In the latter case, it ceases to be a commodity, and becomes a mere ticket of transference, or arbitrary sign of value; and then the natural requisites above described become of comparatively little importance. The quality by which money passes from hand to hand with little injury enables it to compensate inequalities of supply by the slackened or accelerated speed of its circulation. The rate of circulation serves as an index of the state of supply, and therefore tends, where no restriction exists, to an adjustment of the supply to the demand. Where restriction exists, the rate of circulation indicates the degree of derangement introduced among the elements of exchangeable value, but has no permanent influence in its rectification. -------------- In proportion as the processes of exchange become extensive and complicated, all practicable economy of time, trouble, and expense, in the use of a circulating medium, becomes desirable. Such economy is accomplished by making acknowledgment of debt circulate in place of the actual payment,—that is, substituting credit, as represented by bank paper, for gold money. The adoption of paper money saves time, by making the largest sums as easily payable as the smallest. It saves trouble, by being more easily transferable than metal money. It saves expense, by its production being less costly than that of metal money, and by its setting free a quantity of gold to be used in other articles of production. A further advantage of paper money is, that its destruction causes no diminution of real wealth, like the destruction of gold and silver coin; the one being only a representative of value, the other also a commodity. The remaining requisites of a medium of exchange—viz., that it should be what all sellers are willing to receive, and little liable to fluctuations of value, are not inherent in paper as they are in metallic money. But they may be obtained by rendering paper money convertible into metallic money, by limiting in other ways the quantity issued, and by guarding against forgery. Great evils, in the midst of many advantages, have arisen out of the use of paper money, from the neglect of measures of security, or from the adoption of such as have proved false. Issues of inconvertible paper money have been allowed to a large extent, unguarded by any restrictions as to the quantity issued. As the issuing of paper money is a profitable business, the issue naturally became excessive when the check of convertibility was removed, while banking credit was not backed by sufficient security. The immediate consequences of a superabundance of money are, a rise of prices, an alteration in the conditions of contracts, and a consequent injury to commercial credit. Its ulterior consequences are, a still stronger shock to commercial credit, the extensive ruin of individuals, and an excessive contraction of the currency, yet more injurious than its excessive expansion.