The Goodland republic. [volume] (Goodland, Kan.) 1891-1907, 1896-02-21

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is only when the proportion between
the supply of money and commodities
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 ask himself
the question, 1What determines prices,
OF what determines the relative values
Of things among themseITes?" he viii
find when he has answered that ques-
ticn be has found an answer to the
main question; namely, why there has
been such a 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 corr, 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 a thing
government interference or anything
demand remaining the same, af-
fects its value. Secondly, whatever at
fects the demand for anything, the sup
ply remaining the same, affects its
value; or to put these two forms Of
statement into one-whateYer cause
affects therelation of the supply of any
thing 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, none atall. In other words,
this law would be true under conditions
of barter.
We have next to show that the same
law holds good as to the value of money
or asto prices of commodities 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 some
thing else, or the value of money in
commodities, or. as is sometimes said,
its purchasing power.
Bankers often use the phrase "value
Of money" when they mean the interest
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 a
thing in money, or the quantity Of
money it will exchange for.
With this in mind then, the law gov
erning the value Of money, that is, the
quantity of commodities a 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 bought and sold remaining the
same, affects its value
Secondly, whatever affects the de-
mand for money, the supply remaining
the same, affects its value. The demand
for money, it should be remembered, is
mainly to pay debts and to exchange
for commodities.
The enunciation of this law may also
be put in a single form, as follows:
Whatever cause or causes affect the re-
lation of the 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; OF which
is the same thing, affects prices gener-
ally. If the quantity of money be in
creased, 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 viii rise and money will fall.
When prices rise money necessarily
falls; and when money rises-grows
dearer-prices fall. A good way to
look at the relation of money to com
mOdities is to ask how much money a
given quantity of commodities will
bring.
In order to retain a clear idea of this
law Of value of money, or of prices gen
orally, it should be kept in mind that
the value Of the total volume of money
does not change. If, for instance, the
volume of money should be doubled
with no change in the quantity of
things to be bought and sold, the double
volume would stand against the same
quantity of things to be exchanged for
money. Each unit of the larger vol
ume, therefore, would exchange for but
half as much as unit of the volume
before twas doubled. For like reasons,
if the volume should be balved, other
things remaining the same, each unit
of the smaller volume would have