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 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 
 
 

 
 THE 
 
 QUESTION 
 
 CONCERNING THE 
 
 DEPRECIATION 
 
 OF OUR 
 
 Currency 
 
 STATED and EXAMINED. 
 By W. IWSKISSON, Esq. MP. 
 
 " It is (lie interest of every country that the Standard of its Money, once 
 settled, should be inviolably and immutably kept to perpetuity. For when- 
 ever that is altered, upon what pretence .soever, the Publick will lose by it. 
 
 " Men, in their bargains, contract, not for denominations or sounds, but 
 for the intrinsick value." Locke on Money. 
 
 SEVENTH EDITION. 
 
 LONDON: 
 
 PlflNTED FOR JOHN MURRAY, 32, F LEET-STREET ; 
 
 AND J. HATCHARD, PICCADILLY, LONDON: 
 
 \Y. BLACKWOOD, EDINBURGH; AND 
 
 M. N. MA HON, DUBLIN. 
 
 1811.
 
 // 
 
 PREFACE. 
 
 -T ROM the circumstance of my having been 
 a member of the Bullion Committee, and from 
 its being known to several of my friends that I 
 had taken a part in the discussion which pre- 
 ceded the Report, I have been pressed, by 
 more than one of them, for some explanation 
 of my opinions respecting the state of our cur- 
 rency and circulation, and of the grounds on 
 which those opinions are founded. Gratified 
 to find their attention awakened to all the im- 
 portance of the subject, and with my own 
 feelings fully alive to it, I committed to paper 
 the substance of my opinions, in part before, 
 and the remainder very soon after, the publi- 
 cation of the Report. 
 
 Proportionate to the general interest excited 
 by that Report, has been the clamour raised 
 against it. That clamour, and the strange doc- 
 trines which are set up in opposition to the 
 principles and conclusions of the Committee, 
 have induced some of those who had originally 
 read what I had written with the partiality of 
 
 :> friends, 
 
 1M! 
 
 fln r \ "1 >>
 
 ( ) 
 
 friends, to express a wish that I would pub- 
 lish it. 
 
 If this wish had not been fortified by other 
 considerations, I should not, by yielding to it, 
 have exposed myself to the imputation of that 
 vanity, to which such indiscreet compliance is 
 generally, and perhaps often justly, ascribed. 
 But when so many pens are employed to pro- 
 pagate what appear to me most false and dan- 
 gerous theories upon the subject of our curren- 
 cy; when several of those who have taken upon 
 themselves to controvert the Report, have gone 
 out of their way to misrepresent the conduct, 
 and to cast obloquy on the characters and mo- 
 tives of those who concurred in it ; and above 
 all, when the many evil consequences of an erro- 
 neous, or even an unsettled state of the pub- 
 lick mind upon a question of such vast im- 
 portance, are considered ; I trust that I shall be 
 justified in submitting, what was originally pre- 
 pared for an indulgent and limited circle only, 
 to the examination and judgement of a more 
 extended and impartial tribunal. 
 
 With deference then I venture to offer to 
 the publick an exposition of the course of rea- 
 soning which led my mind to the conclusion 
 which I have formed upon a question in which 
 the publick has s?o deep an interest. 
 
 Any
 
 ( Hi ) 
 
 Any man, I think, who lias read the pam- 
 phlet of Sir John Sinclair, or the speech of 
 Mr. Handle Jackson to the Proprietors of Bank 
 Stock, (as reported in the newspapers,) must 
 admit that I have not unfairly described the 
 attacks which have been made upon the Re- 
 port of the Bullion Committee. 
 
 Both these productions appeared long after 
 the following- observations were written. To 
 enter into any examination of their contents is 
 not compatible with the object and limits of 
 these introductory remarks; nor indeed, if it 
 were, should I be tempted to such an exa- 
 mination, notwithstanding the circular invita- 
 t ion with which the Right Honourable Baronet 
 is said to have accompanied the distribution 
 of his pamphlet. 
 
 When among other theories equally extraor- 
 dinary, (whimsically dignified with the name 
 of axioms in the work itself) this author, be- 
 fore he is well clear of his preface, lays it 
 down as a leading principle, " that the abun- 
 " dance of circulation is the great source of 
 " opulence and strength ;" and emphatically 
 styles it " the mine of national prosperity;" when 
 lie defines Money to be " a well regulated paper 
 " currency with a certain proportion of coin' 1 
 f should be at a loss how to deal with such 
 a 2 axioms.
 
 ( iv ) 
 
 axioms. They appear to belong to that class 
 of propositions which have been sometimes 
 characterized by rhetoricians as being " nei- 
 ther true nor false;" and as they are (to me 
 at least) wholly unintelligible, they must of 
 course be unanswerable. 
 
 There is, however, one charge against the 
 Committee, much dwelt upon both in the 
 speech and in the pamphlet to which I have 
 referred, with which I must detain my readers 
 for a few moments. It is that of having made 
 a Report directly contrary to, and altogether 
 inconsistent with, the evidence. This asser- 
 tion has surprised me: and I have looked in 
 vain for any proofs in support of it. 
 
 The Committee endeavoured, in the first in- 
 stance, to collect and place upon their records 
 certain fads; such, for instance, as the con- 
 tinued high price of gold bullion, and the great 
 depression of the foreign exchanges. To any 
 explanations, that were offered by the witnesses, 
 of the causes which had produced this state of 
 things, they listened with the most patient 
 attention: and have given them a place in the 
 Appendix, in the words of the parties examined. 
 But when these explanations appeared to the 
 Committee to be either unfounded or insuffi- 
 cient; to be contradicted by the experience of 
 
 former
 
 ( v ) 
 
 former times, or by the actual state of facts ; 
 to be inconsistent with each other, or with the 
 admissions of the witnesses themselves; could 
 it be the duty of the Committee to adopt them 
 as their creed ? Was it not rather their duty 
 to state, in what respect, in what degree, and 
 in what instances these explanations appeared 
 to them unfounded or insufficient; and to point 
 out the circumstances by which they were con- 
 tradicted, and the inconsistencies which they 
 involved? 
 
 It was indeed for the House of Commons to 
 consider whether they would appoint such a 
 Committee at all, or refer such a subject to 
 such a mode of examination: and if it was 
 foreseen that the promulgation of an opinion, 
 such as that which the Committee have formed, 
 would be attended with publick mischief,(which 
 I however am very far from thinking) it might, 
 in that case, be matter of regret that the House 
 should have consented to its appointment. But, 
 even in that case, nothing can be more unjust 
 than to impute as blame to the members of the 
 Committee', acting under the orders of the 
 House, the due discharge of a duty which the 
 House had thought proper to impose upon 
 them. 
 
 In the execution of this duty it became 
 a 3 neccs-
 
 ( vi ) 
 
 necessary to ascertain the principles by which 
 the Directors of the Bank of England had been 
 governed in the issues of their paper since the 
 restriction. 
 
 This information could not be obtained from 
 them in their corporate capacity: it could 
 only be collected from those who were at the 
 head of the Direction. 
 
 This forms by far the most important part 
 of the evidence: because the supply of our 
 circulation being now without controul in 
 the hands of the Directors, it was essential 
 to ascertain by what rules and principles 
 they were guided in the exercise of this ex- 
 tensive discretion. Before this enquiry, these 
 rules and principles were, I believe,, unknown 
 to the publick : they were certainly unknown 
 to me. The Committee have stated them in 
 the words of the Governor and Deputy Go- 
 vernor of the Bank; and have assigned rea- 
 sons for thinking that they do not afford a 
 check constantly and sufficiently operative 
 against an over-issue, and consequent depre- 
 ciation of Bank paper. Is this what is called 
 making a Report directly contrary to the evi- 
 dence ? 
 
 Mr. Jackson, indeed, is of opinion that the 
 Committee ought to have surrendered their 
 
 judgement
 
 ( vii ) 
 
 judgement altogether to the authority of those 
 witnesses who asserted, that Bank Notes are 
 "not depreciated;" and who stated as the 
 grounds of that assertion, that " in their ex- 
 " tensive and various transactions, no difference 
 " exists between Bank Notes and coin." As 
 Mr. Jackson is, unfortunately, not the only 
 person to whom this inference appears to be 
 conclusive, it may be regretted, as an omis- 
 sion, that the Report of the Committee did not 
 more particularly guard against it. There is 
 perhaps no part of the question which is capa- 
 ble of being settled with greater ease and cer- 
 tainty. The experience of our own, as well 
 as of all other countries, has placed beyond 
 the reach of controversy the proposition, that 
 if one part of the currency of a country (pro- 
 vided such currency be made either directly 
 or virtually a legal tender, according to its 
 denomination,) be depreciated, the whole of 
 that currency, whether paper or coin, must be 
 equally depreciated. This proposition, I trust, 
 the reader will find satisfactorily made out in 
 the following pages. 
 
 Whilst I am aware that I must despair of 
 convincing persons so entirely at variance 
 with the first principles of political economy, 
 
 there is another, and 1 hope a larger class, 
 u i to
 
 ( viii ) 
 
 to whose understandings the following obser- 
 vations must appear superficial and unneces- 
 sary. They certainly contain nothing which 
 is new; or which can be striking or interesting 
 to any readers of that class. A discussion 
 which goes back to the first principles of our 
 money system, and in which, at the risk of a 
 wearying repetition, the same proposition is 
 illustrated in several different modes, must 
 appear superfluous to persons who are already 
 well acquainted with those principles ; and 
 whose own ingenuity would supply them with 
 illustrations more apt than, any that I have 
 been able to furnish. 
 
 But I am convinced, as well from the ex- 
 perience which I derived from the enquiries 
 carried on in the Bullion Committee, as from 
 every thing that has since come under my 
 observation, that a great proportion of the 
 publick, including (even in the limited circle 
 of my own acquaintance) many men of excel- 
 lent understandings, have either overlooked 
 the elements of the whole question ; or, more 
 probably, have never turned their minds to the 
 course of enquiry, which, if properly pursued, 
 must have prevented some of the misconcep- 
 tions now afloat on this subject. To the want 
 of this knowledge, to the want of time, or 
 
 oppor-
 
 ( ix ) 
 
 opportunity, or inclination to attain it, much 
 of the error which prevails in some quarters* 
 and of the doubts, uncertainty, and apprehen- 
 sion which exist in many others, is, in my opi- 
 nion, to be ascribed. 
 
 In the present state of the question, surely, 
 no man who takes any interest in publick 
 affairs, more especially if he have any legisla- 
 tive duty to discharge, will hesitate to acquire 
 that knowledge ; and to overcome any disincli- 
 nation that he may feel from the natural dry- 
 ness, or supposed intricacy of the question. 
 The necessary information is to be easily ob- 
 tained, by resorting to the history of our cur- 
 rency in former periods, and to those authors, 
 in our own language, who are looked up to as 
 of the highest authority in political economy. 
 To which I may add, that, since the agitation 
 of the question in Parliament, several excellent 
 publications on the subject have made their 
 appearance. 
 
 Of most of those publications, however, 
 including oven the very able pamphlet of Mr. 
 Blare,* I cannot help observing, that they 
 
 * " Observations on the principles which regulate the 
 " Course of Exchange, and on the present depreciated State 
 ' of our Currency." By W. Blake, Esq. This pamphlet 
 contains the most complete exposition of the whole doctrine 
 of exchange that I have met with in any language. 
 
 appear
 
 ( * ) 
 
 appear to me, both to suppose a degree of 
 elementary information in their readers, which 
 all do not possess ; and to take for granted, on 
 the part of their opponents in the argument, a 
 concession of principles, which have, indeed, 
 been long since established as fundamental 
 truths; but which have been again called in 
 question on the present occasion. To revert, 
 therefore, to first principles, and to endeavour 
 to prove again what has been already so often 
 proved, may, as I presume to think, be a 
 useful, though humble, help in the discussion 
 which now agitates the publick opinion of the 
 country. 
 
 They who think with me, that it is by the 
 establishment of sound, and the detection of 
 false principles, upon points of general interest 
 and leading importance in political economy, 
 that the greatest benefits are secured to nations, 
 or the greatest calamities averted from them, 
 will not find fault with the mode in which I 
 have ventured to treat the subject. They will 
 even pardon the repetitions, which I have found 
 unavoidable, when they consider that, in a 
 question of a complicated nature, but admit- 
 ting (as I conceive) of strict proof, one mode of 
 arriving at the truth is more easily appre- 
 hended by some minds, and another by others; 
 
 and
 
 ( xi ) 
 
 and that, in contentions, where interest and 
 prejudice take a part, it is not enough to esta- 
 blish a proposition ; it is also necessary to 
 expose the fallacy of the reasoning by which it 
 is attempted to be controverted. 
 
 Having once made up my mind to submit 
 these remarks to the publick, I could not 
 think of withholding my name. I am anxi- 
 ous to meet, upon a fair and equal foot- 
 ing, those persons who have publickly attacked 
 the Report of the Committee. I wish to draAv 
 from them, either an admission of the princi- 
 ples which I state; or a clear and explicit 
 exposition of their own. If they admit the 
 principles stated by me, it is for them to recon- 
 cile their own deductions to those principles, 
 so admitted; and to disprove mine. If the 
 difference between us be as to principles, let 
 them lay fairly before the publick those, on 
 which their theory is built; and shew the prac- 
 tical consequences, to which their own princi- 
 ples would, in their own opinion, lead. 
 
 I may add, that none of the considerations 
 which sometimes disincline men in publick 
 life from this mode of declaring their senti- 
 ments, apply in the present instance. The 
 question is already necessarily before the pub- 
 lick. The parliamentary discussion of it is 
 
 unavoid-
 
 ( xii ) 
 
 unavoidably at some distance. It is plain that 
 the opinion of the publick will not remain so 
 long altogether suspended: and besides it is 
 a subject upon which many persons would 
 rather collect their ideas and form their 
 decision in the leisure of the closet, than in 
 the warmth of debate. 
 
 I have yet another reason for avowing my 
 opinions as openly and as early as possible. 
 If I know my own mind, those opinions have 
 been formed as coolly and dispassionately, as 
 they could have been upon any point of ab- 
 stract science: and I should have felt it as 
 impossible to avoid coming to the conclusion 
 to which I have been led upon this subject, 
 as to refuse my assent to the demonstration of 
 any problem in mathematicks. I say this the 
 rather, because I see (and I see with deep 
 regret) an attempt made to create political 
 divisions on this subject: and to array parti- 
 cular parties against principles which, surely, 
 are not to be classed among the articles of any 
 political creed, or to be considered as con- 
 nected with the separate interests of any 
 party: principles which, if false, may be dis- 
 proved by calm argument, without the aid cf 
 influence or combination ; but which, if true, 
 rannot be refuted by clamour, and could not 
 
 be
 
 ( xiii ) 
 
 be overpowered by numbers or authority, 
 without material hazard to the interests of the 
 country. 
 
 So far as I know, and as I believe, this 
 attempt has not hitherto been successful. The 
 speech of Mr. Handle Jackson, though it im- 
 putes party spirit to others, is obviously dic- 
 tated by nothing more than a corporation 
 spirit: a distinction which, fortunately, is too 
 plain to be misunderstood. As to Sir John 
 Sinclair, the only other avowed author of 
 such imputations, it would be most unjust, 
 both to him and to mankind, to suppose him 
 the organ of any other sentiments than his 
 own. 
 
 Fatal, indeed, would it be for the country, 
 if those who are to decide upon this ques- 
 tion, (a question which, while it is, on the 
 one hand, so abstract as not to allow to error 
 the apology of passion, yet, on the other hand, 
 affects, in its practical consequences, the 
 interests and the comforts of every class of 
 society,) could be persuaded to regulate 
 their conduct, upon this occasion, by any 
 feelings of political partiality or hostility. I 
 trust that such feelings will not be allowed to 
 disturb and exasperate this discussion: and, 
 as to myself, 1 am most anxious to declare 
 
 and
 
 ( xiv ) 
 
 and record my opinions, while these feelings 
 have not yet made any progress; and while 
 the course of party politicks, (if, most un- 
 fortunately, party politicks are at any period 
 to mix themselves with the subject,) is yet 
 unascertained. 
 
 I am aware that I have already detained the 
 reader too long upon points which are, in some 
 degree, of a personal nature; especially as 
 there is one other, more entirely personal, per- 
 haps, on which I must request his indulgence 
 for a few sentences. In discussions of an ami- 
 cable nature Avhich have arisen with those for 
 whom these observations were originally in- 
 tended, I have been asked, (and the question 
 may possibly be repeated in a less amicable 
 manner,) " Why I did not give to the publick 
 an earlier warning on the subject, why not, 
 while I was myself in office, and before the 
 evil had grown to its present height ?" 
 
 My answer is, first that it is one thing 
 to trace effects, the existence of which is 
 manifest, up to the causes which produced 
 them: but that it would have been another, 
 to foresee all the possible consequences of 
 a new r measure ; especially when those conse- 
 quences were liable to be produced, or to be 
 varied, by circumstances of which one had no 
 
 know-
 
 ( *v ) 
 
 knowledge. To the perspicacity, which alone 
 could have qualified me for such foresight I do 
 not pretend ; but, nothing more than diligence 
 and impartiality was required to qualify for 
 the task of that enquiry and examination which, 
 where the conclusion is as plain, as to my un- 
 derstanding it appears in the present instance, 
 could not fail to lead to conviction. 
 
 I answer secondly, that neither I, nor any 
 man with whom I ever had intercourse, offi- 
 cial or private, upon the subject, at any time 
 considered the restriction of Bank payments 
 as any other than an expedient, originating in 
 necessity ; and determinable whenever that 
 necessity should cease. Nor could I have 
 imagined, till the examinations before the Com- 
 mittee produced the disclosure, that there ex- 
 isted any individual who viewed it as an im- 
 provement in our money system, or who could 
 look with satisfaction to the possibility of its 
 indefinite continuance. 
 
 I answer further, that those consequences 
 of this measure which are developed in the 
 Report of the Committee did not arise till 
 a late period. Up to that period, the foreign 
 exchanges were not unfavourable; and the 
 market price of gold not materially above 
 the Mint prick : ---two circumstances, of 
 
 which
 
 ( xvi ) 
 
 which 1 felt assured that the Bank Directors 
 never lost sight in regulating their issues. 
 During the suspension of cash payments, a 
 permanent depression of those exchanges, or 
 a rise in the price of gold, appeared to be 
 pointed out to them, by the principles of their 
 institution, and by the course of all former ex- 
 perience, as the obvious and best criterion of 
 any tendency to excess in the amount of their 
 paper. It was therefore natural to conclude, 
 that, in regulating their issues, they constantly 
 and carefully watched these indications of the 
 value of their notes. Persons more conversant, 
 than I could be, with the course of business 
 at the Bank, and whose opinions might na- 
 turally be supposed to have great weight with 
 some of the Directors, whilst they urged the 
 importance of this criterion, appeared to enter- 
 tain the same confidence with myself, that to 
 all practical purposes, it was duly observed.* 
 It was not, till the Committee were furnished 
 with the evidence of the Governor and Deputy 
 Governor of the Bank, that I found that, in re- 
 gulating the amount of their issues, the Bank 
 had no reference to this criterion. 
 
 * See An Enquiry into the Nature and Effects of the 
 Paper Credit of Great Britain. By Henry Thornton, Esq. 
 M. V. 
 
 Before
 
 ( xvii ) 
 
 Before that declaration was made, I own 
 that my opinions upon the whole subject were 
 much more undecided. When the great fall 
 in the foreign exchanges first took place, I as- 
 cribed it, without hesitation, and perhaps with- 
 out much reflection, altogether to the effect of 
 the violent measures, political and commer- 
 cial, adopted on the Continent; and to the 
 suspension of our commercial intercourse with 
 the United States. When that fall had conti- 
 nued for near a twelvemonth, doubts arose in 
 my mind whether, the cause of its long con- 
 tinuance might not be, that the Bank, from too 
 much indulgence to their customers at some 
 particular moment, had somewhat improvi- 
 dently extended their issues; and too much 
 delayed restoring them to a proper level. But 
 as I still took for granted that they had not 
 lost sight of the criterion above mentioned, my 
 doubts went no further. 
 
 Such was the state of my mind at the time 
 when I retired from office. Every month 
 which passed from that time, whilst our ex- 
 changes were growing worse, and the price of 
 gold rising, (notwithstanding that our expedi- 
 tion to the Continent was terminated, and 
 our pecuniary aid to Austria discontinued,) 
 could not fail to increase the doubts which I 
 had begun to entertain. 
 
 b Under
 
 ( xi iii ) 
 
 Under these circumstances, and very soon 
 after the opening of the last session, the sub- 
 ject was taken up in parliament. When the 
 Committee was appointed, I gave to the En- 
 quiry all the attention in my power. The 
 general principles which I carried with me to 
 that Committee were the same which I now 
 profess : but the information which has led me 
 to a more specifick and particular application 
 of them was chiefly derived from what came 
 out in the investigation. When I found that 
 the principle of regulating the issues and as^ 
 certaining the value of their paper by a refer- 
 ence to some fixed standard, and even the ex- 
 istence of such -a fixed standard were either 
 altogether overlooked by the Bank, (they could 
 scarcely be unknown to them) or utterly dis- 
 regarded in their practice, my astonishment 
 was great indeed. From that moment I was 
 more at a loss to explain to myself why the 
 evil was not greater, than to account for its 
 present extent. 
 
 I am not ashamed to add that my indi- 
 vidual efforts would not have enabled me 
 to follow in all its practical bearings a sub- 
 ject of such extent and intricacy, without a for 
 more regular and careful attention than was 
 compatible with the incessant occupation, and 
 
 multi-
 
 ( xix ) 
 
 multiplied duties of such publick situations as 
 it has been my lot to fill: and this is far from 
 the only instance in which the studies and 
 self-examination of retirement have shewn to 
 me how great in almost every respect (assi- 
 duity perhaps excepted) were my own defi- 
 ciencies in office. 
 
 I can, however, conscientiously declare that 
 whatever humble means I may possess of discri- 
 minating between truth and error, between de- 
 grees of probability and strict proof, between 
 conjecture and certainty; have been recently 
 and anxiously employed in the re-examination 
 of the opinion which I supported in the Com- 
 mittee. 
 
 Bart ham, 25d October, 1810.
 
 THE 
 
 QUESTION, &c. 
 
 JL HE various definitions of the word money, 
 and the different acceptations in which that word 
 is used in the ordinary transactions of life, have 
 contributed to produce much of the doubt and 
 uncertainty which prevail at this moment re- 
 specting the state of our currency. 
 
 Money, in the popular sense, is frequently con- 
 sidered as having no other value than one purely 
 arbitrary and conventional. It is sometimes 
 defined to be the representative of all other 
 commodities; and sometimes the common mea- 
 sure of them. These definitions are both in- 
 complete, as applied to money; because they 
 are equally applicable to every description of 
 currency, whether consisting of the precious 
 metals, of paper, or of any other article. 
 
 It is of the essence of money to possess in- 
 trinsick value. 
 
 The quality of representing commodities does 
 b not
 
 ( 2 ) 
 
 not necessarily imply intrinsick value; because 
 that quality may be given either by confidence, 
 or by authority. The quality of being a com- 
 mon measure does not necessarily imply intrin- 
 sick value, any more than the possession of a 
 foot rule implies the power of acquiring what- 
 ever it enables us to measure. Money, or a 
 given quantity of gold or silver, is not only the 
 common measure, and common representative of 
 all other commodities; but also the common and 
 universal equivalent. 
 
 Paper currency has, obviously, no intrinsick 
 value. 
 
 A promissory note, under whatever form, or 
 from whatever source it may issue, represents 
 value. It does so, in as much as it is an under- 
 taking to pay, in money, the sum for which it is 
 issued. 
 
 The money, or coin of a country, is so much 
 of its capital. Paper currency is no part of the 
 capital of a country. It is so much circulating 
 credit. 
 
 Whoever buys, gives whoever sells, receives 
 such a quantity of pure gold or silver as is equi- 
 valent to the article bought or sold : or if he 
 gives or receives paper instead of money, he 
 gives or receives that which is valuable only as 
 it stipulates the payment of a given quantity of 
 
 gold
 
 ( 3 ) 
 
 gold or silver. So long as this engagement is 
 punctually fulfilled, paper will of course pass 
 current with the coin with which it is thus con- 
 stantly interchangeable. Both money, therefore, 
 and paper, promissory of money, are common 
 measures and representatives of the value of all 
 commodities. But money alone is the universal 
 equivalent ; paper currency is the representative 
 of that money. 
 
 Of paper currency, however, there are two 
 sorts ; the one resting upon confidence, the other 
 upon authority. Paper resting upon confidence t 
 is what I have described as circulating credit ; 
 and consists in engagements for the payment, on 
 demand, of anyspecifick sums of money: which 
 engagements, from a. general trust in the issuers 
 of such paper, they are enabled to substitute for 
 money in the transactions of the community. 
 Paper resting upon authority, is what, in com- 
 mon language, is called paper money ; and con- 
 sists in engagements issued and circulated under 
 the sanction, and by the immediate interventipn 
 of the publick power of the state. 
 
 Paper, such as alone used to be current in 
 Great Britain before the Restriction on the Bank, 
 was strictly circulating credit. The paper cur- 
 rent in Austria, Russia, &c. is properly deno- 
 minated paper money. 
 
 b 2 The
 
 ( 4 ) 
 
 The division and subdivision of the precious 
 metals into various shapes and sizes; the pro- 
 portion of alloy mixed with them in the coins of 
 different countries ; the stamp affixed upon such 
 coins, and the names by which they pass cur- 
 rent, are things in their nature arbitrary; and 
 subject to such regulations as may be made by 
 the sovereign power of each independent state. 
 By any alteration in these particulars, the price 
 of all other commodities, or, in other words, 
 the amount or denomination of money in which 
 their value is stated, may be altered ; but these 
 changes cannot affect the relation which the 
 value of the bullion contained in the coin bears 
 to that of such commodities. 
 
 Price, therefore, is the value of any given 
 article, in the currency, by reference to which 
 that article is measured; and must, of course, 
 be varied by any variation in the quantity of 
 gold or silver contained in such currency. 
 
