LEGISLATIVE BODIES OF THE WORLD.-(Continued.)

UNITED STATES:

THE STATE LEGISLATURES--Number in Senate and House:

PAPER MONEY IN ANTIQUITY.

[Abridged from the Journal des Économistes, Marco Polo's Travels, and other sources.]

THE true definition of paper money is a promissory note on which a law of the government confers the character of money. A distinction exists between paper money and money of paper. The latter grows out of contracts between man and man, while the former is a direct creation of the political power. The promises to pay, which we may call money of paper, are exchangeable against their value in specie, while the holder of paper money has no claim to have it redeemed in specie at all. Money of paper is freely accepted or refused in commercial transactions; paper money, on the contrary, has a forced currency, and cannot lawfully be refused. While money made of gold or silver, quite independently of its government stamp or numismatic character, has an intrinsic value in all ages and throughout all countries, paper money, on the other hand, has no intrinsic value whatever.

It is not necessary that irredeemable money should be made of paper. Any other material without intrinsic value would possess all the characteristics of irredeemability. All sorts of currency which has no intrinsic value, regardless of the material of which it is composed, may be called paper money. Thus, at Carthage, and at one time in Lacedæmonia, money was made of leather, and given a forced currency; although, from the slight and fugitive allusions to the matter made by the classic historians, it is evident that this kind of money could have had but a brief temporary circulation.

In Russia, during the middle ages, the furs of wild animals came into use as a medium of exchange, and at last the government began to stamp pieces of these skins with a seal, and gave them forced currency as a representative of money, or a bank-note. These stamped pieces represented the entire skin of a fur-bearing animal, and were redeemable in value received-that is, in precious furs; but when the government had parted with the furs which they represented, these leather bank-notes no longer rested upon any solid value, and became simple paper money. So when the Mongolian conquerors refused to recognize this singular species of money, sudden bankruptcy was the result to Russia.

The Chinese, that pre-historic nation which claims to have discovered the use of printing, gunpowder, and the magnetic needle, ages before Europe rediscovered them, were also completely familiar with the use and abuse of paper money, and that, too, as early as the second century before the Christian era. The form employed by the Chinese for his paper money was either little pieces of parchment or

of cards similar to the smallest playing cards of modern days. It was the Emperor Won-Ty, who reigned in China 119 B.C., who had the honor of introducing the first paper currency of which any trace remains in historic records; and he appears to have resorted to it as a war measure to carry on a campaign against the Hiong-Nous, Being in want of money to support the expense of his costly expeditions, and at his wits' end to know by what means to procure it, he bethought himself of bringing together in his parks a great number of white stags. He then prohibited his nobles from raising any stags of that color, and when they came to the court to pay him a visit of ceremony, he gave them in exchange for the presents they brought him a piece of the skin of his white stags, which was taxed by the Emperor at the value of 400,000 trier, or pennies. These pieces of deerskin did not, perhaps, properly constitute paper money, but they furnished to the Emperor Won-Ty an expedient precisely resembling the modern issues of assignats or inconvertible paper.

For this fact regarding the introduction of paper money in China, we are indebted to the Journal Asiatique. But this stag currency of the Emperor Won-Ty was, it appears, of short duration; and we hear no more of paper money in China until the year 807 of our era. Then merchants, who made deposits of the precious metals in the Imperial Treasury, began to receive for them what was called a "light money," or billets known as tsychy, which were given circulation in the place of specie, and which could be exchanged against deposits. "This was not real money," says the learned Chinese publicist, Matananlin; "it was simply a means of transporting the value of the metallic money.'

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The public credit," says Biot, was totally ruined by the uncertainty of redemption, and there is even no probability that any series of the paper money emitted after 1160 was ever redeemed except by other emissions of paper. Duties, taxes, public works, the army, salaries of public officers, all were paid in paper; but it profited nobody, and at last the whole civil and military population of the cmpire threw off the yoke, and replaced the paper money dynasty by a national specie-paying government.

The following conversation is reported as taking place between Ogodai, one of the Emperors of the Song Dynasty, and his minister, Thsan-Thsai :

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Learned minister," said the Prince, it has been proposed to me this day to create a paper money. What do you think of it?" "From the time of Tchang-Sanang of the Golden Dynasty," answered Thsan-Thsai,they began to put paper in circulation concurrently with money. The minister of that day made a great profit by the emission of that paper-so much so, indeed, that they gave him the surname of " Signor Billet." Things went to such a point that for ten thousand billets one could scarcely pay for a rice cake. The people suffered much, and the State was ruined. That was an example of which your Majesty should not lose sight. If paper money should now be emitted, it should on no account exceed the sum of one hundred thousand ounces of gold (750,000 francs).

Marco Polo, the Venetian traveller who visited the East in the thirteenth century, and journeyed long through the realms of Kubla Khan and Far Cathay, gives an account of paper money made of the bark of the mulberry tree, which had a forced currency through the Emperor's dominions. "The Khan causes every year to be made," says Marco Polo, “such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the

world. Nobody, however important he may think himself, dares to refuse them on pain of death.” Our traveller further informs us that when any of these pieces of mulberry paper stamped with vermil ion are spoiled, the owner carries them to the treasury, and by paying three per cent on the value gets new paper money in exchange. The redemption bureau of his Majesty seems to have done a thriving

business.

