ON TABIATIONS IN THE VALUE OF THE MONETARY STANDARD. 135 



clearly in the former Memorandum. Professor Foxwell is understood i 

 to regard as the ideal measure of the variation in general prices an Index- 

 number which is based upon all vendible commodities whatever. He 

 ■would make no distinction between articles of consumption and agents ot 

 production. In averaging the respective price- variations he would assign 

 to each an importance proportioned to the corresponding value, or rather 

 to that value multiplied by the number of times it changed hands (in a 

 day, month, or year) by way of a monetary transaction. This plan is 

 regarded as par excellence the measure of appreciation or depreciation. 



''if pressed with the objection which has just been addressed to 1 ro- 

 fcssor Newcomb, namely, that the Index-number thus obtained is not the 

 exactest possible measure of the change in the purchasing power of money 

 experienced by the consumer. Professor Foxwell would reply that t^e con- 

 sumer is not everyone. The interest of the producer, damnified by 

 appreciation of money, is also to be regarded. The question set to us is 

 a pure currency-question ; and the answer to be sought primarily is not 

 by how much are debts to be scaled up or down, but by how much the 

 metallic currency is to be multiplied in order that the monetary status in 

 <7Mo may be restored. _ 



An extreme example may serve to bring out the character ot the , 

 method. Suppose that the national consumption were divisible into two 

 categories of commodities, the one involving only two mercantile trans- 

 actions in their production, the other sold or re-sold some twenty times 

 at different stages of its production. Suppose the prices of the former 

 class drop on an average five per cent., while those of the latter drop as 

 much as fifteen per cent., other things, and in particular the National 

 taste, remaining constant. Then, according to the Consumption Standard, 

 the Index-number will be of the form ix95 + ix8o . ^^^^ ^^ qq^ g^t 



u ■,, * x 2^x95 -14x20x85. ,,.. 

 the new Index-number may be written i^_^x^20 ' 



proximately 86. This is not a Tabular Standard adapted to the interest 

 of creditors and annuitants. It is the measure of the seriousness of ap- 

 preciation for the community. 



It will be observed that the example derives its force from the occur- 

 rence of a displacement in the rates of exchange between two classes of 

 consumable articles ; for without such displacement, if the drop of price in 

 both categories were the same, there would be no difference between the 

 results of the contrasted methods. Now (it may be said) such displace- 

 ment is not one of the evils which ' laws and kings can cause or cure. 

 Let debtors and creditors regulate their private affairs by a special Index- 

 number if they like. That is not the affair of statesmen and financiers. 

 But currency is within the province of government. It is competent to 

 governments so to augment the currency, that the appreciation accused by 

 the proper Index-number may be reduced. 



It should be explained that this scheme does not commit its pro- 

 pounder to any of the extreme views which in the former Memorandum 

 ■were connected with the conception of amount of sales and the work 

 which gold has to do. He is not bound to refer to the quantity of gold 



> The present writer is responsible for the exposition and illustration of the 

 views which he has obtained in the course of repeated conversations with Protessor 

 Foxwell. * Section IX. 



