his stock of money doubled, that the same good effect would follow were the money of every one increased; not considering that this would raise as much the price of every commodity, and reduce every man in time to the same condition as before. It is only in our public negotiations and transactions with foreigners that a greater stock of money is advantageous; and as our paper is there absolutely insignificant, we feel, by its means, all the ill effects arising from a great abundance of money without reaping any of the advantages." 1

"Suppose there are £12,000,000 of paper which circulate in this kingdom as money; and suppose the real cash of the kingdom to be £18,000,000. Here is a state which is found by experience to be able to hold a stock of £30,000,000. I say, if it be able to hold it, it must of necessity have acquired it in gold and sil ver, had we not obstructed the entrance of these metals by this new invention of paper. Whence would it have acquired that sum? From all the kingdoms of the world. But why? Because if you remove these £12,000,000, money in this state is below its level compared with its neighbors, and we must immediately draw from all of them, till we be full and saturate, so to speak, and can hold no more. By our present politics we are as careful to stuff the nation with this fine commodity of bank bills, and cheque-notes, as if we were afraid of being overburdened with the precious metals."

"What a pity Lycurgus did not think of paper credit when he wanted to banish gold and silver from Sparta! It would have served his purpose better than the lumps of iron he made use of as money; and would have prevented more effectually all commerce with strangers."

"These institutions of Banks and Paper Credits render paper the equivalent of money," says Hume. It is the capital such paper represents that makes it the equivalent of money. By representing capital, and serving in the place of coin as the means of its distribution, it reduces instead of "raising propor

1 Essay on Balance of Trade, p. 397.

2 Ibid., vol. iii. p. 348. As Aristotle deduced the laws of money from the baseness of its uses, it is not improbable that Hume reasoned, or was biased, in a similar manner. He was a thorough Tory, holding the trading and mechanic classes in indifference, if not contempt, which, like that of Aristotle, may have attached itself to their methods and implements. It was natural that he should have a Tory's spite against the Bank of England, as it was founded by the King and Parliament that expelled the Stuarts, to vindicate and uphold whom was the great object of his life; and as the Bank was one of the greatest supporters of liberal principles and of constitutional government in England. With such sentiments, he was much more likely to utter a sneer, than to enter upon an inquiry which would show the Bank to be one of the most beneficent instruments in promoting the progress of the nation.

? Ibid. p. 349.

tionably the price of labor and commodities." His assumption consequently is exactly opposed to the fact. "We fancy," he says, "because an individual would be much richer were his stock of money doubled, that the same good effect would follow were the money of every one increased." But would not every one be richer by having his money doubled? If it were in coin, it could be used as capital, and its possessor's means of consumption be doubled. Its price at home would be regulated by its price the world over, so that an increase in its amount in any one country would by no means affect in like ratio, and permanently, the price of other commodities. Suppose the iron and breadstuffs in a community to be doubled, would it not be all the better off? If a symbolic currency be doubled, would it not be evidence that the means of consumption were doubled? What is wealth but an abundance of such means? With Hume, money was not capital at home while it was capital abroad. It is the highest form of capital at home, for the reason that it is the highest form of capital abroad. With Hume, the evil of paper money is, that it displaces a corresponding amount of coin, sinks it below its level, compared with other countries. How did he ascertain this? England, at the time he wrote, with £18,000,000 of coin and £12,000,000 of bank notes, might have had more than its share of coin. Its paper currency, by assisting in the exchanges, may have secured to it a larger amount of coin than it would have had without such currency. His assumption, therefore, that the notes in circulation replaced a corresponding amount of coin is wholly gratuitous. It is from this assumption, however, that Economists have drawn their celebrated dogma or axiom that the proper measure of issue of paper money is the amount of gold that would have been in circulation but for such issue; overlooking the fact that paper money is not based upon coin so much as upon merchandise; and that the amount of the coin of a nation is to be measured not by that which it possesses, but by that which it can command. England may not have so much coin within her borders as France has within hers; but in England every coin that can be spared is loaned. Her money is in every quarter of the globe. Were her loans all called in, she would have an amount of coin far exceeding that which France could command. The latter country is the land of revolutions, and the greater part of the

population prefer, for their better security, to keep their own cash, instead of intrusting it to Banks or bankers.

