purchase. To say, therefore, that a term of 100 years was worth. five times as much as a term of twenty years, was to say that a term of 100 years was worth five times the fee simple; in other words, that a hundred was five times infinity. Those who reasoned thus were refuted by being told they were usurers; and it should seem that a large number of country gentlemen thought the refutation complete"

12. Law's theory was to calculate the value of the fee simple of the land at twenty years' purchase and to coin notes to the value of that amount, and advance them to the owner of the land. This plan, therefore, had a limit, however absurd it was. It was bounded, in the first instance, by the value of the land expressed in silver money, but Chamberlain's had positively no limit at all to carry it out to its full length; the advance might be made to infinity; consequently, in mathematical language, we should say that Chamberlain was infinitely more mad than Law

13. Law showed that notes issued upon Chamberlain's plan would immediately fall to a heavy discount; but yet he says that though £500 of these notes were only equal to £100 in silver, yet the nation would have the same advantage by that £500 in notes as if an addition of £100 had been made to the silver money

"So far as these bills fell under the value of silver money, so far would exchange with other countries be raised.* And if goods did not keep their price, i.e., if they did not sell for a greater quantity of these bills, equal to the difference betwixt them and silver, goods exported would be undervalued, and goods imported would be overvalued

"The landed man would have no advantage by this proposal, unless he owed debt, for though he received £50 of these bills for the same quantity of victuals, he was in use to receive £10 silver

This is the first occasion that we are aware of on which the great principle, that a depreciation of the paper currency would produce a fall in the foreign exchanges, which was so ardently contested in 1811 and subsequent years, is asserted. And it has all the more merit, that it is a prediction and not an observation

money; yet that £50 would only be equal in value to £10 of silver, and purchase only the same quantity of home or foreign goods

"The landed man who had his rent paid him in money would be a great loser, for, by as much as these bills were under the value of silver, he would receive so much less than before

"The landed man who owed debt would pay his debt with a less value than was contracted for, but the creditor would lose what the debtor gained"

Oh that the philosophers of 1811 had only pondered over this extract from John Law

14. Law then shows that

"Notwithstanding any Act of Parliament to force these bills, they would fall much under the value of silver; but allowing that they were at first equal to silver, it is next to impossible that two different species of money shall continue equal in value to one another

"Everything receives a value from its use, and the value is rated according to its quality, quantity, and demand. Though goods of different kinds are equal in value now, yet they will change their value from any unequal change in their quality, quantity, or demand

"And as he leaves it to the choice of the debtor to pay in silver money or bills, he confines the value of the bills to the value of silver money, but cannot confine the value of the silver money to the value of the bills, so that these bills must fall in value as silver money falls, and may fall lower, may rise above the value of these bills, but these bills cannot rise above the value of silver"

15. Law succeeds, with great skill and acumen, in exposing the wild insanity of Chamberlain's plan, and truly predicts the results which would follow from it, or at least some of them, for there are many important ones he has omitted. The exact consequences which he predicted were manifested in Ireland and England a century later; and the sentences we have quoted, if we did not know their origin, might have been supposed to have been written to rebuke the folly of the directors of the

Banks of Ireland and England, and the mercantile witnesses of 1804 and 1810. But having demolished Chamberlain, he comes to his own proposal, which he says is "to make money of land equal to its value, and that money to be equal in value to silver money, and not liable to fall in value as silver money falls." He then says "Any goods that have the qualities necessary in money, may be made money equal to their value. Five ounces of gold is equal in value to £20, and may be made money to that value; an acre of land, rented at two bolls of victual, the victual at £8, and land at twenty years' purchase, is equal to £20, and may be made money equal to that value, for it has all the qualities necessary in money"

