The Bank Charter Act
Jonathan Duncan

CHAPTER II.

Adam Smith’s Eighth Chapter “On Wages” examined.  David Hume on the Expansion of Money.  Views of Sismondi.  The difference between Political Economy and the Science of Society.  The fallacies of Over-production, Over-trading, and Over-population.  Mr. James Mill on the Relation between Money and Commodities.  Views of Mr. Thomas Attwood and of Mr. Huskisson.  The Representative Character of Imperial Money and of Commercial Currency.  Opinions of Plato, Seneca, and Xenophon.  Influence of Prejudice.

IN England, Adam Smith’s “Wealth of Nations,” is generally accepted as the text book of political economy;  and it appears to the writer of this pamphlet, that a blind devotion to his doctrines has exercised a most baneful influence on the best interests of society.  It is, therefore, desirable to expose the fundamental errors of his system, before approaching the nature and action of money.  The reader is now referred to the eighth chapter of the “Wealth of Nations,” in which he will find the following extracts :—

“ The produce of labour constitutes the natural recompence or wages of labour.

“ In that original state of things which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer.  He has neither landlord nor master to share with him.

“ Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers to which the division of labour gives occasion : all things would gradually have become cheaper.  They would have been produced by a smaller quantity of labour;  and, as the commodities produced by equal quantities of labour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity.

“ But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock.  It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labour, and it would be to no purpose to trace further what might have been its effects upon the recompence or wages of labour.”

The passage underlined is the condemnation of Adam Smith’s work.  He commences by truly describing the just relations that once existed between the producers and products, and what is just ought to be permanent.  If the appropriation of land and the accumulation of stock necessarily wrought injustice, and robbed the labourer of his fair recompence, they ought to have been condemned;  nevertheless, had those two processes not come into existence, what is termed civilization would not have been known.  Adam Smith, as a teacher, ought to have solved the industrial problem, instead of declaring that it would be to no purpose to trace it to its ultimate consequences.

In another sentence he writes thus : “What are the common wages of labour, depends everywhere upon the contract usually made between those parties whose interests are by no means the same.  The workmen desire to get as much, the masters to give as little as possible.”  Here he indicates a perpetual antagonism of classes, without making the slightest effort to harmonise interests which are really identical.

“No society,” says Adam Smith, “can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.  It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.”

The equity of the case is indisputable, especially as, in the natural state of things, according to Adam Smith, the whole produce of labour belongs to the labourer, who then has neither landlord nor master to share with him.  And what a mighty boon does Adam Smith confer on those who feed, clothe, and lodge the whole body of the people, when he simply insists, in his narrow view of equity, that they who perform this great work should themselves be tolerably well fed, clothed, and lodged.

Here is another passage, which appears to the writer of these Essays absolutely revolting :—

“ The wear and tear of a slave, it has been said, is at the expense of his master;  but that of a free servant is at his own expense.  The wear and tear of the latter, however;  is, in reality, as much at the expense of his master as that of the former.  The wages paid to journeymen and servants of every kind must be such as may enable them, one with another, to continue the race of journeymen and servants, according as the increasing, diminishing, or stationary demand of the society may happen to require.  But, though the wear and tear of a free servant be equally at the expense of his master, it generally costs him much less than that of a slave.  It appears, accordingly, from the experience of all ages and nations, I believe, that the work done by freemen comes cheaper in the end than that performed by slaves.”

Sentiments so heartless merit unqualified reprobation, but Adam Smith does not accompany them with a single word of censure.  He accepts them as expressing an inevitable condition of society.  Journeymen and servants are permitted, in this system of political economy, to multiply a race of operatives sufficient to minister to the wants and luxuries of the rich, but that limit they must not overstep.  In point of industrial reward the free labourer is worse off than the slave;  for, though he produces more, he receives less, so that his nominal liberty is a real delusion.

