WE may begin this chapter by remarking that if all the world were absolutely honest, and each man in it could foresee with accuracy the quantity of economic wealth that would issue from the industrial enterprise in which he was engaged, it is probable that mere paper currency and credit acknowledgments would not only partially as at present, but entirely supersede the necessity of gold or silver as a medium of exchange, and that some purely numerical unit, as Mr. Kitson has suggested, would replace both of these metals as a standard and measure of value for all commodities whatever. But as, unfortunately, at this stage of civilization neither the requisite amount of honesty nor yet of economic penetration and foresight is forthcoming, these paper transactions must still continue to rest on some material tangible commodity, like gold or silver, in which they are redeemable, as final security for men's economic hopes and fears, and as guarantee at once for the intelligence with which the enterprises have been undertaken and for the good faith on which liabilities have been contracted.

If this be so, it would seem to follow that however many of these paper credits were issued and set flying in the economic sky as a medium of exchange for the consumable goods that are in continual circulation from hand to hand around the wheel, all would go well, provided always that like paper kites they were each attached to the earth, as it were, by some controlling string, and bore a definite relation primarily to the gold but ultimately to the fixed capital in actual operation turning out the products on the expectation of which the credits were issued. Now were there nothing but gold in the nation as the medium of exchange, nothing could go wrong, for the aggregate amount of the gold would, by the tariff of values or prices of commodities, coerce the aggregate of fixed capital into keeping step and balance with it; inasmuch as being the standard of value as well as the medium of exchange all other things must be measured in terms of it, and not it in terms of them. The only difficulty of a pure gold currency would appear when the consumable goods which issue from the fixed capital, have to be circulated from hand to hand among the millions of separate individuals that make up the nation, and when coins have to be found to effect the tens of millions of exchanges which make up the process.

For then it would be found that unless you could divide up your gold into quantities and denominations so minute that they could be used for purchase or sale in the smallest retail transactions, the wheel of circulation would be obstructed on the side of consumption. And as we have already seen that an obstruction to any one side or aspect of the wheel must slow the whole wheel, the consequence would be that with a lessened turn over' in the retail shops, production itself would be lessened also, and the wealth of the nation as a whole would decline. To meet this difficulty, accordingly, silver and the baser metals, down even to the copper farthing, with their amounts strictly limited as legal tender, and all of them bearing a fixed and unalterable relation to gold, answer admirably in all the ordinary daily transactions of life. But as the business transactions of a nation become increasingly complex, subdivided, and minute, and the saving of time in the handling of this multiplicity and complexity becomes of increasing importance,,no money coins or combination of coins can be rapidly enough got together to cope with them, or can be sufficiently flexible and expansible to meet emergencies of which time is the very essence.

Something more readily accessible, flexible, and manipulable than metallic coin is necessary to negotiate transactions when all commodities are on the loom of time at once, and when their quick-change transformations admit of no delay. Chances, anticipations, forecasts, and time calculations must therefore be made and taken on all hands, and by all the parties concerned, if the wheel of wealth is to speed its revolutions, and the wealth of the nation to be increased. To meet this new economic want, accordingly, some other symbol must be found for the transfer of wealth, something which has neither to be dug out of the mines, like gold or silver, before business transactions can begin, nor to be gathered in driblets from those who happen to have it in immediate possession. An effective expedient for peoples who could write and had convenient materials at hand to write on, as well as safe places of deposit for these writings when executed, was found in ' promises to pay' scribbled on pieces of paper and enforced by all the power of the State. And accordingly, in the modern industrial world from the time that commodities issue from the storehouses of fixed capital in the soil, mines, factories, and workshops in which the economic powers of Nature reside, and are placed on the wheel, they are attended at each change of ownership on their way around it by flights of these paper credits of all kinds - bank notes, bills of exchange, cheques, notes of hand, etc., - corresponding to the transmutations and changes of ownership of the material commodities which they represent.

In their aggregate, and when seen from a sufficient distance where their details are lost, they form a kind of fluid elastic medium surrounding the grosser material commodities on the wheel, as the air surrounds the earth, and move around this wheel as much more easily and freely as do the birds in the air than the beasts over the earth.