UNIVERSITY OF CALIFORNIA 
 AT LOS ANGELES
 
 ~ y ~ r / ^/^5L ^^ - 
 
 AN 
 
 EXPOSITION 
 
 OF 
 
 IRISH EXCHANGE, 
 
 AND OTHER 
 
 IMPORTANT SUBJECTS; 
 
 BEING PART OF 
 
 A SERIES OF LETTERS, 
 
 ADDRESSED TO 
 
 THE RIGHT HONORABLE 
 
 LORD GBENVIJLILE, 
 
 FIRST LORD OF HIS MAJESTY'S TREASURIES 
 
 IN 
 
 GREAT BRITAIN AND IRELAND, 
 
 &c. &c. &e. &c. 
 
 BY D. BEAUMONT PAYNE, ESQ. 
 
 CITY OF WELLS: 
 
 PRINTED FOR THE AUTHOR, 
 
 BY 
 
 JOHN E. LEWIS. 
 1806, 
 
 9 8 2 6
 
 ^50 
 
 r ( 
 
 TO 
 
 T/ie ifoVfa Honorable 
 
 LORD GRENVIJLILE, 
 
 < 
 
 FIRST LORD OF HIS MAJESTY'S TREASURIES IN 
 GREAT BRITAIN AND IRELAND. 
 
 Uc. (3c. (3c. (3c. 
 MY LORD, 
 
 ,o JL HE present Chancellor of the Ex- 
 
 ' chequer, Lord Henry Petty, having honored 
 
 S me with information that " the State of the Ex- 
 
 " change between this Country and Ireland will 
 
 " shortly become a subject of serious investiga- 
 
 " tion by his Majesty's Ministers ; and that his 
 
 " Lordship will then be happy to give every at- 
 
 ,{ tention to any suggestions with which I may 
 
 " please to favor him:" and as I have also been 
 
 ^ given to understand that if copies of my papers 
 
 3 were multiplied by printing, they might be more 
 
 5 conveniently perused; I feci it my duty to pre- 
 
 B 
 
 301015
 
 sent the fruits of my labor in the best manner 
 I can, although my numerous private duties 
 have prevented that final arrangement, which 
 would have better fitted these sheets for public 
 examination. 
 
 The flattering attentions which my communi- 
 cations on the subjeCl of Exchange obtained 
 from the late First Lord of the Treasury, give 
 me reason to presume that, at least, the matter 
 of my ideas is worthy the consideration of his Ma- 
 jesty's Government; yet I am fully sensible of my 
 inability to present them in any other dress than 
 that of an unpolished student in political cecono- 
 ray. There is, however, in simple unafFecled 
 truth, a charm that, like " beauty, needs not the 
 " foreign aid of ornament;'' and if the desire 
 of establishing truth be every where apparent in 
 the following pages, I shall not despair of an 
 advocate in every honest statesman, every ele- 
 gant scholar, and every liberal critic: through 
 whose favor, I may be hereafter enabled to pub- 
 lish a System, that, I hope, will be eminently en- 
 titled to the study of every well-wisher to his 
 King and Country.
 
 3 
 
 I believe that the care of the King's revenue 
 is one of the principal duties of your Lordship's 
 ofBcial situation ; and therefore, as my papers re- 
 late materially and essentially to the revenues 
 of Great Britain and Ireland, and to the well- 
 being of all his Majesty's subjects, I address them 
 direlly to your Lordship, rather than to either 
 of the other Noble and Right Honorable Persons 
 who have gratified me by their polite and liberal 
 consideration. 
 
 If I could have found in the numerous pub- 
 lications that have issued from the press, a com- 
 plete exposition of the origin of the principal 
 grievances in Irish Exchange, I should not have 
 thus troubled your Lordship : but having disco- 
 vered that the opinions of many able writers on 
 this subject have been founded upon erroneous 
 premises, tending rather to mislead than to assist 
 the Members of the Executive Government ; 
 that many persons who might have been sup- 
 posed well and practically acquainted with the 
 business of Exchange, and who were examined 
 by the " Committee of the Commons appointed 
 " to enquire into the state of Ireland, as to its 
 " circulating paper, its specie, and current coin,
 
 4 
 
 " and the Exchange between that part of the 
 " United Kingdom and Great Britain," answered 
 several pertinent questions in a manner that, ac- 
 cording to my practical knowledge, appears very 
 remote from the truth ;^ that other questions 
 were entirely evaded, or answered so as to con- 
 ceal the truth ; that the Committee were, in 
 fact, misinformed on many material points that 
 affecied their report ; that the remedies hitherto 
 adopted by the Irish Government will rather per- 
 petuate than remove the evils complained of; 
 that these evils are, in fact, more lamentable in 
 their consequences than would be imagined with- 
 out plain and unequivocal demonstrations; that 
 such demonstrations can be given with compara- 
 tive ease, in every point of the enquiry; (where- 
 by, of course, the proper remedies will be sug- 
 gested) that the general business of Exchange 
 is a complete, though complicated, system; which 
 has for more than five centuries, enabled the 
 merchants to enrich themselves at the expence 
 both of the people and of the successive Govern- 
 ments; that to the Exchange must be referred 
 the Causes of all the variations, at different pe- 
 riods in the nominal value of the precious me- 
 dals used as current money ; that by it the legal
 
 5 
 
 tributary impositions on mercantile commodities 
 are partly evaded; that from the same cause 
 the Revenue of the State is rendered less effi- 
 cient, and the necessity for new taxes is greatly 
 increased on every occurrence of foreign war; 
 that by the Exchange and Current Money the 
 kingdom is immensely defrauded in the produce 
 of public loans ; that, through the effects of the 
 Exchange-system, the British Government has 
 seldom borrowed money to supply the public exi- 
 gencies without sustaining a loss of nearly 50 
 per cent.; although the Loan-system has been 
 resorted to, and endured as a means of relieving 
 the pressure of the public burthens, and of avoid- 
 ing the levy of the necessary supplies within the 
 current years ; that, in fact, the burthens of the 
 people and the expences of every war have been 
 enormously increased by everv application to the ' 
 Funding System; which involves one of the 
 greatest fallacies that ever imposed upon a loyal 
 kingdom; that it is most unjustly partial in its 
 operation, and gives to one description of sub- 
 jects an oppressive power over the rest; and 
 that, finally, it keeps the Executive Government 
 continually dependant on the Governors or 
 the Exchange, (who are almost uniformly con-
 
 suited in cases of pecuniary difficulties; who 
 are, in fact, the principal authors of those difficul- 
 ties, and derive immense profits from them; and 
 who, therefore, cannot be expe&ed to give that 
 advice which the Government seeks; which 
 would cut off the creative profits of Exchange; 
 and disclose the system that has been so lucra- 
 tive to its authors for many generations.) I say, 
 that having made these important discoveries by 
 dint of incessant study and many privations, I 
 deem it a part of my public duty to submit them 
 to your Lordship for the consideration of his 
 Majesty's Government. If they be found to ac- 
 cord with my representations, I shall be certain 
 of that recompence which is most grateful to the 
 human heart; and if I am unfortunately mistaken, 
 this consolation at least will remain to me, that I 
 have honestly labored to deserve the approbation 
 of my King and of my Country. 
 
 Some parts of my papers having been sub- 
 mitted to, and adopted by, the l^te Mr. Pitt, I 
 shall first exhibit those parts : not merely for the 
 purpose of a general Exposition of the Prin- 
 ciples of Exchange; but to shew the origin of 
 that measure, of which notice was given in the
 
 7 
 Courier, and other papers, on the 7th of 
 January 1 805 ; and which was afterwards aban- 
 doned in a manner not much to the satisfaction 
 or honor of the parties concerned. 
 
 It will be seen that although I was correct in 
 the general principle of Exchange, yet that in dis- 
 cussing subordinate parts, I had in those papers 
 fallen into some inaccuracies, in consequence of 
 the hasty and comparatively superficial view 
 which I had then taken of the subject ; but those 
 inaccuracies will be fully corrected by the parti- 
 cular expositions and demonstrations in the sub- 
 sequent pages of this Work: and I shall not re- 
 linquish my endeavor to get at the truth, 'till I 
 have satisfactorily accomplished that desirable end 
 of my laborious researches. 
 
 Although I cannot approve of the temporary 
 measures suggested by the Exchange-Committee, 
 and authorized by the legislative wisdom of Par- 
 liament, yet I feel for those authorities the most 
 respectful sentiments. That Committee in their 
 Report to the House of Commons, expressly 
 stated " that if their enquiries have failed to enable 
 " them to propose any effettual remedy, still a re-
 
 8 
 
 H medy ought to be sought for by the wisdom of the 
 " House.*' The remedies adopted have been 
 found insufficient. Those which will be sug- 
 gested in the course of this Work will naturally 
 arise from a discovery of the real causes of the 
 long-lamented grievance. The present compre- 
 hensive Administration will thoroughly investi- 
 gate the evidence before them ; and, I trust that, 
 the result of their deliberations will be a durable 
 benefit not to Ireland alone, but to the whole 
 British empire. 
 
 I have the honor to be, with the most pro- 
 found respect, my Lord, 
 
 YOUR LORDSHIP & 
 
 most obediently devoted 
 
 and very humble Servant, 
 B. BEAUMOJVT F>*4YJVE. 
 
 Wp. lis, Somerset, 
 June, 1806.
 
 AN 
 
 EXPOSITION 
 
 OF SOME OF THE SECRET CAUSES 
 
 or 
 
 THE MUCH-LAMENTED GRIEVANCES 
 
 IN 
 
 URISH EXCHANGE.
 
 " Every grain diminished from the juit weight of our money, is 
 " so much loss to the nation ; which will one time or other be 
 '< sensibly felt." See Considerations on raising the Value of Money. 
 Locke's Works, ninth Edition, Vol. IV. p. 97. 
 
 " Money is the measure of r.mnmrrrr, and of the rati of every 
 " thing, and therefore, ought to be kept (as all other measures) as 
 " steady and invariable as may be." Ibid. p. 100. 
 
 " This business of money and coinage is by some men, and 
 " amongst them some very ingenious persons, thought a great my- 
 M stery, and very hard to be understood. Not that truly in itself 
 " it is so, but because interested people, that treat of it, wrap up the 
 sicrst, they make advantage of, in a mystical, obscure, and 
 " unintelligible way of talking ; which men, from a preconceived opinion 
 " of the difficulty of the subject, taking for sense in a matter not 
 " easy to be penetrated but by men of art, let pass for current with* 
 " out examination. Whereas would they look into those discourses 
 " and inquire what meaning their words have, they would find for 
 ' the most part, cither their positions to be false, their deductions 
 " to be wrong, or (which often happens) their words to have no 
 " distinct meaning at all. Where none of these be, then their plain t 
 ' true, honest sense would prove very easy and intelligible, if cx- 
 " pressed in ordinary and duett language." Ibid. p. 103 4. 
 
 ' The pr;i.r of things will always be estimated by the quantity of 
 " silvci given in excl.angc tor them. And it you nuke your money 
 " less in ux '.'.', it must be made up in tale," Ibid. p. 112.
 
 TO 
 
 The Right Honorable 
 LORD GRENYILLE, 
 
 (3c, (3c. (3c. (3c 
 MY LORD, 
 
 JLN consequence of an interview with 
 the late Right Honorable William Pitt, 
 in December, 1804, I privately addressed to him 
 a Letter, at the end of that month, in nearly the 
 following terms. 
 
 SIR, 
 
 I cannot better convey my sense of 
 the honor conferred by the desire which you 
 were pleased to express for my ideas, in writ- 
 ing, upon the subject of Exchange between 
 Great Britain and Ireland, than by losing no 
 time in complying with that desire to the full 
 extent of my abilities.
 
 12 
 
 The mass of evidence which the industry of 
 the Committee of the House of Commons col- 
 lected and their Report thereon, form (in my 
 estimation) one of the most interesting com- 
 mercial volumes that ever occupied the attention 
 of a British merchant. 
 
 But the opinion which the Committee enter- 
 tained and reported to the House of Commons, 
 that " the unfavorable Exchange arises from a 
 depreciation of the circulating paper of Ire- 
 land," and the manner in which that opinion is 
 supported are points together so extremely alarm- 
 ing, that I hope to be excused by you, Sir, and 
 by my country, for calling your attention to 
 " the minutes of evidence" whereon the opinion 
 is said to have been founded. 
 
 With all due respect and submission to that 
 honorable Committee, I think, I shall be able 
 to prove, not only that their inferences from 
 the premises were greatly incorrect, but also that 
 the remedy, adopted for the " cure or allevia- 
 tion" of the actually existing evil, was ren- 
 dered inadequate by the unfortunate adoption of 
 a temporary measure to supply the want of small
 
 13 
 
 circulating coin: whereby the very lamentable 
 distresses and burthens of Exchange have been 
 continued; to the great and manifest injury of 
 his Majesty's Irish subje&s, residing both in Eng- 
 land and in Ireland. 
 
 The high rate of Exchange, while a loan of 
 ^4,500,000 is a&ually in a course of remittance 
 to Ireland, incontestably proves to my mind, that 
 the Committee mistook an effect for a cause; 
 and that the till-lately-unprecedented high rate 
 of Exchange has not proceeded from those cir- 
 cumstances which are so prominently placed as 
 the basis of their Report. 
 
 Yet, Sir, the dreadful evil exists in strength 
 and magnitude so formidable, that every exertion 
 should be made to discover its origin to prevent 
 its further growth to expel it from the country, 
 and to render its return impossible at any future 
 period. 
 
 For these ends, Sir, (as the subject is worthy 
 of your exalted station) I have ventured to ask 
 your attention: and I now request that you 
 will patiently go with me through those material
 
 14 
 
 parts of the evidence which appear to yield a 
 clue to the monster's den. If we find him (and 
 I do not doubt our success) effectual means may 
 be speedily devised for accomplishing a total re- 
 lief: and the country may at length be freed 
 from that oppressive operation which many have 
 lamented, but without contributing the requisite 
 and long-sought assistance. 
 
 Such is the importance of Paper-Credit in all 
 the pecuniary transaftions of the United King- 
 dom; and so intimate its connexion with the inter- 
 ests of every rank and denomination of society ; 
 that it becomes a point of moment to ascertain 
 whether a depreciation has or not actually taken 
 place in the Bank of Ireland paper. For the 
 arguments in proof of a depreciation may, if just, 
 be occasionally applied to the paper of the Bank 
 cf England. Yet it is not reported by the Com- 
 mittee that Bank of England paper is in any de- 
 cree depreciated : and I undertake to prove* that, 
 
 * The Author's opinion is, that cither the Notes of the 
 Bank of England and of the Bank of Ireland are both depre- 
 ciatedor that neither of their Notes are depreciated ; and 
 he has confidence thai Mr. Foster's idea of depreciation, 
 as it appears in page 9, of the Committee's Report, will sup- 
 port the assertion that the Notes are not depreciated. The 
 cmetion will be fairly discussed in a subsequent paper.
 
 15 
 
 if the notes of the Bank 0/ England are not 
 depreciated, then the ideas of the Committee, 
 as to the Depreciation of " the Notes of the 
 Bank and reputable Bankers of Ireland/' 
 are altogether unfounded. 
 
 If" brevity is the soul of wit" it is also the 
 spirit of business therefore, Sir, without farther 
 preface, I hasten by the shortest road to the 
 haunts of that truth which is equally the objecT: 
 of our research. 
 
 I admit (in the language of the Committee- 
 Report) ** the existence of an unfavorable and 
 high rate of Exchange between England and 
 Ireland :" I admit also (according to Mr. 
 Puget's accurate Tables) that when at Belfast 
 the rate of Exchange, upon giving gold for 
 drafts on London, was only seven and a quarter 
 per cent, the rate at Dublin, upon giving paper 
 of the Bank of Ireland for drafts on London, 
 was nineteen per cent.: making a difference be- 
 tween Belfast and Dublin of 11. 15s. per 
 cent. I admit also, that " an Irish Bank note 
 for one guinea has often, and generally in 
 Dublin for some time, been given with two shil-
 
 16 
 
 lings for an English guinea in gold ;** and that 
 the same guinea would repurchase " a guinea- 
 note of the Bank of Ireland and also two shil- 
 lings." But, Sir, I do not admit that, " when 
 Exchange is the objeft of enquiry," these fab 
 amount to proof that " the circulating paper is 
 by so much depreciated;" although this compara- 
 tive valuation " keep pace with the difference in 
 the Exchanges of Belfast and Dublin." It is 
 upon this point that the whole enquiry hinges: 
 and it is this consideration which constitutes the 
 intricacy and difficulty of our subjecl. 
 
 In searching history for authorities to esta- 
 blish the date and cause of the difference between 
 English and Irish money, I have found that the 
 money of Ireland has been frequently changed : 
 that in the reign of King James the First, 
 " the Irish monies were in every respect like the 
 English*" and that for more than a century 
 past Ireland has had no coin peculiar to itself; 
 excepting copper. 
 
 * Sec Sir James Ware's Antiquities of Ireland. (Fol.) 
 V. II, p. 218, &c.
 
 17 
 
 Dr. Smollett mentions that in the reign of King 
 George the First, William Wood had a contract 
 to supply Ireland with a coinage of half-pence ; 
 which occasioned a great clamour, as they were 
 deficient in weight, <fec. : and that in conse- 
 quence only ^40,000 of that coinage were 
 issued. 
 
 Although this authority is not sufficiently ex- 
 plicit of the fa&, I am inclined to think that the 
 Irish people were reconciled to the issue of that 
 copper coin, in consideration of their receiving 
 thirteen-pence of it, in 'change for every English 
 shilling : and that a compromise of that nature 
 gave rise to the par rate* which has ever since 
 prevailed between England and Ireland. 
 
 * In Lord Liverpool's Letter to the King (published since 
 the date of this Letter) there is a note (page 100) which says 
 that the par of 8^- per cent, was made by a proclamation of 
 James II. dated 25M March, 1689, when he returned to 
 Ireland from France, after his abdication ; and that it has con- 
 tinued so ever since : and a reference is given to Simon's Irish 
 Coins, p. 150. I have not yet been able to meet with 
 Simon's Irish Coins. But, in Sir James Wart's " Antiqui- 
 ties of Ireland, 1 ' (Vol. II. p. 218, &c.) it is mentioned, that 
 " in 1689, after King James II. had abdicated the crown, a 
 " mint was set up in Dublin for coining money of the worst 
 *' kind of brass, old guns, and the refuse of metals valued at
 
 18 
 
 Be this as it may, Sir, all who are acquainted 
 with the matter agree that thirteen Irish pence t 
 are but equal to twelve English pence ; and that 
 the money-tables of England and Ireland are the 
 same: that is, 12 pence make one shilling; and 
 
 20 shillings one pound. 
 Now, Sir, if one hundred pounds English be re- 
 duced to Irish pence t by multiplications of 20 
 and 13, the result will be 26,000 pence: and 
 these pence divided by 12. and 20, will give 
 ^108 : 6 : 8, being a difference between the Eng- 
 lish and Irish money of 8 : 6 : 8, or eight and 
 
 about threepence or four-pence a pound weight, which by 
 44 proclamation (the 18th of that year) were made current, un- 
 " der the denominations of half crowns, shillings and six- 
 " pences ; so that eight half crowns were not intrinsically 
 *' worth two-pence. His half- pence and farthings were of 
 " block tin, with a speck of copper in the middle. In this 
 4; wretched sort of money the popish soldiers were paid their 
 ,: subsistence ; and the protestant tradesmen and creditors were 
 ,; obliged to receive it for their goods and debts, at a loss of 
 ,{ upwards of <6o,ooo a month. 
 
 " After the success of the battle of the Boynr, King 
 " William, by proclamation, on the 10th July 1689, put a 
 41 flop to the currency of King James's base coin, other than 
 " at tlie values following, viz. the large half-crown to pass at 
 ' a penny, the small half-crown at three farthings, the large 
 ' copper shilling at a half-penny, and the small shillings and 
 " six-pences at a farthing.''
 
 19 
 
 a third per cent, which difference constitutes the 
 reputed par of Exchange between England 
 and Ireland. 
 
 The evidence before the Committee states, 
 and the Committee themselves bear witness, that 
 " there is no mint coin in circulation in Ireland:" 
 consequently Irish money is either counterfeit or 
 nominal; and the money of account in Ireland is 
 altogether nominal. 
 
 These points being clearly understood; it is 
 further necessary to remark, that many of the 
 difficulties in writing upon the subject of Irish 
 
 Having no opportunity of referring to the proclamation 
 (nor immediately to Simon's Irish Coins) I cannot attempt a 
 refutation of the authority. But I may be permitted to re- 
 mark, that it is a most extraordinary circumstance if a procla- 
 mation issued by King James the II. after his abdication cf 
 the crown, has been suffered to remain in force as a law, so as' 
 to determine, ever since, the nominal value of the Irish mo- 
 ney : especially as the circulation of the base coin issued by 
 that monarch in March, 1689, was stopped by the proclama- 
 tion of Kinor William so soon after as the 10th oi' Juiy, in 
 the same year. It can, if true, be accounted for, only by re- 
 ferring it to the influence of such mercantile advisers, as Live 
 o 
 
 $ince occasioned the modern variations in the nominal value 
 of the current money.
 
 20 
 
 Exchange, seem to have arisen from the cir- 
 cumstance of the gold and silver coins of Eng- 
 land being constantly current in Ireland as if 
 they were Irish money ; whereas in fat, Ire- 
 land has no gold or silver coin; but our 
 English pieces circulate there with a nominal 
 value ajjixed to them % exa&ly equivalent to the 
 number of Irish pence contained in each of those 
 pieces: that is, an English shilling is called 
 thirteen pence, and aGuiNEA^i:2:g Irish. 
 
 When the issues of gold from the Bank of 
 England were suspended, it was thought neces- 
 sary also to suspend the issues from the Bank of 
 Ireland: which was done accordingly. The 
 predicaments of the two Banks were, however, 
 greatly dissimilar: and the latter required a go- 
 vernment very different from the Bank of Eng- 
 land. Yet the novely of the measure of suspend- 
 ing the cash issues was such as could not be im- 
 mediately contemplated in all its bearings and 
 connexions : but it furnishes very interesting 
 matter for our present consideration* 
 
 From the moment of the restriction the Bank 
 of Ireland was confined, in ejfeft, to the use of
 
 21 
 
 silver alone, as its cash payment. Silver, 
 therefore, became under the A& of Restriction, 
 the actual currency of Ireland: and consequently 
 the only current Irish measure of value. 
 
 Its influence upon Exchange was not alarm- 
 ingly perceptible till the balance of trade and ac- 
 count turned against Ireland ; then the exchange 
 found its proper* level. 
 
 I cannot avoid smiling, Sir, at the great va- 
 riety of arguments and opinions which have been 
 hazarded upon this point: but / grieve at the 
 gains which some men must have heaped by a 
 most reprehensible concealment of the truth; 
 while they were gorging upon the vitals of their 
 country. When I see the names of men whose 
 business required a daily practice of all those rules 
 
 * The epithet " proper" is used here with reference to the 
 regular system of Exchange which this Work is intended to 
 disclose. The whole sentence, however, would have been 
 more correft, if it had been said, that the influence of the silver 
 measure was not alarmingly perceptible till the demands for 
 money on the Continent afforded to the Governors or 
 Exchange an opportunity For raising the price of silver, 
 bullion; then its consequences began to be severely felt.
 
 22 
 
 and calculations which disclose the profitable 
 mystery, under which Ireland has been pil- 
 laged, the poor have been starved, and for- 
 tunes have been accumulated ; I blush for the 
 honor of those men; and charitably hope that 
 they are indeed as ignorant as they appear to have 
 been artful and avaricious. 
 
 The operation of the loans raised in England 
 for the use of Ireland prevented some of the 
 great inconveniences which the restriction of the 
 Bank of Ireland must otherwise have pro- 
 duced: because that Bank was not cOiMPELLED 
 by law to furnish for its own notes, Bank of Eng- 
 land notes, or drafts upon London at or near par. 
 Such a measure would have been both just and 
 beneficial to the Bank: for even then the Direc- 
 tors of the Bank of Ireland would have been 
 saved the expence. which before the restriction was 
 frequently incurred in procuring guineas from Eng- 
 land. The Bank of England, Sir, was the 
 dernier resort for guineas as often as the Irish 
 Bank Dire&ors found them necessary to recruit 
 their diminished stores: and, as notes of the Bank 
 of England could after the restriEion have been 
 obtained from England as easily as guineas
 
 23 
 
 were before; the deficiency of the law ought to 
 have been supplied by the prudence and good 
 management of those Directors ; who by drawing 
 upon London, might have increased the equi- 
 table sources of profit to the Irish Bank, and 
 have given ease and regularity to the commer- 
 cial and pecuniary intercourse of the two king- 
 doms. 
 
 As to the " balance of debt due from Ireland 
 to England'' which so many of the persons exa- 
 mined by the Committee declared to be the 
 cause of the high rate of Exchange, I am firmly 
 of opinion that the balance has been constantly 
 against En c land, except during the years of 
 scarcity; and I think, Sir, that you will soon be 
 inclined to a similar opinion To ascertain the 
 faft, we must thoroughly understand the nature 
 and principle of Exchange; which is thus de T 
 fined. 
 
 Exchange, or the course of Exchange, is the 
 rate or allowance, between merchants, for con- 
 verting the currency of one country into the cwr- 
 rency of another, according to their relative 
 values.
 
 24 
 
 We have seen that a difference or deficiency 
 in the copper coin of Ireland, of one thirteenth 
 part of a half-penny, when compared with the 
 half-pence of England, created a difference in 
 the Exchange, between this country and Ireland, 
 of 8 : 6 : 8, or eight and a third per cent. For 
 the same reason, after the issues of guineas were 
 restricted, and silver became the only money 
 used at the Bank in payments, the dealers in 
 Exchange and bullion in Ireland (no doubt) 
 computed the relative values of guineas and sil- 
 ver ; and would not part with guineas without an 
 allowance in proportion to the difference between 
 the mint valuation of guineas, and the aftual va- 
 lue of the silver currency*, 
 
 * Mr. Frank, an Exchange-merchant," stated 
 to the Exchange Committee (Min. page 8i) that 
 " ever since he knew the silver circulating in 
 
 * Subsequent researches have proved lo me lhat external 
 Exchanges, or the relative values of English currency and 
 that of foreign countries, are determined by the market price of 
 bullio N but that internal Exchanges, or the relative values 
 of our currency and of commodities at home, are determined 
 according to the power of the merchants, under a considera- 
 tion of the aflual and nominal value of the current money.
 
 5 
 
 Ireland, it was inferior to the silver in England 
 in the proportion of five pounds per cent.*' 
 
 This consideration, therefore, must have 
 created in his calculations a new rate for the 
 tar of exchange. 
 
 He must have considered in the first place, 
 that, as every shilling passes in Ireland for thir- 
 teen pence, of course, one penny upon a shilling 
 makes a difference of s8 : 6 : 8 per cent. and 
 in the next place, that, as the current silver in 
 Ireland was five per cent, wors e than the current 
 silver ^England, an allowance in that addi- 
 iional proportion should be made for exchanging 
 Irish money into bills or drafts upon England : 
 therefore, the par between English and Irish mo- 
 ney, must be \% : 6 : 8 per cent.: to which he 
 would add one per cent, as a recompence for the 
 accommodation afforded by every bill or draft 
 which he drew upon England in exchange for 
 Irish money. His new rate in such cases would 
 consequently be \ 4 : 6 : 8, or fourteen and a third 
 per cent. 
 
 Having understood this material point, we
 
 26 
 
 proceed to examine, briefly, the account, be- 
 tween England and Ireland, from January 
 
 1797- 
 
 It is evident by Mr. Pugefs Tables that, in 
 January 1797, the Exchange was against Eng- 
 land: for the rate at Dublin in that month was 
 several days at six and three quarters per cent.; 
 -or ji : u :8 under the then reputed par of 
 eight and a third per rent. The usual commis- 
 sion taken by Exchange-merchants either for 
 drawing, or for giving value in lieu of bills upon 
 England, is one per cent. But if the demand for 
 money in exchange, or for drafts on England, 
 happen to be excessive, or beyond the usual 
 course, then those who give the value in currency, 
 or afford accommodation by drawing bills upon 
 England, exact a greater premium than usual: 
 which premium progressively increases in pro- 
 portion to the pressing necessities of those who 
 want accommodation. Therefore the Exchange 
 rate having been in January 1797, at six and three 
 guarcers per cent, is good evidence that the sellers 
 of drafts upon England, or of English paper, were 
 numerous, and inquisitive for persons who would buy 
 such paper: and that desire to sell is sufficient
 
 27 
 
 proof that the balance of debt was then against Eng- 
 land on the daily settlements of the Exchange 
 market. 
 
 In February, the issues of cash were restricted. 
 In March, Government paid Bank of England notes 
 ill Dublin ; and the F.vrhaiigc was, two days at 
 four and a half per cent. that is, : 1 6 : 8 per 
 cent, under the reputed par of eight and a third. 
 From that time to the beginning of December fol- 
 lowing, the Exchange rate did not exceed seven 
 per cent.: but at the end of the year it was* eight 
 and a quarter per cent. The Government sale 
 of Bank of England notes in the Exchange- 
 market had then been discontinued, and the Ex- 
 change-business apparently resumed its ordinary 
 course. 
 
 In 1798, the Lords of the Treasury in Ire- 
 land drew upon England, and the Exchange on 
 the average rate of that year was *3 : 8 : 3 per 
 cent. 
 
 * It will appear in future papers that the alteration was oc- 
 casioned by a change in the prices of silver bullion in {he 
 English market.
 
 28 
 
 In the year 1799, the increasing demands of 
 the importers of foreign corn, as well as those of 
 other merchants, having overpowered the weight 
 of the loan raised in England for the Irish Trea- 
 sury, or rather, having given the command of the 
 Exchange-market to the Exchange-merchants^ 
 the market-rate rose gradually 'till it reached the 
 par-rate deduced from Mr. Frank's evidence 
 above mentioned. But as the market-rate did 
 not, at any time that year, rise above fourteen 
 per cent. ; I have no doubt that the balance due 
 from England, was then fully equal to the de- 
 mands arising from the scarcity of corn, for re- 
 mittances to absentees, and for every other 
 purpose. 
 
 During the year 1800, Bank of Ireland notes 
 were exchanged at the Bank of England " amine 
 and a half per cent.; for such part of the instal- 
 ments of the loan as became due to Ireland that 
 year*:" which measure, though partial in its 
 operation, very materially kept down the Ex- 
 change ; except when extraordinary occasional 
 demands afforded opportunities for the ^ealers to 
 
 * See Minutes of the Exchange Committee, p. 5.
 
 2Q 
 
 exercise their skill and power over the appli- 
 cants for accommodation. But the average rate 
 of that year was only ten and a quarter per cent. 
 
