only party that undertakes to retire it. The means therefor, if provided at all, can only be provided in the future, and by taxation. It can never be presently retired. It would never have been issued had the means for its retirement been provided previous to its issue. It is always the last confession of imbecility or exhaustion. As it cannot be presently paid, it must always be at a discount from the standard of coin, which is capital in hand, and as capital in hand must be more valuable than capital to be received at a future day.

A currency issued by government is made legal tender in the payment of debts as the necessary condition of its circulation. The effect of this provision is to cause its notes to be received as money at their estimated value, otherwise they would no more have the attributes of money than any other form of debt, or than merchandise. Their value is greatest when first issued, as they are always assumed to be a temporary expedient, and soon to be retired by their payment. Such an expectation alone might for a time maintain their value very nearly at par with coin. They will have a value equal to that of coin to all parties in debt at the time, as they will pay their debts equally with coin. A market, consequently, is at once created for them equal, or very nearly equal, to the whole amount of merchandise held for consumption, as such merchandise is usually purchased and held on credit. They decline rapidly in value so soon as it is seen that they are not likely to be speedily paid, and as contracts existing at the time of their issue are discharged. The consideration of those subsequently entered into will have reference to the real value of the notes, which is measured by the time that, in public estimation, is to elapse, before they are retired by payment. The effect of the legal tender clause is to cause them to circulate as money at their estimated value, whatever this may be. If they become valueless, that is, if in public opinion they are never to be paid, either from the inability or indisposition of their issuers, the clause ceases to have any force or effect whatever.

While the issue of a currency of legal tender notes is a most direct and efficient expedient on the part of government for raising money, no act can at the outset be better received;

for it seems equivalent to the creation of capital equal to the whole amount issued. It is capital to every one in debt and holding merchandise or property. Government must accept the effect of its own act. When it issues legal-tender notes it is the great consumer, and must pay an advance equal to the amount of the instruments of consumption -money-with which it enters the market. The demand which it creates may suddenly double the value, in paper, of all the merchandise upon it. The holders of such property become suddenly rich. They can pay their debts and have a large surplus left. The indebted classes, consequently, always eagerly welcome a currency of the kind. The creditor classes the capitalists

seem, at the same time, to be benefited rather than injured, as some time usually elapses before the currency suffers any considerable degree of depreciation; as the debts owing them are more readily paid, and as whatever they possess is largely advanced in price, and apparently in value. The delusion on all sides is increased from a real addition to the means of consumption, the greater part of the metallic currency previously in circulation, or held as reserves by Banks and bankers. All this becomes available for consumption, and, as it is no longer needed at home, it is speedily sent abroad in the importation of merchandise of one kind or another, but largely of luxuries to gratify an already pampered appetite. A currency of capital - of coin will never circulate alongside of a currency of debt to which is given the legal competency of coin. Of the two methods, or instruments, the least valuable will always have the preference. No fact in reference to money is more universally recognized than this. In the abundant supply of capital, as well as of the instruments of expenditure, it would not be singular if even the coolest and most sagacious heads should come to regard such abundance and activity as the evidence of a genuine prosperity, and should lose themselves in the general delirium.

It has been shown that a symbolic currency is always an accurate measure or test of the ability of a people to consume. Such a currency, or the capital represented by it, can always be made the basis of reproduction of an equal or of even a greater amount of merchandise, as production should, and always does, in a healthy condition of industries, exceed con

sumption. Such an excess is the test of the prosperity and progress of society. The fruit tree, or the field, should always realize a larger sum than that expended in its culture. But a currency issued by government is no measure or test of ability of the people to consume. It is the evidence of a want of such ability, — of the waste or loss of a corresponding amount of capital. As it is however treated as capital, it is made the basis of vast industrial and commercial undertakings, the products of which there is no ability on the part of the public to consume. Utter failure and disappointment are the inevitable results. The condition of the United States, to-day, is a striking illustration of the effect of the use of a currency of debt as capital. There is a great abundance of products of all kinds, but no demand for them, even at rates far below cost. All are sellers, none buyers. Utter stagnation prevails in all the departments of commerce and trade. No one dares to purchase in excess of his immediate wants, as he has no means of telling whether there will be any market for what he buys. The amount of money in circulation is no test. It is not capital for exportation, nor does it represent capital for domestic consumption. In the general stagnation which prevails, money flows to the centres; but no one, in the face of losses which stare at him on every hand, dares to use it in any industry whatever. He fears to lend it, for the reason that the borrower may be no better able to employ it than himself. He sees no solution of the condition of things; nor is there any, but for government to allow the people to provide themselves with a currency which is capital, or the representative of capital. Till this is done, there not only can be no permanent recovery, but the community must become more and more exhausted, and less able, when permitted either by the retirement of the currency, by its payment, or by repudiation, to resume their industries upon any thing like the scale of the past.

It has been seen that borrowers at Banks always pay interest on their loans. Although this is paid in the first place by producers in the discount of bills received by them in the sale of their merchandise, the amount is added to the price at which it is sold to be paid in the end by the consumers. The latter must pay the total cost, which includes distribution as well as production. If they fully understood the process of distribu

tion by symbols, they would more readily pay interest charged for their use than for the use of a corresponding amount of coin, as they would see that by their means merchandise would come to them at a lower rate than by the use of a currency of coin. Such symbols, as they represent capital, are its equivalent in the hands of every holder; and, as already observed, the possession or the right to the possession of capital always carries with it the obligation to pay interest on the value of the same. But a government receives no interest on the currency it issues, for the reason that it does not represent, nor does it entitle the holder to, capital (except, perhaps, in the doubtful contingency of its ultimate payment). Such a currency is the exact opposite, in every particular, to that issued by Banks. No one ever questions the propriety of a demand by the latter for interest on their issues. The borrower, if he choose, could require to be paid the proceeds of his loans in gold or silver, in capital in hand, as well as in notes and credits. If he take the latter, it is for his own convenience. But no act could be regarded as more absurd than for a government to demand interest on its issues of currency, even from those to whom, in consequence of owing debts, it would in their payment, be equally valuable with a corresponding amount of coin; for the reason that, as no time could be agreed upon for its retirement, no basis was established upon which interest could be calculated. It is fifteen years since the legal-tender notes of the United States were issued. Assuming that they will be paid by January 1, 1879, the interest upon them at six per cent, had it been demanded at their issue, would have exceeded their whole nominal value! Loans made by Banks are for certain periods. The amount, therefore, paid for the use of their currency can be exactly determined when it is issued. No more striking illustration can be given of the radical difference betwen the two currencies than that interest is always payable upon one, and never upon the other.

That which has preceded sufficiently disposes of the assumption of all writers (without exception, I believe) upon the subject of money, that a currency of notes issued by government saves to it, and consequently to the people, in relief from taxation, a sum equal to the interest on its amount. Such an assumption is an absurdity for the reason that in

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 $100,000,000,-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