IX. Mathematical Exposition of Certain Doctrines of Political Economy. Third 

 Memoir. By W. Whewell, D.D. Master of Trinity College. 



[Read Nov. 11, 1850.] 



68. In my former memoirs on this subject, I have remarked that the mathematical 

 mode of treating questions of Political Economy may be very useful in deducing the results 

 of fundamental principles, assumed or independently established, although of course, it cannot 

 add anything to the certainty of the principles themselves. It was further remarked, that 

 this mode of treatment might be expected to shew, more clearly than any other, within 

 what limits, and under what conditions, propositions in Political Economy are true. This 

 remark was illustrated by the mathematical exposition of certain doctrines concerning the 

 results of international trade ; from which exposition it appeared, that assertions which have 

 been made in a general form, respecting the advantages of such trade to the countries con- 

 cerned in it, are true only within very narrow limits, even on the principles which have been 

 put forward as their basis. 



In the last memoir the international exchange of commodities was considered without 

 reference to money, as the medium of exchange, or means of paying balances. In the 

 present memoir I shall consider money, that is, gold and silver, as among the things ex- 

 changed, and shall endeavour to trace the effect produced by this element in the different 

 countries, which are parties to the exchange. 



69- As has already been said, we must, in such mathematical expositions, assume our 

 fundamental principles, as being supplied to the science of Political Economy by means of 

 other modes of reasoning. The principle according to which prices in different countries are 

 affected by the exports and imports of gold and silver may be, in special cases, obscure and 

 complex; but there is one general principle affecting these changes, in the long run, and on 

 the large scale, which writers are in the habit of asserting, and which we shall assume as 

 our basis ; leaving it to others to illustrate and confirm, or to correct it. 



We shall assume that if the quantity of metallic currency, that is, of the gold and silver, 

 used as money in any country, be augmented, other things remaining the same, (for example, 

 the quantity of commodities to be circulated, and the activity of such transactions) the 

 prices of all commodities will be augmented in the same ratio. Thus, if the metallic cur- 

 rency of England be 30 millions of pounds sterling, and if there be added to it, by extraneous 

 causes, 10 millions more, prices will be increased in the ratio of 3 to 4. And in the same 

 manner if the currency be diminished by 10 millions, so as to be only 20 millions, prices will 

 be diminished in the ratio of 3 to 2. 



70. In every country which does not produce its own supply of gold and silver, there 

 Vol. IX. Paet II. 25 



