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siderable length, the absurdity of this position ; and traced some of the many erroneous conclusions which are derived from it. Mr. Thomas Smith, who knows more of the subject than Mr. Wheatley, seems clearly to have seen the fallacy of this opinion. "The great mistake," he says, " into which, it is conceived, the writers upon money have fallen, is, that they have not gone deep enough for a foundation whereon to rear their speculations. Finding that gold and silver had, in all ages, been employed as the circulating medium, and that the quantity of these in a coin was always equal, or nearly equal, to the value it passed for, they concluded that these metals were the standards of'value; and therefore they have employed all their labours and skill in vain endeavours to reconcile the different phenomena of money to this idea; and this they did, although, at the same time, they allowed that the metals themselves varied in value; consequently, they ought to have seen the absurdity of attempting to establish any article of variable value, (he invariable standard of value; and should therefore have sought for some other." To the same purpose he observes, a few pages onwards, " The very circumstance allowed by all these writers," (the writers who represent gold and silver coin as a measure or standard of value) " that gold and silver vary in value themselves, is a most convincing proof that there exists another standard'of value, else how could the variation ,in their value be ascertained?"
The notion, however, of a standard or measure of value, had taken too firm possession of his mind to be easily eradicated. When gold and silver, therefore, answered not his purpose, he set to work to discover something else by which this important function of measuring was discharged. This, however, was a difficult task; for the objection which appljed to gold and silver, applied te'evtry O'her conceivable commodity. The author, therefore, was driven to a very violent shift. He found a passage in Montesquieu, which he quotes, and in which it is stated that " The blacks, on the coast of Africa, have a sign, purely ideal, for fixing the value of their commodities;—when they wish to make an exchange of them, they say, such an article is worth three macutes, such an other is worth five macutes, and such another, ten; and yet a niacute can neither be seen nor felt ; it is entirely an abstract term, and not applicable to any sensible object. Is it a coin? Is it a token? Is it a measure.? It is neither a coin, a token, nor a measure ; for they (to not exchange their merchandize for three, five, or ten macutes, but for some article worth the same number of macutes." In this statement, Mr. Smith found exactly the measure or standard of value which he wanted. He declares, accordingly, that the real standard of value is "a nominal or imaginary one, of which the coins, passing in circulation, are only symbols or tokens." The passage from Montesquieu, he says, "is an exact description of what is meant by an imaginary standard. Indeed," he ad.ls, "it is conceived that, without it, little or no intercourse could,be carried on betwixt man ai>d man; because all value being comparative, it would be impossible for mankind, especially in the present improved state of society, to make the daily exchanges of property, without assuming some fixed point, upon which to found their calculation of the value of each article." In another passage, he says, " This ideal standard, or, as it will in future he called, the Standard Unit, appears to be something of the same nature with the letter placed for the unknown quantity in algebra; it has no real value itself, but, by it, the relative value of all articles are* fixed, all accounts are kept, and all exchange of property is settled."
In all this, the luckless author has been following a mere phantom. There is in reality no fixed standard of value; and the absurdity, the ridiculous absurdity, of Mr. Thomas Smith consists in this, that after seeing far enough into the subject to perceive that no commodity is calculated to afford a standard of value, ho should have supposed an abstract idea, an absolute nonentity, capable of measuring value.' He might just as ^reasonably have talked of measuring water-casks by the sound of a trumpet. The fact is, that one commodity measures the value of another, and there neither is nor can be any other measure. That commodity which is the most commonly employed in purchases, is that by which the relative value of commodities is most commonly expressed ; and as gold and silver, within a limited time and a limited space, in the same country, for example, and the same age, vary but little in their value, they afford, in all transactions that occur within these limits, a standard which is sufficiently accurate for practice. For distant times and places there neither is, nor can be, any standard. All that can be gained is an approximation, which is greater or less according to circumstances.
Considering the uncommon discernment which Mr. Thomas Smith displays on other topics connected with his subject, it is lamentable to contemplate the nonsense which he utters concerning the Standard Unit. He tells us the Pound sterling is the Standard Unit in England. It seems a singular suspension of the reasoning power to have been unable to reflect,
* This grammatical error we point out with no invidious intention. The author sets not up the pretensions of a scholar. But he should have been a little more read before he attempted theoretical discoveries.
that the Pound sterling has at various times expressed very different values.
He very humbly thinks, however, that in this Unit he has made a notable discovery. "The existence of the standard," he says, "has hitherto escaped the notice of all the writers on this subject; even Dr. Adam Smith appears to have been quite ignorant of it." Nothing is so easy now-a-days as to find things in which Ur. Adam Smith was ignorant. The time, we trust, is coming, when our countrymen will be dull enough to discover fewer errors in that writer. But at present they are so generally wise and discerning, that they find Dr. Smith to be ignorant on almost every topic of political economy. It is a.pity, however, that he did not know more about the Standard Unit. Had he been but a convert to the doctrine of the Unit-,—whether he would have been of more utility to his species, is one question; but he would certainly have written /a very different book from the Inquiry into the Nature and Causes of the Wealth of Nations.
