CO
iCO
CO
THE HONOUR OF
Accqitanci' and Examination of this Volume, on the
Nature and Use of Money, is most respectfully solicited by
THE AUTHOR.
Kbi.xbrui.il, 11, 1> VKKI.KI ru-Kow, ALUUST 1, 1848.
MONEY.
KlUMtURGII: T COXSTA1U.K. 1MCIXTKK To HER MAJHSTY.
LECTURES
NATURE AND USE OF MONEY.
I'KUVKKKD BEFORE TIIK MKMISKKS OF THE "EDINBURGH
l'HIL(>Sil>HICAL INSTITUTION" DURING THE MONTHS
<tF FEBRUARY AND MARCH, 1848.
BY JOHN GRAY.
' <n <>r riiK *..( IM. <\.H:M, A TRKATisr r>\ TIIK PRIN-C-III \>or"
MOTTO. rilXllrLR. OBJECT, XO UOLt TIOX :
" riit.| (TloX RATI'kALLT Til* ( Al >It t PKMAilP *HALL Bit (U) flACTICAltt."
BDINBURGB
ADAM AND CHARLES BLACK
BOOK8KLLERA TO THE QCEBM.
LONDON: LnXOMAN, BROWN, QRKEN, AND LONGMAVB
w
TO TIII: i' mi. ic PRESS.
THK simultaneous nppearam-e of this work in even' part
of Groat Britain and In-hind, and in the French metropolis,
t-H'e.-ted I'V the unusual, if not altogether unprecedented,
means of gratuitous distribution, to the extent of twelve
hundred copies, may very possibly be so far calculated to
enlist tin- favour of the public press as to create a dispo-
sition to tn-at the work itself with more than common
leniency. Or, as a Premium of one hundred guineas is
offered to whomsoever may be able to refute its contents,
the Editors of Reviews, Newspapers, and other Periodicals,
who have no intention of competing for the prize thetn-
s may possibly consider it unfair, by means of severe
criticism, to put arguments against the work into the hands
of other people, by whom they may be employed, to the
disadvantage of its author.
Now, the answer to both these suppositions is the
same: Truth, not Party nor the advocacy of any par-
ticular set of opinions, whether they be right or wrong
is the object of the present writer; and believing
(as who does not ?) his own opinions to be correct and if
correct, their importance will certainly not be disputed
he has adopted the most effectual means in his power
<>f testing their accuracy, by placing them at once in
the hands of the entire public press of the three king-
doms. His object, therefore, it is obvious, would be alto-
gether frustrated by the extension of undue leniency to
his writings. The subject of his pen is one which he
has long and deeply studied, and if he be right, the
Government of this country ought immediately to make
themselves acquainted with his principles, and to act upon
them; whiUt if he be wrong, it will be nothing short of
a mere act of charity to himself, on the part of any public
writer ! exliil.it the f:ll ;1 .-v of hi-
viii ADVERTISEMENT.
Let not, therefore, any disposition to annihilate his
arguments be for one instant affected either by the fore-
going considerations, or by any other.
But there is a different view of this subject : If, as is
herein most positively affirmed, the people of this country
are at present actually taxed to the amount of One Hun-
dred Millions a-year for the support of nobody, and for no
earthly purpose whatsoever, unless it be to afford them the
mere pleasure of paying Can that Reviewer, Journalist,
or other public writer be truly said to perform his duty
to his readers, who shall fail to bring this subject before
them, and that not once or twice merely, but again and
again, until its importance shall be universally recognised
and acted on ? Surely not !
And again, if the Reviewer should see that the author
is right should see that a long undiscovered truth has at
length been dragged from its hiding-place, deposited in the
noon-day sun, and exhibited to the eyes of all who may be
willing to look upon it, Let him, in that case remember,
that in the hands of every Member of the House of Com-
mons, this Work will have been already placed, ere he
himself can have perused it. Under which circumstances,
the author would suggest, that, the Editor of every paper,
who may either subscribe to his opinions, or merely go the
length of admitting the importance of inquiring into their
validity, should endeavour to impress the same on the
Representative or Representatives of his own locality; a^
well as on the minds of his readers generally.
Ireland unfortunately, is the one absorbing theme just
now. Remedial measures, however, or what will be con-
sidered such, will ere long be applied to the ills of Ire-
land ; but unless a right Banking System be amongst their
number, Prosperity to that unhappy country will most
assuredly form no part of their result.
It is very earnestly requested, that a copy of every Public
Notice of this Work may be transmitted to the Author.
EDINBURGH, 11, INVERLBITH-ROW, AC-OUST 1,1848.
PREFACE.
i why any Preface at all? Custom! ^
truly, that is the reply: a book without a Pn-faee
would not be according to rule, and, therefore, no
proper book. Oh Custom ! tyrant thou art, and thy
slaves! how many"? Tell me the number of full-
grown men and women on this little earth, and I
will tell thee the number of thy slaves. All, all !
exception there is not a solitary one.
Hut the title-sheet of sixteen pages must be occu-
pied in some way ! Well, then, in the first place,
there is the blank leaf at the beginning, counting
pages two ; then the half-title, consisting of the
one word " Money," with the imprint at the bark of
it./"//-; in -\t t lie full title-page, with nothing behind
it a very common occurrence in this book-making
world, six; to be followed by a two page advert i-r-
ment, apology, or petition of some kind. '/<//// ; then
the " Contents," immediately preceding Lectmv the
tii-t. will take two pages more. ////; so that the Pre-
face must positively extend to no less than six pages !
Hut how will it In- possible to fill them ! Write thou
the Preface for the author, oh Custom ! for he hath
already said all that he desiivth to say within the
I itself, and rareth not just now to ,-idd another
nee.
X PREFACE.
But the title-sheet must be filled ; the law of book-
making must be obeyed. Well, then, what have we
here t Thomas Carlyle, " Past and Present." What,
no Preface ! A precedent, verily a precedent ! But
we must not copy Thomas Carlyle, who writes like
no man else. Peculiar in thought and style, in the
construction of sentences, and in the manufacture
and use of words and even points ! An original
truly, but not for imitation.
Besides, he understandeth not his own thoughts,
and herein we differ I do. He says : " Oh if the
accursed invisible nightmare that is crushing out the
life of us and ours would take a shape ; approach us
like the Hyrcanian tiger, the Behemoth of Chaos,
the Archfiend himself, in any shape that we could
see and fasten on ! A man can have himself shot
with cheerfulness ; but it needs first that he see
clearly for what."'"" Thoughts akin to these al-
though in very different phraseology were wont to
invade my mind ere I was fifteen years of age ; a
few more months, if I shall see them, will call me
fifty, and as compared with many a luxurious slug-
gard of equal years, I have lived a hundred, and
now affirm that mystery or " invisible nightmare,"
there is none. The fact that " England
full of wealth, of multifarious produce, supply for
human want in every kind ; yet dying of
inanition : with unabated bounty the land of Eng-
land, * * waving with yellow harvests ; thick-
studded with workshops, industrial implements, with
* Past and Present, second edition, p. 20.
I'KI. I \> I.. M
ii millions of \\..rker>. un.li-r-t I to be the
strongest, tin- cunnin<xest, ami the willin^est our
Karth r\vr had." with hunger, nakedness, and misery
I'm- their reward is just as great a mystery, ami a
TV no greater than the fact that one and one
make t nig that we have provided for this
state of things ; framed laws, enacted, and most
religiously obeyed them if not with the express
inn of insuring these results, still in such mode
as to defy all chance of failing to insure them, have
\\e framed our la\\-.
Again, " Behold us here, so many thousands, mil-
lions, and increasing at the rate of fifty every hour.
We are right willing and able to work ; and on the
planet Karth, is plenty of work and wages for a mil-
lion times as many. We ask, If you mean to lead us
t >wanls work, to try to lead us by ways new, never yet
heard of till this new unheard of time ? Or if you
Krlare that you cannot lead us, and expect that \\r
are to remain quietly unled, and in a composed man-
ner perish of starvation ? What is it you expect of
ns1 What is it you mean to do with us^f This
tion, I say, has been put in the hearing of all
I Britain, and will be again put, and ever again, till
some answer be given it.
* Past and Present, second edition, \>. 1.
t The sentiments I have expressed in one of my Lectures, (see
: o I., pages 26 and 27,) so nearly resemble these, that I might
very fairly be suspected of plagiarism. I think it right, therefore, to
state, that I never road one line of " Past and Present," until after
these Lectures were written, and in part delivered, when my attention
was called to Mr. Carlyle's work, now quoted, by one of the audience.
Xll PREFACE.
" Unhappy workers, unhappy idlers, unhappy men
and women of this actual England! We are yet
very far from an answer, and there will be no
existence for us without finding one."'
A mistake ! This is the answer, this the explana-
tion, than which not all the men and women on this
" Planet Earth," can find another true, or prove this
answer false :
The dependence of Production on Demand an
artificially created evil, and one, therefore, which is
remediable, removeable in short altogether, whenever
to remove it this nation shall think proper.
Again, says Mr. Carlyle " Over-production : runs
it not so ? Ye miscellaneous, ignoble, manufacturing
individuals, ye have produced too much ! We ac-
cuse you of making above two hundred thousand
shirts for the bare-backs of mankind. Your trousers
too, which you have made, of fustian, of cassimere,
of Scotch plaid, of jane, nankeen, and woollen broad
cloth, are they not manifold ? Of hats for the
human head, of shoes for the human foot, of stools to
sit on, spoons to eat with nay, what say we, hats
or shoes ? You produce gold watches, jewelleries,
silver-forks and epergnes, commodes, chiffoniers,
stuffed sofas Heavens, the Commercial Bazaar ainl
multitudinous Ho wel-and- Jameses cannot contain
you. You have produced, produced ; he that seeks
your indictment, let him look around. Millions of
shirts, and empty pairs of breeches hang there in
judgment against you. We accuse you of over-
producing : you are criminally guilty of producing
* Pant and Present, second edition, p. 23.
I'll! Mil
>lurt>, IM hat>. -li, M ->. aid cnmiuoditir.s. in a
frightful over-abcmd&noe. Ami now then- is a glut,
and your iij>.-r:iti\-> cannot I..- fed!" 1
Admitted all this, hut still Whore is the mystery,
where the " invisiltle nightmare ?" There is no
my>tery, no invi-iblr nightmare! There is nothing,
in >lmrt. l>m mere consequence, as natural as any
other ascertained ami universally admitted conse-
quence in this world. Over-production is it of which
\<u speak '. Hut why call you it not by the other
name which, equally with that you give it, is its own
Over-ih'nniiuL Wherein consists the difference, Mr.
Carlyle. hetween supply and demand'? There is no
difference ! All supply is at once and equally de-
mand, whilst all demand is at once and equally sup-
ply. The terms are exchangeable, and difference be-
11 their meaning there is none at all : qualify,
however, this assertion with the one word naturullu,
and then no truth was ever questionable less than
this truth which I have told you.
" But is it l\\\\s pi-act i<-< ill* i .'" possibly retorts Mr.
Carlyle. Of course it is not ! How should it be so,
wl u-ii the law of the land we live in hath enacted and
declared, that it shall not be so ! hath enacted
that supply and demand shall be two totally dissi-
milar things, instead of remaining one and the same
for ever ! " But, explain yourself more fully," con-
tiniu s Mr. Carlyle. To which my answer is
/ hnn: done so. In the pages following, this subject
;idTi'd plain a> A It c, so plain indeed, that he
* Paat and Present, second c-liti-'ii. p. 230.
XI \ PREFACE.
who runs may not only read, but understand ; for
difficulty connected with this matter there is none
whatever, nor even the shadow or resemblance of
any mystery at all.
Well, thanks to " Past and Present," my Preface
is written the sixteen pages are satisfied, and my
book is finished. I trust that Mr. Carlyle will read
it, and that, as a sequel to his " Past and Present,"
he will one day favour us, in somewhat brighter
colours, with " The Future"
CONTENTS.
LECTURE I.
PAM
IirrRODfCToHY Difficulties of the subject detailed Popular Lectures
in general teach that which is admitted, whilst in the present in-
stance the task of the Lecturer is that of contending for opinion-
which, for the moat part, are new to the public General character
of these opinions, 1
LECTURE II.
lit a perfectly free commercial society, uninfluenced by the existence of
any monetary system whatsoever, Production would be the uniform
and never-failing cause of Demand. In the aggregate, it would bo
as easy to sell goods as it is to buy them, and that <</ infinitHw ;
and the words Supply and Demand would be just two names for
the self-same thing, 30
LECTURE III.
PRODUCTION, naturally the cause of Demand, is now the effect of it
ili'- operations of our existing monetary system having reversed
i heir position. The co-equality, therefore, of Production and De-
mand, which has thus been insanely suspended, must be restored,
ere it can be pvuibi* for mankind to prosper, . . . .67
LECTURE IV.
DESCRIPTIVE of a Hanking System, by the Establishment of which Pro-
duction, now the Cow*. . /*<*.. of Demand, may be converted at any
linir into tin- OINK ')/j/
XVI CONTENTS.
LECTURE V.
PAH
THE SUBJECT of the preceding Lecture continued that is to say, Con-
tinued description of a Banking System, by the establishment of
which Production, now the Consequence of Demand, would be con-
verted into the C<iuse of it, 134
LECTURE VI.
THE SUBJECT of the fourth and fifth Lectures continued and concluded
Fallacy of the Existing Principle of Coinage shown, and the True
Principles of Coinage explained and demonstrated, . . . 164
LECTURE VII.
PROFESSIONAL MEN, the nature of their avocations considered with refer-
ence to Money Pecuniary provision for the conducting of such
Retail and other Business as may be wholly unconnected with the
proposed Standard Manufacturing and Commercial System Fal-
lacies of Messrs. J. R. M'Culloch and Richard Cobden, . . .199
LECTURE VIII.
RECAPITULATION and brief Review of the entire subject, . . .245
APPENDIX.
THE Social System Early offer of a Copy of these Lectures to the
Provisional Government of France Unaccepted Challenge to Th>-
to discuss the Monetary Question for the sum of Five Hun-
dred Guineas Terms and conditions of a Prize Argument on the
subject of Money, for the sum of One Hundred Guineas A List of
the Parties to each of whom a Copy of this Work will be Presented
by the Author, immediately on its Publication, . . .* 281
LECTURES
NATURE AND USE OF MONEY.
LECTURE I.
I.NTRODCCTORT. Difficulties of the subject detailed. Popular
Lectures in general teach that which is admitted, whilst in
the present instance the task of the Lecturer is that of con-
tending for opinions which, for the most part, are new to the
public. General character of these opinions.
IT is under the influence of feelings of much
anxiety that I venture to come before you upon this
occasion ; and very earnestly do I solicit your kind
indulgence under the rather peculiar circumstances
in which I am at present placed.
In the first place, then, as most of you indeed are
ahva-ly aware, tin- task before me that of address-
ing a numerous assembly is one to which I am
wholly unaccustomed. I am not in the habit of
speaking in public, nor do I indeed very frequently
atini.l public meetings of any kind; and hem in
tin 1 attempt I am now about to make, I feel the
A
2 LECTURES ON THE
utmost diffidence ; although confessedly none what-
ever so far as regards the opinions which I propose
to lay before you, should I only be able to express
them clearly and audibly.
Again, the subject to which I am about to call your
attention money, its nature and proper qualities,
what money is, what it should be, what it must be,
before this or any nation upon the earth can prosper
is one which seems, by very general consent, to be
regarded as all but incomprehensible. And hence,
perhaps, it is the last that could be selected with very
much chance either of amusing or interesting a
popular audience.*
And again, in pursuance of the inquiry before us,
where is our text-book \ In the arts and sciences,
generally, on which lecturers are in the habit of
addressing assemblies of this description, we have a
large collection of standard works, containing at least
their elementary principles, ascertained, demonstrat-
ed, proved : to dispute any one of which elements
would be merely to exhibit our own ignorance. Hence
every lecturer on a popular subject finds himself, to
some extent at least, in a situation similar to that of
an ordinary teacher of arithmetic. He imparts know-
ledge, previously ascertained and demonstrated, to
those who desire to acquire it ; and who, therefore,
come to him to learn that which he is understood and
supposed to be capable of teaching. And it is only
u|M.u occasions wherein he may extend his inquiries
beyond the rudiments beyond the first principles of
* A considerable number of Ladies as well as Gentlemen usually
attend the Lectures of the Edinburgh Philosophical Institution.
UK AM) USE OF MONEY. 3
his art. tli.u he treads upon questionable ground, or
incur- the i i-k >( -t;itin^ that to be true, which others,
\\li<> an- fairly supposed to be equally competent with
him.selt, will be at all likely to question or deny.
it tit-- main tacts, about the first principles,
there will be no difference of doctrine amongst the
|>nfeSSOr8 Hone \\hate\er.
1 leai, however, that, upon the subject of Political
loiiiy. there exists even at this day no text-book
to \\hich any student of the science can be referred
for even the undisputed cl< 'nH'iita ; to say nothing of
tli'.M- minute differences on minor points which must
be for ever common amongst fallible human reasoners,
on subjects of an abstruse and difficult character.
True it is, that the Encyclopaedia Britannica, for ex-
ample, is a great work ; and the last edition thereof
is one of recent date. But even in this compendium
of both ancient and modern wisdom we shall seek in
vain for any definition of theirs/ principles of Poli-
tical Economy in an undisputed form.
The article "Political Economy," in the Encyclo-
pa-<lia liritannica, was written by Mr. J. R. M'Culloch,
Professor of Political Economy in the University of
London. The \ cry first principles of Political Econ-
omy, however, as expounded by Mr. M'Culloch, are
disputed by other writers of equal status and celebrity
with hiniM-lf by the late Rev. Mr. Malthus, for ex-
am pie, Professor of Political Economy in the East
India College, Hertfordshire, author of the well-known
theory of Population that very theory being itself
"in of the numerous popular fallacies of the Last
twenty veaix. Mr. M'Culloch, it is true, goes along
with the late Mr. Malthus upon his pet subject of
4 LECTURES ON THE
population ; but upon some other points of first-class
importance their opinions are wide as the poles
asunder.
Another writer who agrees with Professor Malthus
in contradicting Mr. M'Culloch upon one of the first
principles of Political Economy is Mr. Samuel Laing,
jun. And although this gentleman is much less
known as a writer on Political Economy than either
of the authors before mentioned, we are yet fairly en-
titled to call him "celebrated" when we consider that,
against one hundred and fifty-seven competitors, to
him was some time since awarded the Atlas Prize of
100, for the best Essay " On the Causes of, and
Remedies for, the [then] Existing Distress of the
Country ;" the Adjudicators being personages of no
less importance than Sir David Brewster, Vice-Presi-
dent of the Royal Society of Edinburgh ; Mr. Herman
Merivale, Professor of Political Economy in the Uni-
versity of Oxford ; Mr. George Pryme, Professor of
Political Economy in the University of Cambridge ;
Mr. Thomas Tooke, Vice-President of the Statistical
Society of London ; and Mr. John Wilson, the learn-
ed President of this Institution, and Professor of
Political Economy in the University of Edinburgh.
For example, " Effectual Demand depends upon
Production," says Mr. M'Culloch. No ! said Mr.
Malthus, and no, also, says Mr. Laing. So that here
we have the Sir Astley Coopers, Listons, and Symes
of the science of Political Economy, at issue on the
simple and elementary question whether Production
depends upon Demand, or Demand upon Production !
A question, which I shall in due time show you, is
one of such vast and overwhelming import, that the
NATURE AND USE OP MOM V 5
would be as rationally employed who should
sit down to writr ;m rlniicntary tiv.it i>.- upon Astro-
nomy, without knowing whetln-r the sun goes round
nth or the earth around the sun, as he who, in
the present day after what has already been done
to hi-, hand hy Dr. Adam Smith should betake him-
self to the task of writing a system of Political Econ-
oiiiv, \vithout a thorough knowledge of the subject
i/>ly and demand ; in which predicament do I
nevertheless affirm, stand the whole fraternity of
Political Economists, Mr. Samuel Laing, junior, him-
M-lf included, in common with Lord John Russell,
Sir Robert Peel, the Editors of the Edinburgh and
Westminster* Reviews, of the Leading Journal of
Europe, and of nearly the whole newspaper and
periodical press of the country, so far at least as I
have ever been able to discover or obsen .
But, it may be asked setting aside for a moment
all other authorities upon this subject, omitting al-
together the disputations of the Political Economists
of the present day, and those of the thousand and
one occasional writers upon the same subject has
not Dr. Adam Smith himself left us, in a clear and
distinct form, and in the most beautiful and pleasant
language, the elements of Political Economy, in his
immortal " Wealth of Nations I "
The answer is obvious Not all of them ! For if
Dr. Adam Smith had bequeathed to us a clear and
unimpeachable demonstration of all the elements of
I'olitical Economy, it is certain that in his numer-
* I believe that this work is now out of the hands of the parties
to whom I more particularly refer.
6 LECTURES ON THE
ous commentators and expositors we should not, to
this day, have had an almost equally numerous fra-
ternity of objectors and disputants. If, for example,
Dr. Adam Smith had demonstrated seventy-two years
ago, the precise nature of supply and demand, as
clearly as he demonstrated that labour is the one
and only original source of wealth, we should not so
lately as comparatively but yesterday, have had Pro-
fessors Malthus and M'Culloch at war upon the same
subject ; and neither, in my humble opinion, would
it ever have been necessary for the proprietor of the
Atlas newspaper, to have sought, by means of public
advertisement and reward, for any exposition of the
causes of and remedies for the distresses of this
country.
The real state of the case appears, therefore, to be,
that whilst in the Wealth of Nations, we have most of
the rudiments of social science, but not the whole of
them, the learned writer's successors and commenta-
tors, in the course of their endeavours to follow out his
principles and discoveries, have sorely puzzled man-
kind in general and themselves in particular sorely
bungled the matter in hand and that there yet re-
mains to be demonstrated one principle in social
science, one element of Political Economy, of such
enormous magnitude and importance, that, whenever
we shall come rightly to understand it, a mist will be
dispelled from the social atmosphere, by which the
entire subject of our collective interests has hitherto
been so greatly obscured, that " An Enigma, which
no one understands," seems to this day to be the
character awarded by the public at large to the
science of Political Economy.
i USE OP MONEY. 7
T.. supply tin- delieieney. tli. -11. to \\liicli 1 have
referred to demonstrate tin- \ , .f a principle
in .social seieinv hitherto miol.-.-rved by some writers.
misunderstood by other-, and rightly appreciated by
Hour -ifl (lie object of the present Series of LeCt
An. I. >hi>uld I In- MI fortunate a> to reii-ler this sub-
ject as clear to tin- minds of a fair proportion of my
hearers as it ha> l. t-n for some years past to my own,
I >hall thenoeforward encourage the hope that, in
In * \\rviT .xliii'lit a degree, I may have been instru-
mental in laying the foundation of the greatest and
most beneficial commercial revolution that shall
li.iv, taki-n place either in this country or in any
other. And it is the 1 inward consciousness of having
acquired, by upwards of five-and-twenty years' study
of this subject, some knowledge of it, which now en-
courages me to sink all private and personal consi-
derations; and, however ill qualified, in some respects,
for the performance of the task, to attempt to com-
mumVate to you the result of my investigations.
And hence my list of preliminary difficulties is not
(\rii yet ended. For, as you will now perceive, the
task 1 have undertaken is not that of expounding or
detailing ascertained truths, admitted to be such by
all parties ; hut rather, in certain particulars at least,
that of demonstrating the fallacy of some of the fa-
vourite doctrines of your most celebrated writers.
Therefore are you, in an especial manner, entitled to
receive whatever peculiar opinions I may endeavour
to convey to you with suspicion and distrust ; to take
nothing for granted that I may advance in opposi-
tion to the doctrines of others ; but rather, it is for
you to pre-suppose that I am wrong, and thei et >iv,
S LECTURES ON THE
in an especial manner, bound to prove that I am right.
And I cheerfully accept the terms.
The last, but not the least ground, on which I
shall solicit your indulgence is this : I am no prac-
tised orator. I cannot trust myself to speak extem-
poraneously on this subject. And this I feel to be
so great a drawback, that it is literally with fear and
trembling that I attempt the performance of the task
that is before me. But the subject of these Lectures
is one of vast and overwhelming importance ; and I
have looked east, west, north, and south, in the hope
of discovering some competent advocate of the cause
I have espoused. The result has not been satisfac-
tory. I know not any party or even any one person
with whom I hold opinions in common upon the sub-
ject of money ; and as those which I am about to
communicate to you are the result, as I have already
stated, of many years' consideration ; as they may be
valuable ; and as they cannot, so far as I know, be
elsewhere found I am willing to risk your disap-
probation, or even ridicule, rather than to forego the
opportunity with which I am now favoured, for en-
deavouring, to the best of my ability, to perform a
duty which every man owes to the society in which
he lives namely, that of communicating to others
such knowledge as he may either in reality possess, or
believe that he possesses.
But, to approach more nearly to our subject
money pounds, shillings, and pence. Well ! it would
be superfluous to tell you that monetary philoso-
phers are now becoming very rife. It would be
superfluous to inform you that there is at present a
great deal of discussion going on between the golden
NATURE AND USE OP MONEY.
philosophers and those of paper, between the al-
chy mists, who would turn everything into gold, who
tell you that a loaf is not bread, a coat no article of
dress, a house no place to lodge in, nor a < limn- -
table a piece of household furniture, until each and
all of these respectively shall have been weighed or
measured in gold and between the men of paper,
who tell you that gold is merely a commodity, which,
like bread, and cheese, and butter, must find its own
value in the market ; but who, unfortunately, when-
t \. i you press them for a clear and explicit defini-
tion of the word value, do not, I regret to say, ap-
pear to be particularly well able to give one.
You are aware, too, that a sort of contest is gene-
ral ly going on between the advocates respectively of
the Scottish and English systems of banking ; and
that during the ferment of the late election of the
now-existing Commons House of Parliament, not a
fe\\ of our would-be members expressed their readi-
ness to entertain the subject of Monetary Reform,
should the same chance to be brought before them
in their parliamentary capacity. Our honourable
and worthy member for the city of Edinburgh, Air.
Charles Cowan, for example, was amongst their
number. A tacit admission, this, to say the least of
it. that there may be something not quite right in the
existing monetary or banking systems of the day the
banking system of Scotland not even excepted.
Of the majority of these gentlemen I have, how-
ever, the advantage, so far at least as regards priority
of date. For, whilst it was, as it were, but yesterday,
that Messrs. Cowan and others told you, for thejlrst
time in their lives, that they are willing now to re-
10 LECTURES ON THE
vise our monetary laws, / am able to quote as follows
from writing* of my own, printed and published up-
wards of sixteen years ago :
" As it is by labour that all things valuable to man-
kind are produced, so is it by exchange that indi-
viduals are enabled to partake of a great variety of
commodities which their own labour could never,
by any possibility, have commanded without it. In
an advanced state of society, the food, clothing, and
habitation, in ordinary use, amongst all classes of
men, are composed of an immense number of ingre-
dients, the result of the industry of individuals scat-
tered over the face of half the globe ; whilst it is evi-
dent, that if each person could obtain nothing but
what should be immediately and directly produced
by the labour of his own hands, mankind never could
have emerged from a state of the rudest ignorance
and barbarism.
" Exchange, therefore, may be denominated the
bond and principle of society. But it is nevertheless
a matter of legitimate inquiry, whether our existing
plan of exchange be a good one ? whether it be
founded in right principles "? and whether it be cal-
culated to confer upon us all the benefits which the
present advanced state of human knowledge and re-
source entitles us to look for and expect ?
" And these questions I answer with an unequivocal
and emphatic No. It is our system of exchange
which forms the hiding-place of that giant of mischief
which bestrides the civilized world, rewarding in-
dustry with starvation, exertion with disappointment,
and the best efforts of our rulers to do good, with
perplexity, dismay, and failure ; and it is our system
NATURE AND USE OF MOM V 11
vchange which has produced the wor>e than
l.inian r..ntuM.>n in the ideas of men upon the
subject ft' their collective intm
" Give us and we have it now within our grasp
parliamentary reform give us universal suffrage,
annual parliaments, vote by ballot, free trade, an ac-
quittal >f the public debt, freedom from all tax<
repeal of the Union, and every other thing upon
which the public has ever yet rested its disappointed
hopes and still shall this demon of commercial
error hold our prosperity in his iron grasp, and smile
upon our ignorance and folly, as he shall see our
burdens, as we call them, one by one removed, whilst
we continue to sink deeper and deeper still into the
Slough of Despond, under the invisible but enormous
weight that is oppressing us." *
Again, in 1842, I repeated the same language,!
and now, I tell you for the third time, on thetwenty-
nd day of February, 1848, that any infant child
in.ir within these realms, is just exactly as cap-
able of improving the general condition of mankind,
as the man be he a minister of state or the most
humble individual in the land to whose mind the
fact is not obvious as the sun at noon-day, that to
our System of Exchange sown, rooted, grown, and
expanded in error is attributable at least nine-tenths
of all the misery, properly called commercial, bywh'u-h
we are now summm/a/, and to the recurrence of
which, so long as we shall persist in adhering to our
present monetary system, we shall be for ever liable.
* The Social System, page 56.
t In my little work entitled " An Efficient Remedy for the Distress
of Nations."
1 -2 LECTURES ON THE
Prosperity to this nation may be legislated for by
our governors, sighed for by our philanthropists,
written for by our public press, prognosticated by
our political economists, and hoped for by every sub-
ject in the Queen's dominions ; but never never, at
least, until the terms cause and effect shall cease to
have any meaning shall we be able to attain those
advantages which are naturally within our reach,
until we shall begin the task of reformation, not by
merely puerile and partial reformations in our modes
of banking, but by a change as great in the funda-
mental principle of our monetary system as that
which all of us here present have lived to see in the
principle of locomotion. And I tell you farther, that
the rail itself the confessed miracle of the age is a
far less wonderful thing than one other which is co-
existent with it, by which I mean the darkness
which to this day continues to pervade the national
mind upon the all-important subject of Exchange.
Say that this is strong language ! Be it so. My
present purpose the purpose of this evening will
be accomplished if, by exciting your curiosity, I may
in future be enabled to command your attention;
that obtained, we shall go seriously enough to work
by-and-by.
And suppose that we now devote a few minutes
to the inquiry Is there in reality anything anomal-
ous in the present state of society at all "? Anything
very bad, and yet of a nature not to be accounted
for either by the existence of irreligion, immorality,
idleness, improvidence, or any other of the causes to
which mankind in general are so very apt to attri-
bute misfortune, want of employment, poverty, dis-
X ATI' UK AND USB OP MOXHY. 13
tress, starvation, crime, and prematuiv di-eas.- .-ml
111 1 tliink there is. Nay, I can hardly con-
it pnssiMi- tor any man to take a general Mirvey
<f the rxistiiiL' >tato of society without arriving at
die oondufdoo tliat tin-re is something so anomalous
in our collective condition, that the most searching
inquiry into the nature and causes of that anomaly
is imperatively called for. But let us take an ex-
ample :
Suppose, then, the case of an individual isolated
for a period of years from the rest of the world a
nd Robinson Crusoe. Suppose this man to be
possessed, in the first instance, of but a few tools and
implements, and those of the most simple kind. He
is thrown upon an island, but not a barren one. 1 1 e
possesses good mental energy and bodily vigour, and,
having justly estimated the nature of his situation,
nanimously resolves to make the best of it to
die hard at least, and not to die at all from any want
of industry or of a persevering attempt to live, and,
so far as circumstances will permit, to enjoy himself.
It is certain, then, that a person thus situated
would best accomplish his purpose that purpose
Id-ing to supply his rational wants by subdividing
his time in a proper manner, and by devoting his
energies to the effectual working out of the plans on
which he should resolve. Say, for example, that he
devote ten hours out of the twenty-four to work,
eight hours to rest, and the remaining six to meals,
and recreation, and to mental, moral, and religious
culture.
What may be called the wealth of this man, then,
would obviously consist of such a house or cabin as
1 -i LECTURES ON THE
he might be able to erect, and of such a supply of
food, clothing, furniture, and implements, as he
might have originally secured at landing, and have
subsequently created by the labour of his hands.
Now, if, in the first instance, say for the first twelve
months, it should take the whole of this man's work-
ing-time that is to say, the whole of the ten hours
he is supposed to have set apart for working to
supply himself with mere food, it is clear that he
could not devote any portion of the said ten hours
to the obtaining of additional clothing, furniture, or
anything else : he must work so long at least for
food, and for it only. But if, from some cause and
it matters not to our argument what that cause may
be he should, during the second year of his exile,
be able to obtain his food by the exercise of eight
hours' labour a-day, in place of ten, then it is certain
that he would be in a position to add to his little
stock of clothes or furniture ; and that to the precise
extent or quantity that he might be able to make,
during the two spare hours a-day which he is now
supposed to have acquired. Again, if during the
third year of his exile, he should so greatly have im-
proved in skill or advantages as to find it necessary
to labour but six hours a-day in order to supply
himself with food, clothes, and furniture, then it fol-
lows that/owr working hours would now remain to
him, during which, without at all encroaching on the
time originally set apart for rest and recreation, he
might engage in the pursuit of such luxuries as should
be within his reach ; or he might employ these newly
acquired hours in erecting a better house, and in im-
proving the quality of his ordinary food, clothing, or
ill. \M> USB OP MONEY. I .')
furniture; or, it' In- incline not thus, he might add
them in his hours >f leisure. An<l. still farther. v\e
may suppose the time to arrive when so great would
he tlu> facility with which he could create an abund-
ance of whatxieser should lc requisite for the ample
supply of all \aBpkyrieal wants, that even one h<mr
i~tlii>i ini^ht suffice for their production ; in which
case, it is evident that twenty-three hours out of every
twenty-four would now be his own for rest, meals,
recreation, and the exercise of his faculties, bodily
and mental, in whatsoever way he should think proper.
In a word and this is the principle I wish you to
understand according to the difficulty or facility of
jH'nt/ncfion would this man be ill or well supplied
with the necessaries, comforts, and luxuries of life,
or more shortly, would he be poor or rich.
There is, I presume, no question as to this fact !
For if it take but one hour's labour to-day to accom-
pli>h an object which could only be accomplished by
the expenditure of ten hours' labour a few years
since, it is certain that a man who should be situated
in the manner we have supposed, must have the al-
(. mative of being either ten times as rich now as he
was formerly, or he may forthwith devote his nine
remaining hours of leisure to amusement and recre-
ation.
Have, then, the masses of mankind realized this
principle \ I speak not of particular classes of men,
but of ths population of these realms. As facility of
production has progressively increased in Manchester,
Leeds, Nottingham, Coventry, Birmingham, Sheffield,
l'ai>lev. and other manufacturing towns, have the in-
of Manchester, Leeds, Nottingham, Coven-
16 LECTURES ON THE
try, Birmingham, Sheffield, Paisley, and other manu-
facturing towns, risen in the scale of comfortable ex-
i#ti-nce, in the like proportion? Are the working
men of the present day be they weavers or smiths,
mechanics in any department of trade, or even field-
labourers better off, better supplied with the neces-
saries, conveniences, and comforts of life, than were
the like description of operatives, ten, twenty, thirty,
forty, or fifty years ago, by just exactly so much, and
no more, as aggregate facility of production has ad-
vanced during the same period f And has the con-
dition of all the other classes of society, risen also in
the like proportion f
If so, then is there an end to the argument. If
the condition of men, and of mankind in general,
have improved in this precise ratio if, as a nation,
we really create, possess, and enjoy all the wealth
that, as a nation, we have either the power of creating,
or the inclination to create then have we now all
those things that are good for us, which, with our
present extent of knowledge and resource, we can
possibly obtain. But if, on the other hand, wo have
not all this if there be any limit to our physical
means of enjoyment other than the exhaustion either
of our ability, or of our willingness to create them,
then do I affirm that there is something wrong in the
nature of our public institutions something which
stands between mankind and that amount of wealth
which is naturally within his reach which something
is not traceable to any of the " causes" to which the
misfortunes of want of employment, poverty, distress,
and consequent crime, and premature disease and
death, are commonly attributed ; and that, therefore,
X.VTURB AND USB OF MONET. 17
there is yet a mystery connects! with this matter
ivmaining to be solved.
And ditli-riiiLj. as no doubt many of you will do
with each other, upon minor points connected with
religion, politics, commercial principles, free trade,
nr trade in fetters, criminal jurisprudence, and fifty
thinirs h->ide-. n-rtain 1 am tliat you will all agree
with me in this one particular, namely :
That, so far as regards our social condition, inde-
pendently that is to say of all political and religious
con.Mderations, the great desideratum of society is
in a single word, employment employment for all
who are able and willing to accept of it to which
add, " a fair days wages for a fair day's iuork"
It will be my duty, then, in the course of these lec-
B, to prove that both these desiderata are within
our reach, and that all we require is, to turn the
natural advantages of which we are in full possession
to their right account.
You are well aware, that the opinion here so con-
fidently expressed, that there exists some tremendous
error in the commercial constitution of society, is by no
means ne\\. Many and various have been the schemes
and contrivances which of late years have been laid
before you for bettering the condition of the m<:
of our fellow-countrymen. We have had Mr. Owen,
and his system of co-operation Mr. J. M. Morgan,
and his system of bee-hives, and many others. The
co-operative communities do not seem to have pros-
i ; and as I never was inside a bee-hive, my ac-
quaintance with the bee system of Political Economy
is altogether external. So far, however, if we except a
more u. n ill disposition to the encouragement of free
B
18 LECTURES ON THE
trade, a tendency to a less complicaed system of tax-
ation, and a few minor reforms in the details of
our commercial proceedings, little or no change has
been effected. The general principles of our social
system continue the same ; and the great error, if
there really be one, yet remains, if not to be dis-
covered, at least to be recognised and acknowledged,
as well by society in general, as by the government
under which we live.
To one circumstance only in connexion with this
subject shall I call your attention farther.
It will be very generally remembered, that, so
lately as 1842 or 1843, the then proprietor of the
Atlas newspaper offered a premium of a hundred
pounds for the best Essay " On the causes of, and
remedies for, the existing Distress of the Country,"
and that two additional premiums of respectively
fifty and twenty-five pounds were subsequently of-
fered, by the same party, for the second and third
best essays upon the same subject.
Now, whoever will take the trouble to turn to the
pages of the Atlas about the time to which I refer,
will find that the editor of that paper appeared by
his writings to be very decidedly of opinion that
there must be some particular cause for the great
evils that afflicted us. He did not seem to regard
those evils as arising naturally out of the extensive,
intricate, and incomprehensible commercial system,
or rather no system, under which we live. He did
not seem to consider that the lowest depths of
wretchedness, to which myriads of our fellow-crea-
tures and fellow-subjects are at all times consigned,
were to be regarded as unfathomable or irremedi-
I'RE AND USE OK 19
On the n.ntrarv. What is the cause of all
tln> distress, and /nw can \\o remove it?" were alike
tli- tone of his own writings and the spirit of his
proposition to tin- competing essayists.
Wi-H ! the reMilt. as already mentioned, was, that
one hundivd ami fifty-eight competitors came for-
ward on the occasion, and that the Judges awarded
to Mr. Samuel Laing, junior, the principal prize of
one hundred pounds.
Before recapitulating, however, the chief causes of
national distress and the remedy to be applied, as
propounded by Mr. Laing, I cannot help remarking
upon, and indeed I may add, very sincerely regret-
tinir, that the proprietor of the Atlas did not avail
himself of the opportunity, which he in so peculiar
a manner possessed, of compiling and publishing one
of the most curious books that can be conceived.
What I mean is this : He might have required
each of the competing essayists to have given at the
end of his essay, a brief summary, compendium, or
abstract of his opinions the chances being, that at
least nine-tenths-of the whole number of them did this
at all events and that he, the proprietor of the Atlas
.aforesaid, should have had the right of retaining
and publishing tit it fxirt/fular part of every essay.
Oidy fancy, then, a collection of no less than one
hundred and fifty-eight answers, by as many different
writers, to the question " What are the causes of,
and what the remedies for the distresses of this
Nation ?" Verily, if out of a multitude of counsellors
wisdom be obtainable, the late proprietor of the Atlas,
and the adjudicators of the Atlas prizes, ought at this
hour to be the wisest people in existence, so far as re-
20 LECTURES ON THE
i:an Is this particular subject. Something very like the
perfection of human wisdom they surely must have
culled from this prodigious mass of argumentation.
But be this as it may, the compilation I have sug-
gested, and which, under the circumstances to which
I have referred, might so very easily have been
made, would certainly have been one of surpassing
interest.
I may here mention, that, at the time when the
Atlas Prize Essay was one of the popular subjects of
the day, I was myself writing on the very point at
issue. But I had no ambition to become one of the
rejected ; and therefore, when I learned that certain
Political Economists were to form the majority of the
adjudicators, I at once discarded all thought of com-
peting for the prize. Gentlemen of status equal with
those who were appointed, but wholly uncommitted by
any public declaration or writing to any system of Poli-
tical Economy, would have been the proper judges in
the Atlas case ; in place of gentlemen, however high
their respectability or exalted their station, who in all
probability had been educated, trained, and rooted
in the errors of what are called the best writers on
the subject.
But what, says Mr. Laing, is the cause of national
distress, and what the remedy ? It should be super-
fluous to answer this question here. An essay upon
a most important subject, the chosen of one hundred
and fifty-eight, certainly should have been read by
all such members of this Institution as may, for any
considerable time past, have been students of the
great problem of society. But there are doubtless
many persons here present who have not seen Mr.
in: AND USE OF MOV 21
La ing's Essay, to whom I would say, that there is
much thnvin worthy of their attentive con>i'ler;ition.
Many important facts, collected and well arranged,
from a variety of authentic sources, and evincing much
industry on the part of the author, as a coll-
of materials for thought, are alone sufficient to give
value to the Essay. But the great questions of tin?
Atlas What are the causes of, what the remedies for,
the o! (stresses of this country? remain unanswered.
Nay, not even tin' fulntc^t /////// mering of new 1'njht Im*
been thnum ///>on the subject by Mr. Lalng* So far
from it indeed, he says, almost in so many words
That an enormous mass of misery exists and hen-,
a la-! his proof was easy ; but that there is no special
or par/imlar Cause for it, and consequently that
there can be no />f'-/<il or i>artirul<ir Remedy. But
him for himself.
I lr tells us, then, "That it is in the condition of the
Inlnmrinii classes that the danger lies. Amidst the
intoxication of wealth and progress, and the dreams
of a millennium of material prosperity to be realized
by tin- inventions of science, the discoveries of
Political Economy, and the unrestricted application
of man's energy and intelligence to outward objects,
society has been startled by a discovery of the fear-
ful fact, that as wealth increases, poverty increases
faster ratio, and that in almost exact proportion
to the advance of one portion of society in opulence,
* Proving to demonstration the deplorable ignorance of the ma-
jority of the judges themselves upon the same subject ; seeing that I
chance to know that tht realcenue of our commercial miseries, namely,
our Mod Monetary System, wxw distinctly pointed out to them by
one at least of the Competing Essayists.
22 LECTURES ON THE
intelligence, and civilisation, has been the retrogres-
sion of another and more numerous class towards
misery, degradation, and barbarism.
" To speak more specifically, the leading facts to
which the evils that, in one shape or other, are
continually forcing themselves upon the attention of
society, may be reduced, appear to be
" 1st, The existence of an intolerable mass of misery,
including in the term both recognised and official
pauperism, and the unrecognised destitution that
preys, like a consuming ulcer, in the heart of our
large cities and densely-peopled manufacturing dis-
tricts.
"2dly, The condition of a large proportion of the
independent labouring class, who are unable to se-
cure a tolerably comfortable and stable existence in
return for their labour, and are approximating, there
is too much reason to fear, towards the gulf of pauper-
ism, in which they will be, sooner or later, swallowed
up, unless something effectual can be done to arrest
their downward progress."*
And again " Such, then, is the condition of the
English agricultural labourer ; one degree better off
than the hand-loom weaver and unemployed popu-
lation of large towns, he can, while in health and
strength, and under ordinary circumstances, support
a family in the bare necessaries of life, under a roof
of their own, and in comparative decency and respec-
tability ; but he can only just do this by unremitting
labour and unceasing economy ; he has absolutely
nothing to look forward to, nothing to fall back upon.
* Atlas Essay, page 8.
1KB AND USE OP MOM.V 23
" To use the words of an assistant poor-law com-
iiii->ioner 4 The Eugllsh agricultural labourer, even
it'he II.-IN traiiM- ( -iidem abilities, has scarcely any pros-
: in the world, and of becoming a small
tanner. II.- commences his career as a weekly la-
bourer, and tin- probability is, that whatever may be
his talents and industry, as a weekly labourer he will
end his days.' This is the best side of the picture
what is the reverse ? If he has no chance of rising
in the world, how many chances has he of falling?
It he is thrown out of employment if he loses his
health it' he has a large family of girls or young
children if he yields to temptation, and becomes
irregular in his habits what is to become of him I
The answer is obvious : for a time he will be assist-
ed by casual charity, and struggle on against extreme
privations ; but if the causes of distress continue, one
or other of two things will be his final lot he \\ill
milled among the 1,072,978 paupers receiving
I -a rM i relief under the harsh conditions of the new
poor-law, or, he will be starved out of the country
into some large town, and absorbed in the floating
population who tenant the cellars and lodging-houses,
and li\e by the worst-paid description of manufactur-
ing industry, or by thieving, prostitution, and casual
employment. Let it always be remembered, that
when we read in Poor-law Reports, and Treat i-ex
nn Political Economy, of labour being absorbed and
di>tre disappearing by refusing relief, this is, in nine
cases out of ten. \\hatthe thing practically means."*
And again he says "We feel satisfied that if we
* Atlas Enaj, page 31.
'J4 LECTURES ON THE
were to estimate the class who are below the lowest
independent labourer, including paupers receiving
relief, criminals, vagrants, and poor living mainly on
private charity, at 2,000,000, we should be far under
the mark, and that 2,500,000, or between one-
seventh and one-eighth of the total population, is
much more likely to be a correct estimate. If we
include all those who would habitually feel the pangs
of hunger and cold, if they had no other resource
than the earnings of lawful industry, and who sub-
sist, wholly or in part, by the earnings of crime, or
by public or private charity in the latter case prin-
cipally by the charity of those of their own rank of
life, we feel convinced that 3,000,000, or one-sixth
of the population, would not be over the mark. In
Ireland the proportion would be nearer one-third,
which would give for the whole empire an average
of more than one-fifth of the population unable to
live by lawful industry. Of these, a very small pro-
portion are professional criminals, probably not above
100,000 regular thieves, and as many unfortunate
women, but many more eke out the insufficient wages
of labour by occasional pilfering, and a still larger
proportion are only able to exist by occasional charity
from those one step above them in the social scale.
t>, it must be remembered, are exclusive of the
1,300,000 paupers who receive legal relief. We
are satisfied also that the number has been, and is
frightfully on the increase.
" This is the first great evil in our present social
condition.
" The next is, That a large proportion of the inde-
pendent labouring class, including the bulk of the
NATURE AND USB OF MOM K
and agricultural population, an- in
Midi a position as to be unaMe to .support tin
in tolerable d ,vnc\ and comfort by their labour, and
(4. make any |T.\i->i..n against illness, old age, 8U8-
penvjon ,,f employment, or any of the other numerous
accidents \vliicli may at any time merge them in the
<>f paupers or destitute.
"The third evil is, That even among the class of
i'l>erati\e> \\ho-e pecuniary earnings are sufficient for
their support, various demoralizing causes exist such
a- female and infant labour, want of education and
religious instruction, intemperance, and the like,
which tend to depress their condition, and in many
cases to degrade them to a level with those who con-
stantly suffer the pressure of physical want.
" The fourth and last great evil is, That all the pre-
ceding evils are apparently on the increase under
the operation of deep-seated causes which almost
assume the appearance of necessary laws, and that,
in addition to this, certain temporary causes have
produced a very great and decided aggravation of
the tir>t and second evils within the last few years,
and especially during the last twelvemonth."*
For this enormous amount of misery, then, what
is the remedy, for the discovery of which the five
learned adjudicators awarded Mr. Laing the Atlas
l>i i/e of one hundred pounds ? Hear it from Mr.
La ing's own book ; and whilst you hear it, blush for
the deplorable ignorance that yet pervades this land
upon the subject of the collective interests of our
race or else hear it and tremble ; and whenever
* Atlu KMJ, [wges 63 and 54.
2G LECTURES ON THE
you may learn that plague and pestilence are abroad,
say Let them go forth to the east and to the west,
to the north and to the south, that in kindness they
may sweep away the myriads of beings whose heri-
tage is misery, whose life is worse than death, and
for whom all hope of relief in this world is vain and
of foundation destitute.
" When [then, says Mr. Laing,] we turn from a con-
templation of the disease to a consideration of the re-
medies, it appears evident, that as no specific cause can
be assigned, so no specific remedy can be pointed out.
The only effectual reform is that in which each person
begins by reforming himself in other words, where
a revival of those feelings of duty and moral obli-
gation, whose decay has been the primary source of
the evil, leads to innumerable individual efforts, and
to an improved state of public opinion. Without this,
it must be frankly admitted that legislation can do
little. In the first place, legislative measures of im-
provement are, in the present political constitution ot
the country, impracticable, unless supported by the
public opinion of the upper classes. In the next place,
even if practicable, they would be inoperative against
a continuance of the causes which tend to swell the
-\i>tiii^ evils, and to make distress, if driven back
for a moment, continually recur on a wider scale."*
Such, then, are the consolations which Mr. Laing
has, according to his own estimate, to offer to three
in til ions of his fellow-countrymen, whose daily ques-
tions to the well-conditioned are in thought at
least "Are not we men like yourselves ? Have we
* Atlas Essay, page 166.
\ vn i:r. \M> USB OP MUM:>. 27
the same organs iad senses'? Require we not
the same food, tin- >ame protection from the blast
an.l tin- storm, nii'l tin- same culture, mental, moral,
an-1 : as do ye? Whence, then, this enor-
mous amount of difference between us? Whence
tin- invisible. l>ut, as we find it, impassable gulf
which M our condition f Von i your condition ?
And if, as Mr. La ing tells us, this gulf be passable
only l>v each one of us commencing the task by .W/-
refonmifiini. will he be so kind as to tell us farther
in what precise manner we are to begin the work ?
Cold are we and hungry, naked and houseless, able
to labour and willing to labour too, but employment
none can we obtain, and our name is L<'>ji<>n."
It is not, however, to the mere feelings or sympa-
thies of this audience that I wish to appeal farther,
at lea>t, than may be necessary to awaken you to a
due > us.- of the vast importance of the subject before
us. It is to your reasoning faculties, and to them
only, that I would more especially address myself.
Well, then, here we arrive at something specific.
Tin- dux of a class consisting of one hundred and
fifty-eight essayists "On the causes of, and remedies
tor. the diM roves of the country," comes to the con-
clusion that the prodigious evils, which he himself
enumerates, are referable to no particular cause, and
that, therefore, it is to the correction of a multitude
of minor errors, remediable only by the self-reforma-
tinn i,f iln- unit* of society, that we must look for the
improvement so ardently desired by all.
