be no hesitation in declaring that the board of management requires remodelling; that the library, as respects the procuring of books, and cataloguing, must be greatly improved; and lastly, that the funds for carrying all necessary alterations into effect, must not be niggardly afforded, otherwise the loss will continue to be far greater to the community, than can be calculated by pounds, shillings, and pence.

ART. V.-The Currency, and its Connection with National Distress. By 'H.. London: Van Voorst. 1836.

THE currency of nations, taking it in its most enlarged sense, consists of those commodities, whether the produce of the soil or of labour, that a nation produces within herself, which she exports to other countries, in exchange for their commodities. These productions are the natural money or wealth of nations. Hence the proper money and currency of England consist of those commodities which she gives in exchange for gold, silver, and the various productions of other countries. And as these commodities are produced, and rendered fit for such exchange, by labour, it follows that labour is the proper standard of value in England. If, therefore, trade were perfectly free, the price of all foreign commodities, including gold, silver, and all descriptions of foreign produce brought to the English market, would be in proportion to the cost for labour in producing the British commodities, added to the cost of exporting such commodities, and bringing back the foreign article in

return.

The currency of merchants consists of a paper money, called bills of exchange with this description of money all mercantile transactions between nation and nation, and merchant and merchant, are carried on. These bills are marketable commodities. If a merchant at Oporto has a debt to pay to England, or is in want of British commodities, he will purchase with Portuguese coin, bills drawn on England, which he will remit in payment. With this paper money—that is, bills-gold, silver, and all kinds of commodities, are purchased. When bills drawn on London will purchase a greater quantity of gold of the same fineness in Paris, and in other countries, than the same bills would purchase in England, the exchanges are called in favour of England, and vice versa. Thus, bills drawn by merchants and others, regulate the exchanges between nations. When the exchanges are in favour of a nation, foreign produce is sold cheaper in such nation than at other times.

The internal currency of nations consists of gold, silver, copper, and paper, so converted as to bear the stamp and nominal value of coin; but the coin of one country does not pass current as coin, or

money, bearing the same value, in another country. Hence the coin current in one country possesses a local value, which is generally greater in the country where it passes current than in any other.

Paper money is a circulating medium, which, by increasing the amount and quantity of the article that circulates under the denomination of money, reduces, and keeps down, the value of the metallic currency, and prevents gold and silver from advancing in price in proportion to the increased demand for money, which they would do were there no paper money.

Whenever a paper money passes for less than the gold and silver money which circulate under the same denomination in point of value, the value of the metal contained in the metallic coin is greater than the value of the coin for which it passes current.

Since the resumption of cash payments, the value of the current coin in England has been, and now is, regulated by the demand for, and the supply of, gold; and also by the demand for, and the quantity of, paper money in circulation.

Money (implying gold, silver, and bank of England notes) is a commodity which in the present day we cannot do without. We require it to pay taxes, to pay rents, to discharge debts, and to purchase the necessaries of life. And this commodity we cannot obtain except by labour, or by exchanging some other commodities for it, or by receiving it as interest, or as rent, for commodities lent, either for occupation or use. The value of this commodity is therefore in proportion to the demand there may be for it, and the quantity in circulation, and also to the interest we obtain for what we lend, and pay for what we borrow. If the quantity in circulation exceeds the demand, we must lend it at, or we may borrow it at, a reduced rate of interest: hence, when interest falls, the value of money is lessened.

Coin, or money, is a commodity of itself, and bears a value totally distinct from the value of the metal into which it is convertible. But while the bank is required to pay in gold, the value of the metal contained in the gold coin cannot exceed the value of the coin, nor of the paper money bearing the same nominal value.

;

Having premised the foregoing observations on currency generally, we will now revert to our author; and first of all observe, that we think he has undertaken too large and extensive a task for his inquiry extends to so ramified and complex a variety of subjects, and far too intricate to be handled in the manner they deserve in the small pamphlet he here puts forth. In the second chapter of his production, he treats briefly on the origin of commerce and capital, tracing their progress from the rudest state of society, to the present period.

"Industry is the fountain of wealth; capital is hoarded labour. This

has been proved again and again. In the first rude state of society, each individual, by his separate labour, or each family for themselves, gathered the wild produce of the earth, and satisfied, with savage plenty, all the actual wants of nature. Then mankind were barbarous, and little better than brutes. Economy was soon found in the subdivision of labour, and hence came the exchange of its fruits. This was the first step of civilization. It then became manifest that the labour of each individual was more than sufficient to supply individual wants, and the surplus became capital, in the shape of tools and furniture. The more perfect the subdivision of labour, the greater the economy, and the more the surplus left to form capital. To apply this law of subdivision and economy to the exchange or barter of goods, certain persons assumed the office of carriers and exchangers, in the first instance, for the benefit of those whose goods they carried, and of which they received a portion for their trouble, but ultimately on their own responsibility and risk. These were the first merchants. Their trade was always conducted for a profit; and the greater the demand for a commodity in one spot, and the greater the plenty in another, so much the greater was the proportion which these merchants obtained for the labour and risk of transport. And this is still the law of commerce;-foreigners come to our markets for that which is most plentiful with us, or most wanted by their own countrymen. As society advanced, and the principle of subdivision became better understood, people increased in wealth, and added luxury to convenience; the adornments of person amongst the first. They sought also to lay by, out of the produce of labour, a portion of capital, to enable them to live at a future day in pleasure or idleness; and, as corn or flesh would not well answer this purpose, things occupying a small space, and of great estimation, were preferred; such were ornaments especially, whether shells, feathers, precious metals, or gems.

