of money, for the sake of interest. The dealers in rice, wheat, or other produce would need to borrow money when pur chasing a crop, and would have money to lend after the crop had been marketed. Raiders or traders, when starting upon an expedition, would need plenty of ready money, and upon their return might find it more profitable to borrow against a heavy stock of ivory than to sell it at once. The weak or timid persons in a primitive community would like to deposit a portion of their savings in the hands of a strong and trustworthy man, especially if such a man would pay something for the use of the money. A rich, strong, trustworthy man, either old or willing to lead a quiet life, would drift into the banking business for power, profit, honor, or simply to oblige his friends and neighbors. Indeed, so naturally does the banking business come up that, without offering further proof, we may assume that this business has been necessary in all the steps of trade and civilization. Certainly it is so necessary in our modern world that wherever we find a

large village which has no bank or banker, nor one in proximity, we are pretty sure to find a community that is both poor and ignorant.

Of tremendous importance for good and evil has been and is the financial contrivance which we know as paper money; properly, a receipt for real money and a promise to pay it back on demand. When one person saw fit to trust another with money or other valuable thing, either for safe-keeping or both safe-keeping and interest, the first person would be glad to have a receipt. And if the banker were well known, his receipt might be passed by the first person to a second, in exchange for merchandise. But the first person would want probably a number of things, belonging to a number of people, and not want all the things at once; and he would therefore ask the banker for a number of receipts, each for a convenient portion of the whole deposit. And, as business grew, the banker, for his own convenience, would keep in readiness a great number of receipts, for small and large amounts—that

is to say, he would be ready to issue to the public paper money, in small and large denominations. People like paper money because of its lack of weight; but the benefit to the issuer comes only in issuing an amount which exceeds the sum of real money that is supposed to be represented. If a banker issue one hundred thousand dollars in paper money in receipt for one hundred thousand dollars in real money, and keep the real money in his vault, no profit can result. But if he lend seventyfive thousand dollars of the real money on interest, trusting that the public will not demand payment for more than twenty-five thousand dollars of his paper, his profit becomes quite clear; and it is equally clear that the community has the use of a circulating medium seventy-five thousand dollars greater than before. Given the good faith of the issuer, the question whether paper money be a blessing or a curse must always have been mainly a question of quantity, not of exact but of relative quantity,--rela tive to the real money in the vaults of the issuer, relative to the customs of the public

in the matter of carrying money, relative to the public's belief in the wealth back of the issuer, relative to the state of trade, present and prospective and foreign and domestic, relative to the probability or improbability of happenings which, in a moment, would change confidence into panic and bring to the doors of the issuer the holders of most of his paper, crying loudly for gold. In truth, the line between safety and danger in a volume of paper money moves forward and backward with changing circumstances, and holders have always been willing to hold when they thought they were not obliged to hold, and have always demanded payment when they thought that payment might be refused.

When governments took to themselves the right to issue paper money, the drawing of a danger line became still more difficult, because of a prevailing notion that the value of money rests in the governmental stamp upon it. Governments have put forth excessive volumes without knowing that there was any danger, and with an ease which has been equalled only by

the difficulty of subsequent withdrawals. Whether given a legal-tender character or not, paper money paid to troops, for food, clothing, weapons, ammunition, or for other things, readily finds its way into circulation. And with a large quantity flowing from the national treasury, people appear to be prosperous, demagogues applaud, and safety is already well behind before any exportation or any hoarding of gold acts as a danger signal. The test of relative quantity applies to government notes as well as to bank-notes; but the former have the advantage of being known by the whole instead of by sections of a community. It is important that A, in the East, trading with B, in the West, should agree to give or take the kind of money that B has in mind; or, for example, that C, in the South, trading with D, in the North, should not be compelled to receive banknotes which are bankable only in the North, or be permitted to settle a debt with the bank-notes which are bankable only in his own section. Governmental safeguard, guaranty, or responsibility is