mu ch of wh athas been said here, and the present writer would agree with Professor Clark,as indicated above, that for many purposes we do not need to look behindpricesentering a caveat that this is true only so long as we can assume afixed absolute value of mon ey.


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ECONOMIC VALUE 15broken down, as will appear in the chap ter on " MarginalU tility ." In general, it may be said tha t the effort to pickout feeling magnitudes,1 either of pleasure or pain, in theminds of individuals, and combine them into a social quan-tity , leads to circular reasoning. Th us, the utility th eory:It is not alone the intensity of a man's marginal desire fora good which determines his influence on the market.If he has no money, he may desire a thing ever so intenselywithou t giving it value. If he is rich, a slight desire countsfor a great deal. In other words, utility, backed by value,gives a commodity value. But this is to explain valueby value, which is circular. So with the theory of averagelabor time. How shall we average labor time? The prob-lem is easy if we confine ourselves, say, to wheat. If onebushel of wheat is produced w ith ten hours ' labor, a secondwith eight hours' labor and a third with six hours' labor,the average is eight hours, and we may fix the value of thebushel of wheat according. But suppose we wish to com-pare the labor engaged in making hats with the labor en-gaged in raising wheat. How can such labor be compared?Hats are, in their physical aspects, incommensurable withwheat. Th e one qua lity which they have in common,relevant to the present interest, is value. Given the valueof the wheat and the value of the hats, you may compareand average out the labor engaged in producing them.But if value must be employed as a means of averaginglabor, it is clear that average labor can be no explanationof value. This is no t the only flaw in the labor-time theory,but it illustrates a vice which it has in common with allthose theories which start with individual elements, andseek to combine them into a social qu an tity . Th e whole

1 The psychology of this statement, which involves hedonism, needs im-provement, but the issue need not be discussed here. Cf. Social Value,ch. 10.


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16 THE VALUE OF MONEYmethod of approach is wrong. It makes two abstractions,neither of which is legitim ate: first, it abstracts the individ-ual from his vital and organic connections with his fellows,and then, second, it takes from the individual, thus ab-stracted, only a small part, that part immediately con-cerned with the consumption or production of wealth.In this process of abstraction, very m uch of the explanationof value is left ou t. The whole man, in his social relations,must be taken into account before we can get an adequatetheory of value. We turn, then, to a brief discussion ofsociety and the individual, and to a discussion of thoseindividual activities and social relations which are mostsignificant in the explanation of economic value.

All mental processes are in the minds of individual men.There is no social "oversoul" which transcends individualminds, and there is no social " consciousness" which standsoutside of and above the consciousnesses of individuals.So much by way of emphatic concurrence with those criticsof the social value theory * who persist in foisting uponthe theory the notion that there is a social oversoul, orthat the "social organism" is some so far unclassifiedbiological specimen. T o . say th at economic value is asocial value, the product of many minds in organic inter-play, is not to say that economic value is independent ofprocesses in the minds of individual men, or that it resultsfrom any mysterious behavior of a social oversoul.The human animal is born with certain innate instinctsand capacities. H um an animals of different races anddifferent strains are in highly important points differentin their instincts and capacities. But the human animalis not born with a human mind. Nor could the humananimal, apart from association with his fellows, ever de-

1 As Professor R. B. Per ry , Quart. Jour, of Econ., M a y , 1916.


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ECONOMIC VALUE 17velop a hum an mind. "T he human mind is what happensto the human animal in a social situation." * Of course,without the care of adults, the infant would, in general,prom ptly perish. But, more fundamental for our purposes,is the fact that all the important stimuli which play uponthe child during his first two years, when the human mindis being developed, are social stimuli. So true is this, t hatthe child's commerce with physical things runs in socialterms. The child interprets the physical objects abouthim personally, attributes life and human attributes tothem, holds conversation with them, praises and blamesthem, makes companions of them . Th is animism of thechild, so puzzling to an old-fashioned psychology, is readilyexplained by social psychology. I t is a social inte rpreta-tion of the universe. I t follows na turally from the prin-ciple of apperception: the interpretation of the unknown interms of the known; the extension of accumulated experi-ence to the inte rpreta tion of new experiences. Th e firstexperiences of the human animal are social experiences.

