THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 

 
 PWK
 
 REMARKS • ^ 
 
 t^^y^^c^^ 
 
 ON 
 
 CURRENCY ANB COMMERCE. 
 
 % jnUN WHEAT LEY, Efq. 
 
 Mmm^ 
 
 PRINTED BY T. BURTON, LITTLE qUEEN STBIKT. 
 
 fOR MESSRS. CADELL AND DAVIES, STKAND. 
 
 1803.
 
 PREFACE. 
 
 JL HE following Work is written to 
 elucidate the principles of National 
 Wealth, which, notwithftanding the 
 inquiry of Dr. Adam Smith, appear 
 to me to be infufficiently underftood. 
 Though his work be more lutminous' 
 on this fubjecl than that of any other 
 author, it has bad no influence to 
 efFc6i: an alteration in our policy. 
 
 A 2 The
 
 The Balance of Trade is the fyf- 
 tem by which we have been hitherto 
 fuppofed to acquire our wealth. It 
 neccffarily, therefore, prefcnts itfelf 
 as the firft objed: of attention in thefe 
 Remarks I am well aware of the 
 difficulties that attend its difcuffion. 
 The late Mr. Irving*, whofe talents 
 were devoted to the ftudy of this 
 fubje6tj acknowledged that there 
 were few queflions, to which the hu- 
 man attention could be diredled, more 
 difficult to form an opinion upon 
 than this. Mr. Hume and Sir James 
 Steuart were equally fenlible of its in- 
 tricacy. I truft, therefore, that 
 
 * Vide Report of the Secret Committee of the 
 Houfe of Commons, page 111. 
 
 fome
 
 V 
 
 fome allowance will be made for the 
 errors which I may have committed. 
 
 The fubjed of Currency is fo inti- 
 mately conncdled with that of Com- 
 merce, that one can fcarcely be confi- 
 dered without the other. From Mr. 
 Thornton's effay on Paper Credit I 
 have received confiderable affiftance. 
 It is written with ability and fpirit ; 
 and, though by the courfe of my ar- 
 gument 1 am led to a different con- 
 clufion on the policy of circulating 
 the paper of country banks, it is 
 with great diffidence that I offer an 
 opinion againft fuch high authority. 
 
 I am confcious that this inquiry, 
 from the complicated nature of the 
 
 fubjcd,
 
 VI 
 
 fubjecft, muft be in many inftances de- 
 fedive; but I offer it to the public 
 much more as the Profpedus of a 
 future Work than as a diftindt Treatifc 
 in its prefent fliape.
 
 CONTENTS 
 
 CHAP. I. 
 
 Page 
 
 On the Utility of Money 
 
 I 
 
 CHAP. II. 
 
 
 On the Balance of Trade 
 
 57 
 
 CHAP. HI. 
 
 
 On Commerce - - - 
 
 loa 
 
 CHAP. IV. 
 €>n the Depreciati§n of Money - - 171 
 
 CHAP. V. 
 On the Reformation of the Paper Currency of this 
 Country - - - - 198 
 
 CHAP. VI. 
 On the Reduction of the National Debt by the 
 Deprefwn of Money - - - 231
 
 ON THE 
 
 UTILITY OF MONEY. 
 
 CHAP. L 
 
 Previous to entering upon the fubjea:^ 
 matter of this work, it is neceffary to explain 
 the fundamental principles upon which its 
 future reafoning is grounded. Moll of the 
 errors in our prefent commercial and finan- 
 cial fyftem, appear to me to arife from a 
 miftaken opinion of the UtiHty of Money ; 
 money and wealth have always been ufed as 
 fynonimous terms ; and as the principle, 
 that an increafe of money conftituted an in- 
 treafe of wealth, feemcd too obvious to the 
 tmderftanding to admit of invcftigation, our 
 policy has hitherto been exclufively direfled 
 B to
 
 ( 2 ) 
 
 to its accumulation as the only means of 
 advancing our opulence. This policy has 
 been examined at great length and with great 
 ability by Dr. Adam Smith -, but as his in- 
 quiry into the properties of money was not 
 fufficiently minute to imprefs general con- 
 vi61ion, his examination has had little efFe6l 
 to divert our policy to the true obje6l to 
 which it fhould be dire6ted for the augmen- 
 tation of our wealth, the increafe of produce, 
 and not the increafe of money. 
 
 To give our policy this direction is the 
 purport of the following work. 
 
 The fundamental principles, which I fliall 
 endeavour to eftablifh, have already been 
 partially advanced by prior authors, and par- 
 ticularly by Mr. Hume in his political trails ; 
 his opinions have been canvaiTed by Sir 
 James Steuart, the principal fupporter of 
 our prefent fyftem, upon whofe arguments 
 I .{l:iall offer fome obfervations at the clofe of 
 the chapter. 
 
 The
 
 ( 3 ) 
 
 The fundamental principles which I fhall 
 attempt to prove are thefe : 
 
 That an increafe of the national ftock of 
 fpecie is an increafe of eurrency, and not of 
 capital. 
 
 That an increafe of currency is not an in- 
 creafe of wealth. 
 
 And that no one nation can pofTefs a 
 greater relative currency than another. 
 
 The exclufive Utility of Money confifts in 
 its properties as an univerfal meafure of va- 
 lue, and an univerfal medium of exchange. 
 As it forms the univerfal meafure of value, 
 every one eftimates his capital by the quantity 
 of money it is worth. A merchant fays of 
 himfelf, that he is worth forty thoufand 
 pounds, or a hundred thoufand pounds, 
 becaufe the capital, of which he is poilefTed, 
 is capable of being converted into fuch a fum 
 at his option, and not becaufe it a6lually 
 B 2 confifts
 
 ( 4 ) 
 
 confifts of fo much money: the perfon of 
 landed or funded property, when fpeaking 
 of his colle6live wealth, always makes the 
 fame remark ; and though from the quantity 
 of currency in the country, and from the 
 average demand for the capital which he pos- 
 fesses, there exifts a facility of his making 
 the converfion at his pleafure; yet at the 
 time that he makes the aflertion; he has not 
 perhaps twenty pounds of cafli in his pof- 
 feffion. No individual, when he is alked the 
 queftion of what he is worth, enumerates his 
 lands, his houfes, his (lock, his mortgages, 
 or whatever may be the nature of his pro- 
 perty, but immediately mentions the fum, 
 into which the whole of his property may be 
 converted -, and unlefs he eftimated it by this 
 univerfal meafure of value, he would not be 
 underllood. 
 
 It is this property that conflitutes the pe- 
 culiar ufe of money, as it enables us to com- 
 pute the value given, and the value received, 
 to afcertain the equivalency ©f exchange 
 
 through
 
 ( s ) 
 
 through the various relations of fociety. 
 The wages of labour, the profits of flock, 
 and the commercial interchanges between 
 nation and nation j are exclufively eftimated 
 at their proportional value by this meafurc. 
 To maintain the uniformity of the meafure 
 is the conflant effort of every individual, and 
 of every nation -, and in a fubfequent part of 
 this work I fhall endeavour to point out the 
 means which are taken for this purpofe. 
 
 It is this property that peculiarly adapts 
 it for a medium of exchange. But as the 
 only Utility of the Money is for the exchange, 
 immediately that one capital, or fome por- 
 tion of a capital, is fold, another is bought. 
 No one keeps the money beyond the oppor- 
 tunity of making the converfion to moft ad- 
 vantage. If any pcrfon were delirous of 
 exchanging his eflate in one country for an 
 eflate in another, for the purchafc of govern- 
 ment fecurities, or for the difcharge of 
 claims, the purchafe money would be in- 
 flantly applied to the purpofe for v/hich the 
 
 exchange
 
 ( 6 ) 
 
 exchange was made, and inftantly re-appro- 
 priated to the general circulation of the 
 country. 
 
 But from thefe united properties of mo- 
 ney, as a meafure of value, and a medium of 
 exchange, we ufually affix the idea of the 
 real pofleffion of fo much money, when we 
 talk of the capital of an individual 3 and fo 
 familiar is the cuflom, that we feldom ad- 
 vert to the fpecific property of which it 
 a6lually confilts -, we even find it difficult to 
 diveft ourfelves of the idea, that it does not 
 really confift of money. The cuftomary 
 terms of converfation imply, that we think 
 more of the money than the money's worth ; 
 we fay of a rich man that he has a great deal 
 of money, and of a perfon becoming fo, 
 that he is getting money, without adverting 
 to the money as a meafure of value, but 
 thinking at the time that it actually conili- 
 tutes the wealtli o5 which we fpeak. From 
 this familiar habit of expreffion we are inad- 
 vertently led to infer that money conilitutes 
 
 the
 
 ( 7 ) 
 
 the capital of an individual, and thence that 
 it conftitutes the capital of a nation. 
 
 When we fpeak of the commercial as the 
 monied intereil, an opinion is always im- 
 plied, that their capital confifls of money. 
 But though the capital of the merchant is 
 more frequently converted into money, than 
 the capital of the land proprietor, yet in this, 
 as well as in every other inftance, recourfe 
 is only had to this medium for the purpofe 
 of enabling him to exchange his exifling 
 property into property of another fhape with 
 more facility. It is no longer retained in 
 money than is correfpondent with his inte- 
 refl J and as pending its continuance in this 
 ftate there is a total fufpenfion of profit, its 
 detention is not likely to be of long dura- 
 tion. No capital is ever converted into this 
 medium for the purpofe of being perma- 
 nently retained in a mafs of money. Among 
 the annals of domeftic narrative two or three 
 folitary inftances of an eccentric character 
 are recorded, where a mifcrly being has con- 
 verted
 
 ( 8 ) 
 
 verted his property into fpecie, and hoarded 
 it in treafure for partial confumption, as thie 
 paucity of his wants required. But I thinl?; 
 I may venture to affert, without any great 
 probability of a violation of truth, that na 
 iuch character now exifts ; or at lead the 
 inftance muft be fo rare, that it cannot be 
 faid to militate againil: the general conclu- 
 fion, that the capital of no individual in 
 the country is retained in money. 
 
 I admit that the exifting flock of fpecie, at 
 any given moment, conftitutes the capital, or 
 a portion of the capital of many individuals ; 
 but it is difcharging the functions of cur- 
 rency at the tinfie that it forms them. The 
 fame money which conftitutes the capital of 
 an indi\ridual merchant at one moment, in 
 the fpace of a fhort time may conftitute the 
 capital of five hundred ; — and the compa- 
 ratively fmall fum of ten millions, may be 
 capable of anfwering all the necefTary pur- 
 pofes of circulation in a great commercial 
 (^ity, where the aggregate capital of the in- 
 habitants
 
 ( 9 ) 
 
 Iwbitants may be of the value of two hun- 
 dred millions, and may form, by turns, the 
 capitals of all. 
 
 Though large fums of money are necef- 
 fary for moving the more important tranf- 
 aclions of trade, their magnitude does not 
 alter the nature of money, and convert it 
 into capital, becaufe it is occupied in circu- 
 lating the materials of the merchant, when 
 it is acknowledged to be currency in circu- 
 lating thofe of the retail trader. The tran- 
 fit of large fums from hand to hand, is as 
 rapid in the city of London, as the tranfit 
 of fmaller fums in the inferior tranfadlions 
 of the country village : and though it may 
 conftitute the capital of many individuals in 
 its tranfit, it is not more ftationary in the 
 one inftance than in the other. The deten- 
 tion of money in a ftate of flagnation for 
 the formation of capital, is obviovfly witli- 
 out foundation j no one would retain it for 
 the improvement of his property, as money- 
 is incapable, like produce, of being worked 
 
 into
 
 ( 10 ) 
 
 into profit, or exchanged to advantage : and 
 no one would retain it for expenditure, as 
 expenditure, however gradual, mult even- 
 tually lead to its confumption. 
 
 The Utility of Money confifts exclulive- 
 ly in forming the meafure of value, by 
 which all property is edimated 3 and the 
 medium of exchange, by which one proper- 
 ty is transferred for another. For this pur- 
 pofe it was invented -, and in the difcharge 
 of thefe functions, the whole exifling fpecie 
 of the world is, without any ftagnation, in 
 the form of capital invariably occupied. 
 
 But there is one exception to this argu- 
 ment. — The a6live capital of fociety confifts 
 in its produftive ftock, and the income of 
 fociety in the produce arifmg from it. Mo- 
 ney in a ftate of currency can form no part of 
 either the one or the other : but in their mi- 
 neral ftate, the precious metals may form a 
 portion of both. Gold and filver mines may 
 certainly conftitute a large component part 
 
 of
 
 ( " ) 
 
 of the produ6live ftock of a nation, and 
 may yield by their produce a confiderable 
 income. But the immediate produce of 
 bulUon from the mine has no common pro- 
 perties with money in a flate of circulation: 
 it is precifely fimilar to all other merchan- 
 dize, influenced by the fame caufes, and re- 
 gulated by the fame principles. It does not 
 form a medium of exchange, for which an 
 equivalent has been given, and for which 
 no more than an equivalent can be received, 
 and aft folely as agent for the transfer of 
 commodities, but it is an original produce, 
 for which no equivalent has been given j 
 and which, like the iron and lead that iiiiie 
 from their refpe6live mines, affords a clear 
 gain, exclufive of the expence of produc- 
 tion. 
 
 Money, in a flate of currency, has no 
 power to augment the wealth of a nation. 
 Its fole occupation is to exchange, not in- 
 crcafc, the produce and productive flock of 
 fociety : and, though it forms as it circulates, 
 
 the
 
 ( J2 ) 
 
 the whole or a portion of its wealth, yet as 
 it is invariably bought and fold for its equi- 
 valent, it has no power of adding to its opu- 
 lency. But bullion from the mine may 
 confiderably augment the wealth of a na- 
 tion ; for though it may be coined into mo- 
 ney, for the purpofe of conftituting the in- 
 ternal circulation of the country to which 
 the mine belongs, from a mifconception of 
 the principles of national wealth, yet, as the 
 intereft of individuals never fails to defeat 
 fuch a proje6l: on the part of government, 
 by exchanging it for additional produce, 
 it augments in proportion to this addition 
 the wealth of a nation. 
 
 If then it may be inferred, fj'om the fore- 
 going oblervations, that all the fpecie exifling 
 in a nation mufi be appropriated to the pur- 
 pofes of circulation j that it conftitutes cur- 
 rency, and not capital i it follows as a ne- 
 cefTary confequence, that an increafe of the 
 national flock of fpecie muft be an increafe 
 of currency. 
 
 I fliall
 
 ( -3 ) 
 
 I fliall now therefore endeavour to prove, 
 that an increafe of currency is not an in- 
 creafe of wealth. 
 
 Every individual is fenfible, that if he 
 pofTelTed fo much money, he could com- 
 mand fo much produce ; and if he pofTefred 
 fo much more money, that he could com- 
 mand fo much more produce : and it may 
 be naturally concluded, that, what is true 
 of an individual, muft be true of the collec- 
 tive body J and that an increafe of money 
 in a nation, muft be an increafe of wealth. 
 But as in an increafe of currency all acquire 
 in the fame ratio, unlefs obftrucled by ex- 
 ifting contrafls, no one will be in a better 
 relative fituation than another 5 no one will 
 receive a greater or lefs quantity than that 
 proportion, which is competent to maintain 
 him in the fame relative pofition in fociety. 
 The great Utility of Money is its property 
 as the meafure of equivalency. Man- 
 kind find out w ith ready facility whether the 
 money they obtain for their labour or pro- 
 duce
 
 ( H ) 
 
 duce can meafure the fame quantity, or 
 command the fame quantity of the necefla- 
 ries and luxuries of life, which they have 
 been accuftomed to receive for it. Their 
 v/ages or their profits are the meafure of 
 that quantity, and no one will fubmit to an 
 alteration of the meafure to his own detri- 
 ment. No one will fuffer his produce to be 
 fold at the fame price, when the produce of 
 another is advanced, as it would confound 
 the equality of exchange, and prevent the 
 fame quantity of money from being the 
 meafure of equivalency between the refpec- 
 tive produce of the one, and the refpe6live 
 produce of the other, by making more of 
 the one exchange for lefs of the other 
 than previous to the augmented currency. 
 The price of all things, therefore, foon be- 
 comes commenfurate with the increafe ; and 
 the exifting relations between man and man 
 are unalterably maintained in the fame ftate, 
 though all receive a greater nominal income. 
 