 In 1801, the Lords of the Irish Treasury again 
 drew upon England : and their Lordships drafts 
 of that year amounted to more than a million of 
 the loan. But the instructions, under which the 
 Government rate of Exchange was regulated, 
 were, according to Mr, Crofton's evidence*, pre- 
 cisely such as were desirable to the Bullion and 
 Exchange merchants. For those merchants were 
 placed, after a few days experience, in a most 
 agreeable state of certainty \ as to their profits ; and 
 were made the absolute governors of the market 
 rates. The Exchange consequently rose in July 
 to fifteen per cent, which may possibly be con- 
 sidered a natural indication that the daily ba- 
 lances of the Exchange-market were then against 
 Ireland, through the excessive importations of 
 corn, added to the demands for remittances to 
 
 * Minutes of Exchange Committee, page 69 and 70, Mr. 
 Crofton states, that " it was found, by the mode adopted, that 
 " the speculators in Exchange had great advantages, by tak- 
 " ing the power of drawing out of the Lords of the Treasury, 
 " in a short period ; and thereby having the markets under 
 '* their controul.
 
 so 
 
 absentees. However, as the Exchange did not 
 remain at that rate many days, but was before the 
 end of July at thirteen per cent., I am per- 
 suaded that, if the balance of all accounts was 
 really unfavorable, it was so only long enough to 
 beget an examination of the state of the coin, by 
 the Bullion and Exchange merchants : who must 
 have expe&ed that corn merchants and others re- 
 sorting to foreign ports for importation-cargoes 
 would, if possible, carry with them part of the 
 circulating coin; or at least melt it into bullion, 
 and export it in that shape, while the Exchange 
 abroad was so much against them. Other mer- 
 chants also wanted specie to remit in payment of 
 their debts to England, during the temporary 
 (real or artificial) scarcity of English paper: 
 and some of the latter merchants procrastinated 
 the settlement of their debts, because of that 
 scarcity ; as well as on account of the high rate of 
 Exchange, and the premium upon guineas: inso- 
 much that the manufacturers of Gloucestershire, 
 who dealt largely with Ireland, actually sent a 
 memorial to Mr. Addington praying for speedy 
 and effectual relief*. 
 
 * See No. 10, in the Appendix to the Exchange Com- 
 mittee Minutes of Evidence,
 
 31 
 
 The average rate of Exchange for the whole 
 year 1802 was only 11:3:4 per cent. : I 
 therefore believe that Mr. Marshall's account of 
 the general balances between Great Britain and 
 Ireland* is very near the truth. 
 
 By that account it appears that the balance 
 of 1803, including the loan, was upwards of 
 2,300,000 against England: yet the Ex- 
 change rose in September to the unprecedented 
 rate of nineteen per cent.!! and the fluctuations 
 afterwards were very great and profitable to the 
 dealers in Exchange. 
 
 In page 76 of the Exchange Committee Mi- 
 nutes, Mr. Crofton states " that the Lords of the 
 Treasury did not feel themselves justified in con- 
 tinuing to issue bills at a reduced rate when the 
 market had a considerable rise." Consequently 
 the market was left to the Exchange-merchants, 
 and to the influence of those causes, which al- 
 ways affecl: the rate of Exchange ; unless there 
 happen to be at the same time some extraor- 
 dinary counteraction. The balance in the power 
 
 * See No. 11, in the Appendix to the Exchange Com- 
 mittee Minutes of Evidence.
 
 32 
 
 ;of the Lords of the Treasury would have been 
 an abundant counteraction, if it had been pro- 
 perly brought to bear upon the market. But, as 
 that was not done, we will proceed 3 Sir, to in- 
 vestigate the occasion of a rise in the Exchange 
 so greatly injurious to the general interests of 
 the Irish people. 
 
 Mr. Frank tells us (Min. p. 81) not only that 
 " the silver circulating in Ireland was at the time 
 of the restriction, ^5 per cent, inferior in value 
 to the silver in England/' but also that " since 
 that period it had been getting gradually and uni- 
 formly worse." 
 
 When the state of the general balance of ac- 
 counts was said to be against Ireland, and the 
 Exchange was so alarmingly high, the only re- 
 medy in the power of those who had payments, 
 to make in this country, was a remittance of gold 
 and silver coin. Some persons bought guineas 
 at a very high premium ; while others probably 
 availed themselves of their contiguity to the 
 Bank of Ireland, and used every means in their 
 power to draw money from the Bank, even 
 though it were silver only, and that in very
 
 33 
 
 small sums. It is also probable that the shop- 
 keepers and chandlers gave the silver in their 
 possession for notes upon receiving a premium 
 thereon: and that experience of the profit on 
 those transactions gave rise to the " specie shops" 
 which are mentioned by Mr. Marshall in his 
 evidence before the Exchange Committee *. 
 
 That gentleman particularly states, that a 
 " depreciation of the paper currency com- 
 menced in Dublin immediately after the suspen- 
 sion: it did not manifest itself on 'Change, nor 
 were any specie shops opened ; it was perceiv- 
 able only on the quays, where the colliers pur- 
 chased guineas at from six-pence to nine-pence 
 each, in order to pay for their cargoes at White- 
 haven. Some merchants also purchased large 
 parcels of guineas to send to the north of Ire- 
 landt." 
 
 Now, Sir, though silver is not mentioned by 
 Mr. Marshall, it cannot be imagined that those 
 who stood in need of cash (whether colliers for 
 Whitehaven, or merchants for the north of Ire- 
 land) did not also secure as much of the gcod silver 
 
 * Mm. p. 116. + Min. p. 123.
 
 34 
 
 currency as they could any where obtain. The 
 colliers were a continual drain*', and the great 
 saving, by avoiding the Exchange in drafts, was 
 to every trader a constant inducement to export 
 silver, as well as gold, for the discharge of debts ; 
 while good silvery that would pass by tale could be 
 secreted for remittances. The result proves the 
 accuracy of the supposition: for so great was the 
 scarcity of silver that there was nothing but 
 " silver notes," and counterfeit coin in cir- 
 culation. 
 
 Mr. D'Olier, aBuLLioN merchant, (and one 
 of the Directors of the Bank of Ireland) says t, 
 that " he has found by -weight that such of the 
 Mint silver, as he could meet with, requires 94s. 
 
 * I had 'till now overlooked the evidence on this point 
 from Mr. Colville, a Director of the Bank of Ireland, who 
 says (p. 94, Min. of Exchange Committee) " that there arc 
 " not more than two parts in one hundred of Mint silver in 
 " circulation. The very high Exchange having caused it lo 
 " be carefullv picked up for the purposes of being carried to 
 " Great Britain." He adds, " The captains of the colliers 
 " who bring coa's to Dublin form one channel by which it 
 u goes; but of the extent of it (he says) I am notable to 
 " inform the Committee." 
 
 + Minutes of Exchange "Committee, p. %>..
 
 31 
 
 6d. to make a pound Troy * ; which was issued 
 from the Mint at 62s. that the other coin in 
 circulation is base: and that the bestf 0/ thai 
 base coin is not worth half its nominal value.** 
 However, Sir, the general estimation J of the 
 circulating coin may not have been quite so 
 low as Mr. D'Olier here mentions. He himself 
 (speaking as a Bank Director) states (in p. 140 
 of the Minutes) that " the Bank of Ireland had 
 then lately engaged in the purchase of base sil- 
 ver, in Dublin, at about thirteen-pence per ounce 
 beyond the Mz^-price; and (as he believed) about 
 ten-pence above the market price." This state- 
 ment is obscure, and seems contradictory. For 
 it cannot be supposed that the Bank of Ireland 
 paid for base silver thirteen-pence per ounce 
 more than the Mint price of silver; which Mr. 
 D'Olier's expression seems to indicate. I rather 
 
 * If 62s. equal 94|s. then iBioo equal ^152-J- ; conse- 
 quently the nominal value was 52-^- per cent, above the real 
 value. 
 
 + It was probably nearly proportioned to the Mint silver 
 a; above. 
 
 ^ I have since found reason to think that commodities were 
 generally valued according to the real worth of the circulating 
 medium : as will be demonstrated in future papers.
 
 36 
 
 presume that as the base coin was bought by 
 weight, its value was computed, in the first in- 
 stance, by the market price of silver, and then 
 twenty per cent, was taken off as an allowance for 
 its base quality. This will agree exa&ly with the 
 presumptive meaning of the statement. For, I 
 think, the market price in London was at the 
 time of Mr. D'Olier's examination five shillings 
 and five pence an ounce. Twenty per cent, or 
 one fifth taken from 5s. 5d. will leave 4s. 4d. 
 which is " ten-pence less than the Mint price, and 
 thirteen pence per ounce less than the market 
 price of silver." As Mr. D'Olier was giving 
 evidence before a Committee sitting in London, 
 he, no doubt, referred to the London prices; and 
 that idea is confirmed by the fact of there being 
 no Mint in Dublin. 
 
 These quotations from the evidence of Mr. 
 Frank the Exchange merchant, and from Mr. 
 D'Olier, the Bullion merchant, illustrate the 
 manner in which the dealers in Exchange 
 and Bullion compute the value of current mo- 
 ney that is, always with reference to the in- 
 trinsic, instead of the nominal value of the coin: 
 . to its weight and purity instead of its current
 
 37 
 
 palue by tale : and it will not be improper, nor 
 impertinent, to make another quotation as to the 
 practices of other merchants, when exchanging the 
 circulating money for articles of necessity. 
 
 Mr. Colville, a corn merchant, (and one oj 
 the Directors of the Bank of Ireland) in his 
 examination before the Exchange Committee 
 gave the following testimony. " The silver cir- 
 culating in Dublin is as bad as bad can be; 
 it is a base coinage, the shillings of which, 
 upon an average, may be worth about six-pence, 
 and the six-pences worth about three-pence''' 
 Again he said, " the remedy, I have suggested, is 
 to take those base shillings at six-pence, and the six- 
 pences at three-pence ; but the objection to that 
 scheme is, that common consent must be obtained 
 in order to carry it into execution. But so 
 firmly convinced am I of the propriety of that 
 measure, that my present determination is, on my 
 return to Dublin, to give directions to the mer- 
 cantile house, in which I am concerned, to take 
 no silver of that kind but upon the principle I 
 have stated. He said further : " This particular 
 question of silver bears personally upon me from 
 the nature of the trade in which I am engaged, 
 
 ."01015
 
 88 
 
 that of a Corn-merchant. My dealings are witk 
 the brewers and bakers of Dublin; whose receipt 
 for all they sell is more in silver and copper than 
 in any other coin: and so great was the incon- 
 venience that /, and other persons in the same branch 
 of trade, suffered, that we were apprehensive we 
 must stop selling of corn for the bread of Dublin: 
 the brewers and bakers, from the unfortunate situ- 
 ation of the silver and copper, being unable to 
 pay us*'' 
 
 This declaration of the great inconvenience 
 which Mr. Colville, and others of his trade, suf- 
 fered, warrants the conclusion that they took 
 measures accordingly. And the remedy sug- 
 gested by Mr. Colville (which he claims as his 
 own) seems to tell very plainly what measures the 
 corn-merchants adopted. When they had ascer- 
 tained the intrinsic value of the silver currency, they, 
 of course, afted according to the rule on those 
 occasions, and raised the price of their corn in pro- 
 portion to that value. They could not legally re- 
 fuse to take the circulating money at less than its 
 nominal worth: and the supply of corn was in- 
 
 * Minutes of Exchange Committee, p. 93, 94, 95, &c.
 
 89 
 
 dispensable in Dublin. If, therefore, the nomi- 
 nal price of corn was so raised, as that one shik 
 ling was charged for the quantity of corn or bread 
 that might have been sold for six-pence in good 
 money, the effetl to the merchants was precisely 
 the same, as if they had taken a base shilling for 
 six-pence, and a six-pence for three-pence. But 
 the unfortunate poor must have been starving 
 under the pressure of the consequent enormous 
 prices of provisions. Almost every other com- 
 modity seems to have been raised in similar pro- 
 portions : and that the Exchange did not rise in 
 the same degree is attributable to the interven- 
 tion of the Government by borrowing money in 
 England for the service of Ireland ; If that 
 powerful supply had not been afforded to the 
 Exchange-market, it is probable that the dealers 
 in Exchange and Bullion, instead of selling gui- 
 neas at a premium of ten per cent., would have 
 raised them to nearer fifty per cent. For the 
 difference is none whether half the silver be dipt 
 away, (as was the case in the reign of King Wil- 
 liam) or whether it be perfect in shape, and half 
 of it mere alloy.
 
 40 
 
 As Mr. Marshall and the Exchange Com- 
 mittee have quoted Dr. Adam Smith, I have 
 examined the passage in that able and intelligent 
 writer. The ideas conne&ed in his Work with 
 their quotation are so strikingly in point, that I 
 cannot forbear transcribing them in this place. 
 He says*, " In the way the par of Exchange 
 has hitherto been computed the ordinary course 
 of Exchange can afford no sufficient indication 
 that the ordinary state of debt and credit is in fa- 
 vor of that country which seems to have, or 
 which is supposed to have, the ordinary course 
 of Exchange in its favor : or in other words the 
 real Exchange may be, and often is, in fact, so 
 very different from the computed one, that from 
 the course of the latter, no certain conclusion 
 can, upon many occasions, be drawn concern- 
 ing the former." 
 
 " When for a sum of money paid in England, 
 containing, according to the standard of the 
 EngliiJi mint, a certain number of ounces of 
 pure silver you receive a bill to be paid in 
 France, containing according to the standard of 
 
 * Wealth of Nations, Vol. II. p. 214, &c.
 
 41 
 
 the French mint, an equal number of ounces 
 o/pure silver, Exchange is said to be at par 
 between England and France. When you pay 
 more you are supposed to give a premium ; and 
 Exchange is said to be against England, and in 
 favor of France: when you pay less you are sup- 
 posed to get a premium, and Exchange is said to 
 be against France and in favor of England.*' 
 
 -< But we c^mzoi always judge of the value of 
 the current money of different countries by the 
 standard of their respective mints : in some it is 
 more t in others it is less worn, dipt, and other- 
 wise degenerated from the standard. But the va- 
 lue of the current coin of every country, compared 
 with that of any other country, is in proportion- 
 not to the quantity of pure silver which it ought 
 to contain but to that which it actually 
 does contain. Before the reformation of the 
 silver coin in King William's time, Exchange be- 
 tween England and Holland, computed in the 
 usual manner, according to the standard of the 
 respective Mints, was twenty-five per cent, against 
 England but the value of the current coin of 
 England, as we learn from Mr. Lownds, was, 
 
 c
 
 42 
 
 at that time rather more than twenty-Jive per cent. 
 below its standard value. The real Exchange, 
 therefore may, even at that time, have been in 
 favor of England, notwithstanding the com- 
 puted Exchange was so much against it.'* 
 
 Upon these premises I am firmly of opinion 
 that the magnitude of the Irish loan for the 
 present year would have reduced the Exchange 
 as low as two or three per cent, under the reputed 
 par of eight and a third, if the dollars* issued 
 by the Banks had been made current at or near 
 their real value . But their high nominal value 
 .opposed an almost insurmountable barrier in the Ex- 
 change ynarket. The rate could not naturally 
 come down with such an injurious impedi- 
 ment in the way. Government, however, 
 with the power of such a loan, might probably 
 have made and kept the Exchange at almost any 
 reduced rate: but Ireland generally could not 
 have been benefited by the measure : yet the 
 debtors to England would have easily balanced 
 
 * I have since discovered another impediment, which will 
 lie exposed, in its proper place in future papers, when the 
 CovtHsoJis of Ex chance come under consideration.
 
 43 
 
 their accounts, and a few individuals would have 
 been rapidly growing richer. 
 
 Every skilful dealer in Exchange is well 
 aware, that the dollars issued by the authority 
 of Parliament (although under the name of to- 
 kens) are, for the time being, the Bank, of Ire - 
 land-MONEY -, in use both for payment of small 
 balances, and for discharging the Bank small 
 notes : that those dollars or tokens are, while in 
 use, by adoption, the circulating money of Ire- 
 land : that, they are, in the internal, or home- 
 trade, of no more use or value than would have 
 been Bank of Ireland notes for the same sum: 
 that, in the present state of the Bank-restriction, 
 and of the consequent power of Exchange-mer- 
 chants, if Government discontinue the practice 
 of raising loans in England for the service of 
 Ireland, specie must be wanted for the settle- 
 ment of balances in foreign markets, as well as in 
 Great Britain: that guineas will not then be 
 obtainable in Exchange, but according to the pro- 
 portion of pure bullion in the dollars com- 
 pared with guineas : and that therefore the par 
 of Exchange between guineas and dollars or 
 tokens will be, and actually is, the difference.
 
 44 
 
 between ilu real value of the dollars, and the real 
 value of the guineas, independent of their nomi- 
 nal worth although that difference must be ex- 
 pressed in the nominal value of the currency. 
 
 The same skilful Bullion and Exchange-mer- 
 chants also know that the par of Exchange 
 between guineas and Irish dollars is now* 
 about thirty-three and a HALF per cent., and 
 that the par of Exchange between notes of the 
 Bank of Ireland, and notes of the Bank of 
 England is now about twenty-two per cent. 
 
 * These calculations of par rates were made in December 
 1 804 ; but they are materially altered by the silver coinage of 
 1805. I have been given to understand that seven ten- 
 pinky r o K E n s, which are now circulating in Ireland, weigh, 
 eighteen penny-weights twenty-one grains troy and that they 
 were coined from Spanish dollars, which are generally valued 
 at two-pence half-penny per ounce less than the standard lilver 
 of the English Mint. Consequently the difference between 
 those small tokens and legal silver coin of the Mint is about 
 je?27 : 15 : 6 per cent. The dollar tokens of tbe Bank of 
 England, exceed the Mint value about ^15 : 7 : 6 per cent. 
 Therefore the par of Exchange between notes of the Bank of 
 England and notes of the Bank of Ireland is now about twelve 
 and a half per cent. and the market rate will sometimes vary 
 one per cent, over or under twelve and a half, according to the 
 power of the Exchange dealers at different periods. It is easy 
 to verify this statement by referring at once to the market rates 
 since the small Irish tokens were sent into circulation.
 
 45 
 
 It is a JaB not generally known or suspected 
 that Bank of England notes are not now quite 
 so valuable every where in Ireland as they were 
 supposed to be, when it was stated, that *' the pre- 
 mium upon a Bank of England note was the same as 
 upon a guinea." A Bullion-merchant would 
 now make a very material difference in the price 
 of bullion if he were to pay guineas, rather than 
 Bank of England notes in exchange for it. In 
 that case it would be seen that the issue of dol- 
 lars or tokens from the Bank of England at a 
 nominal value, which is considerably above 
 both the market and Mint prices of silver, was a 
 measure that ought not to have been adopted by 
 the Bank, or sanctioned by the Legislature : a 
 measure pregnant with the greatest injuries to our 
 Exchange with foreign countries, and to the prices 
 of every commodity in our markets at home : 
 a measure particularly injurious to the public 
 revenue, to the industrious poor, and to the peo- 
 ple generally, and which therefore ought to be 
 immediately abandoned. 
 
 Should any recurrence of scarcity in corn, or 
 any operation of Government, again turn the 
 balance of foreign trade and account against 
 England, while the issues of gold from the Bank
 
 46 
 
 are restricted, guineas in England might bear a 
 premium* of ten, fifteen, or even twenty per 
 cent.: and causes similar to those which have 
 already drained the British empire of the 
 greater pari of its silver coin, would then take 
 away the dollars, or tokens of the Bank of Eng- 
 land, in despite of their increased nominal value. 
 When bills are dear, bullion will be secured in 
 any quarter, whence it can be had : especially 
 by those who go to foreign markets for corn : 
 whose prospers of gain depend upon an expedi- 
 tious lading, and a quick return to the English 
 market. 
 
 If Bank notes or Bank dollars be taken 
 to the Bullion or Exchange merchant to be con- 
 verted into foreign money : the conversion will 
 be made n ot by the nominal, but by the real 
 value of the dollars, and ihe Bullion or Exchange 
 merchant will moreover have a profit upon the 
 
 * In April 1801, dollars were in the market five shillings 
 and eleven pence per ounce; and the quality of those dollars 
 is, I believe generally, computed two-pence half-penny per 
 ounce inferior in value to the standard silver of the English 
 Mint : consequently, according to the price of dollars at the 
 Mint, the market-rate of April 1801, was nearly twenty per 
 cent, above the standard value.
 
 47 
 
 transaction. Or if the merchants importers of 
 foreign grain secrete and export such money as 
 is current in this country, and convert it abroad 
 into the currency of the foreign markets, those 
 merchants will by the foreign exchange ascertain the 
 real value of the Bank tokens (or other money) and 
 will on their return to England set a price upon 
 their corn, according to their power, under a 
 consideration of that real value. If the loss upon 
 the nominal value of the exported money, or 
 in procuring bills drawn upon foreign places, be 
 ten, fifteen, or twenty per cent. they will not 
 only repay themselves that loss, but will also add 
 as much more as they can to their selling prices, 
 as a mode of anticipating and providing against 
 all future contingencies. Thus the prices of the 
 home market will be considerably advanced at the 
 Corn-Exchange in London; and those prices, 
 spreading over the kingdom by the help of the 
 news papers, will proportionally raise (as they 
 have heretofore done) all the interior markets : 
 where the dealers in grain are but too apt to pro- 
 fit by the London prices, without any regard to 
 the difference of place and circumstances. 
 
 By Lloyd's and the smpprNG lists, I think 
 it appears that the importation of foreign corn raised
 
 48 
 
 the London market in a few weeks, in October and 
 November last, (1804) about fifty per cent. The 
 prices of English wheat were on the 13th of No- 
 vember from twenty to thirty pounds per cent. 
 below the prices of foreign wheat ! but the former 
 have since risen gradually to the level of the 
 latter. Attempts were made to raise the country 
 markets *, (and they were actually in some places 
 raised) in the same manner ; but these have since 
 fallen back : and I understand the difference be- 
 tween them and London is now (December 
 1804) from fifteen to twenty per cent. The 
 prices in Mark-lane have been lately more than 
 cent, per cent, dearer than they were in May 
 last. 
 
 But it is not the home markets alone that are 
 raised by the use of nominal or degraded money: 
 .the home prices precede the merchants to the fo- 
 reign markets ; and the prices of those markets 
 
 * The fanners are not masters of the systematic proceed- 
 ings of the merchants in regulating prices ; but they have tear-nt 
 to aCl in concert in many country markets ; where instructions 
 have been given to them by artful monopolist*. Acid to this, 
 that ihrtr power is prodigiously increased bv their accession oi 
 wealth, and l>v ilic demand for tlie necessary supplies (<f the
 
 40 
 
 are consequently raised ; to the great aggrava- 
 tion of our distresses at such unhappy periods. 
 These, Sir, are some of the evils of a nominal or de- 
 fective coin ; which are more glaringly manifest 
 both in the internal and external trade of Ireland. 
 
 " By an aft of the 7th year of King Edward 
 
 IV. an ounce of silver was coined into money for 
 Ireland, at the rate of six shillings and eight-pence 
 for every ounce: the inconveniences whereof" (says 
 Sir James Ware, in his Antiquities of Ireland) 
 " soon shewed themselves in the excessive dearness of 
 provisions; which caused numbers to forsake the 
 kingdom : and many who stayed were reduced to great 
 want. To remedy which (by a statute of the tenth 
 year of the same king) all the corns were reduced to 
 half the value they were stamped at.'* Such were the 
 consequences of raising the silver to six shillings 
 and eight-pence per ounce : but the dollars in 
 Ireland are now current at the rate of seven shil- 
 lings and tzvo-pence per ounceW No wonder then, 
 that all the necessaries and luxuries of life are 
 so exorbitantly dear in that part of the united 
 kingdom. 
 
 Mr. D'Olier, Mr. Colville and Mr. Frank, de- 
 clared to the Exchange Committee that, in their 
 
 H
 
 60 
 
 opinions, it was expedient and necessary to make 
 the Irish dollars or silver tokens of a nominal 
 value, that should meet the rate of Irish Exchange : 
 that is, that the dollars of Ireland should be seven- 
 teen or twenty per cent, higher than the nominal 
 value of the dollars in England : to prevent, 
 as they said, the melting of them by the coiners. 
 The Irish dollars were contracted for by Mr. 
 D'Olier, (one of the Irish Bank Directors) and 
 ordered to be stamped for six shillings Irish: 
 which is, in faft, about twenty-three per cent, above 
 the nominal value of English dollars; and 
 nearly thirty-eight and a half per cent, above the 
 value of silver at the English Mint. Conse- 
 quently there are now two par rates between 
 Ireland and England. One between the dol- 
 lars of England and the dollars ^Ire- 
 land, {or the notes of the Bank of Ireland, and the 
 Notes of the Bank of England); and another be- 
 tween the Irish dollars and English guineas : 
 for the par rates of Exchange are the exacl 
 differences of the several species of Irish circu- 
 lating medium, when compared with those which 
 circulate in England. During the restriction, 
 the Exchange upon guineas is in a great degree 
 suspended, and known only under the appellation 
 
 of i> R i. M I U M .
 
 51 
 
 The Mint value of the dollar tokens in 
 England and in Ireland is precisely the same; but 
 
 the nominal value of the Irish token is twelve- 
 pence upon each dollar more than the nominal 
 value of the English token : and the English 
 tokens are valued nominally eight-pence on each 
 dollar more than the value of dollars at the Eng- 
 lish Mint: and the Mint-value of a dollar, ac- 
 cording to the evidence of Mr. D'Olier, the Bul- 
 lion-merchant, is four shillings and four pence. 
 Now, as four shillings and four pence, or fifty- 
 two pence of the Mint, are made equal to sixty 
 pence in the Bank of En gland tokens, of course, 
 ^ioo in the former arc equal to <i 15 : 7 : 6 of 
 the latter and as fifty-two pence of the British 
 Mint are made equal to seventy-two pence in the 
 Bank of Ireland tokens, si 100 legal British are 
 equal to ^138 : 9 : 2 of Irish Bank money. The 
 difference or par-rate of Bank of England tokens 
 and Bank of Ireland tokens, or of the notes of 
 those two Banks is, therefore, ^23 : 1 : 8 per 
 cent. : and the par of Exchange between the 
 standard silver of the Mint, and the nominal value 
 of the Irish tokens, is ^38 '.9:2 per cent. 
 
 Vain, therefore, were the expectations of those 
 who were assured that a loan, sufficient to dis-
 
 52 
 
 charge the balance of trade and account between 
 Ireland and England, would bring down the Ex- 
 change to the long-established par rate. Such an 
 effecl: was impossible under the circumstances ; if 
 the market were left to its natural course : and 
 I conceive, that nothing less than an absolute or- 
 der of Government for the Lords of the Treasury 
 to supply bills at a reduced rate, could bear down 
 the market rate lower than the natural efFeft of 
 the balance with England. 
 
 An absolute order has, I presume, been given: 
 which will be effectual while their Lordships con- 
 tinue to draw at the same rate : but, I suspect 
 that, the instant their power is exhausted, the Ex- 
 change will rise as near to twenty-three per cent, 
 (cither over or under) as the aclual state of the 
 demands and supplies of the market* will allow. 
 The arguments for a further loan will probably 
 be then repeated ; yet I should hope, not with the 
 success of the last negociation. 
 
 A deeper investigation of this subject proves that the 
 value of" English Bank notes is sometimes computed by the 
 market price of bullion : there is consequently another rea- 
 son fur the variation of the market-rate of Exchange, which 
 will be fully given in the concluding papers of these ex- 
 positions.
 
 53 
 
 Previous to the Bank restriction, the issue of 
 copper coin, of the same value as in England, 
 might have destroyed the distinction between the 
 money of Great Britain and Ireland*. But that 
 measure alone (as hinted in some of the daily 
 papers) would, I think, now produce only the ef- 
 fect of discontent and resistance. For while the 
 dollars in circulation remain nominally above 
 their heal value, the new copper would have 
 the appearance of taking away, in Ireland, a 
 penny from every English shilling without giving 
 the smallest beneficial return. And if, in addition 
 to such coinage of copper, the tokens of Ireland 
 were reduced only to the nominal value of Eng- 
 lish tokens, the Exchange upon bills or drafts 
 payable in England ought to cease (excepting the 
 usual rate of commission) ; but a premium upon 
 guineas would still remain, and be exacted as 
 often as coin become necessary, either to settle a 
 foreign balance, or to counteract an unfavorable 
 
 * The equalization of the money of Great Britain and Ire- 
 land would be productive of the most benefical effefts to the 
 revenue of the united kingdom ; and I cannot find a valid ob- 
 jection to that measure Every argument that I have heard 
 against it, may in my humble opinion be very succesfully used 
 in its support.
 
 54 
 
 course of Exchange. In the event of such an 
 equalization of the Bank tokens, the difference 
 between them and guineas would be then the 
 same both in England and in Ireland. The prices 
 of commodities would, however, be kept up as 
 much as possible, till the removal of the re- 
 strictions would enable all persons to complete 
 their remittances, without the necessity for an ap- 
 plication to brokers and dealers in Exchange. 
 
 There is a grand distinction between England 
 and Ireland in the settlement of their respective 
 foreign debts. England generally settles her 
 commercial debts at home, whereas Ireland is, in 
 most instances, compelled to settle through Lon- 
 don. All the balances against Ireland may, there- 
 fore, be said to centre in England: where, of 
 course, provision must be duly made in propor- 
 tion to the Payments. The restriction of the cash 
 issues is said to be an impediment to that provision : 
 and, therefore, it is also said, aids from Govern- 
 ment by loans are become indispensable. 
 
 It is true that, before the restriction, guineas 
 were drawn from the Bank of Ireland, and sent 
 to England, when a sufficient number of bills
 
 55 
 
 could not be procured. But it is also true that 
 the Irish Bank replenished its stores by re-draw- 
 ing guineas from the Bank of England, as often 
 as occasions required! It is also true, that a con- 
 siderable expence was incurred both by those who 
 remitted guineas to, and by those who received 
 them from England : which expence might have 
 been saved to both parties, if the Bank of Ireland 
 would have given drafts upon England, when cash 
 was wanted for remittances. The uncertainty of 
 the calls for guineas, exaBed from the Irish Bank 
 Directors such prudential arrangements, as would 
 enable them to demand cuineas from the Bank 
 of England, whenever the state of the Irish Bank 
 required them : And those prudent arrange- 
 ments, and the occasional importations of gold, 
 unavoidably curtailed the sources of profit. The 
 restriction, therefore, was in fact., a Boon and pro- 
 tection to that Bank; and, if laudably managed, 
 might have greatly increased the honor, as well 
 as the profits of the Bank of Ireland. The Di- 
 rectors of the Bank of Ireland, instead of avow- 
 ing themselves, in effect, immediately dependent 
 on the Government for money in England, and 
 suffering their paper to be disgraced by a com- 
 parative depreciation, ought to have known that
 
 56 
 
 the reputation of their notes, the regularity of 
 their payments, and the pecuniary intercourse 
 between the two kingdoms, might have been 
 maintained and prote&ed by establishing a power 
 to draw at all times upon England, in exchange 
 for their own notes: and that no other means 
 than those which, before the restriction, enabled 
 them to pay their notes with guineas drawn from 
 England, were necessary, after the restriction, to 
 enable them to pay by drafts, whenever the 
 holders of notes might find it expedient to de- 
 mand the payment of them in drafts, at the usual 
 date, upon London. 
 
