5
MONEY
we tend to diminish the demand for it and conse
quently to reduce its value. For the most part every
week or month or year we give as much as we get,
and the temporary ups and downs of our stocks
cancel each other quickly; but when we increase
our holding for good or diminish it for good we
exercise a permanent influence.
The exposition so far given may seem to leave no
place for the theory of value being connected with
marginal utility, as taught in the economic text-
books in regard to ordinary commodities. But
marginal utility plays just the same part with regard
to gold (both for ordinary purposes and for currency)
as it does with other commodities. The lower the
value of gold, the lower will be the uses to which
it will be put, and the poorer will be the classes of
people who are able to use it ; as has been suggested
above, if gold were cheap enough, it would be used
for roofs, and many people who do not have things
which are now made of gold because they cannot
afford them would have them. This is really easy
enough to understand, but it may be a little difficult
to see how the marginal utility theory applies to
currency. Can we say that the value of sovereigns
falls as they become more plentiful and their marginal
utility diminishes ? Where is the marginal purchaser
or the marginal purchase? Where the elasticity of
demand? The answer is that the difficulty we feel
is only the result of the strangeness of estimating
the value of sovereigns in other things instead of, as
usual, the value of other things in sovereigns. The
marginal purchaser is the man who is only just
convinced, or in practice in modern times the bank
or Government which is only just convinced, of the
desirability of increasing or diminishing the stock of
coin in hand, just as the marginal purchaser of house
room is the man who is only just convinced of the