"These valuables naturally soon became distinct objects for the employment of labour. Their exchangeable value for other commodities, and for each other, depended on many circumstances besides mere beauty or utility; such as permanency of character and facility of identification, the distance at which they were procurable, and the difficulty to be overcome in their acquisition. They were esteemed in proportion as they possessed these elements of worth. Those things were valued most highly and universally, which were everywhere scarce and difficult of access, such as gold, silver, and gems.

"It is not necessary here to inquire far into the origin of interest on loans. It is sufficient to state the universally admitted axiom, that capital accelerates the productive power of labour! in other words, that money makes money, and that, therefore, he who has capital, and is content to live in idleness, lends to him who has no capital and is willing to labour, and receives, in return, a portion of the profit which capital and labour conjointly produce.

"But it is important to the question of currency to notice this pointthat, although he who lives in idleness on the interest of lent capital may be considered blameless, yet he would justly be thought prodigal, who should live in idleness, consuming the capital itself, because he would deprive society of the advantages which would flow from its circulation.

He would be bartering the accumulations of the labour of yesterday for those things which the labour of to-day ought to produce.

"On this principle a nation may be treated as an individual. It is equally unwise for a nation to give away her saved capital, for the gratification of the present wants of her people; and there are considerations which apply even with more force to nations than to individuals. Nations, when involved in war, need that species of capital which is valued all over the world; and it is, therefore, extravagance in a nation to send the precious metals abroad, if commodities, the produce of present labour, will serve in lieu; it is the more unwise if those metals be not the produce of her own soil."-pp. 2—4.

Money, of whatever materials it may be composed—whether of the skins of animals, as among the American Indians; of cattle, as among the Tartars; or of the gold, silver, or paper of a commercial and civilized people, is employed for two purposes: first, to serve as a medium or instrument of exchange; secondly, to serve as a standard by which to measure the value of the commodities exchanged. When I buy from my baker a loaf of bread for a coin called a sixpence, and when with that coin the baker buys a pound of meat, the sixpence serves the baker two purposes: first, to exchange his loaf of bread for a quantity of meat; and secondly, to measure precisely that quantity of meat, which according to the relative values of meat and bread, is worth neither more nor less than the loaf.

The author has a few observations which sets this matter in a more clear light.

"As population increased, and commerce was extended, the difficulty of conveying bulky commodities to considerable distances, led merchants to seek such articles in exchange for those they had to vend, as should be easy of transport. The beauty and usefulness of the precious metals, their scarcity, and their unchangeable character, soon rendered them most acceptable for this purpose. At first they were brought into the market as articles of merchandize merely, and their exchangeable value depended upon their abundance or scarcity, compared with other commodities. The universal value attached to gold and silver, and the facility with which they could be conveyed from place to place, gave them a currency amongst merchants as the most convenient article of exchange. The value of specific portions of them was fixed by their weight and fineness. This was sufficiently convenient for extensive dealings, but in minor transactions, and in dealings which required minute and fractional subdivisions, very considerable difficulties must have presented themselves to prevent the reception of gold as a general measure of value, because it would be often almost impossible, or, at least, a large waste of time, to assay and weigh small quantities. The means by which this difficulty should be overcome was very simple. It was only requisite that the metals should be divided into aliquot portions, of known weight and fineness, and sufficiently minute to enable dealers to estimate, in them, at once, the value of their commodities. But, as this operation, if per

formed by individuals, would afford a strong temptation to fraud, it was requisite that the divided portions of metal should bear a seal, or other denoting mark, to express their weight and fineness, and that they should be issued by individuals or companies, of character and credit sufficient to be an assurance of the truth of that which was denoted by the impression. Thus originated coinage. With a few exceptions it was assumed by the sovereign power of every state, or by persons receiving a licence from that power. The laws against forgery, clipping, and washing followed of course."-pp. 4, 5.

We must go forward to his chapters on credit and paper money, wherein he attempts to show that a large demand for gold for a circulating medium, or to pay bills drawn by other countries on England, might cause such a drain of gold from the bank, as to oblige it to sell its securities for its own paper and for gold, and so to contract its issues of paper, until, by reducing the amount of the circulating medium, it may so increase the value of money, as to cause so considerable a fall in the price of other commodities, as to induce foreigners to exchange their bills on England for such commodities rather than gold. But should the demand for gold be so great as to render it impossible for the bank to meet it without causing such a scarcity of money as would involve a great portion of the trading population in ruin, and the whole country in confusion, it would be again empowered by the legislature to suspend cash payments.

An eminent political economist asserts that, on the return of peace, the Bank of England, and the country banks, with a view to prepare for cash payments, contracted their issues, and thereby increased the value of money; and the opinion is very generally entertained, that the act which required the bank to pay their notes in gold, increased the value of the currency. If this were true, the legislature ought, in justice and equity, to have annulled all leasesall contracts; and reduced debts, pensions, annuities, and taxes, in the same proportion. But these opinions are founded in error: and those who have adopted them appear to have confounded the value of money with the value of gold at different periods; and they do not appear to have been aware that the reduced amount of Bank of England and country notes, in circulation since the peace, was occasioned by the reduced demand for a circulating medium.

From the suspension of cash payments up to the period when the bank resumed its payments in gold, the currency had no relative value to any other commodity whatsoever. Its value was lessened and increased in proportion to the demand and supply, and had no reference whatsoever to the price of gold.

Although a reduced issue of bank paper, while the demand for a circulating medium remains the same, must increase the value of the currency, and vice versá; yet if the demand for money be re