8. We have seen that there are three species of Economic Quantities, each containing many varieties, which have Value. We have seen that the Value of any Quantity is any other Quantity for which it can be exchanged. We now come to the second branch of our inquiry - What is the Cause, or Source, of Value, and whence does it originate?

Now when we are to search for the Cause, or Source of Value it may be as well to understand what it is we are searching for.

There is a very great number of things of several different natures which all have Value: we must manifestly search for some single cause which is common to them all: which being present, Value is present: which when it increases, Value increases: which when it decreases, Value decreases: and which being absent, Value is absent.

Now as we have defined the Value of a thing to be any other Quantity for which it is exchanged, it is evident that there must be at least two parties to Economic Value. And as Exchanges are voluntary, each of the two parties must have some product, and each must desire, or be in want of the product of the other. Hence reciprocal Demand is the cause of Value. Aristotle said long ago that it is Demand which binds society together.

Here it is quite clear that we have got the true Source, or Origin, or Cause of Value. It is Demand. Value is not a quality of an object, but an affection of the mind. The sole Origin, Source, or Cause of Value is Human Desire. When there is a Demand for things they have Value: when the Demand increases (the Supply being supposed the same), the Value increases: when the Demand decreases, the Value decreases: and when the Demand altogether ceases, the Value is altogether gone.

The whole body of ancient writers made Demand the sole Origin of Value: and they shewed that Demand or Value is the inducement to Labour - "Eo impendi laborem ac periculum .. magna prĉmia proponantur."

In modern times, Boisguillebert saw this very clearly; he says - "Consommation (Demand) is the principle of all Wealth" - "All the revenues, or rather all the riches of the world both of a prince and his subjects only consist in Consommation (Demand): all the most exquisite fruits of the earth, and the most precious products would be nothing but rubbish if they were not Consommes (Demanded)?

So Hume says - "Our passions (desires or Demand) are the only causes of Labour."

The Italian Economists are very clear and consistent in shewing that human wants or desires are the cause of all Value. Genovesi shews that the words used indiscriminately, Prezzo, Stima, Valuta, Valore, are words of relation, and not absolute, and that they are not applied to intrinsic qualities. That though Money is the apparent or proximate measure, the ultimate measure to which not only things, but their price, is referred is man himself. Nothing has Value where there are no men, and the very things which have a low price where men are few, have a very high price where there are many people.

"Men however do not give Value to things or services, unless they want them. Hence our wants are the first source of the Value of all things, and Price is the power to satisfy our wants." He says that the wants of men are the first source of the Value of everything, and of all Labour: and that Value is the child of Demand.

So Beccaria says - "Value is a substance which measures the estimation in which men hold things."

Condillac is also very clear on this point - "This esteem is what is called Value." - "Since the Value of things is founded on the want of them, or the Demand, it is natural that a want more strongly felt gives things a greater value: and a want less felt gives them less Value. The Value of things increases with their scarcity, and decreases with their abundance. It may even, on account of this abundance, decrease to nothing. A superfluity, for example, will be without Value whenever we can make no use of it."

The Physiocrates, or first school of Economists, made all Value proceed or arise from Demand: and they shewed that things which remain without Demand ( Consommation) are without Value.

Anything has Value when it is Exchangeable; when it is not Exchangeable it has no Value. It is often supposed that Smith proved that Labour is the source of all Value and of all Wealth. But Smith's doctrines are quite contradictory on this subject, as we have fully pointed out in our Principles of Economical Philosophy, and Theory and Practice of Banking, and Smith himself says that if a guinea would exchange for nothing it would have no Value. It is well known that a considerable number of writers have asserted that Labour is the Cause of all Value. But any one who reflects on this assertion must see its utter fallacy. The simple observation that however much a person may labour on producing a thing, if no one will buy it, it has no Value, must at once shew the fallacy of it. Moreover there are abundance of things which have Value upon which no Labour was ever bestowed.

It is this doctrine that Labour is the Cause of all Value, and that all Wealth is produced from the earth, which has done so much to obscure and confuse the Theory of Credit. Whereas when we consider Exchangeability as the sole essence and principle of Value, the whole subject becomes perfectly clear and simple. A Bank Note or a Bill of Exchange has Value because it can be exchanged for Money; and Money has Value solely because it can be exchanged for other things. "An order or note of hand," says Mill, "or bill payable at sight for an ounce of gold, while the credit of the giver is unimpaired, is worth neither more nor less than the gold itself," i.e. of exactly the same Value as gold. And it is for this reason that Jura, Rights, are termed Wealth in Roman Law. They are Pecunia, Res, Bona, Merx, because they can be bought and sold. And it is the commerce in this species of Merchandise which is the subject-matter of this work.