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extent, because mercantile confidence undergoes a temporary suspension. Such, no doubt, was the case in a part of Austria, and, perhaps, in Walcheren; such is still the case in Spain. and Portugal: but nothing of the kind has been practised among ourselves, nor in the rest of the world. Will it be said that this alarm led to the retention of the precious metals in Spanish America; or prevented the produce of the mines from finding its way, in unexampled quantities, from the Spanish Main to Jamaica, and thence to England, or direct from Vera Cruz to Portsmouth? Had bullion been in such eager demand on the Continent, it would of course have been at least as dear there as here; yet we find that, when it was here at the highest, it did not on the Continent rise more than three or four per cent. above its coinage price +. A fact still more to the purpose is that, notwithstanding the many ingenious methods of accounting for the want of bullion, (all of which Sir John Sinclair very good-naturedly enumerates and believes,) no actual scarcity of bullion has existed either here or on the Continent. It is to be obtained, and in abundance, by all who will pay the market-price for it. Since the distracted state of Spain and Portugal has discouraged the transmission of specie from America to those countries, England is the first quarter to receive supplies of the precious metals; and accordingly, on referring to the books of the Bullion-office at the Bank, we find that the gold and silver imported from abroad during fifteen months, beginning from 1st January last year, amount to not less than two millions and a half sterling 1. To infer that an article has grown dear in the midst of an increased supply would be a new mode of reasoning. Is it not more likely that the notes with which we go to market have become cheap? Sir John Sinclair, and those who with him maintain that gold-bullion has become dear, do not seem to be aware that gold long was, and ought still to be, the measure of all prices in this country. It follows that, if gold were dear, whatever is bought with gold — that is, all the commodities in our markets-ought to be cheap, and housekeeping should, at this rate, be an easy matter: but that such unluckily is not the case, all of us who have to pay for our consumption, whether BankDirectors or Reviewers, know but too well. When obliged, then, to give up this point, these indefatigable persons fly off to the opposite extreme, and boldly allege that bullion is no

Evidence before the Bullion-Committee, as presented to the House, p. 64.

+ Evidence, p. 91.

See accounts in the Appendix to the Bullion-Committee, p.162.

criterion

criterion of the value of bank-notes. One gentleman pointedly told the Committee that he " did not conceive gold to be a fairer standard for Bank of England-notes than indigo or broad cloth;" and Sir John Sinclair, after having taken much trouble to account for the high price of bullion, adds that it is of very little consequence, (p. 32.) because bullion is merely merchandise, and we might as well institute an inquiry into the price of diamonds, cochineal, or sugar, as of gold. At this rate, gold is no longer our standard, and bank-notes have taken its place:-a precious improvement, to exchange a standard that connected us with all the world, for one which is unavoidably confined within the limits of our own territory !Still, however, the opponents of the Report of the BullionCommittee adhere to their point that our paper is not depreciated. They say, and here lies their grand argument, "Go to any market in England with guineas in the one hand and notes in the other, and you will buy goods as cheap with notes as with guineas." They overlook, however, two very material points; first, that the comparison is hard to make, since guineas have become so rare; and next, that, as we mentioned in our article on this subject in our last Review, the law prohibits the existence of any distinction, since it would award a punishment to those who gave more than twenty-one shillings for a guinea.

2dly, Exchange. We come now to the most important branch of this inquiry, an investigation of the circumstances which have led to the present high rate of exchange. The Report of the Committee points to an over-issue of paper as one of the principal of its causes; while Sir John Sinclair, and those who share his opinion, insist that our paper-currency has no connection with the rate of exchange, and that the fall is altogether ascribable to the expence of our troops abroad, and the disadvantageous state of our trade with the Continent. The expence of our troops abroad, however, like the wants of the French military chest, is an argument of long standing, and seems to have no particular reference to the last two years. What demands on government from the North of Europe have been made during that period, except a short subsidy to Sweden, and one still shorter to Austria? In regard to a disadvantageous trade with the Continent, it is amusing to remark that Sir John, in this respect, is quite at variance with his ministerial friends; who told us in the Spring, in the House of Commons, with no slight degree of exultation, that our last year's trade with the Continent had afforded us a balance of not

Evidence, p. 102,

less

1

less than fourteen millions sterling *. Now the arguments of the Baronet, and the opinions of most of the mercantile men who were examined by the Committee, proceed on the assumption that the balance was greatly against us, and required for its liquidation a considerable export of our specie. In the fact of an unfavourable balance we see but too strong reason to concur, though the causes of it do not seem to have been generally understood. It was chiefly ascribed by the mercantile witnesses to the Continental interruption of trade with England, to the irregularity of judicial proceedings in the North of Germany, and to the want of middle-men as dealers in Bills of Exchange. This enumeration serves only to shew the proneness of practical men to find the solution of a general embarrassment, in the particular circumstances which pass under their personal observation. The causes thus assigned are wholly inadequate to the effect:- their operation in clogging trade is obvious: but in regard to the rate of exchange with England, they might tend, for aught that we know, as much to raise as to lower it. Accordingly, during 1807 and 18c8, the years in which these impediments chiefly prevailed, the state of the continental exchange was not unfavourable to this country.Another point much maintained, as conducive to the fall of exchange, is the difference in the time of payment between our imports and our exports. "We are called," say the merchants, "to pay the former in the course of a few weeks, while many months and sometimes years elapse, before we obtain reimburse ment for the latter. This, it is true, does not greatly apply to the Continent of Europe, nor, at the present moment, to the United States, but it holds in respect to Brazil and Spanish America." Plausible as this argument is, we shall find that, like the others which we have noticed, it is an argument common to all our seasons of pecuniary embarrassment. It was brought forwards at great length by the Parliamentary Committees, which were appointed to examine into the origin of the drain on the Bank in 1797; and it will be found applicable to every country that is possessed of sufficient capital to afford long credits. Since the fall of Holland, the English are the only nation which can submit to the great outlay of money that is indispensable to the maintenance of commercial intercourse with a newly settled country; and it is to this circumstance that we owe the possession of the trade with the United States; to which we export four times as many manufactured goods as the whole Continent of Europe put together +. Now if this has been long our situa