In the history of human society, a similar generaliza-tion is possible. Th e hum an individual is found, not inprimitive life, but late in the scale of social evolution.Indiv iduality is a social produc t, Th e savage is not a free,self-conscious person, who can set himself off against thegroup, and feel himself an isolated cen tre of power. Hislife is wrapped up in the group life. In the great barbarianstates like Ancient Egypt or China, the life of the individualwas so controlled by social tradition, and innovation wasso ruthlessly crushed out that individuality had littlescope. Greece and Judea gave larger scope to individualvariation, but the individual still felt himself bound up1 In this I am following a line of thought developed by Professor JohnDewey in a lecture delivered before the Harvard Philosophical Club in

1913-14.


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18 THE VALUE OF MONEYwith his group, and was stoned, given hemlock, or cruci-fied if he challenged the existing social order too seriously.The break-up of the Greek city states, as independentsovereignties, and their subjection to the universal swayof Rome, made it possible for the cultured Greek to sethimself up in opposition to the State; the coming of Chris-tianity, substituting personal relations with deity, for thecommunal worship which had preceded it, gave the indi-vidual a vital interest apart from the life of the group abouthim, so that he could still further feel independent of hisimm ediate social environment. The development by theRoman lawyers of the Jus Gentium, the law which is com-mon to all nations as distinguished from the par ticula rlaw of a given group, emphasized the doctrine of the Chris-tian religion and of the Stoic philosophy of a humanitywhich transcends the limits of a given state,1a notionwhich tended to free the individual from dependence onhis imm ediate associates. B ut no te tha t in all this we hav emerely a widening and multiplying of social relationships,and that the individual gains freedom from one set ofsocial relationships only by coming into others. T heChristian gains freedom from his immediate surroundingsbecause he feels himself in communion with "angels andarchangels and all the glorious company of Heaven."Francis Bacon could survive his degradation in the Eng-land of his day because he could leave his "name andmemory . . . to foreign nations and to the next age ."

Bagehot, in his Physics and P olitics, Tarde, and Baldwin,to name no others,2 have shown how tremendously re-sponsive human beings are to suggestion, how wide is the1

For the elaboration of these ideas, cf. Hegel, Philosophy of History,passim; Willoughby, The Nature of the State, passim; Davidson, T. , Historyof Education, New York, 1900, passim; Bosanquet , B. , Philosophical Theoryof the State; Royce, J . , The World and the Individual.2 T a r d e , Laws of Imitation; Baldwin, Social and Ethical Interpretations.


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ECONOMIC VALUE 19sway of imitation in hum an life, how fashion, m ode, custom ,etc., make and mold the individual. Cooley,1 with animproved psychology, has amplified the analysis, tracingthe development of the individual mind in interactionwith the minds of those about him, making still clearerthe sweep and pervasiveness of social factors in framingthe very self of the individual. In what follows, I assumethe results of these investigations. They constitute thestar ting po int from which we set out on the quest of a theoryof economic value.So much for the individual. He is a social product.But what of society? Objective, externa l, constrainingand impelling forces, which are not physical, which areseemingly not the products of the will of other individualswith whom the individual holds converse, meet the individ-ual on every hand . There is the Moral Law, sacred andmajestic, which stands above him, demanding the sacrificeof many of his impulses and desires. There is the Law,external to him and to his fellows, in seeming, failure toobey which may ruin his life. There is Public Opinion,which presents itself to him as an opaque, impersonalforce, before which he must bow, and which he feels quitepowerless to change. There are Economic Values rulingin the market place, directing industry in its changingfrom one sort of production to another, bringing prosperityto one individual and bankruptcy to another, not withthe caprice of an individual will, but with the remorselessimpersonality of wind and tide. He who conforms to them,who anticipates their mutations, gains great wealthbut no business man dare set his personal values againstthem. There are great Institutions, Church and Stateand Courts and Professions and giant Corporations andPolitical Parties, and multitudinous other less formal or

