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holds that no guaranty is necessary, "that the value of money is a value sui generis, independent of the value of the material of which it is made, or of the guaranties by which it is secured;" but, nevertheless, almits it to be subject to the law of supply and demand, the same as any other commodity.

Now, if the above proposition were true, the law of supply and demand could not affect it. But it is simply because it is not true, that the law of supply and demand does affect it. Therefore, money must be dependent for its value upon one of two things: eitheir upon the value of the material of which it is made, or upon the guaranties by which it is secured. The simple difference between money (of paper) and bank-notes is this: that one is an equivalent, and the other is the promise of one. Therefore, one is good or bad, as the promise is likely to be redeemed, or otherwise; and the other is good for the face of it, so long as the supply is not more than equal to the purposes for which it was guarantied by the law, and is as much an equivalent for the time being as coin, bullion, or any other commodity. To support the view he has taken, M. Chitti has slightly twisted, or extended, the obvious meaning of the word wealth.* He says: "True wealth is the

possession of things adapted to the satisfying of our wants. If all things were given us in such abundance that they might be used without exhausting the supply, as is the case with air, light, electricity, we should be immensely rich, and yet should not possess one cent of value."

Now, I must object to this reasoning. That, under these circumstances, we should possess no value, is very true: but the words wealth and poverty would have no meaning; therefore I must stick to the old economists. I believe that wealth and value are nearly related. A person cannot be wealthy without possessing a large quantity of value. Value, therefore, is not an abstraction, but a concrete quantity of labor or sacrifices, which can be measured in relation to other quantities of labor or sacrifices. It is not the mere relation between things given and things received, but the relation of the amount of labor in each. But, it will be asked, Why do the relations of things vary? Simply because the labor of man is not uniformly productive, while his wants remain constantly the same. The inconstancy of seasons and the ingenuity of man, are the only necessary causes of variations in value.

Labor, then, is the foundation of all value, notwithstanding the frequent unnecessary oscillations of supply and demand. Supply and demand can have no relation to things which have not value; that is, things one of whose constituent parts is not labor, such as air, light, electricity. It is precisely, then, because the value of money depends upon the amount of labor it represents, that the law of supply and demand affects it, and not

otherwise.

Money must either have an intrinsic value, with an unlimited circulation, or it must have (so to speak) a prescriptive value, equally absolute, dependent upon the circumstances of its condition. If an individual offered a merchant his note at sixty or ninety days, for an article the merchant had to sell, would he take the note if it had no value?—that is, unless the character and standing of the man, or the law, or all combined together, guarantied that he should be paid in full, in some useful commodity, when the note came to maturity? Certainly not. So must inconvertible paper money

• Vol. xxvi., page 47, Merchants' Magazine.

present a guarantied value, the conditions of which must not be violated, or its value will depreciate accordingly. Thus, if the United States government were to issue eighty or one hundred millions of dollars, in large notes, of inconvertible paper money, or any other sum, which upon due consideration and inquiry should be agreed upon, under the sanction of Congress, with the most stringent and careful guaranties against abuse, which should at all times be a legal tender for debts and taxes; there can be no doubt, that if properly adjusted, this currency could be kept rather above than below par. The rest of the currency would be made up of gold and silver, at the market rate, with the exception of a subsidary one, under a dollar, which should be composed of silver and copper, and should not be a legal tender above that amount. Upon some such plan as this a perfect currency might be founded, or as near perfection as we may expect to come. I, of course, throw out these hints only to be matured and adjusted by others, who have more time and opportunity than myself, and are better qualified for the task. Although many writers of late have advocated the adoption of an inconvertible paper currency I have seen no well-adjusted plan; besides, most or all of them have been clogged with gross mistakes upon other points of political economy, calculated to mystify the subject rather than to assist in its adoption. The error in regard to value is shared by two writers, at least, in the Merchants' Magazine, and probably others, who maintain to some extent the same theories. I hope, therefore, to be excused for recurring to this important point. Both repudiate the old axiom, that labor is the criterion of value, and one thinks "the attempt to ascertain a constant measure of value is not only idle, but cannot possibly lead to any result." I am, however, of opinion, that much light has been thrown upon the subject, in the Merchants' Magazine, by some of its able correspondents. I think it has been shown, that under certain circumstances, what is called money of account could as easily and correctly measure all values as a yardstick can measure a piece of calico, and that really there is no more necessity for a fixed price of silver or gold, than there is for a fixed price for any other commodity, and that evil and only evil attends it. The idea that some material or system may be found or invented, possessing no value in itself, but should at all times be capable of determining the value of other commodities, and at the same time that it is used as an equivalent, should be attainable with a fixed and certain facility, is sufficiently utopian. We lay it down broadly, then, that labor is the only criterion of value. But it bas been said, the value of commodities vary without the amount of labor in their production being changed. This is not true with regard to natural productions. Neither is it produced by any necessary cause, when it is observed in other cases. Let us take a bushel of wheat. A bushel of wheat is worth a dollar; but the crop falls short, and it rises twenty-five per cent. What causes the rise in price? The quantity of labor is increased in relation to the amount of wheat produced, consequently the value is greater in relation to other thing; and, although the supply may be increased at any given point, the price will increase because the extra labor must be paid for. But the price of wheat may fall in a commercial city without an extra crop. Why because a railroad is made, and it takes less labor to bring it to the city. But, it will be said that the prices of other necessaries decrease, without the amount of labor being decreased in their production. Whenever this is observed, it takes place from some adventitious cause. It might possibly happen under the protective system of France, or the former one of

