Inasmuch as the average subjective value of a dollar cannot be exactly determined on account of the difficulty in measuring or comparing the feelings of different people, it becomes necessary to judge of value movements by such external signs as are available.

Adam Smith regarded the quantity of labor which is willingly given for anything as a true measure of its value. He speaks of labor as "the only universal as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places."

This statement has been much abused by economists who have not understood it, and it cannot be understood by any one who looks upon value from the standpoint of commodities. There is no constant relation between labor and commodities, but the relation between labor and personal sacrifice is perhaps as constant as any of the quantitative relations which we find in our ever-changing economic life.

a whole, but to those individuals who are concerned in debts and credits, and that in forming the average, each man's personal estimate of a dollar should be weighed by the number of dollars which he has at stake in debts and credits.

Compared with such a standard, we cannot doubt that the value of gold is depreciating, although the complaints against the gold standard are made altogether on behalf of the debtors.

After all, the question whether the commercial standard of value is really ap preciating, depreciating, or constant in value is of far less importance than the requirement that its value should be free from fluctuations and uncertainties. A steady movement, whether upward or downward in the value of the money unit, will be adjusted in the credit contract, but uncertainty in regard to the standard causes risks and results in loss to both debtors and creditors.

Prof. Frank Fetter, in an article upon this subject in the Annals of the American Academy for May, 1895, says that the question of a just standard of deferred payment "has not received and is not likely to receive a positive answer from pure economic theory."

1 Prof. Sidgwick, in his "Scope and Method of Economic Science," quotes this passage, though incorrectly, and asserts that "a tyro can now see the fallacy of Adam Smith's statement."

It is true that labor is hardly a practicable measure of the objective exchange value which Prof. Sidgwick has in mind, but even for exchange value the statement is not altogether fallacious if, as Adam Smith proposed, "the different degrees of hardships endured and of ingenuity exercised be taken into ac count." For what better criterion of the exchange value of an object can we have than the services which the object will command?

In regarding labor as a perfect measure of value, Adam Smith was doubtless wrong, whether the subjective or the objective standpoint be taken. Viewed from the subjective standpoint, quantity of labor could be so defined as to be equivalent to quantity of sacrifice, but as we have seen, it is not the total sacrifice of labor, but the marginal sacrifice, which corresponds to the marginal utility and value of the earnings.1

Among the tangible signs of changes in the value of the monetary unit an important place must doubtless be given to price movements as indicated by the use of index numbers, but it must be remembered that while a general movement in prices may indicate a change in the value of money it does not necessarily constitute such a change. A price is but a ratio between two values and will be equally affected by a change in either term and both values may change without affecting the ratio.

Doubtless an index number could be so made up as to be a much better criterion of the importance to men of a dollar's worth of goods, but this desideratum has hitherto received comparatively little attention.2

1 The sluggish negro basking in a southern climate values the dollar less than the energetic artisan, though labor on the whole is more irksome to him. The artizan, however, continues work till its final disutility to him is greater.

2 A vague idea of this sort seems to underlie the choice of the consumption standard or the income standard instead of a more general system of prices. See Prof. Edgeworth "On Variations in the Value of the Monetary Standard,'' Report of the British Association for the Advancement of Science, 1889, and the article on "Index Numbers" in Palgrave's Dictionary. A nearer approach was made by Prof. Marshall (quoted by Prof. Edgeworth, loc. cit.), when he spoke of "the real value of gold" as measured by its power "of purchasing labor of all kinds - that is, not only manual labor, but the labor of business men and all those engaged in industry of any kind."

It is evidently with the subjective nature of value in mind that Prof. Newcomb, Principles of Political Economy, p. 210, says: "We might assume that the absolute value of everything produced by the population of the country remains unchanged except that as population increases the total value produced increases in the same ratio. In other words, we may suppose the average productiveness [in real value] of each individual to remain the same from year to year." Again Prof. Newcomb says, p. 213: "One source of error in drawing conclusions from such a table [a multiple standard table] can be more easily seen than avoided. The improvements constantly being made in manufactures lead to their being really cheaper when measured in terms of human labor, which is our proper ultimate standard. This improvement should be allowed for, if possible, by increasing the quantities in our standard collection."

The subjective standpoint has been maintained throughout the preceding discussion. The article has chiefly considered the nature and measurement of the value of the monetary unit. By a well-founded habit we express all values in our ordinary economic life in terms of the monetary unit. The explanation of the way in which these different money values come to be assigned to different commodities belongs to the theory of prices, and cannot be considered here. But before we can know the significance of a price or value as ordinarily expressed, we must know the value of the monetary unit. All other values are expressed in dollars and cents. If we can find the value of a dollar by referring to its subjective importance, we have the key to the whole system.

We find the subjective importance of a dollar varies with one's wants and economic condition, and, to each individual, is determined by the marginal utility of his money to him, orwhat amounts to the same thing-by the disutility of earning money at the point of time when that disutility is just offset by the utility of the earnings.

