value of gold to-day, and before the year expires be down to the price of silver; it may be abundant at six per cent. per annum when a business operation is undertaken, and be scarce at thirty-six per cent. before it is closed. These are the conditions that environ the workers, the wealth-producers of the United States, and they are the result of the government's undertaking to be banker-in-chief for the nation. The demoralizing tendency of such conditions, which stimulate speculative ventures and discourage legitimate industry, needs not be pointed out. Nor need we be surprised that the farmers and planters are impressed with the belief that there is a moneyed conspiracy against them. In the interest of the whole country, is it not well that there should be a "greenback craze," a "silver delusion," and a continued agitation, until the most productive of all our industries is relieved from the incubus of a false monetary system, since these are the surest signs that there is an evil that needs correction?

If any more evidence is needed to prove the inability of our local banks to perform their proper functions, we have it in the fact that our western grain dealers are obliged to resort to Canadian banks for monetary aid. It is estimated that in the autumn of 1891 more than three million dollars were bor

rowed from these banks for use in Minnesota and Dakota alone. It may be said that the grain-dealers resort to the Canadian banks only because they can borrow at a lower rate of interest; but is not this of itself a full concession of our contention that our local banks are unable to perform their functions? It is solely because they are deprived of the right to issue their own notes on the security of the grain, as the Canadian banks do, that they are unable to compete with these banks. On what better security could paper-money be issued than on a bill of lading, or a warehouse receipt with accompanying insurance policy, which is the collateral given by the graindealer? The Canadian banks do not send gold into the United States to perform these services; they are able to come to our aid simply because their implement for effecting exchanges is of higher refinement than ours, and it is so by reason of its having less gold in its composition and more intelligence and integrity.

The idea which prevails among us that in some exceptional sense Canada is backed up by British capital, ignores the established principle that capital is not limited by nationality. The motives that move English capital are a sense of security and a higher rate of interest or of profit than

can be realized at home, and it will come to the United States on these terms just as readily as it will go to Canada. It was reported last July (1893) that Canadians "loaded with English capital" had appeared at Duluth as buyers of grain, when prices had broken in consequence of the hoarding of our currency. Now, we venture the assertion that if, as stated, Canadians went to Duluth to buy grain, they employed neither English capital nor English credit. A sight draft of the Bank of Montreal on its representative in New York for the purchase money would be a satisfactory form of payment to the seller of the grain; we may suppose the grain then shipped via the Lakes and St. Lawrence River to Liverpool, where it would be immediately convertible into English money; the bank meantime being in secure possession of the grain by bill of lading. But the bank could realize upon the grain before it arrived in Liverpool; it could authorize its agent in New York to draw a sixty-days' bill of exchange on its agent in London, and this it could convert immediately into cash in New York, even in time to pay the draft from Duluth. It will be seen that the only capital that appears in this transaction is the grain itself, the credit of the Bank of Montreal being the medium of exchange.

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CHAPTER VI.

ONEY is not capital, nor is capital money,

though these words are often, in common parlance, used interchangeably; but there is a marked difference in their signification which should not be lost sight of. Strictly speaking, money is never anything but the common medium of exchange, whereas capital is an investment, producing some income. The term capital is commonly applied to the kind of investment known as personal property, such as the bonds or stock of railroads, or the capital stock of a business, which may include the money in use at the time and the building in which the business is conducted; but the name is not applied to land, nor to real estate, nor to money in general, though it may be applied to metallic money. When we speak of a capitalist, the idea conveyed is not merely of a man of wealth, but of one who has his wealth so at command that it is readily convertible into money,

or into other forms of wealth through the agency of money. It is doubtless because of the intimate relationship between capital and money, and the mobility of both, that the words overlap occasionally, even when their significance is understood; but the distinction between them becomes important when we inquire into the real purport and function of money.

Let us suppose that A has capital in England which he finds he can invest more profitably in the United States, and so concludes to transfer it from England to this country. It is stock in a brewery, paying him six per cent. per annum, and he finds he can make a similar investment here that will pay him nine per cent., so he sells his English stock, receiving English money therefor; with this money he buys a bill of exchange on New York, and with the American money received upon it here he pays for the American brewery stock. In this example, no English money passes from England to the United States-the thing transferred is capital. The English money which bought the bill of exchange remains in England, and the American money which paid for the American brewery stock remains in America, and goes immediately back into circulation to continue the performance of similar services: this is all that money ever does.