Toputitinotherwords,moneycirculatesindifferentcountriesonlybecauseitcirculatesascoinineachcountry。Moneyissimplyspecie,andtheamountofgoldpresentinacountrymustenterthesphereofcirculation;
asatokenrepresentingitselfitcanthusriseaboveorfallbelowitsvalue。Bythecircuitousrouteoftheseinternationalintricacieswehavemanagedtoreturntothesimplethesiswhichformsthepointofdeparture。
AfewexampleswillshowhowarbitrarilyactualphenomenaarearrangedbyRicardotosuithisabstracttheory。Heasserts,forinstance,thatinperiodsofcropfailure,whichoccurredfrequentlyinEnglandbetween1800and1820,goldisexported,notbecausecornisneededandgoldconstitutesmoney,i。e。,itisalwaysanefficaciousmeansofpurchaseandmeansofpaymentontheworldmarket,butbecausethevalueofgoldhasfalleninrelationtoothercommoditiesandhencethecurrencyofthecountrysufferingfromcropfailureisdepreciatedinrelationtotheothernationalcurrencies。
Thatistosay,becausethebadharvestreducesthevolumeofcommoditiesincirculation,theexistingquantityofmoneyincirculationexceedsitsnormallevelandallcommodity—pricesconsequentlyrise。[18]Asopposedtothisparadoxicalexplanation,statisticsshowthatinthecaseofcropfailuresinEnglandfrom1793uptothepresent,theexistingamountofmeansofcirculationwasnotexcessivebutonthecontraryitwasinsufficient,andthereforemoremoneythanpreviouslycirculatedandwasboundtocirculate。[19]
AtthetimeofNapoleon\'sContinentalSystemandtheEnglishBlockadeDecrees,RicardolikewiseassertedthattheBritishexportedgoldinsteadofcommoditiestotheContinent,becausetheirmoneywasdepreciatedinrelationtothatofcontinentalcountries,thepricesoftheircommoditieswerethereforehigherandtheexportofgoldratherthancommoditieswasthusamoreprofitablecommercialtransaction。AccordingtohimcommoditiesweredearandmoneycheapontheEnglishmarket,whereasontheContinentcommoditieswerecheapandmoneydear。
AnEnglishwriterstateshowever:\"Thefact……Imeantheruinouslylowpricesofourmanufacturesandof,ourcolonialproductionsundertheoperation,againstEngland,oftheContinentalSystem\'duringthelastsixyearsofthewar……Thepricesofsugarandcoffee,forinstance,ontheContinent,computedingold,werefourorfivetimeshigherthantheirpricesinEngland,computedinbank—notes。Iamspeaking……ofthetimesinwhichtheFrenchchemistsdiscoveredsugarinbeet—root,andasubstituteforcoffeeinchicory;andwhentheEnglishgraziertriedexperimentsuponfatteningoxenwithtreacleandmolasses——ofthetimeswhenwetookpossessionoftheislandofHeligoland,inordertoformthereadepotofgoodstofacilitate,ifpossible,thesmugglingofthemintotheNorthofEurope;andwhenthelighterdescriptionsofBritishmanufacturesfoundtheirwayintoGermanythroughTurkey……Almostallthemerchandiseoftheworldaccumulatedinourwarehouses,wheretheybecameimpounded,exceptwhensomesmallquantitywasreleasedbyaFrenchLicence,forwhichthemerchantsatHamburghorAmsterdamhad,perhaps,givenNapoleonsuchasumasfortyorfiftythousandpounds。Theymusthavebeenstrangemerchants……tohavepaidsolargeasumforlibertytocarryacargoofgoodsfromadearmarkettoacheapone。Whatwastheostensiblealternativethemerchanthad？……Eithertobuycoffeeat6d。apoundinbank—notes,andsendittoaplacewhereitwouldinstantlysellats。or4s。apoundingold,ortobuygoldwithbanknotesat£5anounce,andsendittoaplacewhereitwouldbereceivedat£317s。101/2d。anounce……