“ It deserves to be remarked,” says Adam Smith, “that it is in the progressive state, while the society is advancing to the farther acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable.  It is hard in the stationary, and miserable in the declining state.  The progressive state is in reality the cheerful and the hearty state to all the different orders of the society.  The stationary is dull;  the declining melancholy.”

Here it may be asked, what is to be understood by the “full complement of riches?”  Surely the term is vague, if not meaningless.  This “fulness” is a point to which society is ever tending, but never reaches.  If every man, woman, and child had a constant command over all that they desired to possess—if all were well fed, well clothed, well lodged, and well educated—and if the labouring classes were relieved from the excessive toil they are compelled to endure, and had leisure to cultivate their minds and invigorate their bodies—it might be said, and yet only in an hypothetical sense, that a full complement of riches had been realized;  but the phrase would still be loose and imperfect;  for, were such an advance in social progression attained, it would only be a new point from which to start in a new race.

David Hume had a deeper insight into this question than Adam Smith, for he points out the true condition on which alone society is enabled to make ceaseless progress from epoch to epoch.

“In every kingdom,” says Hume, “into which money begins to flow in greater abundance than formerly, everything takes a new face;  labour and industry gain new life;  the merchant becomes more enterprising;  the manufacturer more diligent and skilful;  and even the farmer follows, the plough with greater alacrity and attention.  The good policy of the magistrate consists only in keeping it, if possible, still increasing;  because, by that means, he keeps alive a spirit of industry in the nation, and increases the stock of labour, in which consist all power and riches.”^[1]

Political Economy and the Science of Society.

The comments made on Adam Smith’s Chapter on Wages, have been introduced for the purpose of pointing out the wide difference that exists between the science of political economy and the science of society.  The former simply calculates the product, and forgets the producer;  the latter proclaims that the labourer is worthy of his hire, lifts him from the degradation of being a mere hewer of wood and drawer of water, recognises the dignity of manhood in every class, and insists on the equitable distribution of wealth.  The school of Adam Smith, solely intent on material things, and forgetting persons, has vainly endeavoured to establish a social equilibrium, and though it has taught many useful truths in reference to the division of labour, and the production of wealth, it has done nothing to elevate the standard of humanity.  It does not profess to take any heed of morals, or of the feelings and affections.  Its philosophy dwells on insentient matter, not on sentient beings.  Certainly, this utilitarian school has a right to adopt its own course, and if it did not venture beyond the sphere of accountants and statisticians, no fault could be found with its teachings ;  but when it succeeds in infusing its false and heartless precepts into practical legislation, it becomes dangerous to society.  This school forgets that wealth, rightly understood, is not an essence, but an attribute, and that its nature changes with the persons and the things to which it is attributed.  To accumulate riches, and place them beyond the reach of the producers, is simply to realise the fable of Tantalus.

The Genevese Sismondi attempted to found another school, but he failed to solve the industrial problem, because he never perceived the baneful action of metallic money;  but he saw the evils of the system of Adam Smith, and contributed some valuable materials to the science of society.  A single quotation will show the aspect under which he contemplated the subject.

“ That product of human labour, which, with subsistence, represents all the material good which man can enjoy, and almost all the intellectual good to which he can only attain by the help of the first, has been called wealth.  Wealth, or the theory of the increase of wealth has been regarded as the special object of political economy, an object better designated since the time of Aristotle by the name of “Chresmatistics.”  Ideas are not made clearer by disputes upon words, and we should not bring this forward, if it did not serve to define precisely the course of the false direction which has been followed in our time, in one branch of social science.  This science has always had, and always must have, for its object, men gathered together in society;  economy, according to the proper sense of the word, is the regulation of the house;  political economy is the regulation of the house applied to the city;  these are the two great human associations, the primitive associations which are the objects of the science;  all proceeds from man;  all must relate to man, and to man united by a common tie.  But wealth is an attribute—shall we say of men or things ?  Wealth is a term of comparison which has no sense, if it is not distinctly expressed at the same time to what it relates.  Wealth, which is an appreciation of material things, is at the same time an abstraction, and chresmatistics, or the science of the increase of wealth, having considered it abstractedly, and not with relation to man and society, has raised its edifice on a basis which is dissipated into air.—Wealth, we have said, is the product of human labour, which procures for man all the material good which he wishes to enjoy;  it is the representation of all physical enjoyments, which proceed from them.  Very well;  but for whom ?  This question should never be lost sight of;  whilst, on the contrary, it never presents itself to theorists.  For whom ?  According to the answer which is given to this question, man himself belongs to wealth, or wealth belongs to man!”^[2]