 The Restriction Act might easily have 
 been modified to relieve a certain portion of that 
 dead capital, which had been previously locked 
 up, as a provision against contingencies: and 
 that relief would have enabled the Directors to 
 extend their business by honourably increasing 
 the legitimate sources of profit. A moderate com- 
 mission (either in time or in money) upon trans- 
 actions with England, would have taken the greatest 
 part of the Exchange-business ^Dublin into the 
 Bank of Ireland: and the convenience and cer- 
 tainty which would thence have resulted, to all
 
 57 
 
 who had connexions in this country, would have 
 added to the growing prosperity of Ireland, in 
 the same manner as the bankers of Scotland 
 (greatly to their honor) have added to the happi- 
 ness and opulence of that part of Great Britain. 
 
 But how different the pi&ure exhibited by the 
 Irish Bank Directors ! They appear to have cre- 
 ated the distresses of their country, through dis- 
 regarding the public interest, and having too great 
 attention to their own private emoluments: and 
 they are now in this dilemma : either they are in 
 a state to resume their payments in specie, and, if so, 
 to pay their notes by drafts payable in London : or 
 they have been guilty of palpable mismanagement in 
 extending their issues of paper beyond the power and 
 contrmd of their capital and private funds i Either 
 way their conduct merits parliamentary examina- 
 tion : and the pecuniary distresses of their coun- 
 try demand the wisdom and vigor of legislative 
 interference. 
 
 At present, Sir, it is well known that if the 
 loans from England to Ireland cease; then Ire- 
 land cannot be at a certainty of settling her 
 balance on the London Exchange without the
 
 58 
 
 aid of specie or bullion : because, during the 
 restriction upon gold, the Bank of Ireland 
 cannot be compelled to furnish drafts upon 
 England in exchange for their own notes. 
 Those merchants who originally recommended 
 the use of dollars, as bank tokens, must, no 
 doubt, have been perfectly aware ihat, as those 
 tokens are intrinsically valuable only according to 
 the weight and purity of the bullion they 
 contain , therefore, those who have occasion to 
 make remittances have no remedy against the 
 exactions of the dealers in Bullion and dealers 
 in Exchange ; save only by casually purchasing 
 bills, which other merchants sometimes offer for 
 sale in the Exchange-market or guineas, from 
 persons who do not understand the causes of the 
 fluctuating premium upon them. But while the 
 loans continue to be raised in England for the 
 exigencies of the Irish Government, the dealers 
 in Exchange have a double game to play : one 
 in .their capacity of wholesale dealers with the 
 Treasury in Ireland, and the other as retailers of 
 drafts to those who may be reduced to the ne- 
 cessity of purchasing bills, at any rate, for remit- 
 tances to England. Every possible advantage 
 appears to have been taken: and the only ques-
 
 59 
 
 don with the dealers seems to have been, " how 
 may we lay both the Government and the people 
 under contribution, without hazarding a disco- 
 very of the important secret in the business of 
 Exchange ? 
 
 Perhaps, Sir, I have written enough to satisfy 
 your enlightened and capacious mind that the 
 true cause of the high rate of Exchange between 
 England and Ireland has been most artfully and 
 industriously concealed : that the private inte- 
 rests of those, who derive a profit from the trans- 
 mission of money (or loans) from one part of the 
 united kingdom to the other, were at variance 
 with the general interests of their country ; and 
 that the former interests have too long and most 
 injuriously predominated: that, when the last 
 loan was recommended as a certain means of re- 
 ducing the Exchange to the ancient par-rate, an 
 effectual counteraction was also recommended in 
 the issue of dollars at a high nominal value; 
 which rendered the fall of Exchange an utter im- 
 possibility; without some profitable combination 
 of the dealers in Exchange, or the intervention 
 of some unnatural force: that the exchange 
 
 MAY BE INSTANTLY REDUCED, OR TOTALLY
 
 '00 
 
 removed by reducing the nominal value of the 
 dollars to their real value t and compelling 
 the Bank of Ireland to give drafts on England 
 in exchange for its own notes: that the restriction 
 upon that Bank ought not to have been an im- 
 pediment to the payment of Irish Bank notes by 
 drafts upon London: that the Bank Directors 
 ought to have provided for that measure, with- 
 out any assistance from Government ; and might 
 have done so, more easily than the Banks of 
 Scotland did it, unaided by such protection as the 
 restriction afforded ; and, indeed, as all the 
 private Banks tf Great-Britain have uniformly 
 done: that the Bank of Ireland Directors can- 
 not have any just apprehensions from the pre- 
 tended balance against Ireland, when the actual 
 par-rate of Exchange exhibits the balance con- 
 stantly and invariably against England: (with the 
 exception, perhaps, of the years 1800 and 1801) 
 that if any difficulty be really felt in the Bank 
 of Ireland, such difficulty may be removed by 
 granting to the Bank-Direttors the power of remov- 
 ing guineas or bullion to England; or of de- 
 positing them in the Irish Treasury for the use 
 pf Government; who can furnish a credit upon 
 England, to be drawn for at discretion: that,
 
 Cl 
 
 "however, nothing but an error in management, 
 could have occasioned such necessity ; as the re- 
 putation of the Irish Bank notes was (according 
 to Mr. Marshall's evidence) unattacked even in 
 the midst of absolute rebellion: that foreign 
 corn has been, and will be, always affected in its 
 price by the difference of Exchange, arising 
 from a deficiency of the precious metal in the circu- 
 lating coin; whether that deficiency proceed 
 from wearing, clipping, or the fixing of a nomi- 
 nal value far above the real one : that the 
 high prices of the London markets spread over 
 the kingdom and beget corresponding high prices; 
 which extend prejudicially to all the king's sub- 
 jects ; and especially affect the industrious poor : 
 that the high prices of provisions create more 
 discontent and disloyalty than all the taxes 
 which war can accumulate: that therefore the 
 safest policy, independent of the wisdom of the 
 measure itself, most strongly recommends the re- 
 moval of that evil in the current coin, which has 
 been productive of such alarming effe&s; and is 
 the most powerful impediment to that cordial 
 union of Great Britain and Ireland, which is es- 
 sential to the well-being of the British Empire; 
 to the accomplishment of your own grand and glo-
 
 62 
 
 rious designs ; .and to the permanent establishment 
 of that commercial and beneficial intercourse 
 which alone can identify the united kingdom, as 
 a consolidated, prosperous, and happy people. 
 
 Having denied (in the beginning of this Letter) 
 the doctrine of Depreciation, which is the founda- 
 tion of the Committee's Report, I have purposely 
 avoided all mention of the circulating paper, as 
 some evidence that paper , in a primary conside- 
 ration, has nothing to do with the subject of Ex- 
 change. That which is called a depreciation of 
 the Bank of Ireland paper is an effect pro- 
 ceeding from the same cause as the high rate of 
 Exchange : It is deducible from the same source, 
 referrible to the same origin and removable by 
 the same cure. Let the dollars be reduced to their 
 Mint value, and the other silver coin be restored 
 to its proper weight and standard ; let the Bank 
 of Ireland be compelled to give drafts upon 
 England at par*; when demanded in exchange 
 
 * The late Mr. Pugct asserted before the Exchange Com- 
 mittee (Min. p. 4.) that " if the balance continue against Ire- 
 " land, compelling the Bank of Ireland to pay in English 
 k ' Bank notes would ultimately ruin the Bank by making it 
 " pay (he whole loss of the exchange of the country!" I am 
 sorry the death of that gentleman has put it put of my power
 
 63 
 
 for its own notes; and the clamor about the de- 
 preciation of paper will be no more heard. Then 
 those who are " firmly and decidedly of opinion, 
 that the Bank of Ireland paper, and the paper in 
 general of Ireland is depreciated" will, in that 
 respect, I think, be convinced of the erroneous 
 foundation of their opinion : they will see that 
 Bank notes have been improperly considered as 
 the " currency" of their country: as if, in 
 
 to give him a personal challenge to substantiate the truth of 
 this position But he had partners and friends, and I defy 
 them to do it. However, my proposition is to make the Bank 
 pay in drafts upon London at par, and payable thirty days 
 after date. The compulsion can operate only in the exchange 
 of Bank of Ireland notes in all other applications the Bank 
 has a discretionary power. Let us sec, therefore, what com- 
 pulsory demands could be made upon it. We understand 
 from Mr. Colville's evidence (Min. p. 96) that the Bank of 
 Ireland has notes in circulation to the amount of three 
 millions of which ii, 200.000 are in notes under Jive 
 
 pounds value. These, being substitutes for the guineas 
 
 withdrawn from circulation, are consequently dispersed over 
 Ireland, and cannot without much time and difficulty be col- 
 lected in a body to oppress the Bank there remains then only 
 the sum of ~ 1,800,000 in notes of the value of five pounds 
 and upwards. Mr. Colville also stated that he " should ima- 
 " gine the private bankers' notes in circulation are equal in 
 " amount to those of the Bank of Ireland." Cash having 
 been so long at a premium in Ireland, it will not be suspetted 
 that the private bankers have kept guineas in store: they must 
 consequently keep a certain portion of Bank of Ireland notes
 
 04 
 
 fad, they were the current money : whereas, if 
 we speak correctly, Bank notes are only- 
 transferable TESTIMONIES OF A RIGHT 
 OF PROPERTY IN THEIR HOLDERS, ACCORDING 
 TO THE PROMISES CONTAINED IN THEM;* 
 
 "and they are valuable in no other view: con- 
 sequently cannot be depreciated while the sol- 
 vency of the Bank is unquestioned, and the notes 
 are acknowledged good and legal vouchers of the 
 
 to pay their own with when demanded. Now, if we suppose 
 that the private bankers of Ireland could be easy in their minds 
 with only one fifth of the amount in Bank notes, which they 
 have promised to pay on demand that supposition will amount 
 to s6oo,ooo divided between all the private bankers of 
 Ireland constantly at a great distance from the Bankand 
 not likely to be taken there, unless guineas could be had. Thi 
 sum may therefore be deducted from the \, 800,000, and 
 the remainder will be ji,aoo,ooo. But this sum also is 
 distributed among the gentlemen, merchants, and tradesmen of 
 Ireland. If we admit that two thirds of it remain in and near 
 Dublin, I think, that we shall concede more than the fact. 
 Yet grant it .aC8oo,ooo, and then we have another considera- 
 tion If the whole of this je?8oo,ooo happen to be in the 
 hands of persons who have payments to make in England, 
 then the whole of the ^800,000 might be demanded from 
 the Bank, in drafts payable in London thirty days after date. 
 But the improbability of the WKOLl being in the hands of 
 dekors to England is sufficiently obvious. Yet were it other- 
 wise, would the Bank of Ireland be injured by such an appli- 
 cation ? Docs the Bank issue Hotcs without a deposit of se- 
 curities ? If securities arc taken arc they never paid ohV
 
 65 
 
 holder's right. But if the promises be performed 
 at the Bank, in light, dipt, or degraded coin, or 
 in coin only nominally agreeing with their 
 sum ; then the notes must be considered (for the 
 time being) as transferring a right only to such 
 light, dipt, degraded, or nominal money: and 
 such light, dipt, degraded, or nominal money, is 
 taken as, and deemed, the measure of their value 
 
 Cannot loans be reclaimed by the Bank? Have the Di- 
 rectors no property transmissible to England, either with or 
 without the authority of the Legislature? and has the Execu- 
 tive Government no dispensing power to relieve the Bank ; if 
 gold, which is useless in the Bank of Ireland, would afford a 
 provision for an extraordinary demand of drafts, by a mere re- 
 moval to the Bank of England? My Lord, there are so many 
 ways to overcome the pretended difficulties in the Exchange 
 between Great Britain and Ireland, that I am astonished at 
 the veil bf imposition so successfully thrown upon those great 
 luminaries of wisdom and talents which adorn the two Houses 
 of the Imperial Parliament. It was truly written by the great 
 Mr. Locke, that <; interested peoitle, (who treat of 
 " this subject) wrap up the secret they make advantage of t 
 *' in a mystical, obscure., and unintelligible way of talking: 
 '* which some very ingenious persons, from a pre* 
 " conceivkd opinion of the difficulty of the subject, let pass 
 ' ; for sense, in a matter not easily to be penetrated, but by mer% 
 " of prafiical knowledge." I shall endeavor, in future papers, 
 " to put the evidence of the Bank Directors into plain, true, 
 " honest and dirccl language," when, I hope, it will " proYe 
 u ver y casv an( j intelligible. "
 
 66 
 
 in all cases of exchange for gold coins, which 
 are according to the standard of the realm. The 
 guineas are, therefore, of more worth, in propor- 
 tion to the difference between them and the sil- 
 ver currency : and that difference ought to be the 
 premium in the market. The premium, however, 
 according to Mr. Frank's evidence (Min. p. 28.) 
 is now regulated by the rate of Exchange. But the 
 rate of the Exchange, during the Bank restriction, 
 is the mere evidence of that power which the 
 dealers in Exchange possess in the market ; and 
 by no means a decisive proof of the state of the 
 balance between the two countries. It was the 
 dipt, and worn coin in the reign of King William, 
 (operating as the dollars or tokens now do, in 
 Great Britain and Ireland,) which occasioned the 
 high rate of Exchange between England and 
 Holland: and Doclor Smollett mentions that 
 < the notes of the Bank o/England were theti 
 at a discount of twenty per cent. !!" With similar 
 propriety it might be said, that the Bank of Eng- 
 land notes were at a discount of nineteen per cent. 
 in April 1801 : for that is nearly the difference 
 between the Mint price of silver and dollars at 
 5s. nd. per ounce; which was then the market 
 price.
 
 07 
 
 The difference between the rates of Belfast 
 and Dublin, has been taken by the Committee as 
 a proof and measure ^depreciation: and as that 
 difference involves, in their judgment, an other- 
 wise inexplicable difficulty, I must take the li- 
 berty of trespassing a minute longer, while I en- 
 deavour to obviate that formidable mystery in the 
 subjed of Irish Exchange. 
 
 I have said that Bank notes are not mo- 
 ney : although some of the witnesses, and the 
 Committee in their Report, have comprehended 
 them under the general term " currency'*. I 
 should rather confine the idea of currency to the 
 coin of the country ; and define Bank notes 
 a paper medium testifying the amount of cur- 
 rency to which the holders of them are entitled 
 from tlie Bank whence they were issued. 
 
 A Bank of Ireland note is a promise to pay a 
 sum of Irish money : which, being merely no- 
 minal, is expressed by its equivalent in 
 English money in the margin or corner of the 
 note. For example a Bank of Ireland note for 
 " 11 : 7 : 6 Irish money" has in the corner of 
 it the words " Ten Guineas:" that number (at 
 the par of eight and a third) being equal to the
 
 C8 
 
 sum of *n : 7 : 6 Irish (which has the copper 
 money aforementioned for its root, and for the 
 nominal measure of the Irish money of account) 
 The promise is not of guineas, but of Irish mo- 
 ney: although the Irish people generally call 
 them ten-guinea-notes ; through their familiarity 
 both with the name, and with the English money 
 itself. 
 
 That which is called " a guinea note" is a note 
 for 1 : 2 : 9 Irish ; and, when presented at the 
 Bank, is payable in the money which the Bank 
 uses, be that what it may. Now dollars, at the 
 nominal value of six shillings each, are the money 
 in use : But wjien a guinea note of the Bank 
 of Ireland, and also two shillings were given in 
 Exchange for a guinea in gold,'* I presume, 
 the Bank was using in payment of such notes, ei- 
 ther liglit and worn Mint silver coin, or the 
 base money then in circulation; and most probably 
 the latter; this coin was taken, generally, by 
 the postmen and m the public offices of Govern- 
 ment, and paid into the Bank of Ireland on the Go- 
 vernment accounts *: and the former had for some 
 
 * See the Exchange Com. Min. of Mr. Croftcn's cv].
 
 00 
 
 time disappeared. The money which the 
 Bank, used in payments was, consequently, ac- 
 cording to its intrinsic value at the Mint, the ac- 
 tual measure of the value of Bank notes. 
 The solvency of the Bank was not questioned. 
 The notes were not depreciated. For they 
 produced at the Bank, and were each of them ac- 
 cepted as evidence of a right to 1 : 2 : 9 Irish 
 money, the amount of the promise. But the 
 Irish money, or money in use by adoption, was 
 less valuable than formerly, in comparison with a 
 guinea: and the difference between the former 
 and the then present value of the silver currency 
 was, in fact, the proper premium upon guineas in 
 Dublin, Yet purchasers could not be found at 
 that premium, while the rate of Exchange, upon 
 drafts payable in England, was kept down by the 
 interposition of Government in drawing from Eng- 
 land the loans raised there for the service of 
 Ireland. 
 
 A guinea in Ireland is a more compound idea 
 than in England. Before the restriction it meant, 
 at the same moment, twenty-one shillings Eng- 
 lish, or, one pound two shillings and nine pence 
 Irish. A guinea note means only 5^1:2:9
 
 70 
 
 Irish. Two shillings (although of worn or 
 counterfeit money adopted in Ireland) mean two 
 shillings and two pence Irish. A guinea note and 
 two shillings, therefore, make i : 4 : 11 Irish; 
 which were given in Exchange for 1 : 2 : 9 of 
 the pl re Irish money represented by its equiva- 
 lent. an English guinea in gold : The Exchange 
 hi Dublin, o/"paper into guineas, was conse- 
 quently a real Exchange ; and the premium 
 was the rate of that real Exchange accidentally 
 reduced by the intervention of Government in 
 the manner above mentioned. 
 
 Guineas so procured, and circulating at Belfast 
 constituted, in effecl:, at the same instant, a pure 
 English, and a pure Irish currency : every guinea 
 being equal to 1 : 2 1 9 of the iviaginary or 
 nominal Irish money. Consequently the Ex- 
 change between Belfast and London was com- 
 puted on the merely nominal value of the gui- 
 neas in Irish money; and was, therefore, in point 
 of fat, a merely nominal Exchange. The 
 transactions between the merchants of Belfast are 
 merely commutations of English gold for English 
 papsr; that is, for bills payable in London. On 
 i!k>sc commutations an allowance for agency or
 
 71 
 
 commission is generally made to the party w ho 
 supplies the specie ; and that allowance is usually 
 about one per cent, in English, or t : 1 : 8 in 
 nominal Irish money. For example: Every 
 d^ioo in English gold is equal to ^108 : 6 : 8 
 of pure nominal Irish money. The difference of 
 e8 : 6 : 8 per cent, is called the par of Exchange. 
 If from this par of ^'8 : 6 : 8 we deduct ji : 1 : 8 
 (which is equal to the English commission of one 
 per cent.) the remainder will be j : 5 : o or 
 seven and a quarter. And it is well-known that 
 seven and a quarter per cent, was (before the re- 
 striction) the most usual rate of Exchange both at 
 Belfast and at Dublin. The rate, however, varies 
 according to circumstances. It becomes imver 
 when pressing demands are made for cash in ex- 
 change for English bills : and on the contrary, it 
 rises higher when bills are very much in demand 
 for remittances. Cash and bills are, in these 
 cases, like all other commodities, more or less 
 productive in proportion to the equality of the 
 demand and of the supply ; or, more correctly 
 speaking, according to the pozver of those who hold 
 the commodities required. Any considerable varia- 
 tion in the market rate will induce the dealers in 
 Exchange to speculate in bills; either by purchas-
 
 72 
 
 ing, or by drawing, as the temptation requires; 
 
 and the events of a few days "will sometimes afford a 
 profit of two or three per cent. 
 
 The Exchanges of guineas for bills upon Lon- 
 don are, in ordinary times, as regular transactions 
 between Belfast and London, as similar transac- 
 tions are between Edinburgh*, Liverpool, Bris- 
 tol, or any other place in Great Britain, and 
 London. The bankers and merchants having an 
 allowance or commission for their trouble, ac- 
 cording to circumstances, for furnishing the means 
 of conveying money from one place to another. 
 
 The Exchange at Dublin seems also to be a 
 real Exchange; performed in some cases by 
 one operation, and in others by two operations. 
 When guineas are bought there at a premium, 
 those guineas are taken as pure Irish money at 
 1 : 2 : 9 each, and not, as some Englishmen 
 imagine, at twenty-one shillings each. The pre- 
 mium, therefore, is the difference between the 
 
 * In mere justice to Mr. Mansfield, Mr. Convngham 
 and Mr. Irving, I must acknowledge that, although I do not 
 entirely agree with those gentlemen. I concur with the greatest 
 ji.irt of their evidence, recorded hj- thr Fxchange Conrmittee.
 
 73 
 
 pure nominal Irish money and that^oin which 
 is in circulation. It is the Jirst operation to 
 equalize* the light, degraded, counterfeit mo- 
 ney and the pure nominal money. The second, 
 operation equalizes the pure Irish, and pure 
 English money, with an allowance for agency. The 
 second operation is similar to the Exchange at 
 Belfast : where, (as already mentioned) the cur* 
 rency is pure English, 
 
 The business of bills upon the Exchange in 
 Dublin joins the two operations above men- 
 tioned : and that jun&ion constitutes the Dublin* 
 
 * The irregularity of the Exchange-market, in consequence 
 of the interposition of Government, and of the loans raised in 
 England, for the service of Ireland, puts it out of the power of 
 the dealers in bullion to raise the premium upon guineas, 
 in Dublin, in proportion to the actual difference between 
 tliem and the base circulating money : Because the guineas 
 are generally wanted for the same purposes as bills to make 
 payments either in England, or in some other place: There- 
 fore, while the Exchange upon Bills is kept down by Go- 
 vernment, none will buy guineas at a premium exceeding 
 the market rate of Exchange. The Government rate of Ex- 
 change, on the Treasury drafts, determines (during the time of 
 drawing by the Lords) the value of the currency in external 
 Exchanges; but the internal Exchanges, or prices of com' 
 modities, are still determined by the real value of the circulat- 
 ing coin ; as will be shewn in future papers.
 
 74 
 
 rate of Exofcange. -The difference, therefore, be- 
 tween the rates of Dublin and Belfast must be 
 generally equal to the premium upon the guineas 
 (with a little variation in consideration of the 
 trouble and expence of removing guineas from 
 Dublin to Belfast). That difference has 
 been noticed by the Committee ; and adduced by 
 them as a proof and measure of depreciation 
 in the notes of the Bank of Ireland Whereas, I 
 presume that, the fallacy of that opinion must 
 now fully appear. 
 
 With respeft: to the business of Belfast, I 
 think, it is obvious, that both the rate of Ex- 
 change and the Irish money are there merely 
 nominal. And I do therefore most humbly sub- 
 mit, that the distinctions of real and nominal, 
 which the honorable Committee have made in 
 their Report, ought to be entirely reversed. 
 
 I bear witness that the paper credit both of 
 England and Ireland stands in need of great re- 
 gulations : that the general issue of small notes un- 
 der the value of five pounds is a most pernicious 
 grievance; pregnant with the most injurious con- 
 sequences; and that when small notes were real-
 
 75 
 
 ly necessary they ought to have been confined 
 to the national Banks of Great Britain and Ire- 
 land. But upon this point, as well as on the 
 restriction of the cash issues; on the great want 
 of a new silver coinage (which is the principal 
 source of the high prices of all commodities) and 
 on several other important considerations, which 
 affect: the Government, the revenue, and the 
 people, I must of necessity reserve myself till 
 future opportunities. 
 
 In this Letter I have probably deviated from 
 the rules of elegant composition: but, I trust 
 that, I have not offended against truth and 
 good understanding. My aim has been precision, 
 as far as was consistent with the acknowledged 
 ** intricacy and difficulty" of my subject : and I 
 shall have reason to be satisfied, if, Sir, my ideas 
 meet your approbation : and can in any degree 
 contribute to the furtherance of your efforts for 
 the safety, glory, and happiness of his Majesty's 
 dominions. 
 
 I have the honor to be, Sec. Sec. 
 
 Wills, Sonitrsdj 
 Dec. 31, 1804.
 
 70 
 
 The original Letter was delivered at Mr. Pi tt's 
 house in Downing-street, on the second of January 
 1 805, and on the seventh of the same month, a 
 paragraph appeared in the Courier in the folf 
 lowing words. 
 
 " We are informed that a measure has just been 
 adopted by the Minister, which will do away at ance t 
 the long-corn plained-of inconvenience resulting to Ire- 
 land, from the mode by which the course of Exchange 
 between that country and England has hitherto been 
 regulated* The Bank of Ireland, it is said, will in 
 future be permitted to draw on the Bank ^Eng- 
 land at par, to any amount." 
 
 This information was evidently inserted by 
 authority ; and it probably attracted your Lord- 
 ship's attention. Subsequent events indubitably 
 prove that the Minister was earnestly engaged 
 in the adopted measure ; (although only a part of 
 my plan) and that its intended operation was pre- 
 vented by very remarkable occurrences. 
 
 According to the Parliamentary Report in the 
 Morning Chronicle, dated Feb 6, 1805, it 
 appears that on the preceding day several motions
 
 77 
 
 were made by Lord Archibald Hamilton, in 
 the House of Commons, relative to Irish affairs: 
 and that those motions induced Mr. Foster to 
 inform the House, that "M* Bank {/England 
 had been applied to, to send over a considerable sum 
 of money to Ireland; and they were requested to 
 transmit it to Ireland at par. The Directors, 
 however, refused, as many of them dealt 
 in Exchange, aud such a transaction might 
 be injurious to their character. The Treasury- 
 then sent the amount of the sum to which he 
 referred, in Bank-post-bills. The day of 
 their being issued was previously announced, 
 in order that every one who thought fit might 
 have an opportunity of bidding for them. 
 They were, at first, set up at 1 1 ; but the peo- 
 ple would not purchase at that rate. The price 
 of Bank bills was then lowered until it was 
 brought down to par, and there (said he) the 
 matter now stands.'* 
 
 Lord Archibald Hamilton afterwards (on the 
 2 ist. of March) " thought it necessary to call the 
 attention of the House to the state of the Ex- 
 change of Ireland. He could not avoid 
 stating a circumstance, which shewed the injudi-
 
 78 
 
 cious manner in which it was attempted to restore 
 the former rate of Exchange. When the Ex- 
 change between England and Ireland was 13 per 
 cent, the Commissioners of the Treasury in 
 drawing for .=200,000 of the loan from England, 
 offered it for sale at 10 and 11, and afterwards at 
 8^, which was the par. There was such a con- 
 course of people in the Castle-yard of Dublin, to 
 get English Bank post bills at par, that it was 
 hard to prevent an absolute riot taking place. 
 The whole difference between selling these Bank 
 notes at par, and at 12 and 13, which was the 
 current rate at that time, was .40,000 on each 
 million, or .=200,000 on the five millions that 
 were to be transmitted from England in the 
 course of the year. This whole sum was lost to 
 the Irish nation by the manner that the Com- 
 missioners of the Treasury managed the trans- 
 mission of the money, in the hope that they could 
 regulate the rate of Exchange, and restore it to 
 par. He concluded, by proposing a resolution." 
 
 Mi. Foster said, " the Resolution was no- 
 thing less than a charge against the Commissoners 
 of the Irish Treasury for waste of public money. 
 He could explain the circumstance which was
 
 79 
 
 laid such stress upon by the noble Lord. The 
 
 Commissioners of the Treasury had no intention of 
 affecting the rate of Exchang&l and did not wish to 
 have any thing to do with the transmission of the 
 money. They applied to the Bank of Ireland 
 for the purpose. He himself wrote a letter to the 
 Governor of the Bank; but they refused to in- 
 terfere in the transmission of it. Mr. Foster then 
 read a copy of his letter, and of the answer of the 
 Governor and Company of the Bank of Ire- 
 land ; in which they refused, from motives 
 
 OF DELICACY, AND FEAR, LEST THE MER- 
 CHANTS SHOULD SUSPECT THEM OF INTER- 
 FERING ABOUT THE RATE OF EXCHANGE. 
 
 Under these circumstances what could the Com- 
 missioners of the Treasury do? They got the 
 money over in post bills, which they advertised 
 for sale ; and not being able to get either 10 or 
 11, they consented to take the par of 8y. The 
 rate of Exchange was now (he said) by no means 
 so unfavorable as formerly; and/Ae operation of the 
 loans, by sending a large sum into the country 
 annually, must turn the rate. He must unequi- 
 vocally admit, that the restriction of issuing specie 
 from the Bank, and the over-issue of paper, and 
 consequently its depreciation, were the principal
 
 80 
 
 causes of the unfavorable state of the Exchange. 
 But, as at present it was impossible to remove the 
 principal cause, by allowing the Bank to pay in 
 specie, he thought the discussion was unneces- 
 sary, and might be injurious." 
 
 " Lord Henry Petty agreed with the Right 
 Honorable Gentleman (Mr. Foster) in almost all 
 the general principles he had laid down ;" and 
 
 *' The Chancellor of the Exchequer (Mr. 
 Pitt) was ready to agree with the noble Lord, 
 that the restriction on the Bank was the cause of 
 the high rate of Exchange against Ireland. But 
 how had it produced this effect ? There was an 
 over-issue a/paper; and, consequently a de- 
 preciation of it. In the Exchange, then, be- 
 tween England and Ireland, it must be considered 
 that it is an exchange of Irish paper; that it is 
 depreciated, and at a discount against the paper 
 of this country ; which is not depreciated.*' 
 
 " Mr. Fox expressed great pleasure, in finding 
 that we had at length got rid of all those ridi- 
 culous propositions, advanced last sessions, ahoitt 
 the paper of Ireland not being depreciated. Had
 
 *] 
 
 the guinea increased in value ? and could there 
 be a necessity for an unlimited issue of paper?'' 
 
 " Lord Archibald Hamilton seeing the sense 
 of the House against him, declined pressing to 
 a division." 
 
 This extract is from " Lloyd's Evening 
 Post/' which is the only Paper now near me, 
 wherein I could find so much of the debate of 
 the 2 ist of March. 
 
