THE LAW OF CHANGING INSTITUTIONS. 431 landlords and the desire of others to take unfair advan tage of the rest, would render such an arrangement impracticable, the reply is that in new suburban streets not yet taken to by the authorities such an arrangement is, to a considerable extent, already carried out, and would be much better carried out but for the consciousness that it is merely temporary. Moreover, no adverse inference could be drawn, were it even shown that for the present such an arrangement is impracticable. So, also, was personal freedom once. So once was representative government, and is still with many nations. As repeatedly pointed out, the practicability of recognizing men's rights is proportionate to the degree in which men have become moral. That an organization dictated by the law of equal freedom cannot yet be fully realized is no proof of its imperfection is proof only of our imperfection. And as by diminishing this, the process of adaptation has already fitted us for institutions which were once too good for will it go on to fit us for others that may be too good for us now. us, so 9. We find, then, that besides being at variance with the moral law, and besides involving absurdities, the dogma that it is the duty of the state to protect the health of its subjects may be successfully combated on grounds of policy. It turns out, upon examination, to be near akin to the older dogma that it is the duty of the state to provide for the spiritual welfare of its subjects-must, if consistently followed out, necessitate a coextensive organization-and must, for aught there appears to the contrary, produce analogous results. Of the sufferings consequent upon unrestrained empiricism, it may safely be said that they are not so great as is represented; and that in as far as they do exist, they are amongst the penalties nature has attached to ignorance or imbecility, and which cannot be dissociated from it without ultimately entailing much greater sufferings. The anxiety to improve by legislative measures the salubrity of our towns, is deprecated on the ground that natural causes insure the continuance of progress-insure further sanitary reforms, just as they insure advancement in the arts of life, the development of manufactures, and commerce, and the spread of education. Moreover, it appears that such of these measures as are directed to the improvement of habitations, aim at what laws either cannot do, or what is being done much better without them; and to the rest it is objected, that they are not likely to accomplish the proposed end-a belief founded upon the results of all analogous legislation, and confirmed by the little experience we have at present had of sanitary legislation itself. Further it is argued that even could the hoped-for advantages be fully realized they would be purchased at too great a cost; seeing that they could be obtained only by an equivalent retardation in some still more important department of social progress. CHAPTER XXIX. CURRENCY, POSTAL ARRANGEMENTS, ETC. § 1. So constantly have the ideas currency and gov. ernment been associated-so universal has been the control exercised by law-givers over monetary systems-and so completely have men come to regard this control as a matter of course, that scarcely any one seems to inquire what would result were it abolished. Perhaps in no case is the necessity of state-superintendence so generally assumed; and in no case will the denial of that necessity cause so much surprise. Yet must the denial be made. DISTURBING THE RIGHT OF EXCHANGE. 433 That laws interfering with currency cannot be enacted without a reversal of state-duty is obvious; for to either forbid the issue or enforce the receipt of certain notes or coin in return for other things, is to infringe the right of exchange is to prevent men making exchanges which they otherwise would have made, or to oblige them to make exchanges which they otherwise would not have made-is, therefore, to break the law of equal freedom in their persons (Chap. XXIII.). If there be truth in our general principle, it must be impolitic as well as wrong to do this. Nor will those who infer as much be deceived; for it may be shown that all such dictation is not only needless, but necessarily injurious. The monetary arrangements of any. community are ultimately dependent, like most of its other arrangements, on the morality of its members. Amongst a people altogether dishonest, every mercantile transaction must be effected in coin or goods; for promises to pay cannot circulate at all, where, by the hypothesis, there is no probability that they will be redeemed. Conversely, amongst perfectly honest people paper alone will form the circulating medium; seeing that as no one of such will give promises to pay more than his assets will cover, there can exist no hesitation to receive promises to pay in all cases; and metallic money will be needless, save in nominal amount to supply a measure of value. Manifestly, therefore, during any intermediate state, in which men are neither altogether dishonest nor altogether honest, a mixed currency will exist; and the ratio of paper to coin will vary with the degree of trust individuals can place in each other. There seems no evading this conclusion. The greater the prevalence of fraud, the greater will be the number of transactions in which the seller will part with his goods only for an equivalent of intrinsic value; that is, the greater will be the number of transactions in which coin is required, and the more will the metallic cur rency preponderate. On the other hand, the more gener ally men find each other trustworthy, the more frequently will they take payment in notes, bills of exchange, and checks; the fewer will be the cases in which gold and silver are called for, and the smaller will be the quantity of gold and silver in circulation. Thus, self-regulating as is a currency when let alone, laws cannot improve its arrangements, although they may, and continually do, derange them. That the state should compel every one who has given promises to pay, be he merchant, private banker, or shareholder in a joint-stock bank, duly to discharge the responsibilities he has incurred, is very true. To do this, however, is merely to maintain men's rights-to administer justice; and therefore comes within the state's normal function. But to do more than this-to restrict issues, or forbid notes below a certain denomination, is no less injurious than inequitable. For, limiting the paper in circulation to an amount smaller than it would otherwise reach, inevitably necessitates a corresponding increase of coin; and as coin is locked-up capital, on which the nation gets no interest, a needless increase of it is equivalent to an additional tax equal to the additional interest lost. Moreover, even under such restrictions, men must still depend mainly upon each other's good faith and enlightened self-interest; seeing that only by requiring the banker to keep sufficient specie in his coffers to cash all the notes he has issued, can complete security be given to the holders of them; and to require as much is to destroy the motive for issuing notes. It should be remembered, too, that even now the greater part of our paper currency is wholly unguaranteed. Over the bills of exchange in circulation,* * Though not literally currency, bills of exchange, serving in many THE SCOTCH CURRENCY SYSTEM. 435 which represent liabilities three times as great as are represented by notes, no control is exercised. For the honouring of these there exists no special security and the multiplication of them is without any limit, save that natural one above mentioned-the credit men find it safe to give each other. Lastly, we have experience completely to the point. Whilst in England banking has been perpetually controlled, now by privileging the Bank of England, now by limiting banking partnerships, now by prohibiting banks of issue within a specified circle, and now by restricting the amounts issued-whilst "we have never rested for many years together without some new laws, some new regulations, dictated by the fancy and theory fashionable at particular periods" *—and whilst "by constant interference we have prevented public opinion, and the experience of bankers themselves, adapting and moulding their business to the best and safest course "t-there has existed in Scotland for nearly two centuries a wholly uncontrolled system-a complete free-trade in currency. And what have been the comparative results? Scotland has had the advantage, both in security and economy. The gain in security is proved by the fact that the proportion of bank failures in Scotland has been far less than in Eng. land. Though "by law there has never been any restriction against any one issuing notes in Scotland; yet, in practice, it has ever been impossible for any unsound or unsafe paper to obtain currency." And thus the natural guarantee in the one case has been more efficient than the legislative one in the other. The gain in economy is proved by the fact that Scotland has carried on its busi cases to effect mercantile transactions which would otherwise be effected in money, to that extent perform its function. * Capital, Currency, and Banking. By James Wilson, Esq., M. P. f1b.d. Ibid. |