or from a necessity of export; and, of course, can never be safe in giving his notes predicated upon the currency as it exists at the time.

So far as the fluctuations we have shown derange general plans of business, distort prices, work injustice to one party of every bargain, and tend, by such inequalities and uncertainties, to discourage steady enterprise, they do not present themselves here for examination. We shall meet them, when discussing a mixed currency as performing its function as a standard of value. We have to do here, not with the unfairness and injustice with which indebtedness is discharged under such a currency, but with the difficulty or impossibility of discharging it at all.

To falsify the standard of value is a serious, but not necessarily a ruinous error. It takes from one unjustly, and adds to another; but it destroys nothing directly. There are fluctuations in the currency, found in our national experience and depicted in the diagrams given, which proceed to an entire revulsion of the body of trade. Panic is not a century plant. It blossoms and bears fruit once or twice while a child is growing up; many times while a man remains in business.

How does a mixed currency perform the functions of money, so far as discharging indebtedness in such times?

Let us suppose the case of the best man in the community. He has, in the legitimate course of business, contracted obligations, all within the limit of his abilities, now coming due. The banks are withdrawing their circulation as largely as possible, and do not mean to let it out again. The fact of his own excellent standing is of no moment in securing discounts; for there is just as much danger to the banks in his having their notes as in their being anywhere else. It is the peculiar hardship of good men, in such times, that it is not their credit, but the credit (that is, the condition) of the banks, which is to decide the question of loans. With a value currency, on the other hand, the only

matter of importance is the solvency of the applicant himself.

If he cannot get money, he cannot meet his obligations; for he cannot pay in merchandise or real estate. The money is not to be had; that is, if the banks would accomplish what they must do to save their credit.

Of course, there are individuals and institutions, who, in consideration of high premiums and full security, will grant accommodations to a limited amount. He may try to get along, sacrificing his property to save his name, and paying twenty-four or thirty-six per cent for loans. Perhaps, if others stood well, he might get through; but all are not so firm as himself. Most have less accumulation and less credit. His debtors fail to pay: how can he answer his creditors? If he tries to go through, the payments are all one way, like the tracks about the lion's den. He has to pay both sides of the ledger.

We have spoken of the credit element of a mixed currency. But panic, suspicion, apprehension, are the deadly enemies of credit: when these are aroused in the community, it cannot go abroad. Just as nearly as the object can be accomplished in the time given, all forms of credit will be withdrawn. But this will produce, in its several degrees, stringency, distress, panic, ruin.

Is it, then, too much to say that credit is not reliable for the discharge of indebtedness?

The element of credit introduces a direct hostility between the interests of those who control the currency and those who wish to use it. The interest of the one requires that the notes shall be withdrawn. The interest, nay, the life, of the other requires that they shall be kept in circulation. Is there any such hostility in a value currency? Not at all. No matter how intense the apprehension, how manifold the suspicion, how frenzied the panic, there is never a moment when it is not better for the owner that such money should be used than kept out of use.

We have said that a sudden and severe contraction is necessary whenever any cause threatens the specie basis of a mixed currency. Such a contraction deprives the community of the means of meeting obligations undertaken when the currency was redundant.

But this contraction, when it has become inevitable, does not take place without danger and loss to the banks themselves; danger and loss being the proper consequences of such operations. The banks make no more loans, or as few as possible. The means of discharging debts become less and less in the community each succeeding day, until the rate of interest goes up to two or three per cent a month, and money can hardly be had at all.

The banks now find themselves in this dilemma: if they make loans, they must keep paying out their specie. This will soon become exhausted, and they must suspend and be dishonored. If they do not continue to accommodate their customers with the usual means of paying debts, the latter must succumb. But, if their customers generally fail, the banks will lose their capital (it being chiefly in the form of notes given by individuals), and be permanently ruined. The history of the country shows on which horn of the dilemma they choose to be impaled. They suspend or stop specie payments, and then furnish the public with an abundance of their notes, such as they are.

After this has been accomplished, and after the credit of the banks has been exchanged for the credit of the individ uals who owe them, and after the demand for specie has ceased, the banks can resume payments.

It may be said, at this point, that the result we have reached does not seem very formidable; that, let it but be understood the banks are to suspend in such circumstances, we can by this means still have the advantages of a mixed currency in favorable times, and relieve the distress when a contraction is threatened. The answer to this plea will be deferred to the chapter on "Fallacies," in preference to interrupting the present line of argument.

CHAPTER IX.

MIXED CURRENCY AS A STANDARD OF VALUE.

2d, Does a mixed currency act justly as a standard of value?

This function of money is of a very important character. It lies at the foundation of all credit and all business calculations. If no man dealt with or trusted another, or waited a day to receive and consume the reward of his labor, there would be no great need of such a standard. It would then be only of scientific interest, to show what was the comparative wealth of different communities and ages, and what the fairness of their several systems of distributing the result of industry among the producing classes. If every act of labor received its own reward, in a distinct form, at the time, to be consumed then and there, a standard of value would be of less practical importance.

But whenever there is the slightest exchange of commodities or association of laborers; whenever one man trusts another for recompense of service, or applies wealth and toil to an enterprise in the faith of receiving a reward at a future time, a standard of value must be had, so that all can be done safely, expeditiously, and justly. Unless something possessed the property of being a standard of value, all exchange would inevitably be confined to the gross and clumsy form of barter. It has already been included in the definition of money, that it performs this office. There is not a possibility of taking a scientific exception to this statement; yet a great deal of popular controversy has arisen, which we are obliged to stop here to notice. It has been said, that a dollar, for example, no more measures the value of wheat, than wheat does the value of the dollar; that "the dollar is wholly an arbitrary, conventional standard, forced on the people, unjustly, by legislative enactment."

Much confusion has undoubtedly been caused by mistaken views of what is really meant by a standard of value.

Suppose A sells B a tract of land, and agrees to take five hundred oxen in payment at a future day. The value of the land sold is, in this case, clearly measured by the oxen. These latter are the standard by which the value of the land is determined. They form the money, or currency, by which the debt is legally and rightfully to be discharged. The oxen here occupy precisely the position of the dollar in ordinary contracts; and, if we suppose a community in which they are altogether used as money, they become, without any necessary legal enactment, the universal standard, or that by which all other values are measured and expressed. Value must be determined in some way; and it can only be done by comparison,- by measuring the land against oxen, wheat, gold, or something else that has value.

As long as the land was measured, in the single instance, by the oxen, so long each measured the other alike; but, when the use of the oxen was extended to a comparison with each other commodity in the market, and all others together, then it became as improper to say that the land measured the oxen as to say that the wood or the cloth measure the yardstick by which their length and breadth are universally determined. The government does not insist that length or breadth shall be determined in all bargains. by the yardstick. Men can and do take arms and fingers for the purpose, or any thing else they please: it is nothing to government, which only says what a yard shall be.

So, by universal consent, mankind have agreed to measure every thing by the precious metals. The laws of the United States, for example, enact that a certain coin, or planchet, of gold, nine-tenths fine, and weighing 25 grains, shall be called a dollar. That is all the government does, all it ought to do. It compels no one to receive the dollar for any thing, unless he has agreed to do so, any more than it compels him to receive hats or boots, wheat or cotton. But,