Financial Legislation and its Limitations. 



67 



value left in the stock, because, if any one unspecified dose is 

 sold from it, that will not produce any more utility than any 

 other. What it will afiford will be only just the utility of the 

 last. Consequently, the value of all of the stock, under this 

 definition of value, is a rectangle equal to the product of the 

 utility of the last dose by the number of doses, which is equivalent 

 to saying, by the physical mass of the stock. Creditors expect to 

 receive back, in the future, the same total value with which they 

 have parted. They want to be restored to their former situation 

 where they can sell any one of the doses, and, presumably, in the 

 open market, all of them, and receive back the same original 

 value. 



If at a future date, goods become easier to produce and hence 

 more abundant, a dose of goods will have a smaller marginal 

 utility. How many goods must be received or given in order to 

 restore the same value that was loaned? The creditor must 

 demand back enough so that, if he multiply their marginal utility 

 by their quantity, he will come into possession of an area of 

 utility equal to the surface of value he parted with in the first 

 place. The required number of new units is found by dividing 

 the original value-area by the new marginal utility. Thus is 

 obtained the number of goods receivable in the future as com- 

 petent to replace subjective value parted with. It is evident, 

 under the realization of these circumstances, that prices must 

 have fallen in proportion to the decrease in the marginal utility 

 of goods. In that case, the same amount of money returned will 

 buy more goods in that ratio.^- 



§ 4. Before examination of the questions involved in the 

 counter-proposition of the total utility theory, it may be well to 

 pause a moment to attempt to obtain the exact relation of a dis- 

 cussion of this sort to social conclusions. How far is a standard 

 of this sort social and not merely an imagined case of individual 

 valuation? And also what is the helpfulness of such a psycho- 

 logical standard in solving the question of justice? It is oppor- 



for it affords a 

 practicable 

 way for it to 

 arrive at the 

 total value of 

 a stock of 

 goods. 



"^This theory of price restitution is due to the late Dr. S. S. Merriam, 

 " The Theory of Final Utility in its Relation to Money and the Standard 

 of Deferred Payments," Annals of the American Academy, vol. III. 



181 



Conse- 

 quently, 

 prices should 

 fluctuate as 

 marginal 

 values 

 fluctuate. 



The question 

 of deferred 

 payments 

 essentially one 

 of values. 



