MEANING OF CURRENCY.

23

commodities for Money or Credit, it is evident that the Circulating Medium is the Medium by which Circulation is effected: and that Medium is simply Money and Credit in all its forms and varieties.

This is so plain as to require no more explanation: but an immense amount of controversy has been waged about the word CURRENCY.

20. We shall not notice here any of these controversies. The word CURRENCY is a term of pure Mercantile Law; and we shall simply explain what it really means.

66

To call Money by the name of CURRENCY is a strange abuse of language. In old times men used to speak of Money being current" as it passed from hand to hand. Hence arose the expression the Currency of Money. Lord Mansfield, in Miller v. Race in 1750, says of Money that it cannot be recovered after it has passed "in Currency," but before Money has passed "in Currency" an action might be brought for it. He says the same of a Bank Note: an action could not be brought for it after it was paid away "in Currency." Hence the word Currency was applied to a certain peculiarity of Money. But about the begining of the last century, by a most extraordinary confusion of ideas, and as far as we have been able to discover, it arose in our American colonies, the Money itself was called CURRENCY.

To show the extreme absurdity of this name, we have only to consider a few similar cases. Nothing is more common than to say that such an opinion or such a report is current: and we speak of the Currency of such an opinion, or such a report. Tom Paine said "I have gone into coffee houses and places where I was unknown on purpose to learn the currency of opinion. this I think a fair way of collecting the natural currency of opinion." But who ever dreamt of calling the opinion, or the report itself, currency? It is very common to speak of the currency of the Session of Parliament-but who ever dreamt of calling the Session itself currency?

.....

Now how can it be more rational in a scientific sense to call Money, Currency, than to call a report or an opinion, or the Session of Parliament, Currency?

Such as it is however, this Yankeeism is far too firmly fixed

in common use to be abolished, and hence we must accept it, and explain what it really means, and ascertain what in a scientific sense it includes.

The following is the meaning of the words "CURRENT" and "CURRENCY" in English Law.

It is a general rule of English Law that a person cannot transmit to another any better title to a thing than he has himself. It is also a rule of Law that if a person accidentally loses a thing or has it stolen from him, he does not thereby lose his Property or Right in it. Consequently he can not only recover it from the finder or thief, but even if the finder or thief has sold it to some one else who has given a full price for it, and bought it quite honestly without knowing that it was not the Property of the seller. The only exception to this was if the finder or thief sold the goods in "market overt." If the goods were bought in market overt the buyer may retain them against the true owner, even though they were stolen.

But to this rule of English Law Money was always an exception. If the true owner of Money which has been stolen finds it in the hands of the thief he may recover it: but if the thief has purchased things in a shop with it, in the usual way of business, and the shopkeeper takes it honestly in the way of his trade, and without knowing it has been stolen, he may retain it against the original owner from whom it has been stolen. That is the Property in it passes by delivery.

And it is this peculiarity in the Law affecting the Property by delivery in Money which is denoted by the word "CURRENCY."

And when the substitutes and representatives of Money such as Bills of Exchange, Bank Notes, Cheques and other Securities for Money came into use, the Lex Mercatoria, or custom of merchants, applied the same doctrine or principle of "Currency" to them. They were treated like Money in so far as this, that the Property in them passed like that of Money. Thus if they were stolen, though the real owner might recover them if he found them in the hands of the thief, yet if the thief had passed them away for Value in the ordinary course of trade to an innocent holder, that innocent holder acquired the Property in them, and might retain them against the true owner, and enforce payment from all the parties

MEANING OF CURRENCY.

25

liable. Thus Bills of Exchange, Bank Notes, Cheques, &c., were assimilated to Money in this important respect, that, even though stolen, when they had once been passed away "in Currency," the Property in them belonged to the person who had innocently purchased them; and as Lord Mansfield said, no action would lie for them after they had once been paid away "in Currency." This principle of Currency is also called NEGOTIABILITY; a Negotiable Instrument means a document of which the Property passes by delivery.

That this is the true meaning of the term Currency is well known to every Mercantile Lawyer; and is established by a series of decisions in the Courts of Law. As it would not be suitable to the limits of this work to quote these here, we must refer any of our readers who wish to follow the subject further, to our "Principles of Economical Philosophy," chap. xvii., where we have given full extracts from the decisions of the Courts of Law.

