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WHOEVER has examined with at- when a currency is provided adequate tention the past annals of mankind, to the wants of men, and capable of must have become aware that the extension in proportion to their necesgreatest and most important revolu- sities; because, in such a case, prices tions that have occurred in human are rising or remunerative, and indiaffairs have originated in the varia- vidual effort, stimulated by the prostions which from time to time have pect of an adequate return, becomes taken place in the supply of the universal, and acts powerfully and precious metals which could be ob- decisively upon the general welfare of tained for the use of man. As they society and the issue of the national constitute, by the universal consent of fortunes. the world, the common medium of The two greatest revolutions which exchange and measure of value among have taken place in the annals of the nations, their plenty or scarcity has species, and which have for ever left an immediate and powerful influence their traces on the fortunes of manupon the remuneration of industry kind, have arisen from the successive and the activity of the workinge diminution and increase in the supply classes in all countries. Accords of the precious metals for the use of ing as they are increasing or dimi- the world. There can be no doubt nishing, abundant or awanting, is that the decline and fall of the Roman the condition of the people pros- empire--so long and falsely ascribed perous or calamitous - the national to its latter extension, plebeian slaprospects bright or gloomy. No very, and patrician corruption - was amount of human exertion, no efforts in reality mainly owing to the failure of human patriotism, can sustain the in the mines of Spain and Greece, national fortunes for any length of from which the precious metals in time, or diffuse general and enduring ancient times were chiefly obtained, prosperity among the people, if the joined to the unrestricted importaexisting medium of exchange is below tion of grain from Egypt and Libya, what their numbers and transactions which ruined the profit of the require ; because, in such a case, harvests and destroyed the agriculprices are constantly declining, cre- ture of Italy and Greece, at once dit is liable to periodical and ruinous paralysing industry, and rendering contractions, and industry, on an ave- taxes overwhelming:

We know rage of years, ceases to meet with its now to wbat the failure of these due reward. No calamities are insu- mines, attended with such portentous perable, no dangers insurmountable, results, was owing. It was to the

* See “ Fall of Rome,Alison's Essays, vol. iii. p. 440. VOL. LXIX. --N0. CCCCXXIII.

exhaustion of the anriferous veins in the second Punic war ; and that Spain and Greece near the surface, dreadful contest was less brought to from long-continued working, and the a successful issue by the firmness of extreme hardness of the rock in which the senate or the arms of Scipio, than they were imbedded farther down, by the wisdom of a decree which which seems to be a general law of virtually, at the crisis of its fate, nature all over the world, * and which doubled the currency of the Roman rendered working them, to any con- republic.f The Transatlantic revolusiderable depth, no longer a source of tion was brought to a successful issue profit. On the other hand, the pro- in the same way; and the independdigious start which Europe took ence of the United States is less during the sixteenth and seventeenth to be ascribed to the imbecility of centuries, and which has implanted British counsels, or the wisdom of the European race for ever in the American generalship, than to the new hemisphere, is well known to establishment of a paper currency, have been mainly owing to the disco- which sustained the efforts of the very of the mines of Mexico and insurgent states when they had no Peru, and the continual rise of prices other resources wherewith to mainduring nearly two centuries, which tain the contest. It was the assignats, took place all over the world, from as all the world knows, that set on the constant and increasing influx of foot those prodigious armies which, the precious metals drawn out of their amidst the destruction of all private rich strata.

fortunes, enabled France, during the The greatest and most momentous Reign of Terror, to repel the assault contests which have taken place of all the European powers; and the among nations, have been in a great coalition which at last overturned degree determined by the discovery or the empire of Napoleon was sustained nse, by one of the belligerents, of an by a vast system of paper currency, expansive currency, to which the issued in 1813 in Germany, which, other was for a time a stranger. The guaranteed by the four Allied powers, most memorable strife in antiquity, passed as gold from the Atlantic that between Rome and Carthage, on Ocean to the wall of China, and which depended whether Europe or arrayed all the armies of Europe in Africa was to become the mistress of dense and disciplined battalions on the civilised world, was in reality the banks of the Rhine. Of what determined by a great extension of incalculable importance it was may the Italian circulating medium during be judged of by the dreadful straits to

* See a very able article on California, Quarterly Review, Oct. 1850.

