The proposition of Mr. N. H. C, is a violation of the principle on which rests a system of money of paper, that is to say, Mr. N. H. C. thinks it necessary to give a guaranty to these State notes which we call money of paper, while, according to our theory, this money is a value which, like all other values, exists in and by itself, and is subject to the general law of values, that of demand and supply; that is to say, the quantity in circulation, and the aggregate of wants which money is designed to supply. To require for monetary value any other guaranty than that proceeding from demand and supply, is to return to the old notion that money has no other value than that of the material of which it is made, or that of the things which furnish a guaranty for it; it is to declare the system of money of paper, absurd and chimerical.

To demonstrate the position that the value of money is a value sui generis, independent of the value of the material of which it is made, or the guaranties by which it is secured; in other words, to demonstrate that the system of money of paper which rests upon the doctrine, is positive, rational, practicable, we should have to reproduce the arguments and developments contained in the work above referred to. But, as it is impossible to do this, we must refer the reader to a criticism from the Revue Britannique published in the December number of Hunt's Merchants' Magazine, where our views and doctrines with regard to the subject of money are clearly and succinctly set forth.

There is moreover a further objection to the system of Mr. N. H. C.

One of the principal advantages to be derived from a good monetary system is the greatest possible freedom from fluctuation in the value of the unit of money. Now, to bring about this result, it is necessary to keep in circulation as much money as the wants of the community require; that is to say, not to increase the supply, the demand remaining the same. Now, in Mr. N. H. C.'s system, the aggregate of money increases in proportion as capitalists procure new loans, while the want of money—that is to say, the demand, remains the same.

The expression, want of money, which we have employed, does not mean the wants of those who have acquisitions to make and plans and agreements to carry out. These wants are immeasurable, like the desires of men; it is not these wants which money is designed to satisfy; what supplies these wants is those things of which a use can be made, corn, cotton, iron, or anything of that kind; money serves only as a medium, a vehicle to bring these things within the reach of those who want them and who have other things to give in exchange.

By the want of money, in this discussion of the best monetary system, must be understood, the want of a medium of exchange of values, one for another; but of real values, of values already created, already in existence at the time of the exchange. Now the notes which the State gives to the capitalist who asks for them, are not in the power of the State to give in consequence of a previous exchange of values, but they are a new emission, and an abuse of money which increases by so much the mass in circulation; an increase which becomes very considerable in proportion as new emissions take place, and which, in consequence, diminishes the value of the money of the country, by taking from it that freedom from fluctuation which it is so necessary to maintain in the value of money.

It will be seen from the statements just made, that it is not in the power of the State, or of any one else, to create new money values. It may create new units of money, by increasing the number, but the total value of these

units is not increased, since the value of the unit diminishes, in proportion to the increase of the number. This is what resulted from the arrivals of gold from California. The gold regions of that country increase the aggregate mass of gold in existence, and the number of pieces coined from the metal, but they do not increase the sum total of their value. In fact gold coin is already depreciated, although but slightly, as compared with silver coin, which has not undergone any increase of value. To enable the reader, however, to perceive the full force of these rather abstract principles, we must refer him to the article in the Revue Britannique, where their truth is amply demonstrated. It is from not comprehending their true import that reformers like Prudhomme and others, have been led to conceive the possibility of banks of the people, from which any one might borrow as much capital as he needed. These Utopians imagine that by issuing paper which they call money they are creating money, as if capital was anything else than those things which have the property of satisfying our wants, and not bits of paper, which, by improperly making them take the place of money, serve only to depress the value of real money.

Mr. G. Bacon, whose essay is full of judicious observations, and evinces an inquiring spirit, has also fallen into the error of supposing that it is necessary to redeem paper money in order to maintain its value; only in place of redemption in specie of gold and silver, he would have it redeemed by State stocks. We grant that there is a luminous idea involved in this plan, the end proposed to be attained by this mode of redemption, according to Mr. Bacon, being to fix the rate of interest on capital in accordance with, or at least to make it oscillate in harmony with, the rate of interest allowed on State stocks; but we do not think Mr. Bacon's system reaches the object proposed.

Mr. Bacon, it would seem, thinks that the rate of interest on capital is regulated by the amount of money in the country. And he thinks that the Larger the supply of money, the lower the rate of interest, and vice versa.

This opinion rests on the idea that coin and capital are one and the same thing.