Personal slavery is the sternest and most absolute form in which man himself belongs to wealth.  Cuba is a rich island, but its riches belong to the white man alone, the slaves being the most valuable part of their property.  Cotton enriches the planters of the Southern States of the American Union, and the negroes bought and sold at public auction are included in the balance-sheet of their wealth.—The serfs of Russia create riches in which they never participate.  In some countries, the nominally free labourer, receiving wages, is only one remove from this degradation.—Thus the Irish peasant raises bread and meat, but rarely tastes either.  The cultivator of the vine in the Gironde, on the banks of the Rhine and the Douro, never quaffs the juice of the high flavoured and fully ripened grape.  Our weavers and spinners, whose industry clothes the distant Chinese, are scantily supplied with raiment;  and in the general interchange of commodities between different nations, only the select few of the wealthy classes enjoy the luxuries produced by a scattered and diversified labour.  The school of Adam Smith admires this system.  Some of his disciples assert that a national debt is evidence of wealth, whereas it is plain that they who pay the dividends are the bondsmen of those who receive them;  if the debt did not exist, the power of production would not be the less, but the produce would remain in the pockets of the producers.  This unequal distribution is defended by Ricardo, who did not blush to maintain that the productive classes should be limited “to the necessaries and conveniences required for the support of the labourer and his family;  or that quantity which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution.”

These selfish dogmas are founded upon narrow views of the science of society, to which the science of political economy ought to be subordinate.  The science of society teaches that labour is the appointed destiny of man, and that to sustain physical existence he must raise his own food, fabricate his own clothing, and construct his own dwelling.  Had the materials on which industry can exert itself, been withheld by the Creator, the condition of the human race would have been the most pitiable;  but Infinite Power, directed by Infinite Wisdom, and prompted by Infinite Benevolence, has made a boundless provision for all His creatures.  The three kingdoms of nature, teeming with all the elements of enjoyment, are placed at our command.  The surface of the earth is endowed with endless fertility;  the race of domestic animals will never be extinct;  the mining districts, rich in metals and minerals, are inexhaustible.  What is deficient in one hemisphere is redundant in another.  The trade winds are the unerring auxiliaries of transmarine intercourse, while the magnet is the pilot of navigation.  Moreover, man is gifted with inventive faculties, which enable him to mould and fashion all raw materials according to his necessities;  and the triumphs of science are measured by the extent of his conquests over the external world.

The argument deducible from this statement affirms that all things needful to the happiness of man have been abundantly bestowed on him by the benevolence of the Deity, and that the sole condition of human enjoyment is labour.  Such, in its purity and simplicity is the relation established between the Creator and the creature, so far as the sustentation of physical existence is involved.  But God has also endowed man with reason, to distinguish between good and evil—with liberty of choice, to determine his conduct under the influence of motives—and with liberty of action, to execute the determinations on which he may resolve.  All this constitutes him a responsible being, the subject of reward and punishment, and establishes his moral relations with Deity.  If then, man abuse his reason or liberty, he becomes the author of his own suffering.  Under these views the science of society is made to rest on a religious basis, which recognises God as the sole Proprietor of His Earth, and of all that it contains;  while it declares man to be the accountable trustee, answerable for its usufruct.  In this sense it fundamentally opposes that utilitarian school of political economy, which, calculating the produce and forgetting the producer, takes as its motto, “am I my brother’s keeper?”  This school has affirmed that a country is over-populated when millions of acres susceptive of culture are abandoned to sterility;  that industry has been guilty of the sin of over-production, when millions of men, women, and children, are destitute of the necessaries of life;  and that money is redundant, when millions of pockets are penniless.

