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THE SCIENCE OF MONEY 



THE SCIENCE OF MONEY. 



BY 

ALEXANDER DEL MAR, C.E., M.E., 

Formerly Director of the Bureati of Statistics of the United 

States; Member of the United States Monetary 

Commission of 1876 ; Author of a 

" History of the Precious Metals" 

a ' ' History of Money, " 



- 




LONDON: 

GEORGE BELL AND SONS, YORK STREET, 
COVENT GARDEN. 

1885. 
All rights reserved. 



Entered according to Act of Congress in the year 1885 by 
ALEXANDER DEL MAR in the Office of the Librarian of 
Congress at Washington, D.C. 



CHISWICK PRESS : C. WHITTINGHAM AND CO., TOOKS COURT, 
CHANCERY LANE. 



PREFACE. 

TN the author's "History of the Precious Metals" it was 
shown from personal observations and practical tests 
made in the principal mining districts of California, Aus- 
tralia, Nevada, and other countries, where mining for these 
metals had been conducted by free labourers and under 
economical conditions, that the present value of these 
metals was far less than "the average cost of their produc- 
tion ; and that mining for them was kept up, not because 
of any proofs that it was remunerative, but in consequence 
of the gambling character of the pursuit and the hope 
entertained by each adventurer that his mine would prove 
a fortunate exception to the rest. 

Upon looking for the circumstances which had originally 
determined the present value of the precious metals, such 
circumstances were found in the military conquests, the 
rapine, and the slavery by which, previous to 1849, the 
European world had usually obtained them chiefly by the 
Spanish conquest of America, the cruel consignment of its 
aboriginal inhabitants to the mines of Mexico and Peru, 
and the capture of Spanish plate ships by British, Dutch, 
and French privateers. 1 These circumstances were regarded 

1 The precious metals became so plentiful in Europe that the dukes 
of Alva and Medini Coeli were enabled to possess from twelve to four- 



vi PREFACE. 

as continuing to have the most important bearing upon the 
value of the precious metals until the Mexican and Peru- 
vian races were exterminated/ and the Spanish Encomienda 
system failed ; events which occurred towards the end of 
the seventeenth century. 2 

That, upon the happening of these events and the falling- 
off of supplies from the mines, the existing level of prices 
and therefore the economic under- valuation of gold and 
silver was maintained in the various countries of Europe 
and America by paper notes, authorised by governments 

teen hundred dozen silver plates each, besides dishes and other vessels 
to match ; and the Marquis Trevain proposed that France should 
abjure the use of the precious metals for money, and adopt, instead, 
coins of iron. 

1 Most of the present survivors of these races are of mixed breed. 

2 Another circumstance, and one which has hitherto escaped the notice 
of historians, occurred at about the same time, with important results 
in this connection. The conquest of America gave rise to mining 
excitements in Europe which culminated in the reopening of nearly 
every abandoned mine on the Continent. Lord Bacon engaged in a 
gold mining enterprise in England ; gold mines were opened in Ireland, 
France, Germany, Austria, Switzerland, Italy, Turkey, Portugal, and 
Spain. In the last-named country vast alluvions which existed in 
Asturias, Leon, Gallicia, and Lugo, and which the Romans had 
thoroughly washed, were again worked by the deluded gold-seekers. 
The author has visited all these localities, and speaks from personal 
observation when he declares that, except in a very few and remote locali- 
ties, these placers are substantially exhausted, and will not pay to work 
even by the devastating " hydraulic" process. Although the product of 
the Continental mines (by no means inconsiderable) was gained at a loss, 
it entered the exchanges of Europe at the same value as the stolen 
treasures of America. A similar, though less notable, revival of mining 
in Europe took place after the opening of California and Australia. 



PREFACE. Vll 

and issued by banks, who owed this extraordinary privi- 
lege to the general dread of a fall of prices. 1 

That, toward the close of the eighteenth century, the 
scarcity of money (at the customary levels of prices in each 
country) was marked by the use of clipped coins of ante- 
revolutionary and of inconvertible notes of revolutionary 
date ; 2 that this scarcity was intensified by the Spanish 
American revolutions of 1810 and the closure of the mines 
of Mexico and South America ; and that these events gave 
rise to that great extension of " convertible " bank paper- 
notes which marked the era of 1797-1821. 

Before 1825, when peace was restored and mining re- 
sumed in Spanish America, the industries and commerce 
of the world, adventitiously freed for a time from the limi- 
tations of mining, had grown to such dimensions that either 
the bank emissions had to be permitted further enlarge- 
ment, or the level of prices in each country subjected to a 
calamitous fall. Not without many efforts to limit the 
volume of bank paper, all of which ended in prolonged and 

1 Montesquieu, who clearly perceived that the gold and silver of 
Spanish America had entered into the exchanges of Europe at a value 
greatly beneath the cost of producing these metals under economical 
conditions, thus alludes, in 1748, to the agencies that were at work to 
keep that value down: "The companies and banks established in 
various countries have maintained the under-valuation of gold and silver 
as equivalents for property ; for by new devices (paper notes) they 
have so greatly magnified the size of the measure of value that gold and 
silver (coins), now exercising only part of the office of such measure, 
have become less valuable than before." " Esprit des Lois," xxi. 22. 

2 Alluding to the American Revolution which occurred in 1775, and 
the French Revolution which occurred in 1789. 



Vlll PKEFACE. 

dangerous commercial crises, the various governments of 
Europe and America allowed these emissions to increase, 
until about 1852-5, when the amplitude of the Californian 
and Australian product of gold afforded a favourable oppor- 
tunity to improve the solvency of the banks. Efforts to 
curtail their emissions met with less success, and these 
continued to augment at nearly as rapid a rate as before, 
and have so continued up to the present time ; thus main- 
taining the under- valuation of the precious metals, and post- 
poning to a distant and uncertain era the restoration of 
their value to the cost of their economical production. 

Finally, it was shown that since the exhaustion of the 
principal placer mines of California and Australia, and the 
phenomenal rock mines of the Comstock Lode, the annual 
supplies of the precious metals had steadily diminished; 1 
that in all probability, they would continue to still further 
diminish; 2 and that with this dwindling of the basis of 
convertible paper systems their further extension must be 
regarded as substantially impracticable. 

In the author's " History of Money in Ancient Countries" 
it was shown that although upon a less extended field all 
the difficulties which the modern world has experienced in 

A further cause of diminished supplies has since been furnished by 
the Courts of California and of the United States which have forbidden 
hydraulic or placer mining upon navigable streams, or their affluents. 

The soundness of this opinion has since been confirmed by the 
Eight Hon. G. J. Goschen, formerly Chancellor of the Exchequer, by 
Mr. Lock, in his voluminous work on " Gold," and by numerous other 
writers on the subject. 



PREFACE. IX 

trying to make commerce and industry conform to the limi- 
tations of gold, silver, or copper mining, had previously 
been encountered by the ancient world, many of whose 
nations had at one time or another discarded the use of the 
precious metals for monetary symbols and adopted regu- 
lated or numerical systems of money. The most notable 
of these experiments were tried in China, India, Greece, 
and Rome. 

In the " History of Money in Modern Countries," 1 nu- 
merous other experiments of similar character are described. 

The present work is an arrangement and elaboration of 
the principles which appear to have been established by 
these experiments, and which together should form all that 
we have a right to call the science of money. No attempt 
has been made to apply these principles to the present 
circumstances of nations : this being an effort which the 
author reserves for a future and final work on the subject : 
" The Politics of Money." 

Should the author's conclusions with reference to the 
actual dwindling supplies of the precious metals, and the 
difficulty of further extending convertible paper systems, 
obtain general acquiescence, the present work may have a 
widely-extended and immediate usefulness ; and even should 
his opinions on these subjects not obtain acceptance, the 
science of money will hardly fail to interest alike^. the mer- 
chant, the jurist, the statesman, and the student of history. 

1 This work is completed, and will soon be in press. 



r UHI7EESIT7l 



CONTENTS. 

PAGE 

PREFACE . . . ... . . . . . v 

CHAPTER I. 

THE UNIT OF MONEY is ALL MONEY. Origin of the word 
money Its employment with reference to any period before 
B.C. 273 an anachronism Money, or nomisma, meant originally 
the whole numbers of money This was its classical meaning 
During the Empire and the Dark Ages money came to mean one 
or more coins This is the meaning attached to it in the laws of 
modern nations, because these laws originated in the Dark Ages 
During the Renaissance it meant the whole quantity, not num- 
bers, of money This is the meaning sometimes attached to it by 
the Economists, because their systems date from the Renaissance 
Incongruous nature of this meaning In speaking with pre- 
cision, money can only mean all the numbers of money of a given 
country Teleologically, the unit of money is all money . . 1 

CHAPTER II. 

CLASSIFICATION OF MONEYS. Moneys are of great variety, 
needing classification Moneys are legal institutions Moneys 
of unlimited and limited volumes Commodity, convertible, 
inconvertible, and composite moneys Various classes of com- 
modity moneys Living moneys Merchandise moneys Metallic 
moneys Their variety chiefly due to limitation of coinage, to 
seignorage, and to legal-tender efficiency Coins and bullion 
Unlimited paper moneys Their varieties Composite moneys 
These are the kind employed by the leading nations of the 



Xll CONTENTS. 

PAGE 

modern world Limited moneys These were the kind employed 

in various countries of the ancient world . .13 

CHAPTER III. 

STATISTICS OF MONEYS. The statistics of moneys defective 
Reasons Coins melted and exported surreptitiously Some- 
times minted in one country to circulate in another Coins used 
on shipboard Coins melted in foreign mints Counterfeit coins 
Coinable bullion Light coins Coin reserves Misleading and 
deceptive practices Coins employed for special classes of pay- 
ment Paper money Bank of England notes in foreign countries 
and on shipboard Local circulation of American " State-Bank " 
notes Counterfeits Propriety of including bills, discounts, or 
cheques in the statistics of money decided adversely Inter- 
national comparisons fallacious Every country a law to itself 
concerning money ........ 37 

CHAPTER IV. 

THE FUNCTION OF MONEY is TO MEASURE VALUE. The function 
of money correctly understood by Aristotle During the era of 
that philosopher the volume of money in each country was 
limited, and it formed a definite measure of value therein It is 
now everywhere unlimited, and has lost its character of an exact 
measure Money is not defined in the laws For this reason it 
is unlike all other measures Money is intended, but not now 
fitted for, a measure The size or weight of a dollar or pound 
sterling furnishes no guide to the whole number of dollars or 
pounds ; yet it is this which constitutes the measure of value 
The measuring function of money is altered with every change 
in the whole number of so-called units of value Not so with the 
units of weight, length, volume or area . . . . .48 

CHAPTER V. 

VALUE is A NUMERICAL RELATION. Legal use of the words 
unit of value Their importance They are not defined in the 



CONTENTS. xiii 

PAGE 

law Unit a synonym for measure Evolution of the word value 
Its Classical meaning related to the power of numbers Dur- 
ing the Dark Ages it became associated with labour In the 
Renaissance it acquired the meaning of an attribute of matter 
Fallacy of this last view The correct nature of value redis- 
covered by Montesquieu and Bastiat Value shown to be a 
numerical ratio between all exchangeable things Its further 
character difficult to define because of its continual variance 
Though indefinable, it is not immeasurable Value measurable 
by the whole numbers of money The existing mint laws practi- 
cally make the whole number of money or unit or measure of 
value to consist of an indefinite sum whose only limits fluctuate 
between illimitable demand and uncertain supply ... 59 

CHAPTER VI. 

MONEYS CONTRASTED WITH OTHER MEASURES. Besides the 
difference, already shown, which exists between unlimited 
moneys and limited measures, there are differences between 
moneys and other measures even when both are limited 1. 
Money is used to determine the value of numberless things at 
the same time ; a yard-stick to determine the length of one 
thing at a time 2. Money determines a dynamical and variable 
relation ; other measures a statical and fixed one 3. Money 
determines a numerical and extrinsic relation; other measures 
determine an inherent and intrinsic attribute 4. Money deter- 
mines an equitable relation ; other measures determine attributes 
which have no connection with equity 5. Moneys have a 
tendency to instantly amalgamate, and two or more moneys will 
merge into one money of the combined volume of both, which is 
not the case with other measures ...... 72 

CHAPTER VII. 

LIMITATION is THE ESSENCE OF MONEYS. Resemblances, 
actual and desirable, between money and other measures 
All measures of precision are artificial To become a precise 



XIV- CONTENTS. 

PAGE 

measure money must be of artificial dimensions All other 
measures are susceptible of exact numerical expression To 
become a true measure, money must be defined numerically 
The efficiency of all measures, money included, depends upon 
the exactness of their limits, not the substance of which they 
may be composed The limits of other measures are not left to 
be determined by supply or demand, nor should be those of 
money ........ .76 

CHAPTER VIII. 

THE PRECESSION OF PRICES. Explanation of Price It can- 
not be expressed in a given coin or sum of coins independent of 
other coins It varies directly with the whole numbers of money 
Logically a doubling of money will instantly effect a doubling 
of all prices in point of fact this doubling occurs in time, and 
the time varies with different commodities This variance sub- 
ject to natural law Such law called the Precession of Prices, 
or Movement of Prices in Time Kesults of practical observa- 
tions on the working of this law Danger of employing a money 
without fixed limits Other practical observations concerning 
moneys .......... 79 s 

CHAPTER IX. 

REVULSIONS or PRICES. Coins are not made of gold and silver 
because of the intrinsic qualities of these metals The practice 
arose from the superior constancy of their quantity as compared 
with other substances, and during eras when artificial moneys of 
fixed quantity were politically impracticable Historical examples 
The precious metals were never commonly and permanently 
used for coins until the conquest of Europe by Rome When 
the first effects of this conquest subsided the precious metals 
fell into disuse as materials for coins until the Spanish conquest 
of America The effects of this conquest, and its concomitant 
great supplies of gold and silver to Europe, upon prices have 
been sustained by means of so-called convertible paper notes 



CONTENTS. XV 

PAGE 

This system incapable of further extension Necessity for reform 
in money Fluctuations of prices which have resulted from con- 
vertible note systems Their disastrous and baneful effects . 86 

CHAPTER X. 

CAUSES AND ANALYSIS OF A RATE OF INTEREST. Causes of a 
rate of interest Temporary supply of money Rate of profit 
in production Rate at which animals, plants, and minerals 
increase Rate at which the means of subsistence increase 
Subsistence ultimately governs the rate of interest Subsistence 
also governs the growth of population; so that population and 
the rate of interest are related When to the rate of interest, 
arising from increase of subsistence, there are added allowances 
for risk, taxes, and the cost of superintending loans, the market 
rate of interest follows Present tendency of the market rate 
Ignorance of American ministers of finance Usury laws . . 95 

CHAPTER XI. 

RATE AT WHICH EXCHANGES INCREASE. Exchanges diner 
essentially in frequency Their frequency indicated by the 
customary rates of profit attached to each class They are all 
reducible to one denomination of frequency When thus re- 
duced it will be found that competition has compelled them 
all to bear the same rate of profit That rate is the one at 
which all the capital in a country augments The latter is 
identical with the net rate of interest for money Given the net 
rate of interest in a given country, the following rates can be 
deduced : the average rate of the augmentation of all capital ; 
the net rate of profit on all exchanges reduced to one denomina- 
tion of frequency ; and the net profit on each class of exchanges 
whose order of frequency is given . . . . . .102 

CHAPTER XII. 
REGULATION OF MONEYS. Fluctuations of price which do not 



xvi CONTENTS. 

PAGE 

belong to the domain of science Variations which do Practical 
considerations for the regulation of money Effect in the United 
States of an absolutely fixed sum Influence of a fixed sum per 
capita of population Actual movement of population and money 
during the past century Had money been regulated instead of 
being left to commerce, chance, and political contention, the 
great panics of 1815, 1821, 1837, 1861, and 1870 might have 
been averted ......... 112 

INDEX 117 




THE SCIENCE OF MONEY. 
CHAPTER I. 

THE UNIT OF MONEY IS ALL MONEY. 

Origin of the word money Its employment with reference to any 
period before B.C. 273 an anachronism Money, or nomisma, meant 
originally the whole numbers of money This was its classical meaning 
During the Empire and the Dark Ages money came to mean one or 
more coins This is the meaning attached to it in the laws of modern 
nations, because these laws originated in the Dark Ages During the 
Renaissance it meant the whole quantity, not numbers, of money This 
is the meaning sometimes attached to it by the Economists, because 
their systems date from the Renaissance Incongruous nature of this 
meaning In speaking with precision, money can only mean all the 
numbers of money of a given country Teleologically, the unit of 
money is all money. 

A /T ONEY, as a generic term for the common means of 
payment, the medium of exchange, the unit or 
measure of value, the expression of price, the Thing in the 
fractions of which either law or custom makes taxes, fines, 
debts, services, or exchanges, payable, was first used that 
is, the word was first used towards the end of the third 
century before Christ. 

What we now call money was named by the ancient 
Hindoos ' f cash," from karshdpana, a coin ; by the archaic 
Romans "aes/' meaning bronze, which was the material of 

B 



2 - THE SCIENCE OF MONEY. 

their coins ; by the Greeks ' ' nomisma/' meaning numbers ; 
and by the Romans of the Commonwealth ' ' nummus/' from 
the Greek nomos and nomisma. 

In the year B.C. 273, the Romans, in gratitude to the 
goddess Juno, for an alleged timely warning which saved 
them from defeat in battle, surnamed her Moneta from 
monere, to warn, and erected a temple in her honour which 
they called by her new name. Soon after, when the spoil 
of Tarentum was carried to Rome, this building was used 
as a mint, and its productions came to take the name of 
"moneta. 1 " 

It appears probable that moneta was at first used only in 
a collective sense, meaning all money, or the numerical sum 
of the entire coinage. This was certainly the meaning 
originally attached to nomisma, which was the predecessor 
of the word moneta. This meaning of money namely, all 
money, or the whole sum or numbers of money within a 
given legal jurisdiction or a given country will herein be 
distinguished as the Classical. 

Later on, that is to say during the Roman imperial era, 
the term money was applied to any considerable portion of 
the coinage, and still later to smaller portions ; but not yet 
to a single coin. 

During that lingering decay of the social fabric which 

1 From these circumstances it follows that the use of the term 
money with reference to any period previous to the dates referred to is 
an anachronism. Such an instance occurs in the English translation of 
Genesis, when Abraham is said to have paid for Sarah's grave " four 
hundred shekels of silver, current money with the merchant." (Gen. 
xxiii. 9, 13, 16). 



THE UNIT OF MONEY IS ALL MONEY. 3 

followed the downfall of liberty in Rome, every combination, 
both of things and ideas, gradually resolved itself into its 
original elements. This means of warding off impending 
dissolution Nature offers not only to composite things and 
ideas, but also to words. Isolation affords a refuge from 
which social existence may again emerge. The shattered 
trunk of a tree may survive after its branches and fruit are 
destroyed. 

The Roman Empire split into two, then into many frag- 
ments, each of which was called a kingdom. In the course 
of time these kingdoms became divided into countships or 
dukedoms, and the latter subdivided into still smaller realms. 
Every institution which was composed of a plurality of men 
or things fell to pieces in a similar way. The senate 
perished, the tribunals of justice disappeared, the corpora- 
tions or collegii vanished, the use of annuities and life tables 
was forgotten, the census fell into oblivion, even the organi- 
zation of armies ceased ; and counts and kings alike decided 
their quarrels by single combat. 

Everything of a joint ownership, as a public road, an 
aqueduct, or a water-ditch, everything of a composite struc- 
ture, from a sailing ship down to a piece of paper, every art 
which depended upon the association of labour, from the 
representation of a drama down to the blowing of glass, 
was lost. 

The same course of disintegration attended the history 
of institutions, of ideas, of thoughts. The world, the 
commonwealth, the republic, the nation, the social state, 
the people, public opinion, commerce, credit, society all 



4 THE SCIENCE OF MONEY. 

these were ideas or institutions known to the Greeks and 
Eomans in the widest sense. Says Pliny, " I do not sup- 
pose that the land is actually wanting, or that the earth has 
not the form of a globe; but that on each side the un- 
inhabitable parts have not been discovered" 1 . In the 
Dark Ages the world had dwindled to little beyond the 
compass of southern and western Europe; the common- 
wealth was the duke's courtyard ; and as for the social 
state, public opinion, commerce and credit, these things 
died out entirely. 

Words followed a similar process of decomposition. 
Their meanings gradually contracted, so that from em- 
bracing composite and collected ideas, they canie to have 
only simple and single ones. .They degenerated from 
forcible to weak ; from grand to petty. Many of the words 
were lost altogether. During the Kenaissance which fol- 
lowed the Dark Ages, a few of them revived, to puzzle 
the modern philologist with their successive diminuendo 
and crescendo gamuts of meanings. Among these was 
money. 

The descent of the word money from its original mean- 
ing of the whole numbers of the medium of exchange, or the 
whole coinage, to the feudal meaning of a single coin, piece, 
or fraction of the unit of value, is clearly traceable in words 

1 "Natural Hist.," Bohn's ed., ii. 1 12. Pliny also quotes Eratosthenes 
and Hipparchus, both of whom knew, not only that the earth was a 
sphere, they had even computed its circumference ; the former at 
252,000 stadii, the latter at 277,000. The rotundity of the earth had 
long previously been proved by Thales, B.C. 636. 



THE UNIT OF MONEY IS ALL MONEY. 5 

still extant. 1 There was a time, indeed, when its use 
expired altogether, and species in one country, argent in 
another, took its place. 2 

It was at this period, when every one of its constituent 
parts was on the point of dissolution, that the social fabric 
of Europe suddenly revived. Mahomet arose in Asia; the 
route to the Orient was reopened ; the restorative of com- 
merce was offered to a continent where manufactures had 
become unknown and agriculture was on the verge of ex- 
tinction ; and organized society-^ at first in Italy, after- 
wards elsewhere began to evolve itself anew out of the 
moribund and disintegrating social elements known to us as 
Feudalism. Then followed the Crusades, the reconstruction 
of armies, of kingdoms, of states, and of legal tribunals ; 
and the re-discovery of old truths and inventions, such as 
the rotundity of the earth, 3 sailing ships, glass and paper, 

1 Consult the use of the words nomisma in Aristotle and Plato ; 
moneta in Cicero and Pliny ; moneta in the Essays on Money, edited 
by Buclelius ; and moneta in Du Cange's copious Glossary. 

2 There is a parallelism in the decay and subsequent revival of 
the conception of money and the arts of music and poetry. During the 
Dark Ages the ancient art of music was lost, and poetry, which in the 
classical ages went by numbers, now went by accent. This was common 
to modern Greek and all the languages which sprang from or passed 
through the Dark Ages. Leake's " Topography of Athens,'" Ixxxiii. 
London, 1821, 8vo. 

3 About A.D. 813-33, Almamon, Caliph of Bagdad, caused a degree of 
the meridian to be measured. During the early part of the llth cen- 
tury Ben Mahomed Edrisi presented to Roger II. of Sicily a silver 
globe representing the earth. During the early part of the fifteenth 
century, Olou-beg, successor to Tamerlane, made a measurement of 
the earth. (Voltaire, General History, i. 32 ; ii. 2, 45). A plani- 



D THE SCIENCE OF MONEY. 

together with some new ones, as gunpowder and printing. 
Finally came a resuscitation of old words, among them 
f { money " but money shorn of its ancient meaning, money 
no longer meaning the whole of the unit of value, money 
meaning only what it meant previous to its entire verbal 
disuse a fraction of such unit, a single coin. The plural 
of this word, meaning a number of coins, a term no longer 
in common use, was " moneys." 

From this Dark Age sprang the Common Law of Eng- 
land, and the American law, and the law of other modern 
modern nations. In these laws money is still alluded to as 
a single coin. The unit of value, says the law of the United 
States of America, is one dollar; and this is further de- 
scribed in the same law as a piece of coined metal weigh- 
ing so many grains. 

Shortly after the time when the discovery of America 
had added the plunder of a new continent to the, as 
yet, meagre resources of Europe, certain jurisconsults and 
writers who were conversant with the Roman civil law, 
as those quoted by Budelius and Sir Matthew Hale, evinced 
an acquaintance with the ancient meaning of money ; but 
the common custom of the period, as shown in Italian 
economical works of the sixteenth and the English works 
of the sixteenth and seventeenth centuries, was to use the 

sphere, or map of the world, showing the Cape of Good Hope, was deli- 
neated in the convent of Murano at Venice in 1459, thirty-seven years 
before Vasco de Gama's voyage. A fac simile of this work is now in 
the British Museum. See Gibbon's Essay and Dean Vincent's Notes 
on the Meridional Line in Gibbon's Essays, pp. 499, 511, 4to. edition. 