Marco Polo, in his naïve descriptions of province after province which he visited in China, keeps repeating continually that "the people of this city" (or province, as the case may be) are all idolaters, and have paper money.

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The "Golden Dynasty," which went before the Mongols, issued a flood of rapidly depreciating paper, and the Mongol dynasty, in A.D. 1287, put forth a complete new currency, one note of which was exchanged against five of the previous series of equal nominal value. Thus early in the centuries was the swindle of the French assignats, converted into mandats by forced currency at a greatly depreciated ratio, put in practice in China.

Pauthier has given, from the Chinese annals of the Mongol dynasty, a table of the issues of paper money for nearly forty years, or from 1260 to 1294. The lowest issue of any year was 228,000 ounces, which, at the rate of two dollars to the ounce, amounted to nearly $500,000; and the highest issue was in 1290, when fifty million ounces of this money were emitted in paper, equivalent to one hundred millions of our money. The total amount issued in thirty-four years was over six hundred millions of dollars in nominal value. According to the Chinese authorities, the credit of these issues was continually diminishing. In 1448, the note of one thousand cash was worth only three cash; and it became worthless and totally extinct in seven years more, so that after 1455 there is no more mention in Chinese history of irredeemable paper.

Persia also seems to have made its experiment with paper money about A.D. 1294, the notes being direct imitations of Kubla Khan's, even to the Chinese characters printed in vermilion, which were imitated. They were manufactured at the suggestion of a financial officer called Izzuddin. After the constrained use of this paper of less than a week, the great city of Tabriz was in an uproar, the markets were closed, the people rising, murdered Izzuddin, and the whole project had to be abandoned.

The statement has been widely published that the Bank of Venice (commonly supposed to be the oldest banking institution known to history) used to issue irredeemable paper. This bank originated in the palmy days of the Venetian Republic, A.D. 1171, and was first established as a chamber of loans for the government. The contributors to the loans were made creditors of the chamber, from which they were to receive an annual interest of 4 per cent. This bank is stated in Macpherson's Annals of Commerce to have been the most ancient establishment of a permanent national debt, or the funding system. The loans were inscribed in a great book authenticated by the government, and made evidence of the amount of the debt belonging to each subscriber. The interest was promptly paid by the gov ernment into the office and drawn thence by those entitled to it. The capital of the loans was made transferable with great facility, the inscriptions, or the right of receiving interest upon them, being bought and sold constantly.

This system, found so convenient and valuable in regard to a loan of the government, soon became a medium of payment in com

mercial transactions. After two centuries of experience, in which the power and utility of the Bank of Venice as a financial agent of the republic was demonstrated, it was decreed in 1423 that all bills of exchange payable in Venice, domestic or foreign, should be paid in the bank, unless otherwise stipulated, and that all wholesale payments should be effected also in bank. Those paying debts carried money to the bank, receiving credits on the books therefor; while creditors received payments in bank by a similar transfer from their debtors. He who was creditor on the books of the bank became debtor as soon as he had made his transfer or payment to another, who became creditor in his place. Thus the parties did but change their position without necessitating any actual payment in money. The business closely resembled that of modern clearing-houses, save that the government kept the books. These Bank of Venice credits performed the same functions as money, having the same value. All who had a credit in the bank could obtain money for it whenever they chose, while the republic, by employing the funds which the bank furnished, drew effective aid for its wants, an aid estimated to be greater than that derived from taxation.

The facility given to commerce and the regular payments of trade by this system was incalculably great. The operations of the Bank of Venice gave universal satisfaction, and contributed greatly to the commercial prosperity of that republic. After a time, the government ceased to pay interest for the sums received from the bank, continuing to take all money paid in as a consideration for carrying it to the credit of the depositor on the books of the bank, and of paying every draft on these credits on demand. During the whole existence of the bank, with slight exceptions, the bank funds or credits bore a considerable premium over coin, on account of their superior convenience. This new substitute for money, according to the uniform testimony of authorities, consisted in substituting as a medium of payment the debt of the republic for current coin. There was a great multiplicity of old and new coins in Italy, whither flowed the coinage of many countries of the far East. Merchants found it difficult in transacting business to effect their exchanges through this multifarious currency of the different nations. But the government, taking the coin once for all, and giving therefor a corresponding credit in the bank, with power of transfer to the depositor, effected the commercial exchanges with much greater economy as well as rapidity.

This system of payments proved so well adapted to the exchanges of commerce that it was maintained for almost four hundred years in the great commercial city of Venice, and only perished when the city itself fell, at the conquest of Italy by Napoleon. The Bank of Venice issued no paper money, but the transfers of credit on its books, made in the presence of the parties, or their agents duly authorized, bore on their face the nature of the transaction. Parties making transfers appeared before the bank clerks, whose ledgers were minutely subdivided according to the letters of the alphabet. To prevent mistakes or frauds, a double set of these entry and transfer books was kept. The clerk in charge of each separate book made entry of every bill of exchange or balance of account. The strictness of the regulations enforced exceeded any required by the bank authorities of the present day. The bank was shut one day in each week to balance and thoroughly supervise the books. The bank does not appear to have discounted bills on its own account, and as the credits in which it dealt equalled the sum of bullion actually in its coffers, it made no increase in the quantity of currency in circulation.