WE

E have seen that the improvement in money as a medium of exchange began with the substitution of one commodity for another, because the incoming commodity was better adapted for the service required than the outgoing, and we have seen that silver and gold, having gradually established their superiority over all other commodities, became the only money of the civilized world. Since the

adoption of these two metals, the improvement of money through displacement has proceeded very slowly. Silver being more plentiful than gold, and better adapted to the limited trade of early times, was the predominant money for many ages; but as trade developed into commerce, gold came more and more into use, and is now the chief money of all the more advanced commercial nations, while silver continues to be the chief money of nations second in

advancement.

This condition is in strict accord

with the general march of development.

In the larger and more complex transactions of modern traffic, gold has two qualifications that render it superior to silver; these are, that very much less of gold than silver, in bulk and weight, is required to perform a given service, and that gold has more stability than silver and is therefore a more trustworthy measure of values.

Thus far, it may be noted that all the improvement in metallic money coming through natural displacement, seems to culminate in the supremacy of gold; but while this inference is probably correct, it is certain that improvement of money generally will not cease so long as trade and commerce continue. He deceives himself who believes that such constant improvement as we see around us, in all the implements and appliances of every department of industry, could be possible if the one instrumentality upon which all such advancement depends, and without which it would stop, had remained stationary. We may rest assured that money has continually improved in efficiency, except in places and at times when the industrial organism of society was disordered by warfare, or when arbitrary rulers interfered with the

natural order of progression. This view is supported by the testimony of history.

While the question as to the superior serviceableness of silver or of gold was still unsettled, forces of a more subtle character than those that had produced displacement, came into play to augment indefinitely the monetary efficiency of these metals; these, in brief, were intelligence and integrity. It may not be obvious at first sight that a people's sense of what constitutes fair-dealing has anything to do with the amount of metallic money needed by them to conduct their business, but we shall see as we extend our inquiry that as man rises in the moral scale he requires relatively less and less of the moneymetals. Nothing more truly shows the degree of civilization attained by a people than their estimate of what constitutes right and wrong; it is upon this sense that credit must rest, and it is to credit that we must look for the further growth and efficiency of money.

Let us now see how this new element of credit became not only an indispensable quality of money, but the only quality by which its efficiency could be enhanced when improvement by natural displacement ceased. Take, for example, a community arrived at the silver and gold stage of monetary

advancement, but still hoarding all its idle money or hiding it in the ground for safe-keeping. This money would be used only by the owners of it, and as every transaction in trade would require a sum equal in value to the commodity exchanged, the volume of money employed, as compared with the volume of transactions, would be at its maximum. From this stage, improvement would progress when the owners of idle money lent it to those who would put it to use. This would be the beginning of credit, and the consideration paid by the borrower would be the beginning of interest. Thus, by the introduction of credit-by lending instead of hoarding—the same money would be made to repeat its service indefinitely; the presence of the precious metals would still be required in every transaction, but by turning the money oftener, the volume of money employed, as compared with the volume of transactions, would be lessened, and the cost of maintaining the medium of exchange would thereby be cheapened. To continue to hoard money and to supply the demands of growing trade by increasing the stock of precious metals, would not be monetary advancement; the burdens of trade would not be lightened in the least, and there would come a time when this slow and labored growth would be

arrested by the mere physical inability of the people to handle the metals.

At this stage of development, it is only by the cultivation of intelligence and integrity that any monetary advance can be made; in trading with one another, men are impelled, by the incentive of profit, to exercise these higher qualities of their natures. Through trade they are brought into closer relationship, and the distrust that led them to hoard their money, is gradually changed into confidence by the amenities of commercial intercourse. With the lending and borrowing of money fairly established, there would soon arise the need of a middle-man to promote and facilitate these transactions; and the need would develop the banker. A competent, responsible, trustworthy person, having the confidence of the community, would find his services in demand; he would become the depositary of lendable money; practically, he would himself become the borrower from those who wished to lend, and the lender to those who wished to borrow. profit would be derived from charging a higher rate of interest than he paid; when metallic money was deposited with him, he would give his receipt for it, and as he possessed the public confidence, his receipt would pass from hand to hand, performing the func

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