166 MONEY AND CREDIT 



fully insist that the moment any practical problem in any existing 

 monetary system is taken up, one is instantly faced by the difficulty 

 of agreement upon the terms in use, and in fact upon the simplest 

 monetary principles involved in the examination of each case. 

 Every practical reformer in the field of money is in fact using some 

 theory of prices, true or false, in all the premises laid down in his 

 propositions. One might as well go into practical engineering 

 without a knowledge of thermodynamics as to discuss practical 

 monetary schemes without first settling basic monetary principles. 

 But, unfortunately, the thinking, even among so-called economists, 

 is to-day unsettled on so pivotal a question as the theory of prices. 

 Practical monetary legislation, in more than one country, would be 

 radically modified, accordingly as the so-called " quantity theory ' 

 of money is accepted or not. In my humble opinion that theory 

 is indefensible and erroneous; and yet our great politicians in the 

 United States, in their fencing on the monetary problem, have 

 decided that the question of the gold standard has been definitively 

 settled because of the large recent production of gold. The par- 

 tisans of gold have thus accepted the principle on which the demands 

 for an extension of the circulation of silver and greenbacks have been 

 based, and the position is absolutely untenable. 



The issues in this crucial problem are unmistakable, and they 

 must be threshed out to a conclusion before any practical appli- 

 cations can be attempted. These issues may be briefly stated in the 

 following heads: 



(1) Is the price of goods the quantity of some standard commodity 

 for which they will exchange, or is it the relation between goods and 

 a variety of several media of exchange? 



(2) If true money is a commodity, like gold, then what determines 

 the exchange value between goods and that commodity? Is the 

 problem in any way different from that of obtaining the exchange 

 value of any two commodities? 



(3) What is the actual process of evaluation between goods and 

 gold? 



(4) If demand and supply regulate the value of money (cost of 

 production apart), what is the exact meaning of demand for money, 

 and of supply of money? 



(5) Is the demand for a money-metal only the monetary demand? 

 Is the demand for a commodity as money something sui generis ? 



(6) In the theory of prices, what is meant by " money "? Is it 

 only gold, or gold together with everything, such as deposit-currency, 

 which acts as a medium of exchange? In short, what constitutes 

 the supply of money? 



(7) If prices are influenced by " purchasing power," is that 

 synonymous with the sum of the existing media of exchange, multi- 



