STACK 
 
 REMARKS 
 
 027 
 542 
 
 ON 
 
 THE NEW DOCTRINE 
 
 CONCERNING THE SUPPOSED 
 
 DEPRECIATION OF OUR CURRENCY. 
 
 BY MR. BOASE. 
 
 " Gold and silver, however, like every other commodity, vary in their 
 
 value, are sometimes cheaper and sometimes dearer 
 
 so a commodity which is itself continually varying 
 
 in its own value, can never be an accurate measure of the value of other 
 commodities." Wealth of Nations, Book I. Chap. 5. 
 
 " Quid non mortalia pectora cogis, 
 
 Auri sacra fames ?" Virgil. 
 
 LONDON : 
 
 PRINTED BY W. BULMER AND CO. CLEVELAND- 
 ROW, ST. JAMES'S ; 
 
 AND SOLD BY G. AND W. NICOt, BOOlfcfcELLERS TO 
 HIS MAJESTY, PALL MALL.
 
 ADVERTISEMENT. 
 
 1 HE importance of the matters investigated in 
 the following pages, is generally felt and ac- 
 knowledged : but it is evident, that they are not 
 sufficiently understood. 
 
 A new aera in the science of financial eco- 
 nomy has given birth to opinions contradictory 
 in the extreme. Some of them seem to spring 
 from the prejudices of education, some from 
 fanciful theories, and others from the bias of 
 party spirit. 
 
 The question has been also encumbered, if 
 not obscured, with metaphysical disquisitions, 
 embarrassing distinctions, and novel definitions. 
 The subsequent remarks are intended briefly 
 to point out most of the important facts con- 
 nected with our paper currency ; and to illus- 
 trate them by familiar examples, in the style 
 of business; in order that the reader may neither 
 
 1313539
 
 C vi n 
 
 be fatigued nor puzzled, in forming a distinct 
 judgment of the subject. 
 
 From a plain man of business, plain method 
 and language are all that can be expected, 
 and the writer has been solicitous only to be 
 intelligible. The scientific reader is requested 
 to give the arguments the weight to which 
 they would have been entitled, had they been 
 more classically expressed and arranged. 
 
 The writer feels too sensibly the vast impor- 
 tance of the question, not to be anxious to im- 
 press the reader with the same conviction of the 
 fallacy of the new theory, which a very atten- 
 tive consideration bf all the arguments brought 
 to support it, has produced upon his own mind. 
 It is not from the elegance of style or precision 
 of method, that a judgment of the question 
 ought to be formed, but from the clear evidence 
 and analogy of facts. On these alone the writer 
 rests his argument ; and having no private in- 
 terest to serve, or party feeling to gratify, he 
 will rejoice to find his errors corrected, in case he 
 has drawn any false inferences. Difficult as the 
 subject undoubtedly is, a calm investigation of
 
 C vii ] 
 
 facts and practical results, will not fail to disco- 
 ver the truth : while political partialities, or the 
 bias of preconceived opinions, are likely to lead 
 to erroneous conclusions. 
 
 If the writer is in error, he cannot avail him- 
 self of Mr. Huskisson's apology, of having but 
 lately paid attention to this subject. His is not 
 the zeal of a young convert. He has for four- 
 teen years watched the progress and effects of 
 paper currency, with a care, and a jealousy pro- 
 portioned to the fearful apprehensions he at 
 first, and for a long time entertained of the con- 
 sequences of the Bank suspension; and he now 
 has a thorough conviction, which experience 
 has produced, of the incalculable benefits to 
 this country of a sound and undepreciated paper 
 currency. 
 
 Since the following pages were written, se- 
 veral publications have appeared, and possibly 
 anticipated some of the arguments now used ; 
 but as the writer resides at a very great dis- 
 tance from the capital, he has not seen any 
 work on this side of the question, published 
 since Sir John Sinclair's " Observations on the
 
 [ viii ] 
 
 Report of the Bullion Committee," he therefore 
 disclaims all aid derived from them. 
 
 In denominating the bullion system a new 
 theory r , or a new doctrine, the writer begs to be 
 understood, as not insinuating any disparaging 
 idea of it upon that account. The demonstra- 
 tion of every scientific principle was once new. 
 He has used that term, because he does not find, 
 in the practice of commercial nations, or in the 
 work of any writer of note upon political eco- 
 nomy, that the market price of uncoined bullion* 
 was ever before assumed as the standard of the 
 exchangeable value of other commodities, 
 
 January i6th, 1811. 
 
 * The bullion deposited in the Banks of Amsterdam, 
 Hamburgh, &c. was assayed and certified as to weight and 
 fineness : this was a virtual coinage. Its value was still 
 measured by the standard denomination of an unvarying no- 
 minal money, (as Marcs banco, &c.) which was represented 
 by certain coins.
 
 REMARKS, &c. 
 
 WHEN I first heard the late Reports respecting 
 the supposed depreciation of our currency, I 
 was anxious, that some gentleman, who had 
 taken a part in the laborious and interesting in- 
 vestigations, relative to that difficult question, 
 might be induced to favor the public with a 
 more detailed exposition of the principles and 
 reasonings, that led to the opinions said to be 
 entertained by persons of great consideration 
 in the state. I was desirous of such further 
 elucidation, because the facts given in evidence, 
 appeared to me to warrant a very different con- 
 clusion. 
 
 Mr. Huskisson has gratified that wish ; and 
 " stated and examined the question," with a 
 perspicuity and candour, that must be pleasing 
 to every reader; and with an ability, that has 
 given to the new theory all the plausibility of 
 which it could be made susceptible. He had 
 indeed the tide of popular feeling in his favor. 
 
 B
 
 CO 
 
 Every rank and order of society, every indivi- 
 dual, must feel deeply interested in the adoption 
 of a system, which promises to lower the price 
 of all the necessaries and comforts of life ; and 
 to rescue the national character from the great 
 opprobrium of sanctioning a measure, said to be 
 fraught with injustice and eventual ruin. It is 
 not a small disadvantage to an opponent, that 
 he must tell the public the unwelcome truth, 
 that all this pleasing hope is but a dream a 
 fallacious expectation ; and that the high price 
 of provisions, grievous as it is, cannot be reme- 
 died by the proposed measure. I should be 
 truly happy, if this great evil could have been 
 so easily removed, as the advocates for the 
 repeal of the Bank restriction bill suppose: but 
 convinced, that the rise of prices is owing to 
 causes which, unfortunately, we cannot repeal ; 
 (if I may be allowed the term), and that the 
 new doctrine of depreciation is founded on 
 fallacious principles, I feel it a duty to the 
 public, to endeavour to discover and refute the 
 fallacy. 
 
 Mr. Huskisson complains of clamour and 
 misrepresentation. It would be singular if this 
 controversy, unlike all others, were free from 
 mistake and misstatement. But the advocates 
 for the use (not tbe abuse, ex abusu non arguitur
 
 ad uswn] of paper money,* have perhaps, as 
 much cause of complaint. They have been 
 accused of wilfully recommending a system of 
 legal fraud, and cruel oppression. It is surely 
 time to have done with illiberal insinuations ; 
 and should Mr. Huskisson be followed by 
 other writers on either side of the question, I 
 hope they will not forget his good advice. It 
 is a question, the importance, and the difficulty 
 of which, merits and demands a cool, dispas- 
 sionate, and unprejudiced attention. 
 
 Mr. Huskisson admits, that the use of paper 
 money, (or, as he is pleased to call it, paper 
 credit], is a great improvement in the national 
 economy, provided it is effectually guarded 
 against excess, by the liability to be paid in 
 specie on demand ; and we fully admit that 
 some sufficient check against excessive issues, 
 is indispensable to the well being of a paper 
 currency. As to the necessity of providing and 
 maintaining a check against excess, all are 
 agreed ; and the question in point of fact is 
 only, whether any thing short of the con- 
 
 * I decline adopting the new definitions ; and use the 
 customary terms. By money, or currency, I mean the cir- 
 culating medium in general. By specie, or coin, I mean 
 metallic money ; and by paper money, or paper currency, 
 Bank or Banker's notes, unless otherwise explained.
 
 [ 43 
 
 vertibility into specie, at the will of the holder, 
 is a sufficient check against the over issues of 
 Bank notes. Whenever it can be clearly proved, 
 that no other effectual preventive is to be found, 
 great as the calamity must prove, it is the least 
 of the two evils ; and therefore, let the Bank 
 Restriction Bill be repealed, as soon as that fact 
 is ascertained. It is not necessary to delay the 
 measure for two years : the delay indeed would 
 be more injurious than the repeal; it would be 
 to protract the mischiefs of a growing want of 
 the currency essential to trade and commerce, 
 and as in the case of an unhappy wretch on the 
 wheel, the coup de grace would be an act of 
 mercy. The delay is not wanted by the Bank 
 of England, because they must, (in the present 
 state of the political and commercial world), 
 meet the repeal by a contraction of their issues 
 of notes; which may be diminished to any 
 degree in the space of a few weeks, by the 
 mere act of suspending, or contracting their 
 discount business. 
 
 It being admitted, by those who think the 
 repeal of the Restriction Bill would be a very 
 ruinous experiment at this time, that an effec- 
 tual check against the excess of paper money 
 is necessary ; and that if it does not already 
 exist, it ought to be provided, we shall, I trust,
 
 hear no more of injustice, fraud, &c. in con- 
 nexion with the Restriction Bill of the Bank of 
 England. The argumentum ad captandum 
 has been too freely used. To what good does 
 it tend, to tell annuitants, that they are wronged 
 of one fifth of their limited incomes ? Or the 
 people, that the high price of provisions is to 
 be ascribed to an excess of Bank notes ? They 
 were willing to impute their privations to the 
 circumstances of war, defective crops, &c. but 
 now one hears in every circle, the Bank, and 
 Banking, execrated as the source of all our 
 misfortunes. Opinions sanctioned by so high 
 authority, and recommended by all the energy 
 of Mr. Huskisson's great talents, must be 
 supposed, to create a feeling, and an ex- 
 pectation in the public mind, which are to be 
 lamented, in case these opinions shall be found 
 erroneous. 
 
 Nothing can be further from my mind, 
 than to impute to that gentleman, or to any 
 person, who has espoused that side of the 
 question, the least wrong motive : but I may 
 be allowed to regret, that inferences so inte- 
 resting to popular prejudices should be pre- 
 maturely promulgated. 
 
 Mr. Huskisson also admits, that the conse- 
 quences of the supposed depreciation did not 
 appear till lately. I am at a loss to comprehend
 
 how this subtle principle, like occult miners, 
 could have been secretly and silently operating 
 for twelve years, and then suddenly explode. 
 A depreciation of money always affects all 
 prices equally ;* but, in the present case, the 
 effect has been just the reverse of that, which 
 a depreciated currency must have produced. 
 The price of provisions, and of most commodi- 
 ties of general consumption at home, has been 
 gradually advancing for more than a century ; 
 and more rapidly since the French Revolution 
 disordered the politics and commerce of Europe. 
 The price of bullion, and the course of exchange, 
 (which are affected by circumstances that may 
 or may not influence the price of other com- 
 modities), has fluctuated largely and irregularly 
 from time to time, according to the circum- 
 stance* of trade. From Wetenhali's lists it 
 appears that the exchange with Hamburgh 
 
 amount of 
 fluctuation. 
 
 In the years 
 1790, 1 and 
 
 varied from 
 2 7 per cent. 
 
 above,down to par 
 
 per cent 
 7 
 
 1793, 
 
 4 
 
 and 
 
 5 
 
 llf above, to 
 
 3 
 
 below par 
 
 141 
 
 1796, 
 
 7 
 
 and 
 
 8 
 
 M 
 
 below, 
 
 to 
 
 131 
 
 above 
 
 par 
 
 Iff 
 
 1799, 1800 and 
 
 1 
 
 Wf 
 
 above, 
 
 to 
 
 12 
 
 below 
 
 par 
 
 23 
 
 1802, 
 
 3 
 
 and 
 
 4 
 
 3 
 
 below, 
 
 to 
 
 6 
 
 above 
 
 par 
 
 9 
 
 1805, 
 
 6 
 
 and 
 
 7 
 
 3 
 
 below, 
 
 to 
 
 3 
 
 above 
 
 par 
 
 6 
 
 1808, 
 
 9 
 
 and 
 
 10 
 
 5 
 
 above, 
 
 to 
 
 16 
 
 below 
 
 par 
 
 21 
 
 Thus we find the greatest fluctuations of the 
 * Wealth of Nations, vol. z. p. 378.
 
 L7 3 
 
 exchange during a period, when it could not 
 have been affected by a depreciation of our cur- 
 rency, because it afterwards rose from 12 per 
 cent, below, to 6 per cent, above par, and that 
 too during a period, when Bank notes increased 
 from 12 to 16 millions! The price of -gold 
 bullion rose also, in proportion to the depression 
 of the exchange, from g. \js. d. to 4. 6s. 
 per ounce, being a rise of nearly 1 1 per cent, 
 and fell back to the price limited by the pur- 
 chases of the Bank. 
 
 If such facts do not conclusively prove, that 
 the price of bullion, and the rate of exchange 
 were formerly affected by some other causes, 
 than the state of our currency, I know not 
 what kind of evidence would produce convic- 
 tion.* If the increase of Bank notes creates 
 a suspicion of excess, there was a much greater 
 
 * If the high price of bullion, and the depression of the 
 exchange, are owing to the increase of Bank notes, it would 
 be utterly impossible to account for the recovery of the ex- 
 change in 1802, after it had been depressed for more than 
 two years. 
 
 All Mr. Blttkf's very acute " Observations on the Prin- 
 ciples, which regulate the Course of Exchange," apply as 
 much to our currency in the years 1799, 1800, 1801, 1802, 
 as to the present period : yet, under a continued augmenta- 
 tion of Bank notes, the exchange, which had fallen 23^ per 
 cent,, gradually rose to par, and in 1804 so high as 6 per
 
 relative increase in the former, than the latter 
 j eriod. The exchange, however, not only 
 
 cent, above par, although Bank notes had then increased 
 to more than 18 millions! 
 
 Mr. Blake's mistake appears likewise to be, the assump- 
 tion of an erroneous standard. The commercial standard is 
 not currency. The livre tournois, marc banco, pound ster- 
 ling, &c. retain their fixed value,, although the currencies, 
 which in their perfect state were equivalent, should be 
 debased or deteriorated. Hence the agio of the Banks of 
 Amsterdam and Hamburgh. The currencies of those citiej 
 being merchantable commodities, fluctuated continually: but 
 the ideal y or Bank money, remained fixed. Payments were 
 equalized by adding as much more currency as the actual 
 depreciation amounted to. If our Bank notes were really 
 depreciated 15 per cent., a bill of exchange for 100. ster- 
 ling would be paid by i 15. in Bank notes. The exchange 
 standard would remain unaffected ; and there would be, (as 
 there is between England and countries having a depreciated 
 currency) two rates of exchange, one for current, and the 
 other for sterling money. 
 
 Mr. Blake's theory, like that of Mr. Huskisson, may be 
 thus stated : 
 
 A depreciation of currency will produce a rise in the prices 
 of commodities, and a depression of our foreign exchanges. 
 The prices of commodities have risen, and the foreign ex- 
 changes are depressed. 
 Therefore our currency is depreciated. 
 
 Now, were it admitted, that depreciation would, in all 
 cases, produce the effect assumed, still it may be questioned, 
 whether our currency is really depreciated, because many 
 other circumstances will also occasion a rise of prices; If 
 such circumstances do exist, to a degree sufficient to account 
 for all the effect produced, depreciation can have no share
 
 [9] 
 
 recovered, but attained to a considerable degree 
 of favor ; as unquestionably it will do again, 
 when our receipts from, shall exceed our pay- 
 ments to, the continent. 
 
 Depreciation is a relative term : it exists, or 
 not, in comparison with some fixed standard. 
 The advocates for the new theory, have as- 
 sumed the market price of bullion as the stan- 
 dard of all exchangeable value. This assump- 
 tion, as new as extraordinary, is the basis of 
 their system. The superstructure is propt 
 
 in it, and therefore the rise of prices, and depression of the 
 exchange, do not necessarily imply a depreciation of Bank 
 notes. 
 
 Depreciation can only be discovered by comparison with 
 some fixed standard. If the market price of gold bullion is 
 the real, aud legal standard of all exchangeable value in this 
 country, then Bank notes, as well as guineas, are depreciated. 
 If, however, gold uncoined bullion is not a legal tender, and 
 consequently not our legal standard ; and if the coin of the 
 Royal Mint is the only legal tender, and consequently our 
 legal standard, then the new theory of depreciation, as 
 assumed by Mr. Blake, and by Mr. Huskisson falls to the 
 ground. Mr. Blake's very able pen should have explained, 
 why the exchange fell 23^ in 1799 and 1800 ; and why, 
 after remaining nearly three years below, it rose to 6 per cent. 
 above par, notwithstanding a continued, and very great in- 
 crease of Bank notes. But that enquiry would, I think, 
 have overturned his system. No man is obliged to convict 
 himself.
 