Itistooabsurd,ofcourse,tosay……thatthegoldwasremittedinsteadofthecoffee,asapreferablemercantileoperation……Therewasnotacountryintheworldinwhichsolargeaquantityofdesirablegoodscouldbeobtained,inreturnforanounceofgold,asinEngland……Bonaparte……wasconstantlyexaminingtheEnglishPriceCurrent……
SolongashesawthatgoldwasdearandcoffeewascheapinEngland,hewassatisfiedthathis\'ContinentalSystem\'workedwell。\"[20]
In1810——justatthetimewhenRicardofirstadvancedhiscurrencytheory,andtheBullionCommitteeembodieditinitsparliamentaryreport——thepricesofallBritishcommoditiesslumpedruinouslyincomparisonwiththeirlevelin1808and1809,whereastherelativevalueofgoldrose。
Agriculturalproductswereanexceptionbecausetheirimportfromabroadwasimpededandtheamountavailablewithinthecountrywasgreatlyreducedbybadharvests。SocompletelydidRicardomisunderstandthefunctionthatpreciousmetalsperformasinternationalmeansofpaymentthatinhisevidencebeforetheCommitteeoftheHouseofLords（1819）hecoulddeclare:
\"thatdrainsforexportationwouldceasealtogethersosoonascashpaymentsshouldberesumed,andthecurrencyrestoredtoitsmetalliclevel\"。
Hisdeathoccurredintimebeforetheonsetofthecrisisof1825demonstratedthefalsehoodofhisforecast。ThetimewithinwhichRicardo\'sliteraryactivityfallswasingeneralhardlyfavourabletothestudyofthefunctionwhichpreciousmetalsperformasworldmoney。BeforetheimpositionoftheContinentalSystemBritainhadalmostcontinuouslyafavourabletradebalance,andwhiletheSystemwasinforcehertransactionswiththeEuropeancontinentweretooinsignificanttoaffecttheEnglishrateofexchange。
Thetransferofmoneyhadapredominantlypoliticalcharacter,andRicardoseemstohavecompletelymisunderstoodtherolewhichsubsidiesplayedinBritishgoldexport。
AmongthecontemporariesofRicardo,JamesMillwasthemostimportantoftheadherentsofhisprinciplesofpoliticaleconomy。HeattemptedtoexpoundRicardo\'smonetarytheoryonthebasisofsimplemetalliccurrency,omittingtheirrelevantinternationalcomplications,whichconcealtheinadequacyofRicardo\'sconception,andallcontroversialreferencestotheoperationoftheBankofEngland。Hismainpropositionsareasfollows。[21]
\"Byvalueofmoney,isheretobeunderstoodtheproportioninwhichitexchangesforothercommodities,orthequantityofitwhichexchangesforacertainquantityofotherthings……Itisthetotalquantityofthemoneyinanycountry,whichdetermineswhatportionofthatquantityshallexchangeforacertainportionofthegoodsorcommoditiesofthatcountry。Ifwesupposethatallthegoodsofthecountryareononeside,allthemoneyontheother,andthattheyareexchangedatonceagainstoneanother,……itisevidentthatthevalueofmoneywoulddependwhollyuponthequantityofit。Itwillappearthatthecaseispreciselythesameintheactualstateofthefacts。Thewholeofthegoodsofacountryarenotexchangedatonceagainstthewholeofthemoney;thegoodsareexchangedinportions,ofteninverysmallportions,andatdifferenttimes,duringthecourseofthewholeyear。Thesamepieceofmoneywhichispaidinoneexchangetoday,maybepaidinanotherexchangeto—morrow。Someofthepieceswillbeemployedinagreatmanyexchanges,someinveryfew,andsome,whichhappentobehoarded,innoneatall。Therewill,amidallthesevarieties,beacertainaveragenumberofexchanges,thesamewhich,ifallthepieceshadperformedanequalnumber,wouldhavebeenperformedbyeach;thataveragewemaysupposetobeanynumberweplease;say,forexample,ten。