Exchangeability

“ Menger, "Geld," Handwörterbuch der Staatswissenschaften; Carlile, Evolution of Modern Money.
[456] We should make a slight and unimportant qualification as to Kemmerer. Cf. our chapter on "Dodo-Bones," supra.
[457] It seems necessary to point out this essential lack of correlation between value and exchangeability, since Mr. Horace White, in his Money and Banking (5th ed., p. 135) , identifies value and exchangeability: "Value is an ideal thing in the same sense that weight is. ”

“ Hence it comes to pass, that the exchangeable value of every commodity is more frequently estimated by the quantity of money, than by the quantity either of labor or of any other commodity which can be had in exchange for it. ”

“ In our opinion exchange properly speaking,—true exchange and free from the alloy of any foreign element whatsoever, has never been anything but barter; and as soon as the system of barter was left and that of money entered upon, the exchange system was rather abandoned for another system quite different, than that one form of exchange was simply substituted for another form of exchange. ”

“ The idea of general exchange value originates in the fact, that there really are causes which tend to alter the value of a thing in exchange for things generally, that is, for all things which are not themselves acted upon by causes of similar tendency.
In considering exchange value scientifically, it is expedient to abstract from it all causes except those which originate in the very commodity under consideration. Those which originate in the commodities with which we compare it, affect its value in relation to those commodities ”

“ To this end it is desirable that the greatest number of commodities for which productive facilities exist, should be produced in the same community.
4. The general law of exchange is value for value. This will be obvious if we recur to one of our statements concerning the nature of value, namely, that is the quantity of one commodity that may be equitably exchanged for a given quantity of another. It will be still more obvious if we recall the complete definition: value is our estimate of the sacrifice requisite to secure possession of a desired object. ”

“ If exchange value is nothing but mere labor-time contained in commodities, how can commodities which contain no labor possess exchange-value, or in other words, whence the exchange value of mere forces of nature? ”

“ On the one hand, the exchange-value of these means of production is not increased ; for the exchange value of a commodity is not raised by its use-value being consumed more thoroughly and to greater advantage. ”

“ We next showed that the introduction of money as a medium of exchange, makes no difference in the laws of exchanges and of values between country and country, no more than between individual and individual: since the precious metals, under the influence of those same laws, distribute themselves in such proportions among the different countries of the world, as to allow the very same exchanges to go on, and at the same values, as would be the case under a system of barter. ”

“ To throw away contemptuously the equation of exchange because it is so obviously true is to neglect the chance to formulate for economic science some of the most important and exact laws of which it is capable. ”

“ Surely it is a commonplace of Political Economy, that the effect of an unfavourable exchange, i.e. of an excess of imports over exports, is to stimulate production and export, and bring about a more favourable course of exchange. ”

“ If true money is a commodity, like gold, then what determines the exchange value between goods and that commodity? Is the problem in any way different from that of obtaining the exchange value of any two commodities? ”

“ This is the first and most elementary phase in which the Foreign Exchanges can appear; and for the purpose of appreciating the most important lessons which can be derived from their study, it is better to discard the idea of the exchange taken place between different sorts of money, and to hold fast to the general principle that what is really given in exchange in the natural and simple transactions from which all others are derived, is a sum of money at one place for an equivalent sum of money at another. ”

“ The question of exchange is more especially to be considered, as it is not deemed best to materially deplete our present limited supply of breech-loaders, even of inferior models, to extent below the present quantity. ”

“ The medium of exchange function grows out of the physical difficulties of barter, rather than out of intellectual needs. The discussion in the preceding chapter of the origin of money has emphasized the nature of the difficulties which a medium of exchange meets. A has an ox, which he wishes to trade for shoes, sugar, and a coat. Neither shoe-maker, tailor nor grocer cares to take the ox, however, and, besides, no one of them could supply A with all three of the things he wishes to get. ”

“ Things which by barter would exchange for one another, will, if sold for money, sell for an equal amount of it, and so will exchange for one another still, though the process of exchanging them will consist of two operations instead of only one. The relations of commodities to one another remain unaltered by money: the only new relation introduced, is their relation to money itself; how much or how little money they will exchange for; in other words, how the Exchange Value of money itself is determined. ”

“ Just as a pound of iron and a pound of gold represent the same weight in spite of their different physical and chemical properties, so do two use-values, as commodities containing the same quantity of labor-time, represent the same exchange value. Exchange value thus appears as the natural social destination of use-values, a property which they possess by virtue of being things and in consequence of which they are exchanged for one another in definite proportions, or form equivalents, just as chemical elements combine in certain proportions, forming chemical equivalents. ”

“ Exchange.—It has been shown that several factors in production are each entitled to their share. This share 53is reckoned in terms of money because every producer gets his own return in terms of money. In other words goods are exchanged for money, and money in turn is exchanged for other goods or service. This mechanism of exchange engages the energy of a great many individuals and institutions, such as wholesalers, retailers, brokers, and banks. Economic goods would have relatively little value if they could not be translated into money and thus distributed from hand to hand. ”

“ The exchangeable value of a commodity is that of the labour required to produce it, multiplied into the force of the demand for it. If the value of the labour = x and the force of demand = y, the exchangeable value of the commodity is xy, in which if either x = 0, or y = 0, xy = 0. ”

“ There is always this psychological, or, if you will, artistic element in exchange.
In pure Economics exchange is exactly balanced by the respective advantages of the exchangers; just as in pure dynamics you have the parallelogram of forces. ”