We find that the wants of the different members of society are not satisfied in the order of their urgency, and, therefore, properly speaking, there can be no such thing as a final degree of utility to society as a whole. It appears, therefore, that the value of the dollar to society can be but an average of its values to the individuals who compose the society.

If the average value of a dollar is to remain constant, the average of its final utility to different members of society must remain constant, or, what amounts to the same thing, the average disutility of earning a cent at the point of time when that disutility is just balanced by the utility of the cent must remain constant.

However, there is reason to doubt whether a unit of such constant average subjective value would be the best standard of deferred payments.

On account of our inability to accurately measure the subjective feelings of other people, our main reliance must be upon a careful use of the labor standard for comparing the subjective value of the monetary unit to different individuals and to different generations.

Hartford, Conn.

D. I. GREEN.

THE COIN SHILLING OF MASSACHUSETTS BAY.

II.

We must now turn our attention, for a moment, to the English currency of the latter part of the seventeenth century, since the relation of the colonial currency to it was of the first importance to the colonial.

8

After 1660, the misrating of gold and silver in England led to the clipping and export of silver, and a gold currency for that country. By 1695, the current silver coin was clipped down nearly to one-half its due weight.1 Hammered coins were still in circulation, and it took repeated acts of legislation in the following years to put an end to them. A recoinage took place, in 1696, but the misrating of the guinea (it was to be 22s. after April 10, 1696)2 still caused exportation of the silver coins. This was a protection to the Colonies, to a certain extent, against an exportation of their silver. Guineas were worth about 201⁄2 shillings of legal weight and fineness each, but were rated at 22 shillings. Taking a piece of eight as equivalent to 42s., 459 pieces were equal to a guinea, but it took 4 pieces to pay a guinea. Therefore they were clipped or melted. Copper coins were also issued to excess, 1699 to 1701.3 Since, then, we find the silver coins of England down to 7s. per oz. just before the recoinage, and Massachusetts silver at 7s. per oz. by the law of 1697, the silver shillings of the two countries were, at that juncture, equal; the depreciation of the silver currencies in the two countries was the same. But the money of account of England was guineas, rated, in 1696, at 22s. each. The ratio of the metals was probably 15 to I or 14% to 1, as Sir Isaac Newton found it in 1717.* Soetbeer's figures for the Hamburg market are: 1696, 15 to I; 1700, 14.81 to 1; 1701-10, average, 15.27 to I. At 15 to 1, the guinea was worth 20.711s. Only gold was brought to the mint. In 1696, the mint was closed against gold for nine months in an effort to turn the tide.5 The current shilling of 1 Lowndes, Silver Coins, 87, 107. 2 According to 7 and 8 Wm. III, c. xix. 3 Montagu, Copper, Tin and Bronze Coinage, 76.

47 Parl. Hist., 526.

* 2 Ruding, 46.

account in England was, therefore, one twenty-second of a guinea, 5.88/5.39 grains. In the last years of the century the guinea was rated, by the usage of the market, at 21s. 6d. A shilling was then 6.02/5.51 grains. In 1717, by royal Proclamation, the guinea was rated at 21s.; a shilling was 6.163/5.65. The guinea shilling, as it existed from 1700 to 1717, was equal, at 15 to 1, to 89.3 grains sterling silver; at 154 to 1, to 90.8 grains. In all operations of exchange, American silver money had to be compared with English gold money, or with this silver shilling, which, at the market rate, was the equivalent of it. To this then, we must return below, but now we can see that it was the universal degradation of the silver coin, and its unequal degradation in different places, which led to the numerous projects of reform put forward in the first years of the century, most of which emanated from the Colonies, and were in their interest, but were received with serious attention in England, amongst which was a project for a colonial mint. This agitation led to the Queen's Proclamation of 1704.

Sir Isaac Newton attended the Board of Trade, May 23, 1704, to answer questions about the value of foreign coins. He said that the table of values1 which he submitted was not intended to be published in the Proclamation, but was a guide for fixing ratings in the Plantations. He promised to compute the ratings of the different coins in proportion to the Seville piece of eight. On June 23d, he submitted such computations, but the Proclamation was dated June 18.2

It was prescribed in the document that a 171⁄2 pennyweight piece of eight, worth 4s. 6d. sterling, should be six shillings colonial. This prescription admitted of three interpretations. (1) A 171⁄2 pennyweight coin, if worth 4s. 6d. sterling, would not be .925 fine, but .920.833. It was assumed, however, in the colonies that "Spanish plate" was of sterling alloy. If 171⁄2 pennyweights, assumed sterling, was six shillings, one shilling colonial was 70 grains sterling, but there was no coin corresponding to that or its multiples. Weighing and assaying must have been constantly repeated. (2) A coin of sterling

1 This cannot be the table which is printed, 23 Gentleman's Mag., 6 (1753), in which reference is made to the "late Emperor Leopold," who died in May, 1705. จ 17 Board of Trade Journals, sub dates.