things as the other. Whether there were or were not a sufficient amount of silver in the world to pay the expenses of Paris for a single year has nothing more to do with the question of the activity of money, and the quantity dependent upon such activity, than if there had been silver enough in the world to pay the expenses of Paris for a thousand years.

"In order to illustrate this subject a little farther," says Stewart, "I shall suppose that a laboring man gains ten shillings a week, This man may be said, on which he receives always on Saturday. a medium, to be possessed of five shillings; and a hundred men in this situation may be said to be in possession of £25. This is all they have used, though they have each of them spent ten shillings a week.

"I make a second supposition, that each of these men lives on credit; that his ten shillings are spent by the time they are earned; and that every man pays his debt when he receives his weekly wages. In this case, the money may never have been a single hour in their hands; and it is a chance of a hundred to one if they are masters of twenty shillings amongst them; and yet each of them, as before, spends ten shillings a week.

"I have only another supposition to make: that each of these hundred laborers will live at the same rate as formerly; that they ask no credit; and that they are paid their wages once a year. They will thus receive at once £26, which, having no other use for their money, they will gradually spend on their families, in the course of a year, at the rate of ten shillings a week. It is evident that these men will, at a medium, be possessed of £13 apiece, and that their whole money will be equal to £1,300; though their wage and consumption are the same as those of a hundred men who could not produce twenty shillings among them.

"The obvious inferences from these suppositions are: firstly, that £25 with a quick circulation will go as far as £1,300 with a slow circulation; secondly, that, even where the circulation is equally quick, £1 with credit will purchase as much as £25 without credit; and, thirdly, that, as both the circulation and quantity of money may vary in consequence of a variety of causes, both natural and moral, it is extremely improbable that the money in circulation should always bear a fixed and invariable proportion to the value of all the commodities used in commerce.'

If money be capital, or the representative of capital, and if when it is exchanged it is exchanged for other kinds of capital, then there can be no greater activity in money than in other kinds of capital; and there can be no relation whatever between its activity and quantity. There would be just as much

1 Lectures on Political Economy, Part i. Book ii.

sense in saying that the quantity of wheat necessary for the consumption of a community was in ratio to the rapidity of its movement: that is, if the rapidity of its motion be made twice as great, one-half the ordinary quantity will suffice. Or, to give another illustration. It not unfrequently happens that a pair of steelyards for weighing large quantities will serve for half-a-dozen families. It is borrowed, or passes from one to the other as they have occasion to use it. If all can use it, then the rapidity or diligence with which it is used marks its value. If such pair of scales cost a hundred dollars, and if it will suffice for the wants of the six families, it saves the purchase of five other pair, although each family may frequently use it. This is precisely Stewart's idea as to money, and this is the meaning of his "rapidity of circulation." He overlooked the fact, that, when money was used as the measure of value or the scale of valuation, the thing, the scale itself, passed from the party using it to the party whose goods had been purchased and measured by it. The scale no longer remains with the six families; but may pass into the next neighborhood, or into England or France or China, if the goods of those countries were purchased by its use.

With Stewart and the modern Economists, money is an entity, possessed of volition and will, flying about the country eager to do some good deed; an active and lively piece doing twice the work of a dull, phlegmatic one. But money cannot move unless something else moves, no matter how eager it may be for work. Its eagerness must find its complement in some other kind of property; so that if volition, will, and activity be predicated of one, volition, will, and activity must be predicated of the other. Money has no attribute of activity dif ferent from that possessed by all other kinds of merchandise. The use of one involves the use of the other; the employment of one involves the employment of the other. In the illustration given by Stewart, just as much money was required when the laborers used that received by them in the payment of debts contracted during the week just closed, and had possession of it for only an hour or so, as when they used it in payment of merchandise purchased during the one ensuing. Equal provision of money had to be made in either case. It mattered little in whose hands the money might be, for a few days, whether in those of the laborer or shopkeeper. In the case

where the laborers were paid at the end of the year, and held on hand, during the succeeding one, one-half, on an average, of their wages, they simply allowed their employers the use, without interest, of the whole amount of their wages for the year. If they held them on hand till they were expended, they deprived themselves of interest upon the amount so held. If 100 men should hold unemployed, for six months, £1,300, society would be deprived of the use of a corresponding amount of capital, in the same way as it would if an equal amount of money, previously in circulation, were to be hoarded. But to infer from such operations that the amount of money required by a community is to be measured by the degree of its activity, is an absurdity that can only be matched by Aristotle, by the Schoolmen, or by modern Economists, who are more wild and extravagant, if possible, than either.