The science of society denies these dogmas.  Maintaining, as a fundamental principle, that all the materials of food, clothing, and lodging, exist in profusion, it contends that if every mouth is a consumer, every hand is a producer.  It insists that human desires and appetites are the permanent incentives to labour, and that, as these are insatiable, the motives to production can never be suspended or even enfeebled, unless through some vicious interference of legislation, militating against the laws of nature.  It holds that production and consumption having free liberty and full scope, would act and re-act reciprocally and constantly on each other, so that supply and demand would never fail.  Nothing could be either deficient or in excess;  scarcities and gluts would be unknown.  It rejects the fallacies of over-production and over-population, terms, which rigidly analysed, imply a contradiction;  for a superabundance of people relatively to food and clothing, and, at the same time, a superfluity of food and clothing relatively to people, are propositions mutually subversive of each other.  In real life it is unfortunately true that hunger invades the dwellings of the poor, while granaries are filled with corn;  and that millions are insufficiently clothed, while the warehouses of the manufacturers are stocked with raiment to repletion.  The desire to consume, however, exists in undiminished force, and if the natural law had free play, both the granaries and the warehouses would be emptied.  This, then, is not a case of over-production or of over-population, but clearly one of obstructed distribution.

These fallacies of over-production, over-population, and over-trading, have become so familiar by constant repetition, that few pause to investigate their real import, but accept them as truisms, conveying the sense of a foregone conclusion.  It is therefore desirable to dwell a little longer on the point.  What is the precise significancy of the preposition “over” prefixed to the words “trading” and “production?”  None object to trading or production, but to an excess in those operations, implied in the word “over.”  But “over” is evidently a term of relation;  to what, then, is it related ?  Does it relate to natural demand measured in the desires and appetites implanted in humanity ?  Clearly not;  for those desires and appetites remain unsatisfied, the great body of the people still wanting food, clothing, and lodging;  to them, therefore, the term over-production cannot apply, unless we are prepared to affirm that they ought to be starved, ragged, and houseless.  It is necessary, therefore, to resort to some other alternative, to arrive at a solution.  Let then, the term “over” be applied to mercantile demand.  But the measure of mercantile demand consists in the amount of monetary instruments in which the equivalency of exchange is expressed;  consequently it follows that the term “over” really means that the supply of commodities is in excess of the supply of legal tender, so that an apparent over production of the necessaries and comforts of life is confounded with a real under production of legal tender.  Under these mistaken views a full market is made to depend, in England, on the presence or absence of a single commodity—gold—the desires and appetites of humanity being altogether excluded from consideration;  for if gold is not forthcoming, then it is affirmed by the bullionist school that a case of over-production is established.  Distribution can only be effected through the agency of a suitable instrument;  that instrument is legal tender.  If it be inadequate, distribution fails, and production is arrested.  The expansion or contraction of trade is measured by the dimensions of a golden girdle, and this fact being understood, the problem of “poverty in the midst of abundance,” admits of a ready and easy solution.

