one of those commercial hurricanes to which we are periodically exposed sweeps over the face of society, uprooting establishments of the oldest growth, and hurrying the fairest creations of human industry in ruin before it, who are then the strong men to stand unbowed beneath the storm? Not the man for whom thousands are working in a distant tropical plantation, and whose estates would outvalue many a principality; still less the manufacturer with his costly machinery, his warehouse full of goods, and his organized corps of labourers, whom it seems equal ruin to retain or to disperse. Not even the farmer is to be envied, with his barns and granaries filled to bursting, when rent, and taxes, and wages, are to go out, whilst, with the slack demand of an unemployed people, his market is falling away. While these possessors of the most valuable wealth are paralyzed and trembling, the men whose dominion is supreme are they who own neither plantations, nor factories, nor farms, nor ships, nor merchandise, but who, in dingy counting-houses, have a strong box full of short-dated bills of exchange, whose names are familiar words in the Transfer Office, and who can deliver the proudest from the jaws of ruin by a leaf from their chequebook. These are the men who, according to the great thought of De Quincy, have but to touch a spring in London, to produce a vibration throughout the world, to quicken or arrest the march of armies, to frustrate the ambition of kings and statesmen, or to perform the nobler exploits of modern civilization, those great ocean canals and railways which bind together the families of men.

The property which is the special possession of these potentates, who, whether in London, Paris, Frankfort, Berlin, Vienna, or New York, are all one body, closely knit together and mighty in their union-a true aristocracy and priesthood, commanding obedience is of a nature far too complex to be divested of its mystery by illustrations drawn from a state of barter.

Change from Barter to a Currency.

In an act of barter, each of the two parties makes both a sale and a purchase. Each, in parting with what he brings, acquires a power of purchase, which, however, is at the same instant extinguished by his receiving an equivalent. The introduction of a currency, or “medial commodity," divides the act of barter into two parts'. Thenceforth the seller exchanges his goods for a purchase power, which he can reserve and exercise, at his own time and with a different party. The essence of a “medial commodity" is, that it is taken not for its own sake, but because it gives this power. If it were not a commodity, it would not have become medial; but when the medial function is once well established, it becomes capable of existing by itself. The commodity drops, as it were, first out of sight, and then out of existence, leaving behind it the function, not as a shadow, but as a substantial addition to actual things. This, however, requires further explanation.

In history, there is no example, I believe, of the transition from a state of barter to the use of a currency. Every existing currency has flowed down to us out of that cloud which envelops the origin of nations. A currency being, in the happy phrase of Mr. Bailey, a medial commodity, it is natural to suppose that that commodity which was best known, which it cost nearly equal sacrifices to obtain, and which was itself often the subject of exchange, would become a familiar standard of comparison for settling exchanges, and then a generally acceptable substitute, where a seller wished to reserve the power of purchase accruing to him from the sale, for a future occasion. Thus cattle were used in the Homeric ages, tobacco amongst the early Virginian planters, salt still in Abyssinia, tea in Tartary.

A metallic currency was an immense step in civilization. In a country without mines such a currency must have been made

Essays on Unsettled Questions of Political Economy, by J. S. Mill.

piecemeal. Gold was obtained in exchange for domestic products. Each portion was a substitute for a portion of useful articles sent away. Coming to be used as a currency, its estimation as an ornament would soon be altogether lost in its estimation as a means of obtaining other things; strictly speaking, at this point its intrinsic worth becomes merged in that worth which is ideal or conventional. It practically ceases to be a commodity for use or consumption, except in an inferior degree; but it comes to be coveted more than any, nay sometimes more than all, commodities, for that peculiarity with which the consent of men invests it, namely, its assured power or command over goods and labour. This currency has been bought, as has been said, from foreigners, by a succession of private efforts, each individual thinking the convenience of the portion which he holds worth the abstinence from immediate consumption which his holding it involves. As the gold passes from hand to hand, the position of each successive holder becomes similar to the last: he has given something away, and received not so much an equivalent as the power of taking one when and where he likes best. The currency being obtained, the community, as a whole, has paid away a full equivalent for it out of the produce of its labour; but it has acquired an instrument of singular power in quickening industry, and developing not only material but moral resources. By a law of the human mind, we come in time to prize any habitual instrument of gratification, beyond the gratification itself. By early and multiplied associations, gold becomes attractive and stimulating to common minds, more than the things which it commands, and thus is instrumental in infusing a new energy into industry. So far its essential character appears to be that of a universal equivalent: a power of purchasing whatever is desired, the exercise of which effects a payment as well as a purchase.

