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convenience, she is left to reap a clear profit from keeping the currency in excess. All the other effects of that excess remain at the same time as before. The market price of bullion rises, to maintain its level with other countries; specie being melted, and not supplied, gradually disappears: the coins during a certain time, and within a certain limit of depreciation, continue to exchange, as often as they appear, for bank notes, or for commodities rated in bank notes; gradually, however, a premium comes to be offered for them; and, at last, a fixed difference between paper and specie is the undisguised result.

This interval, between the moment when the market price of gold rises above, the mint price, and the time when an avowed discount upon bank notes takes place, is the circumstance on which the difficulties which puzzle most understandings seem to depend. It seems to be supposed, that, if the theory be correct, the moment the price of gold stands above the rate of the currency, the gold coins ought to exchange for their value as bullion, and a discount to appear immediately upon bank notes. The fact however is, that, the theory being true, it can be shewn that the effects could not take place in any other than the order which we actually witness. It is not all at once that the depreciation takes place, and that it rises to the pitch at which it exbibits any sensible effects. When it begins to affect the state of the bullion market, the event is known to but a few. Even when the price of bullion is so high, and has so long been bigh, as to create much speculation in the mercantile and philosophical circles, very little is known about the circumstances among the great body of the people. · They continue to be governed by appearances which have long governed them. The power of a guinea in the market they have long identified, in their conceptions, with the power of a one pound note and a shilling ; and till some very direct instigation prompts them to mark a difference, it is not natural for them to apprehend one. Among those who know and possess more in this country, there prevails a very laudable delicacy with regard to this subject. It is felt as invidious, to appear among the foremost in demanding the acknowledgement of a difference between paper and specie. It is felt as sure to expose a man to odious in putations, on the part of all those who from selfish or other views assunie the patronage of the existing system. Froin these causes it happens, that the occasioval guineas, which a man in the course of his ordinary affairs receives on the level of bank notes, he without much concern parts with on the sanic terous. It is only by those men whose interest it is to collect thein in large masses, that the difference is felt as an important one, and advantage taken of it accordingly. It requires either a long time or a very material depreciation, provided credit and confidence are unimpaired, to take affairs out of this natural course.

During this time the somewhat curious phænomenon is exhibited, of guineas passing in the ordinary circulation of the country at less than their real value, partly from the ignorance of the people, and partly from the difficulty in ordinary cases of getting them exchanged on other terms. And this is another source of difficulty to the common inquirer. Is not the paper currency, he says, held up by the guineas ; 'not the guineas depreciated by the paper? To this a silencing answer might quickly be rendered, viz. that the guinea is worth more as bullion than as còin. But this is not an explanatory answer,—the sort of answer that on occasions like . the present it is always'desirable to afford. If we consider what it is that furnishcs the standard of appreciation in the given state of any mixed currency, we shall find that it is always and necessarily the least valuable of the articles considered as legal tender. When there are two commodities, any one of which a man is at liberty to pay for the article he has bought, he is sure to give that which he considers as worth the least." As this is done by every man and upon

all occasions, it is with the least valuable of the articles that commodities are habitually bought; and it is in the denominations of that article, by consequence, that they are rated, This, in fact, as is acutely remarked by Mr. Ricardo, is the cause of the practical change from silver to gold which has been made in the standard of appreciation in the currency of Great Britain. Subsequent, to the time at which the rate of silver to gold was fixed at the mint, silver rose in price considerably more than gold. It became by this means the interest of every man to pay in gold, and thus gold became the standard. Such, of course, the' case

rith bank notes, as soon as the amount of currency becomes excessive. Bank notes are the least valuable coinmodity; 'in bank notes every man's payments are chiefly made; and bank notes thus become the standard of appreciation,

Among the objections which are made to this account of the phænomena recently exhibited by the circulation of this country, one is taken from a supposed drain of the precious metals, to which, 'by causes very different from any thing affecting the state of our circulating medium, the country has been exposed. The support of our troops abroad has required the exportation of large sums in gold and silver, The present state of our intercourse with the continent sub. jects us to a continued process of exhaustion. The smugglers



bring us the goods of the continent, but are unable to carry back any thing except gold and silver. Such is the representation we have the mortification to hear from persons of information and thought; such is the representation we hear from people in the situbations of power, on which the redress of the evil depends. It is taken by them, and given to others, as a complete solution of the problem.

It involves a total misapprehension, with respect both to the fact and the principle.

What is it that we are told, and with so much triumph, from places of the highesť authority, on the evidence of the custom house itself, with regard to the fact? Why, this that during the last year our exports, even to the continent of Europe, have been unusually great. They have probably exceeded the usual proportion to the imports. There has been, therefore, no unusual drain of gold and silver to the continent. What has been sent in pay to the army in Spain and Portugal, has been compensated in the usual way by exportation of goods. The men in place ought at leası to have known this; ought at l'east to have been above mistake and delusion, with regard to the facts realized under their own eyes and in their own hands. With regard to mistake and delusion on the groundwork of principle, experience has taught us to feel no surprise, at any thing which happens in that quarter.

