being exportable or convertible, except when light, into bullion. We are disposed to call bullion the standard, to denominate this unavoidable difference depreciation, and we would not complain of a present depreciation of paper to the same, or even to something near the same extent.

But these gentlemen are not satisfied to contemplate coin as subject to a deviation from the standard of bullion only to this, or indeed to any limited degree. Coin, they say, now deviates in fact much more considerably than formerly, and they plead for whatever may be the extent of the deviation which happens to exist. The principle therefore of these gentlemen is practically the same as that of the ideal unit. They have no standard. Let the present 20 or 25 per cent. difference between the value of our circulating medium and bullion be extended to 40, to 50, to 80 or 90 per cent. still their principle will support them in the doctrine that there is no depreciation.--Still they may continue to say that coin in their view of the subject is the standard, and there may still exist some solitary guineas in the country, which some individuals may happen to pass among their paper without being able to claim any discount. The assertors of this doctrine do not indeed distinctly acknowledge that they mean to proceed this length. But we affirm, that if they shall stop short, they certainly will be unfaithful to their own doctrine; and we cannot help observing also, that they have not specified at what point they mean to stop. We would therefore earnestly request them to consider what is the degree of difference between the price of bullion and of paper, which will induce them to consider paper as depreciated, and what the mode by which they will hereafter reconcile their admission of the existence of a depreciation with their present principles.

There is another general and sweeping answer given to all the leading principles of the Bullion Committee, which has been already stated, but which we must not fail here more particularly to notice. It is that an unfavourable balance of trade is the sole cause, both of the present high price of gold, and of the depression of our exchanges. On this extensive and important topic we will at present content ourselves with a very few brief remarks.

In the first place, the very term unfavourable balance of trade is, in the sense in which it is commonly used, and as we hope hereafter to shew, extremely incorrect.

Secondly, the unfavourable balance of trade, or rather of payments, which is affirmed to have existed during nearly the whole of the last three years', (for the exchanges have been unfavourable for all that time,) is inferred from documents necessarily imperfect, and is therefore assumed without sufficient proof.

But, in the third place, supposing, for the sake of argument, this

unfa

unfavourable balance of trade and of payments to have existed, and to be the sole cause of the present evil, there is no certainty that the same cause may not continue, and may not by its continuance produce a still farther diminution of the value of our paper in exchange for gold, and a still farther fall of our exchanges. About three successive years of unfavourable balance have, according to this principle, already past, and where is the ground for trusting that three more years, or even three times three may not be added to the number : or where, according to the doctrine in question, is our security against the greatest imaginable fall of our exchanges even in a single year? The asserters of this doctrine ought at least to mitigate our fears, by shewing that there is some limit to the depression. They ought to place clearly before our eyes some point, below which, in spite even of the most unhappy continuance of what they call our unfavourable balance of trade, the value of our paper cannot sink. Not one of the pamphlets before us suggests the existence of any such limit. We are therefore in this case at the mercy of that unexplained thing, an unfavourable balance of trade, as in the immediately preceding case, we are at the mercy of a coin which entirely accommodates itself to paper, and as in the first mentioned case, we are at the mercy of the ideal unit.

We observe, fourthly, that so far as appears from the only accredited tables, between the time of the reformation of our gold coin (1773), to that of the suspension of the cash payments of the Bank of England, the market-price of gold (we refer to this rather than to the more involved question of the exchanges) never departed in point of fact in more than a very trifling degree from the mintprice. But during those 24 years, was there no fluctuation in what is called the balance of trade? Is it not obvious that there must have then existed some check to depreciation of which we are now destitute. This check consisted in the liability to be drained of cash, to which the Bank was then exposed in the event of any material rise in the price of bullion, in the actual export of gold which then took place, and in the limitation of paper to which the directors were accustomed to resort; a measure which they themselves acknowledge that they now should adopt, if they expected soon to be compelled to resume their cash payments.

We are here reminded of a work of Mr. WILSON, a Director of the Bank of Scotland, on the subject of depreciation, which we by accident omitted before to notice. This respectable writer opposes the conclusions of the Bullion Committee, and calls our attention chiefly to the price of corn, as bearing on the great subject in dispute. He admits that the facility of creating paper produced by the suspension of payments in specie enabled us to maintain those increased nominal prices' which a few years ago a scarcity of

-corn

corn aggravated by the nature of our corn laws produced, and says, that these prices must otherwise have been checked by the limited nature of our circulating medium.' This amounts to an admission of the whole of our preceding observation, and indeed as we think of the main point of the present dispute.*

We observe then, lastly, that from whatever cause the fall of our exchanges and the high price of bullion may proceed, a reduction of our Bank notes must operate in the way of mitigation, or rather indeed of cure. This we stated in the beginning of the present paper. We shewed, from the very admission of Mr. Hill, that a limitation of the quantity of the circulating medium tended most unquestionably to improve its value-to improve its value in comparison not only with commodities exchanged for it at home, of which we shewed bullion to be one, but also with bullion exchanged for it abroad, and with foreign coin exchanged for it abroad, in other words to improve the state of our exchanges.

Of the difficulty of applying this remedy, of the danger attendant on too sudden a reduction of paper, of the extreme delicacy of the question, whether the Bank should or should not open at any time, which can be now distinctly and confidently prescribed, we are fully aware. We leave the determination of such points to those whom it most concerns; we sufficiently perform our part in endeavouring to combat some of the dangerous and delusive principles which have been put forward on this subject.

