alarm in the minds of capitalists, they not only cease lending, but rigidly insist upon the return of what they have already put out; interest then rises immediately, the supply of capital having fallen off. If, on the contrary, agriculture, manufactures and commerce, the three great sources of national wealth, are in a state of prosperity, and make good returns to those engaged in them, confidence is restored, all the capital available is brought into market, and the rate of interest falls, the supply having increased.

Thus we think Mr. Bacon's plan for regulating perinanently the rate of money, by offering at all times to capitalists State stocks in exchange for their money, or, on the other hand, refunding their money on the return of the stocks received, does not effect its object.

But we have another objection to point out. By this system the State is burdened without necessity, without any advantage to the country, with the interest on all sums paid into the National Treasury in return for stocks. This would be to loan money without object, without making any use of the money borrowed, and yet to contract the obligation to meet the interest on it; in other words, it is compelling the State to pay interest on its own money. And the interest, we may remark, would amount to a more considerable sum than is supposed.

The aggregate of money serving as a medium of exchange is very considerable, and a large portion of it would go into the national treasury in exchange for stocks which would be used in performing the function of money, and serve as a medium of pecuniary transactions, at least of those of a certain degree of importance. Every one would willingly receive as many stocks bearing interest, and redeemable with certainty, at any moment. At present, Government stocks cannot be used as a medium of exchange because they are not redeemable at will, and because their value is exposed to all the fluctuations of the market. We may hence judge of the enormous sacrifice the State would have to make in order to have the pleasure of keeping on hand, and idle in its vaults, enormous amounts of its own money.

Mr. Bacon was led to propose the system of currency which we have analyzed, by the discussion of the question of the measure of value. We regret that on this subject also we must differ from the distinguished writer. In our opinion the attempt to ascertain a constant measure of value is not only idle, but cannot possibly lead to any result.

Mr. Bacon, with his usual clearness and accuracy of judgment, sees that the value of things is simply the relation between the quantity given and the quantity received. Value, then, is not a concrete quantity that can be measured, but it is an abstraction. It is the capacity of things to be exchanged for other things.

Almost all the schools of economy have confounded value with wealth, and this confusion has often led away from the right path those who have given their attention to economical questions.

True wealth is the possession of things adapted to the satisfying of our wants. If all those things which have this adaptation were given us in such abundance that they might be used without exhausting the supply, as is the case with air, light, electricity, we should be immensely rich, and yet we should not possess one cent of value.

Some economists are of the opinion that the value of things is the sum total of the sacrifices, or, in other words, of the cost incurred in procuring them. This is again a mistake. Value, we must repeat, is nothing but the relation between the quantity of things given and of things received. Now

as this relation is established by the demand and supply, it may happen, and often does happen, that things are given without the equivalent of the sacrifices they have cost being received in return.

According to these views, since value is not wealth, being only the relation between two variable quantities, it cannot serve as an invariable mea sure of values. However, for daily transactions, money, although subject itself to the variations of the market, may serve as a measure at the moment of exchange. If one hundred yards of cloth, as well as a quarter of wheat, may be exchanged for five dollars, the conclusion is, that the value of these two commodities is the same. Any other article of merchandise might serve as a measure at the instant of the transaction, and if the preference is given to money, it is because all exchanges are made by means of it. But neither money nor any other value can serve as a constant measure of values, since it changes itself. An ounce of gold, before the discovery of the mines of Potosi, had not the same value then, that it has now; and if the mines of California, of Australia, and of the Ural mountains increase to a considerable extent the existing mass of gold, the value of gold must necessarily undergo a change.

A money of paper, not that issued on Mr. Bacon's plan, nor that furnished on the application of the owners of capital, according to Mr. N. H. C.'s system, is the only value subject to fewer variations than any other. But it would vary none the less according to the progress of the wealth of the country, which, making more money necessary, and increasing the demand, as business became heavier and more important, would necessarily lead to a rise in its value. Moreover, this progress being from its nature slow, the variation would be almost insensible, and the State might even prevent it by providing for new emissions, in proportion as wealth increased or the demand for more money made itself felt.

In conclusion, then, we rejoice to see the doctrine of a money of paper making its way among enlightened American minds, and we believe the day is not far distant, when it will become more general, and, by securing the sanction of the federal legislature, will become the law of the country. And it will be reserved for young America to set the example of a social improvement so important, which Europe in its dotage, and the slave of ancient prejudices, obstinately rejects without deigning even to examine its merits.

