44 MUTUAL BANKING. 



dollar in half a day's labor, other men will take ad- 

 vantage of the same process, and undersell the first man, 

 in order to get possession of the market. Thus, by the effect 

 of competition, the price of the article will probably be ultimately 

 reduced to fifty cents. Labor is the true regulator of value; for 

 every laboring man who comes into competition with others in- 

 creases the supply of the products of labor, and thus diminishes 

 their value; while at the same time, and because he is a living 

 man, he increases the demand for those products to precisely the 

 same extent, and thus restores the balance: for the laborer must be 

 housed, clothed and subsisted by the products of his labor. Thus 

 the addition of a laboring man, or of any number of laboring men, 

 to the mass of producers, ought to have no efiect either upon the 

 price of labor, or upon that of commodities; since, if the laborer by 

 his presence increases the productive power, he at the same lime 

 increases the demand for consumption. We know that things do 

 not always fall out thus in practice; but the irregularity is ex- 

 plained by the fact that the laborer, who ought himself to have the 

 produce of his labor, or its equivalent in exchange, has, by the 

 present false organization of credit, his wages abstracted from him. 

 Want and over-production arise sometimes from mistakes in the di- 

 rection of labor, but generally from that false organization of 

 credit which now obtains throughout the civilized world. There is 

 a market price of commodities, depending on supply and demand, 

 and a natural price, depending on the cost of production; and the 

 market price is in a state of continual oscillation, being sometimes 

 above, and sometimes below, the natural price: but in the long run, 

 the average of a series of years being taken, it coincides with it. It 

 is probable that, under a true organization of credit, the natural 

 price and market price would coincide at every moment.* Under 

 the present system, there are no articles whose market and natural 

 prices coincide so nearly and so constantly as those of the precious 

 metals; and it is for this reason that they have been adopted by the 

 various nations as standards of value. 



When Adam .Smith and Malthust say that labor is a measure of 



*The theory tlial the laborer should receive sufficient wages to buy 

 back liis product, and thus prevent over-production, was discovered ;il- 

 most .simultaneously by a number of writers about fifty years ago. The 

 value of this discovery to economics is as great as Newton's was to 

 physics, or Darwin's to biology.— Editor. 



tMalthus says (we quote the sub.stance, and very possibly the exact 

 words, though we have not tlio book by us): "If a man Is born into a 

 world already occupied, and his family Is not able to support him, or if 

 society has no demand for his lubor, t hat man has no right to claim uny 

 nourishment whatever; he Is really one too miiny on the earth. At the; 

 great banquet of nature there Is no plate laid for him. Nature com- 

 mands him to take liimself away; and she will by no means delay In 

 putting her own order into execution." 



