Bourse

“ Bah! when a minister himself, like the late M. de M______, kept a shop, and added the profits of ‘bons bons’ to his revenue, you may form some idea of the spirit of the age. If young nobles are not generally sleeping partners in shops, still they are more or less adventurers in commerce. The Bourse is the profession of those who have no other profession. ”

“ Thirteenthly, The Law that is in use among them for transference of Bills for Debts from one man to another: This is of extra-ordinary advantage to them in their Commerce; by means whereof, the can turn their Stocks twice or thrice in Trade, for once that we can in England; for that having sold our Foreign Goods here, we cannot buy again to advantage, till we are possest of our Money; which it may be we shall be six, nine, or twelve Months in recovering: And if what we sell be considerable, it is a good man's work all the Year to be following Vintners, and Shopkeepers for Money. ”

“ The present purpose, therefore, is to inquire into this vital though neglected part of the subject; to call attention to the economic truths that money and credit fluctuate as much, and often more, than commodities; again to point out that continuing trade is, in substance, only its original form of barter; to show that an exchange of a commodity for money constitutes but a single step, the second and most vital step being the replacement of the commodity with the money thus obtained. ”

“ The manner in which the wealth created by the toiling millions, passed through the channels of trade, into the possession of a few wealthy speculators, was illustrated by pictures and printed explanations, in almost endless variety, so that even the most obtuse observers, could not fail to get a clear idea of the practical workings of a system of commercial exchange, under the operation of which, interest, profit and rent were always added to the market price of the product, every time it changed hands. ”

“ And if in two Neighbouring Countries the Traders of one, by Reason of a greater Plenty of Money, can borrow it to trade with at a lower Rate than the Traders of the other, they will infallibly have the Advantage, and get the greatest Part of that Trade into their own Hands; For he that trades with Money he hath borrowed at 8 or 10 per cent cannot hold Market with him that borrows his Money at 6 or 4. ”

“ I define money to be a commodity or representative of a commodity, accepted by or forced upon the common consent, as an invariable ratio and medium of exchange. Now, since the price of all things else is variable and subject to extreme fluctuations, the dollar in exchange, and especially where the exchange is suspended as in borrowing, or buying on credit, becomes, as friend Pink suggests, a "war club" rather than a tool or instrument of commerce. ”

“ The merchant always advanced the goods or money with which to trade, and the fact that he could, if he wished to do so, fix his own profit at double the value of the capital, is an indication of the very satisfactory returns obtained at this period from foreign commerce. ”

“ Observing only the obvious fact, that the possession of money enabled a man to purchase whatever he wanted, early traders conceived the idea that money was wealth, and that nothing else was. And as the wealth of the nation was of the last importance, both to the governor and to the governed, and as trade was the chief method by which money could be supplied, and by which money might be drawn from the country, the regulation of trade became one of the most important duties of the King and the Parliament. ”

“ But every branch of trade in which the merchant can sell his goods for a price which replaces to him, with the ordinary profits of stock, the whole capital employed in preparing and sending them to market, can be carried on without a bounty. ”

“ Here is more poor stuff; for when I know the current prices of my Wares, both here and beyond the Seas, I may easily conjecture whether the profit of the Exchange or the gain which I expect upon my Wares will be greater. And again, as every Merchant knows well what he gains upon the Wares he buyeth and selleth, so may any other man do the like that can tell how the said Merchant hath proceeded: But what is all this to make us admire the Exchange? ”

“ Money travels rapidly from hand to hand, from one pocketbook to another, from bank to bank, to borrower or drawer, in constant circulation.
"Has any one of your economists calculated how many times an active one-dollar multiplies itself in a year from the time it is first issued from the Treasury? How much does it earn in interest, compound interest, commissions, bonuses, dividends, and profit gain from constantly being shifted from person to person, bank to bank, and loan to loan? ”

“ At another point, the youth, just rising into manhood, conscious of a few guineas in his purse, with a resolute determination to increase them at any price, gathered a group around, while he delivered his invention to the listening throng, who regarded him as a superior spirit. In every corner, and in every vacant space, might be seen men eagerly discussing the premium of a new company, the rate of a new loan, the rumored profit of some lucky speculator, the rumored failure of some great financier, or wrangling with savage eagerness over the fate of a shilling. ”

“ In England, at the time that I am writing, money is not worth 2 per cent. owing to the general depression of trade; the money-market has been in this plethoric or dropsical state for the last three years, and there appears to be no hope upon the commercial horizon of a favourable change. ”

“ The last, accordingly, wound up their business, and, in the language of the day, “went on to the street,” and made their living by selling on time what they did not possess, and buying on time what they never expected to receive, and reckoning profit or loss according to the difference in prices growing [71] out of the fluctuations of the currency between the day of buying or selling, and the day of receiving or delivering. ”

“ Money in this shape, one would almost think, is of a different value from money in any other: the exchange it bears against cash in business, or cash in the prospect of him who knows he can win it, is prodigious. At the very lowest computation, a thousand pounds in the purse of a young lady is worth ten thousand in the stock of a man of trade. ”

“ I think that bankers, brokers, and other business men who are interested in the general problems of money, trade, speculation and credit, will find the book of use. Naturally, however, it is my hope that the special student of money and banking, and the special student of economic theory will find the book of interest. ”

“ With one currency fit for paying bonds, customs duties, and foreign payments, and another not so fit, and therefore, of course, at a discount, we have a condition of affairs that is profitable to "money-sharks" and brokers alone. ”

