happened that neither the farmer had antecedently "exchanged wheat for beer, nor the brewer, beer for "wheat, they would be at a loss to fix the quantity "of wheat that should be given for a gallon of beer. If, indeed, each had luckily procured already a leg "of the same sheep, in exchange for the commodity

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they respectively possessed, they might then dis"cover the relative value of the wheat and the beer; "because two things equal to one and the same thing are equal to one another: but as it would probably happen, that the farmer and brewer had never exchanged wheat and beer for the same commodity, they could not have recourse to this easy mode of deciding the portion of wheat that ought to be "parted with for the acquisition of a given quantity " of beer. The course, therefore, the farmer would "have to pursue, even after he had undergone the "labour necessary to discover a brewer who wanted "wheat, might be infinitely laborious, before he "could trace out, through the medium of various "exchanges, some one interchange, that afforded a

point of comparison betwixt the value of the wheat " and the beer.

"If this, however, could not be discovered, he "would be obliged, as the only means of ascertaining "the terms of the exchange, to institute an inquiry "into the proportion betwixt the demand for and the

quantity of the beer, and also into the demand for

"and quantity of the wheat; these being the circum"stances on which the relative value of all commo"dities depends.

"The beer being procured, it is plain he might be "under the necessity of repeating the same opera"tion in negociating the exchange for the shoes.

"Thus it is obvious, that the portion of a capital "of a country employed in conducting circulation, is not only profitably employed, by saving the "labour of man, in its character of an instrument "for conducting exchanges, but also in its capacity "of a standard for measuring the value of com❝modities.

"It is not, perhaps, at first sight so apparent, that "circulating capital is profitable to mankind from the "circumstance of abridging labour, as it is that the

profit of a machine is derived from that source: but "there is in reality no part of the capital of a nation "that abridges a greater portion of labour, certainly

none, the benefit of which in abridging labour is "more universally enjoyed.

"The labour of the manufacturer fixes and realizes "itself in some vendible commodity. Its existence,

as productive labour, is therefore more easily dis"cernible, than the labour of the menial servant, "whose services generally perish at the instant of "performance. The labour of a manufacturing machine, in like manner, fixes itself in some vendible commodity, which makes the origin of its profit more apparent than that of circulating capital, "whose services, like that of the menial servant, "perish at the instant of their performance; but which, like his too, remain, at all times, prepared to abridge the necessity of another portion of

"labour, which the master must otherwise per

«form.*

"Though coin, employed as circulating capital, "has been thus eagerly sought after, not for the sake "of the gold and silver it contains, but merely on "account of the labour, it supersedes; like other means of superseding labour, it requires, though an

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inferior, yet a certain portion of labour to procure "it. To carry it about when procured, is also, from "its bulk and weight, laborious. To save these "remaining portions of labour in conducting the cir"culation of a country, various modifications of banks "have been successively introduced, highly beneficial to "the community in which they have been established, "from their superseding the labour formerly per"formed by the sovereign of procuring coin, and that

performed by the subjects of making payments in "it, and also from their executing with a machine of "little value, the labour antecedently performed by a very expensive instrument.

* The similarity between the labour of the menial servant and that of circulating capital, is indeed such, that it is natural to suppose, the same circumstances which led to the one being deemed unproductive, would create the same impression with relation to the other. Accordingly, the author of the Wealth of Nations, who conceives the labour of the menial servant to be unproductive, informs us, that the "gold and silver money which circulates in 66 any country, and by means of which, the produce of its land "and labour is annually circulated and distributed to the proper "consumers, is, in the same manner as the ready money of the "dealer, all dead stock. It is a very valuable part of the capital "of the country, which produces nothing to the country."

It is from this last circumstance, undoubtedly, that most countries derive what has been esteemed "the greatest benefit they enjoy from the modern improved method of conducting the circulation of "commodities. Yet it seems to be to the desire of

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man to shorten labour, that we are indebted for "the invention: for banks, we are told, were first "introduced into Sweden, where, the money being "all of copper, it was highly inconvenient, by reason "of its weight and bulk, to carry it about in such quantities as was necessary to conduct exchanges. "In truth, though a country may derive much “benefit from having a cheaper medium of exchange, "insomuch that, if there is a scarcity of capital, it "will by this means have more for other uses; yet "this consideration never could form the motive of <C any individual for preferring one medium of ex

change to another. To the seller of a commodity, "the value of the medium of exchange is perfectly "indifferent, provided he is sure it is in equal estima"tion with those from whom he subsequently means "to purchase. A man can alone have an interest in "the value of what he produces and what he consumes but coin, or its substitutes, are never con"sumed; they only pass from one to another for the purpose of saving labour in the conduct of exchange; "and the only immediate interest that he who accepts a given quantity of any medium of exchange can have is, that it should save as much labour as

:

possible. It is on this principle that silver is pre"ferred to an equal value of copper; that gold, in "making large payments, is preferred to both; and

"that bills of exchange supersede, with advantage, "the use of the metals in extended commercial " concerns.*”

This discussion on the nature and effects of money, though rather incorrect with regard to coin itself, as I 'shall show hereafter, seems to prove, to demonstration, that money, considered simply as a machine proper to shorten or facilitate labour, ought to be ranked with any other machine of that kind in the fixed capital destined to produce a revenue. It is therefore unjustly that Adam Smith has considered it as a circulating capital, which he thinks expensive and diminishing the general income by as much as its keeping costs.

But do bills of exchange, paper money, bank notes, promissory notes, and public stocks, form capitals, and are they part of the fixed or circulating capital ?

They seem entitled to be considered as capitals, because they have all the properties and perform all the functions of capital. Sometimes they assist the circulation of other parts of capital, and sometimes they afford a revenue, and, producing the same effects, they actually appear to be similar to money.

On the other hand, it is clear that they ought not to be considered as capitals, because they have no value of their own, and only represent a mortgage which itself constitutes a part of capital. Bills of exchange and other notes represent the merchandize which they cause to circulate. The mortgage of pri

* The Earl of Lauderdale's Inquiry into the Nature and \ Origin of Public Wealth. Chap. iii. § 5, page 187, and foll.