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actions with him, as quickly as they can: thereby dimin ashing the amount of credit-currency.

Thus we see that the balance of a mixed currency is, under all circumstances, self-adjusting. Supposing considerations of physical convenience out of the question, he average ratio of paper to coin is primarily dependent on the average trustworthiness of the people, and secondarily dependent on their average prudence. When, in consequence of unusual prosperity, there is an unusual increase in the number of mercantile transactions, there is a corresponding increase in the quantity of currency, both metallic and paper, to meet the requirement. And when from war, famine, or over-investment, the available wealth in the hands of citizens is insufficient to pay their debts to each other, the memoranda of debts in circulation acquire an increased ratio to the quantity of gold: to decrease again as fast as the excess of debts can be liqui dated.

That these self-regulating processes act but imperfectly, is doubtless true. With an imperfect humanity, they cannot act otherwise than imperfectly. People who are dishonest, or rash, or stupid, will inevitably suffer the penalties of dishonesty, or rashness, or stupidity. If any think that by some patent legislative mechanism, a society of bad citizens can be made to work together as well as a society of good ones, we shall not take pains to show them the contrary. If any think that the dealings of men deficient in uprightness and foresight, may be so regulated by cunningly-devised Acts of Parliament, as to secure the effects of uprightness and foresight, we have nothing to say to them. Or if there are any (and we fear there are numbers) who think that in times of commercial difficulty, resulting from impoverishment or other natural causes, the evil can be staved-off by some ministerial sleight of hand, we despair of convincing them that the

thing is impossible. See it or not, however, the truth is, that the State can do none of these things. As we shall show, the State can, and sometimes does, produce commercial disasters. As we shall also show, it can, and sometimes does, exacerbate the commercial disasters otherwise produced. But while it can create and can make worse, it cannot prevent.

All which the State has to do in the matter, is to discharge its ordinary office-to administer justice. The enforcement of contracts is one of the functions included in its general function of maintaining the rights of citizens. And among other contracts which it is called on to enforce, are the contracts expressed on credit-documents— bills of exchange, cheques, bank-notes. If any one issues a promise-to-pay, either on demand or at specified date, and does not fulfil that promise, the State, when appealed to by the creditor, is bound in its protective capacity to obtain fulfilment of the promise, at whatever cost to the debtor; or such partial fulfilment of it as his effects suf fice for. The State's duty in the case of the currency, as in other cases, is sternly to threaten the penalty of bankruptcy on all who make engagements which they cannot meet; and sternly to inflict the penalty when called on by those aggrieved. If it falls short of this, mischief ensues. If it exceeds this, mischief ensues. Let us glance at the facts.

Had we space to trace in detail the history of the Bank of England-to show Low the privileges contained in its first charter were bribes given by a distressed Government in want of a large loan-how, soon afterwards, the law which forbad a partnership of more than six persons from becoming bankers, was passed to prevent the issue of notes by the South-Sea Company, and so to preserve the Bank-monopoly-how the continuance of State-favours

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to the Bank-corresponded with the continuance of the Bank's claims on the State; we should see that, from the first, banking-legislation has been an organized injustice. But passing over earlier periods, let us begin with the events that closed the last century. Our rulers of that day had entered into a war-whether with adequate reason, needs not here be discussed. They had lent vast sums of gold to their allies. They had demanded large advances from the Bank of England, which the Bank durst not refuse. They had thus necessitated an excessive issuc of notes by the Bank. That is, they had so greatly diminished the floating capital of the community, that engagements could not be met, and an immense number of promises-to-pay took the place of actual payments. Soon after, the fulfilment of these promises became so difficult that it was forbidden by law; that is, cash-payments were suspended. Now for these results-for the national impoverishment and consequent abnormal condition of the currency, the State was responsible.

How much of the blame lay with the governing classes, and how much with the nation at large, we do not pretend to say. What it concerns us here to note, is, that the calamity arose from the acts of the ruling power. When, again, in 1802, after a short peace, the available capital of the community had so far increased that the redemption of promises-to-pay became possible, and the Bank of England was anxious to begin redeeming them, the legislature interposed its veto; and so continued the evils of an inconvertible paper-currency after they would naturally have ceased. Still more disastrous, however, were the results that by-and-by ensued from State-meddlings. Cash-payments having been suspended-the Government, instead of enforcing all contracts, having temporarily cancelled a great part of them, by saying to every banker, "You shall not be called on to liquidate in coin the promises-to-pay which

you issue," the natural checks to the multiplication of prom ises-to-pay, disappeared. What followed? Banks being no longer required to cash their notes in coin, and easily obtaining from the Bank of England supplies of its notes in exchange for fixed securities, were ready to make advances to almost any extent. Not being obliged to raise their rate of discount in consequence of the diminution of their available capital, and reaping a profit by every loan (of notes) made on fixed capital, there arose both an abnormal facility of borrowing, and an abnormal desire to lend. Thus were fostered the wild speculations of 1809— speculations that were not only thus fostered, but were in great measure caused by the previous ver-issue of notes; which, by further exaggerating the natural rise of prices, increased the apparent profitableness of investments.

And all this, be it remembered, took place at a time when there should have been rigid economy-at a time of impoverishment consequent on continued war-at a time when, but for law-produced illusions, there would have been commercial straitness and a corresponding carefulness. Just when its indebtedness was unusually great, the community was induced still further to increase its indebtedness. Clearly, then, the progressive accumulation and depreciation of promises-to-pay, and the commercial disasters which finally resulted from it in 1814-'15-'16, when ninety provincial banks were broken and more dissolved, were State-produced evils: partly due to a war which, whether necessary or not, was carried on by the Government, and greatly exacerbated by the currency regulations which that Government had made.

Before passing to more recent facts, let us parentheti cally notice the similarly-caused degradation of the cur rency which had previously arisen in Ireland. When examined by a parliamentary committee in 1804, Mr. Colville, one of the directors of the Bank of Ireland, stated

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that before the passing of the Irish Bank-Restriction-Bill -the bill by which cash-payments were suspended-the directors habitually met any unusual demand for gold, by diminishing their issues. That is to say, in the ordinary course of business, they raised their rate of discount whenever the demand enabled them, and so, both increased their profits and warded off the danger of bankruptcy. During this unregulated period, their note-circulation was between £600,000 and £700,000. But as soon as they were guaranteed by law against the danger of bankrupt cy, their circulation began rapidly to increase, and very soon reached £3,000,000. The results, as proved before the committee, were these: The exchange with England became greatly depressed; nearly all the good specie was exported to England; it was replaced in Dublin (where small notes could not be issued) by a base coinage, adulterated to the extent of fifty per cent., and elsewhere it was replaced by notes payable at twenty-one days' date, issued by all sorts of persons, for sums down even as low as sixpence.

And this excessive multiplication of small notes was necessitated by the impossibility of otherwise carrying on retail trade, after the disappearance of the silver coinage. For these disastrous effects, then, legislation was respcnsible. The swarms of "silver-notes" resulted from the exportation of silver; the exportation of silver was due to the great depression of the exchange with England; this great depression arose from the excessive issue of notes by the Bank of Ireland, and this excessive issue followed from their legalized inconvertibility. Yet, though these facts were long ago established by a committee of the House of Commons, the defenders of the "currency-principle" are actually blind enough to cite this multiplication of sixpenny-promises-to-pay, as proving the evils of an unregulated currency !