 1 should be guilty of impertinence in troubling 
 your Lordship with these Reports of Parliamen- 
 tary Proceedings, if I did not suppose them ad- 
 missible evidence, 
 
 That the measure said to have been adopted by 
 Mr. Pitt, could not be carried into effect, in 
 the manner announced in the Courier of 
 the seventh of January, 1805, because the Di- 
 rectors of the Bank of England, and the 
 Directors of the Bank of Ireland, refused 
 to assist in transmitting the money at par: the 
 former giving, as a reason for refusing, that 
 
 " many of them dealt in Exchange, and 
 
 M
 
 82 
 
 such a transaction might be injurious to their 
 character: and the latter, that" they acted from 
 motives of delicacy, and fear lest the mer- 
 chants should suspect them of interfering 
 about the rate of Exchange ;" 
 
 That Lord Archibald Hamilton was of opinion, 
 
 the reduction of the Exchange, from 13 per cent, 
 to p ar, would be a loss to the Irish nation 
 0/ ,=4 0,000* on every million sent from this 
 country to Ireland: whence, of course, his Lord- 
 ship inferred, that the efforts of Government to 
 reduce the Exchange to the ancient par-rate were 
 both injudicious and injurious. 
 
 That Mr. Pitt and Mr. Foster unequivocally 
 declared that the restriction of the cash issues 
 from the Banks, and the over-issue of paper, 
 had occasioned depreciation; and were the 
 principal causes of the unfavorable rate of 
 
 * If his Lordihip believed thai the reduction of the Ex- 
 < i;an ; ;r to par would occasion a loss in this proportion, he will 
 i doubt be astonished to hear that the w/ioU revenue ok 
 I v.t. r a n i) . ( i) 1 m 1 k IS 11 ED, in effect, in a ratio at least equal 
 to ihf rate per rent, thai the Exchange js above par. Yet I 
 ' niVM-li tu icrify litis imj.onaM position.
 
 83 
 
 Irish Exchange : in which opinion Lord 
 Henry Petty and Mr. Fox concurred; 
 and 
 
 That Mr. Pitt expressly stated that the notes 
 of the Bank of Ireland were depreciated, an d 
 those of the Bank ^/"England were not de- 
 preciated. 
 
 The opinions of persons so very eminent, both 
 in abilities and situation, are always entitled to 
 particular respect. Those above-mentioned, and 
 the extraordinary matter of fact, demand my 
 most careful examination ; and shall therefore be 
 collateral subjects of my future letters: not mere- 
 ly because the opinions are extremely different 
 fi;om those which I have already delivered ; but 
 also because the proceedings of the two national 
 Banks affect the vital interests of the British empire: 
 and because, I think, the Directors of those 
 Banks are invested with greater and more injurious 
 powers than were ever granted, prior to the 
 charter of the Bank o/England, to any sub- 
 jects not responsible to their country in the 
 capacity of Ministers of State : Powers, 
 which were craftily exercised by the merchants
 
 84 
 
 before their incorporation as a banking com- 
 pany ?-~which then operated, and still do operate, to 
 diminish the public and private revenue of the 
 King; to reduce , in effe&j the settled ren- 
 tal of every private individual;- and, of course, 
 to reduce the allowance of every officer under the 
 
 CROWN. 
 
 I have the honor to remain, my Lord, 
 Your lordship's 
 most faithful 
 and most humble Servant, 
 
 Wills, Somerset, 
 July, 2, 1806. 
 
 /.cuiu Printer. ll'tlL.
 
 TO 
 
 The Right Honorable 
 JLOMB GRENVIILJLE, 
 
 FIRST LORD OF HIS MAJESTY'S TREASURIES IN* 
 GREAT BRITAIN AND IRELAND. 
 
 &c. c. &c. (2c. 
 
 MY LORD, 
 
 JoEFORE I proceed to investigate 
 further that depreciation, which I have denied, 
 and which is affirmed by those high authorities, 
 whose opinions appear at the close of my last 
 Letter, it will, I think, be extremely proper to 
 have a right understanding of those things which 
 are supposed to be depreciated ; and then to de- 
 fine the term depreciation. 
 
 In my Letter to Mr. Pitt, I submitted that 
 ' bank-notes are a paper medium testifying 
 the amount of currency to which the holders of 
 them are entitled from the Bank, whence they were 
 
 N
 
 80 
 
 issued:" that they are " transferable testimonies of 
 a right of 'property in their holders, according to the 
 promises contained in them :" and that " they are 
 valuable in no other view." 
 
 In support of these several positions, I hope, it 
 is not necessary to attempt a regular historical 
 account of the invention of paper medium; and 
 that no more will be expecled from me than a 
 plain elucidation. However, it will not be amiss 
 (without adverting to the period, place or person 
 of the inventor) to make, incidentally, a few ge- 
 neral observations upon the origin of that happy 
 contrivance, which now affords the greatest con- 
 venience to the whole commercial world. 
 
 Mr. Thornton, in his " Enquiry into the 
 Nature and Effects of the Paper Credit of Great 
 Britain, says, (p. 1 4) that " commercial credit 
 is the foundation of paper credit." This is true : 
 and the prototype of paper credit (if I may be al- 
 lowed the expression) was probably nearly coeval 
 with commercial, credit. For, how can it with 
 propriety be imagined that, in the primitive ages 
 of commerce, mutual confidence spontaneously 
 flourished, in a degree, to induce the generality of
 
 87 
 
 individual traders to trust their commodities in 
 the hands of other traders, under a mere parole 
 engagement, that other commodities of reputed 
 equal value should be delivered in exchange at 
 a future day? When the barter * was not in- 
 stantly completed, it seems natural to presume, 
 that some visible testimony would be required 
 of the delivery of goods without an equivalent. 
 And when the arts of writing and accounts had 
 been invented, the readiest evidence of facls (one 
 would think) must have been written acknowledge- 
 ments of the value of the credit given, on the one 
 side, and of the promise to be performed at some 
 subsequent period, on the other. Herein we pre- 
 ceive the commencement of promissory notes. 
 
 Weights and measures were very early inven- 
 tions: and the eventual adoption of the precious 
 metals as the common medium of barter, gradu- 
 ally matured those inventions into great perfec- 
 tion. Merchants resorting to distant markets 
 necessarily became acquainted with other mcr- 
 
 * The word barter is grown almost obsolete: but a mo- 
 ment's reflection will convince that the a&s of buying ami 
 selling are, in fart, two operations whereby we still barter 
 ;onie commodity in our possession for another that we want.
 
 88 
 
 chants ; and the interchange of commodities be- 
 got, of course, an interchange of civilities. These 
 (perhaps more by accident than by design) ulti- 
 mately led to mutual convenience in the adoption 
 of a paper medium to facilitate the various ope- 
 rations of commerce; to accelerate the final 
 adjustment of accounts; and to enable the paying 
 and receiving of balances by parties far removed 
 from each other. A few examples may afford 
 agreeable illustration. 
 
 Permit me to suppose that, an English merchant 
 in the beginning of the seventeenth century, tx~ 
 ported a cargo of British commodities as an ad- 
 venture to Hamburgh. His objeft, unquestiona- 
 bly in such a case, must have been to barter those 
 commodities for foreign commodities that would 
 yield him a profit on being imported into this 
 country. Whether the commodity which he 
 chose to import were gold, or silver, or conti- 
 nental produce, must have depended upon con- 
 siderations of the probability of gain, on selling, 
 or bartering them again in the English market. 
 For my present purpose, I shall suppose that he 
 bartered his whole adventure; and safely returned 
 to England with 2000 ounces of silver in bars.
 
 89 
 
 On his arrival in London (I may further sup- 
 pose) he projected another adventure. But the 
 previous step must have been a conversion of his 
 silver bullion into current British money; 
 which he might do by two modes : either, by 
 taking it to the British Mint to be coined; or, 
 by selling it to a Jew, or goldsmith, at the market 
 price of bullion. In the event of adopting theybr- 
 mer mode, he must, after taking the bullion to the 
 Mint, have experienced a delay of probably three 
 months : then the silver would be returned to him in 
 coins at the rate of Jive shillings and two-pence per 
 ounce ; making the sum of ^516 : 13 : 4. But 
 if he adopted the latter mode, and carried his bul- 
 lion to one of the Jews or goldsmiths, (who were 
 in that day almost the only dealers in bullion) 
 he was t perhaps, allowed for his silver Jive shillings 
 and six-pence* per ounce, or ^550, for the whole : 
 making ^33 : 6 : 8 more than the Mint allowance. 
 The latter mode, therefore, being so much more 
 advantageous, I cannot hesitate in supposing that 
 a merchant, whose object was gain, would prefer 
 it to the former. 
 
 * The question, Why was the market price more than the 
 Mint price ? will be answered in another place.
 
 90 
 
 Presuming, then, that the merchant went to a 
 wealthy goldsmith, who was in high credit, I may 
 further suppose, the silver to have been examined 
 and weighed, the price agreed upon, and the value 
 computed : and that the merchant, not wishing to 
 incumber himself with the money, requested to 
 have a written acknowledgement from the gold- 
 smith, that so much value had been left in his 
 hands ; to be accounted for when demanded, ei- 
 ther by the merchant, or by any other person 
 whom he might chuse to send with a written or- 
 der for it. 
 
 From the goldsmith's the merchant proceeded 
 to the houses of factors and man uf acturers 
 (amongst whom he was well known and in good 
 repute), in search of fit articles for another ad- 
 venture. Those, with whom he dealt, had no 
 objection to deliver into his warehouses any com- 
 modities that he desired ; neither had they any 
 objection to take his orders afterwards upon the 
 goldsmith, for the value of their commodities, 
 lie therefore gave them written orders, accord- 
 ing to their several rights, in terms resembling 
 the following.
 
 91 
 
 Mr. , goldsmith, please to pay to 
 
 Mr. , factor, fifty pounds, (or as the sums 
 
 were) for goods delivered, and I will allow it in 
 my account with you, and remain, Sir, your hum- 
 ble servant." 
 
 These, with his signature, enabled the mer- 
 chant to make his payments without the care and 
 trouble of telling over the cash, either at receiv- 
 ing, or at paying ; and likewise saved him from 
 the risk of keeping so much money in his own 
 house. 
 
 It is not improbable that many merchants of 
 those days, soon adopted the same mode of mak- 
 ing their payments : nor that the occasional ne- 
 cessity for an intermediate agent between the fac- 
 tor , or manufacturer, and the goldsmiths, soon in- 
 troduced the words " or to his order'" after the 
 names of the persons to whom the orders were 
 first given. The money-orders were then pay- 
 able " to Mr. , factor, or to his order." With 
 
 this amendment, orders or drafts might have 
 sometimes passed through several hands before 
 they were taken to the goldsmith's to be ex- 
 changed for cash. The frequent observance of
 
 92 
 
 such occurrences would naturally lead to the idea 
 of a circulating paper : and, in the connexion of 
 all these positions, we discover the origin of drafts 
 upon bankers, and of banking accounts. 
 
 As the extension of commerce gradually en- 
 larged the sphere of each merchant's actions, it 
 gave also by degrees a liberal expansion to the 
 mind : and the accumulation of wealth, creating 
 an accession of power, naturally nourished the 
 love of ease. Repeated dealings between mer- 
 chants of different countries imperceptibly paved 
 the way to esteem and confidence: and that com- 
 mercial faith, which was first exercised among 
 neighbours, at length extended itself to persons 
 at a distance. This rapidly improved the trading 
 system. Merchants of eminence no longer thought 
 it necessary to attend their commodities to foreign 
 markets ; but, consigning them to foreign mer- 
 chants of like eminence, gave employment to 
 each other in the capacity of agents : thus act- 
 ing reciprocally at their respective markets, ac- 
 cording as the private views of each from time to 
 time directed. A. residing in England, sometimes 
 consigned goods for sale to B. residing in Ham- 
 burgh : and B. in like manner consigned goods
 
 93 
 
 to A. to be sold in England: and they occa* 
 sionally commissioned each other to purchase 
 such commodities as would probably afford a pro- 
 fit upon importation. This mode of buying and 
 selling, in foreign markets by commission, became 
 in time, the general practice ; and is continued 
 to this day. 
 
 It consequently often happened that when the 
 foreign agent could not purchase other commo- 
 dities at a limitted price, to ship in return for 
 goods which had been consigned to him, that 
 agent was under the necessity of shipping bullion 
 for the produce of his sales. And, as similar 
 operations by different agents were sometimes 
 performing at the same period in both countries, 
 it followed that while B. of Hamburgh was send- 
 ing bullion to A. in England; C. in England was 
 also sending bullion to D. of Hamburgh. On 
 the one part, there was an importation, and on the 
 other an exportation of bullion. Therefore, if 
 the sums were equal, there was not any accession 
 of the precious metals : (which our ancestors 
 were always so anxious to preserve in this coun- 
 try) but A. and D. both incurred the expence 
 affreight and insurance; besides the charges at- 
 
 o
 
 94 
 
 tending the procuration of exportable bullion, 
 and of afterwards converting it into the currency 
 of their respe&ive countries. 
 
 Although the fear of rivalry, might, in the in- 
 fancy of commerce, have occasioned reserve and 
 distrust, among fellow merchants of the same 
 country ; yet experience soon taught them, that 
 their common interest would be best promoted 
 by a communion of principles, for the regula- 
 tion of their trade; and that their profits, instead 
 of being diminished by imprudent opposition, 
 might be greatly increased by a wiser system of 
 co-operation and friendly contrivances. These 
 considerations were probably strengthened by 
 such accidental events as sometimes made them 
 understand that a league was absolutely necessary 
 for their mutual defence. Fear is a great pro- 
 moter of alliances; but as fear has many sources, 
 so the objects of the alliances suggested by it, 
 are as various as the sources from whence they 
 spring. The league of the merchants resembled 
 the confederacy of states; in being offensive and 
 defensive : but its principal objeft. was not by 
 arms, but by arts to levy contributions on all 
 the rest of mankind. Yet, as the confederating
 
 05 
 
 parties were not in situations of perfecl equality, 
 the strong, among themselves, had considerable 
 advantages over the weak ; and those advantages 
 were often used for private emolument ; in ob- 
 taining monopolies from the mistaken and er- 
 roneous bounty of unwary governments. 
 
 If there were any public or private charges 
 upon mercantile commodities, tending legally, or 
 casually, to an abridgment of the trading profits; 
 the means of evading those charges were happy 
 inventions : and seem, therefore, to have been 
 most secretly and successfully cherished by the 
 whole community of merchants. 
 
 The charges attending the importation of bullion, 
 were more of a private, than of a public, na- 
 ture : they operated, however, like a tax upon 
 the importer; and could seldom be added, (in 
 the manner that charges are usually added to the 
 cost of all other commodities) so as to be reco- 
 vered in the price of the sales. 
 
 Eminent merchants were taught by their indi- 
 vidual experience, that, through the intercourse 
 of many merchants with foreign markets, bul-
 
 96 
 
 lion was constantly passing and repassing from one 
 market to another; and they knew also the amount 
 of the charges incurred for [nighty insurance, 
 agency, &c. 
 
 By frequently revolving this matter in the 
 mind, in search of a remedy, it was, at last, 
 perceived,, that a merchant might direct his foreign 
 agoit to pay money to any third person, with as much 
 propriety as he directed similar operations to be per- 
 formed by his goldsmith at home, and that if an 
 English merchant, who had money due to him in 
 Hamburgh, could find a merchant who wanted to pay 
 money there, both parties might be accommodated, and 
 the usual expence be wholly avoided. 
 
 When merchants began to traffic with foreign 
 countries, where the precious metals were current as 
 money, authorized and issued by t/ie Governments, it 
 was indispcnsibly necessary to learn not the denomi- 
 nations only, but also the quality, or intrinsic 
 value of the currencies of those countries, in compari- 
 son with the currency of the country where their com- 
 modities zuere bought. For, Mr. Locke truly states, 
 in his " Considerations of raising the Value of 
 Money," that it is the quantity of silver tliat
 
 97 
 
 buys commodities, and not the stamp and denomina- 
 tion upon it.*' When both the value and the de- 
 nomination were well understood, it was easy to 
 fix intelligible prices to their commodities; and, 
 
 to apportion those prices to the cost and charges of 
 the goods, as well as to their desires of gain. 
 
 It follows, that the intercourse which opened a 
 commerce by agency, gave to the merchants of 
 the respective countries, an intimate knowledge of 
 the currencies of each particular Government: 
 and those merchants were made further ac- 
 quainted with the relative values of those cur* 
 rencies, by comparing the produce in their own 
 coin, of any given 6um of foreign money, when 
 sold to, or exchanged with, a goldsmith. 
 
 Therefore,, when the idea was conceived, that 
 the expence of transporting bullion might be 
 avoided, by written orders for the payment of a 
 sum of money by one foreign agent to another, 
 there was nothing wanted for the execution of 
 the projecl, but a meeting of parties in opposite 
 circumstances; of those who wanted to import, 
 and of those who wanted to export, money or 
 bullion.
 
 Q9 
 
 However, the author of the projet also con- 
 ceived that he might derive from it still greater 
 advantages than the mere saving of his usual ex- 
 fences; that "by keeping his own counsel" he 
 might not only serve himself, but obtain also a 
 commission or agency-fee^ for the accommodation 
 which he proposed should result to another. 
 
 If A. found that all the various charges upon 
 his importations of bullion, from Hamburgh % 
 amounted to three per cent. ; he must know that 
 those upon export at ions were nearly in the 
 same proportion : and thence he might naturally 
 infer, that, if he would offer to convey and in- 
 sure money from England to Hamburgh at two per 
 cent, those, who had remittances due to their 
 friends in Hamburgh, would be glad to seize the 
 opportunity of saving one per cent. : that is of 
 conveying money to Hamburgh at two thirds of 
 the usual charges. 
 
 Let me now suppose that A. resolved to make 
 an experiment : and that, therefore, at the same 
 time that he gave B. of Hamburgh notice of a 
 carco of goods consigned to him for sale, he gave 
 him also to understand that the produce of sales
 
 99 
 
 might be retained in his hands, until he (A.) 
 should send directions how to dispose of it. 
 
 Going afterwards to the merchants' usual ren- 
 dezvous for bartering, selling or exchanging, 
 their respective commodities (which place is since 
 called the Exchange, as your Lordship knows, 
 from the object of their meeting) A. made known 
 to his brother-merchants, that he would convey money 
 to Hamburgh at two per cent, freight and insurance 
 included. 
 
 C. having in his hands a sum of money be- 
 longing to D. of Hamburgh (which he was about 
 to send) presently engaged with A. for the con- 
 veyance according to his offer. A. thereupon 
 received the sum in English currency deducted 
 his agency of two per cent. calculated the value 
 of the remainder in Hamburgh currency wrote 
 and addressed an order to B. directing the pay- 
 ment of so much Hamburgh currency to C. or to 
 his order C. remitted the order to D. and D. 
 on its arrival, went to B. who, of course, deli- 
 vered the money according to the directions.- 
 Thus the several parties were accommodated; and 
 thus, apparently, Bills ^Exchange originated.
 
 100 
 
 D. was probably well-pleased with the con. 
 trivance which saved him one per cent. : and A. 
 (your Lordship will perceive) had abundant rea- 
 son to exult in his discovery. By receiving two 
 per cent, from C. and avoiding the charge of 
 three per cent, which he must have incurred in 
 the ordinary mode, he had, in effecl:, gained Jive 
 per cent. ; with the additional convenience of 
 English money for his immediate use. 
 
 It may further be supposed that C. was not the 
 only merchant desirous of embracing the oppor- 
 tunity of sending money on such easy terms ; and 
 that in consequence of the known responsibility 
 of A. the applications to him were so numerous, 
 or of such value, that he was under the necessity 
 of declaring, he could take no more: his powers 
 being obviously limitted by the amount of his 
 consignment to B. However, those who were 
 disappointed (knowing that if they paid two and a 
 half per cent, it would be less than the usual 
 charges,) tempted A. by offering a higher rate 
 than that which he himself had announced. But 
 his means were exhausted. Yet the bright pros- 
 pc61, thus opening upon him, gave vigor to his 
 faculties made him conceive the possibility of
 
 101 
 
 improving his scheme and therefore he inti- 
 mated that although he could not instantly ex- 
 tend his engagements, he would endeavour to ac- 
 commodate them in a very few days. 
 
 Deeply pondering the subje6l, and contemplat- 
 ing the great and unexpected benefits which had 
 suddenly accrued to him; he began to discover 
 that his new business was capable of great im- 
 provements : that the profits derived from it, would 
 enable him to sell the goods which he exported to 
 Hamburgh cheaper than his neighbours could sell 
 there that he might consequently obtain a greater 
 vent in that market and that, if his sales in Ham- 
 burgh were increased by means of a small reduction 
 in the prices of his commodities, he might then be 
 morally certain of the ability to enlarge his newly- 
 invented business. 
 
 It further occurred to him that, as he was z/z- 
 stantly in possession of the money which he engaged to 
 convey, that money would allow him to purchase 
 other comviodities for exportation ; and to obtain an 
 abatement of prices in consideration of his prompt 
 payment that such a proceeding would increase 
 his profits and that all these advantages com-
 
 102 
 
 bined would give him such a decisive power over 
 the prices of the Hamburgh market, as might bid 
 defiance, for some time, to the efforts of his com- 
 petitors. 
 
 It moreover appeared to him that, as it was 
 understood he had no immediate conveyance for 
 the sums, which he had been requested to send, 
 it might be y therefore, possible to get the money into 
 his possession on a condition that he should forward it 
 within a limittei period: and that, if this point 
 could be carried, he should then have plenty of 
 time to perfecl his designs. 
 
 Having properly digested these several ideas, 
 (which are drawn from the leading principles in 
 mercantile affairs) he informed the merchants that 
 he could undertake to transmit their money on the 
 terms he at first proposed ; if they would permit him 
 so far to consult his own convenience, in (he time of 
 the conveyance, as not to pledge himself for its deli- 
 very in Hamburgh before the expiration of a certain 
 number of days. 
 
 This condition, (being, in fa&, within the al- 
 lowance which they could afford to make, rather
 
 103 
 
 than incur the whole of the usual charges) was 
 readily agreed to. A. therefore received their 
 money; and (proceeding as he had done with C.) 
 gave them Order- Letters addressed to B; direct- 
 ing him to deliver, six* weeks from the date, so 
 much Hamburgh currency as was mentioned 
 therein. In this transaction we perceive the ori- 
 gin of Bills of Exchange, with a limitation of 
 the time for payment. 
 
 A. immediately thereafter put his whole scheme 
 in operation ; thereby enlarging and improving 
 his trade, and rapidly accumulating extraordinary 
 profits. 
 
 The experience of A. however, soon con- 
 vinced him, that entire dependance upon the sales of 
 B. might, in the event of a cessation in the de- 
 mand for British commodities, sometimes occa- 
 sion either the non-performance of his engage- 
 ments in Hamburgh, or compel B. to borrow at 
 
 * The Usance of Bills drawn by England on Hamburgh, 
 is one month after date : hut there are, I believe, twelve days of 
 grace allowed to the merchants ; (if they chuse to defer the 
 payment so long after the expiration of the month.) The whole 
 lime is, therefore, six week.";.
 
 104 
 
 high interest, or to sell goods at an extremely reduced 
 price, for the purpose of raising money to obey 
 the money-orders directed to him for payment. 
 
 A. therefore thought it expedient to avert that 
 danger, by making B acquainted with a principal 
 part of his scheme, and then proposing a union of 
 their operations in such an arrangement as might 
 enlarge their scale of business, and enable them 
 jointly to engage for the conveyance of money, both 
 from London to Hamburgh, and from Hamburgh to 
 
 London. 
 
 B. perceiving the advantages that must accrue 
 to himself from the scheme and proposal, readily 
 agreed to it; and, following the instructions of 
 A. became a money-agent to the Hamburgh mer- 
 chants ; who were glad to take his orders, ad- 
 dressed to A. for the delivery of money in En- 
 gland. By means of this system of co-opera- 
 tion, the receipts of each in their respective markets 
 supplied in a great degree, the money requisite for 
 making the payments directed by the other. Their 
 charges for agency, or the rates of conveyance, 
 upon their several transactions, were, consequently 
 all clear gains arising from the trouble of merely
 
 105 
 
 receiving the money, making an entry of it in 
 their books, and writing an order for the delivery 
 of a computed equivalent. This is the original 
 
 SYSTEM o/"dEALINC in EXCHANGE, by the ME- 
 DIUM o/"rills. 
 
 I think, that your Lordship will concur with 
 me in opinion, that the inventors of this sys- 
 tem were entitled to the profits accruing from 
 their laudable ingenuity : and that, if the practice 
 of it had always been conformable to the exam- 
 ples of A. and B. there never could have been 
 an equitable foundation for complaint. Unfor- 
 tunately, however, the noblest institutions are 
 liable to abuse. Even those of divine establish- 
 ment, when operating by the agency of human 
 beings, seem at times to deviate from the designs 
 of their omnipotent author. But, as 
 
 " The eternal art educes good from ill," 
 
 so, perhaps, it is ordained that the aberrations 
 of dealers in exchange shall be finally con- 
 ducive to the happiest results. The King's mi- 
 nisters will make an accurate distinction between 
 the system ^exchange, and the arts of those 
 persons^ who have rendered it subservient to un-
 
 loO 
 
 generous purposes: and, while they devise the 
 means of preventing future malefactions, will take 
 care that the system itself may be preserved in- 
 violate. 
 
 I have already hinted to your Lordship, that I 
 cannot pretend to write a history of paper me- 
 dium: neither do I attempt a complete chronicle 
 of events in the System of Exchange. Therefore 
 it will be understood that, in mentioning any 
 period, or in assuming data for particular illus- 
 trations, I do so with a view to my general expo- 
 positions, rather than for the sake of historical 
 exactness. 
 
 I have supposed the first example in this Letter, 
 (p. 88) to have taken place in the beginning of the 
 seventeenth century : but it might with equal pro- 
 priety have been imagined at an earlier period. 
 
 In Mr. Hume's history, it is said that, " the 
 trade of England was anciently carried on altoge- 
 ther by foreigners; chiefly the inhabitants of the 
 Hanse-towns, or Easterlings, as they were called : 
 and that, in order to encourage those merchants 
 to settle in England, they had been erefted into a
 
 corporation by Henry III. ; had obtained a pa- 
 tent; were endowed with privileges; and were 
 exempted from several heavy duties paid by other 
 aliens. So ignorant, were the English, of com- 
 merce, that this company, usually denominated 
 the Merchants of the Stil-yard, engrossed, even 
 down to the reign of Edward VI. almost the 
 whole foreign trade of the kingdom." 
 
 But in the reign of Henry VIII. " a jealousy 
 arose against the foreign merchants, and, to ap- 
 pease it, a law was enacted, obliging all denizens 
 to pay the duties imposed upon aliens." This 
 tempted the English to enter into commerce ; and 
 a spirit of industry began to appear in the king- 
 dom. Until the passing of this aft, the advan- 
 tages, which the English merchants, by their very 
 situation, as natives, possessed above foreigners, 
 in the purchase of cloth, wool, and other com- 
 modities, had not been sufficient to rouse their 
 industry, or to engage them to become rivals of 
 that opulent company." 
 
 " The Council of Edward annulled the privi- 
 leges of that corporation (which had put them 
 nearly on an equal footing with Englishmen, in
 
 108 
 
 the duties which they paid,)" and the Company 
 was further discouraged " by the extortions of 
 Queen Mary :' Yet, the English merchants did 
 not rapidly increase, till " the merchants of the 
 Hanse-towns complained loudly, in the beginning 
 of Elizabeth's reign, of the treatment which they 
 had received in the reigns of Edward and Mary. 
 Queen Elizabeth prudently replied, that, as she 
 would not innovate any thing, she would still 
 protect them, in the immunities and privileges 
 of which she found them possessed. This answer 
 not contenting them, their commerce was soon 
 afterwards suspended for a time, to the great ad- 
 vantage of the English merchants: who now tried 
 what they could themselves efFet for promoting 
 their commerce. They took the whole trade into 
 their own hands ; and their returns proving suc- 
 cessful, they divided themselves into staplers, and 
 merchant-adventurers : the former residing con- 
 stantly at one place ; the latter trying their fortunes 
 in other towns, and slates abroad, with cloth and 
 other manufactures.*' 
 
 " The persecutions which the inhabitants of 
 the Low-Countries suffered under the bigotry of 
 Philip and the Government of the Duke of Alva;
 
 log 
 
 and the violation of their mercantile privileges, 
 induced many of the Flemings to take shelter in 
 England : and as these were the most industrious 
 people of the Netherlands, and had rendered that 
 country celebrated for its arts, Elizabeth, by af- 
 fording them protection, reaped the advantage 
 of introducing some useful manufactures, which 
 were till then unknown in this kingdom.'^ 
 
 By the settlement of foreigners in England, and 
 of Englishmen in foreign countries, all those con- 
 veniencies were attained which die most skilful 
 merchants would require for carrying on the bu- 
 siness of Exchange, with ease and advantage, in 
 their most extensive and important operations. 
 
 But it seems to me that almost every modern, 
 who speaks or writes upon the subject of Ex- 
 change, confines himself merely to the idea of 
 bartering the money of different countries under the 
 influence of varying circumstances : whereas, in 
 my opinion, Exchange should be also considered 
 in its most general sense; as applying to every 
 transaftion of commerce, wherein one commodi- 
 ty is given for another ; whether of the same, or 
 of different kinds and denominations.
 
 110 
 
 Exchanges may be either internal and single, 
 or external and compound. 
 
 By internal and single Exchanges, I mean that 
 traffic or barter which is carried on between the 
 subjects of any particular state ; or between them 
 and aliens within the jurisdiction of that state or 
 government. 
 
 By external and compound Exchanges, I mean 
 all those pecuniary and commercial transactions 
 which pass between the subjects of different states; 
 and which cannot be settled without involving a 
 consideration of the measure of value peculiar to each 
 of those states or governments. 
 
 Silver has been a measure of value from the 
 earliest periods of history. It was, and still is, I 
 believe, the principal measure of value in the 
 East: it has, I think, been almost uniformly so 
 in Europe: and (I have reason to suppose that) 
 it is, in faft, the primary measure referred to by 
 merchants in estimating the value, and fixing the 
 .selling prices of all their commodities, even in 
 those countries where gold is sometimes used as 
 currency. Nevertheless silver has not been al- 
 ways considered the primary measure by those
 
 Ill 
 
 eminent persons, who, from time to time, have 
 constituted the government of this country : nor, 
 indeed, by many other governments. 
 
 Silver was the only metalic measure of the 
 value of property in England, from the accession 
 of William the Conqueror, to the 41st year of 
 Henry III. a period of 191 years. The pound in 
 tale was then equal to the pound in weight of 
 standard silver, as issued from the Tower. The 
 pound in tale was divided into twenty shillings, 
 and each shilling into twelve pence, or sterlings. 
 The pound weight was divided into twelve ounces; 
 and each ounce into twenty penny-weights : so 
 that each penny, or sterling, weighed one penny- 
 weight, or twenty-four grains. The only coins 
 made in this early period were pennies, or ster- 
 lings*. 
 
