Reduce this proposition to its most general terms, and it becomes self-evident. Thus:—All bank-notes, cheques, bills of exchange, etc., are so many _memoranda of claims_. No matter what may be the technical distinctions among them, on which upholders of the “currency principle” seek to establish their dogma, they all come within this definition. Under the ordinary state of things, the amount of available wealth in the hands, or at the command, of those concerned, suffices to meet these claims as they are severally presented for payment; and they are paid either by equivalents of intrinsic value, as coin, or by giving in place of them other memoranda of claims on some body of undoubted solvency. But now let the amount of available wealth in the hands of the community be greatly diminished. Suppose a large portion of the necessaries of life, or of coin, which is the most exchangeable equivalent of such necessaries, has been sent abroad to support an army, or to subsidize foreign states; or, suppose that there has been a failure in the crops of grain or potatoes. What follows? It follows that part of the claims cannot be liquidated. And what must happen from their non-liquidation? It must happen that those unable to liquidate them will either fail, or they will redeem them by directly or indirectly giving in exchange certain memoranda of claims on their stock-in-trade, houses, or land. That is, such of these claims as the deficient _floating_ capital does not suffice to meet, are replaced by claims on _fixed_ capital. The memoranda of claims which should have _dis_appeared by liquidation, _re_-appear in a new form; and the quantity of paper-currency is increased. If the war, famine, or other cause of impoverishment, continues, the process is repeated. Those who have no further fixed capital to mortgage, become bankrupt; while those whose fixed capital admits of it, mortgage still further, and still further increase the promissory {330} payments in circulation. Manifestly, if the members of a community whose annual returns but little more than suffice to meet their annual payments suddenly lose part of their annual returns, they must become proportionately in debt to one another; and the documents expressive of debt must be proportionately multiplied.