paid, the employer's profit, and such other details as may seem material.” *

It is impossible to shift the responsibility all upon our legislators, law-makers, and executive officers. Public opinion is not only theoretically, but practically, more powerful and more responsible. It is public opinion which makes and unmakes majorities. The trouble is, industrial practice and ideals are still lagging behind in a feudal stage. The feudalism of our industrial ethics is revealed by the outbursts at Homestead and Chicago, and by the chaotic condition of public opinion in regard to such outbreaks. The cause lies in the rapid growth of industrial conditions which are new to us, to which we are not yet adjusted, which we do not fully understand. There is no hope of avoiding such demoralizing collisions until public opinion progresses to a more civilized appreciation of individual and corporate rights and responsibilities. Unhappily, a weak sentimentality sometimes prevails over the sober judgment of those who form the most active and efficient part of public opinion in regard to labor disputes. Belief that the laborer engaged in a strike has a real grievance is allowed to outweigh the greater grievance which society has against those who forfeit their claim to consideration by resort to war without even the formality of peaceful overtures. If society is to escape the unpleasant dilemma of a prolonged period of industrial warfare or a temporary relapse into the maternal tutelage of stricter regulations, public opinion must concede more duties as well as rights to industrial organizations; it must provide itself with the best means of accurate judgment in blame or praise of contending parties; and it must rouse the public conscience enough to make the blame or praise effective.

EDWARD CUMMINGS.

*Speyers, The Labour Question, p. 227.

THE QUANTITY-THEORY OF MONEY.

THE quantity-theory of money is simply an expression, with reference to a special case, of the general law that value is determined in the relation between demand and supply. Prices being nothing more or less than values expressed in terms of money, those who hold the quantitytheory merely point out a specific instance for the application of a principle which has been established by competent induction, and the applicability of which is not challenged in any other instance within the view of the political economist. It is not, therefore, for those who hold this theory to prove their case. It rests upon the critics of that theory to show some reason why a principle, admitted to be otherwise of universal application, should be suspected of failing at this point.

The cause of the incredulity which has attended the quantity-theory is found in the difficulty of defining the terms demand and supply, when used with reference to money. The elements of the case are necessarily complex and elusive. The demand for money arises from the fact that there is a certain amount of money-work to be done; that is, exchanging has, to a certain extent, to be effected in that community through the use of this agent. In the situation existing-the quantity of goods to be exchanged being such as it is, prices ruling as they have done, producers and consumers living at such distance. from each other as may be the case, the habits of the people as to carrying and using money being what they are, the machinery of exchange being what it is—there is occasion for a certain exercise of the money-function in that community. The money-function cannot be exercised in a lower degree than is thus required without personal inconvenience and economic loss. Shall we say

that the demand for money is determined merely by the amount of goods to be exchanged? No. Many of these goods may conveniently be exchanged directly against each other in barter, or indirectly through the intervention of commercial and financial credit, without the use of money. Such goods do not constitute a factor in the demand for money. Even when we know the amount of goods which must be exchanged through the intervention of money, we have still to inquire how often each commodity may require to be thus exchanged. On the other hand, the supply of money is not determined solely in the number of money-pieces of a certain denomination or denominations available to do the money-work. We must also know the rapidity of circulation. "The nimble sixpence does the work of the slow shilling." In a community possessing in a high degree the agencies of transportation and transfer-railroads, parcel express, post, and telegraph - a given volume of money-pieces might conceivably do two or three times as much of the money-work as in a community more backward in the respects indicated. To resume, the demand for money and. the supply of money are both quantities of two dimensions.

When the demand for and the supply of money are thus stated and explained, it is difficult to see how any economist can take exception to the proposition that, other conditions remaining the same, an increase in the quantity of money must raise prices and a decrease in the quantity of money must lower prices. Since money is actually exchanged for goods, since people do give for it that which they have earned by labor and abstinence and risk, it is clear that prices - that is, the value of moneymust be fixed by a sufficient cause. of whim or a matter of accident. reason why the producer sells his

It cannot be a matter There must be some goods for so much

money, and not for more and not for less. There must be some competent force which compels him to give as

much as he does, which releases him from the necessity of giving more than he does. What is that force? In regard to all exchanges of goods for goods or goods for services, under all conditions and in all places, the answer universally accepted is, "Demand and supply." Some powerful reason must be shown for asserting that any other principle governs in the exchange of goods or services for money.

II.

In the March number of the Journal of Political Economy Miss Sarah McLean Hardy has an article entitled "The Quantity of Money and Prices, 1860-92: An Inductive Study," in which she takes up for examination the quantity-theory of money, reaching very disparaging results. Dr. Hardy starts out with characterizing the quantity-theory as abstract and hypothetical, and therefore requiring, prior to acceptance, to be submitted to inductive verification. She calls it "an a priori law," a "hypothetical, deductive law" needing to be compared with "observed facts," and speaks of it as an instance of "pure abstraction." Starting with such a view of the theory in questions, he finds it impossible to verify the theory inductively with any great degree of satisfaction. Now, I must take issue on this point at the outset. The principle that value is determined in the relation between supply and demand - that is, the quantitytheory in general-has been abundantly established by competent induction. The only hypothesis in the case of the quantity-theory of money is that demand and supply have the same dominion and potency here which they have in all other cases of exchange. It is assumed that a principle admitted to be otherwise of universal application can safely be applied to this particular instance, no reason why it should not be so applied having ever been

adduced. Since goods are sold for money and money is exchanged for goods, the advocate of that theory has a right, in the absence of any reason to the contrary, to take it for granted that the universal law of exchange governs here. This is all the hypothesis there is in the quantity-theory of money; and that assumption is no more violent than would be the assumption of a learned and skilled physicist, making observations in a region never before visited, that the law of gravity reigned there as elsewhere, and that the atmosphere of that place, as of other places, was composed of oxygen and nitrogen, with possibly a dash of argon.

But, while declining thus to concede that special inductive verification is necessary to establish the quantitytheory of money, in the absence of any ground for questioning the application here of the general principle governing exchange, one can have no reason for objecting to such an inquiry. What, then, is the scope of Dr. Hardy's investigation? In certain tables and diagrams she places in comparison: (1) the "volume of currency each year, from 1860 to 1892 inclusive; (2) prices, for the same period, according to an index number; (3) the transactions of the New York Clearing House; and (4), for the period of 1862 to 1878 inclusive, the value of gold in United States currency. It is from such a comparison that conclusions are derived unfavorable to the quantity-theory of money.

To begin with, it is to be regretted that Dr. Hardy has not made the currency table one of per capita, and not of aggregate, currency in circulation. During the thirtythree years the traditional life of a human generation covered by this table, population in the United States considerably more than doubled. Had the table given the figures of the per capita circulation, the effect upon the eye and the mind of the reader would have been very different. For instance, instead of the currency of 1890