Nw. to this opinion I am totally unable to sub-
scribe. I have confidence in the advocates of a
national system of education. I have confidence
28 LECTURES ON THE
in the advocates of diminished hours of toil to the
end, that education begun in childhood may termin-
ate only on the threshold of the grave. I have con-
fidence in the promoters of institutions such as this,
the department no matter what ; for those who may
be engaged during a reasonable portion of their time
in study of any approved kind, are not only expand-
ing, improving, and delighting their minds, but they
are also avoiding those evils, into which the mentally
or physically indolent are ever the most liable to
fall. For to be engaged in the pursuit of that which
is innocent, is of necessity, for the time at least, to
avoid that which is injurious. I have confidence, also,
and the very highest confidence, in those great prin-
ciples of free trade, which, inculcated by Dr. Adam
Smith, and at length making some way amongst us,
under the unremitting fire of an ignorant but per-
M-M-ring enemy, have now become synonymous, for
the present hour at least, with the name of Mr. Cob-
den. I have confidence, too, in the spirit of the age,
in the growing disposition for inquiry, and for reliance
upon evidence rather than upon mere opinions, how-
ever illustrious the names attached to them may be,
in matters concerning our social condition and pros-
pects. But I tell you, that all these considerations
notwithstanding, there is another, and to beyin irith,
a far more important subject than any one of these,
which imperatively demands our attention : that sub-
ject is Our false monetary system, the cost of which
to this nation is certainly not less than one hundred
millions per annum, in money of its present value.
My reasons for entertaining this opinion, I hope to
ible to make clear and obvious to all, who will
i:i: AM) USE OP MONTY. '20
nt t<> ht-ar me with patience and attention,
throughout tlir eonr>e i.|' leetuivs whieh is to follow.
And, indeed, ;dl 1 shall contend for is Tliat mail col-
KvtixeK thnultl kiu.u no limit to his physical means
of i-iijoviiu-iit. save those of tin- exhaustion cither of
his i n< I Htt rii or of his productive powers: whilst \\\
by the adoption of a monetary system, false in prin-
ciple and destructive in practice, have consented to
re.Mriet tin- amount of our physical means of enjoy-
ment to that jtrecise quantity, which can be projitulilii
('.i-rltantjedfor a commodity, one of the leust capalih'
of multiplication by the exercise of human induct rii,
of a ni> a/ton the face of the earth.
30 LECTURES ON THE
LECTURE IT.
Is a perfectly free commercial society, uninfluenced l>y the exist-
ence of any monetary system whatsoever, Production would be
the uniform and never-failing cause of Demand. In the aggre-
gate, it would he as easy to sell goods as it is to huy them, and
that ad infinitum ; and the words Supply and Demand would be
just two names for the self-same thing.
IN my Introductory lecture, I endeavoured to
awaken your minds to a sense of the vast importance
of the subject before us. We must now, if you
please, enter upon the consideration of the subject
itself my views of which I intend to lay before you
in the form of certain distinct propositions, and to
treat of such other elements of Political Economy as
it may be necessary to notice, incidentally as we go
along. And, when the various parts of our subject
shall have been thus examined, we shall endeavour
to collect the whole of them into one focus.
My purpose, then, this evening, is to endeavour to
show you that, in any perfectly free state of society,
wherein money there should be none, the exist-
ence of aggregate over-production, or of an over-stock
of marketable produce, would be, in one word, im-
possible.
Ami really I feel the utmost diffidence in entering
: Hi: AM) USE OK -1
tliis argument, imt certainly from the nature
of the ta>k itself. \\liich is by no means a difficult one,
hut because it has alivaily been so admirably treated
ly tli late Mr. .lames Mill, author of the History of
British Imlia, in the second edition of lii- Klements of
Political Kconouiy, that it will be quite impossible
f<>r me. in any language that I am master of, to do
equal justice to the subject; with this important
(inference, however, between us, that whilst Mr. Mill
throughout the whole of his reasoning, takes the
existing monetary system along with him, and there-
by, as I shall show you in another lecture, falsifies
every syllable of his own argument ; we, by confining
ou riches simply to the consideration of interchange
of goods for goods no one of them being the accep-
iel measure of the value of any other shall very
certainly arrive at the conclusion that production is
the Xntnrul cause of demand, ad iiifinitum.
Mr. J. It. M'Culloch, also, I may here remark, in his
Klnnents of Political Economy, second edition, has
fallen into precisely the same error as Mr. James Mill.
Both these authors maintain that production is now
the cause of demand, ad infinitum : the truth being,
that it should be so.
Abjuring, then, all monetary considerations what-
er, let us suppose that every gentleman in this
room, acting solely and singly for his own benefit,
to become a producer of some marketable com-
modity, and that each and all of us should meet to-
gether in a public place, bringing the varied fruits
of our respective labours along with us it is quite
dear that we >hould go there equally to buy and to
sell. One person would have bread, another meat,
32 LECTURES ON THE
another beer ; one would have cloth, another shoes,
another hats, and so on. It is certain, however,
that no one of us would ever think of taking any of
these things to market without a predetermination to
take quite as large a quantity of things from market.
The business of each person there, would be to ex-
cliniifje the surplus produce of his own labour for the
surplus produce of the labour of other men ; but it
would certainly not be any part of his intention to
give more than to receive. The baker would re-
quire meat and drink and clothes; the butcher
would require bread, and food of various kinds, be-
sides that in which it is his business exclusively to
deal ; the clothier, again, would require a portion of
the commodities of the butcher and baker ; and hence
innumerable interchanges must of necessity take place
betwixt man and man, before each and all could be
satisfied with the result of their respective transac-
tions.
In these circumstances, however, no man would
propose to give a greater portion of his own goods
than should be required from him in exchange for
those which he himself should desire to obtain. On
the contrary, his demand would ever be equal to his
*/>/>!>/. He would give, or rather sell, not for the mere
pleasure of giving or selling, but in order that he
himself might obtain a portion of the merchandise of
other men, and the greater that portion, the' better,
no doubt, would he be satisfied.
Then, as the person or party with whom he should
d'-al would be sure to act upon precisely the same
principle, their demand and supply would be respec-
tively just two names for the same thing. The terms
l:i: AN! I SB OP 1IONT.Y. MM
\\mild be exchangeable. Tin- demand <!' the one
would l>e the supply of the other, and the demand of
that other \\ould l>e tin- supply of the one. And as
in tins argument \\. n. Midi tiling as money
amount us. it is plain that tin- iv.p<vtive ^//<///////Vx
of the dttl'ereiit eOMmodities that would l>e_:i\en and
red in exchange for each other, must be of equal
valm ; IM < -a use, in each and every case, these quanti-
\vould be the result of express bantam ; which
bargain, necessarily implying the consent of two op-
posing interests, could never have taken place, un-
less the contracting parties should have proved the
equality of value to be given and received, by the very
act of mutually consenting to give and to receive. For
in all free and uncontrolled circumstances of inter-
change, a thing is truly said to be worth whatever it
will fetch.
Again, the general principle which regulates the
quantity of one thing which is commonly given in
exchange for another thing, is the relative quantity of
capital, skill, and labour employed in its production.
If two men of equal general ability be employed
in dissimilar productive occupations, the one for
one day and the other for two days, half the quan-
titv of the products of the latter should, in fair-
ness, command the whole products of the former.
But this general principle is subject to considerable
ptions. Dr. Adam Smith, for example, tells us,
that " The five following are the principal circum-
-s which, as far as 1 have been able to observe,
make up a small pecuniary gain in some employments,
and counterbalance a great one in others. Fir>t. the
agreeableness or disagreeable ness of the employments
34 LECTURES ON THE
themselves ; second, the easiness and cheapness, or
the difficulty and expense of learning them; third,
the constancy or inconstancy of employment in them ;
fourth, the small or great trust which may be reposed
in those who exercise them ; and, fifth, the proba-
bility or improbability of success in them."
But, apart from all these considerations, the quan-
tity of one thing which may be given in exchange for
another, will at all times depend upon the greater or
less demand that there may be for it in the market.
If, for example, there be at any time a surplus of
corn, as compared with the supply of cloth, and the
?/>>//// state of the market being, that one yard of
cloth exchanges for two bushels of corn, it is clear
that, so long as the supply of corn shall be dispro-
portionately great, two and a half or three bushels of
corn may have to be given in exchange for the yard
of cloth, in place of two bushels only. Thus the cloth
commands an increased quantity of corn in exchange
for it, and that without the slightest reference to the
original cost, or labour of producing, either the one
or the other. A pound of bread might possibly, in
certain circumstances, exchange for an ounce of sil-
ver ; whilst there is hardly a sportsman but will tell
you that many a time in his life he would most
willingly have given a silver coin, worth a dozen
ounces of copper, in exchange for a single glass of
cold water, which, in ordinary circumstances, would
not exchange for one forty-eighth part of the same
weight of the same metal. Thus, in all cases,
wherein a dearth of any article in demand exists, an
increased quantity of other things are sure to be re-
quired in exchange for it ; whilst, whenever the same
\ \TU:F. AND USE OP MOM :\ . 35
happens to be itself in .*////////.?, a greater quan-
tity of /'/ must forthwith be given in exchange for
"tlirr roiiiino.litiea.
It will of course be kept in min-l tliat. in this stage
of our argument, we make no inquiry whatever as to
the <t/>i/ity of our supposed merchants to bring any-
thing to market at all. The existence of such ability
mu>t for the present be aunn <!, seeing that all we
an- now seeking to establish is, that, no matter by
what means obtained, goods brought to market in due
proportion to each other and no such thing as money
being as yet supposed to exist at all are at once and
equally sn/)/>/</ <m<] demand, demand and supply; and
further, that no conceivable quantity of them, be it
so great, could by any possibility disturb this
state of things, even for a moment, so lon<j as the
single condition, in due proportion to each other, shall
be strictly observed.
The term due proportion may, however, require
a \\"i<l or two of explanation. It means, then, simply,
that as men require food and clothes, habitation, fur-
niture, and so on, equal proportions of these must be
\>r< -light to market, or else there will be a glut of some
things, whieh. however, will in every instance be pre-
v balanced by a corresponding deficiency of other
things. Just as a man who, being compelled to per-
form every office of labour for himself, should so mis-
manage his working time, as to spend the whole of it,
for example, in making bread, whereby, in conse-
<|iimce of such mismanagement, he would be over-
supplieil with bread, but destitute alike of clothing,
habitation, and everything else, commonly considered
essential to comfortable existence.
36 LECTURES ON THE
In like manner, a market-place full of such people
all intending dealers in but one, and that one the
self-same commodity would be in the like happy
predicament. No person would be able to sell any-
thing, no person would be able to buy anything,
because each and all would already be in possession
of a superabundant stock of the only merchandise
which any one else could offer. These merchants
would be all and equally intending sellers ; but as
there would not be any one willing to buy, so neither
could there be any one able to sell. Now, it is the
precisely opposite extreme of this supposed case which
would constitute perfectly due proportion : the exist-
ence of which perfect proportion would be practically
illustrated in a market wherein every article brought
thither should be disposed of in exchange for other
things, whilst every dealer should go home at night
with something in his possession preferable, in his
own estimation, to that which he took to market in
the morning.
And here it may be as well to introduce to your
notice the undisputed we may in this case, I believe,
say undisputed doctrine of Political Economy, ori-
ginally seen and demonstrated by Dr. Adam Smith,
that labour is the one arid only source of wealth.
It is labour which tends our flocks and our herds ;
it is labour which directs the plough, and otherwise
prepares the ground for the reception of the seed
which labour scatters upon its surface ; it is labour
that converts our corn into bread ; labour that sup-
plies us with clothing ; labour that builds houses,
and labour that furnishes them. It is labour that pro-
tects us during the hours of rest, and labour that
.\ \TI 1:1: \M> U8B OP MONi:v. 37
prepares the morning meal \vhicli awaits our enjoy-
ment : it is to labour tliat \\- arc in-leU' 1 .! l'.r the
flowers of spring, the summer's ripening fruit-, ami
the autumnal crops- it k in short, to lalx-ur that
\\e an indebted fur everything we possess or enjoy,
ruiuiiiLi. that is to say, within the definition of the
term u-fii/f/i. Ami although we wen- to be fed and
clothed h\- miracle by the spontaneous fall of all
tilings \\e require upon the earth still the soundness
of tlu- learned Doctor's position would not be invali-
dated, for even the wild fruits of the earth, fowls of
tin- air, and fishes of the sea, are not wealth, until
human labour shall have made them so, by the
of collection, or attainment, and appropriation.
Land truly is wealth, and so is water, and even the
-a me upon the one, and the fish within the other
in con>il ration solely, however, of labour having been
iously employed in obtaining possession of them.
When land, for example, has been appropri<ifL
it becomes at once, in all well-governed countries,
capable of being cultivated either by the hands of its
proprietor or by those of his servants ; or of being con-
veyed to others, either on loan, for a consideration, or
in perpetuity for an agreed price. But still it i
every case, by the exercise of human labour that such
property is originally called into existence as property.
This doctrine being now well understood by all
parties, is, so far as I am aware, mere part and
parcel of the common-places of Political Economy,
like tin- a, b, c, of literature.
And again, to the like class of admitted principles
in Political Economy belongs the following : Pro-
p- 1 1 y and wealth of every kind must be secured to
38 LECTURES ON THE
their rightful proprietors or possessors ; for \vlio
else would take the trouble to acquire them, except-
ing only for immediate use or consumption '( This
principle is so obvious, that it would be needless to
enlarge upon it. If, by the exercise of his labour and
skill, a man should be able to obtain more wealth
within a given time than he may either require or de-
sire immediately to make use of or expend, what con-
ceivable motive for the exercise of such industry could
he have, if the surplus produce which he would
naturally propose to lay aside for the day of illness,
misfortune, or old age, be not his own? Render his
accumulation the property of others equally with
himself, and it is quite clear that there would be an
end at once to all his industry and enterprise, beyond,
that is to say, such portion thereof as it would be
necessary for him to exert for the supply of his daily
exigencies. No man would ever dream of accumulat-
ing anything, if the accumulation itself should not
continue to be his own, until he should think proper
either to use it, consume it, or convey it to another.
Apply this principle to the present state of Ireland.
What an utter farce are our periodical subscriptions
for the relief of that unhappy country ! We might as
rationally exhaust our wealth and resources in the pur-
chase of water to fill a sieve, or bottomless reservoir
erected on the top of Arthur's Seat. Relieve Ireland,
forsooth! Afford the same degree of protection to
human life and property \\\ Ireland that you afford to
property and life in England and in Scotland, and
Ireland will very speedily relieve herself. Her lands
will forthwith be tenanted by men both able and wil-
ling to cultivate them. Her towns and villages will
NATIIiK AND USE OF MONT.Y. M9
abound with factories, ainl ln-r cities will teem with
wealth at least to an equal extent with those of
Scotland au.l Kntrland : for a large portion of the
capital aii-1 >kill of the entire kingdom wouM run a
with itself, like streams of water to a lower level.
t renovate Ireland, were but this first condition to
all accumulative exertion amply and permanently
n'<l throughout the land. And if the Govern-
ment really cannot do this for Ireland, why then, it
can do nothing. And hence the views which I si in 11
IMU' occasion to exhibit to you in the course of these
lecture*, with reference to the monetary affairs of
Midland and Scotland, can never be entertained, with
the same hope of success, so far as regards Ireland,
until Ireland shall have condescended to learn that
first and most indispensable lesson in the art of civili-
sation to which I have referred.
On all hands it seems to be agreed that the
immigration of a few hundred Scottish fanners into
Ireland, aided by the amount of English and Scottish
capital which they could most easily command, would
shortly double, and much more than double, the
entire agricultural produce of that unhappy country,
and make the rapid fortunes of the immigrants into
the bargain. Why don't the farmers go, and benefit
the Irish people in general, and themselves in par-
ticular? Simply because self-preservation seems,
somehow or other, in the estimation of most men, to
occupy the first line in the catalogue of human de-
siderata, and the security of their property line the
second.
May God help the Irish nation ! But if ever man
is to be the agent of Providence in so doing, he must
40 LECTURES ON THE
begin the work by devising effectual measures, cost
whatever they may, for the preservation of the lives
and property of Ireland's inhabitants be those in-
habitants Irishmen, Englishmen, or Scotchmen, or
men from the four quarters of the globe. And,
moreover, the nature of the measures to be adopted
for the protection of life and property in Ireland,
must be such as to inspire the most perfect confidence
that such protection shall be of a permanent, and not
of a merely temporary description. Do this for Ire-
land and done it must and will be sooner or later
the compulsory education of every one of her future
children must follow ; time will do the rest ; and, in
a generation or two, Ireland may yet assume her pro-
per place in the scale of civilisation. But this is a
digression.
The Division of Labour, another established prin-
ciple in Political Economy, may also be here incident-
ally mentioned the more especially as it will lead
us, by a direct step, to the consideration of another
principle of great importance to the well-being of
society, and in an especial manner worthy of our
attention with reference to the monetary system, to
which all that we are now considering is merely in-
troductory. I mean the principle of Individual Com-
petition, a principle discarded by nearly all the advo-
cates for co-operation, communities of property, and
other bee-hive systems of Political Economy.
The principle of the division of labour and that of
individual competition, are so nearly allied to each
other, that they may be called the Siamese Twins of
Political Economy they are, in fact, almost insepar-
able. By the division of labour men are led to apply
NATURE AND USE OF MOM V 41
th' mselves to one pursuit, and not unfrequently to a
single operation, l>y which to ^ain their livelihood,
in jlaco of to many pursuits or to many operations ;
tin- result being that a hundred men- each one
being thus employed will do ten, twenty, anl in
instances, a hundred times the quantity of the
\vnrk that they could do, were they to act upon
thr opposite plan of commencing, proceeding with,
and concluding a multitudinous series of operations
\\ ith one pair of hands. But the nature of this prin-
ciple also is so well understood that it would be
needless to dwell upon it.
Whilst, however, by the division of labour, mankind
an- led to concentrate their attention in the manner
already mentioned, and thus to acquire a wonderful
degree of skill by the twin principle of individual
competition, they are stimulated to exert that skill to
tin- utmost of their ability, which the division of
labour first enabled them to acquire. Take away
the division of labour, and the words dexterity and
skill would cease to have any meaning, because there
could be no such thing as either the one or the other.
And a^ain, take away the principle of individual com-
/"//////. and all motive either for the acquirement or
exercise of the foresaid dexterity and skill would
speedily cease to exist.
Indeed, to these two principles it is that we owe
the astonishing fact that although each man is born
so far like every other, that even the equality of or-
ganization itself has been gravely though erroneously
contended for there are few persons but are able to
pint to some others who are to them a kind of miracle.
Take, for example, a profession of a very ordinary
42 LECTURES ON THE
kind, that of a rope-dancer, or, what is less wonder-
ful, that of an opera-dancer. Then pass on to the
mimic stage itself, and see the first-class tragedian or
comedian ; or hear a Pasta or a Jenny Lind : or even
walk into the street, and see the half-naked Indian
sustaining, with astonishing precision and uniformity
of figure, a perfect fountain of balls flying about him
in all directions, and yet ever intercepted, and re-
turned in due rotation to the air, by the exercise of a
dexterity scarcely less wonderful in kind, however
inferior in end and object, than that of the most
accomplished artist, musician, or mechanic.
Or enter the saloons of art, and see the wonderful
power of imitation, wherever it may have been exer-
cised, on marble or canvass ; or go into one of our pub-
lic hospitals, and observe with what consummate dex-
terity and skill the experienced hand of the operator
relieves his fellow-creatures from the burden of en-
cumbrances, which a little longer tolerated would
have borne them to the grave : thus at once restor-
ing health and strength, and hope of life continued
to the unhappy sufferers, at the cost of a little tem-
porary pain ; and even that little, in many instances
of recent occurrence, reduced to none whatever, by
the application of the discoveries of yesterday.
And to what principle in social science is it that we
owe these advances in human acquirement and in
human art ? It is jointly to the division of labour
and to that mainspring of everything which is excel-
lent individual competition between man and man.
And I the more especially desire to call your atten-
tion to these important principles, because I must ad-
mit that although, for many years, I both fully under-
NATURE AND USB OF MOM.V. 43
stood and estimated thorn at their true value, it is
only within a comparatively remit period that I
have been able to see clearly, in what manner a per-
fectly free and unrestricted system of production and
exchange or, in other words, a commercial system
in \\hich production would be the uniform and never-
failing cause of demand may be brought into prac-
tical exigence, and easily maintained, without inter-
fering, to some extent at least, with the exercise of
tin- invaluable principle of individual competition
which we have already noticed.
All truth, however, is invariably consistent with
itself ; and although for a time I had some difficulty
in < -fleeting a perfect reconciliation between the most
abounded individual competition on the one hand,
and the most unbounded freedom of exchange upon
tht- other, I not only see no such difficulty whatever
now, but I am, moreover, fully prepared to demon-
strate thnt there is none.
But you will be inclined to remind me, that the
especial object of this evening's lecture is to enforce
the doctrine that, naturally speaking, and without re-
ference to any monetary system whatever, production
is the uniform and never-failing cause of demand.
And although I have already endeavoured briefly to
explain this principle, I should be guilty of doing
l>oth it and you the greatest injustice, if I were to
trust exclusively to my own feeble language and rea-
soning, whilst we have only to turn to an argument
upon the same subject elsewhere, at once clear, dis-
tinct, and incontrovertible. I make no apology, there-
fore, for substituting the language of a highly esteem-
ed \\riter for my own.
44 LECTURES ON THE
The late Mr. James Mill, then, in the article to
which I refer, now addresses you on this subject.
But you will specially bear in mind that I here sup-
press a few words of this learned author in which he
makes mention of the term money. And I do this
because, taken with reference to the existing mone-
tary system of society, there is not one word of truth
in the argument I am now about to read ; whilst,
taken without reference to any monetary system what-
ever, I believe the wit of man powerless to discover
any fallacy in Mr. Mill's reasoning, or any loophole
by means of which even the merest quibbler may
be able to escape the conclusion at which Mr. Mill
arrives.
In the Preface, then, to the second edition of his
Elements of Political Economy, he says " I have
endeavoured, by new illustrations, to render more
palpable what appears to me to be demonstration of
that most important doctrine, that the aggregate de-
mand and supply of a nation are always equal, that
production can never be too rapid for the market
in other words, that there never can be a general
glut of commodities."
And then, turning to the argument itself, we find
it stated as follows one short passage, consisting of
five lines, in which he makes mention of the word
money, being alone omitted.
" A man [then, says Mr. Mill,] produces, only be-
cause he wishes to possess. If the commodity which
he produces is the commodity which he desires to
possess, he stops when he has produced as much as
he desires ; and his supply is exactly proportioned to
his demand. The savage who makes his own bow
NATURE AND USE OP MONEY. 45
a i hi arrows, does not make bows and arrows beyond
what IK- wi.xhes to possess.
When a man produres a greater quantity of any
commodity ilian he desires for himself, it can only be
on one account namely, that he desires some other
commodity, which lie can obtain in exchange for the
surplus of what he himself has produced. It seems
hardly iieerv>;iry t oiler anything in support of so
>sary a proposition ; it would be inconsistent
with the known laws of human nature to suppose,
that a man would take the trouble to produce any-
thing, without desiring to have anything. If he
de-ires one thing, and produces another, it is only
because the thing which he desires can be obtained
I'V means of the thing which he produces, and better
obtained than if he had endeavoured to produce it
himself
" After labour has been divided and distributed to
any considerable extent, and each producer confines
him>elf to some one commodity or part of a commod-
ity, a small portion only of what he produces is used
for his own consumption. The remainder he destines
for the purpose of supplying him with all the other
commoditie> which he desires; and when each man
routines himself to one commodity, and exchanges
what he produces for what is produced by other peo-
ple, it is found that each obtains more of the several
tilings whieh he desires than he would have obtained
had he endeavoured to produce them all for himself.
" So far as a man consumes that which he produces,
there is, properly speaking, neither supply nor de-
mand. iJeinand and supply, it is evident, are terras
which have reference to exchange to a buyer anda
46 LECTURES ON THE
seller. But in the case of the man who produces for
himself, there is no exchange. He neither offers to
buy anything, nor to sell anything. He has the
property he has produced it and does not mean
to part with it. If we apply, by a sort of metaphor,
the terms demand and supply to this case, it is
implied, in the very terms of the supposition, that the
demand and supply are exactly proportioned to one
another. As far, then, as regards the demand and
supply of the market, we may leave that portion of
the annual produce, which each of the owners con-
sumes in the shape in which he produces or receives
it, altogether out of the question.
" In speaking here of demand and supply, it is evi-
dent that we speak of aggregates. When we say of
any particular nation, at any particular time, that its
supply is equal to its demand, we do not mean in any
one commodity, or any two commodities. We mean,
that the amount of its demand in all commodities
taken together, is equal to the amount of its supply
in all commodities taken together. It may very well
happen, notwithstanding this equality in the general
sum of demands and supplies, that some one commo-
dity or commodities may have been produced in a
quantity either above or below the demand for those
particular commodities.
" Two things are necessary to constitute a demand.
These are 1st, a wish for the commodity ; 2c?/z/, an
equivalent to give for it. A demand means, the will
to purchase, and the means of purchasing. If either
is wanting, the purchase does not take place. An
equivalent is the necessary foundation of all demand.
It is in vain that a man wishes for commodities, if he
NATURE AND USE OF MOM V 47
has nothing to give for them. The equivalent which
a mail limits i> tin- instrument of demand. The
.t of hi< demand is measured hy the extent of
juivalent. Tin- demand and the equivalent are
convertible terms, and the one may be substituted
for th- other. The equivalent may be called the
demand, and the demand the equivalent
" \Ve have already seen that every man who pro-
duces has a wish for other commodities than those
which lie has produced, to the extent of all that he
brings to market. And it is evident, that whatever
a man has produced and does not wish to keep for his
own consumption, is a stock which he may give in
exchange for other commodities. His will, there-
fore, to purchase and his means of purchasing in
other words, his demand, is exactly equal to the
amount of what he has produced and does not mean
to consume.
" But it is evident that each man contributes to the
general supply the whole of what he has produced,
and does not mean to consume. In whatever shape
any part of the annual produce has come into his
hands, if he proposes to consume no part of it him-
self, he wishes to dispose of the whole ; and the
whole, therefore, becomes matter of supply : if lie
consumes a part, he wishes to dispose of all the rest,
and all the rest becomes matter of supply.
" As every man's demand, therefore, is equal to that
part of the annual produce, or of the property gene-
rally, which he has to dispose of, and each man's
supply is exactly the same thing, the supply and
d.-mand of every individual are of necessity equal.
Demand and supply are terms related in a peculiar
48 LECTURES OX THE
manner. A commodity which is supplied, is always,
at the same time, a commodity which is the instru-
ment of demand. A commodity which is the instru-
ment of demand, is always, at the same time, a
commodity added to the stock of supply. Every
commodity is always at one and the same time matter
of demand and matter of supply. Of two men who
perform an exchange, the one does not come with
only a supply, the other with only a demand ; each
of them comes with both a demand and a supply.
The supply which he brings is the instrument of his
demand ; and his demand and supply are of course
exactly equal to one another.
" But if the demand and supply of every individual
are always equal to one another, the demand and
supply of all the individuals in the nation taken
aggregately, must be equal. Whatever, therefore, be
the amount of the annual produce, it never can exceed
the amount of the annual demand. The whole of
the annual produce is divided into a number of shares
equal to that of the people to whom it is distributed.
The whole of the demand is equal to as much of the
whole of the shares as the owners do not keep for
their own consumption. But the whole of the shares
is equal to the whole of the produce. The demon-
stration, therefore, is complete.
" How complete soever the demonstration may ap-
pear to be, that the demand of a nation must always
be equal to its supply, and that it never can be with-
out a market, sufficiently enlarged for the whole of
its produce, this proposition is seldom well under-
stood, and is sometimes expressly contradicted.
" The objection is raised upon this foundation, that
N \Ti lil. AM) USE OK MONT.Y 49
commodities are often found to be too abundant for
Tin matter of fact is not disputed. It will
easily, however, be seen that it affects not the cer-
tainty of the proposition which it is brought to im-
pugn.
Th nigh it be undeniable that the demand which
every man brings is equal to the supply which he
brings, he may not find in the market the sort of pur-
diaM i \\ hicli he wants. No man may have come de-
siring that sort of commodity of which he has to dis-
pose. It is not the less necessarily true, that he came
\\itli a demand equal to his supply ; for he wanted
something in return for the goods which he brought. 41 '
" Every man having a demand and a supply both
equal, if any commodity be in greater quantity than
the demand, some other commodity must be in less.
" If every man has a demand and supply both equal,
the demand and supply in the aggregate are always
equal. Suppose, that of these two equal quantities,
demand and supply, the one is divided into a certain
i lumber of parts, and the other into as many parts,
all equal ; and that these parts correspond exactly
uitli one another; that as many parts of the demand
as are for com, just so many parts of the supply are
of corn ; as many of the one as are for cloth, so many
of the other are of cloth, and so on : it is evident,
* The omitted passage, already mentioned, occurs here, and is as
follows : " It makes no difference to say, that perhaps he only wanted
money ; for money is itself goods ; and, besides, no man wants money
but in order to lay it out, either in articles of productive, or articles
of unproductive consumption." This, as will be duly shown, u the
Jfotuter error of the political economist*.
D
LECTURES ON TH K
in this case, that there will be no glut of anything,
whether the amount of the annual produce is great
or small. Let us next suppose that this exact adap-
tation to one another of the parts of demand and
supply is disturbed ; let us suppose, the demand for
all things remaining the same, that the supply of
cloth is considerably increased : there will of course
be a glut of cloth, because there has been no increase
of demand. But to the very same amount there
must of necessity be a deficiency of other things ;
for the additional quantity of cloth, which has been
made, could be made by one means only, by with-
drawing capital from the production of other commo-
dities, and thereby lessening the quantity produced.
But if the quantity of any commodity is diminished
a demand equal to the greater quantity remaining
the quantity of that commodity is defective. It is
therefore impossible, that there should ever be in any
country a commodity or commodities in quantity
greater than the demand, without there being, to an
equal amount, some other commodity or commodi-
ties in quantity less than the demand.
" The effects which are produced in practice, by
the want of adaptation in the parts of demand and
supply, are familiar. The commodity which happens
to be in superabundance declines in price ; the com-
modity which is defective in quantity rises. This is
the fluctuation of the market, which everybody suffi-
ciently understands. The lowness of the price in the
article which is superabundant soon removes, by the
diminution of profits, a portion of capital from that
line of production ; the highness of price in the
article which is scarce, invites a quantity of capital
i;i; \\n i SR OP MONT.Y. 51
to that 1> ranch of production : till profits are equal i/< I
that is, till the demand and supply are adapted to
one anotli'T
" The strongest case which could be put in favour
of the supposition that produce may increase faster
than consumption, would undoubtedly be that in
\vhk'h every man consuming nothing but necessaries,
all the rest of the annual produce should be saved.
This is, indeed, an impossible case, because it is in-
consistent with the laws of human nature. The con-
sequences of it, however, are capable of being traced ;
and they serve to throw light upon the argument by
which the constant equality has been demonstrated,
of produpe and demand.
" In such a case, what came to every man's share
of the annual produce, bating his own consumption
of necessaries, would be devoted to production. All
l>i<"luction would of course be directed to raw pro-
duce and a few of the coarser manufactures ; because
these are the articles for which alone there would be
any demand. As every man's share of the annual
produce, bating his own consumption, would be laid
out for the sake of production, it would be laid out
in the articles subservient to the production of raw
produce and the coarser manufactures. But these
articles are precisely raw produce, and a few of the
coarser manufactures themselves. Every man's de-
mand, therefore, would consist wholly in these ar-
ticles ; but the whole of the supply would consist
also in the same articles. And it has been proved,
that the aggregate demand and aggregate supply
are equal of necessity ; because the whole of the
annual produce, bating the portion consumed by
52 LECTURES ON THE
the shareholders, is brought as the instrument of
demand ; and the whole of the annual produce, with
the same abatement, is brought as supply..
" It appears, therefore, by accumulated proof, that
production can never be too rapid for demand. Pro-
duction is the cause, and the sole cause, of demand.
It never furnishes supply without furnishing demand,
both at the same time, and both to an equal extent."
Such is the argument of the late Mr. Mill ; which,
leaving the thing called money out of the question,
it is, I submit, quite impossible to refute ; and yet,
perhaps, every person in this room will at once be
prepared to say
" But if this be true, there must surely be some coun-
teracting principle at work among us ; for, practically
speaking, I deny that production is at present the
cause of demand. I deny that supply and demand
are convertible terms. I deny that it is now impos-
sible to increase the one without increasing the other,
both at the same time, and both to an equal extent.''
And with ample reason would this objection be
raised, for there is a counteracting principle at work
among us ; and hence production is at this time no
more the uniform cause of demand as the meaning of
the term demand is universally and properly under-
stood than it is the cause of the annual prevalence
of the east wind in this city during the spring months
of every year of our lives. The nature of this coun-
teracting principle I shall duly and fully explain to
you.
I pray you, however, not to include me amongst
the non-disciples of the political economists. In the
course of these lectures I shall have no occasion to
NATURE AND USB OP MONEY. 53
oppose any doctrine of the laja PF T Ad* !n
although j >h.-ill certainly as>umr one of his prin-
riples l.v and 1'v. and contend for its importance to a
much greater exit- in than hi- him.srlf has done.
I'Yoin Mr. M'Cullocli, thru, a living author, we
shall now take a few sentences, which should be
correct, but which unhappily are, on the contrary,
a mere tissue of error.
l-'i >r example, speaking of this same subject of gluts,
he says : " Every man's object, in exerting his pro-
ductive powers, must be, either to consume the entire
pro- luce of his labour himself, or to exchange it, or
portions of it, for such commodities as he wishes to
obtain from others. Suppose, now, that he directly
consumes everything he produces : it is obvious
that in such a case there can be no glut or excess ;
for, to suppose that commodities, produced in order
to be directly consumed by the individuals producing
them, may be in excess, is equivalent to supposing
that production may be carried on without any
motive, or that there may be an effect without a
cause ! When individuals, instead of directly con-
suming the produce of their industry, offer it in ex-
change to others, their miscalculation may occasion
a glut. Should A, for example, produce commodi-
and offer them in exchange to B or C, who is
unable to furnish him with those he is desirous to
obtain, he will have miscalculated, and there will be
a glut : he should, it is obvious, have either offered
his commodities to others, or have applied himself to
the production of those which he wanted. This,
however, is an error that will speedily be rectified ;
for, if he find that he cannot attain his object by
54 LECTURES ON THE
prosecuting his present employment, he will forth-
with set about changing it, producing, in time to
come, such commodities only as he can find a mer-
chant for, or as he means to consume. It is clear,
therefore, that a universally increased facility of pro-
duction can never be the cause of a permanent over-
loading of the market."*
Now, really there is something very tantalizing in
all this. Mr. Mill, a first-class authority, tells us for
certain that production is the uniform and never-
failing cause of demand ; that the aggregate market
cannot be overstocked ; that supply and demand are
exchangeable terms, and that it is impossible to in-
crease the one without increasing the other, both at
the same time, and both to an equal extent.
Astonished at this statement, so contrary to our
general experience, we turn to our politico-economical
Encyclopaedist, M'Culloch, and he tells us the self-
same thing.
Unfortunately, however, when these wise men have
puzzled us every-day folks pretty nearly as much as
they have puzzled each other, we go to some common-
place, matter-of-fact man of business, and say to him
Now, Mr. A. B., I have recently become a very
learned personage. I have been reading certain cele-
brated works on an interesting subject called Poli-
tical Economy, and the writers tell me that " Pro-
duction is the cause, and the sole cause of demand
that you cannot increase supply without increasing
* A most unmistakeable reiteration this, of the late Mr. Mill's
argument, already quoted in full, but wanting in the item honesty,
being unacknowledged.
NATURE AND USB OF MONEY. 55
demand, both at the same time, and both to an equal
IK. I 'ray, Sir, in your experience do you find
H sot
Imagine the reply for I will not weary you with
any lenirthenr.l attempt to put it into words. "A
theory, Sir a mere theory, and one, depend upon it,
in \\hirh there is no truth" would be the substance
of his remarks. And such would undoubtedly be the
correct answer.
Then comes the great question now before us
" If our existing monetary system were to be dis-
carded, and if what I call a sound one were to be
established in its stead Would production really and
practically become the cause of demand ? or, in
other words, would it, speaking always of aggregates,
be precisely as easy to sell goods at a reasonable
profit as it now is to buy them at a reasonable price,
and that ad infinitum?"
Most assuredly it would] and I challenge the criti-
cal acumen of the three kingdoms to gainsay the as-
sert ion, or to adduce any, save the most puerile and
absurd arguments, in refutation of this most import-
ant doctrine. In a word, the opinions of Messrs.
Mill and M'Culloch upon this subject are not true, but
they should be true, and true they may become when-
ever the public shall think proper to make them so,
and that to the very letter. Both these gentlemen,
however, have failed to take cognizance of another
principle at work amongst us, by the operation of
which their reasonings have been falsified, their ex-
pectations frustrated, and their conclusions very
properly set aside by every practical man, as the
tin 'oretical dogmas of a school oferror: 1 1 1
56 LECTUKES ON THE
of the case being, that production is the natural
cause of demand, ad infinitum, without reference to
any monetary system or systems whatsoever ; but
that, unhappily, the monetary systems adopted by
this and other nations have converted this inestim-
able principle into a dead letter.
NATUBE AND USE Qt MONEY.
LECTURE III.
PBODUCTIOS, uaturally the cause of Demand, is now the effect of
it the operations of our existing monetary system having re-
rersed their position. The co-equality, therefore, of Production
and Demand which has thus been insanely suspended, must be
restored, ere it can be potriUe for mankind to prosper.
IN my last lecture I endeavoured to show that,
apart from all monetary considerations whatsoever,
production is the cause, and the sole cause of de-
mum! ; that supply and demand are exchangeable
terms; and that, in the aggregate, the one should ever
be precisely equal to the other. The existence of
over-production, therefore, in these circumstances,
would evidently be impossible. Disproportion may
exist, no doubt, but this is an evil which, in the scape-
goat phrase of the political economists, will very
speedily cure itself.
It is however obvious, that if a great number of
persons should meet together in a public market, for
the purpose described in my last lecture, namely, that
of exchanging amongst each other the varied pro-
ducts of their respective industry each one having
at once something to dispose of, and at the same time
a miiltitmlr of requirements they would speedily
ti:nl tlu'iux-lves in a most unmanageable position.
58 LECTURES ON THE
A has food, B clothes, and C a house, to sell. D has
furniture, and E fuel, to dispose of. But, unhappily,
it is all but certain that no two persons out of any
number that might be thus collected, would chance
to be in the fortunate situation of mutually requiring
the precise kind and quantity of commodities which
they should wish to buy and sell. A, for example,
has bread to dispose of, and D a mahogany table.
But even suppose A to be in want of the table, this
article must surely be worth a great deal more bread
than D can require at any one time ; and, besides, the
proprietor of the table is in quest of many things in
addition to bread. He wants, perhaps, a coat, a hat,
or possibly a gallon of whisky, all of which articles are
the respective merchandise of other dealers ; and the
table, it is clear, cannot, without injury, be cut up
into as many parts as its owner may require articles
of food or dress in exchange for it.
The man C, again, is, if possible, in a still worse pre-
dicament. He is in search of twenty different things,
at least, but the only property he has to offer in ex-
change for them is a house, which one of the mer-
chants with whom he desires to deal may chance to
want, but who, unfortunately, is not in a position
to give in exchange for it the very numerous com-
modities which the would-be vender of the house
requires.
In what manner, then, are these bewildered mer-
chants to exchange their commodities amongst each
other 1 It being premised that the principle of equity
is recognised by all as the basis of their dealings :
each one expecting to obtain his due, but nothing
more than his due : being, in short, equally pivp;ircl
NATURE AND USB OF MIT 59
to give justice and to receive it : but in what manner
is he to act ?
Well, then How would the principle of giving
equal weight for we'ujlit ;UI-\MT the purpose of these
nit n liants ? Assuredly not at all ; for a pound of
watches, for example, would cost many times as
much labour to produce them as a pound of potatoes.
An elegantly-wrought silk dress or shawl, again, would
hardly be given in exchange for an equal weight of
common canvass or cotton cloth. Equal weight for
weight, therefore, could not ansv.
Try next the effect of measure for measure longi-
tudinal, to wit. But here we are no better off; a
yard of broadcloth for a yard of tape, for instance !
Tin iiK-.juality of labour required in their production
respectively, at once settles the question ; and hence,
then f IT. \\ith longitudinal measure for measure, we
are in no better plight than we were with weight for
weight.
What, then, remains for us but to resort to solid
contents f A cubic foot of coal, for example, in ex-
change for a cubic foot of iron, lead, copper, silver,
ir"M, or of precious stones ! And why not? Be-
cause, and solely because, it would cost a hundred,
a thousand, or a million times as much labour to
obtain a cubic foot of these latter commodities as
it would to obtain a cubic foot of the one first men-
tioned. It might, for example, require the labour of
one man for a century even could he live, enjoy
i, and follow the pursuit so long to collect a
cubic foot of diamonds, whilst the attainment of a
cubic foot of coal, under ordinary circumstances, would
the work of but merely a few minutes.
60 LECTURES ON THE
In equality of number, again, we should seek in
vain for any measure of value. An equal number of
sheep, as an article of food, could seldom equitably
exchange for an equal number of oxen ; because the
labour and material itself the result of labour re-
quisite to feed and tend the former must necessarily
be much less than that which would be required to
feed and tend the latter. And although the carcass
of an ox will go much farther as an article of food
than that of a sheep, this consideration, taken by it-
self, has nothing whatever to do with the cause of its
commanding a higher price in the market. It is not
equal quantities of equally nourishing or life-sup-
porting food that exchange for each other, either
equitably or practically ; it is the cost of production
or relative quantity of labour expended upon them,
that makes one thing dear and another cheap ; or,
more properly speaking, which makes one thing com-
mand in exchange a totally different quantity of
another thing, and that whether the respective quan-
tities be estimated by weight, by measure, or by
number.
Equal utility, again, may possibly at some time or
other have occupied the minds of speculators whilst
looking for a measure of value. But to lay no stress
whatever on the fact that, in particular cases, com-
modities are useful or otherwise in proportion to the
estimation in which they are held to be so by men
individually, it is obvious that water, for example, as
a general rule, is of infinitely more utility than wine ;
and yet no one would ever think of comparing the
exchangeable qualities of wine with those of water.
From what has been stated it will be seen that, as
N ATUKB AND USE OF MONEY. 61
nrit IK r mi ri|iial weight for weight, measure for
measure. nnml>er tor nunil'cr. nor on equal estimated
utility, can any equitable jtrinci^/t- of exchange be
led, we must continue our search for one else-
uhere. lii a \Minl. what we require is a measure of
value, without which, of sonic kind or other, good,
bad, or indifferent, commerce would cease to be com-
n ii ice, society would cease to be society, and the en-
tire race of civilized man would degenerate into a state
of barbarism. For if all our exchanges of labour for
ir, of produce for produce, and of mutual service
t'< >r mutual service, were to be restricted in number and
extent to those which could take place in the ab-
sence of any recognised measure of value, every
man. it is clear, must necessarily consume the best
half of his time in exchanging, by the clumsy pro-
cess of barter, the surplus produce of his own indus-
try for portions of the surplus produce of the indus-
t iv of fifty other people. In short, as already stated,
in addition to scales and weights, to measures of
length and measures of solidity, we must have a
measure of value, by means of which all transactions
between man and man, other than those of gratui-
tous service or mere barter, may be carried on ; and
we must have also instruments of exchange.
And thus we are now conducted by gradual and
easy steps to the consideration of the great problem
which we have proposed for our solution money ;
and not, I trust, for our solution only, for throughout
tin- length and breadth of this land there are at
the present time a great number of persons who
strongly doubting the soundness of the existing mone-
system seem magnanimously to have resolved
62 LECTURES ON THE
no longer to inherit the pecuniary wisdom of their
forefathers, without testing its quality, and judging of
it for themselves. And great and glorious will be the
day for the sons and daughters of mankind, when
this resolve shall have been fully, fairly, and generally
carried into effect.
Premising, then, that the use of money is to enable
us to effect exchanges, which can neither be equitably
made upon the principle of equal weight, equal
measure, equal number, or of equal utility, the desir-
able qualities of money may be thus enumerated :
I. Durability. This quality is essential only so far
as regards the intrinsic value of money itself. If a
pound in money should, as in the case of gold coin,
carry within itself the value which it represents, the
quality of durability is of much importance, because
in the absence of it, the mere annual cost of the ma-
terial whereof to make money would constitute a
serious annual tax upon the country. But if, on the
other hand, the money chiefly in use be merely re-
presentative, as in the case of bank-notes, then as a
pennyworth of paper and printing may represent
from two hundred and forty times to two hundred
and forty thousand times its own value, the quality
of durability sinks into insignificance, and may indeed
be altogether set aside as one of no importance what-
soever. So far, then, we have every reason to be
content with money as it is.
II. Portability. Portability, or the facility of
transmitting money from place to place, at very little
expense, in sums the smallest or the largest, and that
with perfect security against loss, is already so admir-
ably afforded in this country, that there would seem to
NAT i in: AND USE OF MOV ;3
be ban 11 v any room lor improvement upon our existing
monetary system in this particular. Whilst, again, the
portability of money which any person may wish to
nl with his >r her own hand is such, that a
duchess might easily carry about with her enough
money to purchase the commodities of half a street,
without hein.ir at all inconvenienced by the act of be-
coming her own purse-bearer. So that here again
all is well with money as it is.
III. iJii'tsib titty and consequent Convenience.
None of the inconveniences which we have enume-
l as unavoidable under any system of mere barter
a iv at all chargeable against our present usage. A
farthing is a very small sum of money, a million of
pounds sterling a very large one ; and yet whosoever
may be indebted either in the one amount or the
other, or in any amount whatever between the two,
can have no difficulty in settling with his creditor,
if he have but enough of money wherewith to pay
him the existing divisibility of money being suffi-
ciently perfect for all practical purposes.
IV. Uniformity of Quality and Weight.* The
former is insured to us by the Mint Stamp impressed
upon our coins ; whilst the impress of the genuine
plates <>{' the iv>pective banks of issue, guarantees
goodness of paper money to the extent, that
is to say, of the banker's ability to redeem it. The
is, indeed, thrown upon us to detect the fictitious
or note, as the case may be, whenever either the
or the other may be offered to us. But experi-
has proved that there is not any great practical
* Of wfiyAt in certain dues only, M will be fully demonstrated
in a future lecture.
64 LECTURES ON THE
difficulty in detecting either. So that here again we
must hold our monetary system sufficient as it is.
We have no mode, certainly, of ascertaining the
weight of any coin, except that of taking the trouble
to weigh it. But to do this seems to be necessary
only in the case of gold, for persons, now-a-days,
are but seldom seen to weigh silver money, and copper
money never. The word still therefore is content.
V. So many good and useful qualities being thus
conceded to our monetary system as it is, wherein,
it may be asked, consists its great defect f What
is the bad quality which has so far overbalanced all
the good ones in my estimation, as to have induced
me to volunteer a course of lectures against it, and
to offer to discuss the subject with the Editor of the
Leading Journal of Europe, for the sum of five hund-
red guineas ? *
My objection to the existing monetary system is,
in a single word, its dearness. I admit the sufficiency
of its durability, portability, divisibility, convenience
when we have it and uniformity of quality and
weight ; but I altogether deny it to possess the merit
of cheapness.
Premising, then, that the whole amount of the
taxes is, in round numbers, about the sum of fifty
millions of pounds sterling per annum ; premising
that the whole income of the country has been vari-
ously estimated at from four hundred millions to five
or six hundred millions per annum ; and premising
that the national debt stands in our books at some-
where about eight hundred millions What is the
annual cost of maintaining our monetary system f
* See explanation in the Appendix.
NA'ITRB AND USB OP MON ll/i
lit as much as one million of pounds sterling, or
millions? -five millions, or ten millions ? twenty
millions, or fifty millions? In a word, are all our
otluT taxes put together as serious a burden upon
the country as tin- single tax on our money ? or does
tin- cost of our money maintenance amount to any
less sum than one hundred millions of pounds per
annum v in other words, to any less sum than one-
eighth part of that greatest of all bugbears the
national debt itself ?
I reply to these inquiries by affirming that, upon
tin- most moderate computation, the cost of our
monetary system is certainly not less than one
hundred millions per annum. A larger sum than
this I believe it to be, and probably a much larger
one ; but one hundred millions per annum is the very
lowest fraction that we pay for it. And if I should be
able to make out this statement to your satisfaction,
as well as to my own, I expect you will agree with
me in thinking, that our said monetary system is
wmttiny in the essential quality of cheapness that
u have paid too much for our whistle and that
if it really costs us the sum of one hundred millions
per aim inn to keep it in tune, the sooner we get rid
of the gilded toy the better.
On the altar of this golden calf, then, which in
ignorance we have set up and worshipped, have we
sacrificed that great principle in Political Economy
which I explained to you in my last lecture, Produc-
tion the Cause of Demand. In vain did the late Mr.
Mill labour to prove that production is the cause of
ilriiiHii'l -that supply and demand are exchangeable
terms that we never can increase the one without
66 LECTURES ON THE
increasing the other, both at the same time, and both
to an equal extent ; for to the Idol gold have we
sacrificed every vestige of the principle on which the
late Mr. Mill reasoned to this conclusion. And
equally in vain is it that the existing Mr. J. R.
M'Culloch has insisted, in the argument to which I
called your attention the other evening, on the self-
same doctrine. He and Mr. Mill have alike failed to
perceive, that whilst every word of their arguments
upon this subject should be true, every syllable of
them is in reality false. Production is not the uni-
form and never-failing cause of demand now ; would
to God that it were so ! in which case we should hear
very little more either of English Chartism or of
Irish Repeal. The principle, in short, for which
both these gentlemen one of them so ably have
contended has no practical existence. It has been
expelled in the meantime from the face of the so-
called civilized world ; which world would, however,
best exhibit the reality of its civilization by recalling
this important principle, and bringing it into full
operation with the least possible delay.
But where, it will be demanded, do I get my
hundred millions per annum cost of monetary mainte-
nance in the present day 1 Is it in the wear and tear of
the gold itself 1 Is it in the cost of the precious metal,
with so large a quantity of which it is necessary for
us to be provided to carry on our trade "? Or is it
by reference to the indirect, tedious, and unsatisfac-
tory manner in which money is supplied to us, by
parties over whom we have no control, that I seek to
justify the bold assertion which I have made \ As-
suredly in none of these ; for I am quite able to give
N MURE AND USE OP MONKY. 67
you the entire sum of cm- hundred millions, \vliich I
li ;i\ i- set down as being the minimum cost per annum
of our present monetary system, in a tingle item.
Taki . \\n>\\, first, the present annual income of the
country at///v hundred millions, at \vhidi nun I tliink
it h;i> IMVH MTV nm'lrnitely estimated ; seeing that
without going into any other evidence the taxes we
pay annually are about fifty millions, and the total
income of the country certainly cannot be less than
ten times their amount.
Then take, secondly, the annual income of the coun-
try, as it mnild be under the influence of a monetary
system, connected with which /iroportionate production
ii'<il<l rt'ullii become the uniform and never-faHiiKj
cause of demand when to sell goods at a fair price for
money would be just as easy as it now is to buy them
at a fair price with money, and that ad in fin it inn.
