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received of course no benefit from the mass of facts and observations which are there accumulated. We have delayed our account of them till we could obtain this advantage.
Mr. Ricardo's pamphlet ranks first in the order of publica tion; and, with the exception of defective arrangement and the want of titles to the different subdivisions of the subject, it deserves to be considered as a plain and satisfactory sketch of the leading points of the question. He begins by laying down a few preliminary rules; viz. that the value of gold and silver depends, like the value of other commodities, on the labour bestowed in procuring them; that their total quantity throughout the world by no means regulates the proportion in which they are distributed through particular countries: but that such local distributions depend on the extent of local traffic, that is, on the extent of demand for their use. Coming afterward nearer to the immediate subject of his pamphlet, he observes that an increase in the whole stock of circulating medium, such as followed the conquest of America, lowers the value of money throughout the world without much tendency to alter its proportional value in particular countries; that the discovery of a new mine has some effect in lowering the value of money in the country in which it is situated, because it leads to an export of specie; that an increase of bank-notes operates like a mine, as well in lowering money as in sending specie abroad: but that the depreciation thus produced is not considerable, unless the issuers of the notes are exempted from paying them in specie, and permitted to over-do a currency which, in the event of excess, cannot be exported. He is of opinion that the magnitude of our country-bank-circulation is much beyond the general estimate; and that, for every million of excess issued by the Bank of England, the country-banks succeed in circulating four times. As our coin cannot legally be sold above the mintprice, we are prevented, he justly adds, from ascertaining, in open market, its enhanced value in comparison with banknotes, and must therefore have recourse to the price of bullion as the measure of depreciation.
On Mr. Grenfell's pamphlet, we have little else to remark than that we imagine he would have written very differently, if he had waited for the evidence produced before the Bullion Committee. He would not then, in all probability, have hazarded assertions so loosely worded as (page 4.) that an over-issue of bank-notes would tend to lower the price of bullion,' or (p. 15.) that bullion is not so high in London as in Amsterdam. He has entered the lists against Mr. Ricardo, and, in despite of all that gentleman's arguments, contends
stoutly that bank-notes are not depreciated: but he might have saved himself a great portion of trouble by paying due attention to a circumstance mentioned by Mr. Ricardo, and afterward very fully explained in Mr. Merle's evidence before the Committee, that the illegality of paying more than the mintprice for our coin accounts for the difficulty which he and others experienced in comprehending its rise above paper. These precautions, however, we scarcely expected from Mr. Grenfell, after having seen in the first page of his pamphlet that inconsiderate allegation was substituted for deliberate reasoning and careful research. Mr. G.'s first sentence runs
Among the complaints of the times, the depreciation of our paper currency is imaginary; the scarcity of gold and silver, as circulating media of internal commerce, is unnecessarily made a subject of alarm; even were the Bank of England obliged to pay their notes in specie on demand, this measure would be unavailing to any purpose of public utility or convenience; it would also be impolitic and unjust.
Mr. Mushet's pamphlet is the longest, and includes the widest range of topics, of any of those which the bullionquestion has drawn forth. After a few introductory remarks on the principles of money and the relations of paper to coin, he enters on the subject of exchange, and explains very satis factorily (pp. 9, 42. &c.) the manner in which an unfavourable balance of exchange cannot long continue to exceed the cost of transporting specie; and that any great and permanent balance, either one way or the other, must depend on an altered value of the circulating medium in one of the countries in question. Such is the case in Turkey, the government of which has, by three great adulterations of the coin, brought down its exchange with other countries one hundred cent. since the year 1770. Hence the importance of keeping our coin, particularly our gold coin, as nearly perfect as possible. Proceeding to investigate the effects of the BankSuspension-Bill, this writer shews by tables in detail that, ever since the augmentation of bank-notes became considerable, viz. since the year 1800, the price of gold bullion has been as high as four pounds per ounce, and greatly higher during the last two years. The effects of this circumstance in augmenting the issues of country-banks, in the consequent reduction of the value of money, and in hardship on all persons whose income and property consist in money, are very clearly explained. Mr. Mushet likewise takes pains to prove, from evidence before parliamentary Committees, that it was the rule of the Bank of England, as well as of that of Ireland, as REV. OCT. 1810,
long as they were liable to pay in cash, to narrow their issues whenever our exchanges became disadvantageous; that is, they felt or foresaw that a run on them for specie was to be expected, and in course warded off the demand as much as they could by a timely reduction of their notes. It would be unnecessary to enlarge on this point, did it not appear from the late examination of the Bank-Directors before the BullionCommittee, that, having been long exempted from the hardship of this aukward rule, they had in a manner forgotten its existence. We extract that part of Mr. Mushet's pamphlet in which he treats of re-establishing the value of our papercurrency by the resumption of cash-payments; a passage from which it seems tolerably clear that he is no holder of bankstock :
From what has been stated in the foregoing chapters, the remedy for the evils occasioned by the Restriction-Bill must be ob vious. The manner of applying it, however, is of a delicate nature. The immediate resumption of payments in gold at the Bank, would be attended with serious inconvenience; and no doubt considerable embarrassments would follow. From the doctrine which I have endeavoured to establish, a diminution of Bank-notes must take place before the price of gold is affected. The particular mode of carrying this diminution into effect, whether by a considerable reduction, in the first instance, of one and two pound notes, or by small, but simultaneous reductions of the different classes of notes, is a question to be decided by those who are practically conversant with the business of the Bank, and with the ramifications of paper-circulation. It is clear, that an operation of so serious a nature should be gradual. As soon as any considerable reduction of paper shall take place, bullion will experience a fall; the exchange will rise in proportion, and the temptation to melt and export guineas will be lessened. A further reduction would bring paper still nearer to an equivalency with bullion, and exchange still nearer to par. A continued diminution of Bank-notes would produce equality in the bulion market, and bring the exchange to par, or above it, after which the difficulty would be got over. The money-dealer would then find it his interest to import bullion, and the Bank might resume cash payments without apprehensions of a run, it being at all times an accommodation to the public to make their large payments in paper-money.
