of consumption. The holder of a barrel of flour is just as potential in money as the possessor of gold who has to purchase and consume flour as the condition of existence. Gold, however, has the advantage that it is not subject to decay, while the uses to which it can be put are always certain to maintain its value the world over. It has the same significance everywhere. There can be no overstock of it, while flour may be largely in excess of demand, the consumption of it on a large scale being restricted to a few races. Ordinarily, however, the supply of merchandise for consumption, and of gold, keep an even pace, so that the holder of gold has no advantage over a holder of merchandise, even of the kind which, to maintain its value, must be presently consumed.

The greater part of the issues of banks and bankers in all commercial countries is based upon the undrawn proceeds of loans. On the 30th of September, 1892, the loans of the National banks of the United States equalled $2,153,498,829. Their own loanable capital equalled $1,029,077,041, made up of $686,573,115 of share capital, $238,871,425 of surplus funds, and $103,632,501 of undivided profit. Their deposits equalled $1,775,251,128. Their loans consequently exceeded their own means by $1,124,421,788. The loans and discounts of the State banks equalled $654,654,490; of Trust companies, $310,174,726; of private banks and bankers, $69,310,687; the total being $1,034,139,903. The share capital of the State banks equalled $233,751,171; the surplus funds and undivided profits, $90,358,080. The capital of the Trust companies equalled $80,645,972; their surplus and undivided profits, $60,768,148. The capital of the private banks and bankers equalled $34,590,227; their surplus funds and reserved profits, $11,259,164. The total loanable capital of the three equalled $510,372,762. Their loans in excess of their capital equalled $513,767,141. Their deposits equalled $1,153,264,953, made up of $648,513,809 with State banks, $411,659,996 with Trust companies, and $93,091,148 with private banks and bankers. The loans of all classes of issuers equalled $3,187,637,732, a sum $1,648,187,929 in excess of their loanable capital, amounting to $1,539,649,903. Their deposits equalled $2,928,516,081. By the means described the whole available capital of the country is made the basis of reproduction, not a dollar that can be spared remaining unused.

The advantage inures chiefly to workmen, as their

wages are in ratio to the amount of capital employed, while the prices of all articles of consumption are reduced in like ratio.1

As all issues of currency properly made are retired automatically and within brief periods by the consumption of their constituent, their denomination or amount is to be suited to the means or wants of the humblest as well as the largest consumers. There is the same reason for the issue of notes of one dollar as of ten or fifty dollars. No bank, however, would on the score of convenience and economy issue notes for less than one dollar. It is often urged that no notes should be issued for less than ten dollars, in order to force specie into use, so that in the event of a breakdown in paper money the people shall have something to fall back upon. The same reason might be used against the use of cheques of less amount than fifty dollars. It is to be remembered that the purpose of symbolic money is to take the place of metallic money, which is to be wholly discharged from the exchanges, except as subsidiary coins. There can be no more inflation with a symbolic currency, properly issued, than with a metallic currency, as the purpose of each as money is to reach some article of consumption. The amount of specie to be held is a matter of experience, the issuer, where the capital of a bank is fully paid, always inclining, as a matter of caution, to an excess, as much to maintain a high credit as to be always prepared for any emergency. With a proper system no considerable adverse balance could arise in the foreign trade of the country, as the instruments could never be in excess of the means of expenditure.

1 Statement showing the number; amount of share capital; loans and discounts; surplus funds; undivided profits, and deposits of the National banks of September 30, 1892, and of the State banks, Loan and Trust companies, and private banks and bankers at the close of the fiscal year 1892.

SAVINGS BANKS.

