value our own welfare in it; we recognise its importance for us as value; and finally, we develop an anxiety, proportioned to the greatness of that importance, to acquire and hold the good.

Thus, formally defined, value is the importance which a good or complex of goods possesses with respect to the wellbeing of a subject. Any addition to this definition, regarding the kind and reason of the importance, is, strictly speaking, not necessary, since goods can only have an effective importance for human wellbeing in one way, viz., by being the indispensable condition, the sine qua non, of some one utility which subserves it. In view of the fact, however, that in other definitions of volue it is very often translated as an "importance," while the importance spoken of rests, erroneously, on a simple capability of utility, or, not less erroneously, on the necessity of costs, or the like, we shall define it, unambiguously and exactly, as: That importance which goods or complexes of goods acquire, as the recognised condition of a utility which makes for the wellbeing of a subject, and would not be obtained without them.

All goods have usefulness, but all goods have not value. For the emergence of value there must be scarcity as well as usefulness-not absolute scarcity, but scarcity relative to the demand for the particular class of goods. To put it more exactly: goods acquire value when the whole available stock of them is not sufficient to cover the wants depending on them for satisfaction, or when the stock would not be sufficient without these particular goods. On the other hand, those goods remain valueless which are offered in such superfluity that all the wants which they are fitted to satisfy are completely supplied, and when, beyond that, there is a surplus which can find no further employment in the satisfaction of want, and which, at the same time, is large enough to spare the goods or quantities of goods that we are valuing without imperilling the satisfaction of any one want.

After what has been said as to the nature of value, it should not be very difficult to prove these propositions. When the supply of goods is not sufficient, and some of the

wants which they are adapted to satisfy must remain unsatisfied, it is clear that the loss of even a single good involves the loss of a possible satisfaction, while the addition of a single good involves the acquisition of a satisfaction otherwise impossible; and it is clear, consequently, that some gratification or form of wellbeing depends on the existence of that good. Conversely, it is quite as clear that, if goods of any class are to be had in superfluity, there is no harm done if one of the goods be lost-since it can be immediately replaced from the superfluous stock; nor any utillty got if another such good be added-since it cannot be employed in any useful way. Suppose, for instance, that a peasant requires ten gallons of water per day, and no more, for general purposes-say, for his own drinking, for that of his family and servants, for watering his cattle, for cleansing, flushing, etc.,—and suppose that the only spring within reach supplies no more than eight gallons a day. It is quite evident that he cannot spare one single gallon from his water-supply without suffering, to a more or less sensible extent, as regards the wants and aims of his economy. Every gallon in this case is the condition of a definite sphere of usefulness. Even if the spring supplied just ten gallons a day this would still be true. But if the spring supplied twenty gallons per day, it is just as obvious that the loss of one gallon would not do the slightest injury to our peasant. He can only employ ten gallons usefully, and he must let the other ten gallons flow away unused. If one gallon is spilled it is replaced from the overflow, and the only effect is that now the unusable surplus is reduced from ten gallons to nine.

Now as it is the insufficient, or the barely sufficient, goods that are the objects of economical care-the goods we "economise" or endeavor to acquire and keep,-while such goods as are to be had in superfluity are free to everybody, we may express the above propositions shortly in the following form: All economical goods have value; all free goods are valueless. In any case it must steadily be borne in mind that it is only relations of quantity that decide whether any particular good is merely capable of use, or is also the condition of a utility for us.

C. When an article belongs to the class of economic goods a definite quantity of it possesses value. We shall have to consider this word a little before proceeding any further. It is a word that has given rise to so much controversy and misconception, that some people have felt justified in advising that its use should be altogether avoided in an economic treatise. But one of the writers who has been most insistent on this point, W. Stanley Jevons, has failed to adhere to his own advice. In many of his later writings he refers to the value of things, thus proving that he cannot dispense with the word.

