Proceedings of the Royal Society for the month of October, 1895

XXV11

OCTOBER,

At

a

meeting

of the

Royal

Society of

Tasmania

on

Monday,

October

21, discussion

was

resumed

upon

Mr. R.

M.

Johnston's

paper

on

"The

primary

_law

_{of value or price,"}

_which

_was

read at the previous

meeting

_{of the Society.}

_The

_Hon.

Sir

James

Wilson

Agnew

presided,

and

_there

_was

_a

_good

_attendance

_of ladies

and

gentlemen,

among

whom

_were

_the

_Hon.

_{P. O.}

_Fysh,

Mr.

Justice

Dodds,

Hon.

Adye

Douglas,

_M.L.O.;

_Bishop

Montgomery,

and

Hon.

C.

H.

Grant,

M.L.C.

mbs.

meeedith's

watebcolours.

The

_President,

in

opening

the meeting,

mentioned

that

an

effort

Was

_being

_made

_{to secure} Mrs.

Meredith's

watercolour

drawings

of

Tatminianfish,

flowers, shells, etc.,

and

to present

them

to the Society.

Considerable

_amount

of success

had

already

attended

the effort,

but

Wore

_money

_was

still

needed

for the purpose,

and

if

any

public-i-pirited

individual could afford to help, the

members

of the Society

would

be

Very

_grateful.

_The

_paintings

_were

_on

_view

downstairs,

and

he

advised

those present to inspect

them

before

they

left the building.

APOLOGIES.

The

Secretary

(Mr.

A.

Morton)

read

letters of

apology

from

His

Excellency

the

Governor,

Hon.

J.

Henry,

Messrs, E.

Hawson

(secretary

of _the

_Chamber

_of

_Commerce),

_{T. E.}

_Hewitt,

James Whyte,

and

James

Barnard,

_{senior vice-president.}

ME. JOHNSTON'S PAPER.

The

Chairman

said

he

had

repeatedly read

Mr.

Johnston's

pamphlet,

and

thought

he

had

clearly

proved

his case

—

that the cost

of

_production

_regulated the price.

Mr.

A. J.

Cqilvy

said

he

thought

the

thanks

of the

whole

community

were

due

to

Mr,

Johnston

for

having

so ably

brought

the

subject _forward.

He

(the speaker)

was

not going

into

any

particular

application of the

principle—

bimetallism or

anything

else—

for it

was

no good

to

go

into the application until it

was

settled

whether

the

principle

was

the true one.

Mr.

Johnston's

opening statement

when

condensed

was

that the cost of production,

not

demand

and

supply,

primarily

determined

prices.

Later

he

qualified that

by

excluding

things _{the cost of}

_which

was

determined

by

scarcity alone, confining it

to _things

_which

_could

be increased indefinitely,

and

where

competition

operated

without

restraint.

That

price

would

always

represent cost

of

_production

measured

_in labour if there

were

no

natural scarcity or

artifical interference

Mr.

Johnston

had

proved

conclusively,

but

the case _{thus qualified}

_seemed

so

phin

from

the

mere

statement

of it

that

_one

_was

surprised to

hear

that it required proof.

The

ratio

between

_demand

and

supply

as

such

was

the sole

governing

power

of

the

_movement

_of prices,

notwithstanding

that

behind

demand

and

Supply

_was

_{cost of production.}

The

doctrine of

demand

and

supply

Was

that the value of

everything

was

determined

by

its scarcity, as

compared

with

the

demand

for it. If there

was

no

demand

for it it

Would

have no

value,

no

matter

how

scarce it

might

be.

However,

let

them

_keep

to the

main

point,

which

was

that looking at the

matter

broadly

_and

_taking price as a

whole

as it actually

was

with

all its

disturbing iifluenees,

not

as it

might

be

without

them,

it

was

demand

and

_supply

_as

_such

that

determined

it, cost of

production

acting

only

by

_affecting

_supply

_and

so disturbing the ratio, besides

being only

one

_factor

_out

_of

_many,

though

no

doubt

the chief one, in affecting

XXV111

Mr.

Fysh

said

he

had

read

Mr.

Johnston's

_paper

twice.

When

he

first

read

the

pamphlet

_he

was

disposed _{to dissent,}

_but

when

_he

had

read

it again

and

had

_{studied it}

more

_fully

_he

_asked

—

"

Who

questions

it?"

For

so clear

was

it to

him

that the

primary

law

of

value or price

was

the

economic

cost of

production

_that it

seemed

outside of

argument.

