Ifthefirsthundredquarterswereallraisedatthesame
expense（onlythebestlandbeingcultivated）;andifthat
expensewouldberemuneratedwiththeordinaryprofitbyaprice
of20s。thequarter;thenaturalpriceofwheat，solongasno
morethanthatquantitywasrequired，wouldbe20s。;anditcould
onlyriseabove，orfallbelowthatprice，fromvicissitudesof
seasons，orothercasualvariationsinsupply。Butifthe
populationofthedistrictadvanced，atimewouldarrivewhen
morethanahundredquarterswouldbenecessarytofeedit。We
mustsupposethatthereisnoaccesstoanyforeignsupply。By
thehypothesis，nomorethanahundredquarterscanbeproduced
inthedistrict，unlessbyeitherbringingworselandinto
cultivation，oralteringthesystemofculturetoamore
expensiveone。Neitherofthesethingswillbedonewithouta
riseinprice。ThiSriseofpricewillgraduallybebroughtabout
bytheincreasingdemand。Solongasthepricehasrisen，butnot
risenenoughtorepaywiththeordinaryprofitthecostof
producinganadditionalquantity，theincreasedvalueofthe
limitedsupplypartakesofthenatureofascarcityvalue。
Supposethatitwillnotanswertocultivatethesecondbest
land，orlandoftheseconddegreeofremoteness，foraless
returnthan25s。thequarter;andthatthispriceisalso
necessarytoremuneratetheexpensiveoperationsbywhichan
increasedproducemightberaisedfromlandofthefirstquality。
Ifso，thepricewillrise，throughtheincreaseddemand，until
itreaches25s。Thatwillnowbethenaturalprice;beingthe
pricewithoutwhichthequantity，forwhichsocietyhasademand
atthatprice，willnotbeproduced。Atthatprice，however，
societycangoonforsometimelonger;couldgoonperhapsfor
ever，ifpopulationdidnotincrease。Theprice，havingattained
thatpoint，willnotagainpermanentlyrecede（thoughitmayfall
temporarilyfromaccidentalabundance）;norwillitadvance
further，solongassocietycanobtainthesupplyitrequires
withoutasecondincreaseofthecostofproduction。
IhavemadeuseofPriceinthisreasoning，asaconvenient
symbolofValue，fromthegreaterfamiliarityoftheidea;andI
shallcontinuetodosoasfarasmayappearstobenecessary。
Inthecasesupposed，differentportionsofthesupplyof
cornhavedifferentcostsofproduction。Thoughthe20，or50，or
150quartersadditionalhavebeenproducedatacostproportional
to25s。，theoriginalhundredquartersperannumarestill
producedatacostonlyproportionalto20s。Thisis
self—evident，iftheoriginalandtheadditionalsupplyare
producedondifferentqualitiesofland。Itisequallytrueif
theyareproducedonthesameland。Supposethatlandofthebest
quality，whichproduced100quartersat20s。，hasbeenmadeto
produce150byanexpensiveprocess，whichitwouldnotanswerto
undertakewithoutapriceof25s。Thecostwhichrequires25s。is
incurredforthesakeof50quartersalone:thefirsthundred
mighthavecontinuedforevertobeproducedattheoriginal
cost，andwiththebenefit，onthatquantity，ofthewholerise
ofpricecausedbytheincreaseddemand:noone，therefore，will
incurtheadditionalexpenseforthesakeoftheadditional
fifty，unlesstheyalonewillpayforthewholeofit。Thefifty，
therefore，willbeproducedattheirnaturalprice，proportioned
tothecostoftheirproduction;whiletheotherhundredwillnow
bringin5s。aquartermorethantheirnaturalprice—thanthe
pricecorrespondingto，andsufficingtoremunerate，theirlower
costofproduction。
Iftheproductionofany，eventhesmallest，portionofthe
supply，requiresasanecessaryconditionacertainprice，that
pricewillbeobtainedforalltherest。Wearenotabletobuy
oneloafcheaperthananotherbecausethecornfromwhichitwas
made，beinggrownonarichersoil，hascostlesstothegrower。
Thevalue，therefore，ofanarticle（meaningitsnatural，which
isthesamewithitsaveragevalue）isdeterminedbythecostof
thatportionofthesupplywhichisproducedandbroughtto
marketatthegreatestexpense。ThisistheLawofValueofthe
thirdofthethreeclassesintowhichallcommoditiesare
divided。
2。Iftheportionofproduceraisedinthemostunfavourable
circumstances，obtainsavalueproportionedtoitscostof
production;alltheportionsraisedinmorefavorable
circumstances，sellingastheymustdoatthesamevalue，obtain
avaluemorethanproportionedtotheircostofproduction。Their
valueisnot，correctlyspeaking，ascarcityvalue，foritis
determinedbythecircumstancesoftheproductionofthe
commodity，andnotbythedegreeofdearnessnecessaryfor
keepingdownthedemandtothelevelofalimitedsupply。The
owners，however，ofthoseportionsoftheproduceenjoya
privilege;theyobtainavaluewhichyieldsthemmorethanthe
ordinaryprofit。Ifthisadvantagedependsuponanyspecial
exemption，suchasbeingfreefromatax，oruponanypersonal
advantages，physicalormental，Oranypeculiarprocessonly
knowntothemselves，oruponthepossessionofagreatercapital
thanotherpeople，oruponvariousotherthingswhichmightbe
enumerated，theyretainittothemselvesasanextragain，over
andabovethegeneralprofitsofcapital，ofthenature，insome
sort，ofamonopolyprofit。Butwhen，asinthecasewhichweare
moreparticularlyconsidering，theadvantagedependsonthe
possessionofanaturalagentofpeculiarquality，asfor
instanceofmorefertilelandthanthatwhichdeterminesthe
generalvalueofthecommodity;andwhenthisnaturalagentis
notownedbythemselves;thepersonwhodoesownit，isableto
exactfromthem，intheformofrent，thewholeextragain
derivedfromitsuse。Wearethusbroughtbyanotherroadtothe