THE UNIT OF MONEY IS ALL MONEY. 7 

word money in two senses : first, that of a number of coins; 
second, that of the whole quantity, not number, of pieces of 
the coinage. This last-named meaning which the word 
money acquired after its entire disuse during the Dark 
Ages, and its subsequent resuscitation, is traceable back to 
the period of the Renaissance ; and in order to distinguish 
it from the other meanings, it has been herein called the 
Renascent. 

So long as money was made exclusively of metal coins, no 
difficulty presented itself in reasoning from the Renascent 
meaning of money; and since it was during this period 
that the foundations of the present science of political 
economy were laid, 1 it was the Renascent meaning that 
money acquired in the works of Joseph Harris and Adam 
Smith, and those who followed them. Paper money, 
beyond the phase of deposit-notes, was scarcely known 
when the earlier of these economists wrote ; and as for those 
of a later date, though many have attacked and weakened 
the great Scotch sophist, none have had the genius or good 
fortune to overthrow him. 

But since the era of the economists since the time of 
Smith money has come to be largely made of both metal and 
paper ; and as it is physically impossible to express in one 
sum the total numbers of gold, silver, copper, and paper 
pieces, or fractions of money, 2 the silver and copper pieces, 

1 John Botero's works were published about 1590 ; Joseph Harris's 
Treatise on Money, in 1757. 

2 The numbers of two or more unlike things cannot be added 
together into a sum of either one of them. A pound of fish and a 



8 THE SCIENCE OF MONEY. 

formerly full legal tenders, have been demonetized, or partly 
demonetized, in law, and have been conveniently omitted 
from definition and argument j 1 whilst the fiction has been 
invented that all paper constituents of money involve fulfil- 
lable promises, written or implied, to be exchanged for gold 
coins of like denomination. When these subterfuges have 
been overthrown, the economical sophisms built upon the 
Renascent sense of money have resisted demolition by 
hiding themselves behind the ambiguous term " cur- 
rency." 

Thus we have three distinct meanings for money : 

1 . The Classical : The whole numbers of money ; the 
whole number of pieces or fractions of like denomination 
which the law permits to be used for payments no matter 
of what material they are composed. 

2. The Feudal : A coin ; plural, moneys, meaning several 
or many coins. 

3. The Renascent: The whole quantity of material 
gold or silver of which full legal-tender coins are made, 
and in which all paper notes are expressly or impliedly 
redeemable plus the quantity of bullion available for 

pound of flesh cannot make two pounds of either fish or flesh. A dol- 
lar coin cannot be added to a paper dollar and make a sum of two coin 
dollars, or two paper ones. 

1 For example, in answer to the self-proposed question, " What is a 
pound?" (meaning a pound sterling) Sir Robert Peel, in 1844, said 
123.275 grains of gold -f^ths fine. In this definition the silver, copper, 
and paper pounds which circulated at the time are left out of view. Sir 
Robert stated what a gold pound was, but not what either one of the 
other pounds were ; and his answer is therefore incomplete. 



THE UNIT OF MONEY IS ALL MONEY. 9 

coinage, under what is known as "free" or "open coinage" 
laws. 

With a view to determine the bearing which these varied 
meanings of money would have in practice, let it be sup- 
posed that the question were asked, " Of what does the 
unit of value in the United States consist ? " The answers 
would be as follows : 

The Feudal Answer : A gold coin legally called a dollar, 
weighing so many grains. This coin is the unit of 
value. See Revised Statutes of the United States, Section 
3511. 

The Renascent Answer : So many tons of gold coined 
into so many million pieces, each of so many grains, legally 
called dollars plus so many tons of uncoined gold bullion 
ready to be coined into similar pieces, free of seignorage, 
under Section 3524 of the Revised Statutes. The sum of 
this quantity is the unit of value. See Adam Smith and 
John Stuart Mill on Money. 

The Classical Answer : There are many pieces of gold, 
silver, nickel, copper, and paper no matter of what weight 
or size legally called dollars. The sum of their numbers 
is the unit of value. 

It is evident that no succinct, no practical discussion of 
money can be conducted until a choice is made between 
these three different meanings of the term. For example, 
Mr. John Stuart Mill, the most eminent of modern econo- 
mists, holds in one place that " the value of money varies 
inversely as its quantity." This rule is true of commo- 
dities ; it is also true of money when money means [num- 



10 THE SCIENCE OF MONEY. 

bers ; but it is not true of money when money means 
quantity. The proof of this appears in a previous para- 
graph of Mr. Mill's work, where he holds that the total 
sum of money no matter howsoever great or small it may 
be will always have the same value. 1 This rule, so con- 
tradictory of the other, is true of money when money means 
quantity; but it is not true of money when money means 
numbers. 

Bearing in mind Mr. Mill's great penetration and logical 
faculty, it is evident that he has fallen into this contradic- 
tion through the subtle error of employing the term money 
in two different senses. It is quite plain that in the first 
example he means by money the total numbers of money ; 
and in the second, the total quantity. 

To avoid a similar mistake, and until a rightful meaning 
of the term is acquired by familiarity with the nature and 
function of money, the sense in which it is used in this 
treatise will be plainly expressed or implied in each 
instance. 

When its nature is well understood it will be perceived 
that money is a Collective Unit or Thing ; and that it is 
impossible to give it a precise or specific name unless such 
name has the meaning that it is believed belonged to 
nomisma namely, all money, or the whole sum of num- 
bers of money in a given country, or within a given legal 
jurisdiction. 

When used with reference to all the world, money means 

1 Mill's " Political Economy," iii.-viii. 2, p. 299 from Adam Smith, 
Book I., chap. ii. p. 178. 



THE UNIT OF MONEY IS ALL MONEY. 11 

and must of necessity mean all the money in the world. 

Therefore,, teleologically, money, or, what is the same thing, 
the unit of money, is all money ; and the term should not 
be used in any other sense. Nevertheless, so long as the 
various countries of the world employ different monetary 
systems, and each system consists of different kinds of 
moneys that is to say, moneys having different legal 
attributes, as is the case now it becomes necessary, unless 
new and strange terms are introduced, to employ the word 
money to mean sometimes all the money in the world, 
sometimes all the money of a given country and some- 
times all the money of one class as commodity money, 
numerical money, etc. ; whilst the word moneys will have 
to be used to mean sometimes two or more systems of 
money, at others two or more classes of money. The intel- 
ligence of the reader will doubtless guide him to the sense 
in which this, at present, ambiguous term is employed in 
the various parts of this work. 1 

1 The use of the word money in the sense of a single piece or frac- 
tion of money has been avoided as far as possible ; but in some places 
it was found inconvenient to do so without resort to tedious circumlo- 
cution. One striking fact asserts itself at the outset of this inquiry into 
the principles of money : if the unit of money is all money and there 
can be no doubt that this is true it follows that our knowledge of 
money, its composition, dimensions, distribution, operation, etc., must be 
derived from other sources than visual knowledge. We may, indeed, 
perceive a fraction of money, as a coin, a note, etc., but we cannot see 
all money. We must, therefore, consult the laws and customs of money 
for a knowledge of it ; and since these laws and customs are exceed- 
ingly numerous and intricate, and are entwined with other laws and 
customs, and much affected by their operation, we find that money 



12 THE SCIENCE OF MONEY. 

is something more than a mere instrument it is an institution. No 
individual can make it, or a duplicate of it, as one can a pint pot or a 
yard stick. It has to be established and maintained by society at 
large. Nor may this establishment be arbitrary. It must be designed 
with respect to the other social and commercial arrangements already 
in existence, and liable to be affected by its operation. 



CHAPTER II. 

CLASSIFICATION OP MONEYS. 

Moneys are of great variety, needing classification Moneys are 
legal institutions Moneys of unlimited and limited volumes Com- 
modity, convertible, inconvertible, and composite moneys Various 
classes of commodity moneys Living moneys Merchandise moneys 
Metallic moneys Their variety chiefly due to limitation of coinage, to 
seignorage, and to legal- tender efficiency Coins and bullion Unlimi- 
ted paper moneys Their varieties Composite moneys These are the 
kind employed by the leading nations of the modern world Limited 
moneys. These were the kind employed in various countries of the 
ancient world. 

"XT single work nor class of works exist in which the 
principal different kinds of money adopted at various 
times by the nations of the world are mentioned, and in 
which their peculiarities and functions are accurately deter- 
mined and described. The numismatic works are limited 
chiefly to the description and classification of coins ; whilst 
the essays and treatises relating to moneys and " cur- 
rencies " are usually theoretical works, in which a few facts, 
isolated from their congeners, are made to sustain a totter- 
ing burden of conclusions. 

As yet the history of money lies scattered and hidden in 
the chronicles of law, religion, slavery, wars, natural philo- 
sophy, mining, metallurgy and archaeology. If these be 
investigated with attention, it will appear that several 



14 THE SCIENCE OF MONEY. 

hundred distinct classes of moneys have been used from 
time to time by various peoples and nations ; while to speak 
of money is usually to speak of only one of these numerous 
classes. 

In order to avoid the use of a terminology whose looseness 
and vagueness would destroy the claims of this work to 
practical value, it becomes necessary at the outset to classify 
moneys. 

The palpable characteristic which distinguishes money 
from the numerous objects that resemble it, but which are 
not money, is its Mark of Authority, signifying that it is 
issued, circulated, and made payable for debts, services, 
fines, taxes, and commodities, by virtue of Law, or, as in 
some instances, general custom having the force of law. 

There is also connected with this distinguishing mark 
the question of Artistic Design, and the bearing of the latter 
upon Counterfeiting and surreptitious issues. 

The Mark of Authority has not always been affixed to 
money. Cattle, corn, cocoa-beans, metallic slugs and 
rings, and many other objects having no mark of authority 
whatever upon them, have served at various times, and 
amongst various peoples, for that measure of the exchange- 
able relations of other objects which is called money. Such 
instances, however, belong rather to undeveloped or decayed 
communities and to the earlier history of commercial inter- 
course than to peoples and a state of trade in which money 
plays an important part and becomes an institution of law. 

From the earliest historical periods, money, amongst 
highly civilized and commercial communities, has had its 



CLASSIFICATION OF MONEYS. 15 

distinguishing mark and other and still more important 
attributes conferred upon it by law/ a fact, by the way, 
which appears to be strangely ignored by political econo- 
mists. It is from the law, therefore, that these attributes 
are to be gathered. But herein, still more strangely, 
occurs an oversight more important than that committed 
by the economists. 

The law in all instances except in a few not yet well 
settled ones, to be mentioned in the course of this work 
has omitted to describe or limit the Sum or Volume of 
money ; an attribute, according to the economists, who on 
this point are incontestably sound, of the most essential 
consequence, because it determines the value of the whole, 
and consequently the value of each of the many pieces or 
fractions of which the whole money is composed. 2 

When the volume was undefined, and sometimes as, for 
example, whenever the law defining the volume has been 
inoperative in seeming defiance of the volume, the material 
of which moneys was composed has had the most important 
influence in determining their value and efficiency. 

Lastly, the conditions of the production or emission of 
moneys, and the functions and privileges conferred or 
limitations affixed to them by law or custom (if any), all 
bear upon and serve to determine their value and efficiency. 

1 See "Institutes of Manoti " (B.C. 1500 to 3100), viii., 151, quoted 
in the author's " History of Money," chapter on India. 

2 " As their mass increases their value diminishes." Adam Smith, 
i. 178. "By limiting the quantity of coin, it can be raised to any 
conceivable value." Ricardo, " Political Economy," chapter xxvi. 



16 THE SCIENCE OF MONEY. 

Guided by these various characteristics and attributes in 
classifying the different sorts of moneys, they appear to be 
divisible into the following genera, orders, classes, and 
groups. (See p. 17.) 

It will be observed that the two great genera of moneys 
are : 

First, moneys of Unlimited or Unfixed volume. 

Second, moneys of Specifically Limited or fixed volume. 

The first of these genera, consisting of those moneys 
whose sum, volume, magnitude, or number of fractions is 
undefined or specifically unlimited in the law of the nation 
employing them, is divisible into four orders, as follows : 

OEDEE I. Commodity Moneys, as slaves, cattle, corn, 
merchandise, metallic slugs, nonseignoried coins, seignoried 
coins, and coinable bullion marked and unmarked; volume 
not fixed. The material of these moneys when used for 
moneys possess the same value no more, no less as when 
used for other purposes. 1 

1 Seignoried coins usually form an exception to this rule, because 
they are usually issued within some sort of rude limit. When thus 
issued their value as coins may be as great and even greater than the 
metal of which they are composed, whilst they can never be reduced to 
metal again unless at a loss. When issued without limit, the value of 
the coins will conform to their numbers, and if the issues are continued, 
will eventually fall to that of the metal of which they are composed ; a 
circumstance that would reduce them to the condition of commodities, 
and bring them within Order I. In such a condition of affairs the 
owners of bullion will refrain from offering it for coinage, as did the 
Spanish grandees of the sixteenth and the English nobles of the seven- 
teenth centuries, a large portion of whose wealth was accumulated in 
the form of plate. 



CLASSIFICATION OF MONEYS. 



17 



CLASSIFICATION OF THE ACTUAL MONEYS DESCRIBED 
IN THE AUTHOR'S " HISTORY OF MONEY." 



Genera. 


Orders. 


Classes. 


Groups. 


Degree of Legal 
Tender. 


/ 




1 Living 




Not known. 






2. Merchandise. 
3. Non-seignoried coins 


A. Unlimited coinage 
B. Limited coinage 


( Unlimited. 

i Unlimited. 
1 Limited. 




I. Commodity * 


4 Seignoried coins 


A. Unlimited coinage 


} Special. 
t Unlimited. 
-? Limited. 
( Special. 






5 Coinable bullion 


B. Limited coinage 
Gratuitous coinage 


t Unlimited. 
1 Limited. 
(Special. 
Potential 1 t 




( 






Not 1 t 








(A.. Deposit notes 


C Not 1. t. 






2 Bank notes 


. B. "Secured" notes 


1 Special. 
< Not 1. t. 
1 Limited. 








c. Unsecured notes 


I Unlimited. 
( Not 1. t. 


Unlimited 


II. Convertible ...- 


3. Corporative notes 
4. Commnnal notes 


I A. Deposit notes 
B. " Secured " notes 
c. Unsecured notes 
A. Deposit notes 

B. " Secured " notes 

C. Unsecured notes 
A. Deposit notes . . 


7 Limited, 
j Not 1. t. 
\ Special. 
( Not 1. t. 
J Limited. 
( Unlimited. 
J Not 1. t. 
) Limited. 
t Not 1. t. 
J Limited, 
f Unlimited. 
t Not 1. t. 
J Limited. 
I Unlimited. 
( Notl. t. 
\ Limited. 






5. National notes 


B. Treasury notes 
C. Exchequer notes 


1 Unlimited. 








D. Funding notes 
E. Land notes 


Limited. 
Special 






1. Banknotes 


F. Interest-bearing notes. 


( Unlimited. 
\ Limited. 




III. Inconvertible . 


2. National notes 


A. Treasury notes 


( Special. 
( Unlimited. 
1 Limited. 


I 
Limited ... -1 


IV. Composite 

I 


1. Clay, glass, or porcelain. 
2. Leather 


B. Interest-bearing notes 

} 


( Special. 
(Unlimited. 
> Limited. 
( Special. 

Unlimited. 


1 


1 


4. Paper 


1 















18 THE SCIENCE OF MONEY. 

OEDEE II. Convertible Moneys, as individual, bank, cor- 
porative, communal, and national notes, promising to 
deliver some commodity or render some service ; marked ; 
volume not fixed. The material of which they are made 
possesses more value as money than for other purposes ; such 
value varying with their character or that of the commodities 
or services represented or promised, and in the latter case 
varying still further with the credit of the issuers. 

OEDEE III. Inconvertible Moneys. Marked ; volume un- 
fixed, either through neglect or frequent or sudden changes 
in the law, or by their being rendered interchangeable 
with coins or other unlimited moneys, and thus merged 
into the whole mass of money. The French assignats 
and mandats, the American Colonial and Continental notes, 
the Confederate notes, the Italian corso forsali, the Brazilian 
notes, and numerous others, were of this order. 

OEDEE IV. Composite Moneys , composed of two or more 
of the previously named orders of moneys; marked and 
unmarked; volume not fixed. To this order belong nearly 
all the moneys of the world at the present time. 

Descending now to the inferior attributes of moneys, it 
will be found that Commodity Moneys are further divisible 
into the following classes : 

OEDEE I., CLASS 1. Living Moneys, as slaves or cattle. 
Slaves were used as money in Britain previous to the 
Norman invasion, 1 in America during the early portion of 
the Spanish Conquest and the Eepartimiento system, 2 in 

1 Henry's " History of Britain," vol. iv., p. 243. 

2 Del Mar's " History of Precious Metals," p. 63. 



CLASSIFICATION OF MONEYS. 19 

Central Africa very recently/ and in most primitive as well 
as in most decaying communities. Cattle have been used 
as money in all early pastoral communities. 

OKDER I., CLASS 2. Merchandise Moneys, as corn, fish, 
salt, furs, cloths, cocoa, tea, spirits, tobacco, soap, oil, &c. 
Corn was very extensively employed for this purpose in 
Europe during the Middle Ages. 2 Corn rents were paid in 
England so late as the reign of Elizabeth, in France down 
to the period of the Revolution, and in Germany during the 
present century. 3 In 1631 corn, at market prices, was a 
legal tender in Massachusetts; in 1732 it was legal tender 
in Maryland at 2s. 3d. per bushel ; rice is still paid for rents 
in parts of India, China, and Japan ; 4 and millet and dhoura 
in Nubia. Dried fish of some kind has been used as money 
in Iceland ; dried codfish in Newfoundland ; sealskins and 
fish blubber in Norway and Greenland; salt-bricks, at a 
rate equal to about 7i pence in silver each, at Massouah in 
Abyssinia ; and beaver-skins and other peltry in the North 
American Colonies. Silk cloth has been employed in 
China ; linen cloth, at 3s. 6d. the yard, was used in Frank- 
land (now comprised in North Carolina) in 1785 ; and 
cotton cloth is still used in some parts of Africa. Cocoa- 
beans constituted the principal money of the ancient Mexi- 
cans, and in some districts of their country was used by the 



1 Cameron's " Across Africa." 

2 United States "Congressional Record," April 24, 1876, Appendix, 
p. 70. 

3 Hodgkin's " Travels in North Germany." 

4 Del Mar's " History of Money," chapter on Japan. 



20 THE SCIENCE OF MONEY. 

Spaniards for a long time after the conquest. Traces of the 
custom prevailed so late as 1847, when the American army 
invaded Mexico. Brick tea is employed for money in 
Northern China; whisky was used, at 2s. 6d. the gallon, in 
Frankland in 1785 ; rum in Pennsylvania in 1790, and also 
during the present century in Australia ; tobacco was legal 
tender in Virginia in 1635, and (at one penny a pound) in 
Maryland, 1732 ; soap was money at the Castle of Perote, 
Mexico, 1847 ; and quite recently olive- oil in the Ionian 
Islands. 

ORDER I., CLASS 3. Non-seignoried Coins. Marked; 
volume not fixed. This class is divisible into Group A, 
unlimited coinage, and Group B, limited coinage. To the 
former group belong the gold coins of England, France, 
Germany, and the United States. So far as the law is 
concerned these coins are all unlimited legal tenders, but 
custom has often reduced them to special tenders. For 
example, from 1863 to 1878 the gold coins and silver 
dollars of the United States, varying in total sum from 
eighty-five to one hundred and fifty million dollars, though 
lawfully unlimited tenders for all purposes, were in fact 
never used except for the payment of customs duties and 
interest on the public debt. 1 The reason for this custom 
was that the greenback law of 1862 made treasury notes 
tenders for all purposes except the two named; and as these 
notes were issued in excess of the public requirement at 
the previously existing level of prices, the latter rose, in- 

1 A small sum was also employed in the State of California, whose 
Legislature nullified the greenback law of the United States. 



CLASSIFICATION OF MONEYS. 21 

eluding the price of gold and silver coins, which thus 
became worth a premium in greenbacks. After this the 
coins were only paid in cases where the law specifically 
demanded them. To Non-seignoried coins, Group B, be- 
longed the American silver dollar during the interregnum 
from Dec. 1, 1873, to Feb. 28, 1878. It had previously 
belonged to Group A, but at the date first mentioned it was 
surreptitiously dropped from the list of coins which the 
Mint was authorized to fabricate. 1 This act transferred the 
outstanding coins from Group A to B. They remained un- 
limited legal tenders, but no more of them could be coined. 2 
At the last-named date silver dollars were again permitted 
to be fabricated, but only for and on account of the Govern- 
ment, a fact that transferred them to the class of Seignoried 
coins. The silver dollar has always been and still remains 
an unlimited legal tender; nevertheless, the associated 
bankers of New York and other cities of the United States 
have practically reduced it to a limited tender by substanti- 
ally defying the law in their refusal to receive it on deposit. 3 



1 Its coinage is monopolized by the State, which purchases the 
bullion and makes a profit upon the fabrication. See Minute by the 
writer on the Standard of the United States, in "Report of the 
United States Silver Commission," 1876, i., Appendix 90. 

2 This is the case also with the silver thaler of Germany and ecu of 
France. They are no longer open to " free " coinage. 

3 This extraordinary action, emanating from outside sources, operat- 
ing through the Clearing House of New York, and strangely enough 
supported by the Secretary of the United States Treasury, who has 
shirked his duty to enforce the law, is believed to be quite unique in 
the history of money. 



22 THE SCIENCE OF MONEY. 

OEDEE I., CLASS 4. Seignoried Coins. Marked ; volume 
not fixed. Group A, coinage not limited. Examples of 
unlimited legal tenders of this group are furnished by most 
of the Spanish and Portuguese silver dollars and milreis 
and gold doubloons, moidores, &c., minted during the 
sixteenth, seventeenth, and eighteenth centuries ; of limited 
legal tenders by the Spanish and Portuguese silver coins of 
the smaller denominations ; and of special legal tenders by 
the " beshlik " silver coins of Turkey, which are legal 
tenders for only certain classes of payments and not for 
others. 1 

To Seignoried coins, Group B, of unlimited legal tender, 
belongs the American silver dollar since February 28, 
1878 ; to the limited legal tenders belong the smaller or 
" subsidiary" silver coins of the United States, Great 
Britain, Germany, the Latin Union, &c., which are legal 
tender for all classes of payments, but not beyond cer- 
tain limited sums in any one payment ; and to the special 
legal tenders belonged certain French coins of the Middle 
Ages which were current only in the cities where they 
were minted. The "autonomous" coins of the ancients 
were also of this kind. 

OEDEE I., CLASS 5. Coinable Bullion. When the law or 
custom opens the mints of a country to " free coinage," 
that is to say, coinage at the pleasure and upon the demand 
of the owners of bullion, and either free of expense to 
them, as in Great Britain, the United States, &c., or at the 
bare cost of fabrication (brassage) as in France, and when, 

] " History of Money in Modern Countries," chapter on Turkey. 



CLASSIFICATION OF MONEYS. 23 

in addition to granting such privileges, the Government 
provides mints, capable, ready, and willing to expeditiously 
coin all the bullion likely to be thus offered to them for 
coinage, then the bullion itself becomes so far money that 
it only needs a signal from the owner to make it so. Under 
such laws the quantity of money in circulation can no longer 
be regulated by Government. This high prerogative of 
State has been surrendered to private parties, who can 
through its agency, and with the aid of a melting-pot, 
create or destroy, and lengthen or contract, the measure of 
value at pleasure, and without the slightest expense or in- 
convenience to themselves. 

