Monetary.

could not vote to compromise the existing standards of their countries; but "there was one part of the American propositions for which almost all the delegates could vote; and for which as a principle, personally, he would willingly subscribe, viz., that it is not desirable that silver cease to be one of the money metals. Though England had a gold standard she had great interest in the maintenance of silver as currency. She had a more defined and less compromised position for the discussion of this question than other countries, for she had borne the depreciation of silver in India without trying to shut her doors upon it. She had done more than any other country to maintain silver. The Latin union had shut its doors upon silver. Holland half shut hers, while England had allowed it to take its natural course, and for five years had borne all the burdens resulting therefrom. Mr. von Henglemüller of Austria-Hungary could subscribe to the propositions of the United States, but since the advantage of this system depended upon the general adoption of it, his government was compelled to maintain an attitude of expectancy. As a member of the conference he would pronounce for the double standard. Mr. Mees of the Netherlands said that while England and Germany maintained the gold standard no other was possible for his country, but he could express his personal opinion that "it would be most beneficial to mankind that many states should adopt the double standard." He believed that in the Dutch colonies they would find it to their interest to maintain the silver standard. He agreed with Mr. Goschen that if the double standard were utopian, the single gold standard was also, and one that would be very dangerous if by some possible combination of circumstances it should be realized. He suggested that the United States unite with South America and Asiatic nations on silver, and then come to Europe with their proposition. Mr. Baralis of Italy thought that upon some points there was such a harmony of views that, if the precise propositions of the United States could not be adopted, at least some measure of utility closely allied to them might be. He did not sympathize with the advice to the delegates of the United States to seek allies in South America and China; and thought that the nations of Europe could now join in some practical affirmation in the direction of the propositions of the United States. Leon Say explained the monetary policy of France of late years as having the double standard in theory, but not in practice, the privilege of free coinage of silver at the mint having been withdrawn. When this suspension of free coinage first took place the question was warmly discussed in the French chambers whether it was a step towards the gold standard, or a provisional condition, which would permit France to avail itself of a favorable moment for returning to the double standard. The government declared emphatically that the movement was not towards the single gold standard. France is in a condition of expectancy, from which we shall not move except for good reasons, when they show themselves, and then, probably, to re-enter into the system of the double standard." He stated that there were in the bank of France and in circulation in France 2,500,000,000 francs in silver; and that "to withdraw the legal tender power from such a mass of money, and to throw it on the market as merchandize is an inadmissible idea." He thought that until Germany had finished her sales of silver, France would remain in an attitude of expectancy. The proposition of the United States at the present moment seemed to him premature; and as its rejection by a majority would lead to a false conclusion as to the opinions of those at this time voting against its proposi tions as a whole, he suggested that they should not be passed upon, but that the states represented should agree simply upon the expression of a common idea as to the employment of silver as money, and should invite each other reciprocally not to take any measures in their domestic legislation which might depreciate silver. In his opinion, encouragement of the use of silver money will soon increase its value. He expressed assent to the first paragraph of the American proposition. He believed France might some day join the United States, assenting to the rest of their propositions; but not now. Mr. Feer Herzog of Switzerland announced himself energetically for the single gold standard; not for all nations, but "for the advanced nations, and leave silver to countries whose civilization is backwards or stationary.' He announced that, with the Netherlands, Switzerland would maintain the "attitude of expectancy" with the hope of seeing the single gold standard eventually adopted by all. Count Rusconi of Italy was glad to see the general harmony of views on the necessity of continuing the monetary use of silver; and believed there was no difficulty in squarely admitting the fundamental propositions of the Americans. He believed further that when an international agreement as to legal ratio was arrived at, it alone would produce the equality desired; that "nature makes the metal, but law alone makes the money." Mr. H. H. Gibbs, ex-governor of the bank of England, announced himself a partisan of the gold standard, but would not legislate to drive silver out of use. He expressed entire dissent from the notion of Mr. Herzog that the fall of silver was in the ratio of the progress of civiliza tion, by which the most progressive will use the most precious metal, and the less civilized will be content with the other. He believed the recent fall of silver entirely the result of a simultaneous action of many temporary causes, and that the action of Germany was an important factor in the result. He illustrated the greater effect produced on the market by the German mass of coins put up for sale than by any ordinary increase or decrease of production: lessening the use of silver, and at the same time glutting the market with it. The third session of the conference closed the first expressions of opin ion volunteered by delegates from European nations on the American propositions.

