The inquiry, how is one to discover how much buying and selling and paying of debts is going on in England, so as to learn how many sovereigns are needed, is answered in the same way as the parallel question, how many hats does England require. By practical trial; in no other manner. The rule is, so many heads so many hats; the actual number is discovered experimentally by the hatters. In precisely the same manner is the number of purchases and payments effected by handling sovereigns and dollars ascertained; and just as the hatter ceases to make more hats when every head has got one, so when there is more gold in a country than is wanted for actual work, it first finds its way into the vaults of the bullion dealers or of the Bank of England, and then gradually flies away abroad. If the world were full of gold-that is, if all the requirements for use in payments (its employment in the arts is here omitted) were satisfied, then one of two results must follow; either the miners must diminish producing, or gold must fall in value. It must follow the law of all commodities in excess of demand : it must fall in price, which for gold means, it must be able to buy fewer goods. But what if a country labours under a deficiency of coin? Is not this a very serious matter, something like a calamity? Nothing of the kind. In the first place it is not a loss of wealth-the country is none the poorer for it; for gold cannot be procured without giving away other property in exchange for it. There would be no diminution of the power to buy goods in the shops and stores because there happened to be less coin, less money, as is so commonly imagined, most of all in America. Goods are bought with other goods; and the country would possess those which must have been sent away to purchase a mere machine for exchanging. And secondly, some inconvenience would arise from a deficiency of a particular tool. But that inconvenience in the case of coin would be something very different in kind from that which would arise if there were too few ploughs or if factory engines were suddenly diminished. In these cases there would necessarily be a diminution of wealth produced; the country would really be the poorer. With coin, there would simply be an impediment to exchanging, that would be all. But there would be no want of means to meet the temporary difficulty. In these modern days a fresh supply would speedily be acquired from foreign countries; gold would be bought abroad, as it must have been had there been no deficiency; and even without that remedy other resources would be at hand. The circulation of the currency would undoubtedly become more rapid, it would run faster and do more work. In a country where banking was largely used, the momentary difficulty would be trifling. (I am not speaking here of a deficiency of banking reserves, that will be considered under banking.) Small cheques would be given in payment till an increased supply of gold had come in. Fifty years ago it was not an uncommon occurrence in England for employers of labour to be short at times of silver, and they were obliged to pay small premiums to get a bag of silver against Saturday evening; but such events have ceased to happen. A run on banks for gold would be a different matter. It does not imply the fact that we are here supposing, a positive deficiency of the money required for ready-money payments in coin all over the country.

One peculiarity of metallic currency deserves notice. Barring existing contracts for fixed payments of coin, agreed to in the past, the public has no interest in the cheapening of gold for currency purposes, as of all other articles. Cheaper tea is an increase of wealth; cheaper gold coin is not. The reason of the difference consists in the fact that the quality by which gold does its work as a tool is value. The same value must be made up with coin; two sovereigns of ten shillings each would be wanted to make a purchase formerly effected with one at twenty. Cheapness or dearness of the precious metal acts only on the weight and size of the coins carrying the same value in the purchase of other commodities-indeed, a great cheapness of gold would create a very serious inconvenience. A golden shilling worth no more than one of silver would be a fearful aggravation of weight; the inevitable result in practice would be an immense disuse of coin, and a proportionate increase of small cheques, small bank-notes, and other machinery for exchanging.

From the fact that a large increase in the production of gold after the whole world had acquired a full supply for its currency wants would necessarily lead to a fall in its value the inference has been drawn that a similar effect takes place in a single nation, and consequently great importance has been attached to the amount of its circulation. A diminution of gold in England, it has been argued, makes coin dear, and causes a local fall of general prices. An over abundant circulation, it has been held, generates the opposite result, and consequently the amount of the circulation in England is carefully recorded every week. I regard this as a very decided error, and this circulation theory built upon it as an entire mistake. It forgets that the metal of coin, gold, is very portable, easily removable from one country to another. Long before the coin was so scarce as to act on prices, the inconvenience felt would have fetched supplies from abroad very speedily with the modern means of locomotion. The slightest difference in the purchasing powers of gold in two neighbouring lands would swiftly lead to equalisation by importation. The value of gold is the same in all countries within anything like moderate distances. Excess of gold does not lower its value in a single nation, but generates accumulation in banks; it does not remain out in circulation, acting on general prices, like inconvertible notes. At this day sixty millions sterling lie buried in the Bank of France; what possible influence can that hoard or any other hoard exercise on prices? When notes and banking are at work, the quantity of transactions effected by coin then becomes insignificant. In London alone the Clearing House accomplishes more buying and selling in one week than the whole quantity of gold coin in the kingdom amounts to. It follows that the quantity of the so-called circulation of the gold and notes together is quite unimportant; it has no action on prices; it is a curious piece of statistics, and nothing more. All lands are linked together by the steamboat and the railway. The export and import of gold has no significance-unless it be for banking, of which more hereafter. Whether the gold of Australia and California tarries in England, or passes on to pay for French wines or German wools, or American cotton, matters nothing as an occurrence of currency, nay, it may be a great gain. If a bad season has destroyed the harvest, lucky is the country which chances to have a store of gold which it can at once send abroad to buy food. The exportation of the metal causes no diminution of wealth. It was lying idle in a cellar, it departs and brings in capital, food for workmen engaged in the production of wealth. It must not be spoken of as a calamity; it is a thing to rejoice over.