The passage of a ' ' free coinage " law in a country previ- 
ously without one, and possessing the means to coin all the 
bullion offered, would have substantially the same effect 
upon prices as a sudden increase to its volume of money. 1 
Strictly speaking, bullion is not money, and it is incorrect to 
include it in money ; nevertheless, if legal and mechanical 
provision is made for turning one into the other, there can 
be but little practical difference between them. Under 
such circumstances bullion becomes a sort of potential 
money, and its position in the law analogous to that which 
some illiterate persons have advocated for all commodities. 
Their notion was that in order to measure value accurately 
Honey should have no limits, and they proposed to make 
everything a legal tender for everything or, what is the 
same thing, to issue legal- tender notes corresponding in 

Inded ? such was the original object of " free coinage " laws, which 
belonged t the Mercantile System of the Middle Ages. 



24 THE SCIENCE OF MONEY. 

amount to the present (why the present ?) nominal value 
of everything else. 1 

Schemes so monstrous as these belong to the domain of 
lunacy, and " free coinage " is of a kind not far removed 
from them. As the case now stands, a private telegraphic 
order sent across the Atlantic may in a week's time sum- 
mon bullion from the coin or bullion stock of some remote 
country, and within another week this bullion may be 
coined into British pounds or American dollars, and the 
measure of value thus curtailed in one country and 
lengthened in the other without the knowledge or consent 
of either. If prices have risen through violent fluctuations 
since this survival of the Mercantile System has been 
rendered mischievously effective by means of submarine 
cables, it is not because the world's stock of the precious 
metals has increased (for it has not) , but because the emis- 
sions of bank notes and the masquerading of bullion now 
as the coin of one nation, and now as that of another, have 
subjected the measure of value to the design of intriguants 
and speculators. 2 

Convertible Moneys are divisible into five classes, as 
follows : 

1 See pamphlet, " Money and Usury," by W. M. B. Hartley (New 
York (?), 1869), p. 12. I have seen a similar proposition more elabo- 
rately set forth by another pamphleteer, but cannot recall the work. 

2 An important movement of this kind is being conducted at/ne 
present moment (February, 1885) between London and New /ork. 
The demonetization of silver in the United States in 1873, *d the 
present attempt to again demonetize it, was and is being 

interest of political intriguers and speculators in exchange. 



CLASSIFICATION OF MONEYS. 25 

OEDEE II., CLASS 1. Individual Notes. Examples the 
notes of Robert Morris, American Finance Minister in 1786 ; 
the notes of numerous individual bankers throughout the 
various States of the Union previous to 1863, as Pratt' s 
Bank of Buffalo ; and the notes of private banking houses 
in the principal cities of China. 1 All these notes circulated 
as money, not by force of law, but custom. 

OEDEE II., CLASS 2. Bank Notes. Of these there are 
three principal groups : 

Group A. Deposit Notes, or notes issued by banks in 
lieu of deposits of coin or bullion, and not exceeding the 
nominal sum of such deposits. Example the notes of the 
Bank of Stockholm during the seventeenth century. 

Group B. Secured Notes, or bank notes issued upon 
the security of a partial deposit or reserve of coins or 
bullion, as those of the national banks of England, France, 
and the United States ; or upon a deposit of national, pro- 
vincial, communal, or corporative stocks, without any coin 
or bullion reserve, as those of some of the old " State- 
Banks " of America ; or upon both, as those of other of the 
" State-banks." 

These notes are divisible into non-legal tender, as the 
American " State-bank " notes ; and special legal tender, 
as the national bank notes of England, France, and the 
so-called " National-bank" notes of the United States. 

Group C. Unsecured Notes, or bank notes issued upon 

no security of payment, or of convertibility into coins, or 

other commodities. Non-legal-tender notes of this class 

1 " History of Money," chapter on China. 



26 THE SCIENCE OF MONEY. 

were issued by many of the old American " State-banks." 
Examples of limited tenders also occur among their issues, 
this function having been accorded to them by the custom 
of the United States revenue collectors, who, until the year 
1836, were in the habit of receiving them for public dues. 
The Government then put a stop to the practice. 

OKDEE II., CLASS 3. Corporate Notes. The Reading 
Railway, and various other corporations, not banks, in 
America, have issued notes of one or other of all the kinds 
mentioned under Class 2 of this order. 

OEDEE II., CLASS 4. Communal Notes. Notes issued by 
communes or municipalities, and circulated as money, such 
as those of the Society of Utopia, in Ohio. These were 
issued by the community (a voluntary one) in payment for 
services rendered to it, and were payable in " day's work." 
They were unlimited legal tenders. The effect of these 
notes upon prices occasioned the breaking up of the 
Society, 1 

OEDEE II,, CLASS 5. National Notes. Notes issued by 
national Governments. Of such notes there are six princi- 
pal groups : 

Group A. Deposit Notes. The gold certificates of the 
United States were at one time strictly deposit notes. 
They are at present issued in excess of the deposit. 

Group B. Treasury Notes. Example the United States 
11 demand " notes of August 5, 1861. 

Group C. Exchequer Notes, as those issued by the 

For an account of all the various classes of Communal Notes see 
" History of Money," chapter on the United States. 



CLASSIFICATION OF MONEYS. 27 

Government of Great Britain. They are payable ont of 
anticipated revenues. 1 

Group D. Funding Notes. These are temporary notes 
issued during the refunding of public bonds or " stocks/' 

Group E. Land Notes. Examples the land notes of 
Pennsylvania, the French mandats, &c. 2 

Group F. Interest-bearing Notes. Examples various 
issues of the United States during the Civil War. 

Each of these six groups are again divisible into Un- 
limited, Limited, and Special legal tender, examples of 
which occur in the author's " History of Money ," but are 
not adduced here, for fear of rendering the work too prolix. 

OEDEE III. Inconvertible Moneys. Of these there are 
two principal classes : (1) Bank notes, as the Bank of 
England notes from February 26, 1797, to May 1, 1821, 
and those of the Banks of Russia, Austria, etc., at the 
present time ; and (2) Government notes. Of the latter 
there are two principal groups (A) Treasury notes, as 
those of the various Governments of Brazil, Buenos Ayres, 
Turkey (caime), Japan (kinsatsu), etc.; and (B) Interest- 
bearing notes, as were some of those of the United States 
during the Civil War. Both of these classes of money, and 
each of the groups of the latter one, are divisible into the 
three kinds of Unlimited, Limited, and Special legal ten- 

1 " History of Money " (chapter on Great Britain), and Harvey's 
" Paper Money,'' London, 1877, p. 230, where a fac simile of one of 
these notes is given. 

2 " History of Money " (chapters on North American Colonies and 
France), and Harvey's " Paper Money." 



28 



THE SCIENCE OF MONEY. 



ders, examples of which are to be found in the author's 
"History of Money." 

OEDEE IV. Composite Moneys. These moneys consist of 
two or more of either of the foregoing orders, classes, 
groups, or kinds of moneys combined. Examples of this 
composite order are afforded by the moneys of every state 
of the modern world. Each one of their monetary systems 
consists of various kinds of money whose heterogeneous 
and dissimilar characteristics and attributes strikingly re- 
veal their feudal origin. This feudal heterogeneity and 
compositeness are as fully exemplified in the money of 
the newest of these states that one whose foundation 
arose out of a protest and revolution against the feudal 
system 1 as in that of the oldest. 

In the money of the United States, the dollar is the 
nominal common fraction of the unit or measure of value 
not (as the law ignorantly declares it) the unit of value 
itself. So far is this money from being specifically limited 
or fixed in volume, that the number of " dollars " has varied 
from nineteen millions in 1790 to eight hundred and fifty 
millions in 1866, and from $4.60 per capita of population in 
1798, and $6.90 in 1843, to $14.00 in 1837 (before the 
"Suspension") and $22.80 in 1868 (before "Black Fri- 
day.") With reference to the dissimilarity of the fractions 
of which this widely fluctuating unit was composed, it need 
only be said that to-day, after the suppression of a dozen 
conflicting systems of " State-bank " notes, and endless 
classes of local " shin-plasters," there are no less than twenty 
1 The United States. 



CLASSIFICATION OF MONEYS. 29 

different kinds of " dollars " in existence, and made legal 
tender by law. These are as follows : 

1. The gold dollar of a date prior to 1837, and heavier 
than the present one. 

2. The present gold dollar, containing 22.23 grains of 
pure gold. 

3. The silver dollar, containing 371.25 grains of pure 
silver. This has always been its weight. 

4. The trade dollar, containing 378 grains of pure silver. 
This dollar was formerly legal tender to the extent of five 
dollars ; it is now demonetized. 

5. The subsidiary silver dollar, consisting of halves, 
quarters, twenty, ten, and five-cent pieces, and containing 
347.22 grains of pure silver. Legal tender for five dollars 
only. 

6. The base silver dollar, consisting of 33.1-3 three- 
cent base silver pieces, containing grains of pure 

silver. 

7 . A nickel dollar, consisting of twenty five-cent nickel 
pieces. 

8. Another nickel dollar, consisting of 33.1-3 three-cent 
nickel pieces. 

9. A copper dollar, consisting of 100 one-cent (old) 
copper pieces. 

10. A copper dollar, consisting of 100 one-cent (new) 
copper pieces, containing 4800 grains of copper, zinc, and 
tin, combined. 

11. A copper dollar, consisting of 100 one-cent (new) 
copper pieces, containing no zinc or tin. 



30 THE SCIENCE OF MONEY. 

12. A copper dollar, consisting of 50 two-cent copper 
pieces, containing 4,800 grains of copper. 

13. The Treasury " demand-note " dollar, issued under 
Act of August 5, 1861, expressly payable in coins. Un- 
limited legal tender for all purposes. 

14. The " Greenback " dollar, Act of February 25, 1862, 
payable in itself, and an unlimited legal tender for all pur- 
poses except customs duties and interest on the public debt. 
The status of these notes was altered by Act of March 18, 
1869, and January 14, 1875 ; but in case of a suspension of 
(( specie payments" they would practically resume their 
former status. The fractional notes issued under the same 
Act are of the same character. 

15. The National Bank note dollar, provided for by 
Act of 1863. This is a legal tender to any amount to 
and from the Government, except for duties and interest 
on the public debt ; but is not a legal tender between 
individuals. 

16. The National Bank gold dollar is similar to the last, 
except that it is expressly payable in gold (?) coins. 

17 & 18. The one and two-year interest-bearing Treasury 
note dollars. Act of March 3, 1863. 

19. The compound-interest-bearing Treasury note dollar. 
Acts of March 3, 1863, and June 30, 1864. 

20. The gold certificate Treasury dollar. Act of March 
1, 1862. 

21. The certificates issued under Act of March 3, 1863. 

22. The certificates issued under Act of March 2, 1867, 
and different from the former ones. 



CLASSIFICATION OF MONEYS. 31 

23. The certificates issued under Act of June 8, 1872. 

24. The silver certificate Treasury dollar. Act of Feb. 
28, 1878. 

25. The refunding certificates. Act of Feb. 26, 1879. 
At the present time these various dollars circulate upon 

a par with each other; but circumstances could happen 
by reason of which they might all differ in value, because 
they have different legal attributes, or are issued subject to 
different conditions. 1 

Limited Moneys. The second great genera of moneys 
consist of those whose volume or numbers are specifically 
limited by law and restricted by practice. Among the 
highly civilized nations of antiquity, before felted paper, or 
paper of sufficient toughness for the purpose, was invented, 2 
the symbols of such money consisted of porcelain tablets, 
as in China ; thin iron discs, as in Sparta ; highly artistic 
copper discs, as in Rome; discs of a secret metallic com- 
pound, as in Carthage ; or tablets of stamped clay or leather, 
as in several other states. In all cases where these moneys 
permanently retained their original value, it was by means 
of limiting the number of symbols employed, by protecting 
them from counterfeiting, and by abolishing all other kinds 
of moneys. The bits of material which represented the 

1 Within the last few years the writer has seen gold dollars at a dis- 
count in greenbacks ; and silver dollars, silver trade-dollars, silver 
fractional dollars, and nickels, at a discount in gold dollars ; whilst a 
few years previously greenback dollars stood at a discount in all of the 
others. 

2 The paper of classical antiquity was made by pasting together the 
leaves of the papyrus. It was flimsy, and when dry, brittle. 



32 THE SCIENCE OF MONEY. 

numbers, whether porcelain, sheet-iron, or leather, counted 
for nothing. The devices or legends upon them promised 
nothing. Their value was derived from the legal limitation 
of their numbers ; from the legal obligation to receive them 
for debts, fines, taxes, commodities and services of all sorts; 
and from the legal interdiction of all other kinds of money. 
When such a numerical money followed some pre-existing 
metallic commodity money as the system of Roman nummi, 
or sestercii, followed the As system the old coins were re- 
tained in circulation for a time, in order that contracts 
previously made, but not yet fulfilled, might be discharged 
in the particular money for which they covenanted. Moneys 
of this character have usually at the outset been made un- 
limited legal tender. When their numbers, in ordinary 
payments, became inconveniently great, they were repre- 
sented by multiples; when inconveniently few, by dividers; 
such multiples and dividers, when employed in the same 
system, being composed of different materials. Toward the 
end of the Roman system, multiples were made of silver : 
in the Oriental systems, the multiples were made of gold or 
silver, and the dividers of cowrie-shells. 

Among these various systems that one of which we 
possess the most accurate details was the Roman. It was 
established about the year B.C. 385, remained intact for more 
than a century, and lasted in a modified form until about the 
year B.C. 217. At one period the symbols appear to have 
been over- valued about five times ; at another, about six and 
a half times. But the data from which these particular 
inferences are derived may be misleading ; and it is quite 



CLASSIFICATION OF MONEYS. 33 

possible that the over-valuation may have been the same at 
all times. The symbols were called nummi or numerate, 
and money in general nummus, from the Greek word 
nomos, meaning law. The system is described at length 
in the author's " History of Money in Ancient Countries." 
It was revived during the Augustan era, and lingered in a 
disrupted form until about the time of Vespasian, when it 
was again subverted. 

Many of the National notes of modern countries have 
possessed, at one time or another, certain characteristics of 
Limited Moneys. Thus the Greenbacks of the United 
States were, by Act of June 30, 1864, definitely limited to 
four hundred millions of " dollars." But this limit was not 
only uncertain, from the fact that Congress never relinquished 
the power to change it by a single vote ; it was rendered 
in great measure inoperative by permitting various other 
moneys to circulate upon a par with the greenbacks, as, 
for example, various interest-bearing notes of full legal ten- 
der, " National-Bank " notes of special legal tender, and 
coins of various kinds, of both unlimited and limited legal 
tender. Moreover, the greenbacks themselves were not 
unlimited legal tenders. They were of special tender. They 
could not be paid for customs-duties nor interest on the 
public debt both of them very important classes of pay- 
ments at that period. On the other hand, they were at one 
time funding notes, and could be exchanged for six-per- 
cent funds ; and they were by the terms of the land laws 
always, and they are still, exchangeable for public lands at 
a fixed price. During the earlier history of the greenbacks, 

D 



34 THE SCIENCE OF MONEY. 

' ' State-Bank " notes, tradesmen's tokens, postage-stamps, 
and other unlawful and uncouth moneys, mingled with these 
greenbacks, and were used with them in the exchanges, 
either through lack of rigour in executing the law, or want 
of administrative foresight in furnishing small denominations 
of the National notes, coupled with the pressure of com- 
mercial necessity. From February 26, 1862, to March 18, 
1869 practically, until 1879 the greenbacks were payable 
only in themselves or in public lands, which at that period 
were not in demand -, and their value when not affected by 
the vicissitudes of war and, therefore, as the case stood, the 
fears of new emissions depended substantially upon their 
Numbers, combined with that of the other moneys per- 
mitted to circulate with them ; and not upon the pretended 
implication of payment in coins drawn from the word ' ' dol- 
lar " used in the legends upon the greenbacks, or in the law 
of their emission. By the Act of March 18, 1869, it was 
declared to be the intention of the Government to pay them 
in coins; and under the Act of 1875, such as were pre- 
sented at the Treasury after January 1, 1879, were paid in 
coins. Legally from 1869, and practically from 1879, they 
lost their quasi numerical character, and became convertible 
National and Land notes, which they still remain. 

Ilia Limited system of money it is not at all essential that 
the fractions, numerators, or numeraries, should be made of 
a worthless material as porcelain, leather, or paper. They 
may be made of gold, if so desired. But if the limit of 
money were maintained in any progressive community, it 
would be found that the material of which the numeraries 



CLASSIFICATION OF MONEYS. 35 

were formed would have no influence upon their value , 
which might rise to many times that of such material. 
Though, of course, it could never fall below it. 

Such was the case with the Roman numeraries, and 
several others mentioned in the author's " History of 
Money." To maintain such a superior value, the limit of 
the emission must not be open to doubt, nor subject to the 
caprices or exigencies of the moment. It must be defi- 
nitely and permanently fixed or regulated by the organic 
law and maintained by the executive power ; in short, fixed 
as definitely, as certainly, as publicly, and as permanently, 
as are the limits of other measures, such as the mile, the 
pound, the gallon, or the acre. 

The principal kinds of actual moneys have now been 
described and classified according to the importance of their 
several characteristics and legal attributes. It is not from 
these characteristics and attributes, considered separately 
and with respect to their various influences upon the ex- 
pression of value, that the received principles of money are 
derived ; but from the consideration of a portion of them 
lumped together. No analysis has hitherto been made of 
money; and that which, as it stands, is a most hetero- 
geneous and complex object, has been treated as though it 
were homogeneous and simple. The principles of money 
have heretofore not been deduced from an orderly arrange- 
ment of the facts concerning it, but from disorder, from 
chaos, from the aspect of things endless in number and 
indeterminable in form, from the attributes of such things 
not in a simple condition, but when merged incongruously 



36 THE SCIENCE OF MONEY. 

with other things equally numerous and indeterminate ; 
and from relations which were both intricate, involved, and 
indefinable. Within this maze, where Tycho Brahe, Coper- 
nicus, Newton, Locke, and Humboldt, feared to venture, 
the financial pedants and quacks of all ages have made 
themselves a paradise. It need scarcely be said that the 
principles they have established are utterly impracticable ; 
that so far as man's intellect has been exerted in affairs re- 
lating to exchanges and money, books have been of little 
service to him ; that the prizes of commercial life have too 
commonly fallen to the lot of the reckless and undeserving ; 
and that those modern nations, whom nature, history, and 
opportunity, intended to be great, have been dragged down 
to the limits of littleness by monetary systems which were 
based on feudal infirmities, and a conservatism which 
hesitates to rise above them. 



CHAPTER III. 

STATISTICS OP MONEYS. 

The statistics of moneys defective Reasons Coins melted and 
exported surreptitiously Sometimes minted in one country to circu- 
late in another Coins used on shipboard Coins melted in foreign 
mints Counterfeit coins Coinable bullion Light coins Coin re- 
serves Misleading and deceptive practices Coins employed for 
special classes of payments Paper money Bank of England notes in 
foreign countries and on shipboard Local circulation of American 
" State-Bank " notes Counterfeits Propriety of including bills, dis- 
counts, or cheques in the statistics of money decided adversely Inter- 
national comparisons fallacious Every country a law to itself concern- 
ing money. 



T^HE comparative statistics of money in various countries 
for several centuries past which were published in the 
author's " History of the Precious Metals " were the result 
of many years of accumulation and comparison. Before 
giving them to the public in their final form, they were 
published from time to time in various periodicals, with the 
view of eliciting public criticism of their merits. Notwith- 
standing the favourable verdict which was passed upon 
them l it cannot be claimed that they are free from grave 
defects. Indeed, as the case stands, it is impossible to 

1 For example, in the London Statist," March 20, 1880, and 
numerous other statistical journals. 



38 THE SCIENCE OF MONEY. 

obtain any statistics which correctly represent the true 
sum of money, operating on prices, in any given country at 
a given time. This is because all the moneys of modern 
nations are composite ones, and the sums of such moneys 
or measures of value are indeterminable. For comparative 
purposes, and in a rough sort of way, monetary statistics 
have a certain worth; but for more precise and scientific 
uses they cannot be safely employed. 

The statistics of coins in circulation are usually de- 
duced from the issues of the mints and the custom-house 
returns; but, for the following reasons, these are mis- 
leading : 

1 . Vast quantities of coins are melted down by jewellers, 
bullion dealers, speculators, and others. 

2. Considerable quantities are conveyed to and fro into 
and out of countries in the wallets of travellers, and with- 
out notice to the mints or statistical offices. 

3. Large quantities are secreted and transported sur- 
reptitiously in packages of merchandise. This practice 
was more common in former times than at present, and is 
always more common in times of war than peace. Never- 
theless, instances of the sort have come to the author's 
notice very recently, and wherein no obvious motive ap- 
peared to prompt it. 

4. Coins are often fabricated in one country, in whose 
statistics they appear, while they really find circulation 
in another. The quantity of British coins in Portugal, 
Turkey, Egypt, South America, the British Colonies, and 
other countries, and in use on board of steam and other ships, 



STATISTICS OF MONEYS. 39 

must be very great. French coins are to be seen in other 
countries than those of the Latin Monetary Union. Ameri- 
can coins even the seignoried ones circulate in several 
Spanish American countries, whither they have found their 
way without the formality of being registered in the 
custom-houses. No penalty is enforced for making im- 
perfect or false returns of exports ; there is no practical 
way to detect them ; and not only coins but bulky mer- 
chandise is shipped out of countries every day without 
being entered in the export statistics. 1 During the last 
century Portuguese moidores,jaos and half-jaos and Spanish 
dollars circulated freely in Great Britain and the Colonies. 
Prior to February 21, 1857 (the date of their demonetiza- 
tion), the chief portion of the silver coins which circulated 
in the United States were of Spanish mintage. Nearly all 
the gold coins at present in Portugal are British ; all the 
gold and silver coins in China are foreign. Yet all these 
coins are included in the money statistics of the countries 
whence they originated, whether they were registered upon 
being exported or not. 2 

5. There are no statistics of the quantities of counterfeit 
coins in circulation, yet, judging from the vast number of 
convictions for counterfeiting, and the excellent appearance 
of many of the counterfeits, some of which almost defy 

1 This is the case in the United States, Great Britain, and many 
other countries. Relative to the United States, see Commerce and 
Navigation Report of the Bureau of Statistics for 1867 ; and as to Great 
Britain, see Sir Morton Peto's Essay on " Taxation," chapter ix. 

2 Vast quantities of American and other coins were recoined in 
Italy during the years 1882 and 1883. 



40 THE SCIENCE OF MONEY. 

detection,, these quantities must be very great. 1 Upon the 
retirement of the German coinages of minor silver pieces 
under the Imperial Mint Acts of 1871 and 1873 it was 
found that more coins of given dates were returned to the 
mints than had ever emanated from them. It has been 
alleged that aluminium-bronze, and other cheap compounds 
can be made to imitate gold and silver so closely as to 
deceive all but the most skilful eyes/ 2 whilst the design of 
a coin, however artistic, offers in modern days little or no 
obstacle to its successful imitation. 

Perforated and stuffed coins have of late years become 
quite common in the principal countries of the world. The 
perforated ones are chiefly silver, the stuffed ones gold. 
The process of preparing the latter is to drill holes from 
the periphery toward the centre of the coin and fill in with 
base metal. It is extremely difficult to detect this species 
of imposture, and the coinage of a country may become 
and remain vitiated to a large extent before it is apt to 
attract official attention. 

6. Bullion is commonly included in coins under the 
ambiguous and non-legal term " specie," a practice almost 
as erroneous and misleading as it would be to include notes 
or goods in them, for bullion can only become coins when 
it is minted, a process sometimes no less tedious than it 
would be to send notes or goods abroad in exchange 

1 Reports of the British Mint and United States Department of 
Justice and United States Treasurer. 

2 London "Mining Journal," 1883. See Index as to the particular 
date. 



STATISTICS OF MONEYS. 41 

for coins to be imported and added to the existing 
stock. 

7. Light coins are not made the subject of allowance in 
monetary statistics. It has been estimated that toward the 
close of the seventeenth century all the circulating coins of 
Great Britain were on the average one-third light. 1 Quite 
recently the subject of light half-sovereigns was considered 
important enough to engage the attention of British 
statesmen. 

8. It is a common practice in many countries for banks 
and treasuries to issue so-called convertible notes upon a 
partial deposit or " reserve " of coins. No argument seems 
necessary to establish the impropriety of counting both the 
notes and the coins held to redeem them with as parts of 
the whole sum of money. Yet this is frequently done in 
statistics of money. 