 If there were a general increafe of cur- 
 rency in this country to fuch an extent that 
 
 all
 
 ( 15 ) 
 
 all could receive as many guineas as they 
 now receive (hillings, no one would be in a 
 better relative fituation than he is at prefent. 
 If the peafantry of the country received as 
 many guineas a week, as they now receive 
 fliillings, and the gentlemen of property re- 
 ceived as many guineas a year, as they now 
 receive fliillings, the gentleman and the pea- 
 fant would (till continue in the fame relation 
 to each other : and though guineas would be 
 circulated as Shillings, no one would receive 
 more for his guinea, than he nov/ receives 
 for his (hilling. Money can be of no greater 
 value than the produce for which it will ex- 
 change j and if one piece of money would 
 exchange for the fame produce as another, 
 they mufl necelTarily be of the fame value. 
 The livre in France was once cnxulated at 
 the value of an Englifli pound, and is now 
 circulated at the value of an EngUih ten- 
 pence : but as it will nov/ only exchange for 
 a four and twentieth part of the value for 
 which it would have formerly exchanged, no 
 one is now richer in tlie pofle/hon of four 
 
 and
 
 ( »6 ) 
 
 and twenty, than he would formerly have 
 been in the polTexTion of one. Four and 
 twenty form the meafure of value, where 
 one formerly fufficed; and all produce is now 
 eftimated at four and twenty, which was 
 formerly eftimated at one. 
 
 It is thus, that a nation may be juft a^ 
 rich with a currency of five millions, as with 
 a currency of fifty. The greater or lefs 
 quantity is no criterion of its wealth. The 
 wealth of a nation confifts in the aggregate 
 produce arifing from its productive ftock 5 
 for the equal interchange of which, between 
 man and man, money forms only the mea- 
 fure of value ; and whether five pieces, or 
 whether fifty pieces, conftitute the meafure 
 for the fame quantity of produce, is of no 
 confequence. If a nation grew more pro- 
 duce with a currency of five than with a 
 currency of fifty, it would, in proportion to 
 the excefs, be more opulent : and, in that 
 cafe, the five millions would be worth more 
 than the fifty ; as any given proportion of 
 
 the
 
 ( 17 ) 
 
 the five would excI:Kange for a greater quan- 
 tity of produce, than a fimilar proportion of 
 the fifty, and exchanging for more would be 
 of more value. 
 
 As money is exclufively appropriated to 
 exchange, and does not participate in the 
 nature of produce which is grown for con- 
 fumption, an increafe of money, retained 
 for internal circulation, has no effefl, like an 
 increafe. of produce, to augment the wealth 
 of a nation. The greater the quantity in 
 circulation, the lower will be its flandard as 
 a meafure of equivalency, the greater will be 
 the quantity given in exchange between pro- 
 duce and produce, and the higher will be the 
 price of all things. But as an advance in 
 the price of produce, and a redu6lion in the 
 value of money, are fynonimous terms, an 
 increafe of money has no other effeft than 
 to caufe its own deprefhon : this effecl was 
 fenfibly experienced in the reign of Eliza- 
 beth, when the remittances from America 
 confulcrably augmented the currency of Eu- 
 C rope.
 
 ( >8 , 
 
 rope, and proportionally added to the fpecie 
 of this country in common with the reft. 
 But this increafe had no other operation thaa 
 to raife the price of produce, and augment 
 the nominal incomes of all, without making 
 any addition to their real opulence,, as their 
 incomes exchanged for no more fubfequeat 
 to the increafe than before it, and exchang- 
 ing for no more, i could be of no greater 
 value. The leading chara(£lers of her reign 
 were fo well aware of this circumftance, that 
 in the inftance of leafes from colleges, a re- 
 fervation w as made of a third of the rent in 
 corn, in order to prevent their impoverilh- 
 ment by the receipt of a fixed money rent 
 from a further alteration of its value, which 
 a further increafe v/ould have necefTarily 
 effefled. The beneficial confequence^ refus- 
 ing from this policy have been too repeatedly 
 noticed by other authors to require any com-^ 
 rnent from me. 
 
 ^t is imagined by fome, that an increafe of 
 currency gives a ftimulus to induftry by a 
 
 partial
 
 ( 19 ) 
 partial advance of prices -, but it appears to 
 me to have no fuch efFe6l. The wages of 
 labour would be only augmented in propor- 
 tion to the increafe, and would purchafe no 
 greater quantity of produce after the aug- 
 mentation than before it. As no greater 
 ftimulus would therefore in reality exift, no 
 greater efFeft is likely to be produced by the 
 deception. That Europe is advancing in 
 opulence there can be no doubt, but not 
 from this caufe. Spain is conclufive tefti- 
 mony, that it does not necefTarily conduce to 
 national induftry ; nor are there any means 
 by which it can have this effefl. As all the 
 Ipecie retained in a nation muft be appro- 
 priated to the purpofes of circulation, if an 
 increafe of money be effeded without an in- 
 creafe of produce, it muft be occupied by 
 the produce already exifting, and make a 
 proportionate advance in its price, without 
 any power to augment its quantity. If our 
 Cornifh mines could produce annually a mil- 
 lion of money, there is no doubt but that the 
 proprietors would be the richer -by the equi- 
 C 2 valcnt
 
 ( 20 ) 
 
 valent which they procured -, but the nation 
 would not be fo, as it could procure no equi- 
 valent, unlefs the additional fum were ex- 
 ported for additional produce. If it were re- 
 tained for internal circulation, as it could 
 obvioufly occafion no inflantaneous increafe 
 of produce, and as it would not remain in a 
 ftate of ftagnation till the proportionate in- 
 creafe were effe61:ed, it mufl be neceflarily 
 occupied by its exifting produce. A partial 
 rife would take place in the price of all 
 things, unlefs twenty times its value could 
 be inflantly procured, or whatever be the 
 quantity of produce neceffary for the occu- 
 pation of fuch an increafe of currency at 
 the exifting prices. 
 
 If then the currency of a nation be aug-, 
 niented to any extent, and retained for the 
 purpofe of internal circulation, no additional 
 wealth would be attained, as any given, pro- 
 portion of the augmented currency would 
 Exchange for no greater quantity of produce, 
 than a funilar proportion of the currency 
 
 that
 
 ( 21 ) 
 
 that exifted previous to the augmentation. 
 There is therefore no foundation for the 
 fuppofition that an increafe of currency con- 
 ftitutes an increafe of wealth. 
 
 But immediately that any one nation 
 ftiould collect to itfelf fuch a quantity of 
 currency, as to have a tendency to circulate 
 its produce at a higher price than others, 
 foreign produce would be attra6kd by the 
 advance in its maiket, and take off the fur- 
 plus currency i which leads me to an exami- 
 nation of the third pofition, that no one na- 
 tion can pofTefs a greater relative currency 
 than another. 
 
 There is the fame exertion among nations 
 as among individuals to maintain the uni- 
 formity of the meafure of value, whether 
 money be deprelfed or elevated by an increafe 
 or redudlion of currency. I before obferved, 
 that no individual, in the fame nation, would 
 fubmit to a material depreflion in the efli- 
 mate of his labour or produce in any inftance 
 
 where
 
 ( 22 ) 
 
 where he could procure a better market. If 
 a general increafe of currency were effe6led, 
 the peafant or manufadurer would not fell 
 his labour at one place for lefs, if by remov- 
 ing to another, he could fell it for more of 
 the neceffaries of life. He would naturally 
 go, if no impediment obftru6led his removal, 
 where his labour was moft liighly eftimated. 
 This attention to individual intereft, has a 
 conilant tendency to promote an equalization 
 of the wages of labour, and prevents their 
 elevation at one place confiderably above 
 their llandard at another. 
 
 The fame attention to individual intereft 
 prevents any particular produce from ex- 
 changing at one place for more value than 
 it does at another in the fame country. As 
 money is the mcafure of the value of other 
 produce which it is capable of procuring in 
 exchange, the proprietor will naturally con- 
 vey it where it will fell to moft advantage. 
 It is impoflible, that wheat could be at ten 
 ihillings a bufhel at Oxford, and at fifteen 
 
 ihillings
 
 ( 23 ) 
 
 (hillings a bufhel in London; as long ere 
 this difference exiiled, the wheat of Oxford 
 would have been conveyed to London to 
 equalize the price, and reflify the meafure 
 of value. It is impoffible, therefore, that 
 any local rife could exift in the price of pro- 
 duce, or that any particular town or diftri6t 
 could pofTefs a greater relative currency than 
 others in the fame country, as it muft necef- 
 farily create a partial rife. Wherever there 
 was a tendency to this cxcefs, the produce of 
 remoter diftricls would be attra^led by the 
 advance of its market, and draw off the fur- 
 plus currency. The difpofition to buy 
 cheap, as well as to fell dear, would make 
 the poffeffors of the money as ready to part 
 with it to their advantage, as the poffeffors 
 of the produce to procure it for theirs. 
 
 The uniformity of the meafure of value 
 is thus maintained, and the fame commodity 
 is made to exchange for the fame quantity of 
 other produce in every part of the kingdom. 
 Whether, therefore, currency, increafe, or de- 
 
 creafe,
 
 ( H ) 
 
 creafe, whether prices be advanced or deprefT- 
 ed, money ftill maintains its property as a 
 meafure of equivalency. There muft be a ' 
 greater or fmaller number of pieces given, 
 in proportion as it is augmented or reduced v 
 but the fame number would notwithftand- 
 ing be given, in both inflances, for the fame 
 produce in every part of the country. 
 
 I do not mean to contend that no dif- 
 ference can exift in the price of the fame pro:- 
 duce at any two diftinch places; but that 
 the general attention of all to their indi- 
 vidual interefls, has a tendency to approxi- 
 mate them fa nearly to an equality, as to 
 prevent much difference beyond the expence- 
 of conveyance. The difficulties of convey- 
 ance muft always make a certain difference. 
 In commodities that are either of great bulk, 
 or are eafily perilliable, there muft always be 
 fome variation, as there are no means of 
 conveying them from tlie place whcrc they 
 are cheapeft, to the place where they are on 
 this very account deareft, without great ex- 
 pence 3 and this expence muft be neceffarily 
 
 included
 
 { 25 ) 
 
 included in the price. But as this difficulty 
 IS only experienced in a few commodities, 
 and as all other produce, by the emulation 
 of individuals to take advajitage of a rife in 
 the market, is nearly fold at par in every 
 part of the kingdom, it follows as a necef- 
 fary confequence, that no one diftri<51: can 
 poficfs a much greater relative currency tlian 
 nn other. 
 
 But for the fame reafon, that no one par- 
 ticular town or dillricl can pofFefs a greater 
 relative currency than another, in the fame 
 country, no one nation can poffefs a greater 
 relative currency than another, in the world 
 at large. If by a partial increafe of currency 
 in a particular country, its prices were ad- 
 vanced above the prices of other nations, 
 foreign produce \\Guld be attracted by the 
 rife in its market and draw off tlic furplus 
 currency. In the commercial intercourfc 
 between nation and nation, money is in the 
 fame manner the mcafure of equivalency as 
 in the domeftic intercourfe between man and 
 man. The facility with which the recipro- 
 cal
 
 ( 26 ) 
 
 cal communication of nations is carried oit> 
 has a neceflary influence on the markets of 
 all, and approximates the price of their pro- 
 duce to a general level. If it be found that 
 a particular commodity could purchafe only 
 five pounds weight of fdver at home, and 
 could purchafe fix pounds weight of fdver 
 abroad, it would naturally be fent abroad 
 for the moft favourable exchange. Not only 
 foreign produce would be attracted to the 
 country pofTelling the redundant currency 
 by the advance of its market, in order that 
 it might fell dear -, but its money, notwith- 
 ftanding the prohibitions of government, 
 would be clandeftinely exported, in order 
 that it it might buy cheap. The fame at- 
 tention to individual intereft, therefore, will 
 caufe the fame exertions among nations, as 
 among individuals, to equaUze the ftandard 
 of money, as the common medium of men- 
 furation. 
 
 But there are two caufes that operate in 
 the commercial intercourfe of nations, to 
 
 prevent
 
 ( 27 ) 
 
 prevent a complete equalization of prices iil 
 the fame produce; the difficulties of inter- 
 courfe on account of the diftance, and on 
 account of reftri(5lions on the freedom of 
 trade. The difficulties of intercourfe, from 
 dillance, cannot create fo great a difference 
 in the circulating price of any given com- 
 modity In any two diftin6l nations, as to 
 afford an extraordinary profit to the mer- 
 chant who tranfported it from one country 
 to the other. The competition of nations has 
 iubfifted too long to afford any extravagant 
 profit above the common mercantile com- 
 miffion ; but the difabilities of trade, arifmg 
 from prohibition, may make an effential dif- 
 ference in the price of the contraband goods. 
 During the late fcarcity, fronj the reflri6live 
 regulations of France, the price of wheat in 
 London was nearly double the price in Paris, 
 which could never have fubfifled, had the 
 freedom of intercourfe been permitted. But 
 though the difficulties of conveyance, and 
 the prohibitions of government, create a 
 ncceffary variation in prices proportionate to 
 
 thicr
 
 ( 28 ) 
 
 their extent, yet, uninterrupted by thefe dif- 
 abilities, the a^ion of money, direfted by 
 individual intereft, has an uniform tendency 
 to make any given quantity of the fame pro- 
 duce exchange for the fame value in every 
 part of the vi^orld. 
 
 In order to jQiew the impra(5licabillty 
 of accumulating a currency in one country, 
 above the relative currency of others, it is 
 only neceffary to examine the effea: which 
 this attempt has produced in the inilance of 
 Spain. Spain has annually received from 
 her American mines between three and four 
 millions of pounds flerling for thefe laft 
 two centuries, and has made every exertion 
 in her power to retain them for her internal 
 circulation; but, notwithftanding her re- 
 ftriaive fyftem, flie now poffefTes a lefs cur- 
 rency than any nation in Europe. The cur- 
 rency of England has been eftimated at forty 
 millions of fpecie; but I ihali hereafter en- 
 deavour to point out the inaccuracy of this 
 calculation; the currency of France at eighty; 
 
 and
 
 ( 29 ) 
 
 and the currency of Spain at * ten millions of 
 pounds fterlingj but, had her prohibitory 
 regulations been attended with fuccefs, her 
 circulating medium would have now amount- 
 ed to many hundred millions inftead of ten. 
 But as foon as it w^as perceived that fhe had a 
 tendency to circulate her produce at a higher 
 price than otlier nations from her redundant 
 currency, foreign produce was attrafted by 
 the rifmg market i and, notwithftanding the 
 vigilance of government, the Sapaniards al- 
 ways found means to part with their fpecie, 
 when they could exchange it for a greater 
 quantity of foreign than home produce. So 
 long as there is no one who would give a 
 guinea for a commodity at home, which he 
 could procure from abroad, by giving only 
 a /hilling, all reftri6lions to compel a nation 
 to detain its fpecie, muft ever prove totally 
 inefFe6lual. 
 
 Self-intereft is the mofl: powerful fpring 
 of human adions ; and when tlie regulations 
 
 Vide M' Arthur's Trafls, nngc 293, 
 
 of
 
 ( 30 ) 
 
 of government countei*a6l this principle, the 
 moft arbitrary power is incapable of enforc- 
 ing their obfervance. The prohibitory laws 
 of Spain were unprodudive of their defired 
 eiFeft; the furp! as of her currency, that ex- 
 cefs which would have enabled her to have 
 circulated her produce at a higher price, was 
 annually divided among other nations, by 
 the import of foreign mercliandize ; and in- 
 ftead of being occupied by her exifting pro- 
 duce, and operating to no other puipofe than 
 its own depreflion, it was annually exported 
 for an inereafe of produce 5 and in propor- 
 tion to that inereafe, augmented the wealth of 
 the country. Her own intereft combined 
 with the intereft of other nations to prevent 
 the appropriation of the annual fupply to 
 her internal circulation. The detention 
 woukl have produced -no other effect than 
 the depreciation of its value ; and to avoid 
 this deterioration of their property, was as 
 much the object of every individual in the 
 country, as it was the objedl of its govern- 
 ment to enforce it. 
 
