The fourth night we agreed that the only true or correct currency was a credit bank note, currently redeemed in gold coin.
_In other words, we agreed that gold was our standard of value, gold coin our money, and that our currency should consist of gold coin, the subsidiary coins and bank credit currency._
Tonight we want to find out, if we can, what Exchange is. This is a mighty important question for probably 90 per cent or nine-tenths of all our business is transacted in some form of Exchange. Mr. Lawyer, I want to put it up to you first. What is Exchange?
MR. LAWYER: Well, Uncle Sam, the best definition I can give, is to take one thing for or in the place of another. It is illustrated in a way by the old saw, "a fair exchange is no robbery." That describes the act of exchange, but I imagine that what you have in mind is the system or practice of exchange, as carried on today. That practice or system is only a multiplication of transactions where one man takes one thing in place of another. In this connection it means to take one credit in place of another credit; to take one debt in place of another debt. As now developed and applied to the commerce of the world, I would say that _the science of exchange is to substitute one credit for another credit, or to make one debt pay another debt_.
A debt is what is due from one person to another person. I have a deposit with Mr. Banker there, and I owe Mr. Farmer $20 for a load of potatoes; if I draw a check upon Mr. Banker for $20 in favor of Mr. Farmer, and hand it to him, I have paid my debt to Mr. Farmer with Mr. Banker's debt to me.
MR. MERCHANT: Now, Mr. Lawyer, just hold on a minute until I find out a thing or two before we go any further. In fact, I am sure everyone here would like in the outset to find out the same things, except possibly Uncle Sam, who ought to know everything, and is probably omniscient, Mr. Banker, who deals in these things, and you, Mr. Lawyer, who are presumed to know about them, and must know them, as a matter of necessity in your practice. What I want to know is:
Until we know precisely what these various terms signify, or mean in banking, when put into use, we shall soon be so far out at sea that we will not know what we are saying, because we do not know the meaning of the words we are using. This will be true of some of us at least. We must familiarize ourselves with these words, or terms.