 C to} 
 
 up by other assumptions, which I shall endea- 
 vour to controvert. The whole may, I think, 
 be comprised under the following propositions, 
 which I take leave to state interrogatively, as 
 the heads of enquiry, to which I shall confine 
 my remarks : dividing them into separate sec- 
 tions, according to the following order, viz. 
 
 ist, Whether " gold bullion is the real and 
 legal standard of all exchangeable value in this 
 country ; and whether coin and bullion are the 
 same thing ? 
 
 and, Whether an excess of paper currency, 
 not exportable or convertible into specie on 
 demand, is necessarily absorbed in the in- 
 creased price of commodities, which that excess 
 occasioned ? 
 
 3rd, Whether the late high price of bullion, 
 and other commodities, and the depression of 
 our foreign exchange, necessarily prove that 
 Bank notes are depreciated ? 
 
 4th, Whether the instances of former de- 
 pressed exchanges confirm the inferences 
 drawn therefrom ? 
 
 5th, Whether the same sum of currency, by 
 quickness of circulation, and economy in the 
 use of money, is rendered adequate to a much 
 greater amount of trade and payments than 
 formerly ?
 
 C 3 
 
 6th, Whether a diminution of the mass of 
 Bank of England notes, would bring an equi- 
 valent quantity of specie into circulation ? 
 
 7th, Whether the rule, which governs the 
 discount business of the Bank, is an erroneous 
 and dangerous principle ? 
 
 8th, Whether the late increase of the stamp 
 duties on reissuable notes, implies a great aug- 
 mentation of Country Bank paper ? 
 
 pth, Whether the whole mass of our cur- 
 rency is relatively greater at present than for- 
 merly ? 
 
 To these sections I shall add 
 loth, A recapitulation of the arguments ; and 
 nth, A few concluding observations. 
 The attentive reader will have perceived, that 
 the above propositions are all affirmed in the 
 late publications ; and either expressly or im- 
 plicitly so concluded in Mr. Huskisson's inge- 
 nious pamphlet. 
 
 Having no motive but the desire of contri- 
 buting (should I be so fortunate) towards the 
 elucidation of a subject of great public impor- 
 tance, I am anxious to avoid every expression, 
 that should even seem to be wanting in defe- 
 rence towards the very respectable persons, 
 who have avowed opinions different from those,
 
 L -O 
 
 which I endeavour to establish. If, notwith- 
 standing, through haste or inadvertence, any 
 such have escaped me, I entreat the reader to 
 give them the most favourable construction 
 they are susceptible of. 
 
 One remark more, I beg leave to premise. 
 The question is as complex as it is important : 
 I therefore hope, that the reader will give it a 
 very unprejudiced and attentive consideration. 
 With a view to render the investigation as 
 easy, and intelligible as possible, I have divided 
 it into very brief sections ; and treated it as 
 familiarly as I could in so narrow a compass. 
 Some repetitions were unavoidable; and others, 
 the candid reader will, 1 hope, excuse, in consi- 
 deration of the interest, which the importance 
 of the subject continually excited in my mind. 
 I can truly say, that it is " with deference I 
 venture to offer to the public an exposition of 
 the course of reasoning, which led my mind to 
 the conclusion I have formed upon a question 
 in which the public has so deep an interest."(ii). 
 " I can also conscientiously declare, that what- 
 ever humble means I may possess of discrimi- 
 nating between truth and error, between 
 degrees of probability, and strict truth, be- 
 tween conjecture and certainty ; have been
 
 recently and anxiously employed in the re- 
 examination of the opinion I now submit to 
 the public." (xix).* 
 
 SECTION I. 
 
 Mr. Huskisson (p. 6.) assumes as admitted, 
 * that in Great Britain, gold is the scale to 
 which all prices are referred ;" and in another 
 publication it is assumed, that " gold bullion 
 is the real and legal standard." 
 
 This assumption (which appears to be the 
 basis of the new system) is so far from being 
 admitted, or admissible, that it is unsanctioned 
 by our best writers on political economy. 
 There is no principle that Dr. Adam Smith 
 was more careful to establish, than this, " la- 
 bour is the real measure of the exchangeable 
 value of all commodities/' " Gold and silver" 
 (he remarks), " like every other commodity, 
 vary in their value, are sometimes cheaper and 
 sometimes dearer/' And again, " labour, it 
 must always be remembered, and not any par- 
 ticular commodity, or set of commodities, is 
 the real measure of the value both of bullion, 
 
 * Whe^n I make quotations with reference only to the 
 page, it is to that ot Mr. Huskisson 's pamphlet.
 
 ['*] 
 
 and of all other commodities/' Wealth of 
 Nations, vol. i. p. 44, 47, 291. 
 
 The question at present is not whether 
 labour is the real standard, but whether gold is 
 so. Dr. A. Smith affirms that it is not; and 
 if his inimitable illustrations of its unfitness, do 
 not convince the reader, I must despair of 
 doing it. The Doctor indeed goes further, and 
 prefers coin as a standard before gold : " Coin, 
 (he tells us, p. 292,) as already observed, is in 
 all the stages of improvement, a more accurate 
 measure of value, than any other commodity/' 
 
 It is sufficiently obvious, that a commodity } 
 whose real value must vary with a great many 
 contingent circumstances, cannot, in the nature 
 of things, be the invariable standard of the 
 value of all other commodities. The poverty 
 or fertility of the mines, and prohibitions or 
 obstructions of commerce, may occasion either 
 a general fluctuation in the value of bullion, or 
 a great disparity of prices in neighbouring 
 countries. Cotton wool, we are informed, 
 was lately &s. the pound in Paris, when it was 
 only 25. in London. " In quiet or current 
 times," i. e. " times of peace, or of war, free 
 from restrictions of every description upon 
 trade with foreign parts," no such difference 
 of price could have existed at all, or only for a
 
 very short time. An equal value of gold bul- 
 lion is of easier transport than cotton wool, and 
 therefore may be smuggled with greater faci- 
 lity. In all other respects, similar obstacles 
 would produce the like effect. 
 
 It is not a little surprising, that all the in- 
 ferences respecting the commerce of bullion, 
 and the course of exchange, should be ground- 
 ed upon the example of " quiet and current 
 rimes," when it is notorious that, in relation to 
 these things, the present times are as different 
 as the extreme of violence and tyranny can 
 make them. Yet a late worthy Baronet (Sir 
 Francis Baring) and others have concluded, that 
 Bank notes must of necessity be depreciated, 
 because the price of bullion, and the exchange, 
 in common with other prices, were disordered, 
 in these very disordered times ! 
 
 A commodity then, which may, through 
 defective supply, or increased demand, or 
 through political events, be twice, or five times 
 dearer, or cheaper, next year, can never be the 
 real or proper standard of the exchangeable 
 value of all commodities. 
 
 Neither is it the legal standard. The legal 
 standard is merely the creature of the law. As 
 to payments of 25/. and upwards, the law has 
 declared our standard to be the gold coin of the
 
 C 6j 
 
 realm : not bullion, but coin. Forty-four gui- 
 neas and a half (which weigh just a pound) 
 are the legal tender for a debt of q.61. i^s. 6d. ; 
 but a pound of gold is not. Could this be 
 doubted, any gentleman may ascertain the fact 
 next term. Let one of his tradesmen bring an 
 action for ^61. 145. 6d. and the tender of a 
 pound of gold bullion in court, though the 
 bullion would probably sell for a much larger 
 sum, will not stay the action. Again, let the 
 plaintiff, in such a suit, plead his right to a 
 pound of bullion, worth $61. instead of 44 gui- 
 neas and a half, worth only ^61. 14,5. 6d. he 
 would not be heard for a moment. Mr. H. 
 indeed affirms (p. 12.) that a pound of gold, 
 and 4,6V. 145. 6d. ought, by the law of this 
 country, to be equivalent : but the law affirms 
 that it neither is, nor ought to be equivalent. 
 
 I therefore venture, on the authority of Dr. 
 Adam Smith, and from the nature of things, to 
 conclude, that gold bullion is not the real, and 
 from the Statute Book, that it is not the legal 
 standard. 
 
 It has been however assumed, because gold 
 coin is the legal standard, that gold bullion of 
 equal weight and fineness must likewise be the 
 legal standard. I suspected from the reason- 
 ings, and inferences of previous publications,
 
 C 7 3 
 
 that the ideas of money and goods, of 
 bullion, had been strangely confounded : but we 
 owe to Mr. H. the distinct acknowledgement 
 of this very extraordinary fact. " There is not, 
 (he informs us, p, 6.) " 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 quantity 
 of the former is accurately ascertained, and pub- 
 licly proclaimed by the stamp which it bears." 
 What! no difference? Surely this very able wri- 
 ter must have forgotten this paragraph, when, 
 at p. 15, he tells us that, " by law a guinea 
 which weighs less than 5pts. 8grs. is no longer 
 a guinea : it is deprived of its quality of coin : 
 it can no longer be tendered as money, but 
 may be sold as bullion." And that, " by law it 
 is an offence highly punishable, to buy or sell 
 guineas for more than twenty-one shillings 
 each." What! all this avowed and no difference 
 admitted ? 
 
 The inference, methinks, is sufficiently obvi- 
 ous : but lest authority be required, let us again 
 appeal to Dr. Adam Smith. " Money" (he 
 tells us, vol. i, p. 4,33) " is the great wheel 
 of circulation, the great instrument of com- 
 merce, which, like all other instruments of 
 trade, though it makes a part, and a very
 
 C 183 
 
 valuable part of the capital, makes no part of 
 the revenue of the society to which it belongs/' 
 Now it cannot be necessary to prove that bul- 
 lion is a merchantable commodity, of extensive 
 use in our manufactures and commerce, produc- 
 tive of revenue both directly and indirectly, and 
 consequently as distinct from the instrument of 
 commerce called money, as it is from that other 
 instrument of trade called a steelyard. Money, 
 as such, is as distinct in its nature and use from 
 bullion, as the steel balance beam is from the 
 metal of which it is composed : but, in the eye of 
 the law, it is much more distinct, being conse- 
 crated and limited by special statutes to a par- 
 ticular use, and none other. A gold watch, as 
 well as a guinea, contains bullion, but neither 
 can be converted into the use of bullion, with- 
 out destroying it as an instrument. This is the 
 natural distinction: the guinea, or coin, has 
 another, a legal distinction. The owner of the 
 watch may melt it ; the owner of the guinea is 
 not allowed the option. To him it is worth no- 
 thing as bullion. 
 
 Can there be a broader line of distinction 
 either in law, or in fact, than that which so 
 evidently exists between bullion and coin? if 
 so, is it not extraordinary that a theory, big 
 with consequences so momentous, should be
 
 built on a fallacy, which confounds the first 
 principles of money and commodities, and over- 
 looks the letter and spirit of the laws of the 
 realm. These laws, we are told, are of ques- 
 tionable policy. Unquestionably they prove 
 that coin and bullion are different things. The 
 question of their policy I leave to the consider- 
 ation of the proper authority the Legislature. 
 Mr. Huskisson demands (p. 13,) that those 
 who question his conclusions, should shew that 
 he has misstated the permanent laws of the 
 realm. I do not say misstated, but he appears 
 to have mistaken their operation in this and 
 some other respects. Bank notes (except in 
 the case of the Corporation of the Bank of 
 England) are not a legal tender. They merely 
 serve in the nature of bail to protect the debtor 
 from arrest. The law since 1797, considering 
 them sufficient bail in every bailable case, or- 
 dains that, being sufficient, they shall not be 
 capriciously refused. In other respects, the 
 law of debtor and creditor is not altered by the 
 Bank Restriction Bill. Other bodies corporate, 
 bankers, and individuals, are still liable to pay 
 in specie. Shy lock may exact his pound of gui- 
 neas : but not bullion.* Bullion is not a legal 
 
 * A most extraordinary doubt is stated by Mr. Huskisson, 
 (p. 86,) whether a Court of Equity can now grant a dis-
 
 [SO] 
 
 tender : Bank notes are not a legal tender: 
 nothing but the King's coin is a legal tender. 
 
 Nothing therefore can be more evident than 
 that guineas are not bullion, nor bullion guineas. 
 This fact is most essential to the present en- 
 quiry. The contrary assumption is the basis of 
 the new theory. By setting up the market price 
 of bullion as the standard of all exchangeable 
 value, the depreciation of bank notes ( and of 
 our guineas also and equally) is inferred, with 
 all its supposed consequential effects upon the 
 price of commodities, and the foreign exchanges. 
 If bullion is not the real and legal standard of 
 all exchangeable value, and if bullion and coin 
 are distinct in nature, in law, and in use, then it 
 must follow, that the new doctrine of depre- 
 ciation is erroneous in principle ; and would be 
 very dangerous in practice. 
 
 If the current coin of the realm is the legal 
 standard, and Bank of England notes exchange 
 for all commodities on equal terms, at par with 
 that standard, (a fact in evidence, and also of 
 
 charge for a rent of icoo guineas, on payment of 1000 gui- 
 neas, because the said guineas will not now purchase so 
 much of the commodity called bullion, as they would have 
 perhaps done when* the lease was granted. It would be folly 
 to say much in refutation of an objection so palpably absurd. 
 The contract being for guineas, Equity can demand only 
 guineas
 
 C 3 
 
 public notoriety,) then we may safely affirm, 
 that Bank notes are not depreciated. 
 
 Had the new doctrine of depreciation been a 
 mere speculative question, I should here close 
 the argument: but as the collateral assumptions 
 embrace matters of great practical importance, 
 I iritreatthe Reader's patient, impartial, and se- 
 rious attention to the following brief sections, 
 and the few concluding observations. The sub- 
 ject indeed is so extensive and momentous, that 
 the greatest difficulty is to compress the briefest 
 consideration of all its parts into a narrow 
 compass. Much room must necessarily be left 
 to the Reader's own reflections. New argu- 
 ments will naturally present themselves ; and 
 to those which are barely hinted, the attentive 
 investigator will give their due expansion. 
 
 SECTION II. 
 
 IT is presumed, by the advocates for the new 
 theory, that Bank notes have been excessive, 
 and that the excess has found employment, and 
 is absorbed, in the increased price of commodi- 
 ties, occasioned by that very excess. 
 
 We must for a moment admit, that there 
 may have been a temporary excess of Bank of
 
 England* notes, in order to the enquiry, whe- 
 ther they necessarily revert to the issuers as 
 often as they tend to superfluity, or whether 
 they continue in circulation till absorbed in 
 their diminished value. 
 
 The celebrated author of the Wealth of Na- 
 tions, lays it down as a principle (vol. i. p.. 448 .) 
 that " the whole paper money of every kind, 
 which can easily circulate in any country, can 
 never exceed the value of the gold and silver, of 
 which it supplies the place, or which would 
 circulate there, if there was no paper money /'-f 
 And he employs much of the second chapter of 
 his second Book, in demonstrating, that an 
 excess of paper currency must necessarily rec- 
 tify itself, by returning upon the issuers : con- 
 cluding (p. 490) that, "the increase of paper 
 money does not necessarily augment the money 
 price of commodities." 
 Here it may be fairly objected, that the Doctor 
 
 * It is to be observed, that the question is limited \oBank 
 of England notes y it being admitted, that there is an effectual 
 check against the excess of Country Bank notes. 
 
 t " Intrinsic value," is not according to Dr. Adam Smith, 
 " of the essence of money." The essence of money is, the 
 security of obtaining at all times its standard value in 
 commodities. It matters not whether that security is in- 
 trinsic or extrinsic, provided there is equal surety and faci- 
 lity of exchanging it.
 
 presupposes the convertibility of such paper into 
 specie on demand. Certainly; and we have 
 already granted, that the obligation to pay in 
 specie is an effectual check against the exces s 
 of paper money. Doctor Smith neither did or 
 could foresee such a revolution in the political 
 and commercial state of Europe, as renders that 
 check liable to greater evils, than those which it 
 is calculated to prevent. An effectual check is 
 undoubtedly necessary ; and we shall examine 
 whether it does, or may exist, irrespective of 
 the liability to pay in specie. In the mean 
 time it is clear, that the Doctor entertained very 
 different notions about coin and bullion from 
 those lately promulgated. "It would be ri- 
 diculous" (he says vol. 2, p. 153) " to go about 
 seriously to prove that wealth does not consist 
 in money, or in gold and silver ; but in what 
 money purchases; and (i. e. money] is valuable 
 only for purchasing." 
 
 As long therefore as Bank notes will pur- 
 chase commodities on the same terms with 
 specie, so long they are at par with specie ; 
 and prove the existence of some effectual check 
 against their excess. So long also we may avoid 
 the monstrous and absurd injustice of compell- 
 ing the Bank (could that be done) to supply
 
 t 24 3 
 
 fraudulent melters, and our enemies with bul- 
 lion at 15 or 20 per centum under the market 
 price. It would be equally just and politic to 
 compel the Bank to supply Buonaparte's sub- 
 jects with cotton wool at 25. per pound, for 
 which they are ready, if permitted, to pay us 
 Ss. but such would be one of the calamitous 
 effects of the proposed measure. 
 
