564 PROCEEDINGS OF SECTION G. 



ofFering on loan, but the amount of the Avorld's currency cannot 

 fluctuate in this way. Those who connect cheap money with an 

 abundant currency are not the best able to see that the same 

 cheapness of money in the open market may be the result of stag- 

 nation in trade caused by an insufficient currency. It therefore 

 helps our inquiry if we are able to see clearly how money may be 

 plentiful and cheap in times of depression and bad trade, while 

 really in another and its most important aspect it is deficient and 

 dear, and that both conditions may exist at the one time— that even 

 one condition may be a consequence of the other. Professor 

 Jevon, in the work already referred to, attributes to money at least 

 four functions — a standard of yalue, a medium of exchange, a 

 common measure of value, and a store of value — and asserts that 

 it is important to discriminate between them in estimating the 

 results of monetary action. The choice of the precious metals as 

 the depository of these functions was made early in the world's 

 history, and from their imique qvialities they are still considered 

 the fittest of all commodities to perform the duties laid upon them. 



As a standard of yalue we recognise that stability must be its 

 essential feature. This stability is not so much dependent on the 

 amount of the annual production of the precious metal (^which is 

 insignificant compared with the accumulated volume) as on the 

 proportion which that volume bears to the volume of commodities 

 it has to measure. This second function of money — a measure of 

 value — has also its essential featvn-e, which we consider to be its 

 volume, and on which depends to a large extent the stabilit}- of 

 the standard. In its function of a medium of exchange and store 

 of value we recognise the importance of its general difPusion. its 

 adaptability to all mercantile purposes, and its facility of transport — 

 qualities which make the combined gold and silver currencies the 

 best of all known agencies for the transaction of business 



The currency of the world is at all times the measure of its 

 commodities, and its store has a tendency to diffuse itself according 

 as there are commodities to measure. Any general increase of 

 commodities without a corresponding increase in the measure 

 reduces j)rices, and a decrease in the quantity of the measure will 

 have the same effect, or, to put it into common language, when 

 money is abundant prices rise and trade is good ; Avlien money is 

 scarce there is a falling market and bad trade. When, therefore, 

 by any instrumentality the relative proportion of the currency on 

 the one hand and commodities on the other is changed prices are 

 disturbed, and a rise or fall takes place. In the case of a diminish- 

 ing currency producing lower prices the effect on trade and 

 commerce is at once apparent. The producer suffers in ])rofit. 

 This he may attempt to rectify by increasing his production, so as 

 to have the smaller margin over the increased output. 1'his he 

 speedily finds to be delusive, as the same amount of money has to 

 measure the increased amount of merchandise. If the purchasing 



