clares it to be legally current at, these facts prove the general proposition, that the power of the government, and the consent of the people, can invest money with a greater value than the metal of which it is composed bears in the market.

Thus we perceive that the farther we enter into Political Economy, and the more we extend our views of it, as it is taught by the most celebrated writers on the subject, the more numerous and impressive are the proofs and instances of diversity of opinion, -each opinion supported by plausi ble and ingenious arguments, and appealing to incontestable and apparently decisive facts. But the subject of money will supply us with still more proofs of this diversity of opinion.

The doctrine of Hume is, that money is nothing but the representative of labour and commodities, and serves only as a method of rating or estimating them; and he quotes what he calls the shrewd observation of Anacharsis, the Scythian, who had never seen money in his own country, that gold and silver seemed to him of no use to the Greeks, but to assist them in numeration and arithmetic. He farther observes, money is not, properly speaking, one of the objects 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 renders the motion of the wheels more smooth and easy! An Italian Political Economist, of considerable repute, defines money, a commodity-a metal, whose value is represented by the commodity for which it is exchanged; 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."

"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."

Lord Lauderdale considers money as part of capital, and, consequently, as agreeing with capital in being useful or profitable to man, from the cir

cumstance of its either supplanting a portion of labour, that would otherwise be performed by the hand of man, or of its executing a portion of labour, beyond the reach of the powers of man to accomplish.

Say observes, that money is employed as a mere intermediate object of exchange between an object in possession, and the object of desire; it is not desired as an object of food-of household use-or of personal covering, but for the purpose of re-sale, as it were, and re-exchange for some object of utility, after having been originally received in exchange for one such already. Money is, therefore, not an object of consumption; it passes through the hands without sensible diminution or injury, and may perform its office equally well, whether its material be gold or silver, leather or paper.

Ricardo, and some other writers, maintain, that the charges of obtaining the metal, wholly determine its price or relative value, in exchange for all other commodities.

Is money then to be regarded merely as counters, to rate and numerate commodities, and can it have no effect, either good or bad, as Hume maintains, where it is in greater plenty, any more than as it would make an alteration in a merchant's books, if, instead of the Arabian method of notation, which requires few characters, he should make use of the Roman, which requires a great many? Hume allows this conclusion to be just, and indeed, it follows from the doctrine, that money serves only to rate and enumerate commodities; and yet he adds, it is certain that, since the discovery of the mines in America, industry has increased in all the nations of Europe, except in the possessors of those mines; and this, he says, may be justly ascribed, amongst other reasons, to the increase of gold and silver. He then explains how this consequence follows; but it is not our present purpose to enter on, or examine his explanation. The remark, however, forces itself upon us, when contrasting his doctrine with his facts-that Hume's love of paradoxwhich, to his credit, he seldom permitted to influence his Essays on Political Economy-here breaks out.

It is singular, that those who justly object to his definition of money, and

regard it as something more than a method for rating and estimating commodities, should controvert his position, that an increase of money in creases industry.

The question, whether an increase of money is beneficial, injurious, or indifferent to the progress of social wealth, is united with another question, on which also there are different opinions-whether there be a known and fixed proposition between money and the commodities which it is to circulate.

Sir W. Petty and Davenant thought that England required a quantity of currency equal to half the rent of her lands, the fourth of the rent of houses, the weekly expenses of the people, and the value of the fourth of all the commodities exported. Cantillon was of opinion, that the money which circulates in Europe, is generally equal to at least half the produce of the soil, and, at the utmost, to two-thirds of that produce. Montesquieu thinks that the quantity of money is pretty nearly indifferent, because the rising and sinking of its value proportionates it to all wants. On this branch of the question, it is obvious, and it is surprising it did not seem so to the authors just referred to, that all is vague conjecture, and that it is a question of no practical or theoretical importance. Yet, how often in treatises on Political Economy, are the thoughts of the reader diverted from what is attainable and important to such trifling investigations.

Smith perceived the vainness of such an inquiry; he says, "It is perhaps impossible to determine the proportion which the money of any country bears to the whole value of the annual produce circulated by means of it." He adds, however, not very consistently with himself in other places, "that the circulating money must always bear a very considerable proportion to that part of the produce, which

is destined for the maintenance of industry."

According to his system, gold and silver are quite useless to the formation, progress, and increase of wealth; their plenty or scarcity is indifferent in themselves, and destitute of any influence on the wealth of nations. The increase of the quantity of gold and silver in Europe, and the increase of its manufactures and agriculture, he adds, are two events which, though they have happened nearly about the same times, yet have arisen from very different causes, and scarcely have any natural connexion with one another. How is this opinion reconcilable with what he states respecting the Scotch banks?-by means of the cash accounts, which merchants keep with them, he asserts, and asserts truly, that every merchant can, without imprudence, carry on a greater trade than he otherwise could do; and yet these cash accounts enable the merchant to extend his business solely by increasing the circulating medium of a country. His opinions on this subject are therefore contradictory.