_All

_they

had

_to

_do

was

_{to follow the}

_phraseology

of the writer

—

_"

the

primary

law

of value _{or price."}

_There

was

"

_value "

_and

_"price,"

_and

_value

_and

_price

_with

_{the writer}

_were

_the

same

thing. _Therefore the

primary law

of value (leaving out price)

must

be the

economic

cost of its production.

And

the

more

they

thought

it out the

more

surely

they

arrived at that conclusion,

and

yet

not

break

down

the

experience

as to the

law

of

supply

and

demand.

As

to gold, he

was

not

so able to follow

Mr.

_Johnston's

_argument.

They

could

not

make

_an

artificial price of it.

Mr.

Johnston

:

Gold

is

measured

by

itself.

Mr.

Fysh

:

Measured

by

an

arbitrary

standard

of value.

And

if

the

output

was

so

reduced

that it could

not

be

overtaken,

we

would

be

obliged to fall

back

on

some

other mineral,

such

_as

bismuth,

and

which

is

more

scarce

than

gold _at present.

Gold

was, _{after all,}

only

a

matter

of

exchange

—

a

convenience

for

exchange

and

measure.

The

more

he

read the

more

he

_was

convinced

that

Mr.

Johnston

was

right

_with

respect to the

law

of value

and

price.

Take

wheat and

meat

for instance.

That

he

demonstrated

by

facts.

The

thing

was

to limit

themselves

to his terms,

and

then

they

had

only to

ask

them-selves—"

Who

is

going

to question _it ?'

The

law

_of

supply

and

demand

was

quite separate

_from

the

law

of

economic

cost of production.

Hon.

Adye

Douglas

said

he

had

come

to learn,

not

to instruct,

_not

having

had

time

to dip into the subject.

With

_regard

_{to the}

economical

production

theory

put

forward

they

must

all agree _to

that.

So

far as he

had

been

able to read the

_pamphlet,

_he

_quite

agreed

with

Mr,

Johnston.

Hon.

0.

H.

Gkakt

said

he

had

only

cursorily _{read the}

_pamphlet,

_but

was

inclined to agree

with

Mr.

Johnston's

_{demonstration}

_{that the}

primary law

of value

and

price

was

the

_economic

_{cost of production.}

As

to

wheat,

notwithstanding

the increased

demand

_and

_supply,

_the

cost

had

been

enormously

reduced,

and

that

_was

_accounted

_for

_by

_the

increased facilities of transit

—

steam

and

the triple

expansion

_engine.

Mr.

Johnston

:

That

has

largely

accounted

for it

—

also the

reaper

and

binder.

Mr.

Grant

:

Thus

value

and

price are

determined

by

economic

cost

of production.

The

same

principle applies to the

_reduced

_{cost of}

meat.

Dr.

Benjafieid,

in a

lengthy

address, said there

_was

_no

_question that in the early state of society the cost of

production

_was

_{the value,}

but

_we

live in different

times

now,

and

all that

had

_changed.

_Ricardo,

Adam

Smith,

and

others

were

superseded

by

the _{opinions of} up-to-date

men.

Mr.

Johnston

had

told

them

that

"

_gold

_was

_our

_established foot-rule for

measuring

value,

and

the

standard

_{of itself could}

_noi

show

any

variation " ; again, that the falling of prices

could not

be

due

to _{the appreciation of gold. All that}

_seemed

_to

_him

_{(Dr. Benjafield) to}

be

fallacious. _{Professor Nicholson, of}

Edinburgh,

_one

_{of the leading}

authorities in

Britian—

_[Mr.

Johnston

:

"

He

is

not

the best

"]—

said it

was

_{impossible to take labour as a unit of value. Wells,}

_whom

_Mr.

Johnston had

_quoted

_with

_{a flourish of}

_trumpets,

_{as a}

_modern

authority, said _prices

_were

_controlled

_by

_supply

_and

_demand

; that

when

production

_was

_checked

_prices

_advanced.

_[Mr.

_Johnston

:

I

Sold _did

_not

_{regulate prices}

; that the scarcity of

gold

had

nothing

to

_do

_with

_{prices. Mill said that}

if the

whole

money

_in circulation

was

_doubled

_prices

_would

_{be doubled. GiffeD, a greater authority}

than

_Ricardo—

_[Mr.

_Johnston

:

He

was

not

a political economist]

—

showed

_{that the alteratious in value}

_and

_prices

_were

_due

_{to the scarcity}

°i _gold

; that the

gradual

adjustment

of prices

must

be subject to the

gradually _smaller

_supply

_{of gold}

; that a fall in prices implied a

contrac-tion _in

_money,

_but

_{Mr. Johnston}

_{laid it}

_down

_emphatically

_that

it

was

not

so.