But Mr. Thomas Smith has been unfortunately deceived, in the fact on which his idea of the imaginary standard is grounded. Montesquieu has credulously inserted in his ingenious work many erroneous statements of travellers, and this is one. Had Mr. Smith but taken the trouble to look into Mungo Park's interesting book of Travels, he would have found how the fact stands, and would perhaps have discovered a little of the truth in regard to his ideal Unit. As this passage affords a practical refutation of our author's conceit, more generally instructive than abstract reasoning, and presents some curious facts in the history of money, it is highly worthy of insertion. After mentioning how much of the trade of the Africans is carried on by simple barter, Mr. Park says (See Travels in the Interior of Africa, p. 27) " In thus bartering one commodity for another, many inconveniences must necessarily have arisen at first, from the want of coined money, or some other visible and determinate medium, to settle the balance or difference of value, between different articles; to remedy which, the natives of the interior make use of small shells, called cowries. On the coast, the. inhabitants have adopted a practice which I believe is peculiar to themselves. In their early intercourse with Europeans, the article that attracted most notice was iron. Its utility in forming the instruments of war and husbandry, made it preferable to all others; and iron soon became the measure by which the value of all other commodties was ascertained. Thus a certain quantity of goods of whatever denomination, appearing to be equal in value to a bar of iron, constituted, in the trader's phraseology, a bar of that particular merchandize. Twenty leaves of tobacco,
for instance, were considered as a bar of tobacco; and a gallon of spirits (or rather half spirits and half water), as a bar of rum; a bar of one commodity being reckoned equal in value to a bar of another commodity. As, however, it must unavoidably happen, that, according to the plenty or scarcity of goods at market in proportion to the demand, the relative value would be subject to continual fluctuation, greater precision has been found necessary; and at this time, the current value of a single bar of any kind is fixed by the Whites at two shillings sterling. Thus a slave whose price is 151. is said to be worth 150 bars."
The first and second chapters of the present Essay are employed to shew the nature of the standard unit, and the relation which coins bear to it. The third is intended to explain the nature and properties of paper money. On ihis last subject the author very clearly and sensibly explains one important distinction, which has indeed been explained before, but which has been overlooked by almost all ouj1 late writers on the subject of money, and of which the neglect has led many of them into the most erroneous conclusions. This distinction relates to a difference in the kinds of paper money. There are two kinds, of which the properties are extremely different. The first is the paper money issued by government, and which the people are obliged to take; the second is the promissory notes of bankers, payable on demand, and which the people take or not as they please.. Of the first sort there may easily be too much poured upon the country, and this is almost always the case whenever it is used as an expedient; hence depreciation ensues in proportion to the glut. Of the latter too much can never be introduced into the country, and depreciation cannot be the_ consequence of it. Nothing can be of more importance than this doctrine, and we refer the public to Mr. Smith's illustrations. We wish he had confined his work to such useful topics as this, and had moved clear of some other doctrines, from which he has not come off so handsomely. He engages, for example, with the suspension of payments in cash at the Bank of England. He undertakes the defence of that measure in a high strain indeed; for he pronounces it, not only to have been wise and necessary at the time of its adoption, but to be so at this moment, and in all time to come, such indeed as ought never to be altered. We confess when we read the dedication of the book, we expected some sturdy doctrines in favour of certain kinds of policy. It runs thus, "To the Right Honourable Lord Viscount Melville, &c. &c. My Lord,- The following essay, being upon a subject, the accurate knowledge of which is of the greatest consequence, not only to the manufactures and commerce of this country, but also to the regulation of the finances, and, consequently to her political existence, I conceive it cannot be more appropriately dedicated than to One, who has spent a long and active life, in laborious exertions, for the advancement of those objects, and for the general benefit of the country. That your lordship may still be spared, and enabled to assist your sovereign and country with your counsels and labours, for a great length of time to come," is the sincere prayer of, my lord, vour lordship's most obedient and most devoted humble servant, Thomas Smith." In this offerer of sincere prayers' that Lord Melville may get into the ministry and remain in it, " for a great length of time to come, we did expect that the suspension of payments would not want an advocate; but Mr. Thomas Smith has outstripped our expectation. " That banks ought always to be ready to give gold for their notes," he says, '* is a vulgar error, which ought long ago to have been exploded." The reasons for this original opinion we shall examine, or rather, perhaps we ought to say, mention ; for of examination, if that means refutation, they can hardly be said to stand in need. They are stated in that approved and familiar form early known to us by the title of question and answer.
"First. Do the banks, when they issue notes, receive gold for them?
"They certainly do not. It has already been stated, that they issue, their notes upon the credit of bills, at a short date, lodged with them."
We beg Mr. Thomas Smith will permit us to ask him a question.—Of what concern is it to the public, what the commodity, or commodities may be, in exchange for which the banker gives his notes? If he receives not gold, he receives "what is worth the gold which his note represents. Does not his note procure him all the advantage which cash equal to what it denotes would have procured? Does not a note of 10501. advanced on a bill of exchange, bring him the same interest as if he had advanced 1000 guineas? But Mr Smith, whose eye, however penetrating near at hand, seems to have but a poor faculty at looking about him, has not seen that bills of exchange are just as much exempted by this argument from all obligation to pay, as the promissory notes of bankers. We buy, let us suppose, 50 gallons of brandy from Mr. Smith, and pay him by a bill at six months. In this case we neither re-^, ceived gold nor even banker's notes, when we advanced our bill. Would Mr. Smith, therefore, account it a satisfactory answer, if, when he came to demand payment of his bill, we should say that we did not receive money for it, and that it was a vulgar error to suppose we were under any obligation to give money? But let us hear Mr. Smith once more.