Currencies, like bills of exchange, only instruments arising in production

and distribution . .

Distinction between capitalists and Banks

The manner in which banking capital may be provided

This always in the hands of the public till Banks go into liquidation
Bills proper to be discounted . . .
Effect of discounting accommodation bills
Inflation and contraction which result.
Disastrous consequences

Of the discount of bills given in the purchase of real property

Of the discount of bills given in the purchase of securities

Cause of the failure of Banks based upon real estate or securities

No bills to be discounted but those given for merchandise entering into con-

sumption..

That a currency may be convertible, the means therefor must be provided

previous to its issue

Of the discount of bills given in the purchase of merchandise not in demand

for consumption . . .

Short bills only to be discounted.

Banks by discounting bills not properly based responsible for all the great

fluctuations in production and trade.

41

Disastrous moral effects of fictitious currencies

Limited functions of governments in the matter of symbolic currencies

Should forbid the discount of bills not based upon merchandise and having

more than four months to run .

Or such as will not mature within the time required for the distribution to

consumers of the merchandise they represent

Governments can never issue a convertible currency, nor one that is not at a

discount from the standard of coin . .

Wide difference between currencies issued by governments and by Banks.

The former never issued in the discount of bills

43

43

44

44

All government currencies the representatives of debt, not of capital.

Governments the only parties to retire the currencies issued by them

They are made legal tender as the only means by which they can be got

into circulation .

Symbolic currencies measure the means of consumption of a people

Disastrous effects of a currency that does not symbolize capital

Further difference between government and Bank currencies

Interest always paid Banks on loans of their currencies

Never paid on the issue of currencies by governments

All government currencies in their depreciation involve a loss greater than

interest on their amount . . .

48

Why governments cannot issue convertible currencies

50

Constant and excessive fluctuations the law of all government currencies

They reduce all business operations to the hazards of chance.

The great problem of society distribution, not production

52

52

53

A flexible currency a representative currency.

54

A government currency never flexible, as it bears no relation to the means

of consumption

The value of all currencies depends upon their quality, not quantity.

Unlike measures of weight and extension, money, as the measure of value,

A currency of government notes never issued for the purpose of facilitating

Their value never affected by the number of exchanges taking place.

Wholly dependent upon the credit of the issuer

Usually repudiated

Symbolic money simply the record of transactions.

57

58

58

59

The propriety of its issue shown by its return in the payment of the bills in

the discount of which it was issued

59

Every possessor of merchandise competent to issue a convertible currency

The greater part of the currencies to be issued locally.

Convertible currencies will never circulate far from the place of their

59

59

issue . . . .

59

Erroneous assumptions in reference to money

60

Methods followed in the investigation of its laws those of the Schoolmen

Their exposure and refutation the necessary condition of progress in mone-

tary science

61

61

His successors the Schoolmen and Political Economists

The unscientific character of his mind

Childishness and absurdity of his illustrations

The great obstacle in the way of all progress

Complete failure of the Aristotelian method (Whewell)

Bacon in reference to (note)

The legitimate founder of the Schoolmen (Whewell)

Emancipation from either could come only from the new races

Bacon the first to teach the proper method of scientific investigation .

70

70

Difference between his method and that of Aristotle

Emancipation of the exact sciences from the Aristotelian methods.

In the moral, the methods of the Schoolmen still prevail
No considerable progress made in any but Law (note)
Unlawfulness of usury first attacked by Bentham
Money not yet emancipated from the teachings of Aristotle
Permanence of theories in themselves wholly absurd (note)

Disastrous consequences of its debasement (Macaulay)
Its reformation proposed

Opposition headed by Lowndes

His proposition for lowering the standard

Locke called upon to refute him..

Standard value of the coinage to be maintained

Government to assume the loss.

The people for a time without a currency (Macaulay)

The inconvenience and distress

74

74

74

75

77

78

78

78

79

79

80

80

"Money not the value for which goods are exchanged, but the value by

which they are exchanged"..

86

Land better than silver as a basis of currency

87

Money for domestic exchanges may differ from that used in foreign

exchanges

Holds that its issues might be made the basis of industrial enterprises

Money a thing of no importance

Its value imaginary . .

An imaginary value no value

Hume's plan for debasing the currency

His untrustworthiness shown by it.

Prices reduced by reducing the amount of the currency
Prices increased by reducing the currency
Money is in ratio to products exchanged .

Paper money displaces a corresponding amount of coin

Does not displace a corresponding amount of coin

His views upon money wholly erroneous.

His ignorance, and indifference to truth

The anomalous character of the Bank of England

Its success due to the practical sense of its managers

90

90

91

94

94

95

95

95

95

97

98

98

98

99

Labor, as an abstract notion, the real measure of values; coin, the appar-

Fluctuates more from year to year: less from age to age

110

The money or coin price the one by which transactions are made

The universal preference for the precious metals renders them money

The convenient, the natural medium of exchange

Contradictions in which Smith involved himself

Puerility of his illustrations and arguments

The price of every commodity resolves itself into wages, profit, and rent 112

The gross and neat revenue of society.

113

The expense of maintaining its fixed capital no part of its neat revenue

The expense of maintaining its circulating capital may form a part of its

neat revenue

Money is the only one the maintenance of which can occasion any

diminution in the neat revenue

It forms no part of either the gross or neat revenue

It is the wheel of circulation, not the thing circulated

Smith's elements of price and classifications of property arbitrary and

Money the highest form of finished work

The legal division into “real” and “personal” the only proper one

Defect of Smith and the Economists in overlooking interest as an element

in price ..

The expense of maintaining all kinds of property is in ratio to its cost

Money essential to the value of all other commodities

Need not be actively employed to be productive . .

Groundlessness and absurdity of Smith's assumptions and conclusions

Distinction between real and nominal prices

A person's income is not the money he receives

Absurdity of such distinctions

Paper money a substitute for metallic money

That of Banks and bankers "seems" to be the best
Advantages of such substitution

Mode of its issue....

It circulates upon the credit of the issuer
Only occasionally returns for redemption
Reserves necessary to be held. . .

The word "seems" illustrative of Smith's method

Wholly failed to comprehend the nature of paper money

All notes issued return regularly for redemption.

If good bills only be discounted, the notes return in their payment

Manner in which paper money may be substituted for coin

An amount of coin equal to the issue liberated from use

The channels of circulation will only hold a certain quantity of money

If there be too much, they will overflow . .

115

115

115

115

116

The available capital of a country increased by the amount issued

Mode of issue of a symbolic currency.

124

124

The holders of money never send it abroad as the condition of using it as

capital

125

Exported in consequence of previous expenditures

126

Smith wholly misconceived the object and effect of paper money

126

Provision, material, and finished work, the only things that can set indus-

Money only a small, and always the most unproductive part of a nation's

capital ...

126

Money material for the reason that it is always going into the arts

All kinds of capital necessary to the operations of society equally valuable

and equally productive.

127

The proportion of money to the merchandise circulated by it .

The advantage of substituting paper for gold.

Proper limit of paper money the amount of merchandise to be symbolized

Tendency of all commercial countries to symbolize their products.

Paper money (unless legal tender) cannot be substituted for coin

The greater the amount of paper, the greater that of coin.