terest arises from the possession of capital, and has nothing to do with the character of the parties to whom it is loaned. Governments no more than individuals can borrow, nor did a government ever attempt to borrow without agreeing to pay interest. By seeking to avoid its payment it only increases the rate from the discredit attached to such an act. If bills discounted at Bank do not in terms bear interest, it is for the reason that the amount agreed upon is included in the principal sum, to be deducted from the amount paid the borrower. Suppose government to attempt to borrow, at the same time, on bonds bearing no interest, and upon bonds bearing interest at the rate of six per cent annually. In the latter case it would receive an equivalent both for the principal and interest which were contracted to be paid. This might be a sum equal to the par value of the bonds; the interest to be paid being the equivalent for the use of the sum loaned. In the former case, interest for the time the bonds had to run would be deducted from the amount to be received or paid in their purchase. If the bonds were made payable, in say sixteen years, and if perfect confidence were felt that they would be paid when due, the government might receive, in their sale, a sum equal to that which, at interest at a high rate, say ten per cent, (for no one would lend at the same rate on non-interest bearing as on interest bearing bonds) would produce a sum equal to their par value. People in dealing with governments, as well as with each other, deal, or assume that they are dealing, in values, in realities, not in shams or fictions.

Governments not only pay a higher rate of interest on noninterest bearing than on interest bearing securities, but they suffer from the use of the former as money a loss far greater than the excess of interest paid, in the increased price of every thing they have to purchase. By the time the United States had issued its notes to the amount of $400,000,000,-a sum about equalling the coin and Bank notes in circulation in the country at the outbreak of the rebellion, the prices of merchandise and labor of all kinds were, from the effect of such issue, fully doubled. Assuming the amount paid in such purchases, by the Federal as well as the State governments and municipal bodies, to equal $3,000,000,000 after the notes were issued, the excess of payments growing out of their use in the prosecution of the war over values received, measured by the

standard of coin, was fully $1,500,000,000. This vast sum is a part of the penalty which the people paid, or contracted to pay, for the use of a legal-tender currency.

As Banks are seen to maintain in circulation notes and credits largely in excess of the specie they hold, why, it is asked, may not a government, that of the United States, for example, with reserves in coin equalling $50,000,000, maintain in circulation notes to the amount of $250,000,000? All currencies, no matter their kind, circulate only at their value. Were a Bank, holding $50,000 in coin, to issue notes to the amount of $250,000, making no other provision for their payment, they would circulate, if at all, only at their actual that is, at 20 per cent of their nominal value. That they circulated at their par value would be due to the fact, that, in addition to the coin held by the Bank, estimated to equal onefifth of its liabilities, it held bills, speedily to mature, exceeding the amount of the latter. The payment of its bills would retire its liabilities, leaving its coin untouched in its vaults. Its issues would not inflate prices, as each would have its proper constituent. They might be taken in a dozen times. without the movement of a dollar of its reserves. These would be drawn only to take in such notes as were not retired by its bills; the process having already been fully described. That the amount of its circulation appeared to be uniform would be due to the fact, that, as the old disappeared, new symbols would be issued, in equal amount, to represent new creations of merchandise.

Currencies issued by governments, so far as they resemble those of Banks, obey a similar law. If a government should issue notes to the amount of $250,000,000, providing only $50,000,000 for their payment, they would be worth only 20 per cent of their nominal value. If they circulated at all, it would be at their value. If a government, in the case supposed, should hold, in addition to its coin, good bills to be speedily paid, representing merchandise, and equal in amount to its notes, these, like those of a Bank, would pass at their nominal value from the provision made for their payment. As they would return to it without drawing its coin, it might, were it possessed of new bills representing merchandise, make new issues; so that its notes would appear to be uniform in amount, and to remain permanently in circulation, although

