operation; its par value being determined by its ability to put all hands to work and fairly reward them for it.

If metallic money were nothing else than a medium of exchange, and at the same time the only medium of exchange, or, in the language of Mr. Mill, "a thing only wanted to buy other things. with," and if, as he holds, it had such elasticity of exchange value as to be always equal to all varieties of quantity of other things, it must, of necessity, rise and fall in value in the ratio of its supply relatively to the property exchanged by it; and the same thing would be true of its convertible representatives. Its scarcity and its abundance would then work like an elastic measure, and be always equal to all quantities of things exchanged by it. These ifs, however, cover just as many absurdities and sheer impossibilities.

Even confined to its office as an exchanger of values, it is not the only medium in use; and so far as it does serve in this office, it also acts at the same time as a producer of the values to be exchanged, thereby furnishing the increase of subjects upon which it is to operate as an exchanger in the market, and thus maintaining its own equiponderance.

There is one sort of money-the money of account-that, expressed in the ledgers of traders, which has an exact equivalence to the total value of the commodities which they deal in. Such equivalence it has because it is an ideal money only, and not in itself a valuable thing or substance. When such accounts are settled by set-off, the exchanges are effected by simple indirect barter, in which circulating money has no place, and the nominal values are wholly indifferent to the question in hand. But money having the value of its labor cost in itself, or in the thing which it represents, is subject to the general law of value, which is the cost of reproduction, and has no other equivalence than its comparative labor cost; in other words, it is no more, nor otherwise, the equivalent of marketed goods and things than wheat or iron is.

It results from the examination of the whole subject that only ideal money, such as the money of account, employed in indirect barter by set-off, is the sliding-scale equivalent in exchanges; and that all other money, having in itself intrinsically or representatively, a value of its own, and having, besides, the functions of

capital in production, is not a simple exchanger, even when acting in this one of its offices, and for these reasons, is subject to varying price in exchange only as all other commodities are.

Thus far we have been considering money as it is and has been. A history marked by this conspicuous fact-there never yet has been enough of it. Let this fact have its due force. Its assigned office is to put the whole world of men to work upon the whole world of matter. This it has by virtue of its universal acceptance as the representative of all accumulations of wealth, which accumulations. are the instruments and agents of all civilized industry. In the hitherto, and present state of human industry, neither labor nor capital have even tolerably approached the full performance of their duties each defective, in lack of the aid of the other. Insufficiency and inefficiency of labor argues insufficiency and inefficiency of money. Therefore, no casual, or fluctuating, or steady increase in the whole of the medium ever could hitherto have had the character or force of an excess, or overplus supply.

The growing quantity has never done anything but good, tending always towards better and better service to the world. An exception-the only one-might be taken to its effects upon the contract value of debts, to which it is a sufficient answer, that in this, like all other valuable things, the precious metals follow the law of labor value. The original creditor gave something-services or goods, or lands, in exchange for the obligation. If he had kept these properties till the maturity of the debt, they would have been worth no more than the like things produced at the time, and he must take just the quantity of gold or silver that he bargained for, though at the end of the term it is produced at half, or any less, labor cost, and will command only the same or some other proportion of property and service. Moreover, it is well that the burden of old debts-annuities and national debts-lose much of their burden in the progress of human affairs. If it were not so, the coming generations would be wofully oppressed by the debts of the present and past. The interest of some of these debts has already supported several successive lives, and no harm will be done in equity if their successors shall have to do something for their own support. All things else "perish with the using;" why should debts remain intact perpetually?

But the supply of the precious metals has always heretofore been

below the requirement, because of the difficulty of their production, or, what is the same thing, their scarcity; and this has been the cause of their high value in exchange, as it must necessarily be. If ever they shall become as plenty as iron, will they not be as cheap, and thereby be depreciated in value till they exchange by the ton instead of by the ounce troy, as now? We answer, that their labor cost will always be their standard of exchange value, and when they lose their convenience as a medium of payment, they will cease to be so used, and then there will be no question of the effect of their abundance upon the value of other things.

