the peseta; in Portugal, the milréis; in Holland, the guilder; in Denmark, Norway and Sweden, the krone; in Turkey and Egypt, the piastre; in Greece, the drachma. To these we may add the tael in China, and yen in Japan. The circulating value of each, expressed in British money, may be seen in good manuals of commercial geography or almanacs, such as Whitaker's.1

Monetary conventions may provide for the money of one country being legal tender in another. For example, the French 20 franc-piece is legal tender in Spain, and the Spanish 20 peseta-piece is legal tender in France.

§ 79. Next, as to the exchange of money. The Mint par2 of exchange is the value of the coins of one country expressed by those of another using the same metal.3 An absolute par can be established only between coins of the same metal; whilst the arbitrated par "signifies the amount of currency in one country which is equivalent to a given amount in another, taking into account," amongst other things, "the relative value at the time of gold and silver in the case of those countries having a different metallic standard."4 So fluctuating and irregular was the relation of silver to gold during the Middle Ages that the business of money-changing, chiefly practised by Italians calling themselves cambists, became a most important one as it required special skill, it was very remunerative. Readers of Chaucer may remember how his 'marchant' excelled in 'eschaunge.' At the present time the same cause operates in British Indian trade to such an extent that our Lancashire manufacturers are thereby strongly disposed towards bimetallism, the dislocation in the Eastern exchanges having

1 Foreign currencies are well set out in Dr. YATES' Golden Gates, Pp. 175 ff.

2 Our English 'par' is taken directly from the Latin for 'equal'; the German pari is from Italian; the French is pair.

in the year 1893 actually made the shipment of cotton goods from Bombay to Manchester a profitable transaction.1

The 'course of exchange'2 between London and foreign countries is expressed in some cases by the sterling3 as fixed, and the foreign money as variable; in others by the foreign money as fixed, and the sterling as variable. Thus, as between London and France, Germany or the United States, the exchange is expressed in so many francs (25.22), marks (20.43), and dollars (4.84) respectively, equivalent to £1; whilst as between London and India, Russia, or Spain, the exchange is expressed by so many pence (22.6) as equivalent to a rupee, pence (38) for a rouble, pence (47.5785) for a piastre, respectively."

5

Money, just as other commodities, may be the subject of shipment. Such 'movement of specie' is frequently recorded in money articles. In a newspaper before us a steamer is reported as bringing to this country a parcel of sovereigns from Melbourne, silver dollars from Adelaide, and eagles from Hong Kong, besides bullion in the form of gold bars from Singapore. This arises partly from the necessity of redressing the balance of trade between two countries, but also from the speculative transactions of the bullion market. The transmission of money, however, from one country to another for the first-named reason is obviated very much by the use of bills of exchange, which, in their character as instruments of credit, I will be dealt with in the next lesson.

1 Daily Telegraph, March 30th, 1892. (Money Article.)

2 Kurs; cours.

3 This word, commonly contracted into 'stg.,' is with probability derived from 'Easterling,' the name by which any Baltic merchant, who always employed good money, was known in England in medieval times.

* See table in BITHELL, p. 221, and cp. CRITTENDEN'S Commercial Arithmetic, pp. 91, 177, also the 'Course of Exchange' recorded in the London morning papers of every Wednesday and Friday.

5 See MILL, Principles of Political Economy, ch. iii., xix.

6 The importation of gold into the United Kingdom in 1898 amounted to about £30,000,000. 7 As to specie point, see Part iii.

§ 80. The value of money, like that of other commodities, depends on the relation of supply to demand.1 A surfeit of money, such as flooded Europe in the sixteenth century,2 will diminish its value and send up prices; whilst a deficiency of money to meet the requirements of exchange, as in the early part of the present century, enhances its value and depresses prices.3

As abundance of money means high prices, there is no advantage gained from it. This, however, was not seen by the adherents of the old 'mercantile system,' which will come before us in a later lesson.

