number which the public will always retain without sending in for payment, even if convertible, is precisely what the advocates of such notes do not desire or practise. The temptation to obtain supplies of goods is irresistible to governments who once take their stand on the slippery ground of promises which need not be paid. The theorists too of all kinds who preach up "soft money"-who think that there cannot be too much money-that money gives the means of buying, and so is good for trade-and that when prices are low, and goods even unsaleable, the fault lies with there being too little money, and that a fresh supply will set everything right-such persons have for their very object indefinite issues of inconvertible paper.

In considering such notes, therefore, we proceed on the supposition that they are sure to be issued in excess, and that that excess is always susceptible of increase.

Such a note is a bad tool. It does its work badly and that bad work is attended with most mischievous and loss-inflicting results for a country. It is not merely that it is inefficient, that it resembles an old-fashioned machine, which produces smaller effects than one of an improved shape. The inconvertible note's work is evil work; it distinctly produces harm.

That harm is the consequence of the badness of the guarantee it furnishes to the man who is obliged by the law of legal tender to accept it for payment and to give a guarantee is the one sole function of currency.

The guarantee is bad because it is exposed to incessant change of value. All nations require different amounts of currency for use at different times. In England, more sovereigns and notes are needed in summer than

in winter. When winter comes, the sovereigns and notes in excess flow back into store, and there is no alteration of value for those which remain out. But inconvertible notes cannot relieve themselves in this manner. They must stay out in circulation; they must be in excess at such seasons, and down sinks their value, and the worth of the guarantee they give. But much more yet; the issues cannot be prevented from causing them to be always in excess, and which is yet worse, increasing excess, whether actually or prospectively.

And now for the consequences. The law of supply and demand asserts itself here, as everywhere else, in Political Economy. Too great a supply means fall of value. People find that they have more notes than they want. To get rid of them, they make a sacrifice of value; they consent to reckon them for less than their nominal worth when making purchases of commodities.

But what does such a depreciation mean? That every creditor is injured who is compelled to take them at par, and every debtor unjustly benefited at the creditor's expense. The prices of goods in every shop are raised to meet the defective value of the notes. The shopkeeper is charged twenty-seven shillings in notes for what he would procure for a guinea in metal. Thus the creditor who had a debt estimated in guineas and received a one pound note and a shilling was nothing less than plundered. The magnitude of this injustice and wrong may be conceived if one thinks of what the holders

ols and other public securities would suffer if the eceived as interest stood in the same proportion sovereign as the note to the twenty-seven

shillings guinea. Their buying income would be reduced by nearly a-third. And what temptation is thus created for governments to pay off their national debts with heavy discounts, and all on the plea of legality and the use of an enlightened currency. Thus, the one single function which currency was invented to discharge is radically corrupted. Instead of effecting the exchange of equal goods in two purchases by the intervention of money, the bad note exchanges goods in unequal quantities; the seller, when he buys in turn, gets less than the worth of the goods he sold.

But the evil does not stop here. The undulations of the disastrous fall of the stone in the water spread in ever-widening circles. Gambling is introduced into every act of trade-an element most hostile to the nature of true trade and full of ruinous consequences. The shopkeeper who sells in January to be paid at Christmas does not know what will be the value of the note which he will receive then; he protects himself by adding an increased figure to his prices by way of insurance, and by this process a heavy tax is imposed on consumers, that is, on the whole community. So also on the foreign merchant. He imports goods into a country to be paid in bills-but what will be the worth of those bills in metallic money, which is always the only international money, when the bills become due? Again the dealer protects himself by adding an item of currency insurance to his cost of production—and that cost of production all his customers, if the trade is continuous, must pay.

And all this disorder, this taxation on all buyers, this most unjust and cruel wrong and loss inflicted on

all creditors, this tainting of all trading with gambling by the use of a tool which refuses to do the one work it was invented for performing, what assignable motive can it have?

One motive it has in almost every case—what Mr M'Culloch calls "the enrichment of one part of society at the expense of another." We cannot do better than listen to his description of the process adopted to effect this object. "Directly to alter the terms of contracts between individuals would be too barefaced and tyrannical an interference with the rights of modesty to be tolerated. Those, therefore, who endeavour to enrich one part of society at the expense of another find it necessary to act with caution and reserve. Instead of changing the stipulations in contracts, they have resorted to the ingenious device of changing the standard by which these stipulations are adjusted. They have not said, in so many words, that 10 or 20 per cent. should be added to or deducted from the debts and obligations of society, but they have, nevertheless, effected this by making a proportional change in the value of money." *

One plea most commonly urged in defence of inconvertible bank-notes appeals to necessity, the political distress of the hour. The State is in sore want of means, and the limit of taxation has been reached; what else can a Government do at such a time but provide what is indispensable for the safety of the nation, but pay with promises to be made good at some future day? With these inconvertible notes it pays no interest on what it borrows; by an increase of the ordinary

* "Metallic and Paper Money and Banks,” J. M‘Culloch.

National Debt an increased taxation would have been unavoidable. This may be so; at a moment of danger such a proceeding may admit of some excuse. But it should never be forgotten that the harm inflicted by such a currency goes on uninterruptedly year after year; it never stops; it is always working fresh injury. It goes on persecuting society at every turn. It poisons every sale as time rolls on, every exchange. Overwhelming necessity may extenuate the imposition of so easy but so vicious a tax. But the pressure once over not a day should be lost by any Legislature which has any knowledge of the nature and working of money, to arrest the plague and sweep away the inconvertible paper, which it felt forced to have recourse to in the hour of danger.