Credit Money and the Precious Metals. 255 



unchanged relation as regards its inherent force with all 

 commodity ions ; in other words, if it is to remain a per- 

 fectly steady standard of value, it must not derive an incre- 

 ment of value merely from the bestowal upon it of the 

 quality of legal tender by the Legislature. The bestowal 

 upon any one commodity, not capable of indefinite multi- 

 plication, of the function of legal tender, does undoubtedly 

 tend to increase its value by giving it an additional utility ; 

 my view is that, theoretically, the Legislative effect should 

 go no further than the setting free of the ion* In 

 proportion as there is any effect beyond this, that effect 

 is an artificial interference with natural economics, and, 

 therefore, necessarily, with the equitable distribution of 

 wealth involved in the free play of natural laws. A 

 theoretically invariable monetary ion may be unattainable 

 in practice, but in examining the conditions which interfere 

 with its attainment we may at least see how to realise the 

 ideal ion approximately, on the average. 



Now, one way in which the value of a commodity is 

 increased by the bestowal upon it of the function of legal 

 tender is by converting the producer or holder instantly 

 into a buyer. "The situation of the producers of gold," says 

 M. Cernuschi, truly, "is quite different to that of the producers 

 of any kind of merchandise. The producer of any kind of 

 merchandise does not knowhowhisprofit and loss stands until 

 he has realised in gold, that is to say, sold his merchandise 

 for money. The producer of gold himself directly produces 



* In his very thoughtful little book, entitled " Bi-melallism ; or, a Fixed 

 Ratio between the Two Metals, Gold and Silver," recently pubHshed, Mr. 

 Councillor W. T. Rothwell, of Manchester, speaks of the "money-power" as 

 a property which can be added to or taken from gold or silver ; any commodity 

 invested with this property being merely "the raw material out of which 

 money is manufactured." It will be seen, I hope, from what I have written 

 above, that, according to my view, in a perfect monetary system, this "money- 

 power " should not be an addition in the sense of an added value, but rather 

 the mere conversion of the natural economic energy of the material from the 

 potential to the kinetic form. 



