the exchanges of the different banks in the United States reaches a large amount; but the principle of the exchanges is the same. With us, cheques on the Bank of England take the place of specie in the settlement of the clearing balances.

While the circulating medium of this country is most convenient, both for those who live within its boundaries and those who do business with us from foreign lands, those of France and the United States fulfil equally well all the conditions required of them. I have quoted the examples of the United Kingdom and the United States as good examples of a circulating medium consisting of cheques, and that of France as a good example of a circulating medium worked through notes. I might also refer to the circulating medium of the German Empire, which largely consists of notes of the Reichsbank. That system differs in various respects from our own, and possesses several features of great convenience to the trade of the country; but the high authorities in Germany, in England, and in France, have followed a policy of hostility to the local note circulations, which labour under serious commercial disadvantages. In Ireland, as well as in Scotland, the local note-circulation still obtains, and is an advantage to the local trader. In the United States, the notes of the National Banks (which are as well secured, both as to payment in specie on demand and as to safety, as any notes can be) are allowed to continue. But to go further into this subject is undesirable, especially as changes in the system of the National Banks are not unlikely,

While we enjoy the advantages of our existing arrangements, just as we use the air we breathe, without a moment's thought, we are apt to forget how great the inconvenience of an imperfect or unstable instrument of exchange would be. Yet, not many years since, considerable difficulties were sometimes experienced in finding the means of making remittances over comparatively short distances. An example of this difficulty is described in a business letter found among the papers of Mr James Turner, of Great Yarmouth, a banker of more than a century since. Mr Turner was practically the founder of the bank of Gurneys and Turner in that town-now Barclays, Limited. The following letter shows the diffi

culty, at that period, of remitting even a small sum which had to be paid in completing a purchase of land.

'TO MR. PHILIP WALKER.

20th September, 1774.

'SIR,-I have taken the liberty of informing you that the remaining part of the amount of the marshes neither Mr Symonds nor myself can accept the payment of in Bank or Banker's notes, as turning the same into cash at that time of the year will be attended with a great expense. I thought it proper you should know this; as we took the deposit money in notes, you might naturally imagine we should have no objection to receiving the remainder in like manner. We could between this time and the time fixed for the payment of the money draw upon your friend or his Banker for about £2,000 of the purchase, and our Bill should become due on the 24th day of December next, which is the day fixed for the payment; this would be saving your friend the risque and expence of sending down that sum. We will thank you to communicate this scheme to him, and, if it should meet with his approbation, beg the favour of him to let me know it.

The method of remittance from one part of the country to another by means of bills appears to have been not infrequently employed at that time. James Turner's letters and accounts contain continual references to bills drawn by him at Yarmouth on his correspondent in London, for the convenience of the persons to whom the bills were made payable, in order to enable them to pay amounts which they owed to persons who lived at a distance. The amounts were sometimes quite small, even below twenty shillings. However it may be arranged, some form of the circulating medium is indispensable in order to effect those exchanges without which the ordinary transactions of life cannot be carried

I will now turn to a different system, with which the local standard of value is closely united.

The story is told of an Englishman who, starting on the Grand Tour' of Europe about a hundred and fifty years ago, changed a guinea, then the standard gold coin current among us, into its value in the coinage of the country where he landed. He carefully kept separate what he received in return. Whenever, in his pilgrimage, he crossed the frontier of any state, however small-and Europe was then dotted all over with petty principalities Vol. 204.-No. 406.

-he changed the money; with the result that, when he returned to England, the whole contents of the purse in which the guinea had been stored were a few rubbishy coins of practically no value. Though no traveller in Europe would be exposed to the same experience now, there are still countries in which the money-changer holds as high a position as he once did in many ancient cities. In China at the present time the condition of the currency is as chaotic as ever it was in Europe. We are told that in the town of Chungking alone at least sixty recognised currencies exist. The value of the currency in China depends on many elements. The tael, which is the unit, is not a coin but a weight. If it were a fixed and certain weight, like an ounce or a pound in England, that circumstance would be a great assistance towards regulating exchange. But it is an uncertain weight, 544 1 grains in one place and 536.0 in another, with many further variations. It is supposed to be a weight of silver; but the silver may be of different degrees of fineness. Under some conditions absolutely fine silver is used, 1000 fine; under others, trade silver,' between 960 and 970 fine, takes the place of 'fine' silver.

