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be the same; because gold in coin and
Pound Notes, by scarcity equal in value to ten, how is price al tered by that artificial scarcity?li
But it may be said, by reducing our circulating medium 5 per cent in amount, all one Pound Notes will be equal in value to Guineas. -I ask then what must be the consequence? At present there are 50 millions of Pound Notes to pay 50 millions of pounds sterling in taxes. We shall by this scheme have indeed 47,500,000 Guineas, but must be obliged to pay with them, not 47,500,000 Guineas as taxes, but 50 millions of Guinéas.-Let us ask then how the nation is to be benefited by adding 2,500,000 to our taxes, in order to lower the price of Gold ?
I hope that no person will suspect that from what is stated, the Author makes no distinction between a Metallic and a Paper Currency, a currency of universal and intrinsic value, and a currency limited to the home market and founded upon confidence: he is fully sensible of the folly of confounding things in their nature totally separate and distinct, whilst he is anxious that the existing circulation should not be impeached upon unfounded statements and false reasonings, and that destructive remedies should not be applied to evils which do not exist.
He is equally sensible of the folly of those arguers, who conceive that the Mint price and market price of gold must always
gold in bullion, are of the same value and the same quality, and gold of any given alloy is always equal to the same quantity of gold of the same alloy.
Surely it might strike these arguers that such reasonings upon the sameness of the value of gold are mere identical propositions : the same is the same : equals are equals : a quantity of gold of any given purity is equal to the same quantity of the same purity. All these are identical propositions wherein the predicate and the subject is the same. But what have these assertions to do with price? which is the result not of comparing a thing with itself or its equal, but the comparison of any given article, whether bullion or coin or corn or cloth, with other articles.
The purchase of a lump of gold with an equal lump of gold, or of a guinea with a guinea, is a mere nullity; it is no purchase at all. Gold, or any other metal when raised from the mine and purified, converted into. Coin, Dollars or Doubloons, is purchased with other articles deemed by the proprietor equivalent, and though one piece of gold of any given purity must be always equal to another piece of gold of the same purity and weight, it does not follow that they will be of the same value when measured by other articles: when in the same day and the same place bullion
will be often dearer in the morning than in the evening, like three per cents. and will follow the demand of the market. have suffered enough already by the misconceptions on this head
eyen reasoning too far, a large silver coinage was issued, which in a few years disappeared with a loss to the Nation of I think 2,700,0001. The late Lord Liverpool made an attempt on a similar principle in regard to a copper coinage. As soon as it was issued, copper rose in value 17 per cent. and his coinage disappeared. We made something of a similar attempt in 1816, and 4 millions and a half in value of Sovereigns and half Sovereigns were thrown into circulation, which in a few months disappeared likewise, great part of which at present circulates in France recoined under the name of Louis. If we adhere to this absurdity, of adopting identical propositions as logical deductions, and acting upon them in our measures for restoring a metallic currency, we shall merely repeat the same blunders and incur similar losses. And if any man supposes that he can fix the value of gold, by saying gold is equal to gold, let him merely try his reasoning powers upon any other commodity, and then his prejudices about gold being no longer in his way, the absurdity of his principles will flash him in the face.
I do not think it a more absurd problem for solution, utrum Chimera bombycinans in vacuo possit comedere secundas intentiones,' than the problem-Whether the price of gold ought to be regulated by the laws of identical propositions ?
It is understood that silver of 1-48 alloy, forms the deposit of the Bank of Hamburgh; and Bank silver is always Bank silyer, and it has a fixed denomination of value in banco money. But though that denomination of value remains fixed, and the price of banco money, remains nominally fixed, yet the silver when taken from the Bank, sells not at banco price, but at market price. Whilst the silver remains in the Bank, its price is fixed; when taken from the Bank, its price varies in the market according to demand, and commands a greater or less quantity of the coin for which it is sold. The Bank itself takes in silver at one price, and issues it again
at a higher price, and the owner of course never takes his silver out of the Bank but when the course of the market enables him to make a profit. The Bank charges for lodgement and assaying, from 2 to 24 per cent.
The price of Coin may be fixed by a Mint Indenture, and confined to home circulation, as the price of fine silver may be fixed by the Hamburgh Bank, so long as it remains in the Bank. But when coin by melting becomes bullion, or when bank silver is taken from the Bank of Hamburgh, and gets into the market, they become subject equally to the variations of the market,
and follow the course of demand; and rise and fall in price accordingly.
I have thus tried to suggest the errors, which have appeared with regard to the nature of our money unit. or standard-the supposed excess of the issues of Bank Notes—the
argument which has been induced from the excess of currency, at present over its amount in 1810 –and from imagining identical propositions to be logical distinctions.
