artistic pursuits, possess a non-reproducible element of individuality, that removes them to a greater or less extent from the operations of the law of normal value. A commodity may possess this quality of uniqueness to such an extent that it is not affected at all by the forces determining the value of the general class of goods to which it belongs, and in this case its owner may be said to have a monopoly of it. But it is better to look upon the valuations of such non-reproducible goods as determined by individual valuations and the process of bargaining. The "normal" price of such goods is simply the highest price that can be got for them a statement which does not hold true of most monopoly goods. For monopoly goods are not necessarily unique or non-reproducible. They differ from ordinary competitive goods, however, in that they cannot be reproduced except by the monopolist.

Monopoly Values. The subject of monopoly price will be discussed in connection with an analysis of the general subject of monopoly in a later chapter. It is sufficient in this connection to note that the monopolist gets a special power over the price of his product through his ability to control the supply of it. The monopolist, like any other seller, seeks to get the price that yields the greatest net returns, but unlike the competitive seller, he is not hampered by an inability to fix the price very much above the cost of production.

Retail Prices. The retail prices paid by the individual consumer do not always respond to the variations in wholesale prices brought about by changes in supply and demand. There are sometimes tacit or explicit local price agreements between local merchants, which apply even to competitively produced goods. Some retailers consistently sell a few kinds of goods at less than cost to attract custom for the goods on which they may make a profit. Merchants who make a specialty of a high class of goods, and thus cater to a wealthy clientele, are apt to exact higher prices for ordinary goods than do those merchants who have to deal with a poorer class of customers. Custom has more effect on retail than on wholesale prices. The prices of various articles sold as "men's furnishing goods" form a good example of the influence

of custom. Retail prices are also governed by the value of the coins that are in general use, and are generally expressed in round numbers. In the long run, demand and supply govern retail prices, but they do not set a definite price point so accurately as they do in the case of wholesale prices.

Public Authority and Value. - In the middle ages there was considerable speculation by theologians and legists about the subject of "just price" the value at which things ought to exchange for other things. This idea denotes an important difference between the medieval and modern concept of value. Professor Ashley has put it clearly in these words: "With Aquinas, the greatest of the medieval schoolmen, it [value] was something objective; something outside of the will of the individual purchaser or seller; something attached to the thing itself, existing whether he liked it or not, and that he ought to recognize. And as experience showed that individuals could not be trusted thus to admit the real value of things, it followed that it was the duty of the proper authorities of state, town, or gild to step in and determine it, and what the just and reasonable price really was." This "just and reasonable price" was very often thought to be that price which would afford a reasonable compensation for the labor of the producer. When in more modern times theological speculations began to yield precedence to inquiries into "natural laws," the idea of just price was supplanted by the idea of "natural price." Sometimes this was interpreted as determined by the value of the labor put into a commodity (this was the dominant idea during the eighteenth century), but the growth of capitalistic production necessitated the recognition of the other elements in the expense of producing a commodity as part of its natural value. Modern economic science, as we have seen, applied the term "normal value" to the expense of producing a thing, but interprets it only as an important factor controlling the long-period fluctuations of competitive exchange value. The adjective "natural," with its misleading implications, has been abandoned. Yet the competitive system is to-day so thoroughly accepted as the "natural" economic order, that there is, as we have previously noted, a deep-seated conviction that normal

competitive prices (measured by the expenses of production) are natural and just prices. This conviction is, however, brought face to face with the fact of the growth of a large industrial field in which monopoly, rather than competition, rules. The question of just price is again a live issue as it was before the growth of the competitive system. Public authority is frequently invoked to insure that the prices fixed by holders of municipal franchises and other monopolists are just and reasonable. The chief fundamental test which our courts are able to apply to the reasonableness of any particular price is its conformity to what the price would have been under competitive conditions. Thus it is often asked if a particular monopoly charge gives a more than normal return upon the capital invested. The determination of what the expense of producing a particular commodity or service really is, is often a difficult, or even impossible, task (the distinction between constant and variable expenses being frequently a stumbling-block), but, given the general acceptance of the competitive system, it is hard to see what other standard could be used. Moreover, the general consensus of recent court decisions is that the Fifth and Fourteenth Amendments to the Federal Constitution, prohibiting the taking of property without due process of law, prevent federal and state governments from going farther than this in the regulation of monopoly charges.1 And even this power is not conceded, except in the case of businesses affected with a distinct public interest, such as those conducted by socalled public-service corporations. In fixing prices for its own services, such as postal charges, the government is controlled by other considerations. These will be discussed in the chapters on public finance.

