value of the stock of wood is therefore $70? Let him but offer $70 and see if he gets the wood.

Another test of the concept of total value is afforded by those goods which give off a number of distinct, concrete uses capable of independent valuation. A piano, e. g., renders a multitude of musical services, some of which may be of such slight utility to the owner as to be given away. Will, therefore, the owner, seeing the marginal utility of the piano's services is zero, part with or rent the instrument for nothing? A well furnishes so much water that the owner lets the passers-by supply their wants from it. Are we, therefore, to conclude that the total value of the water supply, i. e., the value of the well, is nothing, and that the owner will view with indifference its filling up or drying away? A house may be regarded as rendering an immense number of services of shelter. Now, because a certain vacant chamber may be used as store-room or lumber-room, are we to conceive the total value of the house as merely its total power to shelter old clothes, out-of-style furniture and general household rubbish?

Let us apply another test. In an isolated market a hundred boxes of peaches are offered. The utility of a box at the common margin of consumption resulting from the competition of the buyers is one dollar. The total value of the entire stock of peaches is therefore held to be $100. Now, total value is here a perfectly legitimate conception, seeing an outlay of $100 will actually cause the peaches to change hands. But suppose that the peaches have changed hands. What will now be the total value? The marginal utility is still one dollar, but will total value be $100? Evidently not. With the passage of the goods into the hands of the consumers the uniformity of value that characterizes the market disappears through the addition of unequal consumers' rents. The sum

required to make the peaches change hands again is not $100, but a sum large enough to exceed their total utility in consumption, say $300. We can say that $100 is still their total

value, but if that sum will not buy them, this conception is here evidently an abstraction, corresponding to nothing real. And if $100 is still the total value of the peaches, what then shall we call this sum of $300, which alone can effect an exchange of the peaches? If it be demurred that the peaches could be rebought for $100 provided the consumers could replace them from other sources at the market price, I reply that this is in effect no sale at all, but a farcical exchange of peaches for peaches, which gives us merely the value of peaches in terms of peaches. So long as peaches are parted with not for peaches, but for unlike goods, consumers' valuations will be found very different from market value.

It appears then that, under our modern system of divided labor and production for sale, goods in the hands of the original producer, or any of the intermediaries that help to convey them to their destination in the final market, are valued not for their immediate usefulness, but for their power in exchange. They are esteemed not for their direct utility, but for their use in the market. But in the market it is irrefragably true that the valuation of the marginal unit determines the power in exchange of the entire lot. Although the seller may not submit his goods to the valuation of a particular market, nevertheless, as their only use to him is in exchange, he must value them by what he thinks they will fetch in some other market, or at some other time. So each seller values his goods by what they will bring, not in a particular market but in a normal market. Therefore, all goods en route to the consumer are valued at, and would be sold for, the value of the marginal unit in a normal market. For this stage in the history of goods, total value is a legitimate conception and has meaning.

But when goods are finally lodged in the hands of the consumer, the basis of valuation is changed. Formerly the valuation had reference to an external thing, viz., the market. Now, however, it strikes root in subjective experience. It relates not to power in exchange, but to use. Now, with the

supersession of market values by subjective values, the attempt to measure all value by the marginal unit becomes unscientific. And when the marginal good is no longer regulative that concept which makes total value the product of a quantity of goods by the value of the marginal unit, is no longer useful. However necessary elsewhere, it is in this field a mere abstraction, fit only to mislead. To make it the basis of any conclusion is to expose one's self to error and self-sophistication.

We have been showing that goods sold in isolated and temporary markets lose their uniform market values on passing into the hands of the consumers, and acquire a set of diverse subjective values. Now, as a matter of fact, the experience of real life does not seem to confirm this theory. There is no evidence of any sudden revolution of values when goods leave the final market. On the contrary, we find goods that have ended their career as merchantable commodities still valued at the market rate. And yet the doctrine of consumers' values given above must be true, seeing it rests on the theory of consumers' rent-a theory that has proved of greatest help in explaining the economc phenomena of real life. How are we to explain this paradox?