 According to Dr. Adam Smith, " the re- 
 venues of the ancient Saxon kings of England, 
 are said to have been paid not in money, but in 
 kind; that is, in victuals and provisions of all 
 sorts. William the Conqueror introduced tli 
 custom of paying them in money. This money 
 
 
 
 * Lord Liverpool's Letter to the King, p. 29.
 
 112 
 
 was, however, for a long time received at the 
 Exchequer by weight, and not by tale*." But 
 my Lord Liverpool sayst that, " in the reigns of 
 William I. and William II. and during a great 
 part of the reign of Henry I. the King's rents, 
 arising from his demesnes (which were at that 
 time the principal part of the royal revenue) 
 though reserved in money, were answered in cattle, 
 corn, and other provisions, " because money was 
 then scarce among the people." However, I 
 think it extremely probable that, some persons 
 paid in money, and others in kind, as best suited 
 their convenience. His Lordship adds, that " the 
 rents of private landlords continued to be paid in 
 kind to a still later period :'' and that " the com- 
 merce of the country, whether foreign or internal, 
 was, during that period, of no great extent." 
 
 It will naturally be inferred by your Lordship, 
 that when William I. collected his revenue, which 
 was payable in money, if he received it in kind, 
 the quantity delivered to him, was deemed equivalent 
 to the rent reserved in money: and that, when 
 private landlords discontinued the praUice oj receiv- 
 ing in kind, they received a quantity of mo- 
 
 * Wealth of Nations, v. I. p. 38, 
 + Letter to ihcK. ng, p, 39.
 
 113 
 
 ney deemed also equivalent to the rent reserved in 
 kind. Both of these deviations, from the conditions 
 of the several tenures, were obviously cases of sim- 
 ple, or single, Exchange: wherein a commutation 
 was made of a certain portion of one description of 
 commodities , for such portions of other commodities 
 as were then computed to be of equal value. 
 
 The money-rent reserved to the crown must 
 have been, I presume, a certain number of pounds 
 sterling; and, consequently, the money paid into the 
 Exchequer, by weight, must have been always equal 
 to the number of pounds reserved in tale. But 
 when the officers of the King's Exchequer were sub- 
 sequently content to receive the money-revenue by 
 tale, and not by weight, the deficiency in the 
 w e i g ii t, must, eventually, have been a reduction 
 of the revenue in proportion to that deficiency. 
 
 We have observed that in those " very early 
 times silver coins were weights as well as coins ; 
 or, in other words, a pound, in tale, of silver coins 
 was equal to a pound weight of standard silver ; and 
 that the silver penny (which was probably the only 
 coin then in currency) was the 240th part of a 
 pound in weight, and was intended to contain 
 exa&ly a penny-weight of standard silver: so
 
 114 
 
 that these coins expressed and defined the precise 
 quantity of silver \ which they were intended 
 to represent. The reverse of the penny was 
 stamped with a cross through the middle of it: the 
 people occasionally broke the penny in the part 
 where the cross divided it ; and then it passed as 
 a half-penny. And they sometimes broke the 
 half of the penny into two equal parts, that is, a 
 fourthing or farthing. This practice continued 
 till silver halfpence and farthings were coined." 
 
 " During that period (so correct were our an- 
 cestors in regulating their payments) rules were 
 adopted to remedy any defect, either in the weight or 
 fineness, of the coins then current. When they were 
 deficient in weighty from wear, or any other cause t 
 the method of payment was called compensatio ad 
 pensum : the corns were in such case put into a scale, 
 and taken by weight without any regard to the 
 number. At other times , the deficiency in weight 
 was compensated by an estimated proportion, or al- 
 lowance, in order to save the trouble of weighing. 
 This proportion, or allowance, was a 40/A part or 
 six pennies in each pound; and this was called com- 
 pensatio ad scalam. And when a suspicion was en- 
 tertained that any of the coins were not made of 
 standard silver, either from errors committed by
 
 115 
 
 the officers of the mint (which in those early 
 times were not uncommon] or from other causes, 
 a method was practised of ascertaining the fineness, 
 by a mode of assaying them, called trial by combus- 
 tion. It is certain that all those rules were observed 
 by the sheriffs in receiving the King's rents ; and by 
 them and others in making payments into the Ex- 
 chequer. And, as the kings of this realm had in 
 those times great estates in every county of En- 
 gland, from which their principal revenue was 
 derived, it is probable that the same rules were 
 generally known and practised in all payments what* 
 soever. '* 
 
 " This system for regulating the silver cur- 
 rency continued to subsist to the 28th of Ed- 
 ward I. Then that monarch first debased the silver 
 coins of the realm; and from that time, a pound 
 in tale no longer contained, in weight, a pound of 
 standard silver : consequently the coins then made 
 did not contain so much silver as their names im- 
 plied. In all the successive debasements made in 
 our coins (which will be noticed in another Let- 
 ter) the quantity of standard silver which the pound 
 in tale originally represented, was by degrees further 
 diminished. The denomination therefore of a 
 pound in tale, and of the coins representing all
 
 n<5 
 
 its parts, became from thenceforth merely arbi- 
 trary and dependant on the will of the sovereign. 
 The weight of the silver coin, frequently, did not 
 correspond with any aliquot parts of the pound, ac- 
 cording to the weights then in use, but was some- 
 times made up of fractional parts even of a grain. 
 The practice of weighing then began to be aban- 
 doned ; for the people, in general, could not know, 
 what the precise weight of each coin should be*" 
 
 Till the reign of Henry III. I do not find that 
 any direct efforts were made by the sovereign to 
 improve the trade of this country ; and those of 
 that monarch seem to have sprung from his at- 
 tachment to foreigners rather than from benevo- 
 lence to his natural subjects. Mr. Hume sayst, 
 that the king " had not the prudence to chuse 
 right measures; he wanted even that constancy 
 which sometimes gives weight to wrong ones; he 
 was entirely devoted to his favorites, who were 
 always foreigners; and he lavished on them with- 
 out discretion his diminished revenue." Perhaps 
 it was that predilection for foreigners which sug- 
 gested the charter granted to the merchants of the 
 Hame towns. To the secret influence of those 
 
 * Lord Liverpool's Letter to the King, p. 132, 3, 4. 
 + Hume's Engljnd, Vol. II. p. 176.
 
 117 
 
 merchants may probably be attributed the intro- 
 duction of gold coins ; which were first coined at 
 the English mint in the 41st year of that prince's 
 reign. " They were called gold pennies, weighing 
 two sterlings, or the 120th part of the Tower 
 pound: which gold pennies were to pass each for 
 twenty silver pennies, or sterlings, in tale. The cwr- 
 rency of this gold money was enforced by a pre- 
 cept directed to the mayor and sheriffs of the 
 city of London. However the citizens of London 
 made representations against those gold coins very 
 soon after they were first issued. The King, 
 therefore, put forth a proclamation, declaring that 
 nobody was obliged to take them : and that whoever 
 chose to receive them in payment might bring them 
 to his Exchange, and receive there the value at which 
 each had been made current: but half a ster- 
 ling, or the value of half a silver penny, was 
 to be deducted! " probably"(my Lord Liver- 
 pool says*) " to compensate the charge of coinage.'* 
 But the deduction agrees exactly with the com- 
 pensatio ad scalam already mentioned; which was 
 two pounds and a half per cent.! ! " From these 
 circumstances it may be inferred that, those gold 
 pennies did not then get into general circulation." 
 
 * Letter to the Kin, p. 38, 39. 
 R
 
 118 
 
 Gold is seldom considered by merchants as a 
 measure oj value. It is usually distinguished by them 
 as a vendible commodity \ rather than as a measure of 
 property. When gold seems to be actually the mea- 
 sure of value, that appearance indicates an error in 
 the government which issued it in coins. It 
 becomes a nominal measure, by the authority of the 
 sovereign; but is actually a measure, only by 
 the mercantile estimation of its worth in compari- 
 son with SILVER. 
 
 " From the time -when gold coins were issued 
 as currency, under the authority of the sovereign, 
 the pound sterling, in tale, represented a certain 
 quantity, or weight, of standard gold; in like 
 manner as those coins'' nominally " represented 
 a certain quantity, or weight, of standard silver. 
 The nominal value of the gold coins was from 
 time to time enhanced, or their weight diminished, 
 in proportion as the silver coins were debased*" 
 by variations in the quantity of pure silver con- 
 tained in their respective denominations. 
 
 As it was ever the business of merchants to get 
 the best prices for their commodities, so they have 
 always embraced occasions for raising the nominal 
 
 * Lord Liverpool's Letter to the King, p. 135.
 
 119 
 
 price of gold. Kings and their ministers have 
 been frequently deceived by the fallacious ap- 
 pearances of the nominal price in the market ; 
 and have yielded, (perhaps, in most cases, inno- 
 unity) to suggestions which provoked Dr. Adam 
 Smith to speak thus severely*: " In every country of 
 the world, the avarice and injustice of p r i n c e j and 
 sovereign -states, abusing the confidence of their 
 subjects, have, by degrees, diminished the quanti- 
 ty o/^metal, which had been originally con- 
 tained in the coins. By means of those operations the 
 princes and sovereign states were enabled, in 
 appearance, to pay their debts, and fulfil their 
 engagements, with a smaller quantity of 
 silver than would otherwise have been requisite. 
 It was indeed in appearance only: for their cre- 
 ditors were really DEFRAUDED o/fl part of 
 what was due to them. All other debtors in the 
 state were allowed the same privilege; and might 
 pay the same nominal sum of the new and de- 
 based coin, whatever they had borrowed in the 
 old." He adds, " Such operations, therefore, 
 have always proved favorable to the debtor, 
 and ruinous to the creditor ; and have sonie- 
 times produced a greater and more universal revo~ 
 
 * Wealth &f Nations, vol. i, p. 40.
 
 120 
 
 hdion in the fortunes of private persons, than could 
 have been occasioned by a very great public calamity. 1 * 
 
 Was the learned Doclor aware that the pr inces 
 and sovereign states were, infat~t t the great- 
 est sufferers by every one of those operations ? 
 Did he perceive that the merchants were the only 
 persons who could possibly be benefited thereby? That 
 few, besides the merchants, were able to take silver 
 and gold to the mint to be coined into the degraded 
 money ? and that if the princes and sovereign states 
 coined a sum, for their own wants, equal to one fifth 
 of their whole revenue, the gain upon that on e fifth 
 would occasion a loss, upon the other your fifths 
 of their revenue, in proportion to their imaginary 
 gain ; unless their reikis and taxes were raised in 
 the same ratio, according to the practice of the mer- 
 chant; who " adjusts the price of his goods, as well 
 as he can, not to what the weights and measures 
 ought to be, but to what, upon an average, he 
 finds by experience they actually are*,*' The sovereign 
 is, in fact, the greatest creditor in the state; and 
 must receive his rents and taxes in the money which 
 he himself authorizes to be current. Therefore (I 
 infer that) the sovereign could not have meditated 
 an injury to his subjects in the alteration of the 
 
 * Wealth of Nations, Vol. I. p. 69,
 
 121 
 
 coins. Because it argues an unnatural blindness in 
 princes to suppose that they could calculate the seem- 
 ing advantages on the one hand, and not per- 
 ceive the actual injury which tliey themselves 
 must sustain on the other, Every increase in the 
 nominal value of the current money being an ac- 
 tual deduction from the public revenue, in & 
 ratio, at least , equal to the fraud committed upon tht 
 subject. 
 
 It is the design of my expositions to illustrate 
 this theory, by evidence that., in my opinion, can- 
 not be refuted ! and to prove the fallacy of those 
 doctrines which account, by referring to imaginary 
 causes, for the progressive rising in the prices of com- 
 modities; and more especially by alleging the depre- 
 ciation of the paper medium of England and rre~ 
 land: without considering that Bank notes can- 
 not be of any value, other than as they are representa- 
 tives of the money used in payment at the respective 
 Banks from whence they were issued. 
 
 I am persuaded that your Lordship will not 
 find it difficult to admit that " Bank notes are 
 merely transferable testimonies of a right of pro- 
 perty in their holders, according to the promise* 
 contained in them ; and that they are valuable in
 
 122 
 
 no other view." Nevertheless, as doubts, may 
 remain in the minds of other readers, I think that 
 a reference to the origin of the Bank of England 
 may materially contribute to establish my positions. 
 
 Dr. Smollett mentions that in 1693, '* The 
 scheme of a national Bank, like those of Amsterdam 
 and Genoa> had been recommended to the minis- 
 try of William III. as an excellent institution; as 
 well for the credit and security of the government, 
 as for the increase of trade and circulation. The 
 scheme was founded on the notion of a transfer- 
 able fund, and a circulation by bill on the credit 
 of a large capital. Forty merchants subscribed to 
 the amount of .500,000, as a fund of ready mo- 
 ney to circulate one million at eight per cent, to 
 be lent to the government.'' 
 
 As the Bank of England was to resemble " those 
 of Amsterdam and Genoa," and as the Bank of 
 Amsterdam has been particularly described by 
 Dr. Adam Smith (on the authority of information 
 received from Mr. Henry Hope, the celebrated 
 merchant and banker of that city, and probably 
 the greatest dealer in Exchange in the whole com- 
 mercial world,) I submit to your Lordship a part 
 of the Doctor's narrative in the following words.
 
 123 
 
 " Before 1609, the great quantity of dipt and 
 worn foreign coin, which the extensive trade of 
 Amsterdam brought from all parts of Europe, re- 
 duced the value of its currency, about nine per cent, 
 below that of good money fresh from the mint. Such 
 money no sooner appeared than it was melted down, 
 or carried away; as it always is in such circum- 
 stances. The merchants with plenty of currency, 
 could not always find a sufficient quantity of good mo- 
 ney to pay their Bills of Exchange; and the value of 
 those bills, in spite of several regulations made to pre- 
 vent it, became, in a great measure, uncertain.** 
 
 "In order to remedy these inconveniencies, a 
 Bank was established in 1609, under the guaran- 
 tee of the city. This Bank received both foreign 
 coin, and the light and worn coin of the country, at 
 its real intrinsic value, in the good standard money 
 of the country: deducting only so much as was neces- 
 sary for defraying the expence of coinage, and the 
 other necessary expence of management. For the 
 value which remained, after this small deduction was 
 made, it gave a credit in its books. This credit was 
 Called Bank money; which, as it represented money 
 exactly according to the standard of the mint, was al- 
 ways of the same value; and intrinsically worth more 
 than current money.'*
 
 124 
 
 "It was at the same time enaBed, that all bills 
 drawn upon, or negotiated at, Amsterdam, of the 
 value of six hundred guilders and upwards, 
 should be paid in Bank money; which, at once, 
 
 TOOK AWAY ALL UNCERTAINTY IN THE VA- 
 LUE OF THOSE BILLS. 
 
 *' Every merchant, in consequence of this regula- 
 tion, was obliged to keep an account with the Bank, 
 in order to pay his foreign Bills of Exchange: 
 which necessarily occasioned a certain demand 
 for Bank money*/' 
 
 I have no doubt that this ingenious part of the 
 narrative is faithfully drawn from the materials 
 delivered to Dr. Adam Smith. But your Lord- 
 ship will instantly perceive the improbability of a 
 complaint originating with those who liad to 
 pay Bills of Exchange. It is evident, from the 
 Do&or's first sentence, that " the great quantity of 
 dipt and worn foreign coin," which had " reduced 
 the value of the currency of Amsterdam," must 
 have been current, in all payments, at a specific 
 nominal value; and that, consequently, " the 
 
 * Wealth of Nations, Vol. II. p. 220, Sec,
 
 125 
 
 merchants, with plenty of currency*' if they knew, or 
 could even guess at, the motives of those who 
 " melted down, or carried away the good money fresh 
 from the Mint,'* could not easily fo persuaded to 
 u find a sufficient quantity of good money to pay their 
 Bills of Exchange.'* 
 
 Considering, for a minute, the pursuits of mer- 
 chants, it becomes palpable that the precious metals 
 are, at once, the media, and the objects of their 
 traffic : and that their profits, or gains, are com- 
 plied by the actual differences between the quanti- 
 ties paid and the quantities received. 
 This is the grand fundamental truth the great 
 secret of all commercial transactions. And it was 
 the want of this essential knowledge, or, at least, of 
 proper attention to it, that often, in former times, in- 
 volved the Executive Governments of this kingdom, in 
 pecuniary difficulties : when ministers had supposed 
 that ample provisions were made for the exigencies of 
 the public service. It was inattention to this impor- 
 tant matter that created the necessity for loan af- 
 ter loan, in wonderful succession: and heaped 
 the present monstrous debt upon the shoulders of 
 our country ; now groaning beneath the oppres- 
 sive weight; although surrounded by the glory 
 
 s
 
 120 
 
 of valiant achievements. And it is the possession 
 of, and attention to, this creative secret, which ena- 
 bles the fraternity of merchants to covenant, from 
 time to time, for such enormous loans, as fill the 
 rival powers of Europe with envy and amaze- 
 ment; and would have seemed incredible ro- 
 mance, in the ears of our progenitors. 
 
 Keeping this important truth continually before 
 us ; your Lordship will plainly see the reason, 
 why the Dutch merchants paid their Bills of 
 Exchange in dipt and worn foreign coin;'' and why 
 " good money fresh from the Mint, no sooner ap- 
 peared, than it was melted down, or carried away;** 
 (and why Mr. Hope, or Dr. Adam Smith could 
 add the testimonial finish to the sentence,) " as it 
 always is, in such circumstances." And your 
 Lordship will have no difficulty in believing that 
 " the value of those bills became, in a great measure, 
 uncertain;'* nor that that uncertainty was a griev- 
 ance severely felt by those who had Bills of Exchange, 
 zohich they were under the necessity cf receiving in the 
 current money, according to its nominal worth. 
 
 The learned Doctor correftly mentions (p. 219) 
 that if foreign Bills of Exchange are paid in worn,
 
 127 
 
 dipt, or degraded currency; the uncertain value of 
 any sum, (of what is in itself so uncertain) must 
 render the Exchange always very much against 
 the State, whose currency is so degraded below the 
 standard value : its currency being, in all foreign 
 states, necessarily valued even below what it is worth." 
 
 The injury arising from a defective currency, 
 in any country, is consequently felt, not only at 
 the time of receiving the amount of bills drawn 
 upon that country, but also at the time of pur- 
 chasing bills there, for the purpose of a remittance 
 to any other country, where the coin is in more 
 perfeft accordance with the standard of its mint. 
 
 The means devised by the Dutch " to remedy 
 these inconveniences'* are no less remarkable for 
 their efficacy, than for their admirable simplicity : 
 (although a capital defeft will be noticed here- 
 after) and they are, in my opinion, eminently en- 
 titled to your Lordship's attention. 
 
 A Bank was established, under the guarantee of 
 the city. This Bank received both foreign coin, 
 and the light and worn coin of the country, at its 
 real intrinsic value in the good standard money of
 
 128 
 
 the country; deducting only so muck as was necessary 
 for defraying the expence of coinage, and the other 
 necessary expence of management. For the value 
 which remained, after this small deduction was 
 made, it gave a credit in its books." 
 
 This seems to have been the mode adopted for 
 establishing a fund : but whether with or without 
 a limit of proportions does not appear. How- 
 ever, in this mode, your Lordship will perceive 
 the essence of that System of Exchange, which is 
 partly disclosed in my general expositions. " The 
 Bank received both foreign coin, and the light and 
 worn coin of the country at its real intrinsic value in 
 the good standard money of the country*' or, in 
 other words, according to the standard laws of their 
 mint. The intrinsic value was the object of 
 enquiry not whether it was foreign coin, or coin 
 of i heir own country. And, although the Bank 
 was established for the payment of bills in Amster- 
 dam, yet no distinction was made at the Bank be- 
 tween the Dutch money, and foreign coins : save 
 only as to their weight and degrees of purity. The 
 nominal value of the light and worn coins 
 was entirely out of the question. For, ihe nominal 
 value belonged to them, in fa 61, only while they were
 
 129 
 
 of full weight. The epithets light and "worn 
 plainly intimated alterations and deficiency: and, as 
 they are said to have been about nine per cent, below 
 the value of good money, it is equally plain that 
 the degrees of deficiency were taken into considera- 
 tion by the merchants, as well as at the Bank ; 
 where their value was computed and expressed 
 by the measure and names of the good standard 
 money of the country. 
 
 The receipts of the current money at the Bank 
 were clearly transactions of Exchange, to put the 
 light and worn money upon an equality with the 
 standard of the Mint : and the difference, be- 
 tween the nominal value by tale, and the nominal 
 value by weight, was the premium paid for stand- 
 ard ?noney : or, in other words, it was the par- 
 rate of Exchange, in the transactions between the 
 Bank and the merchants. 
 
 The dedublions subsequently made " to defray 
 the expence of coinage, and the necessary expence of 
 management" were nearly synonimous with the 
 modern dealer's charge, for agency, or commis- 
 sion : and those deductions more completely 
 identify the business of Exchange.
 
 130 
 
 *- For the value which remained, after this small de- 
 duction was made, it gave a credit in its books ;" 
 that is a record was made in the Bank-books ; 
 and a receipt, or note, was given to shew that the 
 party had a right to so much standard money ; 
 payable when, by him, demanded, or, directed to 
 be paid, in discharge of any Bill, or Bills, of 
 Exchange. 
 
 " This credit was called Bank-money ; which as 
 m represented money exactly according to the standard 
 of the Mint, was always of the same real value, and 
 intrinsically worth more than current money" Now 
 I submit to your Lordship, whether my general 
 theory is, or not, a perfect recognition of this 
 fa6l? that the Bank-credit, of which a receipt, or 
 NOTE, is evidence, is always of the same real value as 
 the money with which the Bank-credit is payable ? It 
 is precisely the matter that my arguments are 
 meant to establish, (as will be seen by reverting 
 to pages 68, and 69). But I shall speak again 
 upon this point. 
 
 " It was enacted, that all bills drawn upon, or 
 negotiated at, Amsterdam, should be paid in Bank- 
 money." The force of law was necessary to
 
 131 
 
 compel the use of standard money, by the mer- 
 chants, in the payment of their bills : because the 
 motives to a contrary practice were palpable ; 
 and the prevalence of those motives gave occa- 
 sion for the law. 
 
 The wisdom of that measure was instantly ap- 
 parent. It" TOOK AWAY, AT ONCE, ALL UN- 
 CERTAINTY IN THE VALUE OF BILLS ! !" Can 
 
 any argument be more conclusive ? Is it not de- 
 monstration, that the uncertain value of bills was 
 occasioned by the uncertain value of the money, with 
 which they were paid ? But I need not detain 
 your Lordship on this point : I therefore proceed 
 to other considerations. 
 
 " Bank money, representing money cxatlly ac- 
 cording to the standard of the Mint, was al- 
 ways intrinsically worth more than current 
 money.'' 
 
 This sentence contains (though not in the same 
 words) a proposition, which has puzzled several 
 eminent writers on the subjet of money. They 
 could not comprehend why the market-price of 
 the precious metals, often and generally, exceeded
 
 132 
 
 the mint-price. I therefore think it prudent to 
 facilitate my future enquiries, by entering imme- 
 diately on a brief discussion of that important 
 question which, however, will be more copi* 
 ously examined in another Letter. 
 
 Lord Liverpool, being the most modern 
 writer on coins, has the prior claim to my obser- 
 vations. His Lordship asserts *, 
 
 That " the coins of every kingdom, or state, 
 are the measure of property and commerce, 
 within every such kingdom, or state, according 
 to the nominal value, declared and authorised 
 by the sovereign, so far as they are made legal 
 tender," and 
 
 That * in Exchanges with foreign countries. 
 and in payments made to them, the intrinsic value 
 of the metal of which the coin is made, is the 
 only measure of property and commerce : be- 
 cause the authority of sovereigns cannot extend 
 fo regulate payments made in foreign countries 
 where they have no jurisdiction." 
 
 
 
 * Sfc Letter to the Kin<r. p. i6, 17.
 
 133 
 
 1 presume, that, the first of these propositions 
 is partly answered by the preceding comment, 
 on the mode adopted at the establishment of the 
 Bank of Amsterdam : yet it certainly deserves 
 more particular enquiry. 
 
 I grant, that the coins of a State are the mea- 
 sures of property within its jurisdiction , accord- 
 ing to the nominal value declared and authorised 
 by the Government ; but I cannot add, " so far 
 as they are made legal tender" without asking 
 whether they ought to be made legal tender at any 
 weight less than the standard of the Mint ? I think 
 it would be deemed inconsistent to say, that the 
 measure of a legal foot, is, and shall be, twelve 
 inches; yet if a man use a rule of only eleven inches, 
 that measure shall be also a legal foot ! 
 
 The noble Earl, no doubt, alluded to the 
 standard weight of the English gold coins, and to 
 the least weight allowed to be " legal tender." To 
 form a correct opinion of that allowance, it will 
 be convenient to view it through a magnifier ; 
 which will make its defects appear more con- 
 spicuous. 
 
 T
 
 J 34 
 
 If the King were pleased to proclaim that 
 twelve penny-weights of standard gold should be 
 the weight of a twenty -shilling-piece ; yet that 
 pieces weighing only eleven penny-weights should 
 be" legal tender;" can it be imagined that ei- 
 ther foreign or native merchants would be anxious 
 to " find" pieces of the full standard weight, 
 when they had debts to pay, or purchases to 
 make ? Is it not more probable that they would 
 rather be careful to pay with pieces of only eleven 
 penny-weights ? Especially as they must know, 
 by their foreign business, that the actual difference, 
 between the former and the latter pieces, would 
 be ^8 : 6 : 8 per cent.! 
 
 Suppose that coins of full weight get into the 
 hands of Jews or goldsmiths, who value gold and 
 silver by weight alone, and calculate by grains ; 
 are the diflates of conscience so imperious as to 
 prevent the use of convenient tools for reducing 
 those pieces to the lowest weight legally current, 
 while the King permits the coins, so reduced in 
 weight, to bear the same nominal value which 
 they bore when issued from the Mint ? Is it not 
 presumable that some of those persons would sa- 
 tisfy their consciences, by arguing, from the
 
 135 
 
 legality of the reduced pieces as a tender in pay- 
 ment, that, so long as the atlion of reducing escaped 
 detection, they were merely pursuing the ends of 
 business, by availing themselves of secret oppor- 
 tunities to grow rich by " artful industry ?'' And 
 is it not probable that all of them would take 
 care never to pay away any pieces, that exceeded 
 the lowest weight allowed to be current? 
 
 If merchants trading abroad found it expedient 
 to import bullion, is it likely that they would carry 
 that bullion to the Mint to be coined into stand- 
 ard pieces, when by selling it to a Jew or gold- 
 smith, they could instantly obtain money for their 
 purposes, and have a better price than the Mint 
 allowance? And cannot the Jew or goldsmith 
 afford to pay three or four per cent, more than 
 the Mint price, when he pays in pieces, which have 
 been reduced, eight or ten per cent, below the 
 Mint weight ? 
 
 It is true, that the difference between the 
 standard weight of the present gold coins of the 
 English Mint, and the lowest weight allowed to 
 be " legal tender," is only about one and a quarter 
 per cent. Rut as the essential practice of weigh-
 
 136 
 
 ing has long been discontinued, and as other 
 measures have been authorised by the legislature, 
 the dealers in bullion have now a larger profit 
 than any that I have yet mentioned. 
 
 " The money of any particular country*' says 
 Dr. Adam Smith*, " is, at any particular time 
 and place, more or less an accurate measure of 
 value, according as the current coin is more or 
 less exactly agreeable to its standard, or contains 
 more or less exactly the precise quantity of pure 
 gold, or pure silver, which it ought to contain:" 
 and, " as it rarely happens that the pieces art ex- 
 actly agreeable to their standard, the merchant 
 adjusts the price of his goods, as well as he can, 
 not to what those pieces ought to be, but to 
 what upon an average, he finds by expe- 
 rience, they ACTUALLY ARE." 
 
 " Gold," says Mr. Thorntonf , " may be con- 
 sidered in the same light with all other commodi- 
 ties : it is, in point of fatt, like them, used by our 
 merchants, accordingly, as the export or im- 
 port is likely to yield a profit." 
 
 * Wea.th of Nations, Vol.1, p. 69. 
 
 + Enquiry into the Nature of Paper Credit, p. 121.
 
 Now, if gold is like all other commodities, and 
 merchants adjust the prices of their commodities 
 not to what the money ought to be, but to what, 
 upon an average, they find by experience, it ac- 
 tually is, it follows that, when the coins of the 
 kingdom are deficient in weight, and neverthe- 
 less, are current according to the nominal value 
 declared by the sovereign, the merchants must 
 adjust the price of their gold not to what the 
 coins ought to be, but to what, upon an average 
 they find by experience they actually are either 
 an allowance must be made to the merchants 
 for the- number of grains which the coins are below 
 the standard; which would enable them to sell 
 gold at the Mint-price; or an addition must be 
 made to the Mint-price in proportion to the defi- 
 ciency of the coin; which, in that case, would 
 appear like an increase of the market-price ; 
 whereas, in point of fact, it would only mark the 
 rate of Exchange, with dealers in bullion: be- 
 cause the coins not only measure the value of the 
 bullion, but are given in exchange for it, as of 
 equal value but this they are only by their 
 quantity*. The nominal value of money is 
 
 * See, Locke on Raising the Value of Money.
 
 138 
 
 consequently the measure of property only in 
 name, and not in fact. Since it serves the mer- 
 chant merely to express in the name of the coins, 
 the quantity of the precious metal which he de- 
 mands for his commodity. 
 
 "It is not necessary that bullion be bought 
 with shillings, no stipulation of price is ever made 
 farther than at so many pence sterling per ounce. 
 Does not this virtually determine the value of 
 our currency with regard to all the currencies of 
 Europe ? Did a Spaniard, a Frenchman, or a 
 Dutchman know the exacl quantity of bullion 
 that can be bought in the London market for a 
 pound sterling, would he inform himself any far- 
 ther, as to the value of that money unit ? Would 
 he not understand the value of it far better from 
 that circumstance, than by the course of Ex- 
 change with foreign countries ? Since" exter- 
 nal " Exchange does not mark the intrinsic value 
 of money; but only the value of that money trans- 
 ferred from one State to another*;" where the 
 coins of each must be compared, and all the at- 
 tendant charges of carriage, insurance, agency, 
 
 * Encyclopaedia Britannica. Article, money.
 
 13Q 
 
 taken into the account. This brings me to the 
 second proposition taken from the noble Earl's 
 Letter. 
 