Monetary.

The fourth session of the conference was opened by prof. Francis Walker in a remarkably vigorous address in support of the American propositions, and in refutation of the objections made to them. He maintained that down to 1873 silver had been the principal money of the world, and the sole money of many prosperous nations; that it had ceased, to whatever extent, to be money, not as the result of natural causes, but by action distinctly political-the laws and decrees of governments; that it is no reversal of any law of nature that the American delegates propose, but the reversal of recent works of men's devising in opposition to the natural economic forces which gave silver its position as money. "As," said he, "the conference of 1867, wholly absorbed in the consideration of the means of securing international coinage, did exert a powerful influence in initiating the movement for demonetizing silver, it remains for the conference of 1878, with a more sober judgment, and a larger view of human interests, instructed as the nations have been by the bitter experience of the past few years, to put forth its hand to stay the progress of that demonetization which has already brought such mischiefs upon trade and the production of wealth." Mr. S. Dana Horton of the American delegation followed in further defense of the American propositions. He analyzed and refuted with masterly comprehensiveness the objections, both as to the principles involved, and the fitness of the present time for their application. He re-stated the essential point to which the American delegates desired to confine the discussion, viz., "Is it in the interest of the states represented at this conference to continue to wage a monetary war by seeking, to each other's prejudice, to get rid of the falling metal; or, is it their interest to unite together in order by a common legislation to give to the monetary basis of the business world a stability which it does not now possess?" These speeches of Messrs. Walker and Horton exhibited a masterly familiarity with principles, with law, and with monetary history in all its relations, and were at the same time so aggressively decisive in their maintenance of the American propositions that the majority of the conference, opposed to them from the beginning, showed a plain inclination to put an end to discussion by a decisive vote and an adjournment. But a more generous courtesy prevailed, and the discussion was continued at a sixth session, at which Mr. Groesbeck presented a remarkably clear and condensed summary of the situation which no abstract can fairly present. At its conclusion Mr. Pirmez of Belgium undertook to meet the American presentation of the subject. Fluent, ingenious, and somewhat satirical, he made a good speech; but it was like the firing of small arms against a massive fortification. Mr. Horton's response left no standing ground for the other side except what the astute president Say had announced at the opening session, viz., that theoretically we may be with you, but practically not now. Mr. Horton, in conclusion, reviewed the points gained by the development of national policies in the conference, especially by the new and broader position assumed by England, claiming that, "independently of any other result, this much has already been gained: that the conference of 1878, breaking with the traditions and doctrines of 1867, will have inaugurated a new era in the history of monetary science in our time, and that it will in a manner fix the date of the decline of the theories of mono-metalism." The response of the delegates of European states was then submitted. It is as follows:

'The delegates of the European states represented in the conference desire to express their sincere thanks to the government of the United States for having procured an international exchange of opinion upon a subject of so much importance as the monetary question. Having maturely considered the proposals of the representatives of the United States, they recognize:

"1. That it is necessary to maintain in the world the monetary functions of silver as well as those of gold, but the selection for use of one or the other of the two metals, or of both simultaneously, should be governed by the special position of each state or group of states.

"2. That the question of the restriction of the coinage of silver should equally be left to the discretion of each state or group of states, according to the particular circumstances in which they may find themselves placed; and the more so in that the disturbance produced during the recent years in the silver market has variously affected the monetary situation of the several countries.

"3. That the differences of opinion which have appeared, and the fact that even some of the states which have the double standard find it impossible to enter into a mutual engagement with regard to the free coinage of silver, exclude the discussion of the adoption of a common ratio between the two metals."

The animus of this very courteous, but not quite satisfactory response, is evident. France, at the head of the Latin union, holds the balance of power between gold and silver. Recognizing the equal money power of each metal, and conscious of the value of her own astuteness in the use of the power of the Latin union, she does not care to abandon that advantage for any humanitarian or commercial advantage to any associa tion of nations. Her attitude of expectancy" has an eye on Germany and England, and as her monetary legislation has been based on a clearer insight into the philosophy of monetary science than that of other countries, as proved by its practical results, the preservation of the right of independent action, untrammeled by agreements for co-operation, gives her a vantage ground for national aggrandizement through the financial blunders of other nations.

