If additional proof be required to show that the view just taken of money is the right one, it will be found in the fact, that whenever kings or governments have attempted to give a false value to the coin they had put into circulation, - that is to say, whenever they have endeavoured to make it pass for what its weight and quality did not warrant, - it immediately became depreciated, and that depreciation has always been found to correspond with the amount of the false value put upon it. As soon as the world saw that the proper weight and quantity of metal were not in the coin, it was only taken in exchange for less meat, flour, and clothes in proportion; and thus the fraud ere long defeated itself, because it is impossible to create any money whatever which shall be a standard or medium of value in any other way, or upon any other terms, than the fair principle of bartering or exchanging one commodity of known value for another of known value.

We pour out rivers of ink in England, writing an extraordinary number of works upon money, and upon those principles of political economy which are supposed to apply to it, as well as our forms and habits in making use of it; but we add little, it is to be feared, to our information, practical or theoretical, by our frequent literary labours in this line. On the contrary, things, instead of mending, are getting worse with us. It would be difficult to point out any real addition made to the stock of our knowledge upon the subject since Adam Smith, the father of the science, as it is called, published his celebrated Treatise on the Wealth of Nations; and yet the knowledge and talent employed in this respect have been not inferior, perhaps, to any which the mind of man has, during the same period devoted to the improvement of the species and his own enjoyment. The misfortune has been, that although many clever thinkers have appeared, and much knowledge has been elicited, they have not been of fixed and enduring authority; they have borne upon a defective and transitory state of things, and have not laid the foundations of any great or permanent system. Our currency has resembled the shifting sands that impede the navigation of some of our most capacious harbours, and defy the skill of the most experienced mariners. We have been dealing with a series of experiments; and each succeeding writer has most distinguished himself by showing where and how it was the last experiment had proved a particular failure.

I have stated that we have added little or nothing that is real to what Adam Smith contributed for our use years ago; and I may perhaps go further, and assert, that we are not likely to gain much more than we have learned from him. In saying this I refer, of course, to the true elements or first principles of the subject itself. These he expounded and published; and once that was done, the real nature and proper condition of the science had been ascertained, and all that remained for after-talent to do, was, whenever circumstances happened to modify the previous state of things, to mark each variation and vicissitude correctly as it evolved itself, and apply to it the best relief attainable at the moment, and not inconsistent with the governing laws of the system.

Banks manage money: so completely is this the case now-a-days, that it is hardly too much to maintain, that without Banks we should have no money at all; the relations of business are so complex and artificial, that we could hardly work our way clearly through the mazes of their intricacy, without the aids which Banks afford us, by paper-money, bills of exchange, etc. Let us, then, look at the theory of Banking propounded by Adam Smith; it occurs at book ii. chap. ii. of the Wealth of Nations. The extract is a long one, but it is full of excellent matter, and may prove serviceable to not a few of that numerous body who talk a great deal of Adam Smith and the Wealth of Nations, without ever having read a page of the work.

"It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of Banking can increase the industry of the country. That part of his capital which a dealer is obliged to keep by him unemployed and in ready money, for answering occasional demands, is so much dead stock, which, so long as it remains in this situation, produces nothing, either to him or to his country. The judicious operations of Banking enable him to convert this dead stock into active and productive stock; into materials to work upon, into tools to work with, and into provisions and subsistence to work for; into stock which produces something both to himself and to his country. The gold and silver money which circulates in any country, and by means of which the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock; it is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of Banking, by substituting paper in the room of great part of this gold and silver, enables the country to convert a great part of this dead stock into active and productive stock, into stock which produces something to the country. The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either. The judicious operations of Banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air, enable the country to convert, as it were, a great part of its highways into good pastures and corn-fields, and thereby to increase very considerably the annual produce of its land and labour. The commerce and industry of the country, however, it must be acknowledged, though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper-money, as when they travel about upon the solid ground of gold and silver. Over and above the accidents to which they are exposed from the unskilfulness of the conductors of this paper money, they are liable to several others, from which no prudence or skill of those conductors can guard them.