cnlation, for if it were, then commodities themselves would be money.
An ordinary case of barter would seem to offer a good illustration of the functions of all forms of credit as substitutes for money. Suppose a merchant, A, to have indigo to the value of 10001. to sell, and that he wishes to purchase cotton of the same value, which B is willing to give in exchange for the indigo. The transfer is made at once between them : the trans action is complete without the passing of a shilling, for the indigo performs the functions of money. But can the indigo on that account be reckoned as a part of the circulating medium ? Suppose again, that these merchants, at the time of the transfer, each drew a bill for 10001. upon the other at three months, which each accepted. These bills would represent the value of the indigo and of the cotton ; but no more money would pass between them until these bills became due, than if no part of their bargain had been com mitted to paper. When the bills became due, each would be indebted to the other to the same amount, and might write off one debt against the other ; or each might transfer a portion of his bank-deposits to the other. In the case first supposed, no money would pass, but one commodity would be taken as an equivalent for the other. In the second case the credit of each party would be accepted as an equi valent for the goods without the inter vention of a money payment: and this credit would afterwards be exchanged for another form of credit,—a bank-deposit. In neither case, as it would seem, does the transaction involve the use of any portion of the circulating medium, nor call any new description of currency into existence.
It is of the utmost importance to form a clear opinion as to the distinction be tween various forms of credit and the cir culating medium of a country; for if they be confounded one with another, all the established theories of currency are put to confusion. All hopes of regulating and controlling the circulation must be abandoned, for its variety and magnitude would be such as to defy the operations of the government, or of a bank, by means of paper issues, which would form only one insignificant portion of the aggregate currency ; and free trade in banking and free trade in the issue of notes must be recognised as the only reasonable principle for supplying com merce with a circulating medium.
We have now adverted to the main principles involved in the consideration of the character and functions of money. In treating of a subject which has been so fruitful of controversy, we have been obliged to touch lightly upon many points which to deep students of the " currency question" may seem to have deserved more consideration. To examine them
fully would add volumes to the many which have already been published upon that subject; and frequent allusions to the opinions of others, however deserving of attention, would five a controversial cha racter to an inquiry after truth. We have endeavoured to state, as concisely as we could, the opinions we have formed, to gether with the grounds upon which we have formed them ; and those who agree with us will think us right, while they who differ from us will pronounce us wrong. Upon currency questions unani mity is nowhere to be found ; but the more men seek after truth in preference to quarrelling with one another, the more certainly will truth be found at last.
(Harris, Essay on Money and Coins ; Locke, Considerations on Raising the Value of Monty ; Sir W. Petty, Political Anatomy of Ireland; Hume, Essay Money); Lord Liverpool, On Coins ; Adam Smith, Wealth of Nations, vol. iv. and Note by M'Culloch ; Ricardo, Principles of Political Economy, c. 27; Proposals fora Safe and Economical Cur rency, 1816 ; Jacob, Historical Enquiry into the Production and Consumption of the Precious Metals; 7heGeniini Letters, 8vo., 1844 ; Observations on the System of Metallic Currency in this Country, by W. Hampson Morrison ; Remarks on the Management of the Circulation in 1839, By Samuel Jones Loyd, 1840; Reply Thereto, by J. R. Smith, President of the Manchester Chamber of Commerce ; Ob servations on the Standard of Value, by W. Debonaire Haggard, 1840; Reections on the recent Pressure of the Money Mar ket, by D. Salomon, 1840; Answers to Questions ' What Constitutes Currency r tc., by H. C. Carey, 1840 ; Report of the Manchester Chamber of Conunerce, Dec. 12th, 1839 ; A Letter to Thomas Tooke, Esq., by Col. Torrens, 1840 ' • On the Causes e Pressure of the Money /let, by Gilbert, 1840; The Credit System in France, Great Britain, and the United States, by H. R. Carey, 1838 ; Remarks on the Fardiency of Restricting the Issue of Promissory Notes to a Singh; Issuing Body, by Sir W. Clay, Bart., M.P., 1844; A Theatise on Currency and Bank ing. by C. Baguet, 1839 ; Bullion Report of 1810; -Reports of Lords and Commons, 1819 ; On the Resumption of Cash Pay ments ; Reports on the Circulation V Notes under 51. in Scotland and Irdan4 ; Bank Charter Report, 1832; Reports on Agricultural Distress, 1833 and 1836 ; Reports on Banks of Issue, 1840 and 1841 ; Debates on the Resump tion V Cash Payments, 1819; and on the Bank Charter Renewal Bills, 1832 and 1844; Tooke, History of Prices.)