 The
 
 ( 31 ) 
 
 In every inftance, therefore, where a fiml- 
 lar fupply is imported, a fimilar efFe6l muft 
 enfue. It cannot be added to the circula- 
 ting medium of a country, as it would carry 
 the prices of its produce confiderably above 
 the produce of other nations, and confound 
 the meafure of equivalency. It cannot in- 
 creafe its produce, as the increafe cannot be 
 inftantaneoufly effefted -, and as money will 
 not reft in a ftate of ftagnation till the aug- 
 mentation take place, it can only be ap- 
 propriated to the purchafe of foreign pro- 
 duce, and exported to the country where it 
 will exchange to moft advantage. 
 
 If thefe obfervations be corre6l, it follows 
 as a necelTary confequence, that no one na- 
 tion can poffefs a greater or lefs currency 
 than its due proportion ^ than that propor- 
 tion, which is competent to circulate its pro- 
 duce, as nearly as pofTible at par with foreign 
 nations. That in whatever inftance it 
 Ihould be augmented above this proportion, 
 foreign produce would be attracted by tlie 
 
 advance
 
 { 32 ) 
 
 advance of its market, and take off the iUr- 
 plus cun-ency. That in whatever inftancc 
 it iliould be reduced below this proportion, 
 foreign bullion would be attracted by the 
 cheapncfs of its market, and fupply the re- 
 quifite addition; and tliat no permanent vari- 
 ation can be efFe6led in the value of money 
 to prevent its univerfal agency as a common 
 meafure of equivalency. 
 
 Though the redrictions of government 
 Iiave had no effecl in obilructing the export 
 of fpecie in the fhape of coin or bullion, 
 when it was the intereft of individuals to 
 export it ; yet the regulations that were found 
 neceffary for the prevention of frauds in 
 coinage, have diiqualified the current coin 
 of one country from becoming the cur- 
 rency of another. But the quantity of 
 fpecie in this, and evei'y other country, 
 would have been precifely of the fame amount 
 if the currency of each, inftead of being at- 
 tempted to l>e confined to the partial circu- 
 lation of the nation, whofe ftamp it bore, 
 
 had
 
 ( 33 ) 
 
 had partaken of the general circulation of 
 the world, and without being regarded as 
 the exclufive property of one, had been in- 
 difcriminately admitted in all. The prohi- 
 bitory regulations which the governments of 
 Europe have cftablifhed, would have perhaps 
 never been adopted, had not the principle 
 been too inconfiderately admitted, that an 
 increaie of money was an increafe of 
 wealth. 
 
 I fliall now make fome obfervations on 
 Sir James Steuart's examination of the prin- 
 ciple, that the price of produce is propor- 
 tionate to the quantity of currency i but, as 
 a particular inquiry into his theory would 
 exceed the limits of thefe remarks, I fhall 
 merely notice the pofitions, which by the 
 general fcope of his reafoning, from page 
 400 to page 414, he has attempted to efta- 
 blifli. He is of ophiion, that an increaie of 
 money muft either operate to an increaie of 
 demand, which muft confequently augment 
 the fupply, and reduce prices to their former 
 D ftandard,
 
 ( 34 ) 
 
 ftandard, or that it muft wait not only the 
 call of a defirein the proprietors to confume, 
 but of the indufrnous to fatisfy this call ; 
 and that an increafe of money has no necef- 
 fary tendency to efFe6l a permanent advance 
 in the price of produce. 
 
 But if the principle were true, that an in- 
 creafe of money led to an increafe of produce, 
 money would for the moft part have pre- 
 ferved an invariable flandard through all 
 ages, as Sir James Steuart acknowledges, 
 that if produce augmented in the fame pro- 
 portion, there would be no advance of pri- 
 ces : but from the earlieft period to the 
 prefent times, as will be fufficiently evinced 
 in a future part of this work, there has been 
 an invariable deprefTion of the flandard of 
 money. It is therefore evident, that the 
 augmented demand in confequence of the 
 increafe of money, has not occalioned a pro- 
 portionate increafe of produce. 
 
 The
 
 ( 35 ) 
 
 The other pofition, that if money do not 
 caufe this efFe^l, and augment the fupply of 
 produce in proportion to its increafe, it will 
 not enter into circulation, but be locked up 
 in treafure, is contradidled by the fame fa6l, 
 as if it had never entered into circulation, it 
 could never have contributed to the advance 
 ©f prices. But tliis opinion is too obvioufly 
 groundlefs to need an anfvver. 
 
 He fays, that the price of produce depends 
 upon the comphcated operations of fupply 
 and demand, of which there can be no doubt ; 
 but it muft be at the fame time conceded, 
 that the demand is always regulated by the 
 general ability to pay, and not by the defire 
 to have. Every perfon wants many things, 
 which he cannot purchafe ; but he can only 
 be faid to demand thofe, for which he pof- 
 felTes an equivalent in money. The price of 
 produce therefore, muft ever be regulated by 
 the quantity of money in circulation for its 
 purchafe, and its own quantity at the time to 
 anfwer the demand. This connexion be- 
 D 2 twecn
 
 ( 36 ) 
 
 tween the quantity of money in the market 
 to buy, and the quantity of produce in the 
 market to be fold, is conftantly operating to 
 a flu6luation -, and, in proportion to the ex- 
 ccfs in currency above produce, to a gradual 
 advance of prices. They are reciprocally 
 balanced by each other. Every variation 
 in the quantity of the one, efFe6ls an equal 
 variation in the ftandard of the other, and 
 prices are ever regulated by the proportion 
 which the exiting quantity of the one bears 
 to the exifting quantity of the other, 
 
 I have no wifh to detra6l from the gene- 
 ral merit of Sir James Steuart's Work. It 
 contains a fund of matter from which a 
 flatefman may fele6t much valuable infor- 
 mation. But the inquiry of Dr. Adam 
 Smith has fufhciently refuted the theory 
 which he was defirous of eftablifhing. The 
 ability of the author no one will difpute, if 
 reafoning ingenioufly upon wrong principles 
 can be properly termed ability, 
 
 ON
 
 ON -THE 
 
 BALANCE OF TRABE. 
 
 CHAP. IL 
 
 If the fundamental principles of the fore- 
 going chapter be correal, that the colle6live 
 fpecie of a nation conftitutes currency, and 
 not capital, that an augmentation of curren- 
 cy is not an augmentation of wealth, and 
 that no one nation can accumulate a grea- 
 ter Hock of fpecie than that proportion, 
 which is adequate to circulate its produce, 
 as nearly as poflible, at par with foreign na- 
 tions, it appears to me imprafticable to fup- 
 port the theory of the Balance of Trade. 
 
 I do
 
 ( 38 ) 
 
 I do not mean to contend that one nation 
 cannot contra6l a debt with another, and 
 that at any given moment a favourable 
 balance may not be due ; but that this ba- 
 lance can never be fo far favourable for a 
 continued feries of time as to lead to the in- 
 troduction of a greater quantity of money 
 than to that addition, which is necellary to 
 augment the currency of one country to an 
 adequate proportion with the currency of 
 others, and equalize the ftandard of money. 
 
 At the time that this theory was efta- 
 blifhed, as money and wealth were always 
 ufcd as fynonimous terms, and as no work 
 had then been publifhed illuftrative of pu- 
 rer principles, the opinion was univerfally 
 prevalent, that a nation became rich by the 
 accumulation of its money ; and as it was 
 experienced, that commerce augmented our 
 opulence, it was naturally conceived, that it 
 only conduced to it by the introdu6lion of 
 money. It was therefore concluded, that if 
 any plan could be devifed, which would 
 
 icad
 
 ( 39 ) 
 
 lead to an afcertainment of the quantity of 
 money imported by our trade, it would 
 necelTarily point out the accefllon that was 
 made to our national wealth. For this pur- 
 pofe the theory of the Balance of Trade was 
 eftabliflied, and it was adopted \^'ith the 
 fulleft conviftion, that it would accurately 
 demonftrate the addition that was annually 
 made to our capital, for fuch the aggregate 
 fpecie of a nation was deemed, and form a 
 body of indiiputable evidence to confirm our 
 advancement in real opulence; 
 
 From tlie formation of the theory, at the 
 clofe of the feventeenth century, to the pre- 
 fent day, it has received but little oppofition. 
 Mr. Hume and Dr. Adam Smith, vvhofe pe- 
 culiar habits of reflexion led them to pene- 
 trate into its fallacy with keener intuition 
 than mofl other men, have expofed its illufion 
 with great ability j but as their hoftility did 
 not dire6l them to a particular inveftigation 
 of the principle upon which it is founded* 
 their arguments have failed to imprcfs that 
 
 general
 
 ( 40 ) 
 
 general convi(5^ion, which a further inquiry, 
 conduced by their talents, would probably 
 have produced. Exclufive of thefe cele- 
 brated characters, it has received for the 
 mofl part the concurrence of mankind. 
 From its neceffary implication of a certain 
 portion of abftra6l matter, the movement 
 of which requires fome patience of labour, 
 the minds of moft are averfe to an enter- 
 tainment of the fubje6l. To the complicated 
 queflions that oppofe themfelves to its invef- 
 tigation, the theory is indebted for its 
 general reception j yet fuch is the fallacy of 
 the fyitem that the acquiefence in its fa- 
 vour has arifen much more from the diffi- 
 culty of its refutation than from a clear 
 conviftion of its truth. The arguments of 
 Mr. Hume have in this inftance been again 
 expofed to the criticifms of Sir James Steuart. 
 But I fhall hereafter attempt to fliew that 
 he has oppofed his reafoning upon erroneous 
 principles. 
 
 From
 
 { 4' ) 
 
 From the natural anxiety among all na- 
 tions to form a corre6l eftimate of their re- 
 fources, this theory has obtained in evei*y 
 commercial ftate, and in moft is highly ac- 
 credited. In this country the invariable ex- 
 cefs of exports above imports, which has led 
 to the fuppofition of an uniform commer- 
 cial gain has enhanced its value, as it has 
 flattered our profpe6ls. In all the real and 
 imaginary difficulties in which we have been 
 involved, we have ever regarded it as the 
 only indifputable criterion of remaining pi'o- 
 perty. Throughout the whole of the prece- 
 ding century we were animated by the hope 
 that we had been annually gaining from all 
 other nations animmenfe accelTion of wealth. 
 Government participated in the general de- 
 lufionj and the miniftcr of the day uniform- 
 ly reforted to this topic with fuccefs, to illuf- 
 trate the progrefTive opulence of the coun- 
 try. 
 
 But it appears to me, that io far from 
 correlponding with the views of its authors, 
 
 the
 
 ( 42 ) 
 
 the whole fyftem is founded in error 3 that it 
 has invariably tended to miflead, inftead of 
 dire6l -, and that by the reftridive regula- 
 tions which have been eflabliihed in confe- 
 quence of it, it has confiderably obftruded 
 our commercial aggrandizement. 
 
 This theory is formed upon the follov/ing 
 principle. If a nation export produce to the 
 value of twenty miUions, and import produce 
 to the value of fifteen, the difference is fup- 
 pofed to be received in bullion (unlefs inter- 
 cepted by foreign expenditure,) and added to 
 the aggregate fpecie of the country, to which 
 the exported produce belonged. 
 
 It is grounded therefore upon a principle 
 dire6lly oppofite to that upon which an 
 individual merchant forms an eflimate of his 
 private balance. 
 
 The nation draws an inference of its gains 
 from the excefs of its exports ; the merchant 
 draws an inference of his gains from the ex- 
 cefs
 
 ( 43 ) 
 
 cefs of his imports. The balance- fheet of tl^ 
 one therefore, is diredly oppofite to the ba- 
 lance-fheetof the other. If a merchant export 
 produce to the value of twenty thoufand 
 pounds, and import produce to the value 
 of twenty- jfive thouiand pounds, he juflly 
 concludes that he has gained five thoufand 
 pounds by his bufmcfs. But it is contended, 
 on the contraiy, that the excefs of proceeds 
 above returns conftitutes the profits of a 
 nation, and if it export produce to the 
 value of twenty millions, and import produce 
 to the value of, fifteen, that it gains five 
 millions by the bargain, becaufe it is pre- 
 fumed that the difference is accumulated in 
 capital, and permanently depofited in the 
 country. 
 
 But no attempt is made to prove the 
 fmalleft acquifition of profit. The balance- 
 fheet does not attempt to fhew that more 
 has been received than given, as in the in- 
 ftance of the mercantile balance. Jt is, on 
 the contrary, apparent by its own (hewing, 
 
 that.
 
 ( 44 ) 
 
 that, even if the bullion were received, all 
 equivalent in produce has been given for its 
 purchafe. But as wealth was thought to 
 conlift ill money, and as produce was only- 
 valued as the means of procuring it, the re- 
 ceipt of the bullion was fuppofed to form an 
 accefllon to national wealth, and hence was 
 deemed a favourable balance. 
 
 This theory, therefore, is not grounded 
 upon the principle of a commercial profit 5 
 but upon the principle of accumulation. It 
 does attempt to give evidence of what pro- 
 portion the nation has gained by its com- 
 merce, but what proportion it has faved. It 
 implies, that if we bought to the value of 
 twenty millions, and fold to the value of 
 fifteen, the diiference is faved and accumu- 
 lated in capital, as a permanent depofit in 
 the country. 
 
 As therefore it is the fundamental princi- 
 ple of the theory, that commerce enriches the 
 country in proportion as it leads to the ac- 
 cumulation
 
 ( 4S ) 
 
 cumulation of money ; it is neceflary that 
 the mon^y fhould be detained in order to 
 fupport the pofition, that the nation is en- 
 riched by its introduction. Its reappropri- 
 ation to the purpofes of trade would place 
 the country precifely in the fame pofition in 
 which it was previous to the poirefFion of the 
 balance. For as an equiva' ent has been 
 given for its purchafe, and as no more than 
 an equivalent can be received for it, the pro- 
 duce which purchafed the bullion might, fo 
 far as the wealth of the nation is concerned, 
 have as well exchanged, in the firft inrtance, 
 for the produce which the bullion purchafes> 
 without its auxiliary intervention as a me- 
 dium. If the bullion we receive from 
 Portugal, in exchange for any given pro- 
 duce, be eventually fent to China for teas, 
 the teas of China might as well exchange, 
 in the firft inftance, for the produce which 
 was fent to Portugal, as exchange for the 
 bullion that was received for it. The tran- 
 fitory poficliion of the bullion may materi- 
 ally facilitate the operations of trade; but if 
 
 it
 
 ( 46 ) 
 
 it be merely the inflrument of commerce, 
 and its export be equal to its import, there 
 is no foundation for faying that the nation 
 is enriched by its introduction. The deten- 
 tion of the money received, forms therefore 
 a necelTary part of the fy item. 
 
 • This theory then is grounded upon the 
 following pofitions. That an increafe -of 
 money conftitutes an increafe of wealth ; 
 and that it is practicable for a nation to de- 
 tain the money which it acquires, to any ex- 
 tent, as a permanent depofit in the country. 
 
