240 Mr. Faraday on 



from a direct increase in the value of land, because an 

 appreciation of the standard legal tender (or, in other 

 words, a fall of prices) not only increases fixed rents in 

 terms of the commodities produced, but all debts whatever, 

 and all interest payable on such debts, and especially on 

 permanent investments ; in short, all payments for past 

 services, such as are represented by the National Debt or 

 the existence of the very machinery essential to the life of 

 the State, such as railways, waterworks, and other public 

 and private undertakings. Thus, an appreciation of the 

 standard legal tender not only creates a purely arbitrary 

 unearned increment for the land-holder who has let his 

 land on long leases, but for every bondholder and creditor 

 who can demand payment in terms of the standard metal. 



Now, is there anything which tends to counteract an 

 arbitrary appreciation in the exchangeable value of gold as 

 money? Sir Thomas Farrer, adopting the theory of Mr. 

 Henry Dunning Macleod that credit is money or "currency," 

 practically contends that there is. An appreciation of the 

 standard money is the same thing as a fall of general 

 prices ; and Sir Thomas Farrer, assuming, for the sake of 

 argument, the truth of the quantitative theory of prices, 

 according to which prices in the long run are governed 

 by the relation between the volume of commodities and 

 the volume of money, submits that the volume of money 

 includes credit as well as gold. " Credit," says Mr. 

 Macleod, "is circulating medium exactly as money is.'' 

 " Credit," says Sir Thomas Farrer, " is not merely an 

 economy of gold — it takes its place (in the form of bills, 

 &c ) as a circulating medium " ; and, further, " it is not to 

 gold but to credit that we must look as the immediate 

 regulator of prices " ( What do we Pay With ? or^ Goldy 

 Credit, and Prices. By Sir T. H. Farrer, Bart.). 



Now a little consideration will, I think, show us that 

 credit is really the monetisation of commodities. The bills 



