great deal more currency is required than at others. Why, it is asked, should it not be made to correspond, in amount, to the transactions that are taking place, instead of being fixed at an unvarying sum? and governments issuing it are always importuned, whenever there is a great stringency, to interpose and increase the amount, and relieve a pressure so detrimental to all.

As already shown, a symbolic currency rises and falls in amount with the value of the merchandise symbolized. If the value of wheat received at Chicago for shipment to the Eastern markets for the present year (1877) be double that received for the same purpose in 1876, bills twice in number, or amount, will be drawn the present year over those drawn the year previous. The currency of bills in both years must correspond to the amount, in value, of the exports. The currency issued by the Banks in discounting such bills would equal their nominal value, or that of the merchandise they represented. The local instruments, consequently, would correspond to the means of consumption. If, on the other hand, the crop of wheat exported from Chicago the present year equals only one-half that exported in 1876, only one-half the bills in number, or amount, will be drawn the present, as were drawn the previous, year. As a necessary consequence, only one-half the amount of local currency will be created. In either case the currency would have, in the highest degree, the attribute of flexibility, as it would correspond perfectly to the amount of merchandise to be moved. No small amount of inconvenience and suffering might result from a great falling off in value of the exports, and a corresponding reduction in the volume of the currency; but no one would venture to suggest that the latter was in any way in fault, or that there was any method of relief but better prices or better crops.

As already shown, a currency of government notes differs wholly in kind from one based upon merchandise. As it bears no relation to the means of the community upon which it is imposed, it is justly chargeable with a want of flexibility. An increase in its amount to meet an extraordinary call, or stringency, only serves to increase the degree of its inflexibility. With every increase of issue prices rise, so that the currency, relatively, is no more abundant for such increase. In a very short time, prices of all kinds of property are adjusted to the

new level. With every increase of the currency, however, the resources of the people are diminished in like ratio, increasing in like degree the difficulty that those in debt, and from whom the clamor of inflexibility always comes, find in borrowing capital, or the notes in circulation, which are capital to their possessor to the amount of their market value. The meaning of inflexibility, consequently, is a lack of capital. The demand for flexibility is only a demand for a greater quantity of capital; or that which, at some price, will serve as capital: with every additional issue the demand necessarily increases in intensity, from the increased impoverishment of the community that has been suffered.

As the value of currencies has been held by all writers to depend upon their quantity, the remedy proposed, to restore their value when depreciated, has been to reduce their amount; or to cease issuing till the increase in number or magnitude of the exchanges, due to an increase of production, shall not only give full employment to the amount in circulation, but require an additional quantity. Such is a necessary conclusion from premises which assume value, either intrinsic or representative, to be no necessary attribute of money. In illustration, it is said that if there are too many yardsticks in a community, a part of them must remain in abeyance till the increase, in the number of yards to be measured, will give employment to all. The price, which has been depreciated from an excess in number, will then rise so as to equal cost.

It has been shown that the value of money is the quality or attribute which measures the value of other things; that, unlike the yardstick, it always, when used, passes in exchange for the value of that which it measures. Yardsticks and

weights do not measure values, but space or quantity. Neither do we say that one place is so many dollars distant from another, or that a coat is worth so many yardsticks. Yet it would be just as absurd for government to measure space by dollars, and values by yardsticks, as to declare that its notes, payable at a future day without interest, shall have a value equal to that of coin. Governments cannot change or avoid the operations of natural laws. It would be mere brutum fulmen for them to declare that, after a certain period, equal quantities of copper and gold should have the same price. That of

each will always be regulated by its value, real or estimated. Government notes bear no relation to the amount of capital of a community, nor will they ever bear any relation to such amount. They will be just as much out of place ten years after, as on the day in which they were issued. No increase of exchanges will increase their value. They are never issued in the outset with a view of facilitating exchanges, but always as a forced loan. They are always suggested by the necessities of government. There never was any other ground for their issue. No community ever lacked the means of exchange that possessed the proper subjects of exchange, — merchandise in demand for consumption. These will give their possessors all the money - gold and silver- they are entitled to for any purpose. In highly civilized countries only a small amount of these metals is used as currency, exchanges being in great measure effected by the use of symbols. A currency of government notes, therefore, is always superfluous. An increase of exchanges twenty-fold, within the period during which they are in circulation, will no more increase their value than it will raise the price of other articles above their value. The price of a currency issued by Banks is always regulated by its value. If from any cause it is depreciated twenty-five per cent, an increase in the number of exchanges will not exert the least influence in increasing its value. If a metallic currency is debased, it will be taken only at the value of the pure metal it contains. No increase of exchanges will exert the slightest influence over its price. The media of exchange are the things exchanged; they mutually measure the value of each other, whether they be coin or merchandise. The idea, therefore, so commonly entertained, that a currency of government notes can be increased in price, can be absorbed, as the phrase is, so as to raise their value to the par of coin by increase in the number of exchanges, is one of the most preposterous and absurd ever entertained. Strange to say, no opinion has a stronger hold upon the public mind.