 To return, however, to the more immediate 
 question. It is presumed, that while the public 
 can only demand from the Bank, paper in ex- 
 change for paper, they will not care about re- 
 turning its notes ; and therefore the daily con- 
 tinued issues of new notes must inevitably grow 
 to excess. If the Bank were not also daily oc- 
 cupied in retiring and cancelling its notes, 
 this would be the case : but the first symp- 
 tom of depreciation would naturally prompt 
 the holders of Bank notes to hasten to get 
 rid of an unprofitable and declining article ; 
 and the return of notes to the Bank must 
 be always in the ratio of their superabundance 
 or of their discredit. No man, beit remem- 
 bered, is compelled to take or keepthem : they 
 are not a forced currency. 
 
 It has evidently escaped the objectors, to en- 
 quire bow Bank notes do revert to the issuers
 
 as soon as there begins to be any redundance of 
 them in circulation. This is effected in a way 
 which no legislative regulations could provide, 
 or enforce : bat which is always effective, and 
 uniform in its operation. 
 
 No one, from the Chancellor of the Exche- 
 quer to the humblest customer of the Bank, 
 solicits the discount of " bills of undoubted so- 
 lidity/' unless he has real occasion for the cur- 
 rency : because he must pay for that currency 
 the high premium of 5 per cent, per annum. 
 This is virtually the Agio which Bank notes 
 constantly bear. Besides, it is a matter of diffi- 
 culty and favour to obtain them at all ; how often 
 was that first of customers, the immortal Pitt, 
 refused ? To understand the declamations we 
 frequently hear, one should suppose, that the 
 Bank Directors, like quack doctors, send their 
 bills to be given away at the corners of every 
 street. On the contrary, the Right Honourable 
 the Chancellor of His Majesty's Exchequer, 
 and all the merchants in London will certifj, 
 that it is a difficult thing to procure the issue of 
 Bank notes. The Directors of the Bank will 
 not abate an iota of their rigid rules. Perfect 
 security repayment at a short and fixed period > 
 and the premium in hand, are the indispensable 
 conditions of every issue of Bank notes. Even
 
 their enemies, if they have any, will allow that 
 the officers of the Bank very strictly adhere to 
 those regulations. 
 
 The discount customers of the Bank, with 
 few exceptions, are also the customers of pri- 
 vate bankers ; and ordinarily they do not apply 
 to the Bank for discount, while their hankers 
 are able and willing to supply them. Whenever 
 there is " a plenty of money," private bankers 
 discount more largely ; consequently the mer- 
 cantile applications to the Bank decrease in 
 proportion : whenever there is plenty of money 
 Exchequer bills bear a premium in the market, 
 and government can sell them there, instead of 
 soliciting the advance from the Bank. Thus the 
 Bank issues will diminish, while the daily in- 
 crease of taxes, and the payment of bills falling 
 due, bring in their notes, and cancel them, to a 
 very large amount : so that in the course of a 
 few days, the superfluity of notes will be silently 
 and imperceptibly returned upon the issuers. 
 That every redundance of paper currency should 
 be thus corrected, is a probable expectation ; 
 and that it is actually so corrected, may be sa- 
 tisfactorily ascertained by the evidence of all 
 the money dealers in London. 
 
 A superabundance of metallic money, it is 
 admitted on all hands, will correct itself by
 
 C 27 3 
 
 exportation : but that is comparatively a long 
 process. The return of every excess of paper 
 money upon its issuers is immediate, and the evil 
 is thereby rectified as soon as felt. Should the 
 Bank of England suspend its issues of notes 
 for one week, a tenth part, probably, of all its 
 paper would be cancelled, within that short 
 space of time. 
 
 If, therefore, Bank notes, though not con- 
 vertible into specie, on demand, are convertible 
 at will into gold or silver, or any other commo- 
 modities, on equal terms with specie, there is 
 exactly the same inducement to return the sur- 
 plus to the Bank, as there was, when payment 
 might be demanded in specie. " Wealth con- 
 sists not in money, but in the money's worth, not 
 in the metal pieces, but in what can be got for 
 them." (Wealth of Nations, p. 440, vol. i.) 
 If the paper currency is, or is likely to be, de- 
 preciated, the inducement to return it upon the 
 issuers is so much the stronger. From all these 
 circumstances we may fairly conclude, that an 
 excess of Bank notes will correct itself more 
 certainly and promptly, than an excess of specie 
 could do ; and that every redundance of Bank 
 notes has been so corrected, and not absorbed 
 in increased prices of its own creation.
 
 SECTION III. 
 
 THE new theory having assumed, that " gold 
 bullion is the real and legal standard of all 
 exchangeable value/' concludes that the high 
 price of commodities, and low rate of ex- 
 change, are the effect of, and certainly prove, 
 an excess of depreciation of our currency, both 
 paper and metallic. 
 
 If I have succeeded in demonstrating that 
 Bullion is not our real or legal standard, the fal- 
 lacy of the above inference is already proved : 
 but, in order to the further elucidation of a 
 " question so abstract, and which, in its prac- 
 tical consequences, affects the interests and 
 comforts of every class of society;" (p. xiii) 
 which, I fear, would be very grievously affected 
 should Mr. Huskisson's advice be adopted) I 
 shall now endeavour to explain the true causes 
 of the late rise in the price of commodities, and 
 of the fall in the rate of our exchanges with 
 the Continent. 
 
 Much laborious and minute investigation has 
 been (I shall say) wasted, in order to prove a 
 fact, which nobody would deny, namely that 
 . or 44, guineas and a half, will not
 
 buy a pound of gold bullion at the present 
 market price ; nor a bill drawn from the Con- 
 tinent for that sum, produce in payment a pound 
 of such gold. Neither would it be denied, that 
 a permanent depreciation of currency would 
 produce that effect: but we deny that like 
 effects necessarily prove the same cause. Fever 
 very often produces death, but all deaths are not 
 caused by fever. 
 
 The high price of bullion was ascribed by 
 the gentlemen examined to the excess of 
 demand above the supply. One very intelli- 
 gent witness acknowledged, however, that he 
 could obtain any quantity, if willing to pay 
 the price. Hence an inference was eagerly 
 drawn, that there could be no scarcity of bullion. 
 About ten years ago the same inference was 
 often made by the distressed poor, during the 
 season of a great dearth. "You talk/' said 
 they, " of scarcity, but it is all monopoly. We 
 feel and suffer, because, through exorbitant price, 
 we can purchase but one loaf, while you, who 
 have money, may purchase a thousand every 
 day. Where then is the scarcity ?" It was no 
 easy task to explain this seeming paradox to 
 the comprehension of the famishing poor: but 
 I own, I did not expect to hear such an objection 
 from persons of cultivated minds.
 
 C 3 3 
 
 There not being any official document of all 
 the imports and exports of bullion, it cannot 
 be accurately ascertained, whether these greatly 
 varied in the last few years:* But as we formerly 
 drew most of our gold from Lisbon, and as, in 
 consequence of the invasion and spoliation of 
 Portugal by the French, our supply from thence 
 ceased just before the rise of price was felt in 
 our market, it is hardly to be doubted that the 
 rise was owing to a deficient supply. So far, 
 in truth, from receiving our accustomed sup- 
 plies of bullion from Portugal, we have, during 
 the last three years, been exporting it to that 
 country and to the Brazils. 
 
 From the tables published, it appears that 
 the gold received at the Bullion Office of the 
 Bank,-f between the first of January 1809, 
 and the goth March 1810, was in value 
 520,225. and that the gold delivered from 
 thence between the ist January 1809 and ist 
 April 1810, was 805,56s/. 95. 8d. Now, assum- 
 
 * Would not a small duty both on import and export of 
 bullion be desireable, in order to its being entered at the 
 Custom House. 
 
 t All the bullion, I believe, v/hich is brought home in his 
 Majesty's ships and packets, is sent to the Bank of England, 
 and very little, I am told, is imported in merchant vessels 
 in time of war.
 
 Csi 3 
 
 ing (which is probably very near, if not the 
 exact truth) that the whole supply and demand 
 of the kingdom bore a like ratio, it follows that 
 the supply was less than the demand by about 
 Tths, during the period in question ; and a rise 
 of price would, in this, as in all cases, be the 
 necessary consequence of a scarcity of the 
 commodity. It is also very possible, in these 
 disordered times, that a scarcity of bullion 
 may really be experienced here, and for a long 
 period, although there is, on the whole, a plenty 
 in the great market of Europe. 
 
 It was stated by one witness, that he sold to 
 the trade, (that is for home consumption) 
 2000 ounces a month, or about ioo,ooo/. in 
 value per annum. Now supposing his house 
 to furnish ^ of the whole consumption of our 
 artisans and manufacturers, the whole internal 
 consumption of the kingdom, so far from hav- 
 ing " fallen off almost to nothing/' (as Mr. 
 Huskisson states (p. 80,.) was enormous in 
 comparison with the supply. 
 
 In addition to these strong grounds of belief, 
 that there was in this country a real scarcity 
 of ex portable gold bullion, the enormous freight, 
 paid to foreign ship masters (amounting in the 
 latter part ot 1808 and the year 1809 to several 
 mil lions sterling), would of itself account for
 
 an extraordinary demand and consequent ad- 
 vance of price. From the prohibition of all 
 British goods on the Continent, and the fall of 
 the exchange, those men found it difficult to 
 realise the wages they had earned with much 
 hazard. As the best article, because the easiest 
 to conceal and land at their return, they would 
 be eager to purchase gold, even at the advanced 
 price. This extraordinary demand, accompa- 
 nied also by that of our merchants, in conse- 
 quence of the fall of the exchange, naturally 
 raised the price of bullion. The latter was the 
 inevitable effect of the operating cause ; and it 
 would have been an unaccountable circum- 
 stance if the price had not risen. 
 
 Here then are facts, which necessarily and 
 satisfactorily prove, that bullion ought to have 
 advanced in price, as it has done. Previous to 
 the extraordinary demand in this country, it is 
 probable that gold was rather greater in supply 
 than demand, because the price of bullion did 
 not keep pace with the real advance in the price 
 of most other commodities. The effects of the 
 pretended depreciation, it is granted, " were not 
 felt till a late period," (p. xv.) but some com- 
 modities were dearer, and most of them nearly 
 as dear ten years ago. When Adam Smith 
 wrote, about 40 years since, the average of
 
 country labour in Great Britain, was about a 
 shilling a day of wheat ^os. a quarter, and 
 gold 3/. iSs. an ounce. At present the average 
 of labour may be reckoned 2$. %d. of wheat 
 905. and of gold 905. The quarter of wheat 
 would therefore purchase the same quantity of 
 labour then as now : but the ounce of gold, 
 which would then purchase 78 days labour, 
 though only 3/. 18^. an ounce, will purchase at 
 present, though advanced above 15 per cent, 
 in price, no more than 40 days labour. Gold 
 therefore is still cheap. Had its supply and 
 demand in this country been in the like ratio 
 with wheat, its nominal price at this time would 
 be S/. 155. 6d. per ounce, and its real price 78 
 days labour, as formerly. 
 
 This solves the supposed paradox (p. 87) 
 of ascribing the late sudden rise in the price of 
 gold to an extraordinary demand in this coun- 
 try ; and the non-advance before, and the still 
 small comparative advance, to an abundance of 
 that commodity in the market of Europe. This 
 abundance is also the necessary result of recent 
 events. The supply from the American mines 
 has, for aught we know, not greatly fallen off 
 during the last 20 years ; but within that period 
 Great Britain has not only changed from coin 
 
 D
 
 C 34 3 
 
 into bullion a prodigious sum (perhaps vo mil- 
 lions of guineas ) , but having ceased, or nearly 
 ceased to coin for 13 years, she has also spared 
 an immense consumption ;* and the calamities, 
 which have so grievously afflicted and impo- 
 verished the Continent, must have prevented 
 great part of the ordinary consumption, which 
 wealth and luxury formerly created. 
 
 Therefore, unless I am very greatly mistaken 
 in point of fact, unless we have not had within 
 the last two years extraordinary demands for 
 bullion, unless we have not diminished our 
 coinage, unless a great number of guineas 
 have not been melted or exported ; and unless 
 the misfortunes of the Continent have not di- 
 minished their consumption of gold, I think it 
 must follow, that the rise in the price of bullion 
 in this country, above the other European mar- 
 kets, is satisfactorily accounted for, without any 
 relation to the state of our internal currency.^ 
 Circumstances equally notorious, and influ- 
 
 * The coinage in the first 37 years of the King amounted 
 to above 68 millions ! ! 
 
 t The prosperity of Great Britain, and the penury of the 
 Continent, would alone occasion a great disparity of price. 
 " The price of gold and silver, whatever be the state of the 
 mines, is at all limes naturally higher in a rich than in a 
 poor country," Wealth of Nations, vol. i, p. 295.
 
 t 35 3 
 
 ential on the price of provisions and commo- 
 dities in general, have occasioned a very consi- 
 derable advance. Political events have caused 
 an enormous advance in the price of many raw 
 materials of indispensible use in our trade and 
 agriculture, such as timber, hemp, tallow, and 
 many other things, and. An enormous in- 
 crease of taxes, amounting to more than 40 
 millions a year, in direct payment, and to a 
 much larger sum in its effect upon prices. For 
 the tax in the first instance, must be repaid with 
 interest and profit in every stage, from the im- 
 porter, or cultivator, up to the consumer. One 
 shilling a gallon, for example, on wine imported, 
 always raised the tavern price more than double. 
 3rdly. A decrease of labouring hands. While 
 the increase of agriculture, manufacture, and 
 trade in general, required more hands, the 
 great augmentation of our military and naval 
 force has diminished the number. But, ^thly, 
 and principally, the great increase of national 
 wealth, apparent in every town, village, and 
 hamlet in the kingdom. Houses for business 
 and convenience, docks, canals, roads, bridges, 
 carriages, shipping and goods, the produce of 
 the universe, have increased within the last 20 
 years,more than in the whole preceding century, 
 It is not too much to say that the national stock 
 
 D 2
 
 of real substantial wealth has doubled since the 
 year 1789.* 
 
 All these circumstances powerfully, and ir- 
 resistably tend to raise the price of labour and 
 provisions, which diffuses itself over the price 
 of commodities in general; irrespective of the 
 peculiar circumstances, which further augment 
 the price of some of them in particular. 
 
 Dr. Adam Smith (Book ist,) has abundantly 
 shewn, . that these circumstances, increasing 
 wealth especially, must raise the price of com- 
 modities ; and also that increasing poverty will 
 lower them. In this respect, I have no doubt 
 the new theory would realise its promise of 
 reducing prices. But whether the state would 
 be better without revenue, the landlord without 
 rents, the merchant without profits, and the 
 poor without employment, or with much less 
 than at present, I leave to the consideration of 
 the advocates of the proposed reformation. 
 
 Here again I venture to suppose, that unless 
 the disordered state of the world has not in- 
 terposed unusual obstacles in the way of trade, 
 unless taxes have not increased, unless the 
 proportionate number of labouring hands has 
 
 * If we may judge from the ability to bear the public 
 burdens, the increase is much more, for taxes are augmented 
 nearly fourfold.
 
 C373 
 
 not diminished ; and unless the national wealth 
 has not augmented, we have all those real 
 causes of advanced prices, without any relation 
 to the amount of Bank notes. The rise of 
 prices also, be it remembered, has existed for 
 many years, but the effects of depreciation were 
 not felt till a late period." 
 
 There is, however, another supposed proof 
 of the excess and depreciation of Bank notes, 
 namely, the fall of the foreign exchange. 
 
 Mr. Huskisson's apology for his inattention 
 to the supposed evil of paper money is, "that 
 he felt assured the Bank Directors, in regulating 
 their issues, never lost sight of these two cir- 
 cumstances : a permanent depression of the 
 exchange, or a rise in the price of gold, ap- 
 peared to be pointed out to them, by the prin- 
 ciples of their institution, and by the course of 
 all former experience, as the obvious and best 
 criterion of any tendency to excess in the 
 amount of their paper/' (p. xvi.) " Bullion/' we 
 are also told, " is the true regulator of the rate 
 of foreign exchanges :" " the price of bullion 
 and the general course of exchange taken for any 
 considerable period of time, is the best general 
 criterion from which an inference can be drawn, 
 as to the sufficiency or excess of paper cur- 
 rency;" and, that the Bank cannot safely
 
 [38] 
 
 regulate the amount of its issues, without having 
 reference to the criterion presented by these two 
 circumstances." 
 
 To Mr. Husldsson I reply, by asking upon 
 what principles of the Bank institution, and 
 what circumstances in the coyrse of all former 
 experience, it appears the obvious duty of the 
 Bank to regulate its issues by the price of bul- 
 lion, and the rate of exchange ? It is passing 
 strange, that these obvious principles and duties 
 should have escaped the penetration of all the 
 Bank Directors in succession for more than a 
 century! I would also ask, in what relation 
 little more than a year may be called " a per- 
 manent depression ?" The circumstances which 
 occasioned the alteration of price having con- 
 tinued, the effect naturally keeps pace with the 
 cause. The property tax is not a permanent 
 tax, though it has continued much longer than 
 the evils now complained of, and will probably 
 extend far beyond them. 
 