Ifeachofthepiecesofthemoneyinthecountryperformtenpurchases,thatisexactlythesamethingasifallpiecesweremultipliedbyten,andperformedonlyonepurchaseeach。Thevalueofallthegoodsinthecountryisequaltotentimesthevalueofallthemoney……Ifthequantityofmoneyinsteadofperformingtenexchangesintheyear,weretentimesasgreat,andperformedonlyoneexchangeintheyear,itisevidentthatwhateveradditionweremadetothewholequantity,wouldproduceaproportionaldiminutionofvalue,ineachoftheminorquantitiestakenseparately。Asthequantityofgoods,againstwhichthemoneyisallexchangedatonce,issupposedtobethesame,thevalueofallthemoneyisnomore,afterthequantityisaugmented,thanbeforeitwasaugmented。Ifitissupposedtobeaugmentedone—tenth,thevalueofeverypart,thatofanounceforexample,mustbediminishedone—tenth……
inwhateverdegree,therefore,thequantityofmoneyisincreasedordiminished,otherthingsremainingthesame,inthatsameproportion,thevalueofthewhole,andofeverypart,isreciprocallydiminishedorincreased。
This,itisevident,isapropositionuniversallytrue。Wheneverthevalueofmoneyhaseitherrisenorfallen（thequantityofgoodsagainstwhichitisexchangedandtherapidityofcirculationremainingthesame）,thechangemustbeowingtoacorrespondingdiminutionorincreaseofthequantity;
andcanbeowingto,nothingelse。Ifthequantityofgoodsdiminish,whilethequantityofmoneyremainsthesame,itisthesamethingasifthequantityofmoneyhadbeenincreased;\"andviceversa。\"Similarchangesareproducedbyanyalterationintherapidityofcirculation……Anincreaseinthenumberofthesepurchaseshasthesameeffectasanincreaseinthequantityofmoney;adiminutionthereverse……Ifthereisanyportionoftheannualproducewhichisnotexchangedatall,aswhatisconsumedbytheproducer;orwhichisnotexchangedformoney;
thatisnottakenintotheaccount,becausewhatisnotexchangedformoneyisinthesamestatewithrespecttothemoney,asifitdidnotexist……
Wheneverthecoiningofmoney……isfree,itsquantityisregulatedbythevalueofthemetal……Goldandsilverareinrealitycommodities……
Itiscostofproduction……whichdeterminesthevalueofthese,asofotherordinaryproductions。[22]
Mill\'swholewisdomisreducedtoaseriesofassumptionswhicharebotharbitraryandtrite。Hewishestoprovethat\"itisthetotalquantityofthemoneyinanycountry\"whichdeterminesthepriceofcommoditiesorthevalueofmoney。Ifoneassumesthatthequantityandtheexchange—valueofthecommoditiesincirculationremainconstant,likewisethevelocityofcirculationandthevalueofpreciousmetals,whichisdeterminedbythecostofproduction,andifsimultaneouslyoneassumesthatneverthelessthequantityofspecieincirculationincreasesordecreasesinrelationtothevolumeofmoneyexistinginacountry,thenitisindeed\"evident\"thatonehasassumedwhatonehaspretendedtoprove。Mill,moreover,commitsthesameerrorasHume,namelyplacingnotcommoditieswithadeterminateexchange—value,butuse—valuesintocirculation;hispropositionisthereforewrong,evenifoneacceptsallhis\"assumptions\"。Thevelocityofcirculationmayremainunchanged,similarlythevalueofpreciousmetalsandthequantityofcommoditiesincirculation,yettheymayneverthelessrequiresometimesalargersometimesasmalleramountofmoneyfortheircirculationasaresultofchangesintheirexchange—value。