 Supposing, for instance, the currency of a 
 country to consist of gold, and that, without any 
 variation in the relative proportion of this metal 
 to that of other articles, the denomination of the 
 existing coin should be raised, or its standard 
 lowered, in any given proportion, the prices of 
 all commodities would rise in the same propor- 
 tion ; although the real value of every such com- 
 modity,
 
 ( 5 ) 
 
 modity, measured by a reference to the quantity 
 of gold in such coin, would remain the same. 
 If, on the other hand, the quantity of gold in 
 such a country (considered for the moment ab- 
 stractedly from its intercourse with other coun- 
 tries) should be increased in any given propor- 
 tion, the quantity of other articles and the de- 
 mand for them remaining the same, the value 
 of any given commodity, measured in the coin 
 of that country, would be increased, or, in other 
 words, the relative value of gold to other com- 
 modities would be decreased in the same propor- 
 tion; although the denomination and standard 
 of the coin should remain unaltered; and al- 
 though no addition should have been made to 
 the actual amount of that coin. 
 
 It must be almost superfluous to observe that 
 by denomination is meant the specifick name un- 
 der which a piece of metal of a given quantity 
 is known in the state of coin; and that standard 
 is the precise quantity (ascertained by weight and 
 fineness) fixed by law for pieces of each denomi- 
 nation. Thus the standard fineness of our gold 
 coin is eleven parts of pure gold and one of alloy ; 
 and the denomination of a piece weighing 5 dwts. 
 911 gr. is a guinea. 
 
 It follows from this, that the right and duty 
 of coining, which, in every independent state, 
 
 n 3 is
 
 ( 6 ) 
 
 is one of the most important attributes and 
 functions of sovereignty, consists in affixing 
 to certain pieces of the precious metals a stamp; 
 which becomes to the subjects of that state, 
 and to all the world, a publick voucher, that 
 each piece, according to its denomination, is 
 of the weight and fineness fixed by the law of 
 that state. The publick honour and integrity 
 of the legislature are pledged to the fidelity and 
 exactness of the voucher, which is thus issued 
 in the name of the Sovereign, 
 
 There is not therefore, nor can there be, any 
 difference whatever, between any given coin, 
 and an uncoined piece of the same metal of 
 equal weight and fineness, except that the quan- 
 tity of the former is accurately ascertained and 
 publickly proclaimed to all the world by the 
 stamp which it bears. 
 
 To apply these general observations to the 
 particular money of this country : 
 
 I assume, as admitted, that, in Great Britain, 
 gold is the scale to which all prices are referred, 
 and, since the 39th of the King, the only legal 
 tender, except for payments under 25/. 
 
 I likewise assume, as unquestionable, both in 
 fact and in law, 
 
 1st,
 
 ( 7 ) 
 
 1st, That a pound of gold, of our standard, 
 is coined into 44 guineas and a half; and that 
 any person may, at the King's Mint, procure 
 any quantity of gold to be so coined, free of 
 any expense whatever ; the officers of the Mint 
 being obliged to return, in coin, precisely the 
 same quantity which may have been deposited 
 with them, without making any charge for the 
 conversion of it into money. 
 
 2dly, That, by law, these guineas which, when 
 fresh from the Mint, weigh ddwts. 9grs. each, 
 cease to be a legal tender if, by wear or 
 otherwise, they are reduced below 5dwts. 8grs. 
 which is a diminution in their value of a small 
 fraction more than one per cent. 
 
 Consequently, the law of England, before the 
 year 1797, distinctly secured to every man, that 
 he should not be compelled to take, in satisfac- 
 tion of a legal debt, for every guinea of that 
 debt, less than 5d wts. Sgrs. of gold of standard 
 fineness ; and, as distinctly, that he should not 
 be obliged to receive, as the representative of a 
 guinea, or a guinea's worth, any article or thing 
 which would not purchase or procure that quan- 
 tity of gold. 
 
 Such was the state of our current coin before 
 the year 1707. 
 
 The Bank of England, as every body knows, 
 b 4 is
 
 ( 8 ) 
 
 is a chartered Company of Merchants whose 
 promissory notes, for more than a century, have 
 constituted a very large proportion of the cir- 
 culating credit of this country. From the in-r 
 stitution of that Company up to the year 1797, 
 there had been no interruption to the converti- 
 bility of their notes into money ; nor any inter- 
 ference on the part of the State in any thing 
 that concerned the issue or circulation of those 
 notes. This Company were simply the Bankers 
 of the State, and, by a condition of their char- 
 ter, its Agent for the payment of the dividends 
 due to the publick creditor. 
 
 In 1797, in consequence of a demand upon 
 the Bank for gold, continued for a time, and in 
 a degree, altogether unusual, and arising from 
 a combination of untoward circumstances and 
 events, partly political, and partly commercial ; 
 the Directors of that institution felt themselves 
 bound to state to the Government the unprece- 
 dented difficulties and embarrassments of their 
 situation. 
 
 It is but justice to them to remark, that they 
 did not resort to this measure, till they had tried, 
 and found unavailing, all those means of check- 
 ing the drain of cash, which had been effectual 
 on former occasions. On these former occa- 
 sions the Directors had uniformly found, that 
 
 to
 
 ( 9 ) 
 
 to lessen the amount of their issues of paper, 
 was the sure mode of checking and ultimately 
 stopping the demand for gold. It was natural 
 for them, as practical men, to follow their esta- 
 blished course ; but when they found that, in- 
 stead of abating, the drain increased every day, 
 in proportion as they contracted the amount of 
 their paper, it was equally natural for them to 
 mistrust their own experience. 
 
 In this state of affairs, the remedy which was 
 applied to the difficulties of the Bank and of the 
 Country, was an act for the temporary suspen- 
 sion of cash payments. 
 
 It is material to understand precisely the na- 
 ture of the change which this act created in the 
 state of our circulation ; a change of the mag- 
 nitude of which no man was more sensible than 
 the persons whose duty it was to propose it to 
 Parliament. 
 
 This act did not repeal any of the former re- 
 gulations to which I have adverted, and which 
 are the foundation of our money system. Nei- 
 ther did it make Bank notes a legal tender. It 
 did not alter in any respect the existing state of 
 the law, either as to the weight or the fineness of 
 the gold coin ; or the act of the 39th of the 
 King. It merely suspended other provisions of 
 law (having in themselves no reference to our 
 
 circulation,
 
 ( 10 ) 
 
 circulation, or money system) by which, in de- 
 fault of payment, the person and goods of a 
 debtor are made liable for his debt. This liabi- 
 lity it suspended, in cases where a tender shall 
 have been made to the creditor of the amount 
 of his claim in notes of the Bank of England. 
 
 If it had been proposed, at once, to make 
 Bank notes a legal tender, and, in direct terms, 
 to enact that every man should, thenceforward, 
 be obliged to receive them as equivalent to the 
 gold coin of the realm, without reference to the 
 quantity of gold bullion which might be pro- 
 cured by a Bank note of any given denomina- 
 tion; such a proposition would have excited 
 universal alarm, and would have forcibly drawn 
 the attention of the legislature and the publick 
 to the real nature of our circulation, and to 
 the possible consequences of such an innovation. 
 But, certainly, nothing of the sort was in the 
 contemplation of any man when the first suspen- 
 sion act was passed. That? it was then considered 
 and proposed, as an expedient which would be 
 but of short duration, the course of the proceed- 
 ings in Parliament abundantly indicates. 
 
 Such being the original character of the mea- 
 sure, it is not extraordinary that, in that crisis, 
 Parliament, without much hesitation, and with- 
 out any suspicion of the ultimate possible con- 
 sequences,
 
 ( 11 ) 
 
 sequences, should have afforded a temporary pro- 
 tection from arrest to a debtor, who should have 
 made a tender of payment in Bank notes. But 
 if, in the year 1797, it had been foreseen that 
 this temporary expedient would be attempted to 
 be converted into a system for an indefinite 
 number of years; and that, under this system, in 
 the year 1810, every creditor, publick or private, 
 subject or alien, to whom the law, as it then 
 stood, and as it now stands, had secured the 
 payment of a pound weight of standard gold for 
 every 467. 14*. 6d. of his just demand, would be 
 obliged to accept, in full satisfaction, about 10. 1 
 ounces, or not more than seventeen shillings in 
 the pound; with a prospect of a still further re- 
 duction in every subsequent year: it is impos- 
 sible to conceive that the attention and feelings 
 of Parliament would not have been alive to all 
 the individual injustice, and ultimate publick ca- 
 lamities, incident to such a state of things; and 
 that they would not have provided for the ter- 
 mination of the restriction, before it should have 
 wrought so much mischief, and laid the foun- 
 dation of so much confusion in all the dealings 
 and transactions of the community. 
 
 Whether
 
 ( 12 ) 
 
 Whether the actual state of things be such 
 as I have just described, is the question upon 
 Avhich the publick attention is now fixed : and 
 to which, I conceive, there can be but one an- 
 swer. If the reader shall go along with me in 
 the following statement, that answer will appear 
 to him as obvious as it does to me. 
 
 1st. A pound, or twelve ounces of gold, by the 
 law of this country, is divided into 44 guineas 
 and a half, or 46/. 14*. 6d. 
 
 2dly. By this division, which is made at the 
 publick expence, and without charge for coin- 
 age, nothing is added to the value of the gold ; 
 and nothing taken away from it. 
 
 3dly. A pound of gold, therefore, and 
 46/. 14*. 6d. being equivalent, being in fact 
 the same thing under different names, any cir- 
 culating credit which purports to represent 
 46/. 14*. 6d. ought, by the law of this country, 
 to be exchangeable at will for a pound of gold. 
 
 4thly. No alteration has been made in this 
 state of law except by the act of 1797- 
 
 5thly. The professed and intended operation 
 of the act of 1/97 was not to diminish the quan- 
 tity of gold for which any specifick amount of 
 circulating credit ought to be exchangeable, but 
 merely to suspend, for a time, the option of the 
 exchange. 
 
 6thly.
 
 ( 13 ; 
 
 6thly. But the sum of 46/. 14s. 6d. in our 
 present paper, will procure in exchange for gold, 
 only 10 ounces of that metal: A pound of 
 gold is now exchangeable for 561. in paper cur- 
 rency. Any commodity, therefore, which is 
 equivalent to a pound of gold, is also equivalent 
 to 561. in paper. 
 
 It follows that the difference between 561., and 
 46/. 14?. 6cl. or between 12 and 10 I ounces of 
 gold, arises from the depreciation of the paper ; 
 and is the measure of that depreciation, as well 
 with respect to gold, the universal equivalent, as 
 to every other commodity. 
 
 Those who differ from me in opinion must be 
 prepared to deny some one of these facts, from 
 which, if not disproved, the conclusion necessa- 
 rily follows. They must either shew, that I 
 have mis-stated the permanent laws of the realm 
 which regulate our coinage, and determine our 
 legal tender ; or they must shew, that gold is 
 not the basis of our money that its value is 
 not measured by its quantity that the value of 
 that quantity is varied by its conversion into 
 coin. But these are propositions which no man 
 who has ever looked at the subject will attempt 
 to maintain. 
 
 Otherwise they must shew that the inten- 
 tion of the temporary law of 1797 was different 
 
 from
 
 ( 14 ) 
 
 from that which I have ascribed to it; and that 
 it was intended, by that law, either to lower our 
 standard, to alter our legal tender, or to leave 
 us without any standard at all. But even if they 
 should be able to shew, that the intention of 
 this temporary law was to make any one of these 
 alterations, still, by the establishment of their 
 proposition, they will not invalidate but confirm 
 the conclusion which I have stated. They will 
 only have established, by their own arguments, 
 the fact of the depreciation, and will no other- 
 wise have varied the question arising out of it, 
 than by making it appear, that such deprecia- 
 tion of our currency was not the unforeseen 
 consequence, but the premeditated result of an 
 act of the Legislature. 
 
 Although these appear to be the only imagi- 
 nable grounds on which any exception can be 
 offered to my statement, they are such as 
 will not be taken by any man who does justice 
 to the character of the Legislature, or has any 
 recollection of the circumstances under which 
 it passed the act of 1/97. 
 
 It would be monstrous to imagine that it could 
 ever be in the contemplation and intention of 
 either House of Parliament, that Bank notes, 
 at their present, or at any less value, to which 
 they might possibly be reduced, should be a 
 
 legal
 
 ( 15 ) 
 
 legal tender. To entertain such an opinion 
 would be to impute to Parliament a design to 
 practise a deception, and to encourage a fraud. 
 What would have been the consistency, what 
 the integrity of a Legislature, which, leaving un- 
 repealed and unmodified the regulations which 
 take a way, the character of a legal tender from 
 every guinea weighing less than 5 dwts. 8 grs. 
 would give it to a Bank note, purporting to be 
 a security for the same denomination, but the 
 real value of which is, at this moment, 4 dwts. 
 14 grs. or, in other words, about three shillings 
 less than the lightest guinea which is allowed to 
 pass in payment ? 
 
 If such be the effect of the Act of 1797; 
 let us see, by a comparison of that effect with 
 the whole purport and tendency of all the ante- 
 cedent laws, which regulate and govern our cur- 
 rency, what is the present legal state of that 
 currency; and what the situation of the subjects 
 of this realm, under the whole system as it now 
 stands. 
 
 By law, a guinea which weighs less than 5 
 dwts. 8 grs. is no longer a guinea. It is de- 
 prived of its quality of coin. It can no longer 
 be tendered as money. But it may be sold for 
 what it will fetch in the market as bullion, for 
 the purpose of being melted down. 
 
 Bv
 
 ( 16 ) 
 
 By law, it is an offence punishable with severe 
 penalties to melt a guinea weighing more than 
 ,5 dwts. Sgrs. ; or to reduce it, by clipping, riling, 
 or any other process, below that weight. 
 
 By law, a guinea of that weight cannot be ex- 
 changed for more than the sum of 21*. which 
 sum in paper currency is worth at present 4 dwts. 
 14grs. of gold. To sell, or to buy guineas at 
 a higher rate than 21*. each in Bank paper, is 
 an offence highly punishable. 
 
 For this last offence a man has recently been 
 tried and convicted. 
 
 If the guineas purchased by him had been 
 light guineas, viz. guineas weighing upon an 
 average 5 dwts. 7l * grs. each, he might have 
 bought and sold them without incurring any 
 penalty. 
 
 The state of the law, therefore, is this. The 
 possessor of a heavy guinea, which is intrin- 
 sically worth about 24*. 6d. in Bank paper, who 
 should exchange it for more than 21*. of that 
 paper, would be liable to fine and imprisonment. 
 The more fortunate possessor of a light guinea 
 is entitled by law to exchange it for what it will 
 fetch, which would be about 24*. 3d. 
 
 * From the evidence of Mr. Merle, page 49 of the Appen- 
 dix to the Report of the Bullion Committee, it appeal's that 
 this is the average weight of light guineas. 
 
 A light
 
 ( 17 ) 
 
 A light guinea, therefore, cried down, no longer 
 current, no longer a legal tender, is, at the pre- 
 sent moment, more valuable than a guinea of 
 full weighty in the proportion of 24?. 3d. to 21s. 
 
 The light guinea, by melting, is converted 
 into 5 dwts. 7h grs. of bullion. 
 
 The heavy guinea being, by law, incapable of 
 being converted into bullion, or of being re- 
 duced, by a diminution of quantity, into the 
 more valuable shape of a light guinea, is equi- 
 valent to 4 dwts. 14 grs. of gold. The dif- 
 ference of value in favour of the light guinea is 
 Ijh grains of gold. 
 
 This is the present state of our currency ; and 
 the operation of the laws by which it is regu- 
 lated. 
 
 Is it possible to conceive that this is the state 
 of things, which the Legislature, in passing the 
 Act of 1797, had it in contemplation to produce? 
 Is it one, which, having been produced uninten- 
 tionally, does not require such an alteration as 
 would bring back the currency of the country 
 to an agreement with its antient legal standard ? 
 
 For my own part, I confess that, if absolutely 
 driven to the necessity of deciding between the 
 
 c alter-
 
 ( 18 ) 
 
 alternative, of suffering the present state of 
 things to continue, or of resorting at once to 
 the stale and wretched expedient of either rais- 
 ing the denomination, or lowering the standard 
 of our currency, in any fixed and limited pro- 
 portion, I should not hesitate to prefer the latter. 
 This expedient, I admit, though not unfrequently 
 practised, in former and less-enlightened periods 
 of the history of this and other nations, is now 
 universally and justly reprobated and condemned 
 as too disgraceful in its principle, and too ruinous 
 in its policy, to be resorted to, even by govern- 
 ments the most arbitrary in their internal admi- 
 nistration, and the most destitute of more sub- 
 stantial resources. Yet, let me ask any of those 
 who would have been startled at such a proposal, 
 what would be the real difference between a 
 state of law, which, either leaving the guinea at 
 its present weight and fineness, should raise its 
 denomination to 24s. 67/. ; or, leaving it at its 
 present denomination, should lower its standard 
 to 4dwts. 14grs. and a state of law, which 
 obliges every man to receive the latter quantity 
 of gold as 21s., or to give 24s. 67/. for the 
 former ? 
 
 One difference, indeed, would be this : that, 
 the injury once done, the fraud once committed, 
 the extent of the evil would be known and 
 
 ascer-
 
 ( 19 ) 
 
 ascertained. Prices at home, and abroad, once 
 accommodated to the change in the value of 
 our currency, all uncertainty, and consequent 
 speculation upon a farther derangement, would 
 cease. Creditors, annuitants, and all who pos- 
 sess incomes, fixed in their amount by a con- 
 tract of any description, would be able to mea- 
 sure the extent of their loss. All future leases, 
 and bargains for time, would be made with a 
 reference to this definite alteration in the com- 
 mon nteasure of all exchangeable commodities. 
 Salaries and wages of every description would 
 be more speedily and more proportionably com- 
 pensated for the change. The existing evil, on 
 the contrary, of which the present measure may 
 be reckoned at about 15 per cent., is indefinite, 
 uncertain, and fluctuating, though progressive 
 in its growth. It has consequently a greater 
 tendency to derange and unsettle all the transac- 
 tions of society, and to depress the labouring 
 classes, and all who derive their incomes from 
 salary or wages of any description. It increases, 
 at the same time, the foreign expenditure of 
 Government, in proportion to the fall of the 
 exchange ; and its domestick expenses, in pro- 
 portion to the increased price of all commo- 
 dities at home. It adds, in the same propor- 
 tion, to the amount of our annual loans and 
 
 c 2 taxes.
 
 ( 20 ) 
 
 taxes. A saving, it is true, accrues to the 
 State from paying the wages of valour, talent, 
 industry, and labour, in a depreciated currency, 
 and from the reduction which is thus made 
 (really though not nominally) in the value of , 
 the dividend paid to the publick creditor. But 
 it is equally true that these unfair and unin- 
 tended savings to the State are more than coun- 
 'terbalanced by its increased expenditure : 
 whilst this increased expenditure, and the in- 
 creased taxation necessarily consequent upon it, 
 doubly aggravate the evil on those classes of 
 the community at whose expense these savings 
 are made, by taking from each a greater pro- 
 portion of their already depreciated income, for 
 the payment of all the other charges of the 
 State. 
 
 The propositions which I have stated appear 
 to me so clear and conclusive that I am almost 
 ashamed of saying any thing more on this part 
 of the question. But the doubt and confusion 
 which prevail in the minds of many sensible 
 persons, and the sophistry to which they have 
 been induced to listen, from the want of clear 
 and precise ideas on this subject, are quite 
 extraordinary. There are those who reason as if 
 
 they
 
 ( 21 ) 
 
 they had persuaded themselves, and who endea- 
 vour to persuade others, that Bank paper is the 
 real and fixed measure of all commodities; and 
 that gold is only one of the articles, of which, 
 in common with others, the value is to be ascer- 
 tained by a reference to this in-variable standard 
 and universal equivalent, Bank paper. So widely 
 extended is the error in this respect, that, how- 
 ever much in contradiction with some of their 
 own principles, it pervades, more or less, nearly 
 the whole of the evidence of the respectable mer- 
 chants who were examined before the Bullion 
 Committee. For instance, in the examination 
 of Mr. Chambers, (p. 102), a gentleman who 
 deservedly enjoys the reputation of great intelli- 
 gence and extensive information in the com- 
 mercial world, we find the following evidence. 
 
 " At the Mint price of standard gold in this 
 country, how much gold does a Bank-of- Eng- 
 land note for one pound represent? 5 dwts. 
 3 gr." 
 
 " At the present market-price of 4/. 12s. per 
 ounce, how much gold do you get for a Bank 
 note of one pound ? 4 dwts. 8 gr." 
 
 " Do you consider a Bank-of-England note 
 for one pound, under these present circum- 
 stances, as exchangeable in gold for what it re- 
 presents of that metal ? / do not conceive gold 
 
 c 3 to
 
 ( 22 ) 
 
 to be a- fairer standard for Bank- of- England 
 notes than indigo or broad cloth" 
 
 Question repeated " If it represents twenty 
 shillings of that metal at the coinage-price, it is 
 not" 
 
 In these answers this leading doctrine is man- 
 fully and ingenuously asserted and maintained ; 
 and all who stand up for the undepreciated value 
 of Bank paper, however disguised their language, 
 must ultimately come to the same issue. 
 
 Mr. Chambers plainly avows, that "He does 
 not conceive gold to be a fairer standard for 
 Bank-of- England notes than indigo or broad 
 cloth'''' and that " a one-pound note does not 
 represent twenty shillings of that metal at the 
 coinage price." 
 
 These answers, to my understanding at least, 
 completely give up the whole of the case. 
 
 If " gold be not a fairer standard for Bank- 
 of -England notes than indigo or broad cloth" I 
 could wish to learn what is the really fair 
 standard ? 
 
 If "a one-pound note does not represent twenty 
 shillings of that metal at the coinage price," what 
 does it really represent ? 
 
 Need I recall to any man's recollection the ob- 
 vious, and, as I till lately imagined, undisputed 
 grounds on which the precious metals have, not 
 
 in
 
 ( 23 ) 
 
 in this country only, and by our system of laws, 
 but in all civilized countries, and in all ages of 
 the world, been received, by the common con- 
 sent of mankind, as the fittest standard for mea- 
 suring the value of all other commodities; 
 and employed as the universal equivalent for 
 effecting their exchange? That the precious 
 metals are less bulky in proportion to their va- 
 lue that they are accurately, easily, and almost 
 infinitely divisible that they are less subject to 
 decay less likely to fluctuate in their supply, 
 less liable to be counterfeited or adulterated, 
 more homogeneous and uniform in quality, than 
 either indigo, or broad cloth, or any other known 
 commodity? 
 
 Gold in this country (as silver at Hamburgh) 
 is really and exclusively the fixed measure of 
 the rising and falling value of all other things in 
 reference to each other. The article itself which 
 forms this standing measure, never can rise or 
 fall in value with reference to this measure that 
 is, with reference to itself. A pound weight of 
 gold never can be worth a pound and a quarter 
 of gold ; and being divided, in this country, 
 into 44 & I pieces, called guineas, an ounce of 
 this gold will always be worth fa of this sum, 
 or 31. 17s. lOhd. The truth of these proposi- 
 tions, which cannot, I conceive, be called in 
 
 c 4 question,
 
 ( 24 ) 
 
 question, would not be affected by any imagin- 
 able increase or diminution in the quantity of 
 gold in the country. By such an increase or 
 diminution, indeed, the value of all other things, 
 (the quantity of those other things and the de- 
 mand for them continuing the same,) would be 
 increased or diminished in the same proportion, 
 with reference to gold ; but gold itself would 
 still remain, just as much as before, tht fxed 
 measure of the rising: and falling; value of all 
 other commodities, in reference to each other. 
 
 A Bank note is not a commodity : it is only an 
 engagement for the payment of a certain spe- 
 cified quantity of money. It cannot vary its 
 value in exchange for any commodity, except 
 in reference to the general increase or diminu- 
 tion of the value of such commodity in gold, 
 and in the precise proportion of that increase or 
 diminution. Gold, therefore, is the test by which 
 the value of Bank notes must be tried ; and if a 
 one-pound note, being an engagement to pay 
 5 dwts. 3 gr. of gold, is worth in the market only 
 4 dwts. 8 gr. as stated by Mr. Chambers in his 
 evidence, it is equally worth only 4 dwts. 8 gr. 
 in exchange for any other commodity. 
 
 It follows from this; that a general increase 
 of prices in all the ordinary commodities of any 
 country is not, in itself, an indication of the de- 
 preciation
 
 ( 25 ) 
 
 preciation of its currency. Such an effect may 
 arise from other cause. It could not fail to be 
 produced by an increase of the precious metals. 
 But any considerable or durable increase of price 
 in the precious metal which forms the standard 
 of that currency cannot be ascribed to any thing 
 but the depreciation of such currency ; even if 
 the price of all other commodities should be 
 falling at the same time. This would happen in 
 any country if, at the same period, when its 
 currency is depreciated, in any given proportion, 
 the supply of the precious metals were dimi- 
 nished, or the demand for them increased, in a 
 greater proportion. 
 
 The currency of a country may be depreciated 
 from two different causes. 
 
 1st. By the standard coin containing a less 
 quantity of the precious metal which forms that 
 standard, than it is certified by law to contain. 
 
 2dly. By an excess in the amount of that 
 currency. 
 
 A great depreciation, arising from the first 
 cause, took place, in this country, in King 
 William's time, when the quantity of precious 
 metal actually contained in our coin was, upon 
 an average, nearly 30 per cent less than that 
 coin was certified to contain. A smaller depre- 
 ciation, arising from the same cause, was felt 
 
 early
 
 ( 26 ) 
 
 early in the present Reign, when the quantity 
 of gold contained in our guineas was reduced by 
 long wear, or otherwise, from 4 to 5 per cent, 
 below the quantity they were certified to con- 
 tain. To this evil, within these limits, it was 
 then thought necessary to apply a remedy. That 
 remedy was the general recoinage of our gold 
 in 1773. 
 
 Since that period the first cause of deprecia- 
 tion has ceased to operate in this country. 
 
 The existing depreciation, therefore, must be 
 occasioned by excess. Depreciation from ex- 
 cess, if the coin of a country be maintained at 
 its standard, cannot take place to any amount, 
 or continue for any length of time, unless the 
 currency of such a country consists, partly of 
 paper, and partly of the precious metals : ex- 
 cept indeed in the extreme case of that currency 
 consisting wholly of paper, without any refer- 
 ence to its value in coin. 
 
 If the circulation of any country were per- 
 formed exclusively by gold, for instance, and 
 the supply of that metal in such a country were, 
 from any imaginable cause, doubled, whilst 
 the quantity of gold, and the demand for it 
 should continue the same in all other parts of 
 the world ; the value of gold in such a country 
 would be diminished. This diminution in the 
 
 value
 
 ( 27 ) 
 
 value of gold would appear in the proportionate 
 rise of all commodities : but gold being so much 
 cheaper in the country in which its quantity had 
 been thus increased, it would be bought by other 
 countries, and exported from that country, till 
 its value was restored again to a level in the dif- 
 ferent parts of the world. 
 
