ago, under the prohibition of its exaction from their brethren among the Jews, while it was allowed in their traffic with the Gentiles. I do not know the etymology of the substituted word, Interest. It was probably adopted as a technical escape from the denunciations of the law and the prophets.

P. The wages, or hire of service, are usually described by dif ferent terms-some of them mere euphuisms, used because the rose will smell sweeter under another name.

T. They are distinctive terms, used for descriptions of the same thing under some modification of circumstances. Wages is employed to express the award of common labor; salary, for service for a term; fees, for official or professional persons. Honorarium was used for the compensation of physicians and lawyers, when the common law refused its remedies for the recovery by suit in the courts of justice. In essence these are all alike. They are all labor. The mind labors as well as the body, and its products are called the works of the author.

CHAPTER XVI.

MONEY OF ACCOUNT.

T. Our inquiry has brought us now to the subject of creditmoney; but we cannot enter upon it, restricted, as it usually is, to circulating notes or paper money, without a closer understanding of the general subject of Money of Account. Its explication is the key to the theory of money of every kind and of every

substance.

D. As a description of a kind of money distinct from anything usually known by the name, yet treated as a substantive thing, and requiring distinctive treatment, it may be some sort of a logical necessity for the purpose of theoretical debate.

T. Neither the phrase nor its intention is the invention of any sect of economists. It has long been the property of the analysts of the money function. Montesquieu, in his Spirit of Laws, as

long ago as the year 1748, says: "There are real and ideal moneys." He adduces an illustrative instance in the practice of the blacks on the coast of Africa, who have a sign of value, without money, purely ideal. They say a certain article is worth three macutes, another six, another ten macutes. That is the same as if they said simply 3, 6, 10. Thus the price in their exchanges is fixed by comparison of commodity with commodity, for there is no money, and they have no reference to any medium of standard value existing in some other form or substance, and the goods themselves are directly compared in value.

Bishop Berkeley, still earlier (1730), in the form of a query, which conveys an affirmation, puts the point thus: "Whether gold, silver, and paper money, are not tickets or counters for reckoning; and, whether the denominations being retained, although the bullion were gone, things might not, nevertheless, be rated, bought and sold, industry promoted, and a circulation of commerce maintained?" Here is a distinction between money in substance and money of account fairly presented.

D. These authorities are speculative philosophers. Have any practical writers thus resolved the actual into the ideal?

T. The act of the American Congress of 1792, establishing the national mint, has this recognition of the insubstantial. It declares that "the money of account of the United States shall be expressed in dollars or units, dimes, tenths," etc.

Alexander Hamilton, in an elaborate report on the proposed system of coinage made to Congress, expressly recognizes the distinction between "the unit of the money of account and "the unit of the coins." Jefferson, in his report upon the same subject, assumes the same distinction. Stephen Colwell concludes an exhaustive examination of the question by saying, "It is to be noticed that we are not bringing forward or recommending any new mode of reckoning or computation. We simply assert the matter of fact that all prices, all books of account, all statements of sums of money, all bills of exchange, and promissory notes, and all bank notes, are expressed in money of account.'

The Marquis Garnier well and truly remarks, "We distinguish two kinds of money,-real money, or coins, and money of account, which is the expression of values, or the specification of prices.

The valuation of merchandise made by the seller, the offer made by the purchaser, the accounts, the promises to pay, the stipulations of hiring, quotations of stocks, the rents of farms, all that in any transaction precedes the act of payment,―must be carried on by money of account. Real money only intervenes for actual payments."