Say, in a word, that we are placed in circumstances, by
means of which the whole productive powers of the
nation would be brought into full and vigorous opera-
tion ; and then say whrthi>r the entire <n1 united pro-
ducts of the labour of this country would or would not
be increased in the ratio of five to six?
And if you admit that, under the circumstances I
described, the products of labour certainly would
be increased to this extent, then you do also confess
that the actual cost to this nation of its existing mone-
tary system amounts to the sum of at least one hun-
livd millions per annum, taking goods, money, labour,
and everything else at their present money value. For
' nature of our monetary system it is wholly and
uttrihtitiililf, I It at proportionate production is not
nt this present hour the cause of demand, ad infinitmn.
68 LECTURES ON THE
not only in this country but in every other civilized
portion of the globe which we inhabit.
But to explain the precise manner in which the
existing monetary system operates so fearfully to
our disadvantage :
It is, then, not merely a well-understood principle
in Political Economy, but it is also a fact I make
this distinction because many of the so-called well-
understood principles in Political Economy are not
facts that whenever the demand for any commodity
increases, the money price of that commodity rises,
as compared with other things ; unless and ob-
serve particularly the nature of the exception the
commodity itself be of such a kind that it can be
brought to market without any increased rate of cost,
in sufficient quantities to supply the extra demand,
in which case it will not necessarily advance in price.
Now, take any commodity you please, not actually
multipliabk ad libitum by the exercise of human labour,
and let it be your measure of value. In ounces or
pounds, in yards or acres of this commodity, let all
your money-contracts be made, all your goods be
priced, all your taxes levied let, in a word, your
pound, shilling, and penny consist respectively of a
pound-weight, a twentieth of a pound- weight, and a
two hundred and fortieth of a pound- weight or measure
of this commodity. Then be it gold or silver, brass
or copper, pearls or diamonds, or be it some especial
thing, brought from another world for the express pur-
pose of being to us money, and I defy the wit of man
to show that the two things this measure of value, as
it is supposed to have become and the great principle
of production the cause of demand, can by any possi-
NATURE AMD USB OP MOM.V. 69
bi/ift/ co-exist for onesnlilnri/ //>'/-, in ///// nn(inn upon
the face of the earth ! And why '. Simply because to
ili- existence of <///// mercantile system in which pro-
duction shall he tlit- uniform eau-e i.f demand, money
tin- modes of using it remaining the same must
increase just exact hi and precisely as fast as all other
market, -i I le commodities put together ; for if it do
do this, every commodity multipliable by the
exercise of human industry faster than money itself
although costing no diminished labour to produce it,
will fall in money-price ; and from that instant, the
greatest and most important principle in Political
i'>my that ever occupied the mind of man Pro-
duction the cause of Demand is expelled from our
commercial system, and, practically speaking, an-
nihilated.
I repeat, that, the mode of using it remaining the
same, it is absolutely necessary to the natural deve-
lopment of the wealth of nations, and to the wellbeing
of society, that money should increase just exactly
and precisely as fast as all other marketable commodi-
ties put together, but no faster.
Suppose the existence at the present time of a mil-
lion pounds' worth of marketable property of various
kinds in the city of Edinburgh seeking for customers,
and that what would now be called a fair proportion
of customers, with money in their hands, are both able
and disposed to buy the whole of it. When, however,
the customers are just about to make their intended
purchases the property for sale comes, somehow or
other, to be doubled ; whilst there is no increase, on the
other hand, of money wherewith to buy it. It is ob-
vious that all the property for sale must inevitably fall
in f trice. Practically speaking, however, the supposed
70 LECTURES ON THE
addition to the stock never would take place, seeing
that, however able parties might be to bring all these
goods to market, they certainly never would bring
them to such a market, knowing, as they could easily
do by a little timely inquiry, the state, present and
prospective, of the market.
Thus production, naturally the cause of demand,
is practically the effect of it, the operations of our
monetary system having reversed their position.
Whilst, therefore, it is admitted that money, as it
is now constituted, has afforded us the advantages of
durability, portability, divisibility, and some others ;
whilst it has superseded the cumbrous and imprac-
ticable system of barter, or the direct exchange of
goods for goods of all kinds and denominations ;
it has, at the same time, suspended the operation of
a principle of which we were in possession before
money existed at all, of such inestimable value, and
at the same time so peculiarly applicable to the pre-
sent exigencies of society, that we can no longer af-
ford to do without it.
In short, we have sold our birthright ! Esau sold his
for a mess of pottage, and we have bartered ours for
gold ! Nay I say it with reverence we have gone
the length of countermanding the very decrees of God
himself, and that whether we take those decrees from
the book of Genesis or from the book of Nature ; for
it is equally and unmistakeably affirmed by both these
authorities, that man shall live by the sweat of his
brow that he shall live by labour.
But no, says our golden standard of value ; man
shall not live by the sweat of his brow, for he shall
not labour to any greater extent, at least, than it
may be my will and pleasure to permit him. He
NATURE AND USB OP MOM V 71
shall live henceforth by the sweat of his brain. I1--
shall not obtain and enjoy that quantity of wealth
\\hii-h his in.lustry would enable him to create, but
he shall forthwith be restricted to such a measure of
wealth as his ingenuity may enable him to exck<i/i</<'
t"i certain (jiiantitit's of one of the scarcest commo-
ilities upon the face of the earth.
1'Yom the hour, then, in which men, by human
laws, declared that gold should become the measure
of the value of all other commodities, of all debts, of
all pecuniary obligations, and of all pecuniary credits ;
from that hour, I say, a Law of God was, by an Act
of the British Parliament, broken, set aside, repealed,
suspended, and obedience thereunto declared punish-
able : punishable, too, not by capricious man, not by
the judges presiding in our courts of law, in whom
is oftentimes vested the power of mitigation, when
the cases before them may seem to warrant the ex-
ercise of the prerogative of mercy ; but punishable
by the never yet broken law of natural consequence.
For certain it is, that the self-same Act of Parliament,
which t./v//Wgiihl into our standard of value, debased
production, formerly her progenitor, friend, and equal,
into the handmaid of demand.
And herein consists the great secret of all our com-
mercial troubles. A secret undiscovered by Smith.
blundered alike by Mill and M'Culloch, the key-stone
of the whole Malthusian delusion, and the stumbling-
block of those inveterate players at blind-man's-buff*
Nii- Robert Peel and his numerous disciples: amongst
whom there is not one man who can put pen to paper
upon the subject of supply and demand without forth-
with committing some egregious absurdity or other.
72 LECTURES ON THE
Dr. Adam Smith, unfortunately, did not record
his opinions upon this particular subject at any
length ; and that for the best of all reasons, perhaps,
namely, that he never formed any.
Mr. Mill asserts boldly enough, and labours, indeed,
to prove, that production is the cause of demand, and
that ad infinitum forgetting, obviously, that if this
were true, the task of selling goods at a fair price for
money would be exactly and precisely as easy as that
of buying them with money. Then into the head of
Professor Malthus, again, it certainly never entered,
whilst composing his two volumes of anti-population
denunciations, that demand is now the cause of pro-
duction; and that these two words must change places
that is to say, production must become the cause of
demand, before any one sentence of his theory can
be examined with all the facts of the case before us.
And is it a matter of no consequence to the pro-
duction of food, for example, that the actual quantity
of food produced depends now upon the prospective
quantity of gold coin that may be ready in the market
to buy it \ in place of depending, as depend it should,
solely and singly, upon our ability to produce a suffi-
cient quantity of food itself for the use of the existing
population ? It would, for instance, be a mere truism
to say, that the quantity of fish at present brought to
market might easily be increased a hundred-fold a
thousand-fold would be much nearer the truth. And
if this commodity as dried and salted it should he-
were itself the cause of demand equal to the extent of
the quantity produced, I wonder when we should hear
of such another Scottish Destitution Fund as that
which marked but yesterday, in characters never to
N \Ti i:r. AND USB OF MON 7*
be i-lVared, at once the benevolence and the ignorance
<>f thi> <z aeration !
J f. in the aggregate, it were as easy to sell the pro-
tlinv .. I mm's labour at a fair profit as it is to set
men to work, what would become of poverty \
what of our periodical subscriptions for the support
f UK ii !>oth able and willing to labour for their own
support ?
Then if we pass from the writings of our political
economists to those of the periodical critics and re-
\ie\\ers of the day, appeareth it ever to enter the
heads of any of these gentlemen I speak of t lit in
as a class that production, naturally the cause of
demand, is now the effect of it \ and that, therefore,
as a necessary consequence of this state of things, it
is utterly impossible for any living man to measure
the extent of our productive resources, during the
existence of any such condition ? The answer unfor-
tunately is, that these gentlemen, collectively speaking,
understand the subject precisely as well as so many
children of five years old.
The fact is, that we have bound our trade and com-
merce hand and foot ; and, having done this to our
hearts' content, we gape and stare at each other like
so many persons stupified ! observe, on meeting in
t, "Shocking times these! business very dull !"
To which novel and original remarks, echo replies
"Very!"
What, then, it will be asked, are the proper quali-
>f money ? To which question I reply that they
arc just exactly those which we have- already enumer-
ated, to which add the first, the greatest, and tin-
most i n Us pcnsable quality of all, namely
74 LECTURES ON THE
That money must be of such a nature and quality
that production due proportion being preserved in
the commodities produced shall henceforth resume
its natural right, the right, that is to say, of creating
demand equal to itself; and that, as I have elsewhere
stated, whether production be increased a hundred,
a thousand, a million, or a hundred-thousand-million-
fold. Demand, in short, must ever be able to say to
Production " Still am I your equal in the race."
It is no part, however, of the business of this even-
ing's lecture to show in what manner this great de-
sideratum may be effected : the proposition at pre-
sent before us being merely that production is not
now the necessary cause of demand. And having al-
ready elucidated this doctrine by a general appeal to
facts well known to you all, it yet remains for me to
exemplify still more fully than heretofore, the causes
why, co-existently with the present monetary system
of society, it is a mere impossibility for production to
be the cause of demand at present.
In farther explanation, then, of the principle for
which we are contending, I shall now read over to
you one of my former arguments upon the same sub-
ject, published in 1842.
" The existing limit to production may be easily
defined. Nature is at all times willing that we should
enjoy whatever quantity of wealth our industry and
ability may be competent to fashion out of the mate-
rial that she has so profusely spread before us. Man
can have nothing without exertion ; but never ought
he to attain anything short of those means of enjoy-
ment which his labour can procure for him, as limited
either by its positive exhaustion, or by his own in-
\\T! 1:1; AND USB OF MONn. 75
o!i>|.oMtion t< acti\itv. Hi- has not yet, however, ex-
hausted his productive ]>owera, neither has he satis-
liis wants. The former are so great, that it
would be a difficult task to estimate or mea>ure them ;
whiUt the latter, real and imaginary, are so numi-r-
ous, that the art of supplying tliem is but as the
sowing of see<l <le>tine.l to produce a crop.
The British nation, then, has fixed upon a certain
commodity, and rendered it by law a standard of
value. It has declared that a certain fixed weight of
gold shall be denominated a pound sterling ; and
that the value of all other things shall be determined
lv the number of pounds sterling, or portions there-
of, which they will buy or sell for. The consequence
of this regulation is, that gold being the legal stand-
ard of value, whatever may be the existing quantity
thereof, and of its representative, bank-notes, in the
hands of persons requiring marketable produce, that
mmntttu, be it much or be it little, is the utmost that
can be obtained in exchange for the simultaneously
exist ing quantity of goods seeking to be exchanged
for money in other words, for sale in the public
market. If the quantity of money in the hands of
persons willing to part with it for goods be one hun-
dred and no more, the goods in the market can fetch
on- hundred and no more; and, consequently, if the re
he more goods in the market than are considered by
their proprietors to be worth that sum of money
for example, by one-half, then it is obvious
that the surplus half must either remain on hand un-
sold, or the entire quantity must be reduced in price
to the sum of one hundred pounds, hundreds of
]'mi<U. thousands, or millions, it is all the same.
76 LECTUKES ON THE
" Start, then, with an example, in which both money
and goods may be said to be at par, that is to say,
when all the goods for sale in the market find ready
purchasers at a remunerating price ; and when, also,
the demand for goods is equalled by the supply of
them. Such, then,, being the state of the case, we
have only to keep adding to the stock of goods,
without adding to the stock of money, in order to
obtain a very clear view of the present commercial
state of this country, thus :
Goods, . . 100, money . 100, a fair price.
Increase the goods to 110, money still 100, loss 10 per cent.
Increase the goods to 120, money still 100, loss 20 per cent.
Increase the goods to 150, money still 100, loss 50 per cent.
Increase the goods to 200, money still 100, loss 100 per cent.
Or ?io sales until the tables shall be turned.
" The modes of employing it, then, remaining the
same, the necessity for a circulating medium, which
may constantly and habitually increase as fast as
the aggregate of all marketable produce, is sufficiently
obvious ; for, if money do not do this, one of two
things must inevitably happen either prices must
fall, and that in exact proportion to the difference
between the increase of goods and that of money,
or else production must stop. There is no alternative,
or evasion to which we can resort ; no scapegoat of
any kind whatever, by means of which these conse-
quences can be avoided.
" As, then, the aggregate of goods cannot be in-
creased faster than the aggregate of money, without
the inevitable result of loss to their producers, an or-
dinary consequence is, that loss is the result of pro-
duction. Tempted by a craving disposition to em-
i:r. AND USE OF M"- 77
}>l>y their capital, and " t<> make money," as they call
it. I iy tli. of their trad. -s. mamifarturers, one
!MT <(' them, are for ever over-stepping this line
of denial-ration. I'mt. unfortunately, they do not in
thi> rase makr money, but goods, or rather bads for
a good that can hardly be which sends its manufac-
tmvr into the gazette, and his wife into the poor-
llOll
44 And this it is which constitutes what is miscalled
production. Goods being increased faster than
money, their price falls, and the fool exclaims 'Oh,
the evils of over-production !' whilst it may be de-
monstrated in twenty different ways, thai there
never was, never will, and never by any possibility
can be, any writ thing as an aggregate over-produc-
tion of commodities. It is the under-production of
money, added to a total want of any definite prin-
ci/i/f, either in the increase or diminution thereof,
which constitutes the real evil. Start again at par,
as already defined, a fair profit being the result of
production ; regulate the increase of money by the
increase of goods, instead of regulating, as at present,
the increase of goods by the pro tempore supply of
money, and you may multiply your productions a
hundred, a thousand, a million or a hundred-thousand-
million-fold, and be still as far from over-production
as ever. There will be no such thing ; there can be
no such thing, nor the least imaginable prospect or
possibility of it : Proportionate increase being the
one and only qualification required to the assertion.
" But the increase of goods does not generally go on
\vh -n that of money stops ; for, although imprudence
frequently oversteps the boundary, prudence murh
78 LECTURES ON THE
more frequently restrains us within it : the latter, in-
deed, is the rule, the former the exception. Produc-
tion comes then to a stand-still, and when ? When the
wants of the producers are supplied ! when they are
all physically happy and comfortable! when each and
all of them have a house and home, and the means
of supporting a wife and family, if they chance to
have them ! furniture, musical instruments, books,
and, in a word, whatever is necessary to make life
comfortable, in the ordinary acceptation of the term !
No ! with the ability in their hands to supply every
individual inhabitant of these realms with the neces-
saries, comforts, and many of the minor luxuries of
life, their productive efforts stop and stop they
must, so long as the present monetary system shall
exist and that long ere they have supplied the num-
bers of society with even a sufficiency of the first
necessaries of human life that is to say, with food,
raiment, and decent habitation." *
But there is another view of the subject of money
to which we must now give our attention.
We have, then, a commodity circulating in the world
of business, called money, namely gold. And it would
scarcely affect our argument to introduce the consi-
deration of bank-notes, because bank-notes, although
not made of gold themselves, are, or should be, the
mere representatives, or evidences of the existence,
of gold in store, ready at any moment to be given,
if required, in exchange for the notes in circulation ;
just as the undoubted ownership of the title-deeds
* " Efficient Remedy for the Distress of Nations," by the same
Author, pages 100 to 104.
NATI IM. AM) USE OP MONEY. 79
of heritable property are, to all marketable intents
aii'l purposes whatsor\<-r. . .|iii\alcnt to the produc-
tion ut'thr property itself.
No fixed weight, then, of any valuable thing in this
world ever was, is now, or ever by any conceir(t/>/<-
possllnlitii can become a measure of value.
Gold is the legal measure of value now, no doubt.
But it is so only as in arithmetic two and two might
be legally declared no longer four, but six. Let such
a law be made and then it will be admitted at once
that, legally speaking, two and two are six, and six
tliry will be quite as certainly at least as gold is now
anv ival measure of value. But still two and two are
not six ; neither is gold a measure of value ; neither
gold at any period of time a measure of value ;
neither in this world can gold ever by any possibility
become a measure of value, any more easily than St
Paul's ('athnlral can be sent upon an experimental
trip to new Zealand or the moon.
!' r if gold, instead of being merely nick-named a
measure of value, were in reality one, an ounce of
gold would, under all ordinary circumstances, be ob-
tainable by the exercise of equal quantities of capital,
skill, and labour, usefully employed. A more im-
possibility this, however, for the very sufficient reason,
that whilst capital, skill, and labour may be exercised
in a thousand different ways, and ten thousand more
besides, gold is in an especial manner one of the few
commodities which are not capable of being increased
in due proportion with everything else.
A-ater, for example, were wanted for any pur-
pose, in some particular place the modes of raising
conveying it remaining the same during the whole
80 LECTURES ON THE
period of the requirement the last gallon thereof that
should be required would be obtainable with just as
little labour as the first gallon. But if water of an
especial kind obtainable from some particular well,
and from it only, would answer the intended purpose,
and if the said well should be found to yield but a
constantly diminishing quantity in proportion to the
demands that should be made upon it, then might the
last gallon of water required be obtainable only by a
greatly increased quantity of labour, waiting, and
watchfulness, and hence it might be worth -from two
or three times to two or three hundred times as much
money as the first barrel.
Apply this illustration to gold. Can the metal
gold, here in this country, be obtained at all times,
and under all circumstances, in constantly increased
quantities in exchange for precisely corresponding in-
creased quantities of the products of capital, skill, and
labour, usefully employed ?
Taking the existing quantity and market-price of
goods and gold as the starting-point If we double the
quantity of goods will they infallibly exchange for
double the weight of gold \ If we multiply their
quantity by a hundred or by a thousand, will they
still continue, and that for certain, to exchange for
a hundred or a thousand times the weight of gold ?
Assuredly they will not! and if not, then do I
affirm that gold is no more truly a measure of value,
than ice in hot weather ; which, in exact proportion
as it may become scarce whilst the demand for it
will increase from the self-same cause which melts it,
namely heat will rise in money-price.
Money, be it gold or be it ice, can be no measure
NATURE AND USE OF MONEY. 81
-f Y,ih. , ,i any increase whatever of such aggre-
gate marketable produce, as may continue to cost
>'int of labour to create it, can bo the
c.-iu>e of any fall whatever in the money price of
tli at pm-liice. I say emphatically markehtble produce,
by which I mean to designate all such goods as people
in general are in the constant practice of buying, who
possess the means wherewith to make such purchases
as they desire to make.
If one day's labour of any given kind, duration,
and quality, bring a certain weight of gold, will ten
days' labour of the like description, twelve months
hence, bring ten times, and a hundred days' labour
one hundred times, that weight of gold ?
No person here present needs to be told that it is a
mere matter of chance whether these respective quan-
tities of labour will or will not command equal quan-
tities of money per hour's work, in exchange for
them in the present state of society.
What an utter absurdity, then, is our Parlia-
<try measure of value! Ten times ten bushels
of corn will measure one hundred bushels. Ten
time* ten pounds' weight of tea will weigh one hun-
dred pounds. Ten times ten yards of cloth will
measure one hundred yards. But let the money
tamed by the exercise of any given number of days'
laliour of a certain kind, quality, and duration, be just
now ten shillings, and the money earned by the ex-
ercise of ten times the self-same kind, quality, and
duration of labour a short time hence, may be eighty
shillings, a hundred shillings, or a hundred and
t \\enty si i ill ings, according to the mere scarcity or
plciuifulness of th<- single commodity called ////.
I
82 LECTURES ON THli
Hence is our so-called measure of value a farce, a
fiction, a Will-o'-the-wisp. It is just a pint measure
of to-day, which held a quart yesterday, a gallon
the day before, and may hold a gill to-morrow.
And would to God that it were nothing worse than
this ! but it is something worse It is an instrument
of destruction, compared with which gunpowder is
harmless, and the sword a toy.
For if our productive powers and resources were
in reality so extensive that we could feed, clothe,
lodge, furnish, educate, and otherwise amply provide
for the inhabitants of another planet in addition to
those of our own ; and if we should be inclined to
exercise our said productive powers accordingly,
why then instantly would step forth the law of
gold, and imperatively exclaim, Stop, I command
you! whilst every created man would forthwith
obey the injunction, for the very sufficient reason
that if he should fail to do so, the price in money
of his goods would fall, and hence loss instead of
profit would be his for evermore that is to say,
until he should retrace his steps, and bow in humble
submission to the dictates of a law, originally framed
in the grossest ignorance of its real nature ; tolerated
until this day by the same deplorable folly ; and impati-
ently endured still by men blinder than the mole, and
ten times more stupid than the owl, whose sagacity,
superior to their own, they are for ever accustomed
to libel. Upon the nature of this law, however, the
public seems at length to have fixed its inquiring
eye, as a preliminary to its eternal abolition from the
face of human society. Members of the British Legis-
lature Peel, Russell, Cobden, et hoc genus omne,
P.r. AND USE OF MONET. 83
have yet to become acquainted with the mo.st im-
portant truth, that
No increase of well-proportioned produce, however
t however inconceivably enormous which pro-
duce should continue to cost the same amount of
labour per yard, per pound, or per foot, to create it,
could give occasion to the fall of one farthing in its
money price, had we in practical existence any such
thiiiLT a* an accurate measure of value any more
than weight, measure, or number, can become les*,
jH'i- equal quantity, in o.iiMMjurnce it' its immensity ;
and neither, by any possibility, could well propor-
tioned production in these circumstances ever over-
take demand.
And yet, inconceivable as it will appear to the
future historian of the age in which we live, the fact
that prices fall whenever goods increase at a more
/ rate than money, is perfectly well known t>
the very men who uphold the existing monetary sys-
tem, as proved by their respective writings I These
gentlemen, however, in reasoning upon the sub-
ject, come not to the conclusion that the said mone-
tary system is the greatest absurdity upon the face of
the earth, but at a time when the whole quantity of
our productions do certainly not exceed five-sixths
of their unhirul amount, they forthwith begin to
rave about over-production and over-speculation ; and
strenuously insist that, so far as money is concerned,
all is right or in other words, that it is not food,
clothes, houses, furniture, instruction, and recreation,
for the attainment of which mankind in general should
tight to exert themselves, but for gold, gold,
and nothing but gold. And not even for gold, either
84 LECTURES ON THE
as an instrument of domestic exchange, or as a medium
through which nations may be enabled to come into
more constant and beneficial reciprocity ; but gold
itself the metal gold, is the summum bonum of their
existence, for the attainment of which, by a few
hundreds or thousands of society, starvation to the
working classes, and perplexity, distress, and failure,
as the rule rather than the exception to the classes
mercantile, is not considered to be too high a price.
Think ye that this is an exaggerated or over-
drawn picture of our condition ? It is no such thing !
Truth would carry the same line of argument to a
much greater length than I am disposed to carry it,
at least on the present occasion. What, indeed, I
chiefly aim at is, to put you on the right scent to
the end that whenever the miseries of society may
chance to be the subject of conversation, you may
be able to point with unfailing certainty to those
laws which have condemned our race to an artificial
state of privation and distress. For certain it is, that
our commercial troubles are not natural to our situa-
tion in the world, neither are they irremediable. On
the contrary, they have been created, and to this
day perpetuated, by Act of Parliament, and by Act of
Parliament may they at any time be terminated.
To proceed, however, with our argument. Well
then, in truth, measure of value have we none,
and neither has the public, strictly speaking, an in-
strument of exchange of any kind,* good, bad, or
indifferent.
To weigh, to measure, or to number any sort of
goods, costs us little or nothing ; whilst, strange to say,
it requires the possession of a no less sum of money
l; I. A X I) USE OP 110N E Y. s . >
t/mn they are ivorth, to act as the mere instrument of
exchaii'/ni'i one kind of them for another. In short,
goods must be sold for money to some JTIM.M \\h<>
requires tin -in. before their owner can be placed in
a condition to buy any other goods with the money
hi* own are wortli.
/// place of which I shall prove to you, that all men
may, without a shadow of difficulty y be placed in cir-
cumstances to buy the property of others, the very in-
stant that they are in a position to sell their OH'H :
in which case, production, now the invariable conse-
quence of demand, actual or anticipated, would be-
i -i >ine the unfailing cause of it.
And this proposition, as I shall duly explain, is not
in the least degree affected by the fact, that the
ultimate value of all marketable produce can only
be ascertained by the answer to the question For
how much money will it really sett? which, ind< ><!.
is the self-evident test of all marketable value.
But, what I am here contending for is, not merely
that our present instrument of exchange is imperfect,
but that, in fact, we have no public instrument of
exchange at all.
A number of merchants, for example, meet in a
public market, each of them having goods in plenty
for sale, but nothing else, in consequence of all their
property having been converted into stock. In what
ner, then, are they to exchange amongst each
oilier the various commodities that individually and
collectively belong to them ?
Their condition is obviously that of a fix ; for
although all of them are anxious to sell, that they may
wards be able to buy, none of them can
86 LECTURES UN THE
because none are in a condition to be the first to buy :
their trade, therefore, is at a stand-still.
But where is the banker ? where the man of gold ?
will not he place them in a situation to do all that
they require ?
Verily, he will not ! In his private character, in-
deed, he will buy from them just so many commodi-
ties as he himself may require for his own use or
consumption ; but in his capacity of banker, nothing.
In exchange for his gold, he will take neither tea
nor sugar, cloth nor canvass, tables nor chairs. And
if you have any doubt upon the subject, just go
to-morrow to the Bank of Scotland, the Royal Bank,
or to the British Linen Company, with a drove of
oxen, a score of sheep, or fifty dozen of wine, and
ask the teller to place the same to the credit of
your account.
To which request he will assuredly reply " Sirs,
for oxen we have no byre, for sheep we have no pas-
ture, and for the reception of wine we have no cel-
lars. Upon the security of these things, or some of
them, under certain arrangements, we may possibly
lend you money at the current rate of interest, but we
buy them not. You deal respectively in the goods
you have enumerated ; we deal in money, which it
is our business to sell, to lend, and to exchange only
for money ; and you have no more business to come
here with your oxen, sheep, or wine, and to ask for
money in exchange for them, than you have to take
a leg of mutton to the box-office of the Theatre-
Royal to pay for two or three seats."
Such, however, being the state of the case, it is
clear that there is no public instrument of exchange in
NATURE E OF UU\ 87
existence; no mere instrument ever ready to perform
for all and sundry that duty which neither scales nor
weights, measures nor numbers, can perform for
t hrni.* And hence demonstration in another shape-
That production is not now the cause, and the sole
cause of demand :
That to sell goods at a reasonable profit for money
)>. in the aggregate, a far more difficult thing at pre-
sent than to buy goods at a reasonable price, with
money in our hand :
That supply and demand are not just now ex-
changeable terms: and finally
That it is possible to increase supply without in-
creasing demand, and that to a fearful extent.
And, under this head, these conclusions are all that
I contend for. But in yielding your ready assent
thereto which I have very little doubt you will
remember, and carry home that remembrance to
the circle of your own firesides, that in assenting to
these statements, you are flying in the face of
learned professors of Political Economy, and prac-
tically telling them, that one of their most important
and best established doctrines is a mere delusion.
On this subject I have only farther to state, that
in the course of these lectures I shall endeavour to
describe to you a species of money, in which may be
concentrated all the essential qualities which money
should possess ; and, consequently, by the adoption
* The desideratum in money is, that it may enable any man, at any
time, to exchange any article, of any value, for an equal value of
whatever marketable commodity he may please to have in its stead,
and that with the least possible expense of time, of labour, and of
anxiety. Social SytHm, pngt 62.
88 LECTURES ON THE
of which, not only would well-regulated production
become the unfailing cause of demand ad mfinitum,
but by the use of which also, the entire system
of commercial affairs would be erected on a per-
manently prosperous foundation. Pecuniary diffi-
culty, in short, amongst the manufacturing and mer-
cantile classes of society, and the want of employ-
ment amongst the classes that are productive, may at
any time be rendered the fault of mankind rather
than their misfortune.
So far, then, I have endeavoured to show you, in
the first place, that, without reference to any mone-
tary system whatever, effectual demand or, to speak
more fully, the desire to possess any commodity for
sale, combined with the ability to give an equivalent
for it depends upon production ; and in the second
place, that this most important principle, owing en-
tirely to our monetary blunderings, has become in-
operative, a dead letter, a thing of no existence,
excepting only in the delusive dreams of certain
political economists.
The obvious course, then, which we have to pur-
sue, is for every manufacturer, merchant, tradesman,
and productive labourer, to unite, as it were, in one
mind and in one body, for the purpose of adopting
such measures as, without any uncalled for or un-
reasonable delay, may be calculated to restore the
invaluable birthright of which we have been de-
prived the right to labour in our respective cal-
lings that we may live ; and the right to live, as men
should live, who, having labour to perform, are both
able and willing to perform it.
Be not, however, startled by the word unite, for
NATURE AND USE OP MON 89
I have no bee-hive or other combinative system
of any kind in store for your approbation or oon*
tit lunation. I want no greater degree of mutual co-
operation, confidence, or good faith bet PMB man and
man. than that \\hich is ut present common through-
out the whole of Knuland, Scotland, and the better
part> ft Ireland. What 1 de>iro to see is a firm and
unalterable determination on the part of the PuMi<\
to require at the hands of Government a thorough
ami <;,iiti>lfte revision and reformation of the laws,
of this country relating to money : an imperative
and long neglected duty this, which must be per-
formed sooner or later, and therefore the more
lily it may be taken in hand the better ; for,
commercially speaking, our false monetary position
is the one and only cause of our misfortunes.
And depend upon it, that mere excuses for the de-
lay of monetary reform, will not much longer be ac-
cepted in lieu of monetary reform itself. The pub-
lit will not for ever submit to be silenced by the
ivi it -ration of such quibbling and evasive nonsense
a^ that with which we have recently been satiated
by the Times newspaper. To some extent, at least,
we are at length aroused to the importance of the
thing called money ; the discussion of which seems,
indeed, likely to become general throughout the
country. And, if once awakened to a thorough cou-
v in ion that there really is some deeply-rooted evil
in our monetary system, let past experience ans\\ei
the |iii-stion Whether it is likely that the subject
will ever again be allowed to rest until the necessary
alteration in the laws relating thereto shall ha\e
i attained '
90 LECTURES ON THE
The newspaper press is unhappily a hundred years
behind itself in this matter : it comprehends neither
the nature, cause, nor extent of the evil by which
we are afflicted. Still, there are unmistakeable signs
of growing attention to the subject of money ; and
therefore, as truth is at all times best elicited by
controversy, I shall endeavour, in the course of a
short time, to stimulate the inquiry by the offer of
a premium to whomsoever may be able to produce
.the best answer to the opinions I am now submitting
to you, provided a competent and impartial tribunal
shall declare such answer to be a refutation of my
opinions.
I repeat, however, that I have no combinative
scheme to propose for your adoption. "We require no
reconstruction of society, in order to increase our
annual income a hundred millions or so. A few
salutary money-laws are all that are wanted, along
with the repeal of some that are absurd. Permission
to exchange the various products of our labour
with each other, which permission is now withheld
from us by Act of Parliament, must be conceded
to us. In short, a channel of communication must
be opened between man and man, by means of
which mutual service may henceforth be given and
received, and that upon a principle really deserving
of the appellation -free.
Observe, then, that over-production a thing of
which we so frequently hear in the course of our
ordinary intercourse with society is merely another
name for superfluity.
Now, in the absence of the power of exchanging^
what is the value of a superfluity ? or of fifty super-
N ATI HK AXl I'SE OF MO V !' I
fluities ? or of an aggregate superfluity of everything
upon the face of the earth ' The obvious answer is, of
no value at all! A man. f<>r example, may be pos-
sessed of a coal-mine ; but beyond the quantity of
coals which hr himself may require to consume, all
that remain upon his estate, are to him utterly desti-
tute of value, if he be not able to exchange them for
other things. And so it is with commodities of every
kind. To use, consume, or to exchange, is the object
of all production ; and, consequently, if we be placed
in circumstances wherein we can use only or con-
Mime, it is quite possible for us to be a nation of artifi-
tialpaupen, \\hilstwemight at any time be converted
info a nation of comparatively wealthy men, merely
by the opening a home market amongst ourselves.
It is obvious, however, that the aggregate market
must ever be over-supplied, so long as our ability to
produce shall continue to be greater than our ability
to exchange ; or, in other words, so long as it shall
continue to be a more difficult thing to sell goods at
a fair profit than it is to buy them at a fair price :
whilst it is equally clear, that if, on the contrary,
goods of all kinds could be sold as readily as they can
be made, then all the capital and labour that are now
ing for profitable employment, would at once
obtain it ; because in this case, production would
be truly the cause of demand.
So long, again, as the aggregate labour-market
shall continue to be over-supplied, it is certain that
undue competition more or less, according to cir-
cumstances will arise between the employed and
unemployed, the latter being ever liable to dis-
thr former by consenting to execute any given
92 LECTURES ON THE
quantity and quality of work for a less amount of
remuneration, than that -which, for the time being,
the employed may be in receipt.
So universally recognised, indeed, is the tendency
of unemployed labour to take, on lower terms, the
place of that which is employed, that there is scarcely
a manufacturing business in the kingdom in which
the operatives have not their combinative system
of trade rules, restrictions, and scales of prices,
in obedience to which alone will they permit any
member of their associated body to accept of em-
ployment.
Hence the occasion of strikes amongst the working
classes, either for the purpose of obtaining higher
wages than those which, for a time, they may have
been receiving, or else for the purpose of resisting
attempts on the part of the masters to reduce
their wages : and hence, also, the never-ending
bickerings which take place between the employers
and the employed in our great manufacturing towns.
Now, what would become of all the misunder-
standings and ill-feeling which so frequently arise
between master and man upon the subject of wages,
if it should happen that, speaking always of aggre-
gates, the act of labouring at useful occupations
must of necessity create a demand for the whole of its
own products? It is obvious that the motive, by
which alone the operative classes are stimulated to
combine that motive being to protect the more for-
tunate of their own numbers against the competition
of the less fortunate would cease to exist ; and, in
consequence, that the combinations themselves, along
with their endless train of evils, would cease to exist
NATURE AND USE OP ICON ! Y 93
also, or at least they would become practically a dead
And linv I cannot help remarking upon the apathy
an.l inditliMvnrr with whirh we are in the habit of
tolerating, with little or no inquiry, the existence of
enormous evil, to which we are accustomed, as com-
pared with the attention which we pay to the merest
trifles of a kind not altogether pleasant, to which we
are unaccustomed. Let but a little finger smart, and
- What's the matter 1 ?" along with instant inspection,
follow with the rapidity of thought. Let the features
of a beloved parent, child, or friend, exhibit a shade
less colour than florid health claims to be its own, and
"What's the matter ?" echoes "What's the mat-
ter?" through all the household. Or let a flower
droop a day too soon, and " Why so quickly has
our favourite fled ?" in thought at least, accompanies
the lamentation ; and frost, or snow, or heat, or
drought, or rain, is libelled as the cause of the un-
looked for loss. But let a nation smart the colour
fade, or vanish, from the cheek of half her sons
and let her daughters, not singly but in thousands,
and pine, and die, houseless and fireless, food-
less and in rags ; and so entirely, as a thing of
course, is all this held, by general consent, to be, that
if any man stepping from amongst the throng of in-
di He rent spectators shall venture to inquire " Wliat
M the cause of all this evil?" the answer assuredly
will be" Why nothing /"
This is no fiction no ideal case, for it was but
yesterday, that the Atlas newspaper proposed MM
very question to the British nation, and for thi* very
///, paid one hundred pounds.
94 LECTURES ON THE
Gentlemen for it is upon you in a more especial
manner than upon the other sex* that the duty of
investigation rests there is nothing in this world
that comes of nothing. There is not an atom in the
universe but fills the place it occupies in obedience
to some immutable law of God. No artery is there,
or vein, muscle or nerve, within the human structure,
which has not its specific use, tending each and all
of them to our comfort and wellbeing, when, unop-
posed in their functions and operations by our negli-
gence, ignorance, or folly ; and, depend upon it,
none are there wanting in addition to those which
we possess. To enjoy our physical life, however, it
is incumbent on us to obey the physical laws of
our existence ; and in like manner, if we would
make the most of our social condition, we must
make ourselves acquainted with the natural laws of
that condition obedience to which will as certainly
lead us to a state of social health, as properly to eat
and drink, to sleep and to take exercise, are best
calculated to promote our bodily health.
If, as hath been inculcated, the proper study of
mankind be man, our schools will tell how fully we
have accepted, and how industriously we have fol-
lowed out the maxim, so far as our efforts have been
directed to the examination of the body as well as of
the mind of man. But, as a common, as an every-
day branch of study and investigation, the science of
society has yet to be commenced. There are few
persons comparatively, even amongst the best cdu-
* These lectures, it has been already mentioned, were attended by
several Ladies as well as Gentlemen.
i:i: \M> t SE OF MONKV IM
1 classes, N\h" e\er lake the trouble t<> examine
the books we have upon the subject of Political
Economy ; \\hiUt. unfortunately, r\m it' all classes
were ever so oppositely inclined, books of instruction
then- are none \\hatc\vr, such only cxcoptcd as, like
Smith's Wealth of Nations, are incomplete, or, like
M'Culloch's Principles of Political Economy, are a
tnlerubly equal mixture of right reasoning and wrong,
of truth and error.
On which account I would particularly solicit the
attention of such young men as are now in the course
of completing their education at the numerous schools
and colle-vs of Edinburgh, to the hiatus which exists
in this important branch of literature. If, as is un-
deniably the case, the science of Political Economy be
at present in the background, as compared with almost
every other, then must there be therein a comparative
.im. which whomsoever shall fill up, fully and com-
j'let-'ly, will certainly do so with both profit and hon-
our to himself, whilst conferring, at the same time, a
permanent and incalculable boon upon his fellow-
creatures. And as the study of this science nece
ily demands the constant exercise of the observing and
reasoning powers of the mind upon human affairs in
general, these powers thus exercised cannot fail to be
improved and strengthened, for whatsoever purpose or
purposes they may eventually be applied. He, how-
ever. who would make himself master of the science
<>f Political Economy must study the world before
him rather than the books which it contains ; taking
u|> the latter, as he would mushrooms, with suspicion
ami distrust, lest, whilst seeking for the genuine
>hould but collect, swallow, and vainly
96 LECTURES ON THE
endeavour to digest, a poisonous similitude. In short,
we are very greatly in want of a Johnson's Dictionary
of Political Economy, and possibly it may be in reserve
for some young man, now of twenty years of age, to
supply the deficiency by the time he shall be five-
and- thirty. At present, at all events, there is not, in
the English language, a System of Political Economy
worthy to bear the name.
But to resume our subject r which is to impress
upon you the necessity of annihilating the present
unnatural limit to production. Well, then, if aggre-
gate production be now dependent, as we have al-
ready ascertained it to be, upon demand, it is evi-
dent that not merely the idle and worthless, but the
industriously disposed operative of good character
may at times be unable to obtain employment ; and
then how fearfully society is punished for its folly in
permitting such a state of things to exist, need hardly
be narrated. For a man, idle from necessity in the
first instance, is easily converted into an idle man
from choice. We see, for example, a would-be in-
dustrious person out of employment, and his ob-
vious respectability combined with his manifest want,
excite our sympathies, and naturally dispose us to
assist him. Nay, even our selfish feelings are rewarded
by the pleasure we experience in having been called
upon to relieve a worthy object in distress. Others,
impressed by the like conviction, assist him too ; wlicn
lo ! the discovery is unavoidably made by this hither-
to deserving object of our charity, that so long as he
may be able to maintain the appearance of what, alas!
was, in the first instance, too fearful a reality to \v ( >rk
were folly, since idleness may have proved, perh;ii>s,
AND r>i: ! MI.M.Y.
fi\r murs ov.-r. t> In- tin- liett.-r trad.-. Ami hencr
we have an active. indu>tnous, and worthy m-ml>r.
irtv. DMv.-rted. tir>t into ;i timid and ln-sitatin^
solicitor of a little aid. m-xt into a sturdy beggar,
and finally. into tin- raoo6MlT6 characters of drunk-
ard, thief, and convict.
Now, had this supposed victim in whose ima-
ginary case we have doubtless the real one of many
thousands never at any time known the pangs of un-
satisfied hunger, the result of blameless inability to
obtain employment, he might probably have excel-
led in virtue to as great an extent as we have here
supposed him to exceed in vice. And how is it
possible that cases like these should cease to be number-
less, n'/iikf ?'v> continue to restrict production, ami to
limit the demand for labour by Act of Parliament?
It is not possible ; and hence, by no conceivable
mi ans can we set our national condition right, save by
the act of restoring to society the great principle
Protluction the Cause of Demand of the incalculable
benefits of which the existing monetary laws have, in
the meantime, entirely deprived us.
The existence of the necessity for any continuous
charitable provision for the able-bodied is a disgrace
to the nation in which any such necessity exists.
Temporary embarrassment may be occasioned by ex-
traordinary circumstances. A fancy trade sometimes
arises amongst us, maintains a brief existence, and
thru languishes and dies out altogether ; whilst other
occupation- may cease to exist from the best of all
. namely, that of improvement in other dcpart-
- of the same general business as we have seen
but now, in the case of the guards and drivers of
o
98 LECTURES ON THE
mail and stage-coaches. But the advance of the
new power, or the adoption of the new commodity,
is, generally speaking, so far gradual, that it operates
rather by deterring the young from entering upon
the expiring trade or occupation, than by depriving
the old of their accustomed work.
For the mentally or physically incapacitated ample
provision should be made by the law of the land. I
say ample provision, because, if as we most cer-
tainly do at present we can afford to pay one hund-
red millions a year for the support of a mad mone-
tary system, we must surely be in a condition to main-
tain ungrudgingly, such of our numbers as may be
dependent upon us for that provision which they
themselves are unable by the exercise of their own
labour or talents to obtain. For the founders, how-
ever, of the splendid structures, professedly for chari-
table purposes, so numerously erected, and still in
the course of erection amongst us^my respect is
very small ; and as to the structures themselves, they
will at no very distant period be regarded as so many
tombstones, erected to the memory of an age of com-
mercial darkness.
We require not these things. This nation is more
than able to feed, clothe, lodge, educate, and otherwise
to provide for every one of her sous, and daughters
too, without the aid of private charity. And when-
ever our productive resources shall have been liber-
ated from the fetters by which they are at present
bound, it will be universally admitted, that a man
might as rationally tender the aid of his individual
strength to do the work of a locomotive engine, as
to devote the amount of his private accumulations to
-F. OP M<> v 91
the erection ainl endowment of what have IM-.
jumilv proved to In- mere nurseries of vice and
\\ickedness. Allow production to take up its own
position amongst us, and \\e >\\n\\ hear no more of
; t a Is, schools, or asylums, the offspring of fortunes
diverti -d, at the cost of many a bitter sigh, from the
ordinary and proper channel of natural succession.
A little water would be a poor gift to the sea, yet
such is the precise character of the aid which private
charity on however munificent a scale it may be
otlered is able to give to this great country, in pro-
viding either for the education or the maintenance of
its inhabitants. Give us back the right of wliich we
have been ignorantly deprived : allow merchants re-
si. ling on one side of a street to trade freely with
those residing on the other side a permission which
is not at this moment extended to the inhabitants of
any one street in Europe and the future nobility of
the land and that without any necessary diminution
of their own wealth shall be pretty nearly as likely
to feel the pangs of unsatisfied hunger, as the poorest
honest and industrious man in the Kingdom.
And here allow me to anticipate the reproduction
of the stereotyped volume of drivel, which is brought
out upon all occasions, by that many-headed blunderer
the public, whenever the said public may chance to
be presented with anything a little different in char-
acter and object from whatever else may have been
alnady before the world for half a century or so in
a well understood and acknowledged form.
The most important discoveries, not absolutely
nstrnble to the external senses, and the great-
iv t imairinablr alurdu in one particular.
100 LECTURES Otf TH K
upon a perfect equality, which is this : On first
presentation they are alike condemned, alike ridiculed,
and alike declared to be impracticable, or the mere
visions of an enthusiast. And when, by slow de-
grees, such discoveries as really deserve it come to be
received with a little less amount of prejudice, even
yet a tithe at most of the promised benefit is ad-
mitted to be within the bounds of possibility, whilst
all the rest is still set down to the account of en-
thusiasm.
Now, what is really the fact ? Why, this : When-
ever any newly-discovered principle is cast into the
great ocean of thought if thus I may be permitted
to characterize the aggregate workings of the human
mind the said principle eventually turns out either
to be true or false, or, in other words, to be a prin-
ciple or no principle at all. And if the latter, it
speedily dies the natural death of error ; but if the
former, the ultimate consequence almost invariably
is, that the most enthusiastic expectations of the
original discoverer are altogether left in the distance
by the eventual reality.
Is it likely, for example, that James Watt, even
during the hours of his most sanguine expectation of
results, ever for one moment contemplated the pos-
sible existence of the steam-engine of eighteen hun-
dred and forty-eight, clothed in all its stationary,
marine, and locomotive wonders ? Is it credible
that the original inventor of the gas-light ever con-
templated the revolution that his discovery was des-
tined to cause in another department of utility ?
When Franklin, again, brought down the lightning
by means of a school-boy's toy, and thus demonstrated
UK AND USB Of MOM v 101
the possibility of subjugating even the electric fire of
heaven to the control <>f man. is it supposal>l<- that
r fur on-- instant crossed liis mind, that that
very thud \\uiild eventually heroine the great channel
of instant communicatiun between man and man,
IVM, ling hundreds of miles asunder ? that it would
become part and parcel of the machinery of his own
especial trade that of a printer and disseminator of
intelligence ? or that it would be the time-keeper of
an age to come, performing its work in this capacity,
too, with an exactness leaving nothing to be desired 1 *
Assuredly, in these instances at least, immeasur-
able must have been the difference between the ex-
pectations of the original discoverers and the realittf*
which at this day are admitted and recognised by all
the world !
From these examples, then, and examples such as
the -e, let us henceforth learn to treat with the con-
tempt that it deserves, the ever-ready drivel of those
poor and petty things, whose arguments upon every
subject which may be new to their feeble or indolent
minds, are the mere commonplace reiterations of the
terms " Sanguine" " A mere enthusiast" " May
be some little truth in his opinions, perhaps, but
grossly exaggerated, of course" and the like. Let us
* When Mr. Alexander Bain, the patentee, first introduced this
wonderful invention into the City of Edinburgh, I at once gave him
an order for an Electric Clock, with especial instructions to make me,
if possible, a particularly good one. The accuracy of its time-keeping
qualities may be judged of by the fact, that it goes correctly within
about fire minutes a-year ; that from the ninth of January to six-
teenth of February, during the present year, it had neither gained nor
lost a single second ; whilst its greatest variation during that time
was precisely twenty seconds.
102 LECTURES ON THE
learn to test principles, or what are said to be such, as
we test suspected gold. Let us prove them, as we
prove it, by strict and impartial examination ; and
if we find them to be true and not fictitious, let the
experience of the past teach us a little becoming
modesty in pronouncing too hastily as to the extent
to which the operation of any true principle may
eventually be carried.
To apply this reasoning : I have told you, then,
that in the very nature of things commercial Pro-
duction is the cause of Demand. I have told you,
that we have set aside this principle, just as we might
accidentally or ignorantly have set aside a package
of diamonds of the value of the National Debt. And
I tell you now that we must restore this principle to
society, by founding our future monetary system
upon it : and farther, that by doing this we shall
increase the annual income of the country to the ex-
tent of at least one hundred millions. And now,
instead of laughing at, and conferring upon me the
usual string of honorary titles, to which the early
promulgators of great truths are ever accustomed
to succeed, would it not be the wiser and the better
course to bestow an occasional hour or two of thought
upon the subject I have laid before you 1 ? Do so,
then, and depend upon it, that you will very speedily
be disposed to treat this series of lectures in a very
different spirit. At all events, the principle I have
stated is either true or false, and it is surely worth the
while of every one here present to answer the ques-
tionWhich ?
N \n 1:1: \.\i) rsi: .F M..N 103
LECTURE IV.
Descriptive of a Banking System, by the Establishment of which
Production, now the t'ontequtnct of Demand, may be converted
at any time into the Caitse of it.
IN the course of the preceding lectures I have en-
deavoured to show that without reference to any
monetary system whatever production is the natural
cau-e of demand, that supply and demand are ex-
changeable terms, ami that the one ever would have
been equal to the other, had not some fearful engine
of mischief been allowed a place in our commercial
policy. I have also endeavoured to show that,
somehow or other, the operation of this great prin-
ciple has been suspended, and that therefore our im-
perative duty is to restore its ascendency, and to sub-
mit all our commercial affairs to its rule and govern-
ini nt.
But how is this to be effected ? in what manner
are we to commence the task? and by what means
may we be enabled to complete it? are questions
\\liidi you \\ill no doubt expect me to be prepared
to answer and to answer them I am prepaid.
Notwithstanding this preparation, however, it is no
part of my intention to insist upon the adoption of
any plans of my own. So far indeed from harbouring
104 LECTURES ON THE
any such design, it is at once admitted that / have
no plan which I am at all disposed to regard as the
only one that can be adopted with advantage, or for
which I entertain any exclusive favour or prejudice.
In short, it is not for any one person to answer these
questions authoritatively or dictatorially, but it is
rather for England, for Europe, for the World, to
answer them.
I have endeavoured to lay open to your view
certain principles with which mankind in general
at present appear to be all but wholly unacquainted,
in accordance with which principles it is absolutely
necessary for us to remodel our plans of commercial
interchange, before we can possibly attain that de-
gree of prosperity, either as individuals or as a
nation, which is naturally within our reach. But
the principles to which I allude are not of my mak-
ing, neither are they of your making : they are not
so many goods and chattels to be used or disre-
garded as we may think proper, but they are of the
number of the laws of God himself, written in the
Universe. Hence are they immutable; and from
time immemorial and never more fearfully than of
late have we been punished, and that, in many
thousands of instances, even unto death, for disre-
garding them. We are punished, too, in precisely
the same manner as a mason would be punished,
who, after having contracted to build the spire of a
church, should persist in erecting it upside down.
The spire would be constantly falling about his curs
just as our monetary fabric, which is built upon exactly
the same principle, is perpetually tumbling about our
cars. By nature production is the basis of our com-
AND USE OP MON 105
il fal>ric. l.nt it occupies at present the ordinary
portion of the \\t-atlicr-cock.
1 1 a \ i n LI i n > \v , 1 1 . . liscovcrcd the true principle
of exchange, we shouM treat that principle in com-
niiT.v ]!. -i-rlv in the same manner as we are ac-
i-nst..m'd to treat the principle of expansion in
in. -chanics. Fire acting upon water produces steam.