 His Lordship admits that " in Exchanges with 
 foreign countries, and in payments made to them, 
 the intrinsic value of the metal, of which the coin 
 is made, is the only measure of property and com- 
 merce. 
 
 I should be glad to know what difference there 
 is between making payments to merchants in fo- 
 reign countries, and to foreign merchants in our 
 own country ? IfjoREiGN merchants be in the 
 English-market , I presume, that they must value 
 English-money according to its 1 n t r i n s ic worth ? 
 And if the foreigner do so\ why not the English 
 merchant ? Do not the British merchants import 
 goods from foreign parts? Must they not pay for 
 them there? And how can they pay for them, 
 but by taking, in the market where they sell, a 
 price according to the intrinsic value of the cur- 
 rency of that market ; so as to raise a quantity 
 of bullion equal to the quantity paid, or to De 
 paid, including every kind of charge upon their 
 goods, as well as a surplus for profit ?
 
 140 
 
 The extracts made in this Letter from Mr. 
 Hume's history, are, I believe, sufficient to prove 
 that the foreign commerce of England was, not 
 only opened, but, conducted for centuries, by the 
 merchants of the Low Countries from the char- 
 ter of Henry III. to the suspension of their trade 
 by the wisdom and energy of Elizabeth's govern- 
 ment. Those merchants must have had a golden 
 harvest in the commercial ignorance of our an- 
 cestors and they were frequently assisted in their 
 schemes by the erroneous bounty of the sovereign ; 
 who thereby enabled them to impose on the un- 
 suspecting confidence of the people. 
 
 It is obvious that foreign merchants traded in 
 England for the sake of selling their foreign 
 productions at as much advantage as possible ; and 
 of purchasing, in lieu thereof, English commodi- 
 ties at such a price, as might afford a power to 
 sell in foreign markets, with a moral certainty of 
 considerable profit. 
 
 I have already stated that, the precious metals 
 are, at once, the media, and the objeBs of mercantile 
 traffic; and Dr. Adam Smith* says, " the mer- 
 
 * Wealth of Nations, Vc<'. I. p. 55,
 
 141 
 
 chant, who carries goods from one country to 
 another, has nothing to consider but the money 
 price; or the difference between the quantity of 
 silver for which he buys them, and that for 
 which he is likely to sell them." Consequently, 
 in making his purchases^ the merchant endeavors 
 to obtain commodities for the smallest quantity of 
 gold, or silver; but when selling, he endeavors 
 to obtain the greatest quantity of gold, or silver, 
 that circumstances will allow. For these reasons, 
 if merchants can engage the ears of princes, they 
 are apt to embrace opportunities of insinuating that 
 kings, by their royal prerogative, may affix what 
 nominal value they please to the coins of their 
 dominions ; and that subjects are bound by their 
 allegiance to receive them in payment, according 
 to the value made known by proclamation. If 
 pecuniary difficulties press upon the state, and 
 ministers are embarrassed by the wants of the 
 public service are afraid of imposing new taxes 
 upon the people are reduced to the necessity of 
 borrowing from the merchants such moments 
 are not to be lost. Merchants may then de- 
 claim on the scarcity of money ; on the artifices 
 of f o r e i c n e r s in draining the kingdom of its valu- 
 able coin : then, while enquiring the magnitude
 
 142 
 
 of the requisite loan, they may venture to la- 
 ment, that commerce is fettered; and that many will 
 be ruined; if measures be not taken to prevent 
 the interruption of trade, and the exportation 
 of coin to counteract the temptations of un- 
 favorable exchanges, and the nefarious traffic of 
 tho^e who melt the current money, and secretly 
 convey it to foreign parts. Then, my Lord, I 
 should think it natural for ministers to join in 
 the complaint to enquire the means of preventing 
 the ex port at ions of com of giving vigor to 
 trade ; of promoting the prosperity of the nation; 
 and securing the good subje&s of the kingdom 
 against the machinations of all their enemies. 
 Merchants, in replying, should, of course, be mo- 
 dest, and plead their inability to advise in affairs of 
 state* that they are poor politicians that their 
 information is partial; whereas ministers are in- 
 formed from every quarter and, that the embar- 
 rassments of commerce engross the thoughts of 
 merchants. These evasions may draw sug- 
 gestions from a minister may induce him to 
 submit propositions. And, if his ideas do not ac- 
 cord with their views then the merchants may 
 
 * Sec, Minutes of Secret Committee on the Bank in 1797.
 
 143 
 
 recoiled what they have heard suggested by other 
 persons or, may give it to be understood, 
 that a person (not visibly connected with them- 
 selves) has said, " he knows how the difficulties 
 might be removed; yet, he will not speak out: but 
 ministers, no doubt, if he were sent for, might get 
 the matter from him: ,y that, as to the melting and 
 exportation of com, perhaps the on ly effectual 
 method of suppressing that alarming evil, would be 
 raising the nominal value oj the coin above 
 the market-price ^bullion ; so as to render 
 m e l t i n c, or the sale of coin abroad, an unprofit- 
 able business *. In such an extraordinary case as 
 the drains of cash in 1797, if ministers would 
 take a hint, and send for the person alluded to, 
 (as above,) that person might suggest that" gold 
 is not absolutely necessary for the internal commerce 
 of a kingdom that paper might do quite as well 
 that cash might be effectually secured for the exi- 
 gencies of the state, if a restriction were put 
 upon the issues from the public Banks that trade 
 would suffer no inconvenience from such a measure; 
 provided instructions were given to the 
 
 * See, Minutes of Evidence taken by the Exchange Com- 
 mittee, from Mr. Colville, Mr. Frank, and Mr. D'Olicr.
 
 144 
 
 OFFICERS OF GOVERNMENT; DIRECTING THEM 
 TO RECEIVE THE NATIONAL BANK NOTES IN 
 DISCHARGE OF THE CUSTOMS AND EXCISE DU- 
 TIES, AND IN PAYMENT OF ALL TAXES AND 
 
 impositions" that it is paper*, and not 
 
 cash, THAT merchants feel the want OF 
 
 that, however, "cash might easily be drawn from 
 private hoards, if the rate of interest on some of the 
 securities of Government were increased a little above 
 the legal rate as such a temptation would be irre^ 
 sistible with many wealthy misers." By these, or 
 similar insinuations, ministers have heretofore 
 been throzon off their guard have been induced 
 to seek for temporary relief by grasping at sha- 
 dows, and neglecling the substance to exert all 
 their influence in supporting (under a notion of 
 public benefit) measures that have entailed the 
 most deplorable grievances on their unfortunate 
 countrymen. Nevertheless, some of these insinu- 
 ations are p art ly founded in truth ; and demand 
 more serious investigation, than your Lordship 
 can immediately afford them: especially as they 
 will recur in papers of another period. 
 
 * Sec, Minutes of Secret Committee on the Bank, 1797. 
 P- J 37
 
 145 
 
 " It may be laid down as a general truth/' says 
 Mr. Thornton, " that the commercial exports and 
 imports of a state (that is to say, the exported and 
 imported commodities, for which one country re- 
 ceives an equivalent from another) naturally pro- 
 portion themselves in some degree to each other : 
 and that therefore the balance of trade (by which 
 is meant the difference between the commercial 
 exports and imports) cannot continue for a very 
 long time to be either highly favorable or highly 
 unfavorable to a country. For, that balance 
 must be paid in bu llion, or else constitute a debt.*" 
 To this position I most willingly subscribe: and 
 the dealers in Exchange, and dealers in bullion 
 keep it always in their memory : consequently 
 they are uniformly attentive to the general state 
 of commerce, and to the varying course of na- 
 tional occurrences. 
 
 In former times most of the great commercial 
 men dealt occasionally both in Exchange, and 
 in bullion : but the commerce in bullion was ge- 
 nerally considered as the peculiar business of 
 Jews and goldsmiths ; who had always money at 
 
 * Thornton's Enquiry, p. 116.
 
 14(5 
 
 command ; and with whom the merchants were 
 in the habit of dealing in the manner detailed in 
 the beginning of this Letter. A mature consi- 
 deration of the example there given*, will shew 
 what Mr. Thornton meant, by saying " the exports 
 and imports of a state naturally proportion 
 themselves to each other;" and why it is that " iht 
 balance of trade cannot continue long either Jo- 
 vorable, or unfavorable to any country.'* 
 
 The balance, whether in favor of, or against, 
 any state, must be the aggregate of the balances 
 of all accounts of all the individuals trading 
 wdh that state. But as each of those individuals 
 pursues his separate traffic, for the sake of private 
 emolument, (leaving the general interests of the 
 state to the special care of the Government) it 
 follows that the aggregate balance never can be 
 very considerable : the merchants being all of 
 them naturally anxious to settle their balances by 
 a timely export or import of such commodities as 
 promise, according to existing circumstances, the 
 greatest proportion of profit. 
 
 * See, page 88, &c.
 
 147 
 
 With respeft to the precious metals, it is truly 
 said by Mr. Thornton* that " bullion, in point 
 of fact, is used ^/merchants merely as the export 
 or import is likely to yield a profit.'' No man em- 
 ploys it for any other purpose. At least, I can- 
 not imagine a case, where bullion is employed, 
 except in consideration of its affording a prospeft 
 of benefit ; or, of protection from possible injury : 
 and in either of those views, I think, it is obvi- 
 ously used for gain. 
 
 I have already shevvnt that gold and silver 
 can not be imported or exported, without incurring 
 certain charges; which the invention of Bills of 
 Exchange was originally meant to reduce or avoid. 
 And it is self-evident that the degree of confidence 
 which was necessary to create faith in paper, as a 
 temporary substitute for currency, could have arisen 
 only from an opinion of great wealth and integrity in 
 those who issued Bills of Exchange. Merchants of 
 the first eminence had therefore decisive advan- 
 tages: and. in applying to them, the inferior mer- 
 cantile classes often obtained essential conve- 
 niences. The sources of those conveniences are, 
 
 * Page 121 of his Enquiry, + Sec. page 93, &c
 
 148 
 
 I presume, sufficiently detailed in the origin and 
 progress of Bills, and of the System of Exchange*. 
 
 There is, however, another advantage possessed 
 by dealers in Exchange ; which has not yet been 
 mentioned ; but which will now come opportunely 
 under consideration. 
 
 I concluded my narrative of the origin of the 
 Exchange system, by shewing the profitable union 
 and co-operation of A. in London, and B. in 
 Hamburgh t : but, I should have added that, emi- 
 nent dealers in Exchange are often, and generally, 
 employed in the place of their residence, both by those 
 who want to remit money to, and by those who 
 want to draw money from, any foreign place: 
 and that merchants of subordinate rank (having few 
 applications made to themselves for Bills of Ex- 
 change) frequently find it eligible to draw for money 
 due to them abroad, through the agency of the supe- 
 rior dealers in Exchange : who in such cases become 
 the instruments for balancing most of the accounts 
 between different persons in distant places. The 
 manner of those transactions must depend, of 
 
 * Sr<\ P'ljrrsqjj to 105. + Sec. paire< 103 4.
 
 149 
 
 course, upon the reputation of the several parties 
 concerned. If they were in good repute, A. would 
 sometimes supply them immediately with currency; 
 on being allowed an adequate commission upon 
 the amount of their drafts. But if their credit 
 was doubtful, he would only compute the value, 
 according to his regular rule of Exchange, 
 and then give written acknowledgements and pro- 
 mises to be accountable, on obtaining intimation 
 of the punctual discharge of the bills. When 
 that intelligence arrived he would pay the com- 
 puted value in English currency. By these 
 agencies the Exchange-system became a source 
 of double profit: as may be thus exemplified. 
 If E. a merchant wanted to draw ^500 from 
 Hamburgh, he delivered to A. a bill for nearly 
 that amount in Hamburgh money; and making 
 an allowance of the usual commission, obtained 
 the value in English currency. 
 
 F. another merchant, wanting to remit ^500, 
 went also to A. and purchased his draft upon B. of 
 Hamburgh, in the usual course. Now, (admitting 
 the scale of commission assumed in pages 98, and 
 99.) if A. was allowed, both by E. and by F. his 
 charges of two per cent, on the sum of each bill, 
 
 x
 
 150 
 
 it is plain that he received, in fact, an allowance of 
 20. for the trouble of merely calculating and mak- 
 ing two entries in his books: at least, it will be 
 plain, if we suppose the merchants E. and F. to 
 have had their separate transactions with A. on 
 the same day. And if those transactions took place 
 on different days, the effect would be nearly the 
 same, in a well-established business. In the pre- 
 sent case, the bill bought cf E. balanced the 
 bill sold to F. and the former billy having been 
 sent by A. to B. provided the sum necessary to pay 
 the latter. 
 
 I do not pretend to accuracy in stating the 
 quantum of commission allowed in the course of 
 Exchange with Hamburgh: for the charges on 
 Hamburgh bills are so blended in the Exchange- 
 rate, as not to be distinctly visible to persons un- 
 acquainted with the varying answers to certain 
 questions, which continually occur in the business 
 of Exchange. Every skilful dealer in Exchange 
 pays constant attention to the par-rates of the 
 mint-money of different states; to the actual 
 par-rates of the mint-money and of the currencies, 
 as they vary by wearing, clipping, or counter- 
 feiting; and to the par-rates deducible from the
 
 151 
 
 selling prices of bu llion in the respective markets* 
 These par-rates are severally referred to, when 
 occasions require : and, by one invariable rule, 
 the dealers are always particularly careful to secure 
 their own profits on every transaction. 
 
 To ascertain the par-rates of the mint- 
 money of different states, it. is necessary to know 
 the proportions of pure metal and of alloy, 
 contained in a given weight of the standard coins of 
 each mint. The proportion of alloy, being deemed 
 of no value, must be deducted from the given 
 weight : the remainder will, consequently, be pure 
 metal: and that quantity of pure metal is the 
 intrinsic value of the coins. 
 
 This intrinsic value will be differently ex- 
 pressed by the merchants of different states ; be- 
 cause the value cannot be computed without referring 
 to a measure: and therefore the expression of 
 that value must necessarily include the measure by 
 
 which it was computed, 
 
 
 
 Almost every stale has, apparently, a measure 
 of value peculiar to itself. Consequently, each of 
 the merchants naturally refers to the measure of hi*
 
 152 
 
 own country. Nevertheless, in adverting to the 
 early periods of commercial history, good reasons 
 may be found for supposing that, at least, the 
 standard metal of the mints, in the great trading 
 cities and towns of Europe, was generally the same: 
 although material differences prevailed in the scale 
 and denominations of their several coins. But this 
 latter point will be discussed in another paper. 
 
 The positions, with which Mr. Locke began his 
 " Further Considerations concerning raising the 
 Value of Money," so exactly convey my ideas 
 of the measure of value, that, I think, I cannot 
 do wrong in transcribing them here. 
 
 " Silver is the instrument and measure of com- 
 merce in all the civilized and trading parts of the 
 world. It is the instrument of commerce by its 
 intrinsic value: and it is the measure of 
 commerce by its quantity : and its quantity is 
 the measur e of its intrinsic value. Hence it 
 is evident that an equal quantity of silver is always 
 equal in value to an equal quantity of silver" 
 
 " Here it will be asked, is not some silver 
 finer than other ?" He answers, " One mass of
 
 153 
 
 mixed metal not discerned by the eye to be any thing 
 but silver, and therefore called silver, may have a 
 less mixture of baser metal in it, than another ; 
 and so in common speech is said to be ewer silver. 
 But the truth is the silver that is in each is 
 eqv ally fine: as will appear when the baser me- 
 tal is separate from it: and it is of this pure or 
 fine silver,/ must be understood, -when I men* 
 tion silver : not regarding the copper, or 
 lead, "which may chance to be mixed with it. For 
 example: Take an ounce of silver, ax\6. one fourth 
 of an ounce of copper, and melt them together. 
 One may say of the whole mass that it is hot jine 
 silver: But, it is true that, there is an ounce of 
 fine silver in it: and though this mass, weighing 
 one ounce and a quarter, be not equ al in value 
 to one ounce and a quarter of fine silver : yet the 
 ounce of fine silver in it, is, when separate from 
 the copper, equal in value to any other ounce of silver. 
 
 Thus we learn from Mr. Locke, that the cop- 
 per, or alloy is not to be regarded ; and I say, 
 that it is deemed of no value. Consequently, 
 
 the MASS of ONE OUNCE AND A QUARTER Can* 
 
 not be more than equal to one ounce of pure 
 silver.
 
 154 
 
 Now, my Lord, allow me to suppose the ounce 
 of pure silver to have been coined into five pieces 
 of money; each weighing four penny-weights: 
 which pieces we may call shillings: and that 
 each of those shillings was subdivided into twelve 
 parts t called pence; and, moreover, that twenty 
 of those shillings were equal to an imaginary money 
 unit called a pound sterling. 
 
 Let me also suppose, the above-mentioned 
 
 mass of one ounce and a quarter \ silver and copper, 
 to have been also coined into pieces of f o u r penny- 
 weights each % and that those pieces were called in- 
 tegers : and that each of those integers was sub- 
 divided into twelve parts called twelfths. 
 
 If we further suppose these latter pieces to have 
 been the standard mint-money of Hamburgh ; and 
 ih^ former pieces to have been the mint-money of 
 London; your Lordship will have the following 
 equations : 
 
 12 pence 
 
 5 shillings . 
 
 20 shillings L 
 
 12 twelfths H 
 
 6 integers and 3 twelfths 
 25 intecrcrj............ 
 
 1 shilling, 
 1 ounce of silver, 
 1 pound sterling, 
 1 integer of Hamburgh, 
 1 ounce of silver, 
 1 pound sterling,
 
 These equations give the par-rates of Exchange 
 upon the several denominations of money here 
 mentioned : supposing them to be the coins of 
 the respective mints: and it appears that one 
 pound sterling, in this table, is equal to 25 in- 
 tegers, and therefore ^500 sterling, must, at par, 
 be equal to 12,500 integers. 
 
 Having stated two transactions by Bills of Ex- 
 change between A. of London, and E. and F*. 
 the merchants who applied to him for accommo- 
 dation in reverse operations ; I beg leave to as- 
 similate those transactions to the manner of mo- 
 dern dealers in Exchange. 
 
 I have already hinted that the quantum of 
 commission upon transactions with Hamburgh is 
 so disguised in the rate of Exchange; that none 
 but the skilful can ascertain the fact: although 
 the charges are sometimes exorbitant. 
 
 It is therefore necessary to premise that there 
 are almost invariably two, and sometimes three, 
 rates of Exchange, working in the market at the 
 same time, between the. same places. 
 
 . _ , ..... . . . ,- 
 
 * Ser, page 1 49.
 
 156 
 
 The first is the reputed par-rate ; which is sel- 
 dom the rate of Exchange; except among mer- 
 chants of equal skill ; or, when the parties happen 
 to know that the accommodation is equal; and that 
 therefore neither of them is entitled to commission. 
 For example : If E. and F. had met at the door 
 of A. and communicated to each other what ac- 
 commodation they were about to ask from A. it 
 would have been instantly obvious to them that 
 they could of themselves supply each others 
 wants : and, feeling mutual confidence might na- 
 turally say, " Let us interchange our money and 
 bill ; and thus avoid the commission that we must 
 allow to A. if we get our business done in his office." 
 E. therefore might make a draft in favor of F. 
 for 12,500 integers, in return for his ^500 
 thus making an exchange at par. 
 
 But we are to assume, that E. drew a bill 
 upon Hamburgh for 12,500 integers, and nego- 
 ciated that bill with A. who gave the value in 
 English currency, on having an allowance of the 
 usual commission. 
 
 By the modern practice, when a dealer in Ex- 
 change becomes the agent of monev transactions
 
 157 
 
 with any foreign place, he varies the rate of Ex- 
 change according to the existing circumstances of 
 the case. If he negocia.es a biM brought to hirn 
 for that purpose, he adds to the par-rate enough 
 to clear an adequate compensation : and if he is 
 requested to remit any sum (that is, to give his 
 own draft for it) he deduces from die par-rate 
 enough to leave him a sufficient profit on the 
 transaction. 
 
 E. drawing a bill on Hamburgh for 12,500 in- 
 tegers, and requesting its value in English cur- 
 rency, A. would not say " my commission will 
 be two per cent." but, " the course of Ex- 
 change is twenty-* ivz and a half,'' or 25-6 that 
 is 25 integers 6 twelfths for every pound sterling. 
 The half integer is added to cover the commis- 
 sion: the value of 12 r,oo integers, at 2r being 
 only -^4901^ sterling, instead of .=500, the value 
 at par. 
 
 F. wishing to remit ,500, delivered that sum 
 to A. requesting his draft on Hamburgh accord- 
 ingly. In this case the half integer is deducud, 
 and the Exchange-rate becomes twcnty-touR 
 and a ha 1 /: A. therefore draws upon B. for only 
 
 Y
 
 158 
 
 12,250 integers; being 250 less than the value at 
 par. The difference of 250 integers is equal to 
 .10 sterling: so that A. secures his commission 
 in this mode, as effectually as if it were a sepa- 
 rate item in each calculation. 
 
 Here then are three different results, the conse- 
 quences of three different rates upon three trans- 
 actions fundamentally the same; and varying only 
 in the persons and circumstances. And these 
 are regular: on the assumption that the money 
 of both places was according to the standards of the 
 mints. But " it rarely happens that the pieces are 
 exactly agreeable to their standard;" therefore the 
 dealer in Exchange must attend to the actual* state 
 of the currency; and compute not by what the 
 coins oucht to b e, but by what upon an average 
 he finds by experience they actually are. 
 
 If upon examination it be found that, instead 
 of five shillings weighing an ounce of silver, the 
 shillings are so worn, or dipt, that upon an 
 average six shillings weigh only an ounce; then it 
 is admitted t that " in Exchanges with foreign 
 
 * Sec. page 136. + Sec, page 132.
 
 159 
 
 countries j and in payments made to them, the in- 
 trinsic value of the metal of which the coin is 
 made is the only measure" of value. Consequently 
 the dealer in Exchange must value the silver, 
 which, by his bill, he undertakes to pay, accord- 
 ing to the actual value of the money that he re- 
 ceivesfor that bill. For, although it be notorious 
 that the coins have been unlawfully diminished, yet, 
 by the law*, if they are not cut in pieces, and any 
 person were to pay or receive them at or for a 
 lower rate or value than the same by their de- 
 nominations import, or were coined or coun- 
 terfeited for ; such person would be guilty of fe- 
 lon y, and might suffer deaths in case of felony. 
 Therefore^ dealer, {being paid in coins, which 
 he must receive nominally as shillings ; not- 
 withstanding upon an average they are intrin- 
 sically worth only ten -pence,) values the 
 silver, which he undertakes to pay, at six shillings 
 an ounce : and this he does upon the principles, 
 which are the basis of the several equations in 
 the table of coins, (imagined, in page 1 54, for the 
 M 1 n t-m o neyo/London and Hameurc h :) 
 that is, the value of an ounce of silver must be ex- 
 
 * 8 & 9 W. c. 56.
 
 lOo 
 
 pressed in the denominations of the measure with 
 which it is compared ; or to which it is referred. 
 
 The table says, that five shillings equal one 
 ounce of silver. But, I have already mentioned 
 that, the table expresses the par of the mint-money of 
 full weight: and my supposition* was that 
 the ounce of pure silver had been coined into five 
 shillings, of four penny-weights each : -which in 
 quantity were equal to the ounce: and therefore 
 the denominations of the pieces were, in that instance, 
 absolutely necessary to convey to a foreigners cor- 
 rect idea of the value, either of ihe ounce of 
 silver, or of the five shillings. The table is, 
 in fact, a coltetlion o/"dkfinitions. And a de- 
 finition, your Lordship knows, should be " recipro- 
 cal with the thing de fined t." Consequently, when 
 an ounce of silver could no longer be used in any 
 sentence in the place of five shillings; or, five 
 shillings in the place of 'an ounce of silver ; a new 
 table was become necessary. Merchants, there- 
 fore, viade new tcbksfor themselves. Because com- 
 mercial prosperity depends upon a right understand- 
 ing of the value of things: and errors in judg- 
 _________^__ ^ > . . 
 
 * Sec, page 154, + Walts's Logic, c. vi. s. 5.
 
 101 
 
 me nt would he ruinous to ike fortunes of trading 
 individuals: as errors in legislation' have 
 been ruinous to the estates of the crown; and 
 to the reven ue of ike British empire. 
 
 When the coins have been so red iced, that jix 
 shillings weigh only out ounce t the proper expres- 
 sions of the table (supposing the coin of Ham- 
 burgh to accord with the imaginary mint-money) 
 will be as follow : 
 
 12 ponce 
 
 6shiilm.rs 
 
 c zx. hillings 
 
 12 twelfths 
 
 6 integers and 3 twelfths 
 20 integers and 10 twelfths 
 
 ( I shilling, 
 
 1 ounce of s!K"T, 
 
 J 1 pound stcrlir.g, 
 > equal < . . r , 
 
 1 .ntegerot l I amoro, 
 
 | 1 -mice of silver, 
 
 L 1 pound sterling, 
 
 Here, your Lordship will observe that, by the 
 alteration in the atl'/al value of the London-money % 
 on-" pou";d sterling becorncs equal to only twenty 
 inteue> ; and ten twelfths: whereas, in die other 
 table (p > < ir^ the pound sterling of the mint\t 
 equal to tu ity-five integers, Consequently the 
 p \.r of Eychinrc wiJi Hamburgh on this table, is 
 2 of-, or 20-o; and therefore .^5 no of this re 
 duc?d mnney of London would produce, at iht 
 actual par-rat v, only 10,416! integers. This;
 
 162 
 
 sum, being 2,0834- integers less than the computed 
 equivalent (on the par of the imaginary mint-mo- 
 ney in the-first table,) might lead an unskilful per- 
 son to pronounce that the difference was lost by 
 the Exchange being against London. But the skil- 
 ful dealer knows that the calculation is honestly 
 made upon the real par of the London currency; 
 according to its supposed degradation below the 
 imaginary standard of the first table. 
 
 I must now request your Lordship to indulge 
 me with another supposition. Let it be assumed 
 that F. had been for some time a resident in Ham- 
 burgh; and that, finding it expedient to visit 
 London, he borrowed 12,500 integers of his friend 
 in Hamburgh; who kindly gave him in lieu of it 
 a bill upon London for ^500 sterling : being at 
 the par of the imaginary mint-money. This 
 debt, having been contracted in Hamburgh, is pay- 
 able in Hamburgh money : and F. being in a ca- 
 pacity to discharge it, takes ^500 to A. on a na- 
 tural presumption that it will produce him nearly, 
 if not quite, the quantity of Hamburgh money, 
 which he originally paid in Hamburgh for the same 
 sum. He acquaints A. that he owes 12.500 in- 
 tegers, and wants a bill upon Hamburgh for the
 
 103 
 
 amount. What must he pay for 12,500 integers? 
 The actual par -rate on the reduced money is 20 
 integers and 10 twelfths for a pound sterling. 
 But A. must have his commission: therefore the 
 course of Exchange is 2oi and 12,500 integers 
 at 20r cost 614$$ sterling! So that F. loses 
 1 1 4tt in payiug off a debt of ^500 ! ! 
 
 In the last table six shillings equal one ounce of 
 silver: therefore one ounce of silver equals six 
 shillings : and, in that state of the currency, the 
 price of silver bullion is six shillings an ounce. 
 But the market-price of silver bullion does not 
 always accord with the aftual state of the cur- 
 rency; or, rather the price published in the market 
 does not always agree with the intrinsic value of 
 the currency. The market price of bullion is % 
 therefore, a mercantile signal: and all the 
 skilful merchants observe that signal in all their 
 operations. The great bullion-merchants 
 are, consequently, the arbiters of prices; the 
 governors of Exchange; and the regula- 
 tors of commerce. During a foreign war, they 
 have, under the existing laws, a more absolute 
 power over the nominal prices of all commo- 
 dities, than the executive government pos-
 
 164 
 
 seises over the taxes, legally imposed by the due 
 course of the British constitution !! 
 
 This position wilt probably seem incredible. 
 But, as my reputation depends upon my veracity; 
 and as an attempt to impose upon your Lordship 
 is as far from my thoughts as treason against the 
 state, I hope for that patient examination y which 
 is due to a proposition equal in importance to any 
 that ever was submitted to the consideration of the 
 King's ministers. I do not ask reliance upon 
 my theory; but that my opinions may be tho- 
 roughly sifted ; that they may undergo the most rigid 
 enquiry ; that men better qualified than my- 
 self, may be actively employed in removing the 
 veil, which has concealed imposition for more 
 than five hundred years ; and that invincible 
 TR UTH may appear, if possible, in the splendor 
 of the meridian sun : giving light to the world; 
 joy to the heart of our beloved monarch ; hap- 
 piness to every honest subject ; and a permanent 
 blessing to all the king's dominions. These are 
 objecls worthy of your Lordship's indefatigable 
 ?cal in the service of your country: and the at- 
 tainment of these, will confound the enemies of 
 British freedom will add to the glory of His
 
 105 
 
 Majesty's reign and secure the British Isles for 
 the envy and admiration of future generations. 
 
 I repeat, that the great bullion merchants 
 are the arbiters of prices ; the governors of 
 Exchange ; and the regulators of commerce: and 
 that, during a foreign war, they have a more abso- 
 lute power over the nominal prices of all commodi- 
 ties, than the executive government possesses over the 
 taxes legally imposed by the due course of the Bri- 
 tish constitution. But in verifying these positions, 
 I shall now treat them rather generally ; reserving 
 a more extensive detail, and particular demon- 
 strations, for my next Letter. 
 
 It is necessary to impress on the mind, that 
 
 the precious metals fire the. instruments and the 
 objects of mercantile traffic : and that profits, or 
 gains, are computed by the atlual difference 
 between the quantities paid, and the quanti- 
 ties received. Dr. Adam Smith's position* 
 applies, also, as well to bullion as to every 
 other commodity: {: The merchant has nothing to 
 consider but the difference between the quantity of 
 
 * See. page 141 herein. 
 Z
 
 silver for which he buys, and that for which he is 
 likely to sell." However its application to bullion 
 is, perhaps, not so obvious, as to other articles; I 
 therefore presume to submit a few observations. 
 
 " Bullion/' says Mr. Thornton*, " is used 
 by our merchants, accordingly as the export, or im- 
 port, is likely to yield a prof. t." But I should say, 
 merchants use bullion, only when it is likely to yield a 
 greater profit than any other commodity. The 
 business of merchants is, in fact, a continual bar- 
 tering of one commodity for another : and he, 
 who thoroughly understands his business, com- 
 putes, with accuracy, every description of charges 
 that he incurs, between the place where his com- 
 modities were purchased, and the place abroad 
 where they are to be sold : and the total of these 
 charges, including the original purchase money, 
 constitutes the aggregate cost of his goods. To 
 thij sum he adds a compensation for his own 
 time and trouble ; and as much more for profit 
 as he can get in his sales. Whatsoever foreign 
 money he receives in exchange for his own com- 
 modities, is denominated bullion; and its value is 
 
 * Enquiry, p. 121.
 