Millnoticesthatapartofthemoneyexistinginacountrycirculateswhileanotherpartstagnates。Bymeansofaveryoddruleofaveragesheassumesthatallthemoneypresentinacountryisactuallyincirculation,althoughinrealityitdoesnotseemtobeso。Ifoneassumesthatinagivencountry10millionsilverthalerscirculatetwiceinthecourseofayear,then,ifeachthalerwereusedinonlyonepurchase,20millioncouldbeincirculation。Andifthetotalquantityofallformsofsilverinthecountryamountedto100million,itmaybesupposedthatthe100millioncouldbeincirculationifeachcoinperformedonepurchaseinfiveyears。OnecouldaswellassumethatallthemoneyexistingintheworldcirculatedinHampstead,butthateachportionofitperformedonecircuitin3,000,000yearsinsteadof,say,threecircuitsinoneyear。Theoneassumptionisjustasrelevantastheothertothedeterminationoftherelationbetweentheaggregateofcommodity—pricesandtheamountofcurrency。Millisawareofthecrucialimportanceofestablishingadirectconnectionbetweenthecommoditiesandthewholestockofmoney——notjusttheamountofmoneyincirculation——inaparticularcountryatagiventime。Headmitsthatthewholeofthegoodsofacountryare\"notexchangedatonce\"againstthewholeofthemoney,butsaysthatseparateportionsofthegoodsareexchangedforvariousportionsofmoneyatdifferenttimesthroughouttheyear。Inordertoremovethisincongruityheassumesthatitdoesnotexist。Incidentally,thewholeconceptofadirectconfrontationbetweencommoditiesandmoneyandtheirdirectexchangeisderivedfromthemovementofsimplepurchasesandsalesorfromthefunctionperformedbymoneyasmeansofpurchase。
Thesimultaneousappearanceofcommoditiesandmoneyceasesevenwhenmoneyactsasmeansofpayment。
Thecommercialcrisesofthenineteenthcentury,andinparticularthegreatcrisesof1825and1836,didnotleadtoanyfurtherdevelopmentofRicardo\'scurrencytheory,butrathertonewpracticalapplicationsofit。Itwasnolongeramatterofsingleeconomicphenomena——suchasthedepreciationofpreciousmetalsinthesixteenthandseventeenthcenturiesconfrontingHume,orthedepreciationofpapercurrencyduringtheeighteenthcenturyandthebeginningofthenineteenthconfrontingRicardo——butofbigstormsontheworldmarket,inwhichtheantagonismofallelementsinthebourgeoisprocessofproductionexplodes;theoriginofthesestormsandthemeansofdefenceagainstthemweresoughtwithinthesphereofcurrency,themostsuperficialandabstractsphereofthisprocess。ThetheoreticalassumptionwhichactuallyservestheschoolofeconomicweatherexpertsastheirpointofdepartureisthedogmathatRicardohaddiscoveredthelawsgoverningpurelymetalliccurrency。Itwasthuslefttothemtosubsumethecirculationofcreditmoneyorbank—notesundertheselaws。
Themostcommonandconspicuousphenomenonaccompanyingcommercialcrisesisasuddenfallinthegenerallevelofcommodity—pricesoccurringafteraprolongedgeneralriseofprices。Ageneralfallofcommodity—pricesmaybeexpressedasariseinthevalueofmoneyrelativetoallothercommodities,and,ontheotherhand,ageneralriseofpricesmaybedefinedasafallintherelativevalueofmoney。Eitherofthesestatementsdescribesthephenomenonbutdoesnotexplainit。Whetherthetasksetistoexplaintheperiodicriseinthegenerallevelofpricesalternatingwithageneralfall,orthesametaskissaidtobetoexplainthealternatingfallandriseintherelativevalueofmoneycomparedwiththatofcommodities——