The doctrine, that an increased circulating medium does not increase industry, has lately been supported by an argument, at once at variance with fact, and inconsistent with itself. If an increase of money, it is alleged, does not increase price, it cannot increase industry and produce; if it does increase price, the value of money must by this very operation be diminished, and an increase of price can be no motive to increased industry and produce. We have put this argument in all its force of apparently strict and logical reasoning; as it is, if we are not much mistaken, a most illustra tive instance of the manner in which questions on Political Economy are treated, even when close reasoning is aimed at.*

It is natural to suppose, that, if increased industry does not flow

from increased money, when there is no increase in price, it would flow from it when there was an increase of price, since this branch of the argument, in fact, amounts to thisthat the effect cannot exist where the cause is absent. The two branches of the argument, therefore, cannot coexist-they must destroy each other. If increased industry is not produced by increased money, when increased money does not give rise to increased price, it is natural and fair to conclude, that, when it does give rise to it, increased industry will follow.

But a little reflection, as well as an appeal to facts, will convince us, that increased money stimulates industry, even when no increase of price takes place. Let us suppose a demand for an article which is obtained by the rudest and simplest industry, and that the person who supplies this article does not work more than eight hours a-day, because, in that time, he can obtain all of it that is needed. Let us next suppose that, from whatever cause, he finds he could sell one half more, if he had it ;-will not this induce him to work twelve hours instead of eight, even though the price of the article does not increase. This process is often going on, and must have been in operation in a striking manner, especially in all the little vil lages which have risen to wealth by becoming sea-bathing quarters.

But it will more frequently occur that this increased demand produces increased price for the article. In this case, it is alleged that industry and wealth cannot be increased, because increase in price is, in fact, diminution in the value of money; and it can be no motive to industry to obtain one-and-sixpence, instead of one shilling, if the value of the former

sum, or its command in the market, is no greater than that of the latter sum.

Here again is a fallacy and a variance with fact. Increased demand produces increased price; increased price is, in fact, diminution in the value of money; but, at first, the increased price, and diminution in the value of money, have reference solely to the article for which there is an increased demand; and he who has this article to sell, getting more for it, at a time when money bears its former value with respect to other articles, is thereby enabled to purchase more of them, or, in other words, is richer. The fal lacy lies in confounding the diminution in the value of money, compared with one article which the labourer has to sell, with its general diminution, compared not only with that, but also with all the articles he has to buy. If the diminution instantaneously, and in the same degree, extended itself to the proportionate value of money, and all commodities, increased price could be no stimulus to industry; because a person is not benefited by receiving two shillings where he used to receive one, if he has to pay two shillings where he used to pay one: but if, by increased demand for his goods, he receives two shillings instead of one, and, at the same time, purchases what he wants at the old price, an increased circulating medium must act as a stimulus to industry, so long as men wish to be richer than they are. It is evident that the same operation and the same effects will occur when he becomes a purchaser: he is enabled to increase demand and price; this stimulates the industry of others; they in their turn exert the same influence; but, at length, the increased circulating medium, having divided itself among

all the articles, and increased the produce of them all, ceases to have any farther effect; but, till this takes place, it cannot be inefficient, and it only ceases to operate when the whole increase of articles is equivalent to the increase of the circulating medium. It must indeed be acknowledged, and it is proved by fact, that the increase of the circulating medium may be so rapid, or so great, as not to be attended with a corresponding increase of industry.

We shall now turn from the theoretical questions respecting money, to those which are of a practical nature and bearing; and examine whether, so far as these are concerned, the writings of Political Economists are more enlightened and safer guides than they have proved to be on the theoretical division of this interesting and important subject.

The first practical question is, Whether the quality of unity ought to be reckoned among the requisites of money;-in other words, whether gold or silver alone ought to be admitted as money, or whether both these metals ought to be employed indiscriminately. The necessity of having silver to represent such small values as could not be represented by gold coin, except by making it too small, is obvious: the question is, whether the exchangeable rate of gold and silver coin should be fixed by law, or permitted to fluctuate as the market value of these two metals might happen to fluctuate?

The inconveniency of two metallic currencies was strongly pointed out by Locke; and his opinion has been practically followed by most governments. On the continent, silver chiefly performs the functions of money, and gold is regarded as a merchandize." In England," observes Smith, "gold was not considered as a legal tender for a long time after it was coined into money. The proportion between the values of gold and silver was not fixed by any public law or proclamation, but was left to be settled by the market." In fact, it is only since the year 1728 that England has given currency to gold. Silver is a legal tender, to a certain amount, and, of course, below and up to that amount, it must be deemed and taken equivalent to the sum of gold in coin fixed by law, whatever be the relative mar

ket prices of the two metals. All large payments are to be made in gold.

