The independent. [volume] (Lincoln, Neb.) 1902-1907, 1903-02-12
The VALUE OF MONEY
Mr.. De Hart Returns to His Old Love, the
Subject of Money
CHAPTER |.

Editor Independent: Adam Smith
said: The word VALUE, 1t is to be
observed, has two different meanings,
and sometimes expresses the utility
of some particular object, and some
times the power of purchasing other
goods which the possessor of that OBJ
ject conveys.
THE one may be called value in
use,' the other value in exchange
''The things which have the greatest
value in use have frequently little or
no value in exchange; and, on the
contrary, those that have the greatest
value in exchange have frequently
little or no value in use. Nothing is
more useful than water; but it will
purchase scarce anything; scarce any
thing can be had in exchange for il.
A diamond, on the contrary, has
scarce any value in use, but very
great quantity of goods may frequent
ly be had in exchange for it."
Thus spoke Adam Smith, and it
would have been a great deal better,
if he had said only half as much.
What he said about value as being
power of purchasing goods was
very true, but that part about value
as being utility of some particular
object" was certainly erroneous. 1t is
no more correct to say that value is
utility than to say that value is
wealth. We also need a definition of
value that will separate it from price
as we'll as from wealth and utility.
Economists are obliged to use these
four words and they all should be
used, without one being used for the
other
| have quoted all that Adam Smith
said about value. The next great
political economist coming along was
David Ricardo-born in 1772, dying in
1924, in his fifty-second year-and II
is a great pity that he could not have
had twenty years more. He made
great improvements on Adam Smith,
and he would have done much more
if he could have lived longer. I'm
fortunately, however, he had a con-
fused notion of value or at least a
confused way of explaining it. The
probability is that he was more de-
fcient in language than in ideas. He
undoubtedly saw clearly the differ
ence between utility and value, al
though he did not express it clearly.
He made a mistake in following too
closely the great Adam Smith.
Ricardo commenced the discussion
Of his political economy by quoting
Adam Smith approVngly, and then
adding more illustration, in order to
show that value has two different
| meanings"
He said: Water and air are
abundantly useful; they are indeed
| indispensable to existence, yet, un-
| der ordinary circumstances, nothing
| can be obtained in exchange for them. y
Gold, on the contrary, though of lit
tie use, compared with air or water,
will exchange for a great quantity of
| other goods"
Ricardo continues: utility then,
is not the measure Of eXchangeable
value, although it is absolutely essen
| tial to it. If commodity were in no
way useful, it would be destitute of
| oxchangeable value, however scarce
| it might be, or whatever quantity of
labor might be necessary to produce
| it."
What nonsensei How can value be
''exchangeable? If it is a power of
purchasing" as Smith said, how can
it be eXchangeable? Two commodities
may be eXchangeable, but two pow
ers of purchasing cannot be ex-
changeable.
Ricardo then says: Possessing
utility, commodities derive their ex-
changeable value from two sources:
from their scarcity, and from the
quantity of labor required to procure
them"
He then devOtes thirty pages for the
| purpose of showing that commodities
get their "eXchangeable value"-he
ought to say value" because thera
is no such thing as eXchangeable val
ue-frOm two sources: from their
scarcity, or from the quantity of la
Dor required to obtain them"
While Adam Smith could dispose of
value by dozen lines, yet Ricardo re-
quired thirty pages to give his notions
about it. And it is singular that each
subsequent economist devoted more
and more space to the subject, before
he could come to the discussion of