HISTORY OF MONETARY THEORIES.

The source of the monetary theories of ancient as well as modern times, as well as of the doctrine of the unlawfulness of usury which remained unchallenged till near the close of the eighteenth century, is Aristotle. His views upon both of these subjects will be sufficiently set forth in the following extracts from his works:1—

"There is, also, another kind of acquisition which men specially call pecuniary, and with great justice too; and by this indeed it seems that there are no bounds to riches and wealth. Now many persons suppose, from their near relations to each other, that this is one and the same with the art just mentioned" (which he terms elsewhere natural acquisition, and in which he embraces what is captured in war, the products of the chase, of flocks and herds, and of the soil); "but it is not the same as that, though not very different; for one of these is natural, the other is not, but rather arises from some art and skill. Now let us enter on our inquiry into the subject from the following point. The uses of every possession are two; both indeed essential, but not in the same manner; for the one is strictly proper to the thing, the other not; as a shoe, for instance, may be either worn or exchanged for something else; for both these are uses of the shoe; for he who exchanges a shoe with some man who wants one, for money, or provisions, uses the shoe as a shoe, but not according to its proper use; for shoes are not made to be exchanged. The same thing holds true of all other possessions; for barter in general had its original beginning in Nature, from the fact that some men had a surplus, and others less than was necessary for them. And hence it is evident that the selling provisions for money is not naturally a part of pecuniary science; for men were obliged to use barter as far as would supply their wants. Now it is plain that barter could have no place in the first community, that is to say in the household, but must have begun when the number of those who composed the community came to be enlarged; for the former of these had all things the same and in common; but those who came to be separated had in common many other things which both parties were obliged to exchange as their wants arose." "This sort of barter, then,

1 Aristotle's "Politics," Bohn's edition, Book i. Chap. ix.

is not contrary to Nature, nor yet is it any species of money-getting; but it is necessary in order to complete that independence which is natural. From this barter however arose the use of money, as might be expected; for as the needful means for importing what was wanted, or for exporting a surplus, was often at a great distance, the use of money was of necessity devised. For it is not every thing which is naturally useful, that is easy of carriage; and for this reason men invented among themselves, by way of exchange, something which they should mutually give and take, and which being really valuable in itself, might easily be passed from hand to hand for the purposes of daily life, as iron, or silver, or any thing else of the same nature. .

"Money, then, being devised from the necessity of mutual exchange, the second species of money-getting arose, namely, by buying and selling; and this was conducted probably at first in a simple manner, but afterwards it came to employ more skill and experience as to where and how the greatest profit might be made. For which reason the art of money-getting seems to be chiefly conversant about trade, and its end to be able to see where the greatest profit can be made; for it is the means of procuring abundance of wealth and possessions. For men oftentimes suppose wealth to consist in the quantity of money which any one possesses, as this is that medium with which trading and trafficking are concerned; others regard it as a mere trifle, as having no value by nature, but merely by arbitrary compact; so that, if those who use it should alter their sentiments, it would be worthless and unserviceable for any necessary purpose. Thus oftentimes the man who abounds in money will want the necessary food; and it is absurd to say that wealth is a thing of such a kind that a man with plenty of it around him may perish with hunger, like Midas' in the fable, who from his insatiable wish found every thing set before him turned into gold. For which reason, people look about for something else by way of riches and property, and rightly too; for the mere getting of money differs from natural wealth, and the

1 It is remarkable, not that Aristotle should not have been able to appreciate the significance of a highly spiritual myth, but it is remarkable that he should have so misstated a fable which originated with his own race. Midas by no means wished that every thing set before him should be turned to gold; he wished that whatever he touched should be turned to gold. The table set before him was loaded with delicious viands, which were turned to gold in the attempt to convey them to his mouth. He was caught in his own trap. The moral intended to be drawn was, not that gold possessed no value, but that all mordinate desires defeat themselves; that avarice so deadens the higher faculties that the money gained by it is itself an instrument of punishment. It has already been demonstrated that gold and silver (money) are the most substantial of all kinds of wealth; that a person is rich in ratio to the amount of them that he possesses, as he can by their use command whatever other people possess, and can never come to want so long as there is food or clothing for the use of any one; while a person possessed of the greatest abundance of any other kind of property, such as food or clothing, may miserably perish from his inability to exchange that which he has for other articles necessary to sustain life.

latter is the true object of economy; while trade only procure money, not by all means, but by the exchange of it; and it seens to be chiefly employed about trading, for money is the element and the regulator of trade, nor are there any bounds to be set to the wealth which is thereby acquired. For just as there are no limits to the art of medicine with respect to health, and as all other arts with respect to their ends are infinite-(for those ends they desire to effect to the farthest possible extent)-but still the means used for those ends are limited, and their several ends are the limits of each; so too in the art of acquiring riches, its end has no limits, for its object is money and possessions; but economy has a boundary, though the former has not; for acquiring riches is not its real end. And for this reason it should seem that some boundary should be set to riches, though in practice we see the contrary of this taking place; for all those who get riches add to their money without end. The cause of this is the near connection of these two arts with each other, for they sometimes change employment with each other, as getting of money is their common pursuit. For they each employ the same thing, but not in the same manner; for the end of the one is something beyond itself, but the end of the other is merely to increase it; so that some persons are led to believe that this is the proper object of economy, and think that for this purpose they ought to continue to save or to hoard up money without end. .. Such persons make every art subservient to money-getting, as if this was the only end, and to this end every thing ought to contribute. We have now considered that art of money-getting which is not necessary, and have said what it is, and how we come to need it; and also that which is necessary, which is different from it; for that economy which is natural, and whose object is to provide food, is not infinite like this, but has its bounds.