1 Human Nature and the Social Order.


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2O TH E VALUE OF MONEYsmaller institutions, which go on in continuous life, thoughthe men who act within them pass and change. TheirLife seems an independent life, and the individual whotries to change their course finds that his efforts mean littleindeed, as a rule. There is a realm of Social Objectivity,a realm of organization, activity, purpose and power, notphysical in character, not mechanical in nature, whichis set in opposition to individual will, purpose, power, andactivity. How is the individual related to this objectivesocial world?Three main types of theory have sought to answer thisquestion. On the one hand, there is a type of theory,doubtless the oldest type, a type which arises easily in aperiod when social changes are slow, which sees in the ob-jective social world something really separate and distinctfrom individual life, having a non-human origin, and de-riving its power from something other than the humanwill. On the other hand, there is an extreme individualism,which emphasizes individual separateness, which posits asa datum the individuality which we have seen to be a socialproduct, and thinks of the objective social realm as a meremechanical, mathematical summing up of individual fac-tors, or as a something which individuals have consciouslymade, by contract or agreement, or what no t. Finally,there is a type of theory, to which the present writer wouldadhere, which finds a false antithesis in the contrast thussharply made between society and individual, which holdsthat the individual is not, in his psychological activity,so much set off from the activities of his fellows as thecontrast would indicate, but rather shares in the give andtake of a larger mental life. Th is larger men tal life is com-pletely accounted for when all the individuals are com-pletely accounted for, but it cannot be accounted for byconsidering the individuals separately. No individual is


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ECONOMIC VALUE 21completely, or primarily, accounted for until his relationsto the rest of the group are analyzed. Th inkers who sta rtout with the individuals separately conceived, and thenseek to combine them in some arithmetical way, abstractfrom those organic social relations which constitute thevery heart of the phenomenon we are seeking to explain.The parts are in the whole, but the whole is not the sumof the pa rts . The relationships are no t arithmetical, addi-tive, mechanical, bu t are vital and organic. M en's mindsfunction together, in an organic unity.

1The first two of these types of theory (perhaps becauseindividuals are physically sharply marked off from oneanother, and go on in biological functioning in obviousseparateness) have falsely accentuated the self-dependenceand separateness of individual minds. The second typeof theory, which has sought to work out the whole thingon the basis of this false conception of the individual, haslargely failed to see the objective social realities, or has,with methodological rigor, denied their existence. Thissecond type of thinking has especially characterized a gooddeal of economic theory, which rests on the philosophyand psychology of David Hume.2 We will set our doctrine

xCf. Ellwood, C. H., Some Prolegomena to Social Psychology, Chicago,1901, and Cooley, C. H., Social Organization, New York, 1909. See alsoSocial Value, ch. 9.2 Cf. Social Value, ch. 8. H . J. Davenport is the best modern representa-tive of this extreme individualism in economics. Individualism is nearlydead in modern political, ethical, and sociological theory . Revivals of itappear, however, in W . Fite, Individualism, and in a recent article by R. B.Perry, "Economic Value and Moral Value," Quart. Journal of Economics,M ay, 1916. (I have discussed Professor F ite's views in the Pol. Sci. Quart.of Jun e, 1912.) Professor P erry would there appear to reduce ethical valueto a purely individual phenomenon. Bu t he really brings in a "categoricalimperative," not derived from the values of the individual, by the "backdoor." "Now our general moral law prescribes that an agent shall takeaccount of all the interests which his conduct affects, or shall judge hisconduct by its consequences all round." (Loc. cit., p . 481.) Jus t how this"general moral law" is to be derived from individual values, is not made


