Mrs B. In the case we have alluded to, the fall in price did not take place till after the production of the commodities; and the expense of labor having been already bestowed on them, it is better to sell them at any price than to lose entirely their value. But the manufacturers would in future take care to fabricate a smaller quantity, in consequence of which, many of their laborers would be deprived of work, and part of their capital be thrown out of employ.

Plenty and cheapness are really advantageous only when they arise from a diminution of the cost of production. Thus when the use of any new machinery, or other improvement in the process of labor, enables farmers or manufacturers to produce commodities at less expense, the reduction of price is beneficial both to the producer and the consumer; to the former, because cheapness increases the number of purchasers; to the latter, because he obtains the commodity at less expense. Caroline. But when nature gives us a superabundant supply of corn, the fall in price it occasions is not I suppose attended with disadvantage?

1

Mrs B. No, not in general; because the farmer, if not a gainer, is at least usually repaid, by the abundance of his crops, for the reduction of price; but if (from whatever cause) he should be under the necessity of selling below the cost of production, the low price is no longer a benefit; for the evil arising from the check given to industry far surpasses the immediate advantage of cheapness of corn. The farmers and their laborers

808. It has been said if the price of a commodity would not pay the expense of rent, profit, and wages, it would not be producedwhat reply does Mrs B. make to this?- -809 What precaution would the manufacturers take for the future?- -810. When are plenty and cheapness really advantageous ?--811. What illustration is given of this?- -812. Caroline asks, if the fall in price is attended with disadvantage when there is an unusually large crop of corn-what is Mrs B.'s reply?

would be the first sufferers; but it is probable that, in the end, the whole community would severely feel the effects the following season.

Caroline. True; for farmers would grow cautious, and cultivate less wheat, in order that it might not sell below its natural value; and whilst they would be endeavoring exactly to proportion the supply to the demand, the season might chance to be less productive than usual so as to occasion a scarcity of corn, which would be followed by a rise in the price of bread above the expense of its production.

Mrs B. Thus, you see, when the supply equals the demand, the commodity is sold for its natural value, the producer making just the usual rate of profit. If the supply exceed the demand, it is sold below that value, the competition of producers or dealers, to dispose of their goods, lowering the price. If the supply is less than the demand, the competition of purchasers raises the price of the commodity above its natural value, and the dealers make extraordinary profits.

Caroline. It must then be the interest of the farmer that corn should sell above its natural value; and the interest of the people that it should sell below it?

Mrs B. If we extend our views beyond the present moment, it will appear that the interest of the producer and consumer of any commodity are the same; and that it is for the advantage of both that the price and natural value should coincide. If the consumer pay less for a commodity than its cost of production, the producers

813. Who would be the sufferers?- -814. How does Caroline suppose the whole community might suffer from such an event? -815. What is Mrs B 's remark, when the supply equals the demand-when it exceeds the demand-and when it is less than the demand?--816. What does Caroline say would be for the interest of the farmer; and what for the interest of the people?- -817, But what does Mrs B say will be the fact, if we take a prospective view of the subject?

will take care to diminish the quantity in future, in order that competition may raise the price; for they could not, without exposing themselves to ruin, continue to supply the public with a commodity which did not repay them. If, on the other hand, the consumers pay more for an article than its natural value, the producers will be encouraged by their great profits to increase the supply, and the price will consequently fall until it is reduced to the natural value.

Caroline. I do not understand why the producers of a commodity should increase the supply, if the consequence is to lessen their profits?

Mrs B. We are arguing under the supposition that competition is free and open, and in that case, you know, capital will immediately flow towards any branch of industry that affords extraordinary profits. If, therefore, the original producers of the profitable commodity did not increase the supply, they would soon meet with competitors, which would compel them to lower their price without increasing their sale.

"Price," Mr Buchanan observes with great happiness of expression, "is the nicely poised balance with which nature weighs and distributes to her children their respective shares of her gifts, to prevent waste, and make them last out till reproduced."

We have dwelt a long time upon the subject of value; and we may now conclude, that though a fluctuation in the exchangeable value of commodities may be occasioned by various circumstances, it will seldom deviate much from the natural value, to which (when the employment

818. How does she show this to be true?--819. Caroline asks, why the producers of a commodity should increase the supply, if the consequence is to lessen their profits-How does Mrs B. answer this question?- -820. What does Buchanan say price is ?--821. Does the exchangeable value of commodities usually vary much from the natural value?

of capital is left open) the exchangeable value will always tend to approximate.

CONVERSATION XVI.

ON MONEY.

Of the use of money as a medium of exchange.-Of coining.- Use of money as a standard of value. Of the variation of the exchangeable value of Gold and Silver.-In what manner it affects the price of commodities. Of nominal and real cheapness.-What classes of people are affected by the variation in the value of Gold and Silver.-How far money constitutes a part of the wealth of a country.—Of the exportation of money. Of the means by which the value of the precious metals equalises itself in all parts of the civilized world.

MRS B.

HAVING obtained some knowledge of th enature of value, we may now proceed to examine the use of

money.

Without this general medium of exchange, trade could never have made any considerable progress; for as the subdivisions of labor increased, insuperable difficulties would be experienced in the adjustment of accounts. The butcher perhaps would want bread, at a time that the baker did not want meat; or they might each be desirous of exchanging their respective commodities, but these might not be of equal value.

Caroline. It would be very difficult, I believe, at

822. What is the subject of the sixteenth conversation?--823. Why is money necessary?

any time to make such reckonings exactly balance each other.

Mrs B. In order to avoid this inconvenience, it became necessary for every man to be provided with a commodity which would be willingly taken at all times in exchange for goods. Hence arose that useful representative of commodities, money, which, being exclusively appropriated to exchanges, every one was ready either to receive or to part with for that purpose.

Caroline. When the baker did not want meat he would take the butcher's money in exchange for his bread, because that money would enable him to obtain from others what he did want.

Mrs B. Various commodities have been employed to answer the purpose of money. Mr Salt, in his Travels in Abyssinia, informs us, that wedges of salt are used in that country for small currency, coined money being extremely scarce. A wedge of rock-salt, weighing between two and three pounds, was estimated at 1-30th of a dollar.

Caroline. How extremely inconvenient such a bulky article must be as a substitute for money; the carriage of it to any distance would cost almost as much as the salt was worth.

Mrs B. A commodity of this nature could be used for the purpose of money in those countries only where very few mercantile transactions take place, and where labor is very cheap. Tobacco, shells, and a great variety of other articles, have been used at different times, and in different countries, as a medium of ex

824. To what is money exclusively devoted ?- -825. Have various commodities been used for money?-826. What does Mr Salt say is used in Abyssinia ?--827. Why would salt be inconvenient for such a use?--828. Where could a commodity of such a nature be used?- -829. What other articles have been

used?