Credit Money and the Precious Metals, 251 



exempt from the influence of this tendency, if the assumed 

 steadiness of relation to the commodity ions is to be 

 maintained. 



In various writings on the subject Sir Thomas Farrer 

 has put forward the argument that gold has not appreciated 

 in value, but that commodities have fallen because their 

 production has been increased. As an illustration, he cites 

 ( What we Pay With) an apple tree which suddenly pro- 

 duces 24 apples instead of 12, the labour, or human effort 

 of cultivation or production, remaining the same. Now 

 it is quite clear that, in such a case, assuming that the 

 monetary ions remained unaffected in their quantity, and 

 that, therefore, the price of apples fell one half, the landlord 

 and other fixed creditors payable in monetary ions would 

 receive the equivalent of double the number of apples 

 formerly received by them ; and, perhaps, if the increment 

 were as accidental as Sir Thomas Farrer assumes, the 

 creditors might be as well entitled to it as the labourer. 

 But a general increase of commodities implied in a general 

 fall of prices is not due to such accidental causes ; it 

 depends either on an increase of labour or on the increased 

 efficiency of labour ; and if labour is to get the full reward 

 of its increase in quantity or efficiency it is to me perfectly 

 clear that the relative value of the monetary ions in which 

 the fixed charges are paid must remain unchanged. This 

 can only be by a proportionate increase in their quantity 

 under the action of the same law which affects commodities, 

 by which labour seeks the most remunerative field of 

 production, or in their efficiency by rapidity of exchange 

 increased by a highly organised system of banking, 

 which means, practically, the same result as an 

 addition to quantity. If commodities generally increase, 

 and the monetary ions remain practically unchanged 

 in quantity, then a fall of prices is an appreciation of 

 the monetary ions. Their labour cost of production 



