The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1896-07-18
Intrinsic Value.

Nothing can have an intrinsic value. "-Ldrton,
ia 1895
There is no such thing intrinsic value. =
Iii intrinsic valued is the curse and the bane Of
economic science to this very hour. "-Mdeieod
Although for two hundred years writers on
political economy have secuted the notion that
value is ''intrinsic" in anything, still this
notion continues to be 'sthe bane and the
curse of economic science. 1t holds much
the same relation to the science of economics
that the idea that the world is fiat holds in
geography and astronomy; only the Jaspers IN
economies are far more numerous than their
kindred in astronomy
If value were intrinsic; that is, inherent in
"A thing, of course, it could not change; it
would be the same everywhere and at all
times. If value were intrinsic in anything, it
would be in commodities like iron, wheat, or
cotton. But if the value of these things were
intrinsic, it would, of necessity. be the same
in all paces-the same in Chicago, New
York or London-which is never the case.
If the value of gold, as is so often assumed,
were intrinsic, like its color or its quality of
ductility or malleability, it could not change,
but would be the same from age to age; 1t
would be the same whether there were little
or much of it in the world. No increase IN
the supply of gold, no matter how great and
world could affect its value. 1t must in that
case be the same in all countries and at all
periods of time, regardless of supply or of de-
mand for it, and regardless of whether it is
used for money or not. The same Is true of
silver. If its value is intrinsic, it cannot
change, nor could the relative value of silver
to gold, or of gold to silver, change. But we
know they have changed in value relatively to
each other, and relatively to other things, and
are changing all the time We know histori-
cally and experimentally that these metals,
like everything else, vary according to the law
of supply and demand. If the quantity of
gold or of silver were suddenly doubled, its
value would be reduced in proportion to the
change in the relation of supply and demand.
On the other hand should the supply of these
metals, or either of them, fall off, while the
demand for them kept up, their value would
proportionately increase. The same would be
the case if the demand for either metal should
increase while supply remained unchanged.
When, however, either gold or silver can
be used without limit in the payment of debts
at the option of the one having payments to
make, then the lack OF supply of one may be
made up by an increase in the supply of the
other. In this way the two metals act as one,
and the value of the two metals combined will
vary as their mass varies in relation to the de-
mand for the whole. This is Rimetallism.
The rate at which one thing viii exchange
| for another expresses the value of one thing
in terms of another. Hence the value of one
thing is anything else for which il will ex-
change even. The value ofanything expressed
in money is called the price. The price of a
thing, therefore, is the quantity of money it
will exchange for. Hence, whatever cause
affects demand in relation to supply, affects
value; whatever cause affects supply in rela-
ton to demand, affects value; whatever cause
affects the supply of money, as compared to
demand for it, or as compared with things to
be bought and sold, affects the price level gen.
orally.
Legislation cannot change the intrinsic value
| of anything, but law may and often does, at
! feet the supply of, or the demand for, a thing;
and when the law took away the demand for
silver money and increased the demand for
| gold BY making it the only money for final re-
demption, it did most seriously affect the val
ne of these metals.
The truth, then, is that the value of gold
and silver, like that of everything else, de-
pends entirely on the relation of supply to de-
mand, or OF quantity to use. Or, as John
Locke said two hundred years ago, intrinsic
value in money is therefore nothing but its
quantity
This law applies also to money of any kind.
and, therefore, in general, the value of money
depends on the quantity of money as compared
with things to be bought and sold, or the work
to be done by it. Prices, therefore, depend
on the volume of money, or, as Professor
Nicholson states the law, 1.-THE general level
of prices depends on the quantity of money
compared with the work of circulation to be
done by it. y As the chief value of gold or of
silver is for money, it follows that the chief
value of these metals comes from the demand
for them for money, and that any change in
the monetary use of either of them must
necessarily affect its value.
When, therefore, we hear people talk of
intrinsic" value, it may be set down at once
that they are as ignorant of the principles of
money as they would show themselves to be of
geography or astronomy if they talked Of the
earth as if it we're fat.