on either side have amounted to an equal value, estimated in seals of corn, it is probable that the desire among individuals for procuring, and disposing of demands, will be the same; in that case, a given quantity of corn in either country, will purchase an order for delivering a like quantity in the other, and the exchange will be at par. If the sales have been unequal, individuals in that. country which has most to pay, eager to avoid the expense and inconvenience of actual remittance, will be inclined to purchase demands for grain on the other country, at an advanced price: and the course of exchange will become unfavorable. Individuals in the country making the least purchases will readily find orders on the debtor country, will purchase them cheap, and thus establish a favorable exchange. This is the simple statement of exchange, to which all operations in that department may be reduced, when difficulties similar to the following are removed. The sealed bags of corn in different countries may vary in their contents; the corn may be of several sorts, or mixed with chaff. If the measures in one province of an empire should contain a twelfth part less than those circulated at the capital, an allowance of 8 per cent. will immediately take place in all transactions, to restore the equilibrium.

But at last some balance must remain due, after private accounts have been adjusted to their utmost limit: this certainly will be paid in part by corn; which, pro tanto, must go towards liquidating the debt: the operation produces, however silently and unobserved, effects much more important; the quantity of circulating medium being diminished in the exporting country, and rendered more abundant in that which receives. If seals are sent out, the circulating medium at once undergoes that change; if the export consists of unsealed corn, a temptation will be created, by the advance in relative value of what is left, to open bags, and thus convert the sealed grain into an article of common use; and either mode will be productive of the same effect. The circulating medium having become of more value in comparison with other articles, where its quantity has been diminished, these articles will appear to fall; in the other country they will appear to rise, from the standard of value really becoming more plentiful, and consequently more cheap. These variations encourage exportation from the debtor state, and check it from the creditor. Thus, a very small remittance of the article selected as a standard of value, may, and certainly does, indirectly operate the discharge of debts to many times its own amount, and frequently turns quite round the course of exchange: so that very little, in comparison with the amount of balance, is oven. likely to be setnully komukua 100.

I surely need not repeat this section over again, substituting

gold for wheat, coin for seals, and alloy for chaff, to prove that every peculiar circumstance attached to the medium of circulation, applies equally to whatever substance may have been selected for that purpose. It clearly appears that gold and silver, divested of this character, would identify themselves with other articles of common merchandise.

Exchanges are at par, when a given quantity of the article representing value can be transferred from either country to the other, without any loss, beyond the necessary expenses of brokerage, &c. 'The coin of one country deficient in quantity, may bear an agio: the coin of another redundant, but guarded by laws, may to a small extent, be depressed; paper currency not convertible at will, may be depreciated to any extent. All these causes vary the nominal rate without affecting the reality. To be perfectly accurate, some small allowance should be made for nations possessed of mines, and for others contiguous to them; and when currencies are of different metals, their actual relative values must be taken into the account.

It must surely be established to your satisfaction, that the standard of value has properly no price-that gold in bars, and gold in coin, must always equal one the other, with the trifling variations already mentioned that the greater or less abundance of this article, affects the nominal value of all others, in directly the opposite way from their own excess or deficiency-and that its exportation, in payment of debts, liquidates indeed to the amount, but produces a much greater effect, by decreasing the nominal rates of all articles at home, and increasing those rates abroad; thus checking import, already too great, and forcing an export, sufficient to correct the balance.

SECTION V.

The inconvenience of actually paying each balance by remitting the standard substance of value, having induced individuals to purchase credits on the places where they had debts to discharge, a method was very early contrived for facilitating such transactions; which has proved eminently useful, and occurs in almost every transaction of trade.

The creditor addresses an open letter to his debtor, requiring him to pay a certain amount of the circulating medium to a third person, or to some other claiming under him; usually at the expiration of a given time. This letter is denominated a bill of vaubungry high, haing oneily transferable from place to place, from one country to another, extends the system of balances, by

debts against credits without actual remittance, over an extent of surface, far greater than could otherwise be reached; and has given facilities, beyond what can readily be imagined, to all the parties concerned.

From bills of exchange seem to have arisen notes: these are engagements sometimes of an individual, more frequently of a company, to pay the bearer on demand, that particular quantity of the article representing value, which is mentioned in the note itself. These, equally with bills of exchange, possess the property of ready transmission; constitute to the issuer a capital advanced to him without interest; and, being applied to precisely the same purposes, as the commodity selected for measuring all others, they occupy its place, and cause a part of what had been gold in coin, to become an article of commerce: or, on the other supposition, they would convert corn in seals to the common uses of grain.

The value of these notes being always measured by the quantity of gold, or of corn, for which they may at any time be exchanged, if the quantity of corn in seals be supposed very great, and the substitution by bills extremely rapid, it will follow that so much corn may suddenly be returned to common use, as for some time at least, to reduce the value of any given portion in exchange for other commodities: but the annual production of grain being nearly equal to what can ever be in store, such a reduction of value would correct itself, by diminished tillage, and be of short duration. In the case of gold, it might extend to a great number of years.

