value was made so great that it is not probable there will be need of another change for very many years, if ever. The same is true in England.

PAPER CURRENCY.

ART. 112. Bank notes, certificates of deposit, checks, bills of exchange, etc., are in business used as money, but are not money. They are representatives of money when an equivalent amount of gold and silver is lying idle, and the paper takes its place in the circulation. Otherwise, they are representatives of indebtedness merely, and the man who receives them in payment of any debt has only given up one claim for another which may perhaps be more available. Bank notes, actually representing gold or silver in store, may be used with profit, for the reason that the coin lying in the vault is saved from wear, and the inconvenience and risk attending the transfer of large sums are to a great extent avoided. This is the case with the certificates of deposit that are used by the associated banks in New York in settling their balances at the "clearing house." It has been strongly advocated by some that a "gold-note currency" on such a basis might with many advantages be issued from the Sub-Treasury of the United States. Bullion banks might also be formed that would furnish the same kind of currency.

When gold or silver is received, it is an ultimate payment, for they are supposed to contain intrinsically an equivalent value. The policy of a paper currency, beyond an actual specie basis, is a question upon which intelligent political economists disagree. The use of certificates of deposit, checks, bills of exchange, etc., greatly facilitates the transaction of business and reduces the amount of metallic currency needed. To make them serviceable and reliable, however, they should not be issued as a basis of credit, or for procuring loans, but should arise from legitimate business transactions in which the drawee

has previously become actually indebted for the amount of the bill.

Examples relating to Coins and Money of Account.

1. If a pound of sugar be worth a half a peck of wheat, what would be the price in wheat of 50 lbs. of sugar? Ans. 6 bushels. 2. If a pound of sugar be worth 8 pounds of wheat or 10 yards of tape, how much tape can be bought for a pint of wheat, a bushel of wheat weighing 60 lbs. ?

Ans. 1

yds.

3. If an ounce of silver be worth 6400 ounces of iron, how many tons of iron can be bought with 3 pounds of silver?

Ans. 83 tons.

4. If the value of a bushel of wheat be represented by 1. what would be the value of 5 bush. 1 pk. 3 qts. ?

Ans. 51.

5. Before the federal currency was established by Congress in 1786, and indeed for some time after, the denominations in the money of account in the United States colonies were pounds, shillings, and pence, as in England, while most of the coin in circulation consisted of Spanish silver dollars, their halves, quarters, and sixteenths. Owing to the scarcity of metallic currency, and the fact that the relative value of the money of account, compared with the silver dollar, had not been generally determined or agreed upon, remarkable fluctuations in the money of account arose, varying in different States, so that when it became necessary to fix their relative values, it was found that in the New England States £1 or 20 shillings =3 Spanish dollars, while in New York and Ohio £1=only 2 Spanish dollars. How much below the New England standard was the money of account in Ohio? Ans. 25%.

6. Assuming the pound sterling of Old England to have been equal at that time to 4 Spanish dollars, as is stated by some, how much below that standard had the New England. money of account depreciated ? Ans. 25%.

7. Assuming the Spanish dollar to equal a ollar in federal currency, how much less in cents would an article cost in New

York whose price was 7 shillings, than in New England where the price was 68. 6d. ?

Ans. 20% cts. 8. Paper currency frequently occasions great fluctuations in the money of account. of account. Continental money, when first issued, was very nearly par with silver. In 1778 its depreciation was as 6 to 1, in 1780 as 30 to 1, in 1781 as 1000 to 1. The money of account would, however, soon cease to follow such extreme fluctuations, but would adopt some other standard. Assuming the paper currency of Chicago to have depreciated the money of account 2% below that of New York city, how much more in New York funds would an article be worth in New York than in Chicago, the price in each place being $1000? Ans. $19.608.

0000

9. In 1837 the fineness of the silver dollar United States coin was changed from 3 to T, but its weight, which was 416 grains, was so changed that the amount of pure silver in the coin remained the same as before. What was the weight after the change? Ans. 412 grs.

