Your committee have likewise found, that, towards the end of the year 1808, the exchanges with the continent became very unfavourable to this country, and continued still more unfavourable through the whole of 1809, and the three first months of the present year. Hamburgh, Amsterdam, and Paris, are the principal places with which the exchanges are established at present. During the last six months of 1809, and the three first months of the present year, the exchanges on Hamburgh and Amsterdam were depressed as low as from 16 to 20 per cent. below par; and that on Paris still lower.* The exchanges with Portugal have corresponded with the others; but they are complicated by some circumstances which shall be explained separately.

I.

It will be found by the evidence, that the high price of gold is ascribed, by most of the witnesses, entirely to an alleged scarcity of that article, arising out of an unusual demand for it upon the continent of Europe. This unusual demand for gold upon the continent is described by some of them as being chiefly for the use of the French armies, though increased also by that state of alarm, and failure of confidence, which leads to the practice of hoarding.

Your committee are of opinion, that, in the sound and natural state of the British currency, the foundation of which is gold, no increased demand for gold from other parts of the world, however great, or from whatYour committee find that in the course of ever causes arising, can have the effect of the month of March last, that is, from the 2d producing here, for a considerable period of of March to the 3d of April, the exchanges time, a material rise in the market price of with the three places above mentioned re- gold. But before they proceed to explain the ceived a gradual improvement. The ex-grounds of that general opinion, they wish to change with Hamburgh rose gradually from state some other reasons which alone would 29. 4 to 31; that with Amsterdam from 31. 8 to 33. 5; that with Paris from 19. 16 to 21. 11. Since the 3d of April last to the present time, they have remained nearly stationary at those rates, the exchange with Hamburgh, as stated in the tables printed for the use of the merchants, appearing as much against this country as £9 per cent. below par; that with Amsterdam appearing to be more than £7 per cent. below par; and that with Paris more than £14 per cent. below par.

have led them to doubt whether, in point of fact, such a demand for gold, as is alleged, has operated in the manner supposed.

If there were an unusual demand for gold upon the continent, such as could influence its market price in this country, it would of course influence also, and indeed in the first instance, its price in the continental markets; and it was to be expected that those who ascribed the high price here to a great demand abroad, would have been prepared to state that there was a corresponding high So extraordinary a rise in the market price price abroad. Your committee do not find of gold in this country, coupled with so re- that they grounded their inference upon any markable a depression of our exchanges with such information; and, so far as your comthe continent, very early, in the judgment of mittee have been enabled to ascertain, it does your committee, pointed to something in the not appear that during the period when the state of our own domestic currency as the price of gold bullion was rising here, as cause of both appearances. But before they valued in our paper, there was any correadopted that conclusion, which seemed agree-sponding rise in the price of gold bullion in able to all former reasonings and experience, the market of the continent, as valued in their they thought it proper to enquire more parti- respective currencies. Mr. Whitmore, incularly into the circumstances connected with each of those two facts; and to hear, from persons of commercial practice and detail, what explanations they had to offer of so unusual a state of things.

With this view, your committee called before them several merchants of extensive dealings and intelligence, and desired to have their opinions with respect to the cause of the high price of gold and the low rates of exchange.

*What we call in the United States above par, in England they call below par, and vice versa.-Ed.

deed, the late governor of the bank, stated, that, in his opinion, it was the high price abroad which had carried our gold out of this country; but he did not offer to your committee any proof of this high price. Mr. Greffulhe, a continental merchant, who appeared to be remarkably well informed in the details of trade, being asked by the committee, if he could state whether any change had taken place in the price of gold in any of the foreign markets within the last year? answered, "No very material change that I am aware of." Upon a subsequent day, having had time to refer to the actual prices, he