16. In this sentence is concentrated the whole essence of that eternal delusion, so specious and plausible, and so fatal, which we designate as LAWISM. It is, indeed, nothing but the stupendous fallacy that money represents commodities, and that paper currency may be based upon commodities. This delusion is deeply prevalent in the public mind at the present day, and probably there are few persons, except those who have studied the true philosophical principles of Political Economy, whose views are not deeply tainted with this infection. No man who does not thoroughly understand the great fundamental doctrine established by Turgot and others, that money does not represent commodities, can ever have sound ideas on this subject. Money does not represent commodities at all, but only DEBT, or services due, which have not yet received their equivalent in commodities. Now, the views of Law are much more extensively prevalent than is generally supposed. All those who think that there is any necessary connection between the quantity of money in a country and the quantity of commodities in it are influenced by them. Take the case of a private individual. Is there any necessary relation between the quantity of money he retains and the quantity of commodities he purchases? The quantity of money he has is just the quantity of debt-of services due to himwhich he has not yet parted with for something else. It is the quantity of power of purchasing commodities he has over and

above what he has already expended. And the quantity of money a nation possesses is simply the quantity of accumulated industry it possesses over and above all commodities, but they have no relation whatever to each other. Now, money does not represent commodities, but it represents that portion of a man's industry which is preserved for future use. Whatever a man earns is the fruit of his industry, money included; and none of these separate items represents anything else, though it may be exchanged for other things. Now, the value of money depends upon its relations to what it represents, namely debt, and not to commodities. If money or currency increases faster than debt or services due, it immediately causes a diminution of its value. If debt increases faster than money or currency, then the value of money is raised. The infallible consequence, therefore, of an increase of currency, without a corresponding increase of debt, is to change the existing proportion between debt and currency, and to cause a depreciation of the latter commensurate to the changed proportion. The necessary and inevitable consequence, then, of issuing vast quantities of paper currency on the assumed value of property, is simply to cause a total subversion of the foundation of all value and of all property, and to plunge every creditor into irretrievable ruin

17. In fact, a moment's consideration will shew that the theory of basing a paper currency on commodities involves this palpable contradiction in terms, that one can buy commodities and also have the money as well. When a man buys commodities with money, he gives either a portion of his own industry represented by that money, or a portion of some one else's industry who gave him the money. But it is quite clear that he cannot buy the commodities and keep his money as well. It is exactly the same with a nation. A nation cannot buy commodities and have the money it bought them with as well, which is the principle necessarily involved in issuing paper currency as the representative of commodities. But the money of the nation is the mode and form in which the accumulation of industry which has not yet been spent in commodities is preserved; and if a nation wants other commodities besides what it has got, it must pay for them either with money, or with the

goods it has already. The idea of basing paper currency upon commodities is just as wild and absurd as if England were to sell her cotton goods to America for coin, and then demand back her cotton goods. The only result of such an attempt carried out into practice must be the most tremendous convulsions, and destruction of credit and all monetary contracts

18. Law, as we have seen, immediately saw through it, and exposed the ridiculous absurdity of Chamberlain's proposal. His own was that the value of all the land in Scotland should be estimated at 20 years' purchase, and that a parliamentary commission should be appointed with power to issue an inconvertible paper currency to that amount. He says-—“ "The paper money proposed will be equal in value to silver, for it will have a value in land pledged equal to the same sum of silver money that it is given out for. This paper money will not fall in value,

as silver money has fallen or may fall”

19. We must, therefore, be careful to be just to Law. He was no advocate of an unlimited inconvertible paper currency. Quite the reverse. But seeing that a convertible paper currency could only be based upon bullion to a certain limited extent, preserving its equality in value with bullion, his idea was to base a paper currency upon some other article of value. And he thought that it might preserve its equality in value to silver on an independent basis. His idea was, that it is only necessary to have it represent some article of value. But this attempt was contrary to the nature of things. His paper currency, though avowedly based upon things of value, had exactly the same practical effects as if it had been based upon silver. It became redundant, and swamped everything. And the reason is plain. It was a violation of that fundamental principle we have obtained-"Where there is no debt there can be no currency." And the fresh quantities of currency issued on such a principle only represent the previously existing amount of debt, and then suffer a necessary diminution in value. The necessary and inevitable consequence, then, of issuing vast quantities of paper currency on the assumed value of property is simply to cause