102 



SCIENCE 



[N. S. Vol. XXVII. No. 681 



sailors who were ready to climb over the 

 bodies of their dead comrades to victory 

 before the walls of Vladivostock or on the 

 smoking decks of their battleships in the 

 China Sea. Would it be of any use to 

 preach to the Chinese mechanic in Hong 

 Kong the docti-ine of the eventual eqtializa- 

 tion of wages by the movement of masses 

 of laborers from poorly-paid markets to 

 those well paid until wages in Hong Kong 

 rose to the level of those in London? 

 Would he not reply that an equalization 

 -which could not be accomplished in per- 

 haps three generations was too remote to 

 justify his hazarding his job? 



The operation of the quantity theory of 

 money is another field in which economists 

 themselves have been compelled by the exi- 

 gencies of their own arguments to admit 

 the influence of friction upon the working 

 out of theory. Whatever may be thought 

 of the principles laid down when the use 

 of money was not so extensively supple- 

 mented as at present by instruments of 

 credit, it is now obvious that those prin- 

 ciples rarely operate in a vacuum. Other 

 influences, so important that they often 

 outweigh changes in the quantity of the 

 metallic monetary stock, come constantly 

 into operation. The argument of a few 

 extremists in the silver campaign, that 

 "money of ultimate redemption," or 

 "basic money," alone influences prices, 

 would hardly be defended to-day even by 

 the followers of Mill. Those, on the other 

 hand, 'who depart farthest, either from his 

 theories or from their practical application, 

 contend that prices are influenced by the 

 volume of banking credits, by the rate of 

 discount, and preeminently by the demand 

 and supply for particular articles which 

 interacts in one case upon demand and 

 supply for other articles, so that there is 

 never reached a static point at which a 

 proportionate increase in the quantity of 

 money is accompanied by a like and uni- 



form increase along the entire line of 

 manufactured and exported goods. 



The friction which takes place in the 

 introduction of a new stock of gold from 

 the mines into general circulation has been 

 made the subject of elaborate studies by 

 Cairnes, Chevalier and many others. Their 

 arguments are often quoted in support of 

 the contention that out of this friction 

 emerges ultimately a definite relation be- 

 tween prices and the quantity of money. 

 But if this friction occurs in this first flow 

 of the new metal from the mines, then it 

 almost inevitably follows that it occurs 

 also in its later movements between com- 

 munities and even in its relation to dif- 

 ferent articles. The supply of any article 

 may be so uniform that it is inadequate 

 under certain conditions of demand and 

 excessive under new conditions of demand. 

 Hence come about relations of supply to 

 demand which affect such articles differ- 

 ently from those whose supply can be 

 promptly curtailed or promptly expanded 

 according to the conditions of the market. 

 Friction operating with different degrees 

 of intensity in the case of different articles 

 thus makes it practically impossible that at 

 any given moment such friction shall have 

 been overcome in equal degree for all com- 

 modities and that they shall show a uni- 

 form increase or decrease in price based 

 vipon a corresponding change in the quan- 

 tity of money. Of this friction intelligent 

 economists now generally take note, even 

 where they adhere to the theory that in 

 the end prices become adjusted to an in- 

 crease or decrease in the stock of the 

 standard metal. 



If the influence of friction, then, can 

 be admitted in respect to the movement of 

 capital, the tendency of wages, and changes 

 in the quantity of money, is it not illogical 

 to insist too strongly that it should not be 

 recognized in systems of taxation and 

 especially in rates of customs duties? The 



