24 POPULAR SCIENCE MONTHLY. 



the rapidity of circulation of either gold or silver varies in exact 

 ratio with the variations of trade. The growth of commerce, 

 for example, that began in Europe during the thirteenth century, 

 so far outstripped the increase in the supply of the precious 

 metals that each of the petty states and principalities was in a 

 continual fight with the others for the possession of a sufficient 

 supply of gold and silver whereby the exchange of effort as evi- 

 denced by the exchange of commodities between its own subjects 

 could be rewarded. The world's product of gold was nearly four 

 times as great in 1850-'G0 as during the preceding decade ; it was 

 about twenty-five per cent less in 188O-'90, and during the present 

 decade promises to exceed that of 18S0-'90 by one hundred per 

 cent. 



And the supply of neither metal increases in the same ratio as 

 the other ; therefore, that pursuit after a constant ratio between 

 gold and silver which has continued to this day is vain as the 

 cruise of the Flying Dutchman. 



And as it is estimated that at the present time actual coin 

 passes in less than ten per cent of the exchanges, it is signifi- 

 cant that a medium of exchange has largely taken the place of 

 coins. This medium consists of paper representatives of value. 



And, again, the quantity even of gold necessary to effect any 

 considerable exchange is of such weight that its transportation 

 is a matter of inconvenience, and for any person or association of 

 persons to keep safely on hand all the gold that might be amassed 

 at any one time would necessitate expensive precaution. Ob- 

 viously these inconveniences are avoided by the deposit of silver 

 or gold coin or bullion in the charge of a person or persons re- 

 sponsible for its safe keeping, and for its transfer from the owner 

 to another as he may direct. Hence banks of deposit and pay- 

 ment by check, the use as money of paper representatives of 

 money. For if B is willing to accept the check of A upon banker 

 C in the belief that he can obtain the money for which it calls 

 upon presentation, why should not D accept the same check from 

 B upon B's assurance that it is good ? 



If A, buying merchandise from B, says that he will have the 

 money wherewith to pay for it when he has resold the merchan- 

 dise, or at the end of a particular time, B may be willing to ac- 

 cept his written promise to pay ; usually, however, with the stipu- 

 lation tliat A surrender an additional sum as compensation to B 

 for waiting for the payment. This sum is interest. And upon 

 B's guarantee that the promise is good, D may be willing to ac- 

 cept the promise from B as payment for other merchandise. 

 Or if B need the money in advance of the time specified in A's 

 promise to pay, he may perhaps deliver the promise to D in re- 

 turn for th(i money. Or, as would be more likely, he would seek 