thedifferentterminologyhasjustaslittleeffectonthetaskitselfasatranslationofthetermsfromGermanintoEnglishwouldhave。Ricardo\'smonetarytheoryprovedtobesingularlyappositesinceitgavetoatautologythesemblanceofacausalrelation。Whatisthecauseofthegeneralfallincommodity—priceswhichoccursperiodically？Itistheperiodicallyoccurringriseintherelativevalueofmoney。Whatontheotherhandisthecauseoftherecurrentgeneralriseincommodity—pricesItistherecurrentfallintherelativevalueofmoney。Itwouldbejustascorrecttosaythattherecurrentriseandfallofpricesisbroughtaboutbytheirrecurrentriseandfall。Thepropositionadvancedpresupposesthattheintrinsicvalueofmoney,i。e。,itsvalueasdeterminedbytheproductioncostsofthepreciousmetals,remainsunchanged。Ifthetautologyismeanttobemorethanatautology,thenitisbasedonamisapprehensionofthemostelementarynotions。Weknowthatiftheexchange—valueofAexpressedintermsofBfalls,itmaybedueeithertoafallinthevalueofAortoariseinthevalueofB;similarlyif,onthecontrary,theexchange—valueofAexpressedintermsofBrises。Oncethetransformationofthetautologyintoacausalrelationshipistakenforgranted,everythingelsefollowseasily。Theriseincommodity—pricesisduetoafallinthevalueofmoney,thefallinthevalueofmoney,however,asweknowfromRicardo,isduetoexcessivecurrency,thatistosay,tothefactthattheamountofmoneyincirculationrisesabovetheleveldeterminedbyitsownintrinsicvalueandtheintrinsicvalueofcommodities。Similarlyintheoppositefallofcommodity—pricesisduetothevalueofmoneyrisingaboveitsintrinsicvalueasaresultofaninsufficientamountofcurrency。Pricesthereforeriseandfallperiodically,becauseperiodicallythereistoomuchortoolittlemoneyincirculationIfitisproved,forinstance,thattheriseofpricescoincidedwithadecreasedamountofmoneyincirculation,andthefallofpriceswithanincreasedamount,thenitisneverthelesspossibletoassertthat,inconsequenceofsomereductionorincrease——
whichcaninnowaybeascertainedstatistically——ofcommoditiesincirculation,theamountofmoneyincirculationhasrelatively,thoughnotabsolutely,increasedordecreased。Wehaveseenthat,accordingtoRicardo,evenwhenapurelymetalliccurrencyisemployed,thesevariationsinthelevelofpricesmusttakeplace,but,becausetheyoccuralternately,theyneutraliseoneanother。Forexample,aninsufficientamountofcurrencybringsaboutafallincommodity—prices,thefallofcommodity—pricesstimulatesanexportofcommoditiestoothercountries,butthisexportleadstoaninfluxofmoneyintothecountry,theinfluxofmoneycausesagainariseincommodity—prices。
Whenthereisanexcessiveamountofcurrencythereverseoccurs:commoditiesareimportedandmoneyexported。Sincenotwithstandingthesegeneralpricemovements,whicharisefromtheverynatureofRicardo\'smetalliccurrency,theirsevereandvehementform,theformofcrisis,belongstoperiodswithdevelopedcreditsystems,itisclearthattheissueofbank—notesisnotexactlygovernedbythelawsofmetalliccurrency。Theremedyapplicabletometalliccurrencyistheimportandexportofpreciousmetals,whichareimmediatelythrownintocirculationascoin,theirinfloworoutflowthuscausingcommodity—pricestofallortorise。Thebanksmustnowartificiallyexertthesameinfluenceoncommodity—pricesbyimitatingthelawsofmetalliccurrency。Ifgoldisflowinginfromabroad,itisaproofthatthereisaninsufficientamountofcurrency,thatthevalueofmoneyistoohighandcommodity—pricestoolow,andbank—notesmustthereforebethrownintocirculationinaccordancewiththenewlyimportedgold。