Nor can it be dispensed with. And even if it could, the expression Ratio of Exchange, which Jevons suggests as a substitute, is the very last that should be recommended. Value and ratio of exchange express two conceptions between which we must distinguish carefully. The relative values of things exercise a great influence upon the ratio in which these things are exchanged for each other. We shall presently see, however, that there could be no such thing as exchange, but for the fact that different people attach different values to a given quantity of the same thing. But as there can be only one ratio of exchange at any given time in any given market, it is evident that value and ratio of exchange cannot mean the same thing. The causes which determine the rates at which things are exchanged for one another merit our attention in the highest degree; but before we can understand them clearly we must first of all be clear as to the value which things possess irrespective altogether of exchange. We may observe in passing, that data for throwing light on this subject are to be found in the writings of Jevons himself.

What do you mean when you say that we attach value to a thing? The expression may have a twofold bearing. It may have reference to a class of things. If we say that we place value upon air, sunshine, drinking-water, friendship, art, we simply declare that we regard them as goods.

*Pierson-Principles of Economics (1896), translation published by the Macmillan Co., 1902. Part I, Chapter I, pp. 51-53.

[ Pierson uses the phrase "value irrespective of exchange" where current writing uses "subjective value.”—Editor.]

To value a thing implies that we are unwilling to be without it and that we desire to obtain it. There is an intimate connection between the conceptions expressed by the words value and endearment, hence the twofold meaning of the words carus, cher, dear, theuer. When we say that we attach value to art, we mean that we like art, and that we consider it a disadvantage to be deprived of the enjoyment which it affords.

The expression value may, however, be used in another sense as well, namely, that in which we use it with reference, not to a certain class, but to a definite quantity of things.* This certainly is the sense in which we use the word when we say that air or water, for example, have no value. We do not mean that air and water can be dispensed with, but that we place no value upon a cubic foot of one or on or a gallon of the other. Frequently we attach great value to a certain kind of thing without attaching the least value to a definite quantity of it. On the other hand, it is self-evident that when a certain kind of thing is useless, any quantity of it, no matter how great, will also be useless. But if we are supplied with an article in such abundance as to make it belong to the class of commodities which we have called non-economic, a pound or a gollon or a cubic foot of that article has no value whatever.

When we make use of the word value, it is absolutely essential that we should state clearly whether we use it in relation to classes of things or quantities of things. There must be no room for the least uncertainty on this point; for it may sometimes be said with truth of one and the same thing, that it has value, and that it has no value. Speaking of air in general, we may say that it has value. But under ordinary circumstances no one would consider it a loss if the existing supply were to be diminished by a few cubic feet. Thus we are equally justified in saying that air has no value.

We know that the term value in exchange is always used in relation to definite quantities, and never in relation to particular kinds of things. The value in exchange of coffee

* [The editor's italics.]

is that of a pound of coffee. It is out intention, therefore, to use the word value invariably in this sense, even when we are speaking of value irrespective of exchange. We would have it clearly understood that, in whatever connection the word may occur in the present work, it will always be used in relation to definite quantities. By value irrespective of exchange is meant the importance which particular commodities or quantities of commodities have acquired in our estimation through our recognition of the fact that we need them for the satisfaction of our wants.*

From what has been said it will be clear that to attach value to a thing and to regard a thing as belonging to the group of economic goods are two ways of expressing the same thought. Things are goods because they are useful to us. They possess value because we can spare no portion of them. If their utility increases they acquire increased value; but if they become at the same time more abundant, their value diminishes and may even disappear altogether. The relation between the value which we place upon a pound of gold and that which we place upon a pound of bread is no index of the degree of estimation [of gold and bread viewed as classes of things]; it simply shows how far the extent of our requirements in the matter of gold and bread, viewed in connection with the existing supply of each, will cause us to regard it as an inconvenience whenever we lose, or as an advantage whenever we gain, a pound of either.

* [Editor's italics.]

It is of course an index of the degree of estimation in which we hold these specific quantities of the articles named.-Editor.]