Nor is it always an easy matter to decide the sum of de- 
posits or reserves which should rightfully be deducted from 
the issues of such notes in order to determine the volume 
of money outstanding. During the period when United 
States Treasury notes constituted practically the sole legal 
reserve for bank notes, the author was shown a package by 
the officers of one of the principal banks of New York which 
was supposed to contain several million dollars in " green- 
backs," and in that guise had passed the scrutiny of the 
Government bank examiner, but which really was made up 
of " dummies/' and he was assured that during a previous 

1 " History of Money in Modern Countries," chapter on Great 
Britain ; and Macaulay's " History of England." 



42 THE SCIENCE OF MONEY. 

era of coin reserves bags of copper coins had been similarly 
made to do duty for gold ones. 

9. As shown in the chapter on the Classification of 
Moneys, some coins have only a special function, to which 
they are confined by law or custom. In such cases there 
are equally valid objections to their inclusion or exclusion 
from the whole sum of money. 

The statistics of paper money as paper money has 
hitherto been issued are marked by similar defects. 

1. The quantity of Bank of England notes circulating 
beyond the British Isles must be very considerable, yet no 
allowance is made for them in the tables of money in Great 
Britain. 

2. Some of the notes hitherto in use have had no circu- 
lation beyond the immediate vicinity of the banks that 
issued them ; others circulated at a distance, but only at a 
discount. Under the ' ' State-Bank " system of the United 
States, which lasted until 1863, a large proportion of the 
issues circulated at a discount of from one to ten per cent., 
and some of them scarcely went farther than from one mock 
agency in Wall Street to another. 1 The country bank note 
circulation of England is strictly local. 

1 About the year 1857 an Italian cook, one Girolamo Donadi, after- 
wards the lessee of a hotel in New York, started a " wild-cat " bank, 
nominally in Wisconsin, but really in his kitchen in New York. This 
bank he named, after his hotel, the " Gramercy." After printing 
$100,000 in notes he made a bargain with a money-changer, who subse- 
quently became the president of a " national " bank, to redeem them at 
five per cent, discount, and quote them as " good " at that rate in the 
latter's " Bank Note Detector." Donadi then paid these notes to his 



STATISTICS OF MONEYS. 43 

3. From 1863 to 1877 greenbacks were not employed for 
customs duties nor interest on the public debt, two impor- 
tant classes of payments. Previous to 1836 " State-Bank " 
notes were received by the United States for excise taxes, 
customs duties, and sales of public lands. In that year 
this practice was greatly restricted, an act that precipitated 
a long impending collapse of the " State- Banks." 

4. At one time the proportion of counterfeit to genuine 
notes was greatly in excess of the proportion of counterfeit 
to genuine coins. The particulars of arrests and convictions 
for counterfeiting prove that the contrary is now the fact, 
and that the silk-threaded distinctive-fibre paper, the water- 
marks, the printing in colours, the highly artistic vignettes, 
the geometrical lathe-work, the numbers, signatures, and 
other mechanical safeguards of the modern paper note, 
render it far more difficult to imitate than a coin. 

Before these improvements were invented the sum of 
counterfeit notes circulating in the leading countries, and 
not included in the statistics of money, must have been 
very great. A large proportion of the old issues of Brazil 

employes and tradesmen at par, afterwards buying them in through the 
money-changer at five per cent, discount, the accomplices dividing the 
profits. Seizing a favourable moment when an unusually large sum of 
the notes was outstanding, Donadi absconded, and was never heard of 
again. These $100,000, and many other sums like it, are included in 
the so-called official statistics of " State -Bank " notes in circulation 
which were published by the United States Treasury, and now, owing 
to the faU of the " State-Bank " system, remain the readiest and most 
commonly used source of information on the subject ; an example at 
once of the unreliability of such statistics and the danger of per- 
mitting them to appear in official reports. 



44 THE SCIENCE OF MONEY. 

and many of these are still in circulation were spurious. 
In certain cases where belligerent Governments connived at 
the counterfeiting of the enemy's paper money, the propor- 
tion of counterfeits was so great as to precipitate the down- 
fall of the entire system. This was done by the British 
Government with respect to the American Continental 
notes and the French mandats ; by the American Govern- 
ment with respect to the Confederate notes; and by the 
favourites of the Brazilian Government offices with respect 
to its own notes. 1 

Some writers on the subject have insisted upon the pro- 
priety of including in money the sum of private bills of 
exchange or promissory notes outstanding ; others, the sum 
of the discounts and loans of banks ; others, the sum of 
bank cheques drawn, etc. 

These opinions, and the arguments by which they are 
sustained, are not destitute of plausibility, but they are un- 
sound. Money is what the law or custom makes receivable 
for payments, taxes, and debts ; and such is not the case 
with the instruments or agencies mentioned. Rather are 
they quickeners of money, or means which render it more 
efficient. It would be no more proper to include them in 
money than to include railways and telegraphs, which are 
also quickeners of money and render it more efficient. 2 

1 " History of Money," chapter on Counterfeiting. 

2 Said Sir Robert Peel, in his speech of May 6, 1844 : " In using the 
word ' money ' I mean to designate by that word the coin of the realm 
and promissory notes payable to bearer on demand. In using the words 
; paper currency ' I mean only such promissory notes. I do not include 
in 'these terms bills of exchange, or drafts on bankers, or other forms 



STATISTICS OF MONEYS. 45 

In Turkey, Brazil, Peru, etc., bank cheques, except at 
the sea-ports and among foreign merchants, are unknown ; l 

of paper credit. There is a natural distinction, in my opinion, between 
the character of a promissory note payable to bearer on demand and 
other forms of paper credit, and between the effects which they respec- 
tively produce upon the prices of commodities and upon the exchanges. 
The one answers all the purposes of money, passes from hand to hand 
without endorsement, and without examination if there be no suspicion 
of forgery ; and it is in fact, what its designation implies it to be, 
currency, or circulating medium." 

Said the Chief Justice of the United States, Mr. Salmon P. Chase, 
previously the Secretary of the Treasury, and author of the " Green- 
back " and " National Bank " systems, in a letter to the writer, dated 
December 6, 1869 : " I notice in your table of currency (this table was 
afterwards printed in the ' History of the Precious Metals,' p. 214) 
that you put the amount in 1862-3 and afterwards considerably higher 
than I do. My idea is that no interest-bearing paper can properly be 
called currency. No doubt such paper, and many other things, and 
especially bank cheques, private cheques on banks, and sight bills, 
largely fulfil the functions of currency, but they cannot properly be so 
denominated. Whilst I was Secretary of the Treasury the amount of 
United States notes and National Bank notes did not exceed four hundred 
and eighty million dollars ; beside which, there were about sixty million 
dollars of ' State-Bank ' notes afloat. Of the United States notes fifty 
million dollars were a ' reserve ' for the ' Temporary Loan,' and rose 
and fell with the amount of it inversely." 

The table referred to did not include " bank cheques, private cheques 
on banks, sight bills," promissory notes, nor indeed any other kind of 
currency, or so-called currency, except the following : Gold and silver 



1 The drawing of a cheque by a traveller at an important town 
distant about three hundred miles from Rio Janeiro, upon a bank at 
that place, seemed so strange as to require a long explanation, and so 
remarkable as to bring together the entire Municipal Chamber to 
witness it. " Travels in Brazil," by the author, " San Francisco 
Chronicle," 1883, 



46 THE SCIENCE OF MONEY. 

in the countries of Continental Europe they are seldom 
employed ; in England they are used chiefly for large sums ; 
in the United States they are in common use for sums so 
small as $25; in China they are often used for the most 
trivial sums. Similar disparities exist with reference to 
the custom in various countries of depositing money in 
banks, the employment of railways, telegraphs, etc. 

When these many difficulties which, under prevailing 
systems of money, stand in the way of correctly estimating 
the sum of money in a given country and era, are con- 
sidered, the complacency with which the United States 
Mint Bureau year after year tabulates and publishes statistics 
of this character as "official" would be inexplicable were 
it not probable that the course pursued has been governed 
by some sinister object in connection with the Resumption 
Act. 1 

In view of the difficulties which surround the subject, the 
statistics of money will be cited in the present work with 

coins, demand notes, greenbacks, interest-bearing greenbacks, National 
Bank notes and State-Bank notes ; all of which, except the State-Bank 
notes (then reduced to a comparatively small sum) were legal tender 
moneys. With all respect for the opinion of his illustrious corre- 
spondent, the writer was unable to agree with him concerning the mone- 
tary character of interest-bearing legal-tender demand notes. When 
not held in the place of other classes of greenbacks they circulated from 
hand to hand, and exercised precisely the same influences upon prices 
and foreign exchanges. They were, undoubtedly, money. 

1 There is scarcely a form of defect to which statistics of composite 
moneys are subjected which does not appear in these publications. 
One of them accords to the United States in 1882 upwards of 773 
million dollars in gold and silver money ; whereas, according to the 
reports of the Treasurer and Comptroller, the treasury and banks only 



STATISTICS OF MONEYS. 47 

far more caution and less assurance. Their use will be 
limited to two or three leading countries in which the 
statistics of money are best determined, and it will also be 
confined to showing, approximately, the increase and de- 
crease of money from time to time in each of these countries 
separately. By pursuing this course the defects peculiar 
to such statistics will be restricted within the narrowest 
possible limits. 

As to making international comparisons of money, 
nothing can be more fallacious. Each country should be, 
and in many respects is, as much a law to itself in reference 
to money as it is with respect to the various measures of 
length, weight, etc., with which money is so often com- 
pared -, nay, the example of one country or one era with 
reference to money is, in most cases, the very last thing 
that should be consulted in framing laws or deducing 
rules for another. 1 

held 325 millions, including uncoined bullion and paper certificates ; 
and whereas in point of fact, outside of the mining regions west of the 
Rocky Mountains, there is scarcely a gold coin in circulation from one 
end of the United States to the other. For a specimen of these extra- 
ordinary statistics, see Report of United States Mint Bureau, in 
" Finance Report," 1882, p. 257. 

1 See proposal of John Gr. Fichte to the Government of Prussia 
showing the necessity of a distinctive money to a progressive nation, as 
quoted in Britton A. Hill's pamphlet on " Absolute Money," St. Louis, 
1875, p. iv. This subject is treated at length in the author's "Politics 
of Money." 



CHAPTER IV. 

THE FUNCTION OF MONEY IS TO MEASUEE VALUE. 

The function of money correctly understood by Aristotle During 
the era of that philosopher the volume of money in each country was 
limited, and it formed a definite measure of value therein It is now 
everywhere unlimited, and has lost its character of an exact measure 
Money is not defined in the laws For this reason it is unlike all other 
measures Money is intended, but not now fitted for, a measure The 
size or weight of a dollar or pound sterling furnishes no guide to the 
whole number of dollars or pounds ; yet it is this which constitutes the 
measure of value The measuring function of money is altered with 
every change in the whole number of so-called units of value Not so 
with the units of weight, length, volume or area. 

IV /[" ORE than twenty centuries ago the function of money 
was so correctly expressed by Aristotle that little 
seems needed to render his description of it complete. 
' ' The function of money/' said the Stagyrite, ' ' is to mea- 
sure value." If we add " with precision," the definition 
appears to satisfy all requirements. When Aristotle wrote, 
no such addition was necessary. The volume of money in 
several of the Greek States was, or had been, limited by 
law ; and in each one it formed a definite and precise mea- 
sure of value. 1 

1 A full account of these moneys will be found in the author's 
" History of Money in Ancient Countries " chapter on Greece and 
Greek Colonies. 

The following principles of money are from Aristotle : " Money 



THE FUNCTION OF MONEY IS TO MEASUEE VALUE. 49 

But such is no longer the case. In each and all of the 
various countries of the world the whole numbers or volume 
of money is unlimited, and money has lost its character of 
a precise measure. It is a measure, but one whose dimen- 
sions are fluctuating; so that its function is practically 
impaired. 

When we say that the function of gallon measures is to 
measure the volume of liquids., we mean by gallon measures 
certain concrete things of prescribed sizes or limits ; con- 
trariwise, when moneys are mentioned there is, under 
existing circumstances, no precise meaning to be attached 
to them. The laws of modern states do not define the sizes 
nor limits of moneys ; nor does custom establish them. 

(nomisma) by itself is but a mere device which has value only by law 
(nomos) and not by nature, so that a change of convention between 
those who use it is sufficient to deprive it of value and its power to 
satisfy our wants." "Politica." 

"By virtue of voluntary convention money (nomisma) has become the 
medium of exchange. We call it ' nomisma ' because its efficiency is 
due not to nature, but to law (nomos), and because it is in our power 
to regulate it."" Ethica." 

The following are from the " Pandects ' ; of Justinian, and are said to 
have been introduced into that code of laws by Julius Paulus, a Roman 
lawyer of the third century A.D. In the author's opinion, they are much 
older. " As it seldom happened that what one (man) possessed (to sell) the 
other (man) wanted (to buy) and conversely a thing was fixed upon 
whose legal and perpetual value remedied, by its homogeneity, the diffi- 
culties of barter. This thing, being officially fabricated, circulates and 
maintains its value, not so much from its substance as from its quantity." 

Both of these quotations are reprinted from the testimony of 
M. Henri Cernuschi before the United States Silver Commission, as 
published in their Report, vol. ii. p. 475 ; the originals not being 
accessible in San Francisco, where the present work is being written. 

E 



50 THE SCIENCE OF MONEY. 

Let us state this proposition more at length. 

To measure is to number ; all measurements are ascer- 
tainments of numerical relations; numerical relations can 
only be stated in numbers. 

But in point of fact, measurements are made with yard- 
sticks, pound- weights, and the like. 

What is the reason for such a practice ? If to measure 
is to number, why will not numbers alone, without yard- 
sticks or pound- weights, serve to measure length, weight, etc.? 

Because numbers are abstract and illimitable, whilst the 
things to be measured are concrete and limited ; and in 
order to measure them with precision it is necessary to em- 
ploy concrete and limited measures. To say that the length 
of a building is 100, means nothing ; to say that it is equal 
to that of 100 yards, meaning 100 yard-sticks, has a precise 
significance, and one which everybody comprehends. 

In order to measure value, it would certainly seem that 
just as concrete and limited a money is required as yard- 
sticks for distances, or gallon measures for volumes. But 
whilst the law defines the dimensions of a yard, a pound, 
and a gallon, with great precision, it wholly fails and omits 
to define the dimensions of money. 

It follows that money, until it be precisely defined and 
limited, is little better than an abstraction ; and to say that 
its function is to measure value is to say a thing that, how- 
ever true, can have, as matters now stand, no practical use. 

Eemembering the present position of money in the law, 
unnamed, unrecognised, undefined, unlimited, there exists 
between it and other quantitative measures not a simil- 



THE FUNCTION OF MONEY IS TO MEASURE VALUE. 51 

arity ; but, on the contrary, the most important difference. 
The efficiency of measures runs no risk of being impaired, 
either by alterations in the law, the disturbance of peace, 
the currents of trade, the conspiracies of designing men, or 
the caprices of fashion. The efficiency of money as it now 
stands is liable to be affected by these causes and many 
others. 

Under the same legal jurisdiction there is but one an 
unalterable measure of weight, one of length, one of 
volume, one of area, etc, These measures, carefully 
described and identified in the law, are kept by the 
Government in some safe place for example, the Treasury 
building at Washington, or the Tower of London. All other 
weights and measures under the same law are copies or 
duplicates. By the aid of these copies a vast number of 
measurements can be made at different times, or at the 
same time at different places, without disturbing, changing, 
or wearing out the originals ; and as, when a measure is 
once fixed and publicly defined it is plainly the interest of 
society to keep it so, and it would be a flagrant violation of 
equity to alter it, there is little or no danger that these 
measures will be changed by either edict or legislation. 

But such is not the case with money as it now stands. 
It is not recognised, not defined, not limited in the law ; 
there is no description of it to be found in the statutes of 
any country ; there is none, for example, in the laws of the 
United States or Great Britain ; no prototype of money is 
kept in any safe place by the Government ; money has no 
peculiar size, shape, dimensions, volume ; it is not a mea- 



52 THE SCIENCE OF MONEY. 

sure, nor is it essentially like a measure ; and to draw con- 
clusions from its apparent resemblance to a measure is to do 
violence to the facts. 

Those who would clothe money with the attributes of a 
precise measure do indeed accord it the function for which 
it was intended, but for which it is not at present fitted. 
They forget that all other measures enjoy legal recognition; 
that they are defined in the law with all the precision that 
modern scientific observation and refinement can effect; 
and that, on the contrary, money as we have unthinkingly 
adopted it from the Feudal law is an undefined and shape- 
less thing, whose dimensions and fitness as a measure of 
value is whatever the chances of war, trade or fashion, or 
the caprices of the rich, the powerful, or the indifferent, 
may choose to make it. 

If it be argued that whilst money is not recognised nor 
described in the law, the undetermined fractions of money, 
as coins, bank notes, etc., are both recognised and de- 
scribed, the answer is that since the quantitative relations 
of such coins or bank notes to the whole money is unknown, 
they fail to resemble the fractions of other measures, and 
they cannot precisely measure anything. 

Nobody has ever ventured to maintain that any one coin 
was the measure of value, nor that any number of coins less 
than the whole number in use constituted such a measure. 
To do so would have been to maintain a palpable absurdity. 
As the whole number of coins, notes, etc, is what really con- 
stitutes the measure of value, and as, at the present time, no 
limit is assigned to the whole number, it follows that there 



THE FUNCTION OF MONEY IS TO MEASURE VALUE. 53 

is no limit to the measure of value. If a mile were no- 
where described in the law, but instead, some indeterminable 
fraction of a mile were stated to be exactly so many inches 
and barleycorns long, then the legal position of miles and 
moneys would be alike. But in such case, who would be 
able to determine the length of such a mile ? and who can 
now determine the value of such a money ? 

If it be answered that the value of money is determined 
by that of the material of which it is made, the reply to this 
is that all the political economists, without exception, have 
admitted that to double the number of pieces of money of 
the same denomination no matter of what material made 
would be to diminish the value of each piece by one-half, 
and vice versa. 1 Hence it follows that the value of money 
is determined by numbers and not by material. But 
there is a reply whose cogency is far more evident than 
this one, because it takes the whole subject out of the 
sophistical realms of political economy, and scans it 
by the unmistaken eyes of fact. That reply is that the 
value of the material (gold, for example) is itself determined 
not by the cost of production, but chiefly by the quantity of 
the stock on hand ; and, moreover, that differing from all 
other commodities except improved land the cost of pro- 
duction does not regulate the quantity produced from time 
to time. 2 

1 " If the whole money in circulation was doubled, prices would be 
doubled." John Stuart Mill, " Polit. Econ.," Hi. 8. 2. p. 299. 

2 Consult my " History of the Precious Metals," where this subject 
is dealt with inductively, and at great length. 



54 THE SCIENCE OF MONEY. 

Let us endeavour to comprehend the subtle function of 
money by looking at the subject from another point of 
view. 

In the laws of the United States the American gallon is 
described as "a vessel containing 58372.2 grains (8.3389 
pounds avoirdupois) of the standard pound of distilled water, 
at the temperature of maximum density of water, the vessel 
being weighed in air in which the barometer is 30 inches at 
62 Fahrenheit." 1 

The vessel thus described is kept in the United States 
States Treasury building at Washington, and copies or 
duplicates are furnished, on application, to such persons as 
may desire them. It matters not how many copies of this 
vessel are made, nor whether they are made of brass, tin, 
wood, glass, or other substances ; nor whether the copies- 
are cheap, dear, stamped, unstamped, in use, or out of use, 
the original gallon or standard, and its functional power as 
a measure, remains wholly unaffected ; and, for the reasons 
already stated, it is likely to so remain indefinitely. 

Is this the case at present with the measure called 
money ? Not at all. It is nowhere mentioned in the law > 
its volume, its dimensions, the number of its pieces or con- 
stituent parts, are entirely ignored. They have no place 
whatever in the legal institutions of the United States, nor, 

1 Executive Document No. 27, 34th Congress, 3rd Session: con- 
sisting of Professor Bache's Report on Weights and Measures. 
Washington, 1857. 

" The relation of this gallon measure to weight is said to disagree 
slightly with that accorded by the same authority to the bushel." 
Barnard's " Metric System," p. 39. 



THE FUNCTION OF MONEY IS TO MEASURE VALUE. 55 

indeed, of any other country. It may be argued that 
although money is not defined in the statutes, coins are. 
But this does not help the case, because there is no legal 
requirement concerning the number of such coins as shall 
constitute the volume or whole of money. Moreover, by a 
confusion of language which could only have arisen out of 
the grossness of the medieval law upon which these statutes 
are founded, and the medieval language in which they are 
couched, these coins are termed " units of value." Say the 
Statutes : " The gold coins of the United States shall be a 
dollar piece, which at the standard (i.e., nine-tenths fine) 
weight of twenty -five and eight-tenths grains shall be the 
unit of value," l and then it goes on to mention other gold 
coins. Another statute confers a similar character upon 
the silver dollar piece of 41 2 J grains, nine-tenths fine. 
The statutes do not say that either of these pieces shall be 
the unit of ralue in preference to the other, but makes them 
both equally units ; which, as the law in this respect is not 
inoperative, should have suggested the truth that neither of 
them are units. The same statutes and the decisions of 
the Supreme Court of the United States also make several 
other pieces of money, some composed of metal, others of 
paper, equally units of value ; so that, as shown in a previous 
chapter, there are at the present time no less than twenty 
odd different kinds of units of value recognised by the laws 
of this country, and with a number of each of which a debt 
can lawfully be paid. Is not this defiance of reason, this 
violation and confusion of language, which the law commits, 
1 Revised Statutes of the United States, Section 3511. 



56 THE SCIENCE OF MONEY. 

in itself a sufficient proof that the theory from which it 
arises is false, and that neither of these pieces are in fact 
the unit of value, but that all of them together compose 
such unit ? 

If we disregard both fact and reason, and, following the 
law, accept either of these pieces of money as the unit of 
value, we immediately become involved in practical difficulties. 

It is a well-known fact that every time an additional one 
of the coins called dollars or pounds, and miscalled units of 
value, is put into circulation the measuring value of the 
original one becomes impaired. More than this, the func- 
tion of this coin is certain to be modified by the emission 
of every promise of a dollar or pound coin which the law 
may authorise to be tendered for payments, or which 
custom may sanction for the same purpose. Even a ship- 
ment of uncoined bullion, either into or out of a given 
country, will, as the laws now stand, aflect the measuring 
power of money in such country. 1 From these circum- 
stances it appears that what the law calls a unit of value in 
fact is not a unit at all. The law views it and defines it as 
though it were distinct and separable from all other things ; 
but nature instantly merges it with all like and many unlike 
things, and makes the whole number of these things the 

1 The affairs of the New England colonies were often thrown into 
disorder by the arrival of plate-ships from the West Indies. Sir Isaac 
Newton records similar results in England which followed the arrival 
of plate-ships from America; and other instances are mentioned in 
Mavor's " Voyages," ii. 223, et seq. This subject is fully treated, and 
numerous instances given relating to it, in the author's " History of 
Money." 



THE FUNCTION OF MONEY IS TO MEASURE VALUE. 57 

real measure or unit. And as this whole number is not 
specified nor defined in the law, it follows that the real unit 
has no definite limits nor dimensions, and therefore that it 
has no determinable relation to value. 

In substance the law says : " Such a thing shall be the 
unit of value ; there shall be a blank number of such things 
made ; they are of such a nature and shall have such legal 
attributes that they can only be used collectively and there- 
fore in point of fact the real unit of value must be the whole 
number of them combined ; but I decline to state what that 
number shall be; I decline to place any limit to it; I 
decline to fill up the blank. " 

The essential difference between money as it now stands 
in the law and other measures, whether of length, weight, 
volume, or area is thus rendered evident. The units of 
these are concrete and defined; they are not liable to be 
changed by edict or legislation, and cannot be modified by 
duplication ; whilst money is abstract and undefined, and 
coins, bank notes, and other so-called " units of value/' are 
in fact modified in functional power and efficiency with 
every increase or decrease of their combined number. 1 In 
other words, the unit of money is not one coin, but all coins 
or moneys combined ; whilst, on the contrary, the unit of 
length or measure is not all yard-sticks or pint-pots collec- 
tively, but only one of them. 

An increase or diminution of the whole numbers of yard- 
sticks will not affect the relation of length between any one 

1 This distinction was pointed out by the gifted Bastiat. See his 
" Harmonies of Political Economy," London ed., p. 125. 