Water win -n converted into steam instantly demands
a much larger space for its accommodation than that
which it previously required. And if this space be
not granted that is to say, if the vessel containing
the steam be not more or less an open one the
steam will try to force its way out: and if, like the
engineer of the Cricket,* we resolve to keep it in,
why, then, a trial of strength will forthwith take
place between the vapour and the vessel in which it
is confined the odds upon the respective combatants
being a hundred to one at least against the vessel.
Here, then, we have an instance of an ascertained
power of a well understood kind. The application,
however, of this power is a totally different thing
from the power itself : the power is one, the modes
>t using it are many ; whilst the purposes to which
it i- applicable, it would, at this day, be an endless
task to enumerate.
Hence we have now high-pressure engines, and
engines low-pressure, stationary, locomotive, and
marine; and all these different kinds constructed in
so many forms and sizes, and, as already observed,
for the accomplishment of such numberless purposes,
* A Thames steam-vessel, recently destroyed in London, by the
act of forcibly preventing the operation of the safety-valves.
106 LECTURES ON THE
that a full and complete history and description of
the steam-engine of 1848, would certainly require
the space of several ordinary volumes.
In like manner, I now lay before you the true prin-
ciple of exchange ; but having done this, it remains
for me rather to solicit the opinions of others, than
to insist upon the adoption of my own, so far as re-
gards the precise machinery by means of which this
principle may be practically worked by us to the best
advantage. For, as in the case of the steam-engine,
although the principle is one, the possible modes of
using it are many ; and therefore it is for every person,
rather than for some om per son to turn his attention to
the subject, and to use his best endeavours to devise
such details as may at once be simple, practicable,
effectual, and just. And especially, in the pursuance
of this object, let no man trespass upon any true
principle of Political Economy ; for, as all nature is
consistent with itself, so, in like manner, must all
human institutions be consistent with each other, or
else the reward of our exertions, however zealously,
honestly, and industriously they may be applied,
will be disappointment.
In Political Economy, for example, labour is the
only source of wealth. The subdivision of labour in-
creases the amount of its products. The extent to
which the subdivision of labour can be carried is
limited by the extent of the market. The existence
of free and unrestricted competition between man
and man, and that whether the work be of the head
or of the hands, is both natural and beneficial to
society. The results of labour are the natural pro-
perty of the labourer. Security of property is an
NAT1 i:i: AM) USE OF MON 1"7
OMODtial condition to tin- arcnnmlation of property.
Accumulation, otherwise called capital, is indis-
pensable to all commercial undertakings. Men ex-
change one thing for another, because that which a
man \vant^ is of more value to him than that which
IK is willing to give for it. Hence the result of
e\n v equitable exchange is a gain to both parties ;
anl, therefore, boundless freedom of exchange is good
for all men and for all nations. The existing mone-
tary system of society is false in principle, utterly,
.utely, and radically, because it forbids, and
renders impossible, the free interchange of property
between man and man.
1 mention these things merely to exemplify what
I have already urged namely, that in endeavouring
to erect our monetary system upon a sound basis, we
must avoid placing ourselves in opposition to any
true principle of Political Economy : an error the
more carefully to be avoided, because it is invariably
the one which those persons first fall into, who plac-
ing their confidence in the false principle of expe-
'/, instead of in the true principles of nature
herself hesitate not to attain, or rather to endeavour
to attain, their ends and objects at whatever cost of
reason or consistency.
Whilst, however, I am anxious to stimulate the
minds of others to the study of this subject, and thus
to obtain for the nation at large the benefit of multi-
tudinous counsel ; and relinquishing, as I do most
Min-erely and without reserve, all claim to prefa
for any particular plans of my own, farther, at least,
than upon investigation they may be found t- de-
serve it; still, it \vouldha\e l>e-n a \<TY !:!<<>], >;~tent
108 LECTUKES ON THE
proceeding on my part to have called the atten-
tion of the members of the Edinburgh Philoso-
phical Institution to the merits of a mere abstract
principle, unaccompanied by any plan whatever : but
this is not my purpose. I shall now, therefore,
endeavour to lay before you the plan of a National
Bank, the result of many years' careful study of the
subject, by the establishment of which well propor-
tioned production itself the natural consequence of
free and unrestricted competition would inevitably
be rendered the uniform and never-failing cause of
demand ad infinitum : and that, too, with justice to
all men, and without the slightest infringement of
any recognised principle in Political Economy, not
in itself a fallacy.
To the annihilation, then, of almost every evil with
which this country is now afflicted, arising either from
the want of employment or from ill-remunerated
labour, we require but two things, and these are
First A system of banking, by the operations of
which the natural relationship of supply and demand
the nature of which relationship I have already
so fully explained to you would be restored ; and
Secondly A true measure of value, in place of the
existing fiction so miscalled.
And here I must request the kind indulgence of
my audience, and more especially that of the ladies,
on account of the nature of the subject under con-
sideration, which is one not merely difficult of oral
explanation, but in itself that is to say, without re-
ference to the enormous consequences which it in-
volves it is a subject generally held to be at once
tedious, uninteresting, and. in a word, the last to
I'RE AND USE OP MOM V I I'D
\\liidi anv c.nMtliTaMt' portion of the public
condescend to ^i\c it> attention.
Ill-It . .1. .-ill that I can reasonably hope to accom-
plMi in tlii> r..Min. is to convey to you a general idea
of tlu- nature of the banking system which I have to
propose ; but as these lectures \vill be published
within a short time after they shall have been con-
cluded, the errors, if there be any in my statements,
will in all likelihood be very speedily corrected.
Keeping always strictly in view, then, that our
specific object is, to allow production to become truly
uil practically the cause of demand ad infinitum
the great characteristic distinction between the bank-
ing system as it is, and the banking system as it
uttould be, is this :
The money which a manufacturer or merchant
now receives, in the course of a day's transaction-, i-
usually paid into the hands of the banker with whom
he deals, by whom it is placed to the credit of his
account, whereas the value, at their selling price, of
all the goods, whl<-h may be brought into any manu-
facturer or merchant's warehouse, should be forthwith
placed to the credit of his account by his banker ; in
addition to the amount of all the money that the said
manufacturer or merchant may pay into his banker's
hands, arming from his sales, to be in like manner
placed to the credit of his account. Whilst, on the
other hand, the said customer of the bank should be
debited, first, with the value of all the goods that may
be taken out of his own wan-house, and, secondly,
with all the money which, in the usual way, he may
withdraw from the bank : a stock account, in addition
to a cash account, being thus kept by the banker with
110 LECTURES ON THE
eacli of his customers ; but, so far as regards the
stock, in aggregate sums only, not in detail.
For the accommodation, then, with the exceptions
after named, of every manufacturer and merchant,
commission and otherwise, in the United Kingdom,
doing business only by wholesale, what would properly
be denominated A Standard bank, should be esta-
blished in London, another in Edinburgh, and a third
in Dublin; with branches, one or more, in every
town of the least importance throughout the king-
dom : that is to say, branches of the London bank
should be established throughout all England ; bran-
ches of the Edinburgh bank throughout the whole of
Scotland ; and branches of the Dublin bank through-
out the whole of Ireland.
The exceptions, consisting of those manufacturers
and merchants who should probably be excluded from
doing business with the Standard banks are these :
First All dealers in goods of a very perishable
description ; as, for instance, fresh fish, unpreserved
fruits, and the like.
Secondly All dealers in merchandize of a very
fanciful character, such as ladies' made up dresses or
millinery.
Thirdly All dealers in goods made or imported
for special or peculiar purposes, and, consequently,
unfit for sale amongst chance customers in a general
market. Machinery used in manufactories may be
named as an example, which, in most cases, is made
to order, and, therefore, in accordance with the taste,
judgment, and requirements of some person, firm, or
public company. Goods of this kind, it is obvious, if
sent to any other market whatever than that for
I'RE AND USE OP MOM.1 111
\\hirh tliey arc expressly constructed, would not be
likely t> reali/e a third of their original cost.
Tho/owrM and last except inn that occurs to me is,
that inanuta. turers, or importers, of goods of a dan-
8 kind, such as gunpowder, fireworks, and the
like, should also be excluded from doing business
with the Standard banks.
Even these exceptions, however, would be nominal
rather than real, inasmuch as the beneficial influence
of a system of interchange pretty nearly as free and
inexpensive- as the act of transferring money from
the right hand to the left, would speedily pervade
every nook and corner of society from the highest
departments to the lowest ; and hence, although the
peculiar manufacturers and traders I have enumer-
ated should, in common with all artists and profes-
sional men whatever, be excluded from doing busi-
ness din-Hlii with the Standard banks, still the bene-
fits conferred upon society by the Standard banking
system, would reach them as certainly and pretty
nearly as quickly indirectly, as directly.
The duty of the three Standard banks, then, would
be to keep accounts, through the medium of their
various branches, on the following terms and condi-
tions, with all persons, doing business only by whole-
sale, (their trades not being expressly excepted by
tin Act of Parliament constituting the Standard
banks,) who should declare and enter themselves in
the bank books in some proper form to be legally
imposed by Act of Parliament as Standard mer-
chants or manufacturers.
The said terms and conditions should be mainly as
follows : some others, however, of a more .letaile.l
112 LECTURES ON THE
and subordinate description, would probably be re-
quired.
First, then, a standard merchant or manufacturer
must be a standard merchant or manufacturer only,
at least in any one place of business ; seeing that, in
this capacity, he would become a member of a great
national banking association and, therefore, in trans-
acting his banking business, he must conform to the
principle on which the national bank itself would be
founded : without, however, strictly speaking, associ-
ating at all, or having the slightest partnership or
community of interest with any person whatever.
Secondly On opening an account with the stan-
dard bank, every merchant or manufacturer must
name the maximum amount of money that he is ever
to be indebted to the bank at any one time ; and he
must give security to the bank for the repayment of
any final balance that may arise against him. And
the standard banker should have also a declared mini-
mum amount of annual transactions, below which it
should not be any part of his business to descend.
Thirdly If any manufacturer or merchant should
intentionally make, or cause to be made, any false
entry in his stock-book, or if any such entry should
be made by another person, with his knowledge,
sanction, or connivance, the party so offending should
be forthwith required to close his account with the
standard bank, and be for ever disqualified from re-
opening one, either as an individual, or as a member
of any firm or public company ; and he should also,
for life, be legally disqualified for entering the employ-
ment of any standard banker, merchant, or manufac-
turer, in any capacity whatever.
.NATURE AND USE OF MONKY. 1 1 M
And these are all the < nnditiuns to bo exacted by
tlu- hank, on oj u-iiing an account with any merchant,*
that iio\\ occur tome; which, brin^ recapitulated, arc,
thai in any one place of business, the party shall be
a standard merchant only, and a wholesale dealer ; an
per a legal definition of the term wholesale, to be
carefully worded for the purpose that he shall name
the maximum amount of money he is ever to be in-
debted to the bank at any one time, and give secu-
rity to the bank against any loss it may sustain by,
or in consequence of, its transactions with him that
he shall annually transact business with the bank to a
certain min'unum extent and that, in his dealings with
the bant at least, he shall be honest. And, it is sub-
mitted, there would not be anything very unreasonable
in these exactions, on the part of the standard banker.
The merchant, then, having bound himself to com-
ply with the above conditions, preliminary to his
admission to all the rights and privileges of a member
of the standard society, is now in this position :
He has, we shall suppose, a warehouse, a yard, or
a range of cellars, as the nature of the goods he deals
in may require, into which he brings stock, ready
for sale to his customers, the value of which, of the
seliinij price, is estimated by himself to be worth
10,000. His stock-book is then made up accord-
ingly, which stock-book must be kept in duplicate,
one copy being requisite for his own use, and another
copy for the use of the bank.
The hank, then, on sight of the merchant's stock-
* I here discontinue the constant repetition of the word " manu-
facturer," as being unnecessary " manufacturer or merchant" being
always understood whenever the word merchant onlj is used.
II
1 1 4 LECTUKES ON THE
book, containing the authenticated entry of goods,
value 10,000, into his own warehouse, forthwith
places the sum of 10,000 to the credit of his ac-
count in the bank-books, which sum of money he is
instantly at liberty to draw, to the last shilling if he
pleases, from the bank.
And, this being done, the goods in the merchant's
possession are now, in justice and common sense, the
property of the bank, seeing that the bank is sup-
posed to have paid the merchant their full estimated
value, at the selling price which he himself has put
upon them. But this natural right of the bank, as
it may be termed, is not to be used or assumed in
any way. On the contrary, the merchant is to be
left in the full and uncontrolled possession of his
goods, which he not only may sell to the best ad-
vantage, just as he does at present, but which he
must sell, at some time or other, at some price or
other ; because, as the bank holds him and his sure-
ties responsible for all the money that has been ad-
vanced to him, that money must eventually be repaid.
The next business of the merchant, therefore, is to
sell his goods for standard money, and that at what-
ever profit he may be able to obtain ; which profit
will continue to be regulated, just as it is now, by
the degree of competition that may exist in his par-
ticular trade. He sells, then, we shall suppose, at
different dates, for ready money, and at the price he
anticipated it would fetch, the whole of his stock of
goods, value ten thousand pounds, which money
having been paid into the bank day by day, as the
goods were sold, repaid the bank advance in full,
the whole transaction standing thus :
NATURE AND USE OP MoNT.Y.
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116 LECTURES ON THE
It is plain, however, that if, on the one hand, the
bank is to allow its customers to draw money ad libi-
tum to the whole amount of the selling-price value of
all the goods they may bring into their own ware-
houses and that to the extent of whatever number
of millions or hundreds of millions of pounds the
goods may in the aggregrate be worth the bank
must also, on the other hand, have some very clear,
explicit, and unevadeable mode of obtaining the re-
payment of its advances, as the goods in the standard
warehouses may be sold. And there are various
methods by the adoption of which this indispensable
condition to the right working of the proposed system
of banking might be insured ; but, to avoid incumber-
ing our subject with intricacies, I shall here describe
but one of them.
It will be seen, then, that as every standard mer-
chant is to be paid in full by the standard bank for
all the goods that he may be able to bring into his
own premises, he, consequently, can have no claim
to any part of the money for which the goods may
be sold. By law, therefore, this money must be receiv-
able only by the standard bank-agent with whom the
standard merchant may keep his account ; which
agent, on the receipt of any given sum of money,
from whomsoever, to the credit of said merchant,
must give in exchange for the money a delivery-order
on the merchant for goods to the amount.
The bank would, no doubt, in these circumstances
receive, in the first instance, the whole amount of
profit upon the goods sold, whatever that might be.
But as the surplus, if any, above the amount of profit
originally contemplated, would be placed to the credit
NATURE AND USB OP MONEY. 117
of the merchant by the bank, not a shadow of prac-
tical ditlioulty could arise on this account ; whilst the
ieney. .-i rising from the sale of any goods for less
than their e>timatel value, must in like manner be
made up by the merchant to the bank.
An<l here it may be incidentally observed, that the
existing system of mercantile home credit would
be entirely superseded by the co-equal existence of
standard money and standard goods throughout the
entire kingdom ; whereby one of the many evils which
at present afflict the wholesale department of the
commercial interest would be annihilated. Bad debts
there could be none, for the very sufficient reason that
e\ rry shadow of pretext for obtaining goods on credit-
terms at (ill would have ceased to exist.
Upon the banking system, then, which has been
thus briefly described, it will be seen that money
standard bank-notes would be merely so many trans-
ferable certificates of the existence in the standard
market of equivalent produce, actually for sale in ex-
change for standard notes, and for no other money
or thing whatever. And as not merely the estimated,
but the actual,* value of all the property in the stand-
ard market would ever be precisely equal to the
amount of standard money in the hands of the public,
it follows, of necessity, that production must ever be
equalled by demand. The aggregate standard stock
* " Actual," because, whatever portion of the standard stock might
prove to be unsaleable or saleable only at a reduced price
must be retaken at it* full price from the standard market by iU own
proprietor, who, it will be remembered, is to give security to retake
the same whenever required to do so, prerioutly to the admission of
his name into the standard bank books.
118 LECTURES ON THE
would be the aggregate property of the holders of the
standard money by which that stock would be repre-
sented ; and, therefore, all the goods would either be
demanded or accumulated that is to say, they would
either be taken out of the market or left in it. If
taken out, the money by which they would be repre-
sented must \>Q first paid into the standard bank or
in other words it must cease to e'xist. But if any of the
goods should be left in the standard market that is
to say, if the holders of the money representing them
should wish to accumulate their money in place of
spending it then and in that case, the standard stock
itself would accumulate, on the one hand, and tie
right to demand it, on the other.
But this accumulation, to an unsalutary extent,
could never take place ; because, as money in the
hands of its owner yields him no interest, he is at all
times pretty certain either to lend it on interest to
parties who have a use for it, or else to expend it
outright in the purchase of property yielding a return.
It is obvious, therefore, that aggregate production
will become the unfailing cause of co-equal demand,
whenever we may think proper to establish the
monetary system of the country upon the basis of
transferable voucher ; and from that day forth dis-
proportionate production will be the one and only
cause of a superfluity of anything; whereas, now,
owing wholly and solely to our false monetary sys-
tem, we have, generally speaking, a market glutted
with almost everything.
A man, for example, having acquired property in
the standard stock of the country, as proved by his
possession of standard bank-notes, is sure to require
NATURE AND USE OF MOM V II!'
'/////// in exchange for them tin- note- them
Mlvea l.rin- of no value whatever which something
li- \\uuld indicate, as at present, by the act of 6//////"/
whatever lie mijjht require. It', then, he should buy
standard stock in the standard market, his money
would cease to cxi>t ; whilst, if he go not to the
standard market at all, but spend his money <
when-, thm the act of spending his money el>e\\h< -re.
would be that of transferring to the party with whom
lu >hould deal, so much of his share of the standard
property as the money paid away should repre-
sent.
But if a man require not merchandize of any kind
in exchange for his money, but merely to invest the
money itself at interest, or in the purchase of what
may be termed accumulation that is to say, in
houses, lands, feu-duties, or the like, then and in that
case, he will either pay his money and thus transfer
his interest in the standard stock to the /trirafc
l>art>i from whom he may purchase houses, lauds, or
leu-duties, or else he will purchase these properties
from titamlard house or land-agents ; in which case,
the price thereof must be paid into the standard
hank itself, and forthwith cease to be money.
For the principle of exchange I have described i-
applicable not merely to ordinary merchandize the
produce of this country or imported but it is also
applicable to every description of heritable property
IHHKI fide for sale in the public market : the only
condition being, that if standard heritable property
be not sold to any one else, it must be retaken by
the original depositor ; who, in every instance, when
placing property for sale at a stated price in the
120 LECTUKES ON THE
hands of a dealer in heritable standard stock, must
give him ample security that failing any purchaser
being found to give the price demanded for the pro-
perty he himself will either retake it at the vested
price, or else make up the deficiency, should the
property, with his consent, be sold for any lower sum.
In short, the precise sum of money paid out of the
bank on the occasion of any heritable property be-
coming standard stock must be paid into the bank,
whenever the said property may be withdrawn from
the standard market ; and, consequently, if it be sold
to the buyer for less money than the bank advanced
upon it, the seller must make up the difference at
the time of repurchase, by whomsoever, from the
standard market.
And here it may be desirable to notice the fallacy
of the monetary principle contended for by the Anti-
Gold-Law League.
Certain gentlemen, who have formed themselves
into a society in London under this denomination,
have seen clearly enough the deplorable inefficiency
of the existing monetary system : they truly affirm
that gold is no true measure of value. But in lieu
of one absurdity they only invite us to accept
another. Government, say these gentlemen, should
issue such notes as Government will take in payment
of the taxes, to the amount, if I understand their
plan correctly, of the taxes. So that our future
scramble is not to be for gold, but for sundry bits
of paper, possessing no one solitary or possible ad-
vantage over gold itself. Measure of value they have
none, and neither is there any more rational connex-
ion between the public taxes and the public instru-
AND USE UK MONKV. 121
of exchange than there is between the said
taxes and the law of gravitation.*
Suppose, for example, the public taxes this year
to be fif'tv millions, and the total income of the
o'limrv this v ar to be five hundred millions What
com vi\ able connexion is there between these two
. excepting only that by some means or other
th smaller sum must be paid out of the larger?
Obviously there is no other connexion. But even
though there were, and if by some magical process,
tlu- tifty millions of taxes, represented by fifty
millions of Government bank-notes, were for a twelve-
month to do the work of money, and to do it well
that is to say, suppose that these notes would en-
able us, with tolerable convenience, to exchange
amongst each other our five hundred million pounds'
worth of the products of labour for one year, What
then ? Why, during the year following, perhaps, the
ta\e> \\<uiM -till IK- lif'tv inilliuii>. \vhil>t >// jmn;-rx
of production might have increased in the interim
twenty-five per cent. that is to say, to six hundred
and twenty -five millions. In which case, the modes of
using money remaining the same, our condition would
be just this either the extra power of production
would not be called into operation at all, or, if called
into operation, the result would be a tremendous loss,
ad of profit, to the country ; for the modes of
using money remaining the same the products of
labour can never by any possibility, be increased
* If one kind friend of his country would pay off the national debt,
anil if another would leave us an annuity large enough to pay all our
other pul'lic expenses, why, then, upon the Anti-Gold-Law League
plan, we >ho*ld have no money at all.
122 LECTURES ON THE
faster than money itself, without occasioning a loss of
property, reckoned in money price, to the exact amount
of the difference between the increase of goods and
that of money. In short, the six hundred and twenty-
five millions' worth of goods could sell for five hund-
red millions of pounds only : and hence the first
and most indispensable condition to any true mone-
tary system is, that money, let it consist of whatso-
ever it may, must increase in due proportion with
all other marketable produce, but not in undue pro-
portion or, in other words, not more rapidly. The
increase of money in short should be consequent upon
the increase of marketable produce, and that in ex-
act proportion to the amount of that increase.
Hence all the notions about issuing money on
land on the security of land not actually for sale,
I mean are the merest delusion, being subject to
the objections I have already named. There is no
rational connexion between the two things, and
even if there were any, it would be quite impossible
for money, issued upon any such principle, to be in-
creased ad libitum, precisely as fast as our aggre-
gate powers of production in every department of
industry may be increased ; and hence the old story
over again, whenever goods are increased faster than
money, either prices must fall, without any natural
cause for their falling, or else, very shortly after such
temporary increase, production mu-st stop, and that a
hundred millions per annum at least short of the ex-
haustion of its own power.
Money the representative of laud, or money the re-
presentative of gold, must ever continue to be limited
respectively by the quantity of land or the
NATURE AND USE OF MOM V 123
of gold that there may be to represent. But our
want is money, the representative not merely of
land or gold, but of land and gold, houses and silver.
and, in .short. >( c\ery marketable thing, possessing
in a reasonable drrivc the- two qualities of transfer-
alfi /if i/ and preservabiiitij.
Let the advocates of monetary reform however
much they may agree with or differ from each
other try their respective plans by the one and only
test of monetary truth. Will the London-league plan,
or the Birmingham plan, the Glasgow plan, or the
Scottish joint-stock plan, or will all these plans put
together, or any select portions of the whole of them,
allow proportionate production to be multiplied a
hundred thousand million -fold, without occasioning
the rise or fall of one farthing in the average money
price of goods, so long as equal quantities of labour
shall continue to be essential to their production ? If
so, then are these monetary systems perfectly sound
in principle, and the only remaining question about
tin -i n is, as to their respective simplicity and general
merits in detail. But if, on the contrary, they will
not allow proportionate production to go on ad in-
finitum, without any consequent rise or fall in the
money price of goods, then are these systems false
in principle utterly and absolutely ; and whenever
they may be tried in figures, they will prove to
be delusions, founded not merely in error, but in
the very error which alone constitutes the unsound-
ness of the monetary systems of this and of r\ > i \
other nation in the world. Production, naturally the
cause of demand, would continue, under every on , ,f
these monetary systems, to be subservient to demand.
124 LECTUltES ON THE
There is one principle, and one principle only, on
which it is possible for any monetary system to rest,
without interfering with the very first condition of
human existence, namely that man shall labour
that he may live : The production of money must be
consequent upon the production of every marketable
thing ; whilst money itself must consist of portable,
divisible, and transferable certificates of the existence
of property, ready at all times to be given in ex-
change for it, in whatsoever shape or form the owner
of the money may desire.
Wealth as I stated in nearly the same words
sixteen years ago like a thousand streams of water,
arising in different places, and partaking of different
qualities, should flow into one grand reservoir ; and
being there mixed up and its various qualities amal-
gamated, it should be restored to its owners in
quantities equal to their respective contributions,
but partaking of the qualities of the whole ; whilst
money should be merely a measure, to be used for
the purpose of giving to every man just so much
value as may have been received from him.
England, Scotland, and Ireland, then, accommo-
dated with the banking system, for the establishment
of which I am now contending, would be just three
market-places, containing every description of heri-
table and moveable property for sale upon this prin-
ciple :
The master of the market, that is to say, the
standard banker, addressing the public, says :
" Bring into my market-place whatsoever you may
have to sell, and I will give you cash for all your
property, heritable and moveable, at your own price ;
NATURE AND USE OF MONEY. 125
my only conditions being, that whenever the said
projHJrty may be taken out of in 11 jurisdiction, the full
amount of my advances upon it must be repaid ; for
\\ hi. li 1 ivijuiro you to give me security before it can
be admitted ; as also that, eventually, it shall on
these terms be removed. But the onus of selling
or i n other words of exchanging your respective pro-
ducts and property, must rest entirely with yourselves"
I do not believe it to be within the power of man,
fit her to point out the slightest practical difficulty in
carrying the system of banking here described into full
operation throughout the length and breadth of this
land ; or, if established, to point out the possibility
of proportionate production ever failing to create de-
mand : whilst you will observe that, by the pecu-
liar nature of its provisions, the great principle of
individual competition would be left free and unfet-
tered as the air we breathe. And I am also per-
fectly confident, that, by the adoption of this system
of banking, the inhabitants of Great Britain would
be gainers of at least one hundred millions per annum
in money of its present value.
Issued, then, upon the plan proposed, money would
not be a commodity, neither would it be of the pre-
cise nature of a receipt. Bank-notes, in short, would
be so many certificates of the existence of property
admitted into the standard market, and therein re-
maining for sale by its respective owners, at what-
price they could get for it.
Bankers now receive money from merchants after
tlicir goods are sold, which money is repaid when-
rvi-r the merchants require it. Bankers also advance
money to merchants and others on certain securities.
126 LECTURES ON THE
But the true principle of banking will be found
to consist in the banker paying down to their re-
spective owners the representative value of all goods
that may be brought into the market the said
value being repayable to the banker whenever the
said property may be taken out of the market. And
trivial as the difference between these two modes of
procedure may at first sight appear to be, the real ques-
tion at issue is Whether production shall continue
to be the effect of demand, or become the cause of it f
It will be distinctly understood that, in the pre-
sent stage of our argument, we have no ascertained
measure of value. A true measure of value being,
however, in the meantime, supposed to exist, it will,
I conceive, be obvious, that whatever kind or quan-
tity of property may be brought into the market
must be at once and equally supply and demand,
demand and supply ; the stock remaining on hand
at any given time being merely the undemanded
difference between the quantity of goods brought into
the market and the quantity taken out of it ; for
every fraction of which existing stock on hand there
must of necessity exist somewhere money of no in-
trinsic value to the precise amount.
From w r hat has been stated, some persons may be
inclined to indulge in the jest of supposing that I
wish to convert Napoleon's nation of shopkeepers
into a nation of pawnbrokers, and all our pounds,
shillings, and pennies, into so many pawn tickets. I
have no objection to this or to any other supposition ;
but, in truth, what I am at present striving to accom-
plish is at whatever cost of repetition to render our
subject. Money, intelligible and plain even to the very
I'RE AND USE OF MOM ^ 127
members of this Institution. I desire, in
a \\ . >nl, to enable school-boys, and school-girls, too, to
refute Sir Robert Peel, Mr. Cobdcn, and every other
supporter of that fictitious monetary system by which
tin- inhabitants of this and other nations are at pre-
sent restricted to a fractional part of their natural
amount of income.
Our proposed standard bank would not, however,
be a mere pawnbroker's shop ; for, in the first place,
there would be this difference between them : The
pawnbroker issues a ticket in exchange for an article,
which ticket will buy but one thing in this world,
namely, the article in exchange for which it was ori-
ginally given : whereas our standard money would
purchase not merely any and every description of
property, heritable and moveable, within the stand-
ard market, but it would buy also any and every
description of property out of the standard market.
Standard money, in short, would not merely pay for
our bread and our meat, our clothes and our furniture,
but it would also pay our rent whether of houses or
of lands and taxes ; and that the learned and very
sagacious Times notwithstanding -justly. It would
also pay our clergy and our medical men, lawyers,
artists, teachers of youth, players, musicians, domestic
servants, and, in a word, the whole body of unpro-
ductive as well as productive members of society.
Inasmuch, however, as our standard money would
not, like a pawnbroker's ticket, be the mere represen-
tative of some one commodity and no other, but of
every commodity for sale in the public market, it is
evident that, as all men judge for themselves in what
manner they will expend their income the existence
128 LECTURES ON THE
of the most perfect monetary system notwithstand-
ing there may be a market disproportionately sup-
plied, although by no possibility could there ever be
a market over-supplied in the aggregate, provided our
instrument of exchange were to be a rational one.
Manchester, for example, for aught I know to the
contrary, may be able to over-supply the home
market with cotton goods, and Sheffield with cutlery.
But the existence of any such ability has never yet
been proved, and never can be proved, until, by the
establishment of a free system of exchange, the
terms glut and deficiency shall become merely two
names for the self-same thing, namely disproportion,
which, upon the principle of exchange I am now
describing, they inevitably would become.
For, as in the self-same hour that goods should be
ready for the market they would be convertible into
money, the representative at once of materials,
labour, transit, the expense of sale, and the profit of
the manufacturer which money whenever expended
would take out of the standard market precisely as
much value in one shape or other as should have
been previously /m into it in exchange for the self-
same money, it is obvious that, if one class of ware-
houses, yards, or cellars, should be over-fidl, another
class or classes must of necessity, and that to precisely
the same extent, be over-empty.
And hence the natural index to employment, at
all times, in all places, and under all circumstances ;
if it be not here, it is there, there, or there, for some-
where it must be. Parents and guardians, therefore,
would have merely to observe the general current
of supply and demand, in order to discover at once
NATl'RE AND USE OF MONKY. 129
in what direction employment should be increasing
and wlicr.- ill-creasing; and, consequently, in what
manner to educate and train their children. For,
unlike the present state of society, in which there
may be, and very often i>. a glut of every market-
alle thing, employment could no farther decrease in
one iliivctioii than it must of necessity increase in an-
other direction, or in other directions, and that to at
least the mil amount of the diminution.
This is not the case at present, because, and solely
because thanks to our monetary system production
is now the effect of demand, instead of the cause of
it : the modus operand* being that, the ways of using
it remaining the same, if you produce goods faster
than money, down they go in price; all stock on
hand must then be sold at a reduced figure most
likely at a losing one or else it must be kept on
hand until consumption shall have restored the equi-
librium of goods and money. In the meantime, half-
time is the rule at our great manufactories ; whilst a
hundred smaller works, depending upon the greater
for employment, suffer in like proportion. In a word,
production stops, and then a million or two of people
find themselves in the unhappy and rather curious
predicament of being naturally able to create, by the
collective exercise of their capital, skill, and industry,
an abundance of the good things of this life for the
uae of themselves and their families, but artificially
prevented from creating them by the mere absence of
the ability to exchange the respective products of
their industry amongst each other.
And now, let us see how we should get on with a
n currency along with the banking system that
130 LECTURES ON THE
I have proposed ; as also how the members of the
Anti-Gold-Law League would get on with their Go-
vernment paper.
Well, then, we have our market as already de-
scribed, as also our standard-banker, who, on certifi-
cation of goods having been brought into the market,
is forthwith to pay the full price of them to their
respective owners, and this to all comers and to all
amounts. But now in place of giving mere paper
acknowledgments of the fact that goods of a certain
value have been brought into the market, and are
therein exposed for sale by their respective owners
he is to pay down gold coin equivalent to all the
property, heritable and moveable, that may seek to
obtain admission !
Where, in the name of Sir Robert Peel, is lie to get
the money f It is not, you will observe, sufficient
that his stock of this one commodity for money > strict-
ly speaking, gold is not it is not, I say, sufficient that
his stock of this one commodity, gold, be equal in
value to the national stock of any other commodity,
but it must be equal to the entire and united value
of every other commodity, for sale in the market, or
else each and every merchant will be scrambling to
obtain it for his own advantage and to the disadvan-
tage of his neighbour.
An ounce of gold, again, being equal in value to a
great many ounces, pounds, hundredweights, or even
tons of some other commodities, what precise weight
of gold is the standard-banker to give in exchange
for the various goods that may seek admission into
the market, of which he may be called the master ?
The only rational answer to the question is Just as
NATURE AND USE OP MONEY. 131
little as he can just that weight, in fact, which the
offerers will consent to accept in exchange for the
various products of their labour, in preference to not
selling them at all.
Then do 1 ivj.lv that it is in vain to discuss the
merits of the existing monetary system, seeing that,
strictly speaking, there is no monetary system to dis-
cuss; for in undeniable truth, that which we now call
our monetary system, is but a mere modification
of the semi-barbarous system of bartering goods for
goods ; and that of so clumsy and imperfect a kind,
that we could not carry on even our home trade for
a single week, without the aid of such miserable
auxiliaries as bills of exchange, credit, and the like.
Measure of value we have none whatever, for every
true measure, as I told you in a previous lecture, is at
all times of the same length, superficies, or capacity.
But what does a gold coin contain ? Why, it contains
ten yards to-day and twelve to-morrow of the self-
same thing, the real value of which consisting of the
actual amount of labour essential to its production
may not have varied during the interval to the amount
of the smallest appreciable fraction.
With no description of metallic currency, then, can
we go on for a single year without subjecting our-
selves to the most inextricable confusion. Prices
one thing this week are another next, from the mere
increase of the good things of this life, as compared
with gold. Exert your productive powers, be in-
dustrious, be useful, and what then ? Why, prices
fall, stocks on hand depreciate, debtors are defrauded,
and creditors are obliged to become cheats, or else to
receive dividends in place of payments ; whilst every
132 LECTURES ON THE
ten or a dozen years the whole commerce of the
country is deranged, stultified, and all but suspended.
Such is our monetary system !
Then, again reverting to the League fiction, it has
neither basis nor superstructure ; and neither is there
a pin to choose between the no -measure of value Gold
and the no -measure of value State paper.
This nation requires money which will allow pro-
portionate production to become the unfailing cause of
demand ad infinitum, to the existence of which state
of things a measure of value is indispensable.
Suppose a thousand men to be able and anxious,
by the exercise of their united capital, skill, and labour,
to supply their own wants, and that all they require
is to exchange their respective products amongst each
other upon some equitable principle How is the
fiction of a government currency to help them ? Her
Majesty's treasurers will not take their goods in ex-
change for the money issued ; and even if they would
do so, what then ? Why, so much the worse, for the
producers require the goods for their own use and
consumption ; and, therefore, their desideratum is a
banking system of their own, by means of which be
the machinery of it whatever it may they may be
enabled to exchange their respective products and
properties amongst each other, at the least possible
expense of time, trouble, and anxiety. No govern-
ment currency, however, founded upon a mere fiction
such as has been promulgated by the League, can help
us for a moment to a free and unrestricted system of
exchange keeping always in view that no monetary
system whatever can be founded in right principles un-
less it will allow production to ensure demand.
NATURE AND USB OF MONET. I.'W
The Anti-Gold-Law Leaguers could surely IK
dream of the taxes amounting to five or six hundred
millions a year! and if not, wherein may consist
their mode of preserving the necessary co-equality of
production and circulation ! The truth is, that they
have never contemplated the existence of any such
necessity : if. exists, however, aware of it be they or not.
And it is well for us that the Anti-Gold-Law League
plan has not been tried ; for if adopted to-morrow,
the power of producing would still exceed the power
of exchanging : down, therefore, every now and then
would still go prices, production would flag, wages
would fall, want of employment would ensue, and all
the miseries of our present condition would come back
upon us, aggravated by the reflection that the Money
Doctors, as they are called, had been allowed to try
their specific. And with what success it would be
triumphantly remarked by their opponents let the
present state of the country answer !
Such would be the certain consequences of any
ill-digested attempt to introduce a new monetary
system into society, and therefore far better is it to
do nothing than to attempt something of which no-
thing, or worse than nothing, would be the inevit-
able result. In short, no good can come of half
measures in the circumstances in which we are placed :
we might as well make half a locomotive-engine and
expect it to convey a train, or half a watch, and ex-
pect it to keep time. We must take the true prin-
ciple of exchange, as dictated by nature herself, for
the basis whereon to erect our commercial fabric,
or else assuredly shall we continue to labour, as we
labour now, for the wages of disappointment.
134 LECTURES ON THE
LECTURE Y.
The Subject of the preceding Lecture continued that is to say,
Continued description of a Banking System, by the establish-
ment of which Production, now the Consequence of Demand,
would be converted into the Cause of it.
IN the preceding lectures I have endeavoured to
show you that production is the natural cause of de-
mand, but that practically, owing to the existence of
a false monetary system, it is not so ; that, therefore,
it is incumbent on us to set on foot another mone-
tary system, by means of which whilst retaining
all the minor conveniences which are afforded by the
money we have at present the great principle I
have just mentioned may be restored to us. And
having also told you, in general terms, that this may
be effected by the establishment of a standard-bank,
the business of which is to consist, first, in giving out
paper-money to represent the value of all the pro-
perty, heritable and moveable, that may be brought
into the standard-market ; and secondly, in requiring
repayment of the said money, in the most invariable
manner, on the removal, by whomsoever, of the said
property from the standard-market the next ques-
tion which seems to offer itself for our consideration
is this:
Having already seen, that the A nti-Gold-Law League
NATURE AND USE OP MONKV. 135
party have not taken cognizance of the absolute
necessity of preserving a precise balance between
production and demand Exists there, it may be
asked, elsewhere any monetary plan in which this
principle has not merely been recognised but fully
carried out ? I fear not I Sundry propositions have,
indeed, been made to erect our monetary system upon
the basis of land.
All monetary schemes, however, are false in prin-
ciple, and will prove utterly delusive in practice, which
may be founded either upon the security of land, or
upon the mere security of anything. Money, pro-
vided it shall have been originally issued upon a
true principle, may be transferred from one person
to another. It may be given by A to B for some-
thing or for nothing, or it may be lent out at interest
on security or on no security, and all may continue
to work well. But money can never be issued by
any properly constituted bank, except in exchange
for value to be bona fide offered for sale so soon as
the money issued upon it shall have crossed the
banker's counter to the public side.
And the reason of this is obvious. Suppose, for
example, that paper-money to the amount of ten
thousand pounds be advanced to any party by a
banker upon the security of value to that precise
amount, to be instantly offered for sale. Spend one
pound of this money in the repurchase of any part
of the said value, and the one pound spent ceases to
be money, whilst the value held in security by the
banker is now reduced to one pound less than ten
thousand. Spend five thousand pounds in a similar
repurchase, and only five thousand pounds of money
13G LECTURES ON THE
now exist ; or spend the whole sura of ten thousand
pounds, and then the market will be empty on the one
hand, whilst on the other, money there will be none.
But let ten thousand pounds be advanced to the
same party on the security of the same property, and
let the receiver of the money now stipulate with the
banker that the property assigned to him shall be
merely held in security, and not offered for sale in
the public market at all. The inevitable consequence
of this arrangement, then, will be that the whole of
the money thus thrown into circulation, will merely
have the effect of raising the money-price of the
marketable stock that previously existed. In a word,
if the money be all expended by the borrower, it will
increase demand to the amount of ten thousand
pounds ; but it will not increase supply to the value
of half a farthing. The quantity of property for sale
in the market, after the advance, will be just exactly
as much as, and no more than, it was before the
advance; and, therefore, the competition amongst
the buyers to obtain it will have the inevitable effect
of raising its price to the extent of just ten thousand
pounds supposing always that effectual demand
existed at all events for all the property for sale.
Again, as no amount of paper money can ever be
justly issued by any rightly constituted bank, except
on the security of an equal value of property to be
bona fide forthwith offered for sale in the public
market, so, in like manner, neither can money be
properly issued to any less amount than the full value
of the said property ; because in this case another
mischief would arise precisely opposite in character
to that which has already been described. Ten
1'RE AND USE OP MOM.V. 137
thousand pounds' worth of goods, for example, having
been received in this case, whilst money to the amount
of but five thousand pounds has been given out on
the security of them, and all the borrowed money,
as before supposed, being forthwith passed into
general circulation that is to say, expended in t he-
public market the result now is that ten thousand
pounds' worth of additional goods are placed in the
hands of parties seeking to sell them, whilst money
to the amount of five thousand pounds only is thrown
into the other scale : and thus supply is increased to
the extent of ten thousand pounds, whilst demand
is increased to but half that amount only. The com-
petition of the sellers, therefore, is now increased in
like proportion, and consequently the money-price
of all their goods must fall, and that to the precise
amount of the difference between the value of the
additional stock of goods and the additional sum of
money simultaneously thrown into the market.
And it is mere nonsense to attempt to meet this
statement by vague and general suppositions, such
as May there not be this influence upon the market
here, or that influence on the market there ? It is
quite true that you may complicate the argument by
raising supposititious cases, but you cannot refute it.
You may, indeed, so envelop this subject in a tangled
net of words and quibbles as to render it all but in-
comprehensible to the major part of a mixed audi-
t !! like the present one. It may be very difficult,
too, to untie your endless knots, and to spread open
to view all the meshes of your net divested of every
ravel : but as a stone thrown up into the air will as-
suredly come down ,-i<r.iin. in obedience to the law of
138 _ LECTURES ON THE
gravitation, in spite of any artificial contrivance to
which you may resort in order to cause it to fall as
distantly and unascertainably as possible, so will the
monetary principles I am now laying before you, con-
tinue to operate, in obedience to laws as invariable
as that of gravitation itself, to our destruction or to
our advantage, just as we shall continue to disobey
them, as we are now doing, or as we shall learn cor-
dially to accept them as our director and our guide.
And here allow me to remark, that it is generally
by the most simple, and not by the most intricate
illustrations, that we are led to the discovery of im-
portant truths. An apple falls to the ground, a
powerful mind seizes upon the fact, and the principle
of the universe is discovered. Adam Smith, whose
writings upon Political Economy have never yet been
equalled by those of any other man alive or dead, in
speaking of the principle of exchange, illustrates his
subject thus :
" This division of labour [says he] from which so
many advantages are derived, is not originally the
effect of human wisdom. * * * It is the neces-
sary, though very slow and gradual consequence of a
certain propensity in human nature * * * to
truck, barter, and exchange one thing for another.
* * * Nobody ever saw a dog make a fair and
deliberate exchange of one bone for another with
another dog. Nobody ever saw one animal, by its
gestures and natural cries, signify to another, this is
mine, that is yours, I am willing to give you this
for that."
And thus it is -with all men who really understand
the subjects upon which they write ; clear and distinct
NATURB AND U8E OF IIOM.Y 139
ideas give birth to plain and intelligible language,
whilst a labyrinth of words U a sure index to a mind
of niml.
But to return. Having told you, then, that the
Anti-Gold-Law League project is a fiction, and why
that all schemes founded upon the issue of money
upon the security of land are fictions, and why there
yet remains another fiction to be noticed, namely,
that of the Birmingham Monetary Reformers, the
nature of which I can best explain by giving you the
words of Mr. Muntz, used on the occasion of a public
meeting held in Birmingham in October last, as re-
ported by The Times :
" And now, Sir [addressing himself to the chair-
man] I may as well give you my remedy, as pro-
posed in 1 840 to the Committee upon Banks of Issue.
The first and indispensable step is, a suspension of
cash payments, whilst the subject is debated and ar-
ranged. The second, an entire separation between
the Bank of England and the Government. The
third, taking out of the hands of the bank the
management of the circulation of the country, and
giving it to a National bank, managed by commis-
sioners appointed by, and responsible to Parliament,
which bank should issue notes which should be a
legal tender, and in which all other banks should pay
thrir notes on demand. The fourth, empowering such
commissioners to issue their notes very gradually,
to such extent as should eventually raise all prices
which have fallen, and with them gold and silver,
until silver was 7s. 6d. per ounce, which would keep
wheat at an average price of 7s. Cd. per bushel, and
all other prices in due ratio. And when such price
140
LECTURES ON THE
of 7s. 6d. should have been obtained, the National
bank should at all times receive silver at 7s. 6d.
against their notes, and pay the notes on demand in
silver at 7s. 6d. per ounce."
Now, the plan of Mr. Muntz, like the plans of the
Anti-Gold-Law League and of the land-security men,
is founded in error. It is a mere plan unbased upon
any principle: it is a watch without a spring, a steam-
engine without a boiler, a world without a sun.
The specific fault of the existing monetary system
is, that our power of increasing marketable produce
is greater than our power of increasing money.
Hence, whenever we exert our industry to an in-
creased extent, but still to an extent infinitely short
of its exhaustion, prices fall, goods already existing
can be disposed of only at a loss, and this discovered,
then production stops.
And the specific remedy, come in whatsoever shape
it may, must consist in this : Exert our productive
powers to whatever extent we may be able, prices
must not fall, and then all our goods may be sold at
a profit instead of at a loss, and that provided we
shall continue to produce them in due proportion to
each other until the end of time.
Hence it is evident that the remedy proposed by
Mr. Muntz would be altogether inefficient. His plan
reminds me, indeed, of a little bird confined within
a cage, forever crying, like Sterne's starling, 1 can't
get out ! That little bird is Production. Now, Mr.
Muntz is an honest man : the Times says that Mr.
Muntz is an honest man ; and, therefore, Mr. Muntz
must be an honest man the reasoning is conclusive.
Well, then, honest Mr. Muntz does not admire cap-
.N VTI'KI- AND I'SB OP MONEY. 141
ti\ ity, and / can't get out strikes painfully upon his
ear. But you shall get out, says Mr. Muntz, who
forthwith opens the cage-door, and out flies our little
bin I into the room. But, / can't get out! still re-
iterates the bird ; when, oh, says Mr. Muntz, this is
more than I bargained for ! I found you in a cage,
I have given you the freedom of a room, and still
your lamentation is, I cant get out. Well, then, you
must just stay in !
Now, this is exactly our position : the productive
resources of this nation are caged, not by this man
nor by that man ; not by Sir Robert Peel, nor by the
editor of the Times, but by the utter ignorance that
pervades the whole community, and the mind of al-
most every individual member of it, upon the subject
of exchange. And these productive resources Mr.
Muntz would liberate to a certain but very limited
extent. Liberated, however, to his extent even
though they should be to-morrow, their cry, like
that of our little bird, would still be Freedom, which,
being interpreted, means // is our right and pro-
vince to create demand, instead of being created by it.
This, and this only, is true commercial freedom :
this, ami this only, is the criterion by which every
monetary system must be tested, and by which it
must stand or fall.
Tested by this criterion, then, would Mr. Muntz's
monetary system answer the purposes of this great
country \ Assuredly it would not, and I sincerely
believe that if Mr. Muntz himself will do me the
favour to re-examine the subject of money in the light
in which I have now placed it, he will eventually be
inclined to admit that I am right.
142 LECTURES ON THE
Apologies, I fear, are due for these very numerous
repetitions ; but on a subject like this, new in part
as it probably is to many persons present and wholly
new to some, I have thought it best to completely
clear the way as we go along, to finish one thing
before we begin another, and thus, by subdividing
our inquiry into sections, to prosecute it the more
thoroughly.
Having, then, ascertained beyond all reasonable
doubt or question, that proportionate production, un-
impeded by monetary vagaries of any kind, is the
natural cause of demand, that, as Mr. Mill says,
" Production is the cause and the sole cause of de-
mand ; that it never furnishes supply without fur-
nishing demand, both at the same time, and both to
an equal extent," it necessarily follows that the natural
limit of production itself is the inability to maintain
that proportion.
Now, this proposition, which I believe to be one of
the most important within the whole range of the
science of Political Economy, seems by some unhappy
mischance to have altogether escaped the observa-
tion of the political economists. So far, at least, as
I am acquainted with their writings, it has escaped
them, and yet, strange to say, it is as nearly as pos-
sible self-evident. And it is out of this natural limit
to production, and out of it only, that two necessi-
ties, of the utmost importance to the commercial in-
terests of nations, arise, and owe their existence :
the first of these necessities is a foreign trade ; the
second is emigration.
The necessity for a foreign trade must not, how-
ever, be confounded with the advantages of one ; see-
NATURE AND USB OP MONEY. 143
ing that the latter date their commencement from the
time when, by any less expenditure of labour, we can
obtain any article of which we stand in need by pro-
ducin.u; xniiii' other article, and giving it in exchange
for that which we require, instead of making the
thing which we require ourselves.
Thus, for example, in this country we are fond of
grapes; and as we all know, very delicious grapes
can be produced within our own hothouses. But, to
ascertain the cost of a pound of hothouse grapes, we
must take the rental of the hothouse, the annual cost
of keeping it in repair, the cost of the vines them-
selves, the wages of the gardener and of his assistants,
the cost of the fuel and attendance on the stoves, and,
finally, the cost of gathering the ripe fruit, and of
conveying it to market. Add all these expenses
together incurred within the space of one year, divide
the sum total by the number of pounds' weight of
grapes obtained, and the product will be their cost
per pound.
Now, in the south of France, grapes of very good
quality are produced in the open air, and conse-
quently at a far less cost of capital, skill, and labour
than are essential to their production in this country.
Whenever, therefore, we shall have a perfectly free
trade with France and which event will come to pass
so soon as the two nations shall have emerged
from an age of utter darkness upon the important
subject of exchange our grapes will probably be
grown, for the most part, in Sheffield ; and there,
not in hothouses covered with sashes of glass, but in
the workshop of the cutler, whose goods, costing
equal quantities of labour, just as far surpass in
144 LECTURES ON THE
quality those of his French competitor, as the out-
door grapes of the south of France surpass in quality
the out-door grapes of England.
Here, then, you will perceive how immensely im-
portant to the interests of nations is foreign trade,
and that long before the period arrives when such
trade assumes the character of a necessity. The vine
can be cultivated, and that with great success, so far
as the quality of the fruit is concerned, in this country ;
and cutlery, in like manner, can be made in France.
But the inhabitants of both nations now pay an
exorbitant price for these desiderata ; and that, as
it would appear, for the mere pleasure of continuing
to sacrifice their best interests at the shrine of
commercial ignorance.
Commerce is to a nation what exchange is to an
individual. A first-class portrait painter, for example,
is desirous to obtain his own similitude in the shape
of a marble statue, whilst an eminent sculptor is
equally anxious to have his duplicate on canvass.
Would you, in these circumstances, advise the portrait
painter to chisel his own statue, and the sculptor to
paint his own portrait 1 If you would not, then is
it clearly impossible for you, without committing the
grossest inconsistency, to sanction restrictions upon
trade in any shape or way whatever, either between
individual and individual, or between any one nation
and any other.
