In Turkey, Brazil, Peru, etc., bank cheques, except at the sea-ports and among foreign merchants, are unknown;1

of paper credit. There is a natural distinction, in my opinion, between the character of a promissory note payable to hearer on demand and other forms of paper credit, and between the effects which they respectively produce upon the prices of commodities and upon the exchanges. The one answers all the purposes of money, passes from hand to hand without endorsement, and without examination—if there be no suspicion of forgery; and it is in fact, what its designation implies it to be, currency, or circulating medium.”

Said the Chief Justice of the United States, Mr. Salmon P. Chase, previously the Secretary of the Treasury, and author of the "Greenback" and "National Bank" systems, in a letter to the writer, dated December 6, 1869: "I notice in your table of currency (this table was afterwards printed in the 'History of the Precious Metals,' p. 214) that you put the amount in 1862-3 and afterwards considerably higher than I do. My idea is that no interest-bearing paper can properly be called currency. No doubt such paper, and many other things, and especially bank cheques, private cheques on banks, and sight bills, largely fulfil the functions of currency, but they cannot properly be so denominated. Whilst I was Secretary of the Treasury the amount of United States notes and National Bank notes did not exceed four hundred and eighty million dollars; beside which, there were about sixty million dollars of State-Bank' notes afloat. Of the United States notes fifty million dollars were a 'reserve' for the 'Temporary Loan,' and rose and fell with the amount of it inversely."

The table referred to did not include "bank cheques, private cheques on banks, sight bills," promissory notes, nor indeed any other kind of currency, or so-called currency, except the following: Gold and silver

The drawing of a cheque by a traveller at an important town distant about three hundred miles from Rio Janeiro, upon a bank at that place, seemed so strange as to require a long explanation, and so remarkable as to bring together the entire Municipal Chamber to witness it. "Travels in Brazil," by the author, "San Francisco Chronicle," 1883,

in the countries of Continental Europe they are seldom employed; in England they are used chiefly for large sums; in the United States they are in common use for sums so small as $25; in China they are often used for the most trivial sums. Similar disparities exist with reference to the custom in various countries of depositing money in banks, the employment of railways, telegraphs, etc.

When these many difficulties which, under prevailing systems of money, stand in the way of correctly estimating the sum of money in a given country and era, are considered, the complacency with which the United States Mint Bureau year after year tabulates and publishes statistics of this character as "official" would be inexplicable were it not probable that the course pursued has been governed by some sinister object in connection with the Resumption Act.1

In view of the difficulties which surround the subject, the statistics of money will be cited in the present work with coins, demand notes, greenbacks, interest-bearing greenbacks, National Bank notes and State-Bank notes; all of which, except the State-Bank notes (then reduced to a comparatively small sum) were legal tender moneys. With all respect for the opinion of his illustrious correspondent, the writer was unable to agree with him concerning the monetary character of interest-bearing legal-tender demand notes. When not held in the place of other classes of greenbacks they circulated from hand to hand, and exercised precisely the same influences upon prices and foreign exchanges. They were, undoubtedly, money.

1 There is scarcely a form of defect to which statistics of composite moneys are subjected which does not appear in these publications. One of them accords to the United States in 1882 upwards of 773 million dollars in gold and silver money; whereas, according to the reports of the Treasurer and Comptroller, the treasury and banks only

far more caution and less assurance. Their use will be limited to two or three leading countries in which the statistics of money are best determined, and it will also be confined to showing, approximately, the increase and decrease of money from time to time in each of these countries separately. By pursuing this course the defects peculiar to such statistics will be restricted within the narrowest possible limits.

Each country should be,

As to making international comparisons of money, nothing can be more fallacious. and in many respects is, as much a law to itself in reference to money as it is with respect to the various measures of length, weight, etc., with which money is so often compared; nay, the example of one country or one era with reference to money is, in most cases, the very last thing that should be consulted in framing laws or deducing rules for another.1

held 325 millions, including uncoined bullion and paper certificates; and whereas in point of fact, outside of the mining regions west of the Rocky Mountains, there is scarcely a gold coin in circulation from one end of the United States to the other. For a specimen of these extraordinary statistics, see Report of United States Mint Bureau, in "Finance Report," 1882, p. 257.

1 See proposal of John G. Fichte to the Government of Prussia showing the necessity of a distinctive money to a progressive nation, as quoted in Britton A. Hill's pamphlet on "Absolute Money," St. Louis, 1875, p. iv. This subject is treated at length in the author's "Politics of Money."

CHAPTER IV.

THE FUNCTION OF MONEY IS TO MEASURE VALUE.

The function of money correctly understood by Aristotle-During the era of that philosopher the volume of money in each country was limited, and it formed a definite measure of value therein-It is now everywhere unlimited, and has lost its character of an exact measure— Money is not defined in the laws-For this reason it is unlike all other measures-Money is intended, but not now fitted for, a measure—The size or weight of a dollar or pound sterling furnishes no guide to the whole number of dollars or pounds; yet it is this which constitutes the measure of value-The measuring function of money is altered with every change in the whole number of so-called units of value-Not so with the units of weight, length, volume or area.

M

ORE than twenty centuries ago the function of money

was so correctly expressed by Aristotle that little seems needed to render his description of it complete. "The function of money," said the Stagyrite, "is to measure value." If we add "with precision," the definition appears to satisfy all requirements. When Aristotle wrote, no such addition was necessary. The volume of money in several of the Greek States was, or had been, limited by law; and in each one it formed a definite and precise measure of value.1

1

A full account of these moneys will be found in the author's "History of Money in Ancient Countries "-chapter on Greece and Greek Colonies.

The following principles of money are from Aristotle: " Money

But such is no longer the case. In each and all of the various countries of the world the whole numbers or volume of money is unlimited, and money has lost its character of a precise measure. It is a measure, but one whose dimensions are fluctuating; so that its function is practically impaired.

When we say that the function of gallon measures is to measure the volume of liquids, we mean by gallon measures certain concrete things of prescribed sizes or limits; contrariwise, when moneys are mentioned there is, under existing circumstances, no precise meaning to be attached to them. The laws of modern states do not define the sizes nor limits of moneys; nor does custom establish them.

(nomisma) by itself is but a mere device which has value only by law (nomos) and not by nature, so that a change of convention between those who use it is sufficient to deprive it of value and its power to satisfy our wants."-" Politica."

"By virtue of voluntary convention money (nomisma) has become the medium of exchange. We call it 'nomisma' because its efficiency is due not to nature, but to law (nomos), and because it is in our power to regulate it.”—“Ethica.”

The following are from the "Pandects" of Justinian, and are said to have been introduced into that code of laws by Julius Paulus, a Roman lawyer of the third century A.D. In the author's opinion, they are much older. "As it seldom happened that what one (man) possessed (to sell) the other (man) wanted (to buy)—and conversely—a thing was fixed upon whose legal and perpetual value remedied, by its homogeneity, the difficulties of barter. This thing, being officially fabricated, circulates and maintains its value, not so much from its substance as from its quantity."

Both of these quotations are reprinted from the testimony of M. Henri Cernuschi before the United States Silver Commission, as published in their Report, vol. ii. p. 475; the originals not being accessible in San Francisco, where the present work is being written.

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