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 Better forms have come into being as social progress has become more pronounced; and further improvement may be expected in the future. The condition of things when money is coming into being is characterized by the weighing or measuring of the substances used for aiding the course of exchanges. It has therefore been called the system of “currency by weight.” In strictness, it is better regarded as the stage before the introduction of real money; and thus outside the field of currency systems proper. The simplest system of currency seems to be that in which the state coins ingots of different metals and allows them to circulate without assigning any ratio for their respective values. Such an inconvenient form is not likely to be of long continuance; but it has sometimes arisen at a later time through the introduction of foreign coinages. Holland at the end of the 16th century, Turkey down to the present day may be given as countries approaching this state. The title of “currency by tale” is Jevons’s apt denomination for such a currency system. The next form in logical order is that in which a single metal is definitely appointed as the sole standard money. In early ages this is the most natural arrangement, and it has, therefore, been widely adopted. Silver has been the metal generally used in this way; as the instances previously given (§ 8) prove. The title of “single legal tender” system is the obvious one for this form. With the growth of transactions a difficulty soon presents itself. If the chosen metal is not of high value it is cumbrous for making large payments; if on the other hand its value is high, it is unsuitable for use in small transactions. Hence there almost inevitably follows the use of other metals, which are better suited for certain particular uses. Thus silver is at once too heavy and too light. To pay £1000 in silver at its present value would take 800 ℔ troy, while a silver penny would be under the convenient limit of size. Partly for these reasons, but also to a large extent through the persistence of currency by tale, we find that along with the standard money other kinds are brought into or retained in use. Copper long survives beside silver; and gold is employed for the more important commercial transactions. Public convenience leads to the valuation of these subsidiary forms of money, and in this easy manner another currency system—that of “multiple legal tender”—comes into being. Though, theoretically, several substances might be valued for use as money, in practice some kind of bimetallism is used, and generally gold and silver are the constituents of the system. Thus for over three centuries England had a currency in which the values of gold and silver were fixed from time to time by royal proclamation. France and the United States, as well as many other countries, have had long experience of national bimetallism. The great problem in such a form of currency has always been that of keeping the two metals in effective circulation. As the values of the precious metals fluctuate, the principle of Gresham’s Law is exemplified by the expulsion of the undervalued one. Each change in the conditions of production or in the ratios fixed by other countries tends to disturb the balance and is harassing to trade. Local or national bimetallism comes to be unsustainable, and is replaced by other currency types. The most remarkable is that known as the “composite legal tender” system. Its object is to combine any advantages of multiple legal tender with the maintenance of the single standard principle. One metal is selected as the standard and is legal tender to any amount; other metals are utilized for the purpose of token currency. Thus in the system of the United Kingdom gold is the only standard coinage; but silver and copper are employed for the lower coins and for smaller payments. The establishment of this ingenious arrangement is rather the outcome of the circumstances that governed the English monetary situation in the 18th century than any refined considerations of theory; but its justification on grounds of principle is furnished in Lord Liverpool’s Coins of the Realm (1805). The extent to which the system has been copied by other nations and the stability of the English currency are strong confirmations of its merits as a solution of currency difficulties. Though the composite legal tender system has been a decided success, it does not follow that it supplies the only

mode of dealing with the troubles that attend on the use of the local double standard. Other methods have been evolved from the monetary experiences of France and India, which take distinct forms according to the special features of the case. There is the currency system known as the “limping standard,” the essence of which is the concurrent use of two metals, one being overvalued and coined only by state authority. The quantity of this favoured metal is necessarily limited in amount, to avoid depreciation or the ejection of the other metal from the circulation. It, however, has the position of money in the fullest sense, in that it is legal tender for any amount. The 5-franc pieces issued by the Latin union are the best known specimen of such coinage. In this case also the origin of the system was not theoretical, it was the result of the fall in the value of silver and the fear entertained by the French government that gold would be displaced by the cheaper metal. The temporary expedient of limiting the coinage of standard silver has developed into the maintenance during more than thirty-five years of the limping standard, which derives its name from the shortness of one limb of the currency body. Equally suggestive for monetary theory is another phase or system, usually described as the “gold-exchange standard” system, in which the ordinary currency is of a metal coined only by the state, and so limited as to keep it in a prescribed value ratio to another metal (gold) which does not circulate, but acts as the standard of value. This variation on the limping standard has been produced by the effort of the Indian government to meet the embarrassment caused by the continuous fall in the gold value of silver. Under the pressure of failing revenue and of persons suffering from the rupee depreciation in gold, the limitation on silver coinage was first enacted (1893); to be followed some years later (1899) by the establishment of gold as the standard, with a definite parity assigned for the state silver issues. The success of the Indian experiment—for such it avowedly was—has led to its imitation by the American administration in the Philippine Islands and by Mexico. It may be looked on as the natural product of the condition in which the single legal tender system is proving unfit, while the material for the composite legal tender system is wanting. The employment and theoretic explanation of these methods of currency adjustment mark the greatest advance made in monetary science and practice in recent years. Whether the limping, or the gold-exchange standards will be permanent forms is difficult to determine; but they are beyond doubt of much importance in meeting the risks of a period of transition. In any case they are entitled to recognition as distinct forms of currency organization, resting on a scientific basis.

The types presented by purely metallic currencies can be considered by themselves for the purpose of theoretical exposition. In actual working they are now affected by the existence of representative money. The state issues paper money which may be either convertible or inconvertible, or if it refrains from so doing, the banks take up the task and supply a medium of exchange in the form of notes, or by a later development through providing for the use of cheques by their customers. An inconvertible paper currency has some pronounced affinities with overvalued metal; a duly regulated issue of this kind is quite on the lines of the gold-exchange system, and the difficulties of the two forms are very similar. But, just as the cruder systems of metallic money have gradually given way to the higher ones, so it may be said that the grosser forms of mismanagement in representative money are being removed, notwithstanding the recurrence of such monetary crises as that of 1907 in the United States. The great instance of government paper money is the United States notes, known, as “greenbacks,” which are fixed at the amount of $346,681,016. The most prominent case of bank issue of notes is that of the Bank of France, with somewhat over £200,000,000 in circulation. Examples of the cheque currency are more difficult to state in quantitative shape; as the constituent parts are continually being created and cancelled, but the clearing-house returns give some idea of its extent in England. The figure for 1909 was 