 If the circulation of a country were supplied, 
 partly by gold and partly by paper, and the 
 amount of that circulation were doubled by an 
 augmentation of that paper, the effect upon 
 prices at home would be the same as in the former 
 case. But gold not becoming by this augmenta- 
 tion of currency more abundant, in such a coun- 
 try, than in other parts of the world, as a com- 
 modity, its relative value to other commodities 
 would remain unaltered ; as a commodity also, 
 its price would rise in the same proportion as 
 that of other commodities, although, in the state 
 of coin, of which the denomination is fixed by 
 law, it could only pass current according to that 
 denomination. 
 
 When paper is thus augmented in any coun- 
 try, the exportation of the gold coin, therefore, 
 will take place ; not because gold, as a commo- 
 dity, is become more abundant and less valuable 
 with reference to other commodities in such a 
 country; but, from the circumstance of its value 
 
 as
 
 ( 28 ) 
 
 as currency remaining the same, while its price in 
 that currency is increased in common with the 
 prices of all other commodities. So far as such 
 exportation takes place, the diminution which 
 it effects in the total amount of the currency, 
 has a tendency to support the value of the re- 
 mainder, just as much, and for the same reason, 
 as if, in the case of the circulation consisting 
 wholly of gold, first an augmentation, and then 
 an exportation to the same amount, had taken 
 place, according to the first supposition. 
 
 An excess of paper has, in the first instance, 
 the same effect upon prices as an excess of the 
 precious metals, to the same amount, would 
 have, in any particular country. But it does 
 not admit of the same relief: it cannot right 
 itself by exportation. 
 
 The currency of a country, then, is depre- 
 ciated, 
 
 1st, If its standard coin contains less of gold 
 or silver than it is certified to contain. In that 
 case, the paper, as representing that coin, is also 
 depreciated, and precisely in the same degree as 
 the coin : 
 
 2dly, If the standard coin being of full weight, 
 the paper which represents that standard coin, 
 and is, or purports to be, exchangeable for it, is 
 not exchangeable, at the same time, for so large 
 
 a quantity
 
 ( 29 ) 
 
 a quantity of gold or silver, as is contained in the 
 coin which it represents. In that case, the coin, 
 though undiminished in value, must, as part of 
 the currency, partake of the depreciation of the 
 whole. 
 
 Consequently, if the coin be itself, as coin, 
 deteriorated, the paper which circulates with 
 it cannot be otherwise than depreciated to the 
 same degree. Buttf the coin be undeteriorated 
 as coin, and there be, notwithstanding, a depre- 
 ciation of the general currency, the cause of 
 that depreciation can only be in the paper: 
 and that cause can be no other than the excess 
 in which that paper is issued. 
 
 I shall now proceed to state some of the asser- 
 tions, and to examine some of the arguments 
 and explanations of those who maintain the 
 sound and undepreciated state of our present 
 currency. 
 
 The first and principal of these arguments 
 and assertions is one which, if it could be 
 established, would at once preclude all further 
 discussion. It is this " That there can be no 
 " excess of Bank of England paper in circulation, 
 "so long as it is issued only in the discount of 
 " bills of undoubted solidity, founded in real mcr- 
 " cantile transactions, and payable at fixed and 
 
 "not
 
 ( so ) 
 
 " not distant dates (60 or 90 days at the utmost), 
 " or upon loan to government for publick securi- 
 " ties." The limits of the latter description of ad- 
 vances are not quite so accurately defined, but 
 the principal criterion seems to be " government 
 " not being able to dispose of such securities to 
 " better advantage in the open market."* 
 
 Now admitting, what the Bank itself however 
 states to be impossible, that any extent of expe- 
 rience, or any degree of caution, can be suffi- 
 cient to guard them against ever discounting 
 bills which do not fully answer the above de- 
 scription it must, I think, be matter of asto- 
 nishment to any man whose attention has been 
 at all turned to these subjects, that, in the new 
 
 * Vide examination of Mr. Pearse, the present Governor of 
 the Bank. Bullion Report, page 18, Appendix. 
 
 It is now many years since I had occasion to look into the 
 Treatise of the famous Mr. Law ; and from not having it at 
 hand, I have no opportunity of referring to it at this moment. 
 But I have a confident recollection that there exists a very 
 strong resemblance between the principles on which his cele- 
 brated scheme was founded, and this leading doctrine of the 
 Bank. I mention this not invidiously, but by way of caution 
 to those practical men, who see nothing in the Report of the 
 Bullion Committee, but the production of uild theorists, and 
 speculative politicians. I should be glad to know under what 
 class of theorists, and in what order of politicians, they would 
 have ranged any man, who, before the year 1797, should have 
 ventured to recommend, as a safe system, the principles by 
 which the Bank now professes to regulate its practice? 
 
 state
 
 ( 31 ) 
 
 state in which the Bank of England has been 
 placed since the suspension of cash payments, 
 they could rely upon this mode of regulating 
 their advances, as a perfect, steady, uniform and 
 adequate check against any excess in the issues 
 of their notes. 
 
 The confidence with which this doctrine was 
 stated and maintained by the Governor and 
 Deputy-Governor of the Bank, as well as by 
 several eminent merchants, (not in the Bank 
 direction,) before the Bullion Committee, is a 
 strong proof, not only how much great cor- 
 porate establishments are wedded to an existing 
 system, and long established rules of action, 
 however inapplicable to a new state of things ; 
 but how slow and reluctant, in such a state of 
 tilings, individuals, otherwise of observing minds 
 and excellent understandings, are, to call in 
 question and examine the truth of early impres- 
 sions, adopted upon authority, and followed 
 from usage. This tardiness and reluctance are 
 naturally increased, when interest is manifestly 
 on the side of the existing system. 
 
 The Directors of the Bank, governing them- 
 selves by the rule above-mentioued, had conti- 
 nued for a century to issue their notes, without 
 those issues having ever led to an excess of paper 
 circulation, at least of any continuance. I5ut 
 
 then,
 
 ( 32 ) 
 
 then, during the whole of that century, their 
 paper was convertible into cash at the option of 
 the holder. The security against excess was 
 not in their rule, but in this corrective. 
 
 Their profits, as a Bank, depending on the 
 amount of their issues, it was their interest, at 
 all times, to make those issues as large as pos- 
 sible : in this, the publick had a sufficient secu- 
 rity that the supply of paper should not be less 
 than the demand. But, on the other hand, it 
 was the obvious and plain interest of the Bank 
 to guard itself against direct and positive loss : 
 and in this the publick had another, and not 
 less adequate, security, that those issues should 
 not be carried to excess. The tendency and 
 result of such excess, if continued, for any time, 
 would infallibly have been the rise of the market 
 price of gold above the Mint price; and the con- 
 sequent return of such excess of paper to the 
 Bank in demand for guineas. This demand 
 would have imposed upon the Directors the ne- 
 cessity of purchasing and coining gold at a loss; 
 until, by a diminution of their notes, they should 
 have restored their value to a level with the 
 standard of money. 
 
 By the conflicting action of these opposite 
 interests, the currency was kept at its proper 
 amount, and in its regular course. But one of 
 
 these
 
 ( 33 ) 
 
 these interests having ceased to operate, it is as 
 vain to expect that the uncontrolled action of 
 the other should continue to produce precisely 
 the same effect, as it would be, in mechanicks, to 
 expect that a body impelled by two powers, act- 
 ing in different directions, would continue in 
 the same line of motion, if one of those powers 
 were withdrawn. 
 
 The circumstance of the Bank confining its 
 discounts to " bills of undoubted solidity, and 
 founded in real mercantile transactions," has no 
 connexion whatever with the question of suffi- 
 ciency or excess in the amount of their notes in 
 circulation. The " reality of the transaction," 
 in which the bill originates, and the " solidity" 
 of the holder, who, by the deposit of such a bill, 
 obtains an advance of notes, are prudent con- 
 siderations with the Bank, in their character of 
 a mercantile company; but they evidently af- 
 ford no security to the publick, that bills, though 
 uniting both these qualities, may not be dis- 
 counted to excess. 
 
 The shortness of the date of any such bill, " 60 
 or at most 90 days date," is another prudent 
 banking precaution: and so long as the curren- 
 cy of this country continued in its sound and 
 natural state, this regulation may, indeed, have 
 
 n been
 
 ( 34 ) 
 
 been fairly considered as forming a part of the 
 security of the publick against any durable ex- 
 cess of paper. It gave the Bank a power, in the 
 case of a drain of guineas, to diminish expedi- 
 tiously the amount of their issues by contracting 
 their discounts; to shorten the duration of the 
 run upon them; and to restore the value of 
 their paper without any large sacrifice of their 
 gold. 
 
 Now, however, that they cannot be assailed 
 with any such indication of excess now, that 
 they have every motive for enlarging their dis- 
 counts, and no inconvenience to apprehend from 
 such an enlargement, this regulation is only of 
 consequence to themselves, as bankers, duly 
 careful of their own interest, in selecting for dis- 
 count the best and safest bills; but it is alto- 
 gether without avail for protecting the publick 
 against the evils of a permanent excess in the 
 circulation of their notes. 
 
 The present Governor of the Bank (for whom 
 as a personal friend I have the most sincere re- 
 spect) having, in his evidence before the Bullion 
 Committee, stated that * " in his view of the 
 restriction on cash payments, no positive incon- 
 venience would be likely to result from its being 
 
 * Page 112. 
 
 " made
 
 ( 35 ) 
 
 made a permanent measure"* it may appear to 
 him, perhaps, rather extraordinary, that I should 
 recur to the aid of his arguments, and to the 
 weight of his authority, in support and illustra- 
 tion of the proposition which I have now stated, 
 namely that the security to the publick against 
 any excess in the circulation of Bank paper was 
 
 * In a subsequent examination this opinion was explained 
 by Mr. Pearse, in the following manner. 
 
 " I have already stated that I am not aware of any posi- 
 " tive inconvenience resulting from the present operation of 
 " the Restriction Bill, or likely to result from its being ren- 
 " dered permanent, except as far as regards an expectation on 
 " the part of the publick that it will be removed ; but this 
 " circumstance is, in my opinion, essential, and cannot be kept 
 " out of view in any consideration of the subject. Whether it 
 " would be advisable to secure the publick against a liability 
 " to the recurrence of the inconveniences that led to the Re- 
 " striction Bill, by sacrificing their feelings on this point, and 
 " absolutely removing all expectation of its being only a tem- 
 " porary measure, appears to me to be entirely a political 
 *' question, on which I do not conceive myself qualified to 
 " give an opinion ; but I may venture to observe, that publick 
 " credit and publick opinion always go hand in hand, and that 
 " the one is invariably influenced by the other." 
 
 Appendix, page 120. 
 
 It is therefore clear that, abstractedly of " this expectation 
 (in the part of the publick," the present Governor is of opinion, 
 that " no positive inconvenience would be likely to result from 
 " the restriction being rendered permanent." 
 
 d 2 the
 
 ( 36 ) 
 
 the certainty of such excess being returned 
 upon them for gold ; and that this is the only 
 check by which the amount of their issues can 
 be permanently kept within its proper level. 
 
 In his evidence,* adverting to the possibility 
 ot an excessive issue of paper by the country 
 banks, he says 
 
 " This excess (of country paper), in my opi- 
 " nion, would no sooner exist in any material 
 " degree, than it would be corrected by its own 
 " operation, for the holders of such paper would 
 " immediately return it to the issuers, when they 
 
 " FOUND THAT, in CONSEQUENCE OF THE OVER 
 
 " issue, its value was reduced, or likely to be 
 " reduced bcloxv par: thus, though the balance 
 " might be slightly and transiently disturbed, no 
 " considerable or permanent over issue could pos- 
 " sibly take place.'" 
 
 Now what is the state of a country bank ? 
 It will not be denied that it has the same inte- 
 rest, and the same tendency, as the Bank of 
 England, to make its issues as large as possible. 
 But then a country bank, from its being liable, 
 at all times, to pay its notes in those of the 
 Bank of England, at the option of the holder, 
 is placed precisely in the same situation, by 
 
 * Report of the Bullion Committee, page 12", Appendix. 
 
 this
 
 (. 37 ) 
 
 this check upon the amount of its issues, as the 
 Bank of England itself was, hy the necessity of 
 paying in guineas, before the restriction. If, 
 in any particular district of the kingdom, the cir- 
 culation of which is supplied by country paper, 
 an excess were to exist as compared with the 
 circulation of the metropolis, which is exclu- 
 sively supplied by Bank notes, the holders of 
 such paper would immediately return it to the 
 issuers, and would demand Bank-of-England 
 paper, or, what is, for this purpose, the same 
 thing in effect, bills upon London. 
 
 Whilst near 800 country banks, rivals of 
 the Bank of England, and of each other, are 
 exerting every endeavour to put forth their 
 notes, what is it but the check created by this 
 power in every holder of their paper to demand 
 Bank notes, or bills upon London, that prevents 
 any local or partial excess, and keeps the circu- 
 lation of every district in the kingdom upon a 
 par with that of the metropolis ? Certainly not 
 the description of securities on which the coun- 
 try banks make their advances : for, in this re- 
 spect, they (at least many of them) are less 
 prudent than the Bank of England, and do not 
 confine themselves to " good bills of exchange, 
 " founded on real mercantile transactions, and 
 " payable at short and fixed dates/' Yet it is 
 
 o :j admitted
 
 ( 38 ) 
 
 admitted that they cannot make, or permanently 
 maintain in circulation, any over-issues of their 
 paper. On this point there is no difference of 
 opinion in the evidence taken before the Bullion 
 Committee.* Indeed it cannot be disputed, so 
 long as the country paper is interchangeable at 
 par with that of the Bank. 
 
 Again, what was it, before the restriction act, 
 but the check created by the power in the 
 holders of Bank paper to demand gold for it 
 from the issuers, which prevented any material 
 or durable excess of Bank paper? This check 
 was constantly ready to be applied, if, " in conse* 
 " quence of an over issue, the value of Bank notes 
 " was reduced or likely to be reduced below 
 " par," in reference to the price of bullion, ei- 
 ther here, or in the other parts of Europe ; the 
 circulation of the Bank of England being, in this 
 respect, to that of Europe, what the circulation 
 
 * After the conclusive evidence of the present Governor of 
 the Bank, and of the other witnesses who were examined be- 
 fore the Bullion Committee on this subject, I have been rather 
 surprised to find the proprietors of Bank stock at their late 
 meeting (as far as the sense of that meeting can be collected 
 from the language of their learned orator) disposed to contrast 
 the sparing amount of their own notes with the profuse emission 
 of paper by the country banks ; and to charge the latter ex- 
 clusively with any excess in the amount of our circulation. 
 
 of
 
 ( 39 ) 
 
 of a country bank is now to that of the Bank of 
 England. 
 
 Thus, as it is most correctly expressed in 
 the words of the Governor of the Bank, " though 
 " the balance might be slightly and transiently 
 " disturbed, no considerable or permanent over 
 11 issue could possibly take place. " 
 
 The circulation of country bank paper being, 
 therefore, in exact proportion to that of the 
 Bank of England, it follows, that, in whatever 
 degree the issues of the latter shall be exces- 
 sive, the former must partake of such excess; 
 and, consequently, that no regulation, affecting 
 or restraining country banks, could be of the 
 smallest avail towards diminishing the total 
 amount of the paper circulation of this country, 
 so long as the Bank of England shall continue 
 to act upon its present system. If, in any one 
 district, or in all the districts, where country 
 paper now circulates, one half of it were with- 
 drawn or put down, its place would be supplied 
 by some other paper. Otherwise, the proportion 
 between the circulation of the metropolis and 
 that of the districts so affected would be de- 
 stroyed. The result, therefore, of any interven- 
 tion of the legislature for this purpose, beside 
 being highly objectionable as an interference 
 with the rights of individuals and of private 
 
 d 4 property,
 
 ( 40 ) 
 
 property, would be, only to add several millions 
 more, and principally in small notes, to the 
 amount of issues of the Bank of England ; 
 leaving the present evil exactly as it is : a 
 change which would open a wide door to forge- 
 ry, and be attended with many other publick 
 disadvantages. 
 
 Whether security should be required from 
 country bankers, before they are licensed to 
 issue paper, is a subject which it would be fo- 
 reign to my purpose to discuss Such secu- 
 rity, in a few instances perhaps, might improve 
 the degree of credit which they might have a 
 right to expect with the publick. But this sub- 
 ject has nothing to do with the present ques- 
 tion; which is simply, whether there be an ex- 
 cess of paper now in circulation, and from what 
 causes arising? and not what may be the degree 
 of confidence to which the issuers of any such 
 paper may be respectively entitled? The depre- 
 ciation occasioned by such an excess would be 
 just the same, if every country bank were noto- 
 riously as solid and as rich as the Bank of Eng- 
 land.* 
 
 The 
 
 * This is a part of the subject which it is material should 
 be well understood; because many persons, witnessing the 
 gieat multiplication of country banks within these two last 
 
 years,
 
 ( 41 ) 
 
 The explanations which have been offered by 
 those who have endeavoured to shew that the 
 high price of gold in England is not connected 
 with any excess in the issue of Bank paper, are, 
 1st. That the immediate and operative cause is 
 a great scarcity of gold, and a consequent de- 
 mand for it, on the continent. And, 2dly, That 
 speculation in the purchase of it in this country 
 has been carried, and is still going on, to a very 
 great extent, in consequence of the course of 
 exchange with the continent having been for 
 
 years, are disposed, at first view, to think that in them is the 
 root of the evil. Let the parent stock be restored to its natural, 
 healthy, and sound state, and the country will have nothing 
 to apprehend from these ramifications of credit and circulation. 
 No special interference with them would, in my opinion, be 
 requisite or beneficial. 
 
 The Report of the Bullion Committee has been the sub- 
 ject of much artful misrepresentation ; sometimes ascribing to 
 the members of that Committee a wish to put an end to paper 
 credit altogether; sometimes an opinion that it ought to be 
 reduced to the same amount as in \7V7 Nothing like such 
 a wish, or such an opinion, can be collected from the Report 
 On the contrary, it speaks in the strongest terms of the advan- 
 tages of an extensive circulating credit, and expressly states, 
 that any increase in its numerical amount is, of itself, no proof 
 
 whatever of its being in excess. 
 
 the
 
 ( 42 ) 
 
 the last two years, and still continuing, so much 
 against this country. 
 
 In these explanations every thing is assumed. 
 First, it is assumed that gold is very dear on 
 the continent. Dear, in exchange for what? 
 For the gold coin of the continent? Such an 
 assertion would he ridiculous. Dear, in ex- 
 change for any depreciated paper ? This is very 
 probable in several parts of the continent, but is 
 surely not the criterion to which we shall be re- 
 ferred. Dear, in exchange for all other commo- 
 dities ? Is this a fact ? Where is the evidence of 
 it ? Are cloth, corn, iron, or any other leading 
 articles, twenty per cent, cheaper on the conti- 
 nent, than they were, if paid for in gold ? Cer- 
 tainly not. And if they were so on the conti- 
 nent, has not the drain lasted long enough to 
 bring matters to a level, and produce the same 
 effect in this country? Has the price of com- 
 modities, in this country, fallen within these two 
 years? Is not the contrary notoriously the fact? 
 
 But it may be said, that we have Bank notes 
 as a substitute for gold, and that it is by an 
 abundant supply of them that prices at home 
 are raised and improved. Be it so. In propor- 
 tion as commodities are dear in Bank notes, 
 Bank notes arc cheap in respect to commodities. 
 Gold, we are told, is scarce, and, therefore, must 
 
 be
 
 ( 43 ) 
 
 be dear, whether measured in those same commo- 
 dities, or in any thing else. What is this argu- 
 ment, on the part of those who deny the depre- 
 ciation of Bank notes, but to tell us, in the same 
 breath, that gold is dear that Bank notes are 
 cheap but that Bank notes are of the same va- 
 lue as gold ? 
 
 Nothing appears to me to indicate that the 
 value of gold, in reference to ordinary commo- 
 dities, has increased in the general market of 
 Europe. The annual produce of the gold 
 mines, it is true, appears not to have been so 
 large, during the last hair' century, as at some 
 former periods ; but the supply does not seem 
 to have suffered any diminution of late years. 
 
 The relative value of gold to silver may have 
 been, in some trifling degree, increased. The 
 quantity of silver lately imported from America, 
 has been unusually large; while the demand 
 from the East Indies and China has altogether 
 ceased : nay, I am informed that a large supply 
 of dollars was imported from the latter country, 
 by the fleet recently arrived from Canton. Every 
 presumption, therefore, is, that the value of sil- 
 ver continues progressively, though slowly, to 
 decrease in Europe. 
 
 This alteration in the relative value of the two 
 precious metals, may render it necessary, here- 
 after
 
 ( 44 ) 
 
 after perhaps, to change the proportion which 
 they now bear to each other in our Mint regu- 
 lations. 
 
 In France, where the currency is chiefly sil- 
 ver, an alteration appears to have been recently 
 made in the gold coin, to the effect of raising 
 its proportion to that of silver, from 15 }, to 
 about 15 h. According to Mr. Grefulhe's 
 evidence, this slight alteration appears, very 
 nearly, to have put an end to the premium 
 which before existed on the gold coin. In 
 England the present proportion of our Mint 
 is about 15} to one. If, at any future period, 
 it should be thought necessary to raise that pro- 
 portion, the alteration would perhaps be best ef- 
 fected by lowering, in whatever degree it might 
 be necessary, the standard price of silver, so as 
 to leave that of gold, which is our currency and 
 legal tender, ahvavs fixed and invariable.* 
 
 It 
 
 * It was once my intention, in the course of this discussion, 
 to have made some observations on the state of our silver coin, 
 and the many serious inconveniences which are brought upon 
 the community, (particularly upon the lower classes) from its 
 scarcity, as well as from its debasement ; and also to have 
 stated my ideas on the subject of a new silver coinage. But 
 a very little reflexion will satisfy every reader that, in the 
 present state of tilings, and so long as we have no fixed stand- 
 ard of value for our currency, it would be absurd, and almost 
 
 impracticable,
 
 ( 45 ) 
 
 It is not, however, to a diminished produce 
 from the mines, but to a greatly increased de- 
 mand occasioned by the wants of the armies, or 
 to the practice of hoarding, or to both, that the 
 alleged high price of gold on the continent is 
 imputed. The change in the proportion of gold 
 to silver, by the recent alteration in France before 
 stated, appears to have been rather less than 2 per 
 cent. Now, for many years before this altera- 
 tion, and consequently before the high price of 
 gold in England, there was at Paris a premium 
 or agio of about 1 h per cent, in favour of gold. 
 This agio is now stated to be reduced to \ at 
 the utmost Consequently all the rise that can 
 possibly be ascribed to the temporary causes to 
 which the present demand for gold is attributed 
 cannot exceed 5 per cent. 
 
 It is true that, both at Hamburgh and Am- 
 sterdam, there appear to have been occasional 
 fluctuations to a greater amount, and that, for 
 
 impracticable, to send into circulation any new coinage. The 
 present evil, therefore, admits of no remedy; but will rather 
 increase, so long as the depreciation of our currency is suf- 
 fered to continue : when that shall cease, it will be time 
 enough to consider what should be done in respect to our sil- 
 ver coin. The want of it is an evil, of no trilling moment in 
 our money system, but secondary, as well in point of import- 
 ance, as in order of time, to the question now under consi- 
 deration. 
 
 certain
 
 ( 46 ) 
 
 certain short periods, a larger premium is said 
 to have been given, sometimes for gold in bars, 
 and sometimes for some particular coin ; though 
 very far within the limits of the difference be- 
 tween the Mint and market price in London. 
 This must have been owing to some particular 
 circumstance, having a temporary effect on those 
 markets : otherwise the agio at Paris would soon 
 have been affected in the same degree; which 
 does not appear to have been the case. 
 
 But facts are not the only difficulty in the way 
 of this explanation ; it furnishes abundant argu- 
 ment to destroy itself. It will scarcely be con- 
 tended by any one, that the commerce, the 
 manufactures, or the internal prosperity of the 
 continent, have so rapidly increased, of late 
 years, as to require any great and rapid increase 
 in the amount of its circulating medium. If, 
 from any peculiar and temporary circumstances, 
 a disposition exists to prefer gold to silver, as 
 that medium, it cannot well be denied, that, in 
 proportion as silver is discarded (especially whilst 
 the supply from America is more than usually 
 abundant, and the demand from Asia stopped), 
 silver at least ought to be particularly cheap, in 
 exchange for undepreciated Bank notes, of the 
 full standard value of the coin of this realm. 
 Now is this the case? 
 
 Gold,
 
 ( 47 ) 
 
 Gold, we know, has risen so much above this 
 newly established paper standard as to be worth 
 4/. 12*. per ounce in that paper. Has not the 
 price of silver risen in nearly the same propor- 
 tion ? The present market price of silver of 
 standard fineness is about 5s. lOhd. per ounce; 
 which ounce, by the Mint regulation, is divided 
 into 5s. 2d. only. If the relative value of gold 
 to that of silver be somewhat increased, as there 
 is reason to believe ; if it should, in consequence, 
 be thought expedient to vary the proportion of 
 our Mint from 15 } to 15 2, the depreciation 
 of our paper, measured in silver, would then be 
 very nearly, if not altogether, as great, as it now 
 is, if measured in gold. 
 
 Let us now briefly inquire what aid the ques- 
 tion of our foreign exchange can afford, in ex- 
 planation of the difference between the standard 
 of our coin, and the actual value of our cur- 
 rency. 
 
 Respecting the nature of exchange, and what 
 is understood to be the real par between two 
 countries, there is no point in dispute. Thereat 
 Par, it is admitted, on all sides, consists in the 
 equality of either of the precious metals mea- 
 sured
 
 ( 48 ) 
 
 sured in the respective currencies of the two 
 countries, So far, aH the merchants who were 
 called before the Bullion Committee concur 
 with the statement of the Report. In sub- 
 stance, they are likewise all agreed with the 
 Report,. (however much the admission is at vari- 
 ance with some of their own arguments) that 
 the real depression of the exchange can never 
 exceed, for any length of time, the expense of 
 transporting bullion from the debtor to the cre- 
 ditor country. Nothing can more strongly 
 confirm the truth of this last position, than 
 the evidence and calculations furnished to the 
 Committee by Messrs. Grefulhe and Goldsmid; 
 which prove that, at the period of the present 
 year, when the quoted rates of exchange with 
 the Continent were most unfavourable, the real 
 fall did not materially, if at all, exceed this 
 amount: consequently the difference between 
 the loss on the real and the nominal rates of 
 those exchanges was to be ascribed to some 
 other cause. 
 