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How many different currencies there may be in the Chinese Empire it is impossible to estimate. Nothing else could be expected in a country where no regular coinage exists, the nearest approach being the well-known 'cash,' a coin the metal of which consists of copper and as much spelter or zinc (sometimes lead) as the copper will take up. The irregularity of the composition of the metal may be guessed from this circumstance. The traveller has to make his way furnished with a small steelyard and a string of selected cash' to act as a standard, with the assistance of which he carries out his exchanges, keeping a record of the comparative value of the silver in use in the places he visits. The silver may be current at several different degrees of fineness, perhaps half-a-dozen. The traveller may have to carry, besides his selected cash' and his steelyard, a lump of silver, four pounds' weight of it being probably sufficient to meet immediate needs. If he requires 'small change' in order to pay his way, he breaks a piece off his lump, ascertains the local fineness and rate of exchange for silver, and purchases 'cash,' the value of which he can ascertain by comparison with his string of selected coins. Now in

this country the crown-piece in silver is objected to because of its clumsiness and its weight. The weight of a crown-piece is as nearly as possible an ounce; and, as sixteen ounces go to the pound, four pounds' weight of silver is the equivalent of sixty-four crown-pieces. The inconvenience of carrying about such a bulk of silver can hardly be overrated. If cash' are employed instead of silver, the weight is a great deal more.

Yet the cumbrous coinage of China is popular among some classes of traders. The money-changers make their livelihood from the constant traffic, which offers many advantages to those who carry it on. It is a trade in a necessary of life, almost as much in demand as food, and much easier to deal in, as it never spoils through being kept too long, while it is equally certain to be wanted; and yet the whole of this trade-and it is a large one is a deduction from the profits of the ordinary trader. He cannot dispense with the services of the exchanger, who provides him with what he requires. But it is a secondary industry, one which is not needed where the currency system stands in a sound position. If the government of China ever becomes well organised, the problem of the currency will be one of the first points to be undertaken. Efforts are being made in isolated provinces in this direction. The influence is at present only local; but, if the example of Chang-Chi-Tung, Viceroy of the province of Hu-peh (who has, since the beginning of 1905, issued a silver coin to represent a tael), should spread, the existing chaos may be overcome.

The Commission on International Exchange, which was despatched to China by the United States Government some twelve months ago, forms a part of an effort made by the countries most largely interested in the production of silver to attain something like uniformity, or at least a greater approach to uniformity, in the valuation. The need for this is obvious. The value of silver varies often and greatly. Thus, in 1903, the price rose twenty-six per cent. between January and October, and fell five per cent. between October and December. Such fluctuations impart more or less of a gambling character to all transactions dependent on the value of silver. The countries interested differ widely, and comprise governments as dissimilar as those of Mexico and China. That Mexico

should join in a proposal which aims at bringing silver to circulate at a fixed proportional value to gold far lower than was recently the rule, and should adopt a gold standard, is a proof of the seriousness both of the proposal and of the danger which it is desired to avert. Mexico is the source from which the civilised world has drawn the greatest stores of the most widely diffused precious metal. Yet Mexico recognises the necessity of a fixed value for its most important product, and to secure this is willing to accept a low price for it; and Mexican trade is already improving under the influence of the steadier exchange.

How different is our medium of exchange from that we have been describing! And yet, little as we are conscious of it, variations in the value of our own circulating medium are very great, perhaps as great as, though less inconvenient than, those of China. How seldom do any of us recognise the fact that, though the 'sovereign' which bears the effigy of King Edward VII is identical in weight and fineness of metal with that first coined by his great-grandfather, George III, it varies much in its purchasing power from the coin struck in 1817. Any history of prices points out that this is the case. A glance at the remarkable chart which formed the titlepage to the earlier of the two volumes of statistics recently published by the Board of Trade shows the whole course of events during the last century. In that chart, the range of prices was shown to have fallen steadily, with occasional fluctuations, for fully a hundred years. The downward movement has been especially rapid during the last twenty or twenty-five years. Will it continue, and will it go on accelerating at the pace that it has kept up for so long a time? Prices generally are now less than half as high as they were a century ago, when, however, it must be remembered that, owing to the 'Bank Restriction,' inflation had affected all monetary levels. No doubt industrial improvement, the cheapening of means of communication, increased production, and changes in our legislation, e.g. the repeal of the Corn Laws, have affected prices. But the drop has been especially pronounced during times when these influences have been less active; and the movement still continues.

To come to more modern times. We plume ourselves