+ “Quum Censores ob inopiam ærarii, se jam locationibus abstinerent ædium sacrarum tuendarum, curuliumque equorum præbendorum, ac similium his rerum : convenere ad eos frequentes, qui hastæ hujus generis assueverant ; hortatique censores, ut omnia perinde agerent, locarent, ac si pecunia in ærario esset. Neminem, NISI BELLO CONFECTO, PECUNIAM AB ÆRARIO PETITURUM ESSE."--Livy, lib. xxiv. c. 19. “The censors," says Arnold,“found the treasury unable to supply the public services. Upon this, trust monies belonging to widows and minors, or to widows and unmarried women, were deposited in the treasury; and whatever sums the trustees had to draw for, were paid by the quarter in bills on the banking commissioners, or triumvirs mensarii. It is probable that these bills were actually a paper currency, and that they circulated as inoney on the security of the public faith. In the same way the gorernment contracts were also paid in paper; for the contractors came forward in a body to the censors, and begged them to make their contracts as usual, promising not to demand payment till the end of the war. This must mean, I conceive, that they were to be paid in orders upon the treasury, which orders were to be converted into cash when the present difficulties of the government should be at an end.”—Arnold's History of Rome, ii. 207, 208. This was just an inconvertible paper currency ; and its issue immediately after the battle of Cannæ saved the Roman empire. We have heard, from a gentleman who was present, that, in a political Whig party many years ago, when the conversation turned on the service of a paper currency in bringing a state through a pecuniary crisis, and some one said it was that which enabled the Romans to surmount the Second Punic war, Lord Melbourne, who was present, immediately repeated, from memory, the words above quoted from Livy in capitals.

which Wellington, for five previous the increased numbers or enhanced years, had been reduced by its want. efforts of mankind are amply sustainGreat Britain emerged victorious from ed by the newly opened treasures of the strife, chiefly from the powerful in- the reserves of nature. Rome, imfluence of the same omnipotent agent. pregnable to the assaults of undisVain would have been the constancy ciplined barbarians, yielded, at the of Pitt, the genius of Nelson, or the appointed season, to the contraction wisdom of Wellington, if the paper of its domestic currency, which rencurrency, established in 1797, had dered the maintenance of armaments not given her people the sinews of adequate to the public defence a war, and the means of illimitable matter of impossibility in the later industry, when the Continent was shut days of the empire; and when the to her commerce, and the whole discovery of the compass, of the art precious metals were drained away of printing, and of the new hemiby the necessities of Continental war- sphere, had at once given a vast fare. Nor have the effects of the impulse to European activity, and opposite system, pursued since the provided new and boundless fields for peace, been less striking and mo- its exertion, the mines of Potosi and mentous ; for the contraction of Mexico were suddenly thrown open, British currency to one half of its and nature provided a suitable reformer dimensions, by the bills of 1819 ward for all this enhanced effort by and 1844, has brought about the the continually rising price of its prodreadful panics of 1825, 1837, and duce. 1847, induced by the decline of prices That & period of equal, perhaps and the sufferings it occasioned. The greater activity, than that which English revolution of 1832 trans- followed the discoveries of Columbus, ferred power in the British islands would succeed the outbreak of the exclusively to the inhabitants of social passions that occasioned the towns, and spread such misery throngh French Revolution, has long been the rural population, that three hun- familiar to the thinking part of men, dred thousand emigrants now annually and unequivocal proofs of the reality leave the British islands for Trans- of the change may be seen in every atlantic or Australian shores.

