products of labor, the profits of industry increase,
and consequently production is encouraged and trade and industry are
stimulated. But under an appreciating standard the recompense of labor
becomes smaller and smaller, and the share of the products of labor
absorbed by the creditor larger, which tends to discourage industry
and stifle enterprise.

IV. BY ARTHUR I. FONDA.

The value of any commodity is measured by what it will exchange for.
It is in fact its purchasing power, or power in exchange. This in
substance is the concrete definition of value given by all economists,
and they all unite in stating that value is determined by the supply
of a commodity relative to the demand for it; all other factors
affecting value being secondary and acting through their effect on
either supply or demand.

Since both the supply of and the demand for every freely produced
commodity is variable, and since a true standard of value, like a true
standard of weight or length, must be invariable as regards that which
it measures, it necessarily follows that no single freely produced
commodity can be a true standard of value. But while it is true that
every single commodity must vary in value, it is also true that all
commodities taken together cannot do so. This principle is also
accepted as correct by all economists.

It is evident then that a true standard of value can only be found in
a composite unit containing a definite quantity of every commodity, or
practically speaking, a definite quantity of each of a large number of
the most important commodities. This is what is known as the "multiple
standard," or the "commodity standard," and has long been in use by
economists in the form of tables of index numbers to show fluctuations
in general prices, or what is the same thing, changes in money values.

The only function of money is to facilitate the exchange of goods. In
doing this it acts directly as a circulating medium, and the demand
for it for this purpose, relative to the supply, determines its value;
for money, whether of coin or paper or both combined in one
circulation to meet one need, is subject to the same law of supply and
demand which governs all commodities, and which indeed is as universal
in the economic world as the law of gravitation is in the physical
world.

Incidentally the value of money fills the important function of
serving as a measure of the values of goods transferred without the
direct use of m