where, are striving, by the highest culture, to become fit for the tasks of a future, yet lying bright before you in all the colours of hope;-to you, heirs to an illustrious ancestry and a priceless inheritance ;-to you, to whom belong as your own both the Saxon and the Norman-the mailed crusaders and the peasant archers-the great churchmen and the great thinkers of the times which Mr. Digby has depicted as the "ages of faith,”— the riper and nobler glories of the Reformation—that Ridley and that Latimer, whose fire has been lit up in England, and shall never be extinguished-the wondrous galaxy of poets, statesmen, discoverers, and commanders of Elizabeth-the Falklands and the Hydes, and, nobler still, the Eliots, Vanes, and Hampdens;-to you, who are sensitive to all that was beautiful in the martyr Charles, who

"Nothing common did or mean,

Upon that memorable scene,"

and all that was grand in the character and career of his great destroyer; or to you, whose sympathies may be by choice with the men of later time, whether with either of the great rivals whose jar in the Senate "shook realms and nations;" or with the heroes of charity and faith, the Clarksons, the Wilberforces, the Buxtons, the Wesleys, the Whitefields; or those hearted outspoken men, brave in the midst of obloquy, the Prices and the Priestleys;—to you comes this appeal from one whom a singular destiny has led to dwell in turn upon each and all of these glories with loving admiration, and who can interpret much of your conflicting aims in this perplexing time, out of the conflicts and perplexities of his own experience.

To you, English by birth, comes this appeal, from one who, though not born on the soil, is bound to it by the strongest ties of domestic affection-of friendships dearer than life-of a love which the meditations of years have continually augmented. It comes from one prepared, by long habits of lonely thought, to speak to you at this solemn time. Believe me, it is no common call. Here is no demagogue, seeking to kindle and

then fawn upon the baser appetites-no leader, desiring to use you for his ambition-no turbid excitement for the hustings-no stimulant to party passions. All shall be clear and calm. The pulses of the national life already begin to beat with the fire of an old and well-known disorder. The flush is on the cheek, the unhealthy lustre in the eye. Each paroxysm of that malady, if not more painful, is always morally more destructive, than the preceding. There is too much reason to dread another. You are called, therefore, to a consultation, not, I trust, to one which is without hope-for the issue will rest mainly with yourselves-but to a consultation which concerns even the existence of whatever you hold most dear.

The Problem stated.

The immediate problem, then, is to determine by what steps the new gold can find its way, to any great extent, into the English currency. Such gold, when it arrives in England, must come into the hands of persons who will either seek to employ it as capital or to spend it as income. The course, then, must be, to determine what is capital and what is income; to see how the two are related, how far increase of one is connected with increase of the other; and, those relations being once made clear, to trace in what way the incoming flood of new gold may affect them. A man who is about to commence any industrial undertaking must first have his capital in the form of money. His income is also estimated by him, and spent in the form of money. The first step is to mark out, as accurately as possible, what is the actual and general acceptation of the word, and therefore its true meaning. I mean, then, by Money, not simply gold or bank-notes, but THAT, whatever it may be, which is money in the money market and on the Stock Exchange-money with the draper, the grocer, and the butcher.

CHAPTER II.

MONEY.

"The awful shadow of some unseen power

Floats, though unseen, amongst us."-SHELLEY.

Money is Gold, Notes, and Bank Credits.

THERE is in England, existing separately from and in addition to the sum total of its material wealth, excepting bullion, a certain purchasing and paying power established by convention, a small part of it depending on the possession of bullion, but the much larger part on certain legal rights, the whole being placed as it were face to face with the gross stock of commodities, fixed property, and marketable personal qualities belonging to the people. This purchase power is in the aggregate, at any one time, of a definite ascertainable amount, though capable of being enlarged or diminished. It may be possessed by persons without land or goods, and who render no useful service to society, but who, nevertheless, can take the full amount of their claim out of the general stock. It may be divided into the minutest parts, transferred from hand to hand indefinitely, used immediately as income, or accumulated for future use as capital. The same portion which, when held by one man, is capital, may be income when transferred to a second; and after a third transfer, again capital; its character being determined by the manner in which its possessor intends to apply it. It includes the whole of the currency; that is, coin and bank-notes, and bullion in private hoards, together with a large additional sum, in the form of transferable bank credits.

Money is not synonymous with the gold and bank-note currency, because he who has a credit with a London banker

is universally felt to have money in the same effectual sense as if he had the sum under lock and key. His transfer of that credit by cheque operates as an absolute payment, simply by two lines in the books of the banker. In the words of Colonel Torrens, it "closes transactions."

Bills of Exchange not Money.

It is itself

A bill of exchange never closes a transaction. only the evidence of one or more transactions, all of which are closed then only when the bill is paid by means of coin, notes, or bank transfer, that is to say, in money. Bills of exchange play a most important part1 in effecting transfers of mercantile and banking capital, but they do not enter into income the amount of which determines prices. A bill of exchange is not used for wages or salaries, nor paid away to a butcher or a landlord. For the same reason Government securities, however nearly equivalent to money in many cases, and even acting as money amongst the Scotch bankers, who settle balances in exchequer bills, are yet not money in the popular and correct sense of the term. They will neither pay a bill of exchange nor a railway call, and they do not pass into incomes.

Further, with respect to bills of exchange, on those occasions when the light of monetary science is most needed, they not only cannot be considered in the same line with money as means of payment, but must be placed in direct opposition to it. In a crisis, bills of exchange constitute the precise difficulty that has to be met. Gold, notes, and transferable bank credit, so far as it then exists, are the only means of meeting that difficulty.

Money Capital distinct from Commodities.

Of this aggregate stock of money, a portion is always in

1 See Mr. Newmarch's Paper in the "Journal of the Statistical Society," May, 1851.

the hands of those who intend to use it as income, another portion with those who use it as capital. In the latter case it is money capital. It may pass from one person to another by gift or bequest, but it is usually exchanged for some portion of visible property or personal services. It is wealth, but never to be confounded with the wealth which it commands. Real or specific capital, the capital necessary for production, consists, say the economists, of useful commodities, food, instruments, and materials; but money capital is only a power to procure these, and the two are always, as it were, on opposite sides. But they are two distinct capitals, and both when bequeathed have to pay the tax upon legacies. As soon as the monied capitalist chooses to have his property in the form of food, instruments, and materials for the purpose of production, his money capital is gone; either as capital or as income, it is in the hands of others.

It has been the custom of economists to assume, with some slight attempt at proof, that in a society possessing a currency, the business of exchanges takes place according to exactly the same laws which would prevail in a state of barter. This assumption appears to me to be an error, and to have prevented a true interpretation of many most important phenomena. The conception of money capital existing independently, as a legallyrecognised transferable purchase power, exchangeable for, but never identical with, that specific capital which alone could exist in a state of barter,-as a species of wealth capable of varying in amount, without any corresponding, or perhaps with opposite variations in that visible property which it commands, and, therefore, as having laws of its own,—is a clue without which a correct analysis of our complex and highlydeveloped credit system is utterly impossible.

Monied Capitalists.

In ordinary times great capitalists are estimated by the amount and not by the nature of their possessions; but when