 The fallacy of theJfe principles I attempted 
 to expofe in the foregoing chapter. I en- 
 deavoured to prove that an increafe of money 
 was only an increafe of currency ^ and that 
 augmented currency was not augmented 
 wealth J that it advanced the price of pro- 
 duce, without increafmg its quantity ^ and 
 added to the nominal, without adding to the 
 real, wealth of a country. I attempted alfo 
 to fhew that no one nation would fubmit to 
 
 fucli
 
 ( 47 > 
 
 fuch a facrifice, as to detain its money for 
 the fole purpofe of its depreciation, if it 
 could exchange it to more advantage by 
 fending it abroad. If then theV- pofitions 
 be founded in truth, and we admit, for an 
 inftant, that the theory of the balance of 
 trade is corre6l, as, according to the fore- 
 going principles, augmented currency is not 
 augmented wealth j fo far from gaining an 
 acceflion to its opulence, 'the nation would 
 have loft -by the detention of the balance in 
 an exa61: proportion to the value of the pro- 
 duce which was fold for its purchafe. 
 
 But as it is obvious that the fallacy of a 
 principle, however illufive, can never have 
 fuffiicient influence to fubject us to fuch a 
 deception, it is neceifary to examine how 
 far it be practicable for a nation to buy to a 
 greater extent than it sell, and how far the 
 theory can be borne out by facts. It is evi- 
 dent that if any nation bought for a conti- 
 nuance a greater quantity of produce than 
 it lold, it muft, fooncr or later, be difpof- 
 
 fefl'ed
 
 ( 48 ) 
 
 fefTed of its money. If the aggregate fpecie 
 of a nation amounted to no more than 
 twenty milUons, and it annually bought 
 two millions of produce more than it fold, 
 its flock of fpecie would be completely ex- 
 haufted at the expiration of ten years. But 
 as it is impoffible to difturb the equilibrium 
 of money, fuch an event can never happen. 
 Upon the firft diminution of its currency, 
 and confequent reduction of its prices, fo- 
 reign produce would be attracted by the 
 cheapness of its markets, and, by fupplying 
 the quantity which was withdrawn, restore 
 the equality of the standard. If we were 
 even to fuppofe that from the pofleffion of 
 mines, without the luppofition of accumu- 
 lation from commercial intercourfe, this na- 
 tion could have received an annual fupply 
 during any confiderable period of the prece- 
 ding century to the fame extent, to which 
 Spain has received her American remittances, 
 there is no reafon to conclude that the go- 
 vernment of this country would have been 
 more fuccefsful in its project of detention 
 
 under
 
 ( 49 ) 
 
 under a freer fyftem, than Spain has been by 
 more arbitrary restrictions ; nor that the peo- 
 ple of tliis country would have been more 
 inclined to forego the advantage of a bene- 
 ficial exchange, and fufFer the deterioration 
 of their property without attempting to pre- 
 vent it. 
 
 It was contended, in the preceding chap- 
 ter, that no one nation could accumulate a 
 greater quantity of fpecie than its due pro- 
 portion; than that proportion which was 
 adequate to circulate its produce as nearly as 
 poTfible at par with other countries; that 
 immediately it was augmented above this 
 proportion, foreign produce would be at- 
 tracted by the dearness of its markets, and 
 take off the furplus currency ; that immedi- 
 ately it was reduced below this proportion, 
 foreign bullion would be attracted by the in- 
 feriority of its prices, and fupply the 
 requifite addition ; and that a permanent in- 
 equality of the standard of money could not 
 exift. 
 
 E But
 
 ( 5° ) 
 
 But as it may be faid that thefe principles, 
 however fpecious in theory, may not be 
 practically true, I fliall make fome enquiry 
 into the cuflom of exchange between na- 
 tions, for the purpofe of explaining the ope- 
 ration by which the equilibrium of money is 
 maintained. 
 
 It was remarked in the foregoing chapter, 
 that the Utihty of Money confifled in its 
 properties as a meafure of value and a medium 
 of exchange. In the internal intercourfe of a 
 country, and in the common tran factions of 
 life, it is invariably ufed in both characters : 
 but in commercial relations between nation 
 and nation, it is more frequently ufed in its 
 exclufive property as the meafure of equiva- 
 lency. All commercial tranfactions are ne- 
 gotiated by bills of exchange, which for the 
 moil: part caufe the produce of one country 
 to be received for the produce of another, 
 v/ithout the intervention of money as a me- 
 dium. If a merchant at London fend an 
 hundred pounds worth of cloth to Peterf- 
 
 burgh.
 
 ( SI ) 
 
 burgh, and, exchange being at par, or, in 
 other words, the equihbrium of money being 
 imaintained, he fell his bill to another, who 
 imports an hundred pounds worth of hemp, 
 the hemp is received for the cloth without 
 any conveyance of money from one country 
 to the other. While, therefore, exchange is 
 at par, and money at the fame common 
 flandard, the produce of one coimtry is re- 
 ceived for the produce of another, money 
 being only the meafure of equivalency with- 
 out conftituting the medium of payment. 
 
 But immediately that the currency of one 
 country should be augmented above the rela- 
 tive currency of another, and the prices of 
 the one Hiould be necelfarily raifed above the 
 prices of the other, the fame quantity of 
 money would no longer be the meafure of 
 equivalency between the two countries for 
 the fame quantity of produce. As tlie fland- 
 ard of money would be lowered in the coun- 
 try receiving the augmentation, the fame 
 fum would no longer command the flime 
 E 2 quantity
 
 ( 52 ) 
 
 quailtity of produce, as in the country 
 where no variation had been effected in its 
 currency, and where the ftandard had conti- 
 nued the fame. If the currency of Eng- 
 land were augmented, and the currency of 
 Ruflia maintained without variation, a 
 fmaller quantity of produce would be fent 
 from England to RulTia for the fame fum 
 fubfequent to the augmentation than was 
 previoufly cuftomary; and as the fame fum 
 would ftill continue to purchafe the fame 
 quantity in Ruffian, a fmaller quantity of 
 Britifh produce would thus exchange for a 
 greater quantity of Ruffian produce, than 
 was ufual in the antecedent intercourfe be- 
 tween the tvv'o countries. To this partial 
 alteration of the meafure of equivalency, fo 
 much to the advantage of Great Britain, 
 neither Ruffia nor any other country will 
 fubmit ; they would not fail therefore to re- 
 ject the purchafe of Britifh produce, unless 
 it could be fold at the fame price at which 
 it was previoufly attainable -, till, by a pro- 
 portionate augmentation of their currency, 
 
 they
 
 ( 53 ) 
 
 they were enabled to raife the price of their 
 produce in an adequate ratio; and, by mak- 
 ing an equal quantity of money again bs 
 the meafure of an equal quantity of produce 
 between the two countries, restore the equi- 
 librium . This operation is effected in the 
 foilovv^ing manner by the courfc of ex- 
 change. 
 
 Immediately that by a partial augmenta- 
 tion of currency in any particular country, 
 a partial advance of prices were effected, 
 which would neceflarily extend to every 
 fpecies of produce, its merchants would feize 
 the favourable opportunity of importing 
 large fupplies of foreign produce, which 
 they would procure at the fame price as for- 
 merly ; and, by felling it at home at a higher 
 price than was previoufly attainable, fecure 
 a greater profit to themfelves. And as the 
 exportation of the domellic produce of the 
 country would be retarded by its augmented 
 price, tlic import of pioduce from Ixjreigu 
 nations would be greater than the cx])ort of 
 
 domcflic
 
 ( 54 ) 
 
 domeftic produce to them. The debts of 
 the nation would thus exceed its claims, and 
 the drawers of bills againil the country 5, 
 would be more numerous than the remitters 
 of bills in its favour. Thcfe bills would 
 necelTarily experience a heavy fale in the 
 foreign market, from the repugnance of 
 their merchants to import the produce of the 
 debtor country at the advanced price to 
 which it was raifed; they would, therefore, 
 depreciate according to their furplus beyond 
 the demand, and fell below par ; their de- 
 preflion would continue till the merchants 
 who took them up were enabled to purchafe 
 the produce of the debtor country, at the 
 fame price at which they had been accuftomed 
 to procure it, by paying for it in the currency 
 of the creditor country v/lth the fame quan- 
 tity of money which they had previoufly 
 given. If the currency of England were in- 
 creafed above the currency of Germany, fo as 
 to raife the price of its produce five per cent, 
 above the produce of Germany, which would 
 necefiarlly lead to an excefs of imports 
 
 above
 
 C 55 ) 
 
 above exports j and if, by a confequent 
 fuperabundance of bills againft England m 
 the foreign market, the courfe of exchange 
 between London and Hamburgh, were five 
 per cent, againil London, ninety-five pounds 
 in Hamburgh would be worth an hundred 
 pounds in London j and the merchant who 
 purchafed a bill on England would be capa- 
 ble of buying an hundred pounds worth of 
 Britifli produce, by paying only ninety-five 
 pounds for it in the place where he refided. 
 By this operation he would be enabled to 
 purchafe the -produce of Great Britain at 
 the fame price which he was previoufly 
 accuftomed to give for it, when exchange 
 was at par, and the currency of the two 
 countries in the fame relative propoition. I 
 do not mean to contend, that the courfe of 
 exchange, in every inilance of a partial in- 
 crcafc of currency, will adjuft the difference 
 with fo much corrcctnefs, but that it will 
 ever poflefs fufficient influence to prevent 
 any material alteration in the mcafure of 
 ccjuivalcncv. 
 
 V/hcn
 
 ( 56 ) 
 
 When this depreffion takes place in ex- 
 change, or, in other words, when the 
 cquihbrium of money is thus declaredly 
 altered between any two nations, as the fame 
 nominal fum will piirchafe a greater quan- 
 tity of produce in the creditor country, where 
 the llandard is prefer ved, than in the debtor 
 country, where its value is depreffed: it is 
 natural for the perfon who trades in 
 bullion, like the merchant who trades in any 
 other commodity, to profit by this variation, 
 and export his merchandize where it will fell 
 to mofl advantage. While exchange is at par, 
 and money at the fame ftandard, the bullion 
 merchant has no interell in its remittance 
 from one country to another, as no profit 
 can be derived from its transfer. But the 
 inftant that the equilibrium is avowedly 
 affected by the variation of exchange, it 
 becomes his intercfl: to tranfmit it from the 
 country where it is clieapeft to the country 
 where it is dearefi:, in order to receive the 
 difference as his profit. 
 
 If
 
 ( S7 ) 
 
 If exchange between London and Ham^ 
 burgh were five per cent, agahifl- London, 
 and ninety-five pounds in Hamburgh were 
 worth an hundred pounds in London, the 
 buHion merchant in Hamburgh would take 
 up a certain proportion of the debt, by pur- 
 chafmg bills on England; and for every 
 ninety-five pounds which he thus paid at 
 Hamburgh, he would write to his corref- 
 pondent in London, to fend him an hundred, 
 and would place the difference to the pro- 
 fits of his bufmefs. 
 
 As foon as the Balance of Trade between 
 the two countries was liquidated by this 
 operation, and exchange was reftored to par, 
 the currency of both would be brought more 
 nearly to the fame proportionate increafe. 
 The introduction of fomc part of the furplus 
 quantity, from the debtor to the creditor 
 ftate, V oLild tend to eficft a more equal dif- 
 tribution of the money, and by facilitating 
 in each an elevation of prices, in the fame 
 ratio, necclFarily conduce to an equalization 
 
 of
 
 ( 58 ) 
 
 of the ilandard. The fame quantity of 
 money would again be given for an equal 
 quantity of produce in both nations, and the 
 meafure of equivalency would continue in- 
 violate, till a fubfequent augmentation in 
 the currency of the one occafioned a confe- 
 quent alteration of the flandard of the other, 
 and again give rife to fimilar means to rec- 
 tify the difparity. 
 
 If, then, the courfe of exchange be nothing 
 more than the expedient to which mankind 
 have reforted for the purpofe of maintaining 
 the purity of the common meafure of equi- 
 valency j if upon a partial increafe, or a par- 
 tial reduflion of currency, it never fail to 
 direft the current of money to a level, it is 
 impoffible that any natibn can fell, for a 
 continuance, to a greater extent than it buys -, 
 or that the Balance of Trade can lead to a 
 further accumulation of fpecie, than to that 
 addition, which is necellary to augment the 
 currency of one country to an adequate pro- 
 portion with the currency of others, and ap- 
 proximate
 
 ( 59 ) 
 
 proximate the value of money to a common 
 flandard. 
 
 But if no one nation can pollefs a greater 
 relative currency than another, it may be 
 afked, how it happens that the produce of 
 this country is circulated at a fomewhat 
 higher price than the produce of others. The 
 difficulties of intercourfe appear to me to be 
 the only caufe of this difference. The pro- 
 hibitory regulations vsdiich have been efta- 
 bliflied in different countries, as remarked in 
 the preceding chapter, militate againft the 
 general equalization of the ffandard of 
 money ; and, by preventing the free inter- 
 change of produce, caufe it to be circulated 
 in fome countries at a higher, and in fome at 
 a lower price than it otherwifc would be. 
 The general prohibition of foreign manufac- 
 tured produce in this country cert.iinly 
 operates as a means to keep up our high 
 prices, and fupport that redundancy of cur- 
 rency to which our policy has been hitherto 
 'lire^ledj but as prohibitions have but a 
 
 partial
 
 ( 6o ) 
 
 partial extent, the iiitroduftion of free goods 
 will always be competent to turn the courfe 
 of exchange againfl us, and caiife the clan- 
 delline departure of our fpecie, however 
 flrongly countera6led by other caufes, in fuf- 
 ficient quantity to prevent a conliderable 
 excefs above the relative currency of others 
 Thefe prohibitions were originally dic- 
 tated in moft inilances, in my opinion, 
 by an erroneous fenfe of our real in- 
 tercils J but their general removal, uncon- 
 nefted with a reformation of our currency, 
 might now be attended with ferious confe- 
 quences to many of -our manufadlures. 
 
 As it appears, by the foregoing explana- 
 tion of the courfe of exchange, that thofe 
 nations which have a tendency to pofTefs a 
 redundant currency mufl invariably be the 
 debtor countries ; it follows, as a neceiiaiy 
 confequence, that thofe whofe currency is 
 not augmented to an adequate proportion, 
 muft be creditor ftates. The cheapnefs of 
 their produce procures it a ready admifTion 
 
 in
 
 ( 6i ) 
 
 in the foreign markets, where money is de- 
 prefled; and, by creating a balance in their 
 favour, occafions a favourable exchange; and 
 the influx of money for the fame piirpofe of 
 maintaining the common ftandard. 
 
 But in order to form a judgment of the 
 quantity of bullion u'hich is fuppofed to, 
 have been imported and depofited in this 
 country, during any given period, by the 
 balance of trade, it is necelTary to take a 
 retrofpe6live view of the public entries. If 
 an eltimate be made of the annual ba- 
 lances during ihe laft forty years of the pre- 
 ceding century, it will appear, from the 
 table in Mr. Chalmers's eftimate of the 
 ftrength of Great Britain, page 234, that 
 the annual average excefs of exports above 
 imports amounted to four millions ; all of 
 which being received' in bullion, and appro- 
 priated to the internal circulation of the 
 country, would have made an addition of 
 an hundred and fixty millions to the flock 
 in hand at the commencement of the pre- 
 
 fcnt
 
 ( 62 ) 
 
 lent reign. It is true, that the confumptiort 
 of our manufaflures, and the amount of our 
 foreign expenditure, are to be dedu6led from 
 this fum. There is reafon to conclude, 
 that the confumption of our manufa6lures, 
 during this period, has not exceeded the fum 
 of ten milhons. Upon the effe6l which our 
 foreign expenditure may have on the ba- 
 lance of trade, I (hall hereafter treat. But 
 it is efiential in the mean time to remark, 
 that the public are polTeiTed of no data to 
 direft their judgment upon the amount of 
 our foreign expenditure; no particular do- 
 cument is prepared by (>:overnment relative 
 to their foreign diiburfemciits 3 nor can any 
 corre6l eftimatc be formed of the private ex- 
 penditure of Britifh refidents abroad. Little 
 notice was therefore formerly taken of the 
 fubje6f ; and, as none were capable of calcu- 
 lating the amount, an inference was drawn 
 correfpondent with our hopes, that a large 
 furplus was conftantly received as a favour- 
 able balance. Alilimmg for the prefent, 
 that this may have been the fa6l, I fhall 
 
 confider
 
 ( 6j ) 
 
 confider the various purpofes to which it may 
 have been appHed. 
 