Imputed Value. The only things to which market valuations

'It is the view of some courts that not only concrete physical objects, but also the "franchise value" that has resulted from the ability of a company to charge monopoly prices in the past must be counted as "property" in the meaning of the Constitution. So far as this view governs the public regulation of monopoly prices, it is impossible to reduce them to a competitive standard. It should be possible, however, in any particular case, to prevent any increase in this acquired franchise value; that is, to subject public-service monopolies to competitive standards so far as the increase of their earnings is concerned.

actually apply are the specific units of goods that are actually bought and sold. We are accustomed, however, to impute these market values to all other existing goods of the same kinds. When wheat is sixty cents a bushel, the only bushels of wheat actually valued by the market at that price are the ones actually sold at that price. Yet we impute or ascribe the same value to all other bushels of the potential supply of wheat in the same market. It is obvious that all of the potential supply could not be sold at once except at a very much lower price. Any seller could, however, add a small amount to the supply, without materially affecting the price. Exchange value, as a concrete fact, emerges only in the actual process of exchange. The value imputed to goods not in the actual process of exchange is a hypothetical value: the price which could be obtained for any particular unit of a good under existing market conditions. This concept of imputed value in economics is in some ways like the concept of potential energy in physics. A body of a given mass raised a certain distance above the earth has a certain amount of potential energy, which, if the body be allowed to fall, will be realized in an equivalent amount of actual energy. To make the analogy between potential energy and potential value complete, however, one would not only have to conceive of the force of gravitation as continually fluctuating, but also to imagine that the amount of actual energy realized would be relatively diminished according to the mass of the number of the bodies let fall at any particular time.

Notwithstanding the hypothetical nature of this imputed value, it is often treated as though it were a real thing. Statistical attempts to state the wealth of a nation in terms of dollars and cents are only estimates of the sums of these potential values, and involve the hypothesis stated above. A merchant's inventory of his stock in trade is often accompanied by an estimate of its potential value. Whether this value will be realized or not depends upon the constancy of business conditions, the caprices of fashion, and whether it can be sold in the regular course of trade or whether it has to be disposed of at a forced sale. A good many kinds of consumption goods, such as household fur

niture, are not customarily thought of by the owner in terms of exchange value. It is often necessary for purposes of taxation to ascribe value to them, but it should be remembered that this imputed value is purely hypothetical.

The Valuation of Production Goods. — In our analysis of exchange value it has been assumed that the commodities valued were wanted by consumers for the satisfaction of their wants; that is, that they were consumption goods. It is possible to say that producers' goods - capital and land have a marginal utility for the producers, which measures the importance attached to the possession of them. While one could thus, with substantial accuracy, include producers' goods in the scope of the foregoing analysis, there is a more instructive way of approaching the problem of the valuation of land and capital. Consumption goods have value because they satisfy human wants; that is, they yield an income of satisfactions, while production goods are valued because they have the power of gaining a money income for the owner. Just as the value of consumers' goods varies with the intensity of the wants they satisfy, so the value of producers' goods varies with their power to yield a money income. The valuation of producers' goods will, accordingly, be discussed in the chapters on the rent of land and interest. Other Theories of Value. -The older economists used to emphasize the relation between the value of a thing and the amount or the expense of the labor spent in producing it, — a relation much closer under the old methods of hand production than it is at present. The development of a systematic labor theory of value was, however, the work of Karl Marx, the founder of modern "scientific" socialism. This theory is, in essence, that labor produces all value and that the interest on capital and the rent of land are deductions from the real wages of labor-deductions that are made possible only by the existence of the system of private property in producers' goods. It is so obvious that things do not exchange to-day in proportion to the amount of labor involved in producing them, that to point this out in detail, as some economists have done, is unnecessary. Karl Marx really meant that labor costs constitute the "natural" values