LawofRent，investigatedintheconcludingchapteroftheSecond
Book。Rent，weagainsee，isthedifferencebetweentheunequal
returnstodifferentpartsofthecapitalemployedonthesoil。
Whateversurplusanyportionofagriculturalcapitalproduces，
beyondwhatisproducedbythesameamountofcapitalonthe
worstsoil，orunderthemostexpensivemodeofcultivation，
whichtheexistingdemandsofsocietycompelarecourseto;that
surpluswillnaturallybepaidasrentfromthatcapital，tothe
ownerofthelandonwhichitisemployed。
Itwaslongthoughtbypoliticaleconomists，amongtherest
evenbyAdamSmith，thattheproduceoflandisalwaysata
monopolyvalue，because（theysaid）inadditiontotheordinary
rateofprofit，italwaysyieldssomethingfurtherforrent。This
wenowseetobeerroneous。Athingcannotbeatamonopoly
value，whenitssupplycanbeincreasedtoanindefiniteextent
ifweareonlywillingtoincurthecost。Ifnomorecornthan
theexistingquantityisgrown，itisbecausethevaluehasnot
risenhighenoughtoremunerateanyoneforgrowingit。Anyland
（notreservedforotheruses，orforpleasure）whichatthe
existingprice，andbytheexistingprocesses，willyieldthe
ordinaryprofit，istolerablycertain，unlesssomeartificial
hindranceintervenes，tobecultivated，althoughnothingmaybe
leftforrent。Aslongasthereisanylandfitforcultivation，
whichattheexistingpricecannotbeprofitablycultivatedat
all，theremustbesomelandalittlebetter，whichwillyield
theordinaryprofit，butallownothingforrent:andthatland，
ifwithintheboundaryofafarm，willbecultivatedbythe
farmer;ifnotso，probablybytheproprietor，orbysomeother
persononsufferance。Somesuchlandatleast，undercultivation，
therecanscarcelyfailtobe。
Rent，therefore，formsnopartofthecostofproduction
whichdeterminesthevalueofagriculturalproduce。Circumstances
nodoubtmaybeconceivedinwhichitmightdoso，andvery
largelytoo。Wecanimagineacountrysofullypeopled，andwith
allitscultivablesoilsocompletelyoccupied，thattoproduce
anyadditionalquantitywouldrequiremorelabourthanthe
producewouldfeed:andifwesupposethistobetheconditionof
thewholeworld，orofacountrydebarredfromforeignsupply，
then，ifpopulationcontinuedincreasing，boththelandandits
producewouldreallyrisetoamonopolyorscarcityprice。But
thisstateofthingsnevercanhavereallyexistedanywhere，
unlesspossiblyinsomesmallislandcutofffromtherestofthe
world;noristhereanydangerwhateverthatitshouldexist。It
certainlyexistsinnoknownregionatpresent。Monopoly，wehave
seen，cantakeeffectonvalue，onlythroughlimitationof
supply。Inallcountriesofanyextentthereismorecultivable
landthanisyetcultivated;andwhilethereisanysuchsurplus，
itisthesamething，sofarasthatqualityoflandis
concerned，asiftherewereaninfinitequantity。Whatis
practicallylimitedinsupplyisonlythebetterqualities;and
evenforthose，somuchrentcannotbedemandedaswouldbringin
thecompetitionofthelandsnotyetincultivation;therentof
apieceoflandmustbesomewhatlessthanthewholeexcessof
itsproductivenessoverthatofthebestlandwhichitisnotyet
profitabletocultivate;thatis，itmustbeaboutequaltothe
excessabovetheworstlandwhichitisprofitabletocultivate。
Thelandorthecapitalmostunfavourablycircumstancedamong
thoseactuallyemployed，paysnorent;andthatlandorcapital
determinesthecostofproductionwhichregulatesthevalueof
thewholeproduce。Thusrentis，aswehavealreadyseen，no
causeofvalue，butthepriceoftheprivilegewhichthe
inequalityofthereturnstodifferentportionsofagricultural
produceconfersonallexcepttheleastfavouredportions。
Rent，inshort，merelyequalizestheprofitsofdifferent
farmingcapitals，byenablingthelandlordtoappropriateall
extragainsoccasionedbysuperiorityofnaturaladvantages。If
alllandlordswereunanimouslytoforegotheirrent，theywould
buttransferittothefarmers，withoutbenefitingtheconsumer;
fortheexistingpriceofcornwouldstillbeanindispensable
conditionoftheproductionofpartoftheexistingsupply，and
ifapartobtainedthatpricethewholewouldobtainit。Rent，
therefore，unlessartificiallyincreasedbyrestrictivelaws，is
noburthenontheconsumer:itdoesnotraisethepriceofcorn，
andisnootherwiseadetrimenttothepublic，thaninasmuchas
ifthestatehadretainedit，orimposedanequivalentinthe
shapeofaland—tax，itwouldthenhavebeenafundapplicableto
generalinsteadofprivateadvantage。
3。Agriculturalproductionsarenottheonlycommodities
whichhaveseveraldifferentcostsofproductionatonce，and
which，inconsequenceofthatdifference，andinproportionto
it，affordarent。Minesarealsoaninstance。Almostallkinds
ofrawmaterialextractedfromtheinterioroftheearthmetal，
coals，preciousstones，&c。，areobtainedfromminesdiffering
considerablyinfertility，thatis，yieldingverydifferent
quantitiesoftheproducttothesamequantityoflabourand
capital。Thisbeingthecase，itisanobviousquestion，whyare
notthemostfertileminessoworkedastosupplythewhole
market？Nosuchquestioncanariseastoland;itbeing
self—evident，thatthemostfertilelandscouldnotpossiblybe
madetosupplythewholedemandofafully—peopledcountry;and
evenofwhattheydoyield，apartisextortedfromthembya
labourandoutlayasgreatasthatrequiredtogrowthesame
amountonworseland。Butitisnotsowithmines;atleast，not
universally。Thereare，perhaps，casesinwhichitisimpossible