§ 81. Besides a metallic, many countries, and amongst others our own, make use also of a paper currency.5 The currency of Scotland, and that of the United States, is largely paper. We must reserve the consideration of this as a large subject for other lessons.

§ 82. A further distinction arises between moneys 'in circulation,' which hitherto alone have been in view, and 'moneys of account.'6 Thus for some time after the Act of Union the 'pound Scot' was still used in Scotch accounts, as the livre still is in French Government dividend accounts.7 Our 'sovereign' is money in circulation, but we always speak of 'pounds' in accounts.8

1 See MILL, p. III, ch. ix.

2 Between the Conquest of Mexico (1521) and discovery of the mines at Potosi (1545), more than fifteen millions had been added to the English stock of precious metals.

3 Cp. SYMES, Short Text Book of Political Economy, pp. 106 ff.

4 See LAVELEYE, pp. 195-6. The mistaken notion to the contrary explains such a statute as that of Henry IV. whereby merchant strangers were prohibited from taking out of the country the money which they had derived from trade in English commodities.

5 Papiergeld; papier-monnaie.

6 Rechnungsgeld; argent de compte.

7 The warrants are of course paid in francs, which superseded livres at the time of the French Revolution.

8 The symbol stands for the Lombard librae, as 's.' is for soliai, anċ 'd.' for denarii.

$83. Confining ourselves to the financial history of England, without reference at present to 'credit,' and going back to the early British period, it may be interesting to any reader unacquainted with the fact to learn that, while the Celtic inhabitants of this island under Roman influence made use of coined money, of which specimens are still extant, the first English settlers were without a currency. Wheat was for some time their measure of value, and the use of metallic money was but little developed before the time of Alfred. As long as disunity prevailed there were different mints in various parts of the country, that at Winchester, as the capital of Wessex, being only the chief. No gold was circulated, and the unit was the silver penny.1

In the later Norman period, that is, the troublous time of Stephen's usurpation, the currency became much debased, and one service rendered by Henry II. was his endeavour to purify it. In the reign of Henry III. gold 'byzants' were introduced from Constantinople; this gradually brought in a double standard. But Henry VII. was the first king to coin either a gold coin like our present sovereign, or a silver coin like the shilling. In the reigns of his son and grandson the currency was shamefully tampered with, but Queen Elizabeth signalised her accession by restoring it;2 as did also William III. after the corruption of money by James II.3 Money with edges milled was then introduced.

In 1717 Sir Isaac Newton, as Master of the Mint, estimated the value of the guinea1 at 20s. 8d. It was then made current

1 Twelve of these made up a nominal shilling, which for a long time after the Norman Conquest remained only a 'money of account.'

2 See FROUDE, History of England, ch. vii. She established a sole mint in the Tower.

3 Defoe is profuse in his praise of William III. for the great service he thus rendered to public justice and morality. Workmen would receive their wages by tale, but, by the custom of tradesmen, would have to pay for the necessities of life by weight, thus sometimes losing as much as onehalf of their wages.

4 First introduced in the reign of Charles II.

by proclamation at 21s. Thus gold was overrated, and people accordingly, under the system of alternative tender,1 paid in it as the cheaper metal, and silver was exported.2 The late Professor Rogers has shewn that the alternative tender often gave debtors an advantage of from 4 to 6 per cent., which, as he says, was a "serious inroad on business profits, a serious addition to business risks."

In 1816 this system of tender was abandoned for a gold standard, and our present sovereign' then replaced the guinea, being issued on the basis of Newton's calculations. In 1830 Sir Francis Baring advocated a return to bimetallism, which was opposed by Sir Robert Peel; and although the matter has recently again been before the House of Commons, monometallism remains undisturbed in England.

About the same time that Sir F. Baring advocated bimetallism, Lord Wrottesley in the other Chamber proposed the adoption of decimal coinage, which likewise still remains a subject of discussion in this country.

1 See above as to Gresham's Law.

2 The reverse of course of what has been said as to the practice in France, but illustrating the same law.