In countries at the present day, which carry on their affairs without paper money, gold and silver are the only currency. In some, one metal alone is used, and in others, both metals at certain fixed proportions. In some countries too, the legal coins alone of the nation are current, whilst in others foreign coins circulate upon the same footing as the coins of the country. Copper, too, is the currency of some countries, for even large amounts; but this metal constitutes so small a portion of the currency of most countries, that it is lost sight of, in discussions of this sort, precisely as it is lost sight of, when employed in the alloy of silver coins.

In countries where government paper money exists, but where banks have not been introduced, the elements which compose the currency are necessarily increased in number. They consist of not only gold and silver, but of the promises of the government to deliver at a future fixed, or at an indefinite period, certain quantities of those metals, accompanied by threats of punishment against all who should refuse to accept of the same in payment of debts. Such was the character of the paper money issued by the colonial governments of Pennsylvania and other states, prior to the American revolution, and such was that of the three hundred and sixty millions of dollars of continental money, issued by the American congress in seven years, commenciug with 1775 and ending with 1781. Such also was the character of the assignats of revolutionary France, and such is that, probably, of the actual paper money of some nations of continental Europe. Large issues, however, soon depreciate the currency, drive out of circulation the metallic portion of it, and leave nothing but promises behind, which are rarely redeemed.

It may here not be out of place to remark, that the

* See Gouge on Banking for a particular history of the continental paper money.

British exchequer bills, and the treasury notes of the United States, both of which are payable with interest, have not the character of paper money. They are merely evidences of a temporary debt of the governments which issue them, are sold in market like public stocks, and have no more influence in augmenting the mass of the currency, than the bonds, acceptances, or promissory notes of individuals.

CHAPTER II.

EXAMINATION OF THE QUESTION, OF WHAT DOES A CURRENCY CONSIST? CONTINUED.

IN countries where there is no government paper money existing, as is the present case in Great Britain, France, and the United States, the currency consists of those gold and silver coins which people are obliged to accept by law in discharge of debts, and of such promises of banks or bankers to deliver certain quantities of those coins on demand whenever called upon, as the public or the great body of creditors are willing to accept in lieu of the coins themselves.*

* The notes of the Bank of England are made by law a legal tender, except in the payment of its own debts, but no such measures can be practised in the United States, where by the Federal Constitution, it is declared, that no state "shall coin money, emit bills of credit, make any thing but gold and silver coin a tender in payment of debts," &c. The authority of Congress over the currency, is limited by the same instrument to the simple power, "to coin money, to regulate the value thereof, and of foreign coins." In the exercise of this power, it authorised by act of 2d April, 1792, the coining of silver dollars to contain 371 grains of pure, or 416 grains of standard silver, (the standard being 892.4 thousandths) half dollars, quarter dollars, dimes, and half dimes, containing respectively, one half, one fourth, one tenth, and one twentieth part of the silver con

As to the first element here laid down, there can be no dispute, inasmuch as every body must admit that the gold and silver coins recognised by law, constitute a part of the currency. Still it may be proper

tained in the dollar; and by act of January 18, 1837, the coining of silver dollars, each to contain 371 grains of pure, or 412 grains of standard silver, (the standard being raised by this act to 900 thousandths, that is, to nine parts pure to one of alloy) with the fractions of a dollar above enumerated, containing the same proportions.

It also authorised by act of 2d of April, 1792, the coining of gold eagles to contain each 247 grains of pure, or 270 grains of standard gold (the standard being 22 carats, that is eleven parts pure metal to one of alloy, corresponding to 9163 thousandths) half eagles, and quarter eagles, containing respectively, one half, and one fourth of the gold contained in the eagle; and by act of 28th June, 1834, the coining of gold eagles to contain each 232 grains of pure gold, or 258 grains of standard gold (the standard having by this act been lowered to 21.58 carats and a small fraction, corresponding to 899.225 thousandths) with the parts of an eagle above enumerated, containing the same proportions; and by act of January 18, 1837, the coining of gold eagles to contain each 232 grains of pure, or 258 grains of standard gold (the standard having by this act been raised to 21.60 carats, corresponding to 900 thousandths) with the parts of an eagle above enumerated containing the same proportions. When not of full weight, these gold coins are a legal tender at proportionate rates.

In reference to foreign coins, the laws have been frequently altered, there having been periods at which none but the Spanish dollar was a legal tender. That coin is still a legal tender, but, as it is worth in the market five per cent. more than the American dollar for exportation to China and some other countries, where it passes for more than its intrinsic worth, owing to its being there universally known, it is never now seen in circulation. Other foreign coins, however, are now legal tenders, as will appear from the following extracts from the laws:

By act of 25th June, 1834, it is enacted "That from and after the passage of this act, the following silver coins shall be of the legal value, and shall pass current as money within the United States by tale, for the payment of all debts and demands at the rate of one hundred cents the dollar, that is to say, the dollars of Mexico, Peru, Chili, and Central America, if not less weight than 415 grains each, and those re-stamped in Brazil, of the like weight, of not less fineness than 10 ounces 15 dwts. of

to remark, that that portion of the coin which is at any time not in the actual possession of individuals, but lying in the vaults of the banks, and for the payment of which on demand the public is in possession

pure silver in the troy pound of 12 ounces of standard silver; and the five franc pieces of France, when of not less pureness than 10 ounces and 16 dwts. in 12 ounces troy weight of standard silver, and weighing not less than 384 grains each, at the rate of 93 cents each."

And by act of 28th June, 1834, it is enacted, "That from and after the 31st of July next, the following gold coins shall pass current as money within the United States, and be receivable in all payments by weight, for the payment of all debts and demands, at the rates following, that is to say, the gold coins of Great Britain, Portugal, and Brazil, of not less than 22 carats fine, at the rate of 94 cents and of a cent per pennyweight; the gold coins of France, nine-tenths fine, at the rate of 93 cents and of a cent per pennyweight; and the gold coins of Spain, Mexico, and Columbia, of the fineness of 20 carats 3 grains and of a grain at the rate of 89 cents and of a cent per penny weight."

10

There are no legal tenders now existing by law, but those enumerated.

In England, silver is not a legal tender for any sum exceeding forty shillings.

The following statement, by the Director of the U. S. Mint, showing the fineness and value of certain gold and silver coins, was communicated to Congress on the 7th April, 1840, by the Secretary of the Treasury.

GOLD COINS.

of the promises of the banks, is not to be considered as a part of the currency, if the promises which represent it are estimated as a part. Thus, if a bank has $500,000 in specie in her vaults, and has promises out payable on demand for $1,000,000, in estimating the currency as far as this bank is concerned, the specie would not be added to the amount of the promises, and thus make an aggregate of $1,500,000, currency. In making up an aggregate statement of the two elements of the currency, it is not material whether the specie in the banks be counted, if at the same time the amount of the promises which represent it be reduced in the estimate to an equal extent, or, whether that specie be not counted, and the amount of the promises remains without reduction. The aggregate result is the same, but I nevertheless give a preference, for the sake of simplicity, to the latter mode of stating the case, and would therefore say, that the metallic portion of the currency, we are examining, consists alone of the coins in the hands and pockets of the public.