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22 THE VALUE OF MONEYin clearer light if we contrast three parallel types of theorywhich have appeared with reference to the nature of moral-ity , of law, and of economic value. For each of thesephenomena, we have theories which represent all three ofthe types of social thinking to which we have referred.In the theory of morals, we have, at one extreme, doc-trines like those of Kant and Fichte, according to whommorality is a matter of obligation, independent of thehuman will, independent of consequences, inherent in thena ture of things. M an 's m ind can find out what the morallaw is, but man's mind has nothing to do with the makingof the moral law. The same notion is involved in the ideasof "natural rights," "justice though the heavens fall,"and the like. Th e conception is strikingly brou ght ou tin the question about which old theologians sometimesdebated: is Right right because God enjoins it, or doesGod enjoin R ight because it is Right? W hether or no tRight is supreme over God, these old theologians neverquestioned that Right is supreme over all human wishesand desires, and in no sense an outcome of them. A t th eother extreme, we have the moral doctrine of the Sophists,for whom each man's will was right for hima doctrinewhich reappears in every individualistic and anarchisticage. Fo r this doctrine, there are no valid social standardsof right and wrong. There is nothing binding on the moralagent but his own will. In between, is the moral doctrineof such thinkers as Friedrich Paulsen, or John Dewey,who represent the reigning type of moral theory to-day.For them, mo rality is a purely hum an m atte r. I t growsout of the needs and interests of men . W hat is good atone time and place is not necessarily good at another timeclear. Th at the wan ts of every man should count equally with the wantsof the agent is a principle which one would expect from K an t or Fichte, bu thardly one which individualism can expect to maintain.


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ECONOMIC VALUE 23and place. There are no imm utable moral principles,valid throughout the ages. None the less, morality is not aprivate matter, about which men may do as they please.Morality is the product of an organic society, the productof the interplay of many minds. To a given individual,the moral law is, indeed, an external constraining andimpelling force. I t is the will of the rest of the group. I tmay be his own will too, but if it is not, it overrides hispersonal preference, He, on the other hand, is par t of thegroup which constrains and guides every other individual.There are, in fact, many sets of moral values: on the onehand, the social moral values par excellence, which thegroup will enforce in various ways; and then, for eachindividual, his own moral values, which may correspondqualitatively more or less with the group values, or mayantagonize them . But the Moral Law is the will of thegroup. I t is no simple composite of the moral values ofindividuals. I t has its organic interrelations with all phasesof social life. Economic changes modify it, legal changesmodify it, religious values modify it, all phases of sociallife are expressed in it.

In legal theory, we find these three types of doctrinealso. The first type is clearly indicated in the generalattitude of American and English courts, especially towardthe common law, though it influences their interpretationof all law. The law is something which the mind of manmay find out, but may not make. If a new situation arises,the court "finds" the lawin theory the principle "dis-covered" by the court was in the common law at the be-ginning. Of course, we know tha t the judge inven ts therule he makes, to fit a novel case, but the judge himselfwill no t adm it it. The theory of the law and the theory ofmorality have developed in close connection, and thenotion of "natural right" is a juristic as well as a moral


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24 THE VALUE OF MONEYidea. A t the other extreme, we have from certain recentstudents of law the doctrine that "The Law" is a myth,that there is nothing but the particular opinion of a par-ticular judge at a particu lar time. Individualism cannotgo so far in legal theory as to give every individual in so-ciety a chance to put his oar in, and have a separate lawfor himself! The social and institutional character of lawis too obvious to perm it tha t. B ut individualism has goneso far in legal theo ry as to deny all objectivity to law exceptin a given decision in a particula r case. In between thesetwo extreme views, appear the views of writers like Savigny,or Professor Munroe Smith, for whom the law is a chang-ing product of social psychology, volitional1 rather thanintellectual in character, objective enough to the individualwho violates it, or the judge who seeks to pervert it, butnone the less not outside the minds and interests of men.In Professor Munroe Smith's phrase, law is "that partof the social order which by virtue of the social will maybe supported by physical force." 2 I venture to describethis type of legal theory as the "social value" theory ofthe law. In the chap ter on " T h e Reconciliation of Staticsand Dynamics," infra, I have cited certain opinions ofMr. Justice Holmes which apply it, and even bring intoit the notions of the marginal analysis.

