Financial Legislation and its Limitations. 79 



one between society and society, but between debtors and 

 creditors. The creditor parts with a certain total value. He 

 contracts to receive back again an equal total value, that is to 

 say, what at the time of contract is expected to be such. The 

 parties take into account present and future wants and provisions 

 for want. The contract is made with open eyes as to what the 

 utilities may be to consumers; but the marginal method of 

 computation is the only one that gives a rate per unit of goods, 

 and hence is the only one that can be used. The burden is 

 upon the advocates of the total-utility standard to show that 

 business can be carried on in any other way, and that the conduct 

 of it according to the type presented by the marginal theory is 

 immoral or unfairly competitive. Hence the conclusion that the 

 modification of prices must be such as to return equal values as 

 between debtors and creditors. If all goods were taken away 

 from society, as the total-utility hypothesis supposes, then their 

 utility would be infinite ! Their cost would remain the same, 

 but, as the stock was reduced towards zero, their price would 

 rise towards infinity ; hence, on the hypothesis of trade en bloc, 

 no ratio of values could possibly be established betzveen present 

 and future goods. 



But present and future goods are valued in the transactions of 

 individual debtors and creditors. The sum of those transactions 

 takes into view not all future goods that may be created, but only 

 such as are proposed to be founded on borrowed money ; and 

 not all present goods, but only such as a loan of present money 

 will buy. The sale of present goods for future goods, in other 

 words, the loan, is made precisely on the same principle as a 

 present sale for money, namely, by the valuation of the goods 

 exchanged according to their marginal utility. The fact that the 

 marginal utility of future goods is less than that of present, 

 apart from any other motives that may affect their valuation, is 

 an additional reason why it is unavoidable that the marginal 

 method should be applied in this sort of a deferred exchange of 

 goods.^'^ Hence, if the marginal principle of valuation be 



" Alfred Marshall, Principles of Economics, fifth ed., book III, ch. V, 

 paragraphs 3 and 4. 