 To the other assumptions, Mr. Huskisson 
 has kindly and satisfactorily replied. Instead of 
 the course of exchange being " the best criterion 
 of depreciation," he assures us (p. 75,) that 
 it " is, of itself, of little interest or importance ;'' 
 andj *< connected with the question only as it 
 is a symptom of depreciation." " Partu.riunt
 
 C 39 D 
 
 montes, &c." It had indeed been previously 
 granted, " that the circumstances of the trade 
 of this country, were such as to occasion a 
 real fall of the exchange almost as low as the 
 limit fixed by the expense of remitting gold." 
 This limitation supposes that such remittances 
 are an ordinary consequence of a falling ex- 
 change: but Mr. Huskisson refutes the as- 
 sumption, and affirms that " this position is so 
 little conformable to truth, and to the real 
 course of business between nations, that there 
 is, perhaps, no one article of general con- 
 sumption and demand, which forms the foun- 
 dation of so few operations of trade between 
 the different countries of Europe, as bullion." 
 P. 48, et infra. 
 
 Were any other argument necessary to prove, 
 that bullion is not the true regulator of the ex- 
 change, nor, among commodities, the best re^ 
 mittance at almost any time ; and in the pre- 
 sent times, the very worst ; I would refer to 
 Mr. Lyne's very intelligent and perspicuous 
 statement.* I am aware indeed, that being a 
 man of " practical detail," his opinions will not 
 have much weight with some persons : but I 
 cannot help thinking, that on further reflection, 
 practical opinions upon practical subjects, will 
 
 * Vide Minutes of Evidence.
 
 C 40] 
 
 be allowed their due weight, On a military 
 question, the unanimous opinion of a great 
 number of veteran general officers : or on a 
 medical case, that of a great number of expe- 
 rienced physicians, would be judged decisive. 
 On a commercial question, the unanimous opi- 
 nion of a great number of the first merchants in 
 the universe, seems entitled to equal respect. 
 
 The nameless witness (to whose opinions 
 much deference appears to have been paid) 
 admitted, that the whole depression of the ex- 
 change was owing to the circumstances, which 
 affected our trade with the Continent : but its 
 non-recovery to the want of specie in this coun- 
 try. It is to be regretted, it did not occur to 
 ask that well informed gentleman (for such 
 his answers indicate), bow our currency, sup- 
 posing it all gold, could have restored the 
 exchange. It could not be by mere illusion; 
 ( though some stress was laid upon ftiat charm) 
 his brethren,the/oragw merchants, care nothing 
 about the things they cannot obtain from us. 
 It is not English guineas, but English goods, 
 upon which they speculate. Guineas, however 
 plenty, they could not obtain by fair means; 
 and it would be injustice to suppose them not 
 too honest to break the law ; and we must allow 
 them too much prudence to risk the penalties.
 
 At any rate, it is not the guineas, as such, that 
 could affect the exchange, " it being admitted, 
 on all hands, that our currency has no value in 
 foreign countries'" (p. 75), none as currency, 
 but only as bullion. Hence it necessarily fol- 
 lows, that our stock of exportable bullion would 
 have been diminished in proportion to our 
 coinage and use of metallic money. Who 
 would have thought of rectifying the exchange 
 by prohibiting the export of nine-tenths of our 
 manufactured goods and colonial produce ? Yet 
 the prohibition of exporting gold, as far as gold 
 has any relation to the question, is exactly the 
 same in principle. By coining gold, we pro- 
 hibit its use as merchandize ; we put it out of 
 commerce. 
 
 It is then a proposition almost self-evident, 
 that to coin guineas unnecessarily, would be to 
 create a new and an enormous demand for gold 
 bullion, which would enhance its price, lessen 
 the stock of exportable gold, and defeat the 
 very end for which a great coinage is recom- 
 mended. To oblige the Bank to coin (were 
 that possible) under the present circumstances 
 of Europe, would be to oblige them to supply 
 fraudulent melters and exporters, as well as 
 our inveterate enemies, with gold at $/. 1 7$. lo^d. 
 for which the Bank must now pay ^/. KM. and
 
 C 42 ] 
 
 eventually a much higher price ! No man can 
 wish for such a disaster. 
 
 The notion, that the common mode of 
 balancing an unfavourable exchange, is by a 
 payment in bullion, is sufficiently refuted by 
 Mr. Huskisson, p. 49, and a little enquiry 
 will shew that it is still less common for the 
 internal currency of a foreign country to enter 
 into mercantile calculation. The British mer- 
 chant, who sends sugar to St. Petersburg!*, 
 never sits down to calculate the intrinsic worth 
 of Russian money: He never dreams of im- 
 porting roubles, copecks, &c. He only calcu- 
 lates how much the bills, it will enable him to 
 draw, will sell for in London, or how much 
 hemp, tallow, or other Russian produce, his 
 sugar will purchase. It does not at all interest 
 him in what species of internal currency the 
 seller of the hemp, and the buyer of the sugar 
 adjust their accounts. It suffices, that the 
 money for which his sugar sells, is available to 
 buy other goods at the same standard : in 
 other respects it is absolutely indifferent to him, 
 by what name it is called, or of what materials 
 it is made. ' It is not money, Dr. A. Smith 
 informs us, but that which money will pur- 
 chase, that is valuable." Suppose, in the pre- 
 sent instance, the Russian money actually
 
 t 43 ] 
 
 debased, but current : both the sugar and 
 hemp may require a greater number of pieces 
 to effect the transfer : but if the sugar first pro- 
 duces a greater number of the deteriorated 
 coins, the hemp will cost a greater number in 
 the same proportion, the ratio is the same. 
 The real exchange is between hemp and sugar ; 
 and the same principle governs every operation 
 in all the multifarious transactions of com- 
 merce. 
 
 Had our currency been really depreciated, or 
 of fluctuating value, we should have had two 
 rates of exchange, one for pounds sterling and 
 the other for pounds current. This is, and was 
 always, the case with Holland, Hamburgh, 
 &c. where the currency was marketable and 
 consequently fluctuating, there is one rate for 
 banco, and another for current money. So 
 with countries that had a depreciated paper 
 money, as France and Spain, there was one 
 price for current, meaning paper money, and 
 another for effective, meaning specie. There 
 is unquestionably but one rate of exchange 
 upon London, and that for pounds sterling, which 
 proves the real and computed exchange actually 
 the same ; and our currency not depreciated. 
 
 " The circumstances of the trade of this 
 country," it is admitted, " in the course of the
 
 [ 44 ] 
 
 last year, were such as to occasion a real fall of 
 our exchanges with the Continent to a certain 
 extent/' That extent, it is presumed, was 
 limited by the amount of the cost of sending 
 bullion to the foreign markets. But the very 
 circumstances which occasioned the necessity 
 of sending bullion, operated against that mode 
 of remitting ; and with perfect knowledge of 
 all the facts, a great number of gentlemen, of 
 superior understanding, long experience, and 
 most extensive commercial practice, unani- 
 mously agree that the whole depression of the 
 exchange was occasioned by those circumstan- 
 ces. The mere enumeration of a few of them, 
 is sufficient to account for all the effect, which 
 actually resulted from them. The prohibitions, 
 obstructions, depredations, and lawless violence 
 of a most powerful and inveterate enemy : 
 the prompt payments for importations, far ex- 
 ceeding the amount of former years, aggra- 
 vated very greatly by the want of middle-men, 
 or exchange merchants ; and the difficulty of 
 communication by letter: the long credits, 
 and uncertain payments for our exports ; and 
 the failure of all legal remedies : the enormous 
 freights (amounting in many instances to more 
 than the prime cost of the cargoes) paid to 
 foreigners; and the large subsidies, or supplies,
 
 L 45 3 
 
 sent to our allies and our forces abroad. * 
 All these circumstances co-operated in a very 
 powerful and a very unusual degree, not only to 
 make the balance of actual payments greatly 
 against this country, but to increase the effect 
 of that balance upon the course of exchange. 
 A very great effect they certainly produced : 
 but it would have been far more difficult, under 
 such circumstances, to account for a small 
 depression of the exchange, than for the whole 
 that has been produced. 
 
 The more these premises are attentively con- 
 sidered, the more conclusively, I think, it will 
 appear, that the late fall of the exchange does 
 not prove either any excess or any depreciation 
 of our currency. 
 
 SECTION IV. 
 
 SEVERAL events in modern history have been 
 adduced to confirm the notion that the rise of 
 
 * The bills drawn from abroad upon the Commissioners of 
 the Treasury between the 5th Jan. 1809, and 5th Jan. 1810, 
 are stated at . 4,i62,290/. 
 
 Specie remitted by the Paymasters-general be- 
 tween Jan. 1808, andthe end of the year 1809 4,4O3>884/. 
 Of the bills drawn between 5th Jan. 1809, and 
 May 1 8 10, on the paymasters of the Naval 
 and Ordnance departments, I find no account, 
 but they certainly amounted to a very large 
 torn, perbafs 5,eoo,ooo/.
 
 C*6 3 
 
 prices, and the fall of the exchange, are the 
 consequences and proof of a depreciation of 
 Bank notes. We hear again and again of the 
 American Congress paperFrench ass i gnats, 
 &c. &c. of a forced currency, emitted at the 
 point of the bayonet, issued by parties against 
 whom the takers of the notes had no remedy, no 
 option of refusal ; nor, in most cases, any hope of 
 payment. To assimilate such paper to the free, 
 voluntary, and perfectly secure notes of the Bank 
 of England, is more extravagant, than to com- 
 pare' the bond of an opulent man of known 
 probity, with the note of a fraudulent bankrupt. 
 The congress paper, it is true, was ultimately 
 liquidated, but the uncertainty of that event 
 justified all the depreciation it suffered. 
 
 An occurrence much more to the point, but 
 which appears to me a pregnant proof of the 
 fallacy of the new doctrine of depreciation, is 
 the effect produced upon the exchange of Scot- 
 land by the conduct of the Ayr Bank. The 
 reader may find in " the Wealth of Nations, 
 vol. i. p. 471 et infra, a minute and perspicu- 
 ous relation of the motives which produced 
 that establishment, the principles that guided 
 its management ; and the causes which inevi- 
 tably lead to its failure. It will be found, that 
 in every respect, except that of a great capital,
 
 C473 
 
 it was the very reverse of the Bank of England. 
 It was founded in mistake, managed by inex- 
 perience, and ruined through error. Its pro- 
 jectors fancied that immove able property, such as 
 houses, lands, &c. was a proper fund upon 
 which to create and keep in circulation an im- 
 mense amount of cash notes, or paper money.* 
 By this means a fictitious (or accommodation) 
 capital was created : but the notes, being un- 
 naturally obtruded into circulation, reverted to 
 the issuers as fast as they occasioned excess in 
 the general currency. The disposable funds of 
 the Bank were speedily exhausted, and their 
 dead securities unavailable. In this exigency 
 they had recourse to the ruinous expedient of 
 raising supplies by drawing fictitious bills upon 
 agents in London, which necessarily entailed 
 loss and expences sufficient to accelerate the 
 failure, that must in any case have followed 
 sooner or later. The necessary effect of these 
 drafts and redrafts upon London, was to create 
 a balance of payments against Scotland, and to 
 lower the exchange. For although there was 
 no balance of trade, probably, against Edin- 
 burgh, every one of those fictitious bills pro- 
 
 * A house, called " the Security Bank," was opened a 
 few years ago in London, upon the same principles, but 
 fell to ruin in a very short time.
 
 duced the same effect, as an unfavorable balance 
 of trade would have done. There were more 
 sellers than buyers of bills in the market : the 
 supply was greater than the demand, which is 
 the whole secret, and the price of course fell ; 
 the exchange was depressed . 
 
 From this example we may gather several 
 important facts : first, that the Ayr Bank, with 
 its enormous capital, and very powerful and ex- 
 tensive influence, could not force a single note 
 to remain in circulation beyond the real occasion 
 for currency ; that an excess of paper money 
 does necessarily and speedilyrevert to the issuers; 
 and is not necessarily absorbed in the increased 
 price of commodities ; for it is not even pre- 
 tended, that the notes of the Ayr Bank produced 
 any such effect. It also proves conclusively, 
 that the depression of the exchange was not 
 caused by an excess of currency, but by an 
 excess of bills of exchange, which would have 
 affected the market in the same degree, had the 
 like excess been created in support of any other 
 speculation, or by an unfavourable balance of 
 trade.* 
 
 Another remarkable example adduced in 
 
 * The optional notes of the Scotch Banks, issued about the 
 same period, are not in point. They were more of the nature 
 of securities for loans. They were anomalous as currency, 
 and were properly suppressed by Act of Parliament.
 
 ' C 49 3 
 
 support of the new theory, is the low rate of 
 exchange between Ireland and England, on 
 which, in the year 1804, (when it attracted 
 the notice of Parliament), a Committee of the 
 House of Commons, after long and laborious 
 investigation, made a Report. That Report 
 threw much new light upon the subject of 
 currency and exchange ; and the facts and evi- 
 dence produced, were by many thought de- 
 cisive against the opinion which the Committee 
 expressed. It should seem that Parliament 
 thought so, for no legislative measure (I believe) 
 was founded upon it. One fact was establish- 
 ed, which militated strongly against the whole 
 frame and conclusion of that Report, viz. that 
 at the same time, when Bank of Ireland notes 
 were said to be depreciated, Bank of England 
 notes bore a premium in Dublin of one or two 
 per cent, above guineas. All the arguments 
 which were employed to demonstrate the de- 
 preciation of Irish Bank notes, applied, mutatis 
 mutandis, to the notes of the Bank of England. 
 Had the rate of exchange become equally un- 
 favourable to England, the notes of the Bank 
 of Ireland would have borne just the same 
 premium in London, as was given fon Bank 
 of England notes in Dublin. The motive for 
 
 E
 
 C50 ] 
 
 preferring the latter to specie, was obvious $ 
 the cost of remitting Bank paper was much 
 less, and that difference constituted the pre- 
 mium, which notes bore beyond guineas. 
 
 From whatever cause the fall of the ex- 
 change proceeded, it is evident that the pre- 
 mium upon English Bank notes arose out of 
 that fall of exchange ; and there was no more 
 reason to conclude that Bank notes were at 
 a discount in Ireland, than that they were at a 
 premium in England. 
 
 But it is objected, that while the exchange 
 of London upon Dublin for bills payable in 
 paper was ioper cent, against Ireland, bills upon 
 Belfast, stipulated to be paid in guineas, were 
 at par. Nothing can be plainer than the cause 
 which produced that effect. Guineas had lost 
 their character of coin, and were become a mer- 
 chandise of fluctuating price. They were 
 daily bought and sold as bullion ; and a bill 
 drawn for so many ounces of standard gold, 
 would have borne the same premium, provided 
 the pieces of gold carried a certain mark, or 
 certificate of their weight and fineness. A bill 
 drawn at present on the Continent payable in 
 London in guineas or in pounds sterling, will 
 sell for the same, price : but if drawn to be
 
 paid in gold bullion, it would fetch just as much 
 more as the market is above the Mint price of 
 gold. Take away from guineas the prohibi- 
 tion of melting or exporting, you take way the 
 character of coin, the fixed standard ; and 
 guineas would be merchantable, and as various 
 in price as bullion, with which they would 
 then be identified. Then indeed it might truly 
 be said we have no standard ; except Bank 
 notes should be so declared. 
 
 If further proof were necessary to show 
 that the internal currency of Ireland had no 
 connexion with the rate of exchange, Mr. 
 Huskisson furnishes a most conclusive evidence 
 (p. 56.) He takes up, apparently without ex- 
 amination, a supposed coincidence between a 
 reduction of the notes of the Bank of Ireland 
 in 1805, and the improvement of the exchange. 
 This is a notable instance of the inattention of 
 the new theory to practical details. Had the 
 fact of the assumed coincidence been true, it 
 would not have affected the real question : but 
 it is passing strange, that a man of Mr. Huskis- 
 son's acute discernment should not have per- 
 ceived, that the evidence before him demon- 
 strated the very reverse of his inference. For it 
 appears by the tables, that on the 
 
 Ea
 
 [5*] 
 
 The notes of the Bank The Exchange 
 of Ireland amounted to on London. 
 
 1st Jan. 1805, 2,902,000 S\ 
 
 ist Jan. 1806, 2,4,65,000 11^ 
 
 1st April 1809, 3,200,000 7 
 
 So that the most favourable exchange, since 
 1804, coincides with the highest amount of 
 notes, and vice versa, the lowest amount of 
 notes with the highest exchange ! Can argu- 
 ment add any thing to the force of such a fact ? 
 In King William's reign, our silver coin was 
 debased, Bank notes were at a discount, and the 
 exchange was against us. Here the coincidence 
 is in favour of the new doctrine : but the cir- 
 cumstances are not similar. The silver coin 
 was then debased 25 per cent, but it is now de- 
 based above 40 per cent. Guineas then exchang- 
 ed for 30 of those shillings, now for 21 of worse 
 shillings. Bank notes were 17 percent.* below 
 the debased silver, and above 50 per cent, below 
 the gold coin ; but now they are at par with both 
 silver and gold coin. Now, if it be true, that "the 
 experience of our own, as well as of all other 
 countries, has placed beyond the reach of con- 
 
 * The cause of the discount of Bank notes is explained by 
 Mr. Godfrey, a Bank Director at the time. The Bank 
 issued nstes on mortgage and pledges ! They recognised and 
 rectified this error.
 
