ent qualities of the same commodity. Sauerbeck omits the rate
of wages. He gives no reason for this omission, but it is easily
guessed. Had wages been included, it would have upset com-
pletely the result which Sauerbeck obtained, thanks to this omis-
sion. Only such imperfections in the compilation of the index-
numbers of Sauerbeck can explain the difference in result that
they show when compared with those of Soetbeer, of Kral, and
others.2 These are the data given by Sauerbeck:

The first column gives the actual average prices of the 45
products for each year since 1870 relative to the average price

It is true that the accusation of omitting wages cannot be limited to Sauerbeck.
Pareto made use of this omission to make a general attack on such a method of
investigation. See PARETO, Cours d'économie politique (Lausanne, 1896), p. 280.

Other important criticisms which deny any practical importance to the index
numbers of Sauerbeck are made by PIERSON, "Index Numbers and Appreciation of
of Gold," in the Economic Journal, September 1895.

for the period 1867-1877. The second column represents in the same way the annual average price of silver in London. The third and fourth are obtained from the first and second and indicate, according to Sauerbeck and all the bimetallist economists. who have accepted his calculations respectively, the values of gold and silver, measured in the terms of the 45 commodities.

It is not necessary again to insist upon the errors of fact found in these index-numbers of Sauerbeck, but it is exactly on account of these errors that they can serve as an argument for the bimetallist thesis.

Still more false, however, is the economic conclusions drawn, that there has been an increase in the value of gold. It is as though they set two persons near them: A and B; A is taller than B. They measure A with B and naturally the former is taller than the latter. Then they measure B with A, and B must surely be shorter than A. This comes from the preliminary hypothesis itself. Now this is the discovery made with the index-numbers of Sauerbeck. In Sauerbeck's calculations the increase in the value of gold comes from the very hypothesis assumed; it comes from the premises of these calculations, but these prove nothing.

D'Avenel calculates that assuming the purchasing power of gold at the present time to be one, the centuries preceding ours would show the following scale:1

* D'AVENEL, Histoire économique de la propriété, tome i. pp. 27–32.

Now in spite of certain oscillations, the purchasing power of gold shows a constant tendency to decrease. But who is ignorant of the multiplied causes that have contributed to them. In the long period from the seventeenth to the eighteenth century, gold and silver had been constantly growing in quantity. The ever-increasing abundance of money tends to make prices rise, never to make them fall. But Sauerbeck and the bimetallist assert that for the last quarter of the present century the prices of commodities have diminished because the value of gold had increased. They do not perceive that in their calculations this increased value is purely the consequence of the diminished price of the commodity.' Following Sauerbeck's own calculations, Guyot, Pierson, Raffalovich, and others have reached an opposite conclusion, namely, that it is the fall in prices which causes the increased value of gold. And if we stop for a moment to consider the phenomenon we shall be immediately convinced that these authors are right.

If gold really had increased in value, it would mean that the value of silver and that of all the commodities had remained unchanged. This paradox, which is sustained by Foxwell,' is the extreme conclusion reached by the arguments of the bimetallist.

This modern controversy, in which none assert an appreciation of gold denied by the others, offers a striking resemblance to a debate which took place between economists toward the middle of the century. Then Michel Chevalier, in his well-known

In regard to the measure of value, Gide writes: If it is admitted that work is a result of value, or rather of demand, nothing is more scientific than to measure a cause by its effects. Gravity is measured by the pendulum more accurately than by the balance. The balance only gives a comparison of weights - just as exchange only gives a comparison of values-while the pendulum measures the force of gravity itself. It teaches, for instance, what the balance would never teach, that the force of gravity decreases with an increase of elevation. -- Principes d'économie politique (Paris, 5th ed., 1896). p. 82. Gide forgets all the simplicity and the constancy of physical causes and all the variable complexity of social causes. For while in physical phenomena there is almost always a perfect correspondence between the same causes and the same effect, this rarely happens with social phenomena.

