Importance of a common measure of things. What a common measure enables us to do How value is measured. To obtain a definite idea of the size, the weight, or the value of things, it is not sufficient to compare them with one another. A common measure is necessary. For measuring lengths the term of comparison was originally a part of the body (foot, ell, etc.), and is now, according to the "metric system" introduced first in France, a part of the earth's circumference (the meter, kilometer, etc.). For measuring weights, the term of comparison chosen in the metric system is the weight of a fixed volume of distilled water. The old or original English pound was derived from the weight of 7680 grains of weight, all taken from the middle of the ears and well dried; hence "grains" form the lowest fractional parts of a pound. The standard British. pound at present is a piece of platinum preserved in the office of the Exchequer, at the temperature of 62° Fahr. . . . The yard, as the standard English measure of length, is the distance between two marks on a metal rod imbedded in the masonry of the Houses of Parliament. A common measure enables us to compare two things in different places (which cannot be brought together for direct comparison), or to compare the same thing at different times in order to ascertain what changes have taken place in it. By means of the yard-measure we can compare the stature of the Lapps with that of the Patagonians, and tell exactly how much taller the latter are than the former. The same standard of comparison, if it has not been entirely forgotten, in a thousand years will enable our descendants to compare themselves with the man of to-day and ascertain whether or not mankind has decreased in stature. ... In order to measure value it is not sufficient for us to compare two values one with another (as is done in barter), but we must take the value of some definite object as a basis of comparison. It is a remarkable fact that almost all civilized people have agreed in choosing as their measure of values, as their standard, the value of the precious metals, gold, silver, and copper, but especially the first two. They all use a little ingot of gold or silver, called a dollar, or pound, or franc, or rouble. To measure the value of any object, they compare it with the value of that small weight of gold or silver that serves as the monetary unit; that is to say, they try to find how many of these bits of metal must be given up for the commodity in question. If, for instance, ten are needed, they say the commodity is worth ten dollars, or ten pounds, etc. That is its price. The price of a thing is, therefore, the expression of the relation Price between the value of the thing and the value of a certain weight defined. of gold or silver; or, to put it more briefly, it is its value expressed in money. ... tends to concentrate in cities. Under modern industrial conditions it often happens that the Industry complex division of labor requires the bringing together of large numbers of laborers and other industrial agents. It is primarily because of this necessity that there have grown up in the United States great industrial cities, in which large numbers of workers coöperate with one another under the control and superintendence of business men. The products of these specialists are carried to market by various agencies of transportation, and transportation in turn brings to the city most of the food which is in demand by the various classes of the urban population. The following description of a provision market in Chicago will give some idea of the dependence of urban dwellers upon the mechanism of exchange: There is a street in the city of Chicago which is only five blocks long. It is said to be one of the busiest streets in the world. The perishable produce which Chicago needs for its food is handled there every day. . . . One should picture this short, narrow street, packed with thousands of wagons and automobiles which are coming in or slowly making their way out with the loads of farm products to be distributed to the stores throughout the city. The warehouses and sidewalks are filled with the produce for the day's sales. This produce has been coming in by the carload during the night, and the street begins to be busy at an early hour in the morning — in summer at daylight, in winter before. The prod uce market in Chicago. Each warehouse specializes in some particular class of produce. Here are One is devoted entirely to trading in cheese. One four-story building gathered is filled with Spanish and Bermuda onions. Another has hundreds 1 From the Department of the Interior, Bureau of Education, Lessons in Community and National Life. Washington, 1918. Series B, pp. 34-39. products from all parts of the country. The Some ways in which provisions reach the city market. of bags of potatoes piled from floor to ceiling. These come from states as distant as New Jersey and Montana. A number of cellars of these warehouses are filled with ripening bananas from Cuba and pineapples from Porto Rico. Fruit from California and Florida is the chief stock of other warehouses. Many of the warehouses handle only fresh vegetables. These come from the truck farms around Chicago and throughout the Mississippi valley. For example, tomatoes are brought early in the spring from Mississippi, and as the season advances the supply comes from states further north. In like fashion in the autumn it moves southward from Maine. The wide territory from which Chicago draws these perishable products makes it possible for the people of the city to have fresh summer vegetables at all seasons of the year. ... The markets which we have been describing ... would not be possible without the labor of a great number of people, some of whom are concerned with the distribution of produce to the consumer, some with bringing the produce into the city, others with securing it at the points where