As soon as legal-tender credit notes begin to depreciate in value, or, in other words, as soon as commodities rise in consequence, each person who receives them pays, a tax equal to their depreciation while in his possession. For example, if he receives a ten-dollar note, which will bring him but eight dollars' worth of merchandise at the gold price, he has contributed two dollars to the government. So, of course, with all who receive notes in payment for debts contracted prior to the issue of such currency. When, as in the case of the " continental money," these notes become utterly worthless, those through whose hands they have passed have contributed, at least nominally, the whole amount. We say nominally; for the contribution thus forced from the people is not in fact to the full amount in actual value. For illustration, the government issues one hundred millions of its notes at first; and for this, as prices have not                 been raised, it receives an equal amount in value. It issues

a second hundred millions; but prices have advanced in consequence of the first issue, we will suppose, fifty per cent, so that the government gets but $66,666,666 in value. A third.issue is made of one hundred millions; but prices have gone up one hundred per cent, and the government gets but fifty millions in value. Another issue of one hundred millions carries prices up to one hundred and fifty per cent, and only forty millions is realized in value. This is not intended as a statement of the precise fact, but to exhibit the natural operation of such issues. That it is not exaggerated, appears from what is well known, that the United States government sold many millions of its bonds for that which was equivalent to but forty per cent in gold. The result is shown in the following recapitulation: —

First $100,000,000, issued at par value, ....    $100,000,000 Second $100,000,000, issued at 331/3 per cent discount...............        66,666,666

Third $100,000,000, issued at 50 per cent discount       50,000,000 Fourth $100,000,000, issued at 60 per cent discount...............        40,000,000

Government receives in value for $400,000,000

issued..............    $256,666,666

Loss to the government, or people......      143,333,334


The people must finally pay in taxes $143,333,334 more than the government received in value, if the debt is paid; but, if it should be repudiated, the loss of actual value to the people would be but $256,666,666, the balance being merely the enhanced prices they have received for commodities furnished. But, unfortunately, those who received the extra prices and those who will pay the taxes may not be the same identical persons.

The foregoing illustration shows the operation or general result upon the community of a credit currency as a direct tax: but the effects upon different individuals are diversified in every possible manner; one man losing, another gaining by it, according to the position in which the parties are found at the time they were compelled to accept such a currency instead of money. The laws of value having been violated, universal chaos in all monetary affairs is the inevitable consequence.

The final result of the issue of an inconvertible currency, then, is, that, if it is never redeemed, the taxation it imposes is most unequally and unjustly distributed; if it is finally paid, then the taxation is not only unfairly distributed, but * the amount vastly increased, since the expenditures of the government have been largely enhanced by it. It does not admit of question that a large part of the debt of the United States represents expenditures made solely to meet the excessive prices caused by a credit currency, especially in the years 1863-5, when the premium on gold averaged nearly seventy per cent, and for a considerable period, when the heaviest expenditures were made, as high as one hundred and fifty. Of course, the taxation of the country will be correspondingly increased for the payment of this excess.