D. Suppose this were all true theoretically, what is its use practically?

T. I will not allow myself to argue the value of abstract truth. I content myself with the notion that it is well to understand what we and our neighbors and rulers are all the time talking about. Let me add to the authorities already cited the conclusion arrived at by Kelly, the author of the Universal Cambist, a work of admitted authority, founded upon information obtained with great labor and expense, in which the author was aided by the British government. He says: "Moneys of account may be considered with respect to coins, as weights and measures with respect to goods, or, as a mathematical scale, with respect to maps, lines, or other geometrical figures. Thus they serve as standards of the value of both merchandise and the precious metals themselves." Mr. Colwell corrects the phrase "standard of value," justly remarking that "the money of account is not only as operative, but as necessary, to commercial dealing when the coins correspond with it as when they do not," which is fully supported by such facts as these: England employed the pound sterling in computation and valuation for generations before the year 1816, although until then she never had a coin corresponding to it. The people of Pennsylvania, Massachusetts, and Georgia kept their accounts in British denominations for more than fifty years after, as well as before, the Revolution, though the unit was the dollar, and the coins were in decimal fractions and in multiples of it, and although they had not a single coin answering to the denominations which they persisted in using as a scale of values.

This is what is meant by the rule of valuation as an ideal or mental proceeding. This is what Kelly means by saying that the money of account measures the precious metals themselves, with the necessary consequence that these metals are not the standard of mental valuation.

P. To the same purpose might be adduced the fact that the people of England during their twenty-five years of the suspension of specie payments, ending in 1822, when their standard gold ounce troy went up from the mint price seventy-seven shillings and ten pence ha'penny to eighty-eight shillings, a rise of nearly 13 per cent., must have been estimating their coins by their money of

account.

T. We need not pursue the discussion of this subject further now. In the treatment of credit money we may have occasion to supply and amend deficiencies, and perhaps, to correct remaining misapprehensions.

P. I cannot leave the discussion of the money-value question without indulging myself in a laugh at my own innocency of faith when I was an unquestioning believer in the metallic standard doctrine. This is the way it took me: The British coinage act of 1816 directed that the sovereign should contain exactly 113. grains andths of a grain of pure gold. I was awfully impressed by the precision of the calculation, and naturally thought that it must be that, and nothing less or more, and that the sovereign must have and hold that precise exchange value through all changes of time and revolutions of business affairs. How could I help it? What was all this ciphering for, if it did not fix a certainty, absolute and irreversible? The laugh came in when I heard the story of a quack doctor who ordered Biddy to "boil a bread-and-milk poultice exactly two minutes and a half by the watch, for everything depended upon the exactitude of the concoction."

"Hivens," exclaimed Biddy, "he calkilates like an angel." That poultice drew on my money standard beautifully. The precision of the cooking and the minting explained each other.

CHAPTER XVII.

CREDIT MONEY.

T. Coins and their representatives or substitutes, used as a circulating medium of exchanges, are usually described, the former as metallic, the latter as paper money. You will have observed that I am conforming to this usage in the proposed treatment of the function of the circulating note, whether issued by bankers or by government officials.

Promissory notes payable to bearer on demand, issued by a government or by corporations authorized by it, have all the essential qualities of a circulating money. The principal of these qualities is their convenience as exchangers of value. Money being only a medium, it is a thing whose use does not terminate in itself nor bear any relation to itself. Its function is that of an instrument, and the essential quality of an instrument is its convenience and effectiveness in use. Its form or substance, therefore, ought to be varied with its varying adaptedness. If money were a thing to be consumed in use, or to lose its form and properties in its proper service, its representative character would be lost, and it would become a commodity of consumption; and so take the position in exchanges of a principal, and cease to be a representative of value. Its intrinsic qualities, therefore, are not constituents of its functionary quality.

P. Our dictionaries render "money-anything which freely circulates as a common acceptable medium of exchange." It has been defined by its derivation from the Greek nomos, law, and is by the same etymology called nomisma. Aristotle is quoted for the inference that it has its value from law, and not from nature. You have adverted to the saying of Adam Smith, who regards it as dead capital, and to that of J. S. Mill, who excludes it in his definition of capital. Endless, and to me, confusing definitions have been based upon the word and upon the thing itself. I am glad to get a firm hold of it under the apprehension that it is essentially only a medium of exchange.

T. A medium in any service may be more or less convenient.