toextractfromaparticularvein，inagiventime，morethana
certainquantityofore，becausethereisonlyalimitedsurface
oftheveinexposed，onwhichmorethanacertainnumberof
labourerscannotbesimultaneouslyemployed。Butthisisnottrue
ofallmines。Incollieries，forexample，someothercauseof
limitationmustbesoughtfor。Insomeinstancestheownerslimit
thequantityraised，inordernottoorapidlytoexhaustthe
mine……inotherstherearesaidtobecombinationsofowners，to
keepupamonopolypricebylimitingtheproduction。Whateverbe
thecauses，itisafactthatminesofdifferentdegreesof
richnessareinoperation，andsincethevalueoftheproduce
mustbeproportionaltothecostofproductionattheworstmine
（fertilityandsituationtakentogether），itismorethan
proportionaltothatofthebest。Allminessuperiorinproduce
totheworstactuallyworked，willyield，therefore，arentequal
totheexcess。Theymayyieldmore;andtheworstminemayitself
yieldarent。Minesbeingcomparativelyfew，theirqualitiesdo
notgraduategentlyintooneanother，asthequalitiesofland
do;andthedemandmaybesuchastokeepthevalueofthe
produceconsiderablyabovethecostofproductionattheworst
minenowworked，withoutbeingsufficienttobringintooperation
astillworse。Duringtheinterval，theproduceisreallyata
scarcityvalue。
Fisheriesareanotherexample。Fisheriesintheopenseaare
notappropriated，butfisheriesinlakesorriversalmostalways
areso，andlikewiseoyster—bedsorotherparticularfishing
groundsoncoasts。Wemaytakesalmonfisheriesasanexampleof
thewholeclass。Someriversarefarmoreproductiveinsalmon
thanothers。None，however，withoutbeingexhausted，cansupply
morethanaverylimiteddemand。Thedemandofacountrylike
Englandcanonlybesuppliedbytakingsalmonfrommanydifferent
riversofunequalproductiveness，andthevaluemustbe
sufficienttorepaythecostofobtainingthefishfromtheleast
productiveofthese。Allothers，therefore，willifappropriated
affordarentequaltothevalueoftheirsuperiority。Much
higherthanthisitcannotbe，iftherearesalmonrivers
accessiblewhichfromdistanceorinferiorproductivenesshave
notyetcontributedtosupplythemarket。Iftherearenot，the
value，doubtless，mayrisetoascarcityrate，andtheworst
fisheriesinusemaythenyieldaconsiderablerent。
Bothinthecaseofminesandoffisheries，thenaturalorder
ofeventsisliabletobeinterruptedbytheopeningofanew
mine，oranewfishery，ofsuperiorqualitytosomeofthose
alreadyinuse。Thefirsteffectofsuchanincidentisan
increaseofthesupply;whichofcourselowersthevaluetocall
forthanincreaseddemand。Thisreducedvaluemaybenolonger
sufficienttoremuneratetheworstoftheexistingminesor
fisheries，andthesemayconsequentlybeabandoned。Ifthe
superiorminesorfisheries，withtheadditionoftheonenewly
opened，produceasmuchofthecommodityasisrequiredatthe
lowervaluecorrespondingtotheirlowercostofproduction，the
fallofvaluewillbepermanent，andtherewillbea
correspondingfallintherentsofthoseminesorfisherieswhich
arenotabandoned。Inthiscase，whenthingshavepermanently
adjustedthemselves，theresultwillbe，thatthescaleof
qualitieswhichsupplythemarketwillhavebeencutshortatthe
lowerend，whileanewinsertionwillhavebeenmadeinthescale
atsomepointhigherup;andtheworstmineorfisheryinuse——
theonewhichregulatestherentsofthesuperiorqualitiesand
thevalueofthecommodity——willbeamineorfisheryofbetter
qualitythanthatbywhichtheywerepreviouslyregulated。
Landisusedforotherpurposesthanagriculture，especially
forresidence;andwhensoused，yieldsarent，determinedby
principlessimilartothosealreadylaiddown。Thegroundrentof
abuilding，andtherentofagardenorparkattachedtoit，will
notbelessthantherentwhichthesamelandwouldaffordin
agriculture:butmaybegreaterthanthistoanindefinite
amount;thesurplusbeingeitherinconsiderationofbeautyorof
convenience，theconvenienceoftenconsistinginsuperior
facilitiesforpecuniarygain。Sitesofremarkablebeautyare
generallylimitedinsupply，andtherefore，ifingreatdemand，
areatascarcityvalue。Sitessuperioronlyinconvenienceare
governedastotheirvaluebytheordinaryprinciplesofrent。
Thegroundrentofahouseinasmallvillageisbutlittle
higherthantherentofasimilarpatchofgroundintheopen
fields:butthatofashopinCheapsidewillexceedthese，bythe
wholeamountatwhichpeopleestimatethesuperiorfacilitiesof
money—makinginthemorecrowdedplace。Therentsofwharfage，
dockandharbourroom，waterpower，andmanyotherprivileges，may
beanalysedonsimilarprinciples。
4。Casesofextraprofitanalogoustorent，aremorefrequent
inthetransactionsofindustrythanissometimessupposed。Take
thecase，forexample，ofapatent，orexclusiveprivilegefor
theuseofaprocessbywhichcostofproductionislessened。If
thevalueoftheproductcontinuestoberegulatedbywhatit
coststothosewhoareobligedtopersistintheoldprocess，the
patenteewillmakeanextraprofitequaltotheadvantagewhich
hisprocesspossessesovertheirs。Thisextraprofitis
essentiallysimilartorent，andsometimesevenassumestheform
ofit;thepatenteeallowingtootherproducerstheuseofhis
privilege，inconsiderationofanannualpayment。Solongashe，
andthosewhomheassociatesintheprivilege，donotproduce
enoughtosupplythewholemarket，solongtheoriginalcostof
production，beingthenecessaryconditionofproducingapart，
willregulatethevalueofthewhole;andthepatenteewillbe