again stated to the committee, "I beg leave sequence of the substitution of another meto observe, that there has been no alteration dium of circulation. And your committee of late in the mint price of gold in foreign cannot omit remarking, that though the cirplaces, nor have the market prices expe- cumstances which might occasion such an rienced an advance at all relative to the rise increased demand may recently have existed that has taken place in England; one of the in greater force than at former periods, yet papers I have delivered shows the foreign in the former wars and convulsions of the prices reduced into sterling money at the continent, they must have existed in such a present low rates of exchange, and the ex-degree as to produce some effect. Sir Francis cess above our market price may be consi- Baring has very justly referred to the seven dered as about equal to the charges of con- years' war and to the American war, and veyance.' This statement made by Mr. remarks that no want of bullion was then felt Greffulhe throws great light upon this part of in this country. And upon referring for a the subject; as it shows that the actual prices course of years to the tables which are pubof gold in the foreign markets are just so lished for the use of the merchants, such as much lower than its market price here, as Lloyd's Lists and Wettenhall's Course of the difference of exchange amounts to. Mr. Exchange, your committee have found that Greffulhe's paper is confirmed by another, which has been laid before your committee. Mr. Abraham Goldsmid has also stated to your committee, that, during that part of last year when the market price of gold here rose so high, its price at Hamburgh did not fluctuate more than from three to four per cent.

from the middle of the year 1773, when the reformation of the gold coin took place, till about the middle of the year 1799, two years after the suspension of cash payments of the bank, the market price of standard gold in bars remained steadily uniform at the price. of £3 17 6, (being, with the small allowance Here your committee must observe, that for loss by detention at the mint, equal to the both at Hamburgh and Amsterdam, where mint price of £3 17 10) with the exception the measure of value is not gold as in this of one year, from May, 1783, to May, 1784, country, but silver, an unusual demand for when it was occasionally £3 18. During gold would affect its money price, that is, its the same period it is to be noticed, the price price in silver; and that, as it does not appear of Portugal gold coin was occasionally as high that there has been any considerable rise in as £4 2; and your committee also observe the price of gold, as valued in silver, at those that it was stated to the lords' committee in places in the last year, the inference is, that 1797, by Mr. Abraham Newland, that the there was not any considerable increase in the bank had been frequently obliged to buy gold demand for gold. That permanent rise in the higher than the mint price, and upon one parmarket price of gold above its mint price, ticular occasion gave as much for a small which appears by Mr. Greffulhe's paper to quantity, which their agent procured from have taken place for several years both at Portugal, as £4 8. But your committee Hamburgh and Amsterdam, may, in some find that the price of standard gold in bars degree, be ascribed, as your committee con- was never for any length of time materially ceive, to an alteration which has taken place above the mint price, during the whole pein the relative value of the two precious me- riod of twenty-four years which elapsed from tals all over the world. From the same the reformation of the gold coin to the suscause, a fall in the relative price of silver pension of the cash payments of the bank. appears to have taken place in this country The two most remarkable periods prior to for some time before the increase of our pa- the present, when the market price of gold per currency began to operate. Silver having in this country has exceeded our mint price, fallen in its relative value to gold throughout the world, gold has appeared to rise in price in those markets where silver is the fixed measure, and silver has appeared to fall in those where gold is the fixed measure.

With respect to the alleged demand for gold upon the continent for the supply of the French armies, your committee must further observe, that, if the wants of the military chest have been latterly much increased, the general supply of Europe with gold has been augmented by all that quantity which this great commercial country has spared in con

were in the reign of King William, when the silver coin was very much worn below its standard, and in the early part of his present majesty's reign, when the gold coin was very much worn below its standard. In both those periods the excess of the market price of gold above its mint price was found to be owing to the bad state of the currency; and, in both instances, the reformation of the currency effectually lowered the market price of gold to the level of the mint price. During the whole of the years 1796 and 1797, in which there was such a scarcity of gold, occasioned

