SECTION IV.

OF THE AGENCY OF GOVERNMENT, IN RESPECT ΤΟ A

CIRCULATING MEDIUM.

We have, thus far, said nothing concerning the agency of government, in respect to a circulating medium. The reason is, that, thus far, the necessity for the exertion of such agency has not been apparent. Two men use money, in exchange, for the same reason that a man uses a hammer for the purpose of driving a nail; because, he thus economizes both time and labor. All men use money in exchanges, for the same reason that all men use hammers for the purpose of driving nails; because they all find that they thus save time and labor.

Had governments no agency at all in the matter, the precious metals, as a circulating medium, might have been both introduced, and universally employed; and they would have been so introduced and employed, as they actually were, in the time of Abraham. Hence, as we have before remarked, a circulating medium derives its use, as money, from its inherent fitness, and the desire of men so to employ it, and not from any agency of government in establishing it. While, however, this is the case, and while this is always to be borne in mind, there is yet some agency, which society, or government, which is its agent, may exert, that shall increase the convenience of whatever may be used as a circulating medium.

This agency has reference to two circumstances. 1. Whenever any substance has been found universally adapted to the purposes of exchange, it is important that it should be used by all men, unless something to the contrary be specified by particular contract. If I owe a man for a hat, and when I come to pay him, he demand payment, not in silver, but in beaver skins, I may not be able to procure

them, and he may hold me his debtor, and imprison me accordingly. If I, instead of paying him in silver, offer him leather, and declare that I will pay him in nothing else, he will be defrauded out of his due. Now, to prevent disputes without end, it is desirable that something be fixed upon, of which the tender shall discharge for ever the debtor's obligation. And as this would most naturally and most justly be the substance which all men have chosen for a circulating medium, this is most properly chosen. Hence, society or government have a right to establish the precious metals as a legal tender; that is, to enact, that if a man declare that I owe him ten dollars, and I offer him ten silver dollars, if he choose not to receive them, I am under no obligation to give myself any more trouble about it. The tender, on my part, is a full release. I am under obligation to offer nothing else; and he has no right to demand any thing else. Nor is there, in this, any oppression. If a man wish to be paid in something besides money, he can always specify it in the contract; and thus his object can be accomplished. The whole effect of such a law is, to prevent disputes, and to enact what shall be a full and valid release from obligation, when nothing specific has been agreed upon.

But, secondly: If any substance be used as a circulating medium, it is evident that its utility will be greatly increased by several circumstances. Of these, the principal are:

1. That it be of uniform purity. Were it otherwise, every piece must be tested by chemical analysis. This would be, of course, impossible; and hence its utility would be greatly diminished.

2. That it be divided into portions of such a size, as shall be most convenient for the purposes of exchange. Were coins a foot in diameter, or as small as the head of a pin, they would in either case be almost useless. The former could be used only in large exchanges; the latter would be so small as to

be frequently lost, and of so small a value as to consume a great deal of time in counting them.

3. That it should be so prepared, that each piece shall, on inspection, indicate its value, and also indicate that no change has been effected in that value, by design. To give to the precious metals these qualifications, is the intention of coining.

But it is evident, from a moment's consideration, that the preparation of coin in this manner, for the public use, could never be safely entrusted to individuals. The temptations to dishonesty are too great for ordinary human virtue. It is evident, that such a work should be executed by those, whose interest would lead them to perform it with the greatest possible fidelity. Hence it is, that individuals have, in all civilized countries, surrendered the right of coining money to the whole society, that is, to government; and governments have executed it by means of agents appointed for that purpose. These agents should always be placed under such circumstances, that their interest is strongly on the side of honesty ; and the supervision over them should be of such a nature, that any failure either of skill or of integrity, could be easily detected.

Such are the limits, within which the powers of government, in respect to money, are restricted; and such is the reason, for which this power is conferred. Of the manner in which a government should execute this trust, it is only necessary to add a few remarks.

1. It is the business of the government to regulate the purity of money. Inasmuch, however, as this whole power is conferred for the public convenience, the exercise of this power should never be on the ground of arbitrary enactment, but of public convenience. Thus, as money is liable to loss from wear, and as this loss is rendered less by the addition of a small portion of alloy, which renders it harder; and, also, as the purification of the precious metals from all alloy, would be a process of great

and useless expense, it is for the convenience of all parties, that some portion of alloy should be allowed to remain when the metal is prepared for coining. The degree of this adulteration should, however, be fixed by law, and should thus be publicly known, and should be invariable.

2. The government should regulate the size and form of the coin.

The size of the pieces should be such, as shall best adapt them to the purposes of exchange.

Their relative proportions to each other, should be such as to adapt them most conveniently to the purposes of enumeration. On this account, the decimal system, adopted by the United States, is probably preferable to any other. The size having been once fixed upon, it should remain invariable.

In respect to the form of money, we may add :

1. It should be adapted to convenience for counting. On this account, flat coins are always preferred.

2. It should present the least possible surface to friction. On this account, the thicker the pieces are, the better, provided they be not inconvenient for piling.

3. The whole surface, or so much of it as is possible, should be so ornamented, that if any of the metal should be feloniously filed, or worn away, it may easily be discovered. For the same reason, the edges should always be milled.

4. To reduce the amount of friction, as much as possible, the rim of the edge should be so raised as to protect the face.

It would be of advantage, also, if the amount of pure metal in every piece were always stamped upon its face. This would be an additional check against any interference on the part of government with the purity or the weight of coin. It would also allow persons entering into contracts, to make them either in weight or in denomination, as they choose; and thus, give them additional means of protection

against interference of this sort, even if it were attempted.

Inasmuch as a piece of metal coined is worth more than a piece uncoined; that is, as it has additional value, derived from the means of verification conferred upon it; as this additional value is the property of the owner, and as the conferring of it is a costly operation, it is right that the owner should pay for it. Were nothing charged for it, as it is worth more when coined than when uncoined, when it could not profitably be sent abroad in one form, it might be so sent in the other form; hence, when it could not be sent in bullion, it might be coined, and sent away in money. Hence, there would be, in such a case, a premium given to its exportation. But, on the other hand, the charge for this operation should be just sufficient to defray the expenses of the work. If more than this is charged, so that coining would be a profitable business, it would soon be done by private individuals, for gain; and the country would be flooded with coin made in other countries, and be thus liable to great imposition. The government would thus soon lose the business. If it be done at the lowest practicable price, as no one can make any thing by the operation, all temptation to private coining is taken away.

Inasmuch as money is liable to continual wear from friction, and as it is thus steadily, though slowly, diminished in value, it at last becomes so much worn, as to be unfit for circulation; because its impression is effaced, and also because it contains much less than the standard quantity of metal. When it becomes thus unfit for circulation, on whom is the loss to fall; on the last holder, or on the whole community? Doubtless, on the latter. The last holder has derived no more benefit from it than any one of the thousand holders, each one of whom has contributed, by using it, to depreciate its value; and there is no reason why he, in preference to any other,