every exchange, every one must examine and try every piece by itself. This would consume much time, would require the possession of great skill in every individual, and would by its frequent repetition, soon wear away the substance itself. Hence, it is of advantage that the metals used for money should be peculiar in their weight and color, and that their appearance should attract attention, so that their peculiarities may be easily learned and distinguished. The brilliant lustre of silver and gold, therefore, adds very much to their fitness for coin. Their weight, also, presents a ready means for the detection of adulteration. Platina, which is used in Russia for the purpose of money, has the advantage of both of them in weight; but it has no lustre, and, in appearance, it very much resembles the baser metals. This will be an objection to its universal acceptableness.

5. It should be as little as possible, liable to decay. Were it easily destructible, great losses would constantly occur; as the loss must fall upon the individual in whose hands it happened at the time to be. And besides, it would be from this cause liable to so great fluctuation in value, that it could never be used as a circulating medium. Were fish or wheat the circulating medium, since both are liable to rapid decay, a change of weather might frequently ruin a man. No one would exchange, at such hazards, for the circulating medium, and all exchange would be made in kind. Could the circulating medium always bear the same relative price to other commodities, it would probably be advantageous. But as this is impossible, it is manifest, that that commodity which is liable to the least fluctuation, is, by this circumstance, the best adapted to this purpose.

6. As we sometimes desire to make small and sometimes large exchanges; and, as the substance best adapted to the one is not always best adapted to the other, there is an advantage in employing two

metals for this purpose. For this reason, both silver and gold are commonly employed in most civilized countries. For exchanges of less value than the smallest silver coin, copper is also generally used. And, if silver should ever become so abundant and cheap as to be too bulky to be used for effecting small exchanges, it would take the place of copper, and its place would be supplied by gold. Should gold become as abundant as silver, it would take the place of silver and some dearer metal, as platina, would be used in its stead.

Inasmuch as gold and silver possess all the essential qualities which are required in a circulating medium; and as the condition of man so manifestly points to the necessity of some such instrument, it is not remarkable that they have so long and so universally been adopted for this purpose. But it is always to be remembered, that we use them as a circulating medium, because we want a circulating medium, and because they accomplish the purpose. We do not use them as a circulating medium, because we see a stamp upon them, nor because government has made them a legal tender; but because we know that they represent a given amount of value, and we therefore know, that we can exchange them for the same amount of value, whenever we please. If a bushel of wheat sell for a dollar, we know that it costs as much labor to produce a dollar at the mine and bring it to us, as to produce a bushel of wheat and bring it to us. Hence, we know that until some new and vastly more productive mines are discovered, this dollar cannot be produced for less labor, nor represent a less amount of value. And, as every body wants a dollar, and no one can furnish it at a less cost, we know that it will bring, in exchange, the same as we have given for it.

We remarked, when speaking of exchangeable value, that the demand for any product, and, of course, its exchangeable value, was affected by the number of desires it would gratify. The greater the

number of desires which it will gratify, the greater the number of persons who will want it; hence, they will overbid each other; and, unless there be some improved, that is, cheaper method of producing it, its exchangeable value will rise. This principle applies to whatever is used as money. The precious metals are used for ornament, for domestic utensils, and for coin. If the use of them for one of these purposes should be discontinued, the demand would be less; and, as they are not liable to decay, their relative price would fall.

Hence it is, that the amount of plate and utensils formed of the precious metals, in a country, is no criterion of its wealth, but frequently an indication of the reverse. Should commerce be unproductive, and exchanges diminish, and our intercourse with other nations be cut off, and we be reduced to the condition of Europe in the dark ages, there would be but little need of the precious metals as an instrument of exchange, and their price would fall. Hence they would be melted down by the rich, into plate. And, on the other hand, when they have been used for plate, and the demand for them, and their consequent price have from any cause, subsequently increased, the temptation to use them productively, is too great to allow them to be employed in this manner; and the plate is melted into coin, and its place supplied with porcelain, or plated ware, or glass, or any other material of equal beauty, but of inferior costliness.

SECTION III.

OF THE FUNCTIONS OF MONEY.

Let us now suppose metals to have been selected by the whole community as the circulating medium, and that they have been so divided and verified as

to be fitted to accomplish this purpose. We shall proceed to consider some of the functions which these metals would discharge.

Money is the instrument for facilitating exchanges. This, when considered as money, is its only office. By accomplishing this purpose in the least time, and at the least expense of labor, and transportation, and wear, it reduces the cost of every product, and thus adds immensely to the productiveness of human industry.

The principles on which it accomplishes this result, have been already alluded to. They are briefly as follows:

1. The cost or price of the money employed in every exchange, is equal to the cost or price of the article which is exchanged for it. If a barrel of flour in Lima be exchanged for ten ounces of silver, the cost of producing the flour, and of transporting it to Lima, is equal to the cost of producing the silver and transporting it to the same place. If a barrel of flour in New York, be exchanged for seven ounces of silver, the cost and transportation of the one at the place of exchange, is equal to that of the other. If the flour merchant wishes for a thousand ounces of silver, he can procure it more cheaply by producing flour than he can by going to the mines of Mexico, and working it out from the ore. And, if the miner wishes for flour, he can procure it more cheaply by working in the mine, than by attempting to raise wheat and manufacture flour on the mountains of Potosi.

That this is so, is evident from the fact, that if the cost of the precious metals change, their exchangeable value varies, like that of any other product. Thus, if new and richer mines are opened, so that the cost of producing the precious metals is reduced, or, in other words, so that mining labor is more productive, the price of the precious metals falls. In such a case, we receive more silver for a day's work, for a bushel of wheat, for a pound of wool, or for

any other product. Money is thus rendered cheaper, on the same principle that when a wheat harvest is abundant, we receive a larger amount of wheat for a day's work, or for a pound of wool, than at other times. This is exemplified, in the great change of prices which occurred throughout the world after the discovery of the mines of South America. And, on the other hand, when the price of producing the precious metals is increased, their exchangeable value rises. This has been the case, for some time past, in consequence of the civil wars of South America. Hence, there has been for some time past, a gradual rise in the price of the precious metals; that is, the price of other things has fallen; or, in general, if the cost of the production of the precious metals diminishes, while that of the production of wheat remains the same, we shall receive more silver in exchange for a bushel of wheat. If the cost of producing an ounce of silver is increased while that of producing a bushel of wheat remains the same, we shall receive less silver, in exchange for a bushel of wheat. That is, in exchanging products for the precious metals, as for any thing else, we exchange on the principle of labor for labor.

Besides, the price of the precious metals, like that of any other commodity, is influenced, in short periods, by the fluctuations of supply and demand. There is, in any country, the course of whose industry is not distorted by legislation, a supply of money, equal to the ordinary wants of the community, for the purposes of exchange. The price of both articles, is, in such a case, based upon the cost of the production of specie, compared with the cost of the production of the several articles for which it is exchanged. But, suppose that while this amount of specie remains the same, there should happen a year of universal productiveness in all the departments of agricultural, manufacturing, and commercial industry. In this case, the number of exchanges, and the amounts exchanged, would be propor