With

E come now to a consideration of the question of Exchange, that is, of the marketing of things already produced. It will be noted that in getting a basic understanding of the principles of Political Economy, the subject grows more intricate as it advances. It is not so difficult to understand the laws which govern production as it is the laws governing exchange or the distributing of our products.

We are through, for the moment, with the raw material and with all the processes of manufacture, and have come now to deal with the wholesaler, the retailer, transportation, barter, sale, exchange in all its varied forms. We have now to learn what Cost is, what Price is and what governs in the making of both.

Exchange

Exchange is a transaction in which two individuals mutually and voluntarily transfer to each other the right of property, to a given amount either in capital or labor, or in both.

This transfer must be both mutual and voluntary by both parties, or else it is robbery by one party. If property, without the right of possession, be given in exchange, it is fraud. No right of property has been conferred, because one party to the exchange did not possess that right and therefore could not confer it on another.

The exchange may be either of capital by both parties, as if A and B exchange wheat for corn; or of capital for labor, as when A gives B a bushel of wheat for a day's labor; or of labor for labor, as when A agrees to work for B today on condition that B shall work for A tomorrow. Exchange is of three kinds:

1. Barter in general, or exchange in kind. 2. Exchange by means of a metallic currency.

3. Exchange by means of a paper currency.

It has already been shown that human labor, of some kind, is necessary to pro

duction. And by labor exerted upon any substance in such manner as to give it value, we establish over that value, either in whole or in part, the right of property. If the original capital were our own, we possess that original capital together with all the additional value which the change that we have effected has created.

If by labor on the capital of another we have increased its value, we establish a right to a portion of it to be estimated by the respective values of the labor and capital employed. In fact, this capital is nothing but the result of pre-exerted labor; so that the capitalist contributes his past and the laborer his present labor and they share the product between them.

In other words, Capital is nothing more or less than the interest on previously exerted labor, or stored labor in the product offered for exchange.

The Machinery of Exchange

In the three chief elements that enter into the satisfying of human desiresProduction, Exchange, and Consumptionone is no more important than the other. Without production there could be no exchange or consumption. Without exchange there would be small incentive toward production and little opportunity for consumption. And without consumption both production and exchange soon would cease, except insofar as very limited individual efforts were concerned. There would be no such thing as "business" as the world has known it.

Thus we shall find that the machinery of exchange is as essential to our well-being as is the machinery of production. The wholesaler and the retailer, while they add nothing by way of production to the actual value of a product, play a most important part in exchange and in the economy of our social life.

Each man is fitted both by nature and inclination for the production of one valuethe farmer the value of wheat, the shoemaker the value of shoes, and so on. And

though he worked most earnestly and successfully in the creation of this particular value, manifestly he would possess but one value. The farmer would possess nothing but wheat and the shoemaker would have nothing but shoes.

It also is apparent that if the possessors of these individual values wish to exchange them, the farmer wheat for shoes or the shoemaker shoes for wheat, with nothing but themselves as the agencies for the exchange, the process of exchange in general would be slow, cumbersome and often very costly. The farmer and the shoemaker might live so far apart that the original value of the product might be increased many times before the exchange could be effected.

The Role of the Merchant

While every man possesses the disposition for the creation of a particular value, there exists equally in every man a desire to enjoy every value that can be created. Man is created with the aptitude and the desire for fashioning of one product, but also with the desire for the enjoyment of a thousand products. It is the existence of these contrary indications in his nature that brings the necessity for exchange. The right to use his product as he pleases, is also the right to transfer it to whomsoever he pleases and for whatsoever he pleases.

In order that we may satisfy our desires for the enjoyment of many products, we have the man who sets up the business of gathering various products from various parts so that they may be the more readily exchanged. If this man makes it his business to gather large quantities of a certain class of products, bringing them from long distances and dealing them out in smaller though still large quantities, he is known as a wholesale merchant, or wholesaler. If he deals in still smaller quantities and with individual buyers largely for their own consumption, he is known as a retail merchant, or retailer.

As we are all dependent upon one another for the proper enjoyment of life, it is evident that universal exchange is as necessary to the welfare and even to the existence of the human race as universal production. Since, then, exchanges must be made it is better for the whole that a part

of society devote themselves exclusively to the business of making them.

Exchangers are as necessary to the cheapness of production as producers themselves, and we readily may see the absurdity of the outcry sometimes raised against these exchangers, or merchants, because, it is said, they produce nothing. It is an indisputable fact that whenever mercantile business, the business of exchanges, is most successful, then are the means of living cheaper in proportion, and then are the operative classes richer, and the avenues to riches most widely open to all.

Cost and Price

Whether exchange be as barter, or exchange in kind, as exchange with a metallic currency or as exchange with a paper currency, it always is on the basis of cost. In simple barter the producer will place a value on his product equal to the labor exerted upon it, and in making an exchange for some other product, the work of another producer, he will try to get at least an equal value in exchange for his own.

Whatever has been the value of labor put into a product at the time of exchange, that will be its cost up to that time. But if exchange were made only for the actual labor value put into a product it is manifest that the producer is making no profit. He never will grow richer through such transactions. So the producer tries to get for his product something more than his own actual expenditure, and this something more, whatever it may be, is his profit, his capital, or the interest on his previously exerted labor. The cost of the product plus the proper and reasonable profit to the producer is known as the price of the product.

If the parties to an exchange put no further labor on the products they have secured thereby, but apply them to the satisfying of their own desires, all exchangeable value in those products is destroyed through their consumption. But if they are further enhanced in value and then reexchanged, the additional value is added to the original value as the total cost, and a new exchangeable price for the products rules in the second transaction. And this process continues until the products are consumed. The ultimate price of a product

is its exchangeable value to the person who consumes it, and as he consumes all of the value that has been put into the product, naturally he pays for all of it. In other words, the ultimate consumer, all other things being equal, pays the highest price for any product.

Measuring of Values

As all value is produced by laborthat is, by thought and plan and effort and is preserved throughout all our productive and exchange processes by adding preexerted labor, that is, capital, to present labor, man found it necessary at a very early stage in his history to devise some method of measuring labor, as well as some method of representing value.

In its simplest form labor is measured usually and most generally in terms of time. Broadly speaking, an hour's labor by one man is equal in value to an hour's labor by another man. That is, one man will exchange the product of one hour of his own labor for the product of one hour of another man's labor. From this point on we find that the process grows more and more intricate, but no matter how nearly complete it may become it still is subject to

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the basic principle of labor value for labor value.

As we pass beyond the days of simple barter, as men spread out over the surface of the earth and their desires began to increase and labor became more and more divided and specialized, something generally recognized by which to measure values in exchange was essential, and various standards of value, or rather standards for measuring value, have been devised. As in principle they are all the same, from the beads of the primitive Indians to the gold of the present day, we shall consider here only the standards of value measurement now in general use, taking this as the subject of our next chat.

The Cable Memorial Hospital

The Benjamin Stickney Cable Memorial Hospital, at Ipswich, Mass., though smali, has every department of a larger hospital, for in the designing of the building the memorial feature was not allowed to crowd out essential hospital requirements.