 Two very erroneous opinions on this subject 
 are most generally received in the theory of the 
 mercantile world. 
 
 1st. That, whenever the exchange is against 
 any country, the natural and general course of 
 
 balancing
 
 ( 49 ) 
 
 balancing the account is by a payment in bul- 
 lion. 
 
 2dly. That the balance of these payments in 
 favour of any country is finally to be measured 
 by what is called the Balance of Trade; or the 
 excess of exports above imports. 
 
 These two positions lead to a third, which is 
 the fashionable doctrine of the day; namely, 
 
 3dly. That the Balance of Payments may, for 
 a time, be very much against a country, although 
 the Balance of Trade is, at the same time, very 
 much in its favour: that is, that a country, 
 buying for ready money, and selling at long cre- 
 dits, may be exporting a great quantity of its 
 bullion; although a much greater quantity is 
 actually due to it, and will be forthcoming in 
 the adjustment of its accounts, when these 
 credits come to maturity. 
 
 Such is affirmed to be the present situation of 
 this country, and the true explanation of the 
 very depressed state of our foreign exchanges. 
 
 The first of these positions is so little con- 
 formable to truth, and to the real course of busi- 
 ness between nations, that there is, perhaps, no 
 one article of general consumption and demand, 
 which forms the foundation of so i'tw opera- 
 tions of trade between the different countries 
 of Europe as bullion: and that the operations, 
 
 e which
 
 ( 50 ) 
 
 which do- takf place, originate almost entirely in 
 the fresh supplies which are yearly poured in 
 from the mines of the New World; and are 
 chiefly confined to the distribution of those sup- 
 plies through the different parts of Europe. If 
 this supply were to cease altogether, the deal- 
 ings in gold and silver, as objects of foreign 
 trade, would be very few, and those of short du- 
 ration. 
 
 To establish and illustrate this view of the 
 subject, let us suppose that, in consequence of 
 purchases made by England on the Continent, 
 greater than had been made by the Continent 
 here, or in payment of any debt, service, or de- 
 mand, bills upon England are offered for sale in 
 the markets of the Continent; and that the 
 supply of such bills exceeds the demand. Their 
 price, like that of any other article, under simi- 
 lar circumstances, must fall ; and the exchange, 
 which we will suppose to have been before at par, 
 will of course turn against England : but to this 
 fall there are limits in the competition of the 
 buyers. This competition commences as soon 
 as those bills are offered at such a price as en- 
 ables a buyer to use the credit which he obtains 
 upon England by the purchase of such a bill, 
 either as the means of paying for any goods for 
 which he has already contracted; or of buy- 
 ing
 
 ( tfl ) 
 
 lng others, so as to afford him the prospect of a 
 profitable employment for the capital engaged in 
 the transaction. Much of the skill of a general 
 merchant consists in these calculations; and his 
 intelligence is aided by a comparison of prices 
 current ; as well as by the peculiar means of 
 information which he may be able to procure 
 from any other sources, respecting the state of 
 supply and demand in the different markets of 
 the world. Now, of all the articles of trade, 
 bullion is the least likely to offer this tempta- 
 tion to the purchaser of a bill of exchange j be- 
 cause its price is more steady and uniform, and 
 always nearer to a level (from which it never 
 long departs,) than that of any other commo- 
 dity, in the different markets of Europe. In 
 proportion as these bills are bought at a greater 
 difference below pak, is any holder of them 
 enabled to buy goods cheaper in England. 
 For instance, if, for 100 ounces of gold at Ham- 
 burgh, of any given weight and fineness, he ob- 
 tain an assignment for 105 ounces in London ; 
 it is clear that this is equal to a premium of five 
 per cent, on the purchase of such goods. An 
 unfavourable course of exchange consequently, 
 operates as a bounty upon all exports, and as a 
 tax upon all imports. This bounty and this tax 
 necessarily excite a competition to export, and 
 e L Z a dimi-
 
 ( 52 ) 
 
 a diminished disposition to import; by the joint 
 effect of which, in all ordinary cases, zvithout 
 any transmission of bullion, the real exchange 
 is brought back to its par, and probably rises 
 above it. In its turn, this rise is checked and 
 counteracted by the operation of the same 
 causes; and thus, like the mariner's compass, 
 the exchange is in a state of frequent variation; 
 but of variation confined within certain natural 
 limits. If indeed a fall in the real exchange 
 exceeds these limits, which are confined to the 
 actual expense of transmitting bullion from the 
 debtor to the creditor country, particular indivi- 
 duals will export bullion. They will be induced 
 to do so by a profit much smaller than would 
 tempt them to a speculation in any other mer- 
 chandize, because such profit, however small, 
 is in this case quick and certain. But, this ex- 
 portation of bullion, in the ordinary transactions 
 of trade, instead of being, as is supposed, the 
 habitual mode of adjusting accounts between 
 one country and another, is of rare occurrence, 
 and, when it occurs, can never continue long, 
 because the transmission of a comparatively small 
 quantity of that metal which forms the stand- 
 ard and currency of a country, not only ope- 
 rates, like that of any other commodity, to di- 
 minish in so much the balance of debt to other 
 
 countries;
 
 ( 53 ) 
 
 countries ; but.likewise to force the exportation, 
 and to diminish the importation of all other 
 goods; and thus more rapidly to improve the 
 exchange, than the export of any other commo- 
 dity to the same amount. As the exchange im- 
 proves, the exportation of bullion of course ceases. 
 
 The principle and its application are the 
 same, whether we contemplate only one transac- 
 tion, or embrace the aggregate result of all the 
 different transactions in trade, and of all sub- 
 sidies and government expenditure abroad, on 
 the one hand, and payments to be made here, on 
 the other, as well as all other causes and specu- 
 lations influencing the bill market on both sides 
 of the water. 
 
 The circumstances of the exchange between 
 Ireland and Great Britain in the years 1803 and 
 1804, as stated in the very able Report of the 
 Committee appointed by the House of Com- 
 mons, in the latter of these years, " to enquire 
 into the state of Ireland, as to its circulating 
 paper, its specie, and its current coin, and the 
 exchange between that part of the United King- 
 dom and Great Britain,''' afford a striking illus- 
 tration of the doctrine which I have endeavour- 
 ed to explain, and of the fallacy of that theory, 
 which refers all the variations of exchange to 
 the balance oj payments and the balance of trade. 
 
 E 3 The
 
 ( 54 ) 
 
 The commercial intercourse between Great 
 Britain and Ireland is exposed to no political 
 interruption ; the trade between them in bullion 
 is free; the standard of both countries is the 
 same; the transfer of coin from one to the other 
 is liable to no interruption or restraint; the ac- 
 tual expense of transporting it was proved be- 
 fore that Committee not to exceed one per cent. ; 
 it was then, as it is now admitted, that the 
 fluctuations in the exchange between any two 
 countries could not materially or for any length 
 of time exceed this actual expense : and although 
 the exchange had been for several months from 
 8 to 10 per cent, against Dublin; although 
 it was proved that what is called the balance 
 of trade was in favour of Ireland ^although 
 there was no reason to believe that there was 
 any transmission of guineas from Ireland to 
 Great Britain; although the exchange between 
 London and the north of Ireland, (Belfast), in 
 which no paper currency existed, instead of be- 
 ing from 8 to 10 per cent, against, was, during the 
 same months, about one per cent, in favour of 
 Ireland*; although this fact alone incontrover- 
 
 * In the middle of February, 1804, for instance, the ex- 
 change of Dublin upon London was \"J\ that of Belfast upon 
 London 7|. 
 
 Vide Appendix to the Report of 1804, pages 136 and 155. 
 
 tibly
 
 ( 55 ) 
 
 tibly proved that the real exchange was in favour 
 of Ireland, and consequently that there could be 
 no exportation of gold from it; although it was 
 a necessary consequence of this state of things, 
 that the exchange between Dublin and Belfast 
 was from 9 to 1 1 per cent, in favour of the latter; 
 (just as in the last century, and from a similar 
 cause, it had been from 4 to 6 per cent, in favour 
 of London and Newcastle against Edinburgh;) 
 although it was impossible for the merchants and 
 Bank Directors, examined before that Commit- 
 tee, to controvert these facts, or to reconcile 
 them with their own doctrines and admissions; 
 still nearly all of them professed to be tho- 
 roughly convinced that there could be no excess 
 or depreciation of Bank paper in Ireland. They 
 persisted in ascribing the fall of the exchange 
 altogether to the balance of payments and the 
 balance of trade ; and rejected all explanation 
 which connected that fall with the depreciation 
 of Irish paper. 
 
 Now, if under these circumstances Irish paper 
 was not depreciated in 1804, with reference to 
 the currency of other countries, it follows, that 
 English paper was then, with reference to the 
 same criterion, at from 8 to 10 per cent, pre- 
 mium. Does any man believe this to have been 
 the case ? If there be any man who does, he, 
 
 i 4 and
 
 ( S6 ) 
 
 and he alone, has a right to maintain that our 
 paper (having in some way or other, since got 
 rid of that premium) is now at par. 
 
 Soon after the Report of 1804, the amount of 
 issues of the Bank of Ireland being reduced, 
 the exchange with Dublin was gradually im- 
 proved; and the Directors of the circulation of 
 that country have since kept the depreciation of 
 their paper generally upon a level with that of 
 English paper. 
 
 What the currency of Ireland was in 1804, as 
 compared with that of Great Britain, the cur- 
 rency of the United Kingdom now is, with re- 
 ference to 'that of Hambourg or Amsterdam. 
 The arguments and preconceived theories of 
 those who stood up for the undiminished value 
 of the one, were the same as are now resorted 
 to by those who deny the depreciation of the 
 other. 
 
 If the reader should concur with me in the 
 few observations which I have ventured to sub- 
 mit to his judgement, he will now be able to 
 form a tolerably just estimate of what is called 
 the Balance of Trade. 
 
 If one country have a claim upon another, 
 the holders of that claim have but two ways of 
 
 using
 
 ( $7 ) 
 
 using it: either they will leave the amount ift 
 the debtor country, as so much capital to be 
 vested there at interest,, or employed in such 
 other manner as they may think propei 1 ; or they 
 will withdraw it. The latter is so much the 
 more usual course, that, in the magnitude of the 
 operations of this country at least, we may, ex- 
 cept perhaps from very temporary circum- 
 stances, consider the former as having little or 
 no influence on the exchange. Now, no claim 
 can arise from one country upon another (ex- 
 cept in the way of tribute or exaction) which is 
 not founded in some equivalent. 
 
 An exchange of equivalents is the foundation 
 of all commerce, from the simple barter of the un- 
 tutored Indian, to the most complicated and 
 extensive operations of the London merchant. 
 No nation, therefore, can permanently export 
 to a greater value than it imports, as far as ex- 
 ports and imports are created by a commercial 
 intercourse with other nations. But a con- 
 siderable part of our imports are not derived 
 from commerce. From our colonies, a great pro- 
 portion of them is in the nature of rent remitted 
 in kind, to the owners of colonial estates who 
 reside in England ; to which are to be added, as 
 farther exceptions, the produce of our fisheries; 
 and of any portion of our territorial revenue in 
 
 India
 
 ( SS ) 
 
 India, or of the savings of publick servants civil 
 and military, in that quarter, sent home in goods. 
 If these returns were abated from the sum total 
 of our imports, the annual Balance of Trade in 
 our favour, as stated to Parliament, would ap- 
 pear still more considerable. Yet, taken for any 
 length of years, no part of this balance is cre- 
 ated by our commerce. For every thing that we 
 receive, through that channel, an equivalent, and 
 no more, is returned. All that we send out, 
 above the amount which is thus returned, is 
 drawn from us by the remittance of the profits 
 of foreign capital vested in this country, or is to 
 be accounted for under the several heads of our 
 foreign expenditure. A great balance of trade, 
 therefore, instead of being the natural criterion 
 of increasing wealth at home, is only a certain 
 indication of a great expenditure abroad. It is 
 an indication of wealth, only in the same way 
 as any other great expenditure, by proving the 
 power and ability of the country to sustain it. 
 Whilst it is true, however, that the vaunted Ba- 
 lance of Trade, or the excess of our exports above 
 our imports, is not, as ithas been represented, and 
 is generally believed, the measure and the reali- 
 sation of the profit derived to us from our fo- 
 reign trade; but is, in fact, only capital sent 
 out of the country for which no capital is re- 
 turned
 
 ( 59 ) 
 
 turned to it; it is by no means to be inferred 
 that this expenditure is without equivalent, 
 though without commercial return: still less 
 that it is not beneficial to the country, or that 
 the sum so expended could be employed in any 
 manner equally conducive to its interests. Nor 
 is it to be inferred that the not incurring this 
 expenditure abroad would be a clear saving, or, 
 perhaps, any saving at all. 
 
 It must be obvious to every one, that the 
 two great heads of this expenditure are our ar- 
 mies and fleets abroad; and subsidies to foreign 
 states. Our soldiers, our sailors, the publick 
 servants of every description, so far as they are 
 furnished abroad with whatever is necessary for 
 themselves, or for the operations in which they 
 are engaged, give, to those by whom they are 
 supplied, assignments upon the produce of this 
 country. These assignments, like any other bills 
 of exchange, are converted into whatever arti- 
 cles the ultimate holders of them find it most 
 to their advantage to export from this country. 
 If this head of our foreign expenditure, there- 
 fore, were reduced by the recall of all our pub- 
 lick servants, civil, naval, or military, now 
 maintained abroad ; still if the same number 
 were to be maintained at home, the real saving 
 to the country would not bear any considerable 
 
 proportion
 
 ( 60 ) 
 
 proportion to the reduction in our foreign ex- 
 penditure. The Balance of Trade would be di- 
 minished in proportion to that reduction ; but 
 such diminution would obviously be no proof 
 whatever of the declining prosperity of the coun- 
 try. 
 
 A subsidy to a foreign state may or may not 
 be politically wise ; but, in the view which is 
 here in question, it must be considered as being- 
 paid for a service to be performed, which is held 
 to be equivalent to the expense incurred. The 
 withholding such a subsidy would, in many 
 cases, be obviously the very reverse of economy; 
 but it seems quite as obvious that, in whatever 
 mode it be remitted, it must augment to that 
 amount what is called the Balance of Trade in 
 our favour. 
 
 It may, perhaps, be asked, if commerce is 
 nothing more than an exchange of equivalents, 
 and the Balance of Trade, taken for any length 
 of time, only the measure of our foreign expendi- 
 ture, in what way is a country enriched by trade ? 
 To those who may be disposed to ask this ques- 
 tion, I would, in the first place, reply by putting 
 one or two others. What is the internal trade 
 of any country, that is, the trade carried on 
 between different districts of the same state 
 within the limits of its territory, but an exchange 
 
 of
 
 ( 61 ) 
 
 of equivalents ? Is this a trade by which the 
 one gains and the other loses? by which York- 
 shire is enriched at the expense of Kent ? Then, 
 if our internal trade be an exchange of equiva- 
 lents, what is the distinction, in this respect, 
 between it and foreign trade ? What takes 
 away this character from the latter? and what, 
 after all, is the latter ? 
 
 To the question how then are we enriched by 
 trade ? the answer appears to me as obvious, as 
 it is consistent with this doctrine. 
 
 The mind and faculties of man are constantly 
 engaged in pursuit of his own happiness, and in 
 multiplying the means of subsistence, comfort, 
 and enjoyment. Trade, which effects the ex- 
 change of a part of the productions of the soil, 
 industry, and talent of any one country, against 
 those of the soil, industry, and talent of all other 
 countries, is the great instrument of multiplying 
 these means. By the aid of this exchange, not 
 only those natural productions, which Providence 
 has distributed in abundance in one portion of 
 the globe, and refused to some other, are ren- 
 dered common to all ; but the soil of every 
 country, and of every portion of every country, 
 is left at li berry to be cultivated principally, or 
 wholly, if necessary, in raising those productions 
 for which it is best calculated and adapted; 
 
 those
 
 ( & ) 
 
 those which, by experience, it has been found to 
 afford of the best quality, in the greatest abun- 
 dance, and at the least expense of capital and 
 labour. Labour or capital, employed in manu- 
 factures, is enabled to avail itself of local situa- 
 tions and natural advantages (for instance, a 
 stream or a coal-mine), and to adapt itself, ex- 
 clusively, to those pursuits, in which, from any 
 peculiar disposition, dexterity, ingenuity, or for- 
 tuitous discovery, the people of any particular 
 country, or any particular part of them, may 
 excel. The advantage derived from the division 
 of labour is well known. What is effected by 
 the operation of that principle, for a single un- 
 dertaking, is, by the aid of commerce, effected 
 for the whole world. Commerce enables the po- 
 pulation of each separate district to make the 
 most of its peculiar advantages, whether de- 
 rived from nature, or acquired by the application 
 of industry, talent, and capital ; to make the 
 most of them for its own consumption; leaving, 
 at the same time, the greatest possible re- 
 mainder to be given in exchange for any other 
 commodities produced more easily, more abun- 
 dantly, or of better quality, in other districts of 
 the world. It is thus that a country is enriched 
 by commerce. 
 
 Apply this, for example, to England. Much 
 
 is
 
 ( 63 ) 
 
 is required for the subsistence, much for the 
 comfort, much for the enjoyments and luxury, 
 of the people of this country. Now, if we could 
 not, or, by a mistaken policy, would not, pro- 
 cure salt meat from Ireland ; a country, in which, 
 we will assume, that, from its superior pasture, 
 one acre will feed as many cattle as can be fed 
 upon two in this country ; it is obvious that, if 
 we still wanted to consume the same quantity 
 of meat, a larger portion of our soil must be 
 allotted to pasture. Consequently, we should 
 have less of corn, hops, or some other article of 
 our present growth. 
 
 In the same way, if we had resolved, that, 
 instead of importing sugar, we would make it 
 from beet-root, the sweet maple-tree, or any other 
 vegetables, which could be raised in this climate; 
 we should be obliged to allot a great portion of 
 our soil to their growth; and, after all, we should 
 have very little sugar ; and we should have much 
 less of other produce than we now have, together 
 with an abundant supply of sugar. The same 
 observation will apply to hemp, or to any other 
 article principally imported from other countries. 
 
 Certain small states, which have been enriched 
 by commerce, form no exception to the truth of 
 these observations. Favoured by natural advan- 
 tages
 
 ( ^4 ) 
 
 tages of situation ; pursuing a more enlightened 
 commercial policy than their neighbours ; 
 deriving commercial security from their own 
 political weakness, and from the jealousy and 
 wants of more powerful nations ; they became* 
 when trade was little understood and less es- 
 teemed, the carriers for all the other parts of the 
 world. Great capitals were requisite for this 
 purpose ; and being thus concentrated in certain 
 spots, they were gradually increased by thrifty 
 management, till the owners were enabled, by 
 successive accumulations, to employ part of their 
 wealth in advances to the countries with which 
 they traded, and thus to become partners in the 
 produce of those nations. Venice and Am- 
 sterdam, each in the days of its prosperity, 
 may have been, what London now is, theyb- 
 cuSy in which the greatest mass of capital is drawn 
 together ; the largest emporium of the goods 
 and produce of all other countries ; and the 
 fountain-head of commercial credit. 
 
 The great profits, which center in these ca- 
 pitals of the trading world, are the result of 
 wealth gradually accumulated, or tempted from 
 other quarters, by better prospects of advantage, 
 and by confidence in a more assured state of 
 property. It is this wealth which, in the first 
 
 instance,
 
 ( 65 ) 
 
 instance, creates the trade, and not the trade 
 the wealth. But whatever may have been the 
 profits and accumulation of wealth made by the 
 mercantile community in any one of them, or 
 the incidental advantage of such accumulation 
 to the particular country; the benefits conferred 
 on ail individuals, and all countries, whose pro- 
 ductions were exchanged by the intervention of 
 their capital, industry, and talents, were recipro- 
 cal, and to each equivalent. 
 
 Every addition to the productions of a coun- 
 try, whether ultimately consumed at home or 
 not, adds equally to its means of commercial 
 exchange with other countries. To improve 
 agriculture, therefore, is to extend commerce : 
 and every new channel opened to the latter, 
 affords additional encouragement to the former. 
 It is thus that they both contribute to the 
 wealth of a country ; and that the improve- 
 ment of that wealth is most effectually con- 
 sulted by leaving to every part of the world 
 to raise those productions for which its soil and 
 climate are best adapted. Yet, such is the bar- 
 barian ignorance, or detestable policy, which 
 presides in the councils of France, and sways 
 those of continental Europe, that we are boast- 
 ingly told of whole districts in Italy and Pro- 
 
 v vence,
 
 ( 66 ) 
 
 vence, naturally fertile in other rich productions, 
 being devoted to the raising, at vast expense, of 
 a little very bad cotton. We hear of Princes in 
 Germany, devising wretched substitutes for cofr 
 fee, or planting forests of sweet maple, and sink- 
 ing great capitals in the erection of works for the 
 manufacturing of sugar: and all this, at the 
 same time that the natural productions of their 
 agriculture, those best suited to their soil and 
 climate, in exchange for which these articles 
 might be procured in abundance, are rotting in 
 the fields for want of a market. 
 
 If it were in the nature of violent passions 
 and headstrong power to take lessons from 
 experience, Buonaparte perhaps would begin 
 to perceive, that the mercantile superiority, for 
 which he envies and hates this country, grows, 
 not so much out of commercial regulations, 
 as out of a system of laws, which affords perfect 
 protection to property, admits of no degrading 
 distinctions in society, encourages industr}', 
 fosters genius, and excites emulation, and is sup- 
 ported by that moral, manly, and national cha- 
 racter of our people, which is only another of 
 the many advantages derived from that system : 
 that the wealth, which is employed in com- 
 merce, is the result of long accumulation, un- 
 interrupted by popular violence, or arbitrary ex- 
 actions;
 
 ( 67 ) 
 
 actions ; that so long as these blessings are con- 
 tinued to us, on the one hand, and, as on the 
 other, his warlike pursuits abroad, and caprici- 
 ous regulations at home, conspire to drive com- 
 merce from the Continent, the capitals engaged 
 in trade will seek protection and employment 
 in England; and that, whilst he is thus engaged 
 in adding incalculably to the misery of Europe, 
 by debarring it more and more from the bene- 
 fits and enjoyments which commercial inter- 
 course affords to mankind, the blow, aimed at 
 this country, is counteracted by the course 
 which he pursues ; and the national capital and 
 resources of Great Britain are, upon the whole, 
 perhaps, rather increased by the very system on 
 which he has founded the vain hope of reducing 
 us, either to submission, or to ruin. 
 
 These few observations would suggest many 
 more on this interesting and important branch 
 of political economy. But I am aware that I 
 have already been guilty, in some degree, of a 
 digression from my subject* to which, however, 
 I have been tempted by a persuasion that there 
 is no political question on which the prevalence 
 of false principles is so general, as in what relates 
 to the nature of commerce, and to the pretended 
 balance of trade ; and that there are few which 
 have led to a greater number of practical mis- 
 
 v 2 takes.
 
 ( 68 ) 
 
 takes, attended with consequences extensively 
 prejudicial to the happiness of mankind. 
 
 In this country, our parliamentary proceed- 
 ings, our publick documents, and the works of 
 several able and popular writers, have com- 
 bined to propagate the impression that we are 
 indebted for much of our riches to what is called 
 the balance of tirade. This impression, which 
 has spread through Europe, has contributed, not 
 a little, every where, to suggest the imposition 
 of unnecessary restraints upon trade, and per- 
 haps to render acceptable for a time, even to the 
 nations who were suffering from it, the wild at- 
 tempt to exclude British commerce from the 
 continent. The jealousy, which our general 
 prosperity creates, is enhanced by a notion that 
 it is altogether the effect of our commerce. 
 Whilst our merchants are individually repu- 
 ted pre-eminent for good faith and fair deal- 
 ing, the opinion entertained of us, as a nation, 
 is, that we are little short of sharpers in trade; 
 and that, whatever we gain by it is so much 
 lost to those who deal with us. For the counte- 
 nance given to this opinion, prejudicial to every 
 country, but not least so, to ourselves, we have, 
 I think, more to answer than the most envious 
 of our neighbours. Our true policy would surely 
 be to profess, as the object and guide of our 
 
 commercial
 
 ( 69 ) 
 
 commercial system, that which every man, who 
 has studied the subject, must know to be the 
 true principle of commerce ; the interchange of 
 reciprocal and equivalent benefit. We may rest 
 assured that it is not in the nature of commerce 
 to enrich one party at the expense of the other. 
 This is a purpose at which, if it were practi- 
 cable, we ought not to aim ; and which, if we 
 aimed at it, we could not accomplish. Let us not 
 then disclaim a virtue which we, perforce, must 
 practise. The boast of wealth growing out of 
 unequal advantages would be but a vulgar boast, 
 even if it could, in the nature of things, rest on 
 a real foundation. Our legitimate pride should 
 consist, not in the superiority of the means with 
 which Providence has blessed us for the im- 
 provement and extension of our own commerce, 
 but in the consciousness that those means can- 
 not be employed for purposes purely selfish, and 
 that we do not desire so to employ them. Our 
 national character is to be exalted in the eyes of 
 foreigners, not by a self-complacent display of 
 our own prosperity, but by shewing to surround- 
 ing nations that they have an interest in that 
 prosperity, and that we prize it the more, not 
 because we believe it to be exclusive, but because 
 we know it to be communicable.
 
 ( 70 ) 
 
 To come back, however, to the subject of 
 foreign exchange. I have hitherto proceeded 
 upon the supposition of the money of any two 
 countries, between which an exchange is esta- 
 blished, retaining their relative weight and fine- 
 ness, according to the standard of their respec- 
 tive Mints, upon which the par between them 
 was originally settled. If, in either country, 
 the standard, or the denomination, be altered, 
 whilst, in the other, they remain the same ; 
 of course the real par will be altered in the 
 same proportion, although this alteration will 
 most probably be effected without any variation 
 in the mode of stating the course of the ex- 
 change ; just as a shilling is still called a shilling 
 in Ireland, although its current value has long 
 since been raised from lQd. to \3d. This gives 
 rise to what, in the Report of the Bullion Com- 
 mittee, is called the computed par. Even with- 
 out any change being made by law in the standard 
 or denomination of the currency of either coun- 
 try, this par would seldom be found perfectly to 
 accord with the real par; because the degree 
 of wear might be different in the two currencies, 
 or even in different portions of the same cur- 
 rency. It is only when both contain the full 
 quantity required by the Mint regulations of 
 the respective countries, or are equally dimi- 
 nished
 
 ( 71 ) 
 
 nished by wear, that the computed and the real 
 par are, in fact, exactly the same. The real 
 par will also vary where the standard of the 
 one country is gold, and that of the other silver, 
 with every fluctuation in the relative value of 
 these two metals. 
 