In addition to the deposits with banks and bankers which, as capital, are made the basis of increased issues of symbolic money, are deposits with savings banks, the accumulated earnings, or reserves, of those who, having no adequate means of investing their earnings or savings, intrust them to institutions especially equipped for such purpose. As the deposits with savings banks are ordinarily made. in the notes of banks of issue, or in cheques upon the same, they represent capital in a form fitted to serve as a basis of reproduction, for the prosecution of enterprises of all kinds, or for permanent investment. Deposits with savings banks, as with banks of issue, are payable presently in gold, as an undertaking, or guarantee, that the property upon which they are loaned, or into which they are converted, has a value equal to that of an equal amount of gold, — of the universal equivalent. There is this difference between deposits with banks of issue and those with savings banks. The former, arising out of the discount of bills, are used as the instruments for the distribution of the merchandise which such bills represent, and are retired by their use. If not returned to the issuer, through the purchase of merchandise, they are to be taken in by paying out a corresponding amount of specie. However issued, they are certain to pass into the hands of the holders of merchandise by whom they are presently deposited in a bank which, if not the issuer, to strengthen itself, immediately demands from the issuers payment in specie. On the other hand, deposits in savings banks, though payable on demand in coin, represent accumulations to be invested, their owners having no present use for the same. As they will be drawn only to meet the occasional wants of the depositors, the aggregate amount, with a healthy state of affairs, steadily increases so that the whole mass at any one time may be safely treated as a proper subject for investment. Of course in the event of disturbance or apprehension there may be runs upon savings banks for specie, to be ordinarily returned, as the apprehension subsides, to the banks from which it was drawn, or to some other institutions of the kind. As the purpose of savings banks is to invest the money of the laboring classes, or of those who cannot well invest for themselves, and as it is always understood that the deposits are to be invested in property which cannot be immediately converted into gold, in the case

of a run upon them they are allowed to defer payment for such time as is assumed to be necessary for the conversion of their assets. The amount of deposits in all the savings banks of the United States, September 30, 1892, equalled $1,712,769,626, of which $705,777,557 were held by the savings banks of the New England States, the amount averaging $150 per head of their population. As in these States savings banks may make loans to manufacturing corporations, they are of great aid in carrying large stocks of merchandise for which there may be no present remunerative demand, as the money of these banks for such purposes, and in any amounts, can be had at the lowest current rates. The manufacturers in these consequently have a great advantage over those in other States who have no such facility for borrowing. In the State of New York the deposits in the savings banks equalled $588,425,421. The deposits in the savings banks of the State of California equalled $127,000,000. Had all the States deposits in savings banks at the rate of those in New England, the total for the country would reach $10,000,000,000. There are few manufacturing establishments and no savings banks in the States of Mississippi and Texas, which may largely account for their hostility to interests in which they have little or no share, but out of which deposits in savings banks chiefly arise.

MONEY BY LAW.

There are two kinds of money by law a debased coinage, and notes payable at the pleasure of the issuer; both to be received at their nominal value in the discharge of debts. The latter is by far the more dangerous and disastrous expedient, as debased coins have, ordinarily, no other support than the value of the metal they contain; and by no sophistry can one be persuaded that a coin of a half an ounce of silver has the value of a full ounce. New contracts will be made in them only at the value of the metal they contain. So soon, therefore, as those existing are discharged the mischief resulting from the debasement is substantially at an end. Notes issued to serve as money are a very different affair. They may be issued and accepted in entire good faith, being promises

of a government for which, through its taxing power, the whole means of its people are assumed to be pledged. They are at the outset always well received from the credit attached to them, from the increased activity they impart to all the operations of society, and as a facile expedient for meeting any great emergency. The occasion of their issue is usually one which has roused the spirit of the people to the highest pitch, so that little attention is paid to any voice of warning, the great mass being content to forego present payment for the good of the cause, confident that, the crisis passed, abundant provision for their redemption will be made. As the community among whom they are issued is impoverished in ratio to their amount, as they are instruments in excess of the means of expenditure, each succeeding issue, no matter how great has been the depreciation, is, consequently, always more eagerly welcomed than the preceding one. The Continental currency, though resting on very feeble foundations, the joint action of the several States over which Congress had no control, was well received, and circulated for nearly two years at the par of coin. As the contest was prolonged the amount was necessarily rapidly increased, prices, from the distrust created, being inflated in far greater ratio. Still no one hesitated to take them at a price, as the greater the depreciation the greater the gain, should it turn out that the Government would eventually provide the means for their redemption. They were as readily taken at one-fifth as at their par value. Nothing, however, could arrest the decline as issue followed issue till the amount equalled $250,000,000. At last their worthlessness became so patent that they fell a vast and lifeless mass to the ground. The histories of the time are full of pictures of the sufferings from the extravagance and waste necessarily resulting from the possession of vast sums which, at a rate, served all the purposes of money; and from the losses to the holders when the final crash came. To greatly aggravate the catastrophe the several States vied with the National Government in vast issues of notes for the common cause, all of which shared a common fate. The terrible disasters that were suffered were held up as warnings for all time, and led to the insertion in the Constitution of the new National Government of an article forbidding the States to emit "bills of credit; " that is, notes to serve as money, a restriction which on several occasions has been held to be as imperative upon the National Government