enabledtokeepuphisrenttoafullequivalentforthe
advantagewhichhisprocessgiveshim。Inthecommencementindeed
hewillprobablyforegoapartofthisadvantageforthesakeof
undersellingothers:theincreasedsupplywhichhebringsforward
willlowerthevalue，andmakethetradeabadoneforthosewho
donotshareintheprivilege:manyofwhomthereforewill
graduallyretire，orrestricttheiroperations，orenterinto
arrangementswiththepatentee:ashissupplyincreasestheirs
willdiminish，thevaluemeanwhilecontinuingslightlydepressed。
Butifhestopsshortinhisoperationsbeforethemarketis
whollysuppliedbythenewprocess，thingswillagainadjust
themselvestowhatwasthenaturalvaluebeforetheinventionwas
made，andthebenefitoftheimprovementwillaccruesolelyto
thepatentee。
Theextragainswhichanyproducerordealerobtainsthrough
superiortalentsforbusiness，orsuperiorbusinessarrangements，
areverymuchofasimilarkind。Ifallhiscompetitorshadthe
sameadvantages，andusedthem，thebenefitwouldbetransferred
totheircustomers，throughthediminishedvalueofthearticle:
heonlyretainsitforhimselfbecauseheisabletobringhis
commoditytomarketatalowercost，whileitsvalueis
determinedbyahigher。Alladvantages，infact，whichone
competitorhasoveranother，whethernaturaloracquired，whether
personalortheresultofsocialarrangements，bringthe
commodity，sofar，intotheThirdClass，andassimilatethe
possessoroftheadvantagetoareceiverofrent。Wagesand
profitsrepresenttheuniversalelementsinproduction，while
rentmaybetakentorepresentthedifferentialandpeculiar:any
differenceinfavourofcertainproducers，orinfavourof
productionincertaincircumstances，beingthesourceofagain，
which，thoughnotcalledrentunlesspaidperiodicallybyone
persontoanother，isgovernedbylawsentirelythesamewithit。
Thepricepaidforadifferentialadvantageinproducinga
commodity，cannotenterintothegeneralcostofproductionof
thecommodity。
Acommoditymaynodoubt，insomecontingencies，yieldarent
evenunderthemostdisadvantageouscircumstancesofits
production:butonlywhenitis，forthetime，inthecondition
ofthosecommoditieswhichareabsolutelylimitedinsupply，and
isthereforesellingatascarcityvalue;whichneveris，norhas
been，norcanbe，apermanentconditionofanyofthegreat
rent—yieldingcommodities:unlessthroughtheirapproaching
exhaustion，iftheyaremineralproducts（coalforexample），or
throughanincreaseofpopulation，continuingafterafurther
increaseofproductionbecomesimpossible:acontingency，which
thealmostinevitableprogressofhumancultureandimprovement
inthelongintervalwhichhasfirsttoelapse，forbidsusto
considerasprobable。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book3:Distribution
Chapter6
SummaryoftheTheoryofValue
1。Wehavenowattainedafavourablepointforlookingback，
andtakingasimultaneousviewofthespacewhichwehave
traversedsincethecommencementofthepresentBook。The
followingaretheprinciplesofthetheoryofValue，sofaraswe
haveyetascertainedthem。
I。Valueisarelativeterm。Thevalueofathingmeansthe
quantityofsomeotherthing，orofthingsingeneral，whichit
exchangesfor。Thevaluesofallthingscannever，therefore，
riseorfallsimultaneously。Thereisnosuchthingasageneral
riseorageneralfallofvalues。Everyriseofvaluesupposesa
fall，andeveryfallarise。
II。Thetemporaryormarketvalueofathing，dependsonthe
demandandsupply;risingasthedemandrises，andfallingasthe
supplyrises。Thedemand，however，varieswiththevalue，being
generallygreaterwhenthethingischeapthanwhenitisdear;
andthevaluealwaysadjustsitselfinsuchamanner，thatthe
demandisequaltothesupply。
III。Besidestheirtemporaryvalue，thingshavealsoa
permanent，orasitmaybecalled，aNaturalValue，towhichthe
marketvalue，aftereveryvariation，alwaystendstoreturn;and
theoscillationscompensateforoneanother，sothat，onthe
average，commoditiesexchangeatabouttheirnaturalvalue。
IV。Thenaturalvalueofsomethingsisascarcityvalue;but
mostthingsnaturallyexchangeforoneanotherintheratioof
theircostofproduction，oratwhatmaybetermedtheirCost
Value。
V。Thethingswhicharenaturallyandpermanentlyata
scarcityvalue，arethoseofwhichthesupplycannotbeincreased
atall，ornotsufficientlytosatisfythewholeofthedemand
whichwouldexistforthemattheircostvalue。
VI。Amonopolyvaluemeansascarcityvalue。Monopolycannot
giveavaluetoanythingexceptthroughalimitationofthe
supply。
VII。Everycommodityofwhichthesupplycanbeindefinitely
increasedbylabourandcapital，exchangesforotherthings
proportionallytothecostnecessaryforproducingandbringing
tomarketthemostcostlyportionofthesupplyrequired。The
naturalvalueissynonymouswiththeCostValue，andthecost
valueofathing，meansthecostvalueofthemostcostlyportion
ofit。
VIII。CostofProductionconsistsofseveralelements，some
ofwhichareconstantanduniversal，othersoccasional。The
universalelementsofcostofproductionare，thewagesofthe
labour，andtheprofitsofthecapital。Theoccasionalelements
aretaxes，andanyextracostoccasionedbyascarcityvalueof
someoftherequisites。
IX。Rentisnotanelementinthecostofproductionofthe
commoditywhichyieldsit;exceptinthecases（rather
conceivablethanactuallyexisting）inwhichitresultsfrom，and
represents，ascarcityvalue。Butwhenlandcapableofyielding
rentinagricultureisappliedtosomeotherpurpose，therent