 Of the quantity, which has been added to 
 our fpecie, the coinage affords the moft fatis- 
 fa6lory evidence. 
 
 The whole coinage of this period by the 
 table, to which I have above alluded, 
 amounted to no more than fixty millions j 
 twenty of which was a recoinage of old mo- 
 ney. It is evident, therefore, tliat the pro- 
 duct of our annual balances has not been 
 added to our legal currency : and as foreign 
 coin does not conflitute a legal tender, its 
 intermixture with the general circulation, 
 muft be too partial to have much efFe6t in 
 leflening the difparity between the coinage 
 and the aggregate balance. It is clear, there- 
 fore, that we can have received but little 
 more than forty millions as an augmentation 
 to our fpecie, from the commencement of 
 the prefent reign, and that the exiiiing flock 
 now in hand, cannot be much more than 
 
 fixty
 
 ( 64 ) 
 
 fixty millions, if it may be prefumed thjlt 
 the greater part of the old money was re- 
 coined. But nothing can be more vague 
 and inconclufive, than any eflimate of the 
 current fpecie of a country from the general 
 amount of its coinage. If it fhould happen 
 even to be accurate at the moment at 
 vvhich it is formed, a favourable or unfa- 
 vourable courfc of exchange for a few 
 months afterwards, would confiderably aug- 
 ment or reduce its quantity. There is no 
 reafon to conclude, that money would be 
 retained in a country becaufe it has received 
 the legal ftarap of the mint, or becaufe its 
 export is prohibited j upon the event of an 
 unfavourable exchange, its clandeftine remit- 
 tance is eafily eite61cd j and if by a large 
 iillie of paper currency, which performs all 
 the neceflary funftions of fpecie, the value 
 of money be partially dej^refled in this coun- 
 try, below its relative value in others, there 
 is no doubt but that there will be a depar- 
 ture of our coin to maintain the flandard 
 abroad. 
 
 That
 
 ( 65 ) 
 
 That our fpecie has difappcared, is not 
 only a circumftance of general acknowledge- 
 ment, but of univerfal complaint. The 
 fufpenfion of cafli payments at the Bank of 
 England is conclufive evidence, that a fuf- 
 ficiency could not be detained in the countiy 
 to uphold the credit of our paper; and if 
 an eflimate coidd now be formed of the 
 amount of our fpecie, there would be fome 
 foundation for concluding, if reafoning from 
 analogy be allowed, that but a fmall propor- 
 tion of the fixty millions is now remaining 
 in the country. By the evidence which Mr. 
 H. Thornton gave before the Secret Commit- 
 tee of the Houfe of Commons, relative to 
 the currency of Scotland, which may be 
 feen in the Third Report, page 143, it was 
 conjectured, that the average amount of its 
 paper, was from one million two hundred 
 thoufand pounds, to one million five hund- 
 red thoufand pounds ; and that the amount 
 of its gold was about fixty thoufand pounds ; 
 fifty thoufand pounds of which were usually 
 in circulation. If to this he added the 
 F . quantity
 
 ( 66 ) 
 
 quantity of its filver, which, though it be 
 far too liberal an allowance, may be faid to 
 amount to the fame fum, its fpecie will be 
 about one tenth part of its paper. Now 
 though I do not mean to affert, but that the 
 fpecie of England bears a much nearer pro- 
 portion to its paper, than is inftanced in 
 Scotland, yet I think there are few that have 
 confidered the fubjccSt, who will be hatdy 
 enough to contend, that the amount of its 
 fpecie is greater than the amount of its 
 paper. The quantity of paper currency, 
 that yields no intereft to the holder, may be 
 eftimated at about twenty millions, fifteen 
 emitted by the Bank of England, and five 
 by the country banks ; though there are no 
 corre6l data by which an accurate eflimate 
 can at the prefent moment be formed. But 
 I will venture to affert, that the fpecie of 
 the country would be confid^rably over rated 
 at a fourth part of the fame fum; and if the 
 general mode by which the coinage has been 
 efFe6led be confidered, this allertion will 
 pot appear extraordinary.. 
 
 Previoys
 
 ( 67 ) 
 
 Previous to the fufpenfion of cafh pay- 
 ments at the Bank, during the depreffion of 
 exchange, a conftant demand was made for 
 fpecie, to promote the fpeculatlon of the 
 bulHon merchant, who derived a profit from 
 its foreign remittance. As this drain had a 
 neceflary tendency to exhauft its ftores, it 
 was compelled to purchafe a certain quantity 
 of buUion, and fend it for coinage to the 
 mint, for the purpofe of fupplying the quan- 
 tity withdrawn from its depofits. Thefe 
 purchafes were neceflarily made at a lofs, as 
 if effected at home, the Bank was forced to 
 allow the merchant the fame profit, which 
 he could obtain by its foreign remittance j 
 and if efFe6led abroad, to lofe by the impor- 
 tation the difi^erence of the exchange. At the 
 fame time that thefe purchafes were made, it 
 contrafted the iflue of its paper, by retaining 
 the notes which were prefented for payment. 
 The determination to refufe further dif- 
 counts necefiarily occafioned commercial 
 cmbarrafTments, by leffening the means of 
 payment, and f)bllrud:ing the performance 
 F2 of
 
 ( 68 ) 
 
 of contracts. The difficulties occafioned by 
 this contra6lion of currency, forced out 
 a certain quantity of produce, at reduced 
 prices, to liquidate the balance with foreign 
 nations, and bring exchange to par. 
 
 But it cannot be contended, that the quan- 
 tity of money thus coined made any addi- 
 tion to the current fpecie of the country, 
 as it was only effected for the purpofe of 
 fupplying the quantity clandeftinely with- 
 drawn by foreign remitances. 
 
 The prefent flate of the currency of this 
 country appears to me to afford conclufive 
 teflimony againfl the truth of this theory. 
 It is fuppofed, that trade only fo far enriches 
 a country, as it leaves a balance of money in 
 its favour; and that the wealth of a nation 
 is only increafed in proportion as its money 
 is accumulated. Yet there is fome reafon to 
 conclude that we now poflefs no more than 
 fivQ millions of fpecie, though it is conjectur- 
 ed that we have had an annual average ba- 
 lance
 
 ( 69 ) 
 
 lance of four millions in our favour for thefc 
 Jaft forty years. 
 
 So far, then, from the exifting amount 
 of our fpecie giving any encouragement to 
 the fuppofition that the nation has grown 
 rich by the Balance of its Trade, and the ac- 
 cumulation of money, there is not much 
 reafon to conclude, fuch has been the in- 
 increafe of paper, that the flock in hand, at 
 the prefent day, is equal to the quantity in 
 circulation at the commencement of the 
 reign, notwithflanding the vail advance of 
 prices fmce that period. It is evident, there- 
 fore, that the aggregate of thefe balances, to 
 the amount of an hundred and lixty mil- 
 lions, is not now extant in the legal currency 
 of the country; and to imagine, that any 
 confiderable portion of it is locked up in repo- 
 fitories, in the fhape of foreign coin or bul- 
 lion, is fo totally inconfiflent with reafon, 
 that it would be fuperfluous to invefligate fo 
 futile a fuppofition. 
 
 The
 
 ( 7° ) 
 
 The confumptioii of our manufa6lures, 
 during this period, will account for but a 
 fmall proportion of the united balance. Dr. 
 Adam Smith eftimated the eonfumption of 
 Birmingham at fifty thoufand pounds j and 
 if the eonfumption of London be eftimated 
 at three times that amount, and of the reft 
 of the kingdom at only the fame fum, the 
 quantity introduced for this purpofe, to the 
 annual amount of two hundred and fifty 
 thoufand pounds, will not, in the fpace of 
 forty years, exceed the fum of ten millions. 
 
 If then but a very fmall proportion of 
 thefe balances has been realifed in the ftock 
 of fpecie now in hand, or confumed by ma- 
 nufa6lure, the rerhainder mult have been re- 
 exported. This exportation could only have 
 taken place by means of commercial fpecu- 
 lations, or through the foreign expenditure 
 of government in the time of war. 
 
 On the application of bullion to commer- 
 cial purpofes, I treated in the beginning of 
 
 this
 
 ( 7' ) 
 
 this chapter, where it was contended, that as 
 tin. equivalent muft be given for its purchafe, 
 and as no rriore than an equivalent can be 
 received for it, its tranfitory poffeflion can 
 have had no tendency to have enriched the 
 country, however greatly it may have aflifted 
 the operations of trade. It cannot be aflbrt- 
 cd, that the nation has grown rich by the 
 balance of its trade, if it befaid that the bul- 
 lion which it leaves is expended in com- 
 merce, as it would lead to the abfurdity of 
 contending, that the depofit could be detain- 
 ed at the fame time that it was fcnt away, 
 
 I (hall hereafter attempt to prove, that a 
 very fmall proportion of the aggregate ba- 
 lance has been exported for the payment of 
 our foreign expenditure* 
 
 If, then, the exifting (lock of our fpecie, 
 the confumption of our manufa6lures, and the 
 foreign expenditure of government, will oc- 
 cupy but a fmall portion of the rolleflive 
 balances, it is evident, that whatever propor- 
 tion
 
 ( 72 ) 
 
 tion has been received above the fura applied 
 to thefe purpofes, niufl have been re-appro- 
 priated to the fpeculations of trade ; for if 
 the bulhon, which they are fuppofed to have 
 depofited, can neither be found nor account- 
 ed for, it is competent to conclude, that its 
 permanent detention has net been efFe6Ved. 
 Theexifting flock of bullion, therefore, in 
 whatever iTiape it may be extant, v^ill lend 
 but little countenance to the principle, that 
 the nation grows rich by its accumulation; 
 or that the balance of trade can lead to the 
 introdu6lion of a greater quantity than to that 
 addition, which is neceflary to equalize the 
 ftandard of money, by augmenting the cur- 
 rency of one country to an adequate propor^ 
 tion with the currency of others. 
 
 But as in this country we have taken upon 
 ourielves to augment our currency, by the 
 circulation of paper, fomewhat above its due 
 proportion i the prefent fcaixlty of fpecie 
 fufficiently evinces, that the Balance of Trade 
 has of late years been, for the moft part, 
 
 unfavourable;
 
 ( 73 ) 
 
 unfavourable; and has led to the departure 
 inflead of the introdu6lion of money, not- 
 withftanding that an oppofite inference may 
 be apparently deduced from the general 
 amount of our coinage, and the enormous 
 cxcefs of our exports above our imports. 
 But in order to explain this fa6l, which, 
 however fenfibly it may be felt, but little ac- 
 cords with the theory of the Balance of 
 Trade, and the received opinions of the 
 times, it is necefTary to inveftigate the real 
 caufe of the difference that fubfifts in the 
 general amount of our exports compared 
 with our imports. 
 
 One of the principal errors of this theory 
 confifl-s in the inference which is drawn, 
 that an excefs of exports above imports ne- 
 ceifarily conflitutes a favourable balance. 
 But though it be true, that a favourable 
 balance cannot exift without an excefs of 
 exports ; yet an excefs of exports may exift 
 without a favourable balance. The exclu- 
 five criterion of a favourable balance, is a 
 
 favourable
 
 ( 74 ) 
 
 favourable courfe of exchange : and I (hall 
 attempt to prove that, notwithflanding there 
 has uniformly been of late years an enormous 
 excefs of exports above imports, the balance 
 of trade has bsen for the moft part unfa- 
 vourable, and has led to the clandeftine ex* 
 portation of our fpecie. 
 
 A favourable balance of trade, and a fa-' 
 vourable exchange, are fynonimous terms. 
 It is impofiible that one efFe61 can take place 
 without the other. At the time that a con- 
 fiderable debt fliould be due from us to fo- 
 reign nations, it is impoffible that exchange 
 could be in our favour. As v^e fhould have 
 more to pay than we have to receive, the 
 drawers of bills againft this country would 
 be more numerous than the remitters of 
 bills in its favour j and as the foreign market 
 would be overftocked, the inclination to fell 
 would exceed the inclination to buy, and by 
 caufmg a deprefllon of the value of the bills 
 againft us, render the exchange unfavour- 
 able. 
 
 And
 
 ( 7i ) 
 
 And at the time that the balance of trade 
 fiiould be favourable, it is impoffible that the 
 exdiange could be againll us. At the time 
 that we were the creditor country, and had 
 more bills to draw againft foreigners than 
 they had to draw againil us, the bills againlt 
 them would neceflarily experience a depref- 
 fion in our market, and turn the exchange 
 in our favour. 
 
 But in the fame manner that the courfe 
 of exchange correfponds with the balance 
 of trade, the influx and reflux of money 
 mufi: correfpond with the courfe of ex- 
 change. 
 
 At the time that exchange were unfa- 
 vourable, it would be abfurd to fup- 
 pofe that money would come into the 
 country; and at the time it were favour- 
 able, that money would go out. If ex- 
 change between London and Hamburgh 
 were five per cent, againfl London, no bul- 
 lion merchant at Mamburgh would fend 
 
 over
 
 ( 76 ) 
 
 over an hundred pounds to London, when 
 he could purchafe a Britifh hundred pounds 
 by paying only ninety-five pounds for it in 
 the place where he refided. Nor, when ex- 
 change were five per cent, in favour of Lon- 
 don, would any bullion merchant in Lon- 
 don fend over an hundred pounds to Ham- 
 burgh, when he could purchafe it in London 
 by paying only ninety-five pounds for it. 
 
 As, therefore, a favourable exchange is 
 the necefiary confequence of a favourable 
 balance j and the influx of money, a necef- 
 fary confequence of a favourable exchange) 
 it is requifite to confider how far the appa- 
 rent balance in the Cuftom-houfe entries 
 can be fupported by thefe correfpondent 
 confequences. 
 
 For fome years lafl paft, the general courfe 
 of our exchanges has been, in many in* 
 fiances, unfavourable ; while the public en- 
 tries have invariably declared an enormous 
 balance to have exifted in our favour. The 
 
 one
 
 ( 17 ) 
 
 one implies the neceflary departure, the 
 other, the neceffary introdu6lion of money. 
 Thefe two fafts are evidently inconfiftent 
 with each other; and as the unfavourable 
 exchange is a notorious circumflance, ac- 
 knowledged by the whole mercantile intereft 
 of the country, and may be fatisfa6lorily 
 afcertained by a reference to Lloyd's Lifts ; 
 and as the correfpondent fcarcity of fpecie is 
 a fubjecl of general complaint, there muft 
 either be an error in the inference which is 
 (Irawn, that the excefs of exports above im- 
 ports conftitutes, in all inftances, a favour- 
 able balance ; or there muft be an error 
 in the public entries which announce the 
 excefs. 
 
 AfTuming, therefore, as an incontroverti- 
 ble pofition, that an unfavourable exchange 
 is indifputable evidence of an unfavourable 
 balance, I ftiall endeavour to account for the 
 difference between our exports and imports, 
 by ari inveftigation into the nature of our 
 foieign expenditure; and attempt to fub- 
 
 vert
 
 ( 78 ) 
 
 vert the inference that the excefs of exports 
 in the public entries conftitutes, in all in- 
 fiances, conclufive teftimony of a favourable 
 balance. 
 
