modities for money unless he expected to be speedily able to re-exchange it for something else; 3. that it should, by possessing great value in small bulk, be easily portable from place to place; 4. that it should be of uniform denomination; in other words, that a piece of coin, a sovereign, or shilling for instance, should represent the same quantity of metal in weight and fineness: without this quality the intrinsic value of different sovereigns and shillings could not be known without scales and tests; 5. that it should possess stability of value: as money is the standard or measure by which the worth of all other commodities is estimated, it is as essential that its own value should be invariable, as that a yard measure or a pound weight should be invariable; without this most essential requisite, it in fact ceases to be money, and introduces the greatest derangement in the value of property and mercantile transactions.

With the exception of the last, the precious metals possess the other qualities desirable in money in great perfection; and they possess the last in greater perfection, perhaps, than any other material that could be substituted in their place. Money is itself a commodity, possessing intrinsic value, and its price is influenced by the greater or less quantity in circulation. Fluctuations in value from this cause have operated slowly and at distant intervals, and much less so on gold and silver than on any other articles of use and consumption. The greatest change in their value was caused by the discovery of the American mines in the sixteenth century,

when the price of silver in Europe fell at least twothirds. Plate in consequence became much cheaper, and a service might be purchased for one-third of the coin or labour it before demanded. So far it was a social convenience, but as an instrument of exchange the precious metals became less valuable. It became necessary to load the person with a greater weight of them, and carry three shillings in the pocket to make a purchase, where one would have before sufficed. It follows that the speculative avidity evinced in 1824-5 for opening new and improving the working of old mines in South America, was not a passion in which the public was deeply interested. Individuals might have profited by such adventures had they been successful, but they would have been of slight utility to mankind. Capital, flowing into agriculture or manufacture, or applied to internal improvements, augments produce and facilitates the operation of industry. But if the supply of bullion from the mines had been quadrupled, the value of the metallic currency would, in the same proportion have been depreciated. As an instrument of commerce it would have been rendered less convenient; it would have been reduced nearer to a level with copper, and that portability, which forms one of its chief recommendations, would have been impaired.

Causes, however, of an opposite description are considered by many to have been in gradual operation, and that the tendency of gold and silver has been to rise in value. That such a rise is in pro

gress, has been inferred from the following considerations: 1. The unsettled state of South America, during the last twenty years, and consequent interruption to the working of the gold and silver mines. 2. The increased consumption of bullion in plate and other articles of luxury, from the increase of wealth. 3. The increased demand for the precious metals as a measure of value, owing to the increase of population, commerce, and commodities. 4. The general substitution of a metallic for a paper currency in England, America, and the continental states. All these causes, by increasing the demand, must have increased the value of bullion; unless its tendency to rise has been counteracted by the cotemporary effect of other causes, especially the increased productiveness of the Russian mines, and the less disposition to hoard treasure, formerly so prevalent in Europe, and rendered necessary by the insecurity of property, and the non-establishment of banks of deposit.

The rise of bullion in value, if any, has been too gradual to have had any material share in the ruinous fluctuations in prices that have been experienced within the last forty years. Greater mischiefs than the almost imperceptible variation in the value of the precious metals, have been produced by suddenly altering the standard of the coinage; that is, by suddenly introducing into circulation, coins of the same denomination, but less weight and fineness than those previously issued. This was a favourite device, for cheating their subjects, of Frederic the Great of Prussia, and of some of the Bourbon

kings: it has been even revived in this country, under the specious pretext of an "equitable adjustment" with the national creditor. But it is impossible schemes of this complexion can be countenanced by a just and enlightened community; they are such barefaced frauds, and disgust more than open robbery. A forcible alteration in the measure of value, is a forcible alteration in all pecuniary engagements-debts, leases, agreements, bonds, and contracts of every kind; and as this alteration is made only perhaps for the benefit, as by the consent of one party, it is a forcible violation of the most sacred rights of property.

CHAP. IV.

PAPER CURRENCY.

Origin of Paper Money-Commercial Paper, and its Uses-Distinction between Paper and Coin-Absence of intrinsic Value in Paper, cause of its over-issue-Proper Functions of Bankers, and Defects in our Monetary System-Money ought only to be issued under the Control and Guarantee of the State -Profit on the issue of Money belongs to the Public, not Individuals-Distinction between a Depreciated and Excessive issue of Paper-Proportions of Bills of Exchange and Bank-notes in circulation-Causes of the Mercantile Crisis of 1824-5-Advantages of a Sovereign over a Banknote-Stagnation in Trade caused by a want of Credit, not of Bank Paper.

THE advantages of a coinage of gold and silver are so great, that a long time elapsed before man

kind discovered a more perfect instrument of exchange. Paper money is comparatively a modern invention, and had its origin principally in the increased number and magnitude of commercial transactions. Although the precious metals possess great value in small bulk, they are not so easily transported as bank-notes. A million of specie could only be sent from London to York in waggons well guarded; but a remittance to the same amount in paper, might be done by post, travelling at the rate of ten miles an hour, and in no danger from brigands. As respects secure and rapid conveyance, paper then is better than gold, and this in a trading community, where the transfer of payments is incessant and multiplied, is a valuable recommendation.

The main purpose of money is to facilitate the exchange of commodities, and as the expense of maintaining this pecuniary machinery is borne by the community, it is desirable that it should be done in the most economical manner. But a currency of the precious metals is the dearest, as that of paper is the cheapest, that could be issued. Mr. Jacob, in his Inquiry into the Production and Consumption of the Precious Metals, has entered into some curious calculations to elucidate this subject. The abrasion, or loss of coins from wear, he estimates at one six-hundreth part a year for gold, and one twohundreth part for silver coins. The loss from other causes, as by fires, shipwrecks, and accidents, must be considerable. Altogether, Mr. M'Culloch estimates the annual diminution at one per cent.