Ontheotherhand,bank—notesmustbetakenoutofcirculationinaccordancewithanoutflowofgoldfromthecountry。Inotherwordstheissueofbank—notesmustberegulatedaccordingtotheimportandexportofthepreciousmetalsoraccordingtotherateofexchange。Ricardo\'swrongassumptionthatgoldissimplyspecieandthatconsequentlythewholeoftheimportedgoldisusedtoaugmentthemoneyIncirculationthuscausingpricestorise,andthatthewholeofthegoldexportedrepresentsadecreaseintheamountofspecieandthuscausespricestofall——thistheoreticalassumptionisnowturnedintoapracticalexperimentbymakingtheamountofspecieincirculationcorrespondalwaystothequantityofgoldinthecountry。
LordOverstone（JonesLoyd,thebanker）,ColonelTorrens,Norman,Clay,ArbuthnotandnumerousotherwritersknowninEnglandasthe\"currencyschool\"havenotonlypreachedthisdoctrine,buthavemadeitthebasisofthepresentEnglishandScottishbankinglegislationbymeansofSirRobertPeel\'sBankActsof1844and1845。Theanalysisoftheignominiousfiascotheysufferedbothintheoryandpractice,afterexperimentsonthelargestnationalscale,canonlybemadeinthesectiondealingwiththetheoryofcredit。[23]ItisobvioushoweverthatRicardo\'stheory,whichregardscurrency,thefluidformofmoney,inisolation,endsbyattributingtoincreasesanddecreasesintheamountofpreciousmetalsanabsoluteinfluenceonbourgeoiseconomysuchaswasneverimaginedeveninthesuperstitiousconceptsoftheMonetarySystem。Ricardo,whodeclaredthatpapermoneyisthemostperfectformofmoney,wasthustobecometheprophetofthebullionists。
AfterHume\'stheory,ortheabstractoppositiontotheMonetarySystem,hadbeendevelopedtoitsextremeconclusions,Steuart\'sconcreteinterpretationofmoneywasfinallyrestoredtoitslegitimatepositionbyThomasTooke。Tookederiveshisprinciplesnotfromsometheoryorotherbutfromascrupulousanalysisofthehistoryofcommodity—pricesfrom1793to1856。InthefirsteditionofhisHistoryofPrices,whichwaspublishedin1823,TookeisstillcompletelyengrossedintheRicardiantheoryandvainlytriestoreconcilethefactswiththistheory。HispamphletOntheCurrency,whichwaspublishedafterthecrisisof1825,couldevenberegardedasthefirstconsistentexpositionoftheviewswhichOverstonewastosetforthlater。ButcontinuedinvestigationofthehistoryofpricescompelledTooketorecognisethatthedirectcorrelationbetweenpricesandthequantityofcurrencypresupposedbythistheoryispurelyimaginary,thatincreasesordecreasesintheamountofcurrencywhenthevalueofpreciousmetalsremainsconstantarealwaystheconsequence,neverthecause,ofpricevariations,thataltogetherthecirculationofmoneyismerelyasecondarymovementandthat,inadditiontoservingasmediumofcirculation,moneyperformsvariousotherfunctionsintherealprocessofproduction。HisdetailedresearchdoesnotbelongtothesphereofsimplemetalliccurrencyandatthisstageitisaccordinglynotyetpossibletoexamineitortheworksofWilsonandFullarton,whobelongtothesameschoolofthought。[24]Noneofthesewriterstakeaone—sidedviewofmoneybutdealwithitsvariousaspects,thoughonlyfromamechanicalanglewithoutpayinganyattentiontotheorganicrelationoftheseaspectseitherwithoneanotherorwiththesystemofeconomiccategoriesasawhole。