The question, whether one or two metals should be admitted as money, in all payments, to whatever amount, is now almost universally decided by Political Economists in favour of the unity of the currency: but the dependent and subsequent question, whether silver or gold ought to be the legal or governing coin, has not been settled, although it was much agitated a century ago, and lately, when the mint-regulations of the silver coin were changed. The relative value of gold and silver, it is evident, will be affected by the change, in the quantity of both or either, in the great market of the world; and it is equally plain, that that metal, the quantity of which, in this market, is most nearly stationary, ought to be selected as the standard and regulating coin. But this preliminary question has not been satisfactorily solved; chiefly because it is not easy, when the relative value of two articles changes, to determine whether the change is produced by an alteration in the comparative supply of and demand for both, or whether an alteration in the supply of, or of the demand for one, has produced the change in their relative value. Thus, if gold, instead of exchanging for sixteen times its weight of silver, exchanges for fourteenthis may arise partly from silver being scarcer, and gold more plentiful, or solely from gold being more plentiful, or solely from silver being more scarce; a single and identical effect, arising from one of two causes, or from the combination of two causes, puzzles Political Economists more than any other case in the practical application of their science.

The famous questions respecting the alleged depreciation of the paper-currency, the unfavourable state of the exchange, the fluctuations in the price of corn and other commodities, besides many other questions which agitated this country within the last half century, afford proofs and illustrations of this position, and put it beyond a doubt that Political Economists are not sufficiently attentive to that process, without attention to which, no science can be placed on a firm foundation, or advance with regular and steady progress towards perfection, not only in its theoretical doctrines, but also in

its practical application and utility: the process we allude to is that of taking a comprehensive and full view of all the circumstances which precede any event, and of separating those that are operative from those that are inefficient, and to ascertain, if there is more than one operative cause, whether they all act towards the same end, or whether any one, or more, counteracts, in some degree, the effects of the remainder.

But as our object is not to give a complete enumeration of the practical points in which Political Economists are obscure and unsatisfactory, or where they contradict one another, we shall, with reference to the circulating medium, merely refer to the questions regarding seigniorage of coin, interest of money, paper currency, the depreciation of the Bank of England paper, the foundation of the par of exchange, the causes of its derangements from trade, or alterations in the real value of the currency-questions which, within the memory of our readers, have inundated the country with treatises innumerable, and most of which are still undecided-in support of our position, that Political Economy is very far removed from perfection, and that, in its present state, it can throw little light on any obscurity which may hang over any part of the circulating medium of a country, or its commerce, as affected by that circulating medium.

Let us next inquire, whether, on other great and serious practical questions, a nation will be conducted to those measures which will be most for its real and permanent advantage, by pursuing the path marked out by Political Economists, or whether it will not rather be puzzled and distracted amidst the various paths which each party, with equal confidence, recommends as leading directly and certainly to the public weal.

Which trade, foreign or domestic, is most conducive to national wealth? This question has often been put, and though, if duly considered, and the terms employed accurately defined, it ought not to have remained long without a satisfactory answer, it is still one of the most difficult and most controverted points of Political Economy, as it is assuredly one of the most important.

Some of the earliest writers on this science expressed themselves, without

hesitation, in favour of foreign trade, particularly D'Avenant, Sir James Steuart, Montesquieu, and Beccaria. The Economists were the first to lay it down as a maxim in Political Economy, that, in foreign trade, there is but an exchange of equal value for equal value, without loss or gain on either side, and that a nation cannot have a more advantageous trade than its home trade. Smith considers the home trade as most beneficial to national wealth. It is worthy of notice, however, as an illustration of the vagueness of reasoning on topics of Political Economy, that his opinion proceeds on reasons and facts directly opposed to those by which the Economists support the same doctrine. It is also worthy of notice, that though Smith thinks it more advantageous for a country to consume the produce of its labour than to sell it abroad, yet he upholds the directly contrary doctrine when the question is of purchasing abroad. How can purchases from foreign nations be made, if all the home produce is consumed at home? and, as Ganihl pertinently asks, "If it be the interest of a nation to purchase from a foreign country when that country sells cheaper, how can its interest be insured by selling to the foreign country, when it purchases dearer ?" What difference is there between purchasing cheap from a foreign country, and selling dear to that country?

Smith assigns the last place to the carrying trade, the capital of which, he says, is merely employed in replacing the capitals which support the labour of foreign countries. D'Avenant, on the contrary, is of opinion, that freight is not only the most politic, but the most national and most certain profit a country can possibly make by trade.

The mercantile system of the Balance of Trade, as it is called, has little hold now even on many practical men, and has been long exploded by all enlightened Political Economists; yet, very inconsistently, the sum total of exports and imports is appealed to, as a proof of the state of the foreign trade of a country; and it is yet undecided whether that trade flourishes most when the exports exceed the imports, or when the reverse takes place.

These doubts and various opinions regarding the comparative national advantages of the foreign, the home, and the carrying trade, and of the means of