2 Revue d'économie politique, June 1896. On Foxwell, see also his introduction to JEVONS'S Investigations, etc., already cited.

work, On the Probable Fall of the Value of Gold, predicted with profound conviction a great decrease in the value of gold; and Richard Cobden, who to his wonderful intelligence united the deepest scorn for any kind of adulation, published in 1859 an English edition of Chevalier's work. On the other hand Newmarch in his continuation of Tooke's History of Prices, published in 1857, and McCulloch in the Encyclopædia Britannica, in 1858, maintained a thesis absolutely opposed to that of Chevalier. Later, in 1863, Jevons, in one of his first essays, attempted to strengthen the thesis of the French economist. This controversy found repeated echoes in the Royal Statistical Society and many business men and many economists took part in it.

The literal but incorrect translation of the English phrase, "appreciation of gold," has also contributed to produce errors in the modern controversy. It has been taken as synonymous with an "increased value," and this connection has almost become a popular superstition.

It is true that J. S. Mill made one of his usual hasty assertions when it pleased him to declare the theory of value complete, and when he charged with logomachy the economists who continued the discussion. Far from being beyond discussion, as Mill asserted in 1848, the theory of value is today still as uncertain as ever. But Hermann Heinrich Gossen, in 1854, clearly stated the equation of exchange in his Entwickelung der Gesetze des menschlichen Verkehrs und der daraus fliessenden Regeln für menschliches Handeln. Gossen is the first author and this the first volume of the later so-called Austrian school, which took as the basis of the theory of value the Werth des letzten Atoms as Gossen called it, the "final degree of utility" of Jevons. He has announced his equation in these terms: "The two commodities after the exchange must be divided between the two parties in such a way that the last atom of each commodity received shall have the same value for both parties."

It is the comparative intensity of wants that determines the

See the splendid demonstration and elucidation given by WALRAS, Éléments d'économie politique pure, Lausanne, 1896, pp. 182 et seq.

value of commodities and the consequent exchanges. The value rises or falls according to the comparative intensity of want.' Such a relation expressed in money is called price. The greater or less abundance of money, cannot, therefore, influence the value of the various commodities and of services. Such value depends on the comparative intensity of human wants, to which the products and services conform. It is independent of money and of money price, but it is undoubted that the quantity of money influences the price of commodities. The classic case of the fall of price which took place in the sixteenth century on account of the invasion of the European market of gold and silver is always quoted here. The service or the commodity that before 1492 cost one could not be had after that for less than six monetary units. The influence of the first American production of silver ceases according to Thorold Rogers, to show itself only toward the middle of the seventeenth century.3

But even this phenomenon is exaggerated. Haupt calculates that the two precious metals, in the period extending from the latter part of the fifteenth century to 1520, were reduced to only one millard and the purchasing power of money was sixfold what it is at present, hence the conclusion that the influence exercised by the quantity of the precious metals on the price of commodities is considerable. On the contrary, it is a fact that the relative value of gold and silver, ascertained to be 10.75 during the period 1495-1520 varied a little in the years following. Riese, who estimates the ratio at 10.31 for 1518 makes it too small : Copernicus erred on the other side when he places the ratio at 12. for the year 1526.4 The data prepared by Soetbeer, Shaw. Wirth, and others are more important and reliable.5

Those not understanding the mathematical method can consult F. VON WIeser, Ueber den Ursprung und die Hauptgesetze des wirthschaftlichen Werthes (Wien, 1884); BOEHM-BAWERK, Grundzüge der Theorie des wirtschaftlichen Güterwerthes (Wien,

1886).

G. DE MOLINARI, Notions fundamentales d'économie politique (Paris 1886), p. 165; G. BUCCARDO, Socialismo sistimatico e socialiste incoscienti (Roma, 1896), p. 57. 3 THOROLD ROGERS, History of Agriculture and Prices in England, vol. i. p. 170. 4 V. PARETO, Cours d'économie politique, Lausanne, 1895, p. 286.

5 A. SOETBEER, Edelmetall-Produktion und Werthverhältniss zwischen Gold und