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constantly appearing and disappearing. They would circulate by virtue of the merchandise represented by its bills, and not, as is commonly supposed, by virtue of the coin held by it. They would no more than symbolic currencies of Banks inflate prices. So far, the action of Banks and of a government would be precisely similar, and attended by similar results. The action of Banks and of governments in the matter of currency is never similar. Governments can never issue convertible currencies. Banks can maintain in circulation none other. That of the latter must represent capital, or cease to circulate they must always be presently payable. Government currencies are always issued to supply the lack of capital, never as instruments for loaning it. As a government issuing them can never pay presently, it never makes them payable presently. Their value, consequently, depends on the provision to be made for them at some future day. As plain notes, whatever their value, can never be gotten into circulation as money, the notes of governments are always made legal tender, - that is, a competency is given them to discharge contracts at their nominal value. This attribute gives them, to those in debt and to holders of merchandise, a value, for a time, nearly equal to that of coin; and is one of sufficient potency to drive coin out of circulation, which plain notes can never do. The value of legal-tender notes, whatever it may be, can never equal the value of coin, as they possess only one attribute of coin, capacity to discharge contracts. They cannot be used in the arts; they cannot discharge foreign balances; they cannot serve as the general reserves of society. They cannot equal the value of coin for the reason that they are, to their whole extent, instruments in excess of the means of expenditure. Their price necessarily declines, at least in ratio to their amount, even if perfect confidence be felt in their ultimate payment. There is, on account of their issue, no less, but always a far greater amount of other kinds of currency in circulation. As they do not represent merchandise, they are superfluous to their whole amount. As they are "lawful money," they immediately flow into the banks; increasing their reserves, and with them their issues, in far greater ratio. As these have no greater value than their representative, they become depreciated in ratio to the whole amount of currency for which they form the reserves.

Even with a currency of government notes, its warmest advocates always seek to place all their transactions on the basis of coin. They will never take such notes at any price but at their value, or their supposed value, in coin. To be consistent, they should always receive them at their par value equally with coin. To do this, a person would be no better than a lunatic. In every sale, it is sought to convert that which is sold into something that shall have a more uniform and universal value, into that which will, at cost, when desired, secure to the holder the possession of any and all other kinds of property. No one at the present day can cut himself off from the world. He must consume the products of every part of it. He must have his means in that form which will pay for the articles he consumes, wherever they are purchased. He is compelled to keep this fact constantly in view; and if any intermediary process is to be gone through in the sale of his products, he will take good care that that which he receives shall have the value of coin. The degree of his ability to do this measures that of his thrift or success. A currency of government notes is certain to defeat the purpose which every person has always uppermost in his mind, which is to maintain all his transactions on a specie basis. With all his vigilance and skill, it is impossible but that he should constantly be making losses in taking them. They are always fluctuating in price, often excessively, from causes which he can never foresee, and which he is powerless to control. The only way by which he can hope to escape loss from such fluctuations is to demand, in notes, more for what he has to sell than it is worth in coin; so that, if they fall in value, he may still escape loss. But the purchaser who buys to sell again may be equally subject to the risk of loss, from a rise in price of the currency. If that rises in price, merchandise necessarily falls equally in price. He consequently must add to the price of that which he holds, as his guarantee against loss. It is in this way that the transactions of society become, under a government currency, mere gambling operations,mere chances at hazard, -always involving a risk of loss, and inevitably sapping in a most insidious manner the moral sense of the community. For the reasons stated, prices of all kinds of merchandise are maintained at extravagant figures, so long as money or currency can be had to carry it.

The time will inevitably come, however, in which holders will be forced to sell, from the inability or indisposition of the public to purchase, and a break will be made which will carry prices far below what they would have been in coin, under a currency of symbols.

It is always to be remembered that the great problem of society is distribution, not production. There is hardly a member of it that could not double his products, could he find a market for them. He has only to extend and quicken his industries, to add additional belts to the shaft already in motion. His difficulty comes in the attempt to reach consumers who may perhaps be on the opposite side of the globe. As the slightest break in his machinery will arrest his industries, so the slightest defect or interruption in the process of distribution may shut him off from his markets altogether. The former he may readily repair; the latter is far beyond his reach. A rumor that the relations between two European powers are no longer friendly may cause an American merchant engaged in the China trade to stop his shipments to that country till he can see what is to be the issue. Should a war break out, and his ventures be in foreign bottoms, he may be threatened with the loss of them. The rates of insurance may rise excessively; or the money market may become so disturbed that future shipments may involve a loss where previous ones, at the same rate as to cost, had realized a profit. So, in every community, events are always occurring to interfere with the process of distribution. Its instruments Its instruments may be supplied by a Bank which may become insolvent, and its issues lose their whole power. A corresponding amount of merchandise, consequently, will be left without the means of distribution, and will fall largely in value. Its fall will affect the whole market. If it be of a perishable nature, it may, if the consumers cannot be readily reached, become wholly valueless. A great merchant may fail, and the machinery he set in motion and directed come to a sudden stop. If others cannot be readily reached to fill his place, the merchandise which he held may have to be thrown upon the market at half its cost. The moment, therefore, that one goes from the process of production to that of distribution, he steps from the firm land upon an uncertain sea. Whether the inherent difficulty be greater in one case than the