THE VALUE OF MONEY It is the love of money that causes evil.
Money, being the equivalent of labor and its direct product, can be given in exchange by the earner in turn, either for labor he can not himself perform, or for products he can not produce. Thus, the man who is so skillful in making high grade cutlery that he can dis pose of his production, receives money for it which he can in turn expend for the things he has no skill to make and produce. Hence, he buys a clock, a ton of coal, a brush, a hat and the like with his money. Apparently it is his money that permits him to make the purchases ; strictly speaking, it is his cutlery making knowledge. A producer, then, is one purveying the products of his craft to the world, receiving payment ultimately in ex change. What he makes he exchanges by way of swapping money for what he cannot make. It used to be the custom for the farmer to take his produce to market and swap it di rectly for what he needed and could not raise. The basis of value in money was not physically present in the transaction. We do the same thing to-day, only the money is often present in the operation.
In all purchases, then, a man exchanges his skill for something he needs and cannot make. This point is emphasized here, because the average spender of money entirely overlooks it. His earning capacity should be his standard of fixed values. When he has divided his week's income by the total number of hours it takes him to earn it, he knows what his time is worth. He must ascertain this by dividing the week's income by all the time included from leaving home to his return. Thus, on an over-all time expenditure of ten hours that bring him in four dollars, he must fix his value, not merely in the terms of forty cents an hour but in the statement that every forty cents spent is the present maximum power of his skill, time, thought and strength for sixty minutes. By substituting the latter statement for the former, he knows what things cost in the terms of the actual earning capacity.
Once he begins to set values on this basis, he will be more apt to extend justice to him self in all financial transactions. Assuming he is permitted to work from twenty to sixty on this basis of value, forty cents per hour, losing no time from idleness or illness, he will be able to draw his income for one hundred and twenty thousand hours. These one hun dred and twenty thousand units at forty cents each will earn him a total of forty-eight thousand dollars. This apparently large amount of money must pay all necessary ex penses for forty years, and build up that fu ture protection for the possible years of de creased production after sixty. His income earning power increases from twenty and de creases from fifty, but his savings, if he sets them aside regularly, will increase. We may represent him as follows: While we are assuming a uniform and con tinuous income in this case, there should be, as the diagram shows, an increase in earning power, reaching its height between forty and fifty.
Reverting to the cost of purchases on this basis of income, we now see that an expendi ture of forty cents includes not only the value of a full hour of labor; a certain toll must be expended for every work hour to build up the future protection fund. This cost must be reckoned with in all money spending.
Let us further suppose, only for the sake of a definite illustration, that he so manage his affairs as to live on three of his four dol lars per day, saving one. This means that ten cents of every forty is to be set aside for the permanent fund to be available at the age of sixty. At the beginning, in the first year, that is, when he is twenty, the ten cent piece he should set aside has an ultimate value at four per cent interest compounded annually, of forty-eight cents. The dollar he saves daily in that year will be worth four dollars and eighty cents, while the total three hundred dollars which he should put aside in the first work year will have increased to one thou sand, four hundred and forty dollars.