to the exchange values of all commodities; the fact is overlooked that exchange values of commodities are transformed into prices, i. e. into quantities of gold, before gold develops as a standard of price. No matter how the value of gold may vary, the ratios between the values of different quantities of gold remain constant. Let the fall in the value of gold amount to 1000 per cent., still twelve ounces of gold will have a twelve times greater value than one ounce of gold; and in prices the only thing considered is the ratio between different quantities of gold. Since, on the other hand, no rise or fall in the value of an ounce of gold can alter its weight, no alteration can take place in the weight of its aliquot parts. Thus gold always renders the same service as an invariable standard of price, no matter how much its value may vary.[1]
An historical process which, as we shall explain later, was determined by the nature of metallic circulation, led to the result that the same denomination of weight was
- ↑ "Money may continually vary in value and yet be as good a measure of value as if it remained perfectly stationary. Suppose, for instance, it is reduced in value. . . . Before the reduction, a guinea would purchase three bushels of wheat or 6 days' labour; subsequently it would purchase only 2 bushels of wheat, or 4 days' labour. In both cases, the relations of wheat and labour to money being given, their mutual relations can be inferred; in other words, we can ascertain that a bushel of wheat is worth 2 days' labour. This, which is all that measuring value implies, is as readily done after the reduction as before. The excellence of a thing as a measure of value is altogether independent of its own variableness in value" (p. 11, Bailey, "Money and its Vicissitudes," London, 1837).
