change, is money; to a consideration of the nature and uses of which, we shall devote this and the succeeding chapters. The present chapter will be confined to the consideration of a metallic currency. We commence with the use of a circulating medium.

In treating of this subject, we shall first consider the difficulties which must necessarily embarrass exchange in kind; and, secondly, the manner in which these difficulties are removed by means of a circulating medium.

I. The difficulties which attend upon exchange in kind.

By exchange in kind, I mean exchange of commodity for commodity, as when a farmer exchanges wheat for sugar, or pork for iron, &c.

1. Suppose a producer to have prepared his product for consumption. If he be obliged to exchange in kind, it may be a long time before he finds another person who desires the article which he has created. If he be obliged to wait long, his product, if perishable, will be either destroyed or deteriorated. He must go in search of a purchaser; and, if he at length find one, he may have consumed, in the search, as much time as the article originally cost. This must be added to the cost of the article, or else he will be a loser. But, by this additional cost, the product is no better; it is only dearer. This must, of course, decrease the demand; and hence, by all this additional cost, both parties are poorer.

2. But it is to be remembered, that the producer not only wants to part with his product, but also to part with it for some definite object of desire. He who has raised wheat, does not wish simply to part with his wheat, but also to receive in exchange for it, tea, or coffee, or iron, or salt, or clothing. He must, therefore, in order to effect the exchange which he desires, not only find some one who wishes for wheat, but also some one who is able to give him, in return, the precise product he desires. If he

desire clothing in return, it will not be sufficient to find some one who offers him bread, or shoes, or butcher's meat. This, also, increases the difficulty of exchange, and, of course, the labor and the cost necessary to effect it.

3. But this is not all. Men who wish to exchange, do not always wish to exchange in equal amounts. A grazier who brings a fatted ox to market, may find persons enough who want a few pounds of beef, but very few who want a whole ox. The grazier cannot divide his ox, and give a part of it for a few pounds of coffee or tea; nor, probably, does he require one fourth of the value of the ox, in any article which can be purchased in the town where it may be sold. He wishes to obtain, by the sale of the ox, additional provender for the support of his remaining herd. This he cannot, perhaps, procure, except in the country; or if he could procure it, the merchant who owns the provender, would not want a whole ox for butcher's meat. Thus, exchanges would be arrested; or must be made very rarely, and at great cost, and under every possible disadvantage.

4. Such are the difficulties which attend upon the exchange of material products. But it will be manifest, at once, that material products give rise to but a small part of the exchanges which are, by necessity, made among men. One great article to be exchanged is labor. This every man produces, and must produce, by the law of his nature; and this, every man is able to offer in exchange for the objects of desire. Now, were exchange only in kind, a man who had nothing but labor or skill to offer, would not be able to labor for those who desired his labor and who would give him the greatest wages for it; but he must labor for those who were willing to give, in ever so small quantity, the articles which he needed for his support. The laborer in an ironfoundry would be obliged to take his pay in iron. But, as he could not exchange his iron with the

baker, the butcher, or the clothier, he must go and work for these producers, for any compensation by which he might obtain for himself the necessaries of life. The workman of the baker must take his pay in bread. But he would want only a small portion of bread for himself, and he must spend his time in exchanging it for whatever else he needed. If he could not thus procure tea, coffee, clothing, and other necessaries, he must leave his occupation, and work for those who wished to exchange them for his labor. The physician must take his fee in iron, or bread, or butcher's meat; and if any of his patients produced what he did not want, he must either attend them gratuitously, or they must die without assistance. Besides this, there are many products incapable of division. If a hundred men engaged in building a ship or a house, how would they take their pay in kind, without taking the ship in pieces, and thus rendering their work wholly useless?

5. Hence we see, that were exchange only in kind, there would be no division of labor, except in its most imperfect form. No man could perfect himself in any one art; because, by the exercise of that alone, he could not possibly procure the means of sustenance. I have already shown, how impossible it would be for him to do this by the practice of any one of the ordinary mechanical trades. How much more, when these trades are minutely subdivided. I have elsewhere stated the advantages of this subdivision. But how could this be effected, if exchange were made only in kind? Suppose a man employs his time in the single process of heading pins, or in forming the rivets for the handles of penknives; how could he subsist by exchange in kind? Who would give him what he needed for subsistence, for his pin-heads, or for his knife-handle rivets ? Hence, division of labor, so essential to the productiveness of human industry, to the progress of society, and to the use of natural agents, could exist only in its most elementary forms, were exchange limited to exchange in kind.

And, if it be said that this inconvenience could be avoided by establishments for barter, it will at once appear that these could remedy it only in part. They could assist in the exchange of nothing but material products, and of those which were not rapidly perishable. They could present no relief for exchanges of labor. Hence, they would do almost nothing to facilitate division of labor, and could carry forward the progress of society in no respect beyond its most rude beginnings.

From such causes as these, arises the necessity of a circulating medium; and it will be easily seen, in what manner, by means of a circulating medium, they are remedied.

1. Suppose that the producer can always exchange his product, not for the article which he immediately wants, but for some other article which is universally wanted, and wanted at all times, and in all quantities. As soon as the producer has, by exchange, possessed himself of this commodity, he may then, on account of its universal desirableness, easily procure, by another exchange, whatever he may need. In this manner, by means of two exchanges made at the same instant, the labor of days or of weeks may be accomplished. Thus, if salt were this commodity, and every one wanted salt in all quantities, at all times, and at a fixed value; by exchanging every thing for salt, and then exchanging salt for whatever we might desire, the labor of exchanges would be vastly diminished.

2. This convenience, however, will be much increased, if the article of universal desire be small in bulk; because, in this case, much of the labor of transportation will be avoided. Were the lace-maker obliged to exchange his lace for salt, he would be obliged to furnish himself with a cart, in which to receive his payment. And thus, in general, instead of a purse, in which to carry our money, we should require, for this purpose, the use of a wagon and horses.

3. If this circulating medium be also minutely divisible, it will possess still greater conveniences. The producer may then part with all, or with a part of his product; and he can procure, with a circulating medium, as small a portion of that which he wishes in exchange, as he may choose. The farmer, instead of exchanging one part of his wheat for tea, another part for coffee, and another part for clothing; or else, exchanging it all for tea, and then endeavoring to find customers for his tea, may exchange it all for the circulating medium, procure as much of each as he pleases, or, if he choose, make no farther exchange whatever.

4. The case is still stronger, when labor is one of the articles to be exchanged. The laborer will now no longer be obliged to labor at any price, for him who is able to give him in exchange what he immediately wants; but he may labor for any one who will give him, in return, this object of general desire. Hence, he is now at liberty to labor for him who will give him the best wages; that is, where his industry and skill will be employed most advantageously to himself. With this he can procure whatever he wants, in such portions as he may desire.

5. The practicability of the division of labor now becomes immediately apparent. If the laborer be paid in the article of universal desire, it makes no difference whether the person who produces what he wants, needs or does not need, his particular product. He wants the object of universal desire, and this is enough; for, by this, the laborer can effect exchanges with him or with any one else. If he can procure this circulating medium by means of pin-heads, or knife-handle rivets, this is all that he wants. He is now as independent as though he produced that which every one wants; since, by means of what he produces, he can procure that which every one wants. Thus, we see, that every man is, in this manner, able to devote himself to that in which his skill will be most productive to him