Note-We had written thus far when a friend sent us a work entitled "Treatise of Political Economy," by George Opdyke, published in 1851, by G. P. Putnam, at New York.

We have hastily read, not the whole of the work, which we propose to examine more attentively hereafter, but only the 5th chapter, on the subject of money.

Everything in this portion of the Treatise is written with evident conviction, order and clearness. The principles on which the theory of money rests are established and developed, with the conclusiveness of axioms, and the consequences logically deduced from them are as evident as the principles themselves.

We are happy to find a perfect coincidence of the ideas of the author with those published by ourselves in 1839, (see the criticism from the Revue Britannique, cited above, and published in the December number of the Merchants' Magazine). This coincidence is the more flattering as we are sure from the course of reasoning pursued by Mr. Opdyke, that he knows noth

ing of our own labors, for he would otherwise have certainly mentioned them.

Mr. J. Opdyke boldly proposes the emission of a money of paper, which he calls "inconvertible paper-money." But there is a slight difference between his plan and our own. His aim is principally to do away bank paper, which he calls convertible paper money: and he allows coin to circulate concurrently with his inconvertible paper money. Mr. Opdyke thinks it necessary to retain the metallic currency, in order to liquidate the debts of the country to foreign nations. These are his words: "My proposition is merely designed to transform that portion of our circulating medium which consists of convertible paper into inconvertible, or rather to expel the one and fill its place with the other, leaving the coin portion undisturbed. We should thus blend the service of two portions and secure the utility of both inventions. The paper would circulate at home, coin partly at home, and partly in the channels of foreign Commerce."

On the contrary, we cannot admit any auxiliaries in our system of a money of paper; to it exclusively and absolutely should belong the office of effecting exchanges. Our monetary reform is as absolute as the principle on which it is founded; and as to the payment of foreign debts, it is not indispensable that they be paid in coin; the precious metals uncoined are sufficient for the purpose. It is in this way that foreign debts are paid at present, when the legal currency is exclusively metallic. It is not the money value which the foreign creditor receives in payment, but the value of the metal contained in the national coin. In fact, the par of exchange is established solely by the weight of the precious metals contained in the coin, not by their denomination.

To prevent a rise in the value of money and to keep it at the same level, (a rise which must necessarily result from the increase in the wealth of the country,) Mr. Opdyke proposes new emissions of money of paper according to the growth not of wealth but of population, in the belief that the growth of population furnishes a correct basis for the computation of the growth of wealth. And his opinion is that the relation between the number of monetary units, that is, of dollars, and the number of the inhabitants of the country was 10 to 1.

We have no reason to doubt the correctness of this hypothesis so far as regards the wealth and population of the United States; but we doubt its accuracy with regard to other countries in general. The want or demand for money is in proportion to the pecuniary transactions which daily occur, and these transactions depend upon the agricultural, industrial and commercial movement of a country-that is to say, upon its wealth. Now the wealth of different States is far from being in the same proportion to their respective populations. What a difference, for instance, exists with regard to this relative proportion between the United States and Ireland, between England and Italy, between France and Spain !

Thus Mr. Opedyke's plan for preventing the rise of value of money may suffice for the fortunate American Federal Union, but not in a general way for all the nations of the globe, in a large portion of which the population is poor, idle, and without occupation.

A government has various ways, we think, of determining the right moment for increasing the circulation of a money of paper. It must necessarily take into consideration the increase of population which is usually a

VOL. XXVI.-NO. I.

4

symptom of the increase of wealth, but it will also consider the increase of sources of the wealth of the country.

We will close these remarks by quoting those passages of Mr. Opdyke's work in which he very happily sums up the imperfections of a metallic currency, and of bank currency, (convertible paper-money,) and the advantages of a money of paper, (inconvertible paper-money.)

"I have now finished my survey of the uses and properties of money in its two most customary forms; and if the views that I have advanced are sound, they establish the truth of the conclusions which follow, viz:

"First, That money in the form of gold and silver coins, although an invention of unrivalled utility, is nevertheless liable to three serious objections, namely, it costs too much to produce, it is too heavy for convenience, and it lacks the requisite uniformity of value.

"Secondly, That the invention of convertible paper-money was designed to mitigate two of these defects by a partial substitution of representative value (merely fictitious) for real value, and a material of paper for one of metal.

