of circulation. So Benjamin Franklin[1] and Bishop Berkeley.[2]
How many reams of paper cut up into bills can circulate as money? Put in that way, the question would be absurd. The worthless tokens are signs of value only in so far as they represent gold within the sphere of circulation and they represent it only to the extent to which it would itself be absorbed as coin by the process of circulation; this quantity is determined by its own value, the exchange values of the commodities and the rapidity of their metamorphoses being given. Bills of a denomination of £5 could circulate in a quantity five times less than those of £1 denomination, and if all payments were made in shilling bills, then twenty times as many shilling bills would have to be in circulation as are one pound bills. If the gold currency were represented by bills of
- ↑ Benjamin Franklin, "Remarks and Facts Relative to the American Paper Money," 1764, p. 348, l. c. "At this very time, even the silver money in England is obliged to the legal tender for part of its value; that part which is the difference between its real weight and its denomination. Great part of the shillings and sixpences now current are by wearing become 5, 10, 20, and some of the sixpences even 50 per cent., too light. For this difference between the real and the nominal you have no intrinsic value. You have not so much as paper, you have nothing. It is the legal tender, with the knowledge that it can easily be repassed for the same value, that makes threepennyworth of silver pass for a sixpence."
- ↑ Berkeley, l. c, p. 5–6. "Whether the denominations being retained, although the bullion were gone . . . might not nevertheless . . . a circulation of commerce (be) maintained?"