The supersession of market values by subjective values isdelayed, or rather concealed, by the absence of one indispensable condition, viz., an "isolated market." With the appearance of permanent markets, with the flowing together of periodical demands into a steady and ever-renewed stream of demand, and the fusion of local and temporary supplies into a parallel stream of supply, the true subjective values do not come to light. The consumer can replace any good in his stock by purchase in the market at the market price. This circumstance obscures the great contrast between merchant's valuation and consumer's valuation. For if a quantity of commodity yielding a total utility of twenty can be readily replaced by parting with seven units of utility, its importance immediately ceases to be measured by its proper utility. As

the loss of it means only the cost of substitution, there is imputed to it the market value of its substitute. The possibility of unlimited resort to the market constitutes a connecting pipe, by which the value level of goods in the market is communicated to goods in the hands of the consumer. And as the growing extent, persistence, and accessibility of markets adds to the ease of replacement, the market valuation everywhere presses back and supplants private valuations until the whole field of wealth is overlaid by them. The web of imputed values hangs as a thick curtain before our eyes and hides from us the system of real values.

Never does the confusion of imputed values with real subjective values more fatally betray us than when we inquire the total value of the wealth of society. The line of inference is plausible. We see that in the presence of perennial markets the individual can always fill a gap in his stock by buying at the market price. The importance of a good to him is, therefore, not its positive utility but the value of its substitute, i. e., market value. We see, moreover, that if the individual lose his whole stock of goods, he can replace at the current rate. Therefore the total value of the individual's stock is simply the product of quantity times the market value of a unit. As this can be proven true for each, it follows that the total value of each individual's possessions depends on the market rating. And as the total value of the wealth of society is simply the sum of the totals for individuals' possessions, it is inferred that it must likewise depend on the market value. And as market value is nothing more or less than the utility at the margin of social consumption, we reach Dr. Merriam's conclusion that "total value is equal to commodities measured by physical standards multiplied by the marginal utility of commodities.

modities are the multiplicand, marginal utility is the multiplier." And once we poise our valuation of the wealth of society on the pivot offered by the utility of the marginal

unit there emerge of necessity the striking "paradoxes" of value that maximum value does not coincide with greatest wealth, that total value may decline with growing abundance of goods, and that there is a point where the profusion of wealth is so great that value ceases altogether.*

There is an ancient and well-worn fallacy especially frequent in economic reasoning, which consists in assuming that what is true of one must be true of all. An individual observes that when he has twice as much money he is twice as well off; since what is true of each must be true of all, he infers that if the community had twice as much money it would be twice as well off. A pieceworker notices that an increase of diligence adds to his wages in like degree; on the same fallacious ground he reasons that if the working classes could double their efficiency they would double their income. An investor sees that his income from investments varies directly with his capital, and concludes that the advantage society reaps from capital varies directly with its amount. A landowner observes that his rent increases with the yield of his land, and infers that the share of the landlord class will increase with the productiveness of the soil. An individual producer finds his prosperity furthered by the exclusion of competing foreign goods, and arrives at the proposition that the prosperity of a society will be increased by the exclusion of all goods that compete with the products of any home producer.

* Suppose in a society in which “total value" has passed its maximum and reached steady down-grade a great corporation borrows for a fifty-year term a vast sum representing say more than one-third of the total value of all the wealth of society. Now suppose that, during this period, owing to unexampled progress, abundance and decline of marginal utilities "total value" shrinks to one-third of its former self. If value were interpreted as Dr. Merriam suggests the following paradoxical consequences would appear. First-It would be impossible for the corporation to pay the debt even if it acquired and paid over to its creditors all the wealth extant. (2) With infinite industry for infinite time with infinite success it would be unable to produce enough value to cancel the debt. (3) With every step toward extinction the apparent weight of the remainder of the debt will increase until at last the difficulty of discharging the remaining portion will appear greater than the difficulty of discharging the debt if no part whatever had been paid. Can a doctrine so fruitful of paradoxes be sound?