The relation that ought to exist between legal tender and commodities, has been well illustrated by the late Mr. James Mill.^[3]  Suppose the case of a limited market, in which there were one hundred loaves and one hundred shillings.  Under the law of supply and demand each loaf would exchange for a shilling, and each shilling for a loaf.  Stimulate production so that the loaves are doubled in number, while the shillings remain stationary.  Here it is evident that under the law of supply and demand, 1s. will exchange for two loaves;  whence it follows that the price of each loaf, though possessing the same intrinsic value that it had when it exchanged or sold for a shilling, falls to sixpence.  If production be still further stimulated, and 400 loaves are created while the shillings are not increased in number, then the price of each loaf must fall to threepence.  The result is, that when labour has quadrupled its exertions, the reward of labour is reduced 75 per cent.  When such a system is maximised, production is arrested, and the materials of physical existence are rendered unavailable to man.  But the remedy is obvious.  If one shilling were the proper price for one loaf, which is here assumed in the illustration of this argument, that price ought to be permanently maintained, to hold the balance even between the producer and the consumer;  and this can only be effected by preserving the equation between the shillings and the loaves.  As the latter are multiplied, exactly in the same proportion ought the former to be increased.  If it be objected that the hypothesis of a market limited as described is an unfair mode of stating the case, since no such market actually exists, the following illustration is submitted in an abstract form, to which, it is presumed, no exception can be taken.  The fraction ⁵/₅ expresses unity, and is equivalent to the reduced fraction ¹/₁.  Multiply the numerator by 5, but do not multiply the denominator.  Then we have ⁵/₅ x 5=²⁵/₅=⁵/₁.  Let the numerator in both cases express loaves, or any other product, and the denominator express shillings, or any other form of legal tender.  In the first case, the equation between legal tender and produce is uniformly preserved, but in the second it is violently disturbed.  In the first case, five circulates or exchanges for five;  in the second, one circulates or exchanges for five;  therefore five times as much produce must be given in the second case for the same amount of money, as was given in the first case.  The balance is restored by multiplying the denominator by five as well as the numerator.

The question then arises, “Is it in our power to increase metallic legal tender-money, as an instrument of distribution, as rapidly and extensively as it is in our power to increase exchangeable commodities?”  That question must be answered in the negative;  and experience has shown that in spite of the recently discovered mines of California and Australia, the Bank of England has been unable to make any permanent addition to its stock of bullion.  On this subject Adam Smith has committed a grave error, which requires to be noticed.

“ The quantity of money,” says the author of the Wealth of Nations, “must in every country naturally increase as the value of the annual produce increases.  The value of the consumable goods annually circulated within the society being greater, will require a greater quantity of money to circulate them.  A part of the increased produce, therefore, will be naturally employed in purchasing, wherever it is to be had, the additional quantity of gold and silver necessary for circulating the rest.”

This paragraph deserves the serious attention of all monetary reformers.  It is admitted that the instrument of exchange ought to increase in proportion as the commodities to be exchanged are multiplied;  for, if it did not, production must be arrested.  It is then assumed that “a part of the increased produce” would be sent abroad to purchase gold or silver;  but the fact of increased production cannot be conceded, unless we presume that an effect can precede a cause, which is absurd.  Moreover, on Adam Smith’s own admission, legal tender must exist before the increased produce can be created, and proportionately to that increase.  His reasoning, therefore, completely fails.

As the object of this introductory Section is to establish certain principles, and point out some popular fallacies, the writer now proceeds to notice what is the false, and what ought to he the true sense of the term, “plenty of money,” a subject ably treated by Mr. Thomas Attwood, in a work entitled the “Scotch Banker.”

“The rise of the value of money,” he says, “in its principal, is attended with a correspondent fall in the value of its interest or use.  The money which exists in the country, instead of being scattered and diffused generally throughout the general pursuits of industry, is disproportionately drawn away from those pursuits into the money markets of London, and there it lies inactive, in the hands of bankers, brokers, and retired capitalists;  or it is employed in jobbing and dealing in the public funds, or in lending upon short and undoubted securities, when few are willing to borrow, and still fewer are willing to extend their trading operations.  The legal tender of the country, instead of being employed throughout the country in enabling the population to produce and consume the masses of their own and of each other’s productions, is drawn from those great and vital operations, and is determined into channels where its holders have not the means of employing it themselves, nor the confidence to lend it permanently to others, who, in their turn, have not sufficient confidence to embark it in business, if liable to be called upon for an early return of the loan.  A kind of apoplexy is thus promoted;  the head is deluged, while the great limbs of the country are cold and torpid for want of circulation.  The money market is glutted in the way of temporary and secure loans, whilst the markets of property and labour are everywhere deficient in that supply of legal tender which is necessary to give remunerating prices, to enable the property and labour to interchange with each other, and discharge the debts, taxes, and obligations imposed on them.”