Threefold Aggregate of Money.

The sum total of the medial commodity would be the money

of a primitive community. The sum total of the paying power must be considered as the money of England. It consists, as has been said, of gold, bank-notes, and transferable bank credits, because all these, by general consent, operate as a perfect payment, and there is nothing else that does so in that large and governing class of transactions which take place between dealers and consumers. It must, of course, be assumed that a banker never opens a credit upon himself in order to purchase, but only in order to lend. This being assumed, bank credit is at once separated as a paying power, always definite in amount from private credit, which when used to purchase does not pay or close the transaction, and in amount is perfectly indefinite. The latter is, as Mr. Fullarton says, an illimitable element of purchasing power. No man who has credit knows how much goods it will enable him to obtain, but every one knows how much he can on the instant pay for.

Bullion, bank-notes, and bank credits, then, in a certain important aspect, may be regarded as a uniform mass; but the mass is, in reality, like the crust of the earth, composed of different layers or strata, which differ from each other in stability and texture, even more than the oldest rocks do from the light sand which is tossed in interminable billows by the blasts of the desert. At the bottom is the bullion, the primeval granite, out of which all the others have been formed, and upon which they repose. Then comes the first layer of credit, the bank-note, to the eye a much lighter formation, and yet so solidified by its contact with the bullion, as to be fairly comparable to those crystalline slates and marbles which the central heat has assimilated to the subjacent rock. At the top, not like to any part of the solid earth so much as to the stormvexed ocean, or to the still more stormy atmosphere, floats the third portion of the aggregate, itself a succession of layers, and liable, especially in its upper regions, to changes swift as light, from the most profound calm to the wildest fluctuations.

Bullion Receipts and Bank Notes.

The conception of a currency as a definite measurable purchase power, separate from commodities, and yet received as a full equivalent in exchange for them, is attended with no difficulties. If no form of credit had been superadded, money capital would have been created by laying by not only definite but tangible portions of the currency. Its amount would have been the amount of the hoards. Two men could not possibly seem to possess the same piece of money capital. If any man deposited his gold with another, that other would have it, and not he. But one of the most extraordinary inventions of civilization was that which gave to credit in certain forms-not the power of purchase, for that it must possess wherever man is not so degraded as to have no confidence in his fellows-but the power of effecting payment. One of the simplest forms in which the power arose was that of the ancient banks of deposit, described by Adam Smith in his account of the bank of Amsterdam'. When any one placed gold and silver in the bank, the bank would pay the amount as he ordered. He could thus transfer his right over the bullion to another, and the mere right came to be accepted as equal to the reality. Sometimes bank-receipts were given for the deposits, and the transferable bullion receipt was the parent of the bank-note. It was a mere piece of paper, but it conferred a legal right, which was not exercised, because, while gold awaited it, it served every purpose that the gold could serve, and was more convenient. A pure purchasing and paying power was thus nearly disengaged from the last material fetters, and there remained but one step more to perfect the instrument, by enabling it to circulate and operate with full power over labour and goods after the disappearance of the gold. We may conceive, for the better explanation of the subject, though not historically, that in this case the bankers were struck with finding the same hoard of

The order of the facts here is artificial, and chosen only for the purpose of exposition. The historical order is highly complex.