 C 53 3 
 
 troversy the proposition that if one part of the 
 currency of a country (provided such currency 
 be made either directly or virtually a legal 
 tender according to its denomination,) be de- 
 preciated, the whole of that currency, whether 
 paper or coin, must be equally depreciated." 
 (p. 7.) Then it must follow, that the currency 
 of King William's reign, could not have been 
 in any part depreciated, because some part of it, 
 the gold coin, was not debased. 
 
 We do not know at this distance of time, all 
 the circumstances, which then affected our 
 exchanges with the Continent. That those 
 were very " unquiet and uncurrent times," is 
 very certain : and an unfavourable exchange in 
 a period of so much foreign war, and domestic 
 distrust, is far from surprising. Though the 
 state of our domestic government and circum- 
 stances, and our internal currency, are all very 
 different now, from what they were at that time, 
 yet the foreign exchange is similar. Hence we 
 may infer, that the foil of the exchange, both 
 now and formerly, is to be ascribed to some 
 other cause. 
 
 The same consequence is, with equal con- 
 fidence, ascribed to the depression of the 
 exchanges in 1774,: but it happens, unluckily 
 for the new theory, that for want of attention to
 
 C 54 3 
 
 facts, in this instance, as in that of the Irish 
 exchange, the tables contradict the inference. In 
 the former part of 1773, before the new coinage, 
 the exchange with Hamburgh was at 34, 8, and 
 during the next 18 months the new guineas 
 became plentiful, and the exchange was on the 
 average 34 5, or nearly one per cent, lower 
 than before the recoinage. 
 
 After Mr. Fox had argued upon the sup- 
 posed coincidence, the mistake was pointed out 
 in a publication of that time; and that great 
 man, with his accustomed candour, acknow- 
 ledged it in a subsequent debate. " I am 
 convinced" (he is reported to have said) " that 
 the currency of a country has some effect upon 
 the exchange: but I cannot tell bow: for at a 
 certain period in this country, guineas were 
 much debased, and yet the exchange with 
 Hamburgh was up one or two per cent, but 
 upon a new coinage being issued the exchange 
 fell to par/' 
 
 All these examples militate very much 
 against the truth of the new theory ; and against 
 the discrimination of its abettors. They either 
 prove nothing to the point, or prove just the 
 reverse of the doctrine which they were brought 
 to confirm. 
 
 The notion, that the currency of a country
 
 I 55 ] 
 
 may imperceptibly become depreciated, and 
 affect the price of commodities before the cause 
 or effect is otherwise apparent, is purely metar 
 physical. There is no instance in the history 
 of any country which has suffered a depreciation 
 of the whole, or of any particular denomination 
 ^ofits currency, where that depreciation has 
 not in the first instance been a matter of public 
 notoriety. So far is it from being a fact, which 
 the experience of our own, as well as of all 
 other countries has placed beyond the reach of 
 controversy, that if one part of the currency of 
 a country, being directly or virtually a legal 
 tender, be depreciated, the whole of tljaf 
 currency, whether paper or coin, must be 
 equally depreciated : indeed the very reverse 
 is the fact ; in every country where paper 
 currency has been depreciated, the undebased 
 coin has kept up to the standard. In 160,7 J3ank 
 notes were at 1 7 per cent, discount, our silver 
 coin debased about 25 per cent, and guineas 
 remained at par. (p. 104 ) In France, although 
 the assignats were legalised, and enforced by 
 all the terrors of the guillotine,, and the laws of 
 the realm, their depreciation was notorious at 
 home and abroad, while louis d'or, ecus, &c the 
 gold and silver money, sustained their standard 
 yalue. This " proposition/' so evidently framed
 
 to meet the objection, that Bank notes are at 
 par with guineas, is therefore refuted by " the 
 experience of our own and all other countries. " 
 If the new theory of depreciation were true, 
 we should now have three market prices ; one 
 for gold coin not deteriorated, which would be 
 the standard price ; another for silver coin, 
 actually debased more than 40 per cent;* and a 
 third for Bank notes, supposed to be depreciated 
 15 percent, below the value of guineas ; and of 
 course 25 per cent, better than our silver 
 currency. But we have only one market price, 
 whether for commodities at home, or for the 
 exchange abroad ! 
 
 * It should not be forgotten, that a very great proportion, 
 perhaps more than half, of all our internal trade, is trans- 
 acted in this very debased silver coin, if coin it may be called. 
 Mr. Huskisson notices the evil, and, in common with every 
 man, wishes that a new silver coinage were practicable. 
 The difficulty appears to me great. If new coin is issued 
 without crying down the old, the new pieces would proba- 
 bly disappear ; as it happened to the first of the last two 
 copper coinages. If the old silver should be cried down, 
 the calamity would be grievous to trade in the interval be. 
 tween the suspension of the old, and a sufficient supply of 
 the new currency ; and the loss most severe upon the la- 
 bouring classes of the community, Suppose a new deno- 
 mination, the aliquot parts of the 75. piece, coined, viz. 
 pieces of 2s. 4d. I4d. and yd. leaving the old silver in cir- 
 culation as long as the public choose to use it, and receiving 
 the fractional parts of taxes in it as at present ?
 
 SECTION V. 
 
 " The effective currency of the country de- 
 pends/' it is affirmed, -' upon the quickness of 
 circulation ; and on the use and economy of 
 money among bankers, &c., rendering the same 
 sum adequate to a much greater amount of 
 trade and payments than formerly." 
 
 This notion seems to have sprung from 
 misapprehension of a passage in " the Wealth 
 of Nations," (vol. i, p, 486.) where the inimi- 
 table author describes the different effect of a 
 given amount of money upon the slow transac- 
 tions of wholesale dealers, and the quick opera- 
 tions of retail traders : " the same pieces, (in 
 the latter case) by a more rapid circulation, 
 serving as the instrument of many more pur- 
 chases/' Dr. Smith was not demonstrating, 
 that a smaller sum of currency was sufficient 
 to circulate our whole trade : but that there was 
 a real distinction between that part of the 
 national stock of money, which circulated among 
 retailers and customers ; and that which cir- 
 culated between the wholesale dealers. This was 
 
 i 
 
 tl formerly," and is still, and always must be
 
 [ 58 ] 
 
 the case. Circulation may he quicker at one 
 time, or in one respect, than another ; hut this 
 does not prove, that a less sum of money would 
 be adequate : it only proves, that more pur- 
 chases and sales were made, or, in technical 
 language, that " trade was brisk." 
 
 If we knew the exact amount of all the money 
 transactions to be paid at any given time, we 
 should also know the necessary amount of 
 currency for effecting them. Whether these 
 transactions are all repeated quicker or slower 
 than formerly, does not signify,the same amount 
 of currency will be again wanted for the like 
 transfer of goods, whether that transfer takes 
 place the next hour or day, or not till the next 
 week. For the same sum of currency, to effect 
 a greater relative transfer, it would be neces- 
 sary, that it should discharge more than one 
 payment at the same time and place, which is 
 impossible. The guinea, for example, paid to 
 the butcher, will not at the same time pay the 
 baker. The butcher may pay it away the same 
 hour, but then it is for another transfer of goods ; 
 and quickness of circulation proves nothing 
 more or less, than a quickness of trade. 
 
 Suppose the requisite sum of currency in a 
 certain country to be one million, that being 
 the average amount of commodities to be paid
 
 C 59 3 
 
 for at any given time ; and suppose that last 
 year the transaction was effected weekly, the 
 total mass of trade of that country would be 52 
 millions in the year. Let it be supposed, that 
 this year the same average amount of transac- 
 tions be paid at any given time, but repeated 
 daily, the mass of trade would of course amount 
 in this year to 365 millions; and yet no aug- 
 mentation of the currency would have been 
 necessary. " By a quickness of circulation the 
 same sum would be adequate to a much greater 
 amount of trade and payments than formerly/' 
 But let us suppose that, through increasing 
 prosperity, the average amount of commodities 
 to be paid for at any given time, was increased 
 to two millions, it is plain that two millions of 
 currency would be just as necessary in this case, 
 ss one million was formerly. 
 
 It is therefore certain, that whatever sum 
 of the circulating medium is necessary in a 
 given state of things, no " quickness of circu- 
 lation" can make a less sum adequate to the 
 whole purpose of currency. If the whole 
 mass of trade of Great Britain to be paid for 
 at particular periods, is the same now as 
 twenty years ago, the same amount of currency 
 would be adequate, although, from a briskness 
 of trade, and quickness of circulation, the
 
 C 60] 
 
 annual amount were doubled. But, if the 
 weight, and measure, and price of commodities 
 to be transferred at the same particular periods, 
 have doubled their money value, twice as much 
 currency is evidently requisite. That the quan- 
 tity and value of goods so to be transferred have 
 increased in nearly that ratio, may be supposed 
 from general observation ; and may be inferred 
 from the increase of our merchant-shipping, 
 the tonnage of which was in 1789 1,395,172 
 
 and in 1809 2,368,468!! 
 A great saving, it is assumed, has likewise 
 been made by some new invention and im- 
 provement in " the use and economy of 
 money :" but it appears from the evidence, that 
 the bankers and brokers know nothing of this 
 discovery ;* nor of any notable improvement 
 in saving the use of currency, since the insti- 
 tution of " the Clearing House of the City Ban- 
 
 * The late Sir Francis Baring, who for nearly half a 
 century had been intimately and extensively acquainted 
 with the great money transactions of the Metropolis, knew 
 nothing of these improvements. He did not, indeed, deny 
 their existence, which was not the question ; but declared 
 he did not understand them, and that he doubted their being 
 an object worthy of attention. (Minutes of Evidence.) If 
 there had been any such invention within the last thirty 
 years, it must have been known to a man, so able, and so 
 well acquainted with all financial concerns.
 
 C 3 
 
 kersf (by which the banking houses in and 
 about Lombard-Street, alone are benefited ) 
 and lo ! the said clearing house was established 
 nearly forty years ago 1 
 
 How unfortunate for people of small income, 
 to awake from this pleasing dream, and to find, 
 that one guinea will only purchase one guinea's 
 worth ; and that, once for all, just as it did 
 " formerly." 
 
 The argument, therefore, that the same />ro- 
 portionate sum of currency is rendered adequate 
 to a much greater amount of trade and pay- 
 ments, than it was a few years ago, viz. before 
 1797, is manifestly fallacious. 
 
 SECTION VI. 
 
 In the next place we come to inquire, whe- 
 ther a diminution of Bank notes would neces- 
 sarily bring an equal or any other sum of 
 specie into circulation. I do not find, indeed, 
 that the fact is distinctly affirmed, but it is evi- 
 dently implied, that the repeal of the Restriction 
 Bill must have the effect of supplying, with 
 guineas, the chasm, which the proposed con- 
 traction of Bank notes would otherwise make 
 in our currency. 
 
 This assumption is, I think, founded upon
 
 two mistakes, viz. 1st, that the Bank is indebted 
 to the public ; and consequently, when obliged 
 to pay, they must pay their debt in specie, and 
 the public will thereby be supplied with gui- 
 neas, sdly, that it is incumbent on the Bank 
 to procure coin for the public use. 
 
 A bank proprietor (Mr. Randle Jackson), 
 had asserted, accoringto the report of his speech 
 in the newspapers, that of the 20 millions 
 of notes in circulation, the public owed nine- 
 tenths, or 18 millions, to the Bank. Mr. Hus- 
 kisson, in a long note (p. 79, et infra) combats 
 that assertion, and (acknowledging that Mr. 
 Jackson had not detailed the items of his esti- 
 mate) states an assumed account, to prove, that 
 in point of fact, the public owe the Bank, in 
 demandable debt, only one million. This state- 
 ment is manifestly erroneous ; for the learned 
 proprietor could not have included the capital 
 of the Bank (i i,686,ooo/.) because that would 
 have swelled his estimate to nearly 30 millions ; 
 and because, as Mr. Huskisson rightly observes, 
 the invested capital is not a dernandable debt, 
 any more than other funded property. The 
 case of the six millions, (referred to by Mr. H.) 
 is very different. Its repayment, it is true, is 
 stipulated six months after the termination of 
 the war, when the Restriction Bill, as it now
 
 stands, will also expire. There was no specific* 
 agreement, I believe, that the repayment of 
 these six millions, should, at all events, be made 
 whenever the Restriction Bill shall expire : but 
 it is evident that such was the intention of the 
 parties ; and doubtless, if the term of the Res- 
 triction is changed, so will be the obligation to 
 repay these loans. Mr. Jackson therefore must 
 have included in his estimate, that 
 
 item of 6,ooo,ooo/. 
 
 In the next place, (the sum which 
 
 Mr. H. calls the small remainder 
 
 of any debt), the advances to go- 
 vernment, exclusive of the above 
 
 loans, (vide Table, anno 1810) 
 
 then amounting to - 5474->739/- 
 
 Add the amount of Exchequer Bills 
 
 purchased in the market, and 
 
 bills of exchange discounted for 
 
 the merchants, of which the 
 
 amount is unknown to the public, 
 
 probably was so to Mr. Randle 
 
 Jackson, and may be assumed to 
 
 exceed 6,2,26 1/. 
 
 i8,ooo,ooo/. 
 
 I am induced to think that the learned pro- 
 prietor was not furnished with the exact de- 
 tails, because he supposed a subscription of two
 
 [64 3 
 
 millions requisite to meet the demand, if made 
 upon them. It is however probable that the 
 Bank has a larger fund of undivided profits 
 applicable to such debt, if it exists. In the 
 year 1797, that surplus of assets, beyond all 
 the obligations of the Bank, amounted to 
 3,826,890 /. (vide the Lords' Report) and it is 
 presumable from the subsequent prosperity of 
 the Bank, that the surplus is rather increased 
 than diminished. 
 
 But without the evidence of these details, it 
 is certain, that the Bank owe to the whole pub- 
 lic no other debt than the deposits which that 
 public has made in the Bank. The Banks of 
 Amsterdam and Hamburgh repaid their de- 
 posits in kind:, the Bank of England indirectly 
 does the same. Its obligations are notes, or 
 accountable receipts, not one of which is issued 
 except upon a corresponding deposit made in 
 the Bank. These deposits are Exchequer bills 
 issued by authority of Parliament, and bills 
 of exchange* They are the obligations or debts 
 of the public falling due from day to day ; and 
 consequently, should the Bank suspend its 
 issues, the liquidation of these securities would 
 in a short time (the greater part within two 
 months) remove every Bank note out of cir- 
 culation, and leave, moreover, a balance, (being
 
 the amount of the discount upon such deposits), 
 due to the Bank, and to be paid, for want of 
 other currency, in specie. 
 
 Hence it is plain, that on a general balance 
 of all accounts, the public is indebted to the 
 Bank, and not the Bank to the public. 
 
 We shall be told, however, that the total 
 suspension of the issues of the Bank, is the ex- 
 treme case, and a very unlikely event. True : 
 but the case would differ little, were every 
 holder of a Bank note empowered to demand 
 specie. The law which compels the Bank to 
 pay in specie, will also authorise them to de- 
 mand it ; and should they be unable or unwil- 
 ling to coin, they must contract their discounts, 
 and then all the specie which they pay with one 
 hand, in discharge of their notes, will be vir- 
 tually and speedily received by the other, in 
 payment of their securities : so that in the 
 course of a few weeks these two cases would 
 meet at the same point. 
 
 But, it has been said, this must not be; the 
 Bank must (if it does not voluntarily supply 
 specie enough) be compelled to coin. In softer 
 language, Mr. H. says " the Bank should give 
 the market price/' (1. e. for bullion to be 
 coined), " if that price be 905. per ounce, 90*. 
 must be given." (p. 90.) By this I presume it 
 
 F
 
 may be fairly understood that it is supposed to 
 be obligatory on the Bank to coin for the pub- 
 lic use. 
 
 I cannot discover any thing in their Charter, 
 or in the Statute Book, which imposes any 
 other obligation upon the Corporation of the 
 Bank to coin, than is imposed upon every body 
 corporate, or individual. If they come under 
 an obligation to pay specie, specie they must 
 pay, if it is exacted : but they are not obliged 
 to make such engagements. They may issue 
 notes, that is, they may discount for the Go- 
 vernment, or the merchants, or they may refuse 
 it, at their own pleasure and discretion. 
 
 The error of supposing that it is the duty 
 of the Bank to supply the public with specie, 
 was, however, previously acknowledged by 
 Mr. Huskisson, who informs us truly, " that 
 . the right and duty of coining, in every inde- 
 dendent state, is one of the most important 
 attributes and functions of sovereignty." (p. 6.) 
 Indeed that gentleman seems again to have 
 felt the force of this principle, when (at p. in) 
 he appealed to the feelings of the Bank Direc- 
 tors, " as men attached to the prosperity of 
 their country, and studious to preserve that 
 high estimation in which they are justly 
 and universally held." Doubtless, the Bank
 
 C673 
 
 Directors will be studious to preserve their high 
 character; but as Bank Directors, is it not their 
 paramount duty to preserve the Bank from ruin ? 
 As persons who have a large stake in the public 
 weal, they must also be anxious to prevent so 
 deep a wound, as any embarrassment of the 
 Bank would inflict upon the prosperity of the 
 kingdom. 
 
