in such transactions.

The exact amount gained by one country or party is lost by the other; whilst the cost of transportation or charges for brokerage—as the case may be-form a tax upon both.

Whilst a scientifically regulated money would tend to increase the number of exchanges, including those which arise from the legitimate speculations of the produce and share markets, it would entirely put an end to the class of unprofitable exchanges described.

There is a class of commercial transactions which appear to be exchanges, but are not so: they are simply removals of capital from one place to another. A has made a fortune in India, and wishing to spend it in England, ships his money or goods from one country to the other. This shipment appears in the exports of India and the imports of England, and is therefore commonly regarded as an exchange, whilst, in point of fact, it is not one. B, living in Russia, bequeaths an estate to C, in France. As a consequence, money or goods pass between these countries; but no actual exchange has taken place. D, of New Orleans, espouses E, of New York, and the married couple go to live in California, taking their common fortune with them. Goods and money pass from the former places to the latter, but no exchange has happened. F, in Germany, lends a million to G, in America, and receives annually a sum of interest upon his loan. This is not a case of trade or exchange. J, of Connecticut, has invented a sewing machine which he has patented in England, and upon the use of which

in that country he receives a royalty in money or goods. This is no exchange.

However important this class of so-called exchanges may seem, they fail to exercise any practical bearing upon the efficiency of a given money to measure value in a given country.

CHAPTER XII.

REGULATION OF MONEYS.

Fluctuations of price which do not belong to the domain of science -Variations which do-Practical considerations for the regulation of money-Effect in the United States of an absolutely fixed sum-Influence of a fixed sum per capita of population—Actual movement of population and money during the past century-Had money been regulated instead of being left to commerce, chance, and political contention, the great panics of 1815, 1821, 1837, 1861, and 1870 might have been averted.

BESIDES those changes in the general Level of Prices

which arise from changes in the whole Sum of Money, there is a subsidiary and partial movement of prices-a change in the prices of certain things, not of all thingswhich arises from war, legislation, speculation, foreign commerce, fashion, the chances of mining discovery, good and bad harvests, the progress of mechanical invention " overproduction,"1 and other causes.

These influences directly affect value, whilst money only affects price; these influences, whether separately or combined, may only affect the value of some things, they cannot affect that of all; whilst money cannot affect any without

1 There can only be a permanent over-production of two commodities improved lands and the precious metals. See "History of the Precious Metals," pp. 226, 275.

affecting every one. With the fluctuations of value occasioned by the various causes above set forth, the Science of Money has no concern; they belong to the domain of Commerce.

When money consists, as it does now, partly of a commodity-let us say gold, made into coins-and partly of notes, whether convertible or not, and its Sum is liable to be affected by the commercial or political supply and demand for gold metal, the relation of the gold to other commodities, and consequently its value in commodities, becomes of a dual character. As coins, its value is determined by the numerical proportion which such coins bear to the exchanges of all commodities and services, omitting the gold so coined. As bullion its value is due to the circumstances of its acquisition.

This dual character of commodity-money, and all the complex relations which flow from it, belong also to comScience may try to reduce them to order; but the task will be a fruitless one.

merce.

Apart from these considerations, the relation of money to price must always be a general one. Money can promote a general rise of prices; it can occasion a general fall of prices; it can cause prices generally to remain fixed at a given level; but upon the subsidiary movement of prices money has no influence whatever, save what influence arises from the phenomenon of Precession.

In making an effort to decide in what manner the sum of money may best be regulated, we are met by the gravest difficulties; for money is not, like other measures, made to

I

determine relations of unvarying dimensions; it is designed to determine one whose dimensions tend continually to vary. Value, the relation to be determined, varies continually with the volume of exchanges, and these with the growth of population, the extension of commerce, and the march of civilisation.

In the United States, if money be regulated and limited to an Absolutely fixed sum, there would ensue a general fall of prices, because the sum of commodities and services to be exchanged therein within a given period—and whose value is to be expressed in money-is continually increasing.

If money in the United States were limited to a fixed sum Relative to Population, there would also ensue a fall of prices, although such fall would be far less great or rapid than in the case of an Absolutely fixed sum of money. The fall in the case of a Relatively (to population) fixed sum of money would be due to the fact that capital and exchanges in the United States increase somewhat faster than population.

If we consult the history of money in the United States, and endeavour to learn if the whole sum of money has actually conformed to any other determinable quantity, we shall find that the determinable quantity to which it has conformed most nearly is that of population. This is not to say that it has kept pace with population, or only kept pace with it; but that the average rate of its augmentation appears to have borne a definite numerical relation to the augmentation of population. Thus the population of the United States has increased during the past century at the rate of about three per cent., or thirty per mille per