Money.

Messrs. Rusconi and Baralis of Italy at the sixth session, entered a protest against the response of the majority of the European delegates as follows:

1st. That by the adoption of the formula proposed, the conference does not respond to the question which was put to it, and that in systematically avoiding to pronounce itself upon the possibility or impossibility of a fixed relation, to be established by way of international treaty, between coins of gold and silver, it leaves its task unfinished.

"2d. That since the French law established such a relation (1785) between the two metals, the oscillations of their relative value had been without importance, whatever had been the production of the mines.

"3d. That consequently, a fortiori, if the law of France had been alone able to accomplish the result, then on the day when France, England, and the United States, by international legislation, should agree to establish together the relation of value of the two metals, this relation would be established upon a basis so solid as to become unshakable."

Mr. Goschen, on the part of England, desired it to be distinctly understood that the adhesion of himself and colleagues to the response was because it did not pronounce for a double standard; and that he desired with equal distinction "to combat the theory of the economists who demand the universal adoption of the single gold standard—a measure which, in his view, might be the cause of the greatest disasters." Mr. De Thoerner, the Russian delegate, expressed a decided adherence to the single standard of his country -gold, and desired the response construed to mean nothing outside of its exact language. Count Von Kuefstein of Austria, said that "in presence of the explanations which had been given, from which might be inferred an admission of the impossibility of an international agreement for the double standard, he felt himself obliged to declare that if he adhered to the formula proposed by the European delegates, it was precisely because in his view it did not exclude the idea that such an arrangement was possible." The practical work of the conference closed with the reading of the following rejoinder, signed by the four American delegates, to the response of the European delegates: "The representatives of the United States regret that they cannot entirely concur in all that has been submitted to them by a majority of the representatives of European states. They fully concur in a part of the first proposition, viz., that it is necessary to maintain in the world the monetary functions of silver as well as those of gold,' and they desire that ere long there may be adequate co-operation to obtain that result. They cannot object to the statement that the selection for use of one or the other of these two metals, or of both simultaneously, should be governed by the special position of each state; but if it be necessary to maintain the monetary functions of both metals, as previously declared, they respectfully submit that the special positions of states may become of but secondary importance.

From so much of the second proposition as assigns as a special reason for at present restricting the coinage of silver, that the disturbance produced during the recent years in the silver market has differently affected the monetary situations of the several countries,' they respectfully dissent, believing that a policy of action would remove the disturbance that produced these inequalities.

"In regard to the third and last proposition, they admit that 'some of the states which have the double standard,' or, as they prefer to say, use both metals, 'find it impossible to enter into a mutual engagement for the free coinage of silver.' They, as representatives of the United States, have come here expressly to enter into such an engagement. The difficulty is not with them; and wherever it may be, they trust it may soon be removed.

"They entirely concur in the conclusion drawn from this state of the case, that 'it excludes the discussion of the question of the adoption of a common ratio between the two metals.' It is useless to agree upon a ratio between the two metals if the nations are not ready also to adopt a policy to uphold it. We remain upon ours; the European states upon theirs."

From the beginning to the end it was evident that the little countries embraced with France in the Latin union had special interests to protect that made the broader views and leaning of the American delegates obnoxious to them. England, on the other hand, took a position at the conference that exhibited all the largeness of view that comes of imperial interests in all parts of the world. Favoring a silver unit on one side of the globe and a gold unit on the other, she hopes by the skill of her commercial transactions between the opposite parts to profit by the two different standards, rather than by the joint-standard. What part of the membership of the conference represented the views of great banking houses rather than the interests of peoples, it would be difficult to determine; but that those interests are always likely to be too largely represented in such national conferences is evident. That Belgium and the Netherlands should have a vote in the conference equal to that of England, France, or the United States, is an absurdity, That little Switzerland, under the shadow of France, should be the sole determined advocate of the single gold standard was simply amusing. Yet her vote was half that of the United States. The effect of wide national diversity of interests was clearly seen in the broader views of those who represented the broader interests. The American delegates were conspicuous at the conference in this, and still more in the thoroughness of their intelligence, and the humanitarian scope of their aims.

Money.