Now, capital is not money, but it is that thing which the owner abstains from using himself, and lends to a third person in consideration of return, which, by common consent, is termed interest. Money, by means of which the loans take place, is not itself (as we have above shown) the thing loaned; it is simply the vehicle by which the thing loaned is transferred from the lender to the borrower.

Thus it is not the abundance or the scarcity of money, that is, of the medium of loans, which governs the rate of interest, but the abundance or scarcity of things held in reserve for loaning. We say in conversation, it is true, money is scarce, money is plenty, to account for the rise or fall of the rate of interest; but this language, which is in such general use, is but one of the thousand improper modes of expression which mislead the judgment by conveying false ideas of the true nature of things.

But we may be asked, whence arise fluctuations in the rate of interest on capital, since the quantity in existence is nearly the same before as after a movement of this kind?

We might ask the same question with regard to money. When a panic takes place there is neither more nor less money than there was just before. It is because the rate of interest is regulated not by the quantity of capital in existence, but by the quantity offered. If any cause whatever produces

alarm in the minds of capitalists, they not only cease lending, but rigidly insist upon the return of what they have already put out; interest then rises immediately, the supply of capital having fallen off. If, on the contrary, agriculture, manufactures and commerce, the three great sources of national wealth, are in a state of prosperity, and make good returns to those engaged in them, confidence is restored, all the capital available is brought into market, and the rate of interest falls, the supply having increased.

Thus we think Mr. Bacon's plan for regulating perinanently the rate of money, by offering at all times to capitalists State stocks in exchange for their money, or, on the other hand, refunding their money on the return of the stocks received, does not effect its object.

But we have another objection to point out. By this system the State is burdened without necessity, without any advantage to the country, with the interest on all sums paid into the National Treasury in return for stocks. This would be to loan money without object, without making any use of the money borrowed, and yet to contract the obligation to meet the interest on it; in other words, it is compelling the State to pay interest on its own money. And the interest, we may remark, would amount to a more considerable sum than is supposed.

The aggregate of money serving as a medium of exchange is very considerable, and a large portion of it would go into the national treasury in exchange for stocks which would be used in performing the function of money, and serve as a medium of pecuniary transactions, at least of those of a certain degree of importance. Every one would willingly receive as many stocks bearing interest, and redeemable with certainty, at any moment. At present, Government stocks cannot be used as a medium of exchange because they are not redeemable at will, and because their value is exposed to all the fluctuations of the market. We may hence judge of the enormous sacrifice the State would have to make in order to have the pleasure of keeping on hand, and idle in its vaults, enormous amounts of its own money.

Mr. Bacon was led to propose the system of currency which we have analyzed, by the discussion of the question of the measure of value. We regret that on this subject also we must differ from the distinguished writer. In our opinion the attempt to ascertain a constant measure of value is not only idle, but cannot possibly lead to any result.

Mr. Bacon, with his usual clearness and accuracy of judgment, sees that the value of things is simply the relation between the quantity given and the quantity received. Value, then, is not a concrete quantity that can be measured, but it is an abstraction. It is the capacity of things to be exchanged for other things.

Almost all the schools of economy have confounded value with wealth, and this confusion has often led away from the right path those who have given their attention to economical questions.

True wealth is the possession of things adapted to the satisfying of our wants. If all those things which have this adaptation were given us in such abundance that they might be used without exhausting the supply, as is the case with air, light, electricity, we should be immensely rich, and yet we should not possess one cent of value.

Some economists are of the opinion that the value of things is the sum total of the sacrifices, or, in other words, of the cost incurred in procuring them. This is again a mistake. Value, we must repeat, is nothing but the relation between the quantity of things given and of things received. Now

as this relation is established by the demand and supply, it may happen, and often does happen, that things are given without the equivalent of the sacrifices they have cost being received in return.

According to these views, since value is not wealth, being only the relation between two variable quantities, it cannot serve as an invariable mea sure of values. However, for daily transactions, money, although subject itself to the variations of the market, may serve as a measure at the moment of exchange. If one hundred yards of cloth, as well as a quarter of wheat, may be exchanged for five dollars, the conclusion is, that the value of these two commodities is the same. Any other article of merchandise might serve as a measure at the instant of the transaction, and if the preference is given to money, it is because all exchanges are made by means of it. But neither money nor any other value can serve as a constant measure of values, since it changes itself. An ounce of gold, before the discovery of the mines of Potosi, had not the same value then, that it has now; and if the mines of California, of Australia, and of the Ural mountains increase to a considerable extent the existing mass of gold, the value of gold must necessarily undergo a change.

