Principles of Political Economy and Taxation. 175 



ficient to purchase a new machine just when it is wanted. Let 

 * be the duration of the machine; b the annual reserve for it; 

 therefore we must have an annuity b for k years, of which the 

 present value is c. Therefore 



b - c ">'( 1+ 7) t ^ cy 



(l + yf-l l-(l+ 7 )-*- 



Let b = -.; .-. I = V • d = I - r 



d> d i_(i + 7) -*> 7 7(1+7) *- 



As k increases y {1 \ y)Jc decreases, and d increases. For instance, 



it7 = l0' when k = l > d= Ti> and when £ = 10, rf=6,l4. 

 Now we have 



pr=lw{l+y)+b + yc, 

 = lw (1+y) + - + 7 c : 



or if c = mlw, 



AM 



pr=lw {1+7 + -j + ym]. 



Let wages rise to (1 + u)w. and let p become in consequence 

 (l+x)p; then 



&+*)l»r±ito{fI+y) (I+«) + ™ + y ' m } 



subtracting, xpr = lw {u(l + y :)-{y- y ') (l + m )} ; 



And it is manifest that « being- given, and 7 ' thence deter- 

 mined, the value of m will be least in the cases where m is the 

 greatest; that is, the rise of price is greatest in the cases where 

 the proportion of fixed to moveable capital is greatest. 



The rise of price is here estimated in labour. But if we sup- 

 pose money to be produced always by an equal quantity of 



