ON VARIATIONS IN THE VALUE OF THE MONETARY STANDARD. 277 



that ' the change in the purchasing power of the standard is found by- 

 dividing the value of the new inventory at the old prices by its value at 

 the new.' And he is understood to regard this method as preferable to 

 the converse method, dividing the value of the old inventory at the old 

 prices by its value at the new. His reasoning turns upon the postulate, 

 ' Let the total value of the new inventory (consisting of different quantities 

 of the old items) reckoned at the old prices he Vi, and the total value of 



the old inventory, also at old prices, be w, ; then -' is the measure of the 



Wi 



increase in the quantity of wealth.' In this passage read for ' old prices ' 

 new prices, for y, read lo,;,, and for w^ a new symbol v^, and you will have 

 a postulate no less true, or no more arbitrary. Accoi'ding to the substi- 

 tuted principle, ' the measure of the increase in the quantity of wealth ' is 



~ ; which being multiplied by — i, by parity of reasoning with that em- 



pLoyed by the author on the page referred to, gives for the ' measure of 



the new purchasing power compared with the old ' ^ x — = — ; which 



being interpreted means dividing the old inventory at the old prices by 

 the value of the same inventory at the new prices. 



Observing that the ' change in the purchasing power of the standard ' 

 is the reciprocal of what we have elsewhere called the Unit, we see that 

 the two methods just reached correspond to the formulie (2) and (1) of 

 our section AB CD (above, p. 264). It is important to point out that 

 neither of these solutions is before nor after the other.' Otherwise there 

 might be an objection to the use of a symmetrical mean between the two, 

 such as has been recommended. 



Section VII. 



Definiiion of the Appreciation [^07' Depreciation^ which it is the object of 



Bimetallism and similar projects to correct ; no hypothesis being made 



as to the causes of the change in prices. 



The variation in the value of money which we have been hitherto 

 considering is that which is corrigible by the adoption of a ' Unit ' for 

 defei'red payments. For different purposes different formulge are appro- 

 priate. The purpose next in importance to the construction of a Unit 

 (if not indeed, as some think, prior in importance and the main scope of 

 the task set to us) is to correct the instability of trade, to restore the 

 level of prices by augmenting the quantity of legal-tender currency, 

 whether by Bimetallism or the increase ^ of paper-money. 



Now, if we might assume all prices diminished uniformly, like the 

 shadows of objects as the sun advances from the east, the problem would 

 be very simple. It is an intelligible proposition that the status quo might 

 be restored by an elevation of the objects all round. And the significance 

 of the proposition need not be impaired if we suppose the objects waving 

 and oscillating, and some of them depressed, others elevated in random 

 fashion between the two epochs at which the shadow-lengths are observed. 



' The question whether it is easier to get present quantities at old prices than 

 old quantities at new prices does not come within the scope of this memorandum. 



" E.g. By introducing £1 notes in England, or according to some more daring 

 plan, such as those proposed by Professor Marshall {Contemp. Review, March 1887, 

 note near end), Faucher (jjahrbvchfiir Oesetzgehun^, 1868), and others. 



