MONEY AND SOCIAL PROBLEMS.* No study could be more interesting

than that of the effect of money and monetary legislation on social problems and public welfare. It is hardly necessary to point out that a sound and honest currency is the life-blood of trade, and that trade is the life-blood of a civilised nation. The importance of the subject has been hinted at in a well-known passage in Macaulay's History, but the world has long waited for a full and scientific treatise on the history of money as a factor in human progress, reviewing the matter from its earliest recorded beginning to its latest development, and drawing lessons from the experience of the past for the guidance of living statesmen. Or, if the historical method be found too tedious by the headlong reformers of to-day, who flatter themselves that they can break away from the past and that experience has nothing to teach them, we should willingly welcome an essay on modern monetary systems and their effect on social problems.

At the risk, however, of being considered old-fashioned and pedantic, we must insist that enthusiasm in the cause of social progress is not in itself a sufficient equipment for the champion who devotes himself to such a quest, and that for the construction of a work on "money and social problems" some knowledge of money and the mechanism of the money market is absolutely essential. It is also essential, we submit, that the champion must know what precisely is the object of his quest, and let his followers into the secret at the outset, so that they may mark his prowess intelligently, and may know when he rides full tilt against what seems to be a windmill, that it is really an intolerable giant who must at all costs be put out of the way of progress. These essentials, as we must be pardoned for considering them, are unfortunately lacking in

• Monty and Social Problems. By J. Wilson Harper. Edinburgh and London Oliphant, Anderson, and Ferrier.

the armour donned by Mr. Wilson Harper when he rode forth to attack the monetary barrier, which, as he seems to have read in some Fabian work of chivalrous lore, blocks the onward march of social progress. An important part of his headpiece, like that worn by the Knight of the Rueful Countenance, is constructed of brown paper, and he cannot tell us who follow behind him on a halting mule what he would be at. In other words, he does not attempt to define money, or to tell us in which of the many senses of the word be uses it, and we soon enough discover for ourselves that he neglects to put this explanation before his readers because he has not faced it squarely on his own account. He does not know what money means, and he talks of it first in one sense, then in another, then in two or three at once, and almost always wrongly. Hence it is that having opened his book in the hope that we had at last discovered the treatise which we had long sought, we are reluctantly forced to the conclusion that Mr. Harper has not said even the first word on this most interesting subject. He is full of enthusiasm and writes clearly and well of what he understands, but his ignorance of monetary matters renders his work inconsistent with itself and dangerously misleading to those who are equally ignorant. He does indeed occasionally make use of words, such as "homologate" and " expiscate," which have not, and, it may be hoped, never will have, any place in the vocabulary of cultivated English writers ; but these faults of style are com- paratively rare, and with our eyes upon the camel of his monetary ignorance we can swallow these gnats almost with equanimity.

He appears to believe (1) that the poor are poor because money is scarce ; (2) that money is scarce because certain banks have a monopoly of the note-issue; and (3) that there- fore the remedy for all the social evils of to-day is to be found in a fiduciary issue of paper money by the Government. There are also many other complicated and often inconsistent cross-currents of equally fallacious theory, but this, as far as we have been able to judge, is the main stream of his turbid argument.

As to (1), hear his own words : " There is food enough in the land ; warehouses are stocked with goods, but for lack of counters of exchange' men and women are starving in every hamlet, town, and city." We need not lay stress on the extravagant hyperbole of the last few words ; all that need be said is, granting that men are starving, it is not for lack of counters of exchange, of which there is no lack, but because these men have not been able to render those services which alone give them a claim to receive these counters and exchange them into the necessaries that they require. If we were to double the amount of money to-morrow, in the first place prices would also be doubled, so that we should all be as we were ; but, apart from that, the new money would not be given away at street corners : it would change hands just as money does now, in exchange for services rendered; and those who are unable to render services would still be without the counters of exchange. The problem of the unemployed is serious enough as it stands without being complicated by such fantastic fallacies ae these.