There are, similarly, three types of economic theory.At the one extreme we have theories of "intrinsic" value,which would place economic value outside the wills ofmen. The mediaeval discussions of " ju s t p ri ce" oftenillustrate this notion. I t creeps no t infrequently in to ju-1 1 use "volition" here in that wide sense which makes it cover both the

motor and the affective phases of mind. Munroe Smith would emphasizethe motor aspect, where Savigny stresses feeling and sentiment.2 "Jurisprudence," a lecture delivered before the faculty of ColumbiaUniversity, Feb. 1908, New York, The Columbia University Press, 1909,p. 14.


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ECONOMIC VALUE 25dicial opinions,to which such notions are essentiallycongenial! The working economist of our own day hasfound little use for it, but in periods when economic changewas slow it suggested itself not unnaturally to men, as anexplanation of the seeming impersonality of market phe-nomena, and as a practical idea for combatting extortionand injustice. Som ething of the idea is involved in a sen-tence of Shakspere's: 1

"But value dwells not in particular will;It holds his estimate and dignityAs well wherein 'tis precious of itselfAs in the prizer."

At the opposite extreme would be those economists, asProfessor Davenport and Jevons, who find no value fora good except in the minds of individual men, so that theremay be as many different values as there are different men.That something social and objective exists in the marketplace can hardly be denied, but when pressed for an ac-count of it, these writers reduce it to a bare, abstract,mathematical ratio.2 Each individual mind is shut upwithin its own limits, inscrutable to other minds, and therecan be no psychological phenomena which include activitiesin many minds, for this view. In between these two ex-tremes, is the social value theory of the present writer.Economic value is not intrinsic in goods, independent ofthe minds of men. But it is a fact which is in large degreeindependent of the mind of any given man. To a givenindividual in the market, the economic value of a good

1 1 ran across this in Wagner ' s Grundlegung. Wagner had found it in Rau!I t is from Troilus and Cressida, Act II , Scene II.2 Davenpor t , Value and Distribution, pp. 184, n., and 330-31, n.; Jevons ,Theory of Political Economy, pp. 14, 78-84, esp. 83. Cf. Social Value, ch. 4.This seems to be the position of Professor R. B. Perry, also, though he isno t so extreme as Davenpor t . Loc. cit.


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26 THE VALUE OF MONEYis a fact as external, as objective, as opaque and stubborn,as is the weight of the object, or the law against murder.There are individual values, marginal utilities, of goodswhich may differ in magnitude and in quality from manto man, but there is, over and above these, influenced bythem in part, influencing them much more than they in-fluence it, a social value for each comm odity, a productof a complex social psychology, which includes the individ-ual values, but includes very much more as well. Ourtheory puts law, moral values, and economic values in thesame general class, species of the genus, social value, alikein their psychological " stuff" and character, to be explainedby the same general principles, even though differentiatedin their functions, and in the extent to which they dependon various factors in the social situation. They are pa rtsof a social system of motivation and control. They arethe social forces, which govern, in a social scheme, theactions of men.

It may be well to suggest rough differentice which markoff these values from one another. Legal values are socialvalues which will be enforced, if need be, by the organizedphysical force of the group, through the government.Moral values are social values which the group enforcesby approbation and disapprobation, by cold shoulders f , and ostracism or by honor and praise. Economic values:*.'. are values which the group enforces under a system of.5 . free enterprise, by means of profits and losses, by riches or!.^ v bank ruptcy . The group may, under a communistic orsocialistic system, rely in whole or in part upon the ma-chinery of the law; in which case economic values ap-pear not in their own form as immediately guidingproduction, but as "presuppositions" of some of the legalvalues.The differentiation of these types of social value may


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ECONOMIC VALUE 27also run in terms of their functions,1 though it is not soeasy to mark them off here, since their functions overlap.The function of economic values is to guide and controlthe economic activities of men, to send labor from oneindustry to another, to cause one sort of thi

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Value of Money Theory

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