MONEY 
121 
demand for it for building, the demand for it 
for furniture, the demand for it for boats, and 
so on. However, the composite nature of the 
demand for gold being allowed for, it does 
become necessary to lay down another pro 
position to complete the theory of the purchas 
ing power of money. This other proposition 
denotes the manner in which supplies of gold 
are distributed between its two broadly dis 
tinguishable uses, and runs as follows : the 
distribution of gold between its uses for money 
and in the arts is such that its marginal 
utility is the same in both uses ; which 
means, in other words, that the exchange 
value of an ounce of gold must equal what an 
ounce of gold will buy. An illustration of the 
correctness of this proposition will be found 
in the fact that the price of gold bullion in 
England never departs by more than a 
fractional percentage from £3 17s. lOd. per 
ounce, that is 934 pence per ounce. This 
apparently curious fact, which has caused 
not a little misapprehension, is simply a 
result of the legal decision that a sovereign, 
which equals 240 pence, shall contain about 
|f£ of an ounce of gold. 
The second proposition relating to the 
value of money having been enunciated and 
defended, it must next be pointed out that