The extraordinary reduction in value of gold and silver, as compared with other commodities, in modern times, has been occasioned by the two causes, alone capable of producing such an effect-first, by a great increase of the supply; and secondly, by as great a diminution of the demand.

It is obvious that the quantity of gold, of silver, or of other metals produced from mines, cannot, for any considerable time, be much less than what will exchange for the materials used, and for the food, raiment, and general support of all persons employed in working them. Gold and silver had adjusted themselves to this standard in the Old World, when the discovery of America opened mines far more productive, with an equal expenditure of materials and with equal labor; they were consequently, at first, most advantageous. The mass of gold and silver actually existing in the world, being probably more than the produce of any century from mines, the reduction of value proceeded with a gentle pace: but after the lapse of a certain number of years, these metals exchanged for no greater quantities of other articles, than were sufficient to support

the mines of America, as they had previously done those, less productive, on the other continent. This point once attained, the relative value of gold or silver to other commodities, appeared likely to remain as little variable as in former times; and for some time very little alteration seems to have taken place; till the second cause came into operation, acting with much more rapidity, and capable of proceeding to an unknown extent. No sooner had governments acquired stability, and private credit established itself on a firm basis, than bills of exchange almost excluded metallic payments from large transactions; and the subsequent introduction of notes produced nearly the same effect on transactions of smaller magnitude.-Inventions, more or less analagous to notes, have been contrived in most countries; so that, notwithstanding the great increase of population and of commerce, a far less quantity of coin is now required for circulation than at former periods. The superfluous coin returning to the common stock of mercantile commodities, has of necessity reduced the value of these particular articles in comparison with others. More than the mines could yield in many years, has been rapidly poured on the civilised world, and, combining with the effects already produced by the discovery of a New Continent, they have rendered almost ridiculous the nominal values affixed by our ancestors.

Thus far, however, all mankind acquiesced :—the changes were considered as an inevitable consequence of the natural order of things, of which no one could complain. The mines of America might not have been discovered; they may be worked out: trade, industry, population, may hereafter increase at a greater rate than contrivances for diminishing metallic payments; and the value of gold and silver, in exchange for other articles, may again increase. Quit-rents, now become nominal, would then acquire value; and the creditor, receiving back the stipulated weight of gold, would find himself enabled to command a larger portion of labor, or of the products of labor.

SECTION VI.

We are now arrived at the last step in the progress of circulating media. -Notes, verbally promising to pay the bearer a certain quantity of gold or silver on demand, have been issued in different countries, under various forms, without really entitling the holder to receive, at his pleasure, the equivalent promised. A great variety of circumstances have accompanied these issues. Some govern

ments, refusing to accept their own notes in payment for taxes, have stamped them with a considerable discount, from their first appearance: other governments, accepting them indeed, but forcing notes much faster from their treasuries than they could possibly return, and increasing the stream to compensate its diminished value, have ultimately created such a deluge, as in several instances has swept away every establishment of social life, and ingulfed the whole in universal bankruptcy.

Notes issued in this country by the Bank of England, are so far identified with the foreign, that they promise to pay what the holder has no right to demand: they differ, in being circulated by a company of merchants, not directly under the control of government, and of acknowledged solvency. They are said also to differ by not being legal tenders; but this distinction, except in words, may fairly be denied. Public creditors have no other alternative against receiving notes, than not being paid at all; on them at least they are forced into circulation; and not a single individual has been found in fourteen years, amidst the infinite variety of opinions and circumstances existing in that time, who has ventured to decline these notes, and to demand cash.

From this state of things arises a most important question :-Is not the paper currency of England convertible at the will of the holder, into a substance of intrinsic worth, the produce of labor, hitherto considered as an article the most proper for measuring others-is this paper currency proceeding in the same career of depreciation, which other non-convertible currencies have uniformly run? or, is there such an essential difference between them, as will preserve this, though others have perished?

I shall arrange my answers under two heads of inquiry.
Can such a currency be depreciated?

Is it not actually depreciated?

Preparatory to the first, let us consider what forms the value of gold above lead, what renders saffron more precious than hay.Clearly, the labor, the operation, the manure, the extent of ground requisite for producing these mineral or vegetable substances.-If some cheap process could be discovered for converting materials easily procured into gold, there can be no possible doubt of gold then exchanging for no larger quantities of other articles, than what were produced by an equal expense of labor and cost; but if gold should still continue the standard of value, a pound would remain exactly equal to forty-four guineas and a half, or to 46l. 14s. 6d.; consequently the ounce to 31. 17s. 10d. Let a still more easy and less expensive process be found out of creating this metal; it would evidently become of proportionably less value, perhaps on a level with the cheapest form of iron: but this value in exchange, however