But this is the least important view of the sub-
ject ; for whilst a good artist might contrive to
chisel a bad statue, and a clever sculptor to daub
some sort of likeness of himself in paint, the whole
surplus power of production in any given departments
NATURE AND USE OP MOM.V.
of tin' imlntifn/ of firu nntiunn, is wholly lost to
loth \\hen.-\rr they are prevented from cxchan
their resprcti\e production.- with . ach other. Bj
empliti'd this may ! l>\ reference to the argum* nt
we ha\e already used. For if France, for inst
cutiM produce fruits to the value of one million of
(MM i nds sterling more than she can at present sell,
an- 1 if England could manufacture more cutlery than
she does now by the same amount, it is obvious
that by prohibiting the exchange supposing the re-
spective parties to be willing to make it we tux
lln' den countries to the extent of one million each,
and that just as certainly and unquestionably as we
should l>y taking that precise sum of money out of
their f tilers in gold com.
Hence you will perceive, that whenever impedi-
ments are thrown in the way of free and unrestricted
commercial intercourse, the effect is two-fold /
the cost of production is increased, whilst the article
ob t< dried is of comparatively inferior quality; as in
the case supposed, where the artist turns sculptor
ami the sculptor artist ; and, secondly, the very exist-
ence is prohibited of millions upon millions of wealth,
which, in the absence of all restrictions upon inter-
change, would be created, used, and enjoyed.
much for the advantage of foreign trade, which,
as I have already told you, must not be confounded
with its /fce^ifi/, which arises from a totally different
cause namely, from the inability which may arise
within a nation to go on maintaining the existence of
that proportionate production on which alone, as has
been stated many times already, depends our ability
to produce ad in/initum, without overtaking demand.
K
146 LECTURES ON THE
By the establishment, then, of a National standard-
bank, upon the principle I have laid down namely,
that of issuing money to standard-manufacturers and
merchants to the full amount of all the property,
heritable and moveable, that they may be able to
bring into the market, a perfectly free system of ex-
change would be created.
But if, under the provisions of such banking system,
all men should be enabled to throw the respective
products of their labour into a public market, and
to take out of that market equivalents, in whatever
shape they might think proper and that with all
the facility with which they now pay their money
into a public bank, to be withdrawn at such times
and in such portions as may be most convenient to
themselves it is obvious that the operations of such
a market would inevitably come to a stand-still,
should the time ever arrive when, in exchange for
that which may be put into the market, there could
no longer be obtained from it a full supply of some
one absolute necessary of life. If, for example, the
population of this country should increase to so great
an extent, that we could no longer, by any direct
exertion of our own labour, supply ourselves with a
sufficiency of food, proportionate production must
either forthwith cease, or else some portion of our
labour must take a new direction : that is to say, goods
of some kind must be created, in exchange for which
the inhabitants of some other country or countries
will give us food. And thus our argument is com-
pleted ; the necessity for a foreign trade has arrived,
seeing that without it we can no longer go on main-
taining that proportionate supply within the home-
NATURE AND USB OP MOM V 147
market, on tlio continued existence of which must ever
depend the co-equality of production ami demand.
Tlit-n \\ith respect to fmii/rntioii, tin- ai^niiiei.
>clv similar t the foregoing : for, as in the case
of foreign trade, the tufrtmhtges of emigration nm-t
ever preeedr by a very long period the ahsolut-
cessity for it ; the advantage obviously appearing
whenever any given amount of capital, skill, and la-
bour, will yield a more abundant return abroad than
at In Hue ; whilst the absolute necessity for emigration
can arise only when, neither by the exercise of our
labour, nor by the employment of our capital in for-
eign trade, can we any longer maintain the propor-
tionate supply of the market ; the existence of which
proportion must ever be tested by the answer to the
j nest ion Whether he who has money to spend can
obtain in exchange for it, at a reasonable price, what-
ever he may desire to purchase ?
Far distant, however, appears to me to be the
day on which we shall no longer be able proportion-
ately to supply the markets of this country. Hith-
erto our outcry has ever been not for merchandise,
but for customers to buy it ; and so easily could we
at the present time create and distribute an ample
supply of all the material products that are really
essential to the wellbeing of society, that I firmly
believe the day will come, when the discovery of a
nation of men walking on their heads instead of on
their feet, would excite but little more astonishment,
than will the history of the commercial policy of Eu-
rope and America in the year 1848. For, to create
and enjoy the entire quantity of wealth that he has
tl.e combined ability and inclination to create, is so
148 LECTURES OX THE
obviously the natural duty and privilege of man in
this world, that future ages will require good evi-
dence that the time ever was when, with all his
boasted powers of reason and philosophical acute-
ness, he had actually set aside this natural limit to
his physical means of enjoyment, and adopted in its
stead a fictitious limit, under the operation of which
millions of human beings actually died, at various
periods, of artificially created famine !
Having, then, endeavoured to place before you the
elementary principle of exchange in circumstances of
the least intricacy, I trust it has been rendered suffi-
ciently obvious That whilst mere production will
not necessarily create a demand equal to itself in any
market, however free the mode of interchange may
be therein, Proportionate Production inevitably must
and will do so.
Proportionate production, however, or, what is
the same thing, the proportionate supply of the
home-market, does not, as has been already shown,
depend upon our home-povfer of producing that
which we require to consume, use, or accumulate,
seeing that the home-market may continue to be
supplied proportionately just so long as, but no
longer than, we can go on producing such commo-
dities as other nations may be willing to take from
us hi exchange for those which we ourselves require
exportation and importation being thus of neces-
sity ever precisely equal to each other.
But the continued maintenance of our foreign
trade is not dependent on any one form. Goods
may be exchanged directly as for example, English
coals for French wines : in which case the native
\ \TU!K VM' i >K OK MONK'.. 149
I TO. luce of England is given in exchange for tin-
native product- ,,t' r'rancr. Or Kmrlish cottons may
be given in exchange for French silks ; in whirh
case the labour of England is given in exchange
for tin- I"'" ' <>t I Vance ; the material in both cases
on which the labour is expended, being, for the most
jart, neither the produce of the one country nor of
the other. It will be understood, however, that the
principal material only is here spoken of; for if we
were to take the endless variety of minor essentials
to the production of silk and cotton goods such as
the various dyes and chemicals used in their manu-
facture and to attempt to trace them to their vari-
ous original sources, we should soon be altogether
lost in a labyrinth of details, and those of no practi-
cal value to our argument.
Airain. the products of one country and that
whether consisting of native material and labour, as
in our first instance, or of labour only, as in our
second instance may be given to another country
in >\ change for goods, for which the buyers have no
use whatever, except that of purchasing from a third
country certain commodities for which they are not
in a condition to offer any more direct equivalent.
China, for example, produces tea, of which England
great consumer. But China will not take the
native products of England in exchange for her tea :
she will, however, take gold, which is not the produce
of this country. In this case, therefore, in order that
we may obtain tea from China, we must first buy
sj-nM wheresoever gold is to be had in exchange for
Mich goods as we may be able to give for it. And
it matters not whether the gold, which we
150 LECTURES ON THE
require for this purpose, be obtainable in exchange
for the native products of our own industry, or in
exchange for foreign products, directly or indirectly
purchased with our own.
Hence, therefore and this is the point to which
I desire to direct 'your attention however intricate
the process, so long as the home-market can be pro-
portionately supplied, that is to say, sufficiently sup-
plied with such commodities as people ask for in
exchange for their money, there can be no limitation
whatever to the operation of the important principle on
which I insist, namely That, with a right monetary
system, demand would become, and ever continue to
be, co-equal with production. The true end and
object of all commerce is to obtain whatever we may
desire to possess in lieu of that which we may be
able to give ; and it matters not a straw, commercially
speaking, whether this object be accomplished by
direct or indirect means ; for, provided it be accom-
plished without difficulty or inconvenience, we may,
if we please, export everything that we create by
our own labour, and consume, use, and accumulate
nothing, not even our daily bread, but what shall
have been imported from some other country.
But the time may come when proportionate supply
can no longer be maintained at home, either by
means of bringing the varied products of our own
industry into our market, or by exchanging those
products, either directly or indirectly, for those of
other countries ; and then, but not till then, will pro-
ductive labour of some kind be superabundant in this
land. Has that period arrived ? Is it now, or has
it ever been, necessary for the productive labourer to
NATTIIK \M> CSK oF
151
leave liis native country in search of employment '
or rather Would emit/ration have as yet been neces-
ory had freedom of exchange e\n- truly existed in
this laiul \ had proportionate supply been, as it ever
should have been, the one and on hi condition to the
constant co-equality of production and demand .'
I confess my inability to answer this question with
;my certainty ; and indeed it would involve a tedious
and lengthened course of investigation to arrive at
even a probable answer to it. It would, however, l>c
a mere waste of time and thought to adventure upon
tin- inquiry. It is for us it is for the nation at
large, and for every person in it who has not an in-
dependent income to call his own to insist upon an
immediate and thoroughly searching //</////// into this
subject. For if the statements I have already made,
and urn yet about to make to you be true, irrefutable
a> the existence of light or heat, and demonstrable
by any tolerable accountant to the capacity of any
well-educated youth of twenty years of age, then I
submit that if the inhabitants of these realms shall not
very speedily apply to the government for an ex-
tensive measure of relief, they will well deserve to
sutler, as they suffer now, from a perpetual pecuniary
insnfliciency, relieved only from its tediousiu >> ami
monotony by an occasional pecuniary famine.
1 would, however, earnestly caution you against the
adoption of any half measures with reference to this
subject, by the operation of which we may be lulled
into a state of fancied security. Proportionate supply
is or is not the natural cause of demand : if it be not
so, then is every sentence which I have addressed
to you a mere tissue of nonsense, deserving only of
152 LECTURES ON THE
your contempt and ridicule : but if proportionate
supply be in reality the natural cause of demand,
our task is plainly before us Let it be so practically.
I shall now proceed to present you with a descrip-
tion of an accurate measure of value, consisting not of
gold, neither of silver, nor of any valuable thing
whatever, but merely of a principle.
It being understood, then, that every standard-
manufacturer, merchant, and dealer in houses, lands,
or other heritable property, is to put his own value
upon whatever goods or property he may bring into
the market ; and that, on giving security for its ul-
timate repayment to the bank, the bank is to pay
him at once the full value in money of the said
goods or property as estimated by himself In what
shape, it will be demanded, are we to obtain that ac-
curate measure of value by means of which all inter-
changes between man and man are to be effected
with a degree of fairness and accuracy, rivalling that
which in the case of any two things of like nature
as well as value, would be obtainable by merely
giving equal weight for weight, measure for mea-
sure, or number for number ?
Now, to this subject I would particularly solicit
your attention, because it is one which appears to
have been hitherto misunderstood by all parties, but
more especially by the original''' editors of the West-
minster Review, the present editor of the Times, the
Birmingham monetary reformers, as represented by
Mr. Muntz, and the monetary reformers of London,
as represented by the Anti-Gold-Law League. In
* The Work, it has already been mentioned, is now in other hands.
NATURE AND USE OP MONKV
short, anything like n true mea-uiv <>l value is a
yet to be recognised by men of every shade of
politics, whoso opinions upon the subject of money
; all kii"\\n to thepuMie : very few of whom seem
t" have the least conception, that we have merely
to reform, or rather to reconstruct our monetary
ni. in order to cuter at once upon a state of
society, commercially speaking, as superior to thai
\\hich at present exists, as the railway mode of travel-
ling from one place to another is superior to that of
ur forefathers.
Well, then, I think you must have already seen,
that if whatever the world calls wealth, both real
and personal, in all its varieties, and in the most
minute portions, could be conveniently exchanged, upon
the principle of equal weight, equal measure, or equal
number, there would be no necessity for money at
all ; and that it is because, and solely because, this
cannot be done, that a measure of value is essen-
tial. not merely to the convenience, but to the very
existence of commercial transactions .of any consi-
derable extent or magnitude.
You have seen, farther, that the east wind might
as truly be called a measure of value as gold coin,
were it for no other reason than this one, namely,
that whilst any given number of ounces divided by
sixteen will give the number of pounds avoirdupois ;
whilst any given number of feet longitudinal divided
by three will give the number of yards, and this at
all times and under all circumstances, no given number
either of ounces' weight, or of feet longitudinal, of any
DM thing upon the face of the earth, gold itself only
excepted, will continue to exchange for the same
154 LECTURES ON THE
weight of gold, at all times, even though both the
desire for, and the labour of producing the things to
be exchanged, shall have remained the same to the
smallest imaginable fraction. Gold, therefore, in
place of being any measure of value at all, is itself a
mere commodity, the price of which, as measured by
other commodities, in reality rises and falls just as
frequently as the price of other things ; although such
rises and falls are to a certain extent concealed from
public view, by the operation of the legal fiction that
the value of gold is 3, 17s. 10d. per ounce. Gold
is indeed assumed to be a measure of value, and it
is also declared by the law of the land so to be ; but
still it is no more true in point of fact that gold is a
measure of value than it would be true to affirm that
2 and 2 are 5, 15, 50, or 500.
The law can do a great many things, but there
are still a great many things which it cannot do. The
law, for example, is able to change the name of a
man or even that of an animal. It may enact that
henceforth all dogs shall be called cats, and that all
cats shall be called dogs. And if such a law were to
be enacted, why, then, in future, all the cats would
bark, whilst all the dogs would mew. But the law
cannot suspend the operation of the principle of
gravitation, or convert the darkness of midnight into
the noonday sun, or the chilling blasts of December
into the sultry brec/es of July. And yet did the law
attempt to do a thing quite as impossible as any one
of these, when it sent forth the idiotic mandate
" Gold shall be at once the standard and the measure
of value." For, as the earth we dwell upon is one
land not many, so also is there one standard, one
N \TURB AND USB OF MUM V. 1 .">.j
nu-a'i!v of value given to us by tin- hand of Nature
h.-r-M-lf; ami lir-i-l,-.-. d\\^ th-iv is mi other: neither
is it within the power of man to mate another, any
more than it is within his |>ower to make another sun
or another moon ; an. I neither is it possible for man
"/ thi-s natural standard of value, ami to setup
any (/olden image in its stead, without suffering for
his presumptuous folly that punishment wliich con-
stantly awaits the violator of every natural law.
Come, therefore, the punishment of our disobedience
must and will, and that equally whether we hap-
pen to know that we violate any natural law or not.
In announcing to you, then, that human labour is
at once the source, the standard, and the only possible
measure of value, I tell you nothing new. You have
been told so twenty times before, and never perhaps
more earnestly or emphatically than by your great
countryman Dr. Adam Smith : these are his words :
" The value of any commodity, therefore, to the
person who possesses it, and who means not to use or
consume it himself, but to exchange it for other com-
modities, is equal to the quantity of labour which it
rnal.irs him to purchase or command. Labour, there-
fore. Is the real measure of the exchangeable value of
all commodities.
" Labour was the first price, the original purchase-
money that was paid for all things. It was not by
^rold or by silver, but by labour, that all the wealth
of the world was originally purchased ; and its value,
to those who possess it, and who want to exchange it
for some new productions, is precisely equal to the
<jiittiitit// of labour which it can enable them to pur-
chase or command.
LECTURES <>X THE
" Labour alone, therefore, never varying in its own
value, is alone the ultimate and real standard by
which the value of all commodities can at all times
and places be estimated and compared.
" Labour, therefore, it appears evidently, is the
only universal, as well as the only accurate measure
of value, or the only standard by which we can com-
pare the values of different commodities at all times
and at all places. We cannot estimate, it is allowed,
the real value of different commodities from century
to century by the quantities of silver which were
given for them : we cannot estimate it from year
to year by the quantities of corn : by the quantities
of labour we can, with the greatest accuracy, estimate
it both from century to century, and from year to year.
" Labour, it must always be remembered, and not
any particular commodity, or set of commodities, is
the real measure of the value both of silver and of all
other commodities."""
Now, I think it will be admitted by every candid
reader, that throughout the entire volumes of the
Wealth of Nations there is not to be found one solitary
doctrine more unequivocally or emphatically incul-
cated than that which I have just quoted ; and yet,
strange to say, there the Doct r left his axiom, just
as if it had fallen from him by mere accident, un-
worked out, unexplained, untraced in its results, and
to all practical purposes a dead letter which, un-
happily, to this day it hath remained.
Whilst, however, I thus merely reiterate a great
truth, which was laid before you many years ago by
* Wealth of Nations, Edition, Edinburgh, William Creech, 1806,
Vol. I., Pages 39, 40, 43, 44, 48, 49, and 258.
\ \n i:r. AND r<r. UK M. l."*7
one, the hist iv of NNho.se name has contrihiuvd to the
eelehrity of this city of learning, I would remind you
that it is no new tiling amount us in neglect for
half a century or so, to take any practical ;ul vantage
of e\en tin- uut important discoveries. Compara-
tively few Arsons, indeed, who have been of very
much use in the world, have ever lived to see the
result of their studies estimated at their true value
by the immhers of society. Why, therefore, should
we be discouraged by the fact that a principle in
social science endorsed though it be by one of our
lost modern philosophers has lain dormant for
seventy-two years I And again, backed by such an
authority, why should we despair of seeing lalitmr
one day assume its true position in the world as the
universally acknowledged measure of value as well
as source of it "? or why should we hesitate for a
moment in assigning to labour practical/// that im-
portant office of which naturally it never by any
possibility can be deprived ? The case lies in a nut-
shell Labour is the only real standard, the only real
-ure of value ; and, therefore, if we shall continue
oltinately and stupidly to decline accepting it as
Mirh, why then we must be content to go without any
real measure or standard of value at all ; seeing that
in no other possible shape or form can we obtain one.
Then if we be inclined to carry this investigation
a little farther, the next thing which we shall have to
encounter will be the old set of stereotyped queries,
to be now repeated for the ten thousandth time :
"How will you do this V "How overcome that ?"
How explain the other thing?" &c. And in the
lit instance, these and the like inquiries may
1/58 LECTURES ON THE
neither be few nor unimportant ; and yet, after
more than twenty-five years' consideration of the
subject, I am fully prepared to say, not merely
That I see no practical difficulty whatever in accur-
ately measuring value of any kind by labour ; but far-
ther, I do not believe it to be within the power of man
to raise any objection to our forthwith doing so, which
I am not in a position at once and for ever to refute.
Labour, then, as declared by Dr. Adam Smith,
being the only true standard and measure of value,
our next inquiry is By what process is it possible to
measure labour itself? Equal quantities of labour
of hour's work in a coal-mine and at a cotton-loom,
for example, would surely not be equitably remuner-
ated by equal payment ! neither could the result of
twelve hours' labour expended in a business requiring
an apprenticeship to obtain an adequate knowledge
of it in that of an engraver, for instance be fairly
exchanged for the result of twelve hours' employment
in a work requiring no such previous instruction, or
preparation of any kind !
And again, it is scarcely possible with fairness to
pay any fifty men alike, even when employed in the
like manner. In skill as well as industry, in general
good conduct as well as in skill, and in trustworthi-
ness as well as in all these, there is and ever will be
not merely shades of difference but a great differ-
ence, between the value of one man's labour and
that of another man, even in those cases wherein the
parties are nominally alike in station, occupation,
and in general circumstances.
Then in the case of professional men, as for ex-
ample, advocates, physicians, &c., the value of one
'KB AND rsi: ir MONT.Y. 159
man's hour \x frequently greater than that of another
man > day, or even week.
Admitted all thia, lu.w then, it will be reiterated, is
thr one and only measure of value labour to beit-
srll iiiraMiivd in such manner as to give no just cause
of umbrage to any man, much less to inflict upon him
tin- I;TOSS injustice of placing him in circumstann s
wluTi-in he may no longer be able to ascertain the vain*'.
of his own tinu'. as compared with that of others, by
tin- inn a 1 1' I only true test of all comparative value,
which is The precise sum of money for whicli, lj
free mutual contract, any labour, service, or commo-
dity , can be sold?
Now, the answer to this inquiry is, that nature
contradicts not herself, and, therefore, if we only
obey her dictates ^ith scrupulous exactness we shall
never get into a maze. And thus in the present
instance it will be found That the principle of free
diul unrestricted competition between man and man
throughout every occupation in life, be it profes-
sional, mercantile, mechanical, or laborious, is in per-
fect accordance with the natural measure of value
labour ; and, consequently, that no practical difficulty
or inconvenience could be entailed on any class of
competitors by the act of constituting labour the
legal, as it has ever been, and must ever continue
to be, the natural measure and standard of value.
In some cases immense, in others very minute, dif-
uces exist between the value of the labour of one
person and that of another ; but the principle of free
and unrestricted competition will ever continue to
adjust these differences with sufficient accuracy for
all practical purposes, so long as every man shall
1GO LECTURES OX THE
be at perfect liberty to Name the value of his own
labour, and to Obtain it if he can.
And now, we find ourselves immediately in front
of the grand citadel of the bullionists, the fortifications
of which, however, being composed of straw, will be
very easily converted into thin air.
The everlasting blunder of the bullionists, then,
consists in the supposition That a paper-currency,
unconvertible on demand into any fixed weight of gold
or silver, must necessarily be a depreciated currency !
This supposition, however, is mere delusion ; for the
value of a, one pound note unconvertible into any fixed
quantity of gold, silver, or anything else, may quite
easily be fixed by law with mathematical precision and
certainty ; and that not merely in such a manner as to
defy \\\Q possibility of depreciation, but to such legal
note may, moreover, be assigned whatever value the
nation may think right and proper to give it ; which
value it would thenceforth retain, even though the notes
should be multiplied a hundred-thousand million-fold.
It having, then, been mentioned, that as part of a
monetary system under the influence of which pro-
duction, now the effect of demand, may be converted
into the cause of it, all goods deposited in standard-
warehouses are to be instantly paid for by the stan-
dard-banks, whilst the onus of selling them is still to
devolve upon their own manufacturers or importers
as the case may be, attached to this great privilege
of prepayment before sale, there must be one con-
dition, namely That in every manufactory through-
out the kingdom wherein standard-goods may be
produced, there must be a minimum price of labour
payable in standard -money.
NATURE AND USE OF UUNKY. 161
Now here let no (VIM in tin- >tudy of Political
Momy bo at all amused at tlir mention of any
fixed price whatsoever of wages ; for, if he adventure
int< an argument with me upon the sul.ject, I shall
beat him, I know, and therefore it is but fair to tell
him so beforehand.
A minimum wage of labour, then, payable in paper
nHnn'11. means nothing whatever more or less than a
mere starting point in the race of competition, with
the principle of which it would interfere no more
than interferes the self-same condition at Ascot or at
Epsom. Its language, in short, is merely this :
" Come in first who may, in fairness each and all of
vnu shall start together."
Again, so far as regards the general view of this
subject the particular view will follow presently
it matters nothing where this starting point may be.
The minimum of wages may be fixed at 5s. a-\\n k,
or 10s., at 20s. or 50s., and the real difference bet\\ < n
these amounts that is to say, between the sum of 5s.
and 50s. will be no difference at all : for the produce
of his own labour would be the real wages of the
labourer in every case, whilst his weekly wages in
money would be merely the name by which that pro-
duce would be called.
For the sake of easy illustration, then, suppose we
call the starting point that is to say, the lowest
rate of wages per week, of sixty or seventy-two
that may by law be given, in any standard
tory throughout the kingdom, to nitii H'orkimi man ir/mf-
ever, who shall have attained the age of twenty-one
years by the name of twenty shillings, or one pound
''iftf. Thru it follows as a matter of course for
162 LECTURES ON THE
nature herself has written down the law, " It shall be
so" that each and every person possessing superior
dexterity or skill, or holding an important trust, or
being employed in any superior capacity within a
standard manufactory, would require a rate of wages
exceeding 20s. a-week : the amount of the excess
being in exact proportion to the degree of superiority
asserted by the workman and admitted by his mas-
ter, over the lowest grade of employment already
mentioned as being by law remunerated with the mi-
nimum payment of twenty shillings a-week.
If then, the minimum rate of weekly wages in an
extensive manufactory be 20s., it is obvious that
better men would earn from 21s. to 25s., whilst better
still would earn from 26s. to 30s., and the foremen,
perhaps, from 35s. to 60s., or even more ; whilst
clerks, cashiers, and others holding situations of trust
and responsibility, would require salaries varying from
a hundred to a thousand a-year and upwards. Such
at least, is the case now, and with the principle by
which the variations in the rate of remuneration are
at present regulated we interfere not to the value of
one farthing, by the proposal of a totally different basis
whereon to erect our entire monetary system.
For if we consent to double the minimum rate of
common wages, we are just exactly where we were ;
seeing that if we double the wages of the stoker we
must double also those of the engineer. Double the
wages of the weaver, and we must double those of the
foreman, the warehouseman, the clerk, the cashier,
and, in short, those of every member of the establish-
ment. So that, the starting point or minimum rate of
wages being once fixed, by doubling it we should do
i:i: \M> i SB OP MONEY.
!' .1
ju>t imtliiii- at all. \\e-lmuld merely be consenting to
dengnnii' tin- - It-amc thing by a larger and more
imposing name : for as " that which we call a rose
11 \ <>thrr name would smell as sweet,'' so would
tin weekly prmluce of the labour of a working man
IK- just exactly what it is, whether we call that pro-
duce ly the name of L'OS., 50s., or 500s., always in
''/ money : nor, in adopting a sound monetary
system, would it signify a straw whether the i/tini-
mnm rate of wages, in the various standard- works,
should In- t\\ciity .-hillings or ten shillings, forty shil-
- or five shillings, per week, provided alwut/s that
there wen- no such persons in existence as debtors,
iitors, obligants, contractors, and the like : but I
must reserve the elucidation of this subject for my
next lecture.
164 LECTURES ON THE
LECTURE VI.
The subject of the fourth and fifth lectures continued and con-
cluded Fallacy of the Existing Principle of Coinage shown, and
the True Principles of Coinage explained and demonstrated.
IN my last lecture I endeavoured to show you
that by labour only is it possible to measure value ;
and farther that, but for the existence of debts, credits,
and pecuniary obligations, the money price of com-
modities being merely a name, the said commodities
may very safely be called by any name we may think
proper to give them ; seeing that whether a man's
wages should be twenty shillings a-week, or ten shil-
lings, forty shillings a-week, or five shillings, it would
be all the same to him.
But debts, credits, obligations, and contracts exist
and that to a considerable amount, one item of
eight hundred millions or so being no secret. Now
all these debts and obligations must be justly dealt
with, or else we sacrifice England's fame and En-
gland's honour at the shrine of England's neces-
sity. I am confident, however, that this nation would
much more readily consent to pay her national debt
twice over than to pay it less than once ; or in other
words, to pay it in a depreciated currency. And to
pay our national debt t\vice over in reality would be
N \TIUK AND USE OP MONKY. 1 <:.">
;i far less dithYult task, under the influence of a sou in I
monetary sy>ieni, than is that of continuing to pay
tin- annual interest of it, with our resources crippled
88 they are at present.
It v.ill be necessary, however, to explain this sub-
ject fully, the more especially because The Times has
disseminated its puerilities thereon so very exten-
>-i\ely, that many persons of sound judgment in
other matters have been deluded into the supposition
that a paper currency, unconvertible into any fi.\el
weight of gold or silver, must of necessity be a de-
preciated currency : that is to say, if I owe you a
hundred pounds now, in payment of which debt you
can demand one hundred sovereigns in gold coin of
mint-weight and fineness under the present law, only
let us have, instead of the present sovereign, an
unconvertible -in to-any-fixed -quantity-of -gold paper
pound instead, and then my debt to you of one hun-
dred pounds must of necessity be under-paid i?i re-
alitii if paid in notes of such a character instead of
in gold coin.
Now, to demonstrate the utter absurdity of this
doctrine, I shall take first one extreme case, and then
another, and afterwards I shall endeavour to make
you acquainted with the precise nature of the bank-
note, which ought by the law of the land, to be forth-
with constituted our only national standard tint/
measure of value ; and, consequently, in notes of
which value all our pecuniary engagements existing
and to exist should henceforth be fulfilled.
Already, then, it has been mentioned, that sonie-
\vhere on our future race-course of competition. \\e
must ha\e ti start iny point, consisting of a minimum
166 LECTURES ON THE
rate of weekly wages payable in paper money, below
which minimum no person of twenty-one years of
age and upwards, employed in any standard manu-
factory, or work of any kind, is by the law of the
land to be remunerated : from which minimum price
of labour all other things would as certainly take
their proportionate money price, through the opera-
tion of the principle of individual competition, as
they do at the present time through the operation
of the self-same principle, in the absence of any stan-
dard of value whatever.
We shall suppose, then, the minimum rate of wages
in a given employment to be now twenty shillings
a-week. I take the sum of twenty shillings merely
for the sake of simplifying the argument. I do not
mean to say that twenty shillings a-week is in re-
ality the minimum rate of wages in any employ-
ment at present ; but I take this sum for my argu-
ment in preference to any other sum, because it is the
unit of our monetary denominative, namely, a pound
sterling. If, then, a man be at present able to obtain
a pound sterling in exchange for his week's labour, it
is clear that the produce of his labour be that pro-
duce whatever it may must now be worth one golden
coin ycleped a sovereign, because he is actually in
the habitual receipt either of that coin itself in ex-
change for his labour, or else of a pound note
which will instantly exchange for one. Suppose,
farther, that the minimum price of labour upon the
standard principle, for the establishment of which
I am contending, were to be fixed at ten .*// ////////>
a-week, and that the self-same person, whom we have
just supposed to be earning twenty shillings a-week
I RE AND USE OP 1IONKV. 1 U7
in our present money, be henceforth paid but ten shil-
lings a-week standard, in place of twenty shillings
stfrhiiy tin- conclusion is inevitable, That am the
weekly i>r<,,luce of this man's labour would be jmtt
what it was before, our ten shillings standard would
be precisely njual in value to twenty shillings ster-
ling ; or, in other words, our one pound note standard
would be worth just two one pound Bank of Eng-
land notes, or two golden sovereigns.
But if and it would not affect the interest of the
operative to the value of a farthing the minimum
rate of wages on our standard principle be fixed at
five shillings a-week in place of ten shillings, then
would our one pound note be worth four sovereigns ;
or if we fix the said minimum at two shillings and
>i\ pence a-week in place often shillings, then would
our one pound standard note be worth eight sover-
eigns ; or if the minimum rate of standard wages
should be fixed at a single shilling a-week still at no
possible inconvenience or loss to the operative then
would our one pound standard be worth just twenty
one pound Bank of England notes, or twenty golden
sovereigns and it would in fact exchange for either
the one or the other; whilst our standard shilling
would weigh just twenty shillings of the present coin-
age, and would be worth a sovereign I
So much for the " depreciation" which must neces-
sarily be consequent upon the substitution of a paper
for a metallic currency, according to those very wise
gentlemen the late editor of The Westminster Re-
view, and the present editor of The Times !
But, say these very learned personages for if they
do not say this they must assume a line of arguim nt
LECTURES OX THE
differing wholly from any which they have ever yet
been able to advance " Admitted, which we sup-
pose it must be, that the existing products of labour
would exchange for equivalents, and that equally
whether the equivalents themselves be called by the
name of twenty shillings, ten shillings, five shillings,
two and sixpence, or a shilling Do you really mean
to say, that, if the whole productive powers of Great
Britain were to be let loose upon us, like the pent-
up waters of a lake suddenly bursting from their con-
finement, your pound standard, at whatever present
value you choose to fix it, would continue to exchange for
the same weight of gold as that for which it exchanged
in the first instance 1 Surely it could not do so \ "
Most undoubtedly it would not, and this is just
exactly your weakness and my strength ! the very
point upon which the whole argument turns, the
very sum and substance of everything I insist upon :
namely, that if we increase goods faster than
money, prices will fall, and production must stop ;
whilst if we increase money as fast as we increase
goods, prices will not fall, and, therefore, proportionate
production may go on increasing until the end of time.
And although the multiplied productions would cer-
tainly not go on commanding in exchange for them as
much gold or silver as they did in the first instance,
when they were comparatively scarce, yet would the
productions themselves which is all we have to care
for be no less valuable, in the popular meaning of
that term, than those which preceded them. The
newly-built houses, for example, would be as com-
fortable as the old ones, and possibly a little better
drained and ventilated : the additional food would
N \ Ti UK AND USB OP MOM V. 1C9
be as nutritive, the clothing as warm, and the furni-
tniv a> convi-nirnt. even though each and all of these
should be multiplied a thousand t'll.
llnv tlieii is the plain question before us Shall
we retain our fictitious standard of value, gold, and
tliu.s krep the productive resources of the country in
bondage? or, shall we resort to the natural stan-
dard of value, labour, and thereby set our productive
resources free f
This 1 say is the essence of the whole monetary
'ion, the sum and substance of the difference be-
tween the advocates of a golden and of a paper cur-
; and 1 defy Sir Robert Peel, Lord John Russell,
Mr. Jones Lloyd, and Mr. Cobden, with the Editor
of The Times, with every Golden member of both Houses
of Parliament to help them, either to falsify these state-
ments, or to produce anything better than the most
puerile and transparent sophistry in reply to them.
Hut, to resume our argument. It having, then,
been seen, that by fixing the minimum price of
labour in standard money at a very low sum, that is
to say, by calling it by the name of five shillings,
two shillings and sixpence, or even a shilling a- week,
the value of the pound standard would be very much
greater than the existing pound sterling, it follows,
mi the other hand, that by fixing the minimum price
of labour at a very high sum, the precisely opposite
iv>ult would follow. Suppose, for example, that we
were to fix the minimum rate of wages at five pounds
standard, whilst the wages of the same operative who
furnished our former example should, as before sup-
posed, be one pound sterling. The product.-* }' tin*
labour of this man being still the same i\& before, it is
170 LECTURES ON THE
obvious that his weekly five-pound standard note
would command but one sovereign, or one sovereign's
worth, and that practically he would, therefore, be in
precisely the same situation with his five pou-nds
a-week, as in the case formerly supposed, with but
twenty shillings, ten shillings, five shillings, two shil-
lings and sixpence, or even but one shilling a-week.
His real wages would consist of that quantity of the
necessaries, conveniences, and comforts of life for
which the produce of his labour would exchange ; and
as the reality of that produce would be unaffected by
any mere name which might be given to it, so would
the interest of the operative himself be the same to
the value of a straw, whether his wages in standard
money should be five shillings a-week or five pounds,
seeing that his relative position in society would be
precisely the same in the one case as in the other.
Widely different, however, is the view of this sub-
ject which presents itself for our examination, when
it comes to be considered with reference to existing
debts, credits, and pecuniary obligations. For, ad-
justed by the all-pervading principle of individual
competition, every marketable thing in the country,
upon the principle I have laid down, would inevitably
take its money-price from the minimum price of la-
bour paid in the standard manufactories. Fix this
minimum price of labour then at too high a rate,
and you defraud every creditor ; fix it at too low a
rate, and you defraud every debtor.
Say, for example, that the minimum rate of wages
paid to men of twenty-one years of age and upwards
in all sorts of manufacturing employments throughout
the kingdom be now ten shillings, and suppose this
NATURE AND USE OF MONEY.
171
i- -lit to be just, so far as reganls, not merely the
)|).T.iti\. - (liriiisolves, but also with reference to all
and creditors ; the present j>r/re of all cora-
i> in consequence pro/><>rti<>nate to this state
of things. Ten shillings in standard money, then,
should in this case be the minimum wage of labour
still, because the relative position of debtors, creditors,
and pecuniary obligants of every kind would remain
the same. But fix this minimum at twenty shillings,
in place of ten shillings, and you forthwith defraud
every creditor of one-half his dues in favour of his
debtor ; or fix the minimum at five shillings, and then,
in like manner, you defraud every debtor to precisely
tin- same extent ; that is to say, you just exactly
double his debt. In the former case, you enable the
debtor to pay his creditor with just half the products
of labour which he really owes ; whilst, in the latter,
you compel him to pay his real debt twice over.
Fn>m what has been stated, then, I trust it will
be evident that the value of paper-money may be
fixed by law at whatever may be thought to be its
proper value ; and that with the same mathematical
precision and accuracy, with which we could at any
time create by law a new measure or a new weight.
Our next inquiry consequently is What then, prac-
tically speaking, should be the precise value of the
pound tftn win rd f
Now, this is a question which can only be an-
swered by asking another one, the true reply to
which could not, I will venture to affirm. \^e given
by a committee consisting of the best twenty accoun-
tant- iii Kurope, in less than a seven years' sederunt,
which question is :
172 LECTURES ON THE
Estimated in adult labour, what was the value of
money at the different periods when every monetary
contract existing at this day was entered into ? No
human being, by the expenditure of any amount of
research, could ever qualify himself to reply with ac-
curacy to this inquiry. Some faint semblance of
justice may possibly be awarded to the millions of
existing creditors, but nothing more. The value of
money, in short, has fluctuated to so great an extent
since the commencement of many monetary obliga-
tions still existing and for ever to exist, that, to ask
the question At what value should the pound
standard be fixed so as to do justice to all existing
debtors and creditors ? is just equivalent to asking
Ten thousand men having at various periods of time
lent ten thousand totally different sums of money,
what precise sum of money must we repay to each
man so as justly to discharge his claim, it being
expressly stipulated that the sum total of repayment
to any one man shall be given also to every other?
To ascertain the true answer to the question I have
quoted being, then, a manifest impossibility, and as
much difference of opinion would arise were the
precise value of the pound-note that note being our
future legal tender to be generally discussed, I shall
here confine myself merely to an explanation of the
principle on which that value ought to be determined;
the more especially because this investigation will
enable us to answer the question nearly enough for
all practical purposes.
It has already been explained, that if there were
no such personages as debtors or creditors, and no
such things as pecuniary contracts or obligations, our
I'RE AND USE OP MOM V I 7-5
pound standard, In-m^ merely a conventional tliin-_r,
miirlit take its value from tin- minimum weekly wages
of standard labour being fixed /// //////////'//// ; seeing
that ii\e shillings, ten shillings, twenty shillings, or a
hundred shillings would in fact be of just one and the
same value to everybody. But, as debtors and credi-
tors do exist, and money contracts too, the act of fixing
by law the minimum rate of wages in the standard
work* roiiies to be one of the very first importance.
To give an example, the nature of which will be
quite familiar to every person in this room We have
in Scotland what are called feu-duties ; which mean-.
speaking of them in the singular number, an annual
payment for ever of so much money to the proprietor
of a given piece of ground, in exchange for the ex-
clusive possession and use of that ground, also for
ever : the right of receiving the feu-duty on the one
hand, and the right of possessing and using the
ground on the other, being two distinct heritable
properties, transferable at will, if unentailed, from one
party to another, until the end of time.
Assuming, then for this will be our shortest and
best mode of treating the subject the present mine
of money to be the right value, and assuming also
the present minimum wages of labour in the various
productive employments now existing throughout
th<- kingdom to be ten shillings a-week, then, and in
that case, the actual minimum price of labour to be
paid in our standard manufactories should still l>-
dt tilings a-week, and for this reason :
Namely, that on the foregoing data, the man who
pays or receives ten shillings of feu-duty now, pays or
receives the minimum produce of one mans adult labour
174 LECTURES ON THE
for a week. Fix therefore by law, the said minimum
price of labour at ten shillings a-week, and the re-
lative position of every superior and his vassal will
remain just as it is ; but fix that minimum at twenty
shillings, and you will forthwith defraud the superior
of just one-half his dues, or fix it aiflve shillings., and
then you will in reality double the amount of the feu-
duty to the prejudice of the vassal. For, whilst the
actual sum of money payable by the vassal to his su-
perior is in all these cases the same, the value of the
money itself is reduced to just one-half in the former
instance, whilst in the latter it is precisely doubled.
To avoid these two extremes, then, and to hit the
happy medium between them in fixing, or, more pro-
perly speaking, in giving a pecuniary name to the mi-
nimum rate of wages, is the duty of the legislature ;
but the amount of this minimum wage being once
fixed in the most equitable manner that can be de-
vised, it should remain the same for ever, having become
at once the Law, the Standard, and the Measure of
value for the British nation.
I am well aware that the idea of fixing the rate of
wages in any shape, or upon any principle whatever,
will sound very strangely to certain reasoners ; but
the fact is, I do not propose to fix the ivages of <mii
human being, but merely to establish by law a prin-
ciple, on which the wages of every kind of employment
professional, mercantile, mechanical, laborious, and
menial may be enabled equitably to inl/n^t them-
selves. Not one sentence is there in the doctrine
for which I contend, that proposes to interfere
for an instant with the most unbounded freedom of
individual competition between man and man, or
NATl'KE AND USE OF MONKY.
nation and nation ; m-ithrr is there one sentence in
the slightest degree at variance with the doctrines,
ily understood, of Dr. Adam Smith. I have, in
fact, Imt t<>M vou how to do, what that great master
told you should be done.
" Labour [says he] alone, therefore, never varying
in its own value, is alone the ultimate and real
lard by which the value of all commodities can
at all times and places be estimated and compared."
"Labour, it must always be remembered, and not
any particular commodity, or set of commodities, is
the real measure of the value of both silver and of all
other commodities." "It is the only universal as
well as the only accurate measure of value, or the
only standard by which we can compare the ?v////>.s
of different commodities at all times and in all
;//// w." It will not, then, disconcert me very much
should any one reply "But Sir Robert Peel has
not duly honoured the bill thus drawn upon his
wisdom by Dr. Adam Smith." Truly he has not
done so : the bill, on the contrary, is shamefully
overdue, and has long since been protested. But
better late than never : By some body, if not even
by Sir Robert Peel himself, the bill will yet be paid,
in/- . inul (hut to the last farthiiHi.
Upon the plan of exchange, then, which I have
demonstrated, the money of the country would con-
HM of standard-bank notes, varying in value from
the minimum of one pound to a maximum, perhaps,
of a hundred thousand pounds.
These notes should be issued by three parent
estaMishnMnAi to be denominated respectively the
Standard- Hank of England, the Standard- Bank of
1 76 LECTURES OX THE
Scotland, and the Standard-Bank of Ireland to
their respective agents, of whom, in large towns, there
should be a plurality, in London at least twenty ; and
in every smaller town, of any considerable size at all,
there should be one. *
In their paper department, the business of these
three national banks would consist in issuing money
to, receiving money from, and keeping proper
accounts with, and inspection over, their respective
branches ; whilst in the metallic department, their
business would be precisely the same ; gold, silver,
and copper coins, they must issue, on demand, to all
their agents as the said coins may be required ;
whilst the agents, on the other hand, must return
periodically to their principals, whatever paper, gold,
silver, or copper money they may have in super-
fluity : thus placing within the reach of the entire
community, a sufficiency of gold, silver, copper, and
paper money, to answer every commercial purpose.
Upon the three parent banks, therefore, would
devolve the task of providing a sufficiency of gold,
silver, and copper money, to meet whatever demand
for it might arise throughout the entire kingdom :
a very formidable task this, present experience will,
no doubt, lead you to suppose ; but the anticipated
difficulty will rapidly diminish as we come to ap-
proach it, and very soon prove to be no difficulty at
all. Before entering, however, upon the subject of
coinage, I wish it to be understood, that I would not
have the three standard-banks transact business with
any person or party whatever, but their own agents
and the Government.
The three standard-banks, I may here remark,
NATIIM: AND USE OP MOM.Y. 177
would, in tin- coin-so of ft ^ln>rt time alter their esiah-
li.xhment, he instructed hy (lovernnieut to Collect
tin* whole of the taxes, seeing that they would cer-
tainly he al.le to perform this duty without employing
a single individual in the literal act of collecting
them at all. For let the banking system, for the
establishment of which I am now contending, be once
thoroughly understood, and then, in all human pro-
bability, the whole tomfoolery of customs, excise,
stani]>-dmie>. window-duties, and every other duty
will l>e at once abolished : an equal per cent age on
crri'il th^rrijifinil >,f .--hnitlil nl i>rn,hirf/,>n iftiiiltl l,i' /lit'
one and only tax. And this tax the standard-banks
would be able to collect at no cost whatever, or next
to none : whilst even the local taxes for every district
ini^lit not improbably be in like manner collected by
the standard-bank branches, also without expense.
But I shall not at present enlarge upon this subject.
The standard-hanks themselves should be supported
by charging a small per centage on their issues, and
for this purpose a very small per centage would suffice;
Mg that the whole monetary operations of the
three kingdoms would be far less complicated in their
nature than are those of any one banking establish-
ment, of great extent, now existing in the country.
But you will not have failed to observe that, up to
the present period of our discourse, one of the quali-
of money described in an early lecture as essen-
tial, has been kept altogether out of view I mean
that of Divisibility. So far we have described the
principles of a sound monetary system, and the plan
of it too, down to the value of one pound. Our next
must, therefore, be to ascertain the iliriyilii/ifi/
M
178 LECTURES ON THE
of the said pound into shillings, pence, halfpennies,
and, if they be of any use, into farthings also.
And here allow ine to make the inquiry Did any
member of the present company ever see an impos-
sibility ? You have all heard of things impossible,
no doubt, but that is not my question Did you ever
see an impossibility ? Yes, that you have, and
plenty of them. This is an impossibility,""" it is called
a sovereign ; and this is another impossibility, it is
called a shilling ; and this is a third impossibility, it
is called a penny. And yet, perhaps, I am not strictly
correct, for in truth these coins respectively do but
assume to be impossibilities, which in reality they are
not. They are in fact so many impostors travelling
under a false character ; and unhappily for us, they
are something worse, for there is not at this day a
coin of gold, of silver, or of copper, within the British
nation, which is not in itself an irrefutable witness of
the utter insanity of our existing monetary system.
This shilling, for example, assumes to be of invari-
able denomination, weight, and value and yet, never
since Adam's birth-day, did project enter the mind of
an enthusiast, more completely and absurdly impossible,
than is the persevering attempt of the Government
of this country to combine invariable denomination,
weight, and value, within a piece of metal of any given
degree of fineness. Ice could be preserved quite as
easily in the midst of a furnace, or burning coals in
the centre of a block of ice.
We may use a coin of any denomination we please
to confer upon it, and it may consist of gold, silver, cop-
* Exhibiting one to the Audience.
NATURE AND USE OP MONTY. 179
per, brass, or of any other metal whereof we may think
proper to make it ; and it may be continuously either
of the same denomination and wfiyht, or of the same
denomination and value ; but to devise a coin which
shall continuously be of the same denomination,
weight, and value, is a task which no generation of
tin* race of man will ever live to perform.
The one and only true measure of value is labour :
and tin -reft -re, if our pound note should become the
ivpivM-ntative of a certain fixed quantity and qua-
lity of labour, it follows that our shilling and penny
mn>t henceforth consist respectively of the twentieth
and two hundred and fortieth parts of the weight
of silver and of copper for which our pound note \vill
exchange. But in exchange for no true standard of
value can the same weight either of gold, silver, cop-
per, or of any thing, be continuously obtained. To
merely designate gold a standard of value is not to
make it one, any more than to call water fire would
be to make it fire, with which we could warm our-
selves and cook our food. Call it what you please,
gold is not a measure of value any more than fire and
water are measures of value and no one ever knew
this better, or expressed himself more clearly and em-
phatically on the subject, than Dr. Adam Smith.
But we must now proceed to treat the subject of
coinage practically.
Well, then, in the first place, as I have already told
you, coins may be either of continuous denomination
and weight, in which case their value must of neces-
sity fluctuate ; or they may be of continuous deno-
mination and value, but in this case their weight
must be liable to variation : and to the pleasant
180 LECTURES ON THE
working of any true monetary system both these
descriptions of coin are indispensable, whilst up to the
present period of time we have had but one of them.
A shilling, for example, may be permanently a
shilling ; that is to say, it may be the twentieth part
of a pound. But if the pound itself be a true measure
of value, then it is clearly impossible that it should
continue from year to year, and from century to cen-
tury, to purchase the same weight of silver. Our
shilling, therefore, should consist, and it must in fact
consist, of the twentieth part of the weight of silver
which a standard pound will purchase, whilst the
penny must consist of the two hundred and fortieth
part of the weight of copper which a standard pound
will purchase ; the halfpenny and the farthing, in
like manner, consisting respectively of the four hun-
dred and eightieth, and nine hundred and sixtieth
parts of the same weight of the same metal.
It is farther obvious, that no pound note, being in
itself a measure of value, can possibly go on command-
ing, for an indefinite period, the same weight of silver
or of copper in exchange for it, because, as labour is
the only true standard of value, and as equal quanti-
ties of labour would certainly not at all times obtain
equal quantities of silver or of copper, either directly,
if employed in the mines themselves, or indirectly,
in exchange for their products, if otherwise employed,
it follows, that no fixed weight of silver or of copper
can ever permanently be worth the twentieth or two
hundred and fortieth part of anything in its own
nature unchangeable in valnr.
The Mint, therefore, should cease to exist as a
Government office, and should become a mere ;ij>-
UK AND U8B OF MoNKY. 181
peodage to the standard banks; its future business
to manufa-'turo gold, silver, ainl copper coins
for the hanks, to wh extent they may be re-
quired : the crown COnsfetingSd all times of the fourth,
tin- halt-ciown of the eighth, and the shilling and six-
pence respectively of the twentieth and fortieth
parts of the weight of silver obtainable in exchange
for a standard pound, whatever that weight of silver
may chance to be.
An imaginary difficulty or two may here present
themselves at first sight ; but, as they will prove to
be purely imaginary, a very little examination will
to dispel the mist.
It has been stated, then, in this present lecture,
that on demand, the standard banks are to issue to
their agents whilst, in like manner, their agents are
to issue to the public whatever ijunnttty of gold,
silver, or copper coins may be required! By what
means, it will be asked, are the standard hanks to
oht n in a sufficiency of gold, si/n-r, and copper, where-
iritli tn )iiiiiiiifii<-tiir<> the prodigious number of
tli tit mm i be dem(imJ<-<l .'
The answer is obvious : the standard bankers will
merely have to purchase with their own noteyWhaJ
quantity of these metals may be required. " What!
[says the astonished bulliouist] buy gold and>ilver
buy the precious metals, and these, too, ' in what
quantity may be required/ with mere pieces /'/"// /.
in themselves of no value at all ! Do I hear aright ?"
Perfectly so ! The money standard bank-notes
to be thus offered by the banks in payment for such
gold and silver as they may require, will consist of
order* //"/;/ //// llritidi uutrki'f tor whatsoever that
182 LECTURES ON THE
market may contain. Land, houses, corn, cattle, and
merchandise of every sort and description it will con-
tain. And will not these be worth at least some
quantity of the said precious metals ? those very
metals being themselves among the number of the
things which these standard notes will at all times
purchase 1 Assuredly they will. Then is it a mat-
ter of indifference how much or how little of these
metals may be obtained in exchange for that which
may be given for them. The standard shilling may
be of the size and weight of the present crown,
or it may be of the size and weight of the present
sixpence, for aught any man need care ; seeing that,
upon the general average, it would very certainly
come to pass, that whatever value in other thiiHj*
may of necessity be given in exchange for an ounce
of silver, that same value would the ounce of silver
within a short period recover ; the same observation
being also true of gold and of copper. Whilst, if a
long period should be allowed to elapse before these
metals, so purchased by the bank, be again disposed
of, the chances are, that in the interim they will have
risen rather than fallen in value, as compared with
the products of labour in general. Whatever quantify,
therefore, of other things we may at any time be ob-
liged to give for these metals, for at least an equal
quantity will they be likely to exchange, whenever the
insane attempt to render gold a measure of the value
of other commodities shall have been relinquished.
