value; but I begin to perceive that I was mistaken; for things are valuable independently of money; it is their real intrinsic value which induces people to give money for them. MRS. B. Certainly; money cannot impart value to commo. dities; it is merely the scale by which their value is measured; as yard measures a piece of cloth. CAROLINE. I think the value of things must consist in their utility, for we commonly value a commodity according to the use we can make of it. Food, clothing, houses, carriages, furniture, have all their several uses. MRS. B. That is true; yet there are some things of the most general and important utility, such, for instance, as light, air, and water, which, however indispensable to our welfare, have no exchangeable value; we give nothing for them, nor can any thing be obtained in exchange for them. Utility, therefore, though it constitutes one of the component parts of value in exchange, does not in all cases produce it. CAROLINE. It is true, no one will give any thing for what is so plentiful, and so readily obtained that every one may have as much as he requires, without making any sacrifice. I recollect now your saying that objects must be limited in supply in order to have value, and yet, Mrs. B., such things as light, air, and water, which are essential even to our existence, surely ought to be esteemed valuable. M MRS. B. No doubt they are, but it is in a point of view different from that of exchangeable value. Dr. Adam Smith distinguishes two kinds of value; the one arising from utility, the other from what can be obtained in exchange. He says, "The word value, it is to be "observed, has two different meanings; it sometimes expresses the utility of some particular object, and "sometimes the power of purchasing other goods "which the possession of that object conveys. 66 66 The 66 one may be called value in use, the other value in exchange. The things which have the greatest value "in use have frequently little or no value in exchange; "and, on the contrary, those that have the greatest “ value in exchange, have frequently little or no value "in use. Nothing is more useful than water, but it "will purchase scarce any thing; scarce any thing " can be had in exchange for it. A diamond, on the "contrary, has scarce any value in use, but a very "great quantity of other goods may frequently be "had in exchange for it." Nature works for us gratuitously; and when she supplies us with articles in such abundance, that no labour is required to procure them, those articles, however useful they may be, have not exchangeable value; but when the labour of man becomes necessary to procure us the enjoyment of any commodity, he must be remunerated, and that commodity acquires at value; either a price is paid for it in money, or other things are given in exchange for it. Light, air, and water are the free and bountiful gifts of nature, but if a man constructs a lamp, we must pay for the light it diffuses; if we are indebted to his labours for a ventilator, or even a fan, we pay for the air they procure us; and when water is conveyed through pipes into our houses, raised by pumps, or brought to us in any manner by the art of man, a price is paid for it. Utility may therefore be considered as the sole cause of value in use, whilst value in exchange may be pro duced by any circumstance which renders the possession of an object so difficult of attainment, and at the same time so desirable, that men are willing to give something in exchange for it. Thus not only utility, but beauty, curiosity, fashion, rarity, and many other qualities, may create exchangeable value; and it is to this value that, in political economy, we confine our attention. CAROLINE. There are many articles of luxury which are perfectly devoid of utility; such, for instance, as pictures, jewels, artificial flowers, and other ornaments; these are valued either for their beauty, their curiosity, or their rarity. But, Mrs. B., if an object is valuable in proportion as we are desirous to obtain it, its value will vary with respect to different persons to whom its possession may be more or less desirable. Thus, medicine to the sick, and food to the hungry, will be more valuable than to the healthy and well fed. MRS. B. The value of a commodity is not estimated by the sacrifice which those in the most urgent want would make rather than be deprived of it; but by what is requisite to be given in exchange, in order to obtain it. The apothecary knows that if he endeavoured to take advantage of the sick man's necessity to raise the price of his medicine, it would be procured at another shop; and that instead of making an exorbitant profit he would lose a customer; and if the hungry man were attempted to be imposed upon in a similar manner, he would purchase food elsewhere: thus competition (under ordinary circumstances) prevents undue advantage being taken of the wants of individuals. CAROLINE. What is it, then, which regulates the exchangeable value of commodities? you have said that it was estimated by the quantity of things given in exchange for them, but I wish to know what it is that determines the specific quantity to be given ? MRS. B. It is fundamentally regulated by the cost of production of the commodity; that is to say, the expense laid out upon it in order to bring it to a saleable state. A great deal of labour has been bestowed upon that book case; if the workmen who made it were not repaid, they would no longer make book-cases, but seek some more profitable employment. The price of a commodity, therefore, must be sufficient to defray the cost of production. CAROLINE. But, Mrs. B., the money which this book-case cost does not all go to the workmen who made it; the materials of which it is made must be paid for; the upholsterer who sold it derives a profit from it. MRS. B. It was his capital which purchased the raw materials, which furnished the tools, and set the journeymen to work; without this aid the book-case could not have been made. The price of commodities is the reward, not only of those who prepared or fabricated them but also of every productive labourer who has been employed in bringing them to a saleable state, for each of these concurred in giving value to the commodity. We have formerly observed that no work can be undertaken without the use of capital, as well to maintain the labourer as to supply him with the implements to work with, and the materials to work upon. Subsisting upon this maintenance, and working with these implements, he is to transform the useless trunk of a tree into a useful or beautiful piece of furniture, which acquires value in proportion as it becomes an object of desire. The profit of capital is, therefore, a component part of the value of a commodity, as well as the wages of labour. There remains yet a third component part of the value of a commodity, which a little reflection will, I think enable you to dis cover. CAROLINE. Agricultural produce must, besides the wages of labour, and profit of capital, pay the rent of the land on which it is raised. But this will not be the case with manufactured goods. MRS. B. The raw materials for manufactures are all, or almost all, the produce of land, and consequently must defray the expense of rent, the same as corn or hay. Let us now observe how the value of a commodity resolves itself into these three component parts. Take, for instance, a load of hay; its price pays first, t |