Among men of information and thought, however, a conclusion so fairly confronted by the most obvious principles is truly matter of surprise, They tell us that an anusnal quantity of gold and silver has, by extraordinary causes, been carried out of Great Britain. The price of gold has accordingly risen. An unusual quantity of gold has been carried into other countries. The price of it in those countries must, accordingly, have fallen. İn these circumstances it must be the interest of the bullion merchant, to iinport gold into England, not to export it. But this, by supposition, is contrary to the fact. The price of bullion is above the price of gold at the mint, because gold, it is said, is bought up to be sent abroad:

But another point stands no less formidably opposed to the hypothesis of these speculators., Granting that we have been subjected to a demand for gol?, which in this country has raised its price, this enhancement inust have attended that portion of our gold which is in the shape of coin, no less effectually than that portion which is in the shape of bullion. It is our guineas which the smugglers takė; and in fact our guineas will infallibly travel abroad, either in their own shape, or in the easily assumed one of bullion, as often as a profit is to be made by the journey. If the precious metals in coins be


as is demonstrated, on the naked footing of commodities bought and sold for their value,--the metal in the coins, and the metal not in the coins, must always be on a level. According to this princip!e, which it remains for those gentlemen, if they dislike it, to controvert, no scarcity of gold, no enhancement of its value, can ever occasion a difference between the market and mint price of bullion. Whenever that takes place, it must take place from an alteration in the value of the currency; from something which has made its intrinsic, no longer correspondent with its nominal value. The expression of the market price of bullion, is the expression of its real value. The mint price is, with regard to the currency, in that case a mere name*.

* Nothing more is necessary, than a complete understanding of the ruling principles here asserted, in order to account for the various minute appearances, which the state of the market in its momentary fluctuations may exhibit

. When these appearances vary from the theory, they are most frequently deceptious; and it would only require an accurate acquaintance with the facts, to see that they are actually the same with the facts on which the theory is founded ;-that it is only by some essential circumstance, which the objector is not aware of, that he is led erroneously to question it. Let a theory, however, be ever so just and incontrovertible, the appearances of aberration from it will occasionally be real. The general law will occasionally be modified by extraneous circumstances. The principle of gravity, which keeps the planets in their orbit, and the effects of which in the sublime movements of the heavenly bodies can be so accurately cal. culated, is subject to material variation from the friction of the thin air which we breathe. In the price of gold, after the same manner, there are certain limited fluctuations, from day to day, or from week to week, which are altogether dependent upon accidents, and which neither can for need be reduced to any theory. Those states only, that are to a certain degree fixed, can depend upon fixed causes.

It is evident, that a minute and inconsiderable portion of any great class of commodities, when that portion is put into a very particular shape, and applied to very particular purposes, may be acted upon by circumstances, and subject to limited variations, which do not apply to the rest of the species. This is to an eminent degree the case with regard to coins, as compared with gold and silver in the mass. If these cbey the general rule within a certain sphere, it is all that the truth of the theory requires.

There is so much uncertainty, for example, with regard to the present price of guineas in the English market, as to occasion a considerable diz versity of opinion. Some inquirers assert, that, though a premium upon them of two or three shillings a piece existed some weeks ago, it has now ceased to exist. Others maintain, that the same premium which existed then; exists to the present hour. Without waiting to examine into the fact, it will suffice to shew, that, as the ground of any objection to the doctrine here laid down, it is totally immaterial.

The price of gold bullion, at a medium, has for some very considerable time stood at 41, 10s. per ounce , allowance being made for temporary VOL. VI.


Such is the nature of the evidence which the state of the bullion market affords in this interesting case. The argument which is drawn from the state of the exchange with foreign fuctuations above or below. The fluctuations above have been more con. siderable than those below. In July last the price of gold was as high as 41. 13s. per ounce. At 41. 10s. per ounce, it is mathematically certain that the guinea, which contains 5 dwt. 8 gr. is intrinsically worth 11. 45.; as nothing can render it intrinsically worth less than the gold which it contains. But, as the traffic in guineas is an illegal traffic, and subjects the man who engages in it both to odium and danger, an extra profit must be made by it. Accordingly, the price of guineas, as far as we have been able to ascertain, has never exceeded 11. 2s. 6d. or 1l. 3s. If an occasional alarm is excited, such as may have been excited by the late arrest proclainied in all the newspapers of a certain india vidual for a transaction of this description, it may, for a time at least, make the danger appear greater than such a profit is sufficient to over. balance. To particularize any more circumstances by which the price of guineas may be affected, would be altogether useless. It is well known that every smuggling business is an irregular business; and that the price of all commodities which depend upon a smuggling business, or upon a business which is in a very small number of hands, is subject to fluctua. tions for which the particular pature of the business must account.

The money withdrawn from circulation to defray abroad the expense of the expeditions we have lately sent out the point to which, as being the broadest and most glaring, the eyes of most people are turned, - does not appear in fact to have had any effect upon the prices in question. The truth is, that those very individuals, who had access to know the circum, stances, declare that the changes were not, in point of time at least, connected with the drains for the expeditions. But why need we talk of expeditions, when it is seen that the price of bullion accounts, and more than accounts, for all the enhancement of guineas which has appeared ? At what other point of our history has it been found, that the paying for our expeditions abroad produced a premium upon our guineas? Such is the result of experience. - What is the testimony of the principles? That no such rise is the natural effect of such payment. Deduct a part from the mass of your currency, the effect is to raise the value of the whole-ata lower the price of commodities; but no: to raise one part of the currency more than the rest. Its effect is to make gold dear, but equally dear both in bullion and in coin. Observe, too, that just as much as it is its effect to make gold dear at home, it is its effect to make gold cheap abroad. The gold, therefore, comes inmediately back again. But in the present case this is so far from being the fact, that the fact is directly the reverse, Gold is cheap in England, cheaper than it is on the continent. A profit there fore has long been, and still is, to be made, by buying gold in England and selling it on the continent. As the effect (to whatever extent), of sending gold abroad to pay for the expeditions, must have been to annihilate this state of things, it is intuitively certain that this state of things, as far as it exists, is produced, not by the expeditions, but in spite of them.

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