It may, perhaps, be asked, how is this apoplexy produced ? and by what means is the money of the country determined into the money markets of London ?  By what means is the money sucked up from the employment of industry, and from working the great processes of production and consumption in order to glut the markets of interest, and there to lower the interest of money, at the same time that the principal of money is raised in value ?  To understand this clearly, clear ideas must first be realised.  The principal of money must be essentially distinguished from the interest of money;  or, in other words, the purchase or ownership of money must be distinguished from the mere borrowing and lending of money.  In the one case, the ownership of money is transferred in exchange for property or labour;  in the other case, the mere temporary use of money, or the mere right of employing it for a short period, is transferred in exchange for some given rate of interest per cent.  Entirely different as these two operations are, nothing is more common than to see them confounded in the minds of men.  The banker, the broker, and the jobber, when speaking of the plenty of money, mean thereby the facility of borrowing it cheaply upon good securities.  But when the farmer, the manufacturer, and the labourer, speak of the plenty of money, they mean thereby the facility with which their customers or employers pay them their debts, and with which they obtain good prices for the sale of their agricultural and manufacturing produce, and their labour.  This kind of plenty of money, this facility of acquiring the ownership of money, may exist, and sometimes does exist, when a great scarcity of money is experienced in the markets, where the use of money is borrowed and lent;  and, vice versa, the plenty of money in the markets of interest may exist at the same time that a great scarcity of money exists in the markets of property and labour, where the ownership of money is bought and sold.  It is of great importance ever to keep in mind these distinctions.

No man will ever enter upon any discussion of the details or incidents of the currency question, unless he has previously settled in his mind the fundamental principles on which monetary science ought to be established.—What is a pound? is an idle question;  what ought to be a pound? is the true problem to be solved.  No satisfactory answer can be given to the question till it has been determined whether legal tender money ought or ought not to possess intrinsic value.

Mr. Huskisson, the founder of the modern school of bullionism, affirmed, but never proved, “that it was the essence of money to possess intrinsic value.”  The Earl of Liverpool, adopting this hypothesis, insisted that the richest country in the world ought to use the most costly material far its coinage.  Lord Overstone, better known as Mr. Samuel Jones Loyd, also adopted the views of Mr. Huskisson, and contends that a paper circulation must not only be convertible into metallic money, but to ensure that convertibility at all times and under all circumstances, it is necessary that all the oscillations of the paper must be made to correspond exactly with what would be the oscillations of a purely metallic currency, as indicated by the state of the bullion in the bank which issued the paper.  This entire dogma proceeds on a mere petitio principii, a sheer begging of the question, and takes for granted the very point at issue.  The laws of nature always vindicate themselves, and punish those who violate them.  Now, had it been a law of nature that legal tender should possess intrinsic value, the earliest inhabitants of the earth would never have been permitted to apply primitive industry to agriculture, but would have been forced to discover gold and silver before they began to raise food, which is absurd, because they must have all perished from hunger before they extracted ore, smelted it, coined it, and perfected a system of mintage;  yet all this must have occurred, or the bullion hypothesis is false.  It is plain that the character of money is not fixed by any law of nature, and that man is not bound to use the precious metals as an instrument of exchange;  it is entirely a matter of expediency.