Great Britain, but could not possibly occur. under a state of free trade and a perfect currency. Articles of luxury, subject to the caprices and whims of fashion, it is considered unnecessary to notice; and it may be admitted that no positive rule can be applied to them. Many other errors have been fallen into by writers upon this subject. One has asserted, that under any commercial system like the present it would be necessary, if we would keep the demand equal to the supply, "to increase money as fast as all other commodities put together; for (says he) if we do not do this, every commodity multipliable by the exercise of human industry faster than money itself, although costing no diminished labor to produce it, will fall in money prices;"-forgetting, apparently, that increased production is not only the cause of increased demand, but also involves increased consumption. Upon the slightest review of this position, it is evident it is a great error; but it is no new doctrine, it has been preached for twenty years among the would-be currency reformers of Great Britain. It is singular that men of acknowledged ability and keen perceptions should fall into such grave errors; but, being blinded by their interests or position, they have not been able to penetrate the mists of artificial or secondary causes, and therefore cling to their delusions with the greater pertinacity.

I shall conclude by saying, that I believe that a currency founded upon the plan recommended would be a good, and perhaps perfect currency, at least, far superior to the present. The money of account would be kept intact, present and future evils avoided, and it would become an unvarying measure of value for all other commodities.

R. S.

JOURNAL OF MERCANTILE LAW.

INSOLVENT DEBTORS ASSIGNMENT OF ASSETS.

In Court of Appeals, (New York State,) 1853. Nicholson and others, rs. Leavitt and others, respondents.

J. W. & R. Leavitt, merchants in the city of New York, in the year 1845 became insolvent, their indebtedness amounting to over $300,000, a part of which was then due, and the residue payable at a future period. They in that year executed thirteen assignments of their property to the respondents, or one of them, all of the assignments embracing things in possession, as distinguished from choses in action, containing a provision directing the trustees "in such manner, and at such time or times, either at public or private sale, and for cash or upon credit, and by and under such terms and conditions as they shall think reasonable and proper, absolutely to sell," &c.

The plaintiffs were judgment creditors of J. W. & R. Leavitt, and sought by their bill of complaint, which was filed in March, 1847, in the Court of Chancery, to set aside the several assignments, on the ground that they were designed to hinder, delay, and defraud the creditors of the assignors. The bill was taken as confessed against the assignors. The assignees answered, and proofs were taken.

The cause was transferred to the Superior Court of the city of New York, by which court the assignments were held valid, and a decree made dismissing the bill with costs. (See 4 Sandf. Superior Court Rep. 252.)

From that decree the complainants appeal to this court.

Charles O'Conor for appellants, S. Beardsley for respondents.

Gardiner, J. The only question which I propose to consider is, whether a

provision authorizing a credit in the discretion of the trustees, upon the sale of the property, avoids the trust as to the complainant, a judgment creditor.

One of the express trusts authorized by statute is, "to sell lands for the benefit of creditors." Trusts of personal property are tolerated by our law for the same object. The power to create a trust, of real or personal property, or, as in this case, of both must be construed in the light of other provisions of the common law and the statutes of this State.

One of these statutes prescribes that every assignment of any interest in lands, goods, or things in action, made with intent to hinder, delay, or defraud creditors of their lawful suits, damages, debts, or demands, shall, as against the persons so hindered, delayed, &c., be void. (2 R. S. 137, sec. 1.) Another, that all assignments of goods, &c., in trust for the use of the person making the same, shall be void as against creditors exeisting or subsequent of such persons. (2 R. S. 135, sec. 1.)

These statutes are but expositions of the common law, (2 Cowp. 432,) which in addition, imposes upon the debtor the obligation to pay his debts as they become due. These various provisions of law must stand together, and each should be so interpreted as to preserve the rights of the debtor, without essentially affecting his obligations to his creditors.

The legislature have conferred upon the debtor the right to create a trust of his property for certain purposes. He may also prefer one creditor to another. Of course, the "delay" to creditors, necessarily resulting from a fair exercise of these rights, is not prohibited by any statute; but this delay must be incidental and necessary to the existence of the trust, or the exercise of the power. Where it becomes the principal motive for the creation of the one or the exercise of the other, the conveyance made and thing done in pursuance of such intent, if any injury does, or may thereby result to creditors, is prohibited by statute, and may be avoided at their instance.

