Front Page Titles (by Subject) Difference between a Special and a General Promise. - Money and the Mechanism of Exchange
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Difference between a Special and a General Promise. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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Difference between a Special and a General Promise.
The great importance of the distinctions pointed out in the last section will be easily apparent. He who has made a special promise to give definite parcels of goods in return for particular individual papers, cannot issue any such promissory papers without holding corresponding goods. If he does so, he will be continually liable to be convicted of fraud or default by the presentation of a particular document. If the promises made by him, however, are only general ones, any promissory document can be met by any portion of commodity of the proper quality, and it will be necessary to present most or all of the documents in order to disclose default. The way is thus opened for the speculative issue of promissory notes. The receiver of deposits, finding that a large portion of the deposited commodity always remains on hand, may proceed to use it in trade, only keeping so much as may meet current demands. So long as he does fulfil promises no harm seems to be done; but experience proves that there will always be a certain proportion of persons who, in such circumstances, will not act so discreetly as to be in a position to redeem all their engagements.
Moreover, it now becomes possible to create a fictitious supply of a commodity, that is, to make people believe that a supply exists which does not exist. The possessor of a promissory note or warrant regards the document as equivalent to the commodity named thereon. It is only necessary then to print off, fill up, and sign an additional number of such notes in order to have a corresponding supply of commodity to sell. It is true that the issue of promises involves their fulfilment at a future day; but the future is unknown, and the issuer may believe that before the fulfilment is likely to be demanded the price of the commodity will have fallen. Thus, if pig-iron warrants could be issued in unlimited quantities (irrespective of the stocks actually in the stores at Glasgow), an unscrupulous band of speculators might perhaps make large profits by selling great quantities of iron for future delivery. After suddenly and excessively depressing the price of pig-iron they might succeed in gradually buying up enough at lower prices to meet the warrants when presented. This kind of "bear" operations has certainly been successful in other markets.
About ten years ago it became the practice to rig the market as regards the shares of particular joint-stock banking companies. A party would be formed, perhaps owning none of the shares of the selected company, and they would proceed to sell considerable quantities of the shares, hoping so to damage the reputation of the company and lower the value of the stock as to be able to buy up enough before delivery would be required. This noxious kind of speculation was checked by an Act of Parliament (30 Victoria, c. 29, 1867), which now requires the seller of bank shares to specify the numbers or the registered proprietors of the shares which he is selling for future delivery.
It might be urged, indeed, that there is a natural right belonging to all persons to make promises, if they can thereby benefit themselves. Any one can accept a bill, thereby promising to deliver money at a future day. It is quite common to make contracts involving the delivery of government stock, or of cotton or corn expected to arrive by sea, before delivery becomes due. But we must remember that all laws and all social relations are devised to secure the greatest good of the greatest number. If a right to make all promises be recognized by law, it must be because the right is beneficial to society, and it is the recognition by law which makes it a right. If, on the contrary, it be found by experience that freedom of making and selling promises in a particular way gives scope to illegitimate speculation, or otherwise injures society more than it produces benefit, the law ought certainly to restrict this freedom and regulate the matter for the good of the community. The whole matter, in short, is one of expediency. It used to be held as a general rule of law, that any present grant or assignment of goods not in existence is without operation. Though the rule seems to be generally disregarded, there are many cases in which it might be advantageously enforced.