90 



is associated with a growing intensity of real demand, the 

 consumption of cotton cloth per head of population having 

 gradually increased from 5 - 901b. in the year 1330 to 13-81 in 

 1880, or an increase of 134 per cent, of real demand. 



Cheapened cost of production — the true Primary Law of 

 Economic Price — is the only theory which harmonises with all 

 the facts! Theories like those already referred to (scarcity 

 of gold or appreciation of gold, and Ratio of Demand and 

 Supply), which can only at best be reconciled with a very 

 small part of the facts, must be abandoned as unsatisfactory 

 and altogether misleading. Indeed, when we look at the 

 matter broadly and thoroughly, we must find conclusive 

 evidence to show, in respect of commodities which can " be 

 increased by the exertion of human industry," that supply is 

 subordinate and depends upon demand. The breadth and 

 intensity of the demand determines the breadth or intensity 

 of the supply. The demand for commodities is the measure 

 of the intensity of the need or desire to consume them. 

 G-unton clearly puts it : — •" To-day's wants determine to- 

 morrow's efforts, and yesterday's actual consumption deter- 

 mines to-day's actual production. . . Since consumption 

 constitutes the actual demand, and production the actual 

 supply, it follows that demand is the cause (and measure) of 

 the supply." And we might add that the cost of producing 

 the supply is the Primary Law which determines its economic 

 price. 



Permanence of the Ratios or Equivalent Exchange Weights 



of Principal Commodities in Relation to Gold, and also to 



each other. 



In civilised countries commodities of all kinds, by price 

 lists, have their values equated to the established standard of 

 value,— gold. In the United Kingdom the sovereign is the 

 principal unit, and has been determined by law to consist of 

 a specified weight (-25682 of an ounce, having T 9 oV 6 o 6 o P UI- i fc y) 

 of the commodity gold, which is also used more extensively 

 for other purposes than money. In general utility, and even 

 in the magnitude of its value as an industrial product, gold 

 is one of the most insignificant and almost the least valuable 

 of all commodities which are requisite for man's use. Its 

 utility is trifling as compared with wood, iron, or coal, and 

 even though costly in relation to quantity or weight, its 

 total value as one of the commodities produced annually by 

 the principal civilised countries is as 19 to 12,507, or 0"15 

 per cent, of all industrial products." In relation to the annual 



a. See appended table showing value of different classes of industrial products 



