in the theory of value and prices.

49

for A, but will be compelled to pour much money into C, D, etc. ofwhich the prices have risen. This will cause a rise in their valuationof money and as the quantity of B does not decrease its price must.

Moreover there will he slight changes in all other quantities IB,IIC, etc. If (say) IIC decreases, it is due to one or both of twocauses, a rise in price of C or a rise in valuation of money of II.Tn general the valuation of money will decrease. The decrease willbe relatively great for the poor as compared with the rich, but (asjust seen) will not necessarily decrease for all persons.

If A is a “ luxury ” the fall in its price will be small relatively tothe foregoing case. Most of the increase of A will go to the rich.The total amount of money spent on it will probably increase whichwill in general decrease the price of other articles. Exceptions canbe found analogous to that in the former case. The valuation ofmoney will in general decrease, most perhaps for the middle classand more for the rich than the poor, but not necessarily for all,

5. The cases just discussed assume that the additional productionof A is such that the incomes of I, II, III, etc. are not disturbed.To represent the case in which I produces all of A, after depressingA a given amount, slowly depress I until the difference of income asregistered on the I scale shall equal the final reading on the A scalemultiplied by the price of A minus the former A by its former price:.

The chief change to any one article will be in the price of Awhich will decrease. The chief change to any one person will beto I whose income is increased (especially if the commodity T& aluxury), whose expenditure for most other articles will increasethough not necessarily for all, and whose valuation of money Willdecrease, owing both to an increase of income and to a decrease inprice of other articles consequent on the withdrawal of money fremjthem to be spent on A. Only exceptional articles will increase inprice if their chief consumers sufficiently decrease their expenditurefor A.

But it may be that the increase of A Will so greatly depress theprice that the value of the total will decrease. This is generallytrue of necessaries. The producer I will lose income, that is stopperI must be raised instead of depressed. His valuation of money willincrease doubly, owing to the contraction of his income and. the risein price of other articles. The money* return to such a benefactor

* Monopoly price is not treated here. It is interesting to note that the DutchEast India Oo. used to destroy a part of their spices to prevent a great fall ofprice. The same thing has been done by the Japanese in silk-worm eggs.

Trans. Conn. A.oad Vol. IfflT. IX 4 July, 1892.