One of the great evils resulting from the reputation of such a man as Dugald Stewart is, that every word that he uttered, which was recorded by himself or by others, is carefully gathered up and put into his "works." In the case of Stewart, these are swelled to eleven ponderous volumes, full of propositions of the correctness of not one of which the reader can have the least assurance. Had his "literary executor," instead of carefully raking up, burned three quarters of all he left, he would have rid the world of a vast mass of rubbish, and the painstaking student of a great deal of the most irksome toil. It may be set down as a maxim, that a person who assumes to write authoritatively upon every subject will write well upon none. Life is not long enough for one man to know every thing, or to construct an universal science.

Simultaneously, almost, with the publication of Stewart's Lectures on "Political Economy" came the report of the famous Bullion Committee, which has occupied so wide a space in the discussion of financial and monetary subjects. It is well known that the Bank of England, in obedience to an "Order in Council," suspended payment in February, 1797. The suspension was caused by the extraordinary demands made upon it by the government in the wars growing out of the French Revolution. The financial position of England had been previously somewhat weakened by enormous ex

portations of bullion in the purchase of bread-stuffs, in consequence of disastrous harvests, particularly that of 1795. Wheat, which in January of that year was worth 55s. the quarter, reached, in August, 1088. the quarter. Enormous importations were the consequence. At the same time, government was in the market for a large loan, the proceeds of which were in a great measure to be expended abroad. Similar loans had been made in 1793 and 1794: that for 1793 being £701,475; that for 1794 being £2,601,053; and that of 1795 being £6,253,151: making a total, in three years, of £9,555,679, to be used chiefly in military operations. The means for meeting these loans were supplied through the Bank, as the great financial institution of the kingdom.

In order to convey an adequate idea of the nature and functions of the Bank, and of the influence it exerted as an instrument of commerce and as an arm of the government, it is necessary to give a brief sketch of its organization and history. The Act by which it was established was entitled, "An Act for granting to their Majesties several duties upon tonnage of ships and vessels, and upon beer, ale, and other liquors; and for securing certain recompenses and advantages in said act mentioned, to such persons as should voluntarily advance the sum of £1,500,000 toward carrying on the war with France." After a variety of provisions relating to the duties to be imposed, the Act went on to declare that the subscribers to a loan of £1,200,000 might be formed into a corporation to be styled "The Government and Company of the Bank of England." The whole sum was subscribed within ten days. after the opening of the books. The charter was thereupon issued (July 27, 1694), and the Bank went immediately into operation. For the sum of £300,000, which was to form no part of the capital of the Bank, the subscribers were to receive annuities for one, two, and three lives. Upon the loan to the government, which formed the capital of the Bank, the latter was to receive interest at the rate of eight per cent, with an additional annual allowance of £4000 for management; making the whole income from this source £100,000 annually. The Bank was authorized to issue its notes as money, to an amount equalling its capital. It was to deal in bills of exchange, and in gold and silver bullion; but was restricted from

trading in any "goods, wares, and merchandise whatsoever." It was to make no loans to government but by permission of Parliament. Its charter was to extend for twelve years, or till twelve months' notice to be given after August 1, 1705.

It will thus be seen that the entire capital of the Bank was loaned to the government. Provision for the redemption of its notes, consequently, had to be made by that for which they were issued, and by the deposits, which, upon its organization, it received in very considerable amounts. In 1697, its charter was extended till twelve months' notice after August 1, 1710. In 1708, it was again extended till twelve months' notice after August 1, 1732; the Bank advancing to government £2,175,027 178. 10d., its capital being increased by a like amount. By the provision of this Act, authority was given to the Bank to issue its notes for any amount whatever. The Act of 1708 further provided: "That, during the continuance of the corporation, it shall not be lawful for any body, politic or corporate whatsoever, created or to be created, or for any other persons whatsoever, united or to be united in covenants or partnership, exceeding the number of six persons, in that part of Great Britain called England, to borrow, owe, or take up any sum or sums of money on their bills or notes, payable on demand, or at less time than six months from the borrowing thereof."

It will thus be seen, that the Act of 1708 gave to the Bank the power of unlimited, and, within certain restrictions, exclusive issue of notes. By virtue thereof, it became the "manager and regulator of the currency;" standing in the relation to paper that the government did to metallic money. As the former was bound to coin whatever metal was brought to it, it became, by necessary inference, obligatory on the part of the latter to supply its notes upon all applications that came within the rules prescribed for making its loans. The Act of 1708, therefore, was that upon which the Bank, as it subsequently existed, was based. It gave to the monetary system of England its peculiar character, and was the chief cause of the ignorance which has prevailed in that country in reference to the laws or principles of currency. As for nearly one hundred years after this Act was passed the Bank enjoyed almost uninterrupted prosperity, and as during that period very little disturbance occurred in commercial or financial circles, it came