A critical reappraisal
Say’s successors challenged certain of his proposals commencing with his starting point. For Chevalier, the problem in barter is that the value of a good is expressed in the value of all other goods.
It is in the multiplicity of these expressions that he sees the initial obstacle to the development of trade. To overcome this, we must choose among the goods by joint agreement, the one to which all the others are compared. Money is first a measure of value. Of course it has other functions, but this one characterizes it. Chevalier concluded that money can only be a commodity that has value, a commodity that would satisfy a number of our needs. Banknotes are not money; they are paper credit like promissory notes and bills of exchange.In this perspective Coquelin explained the effects of the development of the banking system - and thus the distribution of banknotes - on the real economy and asserted that the abolition of the privilege of the Bank of France would accelerate capital accumulation and stabilize the economic system. He maintained that Say committed two errors that led him to underestimate the effects of the introduction of banknotes. In the first place Say (1803 [2006]: 577), like Smith, thought that notes replace coins whose value can be used to increase the national capital. Coquelin asserted instead that banknotes replace advantageously bills of exchange: issued by powerful banks, they are circulated everywhere while bills of exchange, issued by individuals, are only accepted reluctantly. The dissemination of banknotes enables credit expansion. Then comes Say’s second error. He (1817 [2006]: 767) argued that credit does not create capital but simply transfers a capital from the lender to the borrower. However, Say considers only the case where a capitalist lends his money to an entrepreneur. For Coquelin, however, credit is most often an inter-company credit: it allows the borrower to make productive use of goods which, in the absence of credit, would have remained unused in the stores of their producers.
The opponents of the freedom of issuance stressed the fact that it could lead to an excessive growth in the quantity of the means of payment and a rise in domestic prices, which would destabilize foreign trade.
When the depletion of metallic reserves of the banks would encourage them to reduce their credits, firms would no longer be able to refinance themselves and a crisis would inevitably occur. Coquelin stated instead that it is the monopoly of issuance which is causing crises. A bank with a privilege allows its shareholders to make excessive profits while other capitalists are inclined to choose riskier investments in order to maintain their profits. The monopoly of issuance increases the instability of the system for this reason.To criticize bimetallism, the Liberals often relied on Say. For example, Chevalier (1850 [1866]: 148-9) argued that the system of a double standard leads to a gradual alteration of currencies. In fact, any circumstance that sustainably decreases the relative value of one of the precious metals causes the outflow of the other. To maintain the circulation of the two metals, it would be necessary to modify the metallic content of the coins whose value is appreciated. The currency would depreciate and creditors would be stripped in favour of their debtors. However, Wolowski (1869) asserted that bimetallism can limit the magnitude of fluctuations in the value of money. In fact, this system allows paying a debt with one or the other metal. Thus, when the price of a metal decreases, it is sought after to make payments, its demand increases and slows down the fall of its price.