CURRENCY means originally the capacity of being current, or, as Johnson defines it, "the power of passing from hand to hand." It is applied in practice to the thing that is so current, and generally to whatever, by being current among any nation or class of persons, serves as the money with which they buy commodities or pay their debts. It is necessary to be content with a practical explanation, without venturing on a scientific definition of the term, because, among the many disputed points in political economy, there is none productive of more exciting controversy than the proper regu lation ,of the C.; and as the advocate of each theory is apt to define, the term in the manner best suited to serve his own ultimate conclusions, his adversaries generally deny that his definition is sound. Whether correctly or not, it is applied in practice to every thing that is received for payment. It differs from the word money, in its general acceptation, in as far as it expresses only that which passes as money at some time or place referred to. The leading question among political economists regarding C. is, how far it should be restrained. The most effectual method of restraining it is by confining it to the precious metals. If it were law that none but a gold C. should be used in any country, and if, at the same time, there were no effort to tamper with this gold C.. and give it an artificial value, the C. of that country would keep its value all the world over, because it has been paid for in commodities, and will be sold again whenever it is in excess of the needs of those who use it. But for this very reason it is a very expensive C., and therefore, ever since man's ingenuity was turned to trade, methods have been devised for superseding gold or the other precious metals by something cheaper. Unless, however, law or custom intervenes to give it efficiency, this cheaper material will only be worth its own intrinsic value. A. five-pound bank of England note is worth so little in its intrinsic value as a picture upon thin paper, that such a value can hardly be expressed. It derives its power as C. from the obligation it fixes on a great rich cor poration to make good its professed amount to the holder. We thus pass from a purely bullion C. to the next step of restraint, which is generally called a mixed currency. Here some maintain that no note should be issued unless the banker or other person issuing it has in his possession as much bullion as will pay it. Others say it is sufficient that he is bound to pay its amount in bullion ou demand without his actually possessing the bullion throughout the whole period of the C. of the note. A third party, again, are for a C. entirely free of a metallic basis; they hold that naturally paper-money, passing from hand to hand, will represent transactions, and will therefore come in the end to be made good in some shape or other; and they further hold, that if some losses should thus occur, these will be more than compensated by the rapid increase of trade and enterprise, caused by a free trade in C., as it is termed—that is to say, by every
man issuing his own notes or promises to pay to whoever will take them. This last and extreme class of "currency doctors," as they have been termed, have lately been losing influence, and disappearing from the contest. Through a succession of practical measures, reached with considerable caution, the English have come to a mixed C., resting on a compromise between the two classes of mixed C. above referred to. In the theory of the measures brought to completion under sir Robert Peel in 1S44, it is admitted that, to a certain extent, a 0. can be based on transactions and the property of those concerned in them, but that a limit must be drawn, to prevent the power of creating such a C. from running to excess, by the issue of notes which cannot be immediately made good by those who issue them. Accordingly, the several banks in existence were allowed to continue their note circulation, but they were permitted to increase it only on the condition of having bullion in their coffers to pay the additional notes issued by them. A C. which is not bullion, and is not worth its nominal value in bullion, is called a "depreciated currency." Before the resumption of cash payments, the notes of the bank of England had sunk to be worth but 16s. in the pound, as compared with gold. A depreciated C. may be created by a government calling notes or any other form of money a legal standard, and issuing a greater quantity of them than the real transactions of the country and the property passing from hand to hand require; or it may be created by private persons acting under laws by which the right of issuing a C. is not duly limited. This faculty which a C. has of being depreciated without being repudiated, is the real source of danger in all proposals for an unfettered C., or a free trade in the issue of money. If the bank-notes for which bullion cannot be immediately obtained were repudiated, there might be a natural check on over-issues; but it is their nature, on account of the difficulty of getting bullion for them, or the chance that it may never be got, that they pass at a discount or reduction of their value. Hence such a C. would be ever shifting; there would be no permanent standard, and the person incurring a debt before a depreciation which he pays afterwards would, in reality, be paying his creditor a dividend only. A depreciated C., however, is useful for small transactions. In the silver C. of this country, a pound is worth little more than four fifths of a sovereign. If a person due £100 could pay it in silver, he would get off with a dividend of from Hs. to 18s. in the pound; but by law, silver is not a legal tender for more than 40s. The copper C. is so far below its real value, that it has not been thought worth while to give it a permanent weight—the pence and half pence now issued are little more than half the weight of those of former mintages; but they are only used as a medium for small sums, and the royal stamp is sufficient to establish a reliance on them.