whichitwouldhaveyieldedisanelementinthecostof
productionofthecommoditywhichitisemployedtoproduce。
X。Omittingtheoccasionalelements;thingswhichadmitof
indefiniteincrease，naturallyandpermanentlyexchangeforeach
otheraccordingtothecomparativeamountofwageswhichmustbe
paidforproducingthem，andthecomparativeamountofprofits
whichmustbeobtainedbythecapitalistswhopaythosewages。
XI。Thecomparativeamountofwagesdoesnotdependonwhat
wagesareinthemselves。Highwagesdonotmakehighvalues，nor
lowwageslowvalues。Thecomparativeamountofwagesdepends
partlyonthecomparativequantitiesoflabourrequired，and
partlyonthecomparativeratesofitsremuneration。
XII。So，thecomparativerateofprofitsdoesnotdependon
whatprofitsareinthemselves;nordohighorlowprofitsmake
highorlowvalues。Itdependspartlyonthecomparativelengths
oftimeduringwhichthecapitalisemployed，andpartlyonthe
comparativerateofprofitsindifferentemployments。
XIII。Iftwothingsaremadebythesamequantityoflabour，
andthatlabourpaidatthesamerate，andifthewagesofthe
labourerhavetobeadvancedforthesamespaceoftime，andthe
natureoftheemploymentdoesnotrequirethattherebea
permanentdifferenceintheirrateofprofit;then，whetherwages
andprofitsbehighorlow，andwhetherthequantityoflabour
expendedbemuchorlittle，thesetwothingswill，onthe
average，exchangeforoneanother。
XIV。Ifoneoftwothingscommands，ontheaverage，agreater
valuethantheother，thecausemustbethatitrequiresforits
productioneitheragreaterquantityoflabour，orakindof
labourpermanentlypaidatahigherrate;orthatthecapital，or
partofthecapital，whichsuPportsthatlabour，mustbeadvanced
foralongerperiod;orlastly，thattheproductionisattended
withsomecircumstancewhichrequirestobecompensatedbya
permanentlyhigherrateofprofit。
XV。Oftheseelements，thequantityoflabourrequiredfor
theproductionisthemostimportant:theeffectoftheothersis
smaller，thoughnoneofthemareinsignificant。
XVI。Thelowerprofitsare，thelessimportantbecomethe
minorelementsofcostofproduction，andthelessdocommodities
deviatefromavalueproportionedtothequantityandqualityof
thelabourrequiredfortheirproduction。
XVII。Buteveryfallofprofitslowers，insomedegree，the
costvalueofthingsmadewithmuchordurablemachinery，and
raisesthatofthingsmadebyhand;andeveryriseofprofits
doesthereverse。
2。SuchisthegeneraltheoryofExchangeValue。Itis
necessary，however，toremarkthatthistheorycontemplatesa
systemofproductioncarriedonbycapitalistsforprofit，and
notbylabourersforsubsistence。Inproportionasweadmitthis
lastsupposition——andinmostcountieswemustadmitit，at
leastinrespectofagriculturalproduce，toaverygreat
extent—suchoftheprecedingtheoremsasrelatetothedependence
ofvalueoncostofproductionwillrequiremodification。Those
theoremsareallgroundedonthesupposition，thattheproducer’s
objectandaimistoderiveaprofitfromhiscapital。This
canted，itfollowsthathemustsellhiscommodityattheprice
whichwillaffordtheordinaryrateofprofit，thatistosay，it
mustexchangeforothercommoditiesatitscostvalue。Butthe
peasantproprietor，themetayer，andeventhepeasant—farmeror
allotment—holder——thelabourer，underwhatevername，producing
onhisownaccount—isseeking，notaninvestmentforhislittle
capital，butanadvantageousemploymentforhistimeandlabour。
Hisdisbursements，beyondhisownmaintenanceandthatofhis
family，aresosmall，thatnearlythewholeproceedsofthesale
oftheproducearewagesoflabour。Whenheandhisfamilyhave
beenfedfromtheproduceofthefarm（andperhapsclothedwith
materialsgrownthereon，andmanufacturedinthefamily）hemay，
inrespectofthesupplementaryremunerationderivedfromthe
saleofthesurplusproduce，becomparedtothoselabourerswho，
derivingtheirsubsistencefromanindependentsource，canafford
toselltheirlabouratanypricewhichistotheirmindsworth
theexertion。Apeasant，whosupportshimselfandhisfamilywith
oneportionofhisproduce，willoftenselltheremindervery
muchbelowwhatwouldbeitscostvaluetothecapitalist。
Thereis，however，eveninthiscase，aminimum，orinferior
limit，ofvalue。Theproducewhichhecarriestomarket，must
bringintohimthevalueofallnecessarieswhichheis
compelledtopurchase;anditmustenablehimtopayhisrent。
Rent，underpeasantcultivation，isnotgovernedbythe
principlessetforthinthechaptersimmediatelypreceding，but
iseitherdeterminedbycustom，asinthecaseofmetayers，or，
iffixedbycompetition，dependsontheratioofpopulationto
land。Rent，therefore，inthiscase，isanelementofcostof
production。Thepeasantmustworkuntilhehasclearedhisrent
andthepriceofallpurchasednecessaries。Afterthis，hewill
goonworkingonlyifhecanselltheproduceforsuchapriceas
willovercomehisaversiontolabour。
Theminimumjustmentionediswhatthepeasantmustobtainin
exchangeforthewholeofhissurplusproduce。Butinasmuchas
thissurplusisnotafixedquantity，butmaybeeithergreater
orlessaccordingtothedegreeofhisindustry，aminimumvalue
forthewholeofitdoesnotgiveanyminimumvaluefora
definitequantityofthecommodity。Inthisstateofthings，
therefore，itcanhardlybesid，thatthevaluedependsatallon
costofproduction。Itdependsentirelyondemandandsupply，
thatis，ontheproportionbetweenthequantityofsurplusfood
whichthepeasantschoosetoproduce，andthenumbersofthe