it is produced. . . . The man who comes into the most direct contact with the producer is the "buyer." . . . He goes through a producing territory, making contracts with the producers for the whole or a stated portion of their output, or buying from day to day wherever he can secure goods at satisfactory prices. He keeps in close touch with his employer, advising him by letter, telegraph, or telephone of the condition of the field and the outlook as to quantity, quality, prices demanded, and amount and character of competition from other buyers. In turn he is advised about the demand at the market and instructed as to how much to buy and what to pay. The buyer turns his purchases over to the transportation companies, who in turn deliver them to the market. ... Goods may arrive at the city market under other conditions. Sometimes the producer ships his products to a commission merchant, who sells them for him. Sometimes selling associations of the producers send their products to their own representatives on the market. Producers in remote regions sometimes combine their shipments and send them in carload and trainload lots to the large cities, where they are sold at public auction. The auction sale generally takes place at railroad freight yards or at steamship piers. The commodities sold by auction are usually limited to the citrus fruits from California, Florida, and foreign countries, and the deciduous fruits, such as cherries, grapes, plums, peaches, apples, and other fruits from the West and Northwest. ... retailer. When the goods reach the market they are handled by a number The of different kinds of traders. The most familiar type is the retailer, whom everybody knows, because it is he who supplies the family with the small quantities needed from time to time. . . . 48. The advantages of exchange 1 There was formerly some discussion as to whether or not exchange were productive. It was said, for example, that exchange could benefit no one, for if an exchange is a fair one and the values of the goods exchanged are equal, there can be neither gain nor loss on either side. Sometimes, too, it was said that one party to an exchange of commodities was certain to lose, for how could anyone reap an advantage from exchange without the other party sustaining a loss? These arguments no longer carry weight, and to-day it is universally agreed that the voluntary exchange of products is generally advantageous to both parties to the exchange. The advantages of exchange are outlined by Professor Gide in the following summary: ... .. We shall state briefly the advantages of exchange from the practical point of view. The advan tages of ex change are no longer denied. enables us to utilize wealth which would (1) Exchange enables us to utilize, in the best way possible, a Exchange large quantity of wealth which without exchange would remain unused. Without exchange, what would England do with her coal, California with her gold, Peru with her guano, Brazil with her chinchona bark? When analyzing the notion of wealth, we found that an indispensable otherwise condition of any object ranking as wealth was its capability of being utilized. And in order that this may be effected, the article must be conveyed, by means of exchange, to the person who is to use it the quinine to the fever patient, the guano to the farmer, the 1 From Charles Gide, Principles of Political Economy. D. C. Heath & Co., 1903; pp. 198-200. remain unused. It likewise enables us to utilize productive capacities which would otherwise remain inactive. The division pends upon exchange. coal to the manufacturer. Suppose that exchange were suppressed everywhere, and that all persons and all nations were obliged to keep all the wealth they possess. What an enormous mass of wealth would thus be condemned to remain useless, and doomed to destruction! . . . If In other words, we must regard exchange as the last of the series of productive acts that begins with invention (which is also an immaterial act) and continues throughout the whole list of agricultural, manufacturing, and transporting industries, bringing products step by step nearer to their final destination, which is to come into the possession of the persons who will use them. These steps are changes of form, changes of place, and changes of ownership all three of which are equally indispensable to the attainment of the final result. (2) Exchange enables us to utilize in the best way a host of productive capacities which without exchange would remain inactive. there were no such thing as exchange, each man would be compelled to produce all that is necessary to supply his wants. If his wants were ten in number, he would have to ply ten different trades. Whether he did this well or not would not alter the case; he would be obliged to regulate his production not according to his aptitudes, but according to his wants. With the introduction of exchange, however, the state of affairs is completely changed. Everyone is then sure of obtaining by exchange just what he needs; every one, moreover, devotes himself to the production of those things which he can produce best. He regulates his production, not according to his wants, but according to his aptitudes or his means. Before the era of exchange, everyone was obliged to produce what he needed most; now everyone devotes himself solely to the production of whatever he can most easily produce. This is a most important and wonderful progress. If there were no exchange, association and division of labor would of labor de- require a previous agreement among those who are to work in harmony. What would be the use of the most perfect division of labor in an immense factory producing (let us say) hats, unless other persons were simultaneously producing food, shoes, houses, etc., to exchange for these hats? Exchange dispenses with the necessity for a preliminary agreement, and thus enables the division of labor to extend |