 The regulation by which our gold coin, if 
 reduced more than a small fraction above one 
 per cent, ceases to be a legal tender, would pre- 
 vent the foreign exchange from being affected 
 to any greater degree, by the wear or clipping 
 of our coin ; even if the currencies of other 
 countries were constantly of their full standard 
 weight and fineness. It is owing to this regu- 
 lation that the exchange became much steadier, 
 and was more generally in our favour, after the 
 re-coinage of our gold in 1773. 
 
 No alteration can be made in the standard, 
 or denomination of the currency of any coun- 
 try, without the precise effect of it upon the 
 value of such currency being immediately and 
 generally known ; and a corresponding altera- 
 tion as immediately ensues in the rates of ex- 
 change with other countries, though the former 
 mode of" computing it may still be continued. 
 In Ireland the standard is precisely the same as 
 in England; but the denomination of the shil- 
 ling being raised, in the former country, to 
 
 ! 4 thirteen-
 
 ( 72 ) 
 
 thir teen-pence, the exchange is at the real par 
 when it is stated to be 8i against Ireland : on 
 the other hand, if the standard of our gold 
 were lowered in England tV, whilst it remained 
 the same in Ireland, or if the denomination of 
 our shilling were raised to thirteen-pence, or that 
 of our guinea to 2,2s. 9d. the effect, in either case, 
 would equally be to do away this computed dif- 
 ference against Ireland. It would be very easy 
 to multiply examples of similar alterations in 
 the currency of different countries, attended 
 with a corresponding effect upon their respec- 
 tive exchanges. 
 
 Although our present situation is somewhat 
 different from that which would arise from an 
 alteration in the standard, or in the denomination 
 of the coin, the effect on our foreign exchange 
 is precisely the same. 
 
 Our gold coin is not materially deteriorated 
 by clipping or wear ; nor has its standard been 
 lowered, or its denomination raised : but for 
 coin we have substituted a paper currency ; 
 which, from being issued to excess, and from 
 that cause only, no longer actually represents 
 the quantity of gold which it purports to repre- 
 sent. 
 
 The following case will perhaps illustrate this 
 part of the subject. 
 
 Suppose
 
 ( 73 ) 
 
 Suppose 12 ounces of gold, of standard fine- 
 ness, to be converted at Paris into French cur- 
 rency, and that, with the proceeds, is bought a 
 bill of exchange upon London for 56/. ster- 
 ling. If, at the same moment, this last sum in 
 English currency (Bank notes,) would purchase 
 exactly 12 ounces of standard gold in London, 
 the real exchange of Paris upon London, it is 
 admitted, would be at par. If that sum would 
 purchase 12 ounces and a half, the real exchange 
 would be against London : if it would purchase 
 11 ounces and a half only, the real exchange 
 would be in favour of London. Now, 12 ounces 
 of gold being equal to 44 guineas and a half, 
 or 46/. 14*. 6d. the difference between that sum 
 and 56/. would, in the first supposition, be the 
 measure of the depreciation of the latter sum in 
 Bank paper. In the same manner, that depre- 
 ciation may be calculated in the two other in- 
 stances. 
 
 In the first case, the loss upon the exchange 
 arises solely from the depreciation of the paper, 
 and is exactly equal to it. In the second, the 
 loss on the exchange is greater than the depre- 
 ciation of the paper; in the third less : the diffe- 
 rence, one way or the other, being half an ounce 
 of gold, or 1/. 18*. 11 id. 
 
 Whether, in point of i'act, the real exchange 
 
 with
 
 ( 74 ) 
 
 with the Continent be, at this moment, for or 
 against this country, itmay be difficult accurately 
 to determine. If the difference, here, between 
 the Mint and the Market price of gold, such as 
 can be legally exported, be less than the loss on 
 the computed exchange; the presumption is, 
 that the real exchange is against us, in nearly 
 the amount of that difference. 
 
 It being admitted, on all hands, that our cur 
 rency has no value in ^.foreign country, except 
 in proportion to the quantity of gold which it 
 actually contains, or which can be procured for 
 it by purchase in the market ; I could wish that 
 some of those who have made this admission, 
 but who do not admit the depreciation of our 
 paper, would explain, distinctly, what it is, other 
 than that quantity, which determines the value 
 of such currency amongst ourselves? Is it any 
 thing in the coinage? Those who allow that 
 44 guineas and a half, new from the Mint, and 
 46/. 14.?. 67/. in Bank notes, are equal values, and 
 who cannot deny the fact that 567. in notes, will 
 not buy one grain more of gold than is contain- 
 ed in those 44 \ guineas, will hardly contend 
 that any thing is gained by the coinage. In 
 truth, their position, as to the undiminished 
 value of our currency, can not be maintained at 
 all, unless they can make out that two unequal 
 
 quantities
 
 ( 75 ) 
 
 quantities of the same article are equal to one 
 another; and, if they can succeed in this, they 
 may as well raise the guinea to the value of five 
 guineas, and declare all our shillings crowns at 
 once. 
 
 But, after all, the subject of foreign ex- 
 change is, of itself, of little interest or impor- 
 tance, compared with the question, to which it 
 is incidental, of the diminished or undiminished 
 value of our currency at home. It is, indeed, 
 connected with the question of depreciation 
 only as it is a symptom of that deprecia- 
 tion. Whether it be, as has been contended 
 by me, and is, I think, satisfactorily made out, 
 a symptom consequent upon the existence of 
 the disease ; or whether as others contend, it is 
 the predisposing cause of it; in cither case, the 
 disease equally exists, and equally demands a 
 remedy. To talk of postponing the remedy 
 until this symptom shall cease, is, in fact, to per- 
 petuate the disease. 
 
 In King Wi l mam's time, the same disease (a 
 depreciation of our currency) was accompanied, 
 as it is now, with a corresponding depression 
 of the foreign exchange. Then, as ?ur, there 
 were not wanting those who wished to invert 
 the relation which these two evils really bear to 
 each other; who maintained that the high price 
 
 of
 
 ( 76 ) 
 
 of bullion, as measured in our currency, was 
 produced by the unfavourable course of the 
 foreign exchange; and who would fain have 
 recommended to Parliament, rather to wait, in 
 helpless expectation, for the disappearance of 
 the evil over which they had no controul, than 
 to apply themselves to the grievance which it 
 was in their power to redress. But Parliament, 
 at that time, felt, that, whatever might be the 
 depression of the foreign exchange, it was their 
 first duty to deal with the manifest evil in the 
 state of our currency, from a conviction that it 
 was, not only a question of policy, but strictly 
 of good faith. 
 
 That it is a question of good faith, can any 
 man doubt, when he considers that the stamp 
 affixed to our coin is nothing more than a gua- 
 rantee given by the sovereign that, in weight and 
 fineness, the money of the country is in exact 
 conformity to the standard fixed by law? when 
 he considers that for the express purpose of 
 making this guarantee completely effectual, the 
 law which makes that money a legal tender, has, 
 at the same time, denounced the severest penal- 
 ties against those who shall imitate or counterfeit 
 such stamp ; and takes away the character of 
 legal tender from any portion of that money so 
 stamped, if, from any accident or circumstance 
 
 whatever,
 
 ( 77 ) 
 
 whatever, the quantity of gold certified by the 
 stamp, is reduced in a greater proportion than 
 about 1 ~io per cent. ? that the value of our mo- 
 ney being thus accurately ascertained and de- 
 termined, all pecuniary contracts and bargains 
 have been made, and all engagements accepted, 
 in the full confidence and assurance, that the 
 publick faith so firmly pledged, so strongly sanc- 
 tioned, and so cautiously guarded, would never 
 be violated or impaired ? 
 
 Does it not follow from these premises, that 
 any contrivance which, under the same denomi- 
 nation of money to which this guarantee applies, 
 should compel any individual to accept, in pay- 
 ment of a legal debt, a smaller quantity of gold 
 than is certified by the stamp to be contained in 
 such denomination, would be a violation of the 
 publick faith; and a loss, to him as creditor, of 
 whatever may be the difference between the 
 quantity of gold to which he is entitled under 
 the guarantee of the sovereign, and the quan- 
 tity contained in the currency in which he is 
 actually paid, or which can be procured for it 
 at the time of such payment? 
 
 In truth, there is but one security for the 
 maintenance of the publick faith of a country in 
 this respect; and that is, to preserve the stand- 
 a iti) of its currency immutable and inviolable. I 
 
 have
 
 ( 78 ) 
 
 have already shewn that the intention of the 
 Act of 1797 was not to introduce, or authorize 
 any variation of our standard. Practically, 
 for a series of years, it had no such effect. 
 Within a late period such an effect has been 
 produced. The standard of our currency has 
 been virtually altered ; and that, which no 
 legislature would advisedly have consented to 
 do, or could have done without violating the 
 obligations of justice, has been unadvisedly and 
 innocently done by the Corporation of the 
 Bank. Not that the Bank were aware that they 
 were exercising, any more than the legislature 
 had it in contemplation to transfer to them, any 
 such power. Yet, it is obvious that while in 
 principle and in law our standard remains the 
 same, in practice and in effect it is lost. If a 
 foreigner had at any time enquired what was the 
 standard of our currency? the answer at any 
 period from the time of the Tudors* down- 
 wards would have been, to refer him to the un- 
 varied letter of the statute, as strictly executed 
 in the regulations of our Mint. The answer to 
 such a question must now be sought in the cur- 
 rent price of bullion in the market, and in the 
 discretion of the Bank. 
 
 * The last alteration in our standard was made in the 43d 
 of Eli/, whtn it was lowered between 3 und 4 per cent. 
 
 Admitting
 
 ( 79 ) 
 
 Admitting these evils, however, it may yet 
 be said, that the restriction is but a temporary 
 measure, which once removed, every thing will 
 return to its proper level. True : but, if it be 
 much longer continued, what confusion and de- 
 rangement must, in the mean time, ensue in all 
 the transactions of society? True: but the 
 very evils which this measure has created, and 
 which it alone keeps alive, are assigned as the 
 reasons for continuing it, so long as they exist. 
 True, again, it is, that this is a temporally mea- 
 sure;* and, out of this very circumstance grow 
 
 most 
 
 * I trust there is no doubt of this fact, but I am sorry to 
 see that the Bank Proprietors (if their sentiments can be col- 
 lected from the report of their proceedings at their last general 
 meeting) entertain a different expectation. 
 
 An uninformed stranger, from reading the account of these 
 proceedings, would be led to conclude, that the proposal of the 
 Bullion Committee to allow the Bank two years to prepare 
 for the resumption of cash payments, is a direct and gross 
 infringement of their charter. It was condemned as a plan 
 <*i compulsion and injustice. The Orator of the Bank, on that 
 occasion, seemed to prefer even their dissolution, as a trading 
 company, to this resumption of the functions for which they 
 were originally instituted. " Let Government (he is reported 
 to have said) " pay us the 18 millions they owe us, and we 
 " will make up the remaining two millions by subscription 
 ' among ourselves within an hour. o as immediately to dis- 
 " charge all our note* 
 
 In
 
 ( 80 ) 
 
 most important considerations for those whose 
 high office it is to administer justice in equity, 
 
 and 
 
 In reply to this lofty language, I would observe; 1st. that 
 no one suspects the Bank of being insolvent, or of having 
 made any advances without very good and ample security ; 
 that no man has imputed the depreciation of their notes to 
 any suspicion that their concerns as a Bank are not prosperous, 
 and that their management for themselves is not extremely 
 prudent; 2dly. that if the Bank Proprietors, as a body, 
 should, after mature consideration, he disposed to petition 
 Parliament for leave to surrender their charter, there would 
 be no difficulty in finding other members of the community, 
 who, upon a transfer to them of that charter, and the other ad- 
 vantages of the Bank, would be perfectly ready to make good 
 any advances from the Bank to Government, and to take upon 
 themselves the whole concern, without refusing to resume- cash 
 payments at the expiration of two years. But 1 must add, 
 that, while on the one hand, I should be very sorry to witness 
 such a transfer, on the other, I have not the smallest apprehension 
 that the Bank Proprietors, when they shall come to weigh the 
 arguments of their learned advocate, will put it in the power 
 of any other body of men to acquire the advantages which 
 they now derive 1st. from the exclusive privileges of their 
 charter; 2dly. from their being the agents of the state in all 
 pecuniary matters; 3dly. from their being the Bank of 
 deposit in which all the money arising from the receipt of the 
 revenue, or issued for the expenditure of the state, is lodged. 
 
 With respect to the sum of IS millions, which was said to 
 be due by Government, it would have been well if, at the 
 same time, that the aggregate was so ostentatiously announced, 
 some of the -heads of that debt had been stated. Such an ex- 
 planation
 
 ( 81 ) 
 
 and to whose care and custody are committed the 
 protection and preservation of property belong- 
 ing to the most helpless classes of society. 
 
 If 
 
 planation would have prevented many unfounded inferences, 
 which, to the prejudice of Government, have been drawn 
 from that statement in other quarters ; as if sacrifices to such 
 an amount had, since the restriction, and in consequence of 
 the facilities which it afforded, been made by the Bank to the 
 Government. On the contrary, I believe, there never was a 
 period of war in which Government were less, or so little, in- 
 debted upon floating securities to the Bank as at the moment 
 of Mr. Raxdle Jackson's assertion. 
 
 The first and largest item of which this sum of 18 millions is 
 made up, is the advance originally made by the bank of their 
 capital stock amounting to 11,6S6',000/. 3 per cents. : which 
 advance has been carried on upon each successive renewal of 
 their charter. This advance has no more connexion with the 
 issues of the Bank than any other three per cent, stuck which 
 Mr. Jacksok, or any of the Proprietors may possess individu- 
 ally ; or than the whole mass of the funded debt of the coun- 
 try. This stock, though ultimately liable for their engage- 
 ments, is no part of the securities upon which their notes are 
 issued ; it is the subscription capital of the company, and the 
 repayment of it is not due or demandablt, till the expiration of 
 the present charter in 1833. 
 
 The next sum consists of two advances, of three millions 
 each : the first lent in 1800, for six years without interest, as 
 the price of the last renewal of their charter; and continued, 
 since the expiration of that period, at an interest of three 
 percent.. the other advanced, without any interest, under 
 an agreement with Government made in 1S08. Both these 
 
 -; advances
 
 ( 82 ) 
 
 If the nature of our money be such as I hare 
 stated; if the laws of England, by which its 
 
 standard 
 
 advances are in consideration of the profits accruing to the 
 Bank ; from the deposit of the publick balances in their 
 hands. These deposits, it is quite obvious, have no connection 
 with the circulation of the Bank ; and would be continued, to 
 nearly the same amount, if that circulation were restored to 
 its sound state. The average amount of these deposits exceeds 
 ten millions sterling. 
 
 No part of this advance of six millions is demandable until 
 six months after the termination of the war. 
 
 The difference between the amount of interest paid to the 
 Bank on this advance, and the amount of legal interest at 5 per 
 cent, on that sum, is correctly stated by Mr. Jackson at 
 210,100/. per annum. 
 
 Thus are 1 7,686,000/. out of the 1 S,000,000/. so confident- 
 ly, but prematurely, called for by Mr. Jackson, disposed of. 
 
 The small remainder of any debt from the Government to 
 the Bank consists, either of the ordinary annual advance on 
 the land and malt, the repayment of which is amply secured 
 by those taxes ; their weekly produce being appropriated for 
 that purpose, until the whole advance of each year principal 
 and interest is repaid or of any advances which the Bank 
 may have voluntarily made, by the purchase of Exchequer 
 Bills, for the repayment of which, with interest, they have the 
 same security, and are upon the same footing, as any indivi- 
 dual who may purchase such bills in the market. 
 
 With respect to the sum of 210,000/., annually saved to the 
 publick upon the advance of the six jirillions, made, as I have 
 stated, in consideration of a deposit in the Bank amounting, 
 upon a permanent average, to more than ten inillions ; I must 
 
 be
 
 ( 83 ) 
 
 standard is fixed, guarded, and guaranteed, 
 have been correctly described by me ; (and up- 
 on 
 
 be allowed to express my regret and surprise, that, at a ge- 
 neral meeting of the Bank Proprietors, where the very Direc- 
 tors with whom the agreement for this advance had been so 
 recently made on the part of the Bank, were probably present, 
 (and surely the conditions and nature of such an agreement 
 must be known to all the Directors) it should have been more 
 than insinuated, without contradiction from any quarter, that 
 this sacrifice of 210,000/. per annum, is made by the Bank 
 to Government, in consideration of the advantage which the 
 Bank derives from the suspension of cash payments. The 
 words of Mr. Jackson* as stated in the report of his speech 
 (Morning Chronicle, 21st September) are 
 
 " But when the Committee determined so earnestly to re- 
 " commend the resumption of cash payments, and a compul- 
 " site measure upon this institution, it would have been but 
 " becoming in them to recommend, as a preliminary step, the 
 " repayment to the Bank of the IS millions due from the pub- 
 " lick, and also the restoration of the 210,000/. derived front 
 " the Bank in consequence of the supposed advantages resulti?ig 
 "from the non-payment of cash. This was a line of proceeding 
 " which at least common justice should have urged the commit- 
 " tee to propose." 
 
 Fortunately the correspondence on this subject between 
 Government and the Bank in 1S0S was laid before Parliament, 
 and is published. By a reference to that correspondence, 
 every one may satisfy himself that this sum is the price paid 
 by the Bank for the use of the publick balances, and on no 
 other account whatever: to which 1 may add, that it was the 
 opinion of several persons in the House of Commons, and nar- 
 
 2 ticularlr
 
 ( 84 ) 
 
 on these points, so well understood, and so long 
 settled, there can be no difference of opinion) 
 if it be of the essence of those laws, that every 
 legal bargain for money can only be satisfied by 
 the payment of the stipulated quantity ; I can- 
 not help suggesting a doubt, whether the many 
 important pecuniary interests committed to the 
 care of our Courts of Equity may not be wrong- 
 fully deteriorated by the continuance of the 
 present state of our currency ? Whether, for 
 instance, an old lease, at the rent of 1000 gui- 
 
 ticularly of, the leading members of the Committee of Finance, 
 jn consequence of whose report this bargain was made ; that 
 the advance obtained from the Bank was not adequate to the 
 advantages which they derived from the agreement. 
 
 Be that as it may, I must decidedly protest against the as- 
 sertion that Government has, at any time, demanded or re- 
 ceived from the Bank any participation in the profits which 
 acrue to them from the suspension of cash payments. Every 
 administration, I am sure, since 179"? w 'iH join me in repelling 
 this insinuation ; and in maintaining that, whatever measures 
 Parliament may think proper to adopt, in consequence of the 
 report of the Bullion Committee, their deliberations cannot 
 be influenced or fettered by any direct agreement, or implied 
 understanding, with respect to the continuance of the suspen- 
 sion. Nothing in fact has ever passed between Government 
 and the Bank which can have the effect of preventing the Le- 
 gislature from fixing the period for the resumption of cash 
 payments, without reference to any other consideration than 
 the interest and the safety of the country. 
 
 neas
 
 ( 85 ) 
 
 ntas per annum, being virtually, though not in 
 terms, a contract on the part of the lessee to pay 
 in each year, at the very least, 266 oz. 13 dwts. 
 8 grs. of gold, (allowing each of these 1000 gui- 
 neas to be of the lowest standard weight per- 
 mitted by law) that contract can be equitably 
 fulfilled by the payment of 220 ounces ? Whe- 
 ther even during the existence of this temporary 
 restriction law; which (be it always remem- 
 bered) is to cease in six months after the termi- 
 nation of the war, and must be so construed and 
 contemplated by every court, either of justice or 
 equity, 1000 guineas, weighing any thing short 
 of 266 ounces, would entitle the lessee to a dis- 
 charge ? By a tender of that which is equivalent 
 only to 220 ounces, it is true, that he is now 
 protected against the process of the court; but 
 in equity, is he entitled to a discharge ? Will he 
 be entitled to it, next year, if that which he 
 may tender should be equivalent to 20 ounces 
 only? Will he be entitled to it the day after the 
 signature of a peace, although it is admitted 
 and notorious that six months after that day, the 
 law would compel him to pay 26*6 ounces? 
 
 I know not whether, by possibility, any man 
 
 can have reflected upon this subject so little, or 
 
 to so little purpose, as to object to the doubts 
 
 which I have now suggested that they pro- 
 
 c 3 cecd
 
 ( 86 ) 
 
 ceed on the supposition that it belongs to the 
 province of courts of Equity to take care that 
 the value of money should never be altered. 
 Nothing so absurd ever entered my imagina- 
 tion. The value of the precious metals relatively 
 to other commodities, cannot be fixed. It 
 is subject to be affected by the same circum- 
 stances of abundance, scarcity, supply or de- 
 mand, as affect the value of all other articles. 
 That it has greatly decreased within the period 
 which has elapsed since the discovery of America 
 is notorious that it continues to decrease slowly 
 and progressively, I am also disposed to believe. 
 This is an inconvenience, but is not an in- 
 justice, to a creditor. All that he has any 
 right to expect, all that his contract stipulates, 
 and the law guarantees, is, that the quantity shall 
 be the same : not that the value of that quantity 
 shall continue invariably to bear a proportion 
 relatively as favorable to that of other com- 
 modities. The reverse might have been the 
 case : still he would have been entitled to the 
 same quantity. True it is that the natural and 
 progressive diminution of the value of money 
 is peculiarly felt by that class of the com- 
 munity which depends for support upon fixed 
 incomes; true it is that the unavoidable increase 
 of taxation adds to this peculiar pressure. The 
 
 more
 
 ( 87 ) 
 
 more incumbent is it upon the Legislature not to 
 aggravate this pressure by prolonging a system, 
 which in its effects greatly out-steps the natural 
 course of events; and not to augment the 
 amount of the necessary deductions from in- 
 come, by one which adds nothing to the revenue 
 of the state. 
 
 One or two observations of those who main- 
 tain that there is nothing wrong in the present 
 state of our currency remain to be noticed. 
 
 From the abettors of the present state of 
 things, when they have been referred to the ra- 
 pid rise in the price of all ordinary commodities 
 as a very strong indication of the depreciation of 
 our currency, I have often heard this answer, 
 " that this is sufficiently accounted for by the 
 progressive diminution in the value of the pre- 
 cious metals"; that is by their increasing abu?i- 
 tlance. When the same persons, in consequence 
 of this answer, have been referred to the high 
 price of these precious metals themselves, if pur- 
 chased in our currency, as a more certain and 
 unequivocal proof of its depreciation, their an- 
 swer has been " that this is the natural effect of 
 the scarcity of these metals." 
 
 But, because gold that can be sworn off for ex- 
 g 4 portation,
 
 ( 88 ) 
 
 poi tation, is worth about 3.?. per ounce more in 
 our market, than gold, of the same fineness, 
 which cannot be legally exported, an inference 
 indrawn, that gold must be dearer abroad than 
 in England, not only by this difference, but by 
 all the expense of transporting it to the Conti- 
 nent; and that this circumstance accounts for 
 its scarcity, and consequent high price here. 
 This inference has already been so fully exa- 
 mined, and, I think, disposed of, in a former 
 part of this Enquiry, that I shall, at present, 
 content myself with offering what appears to 
 me the real explanation of the fact with which 
 it is here connected. 
 
 Since the Restriction Law, and the issuing of 
 one and two pound notes, the quantity of gold 
 coin in circulation has rapidly diminished; and, 
 within these last two years, guineas have almost 
 entirely disappeared. For some years, prior to 
 the autumn of 1808, the price of standard gold 
 was pretty steady at 4/. per oz. and this was the 
 buying price at the Bank. Towards the end of 
 that year, the price rose very rapidly, and has 
 since continued, with trifling fluctuations, at 
 about 4/. 10s. per ounce; the Bank declining 
 however to offer more than 47. 
 
 It is within this last period, principally, that 
 the difference in price between gold that could 
 
 be
 
 ( 8S ) 
 
 be sworn off for exportation, and that which 
 was confined to the home market, has arisen. 
 
 Now, the demand for gold, like the demand 
 for any other commodity, depends upon the 
 consumption ; and the price is regulated by the 
 demand. The consumption in England, before 
 the Restriction, was, either for the purposes of 
 our manufactures, or for coin. The quantity 
 used in the former was very inconsiderable, 
 and probably still continues unaltered. The 
 great demand was for the purpose of supplying 
 and keeping up a certain amount of gold cur- 
 rency^ and the great purchasers were the Bank. 
 This demand has altogether ceased ; and the 
 purchases of the Bank, for these last two years, 
 must have been suspended. The fact, I know, 
 is not in evidence; but a comparison of prices 
 sufficiently warrants the inference. Hence it 
 appears, that the market of this country, for 
 internal consumption, is fallen oft* almost to no- 
 thing, whilst the market of the Continent re- 
 mains just as brisk as before. The necessary 
 result is, that whatever gold there may be in 
 England, or may come to England in the course 
 of trade, and which can be legally exported, 
 goes to the better market. It possesses a pri- 
 vilege which the law has taken away from 
 
 other
 
 ( 90 ) 
 
 other gold; and, under the present circum- 
 stances, this privilege makes it more valuable. 
 There is nothing surprising in this, any more 
 than there would be to find that a better price 
 was given for exportable coffee, for instance, if 
 that privilege were given only to a certain limited 
 quantity, and the remainder of the stock in 
 hand were confined to the comparatively small 
 consumption of this country. 
 
 The only way to stop this exportation of gold 
 is that the Bank should give the market price, 
 and revive the use of it in circulation. If that 
 price be 90s. per ounce, 90s. must be given : 
 but, in proportion as the value of their notes in 
 circulation shall be raised by the gradual with- 
 drawing of the present excess, that price will 
 diminish, until it shall be restored to the Mint 
 price, and their notes consequently to par* 
 On the other hand, if the excess of Bank paper 
 shall continue progressively to increase, 90s. 
 will soon cease to be a sufficient price for an 
 ounce of gold : and either more must be given ; 
 or it will continue to be carried to other mar- 
 kets. 
 
 The difference between the market and the 
 Mint price, it is true, will be just so much loss 
 to the Bank upon all the gold which they may 
 
 now
 
 ( 91 ) 
 
 now buy, whenever they shall resume cash pay- 
 ments: but it is equally true, that this difference 
 is, at this moment, just so much loss to the 
 holders of their notes; and that the latter have 
 no chance of that compensation which the Bank 
 has so amply secured to itself, by the increased 
 amount of its issues since the Restriction. 
 