Thirdly, That while the invention last named has secured the aims of its projectors by partially avoiding the objections referred to, it has produced other mischiefs of a far more serious kind, which may be recapitulated thus: 1. It has turned out that the fictitious value of the convertible paper costs its producers as much or more than it costs to produce the coin which it purports to represent.* This of itself neutralizes one of the two advantages anticipated from the invention. 2. The money thus produced has proved to be insecure; for, although it costs as much to produce as coin, it has no value when the producers become insolvent, which happens so often that its holders are subjected to immense losses. 3. It is demoralizing and otherwise injurious to the general welfare, since, by its ceaseless expansions and contractions of the measure of value, it has thrown around Commerce, and in fact every other branch of production, the chance-like uncertainties of the gambling table. 4. It tends, when aided by tariff laws, to keep the measure of money too full, which, besides giving undue advantages to foreign nations, by enhancing the price of imports while it does not affect the price of exports, is certain to be followed by ruinous contractions or a general suspension of specie payments. To counterbalance these great evils, convertible paper-money has but one compensating attribute, which in comparison with these is but as a feather in the opposite scale, namely, it possesses greater

convenience than coin."

Mr. Opdyke thus sets forth the advantages of a money of paper (inconvertible paper-money.)

"Paper-money thus issued would cost nothing, or next to nothing, to produce, nor would it be inconvenient from weight. Therefore it would clearly obviate two of three serious objections to which coin is liable. And since its quantity as compared with population or Commerce would be invariable, it follows that its value or purchasing power would be uniform, therefore it would be free from the other objections which I have urged against coin, and which applies with still greater force to convertible paper. would possess another advantage over coin which deserves notice. When coin is lost or destroyed, there is an absolute loss of value, the owner loses, no one gains but whenever this should meet the same fate, the loss of the

We are not entirely convinced of the correctness of this position. L. C.

It

owner would be balanced by the gain of the community. If, in these essential attributes, it is thus superior to coin, it is scarcely necessary to compare it with convertible paper, or with a circulating medium made up of coin and bank notes. It may not, however, be amiss to say that in view of its irredeemable character, it would be free from the wide-spread mischiefs produced by bank panics, suspensions and failures, which periodically occur under that system. It would thus greatly mitigate the severity of commercial crises, and perhaps render them altogether harmless; in a word, it would remedy all the defects inherent in coin and in convertible paper."

It may be well, we think, to add a further remark as to the means proposed by Mr. Opdyke for preventing the excessive issue of paper money. To obviate this inconvenience, he deems it sufficient to place the control over it in the hands of the President, Vice-President and Treasurer of the United States, and a commissioner elected by the people; and, as a measure of precaution, he would have the bills issued countersigned by one or more governors of States.

The certainty that it will be out of the power of Government to make secret issues, is the corner-stone of the system of a money of paper. Governments, even republican ones, are forced by circumstances to have recourse for resources to the emission of paper-money. Now, it is precisely the abuse, hitherto, of this means of procuring funds, by governments, in moments of need, it is the disastrous consequences of these excessive issues which now lead many to reject the system of a money of paper, believing it exposed to the same abuses as ordinary paper-money. Hence it is of the greatest importance, not only to render impossible the abuse of this power of issue, but to convince the public mind of this impossibility.

We think, therefore, that the responsible direction of these emissions should be more general than that which Mr. Opdyke proposes. We would have it confided to a commission composed of a large number of members of both branches of the Legislature, of delegates representing Commerce, agriculture, and manufactures, and of commissioners appointed by the Executive. We would also have every thing relating to the currency publicly discussed in the halls of legislation, and made the subject of enactments, and we would have the members of the currency commission personally responsible for the execution of the laws in this particular. We would also have a monthly statement published in the public press, of the number of monetary units issued by the government up to the day of publication. It is essential that the country should know the quantity of money in circulation. It then can be certain that the value of the currency remains stationary and is not threatened with depreciation. By means of these precautions, confidence is confirmed, not only at home but abroad also, and we are sure that the excellence of a system of money of paper such as we have proposed, would also have a tendency to make the rate of exchange incline in favor of the country adopting it.

LOUIS CHITTI.

*A money of paper renders great financial crises impossible, the only cause of which is the excessive emission of bank paper, or paper-money. L. C.