BIMETALLISM. 563 



gold was never so great as it now is ; and its increased value is 

 represented by the larger amount of commodities ofSered for it. 

 As a measure of A'alue and a medium of exchange it is Avanted in 

 all places where there is wealth to measure and merchandise to 

 exchange. It is the basis of every instrvmient of credit and must 

 exist in sufficient quantity to uphold credit. The issue of notes 

 unrepresented by a store of bullion or specie is limited in most of 

 the European States to a comparatively small amount, and even 

 this is represented by securities easily convertible. An inconver- 

 tible currency is the last resort in national financing, and the 

 communities on which it is inflicted are either in the throes of 

 some national commotion, or have not yet fully emerged from the 

 domain of barbarism. 



The securit\ of our vast credit system is based on the presump- 

 tion thar each individual instrument has awaiting it, at the option 

 of the holder, its equivalent in coin ; and the danger lies in the 

 possibility of a doubt of the sufficiency of this supply of value 

 entering the public mind. Economists agree that bills of exchange 

 as credit instruments do not at all supersede the use of money, as 

 its presence is presupposed at either end of each transaction. 

 Therefore the fluctuation of the bank reserves are watched with 

 feverish anxiety, and the rapid advance of the bank rate on a 

 moderate withnrawal of gold attests its paramount interest. 



PROPORTIOX OF CURRENCY TO WEALTH. 



It is significant of the novelty of the situation that economists 

 have not tried to solve the question of a mathematical ratio between 

 the amount of the metallic currency of a country and the measure- 

 able wealth contained in it. Jevon, in his book on money, admits 

 that there is some such ratio, but in the concluding chapter of his 

 work he refers to the inquiry as indicating a question as to the 

 " degree of civilisation, of Providence, or of complexity of banking 

 organisation" rather than as affecting the important question of a 

 sufficient or insufficient currency. 



The want of interest in this question arose, no doubt, from the 

 fact that, while the combined standard existed, the aggregate volume 

 of both metals in their monetary use being the common possession 

 of the nations, any increase depended on the discovery of new 

 sources of supply, and it was not supposed that the demonetisation 

 of one of them would involve a reduction of the currency and the 

 enhancement of the exchange value of the other. 



THE FUNCTIONS OF MONEY. 

 In order properly to understand the question it is necessary to 

 obtain a correct estimate of the different functions which money 

 fulfils. A common mistake is made in attributing a low rate of 

 interest to an abundant currency. The ordinary fluctuations in the 

 bank rate of discount only indicate a larger or smaller amount 



