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science, has nothing to do with fictitious values or false prices, except to show the principles by the abuse of which they are imposed upon men. Beyond that, the question must be sent to social science, or, further than that, to the cognizance of morals and the jurisdiction of law.

The ceaseless gravitations which rule in the economic as they do in the material world, the steady pull and pressure between. buyers and sellers, and between sellers themselves, are certain, in the long run, to bring prices to the level of values, and to bring values to the level determined by the relations of their several elements. And if this level is never reached except for a passing moment, it still remains the necessary ideal line from which all upward and downward movement must be measured. It is the constant "sea level" of the economic world.



55. Its measure presupposes value.-The measurement of value constitutes so important a problem in economic science, that a brief chapter may well be given to its discussion. As an estimation of values must necessarily precede every exchange or sale, and as value is most commonly thought of in connection with some proposition of exchange, and thought of, therefore, in an effort to measure it, it is not surprising that many economists should have confounded the fact of value with the act of estimation. Such is the origin of Bastiat's definition, "Value consists in the comparative appreciation of reciprocal services;" and of that of Prof. Perry, "Value is the relation of mutual purchase established by exchange between two services."

It is true that the perception of value is clearest in the act of measuring it. All its elements are then necessarily passed in review; but, as already answered in a previous chapter, measurement necessarily presupposes the existence of the thing


56. Two kinds of measurement.-In trade, men seek to get as much as they give. Each party, therefore, to a trade, or exchange, necessarily measures the value of what he gives and of what he gets. This measurement is wholly private and particular. It determines only the value to himself, and of the articles actually compared. But there is a public and general measurement of the values of classes of goods, which determines

their market value or price, and decides what each article of any class is entitled to exchange for in general.

There are thus two measurements of value. The first is relative, and consists in comparing one value with another, to determine their equality or difference. The second is absolute, and is the comparison of any value with some standard of measurement, to determine its positive quantity as expressed in terms of the standard used.

57. Relative measurement.-Barter.-Relative measurement, or comparison, is used in barter, or in the exchange of goods for goods, or for services, and it ascertains only equality or difference. In case of difference, it ascertains also the ratio of difference, or the number of times one value is greater or less than the other. Thus, the value of some hat may be found equal to, or greater, or less, than that of a given coat; and, further, it may be determined that the one value is twice as large as the other. This estimation is personal and private, and fixes the amount of values only for the parties concerned in it.

We have already seen that, ultimately, all values are individual, each object having a separate and different value for each person desiring it. In the end, therefore, all values must reduce to personal or private values; hence the necessity of determining the laws of measurement in this ultimate and relative estimation.

In every exchange of commodities between two owners, each will estimate for himself both articles offered in exchange. There will be, therefore, four values put in competition. To illustrate this, take the following figure:



Let A represent the owner of the horse, and B the owner of the carriage, which they wish. to exchange. The lines a and a represent A's valuations of the





horse and carriage, and b' and b represent B's valuations of the same. In order to an exchange, a' must be greater than a, and 'must exceed b; for the motive for the exchange is found in the gain that each party thinks he is making. The double gain is possible because of the double valuation. Each party to a fair trade may receive what to him is of more value than the thing he gives. No exchange can usually take place if either a is greater than a', or b is greater than '; for in either case one of the parties will, in his own estimation, suffer loss.

It is not necessary, in this case of pure barter, that a shall equal b', or that a' shall equal b; for, as the barterers have no common standard of value, they can not compare their several estimates of either the horse or the carriage alone.

58. Relative measurement in sale. In the case that each first puts a money price upon his property, the conditions of trade are changed, as the following figure may illustrate. Let each value his property at one hundred dollars. The money, we may assume, represents the same amount of value to both. As before, let A be the owner of the horse, and B

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a' represent A's estimates respectively of the two articles, and the lines b and 'represent B's estimates of the same. Let c and represent the equal estimates which each puts upon the one hundred dollars. Now the exchange will not depend alone upon the excess of a' over a, and of b' over b, but upon the relations of a and b', and of b and a'. The lines a and b being each equal to (c = c'′), the exchange may take place if either d'or b' are greater than c; that is, if either A or B counts that he shall gain by the bargain, the other not losing, the trade may be effected. In general, both a' and ' must exceed c;

that is, both parties must be tempted by a hoped for profit or gain. In this case it must be noted that a and b represent market values, while a and b represent personal values, or the personal desires for the property sought.

It is obvious that in cases like the above, in which each party sets a price upon his property, there is a double sale; A sells his horse for one hundred dollars, and buys B's carriage for the same sum. But each immediately reduces the market value, in his own mind, to the personal, and feels sure that he has gained as much by the bargain as the personal exceeds the market estimate.

This difference between personal and market values is of the utmost importance in trade, as it furnishes the motive for all exchanges.

59. Absolute measurement.-Absolute measurement is measurement by a standard. The common standard of measurement of values is money, and the measurement is the fixing of the price. This is rarely done by one or two persons, except as they take into account the general wants of those who are expected to purchase. It is, as we have seen, the general estimate of the buyers and sellers concerned that establishes market prices. We leave out of sight, in this statement, those fictitious prices imposed by speculators and monopolists, which are usually temporary, and confined mostly to a few classes of goods. Competition. and the various influences which determine the course of trade, are constantly at work to rectify the estimates of value and to make prices correspond to values.

In sales of goods or services for money, the measurement of value is of the absolute kind. The money price is taken as the value; but, as has been shown, both buyer and seller take into account the personal value of both money and goods to themselves, and count upon a gain of satisfactions, if not of values.

60. A standard of value.-It is conceded that money is not a fixed and perfect standard of value. Like all other commodities, it varies in utility and in purchasing power. Its

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