been paid when he takes base coin. The lending of money on interest and the giving of goods on credit are identical in so far as they each create a debt. Let the terms of human contracts be what they may, it is plain that there can be no effectual sale which does not virtually transfer the ownership of the goods. With regard both to the case of money and goods, a charge is of necessity made for the use and risk, and this charge is known as interest or usury.

I do not allege but that a certain species of barter or interchange is effected and carried on by means of the credit system. Exchange is carried on, and that most expeditiously, too. But, at what a cost is this "facility" obtained! We have been told that the credit system is that by which the barter or exchanges of one set of men are placed over again st those of another set, or by which the debts and credits of one nation are extinguished by the debts and credits of another. These are just the ideas of the socialist introduced into trade. If mankind were resolved into one vast trading partnership or company, such ideas might perhaps hold; but, as nature has constituted us not only with varied passions and interests, but also with distinct, definite, and separate rights, all such attempts to reduce mankind into these degrading positions must end in failure, as they have always done. The course of events have but too plainly proved to us the nature of this social credit system. It is a fatal step to attempt to establish a sort of universal moneyed partnership in order to extinguish the debts of society with the credits of society. A thousand influences are daily at work to falsify the calculations, disarrange the plans, and prejudice the adjustments of such a finely balanced scheme. The complications of it are such that the failure of a single individual largely involved may disarrange the whole. Its only basis is a confidence as capricious as it is vain. Let the thousands of millions of dollars lost under it-lost not through its abuse but use-let the enormous national, municipal, public, and private debts, declare whether or not it is a system which extinguishes the debts of society by means of its credits. Let the blighted hopes and blasted homes of millions of honest men declare the nature of this credit system. The calculations of insurance companies as to the average duration of human life in particular districts or countries may be pretty generally correct. When applied to individual cases, these calculations are in the highest degree presumptuous and uncertain. The foolish anticipations of the credit system are of exactly the same nature. It is indispensable, in matters of business, that every man should stand upon his own feet; and trade will flourish better when there is less sham and more reality, fewer promises and more performances.

Let us distinguish three different parties by the letters A, B, and C. A and C are engaged in trading with each other-that is, the one exchanges the surplus production of his commodities for the surplus productions of the commodities of the other. It is admitted, even by the advocates of the credit system, that all trade is founded on the recognition of this simple principle of barter. A has commodities which he does not require-C has commodities which he does not require. The surplus commodities of A are just the very thing which C requires-the surplus commodities of C are just suited for the wants of A. An exchange therefore takes place between the two parties—that is, A sells a certain amount of goods to C, and C sells an equivalent value of goods to A, an operation

which, whilst relieving each of a superfluity, provides each with things indispensable. The only result of the introduction of a medium of exchange-like goods, for example-between two parties is that the values of these commodities are expressed in money terms. It makes no essential difference if either A or C should have in possession more or less metallic money. On the principles above stated, they must each have given a proportionate amount of value in commodities for this money. Let us now suppose that B interposes between A and C as a middleman or banker. He ceases from the work of production, of laboring for himself, and says, "If you, A and C, will support me by your labors, I will serve you mutually in the way of "facilitating" your exchanges. Now, if it be true that all barter or trade is founded on the simple priciples of one party exchanging his surplus commodities for the surplus commodities of another, what possible purpose of utility can B subserve in this self-imposed middle station? It cannot possibly be shown that B is of any service there, for the trade, barter, or exchange which we have set forth, are independent of any such aid. In the circumstances now stated it needs no argument to show that B is a useless burden on the two parties A and C-a burden in regard to the labor necessary to sustain him, and a burden, eventually, on the prices of the commodities raised by A and C. I shall not be assuming any uncommon case, if I suppose that B comes between the parties-between the buyer and seller-armed with only a very large ledger and a very large stock of credit and confidence. With these three precious commodities he is prepared to go into business on a great scale. But B finds that a cash trade affords for him but a barren prospect, so he labors assiduously to subvert the simple principles of barter as laid down by all the economists. Instead of cash he must substitute credit. Debt must be created, or his business will starve him out. He is not satisfied with the facilities of payment he already affords to A and C. His position as a mere agent is not half dignified enough. He must have trade built upon the bubble of credit, rather than the foundation of cash, and labors to impress them with the necessity and advantage of buying on credit and selling on credit. He denounces the efforts of any one bold enough to lift his voice in favor of the cash system as the heretical notions of a heated and visionary imagination. He sets himself up as possessed of unlimited wealth, and tells these simple traders that, like the magician of old, he has a book, a mere inscription in which turns everything into gold; that he has, in fact, discovered the philosopher's stone. It will never do if A and C persist in buying and selling for cash, in giving value for value, in bartering commodities for commodities. B therefore labors to substitute debt for cash, promises to pay for payment. It is essential, in every respect, that either A or C should fall behind-that some misfortune or calamity should overtake one or other of them which, whilst leaving some sort of substantial security, should destroy the present means of livelihood, or that one or other of them should aspire to something beyond his means. It is quite an indifferent matter to B how many penniless distributors step in between A and C. If collateral security of any kind can be given, he is ready to accommodate each and all. He rightly judges that the more freq lent the inscriptions in his magic book, the better he will fare, and, in his personal aggrandizment, he wisely sinks the public good, well knowing that that public will not trouble itself to inquire too discrimina