direction around us. But sufficient As the expansion or contraction of attention has not hitherto been paid the circulating medium is thus an to the extraordinary encouragement agent of such prodigious power and which this increased mental energy irresistible weight, both upon the for- has received, from the facilities which tunes of particular states and the have been placed at its disposal by the general progress of the species, so it mechanical discoveries of the last half will be found upon examination that century. Yet are they such as to it is by a withholding or letting loose throw all past discoveries into the the fertilising flood, that Providence shade, and give an impulse to human appears often to act most directly and affairs which has scarcely been exdecisively upon human affairs. When ceeded since the first separation of a nation has performed its mission, the dwellers in cities and the soand is to make room for other actors journers in the fields. The steamon the great stage of the world, if its engine has wrought these prodigies. power bas rendered conquest by a Applied to mechanical invention, and foreign enemy impossible, a contrac- the moving of machinery, it has multion of its domestic currency paralyses tiplied tenfold the powers of urban its internal strength, and renders dis- industry, elevated the districts possolution, at no distant period, a matter sessing the necessary fuel to the of certainty. If a great start is clouds, cast down places once the prepared for human industry, if new seats of commercial greatness, but continents are laid open to its energies, destitute of that essential element and an unusual impulse communi- in modern manufacturing energy, to cated to its activity by the develop the dust. Applied to the propelling ment of social and democratic pas- of vessels, it has more than balved sions, a vast addition is suddenly the breadth of the ocean, rendered made to its metallic resources, and navigable against the current the greatest rivers, sent the colonists of tions, and exceeding it tenfold in the Europe in countless multitudes up the magnitude of their extent. Proporstreams of the New World, and pro- tionate to the wants and necessities of vided an entrance for civilised man mankind, in an age of such intellectual into the greatest continents by the and physical activity, has been the very magnitude of the waters which hitherto untrodden fields which the flow down from their inaccessible beneficence of nature has laid open to mountains, or are fed in their marshy their industry. plains. Applied to travelling by land, These advantages, however, great it has diminished distance to a third- and unbounded as they are, have brought the capital of every civilised been, till very recently, counterstate into close proximity to its most balanced, and perhaps more than distant provinces; while the simul counterbalanced, by the serious detaneous discovery of the electric crease which, for the greater part of telegraph has rendered the communi. the period that has elapsed since cation of intelligence all but instan- the peace of 1815, has been going taneous, and made the circulation of on, from the effect of human violence ideas and, it is to be feared, also of or folly, in the circulating medium of passions, as rapid over a mighty em- the globe. The South American repire as heretofore it was in the streets volution at once almost destroyed the of a crowded capital.

working of the mines of Mexico and When nature communicated this Peru: the annual produce of those vast impulse to human activity, and mines sank from £10,000,000, to which, placed these mighty instruments in according to Humboldt, it had risen the hands of men, she was not un- prior to 1810, to less than £3,000,000. mindful of the extended field for The diminution in the supply of the industry which their enlarged numbers precious metals for the use of the and increased energies would require. globe, from the effects of this most The plain of the Mississippi, the calamitous revolution, which Great garden of the world, containing Britain did so much to promote, was, a million of square miles, or six times during the thirty years which elapsed the area of France, was thrown open from 1810 to 1840, certainly not less to their enterprise. Steam power pro- than £150,000,000 sterling. Contempelled a thousand vessels through the poraneous with this immense reducthick network of natural arteries which tion, took place the great contraction in every direction penetrate its vast of the paper currency of Great and fertile plains. In 1790, five thon Britain, the commercial heart of the sand Anglo-Saxons were settled in this globe, which was reduced by the bill magnificent wilderness; now their of 1819 from £60,000,000, which it numbers exceed eight millions. Aus- had reached in 1814, to little more tralia has opened its vast prairies, than £30,000,000, its average since New Zealand its fertile vales, to that time. These two great causes European enterprise. The boundless of decrease, operating simultaneously plains of Central Russia and Southern during a period of general peace, Siberia, afforded inexhaustible re- unbroken industry, great increase in sources to the rapidly increasing population both in Europe and AmeMuscovite population; and an empire rica, and a vast addition to the transwhich already possesses in Europe actions and mercantile dealings of and Asia sixty-six million inhabitants, men in every part of the world, procan without apprehension contem- duced that universal and unlooked-for plate a continuance of its present rate decline of prices which has been of increase for centuries to come. everywhere felt as so discouraging to The Andes even have been passed; industry, and nowhere so much so the Rocky Mountains surmounted; as in the highly taxed and deeply and on the reverse of their gigantic indebted realm of Great Britain. It piles new states, peopled by the was the exact converse of the geneAnglo-Saxon race, are arising, and ral and long-continued prosperity increasing with unheard-of rapidity, which the progressive rise of prices in regions rivalling Italy in the consequent on the discovery of the variety and riches of their produc- South American mines produced dur

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