"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 inferior, yet a certain portion of labour to pro"cure 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 estab

lished, from their superseding the labour formerly "performed by the sovereign of procuring coin, and "that performed by the subjects of making pay"ments 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 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."

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"It is from this last circumstance, undoubtedly, "that most countries derive what has been esteemed "the greatest benefit they enjoy from the modern

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improved method of conducting the circulation of "commodities. Yet it seems to be to the desire of 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 any individual for preferring one medium of exchange 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 “to “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

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46

making large payments, is preferred to both; and

"that bills of exchange supersede, with advantage, "the use of the metals in extended commercial

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 prope> 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.

vate promissory notes consists in the moveable and immoveable goods of the debtor. And public funds or stocks have their mortgages in a particular branch of the revenue.

This merchandize, these moveable and immoveable goods, and this branch of public revenue, constitute part of the fixed capital, of the circulating capital, and of the stock reserved for immediate consumption: it would, therefore, be assigning a double employment to the same thing, if they were comprised in the capital of a country ; which would lead to a confusion subversive of the first principles of political economy.

It is improperly that Adam Smith has placed them on a par with metallic currency, assigned them the same nature, and enumerated them as part of the capital of a country. That bills of exchange, notes and stocks belong to other branches of the science, will be proved hereafter, when I shall inquire into their nature, effects, and co-operation in the formation and distribution of wealth.

Lastly, that part of capital which Adam Smith reserves for immediate consumption, is exactly that which Dr. Quesnay calls revenue.

The latter asserts, that "the totality of the revenue "must return to annual circulation, and pervade it through all its extent; and that no pecuniary for

*Commercial capital, let it then be understood, consists not in paper, and is not augmented by the multiplication of this medium of payment. An Inquiry into the Nature and Effects of the Paper Credit of Great Britain; by Henry Thornton. Chap. i.

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"tunes can be accumulated, or at least, that there "must be a compensation between those that are "accumulated and those which return to circu"lation."*

Adam Smith has been silent on the hoarding of money destined, not only to distribute the income to all classes of the community, but also to assist the circulation of all the other parts of capital. Are we to attribute his silence to simple omission, or to the inutility or little importance of the subject ?+

Metallic currency, as we have seen before, is a mere instrument, proper to circulate the produce of labour, whatever this produce may be. Abstracted from this destination, or hoarded, it becomes like a merchandize that is not in commerce; and which, as long as it remains out of it, has no value or use for any one. It is as if it did not exist, as if it were still buried in the bowels of the earth.

When hoarding is the effect of the passion for gold and silver, which is so violent in some individuals, that they sacrifice to it all other interests, it is of little importance with regard to wealth, because it never is attempted to any great extent. All the harm that arises from such hoarding is, that it forces the nation

Physiocratie, Max. 7.

+ Although money constitutes no part of the capital stock reserved for consumption or revenue, and although Dr. Quesnay has improperly confounded it, I yet thought it my duty to discuss here the question about the hoarding of money, to which his theory of revenue gives rise.