as he wile, withouten estymacioun. For he despendethe not, ne makethe no money, but of Lether emprented, or of Papyre. And of that money, is som of gretter prys, and som of lasse prys, aftre the dyversitee of his Statutes. And whan that Money hathe ronne so longe that it begynnethe to waste, than men beren it to the Emperoure's Tresorye; and than thei taken newe money for the olde. And that Money gothe thorghe out alle the contree, and thorghe out alle his Provynces. For there and beyonde hem, thei make no Money nouther of Gold nor of Sylver. And therefore he may despende ynow, and outrageously." Not a few great emperors and kings and even republics have imitated the Great Chan, and have spent their paper money, "ynow and outrageously."

Reasons for the Use of Representative Money.

It is well to analyse and state exactly the reasons which may be given for the introduction of pieces of representative money. Several motives may be detected, and they have been of different weight in different cases. The origin of the European system of bank-notes is to be found in the deposit banks established in Italy from four to seven centuries ago. In those days the circulating medium consisted of a mixture of coins of many denominations, variously clipped or depreciated. In receiving money, the merchant had to weigh and estimate the fineness of each coin, and much trouble, loss of time, and risk of fraud thus arose. It became,

therefore, the custom in the mercantile republics of Italy to deposit such money in a bank, where its value was accurately estimated, once for all, and placed to the credit of the depositor.

The banks of Amsterdam and Hamburg were subsequently established on a similar system, and a full account of them will be found in Adam Smith's "Wealth of Nations," Book IV., Chapter III., and in Hewitt's "Treatise upon Money" (p. 121). The money placed to the credit of individuals in these banks was called bankmoney, and commanded an agio or premium corresponding to the average depreciation of the coins. Payments were made by the merchants attending at the bank at a particular hour, and ordering transfers to be made. in the bank books. The money paid was thus always of full value, and all trouble in counting and valuing it was avoided. The regulations of these banks were, however, in many respects complicated, and it is difficult to understand their purpose.

Inconvenience of Metallic Money.

Closely involved with the previous motive for the use of representative money is that of avoiding the trouble and risk of handling large amounts of the precious metals. In order to keep large sums of metallic money in safety a person must have strongholds and watchmen. The origin of banking in England has never been sufficiently investigated, but, so far as we know, it arose for the purpose of safe custody. While public and well

regulated deposit banks had existed for centuries in Italy, the only trace of such an institution in England was found in the mint in the Tower of London, whither merchants were accustomed to send their specie for safe keeping. Unfortunately, in 1640 King Charles I. appropriated as a loan £200,000 thus deposited, and the merchants, no longer trusting the government, and finding it dangerous to keep large sums of money in their own houses during the troubled times which followed, resorted to the practice of depositing their money with goldsmiths, who probably had vaults and guards suitable for the purpose.

As acknowledgments of the possession of such sums of money, the goldsmith gave receipts, and at first these documents were special promises, like dock warrants. The practice arose of transferring possession by delivery of these receipts, or "goldsmith's notes," as they were called. Such notes are frequently referred to in Acts of Parliament, and even as late as 1746 most of the London bankers continued to be members of the Goldsmith's Company. It is plain from the manner in which these notes were mentioned in some statutes that they had become general and not special promises-mere engagements to deliver a sum of money on demand, without conditions as to keeping a reserve for the purpose.

The Weight of Currency.

Even the weight of metallic money would be a sufficient reason for the use of representative documents in large transactions. In proportion as the legal tender is more bulky and inconvenient to carry about, is this motive more powerful. Thus, when the state of Virginia employed tobacco as the medium of exchange in the eighteenth century, the tobacco was placed in stores, and receipts on paper were handed about. Paper money was issued in Russia under Catherine II. in 1768, on the ground that the copper money, then forming the legal tender, was inconvenient. So much were these assignats, or notes, preferred, that they at first circulated at a premium of per cent.

In the present state of commerce, even gold money would be far too heavy to form a convenient medium for making large payments. M. Chevalier states that it would require forty men to carry the gold equal in value to the Regent Diamond. The average daily transactions in the London Bankers' Clearing House amount to about twenty millions of pounds sterling, which if paid in gold coin would weigh about 157 tons, and would require nearly eighty horses for conveyance. If paid

in silver the weight would be increased to more than 2500 tons. For the conveyance and custody of very moderate sums in coin or bullion, individuals, or even large banks, resort to the aid of the Bank of England, whose officials are experienced in the matter, and have all facilities.

I find that a Bank of England note weighs about 201

grains (13 grams), whereas a single sovereign weighs about 123 grains, and the note may represent five, ten, fifty, a thousand, or ten thousand such sovereigns with slight differences in the printing. If we were obliged to handle a medium of exchange actually embodying value, it would, ere now, have been necessary to employ precious stones, or some metal much more rare and precious than gold. But the use of representative documents is becoming so general in the most advanced commercial countries, that the portability of metallic money is a question of very minor importance. Gold already acts in England only as change for notes, and the question will arise whether it will long be needed even for that purpose.

Saving of Interest.

A further and very potent motive for employing representative tokens or notes, consists in the saving of interest and capital, which is effected by substituting a comparatively valueless material in place of costly gold and silver. Whenever a nation is in great straits for want of revenue, there is a great temptation to treat the metallic currency as a treasure to be temporarily borrowed for the necessities of the state. The ancient Greeks understood this as well as the modern English, Italians, or Americans. Dionysius, on this ground, obliged the Syracusans to accept tin tokens in place of silver coins, worth four times as much in metallic value. In the book on Economics, attributed to Aristotle, we