by the great demands of the country bankers | committee to involve a misconception, which in order to increase their deposits, the market they think it important to explain. price of gold never rose above the mint price. In this country, gold is itself the measure Your committee have still further to re- of all exchangeable value-the scale to which mark upon this point, that the evidence laid all money prices are referred. It is so, not before them has led them to entertain much only by the usage and commercial habits of doubt of the alleged fact, that a scarcity of the country, but likewise by operation of law, gold bullion has recently been experienced in ever since the act of the 14th of his present this country. That guineas have disappeared majesty, (finally rendered perpetual by an from the circulation, there can be no question; act of the 39th year of the reign) disallowed but that does not prove a scarcity of bullion, a legal tender in silver coin beyond the sum any more than the high price proves that of £25.* Gold being thus our measure of scarcity. If gold is rendered dear by any prices, a commodity is said to be dear or other cause than scarcity, those who cannot cheap according as more or less gold is given purchase it without paying the high price, in exchange for a given quantity of that comwill be very apt to conclude that it is scarce.modity; but a given quantity of gold itself A very extensive home dealer who was ex-will never be exchanged for a greater or a amined, and who spoke very much of the less quantity of gold of the same standard scarcity of gold, acknowledged that he found fineness. At particular times it may be conno difficulty in getting any quantity he wanted, venient, in exchange for gold in a particular if he was willing to pay the price for it. And coin, to give more than an equal quantity of it appears to your committee, that, though in other gold; but this difference can never exthe course of the last year there have been ceed a certain small limit: and thus it has large exportations of gold to the continent, happened that the Bank, while liable to pay there have also been very considerable import- its notes in specie, has, under particular emerations of it into this country from South Ame-gencies, been put to the necessity of purchasrica, chiefly through the West Indies. The ing gold at a loss, in order to keep up or to changes which have affected Spain and Por-repair its stock. But, generally speaking, tugal, combined with our maritime and com-the price of gold, being itself measured and mercial advantages, would seem to have ren- expressed in gold, cannot be raised or lowered dered this country a channel through which the produce of the mines of New Spain and the Brazils passes to the rest of the world. In such a situation, the imports of bullion and coin give us the opportunity of first supplying ourselves; and must render this the last of the great markets in which a scarcity of that article will be felt. This is remarkably illustrated by the fact that Portugal gold coin is now sent regularly from this country to the cotton settlements in the Brazils, Pernam-equivalent to less than an ounce of gold. An buco, and Maranham, while dollars are remitted in considerable quantities to this country from Rio Janeiro.

by an increased or diminished demand for it. An ounce of gold will exchange for neither more nor less than an ounce of gold of the same fineness, except so far as an allowance is to be made, if the one ounce is coined or otherwise manufactured and the other is not, for the expense of that coinage or manufacture. An ounce of standard gold bullion will not fetch more in our market than £3 17 101⁄2, unless £3 17 10 in our actual currency is

increase or diminution in the demand for gold, or, what comes to the same thing, a diminution or increase in the general supply of gold, It is important also to observe, that the will, no doubt, have a material effect upon the rise in the market price of silver in this money prices of all other articles. An incountry, which has nearly corresponded to creased demand for gold, and a consequent that of the market price of gold, cannot, in scarcity of that article, will make it more any degree, be ascribed to a scarcity of sil-valuable in proportion to all other articles; ver. The importations of silver have of late the same quantity of gold will purchase a years been unusually large, while the usual greater quantity of any other article than it drain for India and China has been stopped. did before: in other words, the real price of For all these reasons your committee would be inclined to think that those who ascribe the high price of gold to an unusual demand for that article, and a consequent scarcity, assume facts as certain of which there is no evidence. But even if these assumptions were proved-to ascribe the high price of gold in this country to its scarcity, seems to your

gold, or the quantity of commodities given in exchange for it, will rise, and the money prices of all commodities will fall; the money price of gold itself will remain unaltered, but the prices of all other commodities will fall. That this is not the present state of things is

* Since reduced to 42s.-Ed.

abundantly manifest; the prices of all commodities have risen, and gold appears to have risen in its price only in common with them. If this common effect is to be ascribed to one and the same cause, that cause can only be found in the state of the currency of this country.