 167 
 
 computed by referring to the measure of his own 
 country. To facilitate the comparison, or com- 
 putation, skilful merchants are not only provided 
 with tables*, shewing the relative value of the 
 coins of different places ; but they have also lists 
 of all the principal mercantile commodities, and the 
 selling prices, periodically written against them, ac- 
 cording to the variations of the respective markets. 
 In Hamburgh there is, I think, a paper regularly 
 published called the " Preis courant ;" and simi- 
 lar papers are, I believe, generally provided by 
 the London merchants, and sent to their corre- 
 spondents abroad. By the aid of those papers, 
 
 * Lord Liverpool mentions, in his ' : Letter to tke King," 
 (p. 213, &c.) that there was formerly in this kingdom an 
 officer under the crown, who was called " The Kinc's Ex- 
 changer." lie <; appears not only to have exchanged the 
 coins of different metals made at the royal mint ; hut, as the 
 exportation of the coins of the realm was prohibited, he fur- 
 nished persons, going out of the kingdom, with foreign coirs 
 in exchange for English coins : and he furnished merchants, 
 strangers coming into the kingdom, with the English coins in 
 exchange fur foreign coins. This oflicer had his deputies m 
 many of the out-ports, and principal cities of the kingdom*, 
 and a considerable profit was made by this practice: of wi.'.ii) 
 the King is said to have had his share. When this officer f.v- 
 dianged foreign coins for Encli sit, or English f or forei* n , 
 tke Exchange was regulated by a table hung up in ea h v* .. 
 offices. The last person that was appointed to this office wa>
 
 168 
 
 which contain the price of bullion and the 
 course of Exchange, they are enabled to de- 
 termine what commodities are likely to be most 
 profitable : and those of greatest promise are na- 
 turally preferred. A British merchant may ex- 
 change his commodities abroad several times be- 
 fore he returns to England. But, as the sum of 
 his gains is the difference of all his transactions, 
 his profits cannot be accurately computed till that 
 final ac~l of barter, which repossesses him of the 
 currency of his own country. He may have sold, 
 in Hamburgh, his cargo of British goods: but the 
 success of his voyage is not determined thereby. 
 He must exchange his Hamburgh money for a 
 
 (lie Earl of Holland, in the third year of Charles I. The ap- 
 pointment of a person of so high rank, and, who was at the 
 same time, a favorite of his royal master, is a decisive proof, 
 that the office was of considerable profit, as well as of impor- 
 tance." His Lordship says, he " thought it right to state 
 the nature of this office, that His Majesty might be fully in- 
 formed of the practice which formerly prevailed in this respect: 
 but certainly not as an example to be followed at prssent." 
 I will take leave to add, that it is not possible to devise an office 
 of greater benefit to the k ingdom ; ij filled by a person skil- 
 ful in the subjeel, and who would h o n est l y discharge the im- 
 portant duties of his station: neither can an office be imagined 
 wherein the King and the public could be more injured ; if 
 occupied by an unskilful exchascek. But this office will 
 be reconsidered according to its importance.
 
 I0g 
 
 commodity saleable in the British markets : and, 
 in chusing that commodity, he will be governed 
 by a comparison of the Hamburgh Prtis courant 
 with the selling prices of London : of which he 
 will probably have information almost every post. 
 At any rate, bullion will be the last commodity that 
 he will think of taking home : because wlien the 
 market-price of bullion in England, much exceeds the 
 mint-price, there is either a scarcity o/corn in the 
 British dominions ; or Great Britain has an army 
 in pay, or is subsidizing allies, on the continent of 
 Europe : and then Bills of Exchange, drawn by En- 
 glish agents, may be bought in Hamburgh, on terms 
 that sometimes yield a profit of more than twenty 
 per cent, in the difference of the Exchange alone ! 
 British merchants at such times make extraordi- 
 nary exertions : and those who have the good 
 fortune to be agents of Government, whether in 
 purchasing corn, or in conveying subsidies, or 
 supplies to the army and more especially the deal- 
 ers in bullion evince an admirable zeal for the 
 enforcement of the law; which prohibits 
 the exportation of British coins! It is 
 mere justice to the dealers in Exchange, and 
 dealers in bullion, to say, that I verily believe there 
 are not, in this kingdom, many bullion merchants,
 
 170 
 
 or exchange-merchants, who, in moments of such 
 necessity, would willingly suffer any one to melt, 
 or export the coins of this realm excepting, per- 
 haps, themselves* and their partners. 
 
 Bullion is the last commodity that a British 
 merchant thinks of importing. Because, when there 
 is no external want of money, for the purchase of 
 com, -for the subsidies of allies, or, for the supply 
 of armies on foreign stations, the unrivalled excel' 
 lence of British manufactures, and the extensive scale 
 of British commerce inevitably occasions a considera- 
 ble balance of trade in favor of Great Britain. 
 "f That balance must be paid in bul- 
 lion, or else constitute a debt." And 
 "there is a customary length of credit in foreign 
 parts, which the British exporter, however overflow- 
 ing his capital may be, is not very willing to enlarge. 
 For, events fail not occasionally to arise, which re- 
 mind him of the danger of committing too great a 
 portion of his property into the hands of those, who 
 are not subject to the same laws with himself; and 
 whose country may suddenly be involved, at any mo- 
 
 * Sec, pages 95 to 105 herein. 
 
 + Thornton'* Enquiry, p. u6, and p. 145 herein.
 
 1/1 
 
 ment, in a war with Great Britain.'' This consi- 
 deration operates constantly upon the mind of 
 every well-informed merchant; and begets in him 
 a natural desire to equalize his foreign accounts; 
 without an abandonment of his trade, or offen- 
 sively suspe&ing the honor of his correspondents. 
 To this natural feeling the dealers in Exchange 
 and dealers in bullion are also awake: yet the na- 
 ture of their business gives them advantages which 
 other merchants do not possess : and these advan- 
 tages are cultivated, for the augmentation of their 
 profits, according to the universal policy of com- 
 merce. Merchants, on some occasions, cannot 
 avoid the importation of bullion ; unless we 
 suppose them capable of forsaking the common 
 principles of self defence. It follows therefore, 
 when neither scarcity of corn, nor foreign war 
 demand supplies of bullion, that the importers of 
 bullion must be, in a degree , at the mercy of the 
 bullio-merc:iants (whether Jews or chris- 
 tians) who, availing themselves of their power, de- 
 press the market-prices as low as possible. In some 
 states, indeed, the merchants have prevailed on the 
 governments to allow the circulation of foreign cur- 
 rency ; but such governments accommodated the mer- 
 chants at the expence of the people, and of the publit
 
 172 
 
 revenue. Such errors have been committed in 
 England : but, latterly no coins have been le- 
 gally allowed to circulate in this country, ex- 
 cepting those of the British mint. However, our 
 silver currency has been, for a long period either 
 mini money fraudulently diminished, or counter- 
 feit coins, which are, at the same time, a dis- 
 grace to the nation, and one of the grossest imposi- 
 tions that ever was tolerated by an enlightened go- 
 vernment. The sources of this evil shall be fully 
 revealed : but my present object is to shew that 
 as foreign money is not current in this empire, 
 the importers of foreign coin must convert it into 
 British currency before they can apply it, either 
 to the discharge of their debts, or to the purchase 
 of commodities for other adventures. 
 
 It is shewn already* that if bullion be im- 
 ported, and taken to the British mint, it must be 
 coined into money according to the value set 
 upon standard metal by the authority of the crown : 
 that is, standard silver at five shillings and two- 
 pence an ounce, and gold at if" 3 : 17 : io~ per 
 ounce. This is perfectly understood by the great 
 
 * See, page 89 herein.
 
 173 
 
 bullion-merchants; who are the only persons 
 thai can purchase the numerous quantities of bullion 
 which come to this country in return for British 
 exportatwns. They know that bullion would not 
 be imported; if all the foreign markets could supply 
 a commodity more eligible for sale in the markets of 
 Great Britain. And consequently, they know that 
 the merchants, generally, import bullion only from 
 necessity: which necessity must compel them either 
 to sell at the market-price; or to get it coined 
 at the mint : where, of course, they can have only 
 the mi nt -price: from which a deduction should be 
 made equal to the interest on the time lost in 
 waiting for the coinage. The market-price is sel- 
 dom so much below the mint-price, as that interest 
 would amount to ; therefore, the merchant submits 
 to necessity ; and sells his bullion at the market- 
 price rather than suffer the inconvenience of ap- 
 plying at the mint. 
 
 Your Lordship will remember that the bul- 
 lion-merchants resemble every other descrip- 
 tion of merchants, who buy commodities for the 
 purpose of making a profit by selling them again: 
 and that the prices of bullion must, for that rea- 
 son, vary, like the prices of all other commod'- 
 
 2 A
 
 174 
 
 lies, according to the proportions of the supply 
 and the demand. When there are in the market 
 many sellers , and only few buyers^ the buyers 
 have, in a degree, the controul of the 
 prices : But when there are many buyers, and only 
 few sellers then the sellers have the controul of 
 the prices. In depressing the prices of bul- 
 lion, the bullion-merchants cannot by any com- 
 bination lower them beyond the point fixed by 
 the King's proclamation, (which determines the 
 value of coin) more than the amount of interest 
 which would be lost in waiting for coinage at the 
 mint: Because, in the event of any such attempt, 
 those who imported bullion would have a remedy 
 in merely taking their bullion to the mint: from 
 whence it would be returned in legal money of 
 the realm; and, consequently, in a state to supply 
 those wants which induced them to offer it for 
 sale. Nevertheless, in some extraordinary cases, 
 wherein the parties, did not well understand, or 
 were inattentive to this matter, advantages have 
 been taken tQ reduce the price below the equita- 
 ble point: an instance of which may be quoted, 
 from the sale of the St. Jago prize; which the 
 Bank of England bought, I think, at four shil- 
 lings and ten-pence half-penny per ounce.
 
 175 
 
 In raising the prices there is, unfortunate- 
 ly, greater latitude : and, as this is one of the 
 most import akt points of my communications, I 
 must intreat your Lordship's patience, while I 
 examine Mr. Thornton's statement ; which may 
 possibly have been considered conclusive infor- 
 mation on this difficult subjeft. 
 
 The kingdom is certainly much indebted to 
 Mr. Thornton for the publication of his " Enquiry 
 into the Nature and Effects of the Paper Credit of 
 Great Britain.'* That work contains many im- 
 portant truths: which are mixt with some errors; 
 as might naturally be expeled from the fallibility 
 of human nature. I have already borrowed from 
 it expressions of opinion, as well as matters of facl, 
 which I thought would be more weighty from 
 the authority of Mr. Thornton's name. It may 
 therefore be imagined that I do not wish to inva- 
 lidate that Gentleman's testimony ; but fairly to 
 strengthen my own evidence, by shewing that I 
 dare to question his accuracy, when I cannot 
 subscribe to his judgment. I do this that light 
 may be produced from the collision of our opi- 
 nions ; and, that your Lordship may decide, for 
 the establishment of truth.
 
 Mr. Thornton says*, that w when a bill is 
 drawn by one country on another by Ham- 
 burgh, for instance, on London it is sold, (or 
 discounted) in the place in which it is drawn, to 
 some person in the same place ; and the buyer, or 
 discounter, gives for the bill that article, whatever 
 it may be, which forms the current payment of 
 the spot. This article may consist either of gold 
 or silver coin; or, of Bank paper; or, which is 
 much the same thing as Bank paper, of a credit in 
 the books of some public bank." 
 
 " Let us now suppose the exporter of corn, 
 from Hamburgh to London, draws a bill forioo 
 on London, and offers it for sale on the Ham- 
 burgh' Exchange, at the season when great expor- 
 tation a/"corn to London are taking place. The 
 persons, in Hamburgh, having occasion to buy 
 bills are fewer, in such a case, than those who 
 want to sell them; and the price of the bill, like 
 that of any other article, fluctuates, according to 
 the proportion subsisting between the supply and 
 the demand. The disproportion, then, between 
 the number of those persons at Hamburgh, who 
 
 * Sec, Enquiry, p. 122.
 
 177 
 
 want to sell London bills for Hamburgh coin, 
 and the number of those who want to sell Ham- 
 burgh coin for London bills, causes the price of 
 London bills to fall, and of Hamburgh coin to 
 rise. Thus gold is said to rise at Hamburgh; 
 and the Exchange between London and Hamburgh 
 becomes unfavorable to London. This fluctuation 
 in the Exchange will in the first instance be small. 
 It will be limited to that trifling sum which it 
 costs to transport bullion from one place to the 
 other; 50 long as there is bullion to be transported. 
 But let us now suppose the number of Hamburgh 
 bills on London, drawn for the payment of the 
 goods imported into the latter place, to be so nu- 
 merous, that the exportation of all the bullion 
 which is purchaseable in Great Britain, has not 
 sufficed for their payment ! Gold coin, in this case, 
 will be exported, being first melted down for the 
 purpose. Coin, indeed, is not allowed to be ex- 
 ported from Great Britain, nor gold which has 
 been melted down from coin ; an oath being re- 
 quired of every exporter of gold, that the gold 
 which he exports does not consist of guineas 
 which have been melted. There are, however, 
 many ways of escaping the law which imposes this 
 oath. The law is dishonestly evaded either by
 
 178 
 
 the clandestine exportation of guineas, no oath 
 at ail being taken; of, by taking a false oath; or, 
 by contriving that the person, taking the oath, 
 shall be, in some degree ignorant of the melting 
 which has been practised. The operation of the 
 law is avoided without this dishonesty, through 
 the exportation of gold which had been turned, 
 or had been about to be turned, to the purposes 
 of gilded, and golden ornaments : the place of 
 this gold being supplied by gold melted dovfri 
 from coin. The state of the British law" (Mr. 
 Thornton continues) " unquestionably serves to 
 discourage and limit, though not effectually to 
 hinder, that exportation of guineas, which is en- 
 couraged by an unfavorable balance of trade : 
 and, perhaps, scarcely lessens it, when the 
 profit on exportation becomes very great. The law 
 tends, indeed, to produce a greater interchange of 
 ^old for paper at home: but it encreases whatever 
 evil arises from an unfavorable state of Exchange 
 with foreign countries." 
 
 " Gold* must be considered as dear, in pro- 
 portion as goods, for which it is exchangeable, 
 
 * Sec Enquiry, p. i 27.
 
 179 
 are cheap ; and, as cheap in proportion as goods 
 are dear. Any circumstance, therefore, which 
 serves to make goods generally dear, must serve 
 to make gold generally cheap; and vice versa; 
 and any circumstance which serves to make goods 
 dear at any particular time or place, must serve 
 to make gold cheap at that time or place ; and 
 vice versa." 
 
 " The reason of the difference between the 
 mint-price and the market-price of gold does not 
 easily occur. If the Bank, from time to time, 
 buys gold at a high price, that is, if it gives for 
 gold a large quantity of goods (or something con- 
 vertible into a large quantity, which is the same 
 thing) it is natural on the first view to suppose 
 that the high price given by the Bank, which is 
 the principal and almost the only English pur- 
 chaser, must form the current English price : and 
 that this high current price of gold in England 
 will prove the means both of bringing it hither, 
 and of detaining it here: causing goods, which 
 are cheap, to go abroad; and gold, which is dear, 
 to come hither ; and also to remain in the coun- 
 try. Undoubtedly gold would remain in England, 
 when tempted hither by the high price given for
 
 180 
 
 it by the Bank ; if it were not for the following 
 circumstances. Gold is bought by the Bank, in 
 order to be converted into coin ; and when turned 
 into coin, it forms a part of the circulating me- 
 dium of the country ; paper constituting another 
 part. If, then, this paper is by any means ren- 
 dered cheap; and if the paper so rendered cheap 
 is currently interchanged for one sort of gold, 
 namely, for gold which has been coined, then the 
 coined gold will partake of the cheapness of the 
 paper: that is, it will buy, when in the shape of 
 coin, a smaller quantity of goods, than it will 
 purchase when in the form of bullion. In other 
 words, an ounce of gold, coming from the mint 
 in the shape of guineas, and making ^3 : 17 : ioj 
 (for that is the sum into which an ounce always is 
 coined at the mint,) will be worth less than the 
 same ounce of gold was worth before it went to 
 the mint, and less than it would again be worth if 
 converted back into bullion. There arises, there- 
 fore, a temptation to convert back into bullion, 
 and then to export ; or, which is the same thing, 
 to export, and then convert back into bullion ; 
 or, which is also the same thing, to convert back 
 into bullion, and then sell to the Bank, at the 
 price which would be obtained by exportation,
 
 181 
 
 that gold, which the Bank had turned from bul- 
 lion into coin. In proportion as the difficulty of 
 collecting, melting, and sending abroad the gold 
 coin, is augmented, (and it increases as the quan- 
 tity of coin diminishes) the difference between 
 the mint, and market-price of bullion will become 
 more considerable; supposing the demand for 
 gold in foreign countries to continue. Thus* it is 
 through the interchangeableness of gold coin with 
 paper, that gold coin is made cheap in England ; 
 or, in other words, that goods in comparison with 
 gold coin are made dear. The goods, which are 
 dear, remain therefore in England; and the gold 
 coin, which is cheap (for the Bank is indisposed 
 to buy it, on account of the loss sustained on each 
 coinage) goes abroad." 
 
 In commenting upon this long extract, I find 
 that Mr. Thornton's arrangement would be ra- 
 ther inconvenient ; I must therefore, take the 
 liberty of making my deductions, and placing 
 them in that order which will be most convenient 
 to my general design; only referring your Lord- 
 ship to the text, as it appears in the pages of this 
 Letter: from whence I deduce the following pro- 
 positions : 
 
 2 B
 
 182 
 
 I. " The Bank ^/'England is the principal, 
 and almost the only, English purchaser of 
 bullion." (page 179.) 
 
 II. " TheBANK purchases are madezuithBAKK 
 notes." (page 179) 
 
 III.. " Gold is bought by the Bank in order to be 
 converted into coin." (page 180.) 
 
 IV. " When the gold is turned into coin, it forms 
 o part of the circulating medium of the country : 
 paper (Banknotes) constituting another part." 
 (page 180.) 
 
 V. " It is natural to suppose that the price given 
 for gold by the Bank, must form the current 
 
 English price ." (page 179.) 
 
 VI. "Gold must be considered as dear, in pro- 
 portion as goods, for which it is exchangeable, 
 are cheap : and cheap in proportion as goods 
 are dear." (page 178.) 
 
 VII. " IfBA nk paper is by any means rendered 
 cheap, and the paper , so rendered cheap, is cur-
 
 183 
 
 rently interchanged for gold coin, the coin 
 will partake of the cheapness of the paper : 
 that is, it will buy when in the shape of coin a 
 smaller quantity of goods, than it will purchase 
 when in the form o/"bullion. In other words, 
 an ounce of gold coming from the mint in the 
 shape of guineas (and making % : 17 : 10^ 
 the sum into which an ounce is always coined 
 at the mint) will be worth less than the same 
 ounce of gold was worth before it went to the 
 mint! and less than it would again be worth if 
 converted back into bullion !" (page 180.) 
 
 VIII. " If the Bank, from time to time, buys gold 
 at a high price, (that is, if it gives for gold a 
 large quantity of goods, or something converti- 
 ble into a large quantity, which is the same 
 thing,) it is natural to suppose that this high 
 current price of gold in England will prove the 
 means both of bringing gold hither ; and of de- 
 taining it here: and of causing coons, which 
 are cheap, to go abroad.'' (page 179.) 
 
 IX. " If gold were bought at a high price, and 
 paid for with Bank notes; it follows, from 
 the 6th and 8th propositions, that gold must
 
 184 
 
 be dear, and Bank notes cheap; otherwise 
 Bank notes cannot be denominated goods: and 
 it follows, from the latter part of the 7 th pro- 
 position, that though gold were dear, it would 
 nevertheless, i/coi n e d at the mint, be worth on ly 
 % : 17 : ioj per ounce. Hence " arises a 
 temptation to convert the coin into bullion; 
 and to sell it to the Bank, at the price which would 
 be obtained by exportation.*' (page 180.) 
 
 X. ' When a loss would be sustained on the coin- 
 age, the Bank is indisposed to buy gold; 
 therefore it goes abroad: (p. 181) being first 
 melted down for that purpose" (page 177.) 
 
 XI. " Coin is not allowed, by the British law, 
 
 to be exp orted from Great Britain; nor gold 
 which has been melted down from coin: an 
 oath being required of the exporters that the 
 exported gold does not consist of guineas which 
 have been melted. However, there are many 
 ways of evading the law which imposes this oath." 
 (page 177.) 
 
 XII. " The law serves to discourage the exporta* 
 tion of guineas, but scarcely lessens it> when
 
 185 
 
 the profit on exportation becomes very great" 
 (page 178.) 
 
 XIII. " The law tends to produce a greater inter- 
 change of gold for paper at home; but it in- 
 creases whatever evil arises from an unfa- 
 vorable state of Exchange with foreign 
 countries" (page 178.) 
 
 XIV. " The Exchange between London and 
 Hamburgh, becomes unfavorable, when 
 there is in Hamburgh a disproportion between the 
 buyers and sellers of bills drawn on Lon- 
 don." (page 176-7.) 
 
 XV. " The (rate of Exchange, orj price of London 
 bills fluctuates in Hamburgh according to the pro- 
 portion subsisting between the supply and the de- 
 mand." (page 176.) 
 
 XVI. " The fluctuation in the Exchange 
 will, in the first instance, be limited to thai 
 trifling sum which it costs to transport bul- 
 lion from one place to the other: so Ion* as 
 there is bullion to be transported,** (page 177.)
 
 180 
 
 XVII. " When the bills drawn by Hamburgh on 
 London, are so numerous that all the bullion 
 purchaseable in Great Britain is not sufficient for 
 the payment! gold coin will be exported, be- 
 ing first melted down for that purpose.*' (page 
 
 *77-) 
 
 XVIII. " In proportion as the difficulty of col- 
 letting, melting, and sending abroad the gold 
 coin, is augmented, the difference between the 
 
 MINT-PRICE and MARKET-PRICE of bullion 
 
 will become more considerable: supposing the de- 
 mand for gold in foreign countries to continue." 
 (page 1 81.) 
 
 XIX. " It is through the interchangeableness of 
 gold coin with paper, that gold coin is made 
 cheap in England; or, in other words, that 
 goods, in comparison with gold coin, are 
 made dear. The goods, which are dear, re- 
 main therefore in England, and the gold, which 
 is cheap, goes abroad." (page 181.) 
 
 Having thus arranged Mr. Thornton's opinions 
 into nineteen distinct propositions; I shall now 
 proceed briefly and regularly through them, till
 
 187 
 
 I get to some of the most important conclusions 
 that ever were submitted to the government of 
 this kingdom. 
 
 We understand from the fast proposition, that, 
 the Bank of England is the principal, and 
 almost the only, English purchaser of bullion: 
 and I mentioned (in page 173) that bullion- 
 merchants resemble other merchants in that 
 they buy bullion for the purpose of making a pro- 
 fit by selling it again. Is not profit the pur- 
 suit of the Bank of England? Your Lordship 
 knows that in the original contract with the Crown, 
 for the establishment of the Bank by charter, it 
 was stipulated^ as one of the conditions of the first 
 loan, to King William, from the subscribers 
 to the Bank, that (hey should be permitted to 
 deal in Bills of Exchange^ in buying and selling 
 bullion, and foreign gold and silver coms t Sec. ! 
 It cannot be doubted that the merchants, who 
 claimed these privileges, knew that the advantages 
 arising therefrom would be worthy of their care, 
 and acceptance ; and that they would amply re- 
 pay them for any accommodation, which might 
 be thereafter requested by the government.
 
 188 
 
 But the avowed object, of the original projec- 
 tors of the Bank, was (according to Dr. Smollett) 
 to circulate bills, or notes, on the credit of their 
 capital: and the loan of .1,200,000 to the King 
 was to be advanced partly in coin, and partly in 
 the circulating notes of the Bank. Only ^720,000 
 was called by the Bank directors from the sub- 
 scribers to the Bank capital. Yet this sum ena- 
 bled them to complete their contract for the loan ; 
 with the aid oj their circulating notes : with 
 which they also carried on their traffic in Bills of 
 Exchange, in bullion and foreign coin, &c. : and 
 this accords with the second proposition ; as ap- 
 plying to their dealings of the present day. 
 
 In the third, Mr. Thornton says, " Gold is 
 bought by the Bank in order to be converted into 
 coin." Here I cannot agree with that gentle- 
 man. For (although, by laws made subsequent 
 to the original charter, the Bank was bound to 
 pay its notes in gold J I cannot easily be persuaded 
 that the Bank buys gold in order to its being converted 
 into coin. Certainly that has not been the case 
 since the restriction of February, 1797. Prior 
 to that time the conversion of bullion into coin was a 
 contingfncy (o which the Bank was exposed: but
 
 180 
 
 which the Directors regarded from necessity^ more 
 than from choice. Because, in the event of coi n i n g, 
 they parted with bullion at the price of the mint : 
 which, your Lordship may believe, was far less 
 agreeable than the price of the market : except 
 during an influx of bullion; when the Bank 
 purchases were making at a rate below the mint- 
 price : and when, of course, that lower rate must 
 have been the price of the market. 
 
 The fourth proposition states, that, tf Com 
 turned into coin forms a part of the circulating me- 
 dium of the country , and that Bank notes constitute 
 another part.'* This I admit; but with distinc- 
 tions that are material in the subject. The gold 
 coin is valuable according to its weights But 
 the general and permanent value of Bank notes must 
 be the same as the general and permanent value of 
 that gold 1 ' which they represent; and " for which 
 they are exchangeable." (as mentioned by Mr. 
 Thornton in a Note to page 82 of his Enquiry) 
 When Mr. Winthrop, late Governor of the 
 Bank of England, was examined by the secret 
 Committee of the House of Commons on the af- 
 fairs of the Bank in 1797* he described Bank 
 
 * See, Minutes of the Secret Committee, page 61. 
 2 C
 
 1Q0 
 
 notes as " the representatives of what he con- 
 ceived to be, the right circulating medium of the 
 country meaning gold and silver" And, my Lord 
 Liverpool corre&ly says*, " Paper can never 
 be considered as coin ; for it has no value in itself: 
 it only obtains its (nominal) value with reference to 
 the coins, which it represents." Therefore, though 
 coins and notes are actually parts of the circu- 
 lating media of the country; yet the notes are real- 
 ly tiart^ only as they are representatives of 
 the coins : in* whatever state those coins are al- 
 lowed to be current. 
 
 The fifth proposition says " It is natural to 
 suppose that the price given by the Bank for 
 gold, must form the current English price." This 
 is unquestionable. For, as ' the Bank is the prin- 
 cipal and almost the only English purchaser" the 
 price paid by the Bank must hi the current price : 
 the scale of the Bank business making the com- 
 paratively few occasional purchases by Jews and 
 coldsmiths insignificant exceptions: although 
 those persons, when they have opportunities, of 
 making profit, may sometimes advance on the 
 current price of the Bank on particular days. 
 
 * Letter to the King, page 146.
 
 101 
 
 It is a fact mentioned by the late Bank-direc- 
 tor Mr. Bosanquet* that " the bullion brought 
 into this country is almost invariably taken to the 
 hank for sale.''' Consequently, for the reasons 
 which I have given (in page 173,) the current 
 price must be fixed by the Bank. 
 
 I need not remind your Lordship that, as the 
 
 Bank is the principal and almost the only English 
 purchaser of bullion during importations, 
 the Bank must also be the principal and almost the 
 only English seller of bullion; when there is a 
 great demand for exportation: and that Mr. 
 Thornton might therefore have stated, that the 
 price "which the Bank receives must also be the 
 current English price. When Mr. Bosan- 
 quet gave to the Secret Committee, the informa- 
 tion quoted above, he also informed them, that 
 " the price paid by the Bank for gold bullion was 
 % : 17 : 6 an ounce being four-pence halfpenny 
 an ounce under the coinage price :'* and a difference 
 between the two prices of nearly half per cent. If 
 the Bank would be satisfied with that profit, (con- 
 sidering that the expence of coinage is wholly dc- 
 
 * See, Minutes of the Secret Committee, 1797, page 28.
 
 192 
 
 frayed by the state) I cannot find a valid reason 
 why coin should not be exported, at any time, when 
 the imperious necessities of the Government require 
 money abro ad for any purpose whatsoever. But 
 pi this we shall speak again in future papers: and 
 therefore I shall add here, only that the Bank 
 Directors informed Mr. Pitt* on the Sth of 
 OBobtr 1795, that the then M present price of gold 
 was from 4. : 3 : o to 4 : 4 : o an ounce:'* and 
 that, I find, in December + 1800, and in June 
 j8oi, the price in London was 4 : 6 10 per ounce. 
 
 " Gold must be considered as dear, in proportion 
 as goods, for which it is exchangeable, are cheap ; 
 and cheap in proportion as goods are dear." This 
 is the sixth proposition. When the price of gold 
 bullion was 4 : 4 : o per ounce, (as reported by 
 the Bank directors to the Chancellor of the Ex- 
 chequer, in October 1795.) with what goods was 
 bullion purchased ? It could not be with guineas : 
 for, guineas were issued from the mint at the rate 
 of ^3: 17 : \o~ per ounce: whereas gold at 
 
 * Appendix to the Minutes of Secret Committee on the 
 Affairs of the Bank, 1797, No. 7, p. 171. 
 
 + Private Records of a Bulliou Broker.
 