As the ability of an issuer of notes to convert them depends largely upon their quantity, such quantity becomes a most important element in their price. If a government like the United States should issue $1,000,000 of its notes, these might maintain their value very nearly at par from the ability

of the government to redeem them at any moment, and a belief that they would be speedily redeemed. If, in place of $1,000,000, $100,000,000 were issued, the good faith of the government might begin to be questioned. If the amount should become excessive, the decline in their price would become excessive, in spite of the strongest assertion on the part of the government that its promises would be faithfully kept. When the want of ability or disposition on its part to take in its notes became so apparent as to amount to a moral conviction that they would not be taken in, they would cease to have any value. It is in this way that their quantity may be said to control their value. It was the magnitude of the Revolutionary currency of the United States that forbade all thoughts of its payment. Its circulation was sought to be enforced by laws which were increased in number and severity, in ratio to its decline in price, in other words, in ratio to the distrust entertained as to its value. When it was felt that it was worthless, neither the laws designed to secure its circulation, nor those which declared it to be legal tender in the payment of contracts, had any effect whatever; although the necessity for some medium of exchange increased in ratio to the disuse of that previously in circulation. The French Assignats went out of use from a conviction of their worthlessness, and in face of laws which made it a penal offence not to receive them; though great numbers were executed for such refusal, and the country left for the time almost wholly without a medium of exchange.

The only remedy for such a condition of things is repudiation, not as a deliberate act, but as a matter of sheer necessity. It was far better to repudiate the French Assignats and the Revolutionary Currency of the United States, than to attempt to pay them. Such an attempt would only have prolonged the sufferings that had been endured. The wrong done was too monstrous ever to be repaired by human hands. There is no instance, so far, in which government currencies, that have been issued in any considerable amount, have been redeemed by full payment. Fortunately the most signal instance of recent times the present currency of the United States is not so excessive as to forbid the hope that it may avoid the fate which has so far overtaken all of its kind.

As paper money should be issued only as records of transactions, as symbols of merchandise to serve in its distribution, and as the test of its legitimacy or propriety is its return to the issuer in the payment of the bills in the discount of which it was issued, leaving his reserves intact, it follows by necessary sequence that not only every person possessing merchandise entering into consumption is competent to issue a convertible currency, but that every currency to be used by a community in the distribution of its merchandise should be issued within it, in order that the issuer may have the means of possessing himself of the standing and trustworthiness of the parties to the bills discounted, as well as of the profitableness or unprofitableness of their industries. Otherwise he would necessarily be constantly making losses by discounting fictitious or worthless bills. Local bills made in Texas might be very proper subjects for discount by Banks in that State, while they would be very improper subjects for discount by Banks situated in New York or Boston. The managers of the latter might have no personal knowledge of the character or responsibility of the parties to such bills, and might be wholly unable to obtain any satisfactory information in reference thereto. In such countries as Great Britain and the United States, local currencies are supplied by local institutions. Every community without a Bank, or banker, issuing currency, will be largely wanting in the instruments most essential to the promotion of its welfare. Were there no Banks in the State of Texas, for example, its currency, in the absence of United States notes, would of necessity consist chiefly in coin. As it had no Banks previous to the issue of such notes, its currency consisted in a great measure of coin. It prosecuted its industries, consequently, under great disadvantages compared with States possessed of symbolic currencies which discharged from use a large amount of coin, to be held as reserves against issues of paper exceeding many times the amount of coin which, in the absence of symbols, could have been maintained in circulation.

Paper currencies, so long as they are convertible, will never circulate in any considerable amount at a distance from the place of their issue. They cannot ordinarily get far distant therefrom, as they must, by the operations of trade, return to the Bank for redemption within three or four months