In fact, only let gold and silver take their proper
place in the market beside butter and eggs, and
cloth and calico, and then the value of the precious
metals will concern us just as little, commercially
BATUMI \M> i n "F MONEY. 183
the value of tho diamond, on the one
hand, or of th- cheapest tiling whirh commerce hon-
ours with the name of a commodity, on the other,
(MM, ,i us uanow. Were these metals to become plen-
tiful. even to absolute profusion, or were they to
become scarce, oven to tho extent of extreme rarity,
it would matter not. For, as Dr. Adam Smith has
told us, " The cheapness and abundance of gold and
silver plate, would be the solo advantage which the
world could derive from the one event; and the dear-
ness and scarcity of those trifling superfluities, the
only inconveniency it could suffer from the other." *
Thus, whatever (jt/nntity of gold, silver, or copper,
may be required by the standard banks wherewith
to supply their agents, and through them the public,
that <jti>ifiti/ most undoubtedly would be obtainable
without n */mdow of difficulty, in exchange for standard
nates. And as all the gold, silver, and copper, that
may be bought by the banks with standard money
would take the exact price of the money given for
it. the balance of supply and demand, as in the
case of every other description of goods, would be
precisely maintained. The gold, silver, and copper
would be just so much standard stock that is to
say, snftjihi in the hands of the standard bank it-
self, whilst the money paid for these metals would
constitute a precisely corresponding demand in the
hands of the public.
Another first-sight difficulty, with reference to the
monetary system I am explaining, may j -crimps be
* Wealth of Nation, edition already quoted, Vol I. |go 232.
184 LECTURES ON THE
the variable weight of the proposed silver and copper
coins. But this objection, if it be offered, has no
foundation in fact. Silver coin should be a legal
tender to the amount of twenty shillings only, and
copper to the amount of but a shilling. People cer-
tainly might hoard up silver coin on the chance of
the next issue being a lighter one, but the trade
would prove to be very poor ; and, under any cir-
cumstances, the only public result would be, that in
the silver department of the mint, business would be
brisk. Then, if the same remark be made with re-
spect to copper, it is really not worth noticing. Prac-
tically speaking these coins are never weighed ; and
it must be perfectly well known to every gentle-
man present, of my own age and upwards, that for
a long period, shillings and sixpences, not worth re-
spectively ninepence and fourpence, were current
coin of the realm for many years during his life-
time, with little or no inconvenience to any one.
So far, then, our provision is ample for a supply
of money, consisting of bank-notes and of silver
and copper coins ; these latter being at all times of
the same denomination and value. But I have
already told you that, to the pleasant working of a
true commercial system, coins, of invariable denomi-
nation and weight are also necessary ; and thus we
arrive at the subject of gold coin, which, as it should
never vary either in denomination or in weight, must
of necessity be liable to fluctuation in value.
The only golden coins, then, which I would have
should consist of one ounce of gold each, of the pre-
sent mint quality ; and for their name it matters
little. Suppose we call them Queens during a female
NATURE AND USE OP MOM.V. I ^.~
in 1 A' /yx during a ni;ilo reign.* Or get rid of
that matrlile alunlity the coin now called a sove-
reign, and let the name be forthwith transferred to
th ( ..MI. ,1 ounce of gold, which would certainly be
a more worthy representative of sovereignty than
th- existing miserable nondescript.
A similar class of coins of permanent denomina-
tion and weight as contradistinguished from perma-
n ut denomination and value might also consist of
ounces of silver, that is to say, of one ounce of silver
in each coin : name them what you please.
Now these goods for money they would not be,
any more than beef or bacon are money must also
1>. k. -jit in sufficient stock by the three standard
banks to supply their agents, and through them the
public. The gold and silver, of which they would
respectively consist, being bought in the market with
standard money which, I have already shewn, in-
evitably would fun/ them in sufficient quantities to
meet all demands the price per ounce of gold and
silver must of course be that which it should be
found necessary to give for them respectively in
standard money. This price would no doubt fluc-
tuate, like that of everything else ; but reason there
is none why the price of gold and silver coin should
not fluctuate as much as the price of stone, lime, tim-
ber, corn, or coals. The real folly lies in our absurd
attempt to make one thing the measure of the value
of every other thing ; and were this attempt a nine
* .Vor June 1848 I would prefer these denominations to any
other, if it were merely to exhibit to the eyes of Kurope and the
world, our unalterable respect for the British Constitution.
186 LECTURES ON THE
absurdity and nothing else, we could afford to laugh
at it ; but unhappily this is not the case, for certain
is it that our fictitious monetary system has cost us,
not merely the loss of thousands of millions of wealth,
which should have been created and enjoyed, but it
has converted us into a nation, nay into a race, of
worshippers of mere physical wealth ; which, taken
at its utmost value, is but an item, and that not the
principal item, amongst the various desiderata of hu-
man life.
From what has been stated, then, I trust it will
be seen That whilst the adoption of the banking
system I have proposed would liberate at once and
for ever the productive resources of this country, and
thereby confer upon us that precise measure of wealth
which we may have the combined ability and incli-
nation to create, the effectual demand being ever
equal to the proportionate supply, and the propor-
tionate supply being ever equal to the effectual de-
mand I have, at the same time, abstained from
proposing the slightest degree of unnecessary inter-
ference either with the existing customs or preju-
dices of society, as far as regards the denominations
and subdivisions of money itself.
The decimal system of accounting is no doubt a
much more simple one than our own irregular divi-
sion of the pound sterling into twentieths, two hun-
dred and fortieths, and nine hundred and sixtieths.
But I should not be inclined to change the denomi-
nations of our standard money, at all events simul-
taneously with the adoption of the one and only true
standard of value,- in lieu of the false standard with
which society is at present cursed. For with any
NATURE AND USB OP MON 187
such change most people would be puzzled fora time
at least : some inconvenience, and many errors would
pH'iitlv ensue, the whole of which would be
placed to the debit of the newly adopted monetary
//////<//;// . in-tr.nl of to that of the decimal coinage,
with the adoption of which the monetary principle
I have proposed has no necessary connexion. At
some period, the decimal system of coinage will,
most likely, supersede all others ; but as our exist-
ing subdivision of the pound note into shillings, pence,
and farthings, is sufficiently simple for all practical
purposes, I should not at present desire to see it
changed.
There is also another matter about which a great
leal of misconception may be liable to arise from a
hasty and imperfect examination of the subject of
th<^e lectures. Is not, it may be asked, the monetary
system you have described applicable merely to our
In <i'' trade? Certainly not! and, even if it were so,
Would that be any valid objection to it for the con-
ducting of our home trade ? Surely not. So far,
however, from there being the smallest ground for
any such objection, the fact is just the reverse ; see-
that, as for our home trade not one solitary
ounce of gold would be of the smallest possible use,
the entire (quantity of gold coin in the country, now
requisite for the conducting of our home trade, would
at once be liberated, and thereby made available for
the purposes of foreign commerce : so far, therefore,
the argument is immensely in my favour.
But apart from this consideration altogether, it is
distinctly laid down as a portion of the monetary
system for the establishment of which I am contending,
188 LECTURES ON THE
that the standard-bank is at all times to be pro-
vided with a sufficient supply of the precious metals,
consisting of ounces of gold and silver, to meet what-
ever demand may be made for them ; and it has
been proved also that the standard banker can make
this provision : What, then, is to prevent our foreign
trade from being conducted in bills of exchange,
payable in so many ounces of gold or silver ? that
is to say, in all those cases wherein contracts in that
shape may be preferred to contracts in the pound
standard ? There is no conceivable objection to gold
and silver being used as instruments of exchange,
either between a man and his next door neighbour,
or between one nation and another. The madness
of our present system consists in the attempt to con-
stitute the precious metals measures of value, not in
using them as instruments of exchange.
Within a very brief space of time, it would be seen
how many ounces of gold or silver would be obtainable
in London, Edinburgh, or Dublin, in exchange for a
hundred or a thousand pound standard-note. The price
of these metals would be perpetually before the public
in the newspapers, and therefore a merchant, residing
in any part of the globe, wanting gold or silver in
exchange for merchandise to be shipped by him to
London, Liverpool, or to any other British port, could
stipulate, whenever he should please to do so, for
payment in gold or silver, just as easily as he can
at present.
But I need hardly observe that an immense pro-
portion of all our foreign payments and receipts in
gold or silver are merely payments and receipts of
balances, a very small proportion indeed of gold or
NATURE AND i si: .-r M..NT.Y.
made use of, as compared with the wh"l<-
amount of actual business done. In any case, how-
ever, we have nothing to do \\ith this matter. It is
sutficirnt for us to say that the banking system I
have proposed would give additional fin-Hit 11 to the
use of u'c.M and >il\cr as media <!' foreign exchange,
in place of inijieding it.
There is no uniform monetary system at the pre-
sent time even throughout Europe. Our" shilling is
not in circulation in France, neither is the franc in
1-j inland. Nay, even our own Scottish notes are re-
fused south of the Tweed, whilst in the more remote
parts of Scotland, a note of the Bank of England it-
self is a sort of ram avis, comparatively speaking.
I have yet one more subject to bring before you
this evening, with an explanation of which the pre-
t lecture will conclude :
K\erv shilling paid by the mercantile community
of these realms to the Bank of England, the Bank of
Scotland, the Bank of Ireland, or to any other bank
of issue in existence, in the name of interest of money,
is not merely so much money needlessly thrown away,
but the act of paying it is a downright absurdity ;
and from the hour in which this nation shall have a
bank to call its own, founded on rational principles,
\\liatever sum of money may be requisite for the
conducting of our business, will be obtainable from it,
untaxed with one sixpence of interest.
What would you think of a man who, after having
built a house and paid for it to the last farthing with
his own money, should go to a banker, and say to
him : " I have built a house, Sir, and as it is now
iy for my reception and use, I come to treat
190 LECTURES ON THE
with you about the rent I am to pay you for permis-
sion to live in it !" " I can have no objection, Sir, to
take your money replies the banker and therefore
suppose we say fifty pounds a-year ; but may I be
permitted to inquire, in what precise manner I may
have become entitled to receive it ?"
Now, absurd as such a proposition as this would
appear to be, yet do I affirm that precisely as good
reason would exist, in the case I have supposed, for
paying fifty pounds a-year for nothing, as there
should be now for the payment of fifty pounds
a-year, by any merchant in existence, to any banker
in existence for the interest of his paper money:
and for the very sufficient reason, namely That this
nation can at any time establish a banking house for
itself, by means of which every sixpence of interest,
properly so called, would in future be saved. You
will, however, distinctly understand, that in arguing
this point, as, indeed, in contending for every other
that I have brought before you, my motto throughout,
to use the words of Mr. M'Culloch, is " That the
Economist is not to frame systems and devise schemes
for increasing the wealth and enjoyments of particular
classes, but to apply himself to discover the sources
of national wealth and universal prosperity."
Subscribe you all to this text, and then I shall
have no difficulty in making out my case ; and here,
at least, I have every reason to believe that this doc-
trine of Mr. M'Culloch has been accepted ; upon which
understanding, therefore, I shall proceed to argue
the point.
Well, then, in the first place, you will please to bear
in mind, that interest of money, interest of capital,
NATURE AND USB OP MOM V 191
and the proper expenses of conducting a banking
business. ar<\ T ralhT should IK', three totally differ-
ent tilings, uiiil t> understand the subject before us
properly, as such they must be treated.
First, then, we shall suppose that a merchant
thmws into the >tandard market goods of the value
i'ti-ii thousand pounds, on which lie receives from
MIL lard banker the sum of ten thousand pounds.
In this case what does the banker lend to the mer-
chant ? Why, just nothing at all. He merely, on
ipt of the proper securities, grants him a portable,
transferable, and divisible certificate, that he has de-
posited property of the value of ten thousand pounds
in the standard market ; by means of which certifi-
cate, he, the merchant, in common with every other
standard merchant in the kingdom, is placed in a si-
tuation wherein he is able equally to buy and to sell.
With the single exception, however, of a shillings'
worth or so of paper and printing, the banker has
advanced the merchant value in no shape ; and con-
sequently his claim for interest, if he have any, must
be for the interest of as nearly as possible notlumj.
It is the borrower of the money who is the real capi-
talist, not the lender of it, and, therefore, if there be
any interest payable in the case at all, it must be
payable to himself, seeing that no other person can
have any possible claim to it. The British nation
has never to this hour had any bank. The Bank of
and, for example, is not a bank for England, but
merely one for its own proprietors, whose interest
and that of the public are wide as the poles asunder :
whilst, to all practical intents and purposes whatso-
It is nothing better or worse than a Legalised
192 LECTURES ON THE
Company of Irresponsible Intermeddles uith and
Controllers of the Value of Property. It has been
charging of late as much as seven, and even eight per
cent for its accommodations, falsely so called ; whilst?
as I shall presently show you, an eighth per cent, on
its transactions is the probable sum, a little more or
less, which will hereafter be charged by a future Bank
of England, to be established for the advancement
of the public interest, instead of for the interest of a
company of private speculators. To this subject I
shall return in my next lecture ; but what I now
wish to be thoroughly understood is : That as all
money, strictly so called, must be representative, the
mere issuer of money is not necessarily a lender of
any value, and that consequently he is not entitled to
interest for the use of nothing.
The interest of capital, however, as I shall now
endeavour to explain, is a very different thing from
the interest of money. A man, for example, has a
thousand pounds' worth of goods, which he desires
to convert into standard stock. The standard
banker, accordingly, on receipt of the proper security,
pays him a thousand pounds. Now, as this sum of
a thousand pounds in his hands is the representa-
tive of his own property, the act of lending this money
is that of transferring to the borrower bona fide
capital to that precise amount ; which capital, as it
would be the certain source of revenue, if retained by
its proprietor, is clearly entitled to bear a reasonable
rate of interest in exchange for the use of it, when
transferred to another person. Whilst, therefore,
the standard banker can have no conceivable claim
for any interest upon his issues, it is clear that every
NATURE AXD USE OF MON
other man is justly entitle.l to lend out his money at
tin- current nitc of interest that rate being re.irulate. I.
like the price of everything else, by the competition
<>f the lenders. Ami thus it is obvious, that the in-
terest of money and the interest of capital may be
two very different things ; the former being in most
eases a mere imposition, which the force of circum-
stances enables one set of men to practise on another
set ; whilst the latter may at all times be the result
of perfectly fair and reasonable contracts entered
into between man and man.
Having, then, endeavoured to exhibit the essential
difference between the interest of money, and the in-
terest of capital, the third division of this subject yet
remains for our examination : The />/<///,/ expenses
of conducting the business ofbank'nm. what are they?
Now, strange as it may appear at first sight, it is
nevertheless a truth, that the only exten>i\ r business
in human life which should require no nrcnlatnxi
capital whatever is that of a banker. The manufac-
turer, merchant, retailer, farmer, gardener, fisherman,
nay, even the day-labourer, must have at least some
circulating capital ; whilst the banker, and he only,
of circulating capital requires no more than the mere
value of the printed paper which he may have in
circulation. And although, acting upon the prin-
ciple of the monetary system 1 have defined, it would
be his especial duty to provide an abundance of
coined money, for the use of the entire kingdom,
still not one sixpence of that money would ever be
his own, even for an hour ; neither would the small-
est portion thereof ever lie provided at his own cost
The standard-bank would require a fixed capital,
N
194 LECTURES ON THE
however, and that a large one, consisting of the build-
ings in which the three parent establishments would
be conducted ; whilst all the branches the offices
themselves I mean should also belong to their re-
spective principals. Add to the cost of all these
buildings that of their fixtures, furniture, and fittings,
safes, and books of account, and, in connexion with
each of the three principals, a moderately extensive
printing-office, and the tale of the whole capital re-
quired by the standard-bank is told. A nationally
distributed counting-house and its furniture, with, in
three instances, a printing-office attached, is in short
a description of all the banking property requisite
for this great nation ; not one sixpence of circulat-
ing capital farther than the mere paper and print
cost of the bank-notes themselves being either re-
quisite, or of any conceivable utility whatever.
The only charge, therefore, which the standard-
banks would be entitled to make against their custo-
mers, would consist of a sufficient per centage to pay,
First, the interest of their fixed capital ; the purchase-
money of which should eventually be paid by the
Government ; but it might pro tempore, be raised
by means of an ordinary joint-stock company;
Secondly, the salaries of their directors, managers,
tellers, agents, clerks, and porters ; Thirdly, their
incidental expenses; Fourthly, their printing-office
charges; and Lastly, those of the mint, which, as
already mentioned, should be a mere appendage of
the three standard-banks.
Now, these business expenses should be defrayed,
not by any rate of interest per annum upon the
money advanced to standard merchants by the banks,
NATURE AND USE OF M'M.Y. 195
l>m by a per centage upon their transactions with the
banks. The standard-hanker, as already explained,
<-"uM have no claim upon his customer on account of
the length of time the money might be lent him, be-
oause the money itself would not be of any value.
Suppose, for instance, that the banker advances a
merchant a thousand pounds, on standard goods
which the latter, for a long period of time, is totally
unable to sell it is clearly the merchant who is the
loser by the delay, and not the banker. It is ob-
vious, therefore, that the charge of the bank to sup-
port its own expenses, should consist of a per centage
upon the amount of business done ; because this
mode of exaction would combine the advantage of
perfect fairness with that of extreme facility in the
mode of operation.
Taking fifty thousand pounds as an example of
a year's transactions, the banker's charge thereon at
an eighth per cent., would be 62, 10s.; and as
there would be no interest of money, a rate of an
eighth per cent on its transactions would not im-
probably be sufficient to pay all the expenses of the
bank, whilst at present an advance of but 1,250, in
place of 50,000, would cost 62, 10s.
I am far, however, from asserting, that a rate of an
eighth per cent, upon the amount of transactions,
would actually be sufficient to pay the entire expen-
ses of the banking and mint establishments. I think
that eventually it would be sufficient : but whatever
this rate might prove to be, no tax upon the fund so
to be created would consist of that most fraudulent
of all impositions, the interest of paper money.
The three standard-banks, as a matter of course,
196 LECTURES ON THE
should be constituted by Act of Parliament, the num-
ber of their Directors being fixed by the Act. The
Directors themselves should be appointed by, and re-
sponsible to the House of Commons, and to it only ;
whilst the managers, agents, clerks, and servants of
every description should be appointed by the Di-
rectors, in such manner as their Act of Parliament
might determine.
Having then endeavoured to explain to you that
money and capital are, or should be, totally different
things, that whilst, on the one hand, for the use of
mere money, not a sixpence of interest should ever
be charged, interest of capital, on the other, is, to all
intents and purposes, a perfectly fair exaction, I
shall here embrace the opportunity of explaining
another subject about which many persons, including
some public writers, are exceedingly fond of puzzling
each other.
Nothing, for example, is more common at certain
times and seasons that is to say, than to hear people
talking of the abundance of money the glut of
money the difficulty of obtaining anything like
good interest for money, and so on. And yet, at
the very self-same time, you will find an equally
numerous class of persons proclaiming their want
of money the difficulty they experience in collect-
ing their accounts the extreme smallness of profits,
and the like.
Now the truth is, that these two classes of com-
plainers who are seldom distinguished the one from
the other in the public mind are talking of two
things, as unlike each other as chalk and cheese :
the one party, in short, is proclaiming the difficulty
NATURE AND USE OF MONEY. 197
of obtaining profitable employment for his capital,
whilst the other is lamenting the want of effectual
demand for his produce or merchan* !
I remember the late editor of the Atlas finding
himself in a strange quandary, whilst writing upon
this subject. How, inquired he, could Sir Robert
Peel create a temporary prosperity by the issue of
one-pound notes, at a period of full currency ? when
money would not produce a sufficient interest ? whm
it was literally hawked about in search of customers ?
money itself, and that equally with goods of every
kind, being thus a drug in the market ?
Simply because the money spoken of as super-
abundant was capital seeking to obtain employment,
by means of which it might be enabled still farther
to glut the already over-glutted market, which the
irnnt of the money demandh&d thus left in a state of
plethora. The superfluous money of the Atlas, in
short, was supply, whilst the money in deficiency was
demand. But let our monetary system be erected
upon a proper basis, and thenceforth money, in the
widest meaning of the term, will ever be demand, and
marketable produce coins themselves of every kind
included will be supply : the one being at all times
precisely equal to the other, for the sufficient reason
that the existence of money would ever be consequent
upon the creation of equivalent wealth.
As, however, it scarcely forms any part of my pre-
sent purpose to elucidate the manifold absurdities of
the existing monetary system of society, perhaps even
this little digression, in explanation of the difference
between mere money and bonajide capital, may have
been superfluous. Our object, let it never be lost
198 LECTURES ON THE
sight of, is to ascertain by means of what monetary
system the proportionate production of marketables,
heritable and moveable, with the least degree of in-
tricacy and liability to error, may necessarily create
a demand equal to itself. And that this great desi-
deratum may be brought about, and that by the adop-
tion of means at once simple and practicable, I have
fully demonstrated.
The great error of society, as it is at present con-
stituted, consists in the want of a tendency in demand
to keep pace with production. This evil must be
rectified : production, the natural cause of demand,
ad infinitum, must become the practical cause of
demand, ad infinitum. And to effect this change,
enormous as its results would undoubtedly be, it is
merely necessary for us to make the public well ac-
quainted with the nature, use, and proper qualities
of money with what money now is, and what it
should become. For, only let this subject be once
thoroughly understood by the numbers of society, and to
change the current of the tides would be a task pos-
sible as that of prolonging the existence, for another
year, of the monetary, or rather no-monetary system,
of this country.
Let us, then, endeavour and so long as health
and strength shall be my own, I will never cease
to endeavour to diffuse the knowledge of this subject
throughout the length and breadth of the British
territory : and if we but do this earnestly, indus-
triously, and perseveringly, our object will assuredly
be attained; and that with facility, certainty, and
reasonable expedition.
NATURE AND USB Or MONEY. 199
LECTURE VII.
Professional men, the nature of their avocations considered with re-
ference to Money Pecuniary provision for the conducting of such
Retail and other Business as may be wholly unconnected with
the proposed Standard Manufacturing and Commercial system
Fallacies of Messrs. J. R. M'Culloch and Richard Cobden.
I SHALL commence the present lecture by making
a few observations on one of the propositions already
submitted to you, a little farther elucidation of which
will lead, to the consideration of another subject,
on which we have hitherto been silent : I mean that
of the pecuniary situation of professional men and
others, who are not supposed to be in any way con-
nected with the proposed Standard system, so far as
it has been hitherto explained.
It has been stated, then, that standard-manufac-
tories should be established by whomsoever may be
disposed to embark their capital therein, in which
manufactories a minimum price of adult labour is to
be payable in paper money, whilst the actual rate of
wages is, in every case, to be left to the usual regu-
lator, namely, to that of individual competition : the
masters striving at all times to get their work done
as cheaply as possible, and the workmen, per contra,
to obtain the highest wages they can from their
masters ; but with this invariable proviso, namely
200 LECTURES ON THE
So low shall you be allowed to go, but no lower ; the
nature and importance of which provision were illus-
trated in my last lecture, with reference to existing
debts, credits, and pecuniary obligations.
Contrary, then, so far as I know, to all precedent,
contrary perhaps to all preconceived notions on the
subject, I maintain that so soon as any quantity of
standard goods shall have been produced and placed
by their proprietor in & finished that is to say, in a
marketable state in his own warehouse, the standard-
banker should pay him for them at his own price.
But listen ! for I hear one of those Sages by whom
it is alleged that Ministers of State are governed
a bullionist I mean observe in derisive strain " I
should have thought it better for the manufacturer,
in the first place, to sell his goods ; in the second, to
pay the money he may get for them into my hands ;
and in the third, to take it from me again so soon as
he may have occasion to expend it."
To whom shall he sell his goods \ Growers of
corn, breeders of sheep and cattle, importers of mer-
chandise, builders of houses, and manufacturers of
furniture, musical instruments, and articles of utility
and ornament of every denomination, are each and
all of them in the self-same plight They have goods
in plenty, and that of every marketable kind ; but
by what means are they to exchange tJiem, not merely
amongst each other, but with every member of the
whole community with whom they may desire to
deal ? which, provided always the various products
be but brought to market in due proportion, is all that
they require.
Well, then, speaking for himself and brethren, the
NATURE AND USE OP MONEY. 201
bull ion 1st will say " Why, let them come to us and
borrow gold y to be sure I we will lend it to them, in
plenty as we think, on good security and for an
usance. And in exact proportion to the much or
little gold which we may have to lend, shall be
the price of all the goods which your said mer-
chants may have to buy or sell. With the price of
their own goods the parties you have enumerated
have nothing whatever to do ; that is our affair, and
ours only. Their prices, therefore, shall be high or
low, and their profits something, nothing, or, the
Iri>h one, a loss, in exact proportion to the degree
of competition which may chance to exist for the
time being amongst ourselves. Much gold shall we
spare them, or little, as may best suit our own con-
venience ; but not, you will clearly understand, in
exchange for their goods, but merely on loan, pro
tempore, upon such good security as they may be
able to give us."
To which very kind and consolatory doctrine, I
reply " No, gentlemen ! the evening of your day
has arrived, and a brighter morrow is about to shine
on us. The discovery has at length been made that
your so-called accommodation is but an incubus upon
our commerce, instead of being, what you profess to
call it, its stay and its support ; we want you not, and
henceforth we renounce your miscalled aid !"
Yes ! I repeat the assertion 1 Paper money manu-
factured by a bank of our own, and issued by that
bank in strict conformity with the standard of value
which I have already described, to the full amount
of all the produce which a man may be able to bring
to market, would instantly place him in a condition
202 LECTURES ON THE
to become the customer of every other man, whilst
every other member of the standard-society, in like
manner accommodated, would at once be able to be-
come his customer. And yet the principle of free
and unrestricted competition would remain untouched,
merely by continuing the onus upon every man to
find a customer for his own productions, although
already in receipt of their full value from the standard-
bank. The money issued by the bank would enable
every man to buy, so soon as he himself should have
anything to sell ; whilst the only stipulated condition
of the bank would be, that if he could find no one
else to buy his goods, he must eventually repay the
bank for them himself. And thus it is evident that
the continuance of the most unbounded competition
and rivalry between dealers in the same description
of goods would be guaranteed, seeing that whoso-
ever should bring the best article to market at any
given price would inevitably be the first person to
supply the market.
And here I take my stand upon the vantage-ground
of truth, from which not all the bullionists and Print-
ing-house-square mystifiers put together, can dis-
lodge me. Produce ad infinitum, and I will find you
a market ad infinitum, my only conditions being, that
paper money shall be created as fast as goods may
be produced, but no faster ; and that regulated
precisely as at the present time, by the principle of
individual competition the productions themselves
shall be brought to market in due proportion to each
other.
And what is this assertion after all, more or less
than a mere truism ! namely, that we might, could,
NATURE AND USE OF MONET. 203
would, and should obtain and enjoy that precise quan-
titv of wealth which, collectively speaking, there
exist among us the united ability and inclination to
create.
Well, then, up to the present stage of our argu-
ment, we have exhibited the subject of money with
reference to the great mercantile and productive re-
quirements of society. It has been shown that money,
in place of being a commodity, as it is at present,
should be a mere consequence of the production of
useablc, consumable, and enjoyable wealth : our only
difficulty, if we really have any, being to create the
wealth itself, and not the mere representative by means
of which it has to be distributed amongst the various
classes of society. It has been shown, farther, that
the diffusion of money so far, that is to say, as the
dashes already spoken of are concerned should pro-
ceed with a degree of order, system, regularity, and
accuracy, vicing in these qualities with the motions
of the most perfect machinery ; and that the supply
thereof should not merely approach to within a mil-
lion or two, more or less, of the actual sum required,
but that it should consist of the actual sum required,
and not of one solitary sixpence more nor less : to
attain which degree of accuracy would be unattended
with a shadow of difficulty.
There still remain for our consideration, however,
the subjects of retail business and professions, as also
the trades enumerated in our fourth lecture, which
would appear to be inadmissible into the proposed
manufacturing and commercial system, throughout
the whole of which supply marketable property
and demand money would ever be co-equal.
204 LECTURES ON THE
But briefly to review the mode in which we have
proposed to furnish an ample supply of money for
the use of the manufacturing and commercial classes
of society :
It has been stated, then, that money should be
issued to manufacturers, of nearly all classes, on the
receipt into their own warehouses of goods in a
marketable state, and that to the full value of the
said goods at their wholesale selling prices.
Now, the money so issued would, it is obvious, be
expended, in the first place, in replacing so much of
the capital of the manufacturer as should have been
expended by himself in the production of his goods.
That is to say to be able to go on with his business,
he must replenish his stock of raw material, pay the
continued wages of his operatives, the rent of his
business premises, the interest of his capital, the Go-
vernment taxes, if any, upon his business, and all in-
cidental expenses ; the whole of which, taken for
one year, would constitute the cost price of his year's
productions. Call the amount 18,000, to which
add 2,000 for the supposed amount of his own pro-
fits. Then, as the bank is to pay him throughout the
year, the whole representative value of this produce
say 20,000, that sum of money demand is forth-
with diffused amongst the producers or importers of
the raw material of which his goods are made ;
amongst his clerks, warehousemen, foremen, opera-
tives, and business-servants of every kind ; amongst
the proprietors, if rented, of his manufactory, ware-
house, and other business premises ; amongst the
owners, if any part of it be borrowed, of his capital ;
and, lastly, that portion of it which forms his own
NATURE AND USB OP MONET. 205
profit, is di>|T>'.l. in like manner, in the payment
of the rent of his dwelling-house ; of his taxes, Go-
vernment and local ; and of his private expenses, in
all their endless varieties, including those of house-
kff|iing t servants' wages, the education of his chil-
dren, church rates, medical and legal advice, thea-
trical, or other amusements, voluntary contributions
to public objects of every kind, and miscellaneous
expenditure in general.
Now, the whole of this money, thus expended, in
purposes innumerable, and diffused throughout every
class of society, from the Queen upon her throne
down to the humblest of her subjects, will inevitably
come back one day or other upon the standard-banks.
And this it will do, in the first place, through the
hands of the retail butcher, baker, and grocer, shoe-
maker, tailor, mercer, draper, cabinet-maker, uphols-
terer, book and music seller, and, in short, through
the hands of every class of dealers, professional or
mercantile, with whom those persons who have money
in their pockets may be disposed to expend it. And
as the total sum of money thus put into circulation
would be precisely equal in value, first, to all the
standard heritable property, bonafide for sale, in the
three kingdoms, and secondly, to all the standard
moveable property goods for sale in the wholesale
warehouses of the country, it is not quite certain that
any additional money would be required at all, seeing
that, precisely as at present, money, once in the
hands of the public, would pass from hand to hand,
and thus very frequently serve to effect exchanges
to many times its own amount, previously to finding
its way back again into the standard-banks.
206 LECTURES ON THE
On this view of the subject, therefore, it is ques-
tionable whether it would ever be necessary to issue
any money at all, in addition to that which would be
issued by the three standard-banks ; for, as the actual
amount of money in circulation would, as already
shown, be ever of the precise value of all the herit-
able and moveable stock in the standard market, the
sum would be enormous : it would certainly be many
times the amount at present in circulation ; and yet
the monetary wiseacre of The Times notwithstand-
ing every standard pound must continue to repre-
sent the precise amount of bonafide value, which the
Government should, in the first instance, have as-
signed to it by act of Parliament ; which value no
increase whatever in its quantity could for one instant
affect to the amount of a single farthing; seeing
that, before one additional pound note could exist, a
pounds ivorth must precede its existence.
If, however, I should be incorrect in the supposi-
tion that, issued upon the principle I have laid down,
money enough for all the purposes of the country
would be thrown into circulation by the three stand-
ard-banks, then and in that case there could be no
shadow of objection to allowing the requisite addition
to be made by the joint-stock banks now existing, or
hereafter to be established throughout the country.
And here I may remark that any restriction upon
the amount of such auxiliary issues would be wholly
unnecessary, provided always that ample security
be given to the public by the joint-stock banks that,
for every pound note issued by them, a pound stand-
ard should ever be given on demand in exchange for
it. Standard money only would be taken by the
NATURE AND USE OP MONEY. l2"7
standard-banks. No dealer in standard property,
heritable or moveable, could be allowed by law to
part with a fraction thereof in exchange for anything
but standard money. No increase, therefore, of joint-
stock or other notes not being standard could
affect the price of standard property to the amount
of a farthing. The joint-stock bank-note would, in
with respect to the standard note, be very much
the same thing as it is at present with respect to
the sovereign ; and therefore, as already mentioned,
a ////>//' security being given to the public that standard
money should, at all times, be forthcoming on demand
in exchange for their own, every other banker might
be allowed to issue notes to whatsoever amount he
should find it profitable to issue them, and that with-
out the possibility of doing mischief to any interest
or to any man.
Joint-stock bank-notes would in fact be just so
many bills of exchange, payable on demand, in stand-
ard money ; and, as such, they would be merely pro-
mises to pay. In exchange for them, however, no
property could be demanded or debt discharged, except
by the consent of the receiver ; whereas the standard
notes would not be mere promises to pay, but bona
fide representatives of real wealth, obtainable at any
hour, and in any shape, in exchange for them ; as
they would be also legal tenders in payment of all
taxes, debts, and pecuniary obligations whatsoever.
I shall now proceed to notice more particularly
the peculiar situation of professional men with refer-
ence to the monetary system I have laid before you.
Professional men, then, however nearly allied, and
apparently belonging to the commercial society, are
208 LECTURES ON THE
for the most part supported in a manner differing
very materially from that in which ordinary mer-
chants and tradesmen are supported.
The income of every member of the standard com-
mercial system, which I have proposed for your
adoption, would form a part of the price of exchange-
able commodities ; whilst the income of professional
men, unconnected therewith, would be derived from
a totally different source. The annual issues of the
standard-bank would precisely represent the material
productions and importations of all the standard
agriculturists, manufacturers, and merchants ; whilst
professional men would, for the most part, continue
to obtain their incomes as they obtain them now
that is to say, by making direct exchanges of their
professional assistance for money paid them by their
customers or clients.
For example, a physician, a surgeon, or an artist,
obtains from his customer, in the shape of money, a
right and title to such a portion of the standard
stock of wealth as his customer agrees to give in ex-
change for the professional benefit received ; the act
of giving the money by the one party, and that
of receiving it by the other, constituting the legal
transfer of a certain amount of standard property, in
remuneration for some equivalent service or benefit,
real or supposed, conferred by the one party upon
the other.
But no additional money would be created in con-
sequence of any such transaction, neither would there
be the slightest use for any, seeing that all transac-
tions of this kind are merely barter, and, as such,
they differ altogether in character from those wherein
.\ ATI i:r. AN : 209
Miisly to thn'r beiirj -..1.1. liavo to be
manufa.-;ur-d, warehoused for a time, ami buyers
found for tliciu.
And here it is proper that we >hoiild keep in view,
with reference to the >ulijeet of money, the di-tinc-
tion between j)roduetive and unproductive members
of society a subject of which Mr. M'Culloch, in his
Klemcntft of Political Economy, has made a terrible
jumble : indeed in this, as in almost every other in-
stance wherein he attempts to correct Dr. Adam
Smith, he only gets himself into a maze.
In express contradiction, then, to Dr. Adam Smith,
Mr. M'Culloch tells us that players, singers, opera-
i /< Hirers, and buffoons, are productive labourers. He
does not tell //.* tltat <iambkrs, fortune-tellers, and
/"/ bears, are productive labourers ; and yet, if
the former are productive labourers, so also are the
r. They are. in fact, one and all of them, ob-
/> of wealth. Imt they are not producers of it.
Madlle. Jenny Lind, for example, sang a few songs
at four concerts, which were given in Scotland in the
month of September last, for which she received the
sum of I'l'loO. Now, the actual value of all the
wealth in existence va- ] nrisely the same before she
commenced singing, and after she had concluded,
so far, at least, as her songs had any influence on
that value : the only real difference resulting from
her performances being, that before they took place,
1600 worth of marketable property existed in
the hands of other peopl.-. whilst immediately after
they were over, this wonderfully -gifted lady had
n'<l that value from its previous owners, upon
ten us and conditions mutually agreed upon, and
o
210 LECTURES ON THE
therefore equitably. But let an equal sum of money
be expended in the employment of a number of ship-
builders, for instance, and the result will be, that the
sum total of wealth existing in the country will have
been increased, and that to the precise amount of
the difference between the value of the wealth created,
and that of the wealth consumed by the ship-builders
during the period of their engagement.
Mr. M'Culloch's argument upon this subject is
throughout erroneous : he says,
" Most writers on political economy have entered
into lengthened discussions with respect to the dif-
ference between what they have termed productive
and unproductive labour. I cannot, however, I con-
fess, discover any real ground for most of those
discussions, or for the distinctions that have fre-
quently been set up between one sort of labour and
another. The subject is not one in which there is
apparently any difficulty. It is not at the species of
labour carried on, but at its results, that we should
look. So long as an individual employs himself in
any way not detrimental to others, and accomplishes
the object he has in view, his labour is obviously
productive ; while, if he do not accomplish it, or ob-
tain some sort of equivalent advantage from the ex-
ertion of the labour, it is as obviously unproductive.
This definition seems clear, and leads to no per-
plexities ; and it will be shewn, in another chapter,
that it is not possible to adopt any other without
being involved in endless difficulties and contradic-
tions."
I cannot, however, subscribe to this doctrine ; on
the contrary, I consider it to be of much importance
NATURE AND USB OF MONKY.
t> distinguish between productive and unproductive
labour, because we can never have in operation too
much of the one, nor too little, provided we have
sufficient, of the other. The former is the team, the
latter i> th- .Iriver ; and, therefore, so far as regards
tin- attainment of mere physical wealth, the true in-
terest of every nation must evidently consist in keep-
ing the greatest possible proportion of its population
in the condition of producers, whilst it is as obviously
the bounden duty of every nation to advance that
condition to the highest practicable state of affluence
and enjoyment.
Moreover, it is at the " species of labour carried
<md not at the " results" that we must look, to
ascertain what is and what is not productive labour ;
and unless we do this, we shall never fail to find
Ives " involved in endless difficulties and contra-
dictions." The result of successful gambling, for ex-
ample, is not to create any portion of the necessaries,
conveniences, or comforts of life, but to obtain them.
A lawyer may obtain many thousands a-year by the
\ rcise of his profession ; but he produces not even
the paper whereon he writes. Why, again, is the
Government obliged to tax the country for its support,
but for the one and only reason, that the servants of
the Government as stated bv Dr. Adam Smith are
/
for the most part non-producers f If the people and
the Government were equally and alike producers,
why should not the people tax the Government, in-
stead of the Government taxing the people "? or why
should either the one party or the other be taxed at
all ? Mr. M'Culloch, it is evident, has here con-
founded two things, which are frequently as different
212 LECTURES ON THE
from each other as any two things in the world can
be that is to say, producing and obtaining.
He quotes Dr. Adam Smith upon this subject, and
tells us very complacently that he has refuted the
Doctor : let us see. The author of the Wealth of
Nations, then, says, " The labour of some of the most
respectable orders in the society is like that of menial
servants, unproductive of any value, and does not fix
or realize itself in any permanent subject or vendible
commodity, which endures after that labour is past,
and for which an equal quantity of labour could
afterwards be procured. The sovereign, for example,
with all the officers both of justice and war who serve
under him the whole army and navy are unpro-
ductive labourers. They are the servants of the
public, and are maintained by a part of the annual
produce of the industry of other people." So far
the Doctor.
" But [says Mr. M'Culloch] though these state-
ments are plausible, it will not, I apprehend, be dif-
ficult to show the fallacy of the distinction Dr. Smith
has endeavoured to establish. To begin with his
strongest case, that of the menial servant, he says,
that his labour is unproductive, because it is not
realized in a vendible commodity, while the labour
of the manufacturer is productive, because it is so
realized. But of what is the labour of the manufac-
turer productive ? Does it not consist of comforts
and conveniences required for the use and accom-
modation of society ? The manufacturer is not a
producer of matter, but of utility only. And is it
not obvious that the menial servant is also a pro-
ducer of utility ? It is universally allowed, that the
NATURE AND USE OF MONEY. 213
labour of the hushandmau, who raises corn, beef, and
other articles of provision, is productive. But i
why is the labour of the menial sen ant, who pn--
pares and ilresses these articles, and fits them for
use, to In- M-t down as unproductive ? It is clear to
demonstration, that there is no difference what
860 the two species of industry that tln-v are
cither hoth productive, or both unproductive. To
produce a fire, it is quite as indispensable that coals
should be carried from the cellar to the grate, as
that they should be carried from the bottom of the
mine to the surface of the earth : and if it be said
that the miner is a productive labourer, must we not
say as much of the servant who is employed to make
and mend the fire 1 The whole of Dr. Smith's rea-
soning proceeds on a false hypothesis. He has made
a distinction where there is none, and where it is not
in the nature of things there can be any. The end
of all human exertion is the same ; that is, to in-
eiv.-i.se the sum of necessaries, comforts, and enjoy-
ments ; and it must be left to the judgment of every
one to determine, what proportion of these comforts
he will have in the shape of menial services, and
what in the shape of material products. It is true,
a> ha> l-.-rii sometimes stated, that the results of the
labour of the menial servant are seldom capable of
being estimated in the same way as the results of
the labour of the agriculturist, manufacturer, or mer-
rhant : but are they, on that account, the ! real
or valuable ? Could the same quantity of work be
performed by those who are called productive la-
bourers, were it not for the assistance they dm\.
from those who are falsely called unproductive?"
214 LECTURES ON THE
In another place Mr. M'Culloch has denned con-
sumption to be synonymous with use, and then he
adds, " We produce commodities only that we may
use or consume them. Consumption is, in fact, the
end and object of human exertion." And again he
defines value to mean exchangeable worth. Service
certainly comes under the denomination of exchange-
able worth, and, therefore, the opinions here quoted
are, to a certain extent, in accordance with Mr.
M'Culloch's own definition of the meaning of terms.
But still there are instances without number in which
the term exchangeable worth is no more synonymous
with productive occupation and this is the point at
issue than are the terms production and destruction,
of which Mr. M'Culloch himself has given us a capital
illustration in the specimen of reasoning I have just
now read to you.
" To produce a fire [says he,] it is quite as in-
dispensable that coals should be carried from the
cellar to the grate, as that they should be carried
from the bottom of the mine to the surface of the
earth ; and if it be said that the miner is a produc-
tive labourer, must we not say as much of the ser-
vant who is employed to make and mend the fire 1"
So that here we have two parties, the one engaged
in a clear, distinct, and unquestionable act of produc-
tion that is to say, in increasing the existing stock
of marketable produce ; and the other engaged in as
clear, distinct, and unquestionable an act of destruc-
tion that is to say, in diminishing the existing stock
of marketable produce. As both of them, however, are
declared by Mr. M'Culloch to be alike, and equally
productive labourers, it necessarily follows that if he
:> USE OP MONT.Y. 'Jl.">
be right, the result of their labours seeing tli;it they
.-u-.' Imtli working upon the same material, namely,
coal will be \er\ much the same. The one party,
then, we shall suppose, performs just as much work
as the other; and l><>th. in their way, put through
their hands preci>ely the same weight of coals, say,
for example, a ton per working day. Well, then, at
the year's end the one party will have accumulated
three hundred and thirteen tons of eoaU \vhil>t
the other will have reduced that precise quantity of
previously accumulated coals to the sum of nothing!
So much for the author of the article Political Eco-
nomy in the last edition of the Encyclopaedia Britan-
nica upon the subject of productive labour !
Under other circumstances, however, the person
who makes or mends a fire, may be a productive
labourer. The wages of a man who makes or mends
a fire in a manufactory, for example, form a part of
the direct cost of goods produced, and add to the
money-price of them. The coals themselves, the at-
tendance on the fire, the material wrought, whatever
it may be, and the labour expended thereon, are all
component parts of the cost of some commodity, add
to its exchangeable worth, and, upon the standard
principle, which I wish you to adopt, they would all
be represented by money brought into existence in
nee of the commodity having been so pro-
duced. But the maidservant who makes or mends
a fire in a du'dljinj-house adds nothing whatever to
the existing stock of exchangeable wealth ; on the
contrary. >ln take- from it, and the price of her utility
as distinguished from product ' is paid by
a claim upon the standard stock of marketable wealth
216 LECTURES ON THE
being transferred to her from the pocket of her mas-
ter ; whilst no additional money is created in con-
sequence of the making or mending of the said fire,
as in the other case. By the fire in the factory, in
short, the aggregate stock of wealth is increased, whilst
by that in the dwelling-house it is diminished*
Now and this is my object in bringing the sub-
ject before you if Mr. M'Culloch had ever rightly
understood the nature, use, and proper qualities of
money, had his mind ever taken cognizance of the
great and important truth that money, to be an accu-
rate measure of value, must of necessity be represen-
tative had he known but half as well as Dr. Adam
Smith knew, that gold and silver coins, put them
into whatever shape you will, are, and must ever
continue to be, mere commodities, and, as such, liable
to fluctuate in value that to use them as exclusive
instruments of exchange would be to abolish money,
truly so called, from the face of the earth, and to
retain an exclusive system of barter in its stead he
would never have thus committed the double error of
denying the existence of a truth set forth by Dr. Adam
Smith, and of seeking to establish in its stead a fallacy,
at once palpable, unquestionable, and ridiculous.
All money, truly so called, that is to say, all
money being in itself a measure of value, must be
representative ; and, therefore, in the coal case sup-
posed by Mr. M'Culloch, for every pound's worth of
* According to Mr. M'Culloch, an otherwise idle man, who should
eat up an ox for his dinner, horns and hide included, and wash down
the beast with a butt of beer, would be one of the most Pro<l
Labourers in existence. Mr. M'Culloch, in short, evidently holdt, the
terms Production and Consumption to be synonymous.
t'RE AND USB OF MONEY. 217
coals brought into the coal depot there should e.\i-t
a poui ii 1 in money. Supposing the coals therefore to
be worth a pound a ton, and to be produced, as
In-fore nientionrd, at tlie rate of a ton per every
working .lay, it follows that goods and money would
be co-equally Irony ht Into existence, in the course of
a tuvKriiK.nth, to the extent of 313; whilst, in
the case of the servant employed in burning coals at
the same rate per day. and for the same length of
tiini', the co-equal dcxfrttrtion of goods and money
would amount to precisely the same sum, namely
to 313 ; and yet again I tell you, these two parties,
the miner and the maid-servant, are alike and equally,
in the estimation of one of your most reputed living
political economists, productive labourers !
From one authority, then, upon the subject of
political economy, tuni we now to another. And
here you will do me the justice to observe, that
I am not selecting the tyros of their class; that I
l>ring not under your notice the writings of men com-
paratively unknown as authorities on this great sub-
ject but that I select those persons, and those only,
who are generally held to be at the very top of their
pri'frssion ; and who, on their own part assinnnm to
the utmost extent the importance \\hieh the public
has conceded to them are in the habit of laying
down the law to the shade of Dr. Adam Smith
himself.
In Mr. Cobden, then, I shall now give you a spe-
cimen of another modern economist, who, although
but half-acquainted with the true principle of \-
dianuv. lias, nevertheless, upon the wings of that very
principle, recently risen to European fame, and to the
218 LECTURES ON THE
receipt of a nation's gratitude : to both of which I
trust you will join me in admitting he is most fully
entitled. For Mr. Cobden, as you are all aware, has
not merely recognised, but, to a considerable extent
at least, he has actually carried into active and effec-
tive operation one of the great principles of Dr. Adam
Smith. He has taught, not merely multitudes of
men, such as ourselves in this room assembled, the
utter insanity of refusing to accept the good things
of this life, with which other nations are ready and
willing to enrich us, but he has accomplished the
harder and the greater task of effectually teaching
the self-same lesson to ministers of state : in which
great cause he still continues to labour, and long may
he live to do so !
There are, however, other disciples of Dr. Adam
Smith besides Mr. Cobden, and other doctrines of
that great and learned man, yet to be enforced alike
upon the notice of the public and of the minister.
In short, there is other work to do, and when I de-
tect Mr. Cobden as recently I have detected him
endeavouring to retard the progress of labourers in
the same vineyard with himself of labourers en-
gaged in a work which, would he but give himself
the trouble to understand it, he would be the first
person to take by the hand and to assist thus do I
proceed gently to remove him out of their way.
The essence, then, of Mr. Cobden's great commer-
cial text may, I rather think, be given in a ten word
quotation from Mr. M'Culloch : " The facility of ex-
changing [says the latter gentleman] is the vivifying
principle of industry."
The facility of exchanging, however, in the present
I:RE AND USE OF MONEY. 219
da\. is tin- five. 1. nn of bondage, the wisdom of folly,
tli- virtue of vice: no such thing exists. The free* l"in
Changing now is all on the one side : there is
freedom enough in exchanging money for goods, Imt
there is no freedom in exchanging goods for money.
Tin- fount r is all ease, the latter is all difficulty ; but
whenever freedom of exchange shall really be esta-
bli>hed, in aggregates it will be pnvi.-rly as easy to
convert goods into money as money into goods.
Well, then, for some little time past there has ex-
isted in London a society, assuming the title of the
Anti-Gold-Law League, the members of which be-
ing all, as it would appear, true disciples of Mr. Cob-
den. >r rather co-disciples of his master and their
own. Dr. Adam Smith, are anxious to carry into
practical operation this highly-extolled vivifying //////-
ci/>/<' of ii't/i/stri/ ; and in the course of their proceed-
ings, they have very naturally horn anxious to en-
li>t .Mr. Cobden, if not into their service, at least into
that kind of fellowship, which it is at all times plea-
sant to witness between parties engaged in the
furtherance of a common cause. In consequence of
which de> ire a correspondence, it appears, took place
in December last between Mr. Bennoch, chairman of
the Anti-Gold-Law League, and Mr. Cobden, on the
subject of the currency.
" The correspondence, [says the Daily News,] arose
out of Mr. Bennoch having called Mr. Cobden's at-
tention to the Anti-Gold-Law League, which, Mr.
Bennoch says, Proposes the destruction of a bad
system, and the construction of abettor. The Anti-
(Juld-I.au League concehe that so long as the Bank
of England is, by Act of Parliament, compelled to
220 LECTUKES ON THE
buy all the gold presented to it at a fixed price, and
at a fixed price to sell all gold demanded of it, the
trade in gold is not free. Suppose some gigantic
corporation, on whom Parliament had conferred cer-
tain exclusive privileges, were compelled to buy all
corn presented to it at 3, 17s. 9d. per quarter, and
also to sell it at <3, 17s. 10|d. per quarter what-
ever the amount of labour consumed in its produc-
tion Would you consider the trade in corn free ?
Substitute gold for corn, and the illustration is com-
plete. The principles of the Anti-Gold-Law League,
in less than twelve lines, reasoning are as follows :
" Anti-Gold. First, our home trade should not be
dependent on a foreign product as a medium of ex-
change. Secondly, its so depending is the chief
cause of fluctuation in prices, disastrous panics,
and consequent national suffering. Thirdly, there-
fore, we demand the abrogation of all Acts of Par-
liament which fix the price of gold, or make it the
basis of, or an indispensable element in, our circulat-
ing medium of exchange.
" Pro-Paper. First, a paper currency, under cer-
tain regulations, is more economical and safer than
gold. Secondly, there is no important function that
gold money now performs in our home trade which
paper money cannot perform better. Thirdly, there-
fore we advocate a paper currency as our internal
circulating medium of exchange. These propositions
we are prepared to establish, by fact and argument,
to such as will listen. If Legislators will not volun-
tarily and impartially listen, how can they believe ?
