56 MUTUAL BANKING. 



Mutual Bank can destroy it. Usury is a result of the legislation 

 which establishes a particular commodity as the sole article of 

 legal tender; and, when all commodities are made to be ready 

 money through the operation of mutual banking, usury will vanish. 



CONVERTIBLE PAPER-MONEY RENDERS THE STANDARD OF VALUE 



UNCERTAIN. 



To show the efifect of variations in the volume of the existing 

 circulating medium, not only on foreign commerce, but also on the 

 private interests of each individual member of the community, 

 we will, at the risk of being tedious, have recourse to an illustra- 

 tion. Let us suppose that the whole number of dollars (either in 

 specie or convertible paper) in circulation, at a particular time, is 

 equal to Y; and that the sum of all these dollars will buy a certain 

 determinate quantity of land, means of transportation, merchan- 

 dise, etc, which may bo represented by x; for, if money may be 

 taken as the measure and standard of value for commodities, then 

 conversely, commodities may be taken as the standard and measure 

 of value for money. Let us say, therefore, that the whole mass of 

 the circulating medium is equal to Y; and that its value, estimated 

 in terms of land, ships, houses, merchandise, etc., is equal to x. If, 

 now, the quantity of specie and convertible paper we have sup- 

 posed to be in circulation be suddenly doubled, so that the whole 

 mass becomes equal in volume to 2Y, the value of the whole mass 

 will undergo no change, but will still be equal to -t, neither 

 more nor less. This is truly wonderful! Some young mathema- 

 tician, fresh from his algebra, will hasten to contradict us, and say 

 that the value of the whole mass will be equal to 2.r, or perhaps to 

 X divided by 2, but it is the young mathematician who is in error, as 

 may easily be made manifest. The multiplication of the whole 

 number of dollars by 2 causes money to bo twice as easy to be ob- 

 tained as it was before. Such multiplication causes, therefore, 

 each individual dollar to fall to one-half its former value; and this 

 for the simple reason that the price of silver dollars, or their equiv- 

 alents in convertible paper, depends upon the ratio of the supply of 

 such dollars to the demand for them, and that every increase in the 

 supply causes therefore a proportionate decrease in the price. The 

 variation in the volume docs not cause a variation in the value of 

 the volume, but causes a variation in the price of the individual 

 dollar. Again, if one-half the money in circulation bo suddenly 

 withdrawn, so that the whole volume shall equal XY, the value of 

 the new voluine will b(i exactly Cijual to .r, for the reason that the 

 dilliculty in procuring money will be doubled, since the supply will 

 be diminished one-half, causing each individual dollar to rise to 

 double its former value. The value; of the whole, mass in circula- 

 tion is independent of the variations of the volume; for every in- 

 crease in the volume causes a proportionate decrease in the value 

 of the iiulividual dollar, and every decrease in the volume causes 

 proportionate increase in the value of the individual dollar. If the 