 1Q3 
 
 4 : 4 : o was an advance of nearly eight per cent, 
 on the mint price ! Therefore no person who had 
 guineas, would think of purchasing bullion with 
 them. Were the purchases made with British ma- 
 nufactures? or with the produce of foreign coun- 
 tries? I should think they were not. As I cannot 
 see what benefit merchants could derive from 
 purchasing with those commodities, gold at such 
 an extravagant price. Would they not, in efTeQ;, 
 by such purchases, abate the prices of the com- 
 modities given in exchange for bullion ? Indeed 
 the proposition says, that the gold, being so much 
 above the mint price, was dear, and that goods 
 must have been cheap in the same proportion. Is 
 it within your Lordship's recollection that any 
 commodities purchased by Government, during 
 the year 1 795, were cheap ? I think that not only 
 in that year, but also during the whole of the war, 
 from its commencement to the peace of Amiens, 
 every article, that Government stood in need of, 
 was exorbitantly dear! Whether any bullion was 
 bought by Government, during the war, is un- 
 known to me: but it is not improbable that some 
 purchases were made by Government at the Bank, 
 or perhaps through the agency of the Bank-broker ; 
 who was a convenient person for mutual acconu
 
 194 
 
 modation. I suppose it probabk, because, Mr. 
 Thornton says*, that " the Bunk and the Govern- 
 ment, like two wholesale dealers in a town, the one 
 the only great buyer ; and the other the only gnat 
 seller, of the same article, naturally deal much with 
 each other ; and have, comparatively, small transac- 
 tions with those who carry on only a more contracted 
 business." But if Government did buy bullion 
 cither of the Bank, or through the agency of the 
 Bank-broker, perhaps it was bought upon credit, 
 in account with the Bank, on the pledge of certain 
 taxes: or x upon the credit of Exchequ er bills, 
 which were often at a discount. And, in that case, 
 it might be thought (as Navy and Vi&ualling 
 bills were at a great discount) that Government 
 ought to pay a high price for bullion; or in other 
 words that the credit of the Government ought to be 
 computed very cheap in comparison with gold! 
 This argument appeared feasible until I referred 
 to the " Treasury account of money paid for expences 
 abroad during the years \y 93, 4, 5 and ijg6i" * 
 wherein specie is mentioned only once ; and that but 
 
 * Enquiry, page 61. 
 
 + Appendix (No. 20,) to the Minutes of the Secret Com- 
 mittee on the Bank, 1797.
 
 1Q5 
 
 ^5 0OO J although the total expenditure abroad in 
 those years was near thirty-three millions Sterling. 
 However, it appears* that the Prussian subsidies 
 were conveyed through the agency of John Har- 
 man, Esq; who sent part of it in " silver bullion 
 New Mexico dollars in value ^'723,958 ster- 
 ling purchased, most of it, at the Bank of En- 
 gland.'' The rate per ounce is not mentioned. 
 
 I have been credibly informed, that the dis- 
 count, on all the Exchequer, and Navy, and Vic- 
 tualling, bills, was invariably allowed by Govern- 
 ment : consequently the discount on them could 
 not affect the price of bullion ; even though pur- 
 chases had actually been made w^h those bills. 
 But there is not sufficient evidence to conclude 
 that they were, at any time, the gooes with which 
 bullion was bought. We are therefore compelled 
 to presume that the bullion at 4 '.4:0 per ounce 
 must have been purchased with Bank of England 
 notes : and if that presumption is correel, it fol- 
 lows, from the proposition, that those notes must 
 have been cheap! Your Lordship, perhaps, will 
 
 * Minutes of Secret CommittW on the Bank, 1797, 
 P a g c 73*
 
 1Q6 
 
 ask what could make Bank notes cheap, when the Bank 
 would have paid them in guineas at ^3 : 1 7 : 1 o~ 
 an ounce ? I answer that they could not be cheap, 
 in comparison with gold, while the Bank would 
 have paid them in guineas at the usual mint 
 price. But, if the issue of guineas had Been sus- 
 pended then, I should answer the pr ice, which 
 the Bank charged for silver bullion, might make 
 notes cheap. The effeel: is almost mechanical. 
 When the selling price* of silver bullion at the 
 Bank of England is so raised as to exceed the 
 price which is in exact proportion to standard gold 
 at % : 1 7 : 1 o per ounce, gold bullion is also 
 raised in price; so as to keep the relative proportion 
 of the two metals, according to their valuations in the 
 principal markets of Europe. I say Europe, al- 
 though Mr. Thornton sayst that ,; the value of gold 
 in England is regulated by the general and perma- 
 nent value of it all over the world." That gen- 
 tleman certainly must have meant the comparative 
 value zvkich European merchants would set upon it 
 in any part of the world. 
 
 * There arc, I believe, always two prices at the Bank 
 one for buying, and another for selling, gold and silver bullion. 
 + Set , the Note to pa^e 8^ of his Enquiry.
 
 197 
 
 Gold and silver may alternately measure each 
 other, when both are used as currency. If the 
 nominal value of either of them be over-rated, 
 the market value of the other will be raised in 
 due proportion. But the full illustration of this 
 far. must be deferred till a more convenient mo- 
 ment; when, I think, incontrovertible demon- 
 strations, will be given. In the mean time I must 
 assume, generally, that when gold bullion was 
 4. 14:0 per ounce silver bullion must have borne 
 a price in proportion to that valuation : (referring 
 to the general estimate of gold and silver in other 
 European markets) unless the sellers had any 
 private reason for abatement, to encourage the sale 
 of one metal in preference to the other. 
 
 Dr. Adam Smith mentions*, that " in the mar- 
 kets of Europe, in the French coin, and in the Dutch 
 coin, one ounce of fine gold exchanges for about 
 fourteen ounces of si l ver." If this position is 
 correci, I think that silver in England must be 
 more than 5s. yd. an ounce, before guineas could 
 be exported with any prospet of advantage in 
 the ordinary course of mercantile affairs : for (if 
 
 * Wealth of Nations, b. I. c. v. p. 64. 
 2 D
 
 my calculations are accurate) gold is to silver in 
 the English coins in the proportion of 1 to 15J. 
 I therefore suspeft that Dr. Smith was misin- 
 formed ; although I have not yet been able to 
 procure that certain intelligence of the value of 
 pure bullion in foreign mints and foreign mar- 
 kets, which is necessary to a decision on this 
 point. Be the fat as it may, all the principal 
 writers on this subject agree that gold is over-rated 
 m the English coins : and the late Bank-dire&or, 
 Mr. Bosanquet, has this remarkable expression 
 in his evidence (taken by the Secret Committee 
 on the affairs of the Bank, in 1797*-) " The Bank 
 has given not more than 55. i\d. an ounce for dol- 
 lars; which brings our standard silver to 
 about Jive shillings and FOVR-pence an oitnce. The 
 coinage price is Jive shillings and Two-pence 
 Here then it appears that the Bank paid 55. \d. 
 an ounce J or standard silver when Bank notes 
 might have been immediately afterwards converted 
 into guineas! But it must be remembered that 
 the Bank bought the dollars to sell them again 
 for a profit. Consequently, we arc to infer 
 that, if the exchange had been instantly made for 
 
 * See, Minutes, p;igc z8.
 
 199 
 
 guineas, a profit would have remained to the 
 Bank: therefore, silver at 5s. 4d. an ounce 
 could not have been in exafl proportion to gold 
 at % : 17 : io|- an ourice ! As the Bank gave, 
 at the same time, only : 1 7 : 6 per ounce for 
 gold the relative proportion of the Bank prices 
 was then rather more than fourteen and a half to 
 one. 
 
 I have said* that Bank notes could not have 
 been cheap in comparison with gold ; while those notes 
 were payable at the Bank in guineas at the usual, 
 or mint, price: and therein I have, in effect, de- 
 nied the supposition that gold at 4 -.4:0 an 
 ounce was bought with Bank notes, in Oclober 
 1795. T speak the truth, I cannot find what 
 could have been given in England for gold at 
 such a price: remembering that guineas were, at 
 that period, payable on demand for Bank notes : 
 and that Bank notes were the common medium 
 of payment among all t)ie principal merchants mid 
 bankers of London. Nevertheless, the words of 
 the quoted paper are plain : " The present price oj 
 gold being from 4 : 3 : o to 4 14:0 per ounce; 
 
 * Page 196.
 
 200 
 
 and our guineas being to be had dt : 17 : 10^ 
 per ounce, clearly demonstrates the grounds of our 
 fears : it being only necessary to state these JaBs to 
 the Chancellor of the Exchequer /" Again. In the 
 Bank-dire&ors' minutes of an interview on the 
 18th of November 1795*, it is said, that i% the 
 Governor informed Mr. Pitt that the present 
 price of gold was \ -.2:0 per ounce ; and that 
 the daily large drains of specie, from the Bank, 
 filled the minds of the Directors with serious appre- 
 hensions!" The Bank-diredors must certainly 
 have meant the price in foreign markets: al- 
 though they have not so expressed themselves: 
 and therefore, (relying on that conjecture) I shall 
 suspend my enquiry on that point, until the prices 
 of foreign markets come more immediately under 
 our consideration. But, as so much has been said 
 about the price in London, in October 1795, 
 perhaps your Lordship will not be displeased to 
 know what was really the London price in that 
 month. 
 
 According to the tables, (subjoined to my Lord 
 King's excellent " Thoughts on the 'Effecls of 
 
 * Appendix to the Minutes of Secret Committee, 1 797, 
 p. 172.
 
 201 
 
 the Bank Restrictions/') the highest price of si l- 
 ver in the English market, between January 1789, 
 and the period of the Bank restrictions, in 1797, 
 was 5s. 6d. an ounce: and that price was but 
 of short duration. In September and October 
 1795, the price of silver bullion was only 5s. 5^d. 
 per ounce. Yet, such were the pressing demands 
 upon the B an k. for bullion that, the Directors 
 thought it necessary to address Mr. Pitt in the 
 following terms* : 
 
 " Bank of England, Zth October, 1795. 
 
 " The very large and continued drain of bullion 
 " and specie which the Bank has lately experienced* 
 " arising from the effects of the loan to the Emperor, 
 " and other subsidies, together with the prospect of 
 " the demand for gold not appearing likely soon to 
 " cease, has excited such apprehensions in the Court 
 " of Directors, that, on the most serious deliberation, 
 * they deem it right to communicate to the Chancellor 
 *' of the Exchequer, the absolute necessity they conceive 
 " to exist for diminishing the sum of their present 
 " advances to Govei~nmcrit. 
 
 * Minutes of Secret Committee op the Bank, 1797, 
 page 171.
 
 202 
 
 " It must occur to Mr. Pitt's recollection that 
 " last January the Governor and Deputy Governor 
 " of the Bank, did, by instructions from their Court, 
 " formally announce to him their apprehensions of 
 " the consequences that were likely to ensue from the 
 " Emperor* s loan taking place. The events seem 
 "fully to justify their fears, and to render every 
 ' measure of caution necessary for their future 
 " safety:* 
 
 This large and continued drain, and the perilous 
 state of the Bank, may convince your Lordship 
 that, if there had not been a powerful impediment, 
 the price if silver bullion would soon have been 
 raised by the Bank-directors. But those gentle- 
 men were, no doubt, aware that any attempt to 
 raise the price of silver above its relative pro- 
 portion to cold, at ^3:17:10^ an ounce, 
 would instantly operate to prevent the sale of their 
 silver bullion; and compel those who wanted bul- 
 lion to take away guineas. The increased de- 
 mand for guineas must have made the Directors 
 hasten the coinage of their gold bullion: which 
 in that case, would have been sold at a pro fit of about, 
 nine shillings and eight-pence per cent. Whereas 
 silver bullion at $s. 5^ per ounce, (three-pence half*.
 
 203 
 
 penny per ounce above the mint price) probably 
 afforded a profit to the Bank of, at least, five, 
 if not six, or sevm, pounds per cent.! As the 
 restriction had not then been imposed on the 
 Bank issues of cash, the merchants, and the public 
 could, on emergency, demand standard gold at 
 .3:17:10! an ounce: but silver, kept in 
 bars, or in foreign coin, could not be de- 
 manded; except at the price which the Bank-direc- 
 tors resolved to put upon it. The mint-price of 
 guineas, when they were payable on demand, 
 was, in fa6i, the maximum of gold : no man in 
 his senses would give more, when he could de- 
 mand it at that price. So, likewise, of silver, 
 were it coined at the mint, the silver coins would 
 invariably determine the value of silver bullion: 
 provided the currency of the present gold coins 
 had permanently ceased. But whilst the gold 
 coins, which are over-valued at the mint, art 
 used as English currency, those who know their 
 real value- that is, the skilful merchants will al- 
 ways chuse to pay in guineas. The bullion mer- 
 chants will regard the maximum of silver merely 
 to regulate their purchases of silver bullion : which 
 bullion they will never take to the mint to be 
 coined at the mint price, while the coinage cap
 
 204 
 
 be on any terms avoided : Or, should they 
 deem it politic to comply with the public desires, 
 and to get a quantity of silver coined; those 
 coins will be, in a great measure, withheld; till 
 the necessities of the public service abroad, shall 
 afford a temptation to convey them away, at a 
 profit proportioned to the difference between them 
 and the nominal value of the circulating gold. 
 But the bullion merchants will endeavour to avoid 
 a silver coinage altogether : unless they can per- 
 suade the Government to allow the nominal 
 value of silver to be so raised as to yield a certain 
 and considerable profit : then their exertions will 
 be directed to increase their profits; under a pre- 
 tence of preventing exportation. For, most of 
 the bullion merchants are also general merchants ; 
 and they cannot be ignorant how much an addi- 
 tion to the nominal value of the coin, tends to en- 
 rich themselves at the expence of their king, 
 and of their country. 
 
 The drain upon the Bank for " bullion and spe- 
 cie" having been large and continued, while silver 
 bullion was at 5s. 5^6. per ounce ; and as that 
 drain must have been principally for exportation, 
 and probablv to the continent of Europe, it natu-
 
 205 
 
 rally suggests the idea that silver, at that price , 
 could not (according to the general estimate of 
 gold and silver in the markets of Europe) have 
 exceeded the price proportioned to standard gold 
 at % : 17 : io an ounce: and as the Bank-di- 
 retors said there was no " prospeB of the demand 
 for gold being likely soon to cease" it seems that 
 guineas were drawn as much or more than silver 
 bullion; and that consequently the difference 
 could not have been material whether gold or 
 silver were exported; provided the former could 
 be safely conveyed in defiance of the law. Hence 
 we may presume that these prices indicate with 
 tolerable accuracy the comparative valuations of 
 gold and silver in foreign markets : and their re- 
 lative proportions upon these data appear to be 
 about 14I to 1. 
 
 It is, however, necessary to remark that, there 
 are a great number of merchants who do not under- 
 stand the doctrine of proportions in the prices of the 
 precious metals, in the science of money , and business 
 of Exchange. But their experience has taught 
 them the apparently varying prices of bullion, and 
 the necessity for sometimes using it both as an 
 Import, and as an Export. They know that the 
 
 2 E
 
 20(3 
 
 Bank price of gold, before the restriction, was ge- 
 nerally % : 1 7 : 6 an ounce : and if any of them 
 imported gold bullion and sold it to the Bank at 
 that price ; it is obvious that, when their subse- 
 quent occasions required an exportation of bul- 
 lion, if guineas of full weight were secured, they 
 lost in this country only the difference between 
 the mint price, and that which they had previous- 
 ly received at the Bank that is, about half per 
 cent. But if they were so imprudent as to take 
 guineas which were nearly the lowest weight al- 
 lowed to be " legal tender" in England; their loss 
 in that case might be nearly one and three quarters 
 per cent. / Your Lordship will therefore perceive 
 the reason why merchants, and dealers in bullion 
 and Exchange, seleft the heaviest coins for ex- 
 portation, and keep the lightest at home for pay- 
 ments in Great Britain. 
 
 Lord Liverpool commends* the Bank-directors 
 for weighing all the English gold coins taken into 
 the Bank : and his Lordship considers weighing 
 an act of duly in obedience to the law, and to the 
 King's proclamation. But, as there are not many 
 
 * Sec, Letter to tlic King, page 216.
 
 207 
 
 places where the value of a grain of gold is better 
 understood than at the Bank of England, the Di- 
 rectors could assign a very sufficient reason for 
 weighing the guineas, without adverting either to 
 the law, or to the proclamation. Indeed the noble 
 Earl states that a proposal was made, " at the time 
 of the recoinage, that the different gold coins should 
 continue in currency, and be legal tender ; on condi- 
 tion that two-pence should be allowed for every 
 grain deficient: for two-pence is nearly the value of 
 a grain of gold. By this rule the guineas might be 
 weighed in numbers, and even in bags, as is now 
 practised, in some foreign countries, with the silver 
 coins, of which their currency principally consists; 
 and (as his Lordship was informed) with gold 
 ducats in Holland: and it was suggested, that a 
 table should be constructed to shew what the 
 weight ought to be of any number of gold coins 
 from one to a thousand, which might be carried 
 in every man's pocket-book. This method is cer- 
 tainly conformable to the ancient practice of weighing 
 silver coins, called compensatio ad pensum: ant! 
 (his Lordship continues) it would certainly have the 
 effect of preventing, in a great degree, the exporta- 
 tion of heavy gold coins, or the diminution of them by 
 any art whatsoever ; for n o p r o r i t c oui.d t h e n
 
 208 
 
 BE DERIVED FROM THESE PRACTICES. It Was 
 
 thought necessary, however, by those who ap- 
 proved this system of weighing, that there should 
 be a minimum in the weight of single pieces, be- 
 low which they should not be allowed to be cur- 
 rent, but be defaced and returned to the mint.*'' 
 
 It is impossible to conceive more excellent 
 advice : and if it were reduced to practice with 
 respect to both the gold and the silver coins of this 
 empire, the effect upon the prices of commodities 
 would be almost miraculous. 
 
 I wish that my Lord Liverpool had mentioned 
 why that salutary counsel was rejected: and why 
 the minimum was adopted without the equitable 
 condition which was also recommended; and 
 which even his Lordship applauds in describing 
 some of the consequences that would have pro- 
 bably followed. 
 
 Having submitted to your Lordship that stan- 
 dard silver at 5s. 5^d. an ounce, and standard 
 gold at % : 1 7 : ioj an ounce may, by inference, 
 
 * Letter to the King, page 217,
 
 20Q 
 
 be regarded as in due proportion to each other; 
 and that if the nominal value of either of them 
 be over-rated, the market value of the other will be 
 raised in equal proportion*, it may, perhaps, be 
 expecled that I shall now give some evidence of 
 this truth : although I reserve a more copious il- 
 lustration for future papers. I do therefore most 
 particularly request your Lordship's attention to 
 the first a6l of the Bank-direclors, after the issues 
 of gold were suspended by the order of council, 
 in February 1797. 
 
 I pass over the al of the legislature, which 
 authorized the suspension of the cash payments 
 at the Bank ; because Mr. Thornton sayst that 
 " the Parliament were led, by the practical view 
 which they took of the subject, to disregard 
 theory, as well as some popular prejudice, for the 
 sake of more effectually guarding the public safety, 
 and promoting real justice: 1 ' and because these 
 considerations merit a separate enquiry. 
 
 That gentleman also says, that " The danger 
 chiefly to be apprehended in London (from the re- 
 
 * SeCj page 197, + Enquiry, page 113.
 
 210 
 
 strition) w as that the common class of people, noi 
 receiving their pay in the usual article of coin, and 
 not knowing at the first, that one and two pound 
 notes would purchase every thing in the same manner 
 as gold, might be excited to some tumultuous proceed* 
 ings. It was also feared that, through the discredit 
 cast on small notes, this new paper might fall, at the 
 first issue of it, to a discount. It was important, 
 therefore, to continue for a time to pay the labouring 
 people with money." 
 
 But so great had been the scarcity of silver 
 coin in London, as well as in all parts of the king- 
 dom, that on the preceding " 3d of February 1 797, 
 the Governor of the Bank mentioned to Mr. Pitt 
 the great distress and inconvenience which the 
 Bank, the bankers, and the public suffered for 
 want of a fresh coinage of silver; and requested 
 the Chancellor of the Exchequer to take some 
 early measures for a redress thereof by a new 
 coinage, at least, of some part of what would be 
 wanted*." 
 
 * Minutes of Secret Committee on the Bank, 1797. 
 page 188,
 
 211 
 
 I do not stop to inquire why the Bank-direc- 
 tors did not send silver bullion from the Bank to 
 be coined? Knowing, as they must, that the mint 
 was open to them, #5 well for the coinage of sil- 
 ver, as for the coinage of gold ! Your Lordship 
 will, no doubt, infer the reason of that forbear- 
 ance, when it is recollecled that the Bank mode of 
 supplying the public with money for the payment of 
 labourers, was by issuing Spanish dollars at the nomi- 
 nal value of four shillings and NiNE-pence each! 
 Whereas, (if we may admit the evidence of Mr. 
 D'Olier*, a bullion merchant, and one of the 
 Bank of Ireland-direclors) the value of a dollar at 
 the British mint is " about four shillings and four- 
 pence !" The nominal value of each dollar was con- 
 sequently increased five-pence. Now if four 
 shillings and four-pence gain five-pence, ^100 
 in the same proportion must gain co, : 12 : 3. 
 Therefore the silver of the Bank was raised 
 9 112:3 per cent, above the mint price of 
 silver ! 
 
 But it will be objeQed that the Bank dollars 
 were not the money of the state; and therefore could 
 not be deemed the currency of the country ! I 
 
 * Minutes of the Exchange Committee, paje 84.
 
 212 
 
 beg leave to answer that, whatsoever money is is- 
 sued from the Bank , with the consent of the 
 Government, the money so issued is , for the time 
 being, the measure of value in the kingdom : and is 
 so considered by all who thoroughly understand 
 the science of money : and more especially by the 
 dealers in bullion, and dealers in Exchange. And, 
 I beg leave further to submit, that the nominal 
 value of all commodities will rise in 
 proportion to the actual increase in 
 the nominal value of the new money: 
 provided the increase of nominal value be made upon 
 the metal which has usually been taken as the mea- 
 sure of value in the kingdom. But, if gold and 
 silver circulate at the same time as the currency of 
 the kingdom, then the m e t a l which move r-r a te d 
 will become the measure of value ; because it is the 
 interest of all merchants to make their 
 payments in that metal, which will dis- 
 charge the greatest quantity of their 
 debts: whether those debts be duties payable to 
 the Gov ernment, or the results of contracts with 
 private individuals ; and because they are always 
 liable to be paid, for their commodities, in the same 
 money: that is, in the money which has been over- 
 rated a> the mint.
 
 213 
 
 It is for this reason that gold has been con- 
 stantly used by the Governor and Company of 
 the Bank of England as their money payment. 
 And the duration of their practice made my Lord 
 Liverpool* conclude, that " the gold coins are now 
 bccome ) in the practice and opinion of the people^ 
 the principal measure of property.'* But we have 
 just seen that the people have had no option: 
 although the Bank-directors have had the power 
 of chusing which of the two metals should con- 
 stitute their payment : therefore those who de* 
 manded cash for Bank notes were compelled to 
 take the metal which was offered to them in legal 
 coins! Has the Bank ever been willing to coin 
 and issue silver at the mint price, either before or 
 since the Governor felt the public want so great, 
 as to become himself the organ of public com- 
 plaint; and to demand a new coinage from the 
 Chancellor of the Exchequer ? I am persuaded 
 that no such disposition could be found in the 
 Bank. For, my Lord, one of the Directors, (who 
 has passed the chair,) gave me personally to un- 
 derstand that silver is not rated at the mint in 
 proportion to gold : and that the nominal value of 
 
 * Letter to the King, page 141, 
 2 F
 
 214 
 
 silver in the mint coins ought to be raised I Who 
 occasioned the disproportion between the two 
 kinds of coin? The question is worthy of your 
 .Lordship's attention. If it should hereafter appear 
 that the Bank of England were the original cause 
 of the high valuation of gold at the mint, the 
 public will probably be surprized to find that the 
 Bank-dire6tors objeQ: to coin silver, because 
 their own body, either dirclly or indire&ly, de- 
 stroyed the due proportion between it and gold. 
 Yet such, I believe, is the aQual fat ! 
 
 " The mint indentures of Charles II. James II. 
 William III. and Queen Anne, and even a part 
 of George I. to the year 1717, had determined 
 that the guinea should pass at the rate or value of 
 twenty shillings, and the other gold coins in pro- 
 portion : yet they did not pass at that which was 
 then their legal rate or value, but at a much 
 higher rate or value : and in part of the reign of 
 King William the guinea was current at even so 
 high a value as thirty shillings ! This increased 
 rate or value" (says Lord Liverpool) " was not 
 owing singly to a mistaken estimation at the mint, 
 of the relative value of gold to silver, but the 
 gold coins rose or fell as the Silver coins were less or
 
 215 
 
 more per j ec~l ! No such increase, or variation, in 
 the value of the gold coin has taken place, since 
 the year T717, when the rate or value of the 
 guinea was determined by proclamation, and the 
 mint indenture, to be twenty-one shillings, and the 
 other gold coins in proportion : though the silver 
 coins now current have long been, and are still, 
 at least as deficient as they were in the beginning 
 of the reign of King William. The guinea, and 
 the other gold coins have, notwithstanding con- 
 stantly passed, since 1717, at the rate or value 
 given them by the mint indentures*." 
 
 The noble Earl seems here to have forgotten 
 that since the period he mentions, Bank notes 
 have been, in London, the general medium of all pay- 
 ments; and that, consequently, the price of gold \ 
 like that of every other commodity, must have depended 
 on the quality of the money -which those notes repre- 
 sented. Before the year 1696, the current coins 
 alone were the measure of all value : and then 
 there was no reservoir from whence guineas could 
 be occasionally drawn; excepting those of the 
 jews and goldsmiths : whose profits were in- 
 
 * Letter to the King, page \i l \.
 
 216 
 
 creased by the clippings of the coin. But from 
 1696 to 1797, the Governor and Company of the 
 Bank of England were bound to pay their notes on 
 demand : and that obligation compelled them to 
 procure continual supplies of gold coins from the 
 mint: which coins were therefore always in a to- 
 lerable state of perfection : and, being the only 
 money to be had in large sums, they became, of 
 course, the principal measure of value. How- 
 ever, since the Bank restriction, the Directors have 
 thought it expedient to use silver rather than 
 gold; because, under the sanction which enabled 
 them to raise the value of silver , a barrier is erected 
 to prevent the market price 0/ gold falling to 
 a level with the mint price: and because that 
 seeming high price of gold is a good argument 
 for the continuance of the Bank restriction / 
 Silver is, in faft, the acknowledged measure of 
 value, I think, in all the states of Europe, except- 
 ing Great Britain : and if the gold coins of En- 
 gland formerly " rose or fell as the silver coins 
 were less or more perfect ;" so, in the present day, 
 they will be found to vary in price] fas far as the 
 law will let them) according to the rate at which 
 silver bullion can be procured in Exchange for 
 bakk notes! " The question of prices is a qucs-
 
 217 
 
 lion of power, and of power only; and, in the 
 event of the scarcity of any commodity, the 
 buyers are more or less under the power of the 
 sellers, in proportion as the article in question is 
 of more or less urgent necessity*." The Bank-di- 
 reclors are almost the only sellers of bullion, 
 upon a large scale, in England. If they use their 
 power to raise the price of silver bullion above 
 the price proportioned to gold at % : 1 7 : io|- an 
 ounce, their advanced price o/bullion will be the 
 same thing as a reduction of the coin : and bank 
 notes will consequently be the representatives 
 of coin reduced in value. For, Mr. Thorn- 
 ton truly sayst that, " the advanced price of goods 
 is the same thing as a reduced price 0/ com !" /?- 
 mediately after the Bank restriction, the Bank-di- 
 reclors did use their power, under the sanction 
 of Government, to raise the nominal value of 
 dollars from four shillings and ov R-pence to four 
 shillings and uiKE-pena each: and thereby (if 4s. 
 4d. is the mint value of a dollar) they raised the 
 nominal value o/mint silver q. : 12 : 3 per 
 cent! But it appears, by the preceeding extract 
 from Lord Liverpool, that gold bullion was 
 
 * Thornton's Enquiry, p, 271. + Enquiry, p.211.
 
 218 
 
 raised Jive pounds per cent, in the year 1717; 
 when " the rate or nominal value of the guinea 
 was altered by proclamation, and the mint inden- 
 ture, from twenty to twenty-one shillings:" at which 
 latter rate it has ever since been current. 
 
 If my inference (in page 205) is correct, that 
 silver at 5s. 5d^. an ounce is in due proportion to 
 guineas at ^3 : 17 : 10^ an ounce, the difference 
 between the proportional and the mint value of 
 silver \s$ : 1 1 : 1 per cent. : therefore the guinea^ 
 when current at twenty shillings, was rather 
 
 OVER-RATED AT THE MINT in Comparison with 
 ilLVER COIN ! 
 
 What was the effect of raising gold coin 5 
 per cent. ? Truly, my Lord, it may have been a 
 mere trifle in the estimation of the Bank-direc- 
 tors: who, it will be recollected, were in that day 
 the principal merchants of the kingdom, and the 
 confidential advisers of the King's ministers in all 
 cases of pecuniary difficulties ! But to me, who 
 am not much used to exorbitant profits, it seems 
 to have been a matter of serious consequence 
 to the Government, to the King, and to the public. 
 In the first place, raising the gold coin pex
 
 21Q 
 
 Cent, was, in effel, deducting 5 per cent, 
 from all debts due from the Bank of England 
 upon the notes then in circulation ! ! It was de- 
 dueling 5 per cent, from all debts due from the 
 merchants in their private commercial dealings ! ! 
 It was deducting 5 per cent, from all the duties 
 payable by the merchants on their several im- 
 portations ! ! It was permanently deducting 5 
 per cent, from the King's private revenue!! 
 and from the whole rental of the established churchl ! 
 It was deducting 5 per cent, from the salary of 
 every public officer, every private officer, and every 
 annuitant in the King's dominions ! ! It was de~ 
 duBing 5 per cent, from the pay of every British 
 soldier and British sailor ! ! It was deducting 5 
 per cent, from the rental of every individual in the 
 kingdom, who was not acquainted with the important 
 secret ! ! And, finally, it was deducting 5 per 
 cent, from the whole national revenue ! ! ! 
 
 It may possibly be urged that the alteration in 
 the permanent value of the guinea, was a mea- 
 sure advised by the House of Commons in con- 
 sequence of a " Representation which had been 
 made to the Treasury by Sir Isaac Newton, master of 
 the mint, and of Mr. Caswel, who explained the na-
 
 220 
 
 ture of a clandestine trade carried on by the Dutch 
 and Hamburghers, in concert with the Jews of 
 England, and other traders, by exporting 
 silver coin, and importing gold; which, 
 being coined at the mint, yielded a profit of fif- 
 TEE's-pence upon every guinea ! The House, in 
 an address to the King, desired that a proclamation 
 might be issued, forbidding all persons to utter 
 or receive guineas at a higher rate than on E-and- 
 tvventy shillings each. His Majesty complied 
 with that request : but, people hoarding up their 
 si,lver t in hopes that the price of it would be raised, 
 or in apprehension that the gold would be lowered 
 still farther, the two Houses resolved that the 
 standard of the gold and silver coins of the king- 
 dom should not be altered in fineness, weight, or de- 
 nomination; and they ordered a bill to be brought 
 in, to prevent the melting down of the silver 
 coin*.'' The expectation of the people, that sil- 
 ver would be raised, or the gold lowered still far- 
 ther, partly confirms my doctrine : and the address 
 of the Commons shews that the cause of their com- 
 plaint was a growing enormity. Yet the measure 
 recommended is, to my mind, convincing evidence 
 
 * Smollett's KnglanJ. 
 
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