"That which was doubted at the first is now clear, as to whether the art of getting money is the business of the head of a family or a State, or whether it is not, and yet must of necessity exist; for as the political science does not make men, but, receiving them from the hand of Nature, employs them to proper purposes; thus Nature, whether it be the earth, or sea, or any thing else, ought to supply them with provisions; and this it is the business of the master of the family to manage properly. For it is not the weaver's business to make yarn, but to use it, and to distinguish what is good and useful from what is bad and of no service; and in like manner some one may inquire why money-getting should be a part of economy, when the art of healing is not; since it is as requisite that the family should be in health as that they should eat, or have any thing else which is necessary. Now, as it is indeed in some sense the business of both the master of the family and the ruler of a State to see after the health of those under their care, but in another sense not, but the physician's; so, also, as to money, in some respects it is the business of the master of the family, in others not, but of the servile art. But, as we have already said, it is chiefly the part of Nature, for it is her part to supply her off

spring with food; for nourishment is left for every thing born, by that which gave it birth; and hence by the way, the natural riches of all men arise from fruits and from animals. But since these riches may be applied, as we have said, to two purposes, the one to make money of, the other for the service of the house; of these the one is necessary and commendable, the other, which has to do with traffic, is justly censured, for it has not its origin in Nature, but amongst ourselves; for usury is most reasonably detested, as the increase of our fortune arises from the money itself, and not by employing it to the purpose to which it was intended. For it was. devised for the sake of exchange, but usury multiplies it. And, hence, usury has received the name of Toxos' or 'produce,' for whatever is produced is itself like its parents; and usury is merely money born of money: so that of all means of money-making this is the most contrary to Nature."

Aristotle has been quoted at length, as a necessary condition of getting at his ideas upon the subject of money; as the source of all theories or opinions which have prevailed in reference to it from his time to our own; and to show the methods pursued by him, by his legitimate successors the Schoolmen of the Middle Ages, and by the Political Economists, the Schoolmen of modern times. His method of resolving all questions by verbal distinctions, by dialectics, relieved him of all necessity of investigation into, or analysis of their law. Of this, his treatment of money and of loans of it at usury affords a striking illustration. Money was an invention for the purpose of facilitating exchanges of property. To use it for any other purpose was against Nature; usury,-"money born of money," a crime! It was the very falseness of his method that gave him his prodigious ascendency. By means of it, he was enabled within the period of a very few years to construct what he assumed to be a universal science. His conclusions, to which he gave all the authority of dogmas, were delivered with an eloquence of language and a copiousness of illustration which his successors could never hope to equal; still less, if they had wished, to controvert. This could be done only by the discovery of the law of that to which they related. He had an eminently active, but an eminently unscientific mind. He epitomized his time and his race. When he wrote, the world was in its infancy in every thing that characterizes scientific analysis. On a multitude of subjects it was in the highest degree impious to question the beliefs and traditions of the past. Phenomenon still stood for law. Reflection and inquiry,

with the race as with the individual, come only with the maturity of age. He has been termed the father of the Inductive Method. He indeed said something as to the necessity of proceeding from particulars to generals, and of deducing from a comparison of facts their connection and law; but it never occurred to him to question the testimony of the senses; on the contrary, he made it the foundation of the vast superstructure he undertook to rear. His method was necessarily deductive, from his utter ignorance of, or inability to use, the inductive; from the imperiousness and arrogance of his nature, and from the purpose he had in view, which was nothing less than to solve, in an age wholly incapable of any thing like an adequate investigation of natural law, every question coming within the range of human experience. He was the impressible child, full of animation and garrulity, not the mature man, silent and reflective from the consciousness of his own ignorance and impotence to interpret the mighty problems which confronted him on every side. Child as he was, his statements and illustrations were so grotesque and fanciful that it is to be wondered that he did not see their inconclusiveness and absurdity. Never disturbed by a doubt as to the soundness of his premises, he assumed to dispose by a single stroke, not only of problems for which, with all the lights of the present day, ages will hardly suffice, but those which wholly transcend human capacity. The manner in which he attempted to prove the world to be perfect is a capital illustration of his method and its results: "The bodies," he says, "of which the world is composed, are solids, and therefore have three dimensions. Now three is the most perfect number; it is the first of numbers; for of one we do not speak as a number; of two we say both; but three is the first number of which we say all; moreover, it has a beginning, a middle, and an end!" By a similar method he undertook to prove the existence of a fifth element, or essence. "Simple elements," he tells us, "must have simple motions, and thus fire and air have their natural motions upward, and water and earth have their natural motions. downward; but besides these motions, there is motion in a circle, which is unnatural to these elements, but which is a more perfect motion than the other, because a circle is a per

1 Whewell's "Inductive Sciences," Am. ed. vol. i. p. 72.