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VOL. XIV.

Pum.

NO. XXVII.

B

ADVERTISEMENT.

THE following Letter having procured that approbation, which I was most anxious to obtain from a partial friend, the entire acquiescence of his judgment; I am induced to lay it, unaltered, before the Public.

It pretends to be no more than a plain, simple exposition of an intricate subject, which has long occupied my mind, and to which public attention has been loudly called. If it should induce a wish, and afford a clue, for examining the Question through all its details of documents, &c. I shall be amply satisfied.

The Reader is desired to observe, that Silver is frequently omitted after Gold, to prevent unnecessary repetitions of words-Gold always meaning the currency of intrinsic value, which constitutes a legal Tender; when it is not obviously used in a restricted sense.

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I AM not at all surprised, that even to a man possessed of your clear understanding, the subject recently brought under discussion by the Bullion Committee, should appear difficult and abstruse. Much however of the difficulties may be imputed to the contradictory opinions, and opposite reasonings pursued in the various pamphlets, which seem to have attracted no more than your cursory attention. Many of those opinions, as they stand directly opposed to each other, must be false; and reasonings which endeavour to establish inconsistent theories from the same facts, cannot all be correct. Moreover, the subjects have generally been treated as matters so remote from the transactions of common life, as to throw a veil of mystery round what might otherwise appear sufficiently distinct. It will be my endeavour, in complying with your request for information, to state the various topics, after the most plain and familiar manner, even at the risk of sometimes exciting a smile; as I am much less anxious on the present occasion, to display any talents of my own, than to convince your judgment.

SECTION I.

It is quite obvious that in the earliest stages of civilisation, mutual interchanges of commodities must have taken place; and that

mere barter could not have subsisted long, without suggesting the absolute necessity for selecting some one article, as a general standard of value, to which all others might be constantly referred. The qualities requisite for such a standard have been enumerated and discussed: it is certain, that they cannot be found, separately perfect, and all united together in any substance; but the general consent of nations has given a decided preference to metals; they are easily divisible, of great durability, capable of being re-united, readily assayed, and change their proportional value, much more slowly, and with less vacillation, than other substances. These qualities have established metals as standards of value; and among them, first, silver, and afterwards gold, as comprising all other advantages under a smaller bulk. Still, however, this is only a preference: other commodities, with less convenience indeed, are capable of performing the same office. Corn might evidently be a common standard, and all commodities would then be appreciated in given quantities of grain. It will greatly clear and facilitate our future inquiries to suppose this imaginary case: I shall, therefore, continue to place. corn by the side of gold; and endeavour to establish the exact conformity in principle between the two.

SECTION II.

When a standard of value is once selected, the next care must naturally be, to ascertain the exact quantity and quality of such portions as usually circulate; this has been denominated coining: a stamp is affixed, testifying a certain portion of the whole to be pure metal, and that each piece is of a certain weight. In the case of corn, the finest kind might be selected, and some certain measure sealed in a bag; (I have already anticipated a smile.) Either of these will then become a circulating medium, measuring the relative value of all other articles really and nominally, but possessing no proper nominal value, or price of its own. Several most important errors have arisen from a misapprehension of this curious. circumstance: I shall therefore endeavour to explain it in detail.

The pound of gold, twenty-two parts out of twenty-four fine, is coined into forty-four guineas and a half, at the English mint: a pound of standard gold is therefore always the same, is perfectly identical with, is exactly worth, forty-four guineas and a half; or, substituting for the guinea its other denomination, one pound and one shilling, the pound of gold is always worth forty-six pounds fourteen shillings and sixpence; the twelfth part of which sum is three pounds seventeen shillings and ten-pence half-penny, the worth of an ounce. This cannot, in accurate language, be called the price

of an ounce of gold. Its price in what? The answer must be, in gold; consequently it would remain the same, were gold to become so scarce, that a hundredth part of what now represents other commodities, were equivalent to them; or if its immense abundance were to reduce that metal to a level with tin or lead.

I will now suppose the quarter of fine wheat divided into sixtyfour parts, and secured in bags of a gallon each, which may be denominated seals; the quarter of wheat will then always be worth sixty-four seals, let the scarcity or plenty be what it may. Such seals will vary in their power of procuring other commodities, accordingly as these are more or less abundant, or as corn happens to be plentiful or scarce; but corn, in corn, will ever be the same. The price of an ounce of gold cannot with propriety be stated at three pounds seventeen shillings and ten-pence half-penny; nor the price of a quarter of wheat at sixty-four seals. The assertions simply declare two facts; namely, that the pound of gold has been divided into forty-four guineas and a half; that the quarter of wheat has been divided into sixty-four seals; and the value is idem per idem in both instances.

It will not be difficult, however, to imagine cases where gold in coin, or wheat in seals, may be exchanged against other gold, or other corn, with some small variation of quantity. Coinage of the metal, measuring and sealing of the grain, must be attended with some trouble, at least with some delay; even though the state should defray all the expense. Persons therefore may be willing to exchange gold sufficient to make forty-five or forty-six guineas, for forty-four guineas and a half already coined; or sixty-five, sixtysix, or sixty-seven gallons of wheat, for sixty-four already measured and sealed on the other hand, if positive institutions, with penal sanctions, or even strong general feeling, prohibit the conversion of these circulating media; rather than melt the coin, or rather than unseal the corn, individuals may part with the pound of guineas for less than their weight of uncoined gold, or with sixty-four bags of corn for sixty-two or sixty-three gallons of unsealed grain.

SECTION III.

No proposition seems more firmly established, more universally acknowledged, than that which declares the value of all commodities to depend on the supply and the demand. The universality of its truth cannot be questioned; but, the nominal and the apparent effects are widely different, when this principle becomes applicable to all other commodities, or to the standard of value itself. Foreign produce arrives in unusual abundance, or, from whatever cause, its sale is diminished; in either case, a certain quantity will be ex

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