With regard to (2), it is a little difficult to fix our reformer down to a definite statement, for the haziness of his views on his own subject lead him to talk round it in an indefinite strain. The following passage is the most explicit that we can find :- " We repeat that real wealth abounds ; that the things which the people require for consumption and use are abundant ; and that, notwithstanding this plentifulness, thousands of men and women willing to work cannot find employment. The prevailing distress is largely due to artificial causes which the Legislature has done much to create and may do much to abolish. Privileges have been conferred upon a few men; and in the exercise of these, they have reaped great gains at the expense of the more unfortunate

traders (Here follows a long extract from Ruskin] Less, perhaps, now than formerly, but still to a large extent, the banks of issue influence the money market. They decide rates of interest and demand large discounts when commerce can least

afford them It is recognised that the insufficient supply of money for the constantly increasing trade of the country necessitates monetary changes of a drastic kind."

Or again later:— "We must, therefore, repeat what the history of our subject makes quite manifest, that, so long as the banks have a right of issue, and thus practically usurp the Crown's prerogative, the

monetary affairs of the country will be largely in the hands of a few privileged persons; the benefits accruing from the use of issues of notes will go into the hands of these privileged persons, and reformers in all departments of social work will labour in vain," &c.

The answer to these diatribes is so obvious that any office-boy in the City could have put Mr. Harper right on the point.

It is the simple fact that owing to the evolution of the modern banking system, which has made cheques the currency of commerce instead of notes, the note-issue is a matter of hardly any importance. It is true that the banks of

issue influence the money market, but no more than any other banks. When money becomes tight, and banks call in

their loans, it makes no difference whether the borrowers have fewer notes to handle, or a restricted power of drawing cheques ; and the two banks which have, in ordinary times, most influence on the London market are not note-issuers, and possess their predominant influence because they are the largest bill-discounters. If notes had been as scarce as Mr. Harper implies, how could it have befallen that the circula- tion of Bank of England notes has for years been practically stationary, and that when their issue is increased by additions to the Bank's store of gold they do not go out into active circulation, but merely swell the reserve of the banking department P But he speaks utterly at random and without the most superficial knowledge of his facts. He says that the directors of banks of issue "know the extent and value of the monopoly they possess, and are unwilling to surrender it; " whereas within the last few months a large number of country banks have willingly renounced their " monopoly " for the advantage of being amalgamated with the powerful house of Barclay and Co. He seems to know of the in- vention of cheques, for he is disturbed because the labourer

cannot draw a cheque on his Savings Bank deposit ; "the holder of a Savings Bank receipt," he cries indignantly, "cannot pay his butcher's or baker's bill with it." We should suggest that any such power would checkmate the

only object of the Savings Bank—namely, the promotion of thrift—but Mr. Harper seems to accept the doctrine that thrift is "anti-social," and therefore anathema. So it is perhaps irrelevant to point out that if allabourer likes to save a few pounds and put them in a bank, he can draw:cheques, up to the amount of his deposit, just like any millionaire.

There is no need to examine Mr. Harper's third proposition seriously. Suffice it to say that he first denies that the "almost unthinkable amount of credit upon which the com- merce of the country rests can rely with safety " upon its present gold basis, and then goes on to argue that "the trend of things is certainly towards the further use of fiduciary money ; and if the supply be steady and in a definite propor- tion to the increase or decrease of real wealth, a great benefit would be conferred upon traders." He seems to think that no gold basis at all would be necessary for a Government issue, and he instances the good credit of Brazil, which "issues a paper currency without a metallic basis." Now the Brazilian milreis, the par value of which is 27d., fell below 8d. last November, and the deplorable condition, financially speaking, of the country is chiefly due to the depreciation of the forced paper currency. Mr. Harper does not pause to consider what effect a paper medium would have on our foreign trade, but his opinions on foreign trade are so ludicrously false that he remarks, " There are writers who still compliment us that our exports are larger than our imports." He might have mentioned the names of those writers, for most people who presume to write on such subjects know that we import every year many millions' worth more goods than we export.

We could cover many pages with the misstatements and errors of this writer. But we can only add that, according to him, gold " is on reliable statistics proved to cost more than five times its market price," so that the wealth of Johannes- burg is an impossible dream ; and that he says on one page that "an ounce of gold is always worth £3 17s. 10Id.," and on another makes the astounding assertion that "its price is indicated in the United Kingdom by the advertised discount- rate of the Bank of England," which, we need hardly say, is

a variable figure; and we have no need to call further evidence in support of our contention that his ignorance of monetary

matters detracts seriously from the value of his views on money and social problems.