 It is, therefore, because the use of gold has 
 been superseded by the present state of our cur- 
 rency, whilst the over-issue of that currency has 
 diminished its relative value ; and because the 
 Bank of England, not making a sufficient allow- 
 ance for that diminished value, has ceased to 
 offer the market price, that exportable gold is of 
 more value than that which cannot legally be 
 sent out of the country. 
 
 If the la\\ r which prohibits the melting of our 
 gold coin, and its exportation, either as coin or 
 in bars, could be much enforced, the difference 
 of price would be greater than it now is : but 
 every one knows how easily both these provi- 
 sions are evaded ; and how impossible it is to 
 make them effectual. I have therefore no doubt 
 that there has been sent to the Continent within 
 these last two years, partly in bars, and partly in 
 coin, a considerable quantity of gold not ex- 
 portable by law; which would have remained in 
 England, if the Dank Directors bad raised their 
 
 buying
 
 ( 92 ) 
 
 buying price in proportion as the value of their 
 paper was depreciated.* 
 
 But 
 
 * Any Bank of which the profits are proportionate to the 
 amount of its issues, and which has nothing to consider, in 
 making those issues, but the quality and character of the secu- 
 rities upon which its loans are advanced, must have a natural 
 tendency to a continual increase of its paper. It appears 
 to me, therefore, extremely probable, that, for some consi- 
 derable time before the depreciation of our paper currency 
 was materially marked by the high price of gold bullion, the 
 amount of Bank issues was in excess. But the full effect of 
 this excess was not so sensibly felt, because, so long as our 
 currency consisted of a mixture of gold and paper, the for- 
 mer would give way, and either be exported, or melted down 
 and by thus gradually making room for the augmentation 
 of paper, the value of the latter would be, in a great degree, 
 sustained. But, when, by these successive additions to the 
 amount of Bank of England and country paper, nearly the 
 whole of the gold had been shoved out of circulation, whilst 
 the same disposition and motives to increase the issues of 
 paper still continued, the effect of any such further increase 
 would be more rapidly and seriously felt in the diminished 
 value of our remaining currency. By an unfortunate coinci- 
 dence of circumstances, a disposition to apply for a great in- 
 crease of discounts was excited in the mercantile world, much 
 about the same time when the greatest part of our gold had 
 already been driven away ; and the facility with which these 
 discounts were effected, must have contributed, in this state of 
 things, to accelerate the depreciation of our currency. 
 
 I cannot help observing, on this occasion, that I have lately 
 seen, with regret, that an issue of seven-shilling pieces (I hope 
 
 to
 
 ( 93 ) 
 
 But the Bank, I may be told, could not buy 
 guineas for more than 21*. each. Be it so : but it 
 might have given 4/. 10*. for gold in bars : and, 
 if this had been the Bank price, the guineas 
 
 to a very limited amount) has been made by the Bank. Such 
 issues of coin can answer no good purpose, so long as the va- 
 lue of their paper is kept materially below par; for it is im- 
 possible that gold should continue in circulation, and, the 
 quantity of it remaining in the hands of the Bank is thus fruit- 
 lessly diminished. 
 
 The stamped dollars, though issued at five shillings each. 
 which is somewhat more, than their value at the present price 
 of silver, will in like manner, (as indeed they do every day) 
 though from a different reason, disappear. I say from a dif- 
 ferent reason, because it is true that for a one-pound note you 
 may purchase more silver bullion than is contained in four 
 stamped dollars. But each of these dollars, now worth about 
 As. 9d- is a substitute in circulation for five shillings of our sil- 
 ver coin, worth upon an average about 3s. Any man, there- 
 fore, who exchanges five of these shillings for a dollar, gains 
 about sixty per cent. The profit on the purchase of silver bul- 
 lion would be somewhat greater; but the dollar is preferred, 
 because it is in the way of the shillings which would otherwise 
 in a great degree soon cease to be current in circulation. 
 This is no imaginary case, but a practice which, more or less, 
 is going on every day. So Jong as our silver currency shall be 
 suffered to continue in its present state, the industry and in- 
 genuity of individuals, however restrained by law, will not be 
 wanting to keep up and supply its circulation. This debased 
 currency will drive away any other which, under the same 
 denomination, possesses a much greater intrinsick value, just 
 as our paper drives away the gold. 
 
 which
 
 C 94 ) 
 
 which have now gone abroad, either in bars, of 
 in coin, (the latter to be melted abroad,) would 
 have found their way, as bars, to the cellars of 
 the Bank. 
 
 This is precisely what happened before the 
 Restriction Law, whenever, from a temporary 
 over-issue of paper, (to which the Bank, from 
 the nature of its institution, must be ever prone,) 
 the market price of gold was raised, for a short 
 time, above the Mint price. Guineas, not- 
 withstanding the law, were immediately melted, 
 and the bars sold to the Bank at the advanced 
 price: whilst other guineas were demanded from 
 them, which were melted in their turn, if the 
 difference of price lasted so long ; giving to the 
 melter a profit equal to that difference, and to 
 the Bank a warning to reduce the amount of 
 their paper.* Thus the gold coin did not go 
 abroad, and though small quantities of it were 
 occasionally melted down, no scarcity of coin 
 was ever felt for any length of time. 
 
 Much less would it have gone abroad within 
 these two last years, if the demand and use for 
 gold in this country had continued the same; or 
 if the Bank price had at all corresponded to the 
 
 * On this subject, the reader is referred to Mr. Thornton's 
 " Essay 9Ti Paper Credit." Page 125, &c. 
 
 market
 
 ( 95 ) 
 
 market price : for it appears, by the evidence 
 annexed to the report of the Bullion Committee, 
 that, owing to political circumstances, the ex- 
 pense and risk of transporting gold to the Con- 
 tinent have been more than double what they 
 were before the year 1797; and it must be ob- 
 vious that any increased charge, in this respect, 
 operates as a tax to discourage exportation.* 
 For these two last years, therefore, if the re- 
 striction law had not been in force, we should 
 have had a greater security against our coin 
 being exported, than at any former period: but, 
 owing to that law, and to the consequent con- 
 duct of the Bank, a certain exportation has 
 taken place, and will be continued, more or less, 
 so long as the same circumstances shall continue, 
 in spite of those laws, by which we in vain en- 
 
 * Owing to a great proportion of our guineas being locked 
 up in the Bank, or hoarded by individuals; to the difliculty of 
 collecting such as are still in circulation; to the expense, pro- 
 bably, of purchasing them at a premium, and the charge and 
 risk of sending them abroad; the whole quantity of our gold 
 exported has not, I conceive, been very large, and certainly 
 not to such an amount as there would be any difliculty in re- 
 placing by purchases in the market here, or in the foreign 
 markets which are open to us. 1 should. very much doubt 
 whether the quantity of gold which has been exported, by an 
 evasion of the law, can exceed from two to three millions 
 sterling. 
 
 dcavour
 
 ( 96 ) 
 
 deavour to restrain it. Those laws, indeed, it 
 might be easily shewn, would be prejudicial to 
 the publick interest, if they could be made ef- 
 fectual. Failing in their object, they are still 
 highly objectionable, as holding out a strong 
 temptation to perjury. On this ground alone, 
 their repeal would be desireable. They are in- 
 consistent with the true principles of commerce, 
 and with the long established policy of the most 
 enlightened commercial states of Europe;* 
 states, whose currency, amidst all the political 
 calamities, and military exactions, to which 
 they have been subject, for the last fifteen years, 
 has suffered no debasement, nor ever made way 
 for a system of paper currency, not conver- 
 tible into specie at the option of the holder. 
 Respecting these laws, all that I have further to 
 observe, at present, is, that, however desirable it 
 may be that the gold coin, which has been ex- 
 ported within these last two years, had been kept 
 at home by a diiferent system of policy; the 
 eagerness for enforcing those laws, recently ma- 
 nifested by the very persons, who see, in the 
 
 * Such as Holland and Hamburgh. A similar policy pre- 
 vails in the United States of America; whilst Spain and Por- 
 tugal, who possess the mines from which the precious metals 
 are drawn, have always endeavoured by the severest penalties, 
 and always in vain, to prevent their being exported. 
 
 present
 
 ( 97 ) 
 
 present system of our currency, nothing but 
 sound wisdom and national advantage, appears 
 peculiarly whimsical and absurd. Under this 
 system, gold, a commodity of universal value, 
 am] of which we formerly possessed a great 
 deal, ceases to be of use here, except to a very 
 limited amount. Yet, in proportion as the sys- 
 tem, which they applaud, becomes every day 
 more complete, do they feel a perverse, but un- 
 availing anxiety to keep at home so much dead 
 and unproductive capital, instead of allowing it 
 to be' exchanged abroad for other commodities, 
 for which there is a beneficial use and demand in 
 this country. 
 
 So long as the present system is persevered in, 
 there can be very little doubt but that the quan- 
 tity of our gold coin will rather diminish, and 
 that the small amount which still remains in cir- 
 culation, if not hoarded, will be exported. For- 
 tunately, there is quite as little doubt that, 
 whenever, by the termination of this system, 
 gold shall become again, in fact, what it is 
 now in law the foundation and standard of our 
 currency, it will again make its appearance ; 
 and that when we shall have a use for it, we 
 shall be at no loss to procure a supply adequate 
 to the demand. 
 
 Bullion is a commodity for which we must 
 h pay,
 
 ( 98 ) 
 
 pay, as we do for any other which we want. 
 But, for the same reason that, of all articles of 
 trade, it is that which it is the most difficult for 
 us to keep at home by any operation of law, 
 now that it is not in demand; so would it !>e 
 that which it would be impossible for the inter- 
 vention of foreign powers to prevent us from 
 importing, in proportion to the use and demand 
 which we might have for it here. If a supply be 
 necessary for our circulation, it must be procured, 
 and may be procured, by an exchange of other 
 commodities which we can spare, just in the 
 same way as hemp, for instance, an article of 
 which it is at least as % much the interest of our 
 enemies to intercept the supply. But, in as 
 much as gold in the state of coin is so much 
 capital engaged in an unproductive though ne- 
 cessary employment, it cannot be the wish of 
 any man, conversant with this subject, to pro- 
 scribe the circulation of paper, or not to allow 
 and even countenance it to the fullest extent; 
 only taking care that all such circulation should 
 be concurrent with the standard coin of the 
 realm, and that such paper should be kept in- 
 variably at pa u, by being constantly exchange- 
 able for that coin at the option of the holder. 
 
 It
 
 ( 99 ) 
 
 It will be objected to me, perhaps, that, in 
 this argument, I appear to have assumed that 
 guineas were proscribed and excluded from cir- 
 culation ; whereas, they are still current at their 
 standard price. This objection naturally brings 
 me to the other main defence of those who 
 stand up for the undiminished value of Bank 
 notes; namely, " that commodities have but 
 " one price, whether paid for in gold, or Bank 
 " paper; and, consequently, that the latter can- 
 " not be depreciated/' 
 
 This argument is altogether fallacious : whilst 
 the fact on which it is founded affords the real 
 explanation of the disappearance of our gold. 
 That our gold coin is not cried down and pro- 
 hibited, is unquestionably true: and that the 
 value of the gold contained in a guinea, in its 
 state of coin, and when used as currency, is 
 only -iv more than that of a pound note, is not 
 denied. But then the question is this Is Bank 
 paper or gold our standard ? If paper, then 
 the value of a guinea ought to be measured by 
 it; and the denomination of the guinea being 
 fixed by law at only one shilling more than a 
 pound note, its value can only be u* more than 
 that of the note, be the latter worth what it may. 
 If gold, as I contend, and as I have been 
 all along contending, then a one-pound note 
 
 h ( 2> ought
 
 ( ioo ) 
 
 ought to be exchangeable for M parts of the 
 quantity of gold contained in a guinea. That 
 it is not so exchangeable, is undisputed. That, 
 measured by this standard, Bank paper is de- 
 preciated, is undeniable : and it is only by 
 making that paper a nominal standard, under 
 the protection of law, that the value of coin 
 exchanged for commodities, in the ordinary 
 dealings of the community, becomes referable 
 to this fictitious standard. The consequence is, 
 that our coin is depreciated as currency to a 
 level with the paper with which it circulates ; 
 that twenty guineas, for instance, circulating 
 upon this footing, lose as currency the value of 
 all the gold which they contain above the quan- 
 tity which might be purchased in the market 
 by twenty-one Bank notes of one pound each.* 
 
 No 
 
 * The very able and elaborate essay of Mr. Thornton 
 " On the Nature and Effects of Paper Credit," was pub- 
 lished in 180 2. 
 
 [n this work, to which I have already had occasion to refer, 
 ihe reader wiil find the true principles of political economy 
 united with the practical, I might almost say hereditary, 
 know ledge of a well informed merchant, and the extensive 
 experience of a great London banker. In applying these 
 principles to the actual state of our circulation in 1802, Mr. 
 Thornton was led to the satisfactory conclusion, that, from 
 the d.ite of the restriction up to that period, our currency had 
 r.ot been materially depreciated ; perhaps not at ail. This 
 
 was
 
 ( ioi ) 
 
 No wonder then that guineas cannot be re- 
 tained in circulation. By melting down, or by 
 
 exportation, 
 
 was the fair deduction from the facts to which his principles 
 were then applied. From the application of the same prin- 
 ciples to a different state of facts, such as were, at that time, 
 matter of supposition only, the depreciation of oUr currency, 
 it was shewn by Mr. Thornton, would he the necessary in- 
 ference. The case which he then supposed, is now realized 
 in all its parts. Every argument by which he proved in 1802 
 that our paper was not more than sufficient, equally proves 
 its excess in 1S10. But Mr. Thornton did not even stop 
 here. In 1802, he appears almost to have foreseen and an- 
 ticipated some of the leading objections which would be set 
 up against his conclusions in 1810: this in particular; 
 that the deterioration of our gold coin to the level of the de- 
 preciation of our paper, would be confidently offered as a 
 proof that the latter was not depreciated. His words are 
 these : " Our coin itself, when paper is depreciated, passes not 
 " fur what the gold in it is north, but at the paper price, though 
 " this is not generally observed to be the case. It is the mainte- 
 " nance of our general exchanges, or, in other words, it is the 
 " agreement of the Mint price wit A the bullion price of gold, 
 " which scons to be the true proof that the circulating paper is 
 " not depreciated." 
 
 It is highly fortunate for the country at this moment, that 
 the Bullion Committee had the benefit of Mr. Thornton's 
 most active assistance, and not less so, that the legislature 
 possesses in him, not only a member unconnected with party, 
 but one intimately acquainted with the whole business oi 
 banking, with all the details of commercial credit, and all the 
 bearings of our rnone\ svstem. 
 
 'J 'Ik-
 
 ( 102 ) 
 
 exportation, the gold they contain is restored to 
 its intrinsick value, and relieved from the de- 
 preciation attached to it by law in its state of 
 currency. 
 
 Laws, however severe, cannot alter the inhe- 
 rent and essential qualities, which determine the 
 relations of value. They may, indeed, impose 
 the same denomination upon values essentially 
 different, but the difference will not be the less 
 perceived ; for no restraint upon human actions 
 can permanently or effectually countervail the 
 nature of things. When, therefore, the currency 
 of a country consists, partly of gold of standard 
 weight, and the remainder of a paper currency, 
 mfact depreciated, but clothed by law with the 
 character of a legal tender, the denomination 
 fixed for such paper currency being the same 
 as for the coin, the latter will have an irresis- 
 tible tendency to escape from the depreciation 
 in which it is by law retained, so long as it 
 continues in the character of coin; and, either 
 
 The practical use of such knowledge in publick life cannot 
 be more forcibly illustrated than by stating, that the country 
 is already indebted to Mr. Tiiorntox for the suggestions 
 contained in the second report of the committee of Finance 
 respecting the Bank. The consequence of those suggestions 
 has been a saving to the publick exceeding 250,000/. per 
 annum. 
 
 by
 
 ( 103' ) 
 
 by melting or exportation, it will recover \ti 
 intrinsick value. 
 
 This doctrine will, perhaps, be best illustrated 
 by reference to the proceedings of the English 
 Parliament at a period to which, by common 
 consent, Englishmen look back as a time when 
 the theory of our government, in all its parts, 
 was best understood, and the principles of justice 
 and good faith, on which all free governments 
 must rest, were most scrupulously practised: 
 a period illustrated by great names, both in the 
 science and in the practice of politicks, and 
 which has this further recommendation to our at- 
 tention, that it resembles our own times in one 
 striking particular, that of having been dis- 
 tinguished by a most anxious and energetick 
 struggle for our independent existence, against 
 the power and pretensions of France. I refer to 
 the reio-n of King William. 
 
 Towards the end of the 17th century, the 
 current coin of this country had been reduced, 
 by clipping and other practices, about 30 per 
 cent, below the standard of the Mint. At that 
 time, the pieces, new from the Mint, had no 
 more value as currency than this debused coin : 
 though no man, I apprehend, could now by any 
 sophistry, however ingenious, convince, either 
 
 himst If
 
 
 ( 104 ) 
 
 himself or his neighbour, that the latter was 
 really of the same value as the former. One 
 consequence was, that the pieces of full weight 
 disappeared as fast as they were issued, just as 
 our guineas now disappear; another, that the ex- 
 change was permanently from 20 to 30 per cent, 
 against this country, as it is now from 15 to 20 ; 
 a third, that guineas (silver* being the then legal 
 tender, and the silver coin that which was debased) 
 rose to 30 shillings each, as they have now risen 
 to upwards of 24, measured in our new legal 
 tender Bank paper : and a fourth, that silver 
 
 * For an account of the circumstances which, in the course 
 of the last century, gradually led to the substitution of gold 
 for silver, as the sole legal standard and tender, I beg 
 leave to refer the reader to the very clear and satisfactory 
 treatise on our coin, contained in a letter from the late 
 Earl of Liverpool to the King. But this substitution, how- 
 ever produced, has taken place without any alteration in the 
 weight or fineness of either of the precious metals in our re- 
 spective coins, and, consequently, without creating any diffe- 
 rence in their relative value to each other, as fixed by law, 
 and the long established regulations of our Mint. It is ob- 
 vious therefore, from this statement, as well as from the facts 
 I have already mentioned, respecting the market price of sil- 
 ver, that the change in our legal tender has nothing to do with 
 the depreciation of our paper ; and that, under the like cir- 
 cumstances of excess in the amount of Bank issues, that de- 
 preciation would have been just the same, if no such change 
 had occurred. 
 
 which
 
 ( 105 ) 
 
 which could be sworn off for exportation 
 was, as exportable gold is now, at a pre- 
 mium. 
 
 But how littie do nations profit by experience 1 
 The same fallacious explanations which are now 
 given, were then offered to the publick. The 
 same delusive plans of relief were suggested 
 The balance of trade or the balance of payments 
 was said to be against us. To this was attri- 
 buted the unfavourable course of exchange : 
 to the unfavourable course of exchange, the 
 exportation and melting down of the standard 
 coi/i, and the high price of bullion at home. 
 The remedy proposed was, in the language of 
 the day, " to raise the value of our money** 
 with a reference to the scarcity, and consequent 
 high price of bullion : and the specifick plan 
 suggested was, to coin an ounce of silver into 
 6s. ;}d. instead of 5s. 2d. These doctrines and 
 this plan were supported by official characters of 
 the greatest reputation and practical knowledge, 
 and by persons of the most extensive experience 
 in trade. Fortunately, the fallacy of them was 
 detected and exposed, and the Government of 
 that day was rescued from the adoption of a pre- 
 tended remedy, which would have perpetuated 
 the injustice, and aggravated the calamities 
 
 i fi>i
 
 ( 106 ) 
 
 for which it was confidently offered as a 
 cure.* 
 
 The present state of our currency is, in its prin- 
 ciple, and in its consequences, precisely the same 
 as the case which 1 have now described. The 
 effect is the same, whether the currency of any 
 country being wholly metallick, consists in part 
 of a coin, of full standard weight, and in part of a 
 coin, which under the same denomination, should 
 be materially deteriorated either in weight qv fine- 
 ness; or in part of coin of the former description, 
 and in part of a depreciated paper, discharging 
 the functions cf money in the same manner, with 
 the same denomination, and under the same au- 
 thority of law, as the light coin. 
 
 It being then, as I conceive, placed beyond all 
 doubt that our paper currency is depreciated ; 
 
 * I would earnestly wish to recommend to my readers to look 
 at the writings of Mr. Locke on this subject. The arguments 
 by which that great man was enabled to convince Lord Somers 
 of the real nature of the evil, are worthy of their attention. The 
 sanction of two such names, and of the Parliament of 1 695, which 
 had the wisdom and firmness to adopt their advice, in spite of all 
 the interested misrepresentations of that period, will shew that 
 the doctrines which I have attempted to establish cannot fairly 
 be considered as either new or dangerous. 
 
 that
 
 ( 107 ) 
 
 that its depreciation is to be ascribed altogether 
 to an excess* in the issue of that paper, and that 
 
 * It can scarcely be necessary to protest against any idea of 
 the depreciation being, in any degree, to be ascribed to a want 
 of confidence in the solidity of the Bank. A corporation ori- 
 ginally possessed of a great capital, since increased by immense 
 profits, which never makes an advance but upon the best secu- 
 rities, and which might call in the whole of those advances 
 within three months, can never be exposed to any such 
 suspicion. 
 
 Paper money issued in the name of the state, in aid of its 
 own Exchequer, and in compulsory payment of its ex- 
 penses, such as has been resorted to in various parts of the 
 world, is happily unknown to this country. Such paper 
 is in the nature of a forced loan, which, in itself, implies a want 
 of credit. From this circumstance alone, it falls below par ; 
 and its first depreciation is soon accelerated by the necessity of 
 augmenting the issues in proportion to their diminished value. 
 Thus an excess of paper co-operates with publick mistrust, to 
 augment its depreciation. Such was the fate of the paper 
 issued by the American Congress in the war for their indepen- 
 dence ; more recently of the assiguafs in France : and such is 
 now the state of the paper of the Banks of Vienna and Peters- 
 burgh. Whereas, the state of our currency, in regard to its 
 diminished value, is no other than it would be if our 
 present circulation, being retained to the same amount, were, 
 by some sudden spell, all changed to gold, and, by another 
 spell, not less surprising, such part of that gold, as, by its excess, 
 created a proportionate diminution in its value here, with 
 reference to its value in other countries, could not by exporta- 
 tion, or otherwise, find its way out of our separate circulation. 
 !' is excess not relicvpblc by exportation. 
 
 j 2 Willi )Ut
 
 ( 108 ) 
 
 without the restriction law no such excess could 
 have existed, or at least have been permanently 
 maintained ; it follows, that the repeal of that 
 temporary law is the obvious remedy for this 
 evil. The precautions which it may be neces- 
 sary to observe in removing that restriction, and 
 the precise period when it ought to cease, are 
 points upon which it would ill become me to 
 anticipate the decision of Parliament. 
 
 I shall content myself with offering a few ob- 
 servations on the practicability of the measure, 
 and with noticing such objections as have either 
 occurred, or been suggested to me. 
 
 In considering the great and general import- 
 ance to the whole country of reverting as soon 
 as possible to the former system of cash pay- 
 ments, it must be recollected that there are two 
 parties more nearly and particularly concerned 
 in the present discussion, namely the Bank, 
 and the commercial interest. 
 
 With respect to the former, it may perhaps be 
 inconsiderately supposed, that, in case any spe- 
 cifick, though remote, period should be fixed for 
 the termination of the restriction, the interests 
 of that corporation would lead the Directors, 
 within the shortest possible time after the pass- 
 ing of a law for that purpose, to reduce the 
 amount of their issues, until their notes should 
 
 have
 
 ( 109 ) 
 
 have been so raised in value, as to enable them 
 to purchase Gold at a price not exceeding that 
 of the Mint. Unquestionably it is in their 
 power to effect such a diminution very rapidly: 
 If the separate advantages of any part of the 
 community could, in a matter of this import- 
 ance, be held distinct from that interest which 
 must be common to all, in guarding against any 
 general pressure of publick distress, these classes 
 who surfer most by the depreciation, without 
 deriving, even indirectly, any profit from it. and 
 not the Bank, would be most benefited by their 
 pursuing this line of conduct, it is true, how- 
 ever, that, neither the great profits which the 
 Proprietors of Bank stoek have derived from the 
 restriction, nor any circumstances by which 
 they stand connected with the Government, or 
 the trade of the country, would, of them- 
 selves, entitle the publick to expect that 
 the Directors should make any positive 
 and considerable sacrifice of the interests of 
 their constituents. But how tar would this 
 be the case, should they pursue a more mode- 
 rate course ? 1 assume that, in the event of a 
 period tor the opening being fixed, tin; . 
 would find it necessary to buy gold, in order 
 to purchase it they would be obliged to 'i\<- 
 the market price; and 1 admit that the dimr-
 
 ( no ) 
 
 ence between that price and that of the Mint 
 would, ultimately, be so much loss to the Bank. 
 But then, independently of the profits which 
 they have made of late years by an enlarged cir- 
 culation, unattended with any sacrifice for the 
 purchase of gold ; it is obvious,' that, in what-. 
 ever proportion above the Mint price their fur 
 ture purchases might be made, in the same pro- 
 portion must their issues, bearing interest, be 
 above the amount which ou^ht to be in circula-. 
 tion, or which, in fact, they would be able to 
 maintain in circulation, if the restriction did not 
 exist. Suppose one million in gold to be bought 
 at an average of ten per cent, above the Mint 
 price, in the course of the first year after the 
 Bank shall have received notice of a definite 
 period for the resumption of cash payments: 
 if, during that year, the Bank should have in 
 circulation, upon an average, two millions of 
 paper, beyond the proportion, which, but for 
 the restriction, it would have been able to issue, 
 the immediate and accruing profit from the in- 
 terest on the latter sum, would be exactly equal 
 to the contingent loss upon the purchase of the 
 gold, when cash payments should be resumed. 
 
 Without, therefore, exposing the Proprietors 
 of Bank stock to any material loss, or probably 
 to any loss at all, the Directors may effect a re- 
 duction
 
 ( 111 ) 
 
 duction in their issues, gradually and slowly, by 
 apportioning that reduction over nearly the 
 whole time which the law may assign to them 
 to prepare for the opening. In the same man- 
 ner they may, during the whole of that period, 
 and without forcing the market, be adding to 
 their stock of gold, of which the nominal price 
 would continue to fall, in proportion as the 
 amount of their notes was brought nearer to its 
 proper level. This balance of profit, from ex- 
 cess of issues on the one side, and of loss upon 
 their purchases of gold on the other, fluctuating, 
 perhaps, in a trifling amount one way or the 
 other, would of course cease altogether, so soon 
 as the paper should be restored to the value it 
 purports to represent. 
 