Of the pamphlets in favour of the doctrines of the Bullion Report, the two principal have already been reviewed by us in former Numbers; that of Mr. RICARDO, and the important publication of Mr. HUSKISSON. A modest Tract on the same side has been published by Mr. HOARE; which we recommend to the perusal of our readers. And at the moment when we are concluding this article, a pamphlet entitled 'Thoughts on the expediency of establishing a new chartered Bank,' by Joseph MARYATT, Esq. M. P. has added itself to the lofty pile upon our table. Mr. Maryatt enters with much perspicuity into some of the chief points which are contested, and in the following passage has happily illustrated the influence of

* We fear that Mr. Wilson trusts far too much to the circumstance of our exchanges having recovered after the years of scarcity. The exchange with Hamburgh did not then deviate from what Mr. Wilson in his tables represents as the par more than eight and a half per cent. which amounted to little more than a fluctuation of the exchange, properly so called. The Hamburgh exchange is stated by him to have deviated in January last above 22 per cent. and we understand it to bave fallen still more since. We hope to enter farther into this branch of the subject at a future opportunity. Mr. Wilson thinks, with Mr. Fonblanque and others, (and as we have observed in our text, Mr. Law is of the same sentiment,) that Bank paper never can be issued to excess, in as much as the supply can never exceed the demand. We have already remarked on the dangerous nature of this error.

every augmentation of circulating medium in raising the price of commodities, and in finally producing, through the augmentation of those prices, a rise in the price of foreign bills, or in other words a fall in the exchanges.

In some parts of India,' he says, 'small shells called cowries are used as a circulating medium. If a violent storm were to throw up a prodigious quantity of these cowries upon the coast, it is obvious that a greater number of them would soon be given in exchange for every other commodity; and just the same effect is produced here, by the increased manufacture of our paper circulating medium. If we consider Bank notes as being purchased by commodities, instead of considering commodities as being purchased by Bank notes, we shall readily conceive how the increase of their quantity diminishes their relative value. In point of fact, whenever an increase in the amount of the circulating medium of a country takes place, while the quantity of commodities remains the same, an increase in the price of commodities, and a correspondent decrease in the value of the circulating medium must necessarily follow.'

Although a considerable augmentation of our Bank paper appears by the documents laid before the Bullion Committee, as well as by an account recently laid before Parliament, to have taken place, we ought not to assume that even any new quantity of it is absolutely necessary to the production of that effect which is here supposed to result from a storm throwing up a new quantity of cowries. The new economy which the extension of our banking system and a variety of other circumstances occasion in the use of paper may silently produce an influence on prices as certain and considerable as a positive augmentation of its amount.

Mr. Maryatt proceeds to say:

Nor is this evil confined to articles of our own growth and ma nufacture, but extends to our foreign commerce by its influence on the foreign exchanges; for when the currency of a country is depreciated, it will no longer purchase the same amount of foreign money as before, to be invested in foreign commodities; or, to put the case in the opposite way, if a merchant upon the continent is offered a bill of exchange upon London, for which he is to receive Bank notes, not convertible into specie, those notes can only be invested in commodities here at an advanced price; and, therefore, he will only take the bill of exchange at such a depreciated rate as indemnifies him for the advanced price of the commodities.'

But however we may agree with Mr. Marryatt in these positions, we confess that our minds are by no means in unison with his in respect to the leading suggestion of his pamphlet. Certain Directors of the Bank of England, in common with certain other Directors of the East India Company, have been guilty, as Mr. Maryat states, of supporting a Marine Insurance Bill lately brought

into parliament, against which he contended on the ground of its violating the rights of two chartered companies. This projected violation of charters ought to be punished, as it should seem, by an actual invasion of the Bank charter, and the new establishment would moreover be made the instrument of putting the issues of the Bank to that test, the want of which is the cause of the alledged excess and depreciation of our circulating medium.'

If the present evil arose from an insufficient quantity of paper currency, we could easily understand how the creation of a great additional body of issuers of paper might work a cure. If the converse be the case, it is at least necessary to explain in what manner the new company is to effect the remedy; but we forbear to enlarge on the subject of this speculation. Our principles incline us to avoid unnecessary change. The path which we wish to tread is simply that by which we may return in good earnest, though not without some prudent delay, into the footsteps of our ances

tors.

We will add only one word, which Mr. Chalmers, as we hope, will construe into a farther proof of our dislike to innovation. We will fairly own that we are not quite free from apprehension of some dimunition of the intrinsic value of our gold coin, or some change of its denomination. A measure of this kind unfortunately offers the most easy mode of escape from the evil of a depreciated currency, and the recent advertisement of the Bank, sanctioned by the Privy Council, which in consequence of the increasing difference between the value of our paper and that of silver, directs that dollars which had been issued at 5s., a rate supposed to be sufficiently above their value, shall in future be received and issued at 5s. 6d., has strengthened our fears on this subject. The fall in the value of our paper as compared with the precious metals, (which it was assumed long ago that a favourable balance of trade would soon terminate,) if it should proceed much farther may possibly be deemed to be a depression too great and too rapidly and fearfully advancing to admit of any other adequate remedy. To lower on this ground the standard of our gold coin would indeed be nothing less than an act of bankruptcy on the part of the state, and it would be a measure big with injustice as it respects engagements between individuals. We have been glad to find that the pamphlets which we have reviewed do not suggest any such expedient, but we fear that they encourage us in a course which leads to it, and many of them appear to supply, though we trust unintentionally, something too like a justification of the principle. It is for the legislature to preserve us from this

R 3

calamity.