UIU7BRSIT7 




58 THE SCIENCE OF MONEY. 

yard- stick and any other object. An increase or diminution 
of the whole numbers of coins or notes clothed with the 
functions of money will instantly begin to change the 
relation of value between any one such coin or note and any 
other object. And such increase or diminution as the 
law now stands is within the power of every man to make 
in direct proportion as he is rich and powerful. When 
money shall be recognized in the law, when it is defined, 
when its volume, magnitude, dimensions, limits are set 
forth as precisely, fixed as unchangeably, and protected as 
securely from alteration, as are now the dimensions of the 
yard-stick, the pint-pot, and the pound-weight, then, and 
then only, will money perfectly resemble other measures; 
for then only will it become a concrete thing of known 
dimensions. When this comes to pass, Aristotle's defini- 
tion of its function will resume its original correctness, and 
money will be as fit in fact, as it is now only in theory, to 
measure the relation called value. 



CHAPTER Y. 

VALUE IS A NUMERICAL RELATION. 

Legal use of the words unit of value Their importance They are 
not defined in the law Unit a synonym for measure Evolution of 
the word value Its Classical meaning related to the power of numbers 
During the Dark Ages it became associated with labour In the 
Rennaissance it acquired the meaning of an attribute of matter 
Fallacy of this last view The correct nature of value rediscovered by 
Montesquieu and Bastiat Value shown to be a numerical ratio between 
all exchangeable things Its further character difficult to define because 
of its continual variance Though indefinable it is not immeasurable 
Value measurable by the whole numbers of money The existing mint 
laws practically make the whole numbers of money or unit or measure 
of value to consist of an indefinite sum whose only limits fluctuate 
between illimitable demand and uncertain supply. 



H^HE laws of the United States ordain that either one 
-* of several different coins weighing so many grains, or 
of pieces of paper of such a size, each called a dollar, shall 
be " the unit of value." 

It is not extravagant to say that upon these two little 
words hang much of the welfare of the country. When 
either of them is changed there will have happened a 
momentous revolution. 

Important as they are, neither of these words is defined 
in the law. Reasoning from its use in analogous cases, 
" unit " is a synonym for measure ; but the meaning of 



60 THE SCIENCE OF MONEY. 

value is not to be determined by analogy, for there is no 
analogous use of it in the statutes. 

When it is remembered that the ablest logicians of all 
countries, from Aristotle to Mill, have vainly endeavoured 
to give it form, it will begin to be seen how complex and 
obscure the nature of value must be, and therefore in what 
great uncertainty the statutes have involved all commercial 
relations, by using, without defining, this intricate term. 

Nor is its use a mere matter of speech, of interest alone 
to pedants or grammarians. The law treats value as a 
thing, and measures our affairs and fortunes by means of 
assumed relations to this thing, which, we shall see as we 
go on, is not a thing at all. 

The law ordains that each one of its plural and number- 
less units called dollars shall be the measure of value in 
every exchange; and it compels these so-called units of 
value to be accepted in lieu of commodities and services 
and for taxes, fines, and judicial awards. The law says, 
practically, You shall pay a unit of something which Aristotle 
never discovered ; you shall be taxed ten units of something 
which Mill could not define ; you shall be awarded a hundred 
units of something which is not described in the present law 
and of which everybody at the present time has a different 
conception. 

As has been shown in the case of money, words are 
subject to an evolution which marks the course of ideas, 
just as going a step further back ideas follow the 
material progress of man. Thus, with the growth of the 
social organism words are created, refined, and specialised. 



VALUE IS A NUMERICAL RELATION. 61 

With its decay they lose their special meanings and refine- 
ment ; they become attached to grosser and grosser concep- 
tions, and finally are absorbed into other words, and lost. 
If a societary revival occurs, and the old word is resuscitated 
to grow anew, the new growth may be of quite a different 
character from the old. 

Bearing in mind the numerical character of the ancient 
Greek and Roman monetary systems, the word value, whose 
root is valeo, or power, appears at one period to have become 
attached especially to the power of numbers, meaning an 
arithmetical ratio of some sort. This, again, by metonym, 
came to mean purchasing power. In later times, when 
moneys of limited numbers had given way to those of un- 
limited coinage, when the Roman Commonwealth had be- 
come an Empire and the public weal was supplanted by 
the interests of classes, the original refined meaning of 
value was lost, and the term became associated with grosser 
conceptions, until, in the Dark Ages, it was attached only 
to individual services and their produce ; and it is in this 
sense, probably, that it is used in the American law. 

"With the Renaissance the revival of commerce and the 
study of commercial facts and phenomena the term value 
revived and acquired a new growth. From being a thing, 
or the associate of things, it rose to be classed with the 
attributes of things. It is in this sense that it is viewed 
by the Economists who successively discovered value in the 
attributes of materiality, durability, difficulty or cost of 
production, utility, desirability, etc. 

Upon applying certain crucial facts to these last named 



62 THE SCIENCE OF MONEY. 

views they are readily seen to be erroneous. Services have 
neither materiality nor durability, yet the fact that they 
have to be paid for proves that they are valuable. Ideas 
are not difficult to evolve, yet they are often worth a valu- 
able consideration. Neither buyer nor seller consults the 
cost of production, else there would be no great variance of 
value, no sudden and widespread rise or fall of prices. It 
would be difficult to find more than the merest traces of 
utility in those works of art and luxury which possess the 
highest value. And if we look for value in desirability, 
both land and water, and a myriad of other things which 
naturally form the first objects of man's desires, but which 
nature has supplied to him with liberality, arise in view to 
defeat the search. 

Unable to resolve value as a whole, the Economists at- 
tempted to manage it in parts. 1 They split it into pieces, 
calling them variously temporary, permanent, positive, 
negative, relative, intrinsic, extrinsic, market, monopoly, 
natural, exchange, scarcity, cost, and speculative, value, 
until each fragment was small enough for their purpose. 
But in vain ; there always remained an element of value 
which their alchemy could not dispose of, and which con- 

1 When the Turks had conquered Greece and occupied Athens, 
after demolishing it, they attempted to rebuild it ; but the stones of 
which the public buildings were made, and which the ancients had 
handled with ease, this half- civilised race found too large to lift back 
to their places. They were therefore compelled to break them up, 
and thus perished most of the beautiful and symmetrical architectural 
triumphs of antiquity. Leake's " Topography of Athens," p. cvii. 
London, 1821. 8vo. 



VALUE IS A NUMERICAL RELATION. 63 

stituted the enigma of their science. 1 Such was the im- 
portance of this element that Bastiat afterwards said of it : 
" Every truth or error which this word ' value ' introduces 
into men's minds is a social one." 

Some approach was made to the solution of value when 
its normal variations were observed to coincide with rarity 
or scarcity ; these conditions being merely the rude forms 
of a numerical relation. 

That the nature of value was, indeed, numerical, was 
distinctly indicated by the illustrious Montesquieu, whose 
familiarity with both the monetary history of Rome and 
John Law's recent experiments in France enabled him to 
declare that, " fundamentally, price depends entirely upon 
the numerical proportion of commodities to monetary 
symbols/' and ' ' as the total sum of money is to the total 
sum of commodities in trade, so is a fraction of the one to 
a like fraction of the other/' But in his brief treatment of 
the subject he is often dogmatic and sometimes contra- 
dictory, and he cannot be said to have satisfactorily 
determined the principles upon which it rests. 

To the gifted Bastiat was left the task of successfully 
demonstrating that value did not reside in any object, and 
therefore could not be an intrinsic attribute of matter; 
that it was a relation between different objects; and that 
this relation only appeared during the act of exchange. 
Hence followed his definition that ' ' Value is the relation 
of two services exchanged." ' 

1 Bastiat has a good chapter on this subject in his " Harmonies of 
Political Economy." 

2 " Harmonies," p. 108. Jevons appears to have approached equally 



64 THE SCIENCE OF MONEY. 

But, as Jean Baptiste Say very truly remarked, " It is 
not given to any one to reach the confines of science : 
philosophers mount on each other's shoulders to explore a 
more and more extended horizon." When Bastiat dis- 
covered the general nature of value he stopped. He found 
that it was a relation, and that it only appeared in ex- 
change. Beyond this point he did not venture. 

Yet no man was ever nearer to the whole discoverable 
truth without discovering it. He proved that "Value 
does not reside in matter;" "nature has nothing to do with 
value;" "value is a relation;" "value implies measure;" 
and " value is to political economy what enumeration is 
to arithmetic." Had he taken another step forward he 
could scarcely have failed -to perceive that value was itself 
an arithmetical relation ; for it can only be expressed in 
numbers. But death took him away before his immortal 
treatise was completed. 

Not only is his explanation of value incomplete, it is 
not broad enough. Why should value be restricted to an 
exchange between two services ? Why does it not exist- 
as Montesquieu suspected between all services (and com- 
modities) which are being exchanged or liable to be ex- 
changed ? 

The edifice which shelters us, for example, is not ex- 
changed, nor being exchanged ; yet it has value ; and 

near to the true solntion of value when he regards it as a " propor- 
tion." " Primer of Political Economy " and " Money." 

1 Bastiat, "Harmonies of Political Economy," pp. 104, 107, 125, 
127, 133. 



VALUE IS A NUMERICAL RELATION. 65 

although that value cannot be ascertained without offering 
to exchange the edifice for something else, it may be deter- 
mined in a rude way by referring to the value of similar 
edifices which have been exchanged at the same place and 
at nearly the same time. Value, therefore exists not 
merely between two commodities or services, but be- 
tween all of such; and it exists not only between things 
which are being exchanged but between all things ex- 
changeable. 1 

The notion, common to many of the Economists, that 
money measures the value of only those things which are in 
market, up for sale, or being exchanged, is possibly derived 
from contemplating the disparity between the magnitude of 
all commodities and available services and the littleness of 
the measure the sum of money which forms their nominal 
equivalent. But the sum of money is of its present magni- 
tude simply because it was so chosen to be, or so left to 
become ; it can be made larger or smaller at man's pleasure, 
whenever he chooses to exercise over it the same dominion 
that he has chosen to exercise over yard- sticks and pint- 
pots ; that is, whenever he chooses to define and limit by 
law the magnitude of the measuring unit, which, in the 
case of money is, and can only be, from the nature of things, 
the whole sum. Such increase or diminution of the sum of 
money will not change the value of other things ; 2 it will 
only change the expression of it in the fractions of money 

1 Consult Montesquieu's " Esprit des Lois." 

2 Mill's " Political Economy," iii. 7, 2, p. 298, says : " Causes which 
affect all commodities alike do not act upon values." 

F 



66 THE SCIENCE OF MONEY. 

to wit, price. Nevertheless, this price, or value expressed 
in money, can only be ascertained by the act of exchange. 

In the same manner, the pint-pot is of its present size 
because it was so chosen to be ; it would answer the same 
purposes, and prove equally efficient, no matter what its 
size was made j only in case of alteration, the expression of 
liquid measure in total pints would be different. The 
numerical relations between all other things would remain 
precisely the same as before. 

Whatever may be the origin of the notion that value 
only exists between things that are being exchanged, it is 
evidently erroneous. The fact is that nothing is being 
exchanged. It never can be truly said to be twelve 
o'clock, for time passes eternally, and whilst we speak, nay, 
whilst we observe the clock, time has elapsed and escaped 
fixture. The act of exchange, indeed all actions, are 
equally unfixable, and if value pertained to objects only 
during the act of exchange, it would practically not pertain 
to them at all. Value must, therefore, relate to things 
exchangeable as well as to those which are regarded as 
being exchanged ; in other words, to all commodities and 
services. 

The soundness of this conclusion is proved by the fact 
that when an exchange is being made the value of all things 
is held in view through the medium of price. No man 
will sell a horse, for example, until after he ascertains not 
merely what the intended buyer but what all other men, 
within reach, will give for it. This, the latter determine, 
not with direct reference to the cost of production of horses, 



VALUE IS A NUMERICAL RELATION. 67 

nor to the degree of their utility, nor to their lastingness 
nor desirability, nor to the prices of the corn, land, and 
labour which have contributed toward their cost, nor even 
to the supply and demand for horses ; but simply to their 
price or value in money. This price connects the horse, in 
a rude way, with all other exchangeable things at hand, 
and, by means of commerce and emigration, with all ex- 
changeable things in the commercial world. It does not 
follow from these premises that the price of a similar horse 
would be the same everywhere, because the money of each 
country consists of a sum by itself, a sum which is only 
remotely connected (if at all) with somewhat similarly con- 
stituted sums in other countries, and also because the 
relation between the supply and demand for horses may not 
be the same in any two places. 

Thus far we have seen that value is a term of the highest 
commercial and political importance, yet one whose defini- 
tion is nowhere to be found in the law ; that the term has 
passed through many meanings, due to its long-time use 
and the vicissitudes of European civilization; that the 
Economists regarded it as an attribute of matter; that 
Bastiat proved it to be a relation between two exchanged 
things ; and that further reasoning shows it to be a numeri- 
cal relation, which in a rude way exists between all ex- 
changeable things, appears with precision during the act of 
exchange, and is to be measured most readily by means of 
money. 

If it be asked, What is the precise character of this 
numerical relation called value ? the reply must be that 



68 THE SCIENCE OF MONEY. 

although it depends upon many uncertain and incalculable 
elements,, as human necessity, desire, passion, speculation, 
and caprice, yet, that, as shown in another part of this 
work, it is essentially an equitable relation, or one that 
between equal parties has a tendency to become equitable ; 
that it is extremely variable ; l that it is extrinsic to and 
not connected with the physical properties of, nor difficulty 
of producing, commodities ; and that it is susceptible of 
precise expression in numbers, and in numbers only. 

Being thus susceptible of expression, it is sufficient for 
the purpose of dealing with it practically if value be regarded 
as a fourfold numerical relation which involves the unknown 
ratio between the demand and supply of one commodity at 
a given place and time, as opposed to the unknown ratio 
between the demand and supply of another commodity 
at the same place and time ; and that by comparison and 
analogy it extends to and between all commodities and 
services. 

1 During the American Civil War a member of the New York 
Stock Exchange made a profit of several thousand dollars by accepting 
both of two offers which were made by different persons at almost the 
same instant of time, the one offering to sell certain railway shares at 
a lower price than the other offered to buy them at. This variation 
of value and double bargain must all have taken place within a half- 
second of time. The writer has known mining shares in San Francisco 
in 1878 to double, or diminish one-half in value within a few hours. 
He has heard of an instance in the " early days " of California when 
common hay-scythes rose in value from 25 cents (one shilling) to $100 
(20) each in the course of a few days, and of others when plug tobacco 
fell from a dollar (4s.) a pound to nothing, and was cast into the streets 
as valueless. 



VALUE IS A NUMERICAL RELATION. 69 

In other words, value, though difficult to define, is not 
immeasurable. In this respect it resembles time, space, 
gravity, and the other primordial conditions or relations of 
matter. The measure each of time, of space, of gravity, is 
an arbitrary rule, adopted by law ; and so must be the 
measure of value. 

Although the law at present declares that this measure 
of value shall consist of one single coin, it really and in 
point of fact consists of all coins and notes circulating 
within scope of the law. The law can, indeed, render one 
single coin the measure of value ; but it can only do so by 
prohibiting and banishing all other coins. This it does 
not do. On the contrary, after declaring a single coin of 
a certain description to be the measure of value, it orders 
several hundred millions of similar coins to be fabricated ; 
it makes them each and all payable for taxes and fines, and 
exchangeable for commodities, services, and each other, 
and thus renders them all together, in lump, one measure 
of value ; because, as money relates to all things, and value 
is expressed in money, so value relates to all things, and 
not to any one thing by itself. In other words, such is 
the nature of value, such the law, and such the operation 
of the system of exchange, that the pieces of money cannot 
be used separately ; they must be, and in fact always are, 
used collectively ; so that the actual unit or measure of 
value is the whole legal or tale sum of money, of whatever 
material or materials it may be composed. 

We know already that the law has not specifically 
limited this measure. But has it no limits whatever ? Is 



70 THE SCIENCE OF MONEY. 

the measure of value a mere abstraction ? No. It lias 
certain rude and indefinite limits, which have been left to 
chance, commerce, caprice, war, legislation, etc. These 
limits are roughly known as the demand and supply of 
money. By rendering so much money as may be found to 
express the value of any object of man's desire an effective 
offer in exchange for such object, the law has made the 
demand for money illimitable. On the other hand, the 
supply of money is left to be determined by the march of 
conquest, the progress of slavery, the vicissitudes of mining 
discovery, the development of mining economy, the social 
affairs of distant nations, the happening of war, the cur- 
rents of trade, the progress of the arts, the course of 
legislation in various countries, the designs of financiers 
and speculators, the melting of coins, the wear, tear, and 
loss of coins, the profits of banking, and numerous other 
uncertain events and conditions. 

Hence we have for value a complex and obscure numeri- 
cal ratio of exchange, difficult to define but precisely 
measurable by money ; and for money, a measure sus- 
ceptible of precise limitation, but, as the case stands, 
actually left to vary between illimitable demand and un- 
certain supply. 1 

1 Value only appears in the social state, and merely applies to ex- 
changeable things. When used with respect to health, religion, etc., 
or anything connected with man in an isolated state, it is a metonym for 
worth, as when we say a man keeps a good table, meaning that he 
keeps good viands. Similarly, the value of money is an expression 
meaning the rate of interest thereon. 



VALUE IS A NUMEKICAL RELATION. 71 

Value, being a definitive relation, cannot with propriety be coupled 
with an indefinite article. " A value," for example, is erroneous. 

Value has an active ; worth a passive meaning. 

The quality "worth" is what a thing has in itself; its value is 
determined by what it does for you. Worth is intrinsic ; value 
depends upon circumstances. From Graham's " Synonyms." 

The substitution of " value " for " price," and the use of " value " as 
a noun or substantive, though obvious, are very common, forms of 
error. 



CHAPTER VI. 

MONEYS CONTRASTED WITH OTHER MEASURES. 

Besides the difference, already shown, which exists between unlimited 
moneys and limited measures, there are differences between moneys and 
other measures even when both are limited 1. Money is used to 
determine the value of numberless things at the same time ; a yard- 
stick to determine the length of one thing at a time 2. Money deter- 
mines a dynamical and variable relation; other measures, a statical 
and fixed one 3. Money determines a numerical and extrinsic rela- 
tion ; other measures determine an inherent and intrinsic attribute 
4. Money determines an equitable relation ; other measures determine 
attributes which have no connection with equity 5. Moneys have a 
tendency to instantly amalgamate, and two or more moneys will merge 
into one money of the combined volume of both, which is not the case 
with other measures. 

T T was shown in a previous chapter that money, as it is 
at present constituted in the laws of the United States, 
and as it is otherwise constituted in the laws of the several 
other countries of the world, differed from all other mea- 
sures in the respect that it was not specifically nor precisely 
limited, defined, nor fixed in the law ; whilst the measures 
of length, weight, volume, area, etc., are actually thus 
limited, defined, and fixed. Owing to this lack of limita- 
tion and fixity, the whole sum of money, which is the 
measure of value, is liable to be altered from time to time 
by various uncontrollable and uncertain events ; thus ex- 



MONEYS CONTRASTED WITH OTHER MEASURES. 73 

posing the important relation of price to sudden and 
violent fluctuations. 

In addition to this difference which only applies to 
money as it now stands in the law there yet remain 
other differences between money and other measures. 
These differences apply to all moneys, whether limited 
or not, and it is deemed useful to notice them in this 
place. 

1. A money is used to determine a numerical relation 
between itself and all other things, including other moneys, 
at one time. A yard-stick, for example, is used to deter- 
mine a numerical relation between itself and one other 
thing at one time. The former is a multiple or complex 
measure ; the latter a unital or simple measure. Money 
cannot measure one thing without at the same time 
measuring all things ; a yard-stick may measure one 
thing without measuring any other. The length of one 
object does not depend upon the length of other objects : 
the price of one object does depend upon the price of 
every other object. 

2. Money is used to determine a dynamical and variable 
relation ; other measures to determine a statical and fixed 
one. Value varies with time and place ; it also varies 
with the frequency of exchanges. Hence value is a vari- 
able relation, and it is this variable relation which money 
has to determine ; whilst that which a yard-stick determines 
is an invariable and fixed relation. The determination of 
a yard- stick will last for ever, whilst a determination of 
money in price is only valid for a given time and place. 



74 THE SCIENCE OF MONEY. 

3. A measure of value can only be useful in the social 
state ; a measure of length may be useful in the isolated 
state. This arises from the fact that length is an inherent 
and intrinsic attribute of matter ; it is inseparably con- 
nected with it, and has no tendency to vary ; whilst value 
is extrinsic and relative, and continually tends to vary. 
Length can be determined by comparison ; whilst value 
can only be measured by exchange. 

4. From the social function of money arises its relation 
to intellect and equity. There can be no such thing as an 
equitable or inequitable length ; there may be an equitable 
and inequitable value. Length does not vary with the 
intellectual attainments, the knowledge, information, op- 
portunities, virtues, and power of men ; value does. 
When these advantages and attributes are unequal, the 
determination of value cannot be equitable; one party is 
certain to obtain an advantage over the other. When 
they are equal, value becomes an equitable relation. 
Whether the determination of value be equitable or in- 
equitable its measure should be constant ; for in the case of 
an otherwise equitable exchange an inconstant measure 
will make it inequitable ; and in the case of an inequitable 
one an inconstant measure will only add one inequity to 
another, as is the case now with all exchanges. 

5. Length and every other attribute of matter which is 
susceptible of numerical expression varies directly with 
numbers. Value is a numerical relation which varies in- 
versely with numbers. Hence two yard- sticks cannot at 
the same time and collectively measure one relation of 



MONEYS CONTRASTED WITH OTHEE MEASURES. 75 

length; whilst two moneys may at the same time and 
collectively measure one relation of value. Two moneys 
used collectively become instantly merged into one another, 
and thus become one money; two yard-sticks cannot be 
merged into one another, and therefore cannot be used 
collectively. They will always remain two. 



CHAPTER VII. 

LIMITATION IS THE ESSENCE OF MONEYS. 

Resemblances, actual and desirable, between money and other 
measures All measures of precision are artificial To become a 
precise measure money must also be of artificial dimensions All other 
measures are susceptible of exact numerical expression To become a 
true measure, money must be defined numerically The efficiency of all 
measures, money included, depends upon the exactness of their limits, 
not the substance of which they may be composed The limits of other 
measures are not left to be determined by supply or demand, nor should 
be those of money. 

r T has been shown in previous chapters in what respects 
money differs from other measures; it will now be 
shown wherein it resembles or should resemble them. By 
measures, of course, is meant measures of precision. 

1. All measures of precision are of artificial limits. 
Nature affords none. No natural productions are of an in- 
variable length, volume, magnitude, area, or weight. There 
is a metrical system set forth very minutely in the pages 
of Manou, a Sanscrit lawgiver of, or before, probably long 
before, the sixteenth century B.C. The basis of this system 
is a specified kind of mustard-seed. In order to ascer- 
tain the basis of this system, several modern investigators 
have each of them weighed many thousand mustard-seeds 
and deduced an average weight from these numbers ; yet 



LIMITATION IS THE ESSENCE OF MONEYS. 77 

no two of their results agree more than approximately. 1 
Even the basis of the French metrical system, which is the 
ten- millionth part of a quarter of the meridian actually 
measured on the earth's surface, has been found to be 
variable. 

If money were a measure of precision, its limits would 
also have to be artificial and fixed : and as at present they 
are not artificial and fixed, but left to be determined by 
chance or design, money is not at present a measure of 
precision, although equity demands that it should be one. 

2. All measures of precision are exactly numerical, that is 
to say, they are susceptible of exact numerical expression. A 
measure which is not capable of being exactly and numerically 
expressed is not a measure of precision. Money, as it now 
stands in the law, cannot be thus expressed, for no one can 
tell exactly, nor even approximately, what the whole sum or 
limit of it is in any given country, nor in all countries com- 
bined. It is, therefore, not a measure of precision ; yet it 
ought to be. 