“ The currency.—The last essential in perfect freedom of exchange is a satisfactory means of transferring completely and quickly all property right in any article of trade. Exchange of commodity for commodity or service for service is possible to a very limited extent, since the man who wants my horse may have nothing which I want in return, or if he has, the values may be unequal, and one or the other must remain in debt, which means that one of the articles belongs in part to both. ”

“ There is, indeed, a good deal to be said for the view that the conception of general exchange value could never have been formed without the previous existence of money; it has certainly support from the evidence of competent observers respecting the methods of exchange followed by savage communities. ”

“ And, as the number of people who want things of all sorts must manifestly be greater than the number of people who want the particular thing, whatever it may be that we have to exchange, any difficulty there may be in making our exchange will generally attend the first part of it; for, in exchanging anything for money, I must find some one who wants my particular thing, while in exchanging money for a commodity, any one who wants any commodity or service will be willing to take my money. ”

“ Throughout his life he maintained the 'predominance of exchange,' exposed the 'tricks of the exchangers,' and urged that exchanges should be settled on the principle of 'par pro pan, value for value.' Naturally, therefore, he sought to revive the staple system, and appealed to the government to put down the exchangers. ”

“ It seems to be quite necessary indeed that the commodity chosen for a medium of exchange should, in addition to the other qualities which may fit it for that purpose, be in such frequent use that the estimation in which it was held, founded on the desire to possess it, and the difficulty of obtaining it, should be tolerably well established. ”

“ We should then have a commodity always produced under one and the same combination of all the circumstances which affect permanent value. Such a commodity would be by no means constant in its exchange value ”

“ Not until the exchange value of a commodity is expressed in the sum total of these equations or of the different proportions in which one commodity is exchanged for every other commodity, does it find an exhaustive expression as a universal equivalent ”

“ Fourthly, by this it may plainly appear to your Highness, as the exchange is the thing that eats out all princes, to the whole destruction of their common weal, if it be not substantially looked unto, so likewise the exchange is the chief and richest [Pg 418] thing only above all other, to restore your Majesty and your realm to fine gold and silver, and is the mean that makes all foreign commodities and your own commodities with all kind of victuals good cheap, and likewise keeps your fine gold and silver within your realm. ”

“ The same piece of money which is paid in one exchange to-day, may be paid in another exchange tomorrow. Some of the pieces will be employed in a great many exchanges, some in very few, and some, which happen to be hoarded, in none at all. ”

“ To say that goods command a price because they have power in exchange is like saying that opium puts men to sleep because it has a dormitive power. Physicians now recognize that this is no solution of difficulties, that it is merely a repetition of the problem in other words. If we wish to explain exchange, we must seek the explanation in something anterior to exchange. If value is to be distinguished from ratio of exchange at all, it cannot be defined as "power in exchange." ”

“ When it is remembered that in its origin money is only an instrument to facilitate exchange—we might even say to render it possible—it follows that from its earliest to its latest form the ruling influence is the need of society for the best mechanism of exchange. ”

“ If, however, there were some one commodity for which each producer would readily exchange his products at any time, so that, therefore, each person could at any time exchange this commodity for any other commodity that he might need, the process of exchange would be simplified. ”

“ Now, if an exchange could be always made and completed on the spot, each party giving and receiving an equivalent in labour or the product of labour, the whole problem of exchanges would be solved by this simple method, and there would be no necessity for a circulating medium, or for anything to perform the part which is performed by money in our existing commerce. ”

“ Thus, while commodities become use-values to each other in the process of exchange by casting off all definite forms and entering into mutual relations in their direct material shape, they must assume a new form, viz., proceed to the formation of money in order to appear as exchange values to each other. ”

“ It is evident that a commodity possessing all these advantages must have some intrinsic qualities which all exchangers would recognise—that it must be a standard of value—at once a commodity possessing real value, and a measure of all other values. ”

“ Value in exchange is the relation of one object to some other or others in exchange. To determine this relation accurately in any particular case, an actual exchange must take place; and every exchange must imply not only the power and will to give some object in exchange for one more wanted, but a reciprocal desire in the party possessing the commodity wanted, for the commodity or the labour proposed to be exchanged for it. ”

“ We are disposed to consider them too much in the light of mere articles of export, and valuable, chiefly as commodities of exchange: or, if we do not bestow too much consequence on their exchangeable value, we at least allow too little to their intrinsic worth. ”

“ Had the system of exchange been less advanced, that is, had society been less civilized, he would probably have exchanged his labour for some object of utility, by another and a ruder mode. He would have received a portion of the coals as the price of the labour by which he gave an additional value to the whole heap. ”

“ Anything which acts as currency for something else, once this one comes into possession, this one is obligated for its exchange. How is it? If one exchanges a bull for a cow, or a donkey for a bull, once this one comes into possession, this one is obligated for its exchange. ”

“ By universal and free exchange,--that is, by each person being permitted to exchange what he wants least for what he wants most,--an absolutely perfect system of economy of resources is established; the whole world being included in the arrangement. ”

“ For that reason the money side of the equation is of course greater than the total amount of money in circulation.
II.19 The equation of exchange relates to all the purchases made by money in a certain community during a certain time. We shall continue to ignore checks or any circulating medium not money. We shall also ignore foreign trade and thus restrict ourselves to trade within a hypothetical community. ”