tion, that the expression "valuable commodities," though not always used in the strict sense of capital, is nevertheless but a different way of expressing the same thing; every article of value being in fact a portion of capital, and said to be more or less valuable according as that portion is greater or smaller. XII.—Value, as applied to coins, is that nominal value which is given to them by legal enactment, in which capacity they possess no value in themselves, but merely represent the amount of the debt, which, as a legal tender, they are competent to discharge. This, it is evident, is quite distinct from the value of the materials of which any coin may be composed, considered in relation to which the coin becomes a commodity or an article of commerce, and its value, in such case, is in accordance with the definition given of it under that acceptation. XIII.-Standard value of both convertible and inconvertible paper ought to be the same as the value of the denomination of coin they profess to represent or be equivalent to, supposing them to be of the standard weight and purity. Inconvertible paper may be depreciated by falling in value below this standard either from want of confidence, over-issue, or other causes, but convertible paper never can be depreciated because it is always exchangeable; but in a mixed currency the value of both coin and convertible paper may be lowered at the same time by the over-issue of the latter, so as to depreciate the circulating medium in comparison with the currencies of other countries, in which case an unfavourable exchange and export of specie becomes the result, and upon the same principle both may become appreciated, that is, more valuable than the standard at which it was issued. For example, the price of gold is dearer in England at present, and has been so for a long time past, than on the continent, according to the calculations of the Times newspaper, the accuracy of which there is no reason to doubt; but the price in England is the mint price, and as convertible paper must have the same value as gold in England, it follows that both are higher in price than gold on the continent, and this is proved by the great influx of gold which has taken place, because it will always go where it is of most value. When gold flows into England, it shews that it is more valuable as a coin than as a commodity, because it is the mint price that brings it in; on the contrary, when gold goes out of England, it shews that it is more valuable as a commodity than a coin. XIV.-Depreciation in any currency, whether metallic, mixed, or inconvertible, is the decline in its value (from whatever cause it may arise) which may take place compared with the standard at which it was issued. XV.-Appreciation is the increase in the value of any currency above the standard at which it was originally issued. To make these two definitions more clear, let it be supposed that an inconvertible currency is issued equivalent to the present standard of £3: 17: 101, which it shews itself to be equal to by maintaining the foreign exchanges at par and by the price of bullion in the market, when suddenly a large importation of wheat causes the exchanges to become unfavourable, so that the holder of inconvertible currency is obliged to pay 2 per cent. above the standard price for gold on account of the unfavourable exchange giving it an extra value as a remittance. On the other hand, suppose on account of the inconvertible paper being made scarce, and the great want of it to make good engagements, that the holder of bullion is induced to sell it for the inconvertible paper at 2 per cent. less than the standard. In the former case paper as keeping its original standard is not depreciated, but gold is appreciated as having acquired an extra value as a remittance, and in the latter case gold is not depreciated because it still retains its original standard purity, but inconvertible paper is appreciated, having acquired an extra value above the original standard by its scarcity, and therefore less of it is given for the ounce of gold than the standard fixed. XVI.-Over-trading is when a merchant extends his business and engagements beyond what his actual capital would warrant him in doing, relying upon being able to obtain discounts, which being refused, he is unable to meet his payments. Over-trading is, therefore, a relative term, as the same extension of business may be over-trading under an uncertainty of obtaining discounts, which would not be over-trading if no such uncertainty existed. XVII.-Term of discount is the limited time which a bill has to run, within which limit it is discountable, and beyond which it will not be discounted according to the rules of the discounting establishment. XVIII.-Rate of discount is the per-centage charged by the discounter as interest for the time the bill has to run before it becomes due. XIX. Full currency. When the amount of the circulating medium is not interfered with by forced issues, and the amount issued in the discount of commercial bills is counterbalanced by the amount received for bills falling due, the currency is then said to be full according to the existing state of commercial transactions, and the term and rate of discount that may be established and acted on. XX.-Over-issue is a term generally applied when either in a mixed or an inconvertible paper currency, the paper is issued to such an extent as to increase the amount of the circulating medium beyond what the wants of trade require, so as to raise prices, and thereby lessen the exports and increase the imports, so as finally to produce an unfavourable exchange. But it may also be said to take place in regard to any individual Bank when the amount of the reserved funds may be considered inadequate to the amount of the circulation. CHAPTER I. Preliminary observations applicable to all currencies, involving sundry propositions, an acquaintance with which appears necessary to the right understanding of the currency question. 1. "Man brought nothing into this world," and therefore it follows most undeniably that all which is usually denominated the wealth, or riches, of any country in particular, or of the world at large-all that contributes to the comforts and conveniences of civilized life-all that is called property or is considered valuable, all owes its existence to the labour and ingenuity of man employed upon the materials which the earth produces. 2. The division of labour consequent upon the first introduction of civilization, and increasing therewith by establishing the necessity for a mutual exchange of the labours of each individual, or, in other words, of the commodities resulting therefrom, has been the original source from whence commerce has taken its rise. 3. The inconveniences of barter soon introduced the adoption of some medium of exchange, and in different countries whatever article was locally held in most general estimation became the measure of value for every thing else, of which the cowries of the Niger may be taken as an example in the present day. |