 The Bank, therefore, as a trading company, 
 would have very little, or perhaps no induce- 
 ment to make a sudden and violent reduction of 
 its issues ; such as might derange prices, and 
 distress trade, or operate to the prejudice of the 
 fair credit and legitimate dealings of the commu- 
 nity, in all the otln r relations of life and pub- 
 lick duty in which the Directors stand, as 
 merchants of the first eminence, as men at- 
 tached to the prosperity of their country, and 
 
 idious to rve that high estimation in 
 
 which they : ;u? t!y >::[ universally held, tluv 
 
 id
 
 ( 11? ) 
 
 would find the most powerful motives for adopt- 
 ing a moderate and cautious line of conduct, in 
 the reduction of their issues. 
 
 It will not escape the reader, that, in the view 
 which I have taken of the mode in which the 
 interests of the Bank would be affected by the 
 necessity of purchasing gold under the present 
 circumstances, the argument by which 1 have 
 endeavoured to shew that it would be attended 
 with no real sacrifice, is derived, not from a 
 comparison with their present situation and ad- 
 vantages, but of what their situation and advan- 
 tages would have been, from the circulation 
 which they would now have been able to main- 
 tain, if no interruption had taken place in their 
 cash payments. This, and not their present 
 scale of profits, it must be obvious, is the fair 
 comparison. These profits are increased, not 
 only by an amount of issues carried beyond its 
 proper limits ; but by the Bank being relieved 
 altogether from the necessity of purchasing gold 
 in proportion to that circulation, or indeed of 
 purchasing any gold at all.* 
 
 Another 
 
 * Although the measure of the loss be different, in principle, 
 and in degree, it is as much a diminution of profit to the 
 Bank, to purchase gold at <3. 17s. 10d. as at 4. 10s. or any 
 other pi ice. The notes issued for such purchases are the onlv 
 part of their circulation from which they derive no profit. .All 
 
 their
 
 ( "3 ) 
 
 Another difficulty may be started against the 
 proposal for fixing a period, however distant, for 
 the resumption of cash payments, namely that 
 
 the 
 
 their other issues are upon securities bearing interest. As a 
 Bank, therefore, their policy, at all times, must be that the 
 proportion of their notes issued for the former purpose should 
 be as small, and for the latter as large as possible. Still better 
 lor them, if this buying of gold can be dispensed with alto- 
 gether. This last advantage appears to be ensured to the 
 Bank, so long as, by an excess of circulation, the market price 
 of gold shall be higher than <4 per ounce, which the Di- 
 rectors have fixed upon for their buying price. By every ad- 
 dition to their circulation, therefore, they not only secure to 
 the Proprietors of Bank stock an augmentation of profit pro- 
 portinate to the increase of that circulation ; they also effec- 
 tually gua-rd against any drawback to that profit, by perma- 
 nently maintaining the price of gold above -\ per ounce. 
 This course of proceeding is, at once, so ingenious and so 
 simple, in its operation so effectual, and in its application so 
 completely in the power of ihose who are exclusively bene- 
 fited by it, so lung as the restriction law shall continue, that 
 it is not very surprising that the Proprietors of Bank stock 
 should be disposed to resist any suggestion which touches that 
 Jaw; and to preler the sound discretion of the Directors, un- 
 fettered bv the controul of casti payments. 
 
 Every one must he aware how very near this state of things, 
 now ope.dy avowed as a system, and almost claimed as a right, 
 come to a state of paper money, according to the definition 
 which lias been given of paper money. It is paper rendered 
 current ' y the autiiority, though not issued for the benefit 
 of the State. It consists o! loans advanced at interest : 
 fcr.ut interest being altogether for the benefit;)! the corpo- 
 ration
 
 ( 11* ) 
 
 the Directors of the Bank, notwithstanding any 
 decision of Parliament, may increase the amount 
 f their paper, or, at least, may not so reduce 
 
 that 
 
 ration of the Bank. I may be told, however, that there 
 is no resemblance between Bank notes and paper money, be- 
 cause these notes circulate entirely upon confidence. To which 
 I answer, that the law, which virtually makes Bank paper a 
 legal tender, as much forces it into circulation in this country as 
 paper money could be forced in any other country, by any law, 
 which might, in the most direct terms, make the paper of 
 such a country a legal tender. Whether the government first 
 originate the paper money in payment of its own creditors, 
 and compel all other persons to receive it from them ; or whe- 
 ther it authorize a Bank to advance loans of such money for 
 its own profit, and compel all other persons to receive it from 
 those who obtain such advances, there is no difference as to 
 the degree of compulsion. I may add, that, in both cases, such 
 paper will be received in the purchase of all commodities by a 
 reference to the price of the precious metals in that paper ; and 
 consequently that the principle which determines the current 
 value of Bank notes and of paper money respectively, is the 
 same. Confidence, in the sense in which it is here used, is only 
 the measure of that value. 
 
 I have thought it necessary to state thus much, because the 
 assertion, " that a Bank note is never forced into circulation," 
 is constantly put forward us an irrefragable proof that those 
 r.otes cannot be depreciated. May I be allowed to ask, 
 whether the Bank do not pay the publick dividends, and 
 whether, under the law for raising the Property Tax, they do 
 not pay them at the rate of eighteen shillings for every twenty 
 shillings stipulated for in the contract : What would be thought 
 
 of
 
 ( "5 ) 
 
 that amount, as to be prepared for the opening, 
 when the time that may be fixed for it shall 
 arrive : and that, by this expedient, they might 
 compel Parliament to grant them a further term 
 in the restriction. 
 
 That any provision which Parliament can 
 make for terminating the restriction will 
 be so far incomplete, that it will not ne- 
 
 ef the loglck of any man who should (ell the public^ creditor, 
 that he is not compelled to take eighteen shillings in the 
 pound, because he is at liberty to abstain from receiving his 
 dividend at all ? But if he does receive his dividend, he is 
 compelled to leave two shillings in the pound, or ten per cent, 
 in fcie hands of the Bank, in trust for the use of the State. 
 He is equally compelled to receive the remaining eighteen 
 shillings in Bank paper, subject, however, to the same option 
 of not receiving them at all. A payment in such paper is, at 
 this moment, a virtual deduction from his dividend of three 
 shillings more, or of 15 per cent ; just as much a real and a 
 forced deduction, as if it were made directly from eighteen 
 shillings of standard monev, under all the powers and penalties 
 of the Property Act. The publick creditor, therefore, receives 
 fifteen shillings in the pound of standard stoling money and r.o 
 more. If the Bank of England were, to-morrow, to issue such 
 an amount of notes as would reduce the paper pound in value 
 to one shillingsworth of gold, every man would be compelled, 
 just as much a? he is now, when it is stil! worth seventeen shil- 
 lings, to receive those paper pounds for twenty shillings each. 
 
 Preposterous as this extreme case may appear, there is no 
 security, as the law now stands, against such an issue, except 
 in the discretion of the Bank. 
 
 cessarily
 
 ( H6 } 
 
 cessarily carry along with it the means of 
 enforcing its oAvn object, is certainly true. This 
 objection, however, to the specifick period sug- 
 gested by the Bullion Committee, would equally 
 apply to any other proposal founded on the 
 principle of assigning some fixed determination 
 to the operation of the restriction law. But 
 this difficulty, like that which would arise from 
 an over-rapid diminution of Bank paper, rests 
 on a supposition, possible certainly, but most 
 improbable. They are both extreme cases. 
 Neither of them stated, nor contemplated, by 
 those who concur in the principles and sugges- 
 tions of the Report: though intimated in 
 language too plain to be misunderstood, by those 
 who profess themselves most anxious to prevent 
 any change in the present system. As far as 
 these insinuations affect the character of the 
 Bank, they may do mischief, as coming from 
 persons professing to be friendly to that institu- 
 tion. The conduct of the Directors, under 
 whatever arrangement maybe finally adopted by 
 the wisdom of Parliament, will, I am confident, 
 fully shew that all such insinuations are entirely 
 unfounded. 
 
 With respect to the manner in which our 
 trade may be affected by the resumption of cash 
 payments, no argument has been offered t< 
 
 shew t
 
 ( 117 ) 
 
 shew, and no statement, I am persuaded, can b6 
 produced to prove, that any serious difficulty 
 or pressure is likely to arise, if the excess of our 
 circulation shall be withdrawn in that gradual, 
 cautious, and almost imperceptible manner, in 
 which this change may be effected, in case two 
 years shall be allowed for the purpose. This, 
 beside, is a period within which every ad- 
 venture now pending- will probably be com- 
 pleted, and every credit now outstanding brought 
 to maturity. Every merchant, consequently, 
 will have ample notice, and full time to regulate 
 his dealings, and to bring his affairs within such 
 a compass, compared to his capital and state of 
 credit, as he may think prudent and necessary. 
 No one will be taken by surprise. There will 
 be no sudden fall in the price of goods ; no ra- 
 pid fluctuations in the markets. Our currency, 
 I am sanguine enough to hope, may be brought 
 back to its sound state, if not altogether with- 
 out difficulty in some quarters; at least with 
 much less difficulty than lias been experienced, 
 within these few last months., from the conse- 
 quences of the speculation and over-trading, 
 created and fostered by the excess of that cur- 
 rency. 
 
 Some persons, wholly unacquainted with the 
 nature of commerce, or with any of the details 
 
 or
 
 (148) 
 
 or bearings of the subject, I am told, dismiss the 
 Bullion Report with a short remark, "that it 
 recommends what is impossible: for that gold 
 cannot be procured." To this, I think, I have 
 already given a sufficient answer, unless the 
 principles which regulate the purchase and sale 
 of the precious metals are now become altoge- 
 ther different from those which have hitherto 
 applied invariably to all commodities which can 
 be the objects of barter. I may, however, fur- 
 ther observe, that gold does not form the basis 
 of the currency of any other country ; that the 
 quantity of gold in Europe is not less now, and 
 is probably greater, than it was at any former 
 period ; that the price has not risen on the conti- 
 nent; that it is to be purchased in the markets 
 there; in the markets of Africa and America; 
 in our own market. If, in these markets, the 
 Bank will buy progressively, and, through pro- 
 per agents, whatever gold bullion may be ob- 
 tained without raising the price against itself, a 
 very large quantity may be procured in two 
 years, and, upon the whole, at a fair price. But 
 then, in order to ascertain what is a fair price 
 for gold, we must take its relative value* to 
 
 silver such as it now exists. 
 
 It 
 
 * Supposing that value, as it appears by the evidence of 
 Mr. Grefui.ke and others, to be on the continent 15t to one : 
 
 then
 
 ( 119 ) 
 
 It is no secret, that the Bank, soon after the 
 Restriction, bought and imported a very con- 
 siderable supply of gold. It has since issued 
 very little. To these facts, I may add my confi- 
 dent opinion, (though this of course can be only 
 matter of opinion) that it is, therefore, actually 
 possessed of a large stock of gold. This stock, 
 even without any addition, would, of course, 
 be brought nearer to the proportion which it 
 ought to bear to the amount of notes issued, as 
 the latter is gradually diminished. 
 
 A great quantity of gold, which is now 
 hoarded, would also make its appearance, if 
 guineas were restored to their use and value as 
 currency. In this respect, the country is in the 
 same situation as it was in King William's 
 time, when our metallick currencv was so much 
 depreciated. Before the determination to restore 
 that currency to its standard, pieces of full 
 weight were as scarce as guineas are ?iow; but 
 when that determination was taken and carried 
 into effect, a great quantity of good money, 
 which had been hoarded, was brought back into 
 circulation. 
 
 then ! j ounces of silver arc equal to 3 17s. 10 Ms. or to an 
 out.'' I. In Bat.k paper 15^ ounces of standard silver, 
 
 at the present market price, which is about 5s. 10M. per 
 unce, cannot 1 e purchased lor Uss than ( )1 shillings. 
 
 In
 
 ( 120 ) 
 
 In opposition to all these grounds of confi- 
 dence, that the difficulty of resuming cash pay- 
 ments will not be so great as is generally ima- 
 gined, it has been stated, that the increase of 
 our commerce and of our revenue requires a vast 
 increase of currency. 
 
 It might easily be shewn, indeed it is obvious, 
 that in a country at once rich and free, in which, 
 from these advantages, joined to the long enjoy- 
 ment of publick tranquillity, credit^ either 
 verbal or written, transferable or dormant, is 
 extended to all the transactions of society, ope- 
 rations to a much greater amount may be carried 
 on with a proportion of currency which would 
 be altogether insufficient for the same operations 
 in another country, not possessing these benefits, 
 or in which they might be less firmly established, 
 or less amply enjoyed. In this country, where 
 they are all united in the highest degree, the 
 ingenuity of individuals, especially of our mer- 
 chants and bankers, is constantly at work, to 
 devise new means of substituting credit for the 
 actual intervention of money, and to find fresh 
 expedients, either to supply its place, or to 
 economize the use of it, in their dealings with 
 one another. If this were a proper occasion for 
 such a detail, it might easily be shewn, that in 
 this way, many improvements have been made, 
 
 of
 
 ( 121 ) 
 
 of late years, in the mode of carrying on the 
 banking and commercial concerns of the metro- 
 polis, all tending to introduce a greater economy 
 in the use of money. The quantity of currency, 
 therefore, requisite for the purpose of ex- 
 changing and distributing the commodities of a 
 country, is not to be measured by the extent of 
 its wealth and commerce, compared with the 
 wealth and commerce of other countries, or with 
 its own, at former periods. Neither is that 
 quantity to be measured by the publick revenue. 
 In proof of this assertion, as applicable to the 
 present state of this country, it is not necessary 
 to go into a minute statement of the course of 
 proceeding at the Exchequer, although it is by 
 such a detail that the proof would be most com- 
 pletely established. It is sufficient to state, 
 that in the evening of each day, the whole 
 receipt of the revenue, within that day, is car- 
 ried to the Bank ; and that from the Bank the 
 whole amount of such receipt may be, and pro- 
 bably is, sent into circulation again on the 
 following day, in the discount of commercial or 
 Government securities. If the daily receipt of 
 the Exchequer be, upon an average, increased 
 from twenty to one hundred thousand' pounds, 
 it by no means follows that any tiling like a 
 proportionate increase, or in;.'.'*. J that any very 
 
 K COnside . : ;
 
 ( 132 ) 
 
 considerable increase in the whole amount of 
 the circulation would be requisite, in conse- 
 quence of this increase in the revenue. Did 
 any man, before the Restriction, ever dream of 
 enquiring into the numerical amount of Bank 
 issues, and of regulating and adjusting that 
 amount by the quarterly account of the Conso- 
 lidated fund, or by the annual return of our 
 Imports and Exports? What is the link which 
 connects the value of paper, regulated in its 
 amount by some such numerical scale, with that 
 of the precious metals? By what standard of 
 value is that scale to be increased or diminished? 
 Is that standard to be sought for in artificial 
 checks and banking regulations bye-Xaxvs of 
 the Bank Corporation, made not for the object 
 of restraining their loans, but for their own pro- 
 tection against the risk of insolvency in those to 
 whom such loans are advanced? 
 
 But even if it were admitted that amuch greater 
 numerical account of money is necessary in 
 consequence of the increased revenue and com- 
 merce of the country, it by no means follows 
 that this augmentation would require to be 
 made in the mctallick part of our currency. 
 Circulating credit, either in the shape of Bank 
 not^s, or in some other description of security, 
 will always be preferred to coin in all the large 
 
 operations
 
 ( 123 ) 
 
 operations of trade. For all considerable pay- 
 ments, paper possesses many obvious advan- 
 tages over metallick currency* In other 
 respects it is also more convenient. The actual 
 holder of a note* convertible at will into cash, 
 knows that the guineas which that note repre- 
 sents, and which it can always command, are 
 not liable to be under weight, or to become so 
 by wear in his possession; while every person 
 who may receive that note in succession, 
 equally knows that* without the trouble of 
 weighing, or the risk of deception, it conveys 
 the same title to him. 
 
 The Bullion Committee proposes that the 
 small notes of the Bank of England should not 
 be withdrawn till a certain period after the 
 resumption of cash payments. If this precau- 
 tion should be adopted, I have no doubt that 
 many of those small notes will continue to cir- 
 culate till the end of that period, from the pre- 
 ference, which, in many. instances, will be given 
 to them over gold.* 
 
 * Tiie withdrawing of the small notes is a mexsure sug- 
 gested by considerations of publick expediency which ought 
 to outweigh perhaps the economical advantn ;es winch the 
 country derives from the u^e of them. It is not necessary at 
 present to examine the question in this comparative view, 
 although I own that I very much doubt whether country 
 
 Hoiks oudit not to be allowed t o :-!.'; notes as low a: tw# 
 o 
 
 poun !<:. 
 
 K > It.
 
 ( 12* ) 
 
 It lias been suggested, as another objection, 
 against terminating the Restriction law, that a 
 state of circumstances might, by possibility, 
 arise, in which it might be proper to re-enact 
 that law. 
 
 I admit that it is possible, in the present ex- 
 traordinary state of the world, that, in the course 
 of events, a recurrence of similar circumstances, 
 of general alarm, commercial pressure, and 
 stagnation of individual credit, such as existed 
 in 1797, may, at some future period, again com- 
 pel the Government of this country to afford to 
 the Bank a temporary protection against the 
 demands which may be made upon it for gold. 
 For it must be obvious, that no Bank, however 
 cautious and prudent, can possibly exist, either 
 with advantage to itself, or to the country, 
 unless its circulation of Paper, upon an average, 
 shall considerably exceed the amounts of its 
 deposits, in cash or bullion, for meeting the 
 possible demands that may be made upon it. 
 The consequences of sudden publick alarm 
 cannot be measured. They bailie all ordinary 
 calculation. Cash is then withdrawn, not be- 
 cause the circulation is excessive, but by the 
 country Banks and the town Bankers, for the 
 purpose of meeting possible demands upon 
 them, and by the community at large, either 
 
 directly
 
 ( 12o ) 
 
 directly from the Bank, or indirectly through 
 the former channels, for the purpose of hoarding, 
 from the dread of some imaginary or con* 
 tingent danger. In such a crisis, every reduc- 
 tion in the amount of Bank paper, is so far from 
 checking the drain, that it aggravates the gene- 
 ral distress ; because the gold which is taken 
 out of the Bank, instead of being substituted in 
 circulation for the notes withdrawn from it, is 
 for the most part locked up, and thus, in pro- 
 portion as the stagnant and straightened circu- 
 lation wants life and aid, it becomes every 
 day more embarrassed, whilst each new calamity 
 produced by such a state of things, contributes' 
 to spread and increase the general apprehension. 
 It is therefore manifest, that by, a possible com- 
 bination of circumstances, the Bank might be 
 driven to part with its last guinea, not only 
 without having checked the drain, but with the 
 certainty of increasing it, in proportion as the 
 amount of their notes was diminished. At such 
 a moment, the preservation of the Bank from 
 actual failure, though an important, is but a 
 secondary consideration : that of the country 
 is the first. The possible cases, however, 
 which may call for such an intervention of 
 power, are no! capable of beinj, too-seen or de- 
 fined hv law. The necessity may not oceui 
 
 ; :,
 
 ( 126 ) 
 
 again : if it should, the application of the remedy 
 must be left to those who may then be at the 
 head of affairs, subject to their own responsibi- 
 lity, and to the judgment of Parliament. But 
 I must observe, that in proportion as the 
 knowledge to be derived from the ex peri r 
 ence of 1797, on the one hand, and of the two 
 last years on the other, shall be more generally 
 spread through the country, and as the princi- 
 ples of our money system and of circulating 
 credit shall be better known and more generally 
 understood, will the recurrence of such a crisis 
 be rendered less probable, the danger of it more 
 easily met and overcome, and the nature of the 
 remedy, as well as the extent to which it may 
 be used, more fully ascertained. It is a possible, 
 temporary, and transient interruption of the 
 ordinary course of our circulation, of which we 
 are compelled to meet the risk, in order to insure 
 to ourselves the habitual, permanent, and incal- 
 culable advantages of an extensive and secure 
 circulating paper credit. This is the lesson we 
 should learn from the use of the Restriction in 
 1797, on the one hand ; and from the incon- 
 veniences to which the abuse of it has led on 
 the other. 
 
 It
 
 ( w ) 
 
 It 1ms been objected, that the consequence* 
 derived from the arguments which prove the 
 depreciation of our currency, if pushed to their 
 full extent, would go to establish a title in 
 persons who suffer from being paid in that de- 
 preciated currency, to some compensation for 
 the difference between the payment received, 
 and the amount in standard money of their just 
 and legal demands. According to the principles 
 of strict justice, it may indeed be impossible to 
 deny that this compensation is due to them. The 
 injury which they now sustain, by being paid in 
 i3ank notes, is precisely of the same description 
 us if they were compelled to receive in payment 
 clipped and light coin. In the latter case, every 
 man would agree that such coin ought to pass, 
 not by tale, and according to its denomination, 
 but by weight only. To the former, the same 
 principle might apply. But no arguments 
 are to be looked at with more suspicion 
 than those, which, from the acknowledged im- 
 possibility of attaining to perfection, would 
 infer, that it is absurd to attempt the nearest 
 possible approximation to it. If a system be 
 erroneous, the very consequences of its errors 
 generally constitute the most powerful impedi- 
 ment to a correction of it. But; if that impedi- 
 ment were to he he! 1 conclusive, the result. 
 
 v. ould
 
 ( 128 ) 
 
 would be no other than this that the errors of 
 inadvertency, when they have prevailed for a 
 certain time, are, upon a discovery of their 
 nature, to be persevered in, from deliberation 
 and choice. In the present instance, the result 
 would be, that, a certain degree of injustice 
 having been innocently done, and a certain de- 
 gree of injury unavoidably suffered, the awaken- 
 ed consciousness of that injustice and that 
 injury, should only lead to an advised confirma- 
 tion of the system by which they have been 
 produced. Any man who will give the slightest 
 consideration to the subject, will see that it is 
 not possible to redress the inconveniences which 
 have been sustained; and to every man of sober 
 understanding " that it is impossible," is a suffi- 
 cient answer. But the future is within our 
 power. The Legislature can prevent the con- 
 tinuance and augmentation of the evil ; and it is, 
 therefore, its bounden duty to do so. 
 
 I am not sure that some persons will not be 
 found, who, however unable to deny that the 
 depreciation of our paper is proved beyond all 
 doubt, will still be disposed to maintain that the 
 evil of such a state of things, great as it is, is 
 
 more
 
 ( 129 ) 
 
 more than compensated by some greater publifck 
 advantages. It will be incumbent upon them to 
 shew what those advantages are, that ought, 
 in their judgment and in their morality, to 
 outweigh the strongest claims of justice, 
 and the plainest dictates of publick honour; 
 and distinctly to point out to what extent, and 
 by what classes of the community, they are en- 
 joyed. I purposely forbear again adverting to 
 the various classes and descriptions of persons, 
 subsisting upon fixed incomes, whom I have 
 already shewn to be pre-eminently (though they 
 are not exclusively) sufferers from the present 
 state of things. 
 
 First, then, is it for the benefit of the landed 
 interest that the present system should be conti- 
 nued ? Surely this part of the community is too 
 just to wish for profit to be obtained at the ex- 
 pense of others, even their nearest relations 
 or friends ; too enlightened to countenance a 
 system which, progressive in its nature, would, 
 if unchecked, ultimately lead to the subversion 
 of all property.* One large class of landed pro- 
 prietors indeed those whose lands are actually 
 
 * If ever there was a proposition universally true, this has 
 prove I itself to be so in all countries in which paper currency, 
 from any com! ination of circumstances, has been sutfeied to 
 |;rn\v :t:to a vaprr money. 
 
 under
 
 ( 130 ) 
 
 under lease being for the remainder of those 
 leases within the description of persons of fixed 
 income, suffer in the same manner as other 
 persons which that class comprehends. 
 They even suffer more; inasmuch as the 
 reserved rent is generally subject to repairs 
 and other outgoings, the expense of which 
 is of course increased in proportion to the 
 depreciation of the currency in which it is 
 paid. In such a state of things, landlords will 
 be naturally disinclined to grant new leases. Is 
 this the way in which the cheapness of paper is 
 to contribute to the improvement of their estates ? 
 So far from it, that every landlord must be satis- 
 fied, by a moment's reflection, that the advance- 
 ment of agriculture is best secured by holding 
 out a fair inducement to the employment of 
 capital in this most essential branch of national 
 industry; and that it is, by the real improve- 
 ment of the land, and not by a mere nominal 
 increase in the annual rent, that he must mea- 
 sure the rise in the value of his estate. If, by 
 good husbandly, the produce of an (state be 
 doubled, its real value will be proportionally 
 increased ; but, if the produce remain the same, 
 and the increased rent, in Bank paper, be not 
 exchangeable for a greater quantity of gold than 
 the landlord was intitled to receive under the old 
 
 rent
 
 ( 131 ) 
 
 rent, the real value of the estate will be any 
 thing but augmented by such a rise in the 
 rent.* 
 
 Secondly, is the commercial class really 
 benefited by this state of things ? It is im- 
 possible to deny that some, and. perhaps 
 many individuals, connected with trade, have 
 derived advantage from the greatly increased 
 facility which has prevailed, within these 
 two or three last years, of obtaining credit 
 upon the discount of commercial securities ; and 
 that a few, who have been fortunate, in watch- 
 ing their opportunities, and in boldly availing 
 themselves of this facility, have made great and 
 rapid profits by their speculations. But whe- 
 ther the mercantile body of this country, 
 considered in the aggregate, has reaped any 
 substantial advantage, or will ultimately derive 
 any benefit, from the super-abundance of paper 
 
 * The price of land (either to rent or sell) like that of all 
 other objects, is, of course, raised in proportion to the depre- 
 ciation of our currency. But a great part of the increased 
 value which landed property has acquired within these last ten 
 years, is, I believe, fortunately for the prosperity of this coun- 
 try, of a more durable and substantial nature ; and is fairly to be 
 accounted for by the i{reat improvements made in the science 
 and practice of agriculture; by which the productions of our 
 soil have been both ameliorated in quality and increased in 
 quantity. 
 
 currency
 
 ( 132 ) 
 
 currency is, to me at least, a much more doubt- 
 ful question. It is impossible for any observer 
 of events accurately to discriminate between the 
 adventures to which this excess has given rise, 
 or, at least, a principal aid and support, and 
 those which have their foundation in the mer- 
 cantile capital and industry of the country, and 
 would have been carried to the same, or, per- 
 haps, to a greater extent, if the amount of dis- 
 counts and circulation had been kept within 
 those limits which are compatible with the 
 sound state and undepreciated value of our cur- 
 rency. That some speculations which, it may 
 be fairly presumed, belong to the former class, 
 have turned out unfortunate; whilst others, 
 which are still pending, are of precarious 
 issue, is, I am afraid, an opinion but too well 
 founded, and one to which, I apprehend, that 
 recent and passing events have made many 
 converts among those who have the best practi- 
 cal knowledge on these subjects. 
 
