But all these difficulties are removed if some one commodity can be discovered which represents a certain amount of la bour, and which all persons agree to ac cept as an equivalent for the products of their own industry. If such a commodity be found, it is no longer necessary for men to exchange their goods directly with each other : they have a medium of ex change, which they can obtain for their own goods, and with which they can pur chase the goods of others. This medium, whatever it may be, is Money.
When money has assumed the charac ter of a medium of exchange and equi valent of value, the cumbrous mechanism of barter gives place to commerce. But what must be the qualities of an article which all men are willing to accept for the products of their own labour ? It is now no longer like a weight or measure, the mere instrument for assessing the value of commodities ; but, to use the words of Locke, " it is the thing bar gained for as well as the measure of the bargain." A bargain is complete when money has been paid for goods ; it has no reference to the price of other goods, nor to any circumstance whatever. One party parts with his goods, the other pays hts money as an absolute equivalent. But though money as a medium of exchange thus differs from money as a mere stand ard of value ; yet in both characters it should possess, if it be possible, one quality above all others—an invariable equality of value at all times and under all circumstances. As a measure of value it is as essential that it should always be the same, as that a yard should al ways be of the same length. And unless, as a medium of exchange, its value be always the same, all bargains are dis turbed. He who gives his labour or his goods to another in exchange for a delusive denomination of value instead of for a full equivalent which he expects to receive, is as much defrauded as one who should bargain for a yard of cloth and receive short measure.
But however desirable may be the invariableness of money, complete uni formity of value is an impossibility. There is no such thing as absolute value. All descriptions of measures correspond with absolute qualities, such as length, weight, and number, and may be invari able. But as value is a relative and not an absolute quality, it can have no in variable measure or constant represent ative. The value of all commodities is continually changing ; some more and some less than others. Their real value depends upon the quantity of labour expended upon them ; but temporary variations in their exchangeable value are caused by abundance or scarcity—by the relations which subsist between supply and demand. No commodity yet 1111A covered is exempt from the laws which affect all others. If precisely the same quantity of labour were required for a long series of years to produce equal quantities of any commodity, its real value would remain unchanged ; but if it were at the same time an object of de mand amongst men, variations in the proportion between its supply and the demand for it would affect its exchange able value. It follows therefore, that to
be an invariable standard, money must always be produced by the same amount of labour, and in such quantities as shall constantly bear the same proportion to the demand for it.
But even if any description of money could be invented which possessed these extraordinary qualities, the value of all other articles would still be variable, and thus its representative character would be disturbed. At one time, for example, a given denomination of money will repre sent a certain number of bushels of wheat ; at another time, the same money, un changed in real value or in demand, will represent a much greater number. Every application of machinery, every addition to the skill and experience of mankind facilitates production, and by saving labour reduces the real value of com modities. Their value is also liable to temporary depreciation from other causes, from too abundant a supply, or from an insufficient demand. But if money main tain the same value, in relation to itself, notwithstanding the diminished value of other articles, its proportionate value is practically increasing. The consequences of a growing disproportion between the re presentative value of money and the value of commodities are these: 1st. a producer has to give a larger quantity of his goods than before for the same amount of money. 2ndly, Those who are entitled to pay ments in money, receive the value of a greater quantity of commodities than they would have received if the relative value of money and of commodities had not been disturbed. It follows from these circumstances, that as a general rule, all creditors whose debts have been calcu lated in money derive advantage from any increase in its value relatively to commodities ; while debtors derive bene fit from any circumstance which raises the value of commodities, as compared with that of money : whether it be by increasing the value of the former, or by depreciating the value of the latter. To make these principles intelligible the fol lowing example may not be superfluous : Suppose a farmer to hold land under a lease for twenty-one years at a money rent; and that from any cause the value of agricultural produce is no longer re presented by money in the same manner as when the arrangement was entered into with his landlord, but that the value of money has been relatively increased. In order to pay his rent, he must now sell a larger proportion of his produce, even though its production may have cost him as much as ever. On the other hand, his 'landlord receives the same money rent, but is able to purchase more commodities than before on account of the increased comparative value of money.