Your committee think it proper to state still more specifically what appear to them to be the principles which govern the relative prices of gold in bullion and gold in coin, as well as of paper circulating in its place, and exchangeable for it. They cannot introduce this subject more properly, than by adverting to those simple principles and regulations on which a coinage issuing from the king's mint is founded.

The object is to secure to the people a standard of a determinate value, by affixing a stamp, under the royal authority, to pieces of gold, which are thus certified to be of a given weight and fineness. Gold in bullion is the standard to which the legislature has intended that the coin should be conformed, and with which it should be identified as much as possible. And if that intention of the legislature were completely fulfilled, the coined gold would bear precisely the same price in exchange for all other commodities as it would have borne had it continued in the shape of bullion; but it is subject to some small fluc

tuations.

quantity of bullion. The average diminution of weight of the present current gold coin below that of the same coin when fresh from the mint, appears by the evidence to be nearly £1 per cent. This evil, in more ancient times, was occasionally very great. It was particularly felt in an early period of his present majesty's reign, and led to the reformation of the gold coin in 1773. But it is now carefully guarded against, not only by the legal punishment of every wilful deterioration of the gold coin, but also by the regulation of the statute, that guineas, of which the full weight when fresh from the mint is 5 dwts. 933 grains, shall not be a legal tender if worn below 5 dwts. 8 grs.; the depreciation thus allowed being at the utmost 1.11 per cent. A still more material cause of depression is the difficulty under which the holders of coin have been placed when they wished to convert it into bullion. The law of this country forbids any other gold coin than that which has become light to be put into the meltingpot, and, with a very questionable policy, prohibits the exportation of our gold coin, and of any gold, unless an oath is taken that it has not been produced from the coin of this realm. It appears by the evidence, that the difference between the value of gold bullion which may be sworn off for exportation, and that of the gold produced or supposed to be produced from our own coin, which by law is convertible only to domestic purposes, amounts at present to between 3s. and 4s. per ounce.

First, there is some expense incurred in converting bullion into coin. They who send bullion to be coined, and it is allowed to any The two circumstances which have now one to send it, though they are charged with been mentioned, have unquestionably constino seignorage, incur a loss of interest by the tuted in the judgment of your committee, the detention of their gold at the mint. This whole cause of that depression of the value of loss may hitherto have amounted to about £1 the gold coin of this country in exchange for per cent., but it is to be presumed that the im- commodities, below the value of bullion in provements of the system of the new mint exchange for commodities, which has occawill cause the detention and consequent loss sionally arisen, or could arise at those times to be much smaller. This £1 per cent. has when the bank paid in specie, and gold was formed the limit, or nearly the limit, to the consequently obtainable in the quantity that possible rise of the value of coin above that was desired; and the limit fixed, by those two of bullion; for to suppose that coin could, circumstances conjoined, to this excess of the through any cause, advance much above this market price of gold above the mint price, limit, would be to assume that there was a was therefore a limit of about 5 per cent. high profit on a transaction, in which there is The chief part of this depression is to be no risk, and every one has an opportunity of ascribed to that ancient but doubtful policy of engaging. this country, which, by attempting to confine The two following circumstances conjoined, the coin within the kingdom, has served, in account for the depression of the coin below the same manner as permanent restrictions the price of bullion, and will show what must on the export of other articles, to place it have been the limit to its extent before 1797, under a disadvantage, and to give to it a less the period of the suspension of the cash pay-value in the market than the same article ments of the bank of England. First, the would have if subject to no such prohibition. coin, after it had become current, was gra- The truth of these observations on the dually diminished in weight by use, and, causes and limits of the ordinary difference therefore, if melted would produce a less between the market and mint price of gold,