10. In 1853 the weight of the silver half-dollar was changed from 206 grains to 192 grains, the fineness remaining the same, viz., . What is the value in new silver coin of the dollar coined before 1853 ? Ans. 107 cts.

11. From 1792 to 1834 the United States eagle weighed 270 grs., and was fine. Its weight was then reduced to 258 grs., its fineness remaining the same. In 1837 the fineness was reduced to, the weight remaining the same, since which there has been no change. What is the present value of an eagle coined previous to 1834 ? Ans. $10.651.

12. Augustus Humbert, United States Assayer in California, under a legal provision of 1850, has issued fifty dollar pieces of gold, purporting on their face to be 887 thousandths fine and weighing 1310 grains each. Assuming them to be of full fineness and weight, what is their value in United States gold coinage? Ans. $50.05.

In the above examples no account is made of the alloy.

13. If I take 20 lbs. of bullion of standard fineness to the mint to be coined, and pay a seigniorage of, what amount of money, in gold coin, should I receive? Ans. $4442.79.

14. In A.D. 671 a pound sterling was equivalent to a pound Troy of silver. In the 14th century the same amount of silver was coined into £1 5s., and a pound of gold into £15. After successive debasements for the profit of kings, a pound of silver now makes £3 11s. 2d., and a pound of gold makes £50 9s. 5d. The average price of wheat in the 14th century was £1 for what now averages £21. Prices of other staple commodities and wages have undergone a similar change. The conclusion is apparent, that though governments may depreciate the money of account, they can not force the sale of common merchandise at much less than its value. Though they may change the conditions of legal tender, so that 6 shillings worth of silver will pay a pound of debt, new contracts will recognize the change, and ultimately not be affected by it. Queen Elizabeth, using a pound of silver for coining £3 5s. for England, put no more than that into £8 for Ireland. What ought to have been the price of flour in Ireland for what in England cost £1 ? Ans. £29, shillings.

15. James the Second manufactured four pennyworth of silver into £10, with which he paid off his soldiers. What per cent. of their just dues did they receive? Ans. per cent.

16. Suppose an estate to have been left, centuries ago, for the support of the dean of a cathedral and four choristers, the income then being £300 per year, out of which he was to pay each chorister £30. If the debasement of current coin has raised rents 250%, and the increased supply of the precious metals raised it 150% more, how do the relative salaries of the dean and choristers compare with what they were evidently designed to be by the testator?

Ans. The dean should receive 6 times what a chorister receives, but actually receives 46 times as much.

BANKS AND BANKING.

ART. 113. BANKS are of four kinds. Banks of Deposit, Banks of Discount, Banks of Issue, and Banks of Exchange. The first two and the last may be established by individuals or associations, the other only by special authority from the State.

BANKS OF DEPOSIT.

ART. 114. BANKS OF DEPOSIT are for the safe keeping of money.

A special deposit is made when the identical money is to be returned to the depositor, the bank being responsible only for the safe keeping; the loss, for instance, attending the failure of the banks whose notes are deposited being sustained by the depositor. In other cases, the bank or banker becomes indebted to the depositor, the banker being allowed to use the money as he pleases, but obligating himself to pay the depositor the whole or any part of the amount due him whenever it is demanded, if demanded during business hours. The improbability that all the depositors of a bank will call for the entire balance of their account at the same time, renders it safe for the banker to use a portion of the funds thus entrusted to him, in loaning to those who need the money but for a short time, and may therefore be relied upon for prompt payment. The interest money thus received is the banker's compensation for keeping the accounts of his depositors. Sometimes interest is paid by the banker for the deposit, but, as a general rule, that this interest may be refunded, there is a strong temptation to loan too large an amount "on call," or to seek largely paying investments, with doubtful securities, which is against the interest of both banker and depositor.

When the depositor usually has a large balance with his banker, there is an implied obligation with the banker to give