 It is contended by the fupporters of this 
 theory that the excefs of exports above im- 
 ports would be received in bullion and de- 
 pofited in this country, unlefs it were ab- 
 forbed by our foreign expenditure. In or- 
 der to refute this pofition, it is neceflary to 
 make fome inquiry into the cuH-omary mode 
 of its payment. 
 
 r It feldom happens that a fublidy is made 
 to a foreign power without fome alarm 
 being excited at the fuppofed departure of 
 the money, which is neceflary for its pay- 
 ment. But nothing can be more groundlefs, 
 than the apprehenfions which are entertain- 
 ed upon this fubje6l, even though the money 
 fhould be fent out of the country to effe6l 
 it, as there is no pollibility of reducing the 
 currency of one country to any extent below 
 
 the
 
 ( 79 ) 
 
 the relative currency of others. But it for 
 the moft part happens, that much the greater 
 proportion of the fubfidy is paid by the draft 
 or remittance of bills. It is true, that at 
 the commencement of the late war, two 
 millions were exported in bullion in pay- 
 ment of a part of the Pruffian fubfidy, and 
 ihe imperial loan. This fa6l may be col- 
 lected from the evidence of Mr. Boyd, who 
 was agent for the emperor, page 50, and the 
 evidence of Mr. Harman^ agent for the king 
 ofPruliia, page 93, in the Third Report of 
 the Secret Committee of the Houfe of Com- 
 mons. The bullion confifted entirely of 
 foreign coin, the greater part of which was 
 purchafed of the bank. The refidue of the 
 loan and fubfidy, and the whole of the loan 
 of 1796, were paid in bills without any re- 
 mittance of money from this country. In 
 the Appendix to the fame report, is a paper 
 prepared by Mr. Long, and prefented to the 
 committee relative to the amount and pay- 
 ment of our foreign expenditure during the 
 four firft years of the war. In this it ap- 
 pears
 
 ( 8o ) 
 
 pears that only five thoufand pounds were 
 remitted in fpecie, exclufive of the fums 
 that might be exported in fubfidies and in 
 advances to foreign corps (of the mode of 
 paying which, no particular fpecification is 
 made,) though the total of our expenditure 
 during this period amounted to thirty-two 
 millions, in addition to the imperial loan. 
 Our foreign expenditure, therefore,^ for loans 
 and fubfidies, and for naval and military 
 fer vices, will contribute but little fupport 
 in favour of the pofition, that the bullion 
 which is fuppofed to have been imported by 
 the Balance of Trade is appropriated to this 
 purpofcj or give much countenance to the 
 opinion that the departure of our money is 
 necelfary for its payment. Bills are in ge- 
 neral drawn upon the treafury by the proper 
 officer, difcounted in the place where they 
 are given, and paid at home without any 
 conveyance of money from this country to 
 the feat of war. 
 
 It
 
 ( 8i ) 
 
 it is now therefore neceffary to confider, 
 how far our expenditure may have a ten- 
 dency to anticipate the receipt of bullion, 
 and abforb that portion which would other- 
 wife have been paid and depofited in this 
 country. 
 
 There are two modes of paying our fo- 
 reign expenditure by means of bills of ex- 
 change -y one is by the draft of bills againfl 
 this country} and the other by the remittance 
 of bills in its favour. When the expenditure 
 is paid by the draft of bills againft the 
 country, they are difcounted in the place 
 where they are drawn, and conflitute a debt 
 againfl us for the value which is received 
 and expended abroad. When it is paid 
 by the remittance of bills in our favour, a 
 debt muft have been due to us in confequence 
 of a favourable commercial balance for value 
 exported to the place againfl which the bills 
 are granted. 
 
 G I before
 
 ( 82 ) 
 
 I before endeavoured to prove, that the 
 courfe of excliange muft alw^ays correfpond 
 with the balance of trade, and that one 
 could not be favourable without the other. 
 If therefore there be a balance in our favour, 
 and a confequent favourable exchange, which 
 would neceflarily lead to the influx of money, 
 and the bills againft the debtor country- 
 were purchafed by government for the pay- 
 ment of our foreign expenditure, inftead of 
 being purchafed by the bullion merchant for 
 their invcflment in money, there is no 
 doubt but that the purchafes of government 
 would abforb that portion of bullion, which 
 would have otherwife been received in pa)- 
 ment of fome part of that particular debt. 
 But as the caufe that primarily led to a 
 balance in our favour would in this cafe 
 continue to operate, our foreign expendi- 
 ture would have no eventual tendency to 
 prevent the introduction of a fufficient quan- 
 tity to augment the currency of this country^ 
 to an adequate proportion vv^ith the currency 
 of others. 
 
 If
 
 _( 83 ) 
 
 If the itandard of money were partially 
 railbd in this country by a contia6lion of 
 currency, which led to an excefs of exports 
 to thofe countries where it was partially 
 lowered by an increafe, though the purchafe 
 of the bills by government would obviate 
 the efFe6l of this excefs in the firft effort, 
 and prevent the influx of money, yet a fur- 
 ther exportation of domeilic produce would 
 be encouraged, and the import of foreign 
 produce obflru6l:ed, till, by an additional 
 balance in our favour, a fufficient quantity 
 of bullion were introduced to equalize the 
 ftandard of money, notwithftanding the 
 countera6ling caufe of a large foreign expen- 
 diture. 
 
 But if there be no commercial balance in 
 our favour, and no bills againft foreign na- 
 tions can be granted, our expenditure muft 
 be paid by the draft of bills a2;ainft this 
 country by the agents of the Britiih govern- 
 ment abroad. Thefe bills would have the 
 lame effect of conftituting a debt againft us, 
 G 2 as
 
 ( 84 >. 
 
 as if we had had an excefs of imports abovd 
 exports, and an unfavourable commercial 
 balance. It cannot therefore be contended^ 
 that the payment of our foreign expenditure 
 by thefe means, has any tendency to antici- 
 pate the receipt of bullion, and abforb that 
 portion, which would otherwife have been 
 imported into this country, when no debt is 
 due to us from foreign nations, and no bul- 
 lion can be demanded. And when, on the 
 contrary, we have a debt to pay to them, 
 inftead of a debt to receive from them, and 
 they can demand the bullion from us. In 
 order to give our foreign expenditure a ten- 
 dency to anticipate the receipt of bullion, it 
 is necefTary that a commercial balance Ihould 
 have previoufly exifted in our favour ; and 
 that the value of the bills, which are granted, 
 ihould be expended abroad, initead of being 
 invefted in bullion to be imported into this 
 country. But if no fuch balance exifted, it 
 cannot be faid that the draft of bills, which 
 conflitute a debt againfl us, can prevent 
 the import of bullion, which can only be 
 
 received
 
 ( 85 ) 
 
 received when a debt is in our favour. An 
 examination of the paper prepared by Mr. 
 Long, and above aUuded to, fatisfa6lorily 
 proves, that our large foreign expenditure, 
 during the late war, had no tendency to an- 
 ticipate the receipt of bullion, as it was paid 
 almoft without exception by the draft, and 
 not by the remittance of bills. 
 
 I fhall now endeavour to prove that our 
 foreign expenditure forms the principal caufe 
 of the excefs of exports above imports, which 
 has hitherto been invariably imputed to a 
 commercial balance in our favour. AfTuming 
 this excefs as an indifputable criterion of a 
 favourable balance, without any regard tc 
 the general ftate of exchange, it was natu- 
 rally conceived by the fupporters of this 
 theory, upon difcovering that it did not in 
 all inftances conduce to the introduction of 
 the difference in bullion, that this effect 
 could only be prevented by the anticipation 
 of our foreign expenditure. But I have en- 
 deavoured to prove, that our foreign expen-^ 
 
 diturc
 
 { 86 ) 
 
 diture can only anticipate the receipt of bul^ 
 lion, when it is paid by the remittance of 
 bills in confequence of a favourable com- 
 mercial balance j and that if it be paid by the 
 draft of bills, it contracted a new debt 
 againft us, inftead of liquidating a prior 
 debt in our favour. It isto this caufe then, 
 that the cxcefs is attributable, as it is for the 
 payment of this debt that it is made. When 
 bills are drawn upon the treafury for the 
 payment of our foreign expenditure, they 
 are difcounted in the place where they are 
 given, and their value is virtually received by 
 this country, through its delegated agents 
 abroad, in as full and ample a manner, as if 
 the produce, which they purchafed, were 
 actually imported and entered in the Cuflom 
 Houfe books, and afterwards fent to the feat 
 of war for confumption ; but from the mere 
 circumftance of its not being inferted in the 
 Cuftom Houfe entries, as value received, 
 againft the produce exported for its payment, 
 the equivalent fent out is deemed to condi^ 
 tute a favovirable balance, when it is, in 
 
 reality,
 
 ( 87 ) 
 
 reality, exported to liquidate a balance 
 againft us -, fo far, then, from our foreign 
 expenditure having any tendency to abforb 
 the bullion, which foreign nations would 
 otherwife pay to us in confequence of our 
 excefs of exports, it is evident, that this very 
 excefs is occafioned to prevent the remittance 
 of bullion from this country to them. 
 
 This fact may be corroborated by the dif- 
 ference of our exports to Germany in the 
 time of war and in the time of peace. Dur- 
 ing the four firft years of the late war our 
 exports to Germany amounted to eight mil- 
 lions, though in the time of peace they had 
 not exceeded two, becaufe the difference was 
 exported for the payment of our foreign ex- 
 penditure in that country, which was more 
 or lefs heavy during the continuance of hof- 
 tilities*. 
 
 " Vide the Report of the Secret Committee of the Houfe 
 of Lords, page 25 i. 
 
 If.
 
 ( 88 ) 
 
 If, then, the foregoing explanation of our 
 foreign expenditure be correct, it is obvious 
 that the excefs of exports above imports, in 
 the Cuflorri Houfe entries, is not conclufive 
 evidence of an uniform balance in our fa- 
 vour i it is apparent> on the contrary, that 
 our commercial balance, notwithflanding 
 this enormous excefs, muft have frequently 
 been unfavourable, or the general ftate of 
 pur exchanges could not have b^en adverfe 
 in the many inilances which have been lately 
 experienced. To this furplus of exports, oc- 
 cafioned by our public diiburfements, mufl be 
 added our private expenditure. Whatever 
 bills are drawn upon this country for the ex- 
 penditure of Britifli refidents abroad, for the 
 payment of dividends to foreigners, who 
 have a credit in our funds, for the falaries 
 of officers belonging to our government and 
 refident in foreign courts, and for other 
 mifcellaneous purpofcs, must be placed as 
 value received againfl this preponderance of 
 exports. 
 
 It
 
 ( 89 ) 
 
 It is now necefTary to confider what in- 
 fluence our foreign, expenditure may have 
 to effect a partial alteration of the flandard 
 of money, by caufmg the introdu6lion or de- 
 parture of a greater quantity than would 
 otherwife have taken place. If exchange 
 were at par, our foreign expenditure would 
 not anticipate the receipt of bullion, even 
 though there were a commercial balance in 
 our favour ; as it would be abfurd to fuppofe 
 that the balance would have been paid in 
 bullion, when no profit could be derived 
 from its import, and when an investment of 
 the bills againft the debtor country in pro- 
 duce would offer a preferable fpeculation. 
 
 If exchange were favourable in confe- 
 quence of the depreiTion of bills in our mar- 
 ket, from a large commercial balance being 
 due to us, and our foreign expenditure were 
 paid by the remittance of bills againft the 
 debtor countries, there is no doubt but that 
 it would abforb the bullion in payment of 
 any part of that debt j but, as was previoufly 
 
 explained.
 
 ( 90 ) 
 
 explained, further exportation would be en- 
 couraged till our claims exceeded the amount 
 of our foreign expenditure, and led to an in- 
 troduction of the requifite fupply of money. 
 
 If exchange were unfavourable in confe- 
 quence of a confiderable excefs of debt above 
 claims, and our foreign expenditure were 
 paid by the draft of bills, it would neccffa- 
 rily lead to a further extenfion of the debt, 
 and a further depreflion of exchange ; but 
 if by thefe means a greater quantity of mo- 
 ney were withdrawn than what was neceiTary 
 to equalize the flandard, the export trade 
 would foon become fuperior to the import, 
 and facilitate its return. 
 
 In no cafe, therefore, can our foreign ex- 
 penditure have any power to effect a perma- 
 nent variation of the ftandard of money by 
 eventually preventing the introduction, or 
 eventually caufmg the departure of a greater 
 quantity than would otherwife have taken 
 place. 
 
 Whenever
 
 ( 91 ) 
 
 Whenever any foreign difburfements are to 
 be made for political purpofes, it is necejGTary 
 to examine the flate of exchange, and if, by 
 the draft of bills againft this country, it be 
 probable that the foreign market would be 
 overftocked, and deprefs the exchange, it is 
 more for the interefl of the country, that it 
 fliould remit the money in the firft inftance, 
 and, by caufmg a glut in the foreign market, 
 turn the exchange in our favour, than, by 
 caufmg a redundancy of bills, turn the ex- 
 change againft us. 
 
 During the prefTure, then, of an unfa- 
 vourable exchange, our foreign expenditure 
 is the main and leading caufe of our excefs 
 of exports, though the import of bullion for 
 the manufacture of plate, plated goods, and 
 other ornamental purpofes, which muft be 
 purchafed, whether exchange be favourable or 
 unfavourable, unlefs our fpecie be melted 
 for its confumption, would in fome meafure 
 contribute to its magnitude. 
 
 Thefe
 
 ( 92 ) 
 
 Thefe two circumftances appear to me to 
 conflitute the exclufive caufes of an excefs of 
 exports, except in the inftance of a partial 
 rife in the ftandard of money, through a par- 
 tial contraftion of currency, which will necef- 
 farily caufea favourable exchange, andintro- 
 duce a fufficient quantity of bullion to reilore 
 the level. Bat from the two caufes above men- 
 tioned, an excefs of exports may exift to an 
 enormous extent, although our com.mercial 
 balance may be wholly unfavourable. 
 
 From the foregoing obfervations it is ob- 
 vious, that the excefs of our exports mufl 
 in a great degree be commenfurate wath our 
 foreign expenditure. The import of bullion 
 for manufadlure and the bank occafions 
 comparatively an unimportant part of the 
 furplas. As, in the event of an unfavourable 
 exchange, the purchafes of the bank are for 
 the mofl part made to fupply the quantity 
 of fpecie clandeflinely withdrawn, as was 
 explained in treating on the fubjecl of coin- 
 age, the produce imported for the fpecie 
 
 may
 
 ( 93 ) 
 
 may be put againft the produce exported for 
 the bullion j though whatever quantity be 
 received on a favourable exchange, may be 
 ftated as a legitimate caufe of excefsj but 
 this quantity has not of late years been very 
 confiderable. The bullion imported for con- 
 fumption does not appear even by a favour- 
 able eftimate to be of much magnitude. It 
 is more material therefore, to confider the 
 general correfpondence of the excefs with 
 the amount of our foreign expenditure, fome 
 allowance being made for the agency of in- 
 ferior caufes. 
 
 Upon the firll eflablifhment of this theory 
 as a criterion of our national gain, towards 
 the clofe of the feventeenth century, accor- 
 ding to the information contained ia the 
 preface of Mr. Chalmers, a Committee of 
 Peers affixed a certain rate for the valuation 
 of the merchandize, v/hich was entered in 
 the Cuflom Houfe books, correfpondent 
 wuth the prices of the times, but which the 
 fubfequent depreflion of money has rendered 
 
 wholly
 
 ( 94 ) 
 
 •wholly erroneous. This was clearly ex- 
 plained by Mr. Irving, the late infpector-ge- 
 neral, whofe talents have been fo eminently 
 difplaycd in the Financial and Secret Com- 
 mittees of the Houfes of Lords and Com-^ 
 mons. He fatisfaftorily proved, that the 
 application of a new rate, according to the 
 prices of the prefent times, would confidera^ 
 bly augment the difference between the ex- 
 ports and imports 3 and that if the excefs of 
 imports from, the Eaft and Weft Indies above 
 our exports to them, and the imports from 
 our fiiheries, which, as Mr. Irving explained, 
 were improperly inferted in the entries, as 
 part of our adverfe balance, be dedu6led 
 from the general amount of the imports, 
 which are now indifcriminately united to- 
 gether, as conftituting the total of our un- 
 favourable balance, the difference would be 
 ftill greater. Proceeding then upon this 
 ground, and calculating the amount of the 
 exports to foreign nations only, and the 
 amount of the imports from them, he formed 
 an eftimate, that our annual average ba- 
 lance
 
 ( 95 ) 
 
 lance for four years preceding the year 1796, 
 amounted to fix millions five hundred thou- 
 fand pounds. In order to afcertain, accor- 
 ding to the principle of the theory, which 
 I have attempted to fubvert, what fum had 
 been dcpolited by the Balance of Trade, or 
 in order to afcertain, according to the prin- 
 ciples which I have endeavoured to eftablifh, 
 the correfpondence of the excefs with our 
 foreign expenditure, this was the corre6l 
 mode of forming the eftimate ; but the itate- 
 ment prepared by Mr. Long, explanatory 
 of our foreign expenditure during the three 
 lail years only of the fame period, is fatif- 
 fa6lory evidence, that his eftimate was below 
 the real amount. During thefe three years only 
 the foreign difburfements of government 
 amounted to twenty-tw^o millions ; and if to 
 this fum be added the imperial loan, the 
 private expenditure of individuals, and the 
 whole expenditure, public and private, of the 
 year 1792, the total of our foreign expen- 
 diture for the fame four years would be 
 
 much
 
 ( 96 ) 
 
 much higher than twenty-fix milllonsV th(^ 
 amount of Mr. Irving s caleulation. 
 
