134 REPORT— 1889. 



an intelligible rationale can still be assigned to Professor Newcomb's 

 scheme considered as a standard for deferred payments. It may be 

 regarded as jnst that the debtor should pay, the creditor receive, a con- 

 stant proportion of the goods produced by an average man's labour. If 

 the productivity of the average man increases, the creditor gains without 

 the debtor losing. The principle may be illustrated by the present 

 vrriter's proposal (in the former Memorandum) that the standard might 

 be a constant proportion of the average income.' It is a principle vrhich 

 appears to be countenanced by some high authorities. Thus Sir Thomas 

 Earrer, in his able Memorandum on Gold and Credit prepared for the 

 Commission on the Precious Metals, asks : ' If prices fall, not by 

 reason of any change in the measure of value, but by increased 

 abundance of the things sold, what considerations of justice or of con- 

 venience are there which call for an alteration in the measure of value ? ' • 



There is, however, a more important difficulty in the way of adopting 

 Professor Newcomb's plan as a standard for deferred payments. Appa- 

 rently there would be no distinction between articles of immediate con- 

 sumption and those which are only agents of production ; articles of each 

 class would figure equally in the ' value of everything produced ' per year. 

 Suppose that the national consumption might be divided into two classes 

 of articles, one consumed nearly raw, the other elaborated through several 

 stages of production, at each of which the transformed material changes 

 hands by a mercantile transaction. Suppose the prices of the former 

 category to rise on an avei'age, while the prices of the latter category — 

 both the long series of materials and with them the finished articles — 

 fall on an average. It might happen that the value-in-use of the same 

 monetary income, say lOOL, would remain nearly constant for the average 

 citizen. Yet, according to the new index-number, money might seem to 

 be appreciated. Thus the annuitant or creditor might suffer, as he would 

 receive, say, only 90Z. or 80L for every lOOL, if this scheme were adopted 

 as a standard for deferred payments. 



It should seem, then, that for the purpose of deferred payments the 

 scheme contemplated in theory by Professor Newcomb has no advantage 

 over that which he adopts in practice,^ and which has been described in the 

 former Memorandum: namely, the Consumption Standard. But the con- 

 ception of qua.ntity of marketable articles produced per unit of economic 

 time may well be valid for some other purpose. What that other purpose 

 is will appear in the following sections. 



Section II. 



Professor FoxweU's Method. 



The conception of quantity produced, or rather sold, per unitof time has 

 been embodied by Professor Foxwell in a distinct definition, which it was 

 an omission on the part of the present writer not to have presented more 



* Compare the definition of variation in the Monetary Standard which Mr. GifEen. 

 implies in the following passage of his important paper ' On Recent Changes in 

 Theories and Prices' (^Journ. Stat. Soc. Dec. 1888) : 'There may be a case of what 

 raay properly be described as depreciation of money where prices do not rise. . . . 

 Measured by incomes, tliough not by the prices of commodities, there may unquestion- 

 ably in such case be depreciation.' Cf. Professor Walras's conception of a general 

 diminution of the rarity (or final utility) of commodities. Elements (f Econoviie 

 ]}olHique pure, Lecjon xxxix., § ,390. 



^ Principles, Book 3, ch. ii. § 11. 



