Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1896-03-06
OLYMPIA WASHNGTON FRIDAY EVENING, MARCH g. 1885,

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the supply of money and commoditie.
generally, changes, that general prices
vary.
Some other cause, then, for the re
. cent change in the price level from
the scale marked by dollar wheat, with
other things in proportion, must be
, looked for. If the farmer will ask
himself the question, "What deter
mines prices, or what determines the
relative values of things among them
selves" he will find when he has an.
sweIed that question he has found an
answer to the main question: namely,
why there has been such change in
the prices OF all his products, and for
that matter of products generally?
What, for instance, determines the
relative value of wheat and corn, wool
and cotton, cattle and horses?
The answer, and the only answer, is
"supply and demand" The general
law may be stated as follows: What
ever affects the supply OF thing
Government interference or anything
else-demand remaining the same,
affects its value. Secondly, whatever
affects the demand for anything, the
supply remaining the same, affects its
value; or to put these two forms of
statement into one-whate yer cause
affects the relation of the su pply OF
anything to the demand for it, affects
its value. This is the law that governs
the value OF things as compared one
with another, and would be true
whether there were much or little
money, or for that matter, non at all.
In other words, this law would 20 true
under conditions OF barter.
We have next to show that the same
law holds good rs to the value OF
money or as to the prices of COM
modities generally; and it should be
understood that in using the terms
value" and price," that value is
used to express the value of one thing
as compared with something else, or
the value of moneyin commodities, or,
as is sometimes said, its purchasing
power.
Bankers often use the phrase value
OF money!" when they mean the in
terest money will bring; but this is
not the sense in which the term value
Of money" is used in economics. On
the other hand, price means the value
Of thing in money, or the quantity
Of money it will exchange for.
With this in mind then, the law
governing the value of money, that is,
the quantity OF commodities given
sum Of money will exchange for, or
which is the same thing, the general
range Of prices OF commodities, may be
given as follows: Whatever cause
affects the supply of money, the
demand for it, or the debts to be paid
and the things to be brought and sold
remaining the same, affects its value.
Secondly, whatever affects the de-
msnd for money, the supply remain.
ing the same, affect its value. The
demand for money, it should be re.
membered, is mainly to pay debts and
to exchange for commodities.
The enunciation of this law may
also be put in single form, as follows:
Whatever cause or causes affect the
relation of supply of money to the
demand for money-that is debts to
be paid and things to be bought and
sold-affects the value Of money; or
which is the same thing. affects prices
generally. If the quantity OF money
be increased, other things remaining
the same, the value of each unit will
be lessened; or to put it the other way.
if the quantity OF money is increased
the same quantity of commodities will
bring more money. In other words,
prices will rise and money will fall.
When price rise money necessarily
falls; and when money rises-grows
dearer-prices fall. A good way to
look at the rels ton of money to COM
modities is to ask how much money q
given quantity OF commodities will
bring.
In order to retain a clear idea of
this law OF value of money, or OF prices
generally, it should be kept in mind
that the value OF the total volume OF
money does not change. II, for
instance, the volume of money should
be doubled with no change in the
quantity of things TO be brought and
sold, the double volume would simply
stand against the same quantity OF
things to be exchanged for money.
Each unit of the larger volume there.
fore would exchange for but half as
much as q unit of the volume before
it was doubled. For like reasons. il
the volume OF money should be halved,
other things remaining the same, each
unit of the smaller volume would have
double purchasing power, and conse-
quently the purchasing power of the
whole of the smaller volume would be
the same as the purchasing power of
the volume before it was cut down
one-half. Hence, we must understand
that it is the units of the volume o.
money that vary in value and not the
whole volume. The price OF thing
is the number OF units of money-in
our system dolltrs-that q thing will
exchange for. Hence, the law govern