The report of this monetary conference, prepared by Mr. S. Dana Horton, secretary of the American delegation, forms vol. 5 of the executive documents of the United States, printed by order of the senate in the third session of the XLVth congress, 1878-79. In addition to the journal of the proceedings of the conference, and a collection of the monetary papers and statistical tables submitted by each delegation, it contains a large variety of relevant matter of English and American legislation on money, with classic treatises and reports on monetary questions. Besides these it republishes entire the proceedings of the first monetary conference held in Paris, June, 1867; the whole forming a volume of 918 pages.

MONETARY TREATY OF PARIS, 1865. See LATIN UNION.

MONEY, in political economy. This is a word in continual use all over the civilized world, and perhaps there is none the meaning of which in connection with the business they have in hand is more distinctly understood by those who use it; and yet, on the other hand, there is none of which it is more difficult to give a comprehensive account or a strict definition. Presuming, then, that every one knows the practical use of the word in the affairs of common life, the best thing to be done here will be to point out a few distinctions which may tend to obviate confusion in the comprehensive use of the term as an element in economic science.

Money is often spoken of loosely as the same thing with capital, but they are different. Before anything is money, it must be such that you can go into the market and immediately use it in purchasing commodities or paying debts. The plant of a railway and the machinery of a mill, so long at they are in full use, are capital, and are capital which probably has once been money-but they are money no longer, because you cannot use them in making payments, though they have perhaps become more valuable than ever they were. The confusion of capital with money was the mistake made in issuing the French assignats on the security of the forfeited landed estates. Each assignat was a promise to pay; but when payment was demanded, it could not be made, because land was not a medium for making it. It is of the essence of money, then, that it is capable of making immediate payment either to satisfy a seller or a creditor. But an article may be money though it will not satisfy everbody; and articles available as money-even those most universally accepted as such-are available for other purposes. What we are familiar with as the most approved form of money-as the thing that will be most certainly received in payment all over the world—is coin of the precious metals. The reason why the claim of these is so universally accepted is, that they do not merely represent value, as we shall find other kinds of money do, but they really are value. If the dealer sells a hat for a sovereign, he knows that the sovereign does not depend, like a pound note, on the solvency of the issuer, but that it has got value put into it by costing about as much labor and skill in bringing it into existence as the hat he gives for it. But even all coins perfectly available for money are not of the intrinsic value of their denomination. The silver for making 20 shillings is a good deal less valuable as a commodity than the gold in a sovereign; and in the same way, 240 pence, which are as money equal to a sovereign, only make a percentage of it in value as merchandize. The convenience of their use for small transactions makes up for depreciation in value of coins of the inferior metals, when gold is a standard, and to prevent incidental abuses, the law limits the extent to which they are a legal tender as good money.

Money transactions are distinguished from barter, in which one commodity is transferred for another, as where the shepherd, in primitive times may be supposed to have given the agriculturist a sheep for a measure of corn. This distinction is extremely useful, since the invention of a circulating medium, which supersedes the narrow, cumbrous process of barter, by facilitating transactions of every variety of importance among all sorts of people, is a grand type of advance in civilization. Like many other distinctions, however, it has not an absolute line of demarkation. The precious metals hold their value by their being commodities as well as being money, and coins are frequently used up for plate and jewelry. Where money is only available within one narrow region its use verges on barter. In central Africa, purchases are made and debts paid by strings of beads or coils of brass wire. An ivory merchant or a traveler will lay in a stock of these, just as in Europe he would carry gold or circular notes. They are commodities, being used as ornaments by the inhabitants. But they are distributed to an extent far beyond the demand in this shape, and that they absolutely constitute money is shown by this peculiarity in the case of beads, that a particular color will pass current, and another will not; so that the merchant who chooses the wrong kind, though he have full value in merchandize, has not taken with him a supply of available cash.