 That such embarrassment is possible, " in 
 the present extraordinary state of the world" 
 is admitted by Mr. Huskisson, (p 124,), in cir- 
 cumstances in which the very reduction of Bank 
 notes, instead of lessening, would increase the 
 demand for specie, and " 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/' 
 
 Here then is a distinct acknowledgment of 
 the possibility of occasioning the very evil 
 we labour to prevent : and, should the restric- 
 tion bill be repealed, the event is not only pos- 
 sible, but very probable. How easy would it be 
 for such an enemy as Buonaparte, so powerful 
 and so inveterate, to raise a popular alarm ; 
 which is the contingency supposed. Or to 
 operate the same effect, by creating an unfavour- 
 able exchange and high price of bullion, which 
 <*
 
 68 3 
 
 a less sacrifice than the expense of one cam- 
 paign, might enable him to accomplish I 
 
 What a triumph for the arch-enemy of human 
 happiness ! Can it be supposed that he, who, 
 like his great prototype, " is seeking whom be 
 may devour," would, without an evil motive 
 and design, fill the columns of his Gazettes with 
 arguments to prove the necessity and advantage 
 of repealing the Restriction Bill ?* " Timeo 
 Danaos, et dona ferentes." Inadvertently, his 
 myrmidons have advanced a step too far. 
 They tell us, (and they triumph in the hope 
 and expectation) that " the day the Restriction 
 Bill shall be repealed, the pressure of the Milan 
 and Berlin decrees will be felt in all its force." 
 We are happily able to hurl back his threats : 
 but it would be folly to despise them. 
 
 Thus we may discover the Scylla and Cha- 
 ry bdis of the proposed measure. Were the 
 Bank compelled (was that, I repeat, possible) 
 to continue its issues, and coin specie to the ut- 
 most of its ability, not only the Bank, but the 
 commerce of the country would be placed at the 
 mercy of our implacable enemy : his pigmy 
 
 * Much has lately been said about coincidences ; it is not 
 the least remarkable, that just as we were reading in our 
 daily prints, the reasons for the proposed repeal, the French 
 papers came over, filled with nearly the like arguments.
 
 decrees would become gigantic. If, on the 
 other hand, the paramount duty of the Bank 
 Directors should force them to contract their 
 issues, so as to secure the Bank against the, 
 almost certain run to which they would be 
 otherwise exposed, the want of currency, "the 
 great wheel of trade" would soon derange the 
 whole machine of commerce, and exchange 
 prosperity and energy, for poverty and debility. 
 Were we driven to this dilemma, I should not 
 hesitate to prefer the latter course. Happily we 
 have another, and an auspicious choice. 
 
 But, to admit for a moment, that metallic 
 money in greater abundance is necessary, we 
 know, (for Mr. Huskisson has told us), that 
 " the right and duty of providing it is the at- 
 tribute and function of the sovereign." It is, 
 therefore, the state, and not the Bank, which is 
 bound to provide it. It is the public and not 
 the Bank, which is to be benefited (if benefit 
 can follow) by the proposed measure. Therefore 
 the public ought to pay for their own advantage 
 and gratification. If such an experiment must 
 needs be tried, let the government purchase and 
 coin bullion, with the public revenue, and pay 
 all its expenditure in specie. The risk of ruining 
 the Bank, and, with it, the commerce of the 
 country, will be avoided ; and the new theory
 
 C7o] 
 
 of depreciation be brought to the very test 
 which the anti-restrictionists demand. In one 
 year the eighty and odd millions of public 
 expenditure issued in bright guineas, of Mr. 
 Bolton's most improved and most beautiful dye, 
 would of course drive all the depreciated rags 
 of notes out of the circle. Should the market 
 price of bullion rise in proportion to this ex- 
 traordinary demand, 30, or 40, or 50 millions 
 more of taxes, or loan, might be wanted this 
 year: but" Fiat justitiam, mat cceium." 
 
 Finally on this head, and seriously, I sup- 
 pose, the Bank does not, (were all debts on 
 both sides settled), owe the public a single gui- 
 nea ; nor is it in that case bound to provide one. 
 Consequently the repeal of the Restriction Bill 
 would not necessarily bring any, and probably 
 not an adequate amount of specie into circu- 
 lation. 
 
 SECTION VII. 
 
 " THE circumstance of the Bank confining 
 its discounts to Bills of undoubted solidity,, and 
 founded in real mercantile transactions, (Mr. 
 Huskisson says, p. 33), has no connection
 
 whatever with the question of sufficiency or 
 excess of their notes in circulation." Such con- 
 siderations are allowed to be prudential in re- 
 lation to the trade of the Bank, " but they 
 evidently (he adds) afford no security to the 
 public that Bills, though uniting both these qua- 
 lities, may not be discounted to excess.." If it 
 be meant, that this rule and limitation of the 
 Bank discounts, do not render excess a physical 
 impossibility, we grant it ; but, at the same time, 
 it is demonstrable, that instead of "no security," 
 these regulations form a very powerful check 
 against excess. 
 
 O 
 
 It is possible that a rage for expensive exotic 
 frivolities, might become so much the ton, as 
 lo ruin half the families in the kingdom. Yet 
 no sumptuary law is deemed necessary. The 
 evil would cure itself. So, in the present case, 
 the paramount interest of every party concerned 
 in the issue, or use of Bank notes, is hostile to 
 their excess. Excess, if ever it arise, is likely to 
 grow out of the creation of fictitious capital, 
 and from an illegitimate currency proceeding 
 from thence; and it is against this abuse that 
 the regulations under consideration are opposed. 
 It is objected, that the rule cannot be good, 
 because * the Bank Directors themselves ac- 
 knowledge, that they do not act up to the ex-
 
 [7*3 
 
 tent of its principle/' but frequently reject bills 
 to which, no such suspicion is attached. A iirtie 
 enquiry (had practical information been sought) 
 would have satisfactorily explained the motive 
 of that limitation. The Directors of the Bank 
 are well aware, that notwithstanding all their 
 circumspection and intelligence, bills of accom- 
 modation will be sometimes imposed upon them. 
 So far as these create currency, it is an im- 
 proper issue ; and they seek to counterbalance 
 the evil by curtailments, which may fall upon 
 proper, and legitimate applications. They know 
 also, that there is a tendency to excess in com- 
 
 * */ 
 
 mercial enterprise, which they endeavour to 
 moderate by salutary limitations. 
 
 It is important to observe, that no person 
 can have a discount account with the Bank of 
 England, unless he has been introduced, and 
 recommended by a Director, who, it is presumed, 
 from personal knowledge, or satisfactory re- 
 ferences, is well informed of his character and 
 circumstances. According to the nature and 
 extent of the commercial concerns, and the sup- 
 posed capital of the person so admitted, the 
 Directors fix a limit to the amount of discount 
 which they will grant. The bills likewise, 
 which are offered, have all their respective 
 limitations. If therefore the merchant should
 
 apply for a greater sum, than that to which 
 his account has been limited ; or if the bills he 
 presents happen, by previous discounts, to 
 others, to have reached their boundary, he will, 
 in either case, be refused, without knowing the 
 reason, (for none is assigned), as these limits are 
 unknown to any but the officers of the Bank. 
 
 The Bank Directors, therefore, by these and 
 other regulations, endeavour always to confine 
 their issues within the real and legitimate wants 
 of trade. If they have erred, it has probably 
 been more on the side of granting too little than 
 too much. 
 
 So far, then, from its being "an erroneous 
 and dangerous principle," to proportion the 
 issues of Bank notes to the demand upon real 
 mercantile bills, guarded as it is in practice by 
 wise limitations, there seems much reason to 
 believe, that it affords, if not an infallible, a suf- 
 ficient security, against the excess of Bank 
 notes. The Bank of England, be it remember- 
 ed, does not give away, or hawk about its notes. 
 They cannot be obtained without paying the 
 full value and a premium : nor even then by 
 any but a particular description of persons ; and 
 in consideration of a particular species of value. 
 Is it supposeable that merchants will give their 
 " bills of undoubted solidity/' and pay a pre-
 
 C74 J 
 
 inium also, for notes they do not want ? The 
 interest of the public co-operates powerfully with 
 the prudential rules and practice of the Bank, 
 to prevent excess. The interest of the Bank 
 also, the feelings of the Directors, and all 
 the motives that can actuate them, excite a 
 jealous watch against an excess of their notes. 
 
 The more we examine the principles and 
 practice of the Bank, in the conduct of this de- 
 partment of its business, the more satisfactory 
 they will be found ; and the more we consider 
 the consequences of the proposed alteration, the 
 more dangerous it will appear, in the present 
 state of the political and commercial world. 
 
 We may therefore safely confide the manage- 
 ment of this momentous concern to the wisdom 
 and probity of the Bank Directors : for we are 
 assured, that " they conduct the affairs of the 
 Bank with that integrity, and regard to the 
 public interest, and forbearance of profit, that 
 merit the continuance of confidence so long and 
 justly reposed in them." 
 
 But " the fallacy" (we are told) "lies in not 
 distinguishing between an advance of capital 
 to the merchants, and an addition of currency 
 to the mass of circulating medium." Here we 
 have the singular blunder of a palpable fallacy 
 assumed in refutation of a groundless assump-
 
 L 75 3 
 
 tion. The discount of " bills founded in real 
 mercantile transactions'' is not an advance of 
 capital to the merchants. The capital of a 
 merchant which was yesterday invested in 
 coffee or other goods, may be to-day in the 
 bills of exchange for which those goods were 
 sold; and to-morrow in Bank notes, obtained 
 by discounting these bills. So far from the 
 Bank notes being an advance of capital, the 
 capital would be diminished by the amount of 
 the discount deducted at the Bank. 
 
 Neither does the discounting of such bills 
 necessarily make " an addition of currency to 
 the mass of circulating medium/' for the Bank 
 is as constantly receiving back, as it is issuing 
 notes ; and the former, in numerous instances, 
 to a larger amount than the latter. 
 
 This mistake probably arose from some allu- 
 sion to the practice of the Scotch Banks, which 
 grant what they term cash accounts ; or an 
 advance of capital : but the Bank of England 
 has no such practice. 
 
 SECTION VIII. 
 
 IT is admitted that, " an effectual check is pro- 
 vided against the excess of Country Bank
 
 C 73 
 
 paper, by its convertibility into Bank of Eng- 
 land paper ;" because " the excess of country 
 paper being continually returned upon the 
 issuers for Bank of England paper, the quantity 
 of the latter necessarily and effectually limits 
 the quantity of the former." Hence a con- 
 clusion is drawn, that whenever Bank of 
 England notes increase, a corresponding and 
 simultaneous augmentation of Country Bank 
 notes will take place ; 4t and thus the excess 
 of Bank of England paper will produce" (it is 
 added ) " its effects upon prices, not merely in 
 the ratio of its own increase, but in a much 
 higher proportion." 
 
 This is, as usual, begging the question, by 
 assuming that Bank notes are excessive, a cir- 
 cumstance which remains to be proved : or 
 rather, has already been refuted. But an in- 
 crease of Bank of England notes does not ne- 
 cessarily imply a corresponding, or indeed any, 
 increase of Country Bank paper. In many 
 cases it proves a diminution. When, through 
 the failure of some Country Banks, a diffidence 
 of all or most provincial Bank paper prevails, 
 Bank of England notes, if left to the natural 
 course of things, will fill the chasm, which 
 the discredit of the others produced; and their 
 increase would be proportioned to the decrease
 
 C 773 
 
 of the country circulation.* If the whole mass 
 of Provincial notes should be discredited, the 
 necessary augmentation of Bank of England 
 paper would be equal to the diminution of that 
 part of our currency. 
 
 By the official returns of Bank notes, it was 
 found, that they had increased between the ist 
 of May 1808, and 19, May 1809, above 3 mil- 
 lions. The increase of Country Bank paper in 
 an equal ratio is inferred ; and an estimate 
 formed upon the increased produce of stamps 
 in the year ending the loth October 1809, is 
 adduced in proof that the country currency 
 was also increased in the sum of 3,095,3407. 
 irrespective also of the notes under zl. zs. 
 Now, as more than half of the country circula- 
 tion, in Scotland especially, is in notes of i/. 
 if the argument proves any thing, it proves 
 vastly too much. It would prove an increase 
 of more than 20 millions ! 
 
 The increase of the stamp duty, during the 
 period in question, is however to be satisfactorily 
 accounted for, without any augmentation, and 
 even under a probable diminution of country 
 notes. The new act took place on the loth 
 Octobert, 1808, from which day the re-issue of 
 
 * This is now the case in the districts where Country 
 Banks lately failed.
 
 [78] 
 
 old notes required the additional stamp, and 
 the new issues the new stamp. Supposing the 
 circulation (as has been thought by some) 30 
 millions, and only the additional duty paid, 
 without any new notes, that addition would 
 amount to more than the excess of the tax upon 
 which the increase of 3,oo,5,34,o/. has been con 
 eluded to have arisen. So far then from justify- 
 ing that inference, the smallness of the increase 
 of the stamp duty affords room to suspect, that 
 there was rather a diminution of Country Bank 
 paper; and it is probable that the amount of 
 stamp duty upon re-issuable notes for the three 
 years, which will terminate on the loth Oct. 
 18 11, will not be found to exceed the produce 
 of the three preceding years by so much as the 
 ratio of the increased rate of duty. * 
 
 Another very erroneous deduction from these 
 fallacious premises, is this, " an addition of 
 between four and five millions sterling being 
 made to the paper circulation of the country, 
 at a very small expense to the parties issuing 
 it, only about ioo,ooo/. having been paid there- 
 
 * The stamp duty on re-issuable notes for the quarter 
 ending the 
 
 5th Jan. 1809 was 55,256;. 2s. id. 
 
 5th Jan. 1810 was 32,y3i/ 15*. 8</. being a decrease of 
 nearly one half.
 
 C79] 
 
 upofi in stamps to the revenue/' if the present 
 system is not changed, some mode ought to 
 be devised of enabling the State to participate 
 much more largely in the profits accruing from 
 it." If the measure is eligible, the mode is 
 very simple: it is only to increase the stamp 
 duties : but it will, in that case, be worth while 
 to enquire first, whether such addition to the 
 tax is likely to increase the revenue. There is 
 a point, beyond which taxation defeats itself; 
 and probably it would be found on enquiry, 
 that the duty upon re-issuable notes has 
 actually attained its maximum. It is a 
 great mistake, to suppose, that large profits 
 attach to the issue of cash notes. The stamp 
 duty, charges of management, and losses, 
 arising from the necessary employment of the 
 funds created by the issue of notes, leave, 
 in many instances, no profit ; and in the 
 general, so little, that the same capital, talents, 
 and labour, would be more advantageously em- 
 ployed in other commercial establishments. As 
 long as this species of money is beneficial to 
 the country, it is doubtless desireable that the 
 issuers should be men of large property, com- 
 petent knowledge^ and long experience. No 
 great diminution of the present scale of legiti-
 
 C803 
 
 mate profits (for such men will not risk their 
 funds in speculations) would induce them to 
 drop a business, which has become unworthy of 
 their capital, time, and attention; and the conse- 
 quence would be, the throwing this " valuable 
 and essential branch of improvement in our 
 domestic economy/' into very unfit hands.* 
 '' But the frequent bankruptcies to which such 
 beggarly bankers must be liable, may occasion 
 a very considerable inconveniency, and some- 
 times even a very great calamity, to many poor 
 
 * No one acquainted with Country Banking will deny, 
 that it has been much abused. Speculative adventurers have 
 obtruded vast quantities of very unworthy paper upon the 
 public. The privilege of making currency ought to be 
 considered as a very serious, public trust, not to be exer- 
 cised by every man, who chooses to pay 2o/. for a license to 
 issue notes. It is difficult, perhaps, to devise any legisla- 
 tive regulations, which would remedy the evil, (so generally 
 known and felt), and not produce a greater disadvantage. 
 If that can be done, the respectable part of the Country 
 Bankers will be anxious to promote any measure, calculated 
 to prevent the discredit, which needy speculators so fre- 
 quently bring upon the trade. The evil is not that of 
 excessive issues, because the whole mass of circulating 
 medium is not necessarily increased : but it consists in the 
 displacing the good by bad, or very doubtful notes, issued 
 to promote wild schemes, and injurious monopolies, which 
 reputable and opulent bankers would neither countenance, 
 nor hazard.
 
 people, who had received their notes^in pay- 
 ment/' Wealth of Nations, vol. i, p. 487. 
 
 The number of Country Banks was much 
 increased within a few years,* but neither does 
 that circumstance prove an increase of cur- 
 rency. One bank, in a given district circulated 
 perhaps twenty thousand notes : a new bank 
 in the same place, may, if its capital, conduct, 
 and its connexions, are equal to the former, 
 gradually acquire one half of the circulation ; 
 but, without increasing the total amount of 
 circulating notes. 
 
 The increase of the revenue from re-issuable 
 notes since the loth Oct. 1810, does not exceed 
 the probable addition of the new duties during 
 the first fifteen months : nor afford any fair 
 ground for assuming so large an increase of 
 the previous mass of Country Bank notes : 
 there is reason to suppose, that it has been, and 
 is, diminishing. 
 
 SECTION IX. 
 
 NOTWITHSTANDING the explicit admission, that 
 " the numerical amount of bank notes is no 
 criterion of excess/' yet the late rapid increase 
 
 * The number has lately been much diminished. 
 