tingly into the various elements which go to make up prices, so long as the imposition remains undiscovered. He thus not only destroys the healthy principle by which A and C conducted their business, but robs them of a portion of their property by successfully introducing between them a worthless medium of exchange in the shape of a book of credit or a paper note, and imposing upon them the absurd notion that somehow or other trade cannot be carried on without this paper foundation, an idea, the foolishness of which has only been equaled by the extent of its reception. B is thus held to have the power of creating money by a mere effort or determination of the will. He has brought the community to believe this strange doctrine. The will is naturally determined by the strongest motive, and the motive is, in this case, the desire to earn money without labor. A and C thus place their good name and reputation in pawn or pledge, strike hands, and become sureties for debts. The discounting of a note, and the placing of the proceeds, as a deposit to the indorser's credit, is, in every essential respect, analogous to the payment of money for that note. The indorser can operate upon that deposit just as if it were so much solid gold. And the banker does not act consequently only as simple agent between buyers and sellers. The claims of the sellers are transferred to the banker, with this addition, that he holds both buyers and sellers as security for the payment of the note. For the time being, he takes the place of the seller of the goods, yet the debt is not more effectually discharged than if the seller had retained his note in his own hands and received the amount at maturity. So far as discounted paper is concerned, a banker is a dealer in debt, and not an agent between two parties. What may be said of a bank that discharges its debts by means of its credits, may just as truly be said of every one engaged in trade. The immediate work of a bank, therefore, is to furnish to the community a currency or a means of payment. The discharge of balances, or the payment of mutual indebtedness, is a different and more remote affair, which would go on independent of banks, and fare cheaper and better without them.

The public are receiving, every day, the most striking manifestations of the kind of work carried on by the magic books of credit. The magicians of London ever and anon exhibit, on a large scale, the ease and facility with which millions of her majesty's subjects in distant colonies can be robbed by a mere shuffle of the cards. Yet the public are hoodwinked still. Such things would not be tolerated a single day, did the tribute thus imposed tax the patience of any other class than the laboring and agricultural. It is upon them the burden ultimately falls, and they are patient to endure.

What I have now stated as applicable to these parties will be found to be applicable to nations and communities at large. The true principles of our social and political economy are essentially and unchangeably the same all the world over and in every age. When we come to analyze the various systems which we see at work around us, the mind is arrested at a point beyond which it is neither necessary nor profitable for us to inquire. That point may be defined as the position from which the greatest good for the greatest number is attained. All inquiries which do not tend to this end, or which do not start from this point, are futile and unprofitable. It is by starting from false data that so many inquirers after truth are unconsciously led astray.

In every negotiation for the sale of merchandise, the mind has reference to two things: the article to be sold and the money to be given for it. The price of an article points to the power of property to exchange for money. The long and persistent traffic in usury has given rise to a false association of ideas with regard to price. Nothing is more common than to hear the price of money associated with money itself, or rather associated with a paper medium of exchange. The price of every article of trade is determined by the comparative influences of demand and supply. We do not sell barley for barley, nor wheat for wheat; neither can we sell money for money, nor gold for gold. Unless it can be shown that the laws which regulate the demand and supply of gold, and by means of which its production is attained and its circulation regulated, are, in nature, different from those which regulate the same movements in every other article of trade, we must believe that those principles which profess to regulate the circulation of money under the credit system are fallacious in the extreme. Yet no one has ever presumed to establish or recognize any such differences, simply because it is well known none such exist. The quotations so often heard, therefore, of the socalled price of the currency in money terms, we may designate as the amusements or deceptions of trade, but they have nothing to do with its realities. The price of an article ever points, true as the needle, to its money value; the value of money ever points, as truly, to the price of commodities. No commodity can purchase itself, neither can money purchase money.