Public opinion works wonders." So far Mr. Bennoch.
Mr. Cobden's reply, which is dated Manchester,
NATURE AND USE OP MONTY. 221
mltrr -1. 1 ^47, is reported in the newspapers in
the t'Tins which follow :
" If yon direct your good intelligence to the ques-
tion with iiiiv >tudy. / ///// ,t a re iion will see a fallacy
in the idea f/t>tf tin- jtrice of gold is fixed at all in t/ii*
country. It is merely u'eiahed, assayed, and stamped,
as of a certain <jna/i/n and fineness, in the saun- n-ay
r/.v has been the custom in all count rif,^ ami in all ayes.
Tin- Kink does not buy and sell gold in the common
in. anin^ of the words; it merely saves the merchant,
or the other owners of the metal, the trouble of going
to the Mint to have it weighed, assayed, and stamped,
and takes Ijd. per oz. for the operation. Anybody
can take gold to the Mint and have it coined into
sovereigns ; but that does not alter the value of the
gold. As the Bank of England can also have its
gold coined at the Mint, it can neither lose nor aain
by the operation of ' buying gold' as it is called. You
are, I presume, aware, that in America, France,
Russia, and every other country, the metals are coined
in the same way, an ounce being divided into certain
coins of invariable quantities and fineness. You
say, ' Suppose some gigantic corporation, on which
Parliament had conferred certain exclusive privileges,
U.TC compelled to buy all corn offered to it at
3, 1 7s. 9d. per quarter, and were obliged to sell it
at 3, 17s. lOjd., whatever the amount of labour
consumed in its production, Would you consider the
traffic in corn free ? ' This is not the question at
issue : the question is, whether the corn should be
subjected to an invariable measure of quantity ? For
thi> purpose the law has fixed on the imperial bushel,
which contains a fixed and invariable quantity. And
222 LECTURES ON THE
in the case of gold it has done no more than fix in
coins the weight and fineness of gold. I will not
follow the subject further, for I am sure, if you bring
your mind to a reconsideration of the point, you will
understand it perfectly/'
Now, having told you in a former lecture that I
cannot subscribe to the reformatory plans of the
Anti-Gold-Law League, and given you my reasons
at length for dissenting from them ; having stated
that I agree with the members of the League to
this extent only The existing monetary system is
radically bad, and must therefore be amended it
forms no part of my duty to defend opinions with
which I hold so very little in common. But still,
what shall we say to Mr. Cobden's reply f in what
manner refute the principle which it is evidently his
object to maintain "?
Well, this not very formidable task may probably
be accomplished in two different ways by recourse,
I mean, to ridicule or to argument either of which
would be sufficiently effective ; but in case any per-
son should incline to a different opinion, we had
better perhaps take both.
In the first place, then, I must tell you, that whilst
in the act of cogitating this matter in my own mind,
I chanced to see lying before me a small volume, en-
titled " The Little Girl's Book," carelessly turning
over the leaves of which, I met with the following
passage ; and having, only a few minutes before,
been reading Mr. Cobden's letter to Mr. Beimoch, it
occurred to me on the instant what a capital reply
the passage to which I refer would be to Mr. Cobden,
and as such, therefore, I now beg to offer it :
AND USE OP 1IONKY. 223
" For tin- nurpoM'." prorrfdrtli tlicn this little book
to say, " of testing the memory of a man, who boasted
tliat ho could repeat anything by rote on once hear-
in- it sjh'ken, Mr. Foote first wrote down, and
thru ivad i.\cr ti> liiin. the following nonsense:
' So she went into the garden to cut a cabbage
K-.it to make an apple pie ; and at the same time a
great she-bear coming up the street pops its head
into tin.- >liMji. What ! no soap! So he died, and
she very imprudently married the barber ; and there
were present the Picninnies, and the Job-lillies, and
the Garyulies, and the grand Panjandrum himself,
with the little round bulton at top ; and they all fell
to playing the uaine of catch as catch can, till the
gunpowder ran out at the heels of their boots.' "
Now, absurd as this language may at first sight
appear to be, I affirm that there is infinitely more
sense in it than in Mr. Cobden's reply to Mr. Ben-
noch, and, consequently, that it is more worthy of
your very serious attention : and this position I shall
prove in a minute, thus :
Foote took up his pen for the express purpose of
writing nonsense, and he wrote it ; whilst Mr. Cobden,
on the other hand, assumed his pen with the inten-
tion of writing sense, and he wrote nonsense. Ergo,
I h<ll Mr. F'oote's nonsense to be very good sense,
and Mr. Cobden's sense to be genuine, exemplary,
and unmitigated uousen
If Mr. Cobden, however, be not thus sufficiently
an > \vered, as some of you may perhaps be inclined to
think, he shall be answered, and that to your heart's
content, and to his own too.
\\V11, then, taking up his language seriously and
224 LECTURES ON THE
which I should positively be ashamed to do, had it
proceeded from the pen of any less eminent person-
age than himself Mr. Cobden here distinctly and
emphatically asserts :
That there is " a fallacy in the idea that the price
of gold is fixed at all in this country!" and yet he
tells us in the same breath, that " the Mint can
neither lose nor gain by the operation of buying gold!'
Which two sentences being put together, and into
different words, but without the shadow of a shade of
difference in meaning, assert, as distinctly as it is
possible for words to assert anything First, that
the price of gold is not fixed in this country ; and,
secondly, that the price of gold is fixed in this
country.
As, however, it is scarcely possible that Mr. Cob-
den intended to write such nonsense as this although,
if truly reported by the newspapers, he most as-
suredly did write it we are bound to suppose that
the language above quoted was designed to convey a
rational signification of some kind : and if so, then
must Mr. Cobden have intended to affirm either for
his language admits of no third interpretation what-
ever that the price of gold is not fixed at all in this
country, as measured by itself; or else that the price
of gold is not fixed at all in this country, as measured
by other commodities.
In reply to the former alternative, then What is
the meaning of the term price? Why, according to
my understanding of the English language, the term
price means either the precise number of pounds,
shillings, pence, and farthings, or of pounds, shillings,
pence, or farthings, which are either demanded or
\ \TURB AND USE OF Mo.NKV. --.'
paid. OF aLiivr.l to he paid, by "lie party to aiiothrr.
in \. -han^e t"i corrosiK)nding value, real or supposed.
Tims a man may ask What is thoprice of this tall- '
And the answer may be, ten pounds. But t\\is price
tin- iii|uiivr may consider to be too high, and conse-
quently lie may deeliur to purchase. Again What
is the price of a loaf of bread ? Say sixpence : and,
buying it, we may agree to pay sixpence for it, and
that either with or without ever paying for it at all :
in the latter case a bad debt being the result. Price,
in a word, signifies the sum of money, or quantity of the
nt coin of the realm, which is either paid for any
article by the mutual consent of the buyer and seller .
or it may be the sum of money entered in an account-
book as the pecuniary denomination of any thing which
may be sold on credit-terms. Thus, whenever we
say that bread is sixpence a-loaf, calico sixpence
a-yard, sugar sixpence a-pound, and so on, the word
price is always understood ; and, so far as I am aware,
the word has just this one meaning, and no other.
As measured by itself, then, does Mr. Cobden mean
seriously to affirm that the price of gold is not fixed in
this country? Is not the price of an ounce of gold,
of a given degree of purity, three pounds seven-
teen shillings and tenpence halfpenny ? Are not
three pounds seventeen shillings and tenpence half-
penny the price of an ounce of gold? If I owe you
a thousand pounds, do I not owe you precisely as
many ounces of gold, and fractional parts thereof, as
there are three pounds seventeen shillings and ten-
pence halfpennies in the thousand pounds ? If I
have in my pocket a thousand pound Bank of Eng-
laml note, can I not go to the Bank of England and
22G LECTURES ON THE
demand in exchange for it as many ounces of gold as
there are three pounds seventeen shillings and ten-
pence halfpennies in the note "? Are not, then, an
ounce of gold and three pounds seventeen shillings
and tenpence halfpenny, and three pounds seven-
teen shillings and tenpence halfpenny and an ounce
of gold exchangeable tertns f Does not the one mean
the other, and the other mean the one 1
Well, then, what else have we that admits of the
same kind of exemplification ? Are a loaf of wheaten
bread, of any given weight and fineness, and the sum
of sixpence, exchangeable terms \ Are a yard of
broad cloth, of a certain kind and quality, and a
sovereign, exchangeable terms \ Are a dining-table
of any given wood, make, size, and shape, and the
sum of ten pounds, exchangeable terms ? And in all
these cases, from day to day, from year to year, and
even from one century to another ?
Why, there is not a lady or gentleman present,
nay, there is not even a child in the City of Edin-
burgh, who is not aware that the price of these things
fluctuates ; that bread sixpence to-day may be seven-
pence or fivepence to-morrow ; that a yard of cloth
of a given quality may to-day be worth twenty shil-
lings, and to-morrow but nineteen shillings, or that
it may rise to the value of a guinea ; whilst a ma-
hogany or other table worth a ten-pound note just
now, may, the self-same table, be worth a twelve-
month hence, but eight pounds, seven pounds, or even
a smaller sum, although wholly unused, uninjured, and
the fashion thereof unchanged during the interval.
What sort of doctrine is this, then, which Mr.
Cobden thus attempts to foist upon the Anti-Gold-
NATURE AND USB OF MONEY.
Law League, and through the instrumentality of the
Times, upon the world at large, upon the subject of
the currency ? Let Mr. Cobden tell us by all means :
let him, for example, say that at the time when he
wrote the passage now under review, he was under
the influence of a dream, mesmerism, chloroform, or
that iu some other way the use of his intellects was
suspended.
The short and true answer to Mr. Cobden, is
That measured by itself, the price of gold is fixed
in this country, that price being just three pounds
seventeen shillings and tenpence halfpenny per ounce,
from the first day of January to the last day of De-
cember, in every year of our Lord.
But and there is no other alternative Mr. Cob-
den's meaning may be that the price of gold is not
fixed at all in this country, as measured by other goods!
Why, this is the very thing contended for, the very
point at issue, the sum and substance of the opinion
which I have thought it necessary to spread over
the surface of eight long lectures, and for the esta-
blishment of which I have contended, inch by inch,
throughout a progressive series of reasonings, all tend-
ing to this one point, namely, that gold is no men
of value at all; that its price, measured by other com-
modities, is as variable as the price of fifty, or per-
haps five hundred other things ; and that, therefore,
to call it a measure of value is mere self-evident ab-
surdity; whilst the consequence of that absurdity
being the law of the land, is an annual loss to this
nation of one hundred millions a-year, at the lowest
possible computation, and much more likely twice or
thrice the sum.
228 LECTURES ON THE
The aggregate of marketable produce to-day, for
example, is represented, on the one hand, and the
aggregate of money, on the other, both by the num-
ber of one hundred. In these circumstances, the
balance of supply and demand will be equal. But
what if this day three months the said marketable
produce should be increased to the extent of two hun-
dred precisely double the quantity of material and
labour having been expended in its creation, as com-
pared with the quantity expended on the preced-
ing hundred whilst money, in the meantime, shall
not have increased at all ? Why, then, the market
in this case, will either be a nominal one, the goods
being neither bought nor sold, or else, if the goods
be sold although doubled in quantity, and created
at precisely double their natural cost, namely, that
of labour they will still exchange in money for but
one hundred.*
* No person can possibly put this case either more strongly or
clearly than the late Mr. Mill, whose Elements of Political Economy
I quoted at considerable length in my second Lecture. " When-
ever, [says he] any addition takes place in the quantity of goods,
without any addition to the quantity of money, the price falls, and,
of necessity, in the exact proportion of the addition which has been
made. If this is not clear to every apprehension already, it may be
rendered palpable by adducing a simple case. Suppose the market
to be a very narrow one ; of bread solely on the one side, and money
on the other. Suppose that the ordinary state of the market is a
hundred loaves on the one side, and a hundred shillings on the other ;
the price of bread accordingly a shilling a loaf. Suppose, in these
circumstances, that the quantity of loaves is increased to two hun-
dred, while the money remains the same ; it is obvious that the price
of the bread must fall one half, or to sixpence per loaf." ElemetUs
aforesaid, p. 162. And yet this self-same volume, by the self-same Mr.
Mill, contains, in its Preface, these words :
\ \TI 1:1: \M) USB OP MONEY.
Why, thi'ii, I lcinaii'l (< know, an- the market-
uvrisely doubled in their cost of production.
>t-lv doubled in quantity, and precisely doubled
in the I'xti'iit of 'their utility that is to say, will feed,
rlothe. and lodge twice as many people now as tin v
would More to fall douni in price to the sum of ne
hundred, to the utter destruction of tltt'ir producers,
merely because one other marketable com mod if if like
themselves hath not increased in qiHintifif at all! Why
is the thing in which there has been no change to be
thus doublet! in value, whilst other products which,
by the application of double the material, labour, toil,
an- 1 anxiety, have been doubled in quantity, and in
utility are to remain of precisely the same aggregate
value as before ; that is to say, when there existed
" I have endeavoured, by new illustrations, to render more palpable
what appears to me to be demonstration of that most important doc-
trine, that the aggregate demand and tuppfy of a nation are alvayt
equal, that production can never be too rapid for the market ; in
other words, that there never can be a general glut of commodities.' 1
No human being, however, can reconcile these two paragraphs
except by tupponng the existence of some species of money which may
be increased as fast as the aggregate of every thing else. No such
money exists at present ; and therefore, if the injunction implied in
the second paragraph were to be obeyed ; if producers of every class
were to take the late Mr. Mill's doctrine for their guide, and, in ac-
cordance therewith, to increase for a time their goods as fast as pos-
sible, the result would be, that every atom thereof would fall in price;
ruin to themselves would ensue, demand would speedily come to a
stand-still, production itself would be compelled to stop, and the in-
dustrious classes would be consigned, as usual, to starvation and
wretchedness.^ But reconstruct our monetary system upon the prin-
ciples herein demonstrated, and the assertion contained in Mr. Mill's
second paragraph nl*>vc quoted will be perfectly true; whilst the
argument in the former '(notation will become elucidation and con-
firmation of thnt truth.
230 LECTURES ON THE
thereof enough only to feed, clothe, and lodge but half
the number of persons now amply provided for !
As measured by other commodities, the price of
gold, therefore, in this country, is not fixed, but the
consequence of fixing by law that which cannot be
fixed in fact, is a loss of at least one hundred millions
a-year to the British nation.
People will not manufacture goods to sell them at
a loss, whilst, so long as the law of gold exists, they
can have no certainty of being able to sell them at a
profit. Hence the fetter on our industry ; hence the
tether by which our productive efforts are confined
within a very limited circle; and hence the solution
of the problem Why are the inhabitants of a nation
able and willing to supply their urgent wants twice
over, starving in the midst of plenty ?
And what is the remedy for this enormous evil ?
Why it stares you in the face ! It is as self-evident
as the existence of light or heat. If you double your
goods, you must double your money. If you quad-
ruple your goods, you must quadruple also your
money. If you increase your goods tenfold, you
must increase your money tenfold, and so on. This
is the remedy, and besides this there is no other.
Adopt it, then, and you may go on producing and
producing the productions, regulated by the prin-
ciple of individual competition, being at all times in
due proportion to each other until the world itself
shall be satiated with wealth, and all the people in
it ; and yet the rate of profit obtainable by the sale
of the last pound's worth of goods brought into the
market may be equal to that upon the first.
But I have not half-done with Mr. Cobden yet.
N MURK AND USE OK IfONKY.
" I am sure you will BOO a fallacy [says ho] in the
i<lia that tlic price of gold is fixed at all inthiscoun-
1 r \ : it is merely iveighed, assayed, and stamped, as
of a certain quality and fineness, in the same way as
has lu'i-n tin- custom in all countries and in all ages."
So here we have Mr. Cobden, tin- <li>riple of Adam
Smith, tlu- antic.. rn-law leaguer, the earnest, perse-
v. ring, talented, and to some extent successful
champion of free trade all over the world, descend-
ing to make use of such a weapon as this " In tho
same way as has been the custom in all ages and in
all countries :" but let that pass.
Mr. Cobden tells us, then, that gold is " merely
u't't'/h''!/, assayed, and stamped as of a certain qwiiit;i
and fineness" And a little farther on he tells us
that corn is subjected to an invariable measure of
([Kant'iffi, for which purpose the law has fixed on the
imperial bushel, which contains a fixed and invariable
</>/<in/if>/ ; and in the case of gold it has done no more
than fix in coins the weight and fineness of gold.
To which I reply You are in error, Mr. Cobden ;
the law has done one thing more than this: it has
commanded gold to be weighed, assayed, stamped,
and priced ! Is the imperial bushel of corn priced f
No, it is not.
Hut as Mr. Cobden " will not follow the subject
farther," I will finish the argument for him ; so now,
if you please, we will fix the price of corn instead of
iroM. and take it for our supposititious measure of
value throughout.
As, however, we have not at present any precise
measure of quantity, which, being filled with corn,
would, in ordinary rircum>taiMv-. IT worth the exact
232 LECTURES ON THE
sum of 3, 17s. lO^d., suppose we create one for
the purpose, and call it merely a measure. The
measure of corn then is, first, like gold in the mint,
to be measured instead of weighed ; that is to say,
it is to consist of a vessel full, the said vessel being
of a certain fixed capacity in cubic inches. Secondly,
it is to be assayed; that is to say, it must be of a
certain quality as well as bulk. Thirdly, it is to be
stamped ; that is, certified by Government to consist
of the proper quantity and quality. And lastly, it is
to be priced, that price being just 3, 17s. lOjd.
Here, then, we have in supposition a precise pa-
rallel for the present law of gold* The sum of 3,
17s. lO^d., and a measure of corn, are exchangeable
terms ; that is to say, a measure of corn means
3, 17s. 10|d., just as an ounce of gold now means
3, 1 7s. lOid. ; and the sum of 3, 17s. lO^d., means
a measure of corn, just as the sum of 3, 17s. lO^d.
means at the present time an ounce of gold.
Now, to give Mr. Cobden the full benefit of his
own argument, and gold being, as he says, in pre-
cisely the same legal position as corn, I have merely
taken the latter in place of the former ; and now let
us see what would have been the result of this species
of corn-law during the last year or two : Well, then,
it would have been precisely this :
The price of corn, not being fixed by law, rose,
between the months of August 1846 and June 1847,
a trifle more than one hundred per cent. ; whereas, had
the price of corn been fixed by law at 3, 17s. 10d.
per measure, the price of corn then, like the price of
pold now, would have remained unchanged, whilst
the general average of other commodities would //</
N Ml,' HE AND USB OP MOM > 233
fallen in money price rather nion- iliaii one hundred
lit. lu consequence of which every man in
tin- kingdom, whose assets, taken at their lair value
in September 1S4<. sliould not at that time have
amounted to precisely double the sum of his pecuni-
ary obligations, would inevitably, in the month of
May 1847, have been reduced to the condition of an
'!>>' nt !
And don't you fancy to get out of this dilemma
by saying that, in the case supposed, all things, corn
alone excepted, having alike fallen in price to the
ext nt of a hundred per cent., the comparative state
of things would have remained as before. This argu-
ment would be perfectly sound, as applicable to all
persons being neither debtors, creditors, nor pecuni-
ary obligants. They, if any such there be, would
not have suffered : but with this exception, and with
it only, every person would have been ruined, who,
as I said before, could not have afforded to lose pre-
cisely one-half of his entire property.
And this is no mere case of the imagination, for,
precisely what wiild have happened within the last
eighteen mouths had corn been the legal measure of
\aluc. tJ'til li<tf>j.i-n, in consequence of gold having been
the le-ral measure of value. Gold, of course, rose not
at all in price as measured by itaelf. The ounce of
gold last year, as in the year before and in the year
ni. \\.is just 3, 17s. lOid., and the sum of
i 7>. inid. was just an ounce of gold. But, as
measured by ntlu-r cnim<nlitic*. the price of gold rose
i enormously. It rose, in tact, to such an
nt that, at the lo\veM |>o>>il.]e computation, the
money vain.- of all other proprriv in tlir country had
234 LECTURES UN THE
fallen at one time, in the month of October last, for
example, to the extent of more than five hundred
millions as compared with the money value of the
self-same property in the preceding month of No-
vember. That is to say, a fall took place in the value
of British property last year to an extent most un-
doubtedly exceeding by the sum of a hundred mil-
lions sterling, one-half the amount of the national
debt of this country. And to set at rest all question
as to the truth of this assertion requires no length-
ened nor laborious investigation, for the proof lies
within the compass of a nut-shell.
In the general average state of the money market,
then, the estimated value of the property of this
country exceeds five thousand millions. Now, if the
whole of this property be by any cause depreciated
to the extent of but ten per cent., the amount of that
depreciation will be just five hundred millions, or
within three hundred millions of the whole amount
of the national debt.
Well, then, one of two things is true either we
did actually incur this amount of loss last year, that
is to say, the property of this country had depre-
ciated at one time, in October for example, to the
extent of five hundred millions sterling ; or else, upon
the general average, that is to say, taking one thing
with another, houses, lands, and merchandise of every
description, the money value of property, heritable
and moveable, did not fall ten per cent. I assert that
it did fall ten per cent., and more than ten per cent.,
whilst he who shall refuse his assent to the sound-
ness of this argument must hold that it did not.
The evil of this enormous depreciation in the money
KK AM) U8K OF MOM.V. 235
value i.i' |>roj>erty, however," is not a general one, fal-
qually on all |HT-.>M- in proportion to the value
of tln-ir property. On the contrary, it falls as un-
equally as grape-shot in the field of battle. Some it
do>tri\ - upon the spot ; on others it inflicts wounds
mortal, l.jit not immediately so ; others it maims or
cripples for the rest of their existence ; whilst a very
large number escape injury altogether. And the
nature and causes of this inequality of suffering it will
not be difficult to explain.
Aggregate rises and falls, then, in the money value
of property, do not affect those persons who are
neither debtors, creditors, nor pecuniary obligants.
If all things rise in money price, and that in due pro-
portion to each other, the operative who pays six-
pence for his loaf of bread to-day may pay seven-
pence to-morrow. But if his wages have in the
interim been advanced in the like proportion, his
means of purchasing bread remain unaltered. Re-
verse the case : let the bread fall in price, and his
wages too, and again he is neither better nor worse
off than he was before.
But in place of an independent working man, who
owes nothing, and has nothing owing to himself, let us
take the case of a merchant, whoso moans, like his of
Venice, are in supposition ; who " hath an argosy
bound to Tripolis, another to the Indies, a third at
Mexico," and so on, with, perhaps, a fifty or a hun-
dred thousand pounds stock of goods at home into
the bargain ; and what is his situation ? what are
the consequences to him of a ten per cent, fall in the
money-price of goods ? Why, ruin ! utter, absolute,
and in thousands of instances. irretriovaMo.
236 LECTURES ON THE
Take, for an example, one of every day occurrence.
A merchant has, we shall say, a bona fide capital of
his own, amounting to 20,000, wherewith to com-
mence business, with which capital he embarks
largely in trade. His situation, then, will very soon
be this : his obligations, on the one hand, may,
without the least imprudence on his part, soon
amount to a hundred thousand pounds. He resides
in London or in Leith, and does business on commis-
sion for a numerous foreign connexion, buying, on
the usual terms of credit, goods for his constituents
to a large amount thus making, as I have already
said, his liabilities 100,000.
Then, per contra, to meet his obligations, he has
the amount of his own bona fide capital, which we
have put down at 20,000 ; next the amount of his
book-debts, and then that of his stock on hand ; and
as he has only recently commenced business, and
consequently had no time to add to the amount of
his original capital, the balance-sheet of his affairs
that is to say, the amount of his assets above that
of his obligations will present at foot precisely the
amount of his own capital, namely, 20,000.
Well ! in this state of things, money rises in value,
or, as the law will have it, goods fall in price just
ten per cent. ; and what follows "? Why, in the first
place, the value of his stock on hand is decimated;
stagnation of trade follows ; his customers are unable
to sell their goods at a profit, and unwilling to sell
them at a loss. They, therefore, either dishonour,
or require the renewal of, his bills of exchange, and
he, consequently, must either dishonour his bills too,
<>r else, having renewed those dniwn by himself upon
N \TIIBE AND U8K K M"Nn 2'.\7
lu> I-USI..MHTN. /// must yet them discounted as be*f In 1
ca^ perhaps at an enormous per centage ; which.
being added to the loss upon the value of his stock,
and to the amount of his bad debts, will not impro-
bably relievo him of the last sixpence of his own
bonafide capital.
Is this an imaginary case ? Far from it. Sub-
stantially it is but too true a picture of the fate of
many scores of merchants in this country, whose on-
tiiv property has recently been confiscated by the
law of gold.
Do you ask me for any authority upon this sub-
ject ? I can hardly think so, for the facts I have
stated must be well known to every person present.
If, however, you want still farther evidence, you shall
have it in plenty :
Only the other day, then, in making his financial
statement before the House of Commons, Lord John
Russell, the Prime Minister of these realms, instructed
us as follows, and thus enabled me to prove the
truth of these assertions to the very letter, out of his
own mouth :
" The year [said he] which has passed over our
heads, or I should perhaps say, the period of the last
eighteen months, has been one which, excepting
cases of foreign war or domestic insurrection, is with-
out a parallel, I think I may say, in the history of
this country. The changes and vicissitudes of prices,
the difficulties of commerce, the panic which more
than once prevailed, the extreme distress of a part
of the United Kingdom, the extraordinary efforts
whirh were made to relieve that distress, altogether
affected the state of this country to such a degree that
238 LECTURES ON THE
I believe it would not be easy to find an example of
such distress in our history. To give some notion of
the very great vicissitudes we have gone through, I
will refer to the changes in the price of wheat, the
changes in the rate of commercial discounts by the
Bank of England, and to the changes in the amount
of bullion held by that establishment. In the first
week of September 1846, the average price of wheat
was 49s.; the price in January 1847 was 70s.; and
in the week ending May 29, 1847, the price of wheat
was 102s. 5d. On the 18th of September following
it had again fallen to 49s. 6d., being only 6d. diffe-
rence from the price of the preceding September,
and more than 100 per cent, difference from the price
which ruled in the previous May. The rate of dis-
count by the Bank of England I mean the mini-
mum rate of discount by the Bank of England in
November 1846, was 3 per cent. In April 1847,
it ranged at 5 per cent. ; in October, the lowest rate
of interest charged by the Bank of England was 8
per cent. ; and in January 1848, it was again 4 per
cent. The amount of bullion on the 10th of October
1846, held by the Bank of England, was 15,078,135 ;
on the 23d of October 1847 it was 7,865,445;
and again, on the 5th of February 1848, it was
13,821,754."
Here, then, having the Prime Minister of England
of the present hour for my authority, I am furnished
with data from which to prove :
That had any measure of wheat, fixed by law at the
price of forty-nine shillings, been our standard of value
during the last eighteen months, the average price of
all other commodities would have been as follows :
NATfRK AND USE OK MONKY
289
240 LECTURES ON THE
pelled, from the difficulty of obtaining discounts, to
have realized the value of such speculation in the
month of May following, would have been under the
necessity of sacrificing his property, and that to the
last shilling. Such is the principle on which the
existing monetary system of this country is esta-
blished ; and now for the fact :
Well, then, upon the same indubitable authority,
namely, that of Lord John Russell's last great speech
in the House of Commons, our minimum Bank of
England rate of discount
In November 1846, was 3 per cent,
In April 1847, it was 5 per cent..
In October 1847, it was 8 per cent., and
In January 1848, it was again reduced to 4 per
cent. So that, whilst the fluctuation in the price of
wheat was only a fraction more than one hundred per
cent, between the months of September 1846 and
May 1847, a period of seven clear months, the fluctua-
tion in the interest of money between the months of
November 1846 and October 1847, a period of ten
clear months, was very nearly three hundred per cent.,
and that, too, upon money lent by the Bank of
England itself upon the best possible bills only! Such
is our measure of value ! A parallel for which could
only be found in an Act of Parliament constituting
the yard measure of to-day thirty-six inches, and that
of this day ten months twelve inches ; and the pound
weight of to-day sixteen ounces, and that of next
September a fraction less than five ounces and a-half.
Then as to the modus operandi of all this, why it
is as plain as A, B, c. A little absurd speculation
on the part of a few adventurers, a panic and the
N LTUB1 UTO HOH1Y, '2 I 1
-" 1 thank thee, Jew, [Sir K.>!,rrt IVel I mean.]
for teaching me that word" and the tiling is done.
It happen^ thus :
A jM-ri'. 1 of nvii.-ral prosperity having fora \\hile
continued, a period, that is to say, wherein the
ige number of people in a state of abject IUMTV
is a million or t\\ > l--s than usual speculators 1" -in
-tir theiiiM-lves : one party go to work at a few
railroads: anoth-T would like an extra bridge or
t\\-i across the Thames at London ; whilst a third
get up a building company, and so on ; by far the
greater part of these projects originating with parties
who, having everything to gain and nothing to lose,
care not at all for the success of them, farther than
as mere instruments of their own pecuniary advance-
ment. The scheme, whatever you please the more
absurd, perhaps the better a well-written prospectus,
headed by some first-rate names, with or without
the consent of their masters, no matter which : the
shares, bought up immediately, are at a premium
one week, at a discount the next, and at nothing
shortly afterwards.
But the bait has been takcn^ the shares have been
sold; some capital has been withdrawn from its more
legitimate objects ; men of well-known wealth and
ctahility are on the partnership list : f/n-ti' 01
is shaken in consequence, and a panic ensues ; then
cometh the screw and the work is done. The best
promissory notes discounted by the Bank of Kngland
in November at three per cent., are refused in the
April following at less than five, and in October at
less than eight. All the other banks follow the
example of the Bank of England, ami <m
q
242 LECTURES ON THE
diminution i)i the aggregate quantity of money in cir-
culation, of which bills of exchange form a most im-
portant item,, consequently takes place. But money,
as measured by itself, rises not in price, and therefore
tlie price of other goods must fall Sellers unwilling
to lose by their merchandise hold on for a time ; but
as buyers will not give the old prices, trade stagnates,
and production stops, or its power is but half-exerted ;
and hence manufacturers, merchants, and operatives
are involved in the common ruin.
It must be distinctly kept in mind, however,
throughout this argument, that in thus speaking of
the great variation which took place in the interest of
money during the period mentioned, we are not to
confound the interest of money with the actual va-
lue of money itself as measured by other goods.
For, had the actual value of money risen in October
last to nearly three times its ordinary value, the
whole country would have been involved in the
general calamity, and a national bankruptcy must
inevitably have ensued.
This distinction between the value of money and
the mere interest or hire of it, is precisely similar to
that which exists between the value of house pro-
perty and the rent of it.
A house, for example, in certain circumstances,
may let for a time at more than double its ordinary
amount of rent. But the period during which such
exorbitant rent may be obtainable, being necessarily
a limited one, it would be clearly impossible to sell
the house outright, at double its ordinary value, or
even at an advance of twenty or thirty per cent., in
consequence of any such temporary advance of rent
NATURE AND USK OP MOXKY. 243
obtainable for it. So, in like manner, was it with
respect to money last October ; the rent or interest
of money was indeed as high as eight per cent, on
the very best personal security, consisting of first-
class bills of exchange ; but the money itself a
hundred pounds for example would not pay any
more rent, taxes, or other previously existing obli-
gation, in October, when its rate of interest was
n'irht per cent, than it would have done in the pre-
vious month of November, when the rate of interest
was but three per cent.
And here, in estimating the amount of destruction
committed by the Bank of England last year, by re-
ducing to an enormous extent the aggregate amount
of money in the country, I take the damage at only ten
per cent., or five hundred millions in all ; whereas, had
the like advance taken place in the value of money
itself, in place of in the mere pro tempore interest of it,
the depreciation in the value of property in the mouth
of October would have amounted to pretty nearly
two-thirds of the whole, that is to say, to the sum of
about three thousand millions, or to not far short of
four times the amount of the national debt.
Such is our monetary system. Certain adven-
turers get up a few schemes, which promise for a
time success : others, and others still, stimulated by
their example, follow it, and then the commercial
typhus runs its accustomed course : the ultimate
consequence of which may be, that a few penniless
speculators may so adroitly manage their affairs, as
eventually to cause the Bank of Mischief in Thread-
needle-street to issue forth its decennial, or thereby,
244
LECTURES ON THE
mandate " Let the property of the country be deci-
mated " and decimated it is accordingly.
So much for Mr. Cobden, who, in asserting That,
measured by other commodities, the price of gold in
this country is not fixed is perfectly correct. Let
him, however, in the next place, show the cost of the
golden image, for the perpetuated worship of which
he contends, to be any less sum than one hundred
millions a-year, in money of its present value ! / defy
to do so.
N UTIM-: AND USE OF MONEY. 245
LKCTUKE VIII.
Recapitulation and brief Review of the cutirc subject.
ME one has said that all men think all men
mortal but themselves ; ami he might perhaps have
aiMe-d, that nations are apt to regard their public in-
stitutions in very much the same light. Thus, if I
>a v to you " Let us annihilate the Monetary System
of this country, root and branch," some one will be
inclined to reply " And dry up the Firth of Forth."
Well, oftentimes have I of latj declared that, if
life and health should be spared to me for a few
more years, I would totally change the monetary
in of this kingdom ; and now I faithfully promise
you, thai this task will I perform, <in<l tlmt within seven
years from ami <tft< / ////x >/.//"''///// (hui of March \
unless and thus only do I qualify the engagement
><>inr mi' else should change it sooner.
Manv and important have been the subjects with
which tin- miml of the British nation has been succes-
sively monopolised for the last half century. Napo-
Ift'ii I'.onaj'arte. in t lie days of my early remembrance,
\\ i- the liTrat proprietor of all men's thoughts poli-
tical : next came peace, with its endless train of
H'-Mngs anticipated, and disappointments ivali/ed :
thru lu-funu in Parliament, my first recollections of
which arc intimately associated with Warren's Black-
246 LECTURES ON THE
ing ! For, go wheresoever you might, either within
or in the vicinity of London, for many years, on every
churchyard, barrack or garden wall, tumble-down-
house, or temporary shed, there would you be sure
to find, not as we do things now, in letters of blue,
green, yellow, and even gold, but in simple chalk,
these two very laconic remembrancers
"PARLIAMENTARY REFORM!"
"TRY WARREN'S BLACKING!"
The well-merited libel on the Honourable House
having the precedence, in some cases, of the man of
jet, whilst in others he would take the shine out of
all the honourable members put together, merely by
expunging the reference to their existence, the more
conveniently to proclaim his own.
Then, after sundry interludes, consisting of a little
occasional sedition, the trials of Queen Caroline and
William Hone, the Cato Street Gang, and a few
et ceteras, our next staple commodities were " No
Corn-Laws," and " Catholic Emancipation." When,
lo ! all being fulfilled, we should now be in want of
a Cry altogether, were it not for n ever-ending Ire-
land and the Income-tax.
Thus has the poor Monetary Reformer, whenever
he has endeavoured to bring his modest proposition
before the tribunal of the public, been pooh poohed,
and thrust aside by war, peace, sedition, treason,
and reforms of all sorts, as if he were nobody : and
now, out of mere spite, against myself individually,
the French have been getting up a new play,* deno-
* This language, be it especially observed, has no reference to the
fearful events of June. Sec also the note on the next page but one.
AND USB OP MONKY. 247
" The Revolution," which was performed in
Paris for the first time on the evening on which I had
j.i. \ inusly engaged to deliver my first Lecture in the
cit v of Edinburgh on the Nature and U.s <>l Money.
To treat the subject more seriously : I believe,
thru, that our time is at length at hand ; nay, that
<-\tn the present hour may prove to be our own.
Iivlanil, in<lre<l, may continue to divert attention
from us to some extent ; but in truth we shall take
precedence of Ireland, for the very sufficient reason,
that it is in reserve for us, and for us alone, to regene-
rate Ireland. The Excise Reform party again, must
await their turn, and ours stands before it on the list
of fate : for they, in fact, are a mere portion of our
tail ; and, as such, they can make their way in the
world only by allowing us to go before them.
But what of the new Republic \ What of our
neighbour France f Will not she swamp us for the
next twenty years at least, merely by absorbing the
entire interest of Europe in watching her forward or
backward, upward or downward progress ? I think
not. Indeed, I have reason to suspect that she has
actually stolen a copy of my plans, and is about to
act upon them ; for how else can she hope to keep her
word? how else can she "find employment for nil her
productive classes?"*
I defy her to find them employment otherwise than
in the manner which 1 have pointed out. I assert it
to be morally and physically impossible for any set
* By reference to the Appendix it will be seen that a copy of
these Lectures was promptly offered to the Provisional Government
of France, and with what result ? The receipt of the offer waa not
even acknowledged.
248 LECTURES ON THE
of men in existence to devise means for the employ-
ment cither of the French people, or of any other
equitably at least unless this be at once their Motto,
Principle, Object, and Resolution :
PRODUCTION NATURALLY THE CAUSE OF
DEMAND, SHALL BE SO PRACTICALLY.
Let this, then, be the motto of the French reformers,
or else be it a broken reed ; for unless they be able
to change the very nature of the universe, and of the
creature man besides, upon no other principle, neither
by any other mode of procedure, can they keep the
word which they have pledged* By adopting the
principle of exchange herein developed, the members
of the Provisional Government may be enabled to
keep their promises ; and were I but as well ac-
quainted with the circumstances of France, and with
the language and character of the French people, as
I am with the circumstances, language, and character
of the people of this country, I would willingly sign
a bond to forfeit my head, if I could not, with proper
assistants, in less than twelve months, frame, organize,
and establish a monetary system in France, which
should eventually be imitated, not to say slavishly
copied, by the entire civilized world.
But I fear you will begin to think that I have al-
together forgotten the subject of this evening's lec-
ture, which, as it stands in the programme, was to
consist of a recapitulation and brief review of the
* Impaiti;il Iluader ! Do thou unto the Author of these Lectures
the justice to remember, that this language was addressed by him
to a large and intellectual audience in the City of Edinburgh, on
Thursday, March 16, 1848. The Parisian comment thereon of the
end of June following, needs unhappily, no recapitulation here.
I'RK AND USE OF MONEY.
already dismsM-d on the seven preceding
occasions. I .shall now. therefore, proceed to state
toryou. as clearly an<l concisely as I can, the opinions
which I have formed upon this great subject ; unac-
roinpanied. or nearly so, by any farther reasons,
serin- that of them you have already l.een presented
with an abundance. Here, then, is a brief abstract
or summary of my monetary creed :
I.
Production is the Natural Cause of Demand.
II.
Apart from all monetary considerations whatso-
ever, Supply and Demand are exchangeable terms.
Supply is Demand and Demand is Supply.
III.
Therefore, speaking always of Aggregates, it is
quite impossible either to over-produce, or to over-
stock any market in this world.
IV.
Disproportionate production, however, may exist:
aggregate over-production never.
V.
The existence of Disproportionate production is
proved, whenever it happens, either that parties
are unable to obtain in the market that which they
I- -ire to buy, or whenever they bring to market a
jrn-atcr quantity of any commodity than they may be
aide, at a reasonably remunerating price, to sell.
250 LECTURES OX THE
VI.
In any Perfectly well-proportioned market every
article would be both bought and sold.
VII.
The Natural, and only Natural limit, to Produc-
tion, consequently, is the Exhaustion of the Ability
to go on supplying the market Proportionately.
VIII.
Thus far we speak merely of Exchange or Barter,
and take no cognizance whatever of the existence
of Money, excepting only to avoid it.
IX.
If any valuable commodity whatever be constituted,
either by law or custom, the measure of value, in any
market, from that instant, in that market, Production
will cease to be the necessary Cause of Demand.
X.
Because, as no one valuable thing can by any pos-
sibility be increased ad libitum, as fast as all other
valuable things put together, whenever the commodi-
ties to be measured are increased faster than the
modes of using it remaining the same the measure
itself, prices must fall, and production will stop.
XL
This falling price, as contra-distinguished from the
Natural one, is the Existing limit to production, in
Great Britain, France, America, and in every other
country in the world, miscalled civilized.
N ATirRE AND USE OP MON J .> I
XII.
Tl 10 loss >UN( lincil hv this country, const'|Ui'iit upon
the adoption of, or ratlin- >ul)mission to, thin ninnifii-
nil inn ih it Inn of our productive powers, exceeds one
hundred million pounds a-year in money of its pre-
si-Mt value : and that in every year of our lives.
XIII.
The nature, use, and proper qualities of money,
an- wholly misunderstood by Lord John Russell, Sir
Robert Peel, Mr. Cobden, the Editor of the Times
newspaper, by the public press in general, and
speaking of them collectively by the Members of
both Houses of Parliament ; whilst the subject ap-
pears also from their published decrees, to be equally
blundered by the Provisional Government of France.
XIV.
By Labour only is it possible to measure value.
XV.
A well-considered Act of Parliament constituting
labour the legal, as it is, and must ever continue to
be, the one and only possible standard of value, would
not interfere, in the slightest degree, with the
principle of individual competition between man and
man : professional, mechanical, or laborious.
XVI.
The subdivision of money into pounds, shillings.
pence, and farthings, although not quite so simple as
tin- decimal division, is a very good one, being liable
to no serious objection in practi
252 LECTUHES ON THE
XVII.
The unit of our monetary system should consist
of a pound note, to be denomiimted the Pound
Standard, divisible, as after-mentioned, into silver
and copper coins.
XVIII.
The desire to do so being presupposed to exist in
the minds of our legislators, there would be no more
practical difficulty in fixing the value of the pound
standard by Act of Parliament, than in fixing by
law the number of yards in a mile, ounces in a pound,
or inches in a foot.
XIX.
The value of the pound standard being fixed by
law, the shilling should at all times consist of the
twentieth part of the weight of silver obtainable in
exchange for a pound standard.
XX.
And the penny should consist of the two hundred
and fortieth part of the weight of copper obtainable
in exchange for a pound standard.
XXL
The penny thus defined should be a legal tender
to the amount of one shilling ; and the shilling thus
defined, to the amount of twenty shillings ; whilst
the pound standard should be a legal tender to the
amount of from one pound to a thousand millions
of pounds, the latter sum being a trifle more than
the largest known debt at present existing.
KK AND USE OF MOM.Y.
XXII.
Metallic coins may In- continuously of the same
denomination and weight, in which case f/iftr rnlm-
must of neceii y l>e liable to fluctuation ; or,
XXIII.
They may be continuously of the same denomina-
tion and \ahu-. in which case their uv'ujht iiiu^t ol'
ssity be liable to variation.
XXIV.
The attempt to unite in any one piece of gold,
silver, or other metal, of a given degree of purity,
unchangeable denomination, weight and value, is an
tn-t <>{ (ih.<uliiit'. fiiiljHille, andunadiillrrdfi'il lt'<ij.lnfir<>
t<> (/ *<> be'uj </>iite impossible.
X XV.
To the right and pK-a>ant working of any sound
and efficient monetary system, both these kinds or
classes of coins are indispensably requisite.
XXVI.
Money and Capital are, or should be, two things
entirely different from each other.
XXVII.
No Circulating Capital whatever would be of the
smallest possible utility to any properly constituted
National or Standard-bank.*
* The recent projects of the French people, or rather of certain
would-lic Parisian monetary reformers, nmiinl me of a young uport*-
man, who, whenever the game rise* before him, is ipi'itc aMc to bring
254 LECTURES ON THE
XXVIII.
No interest whatever can be honestly chargeable
for the use of Money by any properly constituted
National or Standard bank.
up his gun to his shoulder, and to discharge it at his object, but in-
variably without success. Whereupon, on protesting to his more
experienced companion that he expected to hit the mark, he is very
coolly told in reply " That a miss is as bad as a mile."
Thus is it with a party in the French metropolis. They are fight-
ing with a subject which they do not understand, and yet with one
of which they are not altogether ignorant. They profess to seek
The Organization of Labour, whereas the thing of which they are
truly in quest is An Organized System of Exchange.
National workshops, and a fixed rate of wages in gold or silver
coin, has been their phantom, whilst the reality, which has b'ien
gleaming before the half-opened eyes of their understanding, is A
Market for the produce which they may be able to create. To engage
permanently to give to men a weekly rate of wages in gold or silver
coin of any greater weight than the produce of their labour will ex-
change for in a free market, is simply to engage to do that which is
impossible. But to devise means, consisting of a mere Banking sys-
tem, whereby operatives of every class may be enabled to obtain
Equivalents in exchange for the well proportioned produce of their
labour, in whatsoever shape they may require them, or, in other
words, to find them a market ad infinitum for those products, is not
merely a possible, but so very easy a task, that the rulers of this
country are quite able to create such a market whenever they may
think proper.
ft But a Bank without a capital, oh, monstrous absurdity ! Where
will folly end ? " So, in other words, inquires The Economist news-
paper, of date May 27, 1848, the Editor whereof, assuming to be in
possession of a store of knowledge upon this important subject,
deigns to enlighten us as follows :
" Of all the wild and visionary schemes which have been pro-
pounded in France since the 23d of February, that which has ap-
peared at great length in the Paris papers of this week has taken us
most by surprise not so much from the startling propositions on
which it is based, as from the emiuent names by which the scheme
NATURE AND USE OF MOM. Y 255
XXIX.
I '.i it interest of Capital is at all times a fair, rea-
sonable, and proper exaction.
professes to be supported. We say professes, for we are unwilling to
beliovo that the eminent and distinguished men whose names appear
to the prospectus before us, hare really and knowingly sanctioned
MK-II dangerous and fatal delusions. Among the list, it U true, we
sue names, such as those of Louis Blanc, . Sue, and E. Arago, which
we are prepared to find attached to any scheme, however erroneous
ami visionary ; and had the one before us been confined to such, we
should have passed it by as unlikely ever to be realised, and there-
fore comparatively harmless. But when we find attached to it the
names of such eminent men as Michel Chevalier, Emile de Qirardin,
and F. Bastiat, we are bound to look to it as a grave reality.
" The proposal is no less than to create an entirely new medium
of exchange a new mode of distributing commodities and labour,
by the unlimited emission of Social paper, or Exchange notes of
twenty frnucs, one hundred francs, five hundred francs, and a thou-
sand francs each ; and through this scheme ultimately to bring
about a new organization of labour. The National Society and Bank
hange, as this association is termed, is to consist of all who
choose to enrol themselves as members, including every class of so-
ciety landlords, farmers, manufacturers, professional and literary
men, traders of all kinds, workmen of every class in short, all who
have either commodities or services to exchange. It comprises, in
fact, the whole of France, if they choose to enrol themselves.
" The immediate object is to furnish all with a medium of exchange
who have either commodities of any kind or labour to offer for it ;
and the ultimate object, in addition to that, is to bring about an en-
tire re-organization of labour.
" The first principle stated is, That this Bant it to have no Capital,
and is to make no profits a charge of one per cent, only being made
on transactions, to pay the expenses.
" The objects of the bank may be thus generally stated, from the
prospectus before us : The bank is to deal only with its enrolled
'members, among whom it is to promote the exchange of all commo-
dities, ' without the help of money,' and * their indefinite multiplica-
ti.i..' by means of the notes which we have already mentioned.
256 LECTURES ON THE
XXX.
By the establishment of three Standard banks,
these principles, as more fully set forth in the seven
preceding Lectures, one in England, another in Scot-
land, and a third in Ireland, Proportionate Produc-
tion would in these lands become, and for ever continue
to be, the Unfailing Cause of Demand, and that ad
infinitum.
These notes are to be exchangeable at sight at the bank for merchan-
dise, and goods of all kinds which it contains, and for services. And
such merchandise, goods, and services are also to be at all times ex-
changeable for such notes at the bank. And thus, the prospectus
gravely states, the depreciation of the note will be impossible, be-
cause it will only be issued against real value."
To the introductory remarks upon which project I thus adventure to
reply : Gentle Economist ! Thou art as yet a child of rather less than
five years old, thy weekly effusion, from which I quote above, num-
bering but two hundred and forty-eight. Wisdom, however, it is to be
desiderated, will come upon thee in maturer years ; and, in the mean-
time, learn, that new as may the proposition be to you, to establish
" A Bank without a Capital," and wondrous as the French project
aforesaid may be in your eyes, wanting it is at least in the item novelty,
seeing that of a verity these Lectures on the Nature and Use of jMoiu-y
now merely verbally corrected and amended for publication were
delivered by me, in the city of Edinburgh, before numerous, highly
respectable, and most attentive audiences, on the dates which follow,
namely, February 22, 24, 29, and March 2, 7, 9, 14, and 16, anno
Domini eighteen hundred and forty- eight.
Seeing, then, which is most certainly the fact, that I never heard
of any " French Bank without a Capital," until enlightened by your-
self upon the subject on the 27th day of May following, it is quite
clear that I copied not the Frenchmen ; whilst unpublished at this
hour July 3, same year excepting only in the shape of delivered
lectures, I can hardly suppose the Frenchmen to have copied me.
But to the point at issue, which is this Of Circulating Capital a
properly constituted National Bank would require not the sum of six-
peiice! A hundred guinea premium is offered to the man who may
NATI UK AND USE OF
Such, thru, being the general principles on which it
is affirmed that a mere System ofBank'nuj may be intro-
diicr.l intosociety, the operations of which would bene-
fit mankind to an extent altogether unexampled, the
first inquiry which will naturally suggest itself is:
What are the difficulties, if any, in the way of
its establishment ? What the peculiarities in human
nature itself, in human institutions, or even in the
habits or customs of society, that would appear to
>t;md in the way of the immediate establishment of
a banking system, promising to yield us such ines-
timable al vantages?
To which questions I reply, that there is little or
nothing new in the propositions I have made ; seeing
that everything I <lesire to establish is already in
operation throughout this kingdom, and that to a
great extent. The chief peculiarity, in short, con-
nected with the system of exchange I have laid be-
fore you, being given in the two words Monetnr>i
Organization.
The plan of the proposed standard banks involves,
it may be said, a most extensive system of credit.
It does so ; but being in truth a system, and not a
mere chaos of credit, like that which at present ob-
tains. my plan comprehends not one-hundreth part
of the amount of risk inseparable from the credit
be able most effectually to refute my arguments ! Win then the
money, Gentle Economist, not for the filthy lucre's sake, of course,
but merely to exhibit thy superior style of argumentation ; and as to
the hundred guineas, why, give them whtn thou hatt von them to
thy printer's devil !
See also Lecture VI., pages 193 and following, where the said sub-
ject of A Bank without a Capital is discussed at considerable length.
R
258 LECTURES ON THE
system of the present day, whilst the advantages it
would confer upon society would be incalculably
greater.
Bankers, as well as merchants, manufacturers, and
others doing business by wholesale, trust now whom-
soever they please ; their only guide being the know-
ledge they may be able to acquire of the responsi-
bility of the parties seeking to become their customers
on credit terms. And so lax are the proceedings,
and imperfect the inquiries, in cases innumerable,
that there is hardly a wholesale house of business in
the city of London, or elsewhere, in which the bad
debts are not an annual tax upon the profits to a
pretty large amount.
Now, upon the banking system which I have pro-
posed for your adoption, no loss by bad debt could,
with ordmary precaution, ever be incurred at all.
