The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1875-12-26
tCOmHuncated. |

Communicated
ECRRENCY AND BANKING. By Bonamy Price
New York: D. Appleton 4 Co. New Or
leans r. G. Eyrich.
This is the work of an Oxford professor ant
contains, as We are told. the substance of hi
lectures published in 1869, and OF other writ
zns,s on the subject In this view we mus
confess to disappointment in its perusal. Hae
it been Q summary from those city articles
Of which he speaks SO CONTEMPORARY, its
detects might be attributed to that Bread
work" as the Germans call it, which almost
necessitates superfcislity and inaccuracy
But it comes from the study of teacher, and
we may justly complain Of the absence Of
clear and consistent thought and accurate ex
ursssion.
The first question which arises in An inquiry
such as that upon which Mr.. Price enters is,
Of course: What is money? He answers
Up. 38): "Coip, metallic coin, alone is true
money, and nothing else is, unless it be a
commodity, as an OK, or COW, or piece Of
salt" Here he commits the scholar fallacy
of seeking in the derivation Of q word the
nature of the thing which it signifies. Abra.
ham when he weighed out the silver to
Ephraim used money, long before the first
stone of the temple of Juno Moneta was laid
in the ground; and even to-day large pay
nents are more commonly made by weight
than by tale. He gave that which would be
unhes:tatingly received by any Of their COM
naunity for any piece of his property of which
he wished to dispose. The OK could not
subserve the same purpose; for when
Ephraim came to buy tent, the tent-maker
might not want an OK and might be unable
with it to crafty his own wants. 1t was to
obviate this and other great Inconvenience of
the direct exchange of ommodities-barter-
that some one or more were selected to serve
as mediums for their indirect exchange, as
the mere representatives of value. When
gold and silver are employed for this pur.
pose their value as commodities for use sinks
aavnost, if not entirely, out of sight. When
receive an eagle for some article which l SELL
it is not the gold which | desire to obtain.
That, in itself and as q commodity, is wholly
useless to me. 1t is the purchasing power
readily and universally available, which that
gold brings with it that have in contempla-
tom. That it is which constitutes it money.
Money, then, is simply the circulating me-
dunn of exchange, and whatever subserves
that purpose is money. Mr.. Prices definition,
then, has the two.fold defect of excluding that
which should be included and including that
which should be excluded.
Bills Of exchange and checks are not money
because, although they do serve as mediums
Of exchange, their circulating capacity is
limited. Mr.. Price would equally exclude
hank notes; and he presents this argument,
1T is q promise to pay. What? Metallic
dollars. But how can the promise to pay be
the thing to be paid. Therefore it is not
money. But is it not evident that he here
ass7mes the very thing to be proved, viz:
that metallic coin alone is money? The note
is certainly not the metallic coin, but the
question is, is it purchasing power? is it
circulating medium of exchange receivable in
all transactions between man and man? As
long as the bank has credit it certainly u.s. and
Mr. Price is compelled, very inconsistently, to
to treat it as such. This is especially OBJ
servable on pages SO and 100, and in that por
ton of the work in which he partly reasons
and partly SCOTS away the principles on which
the Bank Act OF 1874 was based.
He ridicules the anxiety with which, in
periods of commercial distress, the writers of
"city articles, and even some bankers, re-
gard the state Of the gold reserve in the Bank
Of England. He says on page 1853: "The
nearest approach to such danger (stoppage)
occurred in 1925. There was a run on the
bank by depostors. For gold? In no way
The run was to procure the notes of the
eank itself by men who trusted the bank per-
fectly, but, in the then knowledge of banking,
feared that the bank would lend those bank
them ready when these notes were wanted to
,face the engagements of themselves, the de.
positors The bank was saved from declaring
that it had no ready money by the discovery
of million of unburnt one-pound notes."
Is it conceivable that those men, alarmed
for the safety OF their money, should have
III shed to the counters of the bank and will
hugly received, in discharge of its obligations
to them, mere "rags?" Surely not. They
received that which any one would take from
them IN discharge of their obligations or in
exchange for anything they might want
There does not seem then to be any propriety
those Of Mr.. Price, from the generally re-
eeived usage of the language which defines
money as the circulating medium of exchange
thus including bank notes as species under
that genus. It is true that every writer is
privileged to define his terms IS be pleases;
bat the popular usage should not be departed
from except to attain greater precision and
accuracy Of thought Thus We have shown
that he does not attain; and the only effect is
TO subject his language to all those defects
which he enormously attributes to an incon-
zectible currency.
His section on an inconvertible currency
uresents Q strange confusion of thought in
q professor of political economy. In depart
ing from the doctrine established fifty years
ago by Mr.. Ricardo. and since universally &C.
cspted, he owed it to his own reputation to re-
flute it. This he has not attempted to do, but
contents himself with depicting all the evils
of a variable and huotuating currency, and
them to an inconvertible one.
Rat the two are by no means the same. Mr..
Ricardo has fully demonstrated in the 9th
-hanter of his political Economy" that an
recoverable currency may be kept on a par
with gold by the simple expedient Of limiting
Is quantity and consequently it will only vary
IS tnat commodity itself does. By that doc
tri ne. and that alone, are the facts of history,
Scme of which are referred to by Mr.. Price
Limself. explicable; on any other they become
q hopeless tumble Of unintelligible occur
rances. But Mr.. Price writes for the Amer
;ean market, where the simplest elements OF
-.olitical economy are, even to statesmen, So
rsIIed. uncomfortable mysteries or the here
RES of theorists, and where no subject can re-
main untouched by the mildew OF partisan
politics. &C .,o,,,h.