_[Mr.

_Johnston

:

Certainly]

Professor

Foxwell,

of

Cambridge,

said _:

_"

_There

_can

_be

_no

_{question that}

_where

_{the value}

of

money

has

risen _{the price of}

_commodities

_{has fallen." Giffen}

said that

banking

facilities _{did not}

_meet

_{the difficulty,}

_and

_did

_not

_compensate

_{for a} scarcity _{of gold.}

_Saurbeck

_{said that a great increase of}

_production

_and

a

_n

_insufficient

_supply

of gold

were

the causes of

lower

prices.

Mr.

_Justioe

_Dodds

_{rose to a point of order.}

_He

_thought

_gold

should

_not

_{be considered as gold, for the}

_purposes

_{of the discussion,}

*°r _gold

_had

_{a fixed}

_stmdard

_that

_was

_{simply used}

_{as a}

_medium

of

exchange.

_Mr.

_Johnston's

_paper

_dealt

_with

_the

_primary

_{cost of}

_the

production

_of

_commodities,

_and

_that

_had

_{not a fixed standard.}

The

_Chairman

:

That

is the point.

Mr.

_Johnston

_:

_Hear,

_hear.

_This

_is

_bordering

_upon

_{the question of}

bimetallism.

Dr.

_Benjafield

_{(proceeding) said that Professor}

_Nicholson

_ridiculed

the idea _{of gold being a foot-rule, as the value of a sovereign}

_was

changing

_frequently.

_Mr.

_Johnston

_had

_{said that the fall of silver}

Wa

s

due

_to

cheapened

_{production. Giffen said that its}

_purchasing

power

_was

_greater

_than

_ever,

_and

_had

_not

_{really fallen at all,}

_They

should

_speak

_{of silver as appreciating a little}

_and

_{gold a}

_very

_great

deal.

_They

_would

_{find that}

_what

_had

_{occurred to silver}

_had

_occurred

'0 _gold.

_The

_cheaper

_means

_{of abstraction of gold}

_had

_also

_been

Very _great.

_Last

_year's

_output

_was

_{the largest, yet}

its

purchasing

Power

_had

_doubled

_within

₂₀

_years,

Mr.

_Pysh

:

Why

do

you

argue

it is scarce? Is it scarce ?

Dr.

_Benjafield

_said it

was

scarce in the banks.

Mr.

_{Pysii referred to the millions lying idle in the banks.}

Dr.

_Benjafield

_{said that gold appreciation}

_had

_occurred

_through

legislative _{interference,}

_and

_silver

_hid

_{failed to equally appreciate}

through

_the

_same

_cause.

After

_Mr.

W

_oollnough,

M.H.A.,

_had

_offered

_some

_{observations, the}

discussion

_was

_adjourned

_{for a}

_week.

At

_an

_adjourned

_meeting

of the

Royal

Society of

Tasmania

_on

Monday,

_October

28th, Sir

James

Wilson

Agnevv,

_K.C.M.G.,

_M.D.,

M.E.C.

_{(Vice-Fresident)}

_occupied

the chair,

and

_there

was

_a

_good

attendance

_of

_both

_ladies

_and

_gentlemen.

_The

_meeting

_had

_been

a<_{ljourned until this}

_evening

_{to further discuss}

_Mr.

_R.

_M.

Johnston's

Paper

_on

"

_The

_Primary

Law

_of

_Value

_{or Price."}

DEATH

OF

MRS.

MEREDITH.

The Chairman,

upon

taking

the chair, said :

—

Ladies

and

gentle-men,

—

_Before

_we

_proceed

_{to business I}

_have

_to

_say

_how

_{sorry I}

_have

"3en

_to

_hear

_{this afternoon}

—

_and

_I

am

_sure

_you

_are

_very

_{sorry too}

—

_of

Society for

many

years.

She

died to-day in

Melbourne.

You

_will

recollect that the last

time

we

met

_I

brought

_under

_your

_notice

_some

of her

works

which

_{it is}

_very

_desirable

_should

_{be secured for}

_the

Society.

They

_{consist of}

_books

_and

_{pictures of shells, animals,}

_and

flowers.

They

_have

_{been ou view}

_downstairs,

_and

_{several people}

_have

been

to see

them.

Now

_they

_are

_up

_{in this}

_room

_(the

_Art

_Gallery),

and

perhaps

after this

meeting

is over

some

who

are _present

would

like to inspect

them.

