MOJ^EY. 55 



has too much bread, there are always laborers who could produce 

 that of which the baker has too little, and who are themselves in 

 want of bread. It is when the tailor and baker cannot exchange, 

 that there is want and over-production on both sides. Whatever, 

 therefore, has power to withdraw the currency from circulation, 

 has power, also, to cause trade to stagnate; power to overwhelm 

 the community with misery; power to carry want, and its correla- 

 tive, over-production, into every artisan's house and workshop. 

 For the transformation of product into disengaged capital, is one of 

 the regular steps of production; and whatever withdraws the dis- 

 engaged capital, or money, from circulation, at once renders this 

 step impossible, and thus puts a drag on all production. 



THERE ARE VARIOUS KINDS OF MONEY. 



But all money is not the same money. There is one money of 

 gold, another of silver, another of brass, another of leather, and 

 another of paper: and there is a difference in the glory of these 

 different kinds of money. There is one money that is a commodity, 

 having its exchangeable value determined by the law of supply and 

 demand, which money may be called (though somevvhat barbarous- 

 ly) merchandise-money; as for instance, gold, silver, brass, bank- 

 bills, etc.; there is another money, which is not a commodity, 

 whose exchangeable value is altogether independent of the law of 

 supply and demand, and which may be called mutual money. 



Mr. Edward Kellogg says: '"Money becomes worthless when- 

 ever it ceases to be capable of accumulating an income which can 

 be exchanged for articles of actual value. The value of money as 

 much depends upon its power of being loaned for an income, as the 

 value of a farm depends upon its natural power to produce." And 

 again: ''Money is valuable in proportion to its power to accum- 

 ulate value by interest."* Mr. Kellogg is mistaken. Money 

 is a commodity in a twofold way, and has therefore a twofold val- 

 ue and a twofold price — one value as an article that can be ex- 

 changed for other commodities, and another value as an article 

 that can be loaned out at interest; one price which is determined 

 by the supply and demand of the precious metals, and another 

 price (the rate of interest) which is determined by the distress of 

 the borrowing community. Mr. Kellogg speaks as though this last 

 value and last price were the only ones deserving consideration; 

 but this is by no means the case: for this last value and price are so 

 far from being essential to the nature' of money, that the Mutual 

 Bank will one day utterly abolish them. The natural value of the 

 silver dollar depends upon the demand and supply of the metal of 

 which it is composed and not upon its artiticial power to accumu- 

 late value by interest. Legislation has created usury; and the 



♦People who raise the cry of "clieap money" fall into the same error; 

 money that circulates freely at par, whether interest-bearing or not, Is 

 neither cheap or dear.— Editor. 