A money of paper, not that issued on Mr. Bacon's plan, nor that furnished on the application of the owners of capital, according to Mr. N. H. C.'s system, is the only value subject to fewer variations than any other. But it would vary none the less according to the progress of the wealth of the country, which, making more money necessary, and increasing the demand, as business became heavier and more important, would necessarily lead to a rise in its value. Moreover, this progress being from its nature slow, the variation would be almost insensible, and the State might even prevent it by providing for new emissions, in proportion as wealth increased or the demand for more money made itself felt.

In conclusion, then, we rejoice to see the doctrine of a money of paper making its way among enlightened American minds, and we believe the day is not far distant, when it will become more general, and, by securing the sanction of the federal legislature, will become the law of the country. And it will be reserved for young America to set the example of a social improvement so important, which Europe in its dotage, and the slave of ancient prejudices, obstinately rejects without deigning even to examine its merits.

Note-We had written thus far when a friend sent us a work entitled "Treatise of Political Economy," by George Opdyke, published in 1851, by G. P. Putnam, at New York.

We have hastily read, not the whole of the work, which we propose to examine more attentively hereafter, but only the 5th chapter, on the subject of money.

Everything in this portion of the Treatise is written with evident convict'on, order and clearness. The principles on which the, theory of money rests are established and developed, with the conclusiveness of axioms, and the consequences logically deduced from them are as evident as the principles themselves.

We are happy to find a perfect coincidence of the ideas of the author with those published by ourselves in 1839, (see the criticism from the Revue Britannique, cited above, and published in the December number of the Merchants' Magazine). This coincidence is the more flattering as we are sure from the course of reasoning pursued by Mr. Opdyke, that he knows noth

ing of our own labors, for he would otherwise have certainly mentioned them.

Mr. J. Opdyke boldly proposes the emission of a money of paper, which he calls "inconvertible paper-money." But there is a slight difference between his plan and our own. His aim is principally to do away bank paper, which he calls convertible paper money: and he allows coin to circulate concurrently with his inconvertible paper money. Mr. Opdyke thinks it necessary to retain the metallic currency, in order to liquidate the debts of the country to foreign nations. These are his words: "My proposition is merely designed to transform that portion of our circulating medium which consists of convertible paper into inconvertible, or rather to expel the one and fill its place with the other, leaving the coin portion undisturbed. We should thus blend the service of two portions and secure the utility of both inventions. The paper would circulate at home, coin partly at home, and partly in the channels of foreign Commerce."

On the contrary, we cannot admit any auxiliaries in our system of a money of paper; to it exclusively and absolutely should belong the office of effecting exchanges. Our monetary reform is as absolute as the principle on which it is founded; and as to the payment of foreign debts, it is not indispensable that they be paid in coin; the precious metals uncoined are sufficient for the purpose. It is in this way that foreign debts are paid at present, when the legal currency is exclusively metallic. It is not the money value which the foreign creditor receives in payment, but the value of the metal contained in the national coin. In fact, the par of exchange is established solely by the weight of the precious metals contained in the coin, not by their denomination.

To prevent a rise in the value of money and to keep it at the same level, (a rise which must necessarily result from the increase in the wealth of the country,) Mr. Opdyke proposes new emissions of money of paper according to the growth not of wealth but of population, in the belief that the growth of population furnishes a correct basis for the computation of the growth of wealth. And his opinion is that the relation between the number of monetary units, that is, of dollars, and the number of the inhabitants of the country was 10 to 1.

We have no reason to doubt the correctness of this hypothesis so far as regards the wealth and population of the United States; but we doubt its accuracy with regard to other countries in general. The want or demand for money is in proportion to the pecuniary transactions which daily occur, and these transactions depend upon the agricultural, industrial and commercial movement of a country-that is to say, upon its wealth. Now the wealth of different States is far from being in the same proportion to their respective populations. What a difference, for instance, exists with regard to this relative proportion between the United States and Ireland, between England and Italy, between France and Spain !

Thus Mr. Opedyke's plan for preventing the rise of value of money may suffice for the fortunate American Federal Union, but not in a general way for all the nations of the globe, in a large portion of which the population is poor, idle, and without occupation.

A government has various ways, we think, of determining the right moment for increasing the circulation of a money of paper. It must necessarily take into consideration the increase of population which is usually a