Suns, moons, day's-journeys, posts, bow-shots, stone's- 
throws, and paces are measures of length ; armsfuls, loads, 
and cargoes are measures of volume; and a hide is a 
measure of area. These measures cannot be expressed 
exactly ; they are not measures of precision ; and none but 
savage, half-civilised, or unprogressive communities rely 
upon them for measures. Money, as it stands at present, 
cannot be expressed exactly ; it is not a measure of preci- 

1 For the details of these experiments consult Wilson's " Ariana 
Antiqua." 



78 THE SCIENCE OF MONEY. 

sion ; and is therefore not suitable for the requirements of 
highly refined, civilised, and progressive communities. 

3. A measure need not be composed of a commodity. 
Nor need money be. The efficiency of a measure does not 
depend so much upon the substance of which it is made as 
upon the exactness of its limits ; and this is as much the 
case with moneys as with other measures. 

4. The limits of other measures are not left to be deter- 
mined by either supply or demand ; neither should the 
limits of money ; but as the law now stands, these limits 
are left to be formed by insatiable demand on the one side, 
and fluctuating and unforeseeable supply on the other. 
Unless money is of less importance to society than yard- 
sticks or pint-pots, it would seem that it should be described 
and limited by law with at least equal precision. 

5. The essence of a measure of any kind is limitation 
indeed, this is the meaning of the term itself; and the more 
exact these limits are susceptible of being defined in the 
law, the more efficacious the measure becomes. This is 
the case with money. Indeed, the very essence of money is 
limitation ; and such is the origin of the word nomisma. 
The more exact the limits of money are defined in the law, 
the more equitable will it become in its operation upon 
prices and the dealings between man and man. 




CHAPTER VIII. 

THE PEECESSION OF PEICES. 

Explanation of Price It cannot be expressed in a given coin or 
sum of coins independent of other coins It varies directly with the 
whole numbers of money Logically a doubling of money will instantly 
effect a doubling of all prices In point of fact, this doubling occurs 
in time, and the time varies with different commodities This variance 
subject to natural law Such law called the Precession of Prices, or 
Movement of Prices in Time Results of practical observations on the 
working of this law Danger of employing a money without fixed 
limits Other practical observations concerning moneys. 

T)E.ICE is a triplex numerical relation. It involves the 
unknown numerical relation between the demand and 
supply of a commodity at a given place and time, as 
opposed to a known or assumed sum or supply of money. 

Price cannot be definitely expressed in a single coin or 
a sum of coins independent of other coins ; because coins 
are legally interchangeable one for the other. When notes 
are legally interchangeable for coins and coins for notes, 
or when bullion, coins, and notes are all interchangeable, 
as is the case at present in the foremost countries of the 
world, then price can only be expressed in the total sum of 
such composite money, or the definite fractions thereof. 

" Price," said the profound Montesquieu, " depends fun- 
damentally upon the numerical proportion of commodities 
to symbols/' 1 This is only a brief way of saying that 
1 Montesquieu's " Esprit des Lois," xxii. 7." 



80 THE SCIENCE OF MONEY. 

value is a numerical ratio between commodities ; and that 
price, which is its expression in money, varies with the 
numbers of money. 

The variation of price is directly with the numbers of 
money; whilst the expression of the value of money in 
commodities varies inversely with the numbers of commo- 
dities. Thus, the more numbers of money or the fewer 
commodities, the greater price ; and the fewer numbers of 
money or the more commodities, the lesser price. 

The logical consequence of this rule is that, for example, 
a doubling of the sum of money will result in a doubling 
of price ; and all the logicians, from Locke to Mill, have 
come upon this deduction and hastened to enlarge it. 1 
But here they have done violence to Nature, whose move- 
ments are performed only in time ; an element of which 
logic has usually taken but little account. It is upon the 
movement of prices in time that the Precession of Prices 
depends. 

It was asserted by David Hume, and admitted by Lord 
Overstone and John Stuart Mill, that whilst the volume of 
money might be increased or diminished instantly, the 
resulting movement of prices would only occur after an 
interval of time. 2 Mr. Mill appears to have supposed that 
this interval of time was only that which was sufficient 

1 Mill's "Political Economy," iii. 8, 2, p. 299. McCulloch's "Politi- 
cal Economy," 217, 401. 

2 Hume's Essays ; Lord Overstone's " Thoughts on the Separation 
of the Departments of the Bank of England," 1840; Mill's "Political 
Economy," iii. 13, 4, p. 333. Tooke, in his " History of Prices," saya 
something of the same kind. 



THE PRECESSION OF PRICES. 81 

* ' for the increased supply of money to reach all markets, 
or, according to the conventional metaphor, to permeate all 
the channels of circulation." 

The partial regulation to which money was subjected in 
the United States during the Civil War drew the author's 
attention to this interesting subject, induced him to observe 
carefully the actual operation of money upon various classes 
of commodities and services, and led to the discovery on 
his part of the natural law which he has termed the Pre- 
cession of Prices. 2 The observations made were published 
in the New York " New Nation/' during the year 1864. 

From these observations it appeared that in the United 
States, following an increase of money, and taking no 
account of the very brief time involved in geographically 
distributing the increase, it nevertheless required a period 
of several years for all prices to conform to the increase. 
During this time the prices of a certain few classes of com- 
modities or services doubled, after which the prices of 
others doubled, and so on successively, until the doubling 
of all classes was completed. In other words, the doubling 
of prices was not simultaneous, but took the form of a pre- 
cession, the order of which was somewhat as follows : 

1. Bullion. 2. Stocks and bonds. 3. Shares of incor- 



1 Mill, iii. 8, 2. 

2 At that time I did not know that this phenomenon had already 
attracted the observation of the illustrious Englishmen mentioned in 
the text. That neither of them followed it experimentally was, per- 
haps, due to the immense labour involved in the work under a compo- 
site system of money. Like many other laws relating to the science 
of money, this one is only apparent under a regulated system. 

a 



82 THE SCIENCE OF MONEY. 

porated companies. 4. " Staples/' or crude and imperish- 
able commodities. 5. Merchandise, such as perishable com- 
modities, crude articles of subsistence, etc. 6. Fabrics, such 
as machinery, manufactured food, luxuries for wear, etc. 
7. Landed property or real estate. 8. Skilled labour or 
artisans' wages. 9. Unskilled labour, or the wages of 
labourers, soldiers, seamen, etc. 10. Professional services, 
or the emolument of authors, inventors, lawyers, engineers, 
clergymen, accountants, and other professional and clerical 
classes. 

The interval between the doubling of the prices in these 
various classes of commodities or services was not uniform; 
in other words, supposing ten years to be the time required 
for the entire doubling of prices, and the classes of com- 
modities and services to be ten in number, it would not 
follow that each successive year would add one to the 
classes with doubled prices. After once commencing to 
feel the effect of the increased sum of money, some classes 
doubled in price quicker than others. Leaving this irregu- 
larity out of view, and supposing that if during the upward 
movement of prices, say after the fifth year, the money of 
the country had been suddenly diminished to its original 
sum, 1 the Precession of Prices would have appeared as 
in the diagram on the opposite page. 

From this diagram it will be observed that while the 
prices of some commodities are falling, those of others may 
be rising, and that both movements may arise from a single 

1 And assuming population and trade, and therefore the demand for 
money, to have remained unchanged. 



THE PRECESSION OF PRICES. 



83 



original impulse ; the falling commodities having passed 
through the rising period, and the rising commodities being 
yet within it.] This is, in fact, what did occur, though not 
in the symmetrical order delineated. 

Upon examining the details of this induction with atten- 
tion, it was observed that the order of precession conformed 
to the marketability of, or ease of selling or exchanging, 
the various classes of commodities and services enumerated. 





Thus, bullion, belonging to Class 1, was more readily sale- 
able than a Government bond, Class 2, or a railway share 
belonging to Class 3, or a bale of cotton, belonging to 
Class 4; whilst the latter was more marketable than a 
barrel of flour belonging to Class 4, or a piece of cloth, 
belonging to Class 5 ; and so on. All kinds of moveable 
commodities were more readily saleable than land ; whilst 
land commonly commanded a readier market than labour 
or professional services. 

The operation of this principle reveals the danger of all 
empirical measures designed to expand or contract the 



84 THE SCIENCE OF MONEY. 

money of a country, and the folly of exposing money, as it 
is now exposed, to the voluntary or chance expansions or 
contractions occasioned by commerce. Before meddling 
with money it is obviously necessary to determine the 
natural laws which govern its influence upon prices. From 
the observations made by the author it appears that to 
increase money, or permit it to increase, is not merely to 
enhance all prices simultaneously : it is to enhance the 
price of some things in point of time before others ; it is to 
benefit certain classes of the community at the expense of 
the remainder; it is to derange and throw into disorder all 
the varied and complicated interests of society. Contrari- 
wise, to diminish its sum, or to permit it to diminish, is to 
depress the prices of certain commodities sooner than 
others, and to occasion a derangement of affairs even more 
perilous to society; for it so happens that, although theo- 
retically labour benefits from a general fall of prices (it 
being the last, in point of time, to feel the effects of a 
diminished sum of money) , it practically suffers even more 
than during a general rise of prices, because a fall of prices 
hinders commerce and depresses production, 1 and thus 
deprives labour of employment or tangible existence. 

Hence, the only kind of money which is demanded by 
the interests of the productive classes is that one which is 

1 During a fall of prices all enterprises are checked, among them gold 
and silver mining enterprises, or searches for the precious metals upon 
a commercial basis. So that so long as money is made of these metals, 
every accidental scarcity of them will promote greater and greater 
scarcity. Contrariwise, during a rise of prices, mining enterprises are 
stimulated, and plenty of metal thus begets renewed researches for 



THE PRECESSION OF PRICES. 85 

also demanded in the name of general equity a money of 
a fixed sum ; fixed either absolutely or relatively to popu- 
lation or production ; but fixed. 

The observations alluded to above brought to light 
other noteworthy peculiarities in the movement of prices, 
viz. 1, That whilst war, harvests, production, speculation, 
and the other principal influences, other than money, which 
affect prices, may affect the prices of many things, they do 
not and cannot either separately or collectively affect the 
prices of all things ; 2, that whenever they enhance prices 
in one direction they depress them in others, and vice 
versa; and 3, that no cause or influence can enhance or 
depress the prices of all things, either simultaneously or in 
the order of the Precession of Prices, except an increase or 
diminution in the whole Sum of Money. 1 

more. With a commodity-money, it is always a dearth or a feast ; and 
in these days of machinery and associated capital this fact has a signifi- 
cance which it never had before. 

1 Tooke spent a lifetime in trying to refute these simple and almost 
self-evident principles, and he failed. Yet the fallacious doctrine that 
commercial depression may be caused by " general over-production " 
(a myth) is still prevalent. Weston, p. 189, calls Tooke's work 
" mischievous activity." 



CHAPTER IX. 

REVULSIONS OF PEICES. 

Coins are not made of gold and silver because of the intrinsic quali- 
ties of these metals The practice arose from the superior constancy 
of their quantity as compared with other substances, and during eras 
when artificial moneys of fixed quantity were politically impracticable 
Historical examples The precious metals were never commonly and 
permanently used for coins until the conquest of Europe by Rome 
When the first effects of this conquest subsided the precious metals 
fell into disuse as materials for coins, until the Spanish conquest of 
America The effects of this conquest, and its concomitant great sup- 
plies of gold and silver to Europe, upon prices, have been sustained by 
means of so-called convertible paper notes This system incapable of 
further extension Necessity for reform in money Fluctuations of 
prices which have resulted from convertible note systems Their dis- 
astrous and baneful effects. 

O AYS Montesquieu, "That which is the common measure 
of all things should of all things be the least subject to 
change/' 1 It has ever been the theme of ill-informed 
writers that money came to be made of gold and silver 
coins because gold and silver metal possessed certain in- 
trinsic qualities, such as brilliancy, incorrodibility, porta- 
bility, divisibility, reunitability, and the like. But these 
qualities did not prevent the Chinese, the East Indians, 
and the Greeks from again and again voluntarily putting 

1 " Esprit des Lois," xxii 3. 



REVULSIONS OF PRICES. 87 

these metals away and using in their stead other substances 
for coins or monetary symbols substances the supply of 
which, like clay, copper, or paper, were less limited by 
nature, and therefore more amenable to the art of man. 
Indeed, it cannot be shown that either gold or silver ever 
was commonly or permanently used for money in any 
country of the world prior to the conquest of Spain by the 
Romans. It was this event that brought to Rome a suffi- 
cient accumulation of silver to assure a certain stability in 
its value, and it was this stability of value that determined 
its permanent adoption as the material of coins, and not 
the intrinsic qualities of the metal. Previous to this time 
the Athenians had, indeed, owing to their control over the 
productive silver mines of Laurium, employed a money 
consisting chiefly of silver coins ; and the Macedonians had 
used for this purpose both gold and silver, which they 
derived from Alexander's plunder of Asia. But in neither 
of these cases can the monetisation of the precious metals 
be regarded as having lasted permanently. The mines of 
Laurium were closed before the time of Pausanius, and 
were not reopened until A.D. 1870. l Alexander's stock of 
the precious metals soon became dispersed ; and from this 
time until the extinction of Greek liberty the material of 
the moneys of Greece was frequently changed. After the 
Romans conquered the country, its moneys were made per- 
manently of copper. 

Nor was the stability of value which, after the Roman 
conquest of Spain, led to the adoption as money, first of 
1 " History of the Precious Metals " and " History of Money." 



88 THE SCIENCE OF MONEY. 

silver, and afterwards of silver and gold coins, a permanent 
or unalterable attribute of these metals, but a purely 
adventitious one, derived from the immense quantity of 
them which the Romans had been enabled to collect, pri- 
marily by plunder, and afterwards and much more exten- 
sively by means of slavery. It is now but too well ascer- 
tained that the tragical fate which befel America in the 
fifteenth and sixteenth centuries had already overtaken 
many portions of Europe during the period B.C. 200 
A.D. 300. In America the Spaniards immolated in the 
mines fifteen millions out of some thirty millions of the 
native inhabitants ; in Europe the Romans had probably 
sacrificed fully as many. 1 

The influence of these last-named historical events 
marks the limits in the two eras of comparative stability 
which have attended the value of gold and silver. The first 
era commenced and ended with Roman conquest and sla- 
very. The second era commenced and ended with Spanish 
conquest and slavery. When the Roman Empire declined, 
the Level of Prices which its violent acquisition of the 
precious metals had established was sustained as long as 
possible by means of over-valued coins, leather moneys,' 2 

1 Gibbon and Merivale estimate the population of the Roman 
Empire in Europe in the time of Augustus at 60 millions. At the 
period of the Hegira it was not over 30 millions. See Montesquieu 
and authorities therein : also the author's " History of the Precious 
Metals," and " Rape of the Earth." 

2 In the chapter on Leather Moneys, in my k< History of Money," 
more than a dozen emissions of such moneys are shown to have been 
made in the various countries of Europe during the Dark Ages. 



REVULSIONS OF PRICES. 89 

corn moneys,, and a great variety of similar devices; so 
that it may be said as justly of the Dark Ages as of the 
period prior to the conquest of Spain, that neither gold nor 
silver was commonly and permanently used for money in 
any country. It was not until the second era of their com- 
parative stability of value commenced (this was after the 
conquest of America) that gold and silver, at or near their 
bullion value, were again used commonly and permanently 
for money. 

When the Spanish American Empire declined, the level 
of prices which its violent acquisitions of gold and silver 
had established was sustained by means of so-called con- 
vertible, afterwards combined with inconvertible, paper 
money ; and this has continued up to the present day. 

The signs that this level can no longer be sustained are 
making themselves more and more apparent every day. 
Many of the so-called convertible systems of paper money 
have become in reality hopelessly inconvertible ones. This 
is certainly the case in Russia, Austria, Turkey, Brazil, 
Buenos-Ayres, Japan, and some other countries ; it is pro- 
bably also the case in the United States, notwithstanding 
the pretensions of metallic resources periodically set forth 
by the Treasury. 1 The mechanical devices for accelerating 

1 The Government of the United States is now so strong and 
rich that, in the scramble of " specie-paying" nations for the world's 
scant and dwindling stock of the precious metals, it probably has the 
power to secure more than its due share. In other words, it is no longer 
the Bank of England that controls the flow of the precious metals. The 
Treasury and Banks of the United States are capable of exercising an 
important influence upon this movement. It ill becomes the possessors 



90 THE SCIENCE OF MONEY. 

the efficiency of money have received no important addition 
since the general introduction of railways and telegraphs. 
The clearing-house system (which, by the way, iu of long 
standing) does not appear to be capable of further exten- 
sion. The annual supplies of the precious metals, to which 
a sporadic impetus was imparted by the accidental dis- 
covery of the Californian and Australian placers, have 
resumed their previous downward movement. 

Those whose blind faith in the stable value of gold and 
silver cannot be shaken by considerations which cover such 
great periods of history as the rise and fall of the Roman 
and Spanish- American Empires, or who may not be dis- 
posed to admit that the present decline in the production 
of gold and silver is final, need only to consult the fluctua- 
tions of price, in any commercial country during the past 
half-century. These will show that even the admitted 
comparative stability in the value of the precious metals 
has varied to the extent of four or five times. 

We need not go far to ascertain the causes of these 
fluctuations of prices. Although not sufficiently exact to 
furnish grounds for researches into the nature and function 
of money, the statistics of money serve very well to exhibit 
the main cause of the fluctuations of price. 

Commencing in 1775 with $4.40 of money per capita of 
population, the United States, for example, had $6.25 in 
1791 ; this decreased to $5.85 in 1792 ; increased to $7.40 

of such power to permit the employment of the juggling tables of coin 
" reserves " published by the Director of the Mint and Comptroller of 
the Currency. 



REVULSIONS OF PRICES. 91 

in 1794; decreased to $4.60 in 1798; increased to $5.30 
in 1800; decreased to $4.60 in 1803; increased to $5.30 
in 1804; decreased to $5.20 in 1805 ; increased to $6.40 in 
1808; decreased to $6.10 in 1811 ; increased to $8.80 in 
1813; decreased to $8.00 in 1815; increased to $9.20 in 
1819; decreased to $9.00 in 1820; increased to $9.20 in 
1825 ; decreased to $7.20 in 1830 ; increased to $14.00 in 
1837; decreased to $12.50 in 1838; increased to $13.40 
in 1839; decreased to $6.90 in 1843; increased to $11.10 
in 1848; decreased to $10.50 in 1849; increased to $16.40 
in 1855 ; decreased to $16.10 in 1856 ; increased to $16.70 
in 1857 ; decreased to $14.00 in 1858 ; increased to $15.40 
in 1859 : decreased to $13.70 in 1861 ; increased to $28.50 
in 1864, and, with some unimportant variations, decreased 
to $17.00 at the present time. 1 

Surely no one will contend that the alternate periods of 
increasing and decreasing, or, as the present writer has 
termed them elsewhere, 2 of crescendo and diminuendo 
prices which these figures bespeak, have been beneficial to 
society : no one will claim that the undeserved changes of 
individual fortune which they produced, or that the many 
social distresses and disturbances which they occasioned, 
were desirable. On the other hand, that these revulsions 
were entirely preventable and avoidable can scarcely be 
doubted. 

1 "History of the Precious Metals," pp. 216-17. 

2 In the "New York Economist," in 1868; in the first edition of 
Johnson's Encyclopaedia, article " Currency ;" and in several other 
publications of the period 1864-73. 



92 THE SCIENCE OF MONEY. 

The adventitious gains and losses occasioned by these 
fluctuations in prices have led to two very deplorable 
classes of results. First, they have subjected all mercantile 
transactions to extraordinary and unnecessary uncertainty; 
effaced the distinction which formerly existed between 
commercial adventure and stock-jobbery ; and fostered a 
spirit of gambling and jockeying, so deeply rooted in 
the community that not all the pulpits in its midst have 
hitherto been able to check it. Second, they have tended 
to shorten credits ; depreciate the commercial value of 
honesty, foresight, and skill; discouraged commercial en- 
terprise ; and led to a baneful growth of irresponsible 
corporations and limited liability companies. 

If society has thriven and progressed in spite of these 
obstacles, it is because the productive resources which have 
furnished the basis of such progress have hitherto been 
sufficiently numerous and ample to overcome a bad system 
of money, and not that such a system has been without its 
effects upon the general welfare. But these resources are 
no longer numerous and ample. There are no more virgin 
lands or forests, no more free " cattle-ranges," no more 
unworked placer mines, etc. The New World is deflowered, 
and is fast settling down to the industrial conditions of the 
Old. 

In the Roman Commonwealth, which was provided with 
an artificial, permanent, and unalterable measure of value, 
the debtor had so little excuse, beyond his own lack of 
foresight or skill, for failing to meet his engagements, that 
the law, without working any noticeable hardship, accorded 



REVULSIONS OF PRICES. 93 

to the creditor a claim not only upon the former's property 
but his person. 

In modern countries the measure of value is so uncertain 
and fluctuating that no man cares at to-day's prices to sell 
on long credit or to rent or lease upon long terms. Bank 
loans, for the most part, are limited to a few days ; l and 
long credits of any kind are regarded with so much appre- 
hension that in many cases they are forbidden or defeated 
by law. 2 

If it be answered that whatever perturbations of prices 
have occurred, they were not due to the unstable value of 
the precious metals, but to the promotion of paper notes to 
the dignity and function of money, the reply is that but 
for such promotion the perturbations would have been still 
greater. The interests of society are so strongly opposed 
to unstable prices that it resorts to every expedient for the 
purpose of keeping them steady ; and it is only when an 
efflux of the precious metals occasioned by peremptory 
demand elsewhere, or by fears of war takes place, that 
paper money systems have ever obtained a footing against 

1 In 1 867, while Director of the Bureau of Statistics, I obtained a 
return from most of the National Banks, which showed that the average 
period of discounts was about fifty days the first return of the sort 
ever obtained. 

2 Such is the operation of the Statutes of Limitation in America 
relative to mortgages, loans, leases, etc., by private persons, and such 
the operation of squatter laws and customs, and of bankruptcy acts. 
On the other hand, Government and corporative loans and leases for 
lengthy periods have been upheld in law. There is a contradiction in 
these two classes of practices. 



94 THE SCIENCE OF MONEY. 

the prejudice which they had to encounter. 1 Paper notes 
have often in derision been termed the " Money of Revolu- 
tions ; " but they were never adopted by the revolutionists 
of any country until after the precious metals had fled away 
and left such country exposed to more than the accustomed 
hazard of unstable prices. 

1 A noteworthy efflux of bullion took place from the United States 
upon the occasion of the resumption of coin payments by the Bank of 
England in 1821. For remarks on its effects see Gallatin's Treasury 
Report. Another noteworthy efflux occurred upon the breaking out 
of the Civil War in 1861. 



CHAPTER X. 

CAUSES AND ANALYSIS OP A BATE OP INTEREST. 

Causes of a rate of interest Temporary supply of money Rate of 
profit in trade Rate of profit in production Rate at which animals, 
plants, and minerals increase Rate at which the means of subsistence 
increase Subsistence ultimately governs the rate of interest Subsist- 
ence also governs the growth of population ; so that population and the 
rate of interest are related When to the rate of interest, arising from 
increase of subsistence, there are added allowances for risk, taxes, and 
the cost of superintending loans, the market rate of interest follows 
Present tendency of the market rate Ignorance of American ministers 
of finance Usury laws. 

1. r I ^HE rate of interest for money is due, immediately, 
to the temporary or local supply of, as compared 
with the temporary or local demand for, money as a com- 
mercial loan. In case no recent change has occurred in 
the supply of or demand for money, the rate of interest 
depends upon : 

2. The net rate of profit in trade. When this is high, 
the merchant, in order to maintain or extend his business, 
can afford to pay a high rate of interest for money. When 
it is low he can only afford to pay a low rate. The net 
rate of profit in trade and when there is no trade, the 
rate of interest depends upon : 

3. The rate of profit in production, as in agriculture, the 
fisheries, mining, manufactures, and the means of trans- 



96 THE SCIENCE OF MONEY. 

portation. The profit in production might be affected tem- 
porarily or locally by the supply compared with the demand 
for products ; but in the long run it must depend upon : 

4. The rate at which animals and plants increase and 
minerals are produced under the hand of man ; in other 
words, the rate at which the means of human subsistence 
increase. 