No

It is well known that the price of labor or rate of wages is determined by the rule of demand and supply. The same holds good with respect to every article of merchandise. Wherever this great law meets with unrestricted operation perfect equity is secured. It brings the wants of society into immediate contact with the powers of labor and the resources of art, and exercises a vital energy over the whole human race. drones are admissible into the hive of human industry. We take the world for our platform, and do not speak of mere sectional or particular interests. Society requires, in one way or other, either for the amelioration of its moral or physical condition, the full individual powers of each of its members. Only the aged and infirm are discharged from this service. The more full, perfect, and complete the labors of each individual the better will the whole of society fare. Production will increase, plenty will abound, and prices decrease. These are the true indications of wealth, far more than the possession of mere gold.

The mere increase of price does not, of itself, indicate the introduction of any element calculated to disturb or prejudice the means by which prices are fixed and regulated. It is the pecuniary interest of every man to buy in the cheapest and sell in the dearest market, and this motive alone, so far as commerce is concerned, tends to equalize prices everywhere. The only legitimate result of an increased supply of money is an increase of prices, in which all equally share, and in which there is neither advantage nor disadvantage. This result is as obvious as that an additional supply of water will elevate its level.

Although it appears that the general tendency of increase of money is to increase prices, let no one suppose that, as things are regulated at present, we are able to see this law exercising its healthy influences upon either the range or fluctuations of prices. The paper money here steps

in to prejudice this law-that is, to prejudice it with regard to healthy influences, and more particularly with regard to fluctuations. Paper money is now, and has long been, the great instrument of exchange. Gold and silver are not permitted, therefore, to exercise their true and legitimate effects on trade and prices. And if we wish to inquire into the range and scale of prices for a long series of years past, we must mainly take into consideration that which has had by far the greatest exercise in determining these prices, namely, the paper money. The proportion of force exercised in this manner by gold and silver, as compared with paper, may be estimated as one to five. For the same reason the influences of the supply of silver, as compared with those of the supply of gold, cannot now be distinguished, for the paper money acts as a medium of exchange in the place of both these metals. Prices being everywhere expressed in money, and interchange being effected by its means, it needs no argument to show that those prices must be regulated, or rather expressed, other things remaining the same, by the amount of money in circulation used as a medium of exchange. If money, for example, increases ten times faster than population, prices will in general correspondingly increase. The rate of increase of population, as compared with the rate of increase of money, is perhaps the most important of all elements in determining prices. Bank deposits, the proceeds of discounted paper, do not appear to exercise any appreciable effect. Pure barter, also, does not seem to have any effect upon the prices of commodities, that is, in a state of society where money largely circulates. The probability is that nothing can so operate except what is tangible and passes into the hands of the community, either real money, or spurious money which discharges the functions of true money. We cannot hope, in inquiries of this kind, where so many different influences are at work, to attain to any thing more than a mere approximation to the truth. Neither can we expect, under a credit system which gives rise to and fosters all sorts of fluctuations, excitements, and speculations in the market, to comprehend in any great measure the effects which increase of money would surely exercise upon prices under a hard cash system. It is obviously absurd to set up an artificial credit system, with extensive powers lodged in the hands of corporations of contracting and expanding the currency of a whole nation, merely as self interest or policy may dictate, and then to tell us that the operations of such paper institutions present to us the natural and simple movements of the circulation. The fluctuations and contractions in the currency, now so regularly witnessed, are not to be traced to any absolute scarcity or plenty of money. These results are chargeable mainly to the existence of debt, and to the ebbings and flowings of that confidence with which this debt must ever be associated. Debt creates a keen and never-failing demand for money; and should any circumstances arise to call forth universal demand, or shake confidence in credit, or power of borrowing, the contractions in the currency

*

* Since this was written, Mr. Carroll has an article in this Magazine on the Congressional Movement in the Currency Question " which, I trust, its readers have all carefully perused. Mr. Carroll differs from me in opinion as to the influence borne by deposits upon prices. He considers that all bank deposits exercise precisely the same influence as outside currency. It seems difficult indeed, from the nature of the case, to come to any other conclusion. Still, it seems to me that bank deposits have not, in effect, exercised this power. else we should have seen prices still further greatly augmented. The whole subject of the influence of the currency upon prices is one of very great importance. It cannot, however, be brought to any satisfactory issue independent of the usury question, for debt is the main element in the disturbance of prices.