non—agricultural，orratherofthenon—peasantpopulation。Ifthe
buyingclasswerenumerousandthegrowingclasslazy，foodmight
bepermanentlyatascarcityprice。Iamnotawarethatthiscase
hasanywherearealexistence。Ifthegrowingclassisenergetic
andindustrious，andthebuyersfew，foodwillbeextremely
cheap。Thisalsoisararecase，thoughsomepartsofFrance
perhapsapproximatetoit。Thecommoncasesare，eitherthat，as
inIrelanduntillately，thepeasantclassisindolentandthe
buyersfew，orthepeasantsindustriousandthetownpopulation
numerousandopulent，asinBelgium，thenorthofItaly，and
partsofGermany。Thepriceoftheproducewilladjustitselfto
thesevarietiesofcircumstances，unlessmodified，asinmany
casesitis，bythecompetitionofproducerswhoarenot
peasants，orbythepricesofforeignmarkets。
3。Anotheranomalouscaseisthatofslave—grownproduce:
whichpresents，however，bynomeansthesamedegreeof
complication。Theslave—ownerisacapitalist，andhisinducement
toproductionconsistsinaprofitonhiscapital。Thisprofit
mustamounttotheordinaryrate。Inrespecttohisexpenses，he
isinthesamepositionasifhisslaveswerefreelabourers
workingwiththeirpresentefficiency，andwerehiredwithwages
equaltotheirpresentcost。Ifthecostislessinproportionto
theworkdone，thanthewagesoffreelabourwouldbe，somuch
thegreaterarehisprofits:butifallotherproducersinthe
countrypossessthesameadvantage，thevaluesofcommodities
willnotbeatallaffectedbyit。Theonlycaseinwhichthey
canbeaffected，iswhentheprivilegeofcheaplabouris
confinedtoparticularbranchesofproduction，freelabourersat
proportionallyhigherwagesbeingemployedintheremainder。In
thiscase，asinallcasesofpermanentinequalitybetweenthe
wagesofdifferentemployments，pricesandvaluesreceivethe
impressoftheinequality。Slave—grownwillexchangefor
non—slave—growncommoditiesinalessratiothanthatofthe
quantityoflabourrequiredfortheirproduction;thevalueof
theformerwillbeless，ofthelattergreater，thanifslavery
didnotexist。
Thefurtheradaptationofthetheoryofvaluetothe
varietiesofexistingorpossibleindustrialsystemsmaybeleft
withgreatadvantagetotheintelligentreader。Itiswellsaid
byMontesquieu，\"Ilnefautpastoujourstellementepuiserun
sujet，qu’onnelaisserienafaireaulecteur。Ilnes’agitpas
defairelire，maisdefairepenser。\"（1*）
NOTES:
1。EspritdesLois，xi，adfinem。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book3:Distribution
Chapter7
OfMoney
1。Havingproceededthusfarinascertainingthegenerallaws
ofValue，withoutintroducingtheideaofMoney（except
occasionallyforillustration，）itistimethatweshouldnow
superaddthatidea，andconsiderinwhatmannertheprinciplesof
themutualinterchangeofcommoditiesareaffectedbytheuseof
whatistermedaMediumofExchange。
Inordertounderstandthemanifoldfunctionsofa
CirculatingMedium，thereisnobetterwaythantoconsiderwhat
aretheprincipalinconvenienceswhichweshouldexperienceifwe
hadnotsuchamedium。Thefirstandmostobviouswouldbethe
wantofacommonmeasureforvaluesofdifferentsorts。Ifa
tailorhadonlycoats，andwantedtobuybreadorahorse，it
wouldbeverytroublesometoascertainhowmuchbreadheoughtto
obtainforacoat，orhowmanycoatsheshouldgiveforahorse。
Thecalculationmustberecommencedondifferentdata，everytime
hebarteredhiscoatsforadifferentkindofarticle;andthere
couldbenocurrentprice，orregularquotationsofvalue。
Whereasnoweachthinghasacurrentpriceinmoney，andhegets
overalldifficultiesbyreckoninghiscoatat4l。or5l。，anda
four—poundloafat6d。or7d。Asitismucheasiertocompare
differentlengthsbyexpressingtheminacommonlanguageoffeet
andinches，soitismucheasiertocomparevaluesbymeansofa
commonlanguageofpounds，shillings，andpence。Innootherway
canvaluesbearrangedoneaboveanotherinascale;innoother
canapersonconvenientlycalculatethesumofhispossessions;
anditiseasiertoascertainandremembertherelationsofmany
thingstoonething，thantheirinnumerablecrossrelationswith
oneanother。Thisadvantageofhavingacommonlanguageinwhich
valuesmaybeexpressed，is，evenbyitself，soimportant，that
somesuchmodeofexpressingandcomputingthemwouldprobablybe
usedevenifapoundorashillingdidnotexpressanyreal
thing，butamereunitofcalculation。Itissaidthatthereare
Africantribesinwhichthissomewhatartificialcontrivance
actuallyprevails。Theycalculatethevalueofthingsinasort
ofmoneyofaccount，calledmacutes。Theysay，onethingisworth
tenmacutes，anotherfifteen，anothertwenty。（1*）Thereisno
realthingcalledamacute:itisaconventionalunit，forthe
moreconvenientcomparisonofthingswithoneanother。
Thisadvantage，however，formsbutaninconsiderablepartof
theeconomicalbenefitsderivedfromtheuseofmoney。The
inconveniencesofbarteraresogreat，thatwithoutsomemore
commodiousmeansofeffectingexchanges，thedivisionof
employmentscouldhardlyhavebeencarriedtoanyconsiderable
extent。Atailor，whohadnothingbutcoats，mightstarvebefore
hecouldfindanypersonhavingbreadtosellwhowantedacoat:
besides，hewouldnotwantasmuchbreadatatimeaswouldbe
worthacoat，andthecoatcouldnotbedivided。Everyperson，
therefore，wouldatalltimeshastentodisposeofhiscommodity
inexchangeforanythingwhich，thoughitmightnotbefittedto
hisownimmediatewants，wasingreatandgeneraldemand，and
easilydivisible，sothathemightbesureofbeingableto
