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. 80-98

Colonial paper-money not redeemable in coin on demand-

Issue of bills of credit-Abortive efforts of the Crown to

regulate the value of money-Failure of colonial paper-

money due to its defective character-Grounds of opposition

to colonial paper-money-Value and not volume the test of


money standard— The Bank of North America-Govern.

ment paper-money displaced by bank-notes—The Bank of

England America's model in banking-Increase of State

banks—Conflicting views held by Hamilton and Jefferson.





Canada's banking capital and methods-Defects of her
monetary system due to legislative action-Differing stand-
points of her bankers and her politicians-Her ratio of
metallic-money to paper-money-General uniformity of
Canada's interest-rate-Her banking methods in relation to
her agricultural industries—Why our western farmers borrow
money from Canadian banks—British capital not necessarily
a factor in Canada's business transactions with England.

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T may be well to explain at the outset what is

meant to be conveyed by the phrase "the natural law of money.” While it is true that money is a product of man's labor, and that it derives all its usefulness from the actions of men, it was not planned and brought into existence with an intelligent prevision of its nature and workings. It would be more correct to say that it came into use because it possessed inherent properties which fitted it for certain services, and that men appropriated it when they felt the need of the services. This they did in. dividually, without any concert of action, for money was circulating everywhere in the world before men even thought of making laws for its regulation.


When an individual uses money, he is governed in what he does with it purely by his own interests, and he does not concern himself about what becomes of it after it passes out of his possession; thus it circulates indefinitely, impelled always by the motives and interests of individuals acting independently of each other; yet it is found to move and perform its functions with the regularity of a natural law.

The material of which money is composed may be almost any product of man's labor; it becomes money only when it is used as the common medium of exchange. Before the appearance of money in the world, exchanges of commodities were made in a very crude way. If a man had a dog that he wanted to exchange for a sheep, he could not make the exchange until he found some one who had a sheep and wanted a dog. But in the course of time man discovered that, among the commodities produced by him, there was always some one commodity in more general use and demand than others, and this he seized upon as his medium of exchange, -it became his money. Having done this, he was no longer obliged to wait until he found some one who had the particular commodity he wanted, and who also wanted his commodity; he stood ready to accept the commodity in general demand, because

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