I have also suggested, that the real cause of increased prices of bullion, as well as of other articles, is attributable, not to the excess of currency,
but to the excess of taxation. I have suggested, that the remedies hitherto proposed to bring back our currency to. å metallic state, are ineffectual or pernicious—and I have submitted, that the best line to take under existing circumstances, is to follow the course of the market, and the current order of things, without attempting either absurdities or impossibilities. If a system for contracting our currency, for the sole purpose
of forcing the price of Gold to Mint price, is to be inflicted upon the nation, upon the principle that the present currency is excessive in amount, at least let the fact be proved. If upon examination: it is actually superabundant, retrench it ; but if it is actually deficient near a half in comparison with the proportion of other times, let us not add to the evil and pressure of the existing deficiency, and act as if we resented the detection of false views and bad logic.
Above all, I deprecate a starving system, which has already produced great distress, lowered our funds, augments the necessary amount of the loan, increases its interest, and which has thrown a gloom over our affairs, and spread an universal terror in the market.
Having drawn my observations to a close, I beg leave to suggest that possibly it is not necessary to make a decided choice between the two alternatives which I stated in the outset, but to act in unison with them both. To regulate on the one hand the amounts of the circulation, by the wants of the income of the country taken in its most extended sense ;* and to support its value, by controlling it by the market price of Gold, properly regulated.
We must recollect, that controlling our currency by the mint price, or by the market price, must equally produce fluctuations in amount and fluctuations of price. Steadiness is merely nominal : standards will vary as the articles vary to which they are standards, though nominally they may appear invariable. The shore seems to recede whilst the vessel sails away: but whether the shore or the vessel be fixed, the variation in distance will be the same.
Let us also recollect, that if we were to regulate the amount of our currency in Coin and Bank Notes, by the proportion of currency to taxes and income, which existed in 1790, our currency now, if measured by taxes, ought to exceed 100 millions, and if measured by income, 90 millions. So much for the excess of our present currency.
Let us further consider, that if our 'taxes were now all to be paid into the Exchequer at once, and on the same day, there would not on that day be left a single shilling in circulation for the wants and transactions of the country: whereas if a similar regulation had been in force in 1790, though all the taxes had then been paid in on the same day, there would have remained a greater sum in circulation than the whole amount of Bank Notes at present outstanding, and which has been so absurdly stated as a grievance and
Let us also reflect, that in 1790 our taxes were in proportion to our income as 1 to 5; whereas at present they are only in proportion to our income as 1 to about 51; and if taxes seem to press upon the kingdom so much more heavily at present than in 1790, may it not arise from the facility of paying them being diminished by the comparative deficiency of our currency ?-If our currency were extended to the same proportion with our income and taxes, as we enjoyed in 1790, and if a more judicious repartition of
sour taxes were made, might not the Nation hope to enjoy as much ease in every respect as before the war?-I know not why the country is to be sacrificed to a pernicious and chilling system, founded on the assumption of an excess in the issue of Bank Paper, which is demonstrated to be unfounded, and a system too which is utterly incompetent to produce its object? When I advert to the comparative burthens and abilities of the country before the war and at present, according to the views I have taken, I cannot but indulge a gratifying hope of increasing prosperity and diminished incumbrances, provided the Government will continue uniformly an encouraging and protecting policy, and not suffer to be introduced a principle of impoverishment under the false idea of increasing security. When the Nation is made to understand the question, and to feel that diminution of currency will not tend to bring back our gold, but will most certainly augment the pressure of our taxes, and diminish the powers of production; it will not be so dead to its interests as not to deprecate a remedy, which can only aggravate the inconveniences it pretends to cure.
The real criterion of the necessary quantity of a' circulating medium for a great community, is its adequacy to circulate the whole exchangeable, annual value of all its labour, ingenuity, productions and imports, and to support the payment of all its taxes and of all its expenditures in war.
And the relaxation or increase of demand for such medium, is the measure of its deficiency or excess.
Our Circulation was originally purely Metallic. But when it was found impossible to procure any longer a sufficiency of the precious metals, for answering all the demands of a great community, increasing rapidly in wealth and produce, and in requisition of supplies for a war expenditurea second system was introduced ; and a Bank Paper Currency was engrafted on the basis of Coin, which formerly constituting the whole, was now only to form a third of the currency. But to give this currency the appearance of perfect solidity and intrinsic value, the Bank Paper was made convertible into Coin, at the option of the holder; and as it was hoped the public would prefer the Paper to Coin, it was .conceived, that two thirds of the currency might be always kept in the market, and the amount of the circulation be doubled.
Whilst, however, this system acted with a double power to one purely metallic, and entirely of intrinsic value, it was controlled in its amount, not by the real wants and demands of the community, which is the only true controul, but by the proportion necessary to