In pursuing this measure, I do not pretend to deny, that considerable inconvenience would be felt by the mercantile community, for want of such liberal discounts as they may have had of late from the Bank; but the evils arising from this temporary embarrassment, are by no means so great, as to plead for a continuation of the present pernicious and oppressive system.
As far as the Bank is concerned, the public is entitled to the most liberal exertions. The Restriction Bill has afforded the Bank enormous profits-Observe the surprising effects produced on the
value of Bank-stock, by the exemption from cash-payments after
In 1760, the average price of Bank-stock was.
1797, (having fallen after the alarm).
18c8, (having risen progressively) the average was 1809, in July, Bank-stock sold for
The usual dividend on Bank-stock was seven per cent. a year. Observe the large premiums or bonuses, as they are called, given in addition to the dividend.
In June, 1799, there was given on every 100l. Bank-Stock, a bonus or present of tol. Loyalty-Stock.
5 Navy, 5 per cent. stock.
5 per cent. Cash.
And in April, 1807, the dividend was raised to ten per cent. at which it has since continued.'
This pamphlet may be divided into two parts; the first, which we have already noticed, relating to circulation, and the second relating to coinage. On the latter head, the author appears to write with that familiar acquaintance with the subject which may be supposed to arise from professional habits; and we much regret that our limits do not permit us to discuss more largely the propositions which he has submitted to the public. After having mentioned the ruinous consequences attendant on the mixture of light and heavy pieces in our coinage previously to 1773, and the complete cure effected by our great re-coinage in that and the subsequent years, he suggests (p. 78.) the propriety of a small seigniorage on our gold coin. Were this only one half per cent., it would nearly defray the expence of coining, and would tend to lessen, in the only proper way, the speculation in the export of guineas ;-a speculation which is neither wisely nor effectually discouraged by our present prohibitory laws. The seigniorage on gold should be small, because gold has been for a century past, and ought to continue, our standard of value in all money-transactions. Silver being with us a subordinate coin, and used only in small purchases, or as change for gold, the rate of seigniorage on it admits and indeed calls for a much greater latitude. It is to the want of an adequate seigniorage that this country must ascribe the rapid disappearance of the great silver coinage of King William, which was conducted at an expence of three millions sterling. The price put on the N 2 coin
coin was below the market-price, and a temptation was thus excited to melt and export it. Silver, being of considerable use in manufacture, is subject to fluctuations in price, varying not unfrequently in the market to the extent of ten per cent.; and hence, to guard against the hazard of melting, the seigniorage ought to be carried to that rate. Mr. Mushet, assuming this as the proper allowance, and taking five millions as the amount required for the silver currency of the United Kingdom, enters into calculations of length to shew that, without any other expence to the public, the seigniorage might be made productive of a fund that would be adequate not only to defray the mint-charges, but to make good the loss sustained by wear of coin. Considering newness and uniformity in coinas the best security to the public against base money, he suggests also that our silver coin should be regularly called in after ten years of circulation.-Without expressing an opinion on the details of Mr. Mushet's plan, we have no hesitation in agreeing with him in the expediency of a seigniorage to the extent even of ten per cent. on our silver. By prudent regulations, the encouragement to counterfeiting, which is the only serious objection to it, might be obviated, and it could not fail to be productive both of a saving to the public revenue and of permanency in our silver currency. The pamphlet is concluded by some very useful tables, explanatory of the course of exchange and the price of bullion since the year 1760.
After having followed Mr. Mushet through a series of elaborate calculations, which, however valuable, cannot, from the nature of the subject, lay claim to the merit of being attractive, we derived no small amusement from the humourous. and pithy production of Sir Philip Francis; and a brief abstract of its contents will, we are satisfied, prove acceptable to our readers. This veteran in parliamentary combats begins by comparing our paper-system to water introduced into the body to serve the purposes of blood; in which case the patient may be told that it is a very good thing, but he is likely, notwithstanding, to give the slip to the physician, and to die of a dropsy with the panacea in his veins. Paper, adds Sir Philip, is very convenient, but one little condition is essential: to its value, namely security. The first inquiry is, what has become of our gold and silver; and if they are gone, are they likely to come back again? Without them, how are we to. defray an annual expenditure of nearly eighty millions; a part of which, such as the expence of our troops abroad, our foreign subsidies, interest to foreigners for money in our funds, &c. must be paid in specie? The worthy persons who deal in paper tells us, with all imaginable gravity, that bank-notes are