 G
 
 [8 3 ] 
 
 is supposed to be a very strong symptom at 
 least of their having become excessive. 
 
 It appears from " the Minutes of Evidence," 
 that the amount oi" Bank of England notes in 
 circulation, was on the 
 
 ist May 1808 Total. 
 
 of 5/. and upwards 1 3,4,29,6407. ) 
 
 7th May 1809 
 
 of 5/. and upwards 14,068, 1907. ) 
 
 , , >i 
 
 under 5/. 4,54?74 1O M 
 
 And, being the last return, 
 
 12th May 1810 
 of 5/. and upwards 1 5,000, soo/. > 
 
 7 e 1 f2 
 
 under /. 0,1 14^3 40*. 3 
 
 being; an increase between the ist May 1808, 
 
 C-* / 
 
 and die lath May 1810,, of 3,631,9307., of 
 which increase 2, 052,^80 is found in the notes 
 under 5/. The question then is this ; was 
 there, irrespective of depreciation, any just and 
 sufficient reason for that great augmentation 
 of Bank notes ? To whatever cause the high 
 price of bullion, and the low rate of exchange, 
 should be ascribed, the natural effect was to 
 diminish the number of guineas in circulation, 
 and occasion the increase of some other species 
 of money in their room. That this was the 
 case, the fact of the extraordinary increase of
 
 i/. and 2/. bank notes, affords conclusive evi- 
 dence, as it accounts for nearly two-thirds of 
 the whole amount increased. If, during the 
 period under review, the trade of the kingdom 
 did increase, an adequate increase of the circu- 
 lating medium would be necessary. That our 
 trade in general did increase considerably, will 
 not, I think, be denied. Whether it increased 
 in an equal ratio with the increase of Bank notes 
 above /. viz. about -Jth part, cannot be ascer- 
 tained : but the increase of exports affords a 
 strong presumption, that the increase of trade 
 was fully commensurate with that of currency. 
 The official value of our exports for the year 
 
 1808 (per Table 74,), was 29,623,604!. 
 
 1809 45>399> 01 5^ 
 admitting that great part of the excess of ex- 
 ports in the last year was extraordinary, and 
 does not prove an equal increase of trade in 
 general, there is still latitude enough to explain 
 satisfactorily the cause of the augmentation of 
 Bank notes. 
 
 The coincidence of an increase of small Bank 
 notes, with a rise in the price of bullion, was 
 the natural effect, and not the cause, of the 
 latter circumstance ; and does not prove, that 
 the whole mass of currency was thereby in- 
 creased. Just as many guineas probably went
 
 out of circulation, as the augmentation of Bank 
 notes replaced. General observation of the 
 number of guineas in circulation before, and 
 since, the year 1808, confirms this supposition. 
 A review also of the circumstances of our trade, 
 will shew that an increase of currency, of some 
 kind, has been necessary. 
 
 " Money," the reader is requested to re- 
 member," is only an instrument of trade the 
 great wheel in the machine of commerce." If 
 therefore, at any time, we had a currency ex- 
 actly proportioned to its office, and our trade 
 should greatly increase, an adequate increase 
 of the circulating medium would be necessary. 
 If our foreign trade, for example, should be 
 doubled, our shipping must be proportion ably 
 augmented. Within a few years, the tonnage 
 of our merchant ships has been nearly doubled : 
 but nobody supposes that our shipping is there- 
 fore excessive. Why ? Because shipping is too 
 expensive to be kept without employment. 
 Money is also an expensive instrument of trade. 
 Every holder of money (whether paper or 
 metallic money) virtually pays for it at the 
 rate of 5 per cent, per annum. Now, can it 
 be supposed, tiiat many people will keep super- 
 fluous money, at so much loss ? Yet the 
 notion of a lasting excess must presuppose that
 
 propensity to be very general : for one or two 
 thousand such silly persons, could not hoard a 
 sum of magnitude enough to weigh much in the 
 great scale of our circulation. Besides, the 
 money so hoarded, though it remain numeri- 
 cally a part of the mass of currency, is in fact 
 no effective part of it. While boarded, it can- 
 not be in circulation. 
 
 What is the proper ratio of currency to any 
 given quantity and circumstances of trade, is a 
 problem never yet solved. The utmost we can 
 do by comparison of different periods, is to 
 make some probable approximations. 
 
 The liability to pay in specie on demand is, 
 as admitted on all sides, an effectual check 
 against the excess of currency : consequently 
 there could have been no excess, at least no 
 lasting excess, before that liability *was sus- 
 pended. Some period, therefore, previous to 
 the year 1797, will afford probable data for 
 judging whether our actual mass of currency 
 has grown to excess. The disordered state of 
 Europe, after the French revolution began to 
 be extensively felt, makes it proper to go back 
 to more quiet and current times/' Let us then 
 compare the year 1789 with the year 1809, 
 being an interval of just twenty years. 
 
 It cannot indeed be ascertained, what was the
 
 E 86U . 
 
 amount of internal trade and transactions, re- 
 quiring the use of money as an intermediate 
 instrument, in either period. It is probable, 
 however, they bore pretty nearly the same re- 
 lation to the amount of our exports and im- 
 ports, and public revenue, in both years.* 
 
 The official value of our exports and imports, 
 for those two years, was, in round numbers, 
 for 3789 for 1809 
 
 37 millions 64 millions 
 Public Revenue 17 76 
 
 54 
 The average of Bank notes in circulation in the 
 
 year 1789 was about 11 millions 
 
 Mr. Rose estimated tiie amount 
 of specie in circulation previous 
 to 1797 above 4 millions, others, 
 however, at not much more than 20 
 The paper of the Scotch and 
 country Banks was supposed to 
 exceed considerably 10 .' 
 
 * It may be objected, that exports and imports are un- 
 certain data, because we should have wanted a great deal of 
 currency had our foreign trade entirely ceased. Such is the 
 situation of France. But as no revolution, political or
 
 It will, I think, be granted, that we had, in 
 the year 1789, at the very least, 41 millions 
 of currency. Consequently, if 54 -nav repre- 
 sent the unknown amount of money transac- 
 tions in 1789, and 14,0 the amount in 1809 as 
 ,54, is to 41 (the then supposed mass of cur- 
 rency) so is 140 to 103 millions, the amount 
 of currency requisite in 1809. But it is cer- 
 tain, that the actual mass of currenc is far less. 
 For the highest amount of Bank notes, in 1809, 
 
 was less than 21 millions 
 
 the highest (probably too high) 
 
 estimate of the Scotch and coun- 
 
 try Bank notes 30 
 
 And no one will affirm that we 
 
 have of specie, in circulation, so 
 
 much as 10 
 
 So that assuming in the former year the very 
 least, and in the latter the very highest esti- 
 mates of our currency, the result, so far fro.n 
 proving an excess, leaves an almost unaccount- 
 able deficiency. 
 
 Although this estimate seems, at first sight, 
 
 moral, has deranged the previously established order of our 
 trade anrl cornmerce, it may be supposed, that the relation of 
 the foreign and internal transactions has not greatly varied. 
 At any rate an approximation only is sought.
 
 C 88 j 
 
 to exceed the bounds of probability, there are 
 other considerations, which shew that it is, per- 
 haps, not very far from the truth.* Upon the 
 above supposition, the uses of currency have 
 increased more than double within the last 
 twenty years. Taxes, we know, have been in- 
 creased, more than threefold, during that period; 
 and as a great part of them is optional, and the 
 old ones have not fallen off as new ones were 
 imposed, it follows that there is a proportionate 
 increase of the means of paying them. It is 
 matter of public notoriety in almost every town 
 
 * I am aware that this estimate seems to prove too much ; 
 and, assuming the data only as probabilities, I will not dis- 
 pute with those, who may be disposed to think them incon- 
 clusive. If more probable grounds of conjecture can be 
 shewn, I shall be content to rest the argument upon their 
 result. The increasing produce of the old taxes is to my 
 mind a proof that the trade and wealth of the country has in- 
 creased in the same ratio. The public revenue amounted in 
 1789 to 17,620,0007. 
 1 809 to 58,636,ooo/. 
 and the same taxes as existed in 1809 
 
 produced in 1810 63,o73,ooo/. 
 
 being an increase of nearly four millions and half sterling 
 in the last year ! Every view I have been able to take of 
 the subject, compels me to suppose, that whatever our cir- 
 culating medium amounted to in 1789, more than twice as 
 much is requisite at present. But it is certain that the Bank 
 of England notes and those of other bankers, and specie, do 
 not amount to twice as much as they did at that time.
 
 and port, that the number and extent of manu- 
 factories and shops, as well as trade in general, 
 have surprisingly increased. The tonnage of 
 the merchant shipping of Great Britain was 
 tons vessels 
 
 in 1789 i,S95 5 i7 2 in H'S 10 
 in 1809 2,368,468 in 23,070 
 So that shipping is nearly douhled in quantity; 
 and in cost, (which is the point that relates to 
 currency) nearly quadrupled.* In like manner, 
 the quantity of goods in general, it will be al- 
 lowed, is greatly increased; and the price, much 
 more. Every housekeeper, of so long standing, 
 will inform us, that prices, taken generally, are 
 twice as high as they were 20 years ago. Rents 
 of lands and houses and wages of labour are 
 also greatly increased : in short, every ascertain- 
 able fact tends to confirm the hypothesis, that 
 whatever amount of currency was really ne- 
 cessary twenty years ago, twice as much is re- 
 quired at present.-)- 
 
 But it is very certain that the mass of our 
 actual currency (i. e. specie, and Bank or Bankers 
 notes) falls very far short of being twice as 
 
 * Wheel carriages, I am told, have increased nearly as 
 much in number as shipping. 
 
 t The notion that the same amount of money is more 
 effective now than formerly, I have refuted above, Sect. 9th.
 
 C 9 3 
 
 much as it was in the year 1789. How then, 
 it may be asked, has the deficit been supplied ? 
 I believe, by the substitution of a circulating 
 medium of a very objectionable nature, namely 
 bills of exchange. The events of the year 1 797 
 rendered our financical situation so novel, and 
 the difficult science of political economy was 
 (in reference to that situation) so little under- 
 stood, that it was natural to dread the conse- 
 quences of an untried system : especially as the 
 paper money of other countries (which had 
 proved, as in the very nature of things it must 
 have proved, ruinous) seemed, prima facie, to 
 have some resemblance to the new condition of 
 Bank notes. The consequence of those natural 
 apprehensions, was, a frequent expression of 
 alarm at the increasing amount of Bank notes, 
 The Bank Directors, ever vigilant in their care 
 of that great and important establishment, and 
 properly awake to the bias of public opinion, 
 continually strove to prevent the increase of their 
 notes. The very urgent demand of legitimate 
 applicants, and the evident disasters, which 
 would have attended a refusal, prevailed with 
 them from time to time, to relax, upon grounds 
 of public utility, a little of their rigid resolutions. 
 In both respects, the conduct of the Directors 
 merits the greatest praise. They acted riglit in
 
 yielding to public opinion, in the first instance; 
 and in preventing much calamity, by departing 
 from it, when circumstances imperiously called 
 for an extension of their issues of notes. 
 
 At the same time it is to be regretted, that 
 through a mistaken apprehension of the excess 
 of Bank notes, solid bills, founded on real 
 mercantile transactions/' in all respects dis- 
 countable, should want the means of being dis- 
 counted. This has often, and to a vast extent, 
 been the case; and the consequence has been, 
 that transactions, in which currency should, and 
 would have been the medium, were effected by 
 payments of Bills, instead of Bank notes. This 
 practice increased, in proportion to the want of 
 Bank notes ; and it opened a door to the substi- 
 tution of jictitious bills, to an extent, which 
 would be altogether incredible, to any man who 
 has not had practical experience in these mat* 
 ters.* Here, then, has been an enormous ex- 
 cess of paper ; but an excess, that is unquestion- 
 ably in a great measure to be attributed to the 
 deficiency of Bank notes. The result of long 
 experience and much observation, convinces 
 
 ' * 
 
 * The Commissioners of Bankruptcy can inform any gen- 
 tleman, who desires to be certified of the fact, that in many 
 failures of houses so circumstanced, 1,2, 3 or 400,000!. 
 or more of fictitious bills have been found afloat.
 
 lm'3 
 
 me, that the notes of the Bank of England, so 
 far from being excessive, have, for several years, 
 been greatly deficient in amount. That the 
 deficit of that best of paper currency, has been 
 supplied by some of the worst kind. I beg 
 leave to submit this remark to the serious con- 
 sideration of the Bank Directors ; flattering my- 
 self that it is warranted by the preceding ob- 
 servations. If so, I may venture to conclude 
 that the late increase of the numerical amount 
 of the Bank of England notes, does not prove 
 them to be excessive. 
 
 SECTION X. 
 
 RECAPITULATION OF THE PRECEDING REMARKS. 
 
 THE confidence, with which the repeal of the 
 Bank Restriction Bill has been recommend- 
 ed, must have arisen out of a full convic- 
 tion of the truth and certainty of the proposi- 
 tions, which I have endeavoured to controvert. 
 If I have succeeded, in proving that those pro- 
 positions, so far from being indisputably true, 
 are either certainly erroneous, or very doubtful, 
 it will, I presume, be granted that the impolicy 
 of the proposed experiment is sufficiently de- 
 monstrated.
 
 C93D 
 
 Briefly as my prescribed limits obliged me to 
 state a few, and but few, of the arguments, sug- 
 gested by a calm consideration of Mr. Huskis- 
 son's exposition of the new doctrine of depre- 
 ciation, as applied to our present currency, I 
 venture to hope that they will have satisfied the 
 unprejudiced and attentive reader, 
 That gold bullion is not the real, or the legal 
 standard, of all exchangeable value in this 
 country ; and that bullion and coin are 
 not equivalent. 
 
 That an excess of paper money, not exporta- 
 ble or convertible into specie on demand, 
 is not necessarily absorbed in an increased 
 price of commodities. 
 
 That the present high price of bullion and 
 other commodities, and the low rate of 
 our foreign exchanges, do not prove that 
 Bank notes are depreciated. 
 That the instances adduced of former depres- 
 sions of the exchange, do not confirm the 
 new theory. 
 
 That no new quickness of circulation, or eco- 
 nomy in the use of money, has rendered 
 the same sum adequate to a much larger 
 amount of trade and payments, now than 
 formerlv.
 
 That a diminution of the notes of the Bank of 
 England would not necessarily bring any 
 specie into circulation. 
 
 That the rule which guides the discount busi- 
 ness of the Bank, is not an erroneous and 
 dangerous principle. 
 
 That the late increase of the stamp revenue, 
 does not demonstrate an augmentation 
 of the paper of country banks. 
 And, That the mass of our currency is not re- 
 latively greater now, than it was before 
 the Bank restriction took place. 
 If these conclusions are established, it must 
 follow, that the Bank of England notes are not 
 excessive, or depreciated ; and consequently, 
 the repeal of the Bank restriction would not 
 be warranted upon the grounds, on which it 
 has been so strongly and confidently recom- 
 mended. 
 
 There are yet some reasons why that mea- 
 sure not only is uncalled for, but might be at- 
 tended with very fatal consequences ; and if I 
 have been so happy as to engage the reader's 
 attention thus far, I intreat it further to a few 
 concluding observations
 
 953 
 SECTION XI. 
 
 CONCLUDING OBSERVATIONS. 
 
 I NOW assume it as demonstrated, ist, that 
 gold bullion is not the real and legal- stan- 
 dard of all exchangeable value in this country; 
 and consequently, that the value of our cur- 
 rency is not to be measured by the fluctuating 
 market price of that commodity. 
 
 sndly, That the legal standard in this country 
 is the coin of the Royal Mint, and consequently 
 that the value of our paper currency is to be 
 measured by that rule. 
 
 3rdly, That the notes of the Bank of Eng- 
 land did, and do exchange, for gold and silver, 
 and all other commodities, at par with the legal 
 coin of the realm ; and consequently, that they 
 are neither excessive, nor depreciated, 
 
 Upon these grounds, I cannot help conclud- 
 ing, that the new theory is fallacious ; and that 
 the repeal of the Bank Restriction Bill cannot 
 at present be called for, on any pretence of ex- 
 cess or depreciation. With truth I can adopt 
 Mr. Huskisson's affirmation, and say, c< if I 
 know my own mind, these opinions have been
 
 [963 
 
 formed as coolly and dispassionately, as they 
 could have been on any point of abstract 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 mathe- 
 matics." 
 
 But it is possible there may be persons, to 
 whom the facts and reasons I have adduced, 
 may not appear entirely conclusive ; and to 
 them I beg leave to suggest a consideration of 
 some of the consequences, which must, I think, 
 result from the repeal of the Bank Restriction 
 Bill, in the actual situation of the political and 
 commercial world. 
 
 The liability to pay in specie, would oblige 
 the Bank to contract its issues so much as 
 to cause a very serious derangement of the trade 
 and commerce of the country, through the want 
 of that prime movement, " the great wheel in 
 the machine of trade," money ; " the seed/' 
 (as defined by the late Sir Francis Baring) 
 " which serves to produce the whole of our com- 
 merce, finance, agricultural improvements, &c. 
 &c." If, therefore, the seed is deficient, so must 
 the crop be ; and the decrease of rents, profits, 
 and revenue, would be the inevitable con- 
 sequence of a want of the circulating medium.
 