5 per cent.; and accordingly it will be found that in all the periods preceding 1797, the difference between what is called the mint price and market price of gold never exceeded that limit.

may be illustrated by a reference to the mode, The highest amount of the depression of explained in the evidence, of securing a fixed the coin which can take place when the bank standard of value for the great commercial pays in gold, has just been stated to be about payments of Hamburgh. The payments in the ordinary transactions of life are made in a currency composed of the coins of the several surrounding states; but silver is the standard there resorted to in the great commercial payments, as gold is in England. No. Since the suspension of cash payments in difference analogous to that which occurs in 1797, however, it is certain that, even if gold this country, between the mint and market is still our measure of value and standard of price of gold, can ever arise at Hamburgh prices, it has been exposed to a new cause of with regard to silver, because provision is variation, from the possible excess of that pamade that none of the three causes above spe- per which is not convertible into gold at will; cified (the expense of coinage, the deprecia- and the limit of this new variation is as indetion by wear, or the obstruction to exporta- finite as the excess to which that paper may tion), shall have any operation. The large be issued. It may indeed be doubted, whepayments of Hamburgh are effected in bank ther, since the new system of Bank of Engmoney, which consists of actual silver of a land payments has been fully established, gold given fineness, lodged in the Hamburgh bank has in truth continued to be our measure of by the merchants of the place, who thereupon value; and whether we have any other standhave a proportionate credit in the bank books, ard of prices than that circulating medium, which they transfer according to their occa-issued primarily by the Bank of England, and sions. The silver being assayed and weighed in a secondary manner by the country banks, with scarcely any loss of time, the first men- the variations of which in relative value may tioned cause of fluctuation in the relative be as indefinite as the possible excess of that value of the current medium compared with circulating medium. But whether our present bullion is avoided. Certain masses of it be-measure of value, and standard of prices, be ing then certified (without any stamp being this paper currency thus variable in its relaaffixed on the metal) to be of a given quantity tive value, or continues still to be gold, but and fineness, the value is transferred from gold rendered more variable than it was beindividual to individual by the medium merely fore in consequence of being interchangeable of the bank books, and thus the wearing of for a paper currency which is not at will conthe coin being prevented, one cause of depreciation is removed. A free right is also given to withdraw, melt, and export it; and thus the other and principal source of the occasional fall of the value of the current medium of payment, below that of the bullion which it is intended to represent, is also effectually precluded.

vertible into gold, it is, in either case, most desirable for the public that our circulating medium should again be conformed, as speedily as circumstances will permit, to its real and legal standard, gold bullion.

If the gold coin of the country were at any time to become very much worn and lessened in weight, or if it should suffer a debasement of In this manner, at Hamburgh silver is not its standard, it is evident that there would be only the measure of all exchangeable value, a proportionable rise of the market price of but it is rendered an invariable measure, ex-gold bullion above its mint price; for the mint cept in so far as the relative value of silver price is the sum in coin, which is equivalent itself varies with the varying supply of that in intrinsic value to a given quantity, an ounce precious metal from the mines. In the same for example, of the metal in bullion; and if manner the usage, and at last the law, which the intrinsic value of that sum of coin be made gold coin the usual and at last the only legal tender in large payments here, rendered that metal our measure of value: and from the period of the reformation of the gold coin down to the suspension of the bank payments in specie in 1797, gold coin was not a very variable measure of value; being subject only to that variation in the relative value of gold bullion which depends upon its supply from the mines, together with that limited variation which, as above described, might take place between the market and the mint price of gold coin.

lessened, it is equivalent to a less quantity of bullion than before. The same rise of the market price of gold above its mint price will take place, if the local currency of this parti cular country, being no longer convertible into gold, should at any time be issued to excess. That excess cannot be exported to other countries, and, not being convertible into specie, it is not necessarily returned upon those who issued it; it remains in the channel of circulation, and is gradually absorbed by increasing the prices of all commodities. An