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another person happens to be indebted to him in an equal amount, and chances to come possessed of his acceptance. The merchant asks for payment of his debt, and the debtor hands over to the merchant his own acceptance. By this means the debt is closed; and according to this doctrine the merchant's acceptance is Currency or Money.

So a banker, say, issues notes, and discounts a merchant's acceptance. When the acceptance falls due, the merchant collects an equal amount of the banker's notes. Each is then equally indebted to the other; and in payment of their reciprocal claims, the merchant hands the notes to the banker, and the banker hands the acceptance to the merchant. By this means the debts are mutually closed, and if the Notes are Currency because they have closed the debt, is it not manifest that the acceptance is equally Currency, because it has performed exactly the same function?

So if two merchants issue their acceptances for the same amount, and they get into each other's hands, each will offer to the other his own acceptance in payment of the debt by him. By these means the debts are mutually closed. And consequently each acceptance is Currency or Money.

Thus we see that the dogmas of these writers are transfixed by darts drawn from their own quiver!

The same doctrine may be extended to other cases. Suppose a man buys a ticket from a Railway Company, the Company is then indebted to him. But when they have carried him to his journey's end, the debt is closed. Therefore, according to this doctrine, the carriage of the passenger is Currency or Money.

So if a person buys an opera ticket, the manager of the theatre is indebted to him. But when he has witnessed the play, the debt is closed; consequently the performance of the play is Currency or Money.

So if a person buys Postage Stamps, the Post Office is indebted to him: but when he has sent his letters by post, the debt is closed. Therefore the carriage of the letters is Currency or Money. And so on, the same principle may be applied to many other cases.

2. In the next place, we affirm that a payment in Money does not close the debt, because all Economists have shewn that

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But, while we contend that Lord Overstone's criterion of a Currency is fatal to his own view, we are quite willing to accept it. For what is it that exists in all places, in all times, and among almost all persons? DEBT, or SERVICES DUE. And what is it that is universally required to measure, record, and transfer them. Some material. But we see that all Currencies are more or less local, none are universal. The idea, or the want alone, is universal. The notes of a country banker, only circulating in his own neighbourhood, are like a country patois, each district has its own. A national Currency rises to the dignity of a language. But even that is only local, on a larger scale. The ideas only expressed in the language are universal. We are, therefore, strengthened in our conviction, that the only true idea of a Currency is, that it is the Representative of Transferable Debt, and that whatever represents Transferable Debt is Currency.

CHAPTER XIV.

ON THE ORGANISATION OF THE BANK OF ENGLAND; AND ON THE BANK CHARTER ACT OF 1844.

1. We are now, at length, in a position to take a comprehensive survey of the organisation of the Bank of England, and of the Bank Act of 1844. Of all the Acts in the Statute book, there is none which comes home to every man, which so nearly affects every man's interest, as this Act. Few persons are aware of its extremely complicated nature. We hear sometimes of the principle of the Act of 1844, as if there were but one principle involved it! or as if the object of it were the same thing as the principle; the object it aims at, the same thing as the theory it adopts to obtain that object. Whereas, in truth, it is founded upon a multiplicity of theories-it is a combination of several theories of Currency, and, moreover, devises a particular machinery for carrying them out. When, therefore, we consider its very complicated nature, we see what a boundless field of controversy it may give rise to; for each of the several theories it embodies may be partially or totally erroneous; and even if they be correct, the machinery devised for enforcing them may be imperfect, or erroneous, and insufficient for its purpose. We think, however, that we are now in a position to examine the theories upon which it is founded-to test them by the fundamental principles of monetary science established in the preceding chapters, and to point out those principles-if any -which it violates.

In the first chapter we obtained the great fundamental conception, which is the basis of monetary science, that money is the representative of debt, or services due-THAT WHERE THERE IS NO DEBT, THERE CAN BE NO MONEY. In the preceding chapter we found that the fundamental error of Law's Theory of Paper Money is, that it creates Currency where there is no Debt for it to represent. The consequence of which is, that an additional

quantity of material is poured into the channel of circulation, as it is called; that is, a greater quantity of material is required to do exactly the same duty as a smaller quantity did before; the consequence of which is a depreciation of the whole, which may proceed to any length; and we have given several examples of the practical results of this plausible and wide-spread, but delusive theory.

We must now examine the organisation of the Bank of England, and we shall find that it, too, is based upon Lawism.

But furthermore, we have said that the Bank Act of 1844 is based on a peculiar definition of the word CURRENCY; and is expressly devised for the purpose of carrying into effect a peculiar Theory of Currency. In the last chapter we have examined the meaning of the word CURRENCY, and shewn the entirely erroneous doctrines of those writers from whom the scheme emanated which was embodied in that Act. We have now to examine the THEORY upon which it is founded; and to see how far it really carries out the THEORY it is intended to do; and the consequences it has produced.

2. The Bank was a corporation who advanced £1,200,000 in cash to Government. In exchange for this they received an equal amount of Government stock, with interest at 8 per cent., or an annuity of £100,000 a year.

Now, when they had received this annuity, they had already received an equivalent for their cash. But, in addition to that, they were allowed to create an amount of notes equal to their capital, to trade with, and it was supposed that the annuity of £100,000 in cash was sufficient to support the credit of these

notes.

Now, we at once perceive the essential distinction between the Banks of Venice, Amsterdam, and Hamburg, and the Bank of England. The former banks were examples of the CURRENCY PRINCIPLE. The bullion paid into them was kept, or was professed to be kept, in their vaults, and, as long as it was so, the credit created by them was exactly equal to the bullion paid in. Their function was solely to exchange Credit for Bullion and Bullion for Credit. Hence these banks created no augmentation of the Currency.

But the case of the Bank of England was manifestly wholly

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