“ I submit to the inhabitants of this flourishing town, whether this is a mere supposition, or a moderate state of facts; and whether this reasoning will not, in a greater or less degree, apply to every commercial town in the United States.
But is not money scarce? With respect to the quantity of goods in store, money is very scarce: With respect to the produce of the country, there is money enough. Almost every article of home produce will command cash; but the merchant cannot get cash for his goods. Money is the representativ of goods bought and sold. ”

“ Seasonal calls on an inelastic money supply for actual cash to move crops and pay agricultural wages may make a real difference in the value of money; scarcity of money of the right denominations for retail trade may give an agio to such money, [550] but the money and credit used by specula [Pg 523] tors, bill brokers, dealers in foreign exchange, investment bankers, etc., increases, rather than decreases, the funds available for ordinary industry and commerce. ”

“ Character of currency in the Middle Ages.—One of the serious obstacles to the development of commerce was the character of the currency in the various countries of Europe. Assuming that the reader appreciates the importance of money as facilitating the operations of exchange, and knows the qualities of good money, we may confine ourselves to pointing out some of the characteristic faults of medieval currency.
(1) Merchants could not rely upon the government to maintain the standard of value. ”

“ The head of one of the greatest houses even expressed the opinion that a little more currency would do no harm, but would on the contrary help the bankers to relieve themselves of the stocks and bonds they had been obliged to carry for want of a good market. ”

“ The second is, the want of trade, which seldom falls under common observation, although it be equally true: for, where trade is altogether discouraged, there are few borrowers. In those countries where men can employ a large stock, the young merchant, whose fortune may be four or five hundred pounds, will venture to borrow as much more, and can afford a reasonable interest. ”

“ All allocations of Wealth, from the two primary ones—Wages and Rent—to the least of all that are secondary to either of those two, are made through Trade, and in the course of Trade are measured by comparisons of Value, which is the universal regulator of Trade. And as in Production so in Distribution, for Value measurements Money is the more or less stable yardstick and Money terms the spokesmen. ”

“ Starting, then, with a condition of things on the island in which money had clearly neither utility nor value, let us next consider under what change of domestic circumstances it could become useful, acquire value, become an object of exchange, and constitute a standard for establishing prices. ”

“ The object at which we aim is, as it seems to me, a currency which shall keep prices stable, a currency which shall expand, therefore, with the expansion of trade and commerce and development generally, a currency which shall not be lagging behind the commerce and development of the country, and hindering that development, and a currency which shall not, by being too rapidly49 increased, lead to excessive speculation and to loss. ”

“ Then the cunning jobber had another set of men employed on purpose to buy, but with privacy and caution, all the stock they could lay their hands on; till, by selling ten thousand pounds at four or five per cent. loss, he would buy a hundred thousand pounds stock at ten or twelve per cent. under price; and, in a few weeks, by just the contrary method, set them all buying, and then sell them their own stock again at ten or twelve per cent. profit. ”

“ The English Government, far from keeping cash from the Money Market till the position of that market was reasonably secure, at a very early moment, and while credit of all kinds was most insecure, for its own interests entered into the Money Market. ”

“ Money being the principle of representation in exchange, everything of which use is made to facilitate exchange in the form of representative value is money. Anything which can be transferred from one party to another, anything that is negotiable which is not actual value of itself, is money. This includes not only all currency, bank notes, but also bills of exchange, the ledger and bonds. These are all representatives of wealth, all demands for payment at a future time of a certain specified sum, and consequently are money. ”

“ The acquisition of new territory, or of new branches of trade, may sometimes raise the profits of stock, and with them the interest of money, even in a country which is fast advancing in the acquisition of riches. ”

“ The blood of the land, to speak of money under that title, is thrown into Wall Street as the blood of the body is thrown into the head, and so in Wall Street, we have our men on the watch to tell us whether the currency is in a healthy or unhealthy state. ”

“ We recognize a short-loan market, a stock exchange, a number of "markets" where lenders and borrowers are brought together by the aid of various intermediaries, such as banks, bill brokers, and stock jobbers, who correspond to dealers in commodities. ”

“ Perhaps, however, the Stock Exchange can best be defined and described as a market. Just as Smithfield is the market for meat and Covent Garden the market for flowers, fruit, and vegetables, so is the Stock Exchange the market for stocks and shares. ”

“ That as money is a defence as well as wisdom, a circulating medium ought to be established, consisting of gold, silver, copper, and bills of exchange. Its credit should be kept up, and but one currency established in a kingdom. ”

“ Under such conditions all parts of the circulating medium tend to expand or contract in unison and a change in weight of the basic gold dollar carries with it a control of the whole mechanism of exchange, cash, and credit. ”

“ It is a fact very well known to every one who has given the least study to this subject that the amount of currency actually handled in the transactions of business is exceedingly small in proportion to the values passing from hand to hand in the shape of mercantile and banking paper, bills, checks, &c. ”

“ Nearly half a century has elapsed since this essay was written; finance has made great progress, particularly in the United States, where, under peculiar circumstances, a succession of violent convulsions ended in building up a completely new system of currency and banking ”

“ When, however, balances are to be made, exchange becomes intricate; and merchants, being engaged in their particular branches of trade, commonly intrust these complicated calculations to certain agents, who are thence called exchange-brokers, and have made this a most lucrative employment. ”

“ And since Interest hath been for about twenty Years at six per cent notwithstanding our long civil Wars, and the great complaints of the deadness of Trade, there are more men to be found upon the Exchange now worth Ten thousand pounds Estates, then were then of One thousand pounds. ”

“ Now I have shown that an irredeemable currency, producing by its fluctuations high prices for what the farmer has to buy, and low prices for what he has to sell, turns the scale in every case against him. ”