Hence,theyfallintotheerrorofconfusingmoneyasdistinctfromcurrencywithcapitalorevenwithcommodities;althoughontheotherhand,theyareoccasionallyconstrainedtoassertthatthereisadistinctionbetweenthesetwocategoriesandmoney。[25]When,forexample,goldissentabroad,thenindeedcapitalissentabroad,butthisisalsothecasewheniron,cotton,corn,inshortwhenanycommodity,isexported。Botharecapitalandthedifferencebetweenthemdoesnotconsistthereforeinthefactthatoneiscapital,butthatoneismoneyandtheothercommodity。Theroleofgoldasinternationalmeansofexchangeisthusduenottothedistinctiveformithasascapital,buttothespecificfunctionitperformsasmoney。Similarlywhengoldorbank—noteswhichtakeitsplaceactasmeansofpaymentindomestictradetheyareatthesametimecapital。Butitwouldbeimpossibletousecapitalintheshapeofcommoditiesinstead,ascrisesverystrikinglydemonstrate,forinstance。Itisagainthedifferencebetweencommoditiesandgoldusedasmoneyandnotitsfunctionascapitalwhichturnsgoldintoameansofpayment。Evenwhencapitalisdirectlyexportedascapital,e。g。,inordertolendadefiniteamountoninterestabroad,itdependsonmarketconditionswhetherthisisexportedintheshapeofcommoditiesorofgold;andifitisexportedasgoldthisisdonebecauseofthespecificfunctionwhichthepreciousmetalsperformasmoneyincontradistinctiontocommodities。Generallyspeakingthesewritersdonotfirstofallexaminemoneyinitsabstractforminwhichitdevelopswithintheframeworkofsimplecommoditycirculationandgrowsoutoftherelationsofcommoditiesincirculation。Asaconsequencetheycontinuallyvacillatebetweentheabstractformswhichmoneyassumes,asopposedtocommodities,andthoseformsofmoneywhichconcealconcretefactors,suchascapital,revenue,andsoforth。[26]
FOOTNOTES[1。]Incidentally,Humeadmitsthattheadjustmenttakesplacegradually,althoughthisdoesnotaccordwithhisprinciple。SeeDavidHume,EssaysandTreatisesonSeveralSubjects,London,1777,Vol。I,p。300。
[2。]\"Itisevident,thatthepricesdonotsomuchdependontheabsolutequantityofcommodities,andthatofmoney,whichareinanation,asonthatofthecommoditieswhichcanormaycometomarketandofthemoneywhichcirculates。Ifthecoinbelockedupinchests,itisthesamethingwithregardtoprices,asifitwereannihilated,ifthecommoditiesbehoardedinmagazinesandgranaries,alikeeffectfollows。Asthemoneyandcommodities,inthesecases,nevermeet,theycannotaffecteachother……Thewhole（ofprices）atlastreachesajustproportionwiththenewquantityofspeciewhichisinthekingdom。\"DavidHume,op。cit。,pp。303,307,308
[3。]SeeLawandFranklinonthesurplusvaluewhichgoldandsilveraresaidtoacquirefromthefunctiontheyperformasmoney。Forbonnaistoo。[Noteinauthor\'scopy。]
[4。]ThisinventioncanactuallybefoundinMontesquieu\'sworks。[Noteinauthor\'scopy。]
[5。]\"Theadditionalcoinwillprobablybelockedup,orconvertedintoplate……
Asforthepapermoney,sosoonasithasservedthefirstpurposeofsupplyingthedemandofhimwhoborrowedit……itwillreturnuponthedebtorinit,andbecomerealised;……Letthespecieofacountry,therefore,beaugmentedordiminishedineversogreataproportion,commoditieswillstillriseandfallaccordingtotheprinciplesofdemandandcompetition,andthesewillconstantlydependupontheinclinationsofthosewhohavepropertyoranykindofequivalentwhatsoevertogive,butneveruponthequantityofcointheyarepossessedof……Letit\"（i。e。