purchasewithitwhateverwasofferedforsale。Theprimary
necessariesoflifepossessthesepropertiesinahighdegree。
Breadisextremelydivisible，andanobjectofuniversaldesire。
Still，thisisnotthesortofthingrequired:for，offood，
unlessinexpectationofascarcity，noonewishestopossess
moreatonce，thaniswantedforimmediateconsumption;sothata
personisneversureoffindinganimmediatepurchaserfor
articlesoffood;andunlesssoondisposedof，mostofthem
perish。Thethingwhichpeoplewouldselecttokeepbythemfor
makingpurchases，mustbeonewhich，besidesbeingdivisibleand
generallydesired，doesnotdeterioratebykeeping。Thisreduces
thechoicetoasmallnumberofarticles。
2。Byatacitconcurrence，almostallnations，atavery
earlyperiod，fixeduponcertainmetals，andespeciallygoldand
silver，toservethispurpose。Noothersubstancesunitethe
necessaryqualitiesinsogreatadegree，withsomany
subordinateadvantages。Nexttofoodandclothing，andinsome
climatesevenbeforeclothing，thestrongestinclinationina
rudestateofsocietyisforpersonalornament，andforthekind
ofdistinctionwhichisobtainedbyrarityorcostlinessinsuch
ornaments。Aftertheimmediatenecessitiesoflifewere
satisfied，everyonewaseagertoaccumulateasgreatastoreas
possibleofthingsatoncecostlyandornamental;whichwere
chieflygold，silver，andjewels。Thesewerethethingswhichit
mostpleasedeveryonetopossess，andwhichtherewasmost
certaintyoffindingotherswillingtoreceiveinexchangefor
anykindofproduce。Theywereamongthemostimperishableofall
substances。Theywerealsoportable，andcontaininggreatvalue
insmallbulk，wereeasilyhid;aconsiderationofmuch
importanceinanageofinsecurity。Jewelsareinferiortogold
andsilverinthequalityofdivisibility;andareofvery
variousqualities，nottobeaccuratelydiscriminatedwithout
greattrouble。Goldandsilverareeminentlydivisible，andwhen
pure，alwaysofthesamequality;andtheirpuritymaybe
ascertainedandcertifiedbyapublicauthority。Accordingly，
thoughfurshavebeenemployedasmoneyinsomecountries，cattle
inothers，inChineseTartarycubesofteacloselypressed
together，theshellcalledcowriesonthecoastofWestern
Africa，andinAbyssiniaatthisdayblocksofrocksalt;though
evenofmetals，thelesscostlyhavesometimesbeenchosen，as
ironinLacedaemonfromanasceticpolicy，copperintheearly
Romanrepublicfromthepovertyofthepeople;goldandsilver
havebeengenerallypreferredbynationswhichwereableto
obtainthem，eitherbyindustry，commerce，orconquest。Tothe
qualitieswhichoriginallyrecommendedthem，anothercametobe
added，theimportanceofwhichonlyunfoldeditselfbydegrees。
Ofallcommodities，theyareamongtheleastinfluencedbyanyof
thecauseswhichproducefluctuationsofvalue。Nocommodityis
quitefreefromsuchfluctuations。Goldandsilverhave
sustained，sincethebeginningofhistory，onegreatpermanent
alterationofvalue，fromthediscoveryoftheAmericanmines;
andsometemporaryvariations，suchasthatwhich，inthelast
greatwar，wasproducedbytheabsorptionofthemetalsin
hoards，andinthemilitarychestsoftheimmensearmies
constantlyinthefield。Inthepresentagetheopeningofnew
sourcesofsupply，soabundantastheUralmountains，California，
andAustralia，maybethecommencementofanotherperiodof
decline，onthelimitsofwhichitwouldbeuselessatpresentto
speculate。Butonthewhole，nocommoditiesaresolittleexposed
tocausesofvariation。Theyfluctuatelessthanalmostanyother
thingsintheircostofproduction。Andfromtheirdurability，
thetotalquantityinexistenceisatalltimessogreatin
proportiontotheannualsupply，thattheeffectonvalueevenof
achangeinthecostofproductionisnotsudden:averylong
timebeingrequiredtodiminishmateriallythequantityin
existence，andeventoincreaseitverygreatlynotbeingarapid
process。Goldandsilver，therefore，aremorefitthananyother
commoditytobethesubjectofengagementsforreceivingor
payingagivenquantityatsomedistantperiod。Iftheengagement
weremadeincorn，afailureofcropsmightincreasetheburthen
ofthepaymentinoneyeartofourfoldwhatwasintended，oran
exuberantharvestsinkitinanothertoone—fourth。Ifstipulated
incloth，somemanufacturinginventionmightpermanentlyreduce
thepaymenttoatenthofitsoriginalvalue。Suchthingshave
occurredeveninthecaseofpaymentsstipulatedingoldand
silver;butthegreatfalloftheirvalueafterthediscoveryof
America，is，asyet，theonlyauthenticatedinstance;andinthis
casethechangewasextremelygradual，beingspreadoveraperiod
ofmanyyears。
Whengoldandsilverhadbecomevirtuallyamediumof
exchange，bybecomingthethingsforwhichpeoplegenerallysold，
andwithwhichtheygenerallybought，whatevertheyhadtosell
ortobuy;thecontrivanceofcoiningobviouslysuggesteditself。
Bythisprocessthemetalwasdividedintoconvenientportions，
ofanydegreeofsmallness，andbearingarecognisedproportion
tooneanother;andthetroublewassavedofweighingand
assayingateverychangeofpossessors，aninconveniencewhichon
theoccasionofsmallpurchaseswouldsoonhavebecome
insupportable。Governmentsfoundittheirinteresttotakethe
operationintotheirownhands，andtointerdictallcoiningby
privatepersons;indeed，theirguaranteewasoftentheonlyone
whichwouldhavebeenreliedon，areliancehoweverwhichvery
oftenitilldeserved;profligategovernmentshavinguntilavery
modernperiodseldomscrupled，forthesakeofrobbingtheir