* See Mr. Perceval's Speech.

↑ See Baring on the Orders in Council, p. 140.

tion, what solution can it give to the mercantile difficulties of the present period?a period in which, judging from the high price of stocks and other government-securities to which the monied interest usually resort, the proportion of capital invested abroad does not appear to be great.

It is evident, therefore, that the reasons urged to the Committee by the merchants convey no satisfactory explanation of this unfortunate revolution in our Continental exchanges; and if we betake ourselves to the Report for information, we shall be disappointed. Here, indeed, is the deficient part of that valuable and instructive document. The Committee have explained, with much intelligence and perspicuity, the prin ciples of exchange; and they have successfully exposed the fallacy of the Custom-house statements of the excess of our exports over our imports,-statements by which ministers have deluded the public ever since 1793 with the notion that we gained from foreign countries by means of trade as much as we expended in war: but the Committee have failed in exhibiting the mercantile causes of the present fall of exchange. In recording the notions of the mercantile witnesses, they discover no suspicion of their mistaken tendency, and in one passage (p. 16.) they appear even to adopt them. In general, however, the Committee avoid expressing any opinion on this head, farther than conceding to the Bank-Directors (p. 16.) that the fall of our exchange is not to be ascribed, in the first instance, to the state of our paper-currency. This blank in the Report is the more surprizing because the Committee contained gentlemen who, uniting a knowlege of the principles to an experience of the practice of trade, were equal to the task of tracing the unfortunate depression to its source. We believe that the suspension of the American trade to the Continent is the chief cause of the fall of our exchanges. In former years, before the epoch of our Orders in Council, the United States were accustomed to make sales on the Continent of Europe to the amount of three, four, or five millions above the amount of their purchases; and this ample balance was regularly remitted to London, to be applied to the payment of British manufactures exported to America. Such was the mass of bill-business transacted in London for American accounts, that it formed (as we learn from the parliamentary papers on the subject of our Orders in Council) the principal department of several of our most opulent houses. Let those, who understand the decisive operation of our Sinking Fund on the price of stocks, consider how powerfully the course of exchange must be influenced in our favour, by the millions which formerly were in a course of steady remittance from the Continent to REV. Nov. 1810.

U

England

The commissaries for our

England on American account. army, and the contractors for our navy, when on foreign service, instead of draining this country of its coin, were accustomed to receive money for their bills from the American merchants, in the places at which they purchased their supplies. This resource was open to them in the North and in the South, in the Baltic as well as in the Mediterranean. What a fund was this to meet the foreign expenditure of our government, and to liquidate the balance of our mercantile transactions with the Continent! If we read the valuable publication of Mr. Baring, we shall see how, by paying the Americans in manufactures, the industry of Yorkshire and Lancashire was made to meet the wants of our defenders on foreign stations, and to minister directly to the support of our national independence. By what infatuation were we led to be instrumental in robbing ourselves of this resource, and tempted to dash the treasure from our grasp? The advisers of our ill-fated Orders saw that America prospered by supplying the Continent, and were weak enough to believe that, by throwing impediments in her course, we might transfer the chief part of her profit to ourselves. Our government, unacquainted with the complicated relations of trade, disposed to listen to the false jealousy of a part of our merchants, and captivated, after the Copenhagen expedition, with every proposition that wore an aspect of Vigour, imprudently lent an ear to these fallacious counsels: the deed was done; and its result is now before us, written, alas! too legibly in the fall of our exchanges, in the depreciation of our currency, and in the bankruptcy of our merchants.-This, however, is not all. To what cause is it owing that the United States, now re-opened to our trade, have in this year taken so much less of our manufactures than we expected? Are they supplied elsewhere? That cannot be, because the rest of Europe is shut to their vessels. Have they made progress in manufacturing for themselves? This, though a growing danger, is not yet sufficiently advanced to account for so serious a defalcation. It is owing, then, to the want of the millions which America can no longer draw from the Continent, and which she can no longer invest in the produce of British industry.

Although the influence of the American Continental trade on our exchanges appears not to have impressed the members of the Committee, we have succeeded in tracing it in several parts of the Evidence. It seems to be implied in the answers (p.131.) of the late Sir Francis Baring; and it is distinctly brought forwards (p.130.) by Mr. Cuningham, in answer to the following question:

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