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CATYFAMNIA

A TREATISE

ON

CURRENCY AND BANKING.

BOOK FIRST.

OF THE LAWS WHICH REGULATE A CURRENCY COM. POSED ENTIRELY OF THE PRECIOUS METALS.

ADAM SMITH, and other elementary writers on the science of Political Economy, have shown the principles upon which commodities must have been exhanged in that rude condition of society which preceded the use of metallic money, and it is not my intention to travel over the same ground, and occupy the attention of the reader in recapitulating details with which he is probably already familiar. Nor is it my intention to give a history of the various inventions to facilitate barter, which have been adopted at various periods in different countries, such as the use of cattle, cowry shells, tobacco, iron, and some other objects, each of which has been at some period employed to perform the function of what has been appropriately denominated "a medial commodity," by which the relative value of other things could be determined. I propose at once to enter upon the subject of currency as we find it at the present day in commercial nations, and shall first point out the laws by

which commerce is carried on in a country where there are no bank notes or paper money of any kind, and where gold and silver alone constitute the currency; and, as it would be carried on in every country, if there did not exist paper money.

CHAPTER I.

OF THE INTRINSIC VALUE OF THE PRECIOUS METALS, AND OF THEIR ADAPTATION TO THE PURPOSES OF A CIRCULATING MEDIUM.

GOLD and silver, it is well known, are produced in various parts of the globe, at the cost of labor and capital, precisely in the same manner that iron, lead, and other metals are produced; and with regard to all the mining countries, they constitute, if not the only, at least the most inviting product of industry to which a portion of the land, labor, and capital, of their inhabitants can be applied. As products, therefore, of industry, they possess an intrinsic value, like all other commodities, dependent upon the cost of producing them; that is, upon the amount of the rent paid to the owner of the land for the privilege of mining them, the amount paid for the wages of the laborers employed in digging and smelting the ore and in refining the metal, and the amount of the ordinary profits on capital invested in the enterprise. Were this not the case, it is evident that mines would not be worked, for no proprietor of land or capitalist would embark in an undertaking that would lead to certain loss, the object of mining not being to produce gold and silver, but to produce gold and silver of a value greater than that of the capital expended in its production. This much is premised, in order that the

reader may have at the outset a clear view of this fundamental truth in political economy, that gold and silver being products of industry, possess a value as real and substantial as that which belongs to any other commodities; not indeed founded upon the basis of convention, as some people imagine, but upon their well known applicability to various purposes of utility and ornament for which no other materials possess equal qualities, and which renders them on that account universally sought for. They are therefore not mere representatives of wealth as many persons fancy, but real wealth itself to the full extent of their value.

What proportion of the actual value of gold and silver, as exchangeable for other commodities, is due to their applicability to objects of utility and ornament, and what proportion to their fitness for the purposes of a circulating medium, now that they are applied to that purpose, it would not be easy to determine; nor is it at all necessary to this investigation that it should be determined. It is sufficient for us to know, that almost every individual who can afford a silver spoon, or a gold watch, or a plated or gilt ornament, will have one; and that if gold and silver were to be wholly disused as money, they would retain a large share of their present value for the purpose of being converted into plate and other objects of manufacture, and in process of time, would again rise to the cost of their production, which would be an indispensable requisite to ensure a future fresh supply.

It will, perhaps, remain for a future day to develope all the reasons why gold and silver have become so universally adopted by all civilised people as the medial commodity, that is, the commodity in exchange for which any other commodity can almost always be readily had. Those with which we are already acquainted, are the following:

1. Their uniformity of value, varying from one year to another, and from one period of years to an

other, less than any other known commodities, and therefore well adapted to be the commodities of contracts and obligations payable at a future day.

2. The universality of this uniformity of value, by which they serve not only as standards for comparing prices at different periods of time, but prices in different countries at the same time.

3. Their convenient portability, possessing a great value in a small bulk, and yet a bulk not too small for all practical purposes.

4. Their divisibility into pieces of any weight, and of the most exact quantities, and their convertibility by fusion back again into larger masses without loss. 5. Their malleability and toughness, which render `them not liable to break.

6. Their susceptibility of receiving impressions as coins.

7. Their uniformity of physical quality, pure gold or silver being the same at all times and at all places, and thus unlike most other metals and commodities which have different degrees of excellence.

8. Their capacity of admixture with alloy which renders them as coins less destructible by wear and tear, and of their being again separated from it with very little loss.

9. Their durability, not being easily destroyed by fire, and not at all by rust.

10. Their clear sound when dropped upon a hard substance, by which they can be known from base metals, and be thus distinguished from counterfeits.

11. Their specific gravity, which differs from that of other metals of the same bulk, and thus renders the detection of counterfeits easy by a practised hand.

The beauty of the metals adds to their value for purposes of utility and ornament, but perhaps not to their value as money; and hence I have not embraced that quality in the foregoing enumeration.

CHAPTER II.

OF THE DISTRIBUTION OF THE PRECIOUS METALS THROUGHOUT THE COMMERCIAL WORLD.

ALL the gold and silver annually produced in the four quarters of the globe, and not required for consumption in manufactures or for currency in the countries where produced, are in the constant course of distribution throughout the commercial world in exchange for commodities which are more desirable to the producers than the metals themselves; and when thus distributed, they are liable in common with that portion of the pre-existing mass which retains the form of coin and bullion, to such further changes of place as the wants and circumstances of each particular country may require. In these distributions, each country does not equally participate, but each draws to itself that proportion of the whole quantity which is called for by the extent of its wealth, its population, its commerce, and the state of confidence or credit existing amongst its inhabitants, A rich nation, cæleris paribus, will require more gold and silver than a poor one-a large population more than a small one-a nation carrying on much trade more than one which carries on little-and a nation where confidence and credit are circumscribed, more than one in which they are expanded. The first three of these propositions are self-evident. The fourth needs perhaps some illustration, and as I wish to leave nothing in dispute as I go along, I will state more plainly what is meant by it, which is, that in a country where no credits or comparatively few are given on the sale of property or merchandise, and where consequently payments are made entirely or chiefly in coin on the delivery of the articles sold, a larger amount of gold and silver is required, than in another country of equal

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