two controversies-one as to the ultimate standard of value, the other as to the proper destination of the benefits of industrial progress. The merits of both of these controversies were examined and weighed and the decision in both cases was against the monometallist. But the bimetallist contention was not entirely justified. It was held that the creditor is entitled to receive an amount of utility equal to that he originally parted with. And in view of the declining power of commodities to procure social satisfactions, owing to the rising scale of living, he should receive a certain excess of purchasing power. This requires a certain fall in prices much slighter, however, than that justified by the monometallists.

In his reply to this paper Dr. Merriam agrees with the writer in rejecting the labor standard of the monometallists and the commodity standard of the bimetallists. But he finds the simple utility standard likewise faulty and puts forward marginal utility as affording the only basis for a just and scientific standard of deferred payments. There are therefore four different standards in the field competing for the solution of the problem of deferred payments. Their relations may be seen at a glance by referring to this diagram:

Suppose the members of a community are able at a certain date to provide themselves by their industry with A B of goods of which the utility scale is D C. Ten years later, owing to industrial progress, they are able with the same effort to provide themselves with A F of goods of which the utility scale is D H. Population, mode of consumption, credit, frequency of exchange and rapidity of monetary circulation remaining the same, what ratio should exist between the money volumes and between the price levels of the two periods in order to secure justice to both debtor and creditor?

1. The labor standard advocates contend that as the wealth of the community, though more abundant, represents and hence commands no more labor than formerly, it should command no more money. The volume of money should AB

be the same while prices should fall to of their former AF level.

2. The defenders of the commodity standard maintain that the volume of money should increase with the volume of goods so that the price level may remain the same and the relation of goods to money be undisturbed.

3. Dr. Merriam proposes the marginal utility, or "total value" standard, which requires that the volume of money should accurately reflect the change in total value from A B CE to AFHK. Prices then would fall in correspondence with the sinking of marginal utility from B C to FH.

4. The total utility standard proposed by the writer requires that the volume of money should reflect the change in total utility from ABCD to A FHD. Prices should A B C D then fall in the ratio of AB

to

AFHD
AF

These four standards are all that have yet been proposed. As Dr. Merriam and the writer agree in rejecting the first and second, this paper will be devoted to a comparison of the merits of the third and the fourth-the two that have

been brought to light in the course of the discussion. These agree in taking account of the utility of goods rather than of their labor cost, or of their physical quantity, as do the cruder popular theories. They differ, however, in their attitude toward utility, the one emphasizing total value founded on marginal utility, the other total utility.

The relation of his paper to my former paper needs a few words. Directed as it was against the false labor standard of the monometallists, my first paper was critical rather than constructive, and the standard roughly hewn out in the concluding pages is far from possessing definiteness, completeness and precision. The marginal utility doctrine was not sufficiently interrogated, and I am glad to own my debt to Dr. Merriam for the light he has thrown upon its relations to the theory of money. The statement that "A general decline in marginal utilities is as impossible as a general decline in values" was seen to be erroneous even before it appeared. I must ask moreover that in the statement that justice between debtor and creditor consists in “restoring equal values," the word "value" be not interpreted in the narrow sense of "market value." With these qualifications I am prepared to defend my former position and to justify on the theoretical side a standard substantially identical, as I conceive it, with that arrived at in the earlier paper. The argument will be developed in the course of a twofold analysis of value, the one part general, the other special.

The earlier thinkers sought in vain to root value in utility. Not noticing the declension of utility with increase of quantity they were puzzled by the low value of the so-called necessaries and the high value of the luxuries. Again, they found they might review the whole circle of consumers without finding "value in use," or utility, coinciding with market value. As the valuations of individuals seemed to stand at all levels above value but were rarely identical with it, it was held impossible to base value on utility. A thousand pianos

If the

sold to-day will have a thousand different utilities. value of each is as its utility there should be a thousand different values; while there is in fact but one. Can you found one value on a thousand different utilities? Or if you select one utility, then which utility? Why that of A rather than that of B.

The doctrine of Satiable Wants and of the Declension of Utility shed a flood of light on the baffling phenomena of value. The eagerness to possess, or reluctance to forego, a unit of commodity was seen to be measured by its utility at the margin of use. The utility of a unit at the margin, then, became by imputation the value of each and every like unit in one's stock of goods. When men's valuation of a unit of good was thus shown to coincide with its utility at the margin of use, it became evident there was needed only the condition of variable quantity in order to explain the ancient paradox that superfluities are highly valued while necessaries are usually little esteemed.

Once the might of a marginal unit as fixer of subjective value came to light, it was inevitable that the principle should be applied to the problem of market value. When the market is analyzed we discover that Market Value is identical with the valuation of the buyer at a margin determined by the quantity of the commodity. As buyers of fully finished goods in final markets are usually consumers, the valuation that finally prevails is identical with the utility of the good to the consumers at the margin of consumption. The competition of consumers brings about a single margin of consumption which holds for all alike. The emergence of a margin of social consumption for an article does not mean that the marginal increment of one consumer yields him the same number of units of utility as that of every other consumer, but that the measure of a consumer's margin of utility divided by the utility to him of a unit of the medium of exchange is the same for all others. The market value of an increment of commodity is a cent, because its

utility at the margin of social consumption is a cent, which means in turn that each consumer buys clear down to the margin of social consumption, where another increment would yield him no more utility than a cent expended for some other article.

The marvel of the market is that the utility of the marginal increments determines not only their own value, but that of all other portions as well; so that all the exchanges take place at a ratio imposed by that portion which will supply the least intense want for that commodity. From this dominance of the margin arises legitimately the notion of a total value ascertained by multiplying the quantity of commodity by marginal utility. But this conception is very liable to be translated out of its proper sphere and put to illegitimate use. For reasons that will appear later it is frequently applied to all totals of good whatever, whereas, as I hope to show, it is true for goods in or for the market and for these alone. The scope of the total value concept merits attention seeing that in misuse of it lies, I believe, the error of the marginal utility standard.

An individual has five units of a good of which the respective utilities are 8, 5, 4, 2, I. The true importance to him of the fifth unit is plainly 1 and, as the units are alike, each will be valued at 1. Total value then appears to be 5. But will he part with his whole stock for anything above five units of value? If he part with one unit for a breakfast, will he part with all for five successive breakfasts? If he part with one for a Saturday off, will he forego all for the sake of five Saturdays off? As it is impossible that he should hold the importance of all at only five times the value of a single unit, I conclude total value in the conventional sense can here be nothing but an empty abstraction. Or take a concrete instance. A Dakota farmer has provided ten cords of wood as his winter fuel. Heavy snows come and a less provident neighbor wishes to buy wood of him. He will part with a cord for $7. Will anyone say that the total