exchange did, but would such a use of the
horse _have made the horse, in the strictest sense of the term, a part
of the circulating medium of the kingdom_? I think not! A bill of
exchange is not money, but an order for money, and would be valueless
unless honored by payment on presentation. From the time the bill was
drawn until finally paid an amount of money equal to the demand of
the bill must be held out of circulation for its payment. It adds
nothing to the circulation, and in no sense does it constitute a part
of the circulating medium. It may, possibly, increase the rapidity of
circulation, but it is difficult to see how it could do even this. The
L10 held out of circulation for the payment of the bill would have
paid the debts in the same manner that the bill of exchange did, and I
fail to see why they would not have made the circuit as quickly. If a
horse had been made use of in the settlement of the debts mentioned by
Mr. Thornton, it would have been barter, pure and simple, and not a
money transaction.

That the contraction of the volume of credit will not tend to depress
prices in the same manner and to the same extent that a contraction of
the volume of money would will be apparent from the following
illustration.

The most conservative estimates place the national, municipal,
corporate, and individual debts in the United States at
$30,000,000,000. The Secretary of the Treasury estimates the amount of
money in circulation at $1,600,000,000. There is not, in fact,
one-third of the amount available for use; but for the purpose of this
illustration we will take the Secretary's estimate as correct. Now let
us suppose that the volume of credit should be reduced to
$28,400,000,000, either by the payment of $1,600,000,000 of the debt
or by bankruptcy proceedings or in some other manner. If that amount
of the credits were extinguished by payment, business would be
stimulated. That sum of money, or at least a considerable portion of
it, would pass into the hands of the creditor class, where it would
seek investment, and the tendency would be, not to contract, but to
expand prices. If that amount of the credits were extinguished by
bankruptcy proceedings in which no money passed in either direction,
such an extinguishment could not depress or expand prices; it could
have no influence upon them.

Now suppose that $1,600,000,000 of the money, every dollar now claimed
to be in circulation in the United States, shou