Nothing beyond this was determined in Meux vs. Howell, (4 East. 1,) and in Winter vs. Winne et al., (6 Cowen, 287,) and other cases to which we have been referred.

In the first case, Lord Ellenborough said: "The statute was meant to prevent deeds, &c., fraudulent in their concoction, and not merely such as in their effect might delay or hinder creditors."

And in the last it was held, that it could not be left to a jury to decide whether an execution was issued upon a bona fide judgment with an intent to delay other creditors, that such must necessarily have been the intent, the property being sufficient to pay both judgment creditors. Both of these were cases of preference by means of judgment confessed to bona fide creditors, who had issued executions and levied upon the insolvent's property.

The delay in each case to other creditors was the necessary result of the preference given, and for that reason lawful.

Indeed, these authorities and others of the same class, are not distinguishable in principle from a case in which an insolvent, owing debts of an equal amount to two different creditors, with money sufficient to discharge one only, and no other property, pays one demand in full, and omits the other intentionally.

No one would imagine in the instance supposed, that the debtor and the fortunate creditor, one or both, were liable in a penal action for fraud. The payment of one demand, although the debtor happened to owe two, was right in itself, and precisely what the law required. And although the parties may have foreseen, and intended that other creditors should be delayed, the delay would be the incidental consequence of an act perfectly just and legal. But let us suppose that the debtor owed but one debt, and had transferred his property with intent to hinder and delay that creditor, although but for a day, the assignment, if it could have that effect, would be fraudulent and void.

The same would be true of a trust giving preferences, but intended to hinder and delay other creditors.

In these cases the motives for creating the trust, and the purpose to be effected by it, would be illegal. The delay, instead of being incidental, would be the

primary object to be accomplished by its creation. Such an intent, whether manifested by an open or secret trust, avoids the conveyance. There is no case to the contrary, nor can there be without à repeal of the statute.

It was argued that an "intent to hinder and delay creditors, there being no intent to defraud them, will not make an assignment illegal-a positive intent to defraud must exist." The answer to this suggestion is, that a positive intent to defraud always does exist where the inducement to the trust is to hinder and delay creditors, since the right of a creditor to receive his demand when due, is as absolute as the right to receive it at all.

It has been understood, that where an individual has incurred an obligation to pay money, the time of payment was an essential part of the contract; that when it arrived, the law demanded an immediate appropriation by the debtor of his property in discharge of his liability, and if he failed, would itself, by its own process, compel a performance of the duty.

The debtor, by the creation of a trust, may direct the application of his property, and may devolve the duty of making the appropriation upon a trustee. This the law permits, and such delay as may be necessary for that purpose. But the debtor cannot in this way avoid the obligation of immediate payment, or extend the period of credit, without the assent of the creditor. The attempt to do this, however plausible may be the pretense, is in conscience and in law a fraud, and nothing else.

It is the fraud which we are asked to sanction, by upholding the trust in question.

These insolvent debtors have authorized their trustees, according to their discretion, to sell the assigned property upon credit. They are to determine when the purchasers shall pay, and, of course, when the creditors shall receive their dividend. Their power amounts to this, as we shall see, if it amounts to anything.

It is hardly necessary to say that what the debtors could authorize, they could direct to be done; and they could have prescribed the period for the credit in the trust deed. Their power in this respect, upon the principles assumed by the court below, is unlimited, if exercised in good faith.

The whole argument, independent of authority in favor of this extraordinary power, resolves itself into this, that without it the property of the debtor may be sacrificed, and creditors thereby injured. To this it may be answered, if the trust property is not readily converted into money, the debtor may dispose of it himself. He is under no obligation to assign. It was not the object of the legislature, as the late Chancellor remarked, " to hold out inducements to a debtor in failing circumstances to place his property beyond the reach of creditors." (7 Paige, 274.)

In the second place, if the property is more than sufficient to discharge all the debts of the assignor, he has no right to delay creditors, by giving credit on the sale of the property, with a view to increase the surplus resulting to him; this would be a trust for his own benefit, and cousequently void, by the first section of the "Act against fraudulent conveyances." (7 Paige, 37.)

If the property is insufficient to pay the demands of creditors, it is obvious that they are chiefly interested in the amount to be realized by the sale. As they must sustain the loss, if there is a deficiency, they should have the right to be consulted, and to determine whether their interest will be better subserved by a smaller sum presently received, or a larger one at a future period. The rights of the debtor are sufficiently guarded by the privilege which the law gives him of intrusting the sale of his property to trustees of his own selection. That they will consult his interest, whoever else may suffer, is demonstrated by all past experience.

Again, the practice of Chancery in reference to Receivers, and the law authorizing a credit, by certain statutory trustees, administrators, &c., upon the sales of property, on account of creditors, have been cited to sustain the views of the respondents. But all these are officers of the law, and not the representatives of

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