PRACTICAL PAPERS. 
295 
gold and silver, or that which represents it, is fixed — a violent 
supposition, so long as that representative is inconvertible— values, 
or prices rather, will be governed on the average, and in the long 
run by cost of production. But at any particular time and place, 
they will depend upon cost of production, or rather upon what 
would be the cost of reproduction, plus the effect of cost of supply 
and demand. Now cost of production is a very indefinite thing. 
It depends upon the cost of the two essential agents — labor and 
capital. Three variables, too, must be considered in determining 
the cost of these agents. In the case of labor these are: 1st, its 
efficiency ; 2d, the nominal wages paid; 3d, the cost of that, whether 
money or anything else in which wages are paid. In the case of 
capital, they are: 1st, the rate per cent, which must be paid for its 
use; 2d, the time for which it must be advanced before returns 
can come in: 3d, its liability to slow or rapid consumption when 
in the form of tools, machinery, buildings, etc. These elements 
of cost are constant and universal. There are others, such as 
taxes, insurance, etc., which are occasional and incidental. 
We are now in a condition to see how sensitive a thing value is, 
or even price itself, and what opportunities are offered for false 
reasoning and false conclusions in regard to them. The 
elements which enter into cost of production are alone suf¬ 
ficient to account for many of the failures in business which we 
encounter on every hand. How many there are who never “count 
the cost.” 
But wants as well as efforts affect values. It matters not how 
much labor and capital may have been expended, if there is no 
demand, present or prospective, for the finished product, it is 
valueless. If there were no division of labor, and no exchange of 
services — if every man endeavored to satisfy his own wants 
through his own efforts directly, it is quite clear there would be 
no such thing as value — no need of money — no such thing as 
price. Every man’s desires would constitute a market for the 
products of his labor, and his own efforts would determine the 
supply. There would then be no chance for the operation of the 
multiplied checks and balances which govern in exchange. In a 
commercial sense, demand and supply would have no significance. 