 The convulsions of the world have thrown a 
 principal part of the trade of Europe and Ame- 
 rica into new channels. The first who explored 
 those channels, and had the address to elude the 
 difficulties and dangers which besot the ap- 
 proaches to them, were eminently successful. 
 Their exports were inadequate to the demand 
 
 abroad ;
 
 ( ) 
 
 abroad; their returns unequal to our wants 
 at home. Great profits were the result. This 
 result became generally known, and the 
 temptation was irresistible. Not only the 
 original adventurers, in most instances, re- 
 embarked largely in the same pursuits ; but 
 hosts of new ones sprung up in every corner of 
 the kingdom: every one, anticipating a gain 
 like that of the first speculators, became, 
 of course, anxious to procure credit to the 
 greatest possible amount negotiable securi- 
 ties were multiplied in every shape discount 
 was sought for in every quarter ingenuity was 
 at work to multiply the means of obtaining and 
 affording accommodation.* So long as the sales 
 
 were 
 
 * It has been said, that any step which may be taken 
 towards the resumption of cash payments, would immediately 
 compel the Bank Directors to reduce, in a very great degree, 
 tile amount of their accommodation to the merchants ; and 
 some persons have gone so far as to insinuate, that they would 
 pi ibably cease to discount altogether. The abettors of the 
 present system have used this language with much success, 
 u the ir.e.iMS of creating an alarm in the mercantile world. 
 To me thee appears to be no necessity for making any sudden 
 or violent diminution in tiieir discounts: indeed there is no 
 reason why they might not be continued to the same amount 
 as at prcsen*. Kvery facility that could he required would, 
 no cloubi, be aifor.it 1 by Parliament in this respect. The 
 wholu ol the s.x millions, advanced in consideration of the 
 
 de;>os:t?
 
 ( 134 ) 
 
 were brisk; So long as the demand, both for raw 
 materials and manufactured goods, continued to 
 increase, and prices to rise in the home market, 
 
 every 
 
 deposits of publick money, if necessary, might be repaid ; and, 
 instead of this advance, an annual sum might be paid by the 
 Bank to the publick equivalent to the saving on the interest 
 of this loan. This repayment would afford to the Bank 
 more than a sufficient latitude for gradually reducing their 
 circulation without any diminution whatever of their com- 
 mercial discounts. But this is a narrow view of the ques- 
 tion The root of the evil is not in the discounts of the 
 Bank. Their power of giving an increased accommodation 
 to the trade of the country, and the extent to which it is now 
 carried, depend more on the greatly increased amount of the 
 balances deposited by Government in their hands, and which 
 are lent out again upon good bills of exchange, than upon the 
 enlarged amount of their circulation. The amount of these 
 deposits is independent of the amount of the latter, and would 
 not be affected by its reduction, whilst the effect of that re- 
 duction, in raising the value of their paper, would be precisely 
 the same, whether it were brought about by a diminution of 
 their loans to Government or to individuals; because it is to 
 the aggregate excess of their issues, and not to the particular 
 nature of the securities on which they are made, that the de- 
 preciation is to be ascribed. That excess affords a facility 
 to the abuse of credit, and gives birth to wild adventures 
 in other quarters: those, I admit, will be checked by a 
 diminution in the total amount of their currencv; although it 
 should be effected without any diminution in the scale of 
 rommercial discounts at the Bank of England. But have 
 we not seen enough of tb ultimate effects of this artificial 
 
 facility,
 
 ( 135 ) 
 
 every thing went on smoothly, as much to 
 the satisfaction of the manufacturer and mer- 
 chant, as of those to whom they were indebted 
 for the discount of their bills. It was then 
 that all these parties discovered to what a 
 degree the suspension of cash payments afforded 
 facility and security to the extension of this 
 description of credit : but the currency, in which 
 the discounts were effected, became depre- 
 ciated in proportion to the rapid increase in 
 its amount. If trade had continued in its an- 
 cient and accustomed course, and the spirit of 
 rash adventure had not been excited by new 
 prospects of extravagant gain, there is reason to 
 believe that the expense of discount, aided by 
 the strict adherence of the Bank to its long: 
 established regulations, and by the reluctance 
 to engage in Country Banks, which had been 
 created by the disasters of 1793 and 1797, might 
 have afforded, for some time longer, (as they had 
 for several years after the restriction was first im- 
 posed) a sufficient guard against any very material 
 
 facility, and these forced speculations? To those who still 
 shut their eyes to the melancholy but instructive lessons 
 which we have la'ely received in this respect, it would be 
 useless to offer any other proofs of their dangerous tendency. 
 They would remain unconvinced, even if all the follies of the 
 South Sea adventure, or of the Misslsippi scheme, were acted 
 ovc r a^ain. 
 
 excels,
 
 ( 136 ) 
 
 excess, or any great depreciation of our currency, 
 But, on this occasion, the Directors of the Bank 
 appear to have considered the increased eagerness 
 for discount as requiring some increased indul- 
 gence on their part; and, perhaps, whilst trade ap- 
 peared so flourishing, it was not unnatural that 
 they should consult their own fair interest as 
 bankers in this respect. 
 
 The amount of their paper was, in conse- 
 quence, considerably increased, although, by the 
 great and simultaneous augmentation in the cir- 
 culation of Country Banks, the use of Bank paper 
 beyond the limits of the metropolis became 
 every day more circumscribed. Under these 
 circumstances, the rise in the price of goods, 
 which, at first, was the effect of an increased de- 
 mand, was soon considerably aided by the de- 
 preciation of the currency, as well as by the 
 power which the facility of discount afforded to 
 new speculators (calculating upon a still further 
 rise) of keeping back their purchases from market. 
 Thus the diminution in the value of our cur- 
 rency, brought on in a great measure by this 
 mercantile delusion, has, in its turn, been one of 
 the principal means by which the latter has been 
 kept up and supported in the home market. Ma- 
 ny a speculation, probably, within these two last 
 years, for which the party takes to himself the 
 
 credit
 
 ( 137 ) 
 
 credit of. commercial acuteness and great fore- 
 sight, was principally founded, however uncon- 
 sciously to himself at the time, in the decreasing 
 value of our currency. 
 
 In making use of the words mercantile delu- 
 sion^ as applicable to a considerable part of the 
 trade, which has been created andfostered,within 
 the two or three last years, by the circumstances 
 which I have stated : I feel that it would be in- 
 cumbent upon me to offer some more enlarged ex- 
 planation of the subject, if, unfortunately, many 
 recent occurrences did not, at once, establish 
 the facts, and justify the terms I have applied to 
 them. In the nature of things, such a specula- 
 tion could not continue universally and unin- 
 terruptedly fortunate. The markets, at first 
 scantily supplied, would soon be overstocked. 
 Some of the adventurers, from being too late 3 
 others, from ignorance or misconduct, extrava- 
 gance or misfortune, would fail. The chain was 
 sure to give way in some of its links great and 
 numerous failures are the consequence suspi- 
 cion and alarm become general securities, hi- 
 therto negotiable, can no longer find discount 
 many of the discounters themselves are ruined, 
 and all put upon their guard the markets fall 
 goods are forced upon sale, when all are afraid 
 
 L tO
 
 ( 138 ) 
 
 to buy; and, whilst the fortunate/<?i! retire upon 
 wealth rapidly accumulated, thousands are left 
 to lament the ruin, which, deluded by the ex- 
 ample of such rapid success on the one hand, 
 and tempted by the facility of overtrading on 
 the other, they have brought upon themselves. 
 ; I may therefore be allowed to doubt, whether 
 a very great proportion of the more recent spe- 
 culators to South America, as well as to Malta, 
 Heligoland, and the Baltic, do not repent that 
 they ever became acquainted with the tempting 
 tale of a few early adventurers, or were so easily 
 furnished with the means of engaging in similar 
 risks, to an extent out of all proportion, either 
 to the amount of their capitals, or to the demand 
 from abroad ; and whether, ultimately, the legi- 
 timate advantages of commerce, as well as the 
 real interests of the trading and manufacturing 
 classes, will not be injured, rather than ad- 
 vanced, by the consequences of the protracted 
 suspension of cash payments. 
 
 This part of the subject reminds me that 
 a few words are still necessary respecting 
 what is called the " balance of payments' 
 with foreign countries, to which I have ad- 
 verted in a former part of these observa- 
 tions. I then left to the reader to judge for 
 
 himself
 
 ( 139 ) 
 
 htmself how far this fashionable doctrine affords 
 a sufficient explanation of the long-continued 
 depression of the foreign exchange, and of the 
 high price of Bullion at home. 
 
 That a nation, like Great Britain, possessed 
 of great commercial capital, should afford long 
 credits to other countries, where capital is 
 wanting, and where the rate of interest is 
 consequently much 'higher* is certainly very 
 natural ; and it is an obvious advantage to 
 us in trade. But these credits are given in 
 succession, and some are daily coming to matu- 
 rity, whilst others are created : so that, al- 
 though the different parts of the world are 
 constantly indebted to this country, the aggre- 
 gate amount of those debts cannot, in the or- 
 dinary course of things, very materially vary. 
 
 But it is obvious, that if, from any pecu- 
 liar circumstances, an unusual facility of dis- 
 count exists at home, whilst abroad an ad- 
 vance in price, far exceeding the rate of interest 
 here, is given for goods sold upon long credits, or a 
 proportionate abatement madeupon those bought 
 by us lor ready money, the balance of debt to 
 this country may be somewhat increased, and 
 the exchange thereby rendered unfavourable for 
 a short time This fall, if our currency were not 
 l 2 depreciated.
 
 ( HO ) 
 
 depreciated, could not exceed the expense of 
 transporting Bullion to the Continent, or conti- 
 nue, as it has done, for two years. Within that 
 period too, it may be remarked, the longest of 
 those credits must probably have come round, 
 and consequently there would now be an end 
 of the argument. 
 
 Besides, the increase of foreign debt, and 
 whatever fall of the exchange it may, at one 
 time, have occasioned, are to be ascribed to 
 the abundance and cheapness of our paper ; 
 for, if the Bank, when it was liable to pay 
 its notes in cash, had enlarged its issues, till 
 the market price of Bullion, and consequently 
 the course of exchange, were materially affected, 
 these circumstances would have compelled 
 them to make a diminution in the amount of 
 their discounts. That diminution, bv rendering 
 mone}' more scarce at home, would have pre- 
 vented merchants from extending their credits 
 abroad, and induced them, as far as possible, to 
 accelerate the payment of those that were be- 
 coming due. The effect would have been to 
 assist in improving the foreign exchange, till it 
 was restored to its proper level, and, with it, 
 the facility of discount at home to its ordinary 
 course. This increased balance of debt (on 
 
 which
 
 ( 1*1 ) 
 
 which is founded the pretended " balance of 
 payments " ) is therefore only a further instance 
 of the manner in which the harmony of the 
 whole system is destroyed by the derangement 
 of one of its parts, and an additional reason for 
 restoring the value of our paper currency to the 
 standard of our coin. 
 
 I will not add to the length of this discussion 
 by examining more in detail the manner in 
 which the interests of the mercantile and ma- 
 nufacturing part of the community are likely to 
 be affected by the continued debasement of our 
 currency. That they are not necessarily ex- 
 posed to the same injury as is cast upon the 
 other classes of the community I am ready to. 
 admit ; but then let them recollect all the ties 
 by which they are connected with those classes, 
 and that the durable prosperity of the one can- 
 not be built upon the distress of the other. 
 
 The business of a merchant is to buy cheap 
 and sell dear. His general wish is to be able, for 
 this purpose, to command as large a credit as 
 possible, lie must consequently, upon abstract 
 principle, be favourable to any system which is 
 likely to give facility to the discount of com- 
 mercial
 
 ( 1 ) 
 
 mercial securities. His interest, therefore, 
 appears to be the same as that of the banker ; 
 whose profit increases with the extension of 
 such discounts. His skill and his success de- 
 pend upon his rapidly converting credit into 
 goods, and, thereafter, re-selling those goods 
 at advanced prices. Generally, therefore, a 
 merchant is a large possessor, or creditor of 
 produce, and a debtor for a considerable part of 
 the sum with which it was purchased. If the 
 currency, in which that debt is to be liquidated, 
 be progressively decreasing in value, his profit, 
 upon every transaction, will be augmented in 
 proportion to the increased depreciation of the 
 currency, But is this the fair profit of trade ? 
 Are these the gains to which the unsophisti^ 
 cated meaning of our laws, the clearest principles 
 of justice on which they are founded, the sacred 
 obligations of publick faith, of which they are 
 the pledge, and the rights and interests of the 
 v- hole community are to be sacrificed ? Is this 
 the description of trade, or rather of gambling, 
 which ought to find friends among the real 
 merchants, or advocates in the Legislature of this 
 country ? 
 
 Besides, the continued success of such a 
 trade depends upon the progressive increase 
 
 of
 
 ( US ) 
 
 of the depreciation of our currency. In 
 the more probable case, of a fluctuating de- 
 preciation ; liable to be increased or diminish- 
 ed by every change in the councils of the 
 Bank ; by any extensive or sudden failures 
 of Country Banks, or by the doubts and 
 suspicions to which all currency, if not 
 referable to some established and certain 
 criterion of value, must be obnoxious, it 
 cannot, I think, be long before every merchant 
 (if he be really worthy of that name) must wish 
 for some Ji.ced standard, by which he may ascer- 
 tain the value of his commodities, mav regulate 
 his purchases and sales, and measure the extent 
 of his engagements before he must be con- 
 vinced that paper, " though never issued 
 except in the discount of perfectly good bills, 
 founded in real mercantile transactions ," may yet 
 be carried to excess that its real use and bene- 
 fit (and they cannot be prized too highly) are 
 not in what it adds to the currency of a country, 
 but in what it saves of expense in providing it. 
 That from the profit incident to the issues of 
 such paper, the publick derive a sufficient secu- 
 rity that the wants of our circulation will be 
 constantly supplied: but that the full and safe 
 enjoyment of this convenience, essentially de- 
 pends
 
 ( 144 ) 
 
 pends on the assurance that such paper shall be 
 strictly circulating credit; that it shall retain 
 its value in conformity to our own standard, 
 and thereby, in reference to the currency of 
 other countries ; and that nothing but its inter- 
 changeableness with cash, can now restore that 
 assurance, or, at any time, permanently main- 
 tain it. 
 
 Lastly, is it the interest of the government 
 which calls for this system ? This question 
 can hardly be put without seeming to im- 
 ply an admission which every man must be 
 anxious to deny ^that there can be an interest 
 in the Government separate from that of the 
 community. We are told, however, that the taxes 
 could not be raised that the loans for carrying 
 on the war could not be negociated and that 
 the whole of our finance is a superstructure, built 
 upon the basis of our present paper currency. 
 These are assertions wholly unsupported by proof. 
 Why could not the taxes be raised ? How were 
 they raised before the restriction? Would not the 
 real wealth and capital of the country, as well 
 as its population and industry, continue the 
 same ? and what are the taxes but a given pro- 
 portion
 
 ( w ) 
 
 portion of the annual income, which the people 
 of this country derive from their soil, their 
 industry, and the employment of their 
 capitals ? 
 
 It is true that, the price of all articles being 
 restored to their proper relative value, the taxes 
 upon consumption would, in reality, bear a 
 somewhat higher proportion to the prime 
 cost of the commodities upon which they 
 attach, than they do at present; but not 
 higher than they did when they were first im- 
 posed. Besides, as this effect would be pro- 
 duced without any real augmentation of bur- 
 then, persons of a fixed income would be able 
 to consume more, and those whose incomes 
 have increased in proportion to the depreciation 
 of money, would not (even should their in- 
 comes thenceforward be nominally diminished 
 in the same proportion) be reduced to consume 
 less than at present. The case of the assessed 
 taxes, it must be admitted, would be somewhat 
 different, some of them partaking of the nature 
 of an ad valorem duty; but, upon the whole, 
 there could be no very material or permanent 
 diminution in their amount. The ad valorem 
 taxes .;pon the transfer of property, such as the 
 
 auction
 
 ( 1+6 ) 
 
 auction duty*, and the stamps upon convey- 
 ances, would certainly suffer a nominal diminu- 
 tion ; but these branches of the revenue are not 
 very considerable in their amount, and are the 
 only portion of our permanent income which 
 
 * This duty, in the year ended the 5th of April 1 803, pro- 
 duced ^272,570, and in the year ended the 5th of April last, 
 363,434, being an augmentation of one third: although, 
 certainly in the last year, there was no pressure in the country 
 to force property into the market. The auction duty is under the 
 management of the excise ; and it is not, perhaps, undeserving the 
 attention of those who may wish to look at the difference in the 
 first, consequences of a depreciation in the currency of a coun- 
 try, upon the prices of labour and property respectively, that, 
 whilst the produce of thistaxhas increased more than 30 percent, 
 most of the othertaxes, inthe same collection, being upon general 
 consumption, such as malt, British spirits, candles, soap, and 
 glass, have within the same period, been rather decreasing ; 
 and others, such as beer, leather, salt, &c. have been very 
 nearly stationary. The increased produce of taxes of 
 this class must await an increase in the wages and salaries 
 of labour and industry, proportionate to the decrease in the 
 value of the currency in which those wages are paid. To 
 whatever degree that increase has already taken place, and in 
 proportion as it may become general (if the value and standard 
 of our money shall remain unsettled), the nominal benefit of it 
 will probably be felt in these branches of the publick revenue. 
 This appears to me a very strong proof that the effects of a 
 depreciation of currency upon all the transactions, and npon all 
 the comforts of life, are not merely imaginary. 
 
 could
 
 ( W ) 
 
 ould be much affected. The property tax, 
 being also an ad valorem duty, would be liable to 
 some diminution, but as a great part of this tax 
 is levied upon persons of fixed incomes, the 
 falling off, in the first instance, would not be 
 considerable, and would soon be made up by the 
 growing wealth of the country*. 
 
 Why could not any loans, that may be neces- 
 sary, be negotiated ? Is it not the amount of 
 capital, compared with the demand for it, and 
 not the amount of circulation, which regulates 
 the rate of interest in a country ? And what is it 
 that supports the publick credit of a country, 
 except general confidence in the sufficiency of 
 its resources, and a character for punctuality 
 and good faith in its engagements ? Are Bank 
 notes not convertible into cash, the test of the 
 solidity of our resources ? Are payments made 
 in a currency referable to no fixed standard of 
 value, the essential criterion of punctuality and 
 good faith? 
 
 * I have already observed in how many ways, and to what 
 a degree our publick expenditure is increased by the present 
 state of our currency ; and that the savings which form some 
 *et off' to that increase, are neither honorable, nor just, nor 
 j I- ly f r ' br pmnanent. 
 
 It
 
 ( 148 ) 
 
 It is true, that the abundance and cheap- 
 ness of our paper have, in the first instance, a 
 tendency to raise the price of the publick securi- 
 ties, which enables the Government to borrow 
 money on terms nominally better; but it is 
 equally true that, from these same causes, the 
 amount of the loans requisite for the publick 
 service is increased: and who does not see that 
 the latter effect compensates the former? It 
 does so, in the very year in which the loans are 
 made. But if we consider its operation on pos- 
 terity; if we consider that, in order to effect a 
 small nominal saving now in the rate per cent, at 
 which our loans are borrowed, we engage to pay 
 for all time to come an increased amount of in- 
 terest : that we contract to pay the more, be- 
 cause that contract is made in depreciated 
 paper ; but that those payments are hereafter 
 to be made in undepreciated money ; who 
 does not see the improvidence of such a system ? 
 Who does not see that we purchase the shew of 
 what is at best a fallacious and temporary faci- 
 lity, at the expense of a more than necessary 
 accumulation of real and permanent burthen ? 
 Can any one believe, that considerate men will 
 much longer look to the publick funds of the 
 country as a safe and proper deposit for any 
 
 permanent
 
 ( 149 ) 
 
 permanent provision which they may be enabled 
 to make for their families, if the principles on 
 which the value of our currency now rests should 
 either be countenanced and supported, upon sys- 
 tem, as beneficial to the State, or defended and 
 continued, as a necessary evil admitting of no 
 remedy ? This consideration alone forms a most 
 important part of the subject, with a reference 
 to the policy of the present system ; and cannot 
 be too seriously weighed by those who must 
 ultimately decide upon the whole merits of this 
 great question. In coming to this decision, let 
 them also look to the character and honour of 
 the nation, and to the impression which that 
 decision will not fail to make in other coun- 
 tries. Foreigners will not be influenced, either 
 by interest or prejudice, in forming their judg- 
 ment respecting the value of our paper. If 
 they see all the symptoms of a depreciated cur- 
 rency, such as they have witnessed in dif- 
 ferent parts of the continent, they will not doubt, 
 that our paper also is depreciated; and they 
 would by decrees conclude (if all foundation for 
 such a conclusion be not speedily done away) 
 that the change in our money system, by which 
 we have virtually made paper a legal tender, 
 (however in its origin the evil may have been 
 
 unsuspected,
 
 ( 130 ) 
 
 unsuspected, or may still be palliated in its 
 progress,) will ultimately produce the same dis- 
 asters, which have marked the course and ter- 
 mination of similar attempts in other parts of the 
 world. Respecting the language, or the pre- 
 dictions of our avowed enemy, on this subject, 
 I am little solicitous ; but from the dread and 
 mistrust which prevail in every part of Europe, 
 of any thing which, in principle, bears so near 
 a resemblance to paper money, I am con- 
 vinced that the state of our currency, if not 
 speedily rectified, will be a source of disquie- 
 tude to all those whose hearts and wishes are 
 really with us in this great contest. Nor must we 
 allow ourselves to hope that our national charac- 
 ter for strict integrity, and for a rigid adherence 
 to good faith in all our engagements, would not 
 suffer by the protracted duration of the present 
 derangement in our currency. By a refined, 
 and perhaps overstrained sense of our obliga- 
 tions in this respect, we have exempted that 
 part of the interest of our publick funds which 
 belongs to foreigners from the property tax: and 
 shall we feel no scruples in paying that interest 
 in a currency, of vvhich the depreciation unavoid- 
 ably exposes them to a much heavier deduction? 
 How can we expect that our dealings and con- 
 tracts
 
 ( i ) 
 
 tracts will continue to be looked to with the 
 same unbounded confidence, and to be held in 
 the same high estimation, if that upon which 
 they all turn, and by which their amount is 
 measured, instead of being accurately ascertained 
 and invariably fixed, is referable to no establish- 
 ed standard of value whatever, and liable to 
 fluctuations from causes over which the foreigner 
 can have no controul ? His apprehensions will 
 soon outstep the reality of the evil, and his spe- 
 culations on its future progress will contribute 
 to aggravate its present pressure. 
 
 The occurrence of some general alarm, arising 
 from preparations, or attempts which may be 
 made by the enemy against this country, or pos- 
 sibly from some internal cause, should not be 
 lost sight of in the consideration of this subject. 
 
 The difficulties incident to such a state of 
 things, were confined in 1797 to a stagnation of 
 sales, and to an interruption of credit in all the 
 larger transactions of trade and of the commu- 
 nity ; but they were not felt in the exchange and 
 distribution of commodities, in the common 
 dealings by which the daily wants of society arc 
 supplied. But what would be the result of any 
 general interruption of confidence in paper cur- 
 rency at the present moment, accompanied as it 
 
 would
 
 ( is* ) 
 
 * 
 
 would necessarily be, with an anxiety to part 
 with that currency, and a refusal to accept it in 
 payment for commodities On almost any terms ?* 
 In proportion as confidence would be suspend- 
 ed, would power be substituted to give circu- 
 lation to our paper? from the absolute neces- 
 sity of the case, I apprehend that it would and 
 what power ? Not indeed that of the state, as in 
 despotick countries, but the power, probably, of 
 every possessor of a small note, pressed by his 
 own wants and by those of his family, against the 
 possessor of the commodities by which those 
 wants might be supplied. 
 
 But I have said enough, perhaps more than 
 enough, both as to the certain and the possible 
 consequences of the continuance of the evil. I 
 feel that it is more than time to bring the 
 subject to a close. Let it only be remembered, 
 by those whose duty it is to consider this great 
 question, that the existence of the evil cannot 
 be disguised. It is too late to determine that 
 we will not avow it, even to each other: a 
 
 * Some idea may be formed of the distress which would 
 result from such a state of things, by the sudden inconveni- 
 ence which has lately been felt in some small districts of the 
 kingdom in which the country Banks, by which their circu- 
 lation was supplied, have failed. 
 
 policy,
 
 ( 1^3 ) 
 
 policy, which, though it sometimes tricks itself 
 in the garb of wisdom, is not a manly policy, 
 nor one that, in the nature of things, can ever be 
 long successful. 
 
 To recommend helpless acquiescence, or to 
 attempt to palliate the mischief, is to hold out 
 to all the world a discouraging picture of the 
 real situation of this country. It is to repre- 
 sent, as our only support in the conflict, this 
 system, which is, in fact, but the lengthened 
 and distorted shadow of our real wealth ; to 
 represent the duration of that system, unsub- 
 stantial as it is, as forming the real measure of 
 our resources. 
 
 Resources of a far different character this 
 country possesses in abundance. They are to be 
 found in the immense and increasing produce of 
 its territory : in the unwearied extension of 
 its manufacturing industry : in the elastick and 
 expansive force of its legitimate commerce : 
 all mutuallv aiding and fostering each other: 
 all fed and put in motion by capital, the genuine 
 growth of progressive accumulation and not 
 the factitious result of any artificial con- 
 trivance. 
 
 If, irom the currency of a country thus cir- 
 cumstanced, the precious metals have altogether 
 m disappeared.
 
 ( 154 ) 
 
 disappeared, it is idle to suppose, that such a 
 disappearance can be the effect of natural 
 causes : it is absurd to exaggerate the process 
 by which they are to be re-acquired into 
 an effort, or a sacrifice ; or to suppose that any 
 other process can be necessary, for that purpose, 
 than that of restoring things to their natural 
 course, 
 
 'SHE ENS, 
 
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