_The

works

are

bound

_{in the best style, as all}

her

_works

are,

and

now

by

the intelligence _{of her}

_death

_a

_melancholy

interest is

attached

to

them.

NEW

MEMBERS.

The

Hon.

Thos.

Reibey,

M.H.A.,and

_Mr.

_{J. G. Mitchell, of Jericho,}

were

balloted for,

and unanimously

_elected

members

_{of the Society,}

LETTER

_FROM

_MR.

_WRACGE.

Mr.

Clement

L.

Wngge

_wrote

_from

_{the Chief}

_Weather

_Bureau,

Brisbane, as follows :

—

My

Dear

Morton,

-This

letter is

an

official

one

_to

you

_{as secretary to the}

Royal

Society,

and

_I will

beg

you

to read it before the Fellows. _I

must

confess that I

am

much

_{disappointed that the}

_Government

_of

_Tasmania

have

not

voted

the funds necessary _{to continue the}

_maintenance

_{of the}

_new

meteorological service of

Tasmania;

taut I learn at the

same

time,

_with

sincere gratification, that it is proposed _to

hand

_{over the local direction of}

the

Tasmanian

weather

service to

your

Society. I

am

_{sure that the interests}

of this service will be; jealously

and

_safely

guarded

by

_{your august}

_body,

_and

that

your

Society will

do

its

utmost

to take such _{steps as}

may

_{be necessary}

to maintain, not only the observatories _at

_{Hobart and}

_on

_Mount

_Wellington

but

also the out-stations in different parts of the isla,nd.

Of

course _it

was

on

the distinct understanding that these stations are maintained, _{or to}

_put

_it

in other words, that data are forthcoming

from

these stations, _{that I}

under-took to cable daily to

Tasmania, without

any

_{expense whatever, the}

fore-casts issued here for

your

island. It will at once _{be evident that if the}

Tasmanian

stations

cannot

he kept going, the forecasts _{cannot possibly be}

up

to the present standard of accuracy. I

have

reason _{to believe that}

_they

have

already been

found

of considerable _{practical utility,}

_and

_{it will}

_be

most

deplorable in public interests if the present _{efficient service}

cannot

be

kept

afloat. _I

would

_{therefore earnestly}

commend

_{the Meteorological}

Department

of

Tasmania

to the special care of

your

Society,

and

feel sure

that

you

will recognise in

Mr.

Kingsmill, _as

Government

_{Meteorologist for}

Tasmania,

one

who

has thoroughly the interests of his

department

_{at heart,}

and

do

_what

you

can to assist

him

in these

important

duties. I

am

pleased to hear that the icountry has, at last,

determined

_to

_recompense

him

for the outlay he so generously

expended

in order _{to establish the coast}

stations

and

the observatory on

Mount

Wellington. I

am

leaving next

week

for

Cape

York

Peninsula,

and

for

a

long

and

extended

tour of inspection

in Central

and

Northern

Queensland

generally. If

you

have

_anything

important

to

communicate,

please write or wire to

me

at the Post

_and

Telegraph

Office,

Cooktown,

N.Q., until further notice ;

but

should

you

have

communications

that

can

be dealt

with

during

my

_{absence, please} address

my

first assistant,

Mr.

Archibald

W.

Anderson, _Chief

Weather

Bureau,

Brisbane.

Mr.

Anderson

will issue the forecasts during the _{time I}

shall be

away

from

here.

He

has been specially trained

_by

_me,

_and

_I

_have

every possible confidence in his work, Please

convey

my

_{respectful regards}

to Sir

James

Agnew,

your

vice-president, the

_members

_of

_your

_Council,

and

the Fellows of

your

Society.

The

letter

was

received.

THE

PRIMARY

_LAW

OP

_{VALUE OR}

PRICE.

Mr.

VV.

Knight,

_M.A.,

_{barrister-at-law,}

_resumed

_{this discussion}

upon

Mr.

Johnston's

_paper

_by

_{reading a}

_paper

_in

_which

_he

_criticised

Mr.

Johnston's

_views

_very

_strongly.

_Mr,

_Johnston,

_he

_contended,

took

_{an extreme}

_view

_{of the principles of the value}

_and

_{the use}

of

gold.

The

demand

_{for gold}

_was

_never

_kept

_pace

_{with. It}

_had

_a

monopoly

value,

and

_therefore

_Mr.

_Johnston

_had

_not

_sufficiently

Mr.

_J.

_W.

_Isbael

_read

_a

_paper

_showing

_that

_he

_was

_in

_agreement

with

_what

_Mr.