This, then, is the ultimate cause of a rate of interest : 
the rate at which the means of subsistence increase. Other 
things being equal, were this rate to double, the net * rate 
of interest would double ; and were the rate of the increase 
of subsistence to diminish one-half, the net rate of interest 
would diminish one-half. In countries where such net rate 
of interest is high the market rate of interest for the safest 
class of investments of money is high, and vice versa. Thus 
the leading savings banks of California, than which there 
are probably no safer institutions of the kind in the world, 
were able for many years to allow their depositors from 
12 to 15 per cent, per annum for money; and even at the 
present time, after the substantial exhaustion of the very 
productive placer mines of that country, these banks are 
able to allow 6 per cent. To afford this, they must, of 
course, earn 9 or 10 per cent. 

During the decline of the Roman Commonwealth and 
Empire, and throughout the Dark Ages, the turbulent con- 
dition of Europe so greatly diminished the rate of increase 

1 The net, as distinguished from the market rate of interest, which 
latter includes allowances for risks, taxes, and the cost of superintend- 
ence of loans, will be explained farther on. 



CAUSES AND ANALYSIS OF A BATE OF INTEREST. 97 

of the means of subsistence as to cause a continuous decline 
of the population. This decline was arrested by the re- 
opening of commerce with the Orient, and changed from a 
stationary condition to one of growth by the establishment 
of a sea route to India and the discovery of America. 
From this notable instance, and other similar though less 
notable ones which might be adduced were it necessary, it 
follows that the growth of the means of subsistence not 
only governs the rate of interest, but also the rate of the 
increase of population. That it has the last-named influence 
is well attested by the laborious investigations of Malthus, 
Buckle, and others ; but that it also possesses the former, 
has not, so far as I am aware, yet attracted the attention of 
moralists or financiers. 

That the rate of the increase or decrease of population 
in any vast area and during long periods of time must 
conform very closely to the rate of the increase or decrease 
of the means of subsistence, may therefore be regarded as 
having been satisfactorily demonstrated. That the net 
rate of interest upon capital closely obeys the same influ- 
ence is an induction that, however novel, may be accepted 
with equal confidence. 1 

1 The principle that interest is derived fundamentally from the 
growth of animals and plants in time was first broached by the author 
in 1865, in an Essay entitled " The Rate of Interest in Great Britain 
and Elsewhere," published in the New York " Social Science Review " of 
that year. This principle was elaborated in his address on " Interest," 
to the National Insurance Convention of the United States at New 
York, 1872, published in the " Proceedings " of that body, and again in 
his Essay on " Usury and the Jews," published in San Francisco, 1879, 

H 



98 THE SCIENCE OF MONEY. 

Having now determined that the ultimate cause of a rate 
of interest is the rate of the increase of the means of sub- 
sistence, and that such rate is, within very narrow limits, 
also identical with that of the increase of population, it 
remains to explain the difference between the net and mar- 
ket rate of interest for money. 

In every loan of money the lender, in order to recoup 
himself, must charge in the form of interest as much as he 
could earn excluding all risks and expenses, which latter 
must embrace the value of his own time by employing his 
money in trade or production. Let us suppose this to be, 
at the present time and throughout the entire commercial 
world, 2 per cent, per annum. 

In addition to this, he must charge enough to cover the 
risk of the non-payment of the principal. This rate widely 
differs in various countries. For the sake of illustration, 
let it be supposed that throughout the commercial world 
the risk is equal, in the long run, to 2 per cent, per annum. 
Taxes when levied upon money or loans of money, in 
addition to taxes upon production or trade (which latter 
form a part of the expenses of such production or trade) 
have also to be recouped to the lender of money, and must 
be added to the net rate of interest. Let the item of taxes 

a copy of which last-named work is in the library of the British 
Museum. His fellow-townsman, Mr. Henry George, in his work on 
" Progress and Poverty," has adopted the author's postulate with refe- 
rence to the origin of interest, but has nowhere given him credit for it. 
As to the uses which have been made of this postulate, by associating it 
with wages and other foreign subjects, the author entirely dissents both 
from Mr. George's methods and conclusions. 



CAUSES AND ANALYSIS OF A RATE OF INTEREST. 99 

be supposed to amount on the average to half of 1 per cent, 
per annum. 

Finally, to fully recoup himself, the lender must charge 
sufficient to pay him for the cost of personally superintend- 
ing the loan or transaction such as seeking the borrower, 
examining his credentials or securities, ascertaining or 
enforcing his own rights at law, notarial expenses, etc. If 
this charge be fixed as equal on the average to, say, half of 
1 per cent, per annum on the sum of the loan, the average 
market rate of interest throughout the commercial world 
would be 5 per cent, per annum, as follows : 

Per cent. 

Net or unloaded rate of interest, due to rate of the 
increase of the means of subsistence, and agreeing 
substantially with the rate of the growth of popu- 
lation ......... 2 

Kisk 2 

Taxes on money or loans of money . i 

Cost of superintendence of loan, legal and notarial 
expenses, etc. . . . . . . i 

Market or gross rate of interest . . . .5 

In some countries, as in England, where the risk and 
cost of superintendence is comparatively small, more than 
one-half of the average market rate of interest, which is 
about 3i per cent, consists of the net rate, or that arising 
from the net profit of trade, or increase of the means of 
subsistence. In others, as in Turkey, where the increase 
of the means of subsistence is substantially nil, and the cost 



100 THE SCIENCE OF MONEY. 

of superintendence, perhaps, not much greater than else- 
where, the market rate is due almost entirely to risk and 
taxes, which in that country at the present time are both 
high and fluctuating. In the United States the increase 
of the means of subsistence is probably about 3^ per cent., 
whilst risk, taxes on loans of money, and cost of superin- 
tendence combined, probably amount to about If per cent, 
more, making the average market rate about 5 per cent. 

While temporary and local circumstances combine to 
greatly modify the market rate, it is of the highest import- 
ance to know of what elements this market rate consists, 
in order to be able to accord to each modifying circum- 
stance its due degree of importance. For this reason the 
analysis of interest herein made, besides being otherwise 
necessary to the design of the present work, will, it is 
hoped, prove to be of immediate and practical use to all 
persons connected with monetary transactions. 

It may be affirmed with safety that generally throughout 
the commercial world the market rate of interest at the 
present time has a tendency to fall ; and it is a knowledge 
of this fact on the part of financiers and capitalists that 
renders long loans under permanent and equitable govern- 
ments, and upon good security, more desirable, and there- 
fore more valuable, than short ones. Ignorance of this 
fact on the part of the finance ministers of the United 
States has cost that country during the past twenty years 
nearly as much as the whole present sum of the public debt. 
How much it has cost in the equality of fortune and welfare 
of its citizens would be difficult to compute. 



CAUSES AND ANALYSIS OF A RATE OF INTEREST. 101 

After proving that, teleologically, interest arises from 
the rate of the increase of animals and plants, and is there- 
fore founded upon the provisions of nature for the develop- 
ment of organised life, it need hardly be said that usury 
laws, though doubtless often enacted with benevolent in- 
tentions, have the defect of being at variance with the laws 
of nature, and therefore cannot be maintained during eras 
of societary growth and progress. 



CHAPTER XI. 

KATE AT WHICH EXCHANGES INCKEASE. 

Exchanges differ essentially in frequency Their frequency indi- 
cated by the customary rates of profit attached to each class They 
are all reducible to one denomination of frequency When thus 
reduced it will be found that competition has compelled them all to 
bear the same rate of profit That rate is the one at which all the 
capital in a country augments The latter is identical with the net 
rate of interest for money Given the net rate of interest in a given 
country, the following rates can be deduced : the average rate of the 
augmentation of all capital : the net rate of profit on all exchanges 
reduced to one denomination of frequency : and the net profit on each 
class of exchanges whose order of frequency is given. 

T N great commercial countries the exchanges of capital 
are so numerous and diversified as to have hitherto 
discouraged analysis and arrangement. Writers on the 
subject have been content to allude to them collectively as 
the Exchanges, or the Volume of Exchanges. It is evident 
that no progress can be made in determining their relation 
to capital or to money until a more critical and scientific 
method of treatment is adopted. 

The primary and most essential difference between one 
exchange and another is its ratio of activity or occurrence 
in time. One important class of exchanges for example, 
the first sales of live stock, agricultural products, lumber, 
naval stores, fish, game, etc. are comparatively infrequent. 
They wait upon the seasons, and, for the most part, only 



BATE AT WHICH EXCHANGES INCREASE. 103 

occur once a year. Another important class as the com- 
mercial sales of corn, cotton, wool, sugar, tea, coffee, etc. 
are comparatively frequent. From producer to consumer, 
these commodities pass rapidly through many hands, and 
each time at a profit. 

Between these two great classes of exchanges agricul- 
tural and commercial sales there are numerous others, 
each of a different degree of frequency. Beyond them there 
are yet others. 1 

It being assumed that, in the long run, the net annual 
profits upon capital in all industries, whether productive or 
commercial, and in all classes of exchanges after making 
allowance for losses, bad debts, cost of superintendence, 
risks, deteriorations, taxes, rents, expenses, etc. are 
brought by competition to the same level, it follows that 
the average frequency of any given class of exchanges is 
indicated by the rate of profit which they commonly yield. 

Thus, if the ordinary net rate of profit on first sales of 

1 In 1866, whilst Director of the Bureau of Statistics, I made an 
effort to ascertain the frequency of land sales or conveyances, by 
requesting the county clerks, registrars, and recorders throughout the 
various States of the American Union to forward returns of the deeds 
which were placed on record in their offices from time to time ; but 
the work of collating these returns proved to be too great for the 
small clerical force which could be spared from my office for the 
purpose ; and it had to be abandoned. Over 150 of the returns the 
first of the sort ever collected or published will be found in my 
official report for November, 1866, pp. 13, 14. One of the fruits of 
this effort is the custom which has since grown up of the county 
clerks, registrars, and recorders to publish lists of conveyances and the 
terms of sale in the newspapers. 



104 



THE SCIENCE OF MONEY. 



agricultural products is 5 per cent., and such exchanges of 
capital occur on the average only once a year, it follows 
that where the usual net rate of profit is 2 J per cent., as, let 
us suppose, it is upon the sales of retail stocks of dry goods 
or draperies, the exchanges of the last named class of capi- 
tal must occur half-yearly. In other words, while the agri- 
culturist " turns " his capital stock over once a year the great 
London or New York tradesman " turns " his over twice. 

By a parity of reasoning, the banker or broker whose 
profits on each transaction may be so small as one- sixty- 
fourth part of one per cent, must, Cf to make it pay," turn 
his capital over once a day. 

It will be seen from these examples that no matter how 
numerous and diversified the exchanges are, they can all 
be brought to one denomination of frequency. When thus 
reduced it will be found that competition has brought them 
all to the same level of net profit. 

The following hypothetical table will show more clearly the 
relation between frequency of exchange and rates of profit : 



Class of Exchanges. 


Absolute number 
of exchanges. 


Net customary rate 
of profit per cent, on 
each exchange. 


Absolute 
exchanges 
reduced to 
annual ones. 


Net annual 
rate of 
profit per 
cent. 


Decennial 


6i at 


32.00 equal 


100 at 


2.00 


Yearly 


25 




8.00 




100 




2.00 


Half-yearly . . . 


100 




2.00 




100 




2.00 


Monthly 


400 




0.50 




100 




2.00 


Weekly 


2000 




0.10 




100 




2.00 


Daily 


20000 




001 




100 




2 00 


Hourly 


200000 




0.001 




100 




2.00 





RATE AT WHICH EXCHANGES INCREASE. 105 

Investigations which have been made to determine the 
average net annual rate of profit on exchanges of capital in 
various countries and at various periods of time prove that 
such rate alters very slowly. For example, the total capital 
of the United States augmented a century ago at the rate 
of about 4 per cent, per annum. At the present time it 
augments at the rate of about 3i per cent, per annum. It 
is this rate that governs and marks the average net annual 
rate of profit on exchanges : it being clear that if it paid 
better to exchange capital than to produce it there would 
temporarily be such an overplus of merchants or brokers as 
would soon drive the excess to become agriculturists, 
miners, or manufacturers. 

When similar investigations are made into the average 
rates of profit earned by the exchanges of any given class 
of capital in any important commercial centre such as 
London or New York during the past fifty or one hundred 
years, it will be found that these rates have varied but little, 
if at all. Notwithstanding the modifications in our mode 
of living, in the conditions of production, and in the facili- 
ties of transportation, exchange, etc., which have been 
effected through the introduction of steam power and 
telegraphs, the profits, severally, of husbandry, cattle- 
raising, manufacturing, mining, and commerce, both whole- 
sale and retail, appear to be little different from what they 
were half a century or a century ago. It is not contended 
that these average customary rates of profit do not change 
at all : it is merely argued that they change with extreme 
slowness and by imperceptible degrees. 



106 THE SCIENCE OF MONEY. 

From these premises it appears that if the average net 
rate at which all the capital of a country augments can be 
determined, there may be deduced from it not only the 
rate at which any portion (not form) of such capital aug- 
ments, but also the rate at which reduced exchanges 
increase. 

There are two methods by which the rate at which the 
capital of a country augments can be determined : the one 
is inductive, the other deductive. 

The former method is that pursued by the United States 
Census Bureau, which every tenth year computes the 
total wealth or capital 1 of the country in real and personal 
estate. From the decennial rate of increment to this 
wealth or capital, which is shown by comparing the 
results of one " census" with another, the annual rate 
may be readily computed. Unfortunately for the in- 
terests of science, the manner in which this work is 
performed, and the spirit that animates it, render it of 
little worth. 2 

1 In the United States there is very little wealth not applied to 
reproduction : consequently in that country wealth and capital are 
nearly synonymous terms. 

2 The value of real property given in the census is the sum of the 
land tax lists in the various States. As the relation of taxable to 
actual value differs enormously, not only in the various States, but in 
the counties and municipalities, this sum is erroneous. The value of 
personal property is obtained from similar sources, partly from the de- 
clarations of persons interested in concealing or exaggerating the truth, 
and is wholly misleading. All deficiencies in the original returns and 
they are exceedingly numerous are made good by conjecture. No allow- 
ance is made for the different purchasing power of the moneys in which 



EATE AT WHICH EXCHANGES INCREASE. 107 

The other method is the deductive. The rate of the 
growth of capital is unerringly indicated by the net rate of 
interest on money. 

This rate differs, of course, in the various countries of 
the world. 

In the United States it is about 3 per cent, per annum ; 
in the United Kingdom it is about 2 per cent ; in France 
it may not exceed one and a half per cent. ; in Turkey it 
probably falls to zero. 

If it is at this rate that the whole capital of a country 
augments, it is necessarily at the same rate that the sum of 
exchanges, when reduced to the same denomination of 
frequency, augments. 

The net rate of interest not only differs in various 
countries; it differs in the same country in various eras. 
It was formerly 4 per cent, in the United States and 
If per cent, in the United Kingdom. Thus it has 
diminished in one country whilst it has increased in the 
other. 1 

And now, having shown the connection that exists 
between the augmentation of reduced exchanges and the 
rate of interest, the subject may be dismissed for the 
present, to be resumed in another chapter. A few words, 



the results of the different censuses are summed up for comparison. 
Many of the items are destitute of any more solid foundation than 
partisan doctrine and d esign. 

1 For the causes that contribute to establish a given rate of interest, 
and which influence its variations, see the previous chapter, and the 
works therein cited. 



108 THE SCIENCE OF MONEY. 

however, may with advantage be devoted to the subject of 
unprofitable exchanges. 

Besides exchanges which bear profits there is a class 
which do not bear any, and whose growth is therefore not 
indicated by the rate of net profit or the net rate of interest. 
This class of exchanges arises from sudden alterations in 
the volume and value of money. 

" The decline that has sometimes taken place in the 
foreign demand for our products, and the revulsions thereby 
occasioned, have not been owing to their excessive supply, 
but to the pernicious influences of sudden changes in the 
value of money ." 

For example suppose the money of country X to equal 
in round numbers 1,000 millions : if the banks or treasury 
of that country should suddenly put 50 millions more 
money in circulation which in view of what has actua lly 
happened within recent years is not a violent supposi- 
tion 2 it would follow that the general level of prices 
would, either immediately or ultimately, be enhanced 5 per 
cent. This new level of prices renders it profitable for 
another country, Z, to ship 100 millions worth of goods to 
X, which previously would not have paid a profit to 
" market" in that country. The equivalent of these goods 
in gold or silver, or any other material of which the money 

1 McCulloch's " Political Economy," ed. 1849, p. 302. 

2 During the " Black - Friday " panic of 1873, the ~New York Clearing 
House and United States Treasury, combined, suddenly increased the 
money of the country to the extent of thirty million dollars. " History 
of Precious Metals," p. 217. 



BATE AT WHICH EXCHANGES INCREASE. 109 

of X and Z may be made, being sent to the latter country 
occasions a fall of prices in X and rise in Z ; so that it may 
now pay a profit to send the same goods back to Z for 
sale , and such an operation might be repeated again and 
again until the charges for transportation eat up the last 
morsel of profit. 

Of course it is obvious that this profit, however real it 
may be to the merchants occupied in such a senseless 
carrying of goods up and down the earth, is wholly illusory 
to the respective countries X and Z. It arises simply 
from an alternate use of a common portion of two measures 
of value which the laws of two different countries have 
unwisely made of the same material not merely of the 
same kind of material, but the same pieces of material. 
A similar class of unprofitable exchanges sometimes arises 
from the local supply of money within a country ; but it 
is the former class consisting not only of goods, but 
still more largely in the arbitrages of the bond and share 
markets that contribute most powerfully to swell the 
figures of the clearing-houses. They arise simply from 
fluctuations in the volume of money operating upon prices 
within a given country, as contrasted with prices in another. 
Those numerous exchanges of the bond and share markets 
which arise from speculation are of an entirely different 
character. 

In the case of unprofitable exchanges of goods, capital 
is wasted in payments for useless transportation, whether 
of corn, cotton, bonds, or shares. Another waste is in com- 
missions to brokers. There is no real profit to mankind 



110 THE SCIENCE OF MONEY. 

in such transactions. The exact amount gained by one 
country or party is lost by the other ; whilst the cost of 
transportation or charges for brokerage as the case may 
be form a tax upon both. 

Whilst a scientifically regulated money would tend to 
increase the number of exchanges, including those which 
arise from the legitimate speculations of the produce 
and share markets, it would entirely put an end to the 
class of unprofitable exchanges described. 

There is a class of commercial transactions which appear 
to be exchanges, but are not so : they are simply re- 
movals of capital from one place to another. A has 
made a fortune in India, and wishing to spend it in Eng- 
land, ships his money or goods from one country to the 
other. This shipment appears in the exports of India 
and the imports of England, and is therefore commonly 
regarded as an exchange, whilst, in point of fact, it is not 
one. B, living in Russia, bequeaths an estate to C, in 
France. As a consequence, money or goods pass between 
these countries ; but no actual exchange has taken place. 
D, of New Orleans, espouses E, of New York,' and the 
married couple go to live in California, taking their 
common fortune with them. Goods and money pass from 
the former places to the latter, but no exchange has 
happened. F, in Germany, lends a million to G, in 
America, and receives annually a sum of interest upon 
his loan. This is not a case of trade or exchange. J, of 
Connecticut, has invented a sewing machine which he 
has patented in England, and upon the use of which 



RATE AT WHICH EXCHANGES INCREASE. Ill 

in that country he receives a royalty in money or goods. 
This is no exchange. 

However important this class of so-called exchanges 
may seem, they fail to exercise any practical bearing upon 
the efficiency of a given money to measure value in a 
given country. 



CHAPTER XII. 

REGULATION OF MONEYS. 

Fluctuations of price which do not belong to the domain of science 
Variations which do Practical considerations for the regulation of 
money Effect in the United States of an absolutely fixed sum In- 
fluence of a fixed sum per capita of population Actual movement of 
population and money during the past century Had money been 
regulated instead of being left to commerce, chance, and political con- 
tention, the great panics of 1815, 1821, 1837, 1861, and 1870 might 
have been averted. 

T)ESIDES those changes in the general Level of Prices 
which arise from changes in the whole Sum of Money, 
there is a subsidiary and partial movement of prices a 
change in the prices of certain things, not of all things 
which arises from war, legislation, speculation, foreign com- 
merce, fashion, the chances of mining discovery, good and 
bad harvests, the progress of mechanical invention " over- 
production," 1 and other causes. 

These influences directly affect value, whilst money only 
affects price ; these influences, whether separately or com- 
bined, may only affect the value of some things, they cannot 
affect that of all ; whilst money cannot affect any without 

1 There can only be a permanent over-production of t\Vo commodi- 
ties : improved lands and the precious metals. See " History of the 
Precious Metals," pp. 226, 275. 



REGULATION OF MONEYS. 113 

affecting every one. With the fluctuations of value occa- 
sioned by the various causes above set forth, the Science 
of Money has no concern; they belong to the domain of 
Commerce. 

When money consists, as it does now, partly of a com- 
modity let us say gold, made into coins and partly of 
notes, whether convertible or not, and its Sum is liable to 
be affected by the commercial or political supply and 
demand for gold metal, the relation of the gold to other 
commodities, and consequently its value in commodities, 
becomes of a dual character. As coins, its value is deter- 
mined by the numerical proportion which such coins bear 
to the exchanges of all commodities and services, omitting 
the gold so coined. As bullion its value is due to the cir- 
cumstances of its acquisition. 

This dual character of commodity-money, and all the 
complex relations which flow from it, belong also to com- 
merce. Science may try to reduce them to order ; but the 
task will be a fruitless one. 

Apart from these considerations, the relation of money 
to price must always be a general one. Money can pro- 
mote a general rise of prices ; it can occasion a general 
fall of prices ; it can cause prices generally to remain 
fixed at a given level ; but upon the subsidiary movement 
of prices money has no influence whatever, save what influ- 
ence arises from the phenomenon of Precession. 

In making an effort to decide in what manner the sum 
of money may best be regulated, we are met by the gravest 
difficulties ; for money is not, like other measures, made to 

i 



114 THE SCIENCE OF MONEY. 

determine relations of unvarying dimensions ; it is designed 
to determine one whose dimensions tend continually to 
vary. Value, the relation to be determined, varies con- 
tinually with the volume of exchanges, and these with the 
growth of population, the extension of commerce, and the 
march of civilisation. 

In the United States, if money be regulated and limited 
to an Absolutely fixed sum, there would ensue a general fall 
of prices, because the sum of commodities and services to 
be exchanged therein within a given period and whose 
value is to be expressed in money is continually increasing. 

If money in the United States were limited to a fixed 
sum Relative to Population, there would also ensue a fall 
of prices, although such fall would be far less great or rapid 
than in the case of an Absolutely fixed sum of money. The 
fall in the case of a Relatively (to population) fixed sum of 
money would be due to the fact that capital and exchanges in 
the United States increase somewhat faster than population. 

If we consult the history of money in the United States, 
and endeavour to learn if the whole sum of money has 
actually conformed to any other determinable quantity, we 
shall find that the determinable quantity to which it has 
conformed most nearly is that of population. This is not 
to say that it has kept pace with population, or only kept 
pace with it ; but that the average rate of its augmentation 
appears to have borne a definite numerical relation to the 
augmentation of population. Thus the population of the 
United States has increased during the past century at 
the rate of about three per cent., or thirty per mille per 



REGULATION OF MONEYS. 115 

annum compounded. The money of the United States, 
though not without frequent and injurious, if not dangerous, 
fluctuations, appears to have augmented at the rate of about 
thirty- three per mille per annum. 1 

Another determinable quantity to which the actual in- 
crease of money appears to have conformed is the net rate 
of interest for money. This quantity is not so readily nor 
easily determinable as the increase of population ; neverthe- 
less it is determinable. The net rate of interest means the 
average actual or market rate of interest, less risk, taxes, 
and the cost of the superintendence of loans. This rate in 
the United States has been and is still about thirty-three 
per mille per annum. 

Without as yet assuming that these indications offer a 
practical solution to so difficult a problem, let it be sup- 
posed that the money of the United States, instead of being 
left, as it has been, to alternately expand or contract with 
the commercial movements of bullion, the paper emissions 
of banks and treasuries, the exigencies of governments, and 
the contentions of party, had been regulated to augment at 
the rate of thirty-three per mille per annum then these 
results would have followed : 

1. The country would have had, all along, substantially 
the same amount of money that it has had ; only, instead of 
alternately increasing and diminishing, in some years to 
more than half the extent of its previous volume, it would 
have augmented steadily at the rate of 3^ per cent, per 
annum. 

