BOSTON AND NEW YORK
HOUGHTON MIFFLIN COMPANY
The Riverside Press Cambridge
1911
COPYRIGHT, 1911, BY HART, SCHAFFNER & MARX
ALL RIGHTS RESERVED
Published November 1911
TO MY FATHER
BENJAMIN M. ANDERSON
OF COLUMBIA, MISSOURI
MY FIRST TEACHER OF
POLITICAL ECONOMY
This series of books owes its existence to the generosity of Messrs. Hart,Schaffner, and Marx of Chicago, who have shown a special interest indirecting the attention of American youth to the study of economic andcommercial subjects, and in encouraging the systematic investigation of theproblems which vitally affect the business world of to-day. For thispurpose they have delegated to the undersigned Committee the task ofselecting topics, making all announcements, and awarding prizes annuallyfor those who wish to compete.
In the year ending June 1, 1910, the following topics were assigned:—
1. The effect of labor unions on international trade.
2. The best means of raising the wages of theunskilled.
3. A comparison between the theory and the actualpractice of protectionism in the United States.
4. A scheme for an ideal monetary system for the UnitedStates.
5. The true relation of the central government totrusts.[Pg viii]
6. How much of J. S. Mill's economic system survives?
7. A central bank as a factor in a financial crisis.
8. Any other topic which has received the approval ofthe Committee.
A first prize of six hundred dollars, and a second prize of four hundreddollars, were offered for the best studies presented by class A, composedchiefly of graduates of American colleges.
The present volume was awarded the second prize.
Professor J. Laurence Laughlin,
University of Chicago, Chairman.
Professor J. B. Clark,
Columbia University.
Professor Henry C. Adams,
University of Michigan.
Horace White, Esq.,
New York City.
Professor Edwin F. Gay,
Harvard University.
The following study is the outgrowth of investigations in the "QuantityTheory" of money, carried on in the seminar of Professor Jesse E. Pope, atthe University of Missouri, during the term 1904-5. That a satisfactorygeneral theory of value must underlie any adequate treatment of the problemof the value of money, and that there is little agreement among monetarytheorists concerning the general theory of value, became very evident inthe course of this investigation; and that the present writer's conceptionof value, as expressed in a paper written at that time on the "QuantityTheory," was not satisfactory, became painfully clear after ProfessorPope's kindly but fundamental criticisms. The problem of value, laid asidefor a time, forced itself upon me in the course of my teaching: my studentsseemed to understand the treatment of value in the text-books used quiteclearly, but I could never convince myself that I understood it, and theconviction grew upon me that the value problem really remained unsolved.Hence the present book. It was begun in Dean Kinley's