But they will never be produced in excess of the demand for such uses as they can serve; for beyond the point of paying, as well as other things, for the labor employed in their production, it must cease; and in the mean time, while advancing toward such point, they will be more and more dispensed with, by the growing use of those other kinds of money, which are already carrying the world of business towards the type form of exchange, simple barter, by the intervention of credit money, which is so much better, cheaper, and more convenient than gold and silver. Except in international dealings, and the small change of daily expenses, these are now but little used, and are destined to a continual process of elimination, as business is better and better organized.

Until metallic money and its convertible representatives shall have reached the point of increasing by their active agency the production of commodities to their utmost amount and utility, they cannot decline in permanent value, so as to require the counting of more pieces in payment for the same thing in market, for they are found to cheapen such products much more rapidly than their own value declines by added quantity. They of course will not be multiplied in the payment of debts; for the debt-dollar stands unchanged through all changes in other things; and nothing remains to take the effect threatened by the theorists of equivalence, but land and labor. These, indeed, will require larger amounts as they improve; not because money is cheapened, however, but because they have become worth more of it than they were while it was scarce, or comparatively scarce, and was therefore less efficient for their advancement to a higher real value.

The necessary action of its growing quantity is the opening of new industries, and improvement of the old. While there remains

a useful substance in the earth, or sea, or air, not utilized to its highest worth-while an improved apparatus of production is still wanting-while a brain requiring the means of sustenance, and the command of opportunity, and of implements, has yet a latent thought capable of human service-capital in the form of money will have ample scope and verge enough to spread without weakening its value. It will go on constantly cheapening the ultimate products, but its own accretions will all be demanded in calling into existence additional values, greater quantities, and better qualities; and this work will absorb it all without a depreciating remainder of supply.

What remains to be said on this subject will be considered in the chapter upon banks of discount, deposit, and issue.

PAPER MONEY; AND, INCIDENTALLY, OF BANKS OF DEPOSIT, DISCOUNT, AND ISSUE.

Bank paper, not banks, the subject: Banking, an instance of cooperation.Money an exchanger and producer of values.-Exclusive metallic money and barter. Hoarding.-Depositing at interest in early times.-English bankers of the seventeenth century.-Negotiable certificates of deposit, their service.Convenience of metallic money increased in its substitutes.-Basis required for representative money.-Limited analogy of the circulating medium to the circulation of the blood.-Figures of speech need watching.-Plethora of money, a mischievous phrase.-No measurable ratio between quantity and rapidity of money circulation and their effects upon business.-Exchange value of money, the cost of its production, or of the things it represents, not affected by its quantity.-How deposit bankers affect the money supply and its service. Bank of Amsterdam in the seventeenth century.-Banks of Genoa and Venice in the twelfth century.-Difference of effects between the transfer of money and of the property in it. -Representatives of money begin in deposits, and depend upon them; credit system arises.-Miracle power of faith in commerce. Multiplying power of credit.-Faith-force over and above fact-force.— Brotherhood in business affairs corresponds to brotherhood in spiritual things.Deposit banks, sources of profit and creators of credit.-Instances in illustration. Concentration of capital brings credit with it.--Elements of the banking business.-General Benefits.-Credit makes capital of character.-Abuses of the credit system.-Evil is inverted good.-Civilization and liberty rest upon credit.-Bank notes, their convenience greater than that of checks and drafts.Special adaptation to ordinary uses.-The money of the common people.-The bank note as a traveler.-Circulating notes issued by the United States Government-their amount in 1864 and 1871.-Irredeemable currency-six hundred and ninety millions in 1870, against two hundred and fourteen millions in 1857.-Extent of depreciation.-The work done by this currency.-Prosperity under its use.-Paper money the resort of nations in their days of trial.-More loyal and cheaper in its service than funded debts.-Service of deposit banks.— Exemption from runs.-Safe proportion of loans and circulation to amount of capital and deposits.-Profits upon bank capital.-Average of twenty-eight city banks.-Banks enhance the service of money three and a half times.Development of the banking system in serial order.-Benefit, risks, and necessity of banks.-Credit system indispensable-to be amended, but not restricted. English system unimproved in the last two centuries.-Balance of good and evil in favor of banks.-Distribution of banks.-In Scotland