The standard banker would not be permitted to give
or refuse credit, like the existing banker, upon his
own mere opinion, judgment, or caprice ; but being
guided by fixed and invariable rules, he must give
credit to whomsoever should apply for it, and that to
whatsoever amount might be demanded, provided al-
ways, that the applicants should be able and willing
to comply with the legal exactions of the bank, and
to give the required securities.
The legal terms and conditions, then, of the stan-
dard banker, as applicable to securities, being suffi-
ciently strict, bad debts there could be none none,
that is to say, affecting the standard banks.
And here I may remark, that this part of the
banking system which I have proposed, so very
closely resembles that of the cash credit system of
NATURE AND USB OF MONEY. 25.9
Scotland, that tin- difference between the two plans
may be told in a few words.
The Scottisli banker, then, obtains from a merchant
security, to his own satisfaction say, for instance, to
the \ti-nt of 1000, on which sum the latter is at
liberty to operate to its full amount, five percent, per
a min m interest being charged upon the amount of the
accommodation thus afforded by the bank.
The proposed standard banker also requires secu-
rity but, in his case, the nature of it is fixed by law,
in place of being left to his own discretion say, as
before, to the amount of 1000. But now, the mer-
chant is allowed to draw money from the bank to
the full value of his stock on hand, but no farther,
\\li.it. \cr the amount of security he may have given
to the bank may be. He must, therefore, have a
stock-book which every wholesale dealer has at pre-
sent, who keeps properly his books at all ; and of
the state of his stock-book the standard banker must
at all times be aware ; and here no interest of money
n'/ifitever is chargeable.
And now put the question to any merchant or
manufacturer in the kingdom, whether, giving suffi-
cient security to the banker in both cases, he would
prefer
To be able to draw money at pleasure from his
banker, paying, as he does now, intei-est at the rate of
five per cent, per annum, for the advances made to
linn ' or
To be able, at all times, to draw money from his
banker to the full amount of his stock on hand, but
no farther, intlnnit paying any interest at all '
I conceive, then, that in niiu tv niiu- cases out of
260 LECTURES ON THE
every hundred, as merely selfish mortals, parties
would very greatly prefer the Standard system to the
Scottish one. But even if this were not so, I can
hardly think so ill of human nature, as not to believe,
that when merchants and manufacturers should see,
that, by conforming to a certain system of banking,
they would themselves become part and parcel of a
Commercial System, the operations of which were
obviously calculated to diffuse the physical means of
enjoyment throughout their country and the world
their hesitation would be very small indeed to allow
their bankers access to an account-book, open at the
present time to the clerks and warehousemen in
nearly every wholesale house of any importance in
the three kingdoms.
Well, then, this is the one arid only new feature
which I propose to introduce into the system of
banking, involving concession in any shape on the
part of the customer of the bank. And what else have
I proposed that is in reality new new, that is to
say, with reference to the existing feelings, customs,
habits, or prejudices of society 1
Why, absolutely nothing ! my second and only
remaining condition being, that a minimum, rate of
images shall be payable in all the standard works.
Now, this minimum rate of wages, as I fully ex-
plained in a former lecture, signifies merely a start-
ing-point in the race of competition, affecting the in-
terest of no persons, those only excepted who, before
the standard banks should be established, were either
debtors or creditors ; and consequently, with refer-
ence to whose position, its amount, as has been
shown, must be determined ; that is to say, with
AND USB OF MONKV.
reference, in an special manner, to the existence of
tin- national debt, feu-duties, and all other money
contracts.
Then, if the amount of this minimum rate of wages
be onccju.tf/1/ fixed and this is not to be the work
either of the operatives or of their masters, but of the
rnment it-elf who is to complain ?
Men, for example, in cases innumerable, receive
as a part of their remuneration for labour or
service performed, board and lodging ; but in addi-
tion to these, they receive also wages. Of the former
they ;/?//.< it is clear, have a #/////<///////, whilst the
amount of the latter is altogether matter of contract
between themselves and their employers.
In the case of the proposed standard manufac-
tories, in like manner, ever}- man who should enter
tin- door of one of them in the capacity of an \
tive H'oiilil /i are at once, as his legal right, so nun-It
money per week for a certain number of hours u'<>rl\
But in the great majority of cases, this sum would
be a smaller one than that which he would consent
to receive in full payment for his labour. The actual
amount of his wages, therefore, would be determined.
M at present, by mutual contract between himself
and his employer.
Then, if it should be contended that the value of
the standard money would be depreciated in conse-
quence of the exorbitant demands for high >
\vliirli \\uuld be made by the workmen, over and
above the minimum rate, to which every man would
be I'V law entitled, I reply
That the whole experience of human life has
incontestable proved the ability of masters to contend
262 LECTURES ON THE
successfully against the exorbitant demands of their
workmen. The motive for keeping down the wages
of the workmen as nearly as possible to the minimum
rate would be of the strongest possible kind. No
combination would exist in any shape. The masters,
in every description of trade, would have to compete
with each other, as at present. No master, therefore,
would be inclined to give hie/her wages than he could
help, because, should he consent to do so, his compe-
titors would be sure to undersell him in the standard
market, and thus they would either do more business
than himself, or possibly prevent him from doing any
business at all.
On the other hand, again, for the operatives in any
trade to strike for higher wages as they frequently
do now, would be a self-evident futility ; for give
them higher wages, and other classes of workmen
would require the same rate of advance. Others and
others still would make the like demand, and then
where are they, and what have they gained \ Why,
they are just exactly where they were, and they have
gained nothing. In short, I challenge the most rigid
investigation into the principle I have laid down with
respect to a well-considered minimum rate of wages,
by means of which provision the value of the pound
standard may be fixed with mathematical precision
and accuracy ; and I am confident, even to certainty,
that the principle will prove to be invulnerable.
It would be an easy matter to go over the various
propositions that I have laid before you, and to anti-
cipate and reply to such objections as may be most
likely to occur to your minds. It would be an use-
less labour, however, to do so. For, in the first place,
i:r. AM) USB OP MONEY. 26:)
in in- tenths of all the objections themselves would
bo frivolous, and attributable solely to a too hasty
\i' \\ of th.> subject under discussion; whilst it is
also evident that no person can ever be expectc-1 to
state any objection to his own plans which he is not
fully prepared to refute.
To form a deliberate opinion, indeed, upon a sub-
ject involving such enormous interests as the mo-
netary system of society, without devoting much
au< iitimi thereto, is clearly impossible; and there-
fore, witli the view of promoting this deliberate in-
quiry, I have resorted to the plan of proposing a prize
argument concerning it. And were it my object
merely to promulgate some pet theory of my own upon
i lit- subject of money, it is plain that I should never
have dreamed of offering a premium to whomsoever
should be able to refute my arguments. On the con-
trary, my offer, if any at all, would assuredly have
i for the best argument that should be forthcom-
ing in favour of my principle. In which case I should
have constituted myself the sole judge of the respec-
t i\ < mi -i-its of the essays that might be written. But,
in place of entertaining any such desire, I have one
object in view, and but one object, which is to arrive
at truth. And the cause of truth, as it appears to
me, may more probably be advanced, in this case as
in ethers, by securing the talent of opposing counsel,
rather than by feeing counsel to defend any particnKir
cause, whatever the merits or demerits of that cause
ma v eventually prove to be.
A slight difficulty connected with this matter has,
in< I* '!. to be overcome. I have publicly offered the
sum of oiH- hundred guineas to whomsoever shall be
264 LECTUKES ON THE
able to produce the best Reply to, and before a com-
petent and impartial tribunal to Refute, the theory
contended for in the course of these lectures. And
there will be no difficulty in finding a " Competent
and Impartial tribunal." Arbiters mutually chosen,
and an Umpire chosen by the arbiters, in case of any
difference of opinion between themselves, will secure
the proposed tribunal, provided always that the status
of the judges shall be such as to ensure their com-
petency, for which it will be an easy matter to
provide.
But, as already observed, a slight difficulty cer-
tainly exists as to the mode of selecting the best essay
in refutation or attempted refutation of the theory
which I have advanced. An out and out defen-
der of our existing monetary system the party select-
ing should be ; and he should also be of sufficient
status and public repute to give weight to his opinion
to satisfy the competitors, in short, that they shall
not only have been fairly dealt with, but that the
requisite ability, as well as inclination, shall have been
exerted in the business of selection.
Xow, the Editor of the Times being an out and
out supporter of the present monetary system, I
at once offered, either to consign the task of select-
ing the best essay to whomsoever he might be pleased
to appoint, or else to fight the battle of words with
himself, for the sum of five hundred guineas two
hundred and fifty guineas a-side : but he answered
not the call.
Then, in Mr. Cobden again, we have another able
supporter (so says the Times) of the golden mone-
tary system, and, therefore, to him I next tendered
NATURB AND D8E OP MOM V
the office of Selector of the best essay in reply to my
arguments. Hut Mr. Cohdrn al-> has declined to
undertake the task, on the ground of his time being
already fully occupied.
A first-class advocate of the present monetary
in, therefore, who may be willing to undei take
the aforesaid task of selection, has still to be disco-
l. To obtain one, however, will not, I trust,
!>< impossible ; for surely, when the bullionists find
themselves thus publicly challenged, they will not '///
follow the example of their champion Times, who,
after bullvin<r and satirizing the advocates of paper
money for several months in succession, has only been
able to meet a public clmlh-mie, inserted in upwards of
a Imndred newspapers, to discuss the subject fairly, by
what he may perhaps consider to be the very dignified,
but what others will probably be inclined to denomi-
nate, the very cowardly reply of no reply at all.
I have already observed this evening, that no man
ran be expected to start any objection to a theory of
his own, which he is not fully prepared to answer ;
as a question has, however, been twice put to me,
since these lectures were commenced, and in one of
the instances by a banker, I shall here briefly men-
tion, and reply to it :
I low, it has been demanded, do I propose to get
over this difficulty ? A standard manufacturer or
merchant, it has been said, is to be allowed to />?/////>
nu-n mini' on his goods, and to draw money from the
standard bank to the full amount of such value as
estimated l.y himself. By what means, then, are we
to provide against tin- evil of a fraudulent over-esti-
mate of tin said value, or even against that of unin-
266 LECTURES ON THE
tentional miscalculation as to the reality of the value
itself, arising from depreciation in the value of the
goods, or from any other cause 1 Suppose, for ex-
ample, says the querist, that I enter in my stock-
book goods received into my own premises of the
declared value of a thousand pounds, and that I re-
ceive a thousand pounds from the standard bank in
consequence of such entry. Suppose, farther, this
estimate to be altogether fraudulent that the goods,
in fact, are worth but five hundred pounds, or, in
other words, that five hundred pounds is all the
money they would sell for. How, in such a case as
this, is the standard bank to be secured from pecu-
niary loss ?
Now, in answer to the writer of this question,
which I have put into very nearly his own words,
and in answer to every candid inquirer into this im-
portant subject, I would say Learn, in the first
place, to separate entirely the two distinct proposi-
tions I have laid before you, consisting respectively
of a principle and of a plan.
With respect to the principle of exchange for
which I contend / affirm it, then, to be the fact
firstly, that proportionate production is the natural
cause of equivalent demand ; secondly, that, by the
establishment of a monetary system, altogether false
in principle and destructive in practice, we have sus-
pended the operation of this natural consequence, and
thereby entailed upon society an evil, the extent of
which it is all but impossible to estimate ; and,
thirdly, that the great problem now before the com-
mercial world is, In what manner can we most ea*//i>.
conveniently, effectually, and justly restore the natural
> USB OF MONEY. 267
<>j ' KUfiphi and demand, which, in the meantime,
we haw so i. dMngiwi/
Tims, I hol< I tlu- nri>/in(U principle itself produc-
tion the cause of drm:ind the loss or rejection of this
/n-inri/i/n by society, and the absolute necessity for its
uitioii an' I restoration before this country can
prosper to be not merely facts, but the particular
facts, on which all our arguments for the establish-
ment of a new monetary system should be founded,
and on which also our improved monetary system
itself must rest.
But this is all that I insist upon. I do not insist
upon the adoption of any particular plans of my own.
I told you indeed in a former lecture, that I had no
plnn to which I was predetermined to give the pre-
ference over all others ; but that, so far from this, I
solicited especially the attention of other persons to
the subject, that we might thus be enabled to see the
true principle of exchange worked out in as great a
variety of ways as possible.
To apply these observations, then, my earnest ad-
vice to every impartial inquirer after monetary truth
is Look first to the principle that I have laid before
you. Examine, study, and criticise it in every pos-
sible way. The question is altogether one of figures,
and therefore capable either of demonstration or of
refutation ; but again I say endeavour, in the first
place, to confine yourself entirely to this investigation.
And tliis examination being ended, if you should
come to the conclusion that the principle for whirh
I contend is false ; that is to say, no principle at all,
why then there is an end at once to the inquiry ;
you will forthwith dismiss the subject from your
268 LECTURES ON THE
mind, and pay no more attention to the plan of
exchange, to which I have also endeavoured to call
jour attention, than you would to the solicitation of
a man, who should earnestly advise you and your
family to emigrate, for example, to some fine count ry,
rich in all the means of physical enjoyment ; the
soil, climate, productions, and everything, in short,
being in representation of the most desirable kind,
but having, unhappily the said country existence
only in the imaginative brain of your adviser.
Now, such is or is not precisely the nature of the
case which I have endeavoured to lay before you.
I have described to you a land flowing with milk and
honey. I have told you that it is full of corn and
wine ; that it abounds with the finest fruits of the
earth ; that its houses are well built, ventilated, and
comfortable ; that its furniture is abundant ; and that
all, without a single exception, of its children are
respectably educated, (that they can read, write, and
cipher, know their language well, and can write it
tolerably,) that the laws of this country are just, its
national debt nothing, and the labours of its govern-
ment almost a sinecure ; that, in a word, its people
are prosperous, contented, and happy whilst in ex-
tent it is precisely equal to the entire surface of the
globe which we inhabit. And I have told you, farther,
that the name of this great and happy country is
PRODUCTION THE CAUSE OF DEMAND.
Learn, then, in the first place, whether this land, of
which I speak, be a fable or a fact whether it be,
or rather may become, a reality attainable by the
entire race of man, or the mere creation of an ex-
cited mind. Answer this question first, and if you
NATI i:r. AND i'sE OF MOM.Y. 269
should ascertain my assertion of this country's pro-
sptrthri existence to be correct, and will yourself do
a/1 iiou can to make known th<it exigence to others,
depend on it you will very soon find a hundred diffe-
rent mariners c<.iiijiotin<r with each other for the
honour of being the first to realize its shores.
Subject, then, I pray you, the j>rinriji//> announced
f"i your examination to the severest test. Prove it,
in short, to be either true or false ; and, if you should
find it to be true, be not foolishly discouraged by the
appearance of a few difficulties, real or imaginary, in
the mere plan which I have laid before you, with re-
ference to the practical application of this great prin-
ciple to society. If my plan be not altogether to your
mind, why then set eaeli of yourselves to work either
ti> iiuMid it, or to construct a new one altogether ; and
we shall then be enabled to see which of the many
that may come forth may promise to be the best. But
whilst it would clearly be a mere waste of time to
trouble yourselves about any plan of exchange at all,
if the principle upon which it is proposed to found it
be a delusion, commit not the palpable error of reject-
ing a sound principle, merely because you may not
chance to agree with the promulgator thereof upon
a few mere matters of detail, of no real importance
whatsoever.
I have not, however, thus diverged into the gene-
ral question of principle, for the mere purpose of
evading the particular question with which we start-
ed, having reference to a part of the plan of exchange
which I have also submitted to you.
So far, indeed, from desiring to blink any such
question, I have great confidence in the efficiency of
270 LECTURES ON THE
the plans I have promulgated, as well as in their
principle. They are the result of many years' con-
sideration and study : and of this, at least, I am
quite sure, that if any valid argument can be opposed
to them by any party, I have yet to hear it for the
first time.
The specific answer, then, to the inquiry about
the security of the standard-banker against the sort
of imposition to which I referred some minutes since,
was given explicitly in my Fourth Lecture, in which
I stated that " England, Scotland, and Ireland, ac-
commodated with the banking system for the esta-
blishment of which I contend, would be just three
market-places containing every description of herit-
able and moveable property for sale upon this prin-
ciple :
" The master of the market-place, that is to say,
the standard-banker, says to the public, ' Bring
here into my market-place whatsoever you may have
to sell, and I will pay you down the money-value of all
your property, heritable and moveable, at your own
price ; my only conditions being, that whenever the'
said property may be taken out of my jurisdiction,
the full amount of my advances upon it must be re-
paid, for which I require you to give me security be-
fore the said property can be admitted, as also that
eventually it shall, on these terms, be removed. But
the onus of selling, that is to say, of exchanging your
respective products and property, must rest entirely
with yourselves' '''
What conceivable motive, then, could a man,
in these circumstances, have for putting a double
price upon his goods, seeing, that to do so would
XATTUE AND USE OP MOXKV. 271
liave the effect of terminating the existence
of his u\vii business, \vitlmut atVccting the standard-
bank at all I If the prirr of his goods, hats, for ex-
ainplr, In- t\\vntv shillings each, whilst the equally
good hats of other dealers be offered for ten shillings,
how is he to sell them ? or what motive could he
have, in short, for putting one fraction of higher
value on his goods, in his transactions with the stan-
danl-bnnk, than in his transactions with his own cus-
tomers ? It is quite clear that he could have none
whatever. The bank held, from the very outset, se-
rurity for the safety of all its transactions with him
to a certain maximum amount mutually agreed on,
which security he was obliged to give previously to
the admission of his name into the bank books. Sup-
posing, therefore, this maximum to be 1000, and
that he should think proper to value one solitary hat
at the sum of 1000, this act of folly would not in-
dict any injury on the bank. As, however, in this
case the hat-maker would certainly not be able to sell
his hat, the bank would at once discover that he was
doing no business, and consequently, his motive for
opening a cash account being obviously a fictitious
one, the said account would be forthwith terminated,
by the hat-maker, or his securities, being instantly
called upon to refund the bank advances to the last
farthing.
In the case of heritable property, indeed, it would
be necessary so to frame the bye-laws of the bank, as
to prevent the practice of an evasion, namely, that
of borrowing money from the standard-bank upon
the pretence of desiring to sell property ; too high a
1'iii-e being in thi> case intentionally put upon the
"27- LECTURES ON THE
property, for the very purpose of preventing the sale of
it at all. But to guard against evasions of this kind
would not be difficult, anticipated as they would be
before the law relating to the standard-banks should
be framed at all. And, if it be merely reiterated
that, put this law into whatsoever shape you will,
some persons will yet try to evade it, I reply, that
if this objection were good for anything, it would
be valid against a third or fourth part of all the laws
relating to property on the existing statute-book : in
which case, we must just come to the conclusion,
that mankind are such an inveterate set of rogues,
that it is utterly impossible to make laws by which
to bind them. So far as society in general is con-
cerned, this, however, is not the fact.
Having disposed, then, of the only two marked
peculiarities in the monetary system I have endea-
voured to explain to you, there seems to be little or
nothing on which at present to offer any farther
comment.
I should be wanting, however, in gratitude, if I
did not embrace this opportunity of thanking you for
the kind and patient attention with which you have
been pleased to favour me, throughout the rather
unusually long series of eight lectures, upon a very
unpopular subject. It was, I know, prognosticated
that these lectures would fail to attract audiences.
The result has been so far otherwise, that the au-
diences have certainly been larger than I either an-
ticipated they would have been, or than I had any
reason to expect ; the more especially when the dis-
advantageous situation in which I found myself was
considered, in consequence of having immediately to
AND USB OP MUN 273
follow in thi> room a lecturer of both European
and Transatlantic celel.rity.*
Hut ///// purpose, at least, has been answered. I
have, in short, through your kindness, been enabled
to continue the performance of a task, which I com-
menced many years ago, and which I shall most
assuredly relinquish only when I may no longer be
able to labour either at this work, or at any other.
These lectures, such as they are, have not yet ful-
filled their destiny : the principle of exchange for the
_nition of which I have contended, is either true
or false, and, as such, depend upon it, I will devise
means which shall ensure one of two consequences :
either that principle shall be refuted, or it shall be
obeyed, and that by the British nation.
In furtherance of which resolve, I purpose, with
as little delay as may be convenient, to print and
publish the statements I have made to you ; to send
a copy of them to a select number of the members of
the Upper House of Parliament, and to every mem-
ber of the House of Commons. I shall send a copy
also to each of, at least, five hundred conductors of
the public press throughout the kingdom. And, by
means of a competition, already explained, I shall
still farther endeavour to compel, as it were, a dis-
cussion of this important subject.
Which he ing done, one of two things will happen,
and that pretty nearly as certainly as that here we
are assembled, and these are
1. Hither, the principle of exchange for which
* Mr. Ralph Waldo Kmcnon.
8
274 LECTURES ON THE
I contend will be shown, by some party or other,
to be a fallacy, in which case I here faithfully
pledge myself to admit as publicly that I have been
in error, as I now assert the reverse ;
II. Or else, the principle of exchange I advocate
will be established in practice ; and that, even
though rejected for a time by the Minister of State,
ever too wise to take a lesson from the humble ;
though rejected for a time by the members of the
Lower House, ever too indifferent to attend to sub-
jects originating out of doors ; and even though re-
tarded by the lethargy, blindness, and indifference
of the public mind itself.
One party, at least, there is, who will not be in-
different to the truths I have laid before you, if
truths they shall prove to be. That party is the
working man : and with that man's present condi-
tion before his eyes, throughout the whole of Europe,
let the Minister of State himself think twice before
he shall determine to reject a proposition of vast
importance to the interest of every working man in
existence. I, as many, perhaps all of you, here pre-
sent are well aware, have never sought, and am
never likely to seek, ' the bubble reputation/ by
proffering my services to bands of clamorous de-
claimers against our public institutions, whose motto
ever seems to be Whatever is is wrong. But the
importance of the principle of exchange which I have
explained to you, is such as imperatively to demand
the attention of the legislature ; and if legislators
shall continue, as hitherto, obstinately to turn a
NATURE AND USE OF MONKV.
deaf ear to all remonstrances upon the subject of
monetary reform, why thru l<-t them forthwith as-
sume thrir proprr place in the ranks, along with the
Chartists of England, and the Revolutionists of Ire-
land, between whose conduct and their own the fu-
ture historian will relate, and truly, there existed no
practical difference. If Mitchell, the transported,
was a revolutionist, so is Sir Robert Peel ; if Ernest
Jones is a revolutionist, so is Mr. Jones Lloyd ; if the
Editor of the 7mA Felon is a revolutionist, so also is
the Editor of the London Times. Alike are all these
gentlemen as peas in a pod, and between them there
is not a pin to choose. The tendency of their con-
duct is the same in every instance that tendency
being to goad on the working classes to the commis-
sion of acts of desperation and violence : the only
difference between the two parties being, that the
one add guilt n intention to their other sins, whilst
the other, harmless in thought as doves, perform their
part with the eyes of their understanding hermetically
sealed. The one party, in short, are wide awake,
the other fast asleep and dreaming.
There is no intermediate view of this subject.
Production is or is not the natural Cause of De-
mand. Production is or is not now the Cause of
Demand. Production, if naturally the Cause of De-
mand, but not so at the present time, may or may not
be so rendered henceforth and for ever.
And these questions, in the answers to which the
comfort and happiness of the entire human race are
involved, seem never for one moment to occupy the
thoughts either of our legislators, of our public press,
or even of any considerable portion of the mercantile
276 LECTURES ON THE
community itself. It is not, however, the less true,
that herein is involved also the answer to the ques-
tion whether or not we really possess the ability to
carry into effect the many other desirable objects so
strenuously contended for by the various sections of
the political society ; such as the advancement of
education, promotion of the public health, of im-
proved lodgings for the poor, restricted hours of toil,
and many others.
Look to it, then, and that quickly ! See whether
I be right or wrong in the assertions I have made ;
and if I be right, Is it not the fact that ninety-nine
hundredths of our legislators and public men of all
denominations stand at this moment convicted of the
most deplorable ignorance of one of the first prin-
ciples of human society ? of the principle, in short, on
which, and on which alone, the permanent prosperity
of nations can, by any possibility, be founded \
I say they do stand thus convicted, and that from
the Prime Minister of these realms, who fritters
away his time and energies in scraping together, by
all sorts of frivolous shifts and contrivances, fifty
millions or so per annum for the service of the State,
whilst he very coolly allows the country to be taxed,
to the amount of one hundred millions a-year more,
for the service of nobody down to the raving radical
who, by destroying individual property, would sap the
foundation of every thing in this world worthy of
the name respectable, or deserving of the attainment
of rational men.
Examine then, I pray you, this great subject : the
task of doing so will prove to be a far less difficult
one than you imagine. Read, with the care and at-
NATURE AND USE OP MONEY. 277
tention it deserves, the little work entitled " Mill's
Klrments of Political Economy." and, after it, every
Miv tint Mr. M'Culloch has also written upon
the sulijirt of Supply and Demand. Then go care-
fully over the Wealth of Nations, or even over the
lii M volume of it only : and if you will but study
works as they deserve to be studied, with re-
ference to the subject of these lectures, you will not
find it the easiest task in the world to reject the
particular doctrine, for the establishment of which,
in the public mind, I will never cease to labour,
until I shall either have enforced its reception, proved
it to be a fallacy, or taken leave at once of the sub-
ject and of my earthly existence.
END OF THE LECTURES.
APPENDIX.
APPENDIX.
The Social System Early offer of a Copy of these Lectures to the
IV- 'visional Government of France Unaccepted Challenge to the
Times to discuss the Monetary Question for the sum of Five
Hundred Guineas Terms and Conditions of a Prize Argument
on the subject of Money, for the sum of One Hundred Guineas
A List of the Parties to each of whom a Copy of this Work will
be Presented by the Author, immediately on its publication.
" THE SOCIAL SYSTEM."
THE reader musingly " ' Lectures on the Nature and
Use of Money, by John Gray, Author of the Social Sys-
tem ; a Treatise on the Principle of Exchange ! ' Why,
what does this language mean ? There is nothing here
about the Social System Socialism, or any thing of the
kind ! The book seems, in short, from the beginning to
tin- ml, to be pretty closely confined to an attack upon
the monetary system of society, and to an exposition of
another monetary system, for the establishment of which,
th- Author very earnestly contends? But what then
in. ;m> this, ' Author of the Social System ?' "
Qentle reader, I will tell you : Inundated as was this
n.untry many years ago with projects for the establish-
ment of co-operative communities, hives for wingless bees,
and the like, 1 #ivo IIl . v very earnest attention to the
282 APPENDIX.
consideration of these projects, and that for a consider-
able time ; the result being to perfectly satisfy myself of
the injustice, impracticability, and, in a word, futility, of
all such, combinations. But being in the possession of an
advantage, not altogether common to theorists in general
I mean that of a thorough knowledge of the practical
business of human life I had little difficulty either in
pursuing my inquiries into the causes of commercial dis-
tress, or in tracing the troubled stream of commercial diffi-
culty to its original source, which is, The dependence of
Production on Demand. And hence it became at. once
obvious to my mind, that the great monetary error of so-
ciety consisted not so much in this or that defective form of
mere banking, but in the very principle of exchange itself ;
pervading which there is an error of the most fatal char-
acter. I saw, indeed, twenty years ago, as clearly as I
see now, that whilst production ever should have been the
cause of demand, it is the effect of it.
The strength of this conviction in my own mind so far
back as the year 1831, will be sufficiently exemplified by
the following quotation from the sixteenth page of my
Social System :
" The specific object of this work is, to state, to prove,
to exemplify, and to endeavour to call the attention of
the public to the important fact, that it would be by no
means difficult to place the commercial affairs of society
upon such a footing, that production would become the
uniform and never-failing cause of demand : or, in other
words, that to sett goods for money, without any limit or
restriction as respects quantity or value, but not without
regulation as to kind, may be rendered, at all times, pre-
cisely as easy as it now is to buy them with money."
In addition to which, the reader is requested, before he
AIM'KNIUX. 283
goes any farther. t< n peruse another quotation from the
work, \\hirh he will tiiul in the tenth and eleventh
pages of the present volume.
Presuming which pages to have been looked over, the
reader will he quite prepared to admit, that a mind not
naturally indolent, impressed with convictions such aa
these, could hardly fail to endeavour to follow them out ;
:ind hence the origin of my Social System a work which,
I venture to foretell, will be referred to by writers on
Political Economy yet unborn, as one of the earliest in
which the true principle of exchange was clearly and dis-
tinctly defined.
" But why," reiterates the reader, " did you call your
book the Social System ?" To which I answer, Why not ?
A more appropriate name for such a book it would not
have been easy to find, seeing that it treated of a com-
mercial system for society, founded upon the basis of a
national capital. But what followed ? Why, not pre-
viously, but a few years subsequently to the publication
of my Social System, the words, " Social, Socialist, and
Socialism," found their way into the stock-terms of every
Journalist and Periodical writer in the English language,
along with very pretty meanings attached to them, such
as, " Advocate for a community of things in general, and
of wives and children in particular," together with "Equal
distribution to the lazy and the laborious ;" whilst the
public duty of private accumulation was " Henceforth to
be esteemed a sin against society!"
No such meanings as these, however, so far as I am aware,
or ever heard of, were attached to the word " Social," pre-
viously to the date of my first work above mentioned,
which was published by Longman & Co., London, and
William Tait, Edinburgh, in 1831.
284 APPENDIX.
In farther proof of which, it may here be stated, that
in the year 1844, a book was published by Longmans, en-
titled, " An outline of the various Social Systems and
Communities which have been founded on the principle of
Co-operation ; with an Introductory Essay, by the Author
of the Philosophy of Necessity." Now, in this work, my
Social System certainly has the questionable honour of
being named, but that is all ; criticism on it there is
none whatever. And very properly was it thus passed
over, because although bearing this now objectionable
name, the work was, in fact, " A Treatise on the Principle
of Exchange," which sub-title it bore upon its title-page.
I submit, however, that, divested of the new meaning
which was given to it subsequently to the period I
have mentioned, the word Social * is perhaps one of the
best words that could be selected, as the adjective title of
a work upon the Causes of and Remedies for the evils of
society ; and that, divested also of the absurdities which
are now connected with the word social, there could hardly
be a more appropriate title for a work upon society than
" The Social System."
Since the period, however, to which I refer, my leisure
hours have been much occupied in the endeavour to ascer-
tain by what less intricate process than that which I first
pointed out, the great principle of Production the Cause
of Demand might be brought into practical existence, in-
stead of remaining a dead letter and a fallacy in the books
of the Political Economists. Hence the publication of my
"Efficient Remedy for the Distress of Nations" in 1842,
in which the true principle of exchange was again demon-
* Mr. Robert Owen's favourite terms, it will be well remembered, were
not Sociitl or Socialist, but " Ctt-ujn-rntirr, Cv-ujmnitiun, fttfflMMWAtty," & c -
APPENDIX. 285
1 , lair still rwards saw, in a far too com*
plicated form : hence therefore my continued study of the
.sul>je,-t, resulting in this present work, in which I have en-
deavoured to place the entire monetary system of society
in a totally different, and I trust much clearer point of
\ie\v than any other in which tin- public have ever been
previously requested to examine it
This work, which I have no more doubt than I have of
my own existence, is destined very considerably to aid
in revolutionizing the monetary systems of Europe, I shall
at once place in the hands of the public, by the gratuitous
distribution of about twelve hundred copies; the entire
edition printed consisting of two thousand copies; risking
also, in addition to the cost thereof, a farther sum of a
hundred guineas, by the plan which I have adopted to
enforce, if possible, a public discussion of the subject :
and those things I do perhaps at a cost which my own
pecuniary means will scarcely justify.
But what have -we to do with considerations of cost in
a case like this ? What is human wealth ? Weigh it, ye
who value it the most, in the decline of life, in the hour
of sickness, or on the couch of death, in the opposite scale
with the reflection that Whilst health, and strength,
and mental vigour were mine own, I strove to perform my
duty to the society in which I lived.
OFFER OF THESE LECTURES
To THB PROVISIONAL GOVERNMENT OF FRANCE.
(Referred to on page 247.)
I? there existed not the most indubitable evidence that
nearly all these Lectures were written previously to the
commencement of the French Revolution of February,
286 APPENDIX.
and that the first of them was actually delivered before
a pretty numerous audience in the Queen-Street Hall,
Edinburgh, on the momentous twenty-second of that
month, I might be very fairly suspected of having pre-
pared them on speculation for the French market. As
the infallible Times, however, saw not the slightest pros-
pect of any serious outbreak in France, in that eventful
month until after it took place, and not being myself in
possession of the faculty of clairvoyance, I must neces-
sarily stand acquitted of any such design upon the French
purse.
Subsequently, however, when the Provisional Govern-
ment might have been fairly supposed to be open to the
favourable reception of such a communication, I addressed
a letter in the following terms to Monsieur Arinand Mar-
rast, but to which communication I received not any
reply. And although I subsequently received from more
than one party an offer of introduction to Mons. Marrast,
as also to some other Members of the Provisional Govern-
ment, I declined to accept them, and indeed returned
one letter of introduction which was sent me by a well-
known author and medical gentleman, long resident in
Belfast. I considered, in short, the letter which follows,
to Mons. Marrast, to be a sufficient overture on my part,
and I had no notion of pressing on him my services to
the point of intrusion :
" Monsieur ARMAND MARRAST, Member of the Provi-
sional Government of France. EDINBURGH, MARCH 6,
1848. SIR, When motives are pretty nearly balanced,
the merest trifles are apt to determine our conduct : to
apply the observation :
" For several days past / had half-determined to address
the Provisional Government of France upon a subject of
APPENDIX. 287
vital inijmrtaiH'p t<> tin- intm-M nf tin- n-wly formed, or
rat her funning Government. when tlio post brought me
th enclosed lrtt -r f\m an English engineer, now resident
in Ireland, l)Ut who for many years resided in Birming-
ham ; and, whilst tln-ro, was in frequent communication
with tin- advocates of Monetary Reform so numerous and
influential in that large manufacturing town and district.
" Before proceeding, then, to read this letter farther, do
me the favour here to read Mr. Fare's letter, already men-
tioned.*
" Now, overwhelmed as you will doubtless be at this time
with projects and proposals from parties innumerable,
both French and foreign, it is not improbable that you
* " SEVILLK WORKS, DUBLIN. MARCH 2, 1848. Mr DEAR SIR, I am
strongly impressed with the idea that the events of the past week have
created an opportunity for you to be of immense service to France, and
through her to the entire world.
If one fact is more evident than another, it is that there is an universal
expectation apparent alike to the minds of the people, the journalists, both
French and English, and the new Government, that there must be an
entire reorganization of industry. The Government has already decreed
that there shall be national workshops, and that all the work-people shall
be fully employed at adequate remuneration. Now, if they are to succeed
in this they must have an entire remodelling of the Commercial and Monetary
systems. Well, then, my dear Sir, do you believe that it is ever likely in
our lifetime that such a splendid opportunity will present itself for set-
ting in motion A ltntlnnl Syttem nf Monty 1 It you think so let me im-
plore you to seize it without a moment's delay. At any rate, instantly
place yourself in communication with the Provisional Government, person-
ally, if possible, for my belief is, that if you can once secure their confidence
aii'l their ear, you will be enabled to chalk out a plan which may be imme-
diately adopted in practice, and which would relieve them of three-fourths
of all their difficulties.
" I have thought over this matter for the last forty-eight hours, and can-
not dismiss from my mind its great importance. Had I studied and mas-
tered the subject as you have done, no earthly consideration should prevent
me at once answering, what would appear to me, to be an imperative and
tern call of doty. If possible oblige me with a line to appease my anxiety
on this subject, and believe me, my dear Sir yours most truly-
John Gray, Esq. Edinburgh. WILLIAM PA**."
288 APPENDIX.
cannot either personally, or by means of the assistance of
any competent substitute, give attention to the proposal
I have to make to you ; and if so, oblige me by say-
ing so. But if, on the contrary, you can place this com-
munication in the hands of any party able and inclined to
give attention to it, you have only to instruct me to that
effect, to command any little service which it may be
within my power to render you.
" The Provisional Government, then, has " engaged to
find employment for the working classes." But how will
you effect this great object ? Are your plans already fixed
upon, or are you open to receive advice upon the subject ?
If the former be the case, put this letter upon the fire-
back ; but if the latter, let me crave your attention for a
few minutes to what I have now to say :
" The London Times, affirms that you cannot find em-
ployment for the working classes ; that employment de-
pends upon the operation of laws over which you have no
control, and so on : in which opinion the Editor is joined
by large numbers of the public Press.
" Falsely, however, do they make this assertion. You
can devise means to furnish employment for every man in
France, and that profitable employment too, if you only
know how to set about the performance of the task.
" With this rather tedious preface, then, I beg to intro-
duce the immediate object of this communication, which
is to state :
" I. That I am at present engaged in delivering a series
of Lectures in this city, ' On the Nature, Use, and Proper
Qualities of Money,' the last of which is to be given on
the 1 6th instant. See copy of the syllabus inclosed.
" II. That within about three months after these Lec-
tures shall have been concluded, I purpose to publish
APPENDIX. 289
tin-in, and to send a copy thereof to every Member of
our House of Commons, aa also to the Editors of at least
five hundred of the principal Newspapers and Reviews in
tlu- United Kingdom.
111. Hut, if from a perusal of the enclosed syllabus,
you should deem an immediate copy of the Lectures to be
of any probable use to the Provisional Government of
France, I shall have much pleasure in preparing one for
the purpose, with the least possible delay, say within
tli ice weeks at the most, after the receipt of your reply.
" Then, in the event of this offer being accepted by
you, I stipulate:
" I. That the copy of Lectures to be immediately pre-
pared for you, shall be considered so far private, that you
will not allow any copy thereof to be taken or published
in France without my consent. / wish, in fact, carefully
to revise the whole before publishing them at all, either in
England or in France.
" And, II. The remuneration I ask of you is To be-
lieve me when I state, that so far from the hostile feeling,
which is too frequently exhibited in France against this
country, being at all reciprocated by us, there are, I am
persuaded, no persons in this country, or next to none,
who would not in the like circumstances in which I am
at present placed, freely tender, as I do now, the offer
of their services to you without the most remote inten-
tion or desire to profit by them individually to the amount
of a farthing.
" Should you then deem my proposition worthy of your
attention, please to let me hear from you without delay.
I will then use my utmost diligence in preparing and for-
warding a copy of my Lectures ; and a sufficient time having
been allowed to elapse, for their careful examination by
T
290 APPENDIX.
such person or persons as you may appoint to examine
them, I shall then, if you should think it worth while,
have much pleasure in waiting on you personally, for
the purpose of answering any inquiry, or of giving any
farther explanation of the subject which may seem to be
required. I have the honour to be, Sir, your most obe-
dient humble servant. JOHN GRAY, Managing Partner of
the firm of J. & J. GRAY, Proprietors of the North British
Advertiser."
As already mentioned, to this communication no answer
was ever received. It would be childish, however, to sup-
pose that the acceptance of my plans, added to their
promised adoption, would have had the effect of prevent-
ing the storm of June. Instant provision for the hungry
mouths of a hundred thousand people, and these for the
most part of violent and desperate character, could alone
have prevented the fearful transactions of that dreadful
month. But perfectly certain I am, that if the present
government of France shall not avail themselves of the
opportunity now so entirely their own, for the speedy
introduction of a thoroughly reformed banking system,
having for its basis Production the cause of Demand,
they may do whatever else they please, but evil will still
come of it.
It is utterly impossible for me to offer my personal
services to France in this matter, without a total sacrifice
of other duties, obligations, and engagements, which I
would not on any terms be inclined to make ; but I trust
that there are plenty of mercantile men in Paris, who
will at once both see and appreciate the soundness of
my views, and be able also to put them into work-
ing form. Let them, however, beware of attempting to
set on foot any such Banking system as is here con-
APPENDIX. 291
template*!, until they shall have most thoroughly arranged
their plan and details the slightest defect in which, like
one false wheel in a piece of machinery, would be liable
to derange the whole work.
CHALLENGE TO " THE TIMEd"
(Referred to in page 64.)
During the year 1847 there was a great deal of discus-
sion in the newspapers on the subject of the Currency,
The Times, of course, taking, in its own estimation, ' the
lead' in the affray. I am not in the habit either of writ-
ing for or in any newspaper, excepting occasionally in
connexion with my own business, but in consequence of
the many absurd as well as ungenerous comments which
I noticed in The Times, on the proceedings of the Anti-
gold law league in London, I addressed the Editor on
the subject on the 5th October 1847, in the terms which
follow :
" THE CURRENCY QUESTION. Prize Argument for one
hundred guineas and more. To the Editor of The Times.
SIR, So many and various are the forms in which your
numerous correspondents are accustomed to acknowledge
the brilliancy of your talents, the straightforward honesty
of your motives, and the uncompromising fearlessness of
your writings upon whatsoever subject may engage your
pen, that it would perhaps be difficult to find a new shape
in which to reiterate the same sentiments. And yet, when
I t-ll you that, although in the course of my ordinary
avocations, I receive at least a score of London and pro-
viin-ial Newspapers a-week, of which number I peruse
with any thing like regularity but one, that one being The
Times, I pay you at least the highest compliment that it
is within my power to offer.
292 APPENDIX.
" It is with some feeling of regret, therefore, that I
observe the sarcastic character of your observations on the
Anti-gold law league party: I refer to your leading article
on the subject in your paper of the first of this month.
" I am not a member of the Anti-gold law league ; but
I entertain certain opinions upon the subject of Money,
with which your article of the first instant is, in some re-
spects, as completely at variance as it is with those against
which it was more especially directed.
" Now, judging from the fairness which you usually ex-
hibit in such matters, if I were to write even a long article
in reply to such of your opinions as I think I could refute,
you would probably give it a place in your columns.
And, if so, what then ? Why just this : The Times says
one thing, and some obscure and unheard-of Correspondent
of The Times, who is favoured with space in The Times for
the purpose, says another thing. Would, in this case,
equal strength of argument have equal influence on the
public mind ? Assuredly it would not ! The mere ipse
dixit of a great man although great men are nearly as
often wrong upon certain points as small ones or of a
great authority like that of The Times, has ever been ac-
customed to prove, for a time at least, an over-match for
the most conclusive arguments, and even for demonstration
itself, when merely placed side by side in the columns of
a newspaper. And most especially is this true with re-
ference to such matters as the Currency ; a subject which
nobody seems fully to comprehend, and about which nine-
tenths of the public will freely tell you in so many words,
that they really know little or nothing about it. What,
therefore, would be the use of any No-authority Man
writing in your paper against yourself upon such a sub-
ject as this ?
APPENDIX. 293
" Again, how is it possible for any ono to convey his
opinions, with any considerable degree of fulness or fair-
ness, upon the subject of Currency, within the space of
one, or even two or three, newspaper articles, however
liberally the same might be admitted into your columns ?
It is not possible.
" I decline, therefore, to meet you, even though you
should be inclined to allow me, on this most unequal
ground. But if in this question as in most others I am
well convinced it is it be your real object to arrive at
truth, evi-n though the attainment thereof should oblige
you, in certain particulars, to retract your own opinions,
I shall now endeavour to afford you an opportunity, by
means of which I think it not improbable that we may
be able to arrive at truth ; or, failing that, at least to ob-
tain a little further knowledge of a subject in which, if
we may judge from the recent disquisitions of the public
press, a large proportion of the mercantile classes seems
just now inclined to take an especial interest.
" Thus, then, does a humble, and politically speaking,
wholly unknown individual, venture to throw down the
gauntlet to the Editor of The Times, and through him to
every advocate for a golden standard of value in the th ree
kingdoms.
" It is just sixteen years ago at which time, if I remem-
ber correctly, not Monetary, but Parliamentary Reform,
was to be the great panacea for nearly all the evils that
flesh is heir to when monetary reform was apparently
little thought of, and when the voice of any Anti-gold
law league had as yet been unheard at Anderton's that
I printed and published the following assertion, which
assertion, I still maintain, contains a truth, to the recog-
nitiuu of which mankind in general in this country at
294 APPENDIX.
least are just now beginning to open their eyes for the
first time since England was a nation :
" ' Exchange, therefore, may be denominated the bond
and principle of society ; but it is a matter of legitimate
inquiry, whether the existing plan of exchange be a good
one ; whether it be founded in right principles ; and whether
it be calculated to confer upon us all the benefits which
the present advanced state of human knowledge and
resource entitles us to look for and expect ?
" ' And these questions I answer with an unequivocal
and emphatic No. It is our system of exchange which
forms the hiding-place of that giant of mischief which
bestrides the civilized world, rewarding industry with
starvation, exertion with disappointment, and the best
efforts of our rulers to do good, with perplexity, dismay,
and failure ; and it is our system of exchange which has
produced the worse than Babylonian confusion in the
ideas of men upon the subject of their collective interests.
" ' Give us and we have it now within our grasp
parliamentary reform give us universal suffrage, annual
parliaments, vote by ballot, free trade, an acquittal of the
public debt, freedom from all taxes, a repeal of the
Union, and every other thing upon which the public has
ever yet rested its disappointed hopes and still shall this
demon of commercial error hold our prosperity in his iron
grasp, and smile upon our ignorance and folly, as he shall
see our burdens, as we call them, one by one removed,
whilst we continue to sink deeper and deeper still into
the Slough of Despond, under the invisible but enormous
weight that is oppressing us/
" In 1842 I repeated the same language, and sent a
copy of the work that contained it to upwards of five hun-
dred of the principal reviews, magazines, and newspapers,
APPENDIX. 295
throughout the kingdom, a 6 c fashion, just as I found
their names in a then recently published list of such
works, and without the slightest selection or regard to
tin ir party or politics. But, if I except a few rather re-
markuhh> in>tanrcs t the contrary, this work, as well as
the former on. which it is not the object of this letter
to advertise full amongst the public like lead into the
sea ; and by the publication of the two I had the happi-
ness of losing some .250. Nothing daunted, however,
here I am again, in 1847, singing the same song to the
self-same words, now for the first time admitted into the
columns of [read, refused insertion by] The Times news-
paper ; whilst an ill-trained, uninstructed, and blundering
chorus to the same tune is now faintly but distinctly heard
to resound from one end of the kingdom to the other.
" It may be asked, however, What can I expect to do
now more than I have already done, seeing that my opi-
nions as to the especial cause of commercial misfortune
and general distress and difficulty remain precisely what
they were before ?
" The answer is obvious : The times themselves have
changed the people of to-day are not the people we had
to deal with on this subject sixteen years ago, or even jive
years ago ; and, moreover, I am now prepared to demon-
strate a mode of operation a thousand times less compli-
cated than any which I could see before, in carrying a
Free System of Exchange into operation.
" But, to the end and purpose of this letter, which is
to say, that, having been engaged by the Directors of the
Edinburgh Philosophical Institution to deliver ' Eight
Lectures on the Nature, Use, and Proper Qualities of
Money : what money is, and what it should be : a subject
which necessarily includes a brief review of the General
296 APPENDIX.
Principles of Political Economy, in February and March
next/ I hereby offer the sum of One hundred guineas to
any man who shall be able to produce the best refutation
of and to refute, the main argument which I shall then
and there repeat ; namely, that it is to the Reconstruction
of our Monetary System, and to this only, that we must
look for any great and general improvement in the con-
dition of the productive and mercantile classes of society.
I affirm that our Monetary system is false in principle ;
that it is root and branch a system of error ; that it is
utterly destructive of the interests of society ; and that it
will ever be quite impossible materially to improve our
social condition and prospects generally, until our monetary
system shall be erected upon a foundation totally different
in character from that on which it at present rests.
" The terms and conditions of the competition to be
as follows :"
Here followed the terms and conditions, which were
substantially the same as those which are stated in the
three hundred and second, and following pages hereof; and
then my letter in The Times concluded as follows :
" Thus, upon this plan of competition, the Arbiters
would have but three papers to examine ; whilst in the
case of the Atlas Prize-Essay, on the Causes of, and Re-
medies for, the Distresses of the Country, the Adjudica-
tors had the effusions of no less than one hundred and
fifty-eight competitors to go over.
" And now, Sir, if you have really all the confidence you
profess in your golden standard of value, show it by pub-
lishing this challenge in an early number of your valuable
and on the present subject too influential paper ; as
also by accepting the very small share of trouble which
would devolve upon yourself as banker, pro tempore, for
APPENDIX. 297
the competitors, and nominator of the golden judge of
the argument.
" And in case you have not any competent judge of the
subject at this moment in your mind's eye What think
you of the sapient author of the celebrated ' Fire-light 1
article ' On the Instrument of Exchange,' which appeared
in the first number of the Westminster Review ? unless,
indeed, he should prefer to try his hand at a wee bit refu-
tation himself.
" In conclusion, I have only to add, that as I am an
entire stranger to you, the Bank of Scotland will satisfy
you as to my ability to perform the pecuniary part of the
above engagement. I am, Sir, your constant reader, and
most obedient humble Servant." Signed, &c.
Of this communication the Editor of The Times took not
the smallest notice, for which, no doubt, he had sufficient
reason. But as there was an apparent want of candour in
his satirizing upon every possible occasion the Anti-gold
law league, without allowing the other side of the question
any hearing at all, I subsequently published the foregoing
letter to The Times, together with a few remarks thereon,
in the shape of a small pamphlet, which I sent by post to
every newspaper in the kingdom, and then caused the
insertion of the following advertisement in upwards of a
hundred newspapers :
" THE CURRENCY QUESTION. The confidence of The Times
in its own monetary doctrines exemplified by its refusal
to give publicity to a free offer of the sum of one hundred
guineas to any man who may be able to maintain their
validity before a competent and impartial tribunal. This
day is published by Adam and Charles Black, Edinburgh ;
Longman and Co., London ; and all booksellers ; a Re-
d Letter to the Editor of The Times on the subject
298 APPENDIX.
of the Currency ; to which is added a Challenge to The
Times to discuss the subject for the sum of five hundred
guineas."
This Challenge, addressed to The Times itself, to discuss
the subject of money as distinguished from my offer of
a Premium for the best reply to and refutation of my
own arguments against the existing monetary system
was given in the said pamphlet in these terms :
After alluding to a not very celebrated writer on our
monetary system, who had recently been lucubrating on the
subject in Edinburgh, and of whom I asserted that it would
be but child's play to make mincemeat, I continued :
" No one, however, would say thank you for my pains,
neither would any advantage be gained by the immola-
tion. But bring the proud, haughty, and dictatorial
Times before a tribunal of competent, honourable, and im-
partial men ; obtain a verdict against him, and publish it,
along with every word of the pleadings on both sides of the
question, so that every man may be enabled to judge for
himself of the justice of the decision, and then a battle
worth the fighting will have been fought and won the
instantaneous effect of which would be to concentrate the
intellectual power of England upon the consideration of
The nature, use, and proper qualities of money.
" My offer of a premium to any man who may be able
to refute my arguments against a golden standard of value
may, however, be too liberal. The Times would probably
disdain to allow his name to be mixed up with so unfair,
so unequal a contest.
" If so, put it into another shape. The Editor of The
Times has a hundred-fold my learning, a hundred-times
my talent. I could as readily undertake, with any chance
of success, to compete, in their own department, with a
APPENDIX. 299
Sir Isaac Newton or a Sir Walter Scott, as to edit The
Times newspaper. But, so far as regards the knowledge
of this one subject money, I acknowledge no superior,
either in the establishment of ' The Times' or out of it. I
deny that the Editor of that paper, so far as shown by his
writings, has ever made himself acquainted with ev 