creditors，toconferonallotherdebtorsalicencetorob
theirs，bytheshallowandimpudentartificeofloweringthe
standard;thatleastcovertofallmodesofknavery，which
consistsincallingashillingapound，thatadebtofone
hundredpoundsmaybecancelledbythepaymentofahundred
shillings。Itwouldhavebeenassimpleaplan，andwouldhave
answeredthepurposeaswell，tohaveenactedthat\"ahundred\"
shouldalwaysbeinterpretedtomeanfive，whichwouldhave
affectedthesamereductioninallpecuniarycontracts，andwould
nothavebeenatallmoreshameless。Suchstrokesofpolicyhave
notwhollyceasedtoberecommended，buttheyhaveceasedtobe
practised;exceptoccasionallythroughthemediumofpapermoney，
inwhichcasethecharacterofthetransaction，fromthegreater
obscurityofthesubject，isalittlelessbarefaced。
3。Money，whenitsusehasgrownhabitual，isthemedium
throughwhichtheincomesofthedifferentmembersofthe
communityaredistributedtothem，andthemeasurebywhichthey
estimatetheirpossessions。Asitisalwaysbymeansofmoney
thatpeopleprovidefortheirdifferentnecessities，theregrows
upintheirmindsapowerfulassociationleadingthemtoregard
moneyaswealthinamorepeculiarsensethananyotherarticle;
andeventhosewhopasstheirlivesintheproductionofthemost
usefulobjects，acquirethehabitofregardingthoseobjectsas
chieflyimportantbytheircapacityofbeingexchangedformoney。
Apersonwhopartswithmoneytoobtaincommodities，unlesshe
intendstosellthem，appearstotheimaginationtobemakinga
worsebargainthanapersonwhopartswithcommoditiestoget
money;theoneseemstobespendinghismeans，theotheradding
tothem。Illusionswhich，thoughnowinsomemeasuredispelled，
werelongpowerfulenoughtoovermasterthemindofevery
politician，bothspeculativeandpractical，inEurope。
Itmustbeevident，however，thatthemereintroductionofa
particularmodeofexchangingthingsforoneanother，byfirst
exchangingathingformoney，andthenexchangingthemoneyfor
somethingelse，makesnodifferenceintheessentialcharacterof
transactions。Itisnotwithmoneythatthingsarereally
purchased。Nobody’sincome（exceptthatofthegoldorsilver
miner）isderivedfromthepreciousmetals。Thepoundsor
shillingswhichapersonreceivesweeklyoryearly，arenotwhat
constituteshisincome;theyareasortofticketsororders
whichhecanpresentforpaymentatanyshophepleases，and
whichentitlehimtoreceiveacertainvalueofanycommodity
thathemakeschoiceof。Thefarmerpayshislabourersandhis
landlordinthesetickets，asthemostconvenientplanfor
himselfandthem;buttheirrealincomeistheirshareofhis
corn，cattle，andhay，anditmakesnoessentialdifference
whetherhedistributesittothemdirectly，orsellsitforthem
andgivesthemtheprice;butastheywouldhavetosellitfor
moneyifhedidnot，andasheisaselleratanyrate，itbest
suitsthepurposesofall，thatheshouldselltheirsharealong
withhisown，andleavethelabourersmoreleisureforworkand
thelandlordforbeingidle。Thecapitalists，exceptthosewho
areproducersofthepreciousmetals，derivenopartoftheir
incomefromthosemetals，sincetheyonlygetthembybuyingthem
withtheirownproduce:whileallotherpersonshavetheir
incomespaidtothembythecapitalists，orbythosewhohave
receivedpaymentfromthecapitalists，andasthecapitalists
havenothing，fromthefirst，excepttheirproduce，itisthat
andnothingelsewhichsuppliesallincomesfurnishedbythem。
Therecannot，inshort，beintrinsicallyamoreinsignificant
thing，intheeconomyofsociety，thanmoney;exceptinthe
characterofacontrivanceforsparingtimeandlabour。Itisa
machinefordoingquicklyandcommodiously，whatwouldbedone，
thoughlessquicklyandcommodiously，withoutit:andlikemany
otherkindsofmachinery，itonlyexertsadistinctand
independentinfluenceofitsownwhenitgetsoutoforder。
Theintroductionofmoneydoesnotinterferewiththe
operationofanyoftheLawsofValuelaiddowninthepreceding
chapters。Thereasonswhichmakethetemporaryormarketvalueof
thingsdependonthedemandandsupply，andtheiraverageand
permanentvaluesupontheircostofproduction，areasapplicable
toamoneysystemastoasystemofbarter。Thingswhichby
barterwouldexchangeforoneanother，will，ifsoldformoney，
sellforanequalamountofit，andsowillexchangeforone
anotherstill，thoughtheprocessofexchangingthemwillconsist
oftwooperationsinsteadofonlyone。Therelationsof
commoditiestooneanotherremainunalteredbymoney:theonly
newrelationintroduced，istheirrelationtomoneyitself;how
muchorhowlittlemoneytheywillexchangefor;inotherwords，
howtheExchangeValueofmoneyitselfisdetermined。Andthisis
notaquestionofanydifficulty，whentheillusionisdispelled，
whichcausedmoneytobelookeduponasapeculiarthing，not
governedbythesamelawsasotherthings。Moneyisacommodity，
anditsvalueisdeterminedlikethatofothercommodities，
temporarilybydemandandsupply，permanentlyandontheaverage
bycostofproduction。Theillustrationoftheseprinciples，
consideredintheirapplicationtomoney，mustbegiveninsome
detail，onaccountoftheconfusionwhich，inmindsnot
scientificallyinstructedonthesubject，envelopesthewhole
matter;partlyfromalingeringremnantoftheoldmisleading
associations，andpartlyfromthemassofvapouryandbaseless
speculationwithwhichthis，morethananyothertopicof
politicaleconomy，hasinlattertimesbecomesurrounded。Ishall
thereforetreatoftheValueofMoneyinachapterapart。