_Johnston

_had

_advanced.

_He

_{read a}

_{paper on}

_the

Subject eight years

ago

and

then

came

to similar conclusions.

He

then

went

_into

_economic

_{principles to}

_show

_the

_evidence

_{of the}

_same.

Mr.

_Thos.

_Taylor

_urged

_there

_was

_another

_law

_{besides the cost of}

production

_which

_{regulated prices.}

_From

_{the fifties to}

₁₈₇₀

_prices

Went

_up,

_{notwithstanding}

_the

_cheapening

_{of the cost of production.}

_

Mr.

A. J.

Taylob

thought

speakers

had

not

paid

sufficient

atten-tion _to

_Mr,

_Johnston's

_paper

_and

_{diagrams. Dr. Benjafield}

_and

_others

had

_spoken

_{of conditions of things}

_which

_Mr.

_Johnston

_excluded.

He

_thought

_Mr.

_Johnston

_had

_{successfully set}

_out

_to

_prove

_that

_the

law

_{of value or price regulated}

_and

_determined

_{the ratios}

_and

_values

°f _{precious metals,}

_and

_{all other}

_commodities,

_and

_was

_to

_be

_found

_in

the

_economic

_{cost of production.}

_He

_thought

_Mr.

_Johnston

_had

Established _{that the}

_primary

_law

_{of value}

_had

_to

_{do with}

_{the cost of}

production.

Hon.

_Nicholas

_J.

_Bbown,

_M.B

_C,

_said :

Taking

a

broad

view

of

the _{subject, all over the}

_world

_it

_seemed

_to

_him

_{inevitable that}

_the

average

_{prices realised for}

_commodities

_must

_{bear a distinct relation}

to _{the cost of production,}

_and

_he

_could

_not

_understand

_why

_such

elaborate calculations

and

diagrams

.vere so necessary to

prove

it.

He

Was,

_however,

_unable

_{to see}

_what

_{practical value these assertions of}

Mr. Johnston

were.

He

suppossd

the object

was

to

prove

that those

Who

_{agitated for bimetallism}

_were

_{entirely in error.}

_On

_that

_question

he

_was

_not

_prepared

_{to definitely}

_commit

_himself

;

but he

ttiought,

from

_{that point of view,}

_Mr.

_Johnston

_seemed

_to

_have

_{the right}

_end

_of

the _{stick, for}

_he

_could

_not

_understand

_how

_giving

_a

_{fictitious value to}

silver _could

_have

_any

_effect

_whatever,

_{unless there}

_was

_an

_agreement

to _{use it as}

_such

_on

_{the part of the}

_whole

_{of the nations of the world.}

Mr.

_Rule

_did

_{not think}

_{Mr. Johnston}

_had

_demonstrated

_{his thesis.}

No

_one

_would

_{dispute that cost of}

_production

_was

_an

_important

factor

;

but

on

the question of

supply

and

demand

a lot

was

left

unproved.

Mr.

_Johnston,

_in reply,

complained

that his

paper

had

been

largely

Misunderstood

_by

_some

_of the _speakers.

_His

_paper

_went

to

show

that _the

_economic

_{cost of production, not}

_supply

_and

_deimnd,

_was

the _initial

_element

_{in the control of prices.}

_He

_had

_{confined himself to}

economic

_cost.

_He

_showed

_how

_{the intellect of}

_men

_and

_capitalists

had

_{lessened labour.}

_He

_{did not ignore capital as}

_having

_helped.

_The

dominant

_law

_was

_{the cost of production.}

_There

_must

_{be a}

_pivot

'Or

_supply

_and

_demand

_to

_work

_upon

—

_the

_{equilibrium price}

;

economic

cost _of

_production

_was

_the

_major

_law

_{in controlling price.}

_Gold

_could

never

_measure

_itself.

_He

_denied

_{that he}

_had

_shown

_{that cost of}

production

_meant

_{a general} decline of prices.

When

they

took

lengthened

_{periods in their investigations}

_they

_saw

_how

_{the influence} °f

_supply

_and

_demand

_{fell short.}

_Cost

_of

_production

_{included carriage}

and

_{distribution.}

_As

_{to bimetallism, there}

_was

_no

_local

_market

_for

gold _{or silver.}

_The

_world

_was

_the

_market.

_{If the}

_quantity

_of

jnoney

_determined

_{the matter, prices of}

_commodities

_should

_have

_risen,

because gold

had

become

more

plentiful,

and

not

have

fallen.

A

hearty

_vote of

thanks

to

Mr.

Johnston

was

passed

on

the

motion

of