Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy — John Stuart Mill — John Shaqi
Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
John Stuart Mill · en
It is often seen, in our large cities, that money is very
plentiful, but no one seems to wish its use (that is, no one with
safe securities). Inability to find investments and to find
industries in which the rate of profit is satisfactory—all of
which depends on the business character and activity of the
people—will prevent credit from being used, no matter how many
bank-notes, or greenbacks, or how much gold there is in the
country. It is impossible to make people invest, simply by
increasing the number of counters by which commodities are
exchanged against each other; that is, by increasing the money.
The reason why more credit is wanted is because men see that
increased production is possible of a kind that will find other
commodities ready to be offered (i.e., demand) in exchange for
that production. Normal credit, therefore, on a healthy basis,
increases and slackens with the activity or dullness of trade.
Speculation, or the wild extension of credit, on the other hand,
is apt to be begotten by a plethora of money, which has induced
low rates for loans, and moves with the uncertain waves of popular
impression. By normal credit we mean that the wealth represented
by the credit is really at the disposal of the borrowers; in a
crisis, the quantity of wealth supposed to be represented by
credit is very much greater than that at the disposal of the
lenders.(246)
§ 6. What is essential to the idea of Money?
There has been a great amount of discussion and argument on the question
whether several of these forms of credit, and in particular whether
bank-notes, ought to be considered as money. It seems to be an essential
part of the idea of money that it be legal tender. An inconvertible paper
which is legal tender is universally admitted to be money; in the French
language the phrase _papier-monnaie_ actually _means_ inconvertibility,
convertible notes being merely _billets à porteur_. An instrument which
would be deprived of all value by the insolvency of a corporation can not
be money in any sense in which money is opposed to credit. It either is
not money, or it is money and credit too.