 I 97 ] 
 
 However much disposed to coin, the Bank 
 could not long continue to do so, during 
 an unfavourable exchange ; or under any other 
 circumstances, which raised the market price, 
 much above the Mint price of bullion. Mr. 
 Huskisson admits that th Bank might be 
 drained of its last guinea, without adding to the 
 mass of currency in circulation, but even de- 
 creasing it, and aggravating the evil. (pp. 124, 
 125.) It is too obvious to need detailed expla- 
 nation, how much it would be in the power of 
 our implacable enemy, to excite alarm, or de- 
 press the exchange; which would produce, in 
 that case, the great object of his ambition, the 
 ruin of our commerce. What a triumph would 
 it be to find the predictions of his Journalists 
 fulfilled ; that his anti- commercial decrees were, 
 at last, felt in all their force ! 
 
 We must recollect, however, that it is not 
 incumbent on the Bank to coin. The coinage, 
 Mr. Huskisson informs us, is the duty, as well 
 as the prerogative, of the sovereign. The state, 
 then, must supply the public with specie, at an 
 enormous loss, to the great benefit of the 
 fraudulent mclters and exporters, of the cur- 
 rent coin ; who would be careful to keep the 
 mint fully employed; and the wheel of circu- 
 lation as empty as before. 
 
 II
 
 A great coinage, whoever undertook it, would 
 cause a great and extraordinary demand for 
 gold bullion. If our whole importation last year 
 was little more than half a million sterling, and 
 the increased demand of only a few hundred 
 thousand pounds ( the issues from the Bullion 
 Office amounted to about 800, ooo/.) raised the 
 price 12 per cent, what would be the conse- 
 quence of a new coinage of a million or two 
 every month ? Were it determined to line all 
 our battlements with packs of wool, and were 
 contracts proposed to the extent of only one 
 year's supply of that article, it is obvious that 
 the price of wool would immediately rise 
 enormously. The like cause must produce the 
 like effect upon the market price of bullion, or 
 that of any other commodity. 
 
 But supposing for a moment these obstacles 
 to the proposed measure not to exist, what 
 would be the consequence of establishing the 
 new standard. The market price of bullion 
 would vary as before; but in the new vocabu- 
 lary, we should find it fixed and invariable, 
 and consequently we should not say, that gold 
 was dearer or cheaper, but that money was 
 depreciated or bearing a premium. In order, 
 then, to some determinate denomination of 
 value, contracts must be made, and accounts be
 
 C 99 II 
 
 kept, not in pounds sterling, &c. but in pounds, 
 ounces, pennyweights and grains of gold. To 
 adjust the daily varying price of the commodity 
 then called money, itinerant pedlars might, as 
 in China, perambulate our streets, and with 
 their shears and weights settle the quantity of 
 the standard : but still the quality would be 
 uncertain, and must be the cause of endless 
 disputes. 
 
 To prevent such confusion, or to remedy the 
 evil when felt, we must further suppose, that 
 coin and bullion would be by law identified, and 
 that " there would not be any difference what- 
 ever, between any given coin, and an uncoined 
 piece of the same metal of equal weight and fine- 
 ness, except that the quantity of the former 
 would be accurately ascertained, and publicly 
 proclaimed to all the world by the stamp it 
 bore." And that gold, whether in bar, or dust, 
 or coin, or in any other shape, should be the 
 legal tender. Still the difficulty of correctly 
 ascertaining the quantity and quality of the un- 
 coined pieces, and the deceptions which would 
 be practised, would soon render it necessary to 
 limit tiie legal ten !er to pieces certified and au- 
 thenticated by public authority; and then we 
 shall have returned to the point from which we 
 started, to the legal standard established by 
 
 H 2
 
 C 100 1 
 
 the wisdom of our ancestors centuries ago, and 
 happily still in use, namely coin. 
 
 A little reflection will suffice to discover other 
 mischievous consequences, which might, and 
 probably would, result from the repeal of the 
 Restriction Bill, in the present disordered state 
 of the world. 
 
 It is granted on all sides, that the liability to 
 pay in specie would compel the Bank to diminish 
 its notes. Many curious plans have been sug- 
 gested for rendering that diminution of our cur- 
 rency less pernicious. Amongst the rest, Mr. 
 Huskisson's scheme is not the least amusing. 
 He proposes (p. 133, note) that all the reduction 
 should fall upon the advances made to Govern- 
 ment, so that the ordinary discounts to the 
 merchants would not be diminished. To say 
 nothing of the injury and embarrassment which 
 would thereby be occasioned to the public ser- 
 vice, the evils of an inadequate currency would 
 equally affect commerce, whether the contrac- 
 tion began upon the accommodations to the 
 .state, or to the merchants. Nobody knows, 
 nor is it material to know, whether the notes 
 at any time in circulation, were first issued to 
 the Treasury, or to commerce. When a per- 
 son, who lias purchased a butt of wine, finds it 
 only half full, his loss is no ways lessened by
 
 C 
 
 knowing from which end of the cask t r ie wine 
 was drawn off. 
 
 The diminution of the mass of Bank notes 
 is indeed recommended upon the assumption 
 of their being actually excessive. I trust that 
 1 have shewn it to be indisputable, that they 
 have not grown to excess ; and to be probable, 
 that they still remain much below their benefi- 
 cial amount.* 
 
 The advantages of " a sound undepreciated 
 paper money " are too obvious, not to be recog- 
 nised : they are fully admitted by the opposers 
 of the Restriction Bill. To exchange the most 
 expensive and dangerous, for the least costly 
 and most secure instrument of trade, must be 
 unquestionably " the greatest improvement ever 
 made in the political and domestic economy of 
 any country/' But, if it be granted, that the 
 improvement was so great, when a smaller part 
 only of our currency was so exchanged, it must 
 follow, of course, that a larger proportion will 
 increase the benefit 
 
 It will appear incredible to persons unaccus- 
 
 * A late eminent merchant, and worthy baronet, Sir 
 Francis Baring, supposed that eleven millions sterling of 
 Bank notes (exclusive of those employed in the receipt of 
 the revenue) were more than sufficient tor our circulation. 
 If this was not a mere random guess, it is difficult io o.n- 
 oeive upon what kind of estimate it was formed
 
 r 102 1 
 
 U .j 
 
 tomed to practical estimatss, that the difference 
 between the use of paper and metallic currency 
 is so prodigious. Let us suppose that Great 
 Britain and France require each of them, a cur- 
 rency of 50 millions sterling : that, in conse- 
 quence of her moral and political advantages, 
 Great Britain can use paper money, whereas 
 France is under the necessity of employing spe- 
 cie. The difference in favour of Great Britain, 
 reckoning only compound interest, would be 
 three thousand two hundred millions, within one 
 century ! ! ! If we estimate the greater rate, as 
 of capital employed in agriculture and com- 
 merce, on the one hand, and on the other, the 
 expense, to France, of maintaining such a sum 
 of specie ; the result will be nearly doubled ! ! ! 
 That the Bank Restriction Bill has already 
 contributed to the stability and prosperity of 
 the country, in a very considerable degree, can 
 hardly be doubted, when we reflect on the diffi- 
 culties Great Britain has had to struggle with, 
 since that event ; and the efforts she has made 
 to save other nations from ruin. Her public 
 expenditure has increased threefold; and so far 
 from producing debility, her trade and com- 
 merce have been growing in the same propor- 
 tion. Twenty years ago, the most sanguine 
 patriot could not have hazarded a supposition of
 
 C 10 3 D 
 
 our being able to support such an accumulated 
 load of debt and taxation. 
 
 With the probable consequences of the repeal 
 of the Bank Restriction Bill, may we not fairly 
 contrast the present condition of this country ? 
 Does the history of mankind afford an instance 
 of such a military and naval force raised and 
 maintained, without any suspension of agricul- 
 tural and commercial pursuits: nay, even with 
 an unparalelled extension of both ? At the time 
 that our defensive and offensive force has been 
 augmented to an almost incredible degree, have 
 not our numerous sources of real, substantial 
 wealth, been equally improved ? during a period 
 which has witnessed the humiliation, dismem- 
 berment, or overthrow of the most ancient 
 and powerful nations, Great Britain has not 
 only preserved, but extended her territory, her 
 strength, her riches, and her fame. Great 
 Britain alone, among the European nations, 
 affords an asylum to the persecuted victims of 
 lawless tyranny. Public prosperity, individual 
 wealth, domestic tranquillity, personal security, 
 the enjoyment of all the blessings of civil and 
 religious liberty, form the envied condition of 
 Great Britain and of her favoured inhabitants. 
 
 These are so many proofs, that Bank notes 
 are not depreciated, for there is no instance of
 
 a depreciated currency that did not produce in 
 a very short time derangement of trade, and 
 public penury. As long indeed as Bank notes 
 continue universally current at par with the 
 standard of all exchangeable value, specie, so 
 long they will be neither excessive nor depre- 
 ciated. Depreciation is the sole test of excess, 
 and \hefixed standard, is the sole test of depre- 
 ciation.* 
 
 Those who are practically most acquainted 
 with the effect of u the artificial checks and 
 banking regulations," which limit the issues of 
 Bank notes, will be most satisfied, that they form 
 a very powerful guard against excess. When 
 
 * Mr. Huskisson (p. 101) following Mr. Thornton, sup- 
 poses that depreciation may affect both specie and paper 
 money equally and imperceptibly: but that idea is founded 
 on the assumption that the market price of bullion, is the 
 fixed standard of value. This notion therefore falls with 
 the fallacy of its premises. If the fertility or poverty of the 
 mines, or other circumstances, should cause a permanent 
 rise or fall of the market above or below the mint price of 
 bullion, a new regulation of the mint would become neces- 
 sary . Those circumstances would equally affect other coun- 
 tries, and produce the like regulation ; and all that is of 
 importance in the market price of bullion is, that ours bear 
 a due proportion to that of the countries, with which we 
 have commercial relations. " In quiet and current times," 
 the ordinary course of trade will always regulate the prict 
 in the great market of Europe.
 
 C 105 D 
 
 it is considered, that the particular interest of 
 every applicant for Bank paper, induces him to 
 purchase as little as possible ; and that every 
 motive and every interest, which can actuate 
 the Bank Directors, combine to make them 
 peculiarly jealous of every symptom of the de- 
 preciation of their notes, we may reasonably 
 suppose, that the present system does afford an 
 effectual check against over issues of Bank paper. 
 It should also be recollected, that a super-abun- 
 dance of paper currency naturally and speedily 
 corrects itself, by returning upon the issuers. 
 
 That these checks have hitherto effectually 
 prevented the excess of Bank of England 
 notes, appears to me indisputable : for they 
 have not ceased to be, since the Restriction, 
 and still are, at par with specie. If they have 
 uniformly maintained their value for so many 
 years, notwithstanding the opposition of fears 
 and prejudices, .and during a period of so many 
 political disasters, may we not confidently 
 conclude, that they will still support their 
 credit and value ? 
 
 The stability of the Bank, the sufficiency of 
 its funds, the integrity and patriotism of its 
 managers, are all admitted. The security of 
 their paper is unquestioned. But, according to 
 Mr. Huskisson, (p. i.) " it is of the essence of
 
 money to possess intrinsic value." Of metal- 
 lic money, this is true, because there is no 
 recourse to any other security. If the metal 
 piece does not possess it intrinsically, it has no 
 other value. Value is essential to money : but 
 whether that value is intrinsic or extrinsic is 
 perfectly immaterial to the possessor. The 
 money, as money, has no use, or value, except 
 for purchasing ; (see Wealth of Nations, vol. ii. 
 p. 153;) and provided the standard value is 
 perfectly secured, there can be no other secu- 
 rity wanted. It never was, or could be the 
 intention of the laws, to sanction so great an 
 anomaly, as that the holder of a coin legally 
 current for only 21 shillings, should, by filing 
 off a part, be able to sell the remainder for 
 24 shillings. It was not meant, that the guinea 
 should, in any case, be worth to the possessor 
 more than 21 shillings ; and so long as the 
 nominal amount of the Bank note is perfectly 
 secure, and the note as current as the guinea, 
 the essential value is the same. 
 
 If, after all, some more specific check against 
 the over issues of Bank notes is desirable, it 
 may, perhaps, be found, without hazarding the 
 destructive consequences of an obligation to pay 
 in specie. 
 
 Suppose (and I throw out the hint for con-
 
 C 10 7 3 
 
 sideration) the Bank were obliged to pay, that is 
 to sell, bullion at the market price.* The con- 
 vertibility of their notes into gold, or silver, at 
 the will of the holder, would be thereby se- 
 cured. The advocates of the new theory cannot 
 fairly consider this as a less effectual check than 
 the liability to pay in specie : because " it is of 
 the essence" of their system that bullion and coin 
 are one and the same, " there neither is nor can 
 be," they say, " any difference between them" 
 The difference, at present, would only be, that the 
 holder of a pound note might receive 20 shillings 
 worth of gold or silver : but if entitled, with the 
 the note and one shilling, to demand a guinea, 
 he would receive 23 or 24 shillings worth of 
 gold. It could never have entered into the mind 
 of any man seriously to recommend, that the 
 Bank should be obliged to pay 23 shillings a 
 piece for their one pound notes ; and yet, this 
 would be the inevitable consequence of the 
 obligation to pay in specie, so long as the market 
 price of bullion should continue so much above 
 the Mint price. 
 
 Under this regulation, Bank notes would be 
 convertible into gold and silver on demand, and 
 always at the same price that specie would pur- 
 
 * This they continue to do, but, I believe, not In very 
 small quantities.
 
 C "8 3 
 
 chase it, or be legally convertible into it: there- 
 fore it would be impossible for Bank notes to 
 fall in value below that of the legal coin of the 
 realm ; and consequently they could not be 
 excessive. 
 
 Another modification of the Restriction Bill, 
 I also beg leave to suggest ; which is, that the 
 Bank, instead of being restricted from paying 
 specie, should be left at liberty to pay it at their 
 discretion. The issue of even small sums would 
 be gratifying to the public ; and in proportion 
 as the market price of gold found its level with 
 that of the Mint, (which must depend prin- 
 cipally upon the rise of the foreign exchanges), 
 specie might be paid more freely ; and, even- 
 tually, without limitation. Whenever the temp- 
 tation to melt, or export, the current coin shall 
 cease, a very small comparative sum of metallic 
 money would be demanded ; for in all but the 
 very small details of business, Bank notes are 
 much more convenient, and would be preferred. 
 Till the late unfavourable course of exchange, 
 the London bankers usually paid as much specie 
 as was asked, and in general there was not felt 
 any want of guineas. The want has arisen from 
 the fraudulent melting and exporting of the cur- 
 rent coin. It would manifestly be as impolitic 
 as unjust, to compel the Bank (could they be
 
 compelled) to promc A 000116347 e 
 Gold is not, as has been asserted, the regulator 
 of foreign exchanges ; but were it otherwise, 
 and the supply of gold bullion for the purpose 
 of exporting to regulate the exchange, found to 
 be a proper measure, it would be infinitely 
 better to pay a bounty upon bullion, equal to 
 the difference between the Mint and market 
 price, to the fair trader, than to give it in the 
 shape of coin to the perjured contra veners of the 
 laws of the realm. For observe, it is solely upon 
 the " clandestine export of guineas," and " tbe 
 swearing off British for foreign gold," that the 
 supposed benefit to the exchange has been 
 assumed. 
 
 If then the real strength and wealth of Great 
 Britain have increased since the <era of the Bank 
 Restriction, in an extraordinary degree ; and if 
 the repeal of that law would probably weaken 
 the hand of Government, decrease the revenue, 
 reduce rents, embarrass trade, and check our 
 agricultural improvements, surely there can be 
 no hesitation about the expediency of continuing 
 the Restriction. Modified it may ( perhaps) be, in 
 the way just hinted : but the liability to pay in 
 specie without limitation, would expose our 
 public credit, and with it our national prosperity 
 to the machinations of an implacable enemy, who
 
 3 1158 01155 4176 
 
 Clio] 
 
 has concluded upon good grounds, that " WHEN- 
 EVER THE RESTRICTION BILL IS REPEALED, THE 
 PRESSURE OF THE MILAN AND BERLIN DECREES 
 WILL BE FELT IN ALL ITS FORCE." 
 
 The reasons 1 have offered, will, I trust, have 
 satisfied the reader, that the existing checks do 
 very effectually limit the issues of Bank notes, 
 and guard them against the probability of ex- 
 cess ; that every occasional redundance of Bank 
 paper, is corrected by a powerful and inherent 
 remedial principle ; and that no ecxess exists, 
 for Bank notes are at par with specie. 
 
 Irrespective however of all collateral argu- 
 ments, the question at issue rests upon the deci- 
 sion of one simple proposition, isgold bullion the 
 real and legal standard of all exchangeable value 
 in this country ?" Upon this fact the new theory 
 must stand or fall ; and I flatter myself that 
 the reader, upon the clearest evidence, and most 
 perfect conviction, is prepared to decide it by an 
 unqualified negative. 
 
 London : printed by W. Bulmer and Co. 
 Cleveland-row, St. James'*. i