,thequantityofspecieinacountry）\"bediminishedeversolow,whilethereisrealpropertyofanydenominationinthecountry,andacompetitiontoconsumeinthosewhopossessit,priceswillbehigh,bythemeansofbarter,symbolicalmoney,mutualprestations,andathousandotherinventions……Isitnotplain,thatifthiscountryhasacommunicationwithothernations,theremustbeaproportionbetweenthepricesofmanykindsofmerchandise,thereandelsewhere,andthatthesuddenaugmentationordiminutioncfthespecie,supposingitcouldofitselfoperatetheeffectsofraisingorsinkingprices,wouldberestrainedinitsoperationbyforeigncompetition？\"（Op。cit。,Vol。I,pp。400—01。）\"Thecirculationofeverycountry……musteverbeinproportiontotheindustryoftheinhabitants,producingthecommoditieswhichcometomarket……Ifthecoinofacountry,therefore,fallsbelowtheproportionoftheproduceofindustryofferedtosale……inventions,suchassymbolicalmoney,willbefallenupontoprovideanequivalentforit。Butifthespeciebefoundabovetheproportionoftheindustry,itwillhavenoeffectinraisingprices,norwillitenterintocirculation:itwillbehoardedupintreasures……Whateverbethequantityofmoneyinanynation,incorrespondencewiththerestoftheworld,therenevercanremain,incirculation,butaquantitynearlyproportionaltotheconsumptionoftherich,andtothelabourandindustryofthepoorinhabitants\"andthisproportionisnotdetermined\"bythequantityofmoneyactuallyinthecountry\"（op。cit。,p。407）。\"Allnationswillendeavourtothrowtheirreadymoney,notnecessaryfortheirowncirculation,intothatcountrywheretheinterestofmoneyishighwithrespecttotheirown\"（op。cit。,Vol。II,p。5）。\"TherichestnationinEuropemaybethepoorestincirculatingspecie\"（op。cit。,Vol。II,p。
6）。[Noteinauthor\'scopy:]SeepolemicagainstSteuartinArthurYoung\'swork。
[6。]Steuart,op。cit,Vol。II,p。370。LouisBlanctransformsthe\"moneyofthesociety\",whichsimplymeansinternal,nationalmoney,intosocialistmoney,whichmeansnothingatall,andquiteconsistentlyturnsJohnLawintoasocialist。（SeethefirstvolumeofhisHistoryoftheFrenchRevolution。）
[7。]Maclaren,op。cit。,p。43seq。AGermanwriter（GustavJulius）,whodiedprematurely,wasinducedbypatriotismtoopposetheoldBüschasanauthoritytotheRicardianschool。ThehonourableBüschhastranslatedSteuart\'sbrilliantEnglishintotheLow—GermandialectofHamburganddistortedtheoriginalwheneveritwaspossible。
[8。]Thisisinaccurate。Onthecontrary,insomepassagesthelawiscorrectlyexpressedbySmith。[Noteinauthor\'scopy。]
[9。]Thedistinctionbetween\"currency\"and\"money\",i。e。,betweenmeansofcirculationandmoney,doesnotthereforeoccurintheWealthofNations。
MisledbytheapparentingenuousnessofAdamSmith,whohadstudiedHumeandSteuartclosely,honestMaclarenobserves:\"Thetheoryofthedependenceofpricesontheextentofthecurrencyhadnot,asyet,attractedattention;
andDr。Smith,likeMr。Locke\"（Locke\'sviewsvary）,\"considersmetallicmoneynothingbutacommodity。\"Maclaren,Op。Cit。,p。44
[10。]DavidRicardo,TheHighPriceofBullion,aProofoftheDepreciationofBank—notes,4thEdition,London,1811（thefirsteditionwaspublishedin1809）。Also:ReplytoMr。Bosanquet\'sPracticalObservationsontheReportoftheBullionCommittee,London,1811
[11。]DavidRicardo,OnthePrinciplesofPoliticalEconomyandTaxation,p。77。\"Thesamegeneralrulewhichregulatesthevalueofrawproduceandmanufacturedcommodities,isapplicablealsotothemetals,theirvaluedepending……onthetotalquantityoflabournecessarytoobtainthemetal,andtobringittomarket。\"