The Online Library of Liberty

A project of Liberty Fund, Inc.

• Messrs. Vanderput & Snoek.. Preface.
• Chapter I.: Mourning
• Chapter II.: An Excursion
• Chapter III.: Family Arrangements
• Chapter IV.: Wise Men At Supper
• Chapter V.: Going Northwards.
• Chapter VI.: News From Home.
• Chapter VII.: A Night's Probation.
• Chapter VIII.: News At Home.
• Chapter IX.: Close of a Brief Story.
• Summary of Principles Illustrated In This Volume.
• The Loom and the Lugger. Part I.
• Chapter I.: Taking an Order.
• Chapter II.: Giving an Order.
• Chapter III.: Dumb Duty.
• Chapter IV.: An Afternoon Trip.
• Chapter V.: Morning Walks.
• Chapter VI.: A Night Watch.
• Chapter VII.: Hear the News!
• The Loom and the Lugger. Part II.. Preface.
• Chapter I.: The Coopers At Home.
• Chapter II.: Matters of Taste.
• Chapter III.: Chanck Customers.
• Chapter IV.: Grief and Dancing.
• Chapter V.: Hate and Hand-bills.
• Chapter VI.: Investigations.
• Chapter VII.: Prospective Brotherhood.
• Summary of Principles Illustrated In This and the Preceding Volume.

Summary of Principles illustrated in this Volume.

Nations exchange commodities, as individuals do, for mutual accommodation; each imparting of its superfluity to obtain that in which it is deficient.

The imparting is therefore only a means of obtaining. Exportation is the means of obtaining importation,—the end for which the traffic is instituted.

The importation of money into a country where money is deficient is desirable on the same principle which renders desirable the supply of any deficient commodity.

The importation of money into a country where money is not deficient is no more desirable than it is to create an excess of any other commodity.

That money is the commodity most generally bought and sold is no reason for its being a more desirable article of importation than commodities which are as much wanted in the country which imports it.

That money is the commodity most generally bought and sold is a reason for its being the commodity fixed upon for measuring the relative amounts of other articles of national interchange.

Money bearing different denominations in the different trading countries, a computation of the relative values of these denominations was made in the infancy of commerce, and the result expressed in terms which are retained through all changes in the value of these denominations.

The term by which in each country the original equal proportion was expressed is adopted as the fixed point of measurement called the par of exchange; and any variation in the relative amount of the total money debts of trading nations is called a variation from par.

This variation is of two kinds, nominal and real.

The nominal variation from par is caused! y an alteration in the value of the currency of any country, which, of course, destroys the relative proportion of its denominations to the denominations of the currency of other countries. But it does not affect the amount of commodities exchanged.

The real variation from par takes place when any two countries import respectively more money and less of other commodities, or less money and more of other commodities.

This kind of variation is sure to correct itself, since the country which receives the larger proportion of money will return it for other commodities when it becomes a superfluity; and the country which receives the smaller proportion of money will gladly import more as it becomes deficient.

The real variation from par can never therefore exceed a certain limit.

This limit is determined by the cost of substituting for each other metal money and one of its representatives,—viz., that species of paper currency which is called Bills of Exchange.

When this representative becomes scarce in proportion to commodities, and thereby mounts up to a higher value than the represented metal money, with the cost of transmission added; metal money is transmitted as a substitute for Bills of Exchange, and the course of Exchange is reversed and restored to par.

Even the range of variation above described is much contracted by the operations of dealers in bills of exchange, who equalize their value by transmitting those of all countries from places where they are abundant to places where they are scarce.

A self-balancing power being thus inherent in the entire system of commercial exchange, all apprehensions about the results of its unimpeded operation are absurd.

THE LOOM AND THE LUGGER.
PART I.