It will be seen then that in strict legal phraseology the word CURRENCY can only be applied to those Rights which are recorded on some material. An abstract Right cannot be lost, mislaid, or stolen, and passed away in commerce. But if it be recorded on some material substance it may then be lost, or stolen, and sold like any other chattel: and the word Currency simply refers to some legal rules relating to the transfer of the Property in it, in the case of its being stolen and passed away in commerce. For an Obligation to be capable of being CURRENCY in law, it must be recorded on some material so as to be capable of being carried in the hand, or put away in a drawer, or dropped in the street, and stolen from the drawer, or from a man's pocket, and carried off by the finder or thief and sold like a piece of goods. The word CURRENCY has no reference whatever to any property it has of paying, discharging, and closing debts.

So far, then, in point of Law there is not the slightest difficulty; the meaning of the word is perfectly plain. But if the force of public usage is too strong, and the word CURRENCY is too firmly established as the designation of a certain class of Economic Quantities to be rejected, a difficulty arises, and more especially if it is used as synonymous with Circulating Medium,

because there is an immense mass of Credit which has produced exchanges, and which may be bought and sold, which is not recorded on any material substance, so that it can be lost or stolen, and pass by manual delivery.

Thus the gigantic mass of Bank Credits and book debts of traders have effected a sale or circulation of commodities, and therefore they are all Circulating Medium, but they are not CURRENCY in a legal sense, because they cannot be mislaid, lost or stolen, and passed away by manual delivery. But though in point of Law these Credits are not " Currency," they must be included under that word used as a scientific term in Economics: because these Rights of action are exactly the same in their nature and effects whether they are recorded on paper or not.

21. Adopting this definition we may enumerate the different species of Currency, or Circulating Medium, as follows

1. Coined Money: gold, silver, and copper.

2. The Paper Currency: Promissory Notes, Bills of Exchange with all their varieties.

3. Simple Debts of all sorts not recorded on Circulating paper such as Credits in Bankers' books called Deposits, Book Debts of traders, and private Debts between individuals.

It is obvious that there is no distinction in principle between the two latter species. They each denote that a transfer of some sort has taken place, and are a Title to future payment. As a matter of convenience some of these are recorded on pieces of paper, but that does not alter their nature. It is certainly true that some of these descriptions of Currency are more eligible and secure than others, and perform the same duties with different degrees of advantage. The Metallic Currency rests upon the credit of the State, that it is of the proper weight and fineness, and the universal readiness of people to receive it in return for services and products. Paper Currency in this country at least, rests entirely upon private Credit, and is of all degrees of security from a Bank of England Note down to a private I. O. U. These different species of Currency, therefore, though they possess different degrees of circulating power, though they may be more or less eligible or secure, represent but one fundamental ideaDEBT. From these considerations it follows that the amount of

PRICE, DISCOUNT, AND INTEREST.

27

Currency, or Circulating Medium, in any country is the sum of all the Debts due to every individual in it-that is all the Money and Credit in it.

This truth was well expressed by the Marquis of Titchfield in the House of Commons-" Economy of Money was, by contrivances to spare the uses of it, according to the description of his right honourable friend, by substitutions for the precious metals in the shape of voluntary Credit. Every new contrivance of this kind-and every one improved-had that tendency. When it was considered to how great an extent these contrivances had been practised in the various modes of Verbal, Book, and CIRCULATING CREDITS, it was easy to see that the country had received a great addition to its CURRENCY. This addition to the CURRENCY would, of course, have the same effect as if gold had been increased from the mines."

On PRICE, DISCOUNT and INTEREST.

22. When one Economic Quantity is exchanged for another, each is termed the VALUE of the other. But when one of the Quantities exchanged is Money, or Credit, the sum of Money, or Credit, receives a peculiar name. It is called the PRICE of the other. Price is therefore simply the Value of anything expressed in Money or Credit. But as it is invariably the custom in modern times to estimate the Value of every commodity by its Value in Money or Credit only, or its Price, and not by its Value in any other commodities, the words Value and Price have become almost identical and interchangeable expressions, though no doubt we must remember the technical difference between them.

Now as the Value of the Money is the Commodity received in exchange for it, it is manifest that the greater the quantity of the Commodity received for it, the greater is the Value of Money. Or if the quantity of the Commodity be taken as fixed, the Value of Money is greater as less Money is given for the Commodity. Hence it is clear that the Value of Money varies INVERSELY as Price.