1 Consult the author's " History of Precious Metals," pp. 214-17. 



116 THE SCIENCE OF MONEY. 

2. The reckless inflations,, speculations, and dishonest 
transactions of 1814, 1819, 1829, 1837, 1857, and 1864 
would not have occurred. 

3. The contractions and stringencies that followed these 
eras would not have been occasioned. 

4. Nor would it have been necessary to legalise the dis- 
graceful repudiations, nor to pass the stay-laws and bank- 
ruptcy Acts which were enacted to relieve the distresses 
occasioned by these contractions, and into which innocent 
and honourable men were drawn, together with the design- 
ing and dishonourable. 

Though the character of these advantages does not rank 
them among the most important which such a system would 
have brought about, yet surely even these are worthy of 
attention. To secure to each class of persons in a state 
the uninterrupted and peaceful enjoyment of their indus- 
trial condition, should certainly form an object of desire 
to statesmen. To discourage recklessness or dishonesty ; 
to visit upon the labouring and indebted classes no un- 
necessary nor peculiar hardships ; to incur no reproach of 
pecuniary turpitude ; to hold out no inducements to fraudu- 
lent bankrupts ; to let no rascal through meshes of the law 
which are strong enough to bind the innocent, these are 
ends which no progressive community can long afford to- 
disregard or neglect. 



INDEX. 



Aes, the Roman archaic term for 
money, 1. 

Alexander the Great, his plunder of 
the precious metals, 87. 

Aluminium-bronze used by counter- 
feiters, 40. 

America. See United States. 

American " Continental " notes counter- 
feited in England, 44. 

Ancient World, its mining and mone- 
tary experience, viii. 

Argent, a feudal term for money, 5. 

Aristotle on the function of money, 48 ; 
on principles of money, 48. 

Austria, inconvertible money of, 89. 

Australia, exhaustion of its placer 
mines, viii. 

Bacon, Lord, engages in a mining enter- 
prise, vi. 

Bank-cheques, comparative use of, in 
various countries, 48. 

Bank-deposits, impropriety of including 
them in money, 41 to 45. 

Bank-loans, increasing shortness of, 93. 

Bank of England, circulation of notes 
out of England, 42 ; no longer able 
to control flow of precious metals, 89 ; 
consequences of the Resumption of 
1821, 94 ; expansion of its circulation 
during the Suspension, vii. ; further 
expansion after Resumption, vii. 

Bank-notes, general increase of, in first 
quarter of nineteenth century, vii. ; 
further increase in second quarter, 
vii.; various classes of, 17, 25. 



Bankruptcy laws, operation of, in Rome, 

92; in United States, 116. 
Black Friday panic in New York, 108. 
Brassage, a mint charge in France, 22. 
Brazil, counterfeit money in, 44 ; bank 

cheques infrequent in, 45 ; incon- 
vertible note system of, 89. 
Budelius cited, 5, 6. 
Buenos Ayres, inconvertible note system 

of, 89. 
Bullion, when to be classed as money, 

22 ; when not to be so classed, 40 ; 

influence of new supplies upon prices, 

55. 



California, exhaustion of its placer 
mines, viii.; nullification of United 
States monetary laws by, 20; high 
rates of interest in, 96. 

Capital, growth of, affected by money, 
82 to 84 ; rate of augmentation in 
United States, 105 ; rule to deter- 
mine same in any country, 107. 

Carthage, monetary system of, 31. 

Cash, Hindoo origin of the term, 1. 

Census of United States, unreliable 
character of, 106. 

Cernuschi, M. Henry, cited, 49. 

Chase, Chief- Justice Salmon P., his de- 
finition of money, 45. 

Cheques, bank, comparative use of, in 
various countries, 45. 

China, monetary systems of, 31. 

Classical conception of money, 2, 8, 9. 

Clearing-house, nullification of monetary 



118 



INDEX. 



laws by the New York, 21 ; system 
of, not new, 90 ; incapable of further 
extension, 90. 

Coinable bullion a potential money, 22. 

Coins, various classes of, 17 ; quantities 
melted by jewellers and others, 38 ; 
carried abroad by travellers, 38 ; ex- 
ported in packages of merchandise, 
38 ; circulated in foreign countries, 
38 ; on shipboard, 38 ; counterfeited, 
39; light, 41 j sweated, 41; bank 
reserves of, 41 ; not a measure of 
value by themselves, 52, 55. 

Commerce, rapid growth of when freed 
from the limitations of mining, vii. ; 
distinction between and stock -jobbery 
becoming effaced, 92. 

Commercial crises, averted by paper 
notes, viii ; their era coincident with 
closure of Spanish American mines, 
viii. 

Commodity moneys, 16, 17; influences 
upon value of, 113. 

Communal notes, 17, 26. 

Composite moneys, 17, 18, 28; influ- 
ences upon value of, 113. 

Comstock Lode, exhaustion of, viii. 

Confederate States of America, their 
notes counterfeited in New York with 
connivance of Federal Government, 
44. 

Contractions of money injurious to trade 
and social progress, 115, 116. 

Convertible moneys, 17, 18. 

Convertible note system, danger of 
further extending, viii. 

Counterfeiting practised or connived at 
by governments as an engine of war, 
44. 

Counterfeit notes, 39; lessening pro- 
portion of to counterfeit coins, 43. 

Corporations, baneful growth of, 92. 

Corporate notes, 17, 26. 

Credit curtailed through use of unlimited 
moneys, 92. 

Crescendo and diminuendo prices, 91. 

Crises, commercial, viii. 



Currency, ambiguity of the term, 8 ; 
used by Sir R. Peel, 44 ; by Chief- 
Justice S. P. Chase, 45. 

Decay of monetary conceptions, 3, 61. 

Decomposition andrenascence of classical 
terms, 4. 

Deposits, bank. See Bank-deposits. 

Deposit notes, 17, 26. 

Discovery of America, influence of, 6. 

Disintegration and resuscitation of mone- 
tary conceptions, 2 to 6. 

Distinctive moneys for distinct nations, 
47. 

Dollar, gold, weight and fineness of, 55. 

Dollar, silver, 21, 22 ; weight and fine- 
ness of, 55. 

Dollars, numerous varieties of, in the 
United States, 29. 

England. See United Kingdom. 

England, Bank of. See Bank of Eng- 
land. 

England, rate of interest in, 99, 107. 

Enterprise, its commercial value re- 
duced, 92. 

Equity, as established by value, 68 ; 
as affected by money, 85. 

Europe, revival of mining in, vi. 

European civilisation, decay of, 3 ; re- 
vival of, 5. 

Evolution of words, 1, 60. 

Exchanges, analysis of, 102 ; their re- 
spective ratios of activity, 102; these 
determined by rates of profit, 1 03 ; 
hypothetical classification of, 104;, 
reduction of to one class, 104; rate 
of augmentation when reduced, 106 ; 
how determined, 107 ; relation of to 
money, 108. 

Exchequer notes, 17, 26. 

Feudal conception of money, 4, 6, 8. 
Feudal origin of existing monetary 

systems, 36, 82. 
Foresight, its commercial value reduced, 

92. 



INDEX. 



119 



France, its assignats and mandats coun- 
terfeited in England, 44 ; growth of 
capital in, 107 ; rate of interest in, 107. 

Free or gratuitous coinage laws, 22 to 
24. 

Function of money, the, is to measure 
value, 48. 

Funding notes, 17, 27. 

George, Henry, cited, 98. 

Greenback notes of the United States, 
20, 30, 31, 33, 43. 

Genesis, anachronism in English version 
of, 2. 

Gold. See Precious metals. 

Gold and silver, reduction of supplies, 
viii.; first permanently used for 
monetary symbols after Roman con- 
quest of Spain, 87 ; value of not due 
to cost of production, 53. See Pre- 
cious metals. 

Greece, ancient, monetary systems of, 31 . 

Hale, Sir Matthew, cited, 6. 
History of money, materials for, 13. 
Honesty, its commercial value reduced, 

92. 

Hume, David, cited, 80. 
Hydraulic or placer mining forbidden 

in California, viii. 

Illimitable money, illiterate suggestion 
of, 23. 

Inconvertible moneys, 17, 18,27. 

Individual notes as money, 17, 25. 

International comparisons of moneys, 
fallacious, 47. 

Interest, market rate of, to what due, 
95 ; ultimate cause of, the rate of the 
growth of plants and animals, 96 ; 
this cause also affects the growth of 
population, 97 ; hence the rate of 
interest and population are directly 
related, 97 ; analysis of a rate of, 99 ; 
present tendency of the rate to fall, 
100; usury laws at variance with 
nature, 101. 



Japan, inconvertible note system of, 89. 
Jews, usury and the, 97. 
Julius Paulus quoted on money, 49. 
Justinian, the 'Pandects' of, on money, 
49. 

Labor, as affected by money, 82, 83, 84. 
Land, this and money alone liable to be 

permanently "overproduced." 112; 

long leases of, contrary to spirit of 

American laws, 93 ; sales of, their 

frequency in the United States, 103 ; 

value of not due to cost of acquisition 

and improvement, 53. 
Land-notes, 17, 27, 34. 
Laurium, silver mines of, 87. 
Laws of modern nations, feudal origin 

of. 6. 

Leases. See Land. 
Limited moneys, 17, 31, 33, 35, 112, 

114, 115. 
Limited liability companies, baneful 

growth of, 92. 
Living moneys, 17, 18. 
Local circulation notes, 42. 
Lost arts, revival of the, 5. 

Mahomet, influence of, upon Europe, 5 

Measure of value, or money, present 
illimitability of, 53, 57. 

Measures, when precise, are always arti- 
ficial, 76 ; and numerical, 77 ; theii 
efficiency does not necessarily depend 
upon the material of which made, 78 5 
but upon their limits, 78 ; these limits 
fixed by human law, 78 ; essence of, 
is limitation, 78 ; this the meaning of 
nomos, 78 ; function of to number, 50; 
substantial immutability of, 51 ; such 
not the case with money as at present 
constituted, 53, 57. 

Mercantile system, influence upon mone- 
tary laws of the, 23, 24. 

Merchandise moneys, 17, 19. 

Mill, John Stuart, cited, 9, 80. 

Mining for the precious metals a losing 
industry, v. ; why kept up, v. ; revival 



120 



INDEX. 



of in Europe, vi. ; experience in, of 
ancient world, viii. 

Moneta. See Money. 

Money, origin of term, 2 ; original or 
classical meaning of, 8 ; Feudal mean- 
ing of, 8 ; renascent and modern 
meaning of, 8 ; different senses in 
which used, 2 ; the thing money far 
more ancient than the term, 1, 14 j 
money an institution of law, 12, 15 ; 
an equitable one, 85, 88 ; palpably it 
is a collective unit or thing, 10 ; the 
whole of which cannot be seen at 
once, 11 ; its function is to measure 
value, 48 ; compared with other mea- 
sures, 72 ; palpable characteristics of 
its fractions, 14 ; legal attributes of 
same, 15, 44 ; the laws of modern 
countries defective in dealing only 
with such fractions, 15 ; and not, as 
they should, with the whole or volume 
of money, 49 to 60 ; hence, they ex- 
pose such volume to alternate expan- 
sions and contractions, 52 ; from war, 
mining, commerce, intrigue, caprice, 
and neglect, 70; baneful consequences 
of such exposure, vii., 115, 116; ad- 
vantages of stable moneys, 116; ex- 
perience of the ancient world con- 
cerning, ix., 3. 

Montesquieu quoted, vii., 79. 

Music, decay and revival of the art 
of, 5. 

National-bank notes of the United States, 
17, 30. 

National or government notes, various 
classes of, 17, 26. 

Nations a law to themselves as to money, 
47. 

New World, deflowerment of the, 92. 

New Y ork Clearing-house, n unification of 
UnitedStates monetary laws by the,21. 

Nomisma, the ancient Greek term for 
money, 2. 

Nomos, the Greek word for law, num- 
bers, measure, limits, etc., 2. 



Non-signoried coins, 17, 20. 
Nullification of monetary laws, 20, 21. 
Numbers, abstract nature of, 50. 
Numerical moneys of Greece and Rome, 

61. 
Nummus, the Republican Roman term 

for money, 2. 

Oriental commerce, reopening of, 5. 

Origin of present value of precious 
metals, v. 

Over-production of land, money, and 
commodities, 112; fallacies concern- 
ing, 85. 

Overstone, Lord, cited, 80. 

' Pandects ' of Justinian, quoted, 49. 

Paper-money, era of, vi. ; great expan- 
sion of, vii. ; at present forms most of 
the measure of value, viii. ; has les- 
sened the perturbations of price, 93 ; 
defective statistics of, 42 ; derisively 
called "the money of revolutions," 
94. 

Peel, Sir Robert, his definition of a 
pound sterling incomplete, 8 ; his de- 
finition of money proves this, 44. 

Placer-mining forbidden in California, 
viii. 

Plate, great quantities of owned by 
Spanish grandees, v. 

Plate-ships, arrivals of, their influence 
on prices, 56. 

Poetry, decline and revival of, 5. 

Political economy, origin of present 
science of, 7. 

Potential money created by free coinage 
laws, 23. 

Population, causes which influence the 
growth of, 97. 

Precession of prices, the, 80 ; observa- 
tions establishing this natural law, 81. 

Prices, how effected by money, 82 to 
85; revulsions of in the United 
States, 91. 

Precious metals, value of not due to 
present cost, 53 ; but to original cir- 



INDEX. 



121 



cumstances of production, v. ; which 
were chiefly conquest and slavery, v. ; 
hence they are at present greatly un- 
dervalued, v., vii. ; such undervalua- 
tion maintained by paper money, vii; 
value of precious metals not stable, 
88, 90 ; fluctuations in value of, 89 ; 
supplies of diminishing, viii., 90 5 ebb 
and flow of no longer controlled by 
Bank of England, 89; notable effluxes 
of, 94. See Gold, and Silver. 

Trice, a triplex numerical relation, 79 ; 
it is value expressed in money, 79 ; 
it cannot be expressed in a single coin 
or note independent of other coins or 
notes, 79; but only in the total sum 
of money or its definite fractions, 79; 
it varies directly with the total num- 
bers of money, 80; this variation 
effected only in time, 80. 

Principles of money as hitherto deduced, 
35 ; whence properly deducible, ix. 

Production as affected by money, 84, 
85. 

Profit, the basis of interest, 95 ; general 
rate of differs slowly, 105 ; rate of 
in various trades differs slowly, 105. 

Quickeners of money, 44. 

Kegulated moneys, 17, 31, 33, 35, 112 ; 

absolutely fixed moneys, 114; moneys 

fixed relative to population, 114; 

moneys fixed relative to the rate of 

interest, 115. 

Renascent meaning of money, 7, 8. 
Repudiations by certain States of the 

American Union, 116. 
Reserves of coins or coinable bullion, 

41. 
Resumption Act, American, sustained 

by false statistics, 46. 
Revival of European civilisation, 5. 
Revolutions, political, of eighteenth 

century, vii. 
Revulsions of prices in the United 

States, 91. 



Rome, monetary systems of, 31, 32, 35 ; 
peculiar relations of debtor and credi- 
tor in, 92. 

Russia, inconvertible paper notes of, 
89. 

Science of money, as hitherto construc- 
ted, 35 ; its proper basis, ix. 

Signoried coins, 17, 22. 

Silver. See Precious Metals. 

Skill, its commercial value lowered, 92. 

Sovereign, gold, weight and fineness 
of, 8. 

Spain, exhaustion of its placer mines, 
6. 

Spanish America, closure of its mines 
in 1810, vii. 

Species, a feudal term for money, 5. 

Sphereodicity of the earth familiar to 
the Ancients, 4, 5. 

Stability of value, the, once possessed 
by the precious metals led to their 
choice for monetary symbols, 87 ; not 
a permanent relation of these metals, 
88. 

Stability of money, its desirability, 85 
to 87, 116. 

Standard measures, where preserved, 
51, 54. 

State-bank notes of America, 17, 25, 
34, 43 ; example of a worthless class 
of, 42 ; statistics of unreliable, 42. 

Statistics of money, 37 ; their defects, 
37 to 46 ; in the United States, 90. 

Statutes of Limitation, operation of the, 
93. 

Stock-jobbery, 92. 

Suspensions of " specie " payments in 
various countries, 89. 

Tooke's ' History of Prices' cited, 85. 

Treasury notes, 17, 26. 

Turkey, inconvertible note system of, 

89 ; rate of interest in, 99 ; growth of 

capital in, 107. 

Under-valuation of precious metals at 



122 



INDEX. 



close of last century, vi. ; maintained 
by existing paper issues, vi. 

Unlimited moneys, 17, 23. 

United Kingdom, growth of capital in, 
107 ; rate of interest in, 107 ; errone- 
ous statistics of commerce in, 39. 

United States, fluctuations in its volume 
of money, 28 ; heterogeneity of its 
money, 29 ; inconvertible notes of, 
89 ; its increasing power over the 
precious metals, 89 ; statistics of 
money in, 90 ; ignorance of its finance 
ministers, 100 ; rates of interest in, 
100, 107 ; growth of capital in, 105, 
107 5 unreliable character of its cen- 
sus returns, 106 ; suddert increase of 
money in, 108 ; probable operation 
of absolute and relatively limited 
moneys in, 114 ; monetary revulsions 
in, 116 repudiation by certain of its 
States, 116. 

United States Mint Bureau, its errone- 
ous statistics of moneys, 46. 

Unit of money, the, is all money, 1, 11, 
52, 57, 69. 

Unit of value, erroneously defined in 
the laws, 6 ; from which flows an 
actual multiplicity of, 55 ; hetero- 
geneity of, in the United States, 29? 
55 ; its aggregate nature, 56 : politi- 
cal significance of the term, 59 ; its 
true meaning, 59. See Money. 

Usury. Sec Interest. 

Utopia, notes of community of, 26. 

Value, its obscure and complex nature, 
60 ; it is not a thing, 60 ; the classi- 



cal root of the term was valeo, or 
numerical power, 61 ; evolution and 
decay of this conception, 61 ; revival 
of the term with a different concep- 
tion, that of an attribute, 61 ; this 
the view of the Economists, 61 ; fal- 
lacy of this conception, 62 ; its true 
meaning, that of a numerical power, 
ratio, or relation, rediscovered by 
Montesquieu, 63; elaborated by 
Bastiat, 63 ; it is a numerical ratio or 
power of exchange, 65 5 to be mea- 
sured most readily by means of 
money, 67 ; it depends upon many 
uncertain influences ; it is an ecpai- 
table relation, 68 ; it is extremely 
variable, 68 ; it is not connected with 
cost of production, 68 5 it can be ex- 
pressed with precision only in num- 
bers, 68 ; it is a fourfold numerical 
relation, 68 ; it can only be precisely 
measured by an artificial unit, 69 ; 
that unit is the whole sum of money, 
69 ; common error of substituting the 
term for " worth," 70 : for " price," 
71 ; error of using it as a noun sub- 
stantive, 71. 

Value of money under existing laws 
indeterminable, 53 5 not due to the 
material of moneys, 53 ; due to num- 
bers, 53. 

Volume of money, the, not specified in 
the laws, 15. 

Wild-cat American banks, example of, 
42. 




LIST OF MR. DEL MAR'S WRITINGS. 

I. Gold Money and Paper Money New York, A. D. F. Randolph, 
1862. Pamphlet. 

II. History and Principles of Taxation New York Social Science 
Review, 1865. 

III. Essays in Political Economy New York Social Science 
Review, 1866. 

IV. Statistics of the World Washington, Government Press, 1866. 
Pamphlet. 

V. What is Free Trade? New York; G. P. Putnam and Son, 
1867. 12mo. 150 pp. 

VI. Decadence of American Shipbuilding Washington, Govern- 
ment Press, 1 867. Pamphlet. 

VII. The Whiskey Tax for 100 Years Published by Congressional 
Sub-Committee on Retrenchment, 1868. 

VIII. Monthly Statistical Reports on the Commerce, Navigation, 
Trade, Resources, &c., of the Various Countries of the World, from 
November, 1866, to January, 1869. Washington, Government Press. 
26 vols. Quarto pamphlets. 

IX. Annual Reports on the Commerce and Navigation of the 
United States of America, 1865, 1866, 1867, 1868. Washington, 
Government Press. 4 vols. 8vo. 700 to 800 pp. each. 

X. Operation of the Tariff" Laws Familiarly known as the Sup- 
pressed Report. Washington, Government Press, 1868 ; Reprint, 1879. 

XI. Letter on the Finances New York ; Douglass Taylor, 1868 
Pamphlet. 

XII. Seven Essays on the Treasury New York ; Citizen office. 
1869. Pamphlets. 

XIII. Finances of the United States Columbus, Ohio, Statesman 
office, 1870. Pamphlet. 

XIV. Life Insurance for Women New York ; Underwriter office, 1871. 

XV. History of the Rate of Interest New York ; Proceedings of 
the National Insurance Convention, 1872. Pamphlet. 

XVI. Progress of Life Insurance St. Petersburg^ ; Imperial 
Press, 1872. 

XVII. A Summer Tour in High Latitudes, or Travels in Scandi- 
navia, Finland, and Russia New York ; Appleton's Journal, 1873. 

XVIII. Recollections of the Civil Service New York ; Appleton's 
Journal, 1874. 

XIX. Agriculture of the World, by Countries Chicago Times and 
Inter -Ocean, 1874. 

XX. Resources of Egypt Philadelphia ; McCalla and Staveley, 

1874. Pamphlet. 

XXI. Resources of Spain Philadelphia ; McCalla and Staveley, 

1875. Pamphlet. 

XXII. Agriculture of Prussia New York ; Wm. Barnes and Co., 
1875. Pamphlet. 



XXIII. Productive Forces of Bavaria New York; Wm. Barnes 
and Co., 1875. Pamphlet. 

XXIV. Famishing Portugal Philadelphia ; Lippincotfs Magazine, 
1876. Pamphlet. 

XXV. Production of Silver in the United States Washington, 
Government Press, 1876. 

XXVI. First List of all the Merchant Vessels of the United 
States of America, with name, rig, tonnage, hailing port, and signal 
number of each one. Washington, Government Press, 1866 8vo., 300 pp. 

XXVII Report on the Mines of the Comstock Lode Washington, 
Government Press, 1876. 

XXVIII. Essays on the World's Production of Gold and Silver ; 
Relative Value of Gold and Silver; Population and Money ; Demoneti- 
zation of Silver in Germany ; The French War Indemnity ; Movement 
of Silver to India ; Metallic Standard of Money in the United States ; 
Coinage of the United States; Metallic Standard of Money in the United 
Kingdom ; Monetary System of Austria- Hungary, and Monetary System 
of China Printed in the Report of the U. S. Monetary Commission ; 
Washington; Government Press, 1877. 

XXIX. Real History of the Big Bonanza Mines San Francisco ; 
Argonaut print, 1878. 

XXX. Bill to Regulate Mining Companies Argument in California 
Senate Committee Sacramento, 1878. Pamphlet. 

XXXI. Insanity and Crime in Mining Countries San Francisco ; 
Mining and Scientific Press, 1878. 

XXXII. Usury and the Jews San Francisco ; I. N. Choynski, 

1879. Pamphlet. 

XXXIII. Theory of Value San Francisco ; Mining and Scientific 
Press, 1879. 

XXXIV. The Principles of Insurance Argument in California 
Senate Committee on Corporations San Francisco ; Bosqui and Co., 

1880. Pamphlet. 

XXXV. History of Money in China San Francisco ; J. R. Brodie 
and Co.. 1880. Pamphlet. 

XXXVI. History of the Precious Metals from the Earliest 
Times to the Present. London ; Geo. Bell and Sons, 1880. 8vo., 373 pp. 

XXXVII. Impeachment of the Treasury New York Sun, October, 
1880. 

XXXVIII. The Gold Drain and Impending Panic New York 
Sun, March 15th, 1884. 

XXXIX. Rape of the Earth or Travels and Researches in the 
principal Mining Districts of North and South America, Europe, and 
Africa. In Press. 

XL. Essay on Corporations San Francisco ; Printed by the 
Mechanics' Institute, 1884. Pamphlet. 

XLI. History of Money in Ancient Countries from the Earliest 
Times to the Present. London ; Geo. Bell and Sons, 1885. 8vo., 400 pp. 

XLII. The Science of Money. London ; Geo. Bell and Sons. 8vo., 
124 pp. 

XLIII. The Politics of Mov y. In Press. 



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