Hume was one of the earliest writers to refer to the subject of currency to be issued by Banks. An opportunity was thus opened to him, had he chosen, by unfolding its nature and laws, of performing a substantial service for mankind. He preferred to talk rather than to investigate, to appear wise and learned rather than to be so. The Bank of England, when he wrote, had been in operation nearly sixty years, and the currency it then issued was precisely similar in kind to that issued at the present day. He had, therefore, every condition necessary to the scientific investigation of money in all its forms. The establishment of the Bank was an era not only in the history of money, but in that of the race. It was the first attempt, on any considerable scale, to symbolize merchandise, to provide instruments of distribution other than coin. Nothing was better fitted to excite interest and investigation than the nature of such instruments. It seems marvellous that no adequate attempt at their analysis should ever have been made. This is very largely due to the influence exerted by Hume. As the reputation enjoyed by Aristotle forbade all investigation of the truth of his dogmas, and secured for them immunity through the ages, so Hume impressed himself so strongly upon the opinions of mankind as to be received, for nearly a century, as authority upon most of the subjects upon which he wrote, although his works were full of errors and falsifications. He is still constantly quoted, with approbation, upon the knotty points of monetary science; although, as far as any knowledge of the subject was concerned, a Kaffir might as well be quoted for an authoritative opinion upon the Code of Menu.

The anomalous character of the Bank of England has undoubtedly opposed a very serious obstacle to progress in monetary science. It was founded not so much to provide more convenient instruments of distribution and exchange, as to supply the necessities of government, of which it has, since its organization, been one of the most important departments. Its mixed or double functions, as an issuer of currency and as the fiscal agent of the government, have been well calculated to

avert attention from its real nature, with which its relation to the latter had nothing to do. Its success is a striking illustration of the naturalness and necessity of its functions as an instrument of commerce. It was, fortunately, at the outset, restricted in its dealings to commercial bills, and was required to pay all claims upon it, on demand, in coin. It needed no book or instruction to teach an Englishman to demand gold and silver in payment of whatever might be due him, to act like a man of sense, whatever may have been told him in books, to teach the first managers of the Bank that the only way in which they could avoid paying out coin in taking in their notes was to issue them only in the discount of solvent bills, and that the only competent evidence of solvency was that bills were given for merchandise in demand for consumption. The liberties of Englishmen have not been got out of books, nor maintained by any fine-spun theories as to the value of freedom, but by a stolid determination on the part of each one to enjoy whatever he possessed in the manner that best suited him. To this the whole nation have clung with bull-dog tenacity, deaf to all threats or appeals of Church or State. It is almost the only right sacred in their eyes. The only way in which their government could exert power was by the possession of money; and the only way by which it could come into possession of money was through the voluntary gifts of the people. As each one used his own in his own way, the freest play was given to the peculiarities of each; and, out of such free play, whatever is great or good in the nation has sprung.

From Hume we have no writer of eminence on the subject of currency till we come to Adam Smith, who published his celebrated work on the "Wealth of Nations," in 1776, twentyfour years after the publication of Hume's "Civil and Political Essays." The latter were simply monographs upon various questions included in the general term of Political Economy. Smith undertook to treat the whole subject scientifically, and, including his work on the Moral Sentiments, to map out and classify all the motives which influence human action.

"In the Moral Sentiments,"" says Buckle, " Smith investigates the sympathetic part of human nature; in the Wealth of Nations,' he investigates the selfish part. And as all of us are sympathetic as

well as selfish; in other words, as all of us look without as well as within, and as this classification is a primary and exhaustive division of our motives to action; it is evident, that if Adam Smith had completely accomplished his vast design, he would at once have raised the study of human nature to a science, leaving nothing for subsequent inquirers except to ascertain the minor springs of affairs, all of which would find their place in this general scheme, and be deemed subordinate to it. In his attempt to perform this prodigious task, and to traverse the enormous field which he saw lying before him, he soon perceived that an inductive investigation was impossible, because it would require the labor of many lives even to assemble the materials from which the generalization was to be made. Moved by these reflections, and probably moved still more by the intellectual habits which prevailed around him, he resolved on adopting the deductive method instead of the inductive."

1

It will thus be seen that Smith attempted an infinitely wider task than Aristotle, and by precisely similar methods. The latter had no conception whatever of those great questions which now engross the attention of mankind. He had no idea of social and moral progress as its highest condition and law. For the ancients humanity had no claims. Aristotle was unable to raise himself above the low level of his age and race. When his attention was turned to physical phenomena, the great field open to him, he could, for the want of adequate methods, make no progress whatever. If with so few questions, compared with those which pressed upon Smith, Aristotle made such an utter and disastrous failure, how was it to be expected that the former, with no better methods, with a far less acute intellect, and with infinitely more numerous and difficult problems, could otherwise than share the fate of his great master? The objects as well as the methods of the two were almost precisely similar. Aristotle undertook to construct an universal science, and to pronounce authoritatively upon every subject coming within the range of human observation, subjects for the solution of a vast number of which, a lifetime, with the best of training and helps, would have been far too short. The still vaster undertaking of Smith left him no alternative but to apply the Aristotelian method that of dialectics to subjects which yield only to the most patient analysis, and in this way, by a stroke of his pen, to dispose of questions which have required years, if not cycles, to solve. Like those of Aristotle, his teachings upon some of the

1 History of Civilization in England, vol. ii. page 341, American edition.