tion as the theory of prices. Practical monetary legislation, in more than one country, would he radically modified, accordingly as the so-called 'quantity-theory' of money is accepted or not. In my humble opinion, that theory is indefensible and erroneous; and yet our great politicians in the United States, in their fencing on the monetary problem, have decided that the question of the gold standard has been definitively settled, because of the large recent production of gold. The partisans of gold have thus accepted the principle on which the demands for an extension of the circulation of silver and greenbacks have been based in the past; and the position is absolutely untenable. The issues in this crucial problem are unmistakable; and they must be threshed out to a conclusion before any practical applications can be attempted. These issues may be briefly stated in the following heads:
1. Is the price of goods the quantity of some standard commodity for which they will exchange, or is it the relation between goods and a variety of several media of exchange?
2. If true money is a commodity, like gold, then what determines the exchange value between goods and that commodity? Is the problem in any way different from that of obtaining the exchange value of any two commodities?
3. What is the actual process of evaluation between goods and gold?
4. If demand and supply regulate the value of money (cost of production apart), what is the exact meaning of demand for money, and of supply of money?
5. Is the demand for a money-metal only the monetary demand? Is the demand for a commodity as money something sui generis?
6. In the theory of prices, what is meant by 'money'? Is it only gold, or gold together with everything, such as deposit-currency, which acts as a medium of exchange? In short, what constitutes the supply of money?
7. If prices are influenced by 'purchasing power' is that synonymous with the sum of the existing media of exchange, multiplied by their rapidity of circulation? Or, is purchasing power in its ultimate analysis synonymous with the offer of saleable goods?
8. Have the expenses of production, or progress in the arts, no influence on the general level of prices?
9. What is the effect of credit on general prices?
10. How do fluctuations in bank reserves actually affect general prices? Does the rate of interest, being paid for capital and not for money, have an effect on prices through its effect on loans?
11. By what economic process would a great new supply of gold influence general prices? Only by being directly offered for goods as a medium of exchange?