Under the head of Bullion, it is shown how the precious metals are an expensive form of money, which there is a temptation to supersede by paper money. For the various opinions adopted by different classes of economists on paper money, and the devices for getting over the great difficulty of rendering this kind of money secure, and equal in value to bullion, reference is made to the article CURRENCY. It may here be proper to state, that paper money, or money founded on credit-one of the resources of advanced civilization and complicated commerce-introduces a class of moneys so extensive and various, that it is impossible to mark the limits of its extent, or enumerate the shapes it may take. An attempt has been made to get rid of all difficulties by saying that a prom

ise to pay is only the representative of money. But if it serve the purpose of buying or paying debt, it really is money. No one hesitates in counting a £5 Bank of England note as money. But a check by a person known to have a balance or credit at a solvent bank, is equally money; and though it is an order to pay, no actual bullion need ever be given for it, for the payment may be in notes, or the holder may hand it over to his own banker, in whose accounts it will be credited to the holder, and debited against the banker on whom it is drawn. The special difficulty as to paper money is, that it may be mistaken for money when it is none, as in the case of a check not honored by payment; or, that it may be of less intrinsic value than it professes to be, as when there is what is called an over-issue (see CURRENCY). There are thus great risks attached to the use of paper money; but there are also risks specially applicable to bullion money, as light weight, base coin, and the absence of those facilities for detection in theft or fraud, which are among the advantages of paper money. The special risks attending the use of paper have been shown in practice to be so capable of remedy by legislative precautions, that at present, in Scotland, one-pound notes are taken with less suspicion than sovereigns. On transactions in general, the chance of loss from forgery or insolvency is deemed less than the chances from light weight, even if the risk of base coinage should not come into consideration.

Making allowance for coins sent abroad or used as metal, the money of Britain is calculated at: gold, £75,000,000; silver and copper, £13,000,000; and notes, £42,000,000in all, £130,000,000. But so large is the extent of paper money, in the shape of drafts and bills, that of these payments, to the extent of more than £2,000,000,000 in a year are settled at the London clearing-houses, or the establishments where the London banks, and those dealing with them, clear off their mutual obligations by paying over the bal

ances.

*MONEY (ante). Originally, those substances in nature or of art which commerce among men proved to have the most general uniformity of value and convenience in use as measures of exchange of other commodities; which substances, being confirmed in such use, in civilized countries, by laws making them the sole legal tender as money, derive an increased, more certain, and more uniform value by reason of such legal confirmation of their sovereign use.

The laws pertaining to coinage formerly made by kings or ministers have been known in all ages to place in their hands a prodigious power for good or harm to their people. Since coined money has been largely displaced in modern times by legally authorized paper representatives of money, which have become de facto the principal actual money of all highly civilized peoples, and since this paper money is governed, like coin money, by the dominant law of convenience in use-as well as by the enacted laws of its confirmation, limitations, and powers as money-legislation pertaining to it has even greater power to promote or to destroy the prosperity of a people than when coin alone was the sport of kings. The laws which control the qualities or quantities of money, whether of coin or paper, have an influence on the public weal, vast and sudden beyond those enacted on any other subject. They strike at once every material interest of every citizen of the country which is subject to the laws. The examples of France and Germany, between 1871 and 1881, have furnished conspicuous illustrations of the helpful and hurtful power of legislation alone on money. It is especially within the present century, in Europe and in the United States, that all classes have realized this potency of legislation on money. The slightest modification of national laws concerning it affects every branch of trade, every industry, every investment. Yet a small number of the whole people, those whose business it is to deal in money as lenders or bankers, alone keep that close watch of legislation which enables them to control it unduly; so as to promote their own interests when laws are changed; or, if laws are likely to affect their interests injuriously, they are the first to be aware of the effects of changes and to guard against them. That prosperity or adversity may result to a majority of an entire people by a simple act of legislation on money, with a rapidity and a certainty that legislation on no other subject can parallel, has become obvious to all intelligent people. In England, 60 years ago, this subject attracted the observation of great numbers of able writers. But the legislation followed the interest of the moneyed powers, to the injury of the commercial and industrial classes. In France the philosophy of money, and the delicate nature of legislation on money, have called out the highest ability in its consideration for more than a hundred years. After the German war its financial administration was in the hands of Leon Say, son of a philosophic and practical financier and grandson of J. B. Say, whose works on political economy are authority to this day. Yet these men are only atoms in the mass of thought that has been given to this subject in France; whose present financial position is in part the result of its wisdom in money legislation.

The first American money that history informs us of was wampum and the dried cod fish of Newfoundland. The latter were in general use as money, and answered the purpose better than any other material that could have been procured in that region. A single fish was a sufficiently small change for small transactions, and a mass of them not too cumbersome for the purchase of anything a barbarian would be likely to want. Only acquired by labor, easily preserved and transported, at all times useful to tribes away from the sea-shore, and exchangeable for what they had which the sea-shore