PREFACE.

In the following pages the subject of Money has been treated as coming within the range of the exact sciences; the conclusions being assumed to be in the nature of demonstrations. That they wholly contradict those laid down in the books, which have been accepted as fundamental truths for more than two thousand years, is due to the fact that a subject which could only be made to yield to rigid analysis has been treated after the manner of Aristotle and the Schools. Although the laws of Money are assumed to be sufficiently laid down in the first part of the work, the writer, from the universal prevalence of erroneous opinions, has lost no opportunity of illustrating them in the discussions which follow. If he have not in all cases clearly established the connection between his conclusions and premises, the reason will, he believes, be found in the fact that he has not, with all his efforts, yet been able entirely to emancipate himself from the methods of the Economists and Schoolmen.

BROOKLINE, Mass., 1877.

TABLE OF CONTENTS.

[The indented lines have reference to the views or opinions of other writers.]

THE LAWS OF MONEY.

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The desire to possess gold and silver an original instinct stronger than

that felt for any other kind of property. . . .

This universal desire renders them the universal equivalent -

-MONEY

The grounds of this preference, their beauty and the uses to which they
can be applied. .

Other qualities fitting them to serve as money.

Illustration of the uniformity of their value (note)

From their durability they become the reserves of society

Illustrations of their value as reserves (note)

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Errors in monetary science have arisen chiefly from overlooking their

universal attractiveness

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Necessity to social and material progress of some article or articles for
which a supreme preference is felt

Demanded in exchange for all other articles, and in discharge of all

contracts

Their value ABSOLUTE; depending upon cost alone

That of all other articles RELATIVE; depending upon cost and demand

Their value being absolute, they are the STANDARDS of all other values.

Standards of value and media of exchange the same things

Misleading influence of the term "medium of exchange (note)

Prime factors in the creation of wealth and in social progress

Always in demand at INTEREST as the basis of reproduction

The demand for capital increases as natural laws are unfolded

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The importance of the precious metals vastly increased by interest, paid in

kind, on loans of them

Such loans transfer the actual possession of capital from the owner to the

borrower

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They become in this way the highest guarantees for the peace and order

of society.

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Provision for the future to be made only by contracts payable in them, with

interest payable in kind.

Without them, there could have been neither civilization nor continuity of
history. . . . .

Contracts in them authenticated by written instruments

Hence the origin of paper money

Exchanges must be made at the standard, but may be made without the

Their use as money double barter

Importance of avoiding their actual intervention in exchanges

The manner in which this is effected

Sketch of history of coinage (note)

Bills of exchange . .

Their use in commerce between distant communities dispenses with that of

a corresponding amount of coin

Not presently due.

Currencies between communities widely separated

The mode in which they serve as such

Based upon or symbolize merchandise, and retired by its use

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Producers of merchandise the drawers of bills.

The holders of bills entitled to the specific thing drawn against

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Bills not adapted to serve as local currencies

Such currencies required to be of every denomination, and payable presently,

as they do not secure to their holder specific articles of merchandise.

Cannot, like bills of exchange, be issued by producers.

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To be issued by parties possessing capital, and not subject to the risks of

production and trade

These are made by an exchange of their notes, presently due, for the bills of
their customers, due at a future day. .

Retired in the payment of the bills in the discount of which they are issued

Makers of bills virtually undertake to retire the notes issued in their dis-

count...

All these operations based upon merchandise

The instruments by which they are conducted paper money -
So long as they represent merchandise their movement regular and au-
tomatic, and they are retired without the intervention of coin. . . .

No distinction made by the public between currencies where there are

several issuers

Banks discharge obligations arising between themselves by mutual offset

Only balances arising between them payable in coin

Bills and notes of Banks differ chiefly in time of payment.

Interest paid by the borrower on all issues of currency.

Currency the equivalent of capital to the borrower

Bear only a small ratio to the amount of loans

Hence a change in their amount followed by a far greater one in the amount

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of currency

Profit of Banks.

Advantages of a currency issued by them in reducing prices

All merchandise entering into consumption should be symbolized

Amount of symbolic currency in Great Britain

Reserves, their proper amount, and how maintained

Deposits, how they arise.

No difference but in form between notes, and checks drawn against deposits

Necessity of division of labor in distribution as in production

Cumulative symbols representing the same merchandise .

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

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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.

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Disastrous moral effects of fictitious currencies

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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 . . .

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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 ..

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Wide difference between currencies issued by governments and by Banks.

The former never issued in the discount of bills

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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

Their issue always favorably received

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Symbolic currencies measure the means of consumption of a people

Disastrous effects of a currency that does not symbolize capital

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Further difference between government and Bank currencies

Interest always paid Banks on loans of their currencies

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Never paid on the issue of currencies by governments.

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All government currencies in their depreciation involve a loss greater than

interest on their amount . .

Why governments cannot issue convertible currencies

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

A flexible currency a representative currency

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,

passes in every exchange