 It would certainly be defirable that an in- 
 quiry fhould be inftituted into this fubjeft, 
 for the purpofe of affixing a new rate in the 
 infpe6tor's books ^ and that the bills, which 
 are drawn upon the treafury for foreign dif- 
 burfements, Ihould be annually laid before 
 parliament, that the public may be capable 
 of judging of the correfpondence between 
 the amount of our excefs of exports, and 
 the amount of our foreign expenditure. I 
 do not affert that this would form conclufive 
 evidence that no favourable balance exifled, 
 becaufe the general reafoning contained in 
 this work may be erroneous 3 but it would 
 lead to a much nearer afcertainment of the 
 bullion, which is fuppofed to be de'pofited in 
 this country by a favourable balance, over 
 and above the amount of our private foreign 
 expenditure, the purchafes of the bank, and 
 the confumption of manufa6lures, than is 
 now attainable. What this fum may amount 
 
 to
 
 ( 97 ) 
 
 to it is impoflible for me to eflimate j but, 
 according to the principles of this work, it 
 would be too immaterial to be publicly 
 noticed. 
 
 If a retrofpe6live view be taken of the ex« 
 ports and imports of Scotland, whofe fo- 
 reign expenditure is not very great, it will be 
 feen, by the table of Mr. Chalmers, that from 
 1780 to 1800 exclufive, their exports and 
 imports exa6lly balanced each other. And 
 as I think it will be admitted that this na* 
 tion, whofe talents in the condu6l of bufinefs 
 are proverbial, would not have carried on a 
 trade for eighteen years which produced no 
 profit i it is fair to prefume that tliis theory 
 is not, in all inftances at leafl, a juft criterion 
 of national gain. 
 
 The arguments againft this theory are too 
 numerous for recapitulation. The funda- 
 mental principle of the theory that a nation 
 becomes rich by the accumulation of money, 
 has, I truft, been (hewn to arife from a mif- 
 H taken
 
 ( 98 ) 
 
 taken opinion of its utility. I have attempt- 
 ed to explain, that in the commercial intei- 
 courfe between nation and nation, money is 
 only ufed as the meafure of equivalency, 
 where the ftandard is the fame; and that the 
 courfe of exchange, or, in other words, the 
 Balance of Trade, is the mere expedient to 
 which mankind have reforted to reftify the 
 meafure, where the flandard has varied. 
 
 As I fliall hereafter treat upon the re- 
 formation of currency, it is neceflary to re- 
 mark here, that it has hitherto been the po- 
 licy of this country to dire6l its attention 
 to the attainment of a greater relative 
 currency than others by an enormous 
 paper circulation, which is injurious to our 
 general interefts, by advancing the price of 
 produce, obftructing the export trade, de- 
 prefling the exchange, and occafioning the 
 frequent recurrence of commercial embar^ 
 raffments to uphold its credit. But if the 
 reafoning in this chapter be correft, it is 
 obvious, that our poHcy fnould rather be 
 
 direftcd
 
 ( 99 ) 
 
 dire6led to the pofTeflion of a lefs, than the 
 pofledion of a greater : in order that our 
 export trade may receive encouragement ; 
 that commercial difficulties may be lefs fre- 
 quent j and, what will hereafter be more 
 fully explained, that we may enter into com- 
 petition with other nations to more advan- 
 tage. I admit that it is as impoffible for us 
 to poffefs a much lefs, as it is to pofTefs a 
 much greater currency than other countries j 
 but it is material for our interefl, that we 
 fliould have a tendency to poflefs a lefs in- 
 ftead of a tendency to poflefs a greater, to 
 which our policy has hitherto been exclu{iv€- 
 ly diredled. 
 
 I fliall now make a few remarks on Sir 
 James Steuart's examination of Mr. Hume's 
 hypothefis, that if four fifths of the money 
 of Great Britain were annihilated in one 
 night, commodities would fmk in price, and 
 be exported to foreign nations to bring over 
 their furplus currency. Sir James Steuart 
 fays, that if fucli an event took /place, the 
 H 2 people
 
 ( lOO ) 
 
 people of Great Britain would ftarvc, becaufc 
 all the necelTaries of life would be exported 
 for the money of the continent 5 and as it 
 would annihilate both induflry and the in- 
 duftrious, it cannot afterwards be infifted on, 
 that it would draw over a proportional part 
 of the general wealth of Europe. 
 
 Money, in Sir James Steuart's imagina- 
 tion, though it be not fo ftated in his work, 
 conflituted the chief wealth of a nation. 
 He always ufes the money, the wealth, the 
 riches of a nation, as fynonimous terms. 
 He therefore concluded, that all the export- 
 able produce of the country mud be fent 
 out to reftore the money which was with- 
 drawn. After the preceding obfervations of 
 this work, it is unnecefTary to fay, that our 
 circulation could be reflored without the ex- 
 portation of a fmgle grain of corn. 
 
 Then, realifmg the fuppofition of Mr. 
 Hume, be fays, it is thus that a nation, 
 though indullrious, may be reduced to po- 
 verty
 
 ( loi ) 
 
 verty in the miJil: of wealthy neighbours ; 
 while fome may amafs vaft fums of wealth, 
 far above the proportion of it among others. 
 For the application of thefe fums, he reforts 
 to his former argument of their flagnation 
 in repofitories. Worldng flill upon the 
 fame principle, that money alone is wealth, 
 he imagines that one nation only grows rich 
 by the impoverifliment of another j a pofition 
 which I fiiall examine, at fome length, in 
 the fubfequent chapter. 
 
 Sir James Steuart admits, that if Mr. 
 Hume's do6lrine be correal, that money over 
 all the world is like a fluid which muft ever 
 be upon a level, it leads to a chain of con- 
 fequences totally different from the whole 
 plan of his enquiry. The greater part of 
 his work therefore muit, in my opinion, be 
 configned as dead letter to the Ihelf. 
 
 ON
 
 ON 
 
 € O M M E m € E. 
 
 CHAP. III. 
 
 As in the preceding chapter I attempted to 
 expofe the fallacy of the current opinions on 
 the fubje(5l of trade, 1 fhall in this chapter 
 endeavour to confirm my argument, by an 
 ejrplanation of what appears to me the real 
 principles of commercial opulence. 
 
 The principle of all commerce is ex- 
 change, and all exchanges are equal. , How- 
 ever apparently one nation may feem to gain 
 by its commercial relations with another, 
 yet in reality the tranf actions of trade, fo 
 
 far
 
 ( IC3 ) 
 
 far as they are carried on between indepen- 
 dent nations, are the intercliange of recipro- 
 cal conveniences, where one equivalent is 
 given for another, without any acccflion of 
 wealth to either of the contracting countries. 
 Though commerce invariably leads to opu- 
 lence, it does not conduce to the opulence 
 of one nation by the impoverilhment of 
 another J but it leads to the general wealth 
 of all, by exciting in each a particular in- 
 terefl for the increafe of its domelHc pro- 
 duce. Upon the magnitude of its domeflic 
 furplus, the commercial wealth of every 
 nation depends -, and as the general wants of 
 mankind never fail to create a demand in 
 one country for the furplus produce of 
 another, an extended cultivation of home 
 produce neceffarily leads to the introdu6lion 
 of a foreign fupply proportionate to the in- 
 creafe. It is thus »that the emulation of each 
 to promote its individual interefts, by en- 
 couraging the increafe of its own produce, 
 tor the purpofe of procuring the produdions 
 
 of
 
 ( IO+ ) - 
 
 of Others, advances the general opulence of 
 alL 
 
 If no foreign commerce cxiiled, no nation 
 would cultivate a greater quantity than what 
 was fufficient for its partial confamption, 
 and its opulence muft be limited to the in- 
 digenous produ6lions of the foil peculiar to 
 the climate under which it was fituate. But, 
 iince by the fubfifling intercourfe of the 
 world, other nations will take off whatever 
 furplus produce be grown or manufa6lured, 
 and give an equivalent of their furplus for 
 its purchafe j it becomes the peculiar intereft 
 of each to bend its attention to the increase 
 of domeflic produce, as the more equivalents 
 it poflefTes, the more it will pofTefs of the 
 produce of others, and the greater will be its 
 opulence. 
 
 But in the interchange of a portion of the 
 furplus produce of one nation, for the fur- 
 plus produce of another, no advantage can 
 
 u
 
 ( 105 ) 
 
 be gained by tbe oi"us nation more than by 
 the other. Their reciprocal wants are fup- 
 plied by each acquiring from the other the 
 produce in requeft; but no accefTion can be 
 made to the weahh of either. If the pro- 
 duce in pofTeflion, antecedent to the ex- 
 change, had been in either inflance inferior 
 in value to the produce which was offered in 
 return,' the nations who negotiated the ex- 
 change, as neither would have fubmitted to 
 a lofs, would never have con fen ted to the 
 transfer. 
 
 If the pofition of the preceding chapter be 
 corre6l, that no one nation can fell to a 
 greater extent than it buys, while money is 
 at the fame ftandard, it follows, that the 
 value of its returns muft be equal to the 
 value of its proceeds ; and that the fole oc- 
 cupation of commerce is the transfer of one 
 equivalent for another. That this is really 
 the cafe, the common mode of conducing 
 the ordinary tranfa6lions of trade in the 
 commercial intercourfe of nations, which 
 
 was
 
 ( ic6 ) 
 
 was explained in- the foregoing chapter, fuf- 
 ficiently evinces. All negotiations are ex- 
 clufively carried on by bills of exchange, 
 which effeft an immediate interchange of 
 produce for produce, without any recourfe 
 to the intervention of money, while exchange 
 is at pars and, as I endeavoured to prove, 
 that the rife and deprelTion of exchange were 
 only occalioned to equalize the ftandard of 
 money, when a partial alteration was effedl- 
 ed in its value, its intervention for this 
 purpofe, which forms an exception to a ge- 
 neral principle, confirms the pofition, that 
 the produce of one country is exchanged for 
 the produce of another, money being only 
 the meafure of their equivalency, or this ex- 
 ception would not be made for the purpofe 
 of maintaining the purity of the meafure. 
 
 But it may naturally be inquired, if all 
 commerce be an exchange of equivalents, by 
 what means a commercial profit is attain- 
 able by individuals. Merchants are the 
 agents and fa6lors of mankind, and receive 
 
 a com-
 
 { 107 ) 
 
 a ccmmiilion for the trouble and hazard of 
 conducing their commercial negotiations. 
 This commiffion, in tlug ufual courfe of 
 trade, is paid through the operation of ex- 
 change to the reipe6live merchants of each 
 nation by the domeftic confumer. But it is 
 the fame thing, whether it be contended that 
 it is paid by the domeflic confumer or the 
 domeflic grower, as every nation mud be 
 the confumer of a foreign, in the fame pro- 
 portion that it is the grower of a domeftic 
 furplus. If a merchant in London fend 
 an hundred pounds worth of cloth to 
 Peterfburgh, at five pounds profit, and, ex- 
 change being at par, he fell his bill to 
 another, who imports an hundred pounds 
 worth of hemp at three pounds, or any other 
 percentage profit, to the Ruffian merchant, 
 the Britifli money, which purchafed the 
 Ruffian hemp, would be appropriated to the 
 payment of the profits of the Britifh tradersj 
 and the Ruffiian money, which purchafed 
 the Britifli cloth, would be applied to the 
 payment of the Ruffian traders. Thus the 
 
 confumers
 
 ( io8 ) 
 
 confumers of foreign produce in each coun- 
 try would pay the commiiTion of their re- 
 fped'ive merchants. But the confumers of 
 . foreign muft be the growers of domeftic pro- 
 duce. The annual produce of a nation is 
 the only fource of its income ; and only 
 they can buy who are in the immediate re- 
 ceipt, or indire6l participation, of income 
 from its fale. The profits, therefore, of 
 merchants are nothing more than a com- 
 miiTion from the growers of produce in each 
 individual nation to which they belong, for 
 their agency in returning to them the pro- 
 duce of other countries in exchange for the 
 domeftic produce of their own : and though 
 in this exchange more value be apparently 
 imported than exported in both countries, 
 yet, as the commifTion is paid in both by the 
 domeftic confumer, the profit to the mer- 
 chant is derived from home inftead of abroad, 
 and no acceflion is made to the opulence of 
 either. 
 
 Thefe
 
 ( 109 ) 
 
 Thefe remarks only apply to thofe countries 
 which reciprocally interchange their domeftic 
 produce with each other by direct communi- 
 cation. Where the principles of the tran- 
 fit trade intervene, and a nation becomes 
 an entrepot between different flates, fome 
 exceptions are neceirary. It was obferved 
 above, that no nation derived an acceflion 
 of wealth from the interchanges of com- 
 merce, as in all inftances an equivalent was 
 given for an equivalent received ; and that 
 the profit of the merchant was drawn 
 from home inftead of abroad, as the commif- 
 fion was paid in every coimtry by the growers 
 of its domeflic produce. But where a ftate 
 becomes the intermediate agent for different 
 countries, as the exchange is not from do- 
 meflic produce to foreign, but from one 
 foreign produce to another, the payment of 
 the commiflion necefiarily falls upon the 
 foreign confumer, and the profit to the 
 merchant is derived from abroad. The in- 
 ter Nrenient ftate, therefore, acquires an accef- 
 fion of wealth proportionate to the amount 
 
 of
 
 ( no ) 
 
 of* the commifTion. But this acceflion doe* 
 not militate againft the principles which I 
 have endeavoured to eftablifli, as it arifes 
 from an acquifition of produce equivalent to 
 the profit, and not from the accumulation 
 of money. ' 
 
 In whatever inftance, therefore, a fVate is 
 pofleiTed of the tranfit trade, by forming 
 an intermediate mart for foreign produce, 
 whether it unite with its agency, the profits 
 of the carrying trade, as was formerly the 
 cafe with Holland, or whether it be a fmiple 
 entrepot, as at prefent with Hamburgh, it 
 derives an acceUion of wealth from foreign 
 nations proportionate to the amount of the 
 commiflion. The city of London pofTefles 
 fome portion of this tranfit trade, and has 
 fome bufmefs as an intermediate agent ; but, 
 on account of our repugnance to the efla- 
 bhfhment of free ports, the policy of which 
 I fliall hereafter confider, it forms, in a 
 much greater proportion, a depot for the do- 
 meftic and colonial produce of Great Britain, 
 than an entrepot for foreign produce. 
 
 It
 
 ( III ) 
 
 Though therefore the intermediate agency 
 of an entrepot forms an exception to the ge- 
 neral principle, that no profit be attainable 
 in the commercial interchanges of indepen- 
 dent nations, yet it has no tendency to tffcS: 
 the general queftion that a nation is enriched 
 by the increafe of produce, and not by the 
 accumulation of money. 
 
