between this counterfeit coin and the real price of the precious metals.

This occasions the same disadvantages in the exchange, which have been observed with regard to the alteration of the fineness or standard of money.

Independently of the losses which the alteration of money brings upon nations in their commercial dealings with other nations, its effects are not less disastrous in their interior, civil, and domestic concerns.

1. It causes money to be hoarded, which obstructs payments, multiplies failures, impairs credit, diminishes and interrupts labour, reduces the labourers to misery, and occasions universal despair.

2. It alters the price of wages and of personal services, and the stipulations of contracts, deprives labourers, servants, pensioners, and creditors, of part of what is due to them, encourages bad faith, and inflicts a fatal blow to morals.

3. It deprives the sovereign of part of his revenue, forces him to disastrous measures, exposes the state and the subjects to violent commotions, and carries disorder and confusion into every department of civil society.

Not only ought money not to undergo any alteration in its standard or fineness, or in its weight and exchangeable value; but if it be composed of different metals, the proportion of their exchangeable value must also be strictly preserved; so that if the exchangeable value of gold is to that of silver as one to fifteen, that proportion must be accurately observed between the two metals; else the coin, the exchangeable value of which is superior to its nominal value, would

immediately be exported or melted, whilst that of which the exchangeable value is inferior to its nominal value, would occasion an importation of counterfeit coin, which would bring a double loss upon the state and injure internal circulation.

Lastly, the coin of a country ought not only to preserve the proportion of its exchangeable value; that proportion ought also to be observed in the fractions of coin, else the nation is again exposed to have its over-heavy fractional pieces of coin exported or melted, and the lighter ones counterfeited.

These inconveniencies of the monetary system, which have been so well developed by celebrated writers,* overturned the opinion which had at first been formed of money, and it was no longer considered as an ideal and arbitrary sign of value. It was supposed that the share which money has in the interchange of commodities consists in fixing the value of each produce. Accordingly, the most enlightened writers, among whom ranks David Hume, taught that money is "nothing but the representation of labour and commodities, and serves only as a method for rating or estimating them."

Money," says Hume," is not, properly speaking, one of the subjects of commerce; but only the instrument which men have agreed upon to facilitate the exchange of one commodity for another. It is not one of the wheels of trade; it is the oil which

* In England, by Locke; in France, by Dutot ; in Italy, by Da vanzati, Broggia, Galiani, Carli, Neri, and Beccaria,

Though this opinion is rather incorrect, (as we shall see hereafter,) it yet had one good effect; it led to the inference, that since money is the standard measure of value, it cannot be altered without injuring commerce. To augment the value of a coin, a sixth by altering its standard, its weight, or the exchange, able value of the metal of which it is composed, was perceived to be exactly the same operation as if the capacity of a bushel was reduced by a sixth, and that measure yet retained the same name. It hastened the discovery that such an alteration destroyed commercial relations, injured civil transactions, and paralysed business; and the necessity of respecting the standard measure of exchangeable value was at length submitted to.

Enlightened by the errors of the writers who had gone before them, Count Verri in Italy, and Adam Smith in England, gave accurate notions of the nature and functions of money.

"Some," says Count Verri, "fancy that money

Hume's Essays, Edinb. 1804, vol. i. of Money, page 299. But the quotation in the French has this comparison: "L'argent peut être comparé à beaucoup d'égards aux voiles d'un vaisseau sans le secours desquelles un batiment ne pourroit traverser l' espace des mers et naviguer dans les pays les plus éloignés." Which is probably taken from one of the first editions of Hume's Essays; for I have not been able to find this comparison in any of the later editions. Its purport is, that money may, in many respects, be compared to sails, without which a ship could not cross the seas and reach the most distant shores.-T.

2

is the representative of the value of things: but mo ney is a commodity, a metal, whose value is represented by the commodity for which it is exchanged; and the property of representing value is common to any other merchandize...

"Others think money is a pledge, an instrument to obtain merchandize: but merchandize is likewisera pledge, an instrument to obtain money; and any merchandize is also a pledge, an instrument to obtain any other merchandize.

"Others still define money the common measure of things; they forget that money is a value, and the raw material of many manufactures, and that whatever has a value is measured by the value of other commodities.

"These definitions, therefore, do not particularly agree with money, and do not comprise all its attributes. The error arises from the anxiety of considering money as something more than a simple metal. Money has a stamp, but receives no value from this stamp.

"Money is the universal merchandize, that is, the merchandize which, on account of the smallness of its volume, which renders its transport easy, and on account of its divisibility and incorruptibility, is universally acceptable and taken in exchange for any other merchandize. I therefore think that considering money in this point of view, is attaching to it the idea which corresponds with all its functions."*

The definition which Adam Smith gives of money,

* Della Econ. Polit. § 2,

though less circumstantial than that of Count Verri, is precisely the same.

In all civilized nations," says Adam Smith, money has become the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another."*

Reduced to its true nature, that is, considered as a preferred commodity, and, as such, as a general instrument of commerce, money has been released from that dependent and arbitrary state to which it had been too frequently exposed, and henceforward it is safe against all financial or fiscal operations.

As a produce of labour, money has an exchangeble value, which is determined by the demand for it, and by its abundance, or scarcity. As a perferred commodity, it has a higher exchangeable value: but for this increased value it is indebted merely to the nature of the metals of which it is composed. Public authority, which by its stamp confers upon it the character of legal money, adds nothing either to those metals or to their exchangeable value, and therefore cannot give it any other value than what commerce confers upon those metals. The monetary law is simply declaratoy of the fact, and can neither change nor modify this fact; it never can be arbitrary.

Should modern sovereigns assign to money a value in exchange superior to what general commerce assigns to it, either by the alteration of the standard of the metal, the diminution of its weight, or the raising of

*Wealth of Nations, 1805, vol. i. book i. page 44.