in the theory of value and prices. 49 



for A, but will be compelled to pour much money into C, D, etc. of 

 which the prices have risen. This will cause a rise in their valuation 

 of money and as the quantity of B does not decrease its price must. 



Moreover there will be slight changes in all other quantities IB, 

 lie, etc. If (say) IIC decreases, it is due to one or both of two 

 causes, a rise in price of C or a rise in valuation of money of II. 

 In general the valuation of money will decrease. The decrease will 

 be relatively great for the poor as compared with the rich, but (as 

 just seen) will not necessarily decrease for all persons. 



If A is a " luxury " the fall in its price will be small relatively to 

 the foregoing case. Most of the increase of A will go to the rich. 

 The total amount of money spent on it will probably increase which 

 will in general decrease the price of other articles. Exceptions can 

 be found analogous to that in the former case. The valuation of 

 money will in general decrease, most perhaps for the middle class 

 and more for the rich than the poor, but not necessarily for all. 



5. The cases just discussed assume that the additional production 

 of A is such that the incomes of I, II, III, etc. are not disturbed. 

 To represent the case in which I produces all of A, after depressing 

 A a given amount, slowly depress I until the difference of income as 

 registered on the I scale shall equal the final reading on the A scale 

 multiplied by the price of A minus the former A by its former price. 



The chief change to any one article will be in the price of A 

 which will decrease. The chief change to any one person will be 

 to I whose income is increased (especially if the commodity is a 

 luxury), whose expenditure for most other articles will increase 

 though not necessarily for all, and whose valuation of money will 

 decrease, owing both to an increase of income and to a decrease in 

 price of other articles consequent on the withdrawal of money from 

 them to be spent on A. Only exceptional articles will increase in 

 price if their chief consumers sufficiently decrease their expenditure 

 for A. 



But it may be that the increase of A will so greatly depress the 

 price that the value of the total will decrease. This is generally 

 true of necessaries. The producer I will lose income, that is stopper 

 I must be raised instead of depressed. His valuation of money will 

 increase doubly, owing to the contraction of his income and the rise 

 in price of other articles. The money* return to such a benefactor 



* Monopoly price is not treated here. It is interesting to note that the Dutcli 

 East India Co. used to destroy a part of their spices to prevent a great fall of 

 price. The same thing has been done by the Japanese in silk-worm eggs. 



Trans. Conn. Acad., Vol. JX. 4 July, 1892. 