Accordingly, another school of economists hold that legal tender is purely representative, and that it need not, and ought not, to possess any intrinsic value.  That school regards legal tender as the symbol of the reality, not the reality itself;  the sign, not the thing signified;  the token, not the substance.  It affirms that every independent STATE is entitled to issue legal tender for its own internal purposes in discharge of private debts and public taxes within its own realm, such legal tender not possessing intrinsic value, but only a conventional value derived from the authority of the State which calls it into existence.

Of course this national or imperial money is not designed to pay the balances of foreign trade, since the foreigner could not be compelled to take it in payment of any debt due to him.  It would be valuable at home, but valueless abroad, which would prevent its export.  Thus secure of being always kept within the realm of the State which created it, this legal tender would be the special monetary instrument in which all fiscal obligations and mercantile liabilities would be discharged at home, to which function it would be limited.

How, then, are debts due to foreigners to be liquidated ?  In gold or silver, coined or uncoined, at the market price of those metals.  In these distinctions there is nothing new, but simply a revival of what is old.  The use of what may be called a “double currency,” was well known to the people of antiquity.  It was soon observed that the precious metals did not increase proportionately with all other commodities;  and the wisdom of ancient legislators perceived that production must be arrested if no other distributive instruments than gold and silver were employed.  One of the earliest plans adopted to surmount the difficulty was the creation of a national currency in each independent State for internal trade;  and its distinctive characteristic was the total absence of intrinsic value which effectually prevented its exportation.  This invention greatly economised the use of the precious metals, allowing them to be wholly employed in discharging the balances of foreign trade.  Thus the cities of Byzantium and Clazomenæ provided iron money for their own citizens, which circulated at home for the nominal value impressed upon it by public authority.  The monetary laws of Lycurgus were founded on the same principle;  but that great legislator deprived his money of all value as merchandise, by destroying the malleability of the iron of which it was composed.  Seneca states that the Spartans also used leather money, having a stamp to show by what authority it was issued.  Plato, in his imaginary republic, recommended a double currency in every State.  “Coin,” wrote that illustrious philosopher, “is for the purpose of daily exchange, which exchange it is almost a matter of course that artisans must make, and indeed all persons who need their services, and to pay wages to hired servants, slaves, and settlers;  for which purpose we affirm there must be a coin having a value among the members of a State, but no value to the rest of the world.”  For the purpose of visiting other STATES, Plato proposed a common Greek coin of intrinsic value, which would pass current in all the States of Greece.  Xenophon observes that “most of the States of Greece have money, which is not current except in their own territory;  hence merchants are obliged to barter their wares for other wares.”  These examples abundantly prove the early adoption of a double currency in the sense in which we have explained the term.

The general design of this chapter has been confined to throwing open the broader outlines of monetary science.  As to what will follow, the candid inquirer after truth is requested to suspend his judgment.  Many prejudices exist against symbolic money, and an idle fear of what is vulgarly called depreciation, weds the timid to bullionism.—Others revolt at what is new, but they should remember that what is now old was once new.—Nor should it be forgotten that progress has always been checked by the stubborn resistance of preconceived opinion.  When Harvey announced the circulation of the blood, and Jenner the principle of vaccination, both were denounced as ignorant quacks.  The fate of Galileo is well known.  Winsor had to beg his bread by the light of the gas he discovered.  Fulton on the Hudson, and Bell on the Clyde, were deemed drivellers when they proposed to propel vessels through the water, not by sails but by steam.  Stephenson was suspected of being a lunatic when he was projecting his locomotive, and the Quarterly Review declared that he who expected that the speed on a railroad would exceed ten miles an hour, was only fit for Bedlam.  Such examples of error should check rash and precipitate judgments.  Paper money has, no doubt, had its abuses, but so had the steam engine before the safety valve was invented;  and it will be attempted to be shown that the invention of a paper money was as vast a step as from spoken to written language, from manuscript to print.

1 Essay on Money.

2 Etudes sur les Sciences Sociales par Simonde de Sismondi.

3 Commerce defended, by James Mill, in reply to Mr. Spence. 1806.