“No, no. We can imagine a state of barter; and we have read of the different kinds of rude money in use when people first began to see the advantage of a circulating medium;—skins in one country, shells in another, and wedges of salt in a third: and we know that metals were agreed upon among civilized people, as being the best material to make money of; and that to save the trouble of perpetually examining the pieces, they were formed and stamped, and so made to signify certain values. And——”
“And do you suppose they always keep the same value in reality; supposing them of the due weight and fineness?”
“No, certainly. They become of less and greater real value in proportion to the quantity of them; in the same way as other commodities are cheap or dear in proportion to the supply in the market. And I suppose this is the reason why money is now so cheap,—there being a quantity of paper money in the market in addition to the coin there was before. But then, I cannot understand where the coin is all gone, if it be true that we have too much money in consequence of its circulating together with paper.”
“The coin is gone abroad, and more paper still has taken the place of it. This is proved by two circumstances; first, that all commodities except money have risen in price; and secondly, that we have more foreign goods than usual in the market, notwithstanding the war.”
“To be sure, less of every thing being given in exchange for one thing proves that there is more of that one thing to be disposed of. And the foreign goods you speak of pour in, I suppose, in return for the gold we send abroad.”
“Yes. A guinea buys nearly as much abroad as it bought three years ago, while it buys much less at home,—(unless indeed it be sold in an illegal manner.) Our guineas are therefore sent abroad, and goods come in return.”
Fanny thought it had been also illegal to export guineas. So it was, her father told her; but the chances of escaping detection were so great that many braved the penalty for the sake of the speculation; and, in fact, the greater part of the money issued by the mint was so disposed of. He took up the newspaper of the day, and showed her an account of a discovery that had been made on board a ship at Dover. This ship—the New Union, of London—was found on the first search to contain four thousand and fifty guineas; and there was every reason to believe that a much larger sum was on board, concealed in places hollowed out for the reception of gold. Horace told also of a ship being stopped on leaving port, the week before, on board of which ten thousand guineas had been found.
“What an enormous expense it must be to coin so much money in vain!” exclaimed Fanny. “It seems as if the bankers and the government worked in direct opposition to each other; the one issuing paper to drive out gold; and the other supplying more money continually to depreciate the value of that which the banks put out.”
“And in putting out paper money,” observed Melea, “we seem to throw away the only regulator of the proportion of money to commodities. While we have coin only, we may be pretty sure that when there is too much of it, it will go away to buy foreign goods; and when too little, that more will flow in from foreigners coming to buy of us: but our bankers’ notes not being current out of England, we may be flooded with them and find no vent.”
“And then,” observed Mrs. Berkeley, sighing, as if with some painful recollection, “comes a lessening of the value of money; and then follow laws to forbid the value being lessened; and next, of course, breaches of the law——”