 If it may be eflablirned as a fundamental 
 principle that all commerce is an exchange 
 of equivalents, it follows as a necelTary con- 
 fequence, that whatever tends to an increafe 
 of equivalents, tends to an increafe of opu- 
 lence, and that the commercial wealth of a 
 nation fliould be eflimated by the whole 
 value of its equivalents collectively; and not 
 by that portion only, which returns an 
 equivalent in bullion, which there is no pof- 
 fibility of detaining, and which, when parted 
 with, can only re-purchafe the equivalent 
 that bought it. 
 
 If
 
 ( ^12 ) 
 
 If it were true, that a portion of our fur- 
 plus produce were annually appropriated to 
 the purchafe of bullion, and if it were pof- 
 fible that when received it could be detained 
 by being hoarded in treafure, inftead of en- 
 tering into circulation, I admit that it 
 would be evidence of an increafe of wealth 
 to the extent to which it was accumulated* 
 But if no one will fubmit to the lofs of 
 detaining it in treafure, and if the moment 
 it enter into circulation it advance prices, 
 and be taken off by an unfavourable ex- 
 change, which is the necefTary confequence 
 of the advance, there is no pretence for fay- 
 ing that it can caufe any increafe of opulence 
 whatever. 
 
 But even fuppofmg that the theory were 
 true, and that the nation could annually 
 accumulate a certain quantity of bullion, 
 it would be incorre6l to eftimate our com- 
 mercial wealth by this criterion. If our 
 domeftic furplus amount to fifty millions, 
 
 though
 
 ( "3 ) 
 
 though the annual fecretion of two or three 
 would certainly add to our wealth ; yet it 
 ought to be faid that we were rich becaufe 
 we grew fifty, and not becaufe we faved 
 two J in the fame manner as it would be 
 remarked of an individual who pofTefTed 
 fifty thoufand a year, that he w^as rich be- 
 caufe he received fifty, and not becaufe he 
 faved two thoufand, which a pcrfon of 
 four thoufand a year could equally accom- 
 plifh. 
 
 As bullion is of no greater value than the 
 produce for which it will exchange, if one 
 nation annually grow four millions of pro- 
 duce which will at any time buy four millions 
 of bullion, and another annually raife from 
 its mines four millions of bullion, which 
 can do no more than buy four millions of 
 produce, the produce would be of the fame 
 value with the bullion, and both nations 
 would pofiefs an equality of wealth i but if 
 the one grew more produce than the other 
 rofe bullion, it would be in proportion to 
 I the
 
 ( "4 ) 
 
 the excefs more opulent, though no equiva^ 
 lent were given for the bullion. 
 
 A comparifon between this country and 
 Spain, may perhaps put this fubjeft in a flill 
 clearer point of view. 
 
 As from a miftaken opinion of its exclur- 
 five value, the accumulation of money was 
 the great aim of all governments, the fer- 
 tility of America in gold was the £rfl: obje6l 
 of attention to the policy of Spain. The 
 conqueft of the country was effe6led for the 
 purpofe of procuring pofTeffion of the mines, 
 which for thefe lafl two hundred years have 
 remitted to the imperial flate an annual 
 average fupply of between three and four 
 millions. Yet, from the neglect of the cul- 
 tivation of other produce, Spain is perhaps, 
 to ufe an expreflion of Dr. Adam Smith, 
 the moil beggarly nation in Europe. Of 
 the amount of her exports I have no account ; 
 but; exclulive of her furplus bullion, I fliould 
 
 conceive
 
 ( "'5 ) 
 
 conceive that they would not exceed the fum 
 of three milhons. 
 
 As England poff^lTed no mines fhe di- 
 reeled her attention, with no purer concep- 
 tion of the principles of national wealth, to 
 the fame objeft by the cultivation of pro- 
 duce. She did not conceive that the means 
 which file purfued were in reality the end, 
 and that produce was itf:lf the wealth 
 which fhe was fo anxious to attain. Money 
 was her only objeft, and her only means of 
 acquiring it was produce. It was this ob- 
 je6l that gave rife to the Balance of Trade, 
 and the train of confequences connected 
 with the fyflem. But the line of policy, 
 which fhe thus purfued, in oppofition to the 
 policy of Spain, has raifed her to a higher 
 flate of opulence than any nation ever yet 
 attained. Yet had Spain but taken half 
 the pains to cultivate produce as fhe has 
 taken for the attainment of bullion, from 
 the unequalled extent and fertility of her 
 empire, (lie would now have been the 
 I 2 richeft
 
 ( ii6 ) 
 
 richeft nation in Europe inflead of the poor-* 
 eft. 
 
 I truft that it may be concluded, from the 
 whole of the foregoing remarks in this and 
 the preceding chapter, that, though com- 
 merce invariably lead to opulence, it does 
 not conduce to the opulence of one nation 
 by the impoverifhment of another ; but that 
 it advances the general opulence of all, by 
 promoting an extended cultivation of home 
 produce in each for the polTefiion of equiva- 
 lents, in order that it may receive equiva* 
 lents in return ; and that the commercial 
 wealth of every nation fhould be eftimated 
 by the total value of thefe equivalents, and 
 not by any particular portion. 
 
 If then our commercial wealth be efti- 
 mated upon this principle, and upon this 
 principle it ought to be eftimated, it will ex- 
 pofe to our view, what the contracted theory 
 of the Balance of Trade has hitherto obfcured, 
 the vaft extent of the opulence and refources 
 of this country.
 
 ( n/ ) 
 
 The export of Britifh manufactures alone, 
 eftimated according to the old rate in the 
 Cuflom Houfe books, amounted, in the year 
 i8g2, to twenty-five million, feven hundred 
 and nineteen thoufand, nine hundred and 
 feventy-nine pounds ; which the difference 
 between their real and official value, as dated 
 by Mr. Chalmers, in his preface (page 4,) 
 would raife to more than forty millions. 
 According to his calculation, the value of 
 Britifh manufa6lures which were exported 
 was,^ 
 
 Official Value. Real Value. 
 
 In 1798, £A9,6j2,503 ,£.33,148,682 O 
 
 1799, 24,084,213 38,942,498 
 
 1800, 24,304,284 39,471,203 
 
 To thefe forty millions part of our colo- 
 nial produce fhould be added. Our colonial 
 produce from the Eaft and Weft Indies is 
 now inferted in the re-export of foreign 
 merchandife, becaufe it v^as not till lately 
 confidered as forming an integral part of the 
 produce of the Britifh empire 3 but, as Mr. 
 
 Irving
 
 ( "8 ) 
 
 Irving has fatisfactorily explained this cir- 
 cumflance to the public, the quantity ex- 
 ported fhould be equally conflrued as Britifh 
 produce. It is not fair, however, to take 
 the whole quantity. By our prefent policy, 
 produce is forced out from this country for its 
 cultivation, in order that we may purchafe 
 it with an equivalent, inftead of receiving 
 it for nothing, as will be more fully ex- 
 plained hereafter -, it is only fair, therefore, 
 to eftimate it by the excefs of returns above 
 proceeds, which, by Mr. Irving's computa- 
 tion, amounts on the average to no more 
 than four millions. 
 
 Eftimating, therefore, our exports upon 
 this principle, our furplus produce for 1802 
 would amount to forty-four millions 5 
 which, by a comparative furvey of the ex- 
 ports of other countries, will evince the vail 
 fuperiority of the wealth of this country. 
 
 I regret that It is not in my power to lay 
 before the public the necefiary documents 
 
 from
 
 ( "9 ) 
 
 from authenticated data to illuftrate this 
 comparifon. The exports of France are ef- 
 timated by M. Necker at twelve millions ; 
 the exports of PvUfTia are eftimated by Mr. 
 Tooke at about eight millions. I have no 
 means of eftimating the value of the exports 
 of other countries ; but thefe are the mofl 
 confiderable commercial nations, and by the 
 comparatively fmall amount of their exports, 
 v^e might almoft be led to conclude, that the 
 furplus of Great Britain was equal to the 
 collective furplus of the united nations of 
 Europe. 
 
 But as we muft receive either an equiva- 
 lent in foreign pioduce or military fervices, 
 for the furplus w^e export, it is evident that 
 the collective exports of the other nations of 
 Europe muft be fuperior in time of peace to 
 the exports of Great Britain, in proportion 
 to the extent of the trade which they carry 
 on with each other. But from this account 
 of their exports, it may be prefumed that 
 this trade is not very confiderable, as their 
 
 principal
 
 C ^120 ) 
 
 principal intercourfe muft coniift in the in- 
 terchange of Britifh produce for their own» 
 
 Compared, therefore, with other nations, 
 the refources of this country are eminently 
 confpicuous, and difplay an energy and 
 power fully equal to the difficulties to which 
 we may be expofed. 
 
 But in order that the public may be capa- 
 ble of eilimating the real refources of the 
 country with more fidelity, it is certainly de- 
 fn"able that a new rate fhould be made for 
 the valuation of the entries, and that further 
 regulations fhould be adopted to procure a 
 more accurate account of the lading than is 
 now in many inilances attainable. 
 
 I fhall now make fome enquiry into the 
 exifling ilate of our commerce and point 
 out the injurious tendency of ihe theory of 
 the Balance of Trade to obflrud its profpe- 
 rity. 
 
 The
 
 ( 121 ) 
 
 The commerce of England may be divided 
 into three parts, and may be faid to confift 
 of the Home trade, the Colonial trade, and 
 the Tranfit trade. 
 
 The mofl important part is the Home 
 trade, which confifts in the exchange of pro- 
 duce manufaftured at home from Britifli 
 materials, and of produce worked by Britifh 
 labour from foreign materials. The ex- 
 change of this produce forms the mofl valu- 
 able branch of our commerce ; not only be- 
 caufe it commands a greater proportion of 
 foreign equivalent from the extent of its va- 
 lue than any other conftituent part, but be- 
 caufe it is lefs liable to interruption from the 
 viciffitudes of war. Its vaft importance is 
 fufficiently apparent from the official 
 value of the quantity exported in 1802, 
 which was before explained. The value of 
 this and our colonial produce is the true cri- 
 terion of the refources of the country ; be- 
 caufe to whatever purpofe the produce be ap- 
 propriated by the diredlion of national or 
 
 individual
 
 ( 122 ) 
 
 individual intereft, it would return an equi- 
 valent in naval ftores, military fervices, or 
 foreign manufaftures, according to the ne- 
 ceflity or policy of the times, as was evinced- 
 in the late war by our exports to Germany. 
 
 An alarm has always prevailed, that in the 
 exchange of this produce we were liable to 
 be underfold on the continent by the compe- 
 tition of rival nations. Our enormous pa- 
 per circulation, which undoubtedly raifes the 
 price of labour in this country above its 
 price in others, lends affillaiice to this com- 
 petition. But in the danger to which we 
 are expofed, fome diftin6lion is to be made in 
 the produce which is worked up of Britifh, 
 and that which is manufactured of foreign 
 materials. The high price of labour has 
 fome tendency even to affe6l the fale of Bri- 
 tifh produce from Britifli materials, as a 
 fubflitute can always be found among other 
 nations, though of inferior quality -, but in 
 the fale of our manufacture, compofed of 
 raw foreign materials, which are equally at- 
 tainable
 
 ( 123 ) 
 
 tainable by all other countries, our aug« 
 mented currency may certainly operate inju- 
 rioufly, as the cheapnefs of labour would 
 enable a rival nation to fend them in a 
 wrought flate more cheaply to the market 
 than we could -, and though I admit that the 
 courfe of exchange never fails to make a 
 compenfation to the foreigner who purchafes 
 our produce, however dear in the home 
 market, when no produce fimilar in quan- 
 tity and quality be offered in competition to 
 it ; yet, if the fame fum could purchafe a 
 greater quantity of another country of equal 
 quality with our own, there can be no doubt 
 but that ours would be rejed:ed. It is mate- 
 rially efTential, therefore, to the interefls of 
 this country, that our currency fhould be 
 kept as much as pofTible below the relative 
 currency of others, to prevent the confe- 
 quences which v^rould refult from the fuccefs- 
 ful competition of rival nations. That our 
 augmented currency has not hitherto had 
 this cfFecl, the amount of our exports is fuf- 
 ficient evidence. The late unprecedented 
 
 flate
 
 (124 ) 
 
 flate of the continent, fo little favourable to 
 the eftablifhment of rival manufa6lures, has 
 prevented the exiftence of much competi- 
 tion j but a kindly fettlement of the dif- 
 turbances, which have recently prevailed, 
 would, doubtlefs, favour the efforts that may 
 be attempted. 
 
 The theory of the Balance of Trade, upon 
 the principles of which all countries have 
 more or lefs fhaped their policy, has been 
 peculiarly unfriendly to a liberal intercourfe, 
 and to a free exchange of the native produce 
 of one country for the native produce of 
 another. Every country pofTefTes fome pro^ 
 duce more particularly congenial to its cli- 
 mate than another, whether of the animal, 
 vegetable, or mineral world j as the more 
 northerly powers that particular produce 
 which relates to naval ftores; Germany, corn 
 and wines; France, wines and oil 3 and Por- 
 tugal and Spain, wine and fruits. But as it 
 has always been the policy of this country, 
 as well as others, to favour the trade which 
 
 led
 
 ( 125 ) 
 
 lead to an introduftion of bullion, more than 
 that which led to an introdu6tion of pro- 
 duce, we particularly prized our trade with 
 Portugal : and great praife has always been 
 beftowed upon the Methuen Treaty, which 
 fecured to us, as it was conje6i:ured, a great 
 portion of the bullion which fhe annually 
 received from America. By this treaty we 
 ftipulated to impofe a higher duty, by one- 
 third, on French than on Portugal v/ines, 
 provided Portugal v/ould admit our woollen 
 goods, which was readily conceded, as fhe 
 procured, by thefe means, the monopoly of 
 the wine market in this country. Upon the 
 commercial policy of this treaty, at this 
 time, there can, perhaps, be little difference 
 of opinion. It has now exifted a century; 
 and it is needlcfs to remark, after the prior 
 obfervations in this work, that we poilefs no 
 more Portugal gold at this moment than if 
 no fuch treaty had ever exifted, though we 
 have fubmitted, during the whole period, to 
 take her wines at a high price, when wc 
 could have procured thofe of France at a 
 
 much
 
 ( 126 ) 
 
 much lower, had no prohibition, in confe- 
 quence of the increafed duty, taken place. 
 Had we favoured the introdu6lion of the 
 wines of France, and encouraged the admif- 
 fion of her native produce, fhe would have 
 encouraged the admiffion of ours, which 
 v/ould have led to an increafe of the domef- 
 tic produce of both countries, arid both 
 would have been more opulent. That this 
 treaty, therefore, has been injurious to our 
 commercial intefefts there can be no doubt, 
 as our domeftic produce would have been 
 augmented, and we Ihould have polTelied 
 more wines, of a better quality, at a cheaper 
 price. 
 
 But upon the political tendency of this 
 treaty, there may be a difference of opinion. 
 It may be faid, that we fliould have enceu- 
 raged the opulence of France by the con- 
 fumption of her wines j and have, therefore, 
 advanced the refources of a power, who, in 
 the time of hoftility, is our mofl dangerous 
 enemy. But I am of opinion, that, previous 
 
 to
 
 ( 127 ) 
 
 to the revolution, an extenfion of the com- 
 meixial relations between the two countries 
 would have materially conduced to our 
 amity ; but what efFe6l fuch an extenfion 
 may have at the prefent crifis muft be vari- 
 oufly conjedlured, according to the views in 
 which the leading charaflers of the country 
 regard its prefent power. 
 
 It appears to me that the admifTion of 
 their wines upon the fame terms with thofe 
 of Portugal would have a beneficial tenden- 
 cy, as it might dire6l individuals to employ 
 their capital in the culture of wines, for the 
 increafed vent in this country, in preference 
 to employing it in the eftablifhment of rival 
 manufa6lures to our prejudice, in which 
 there would certainly be much rifk of even- 
 tual fuccefs, as we have neceffarily attained 
 more (kill and are already in poflefTion of the 
 market. Should a commercial treaty be 
 projeded between the two countries, elaufes 
 might certainly be introduced to pro- 
 hibit the eflabliflimeut of particular rival 
 
 manufa<5lures
 
 ( J28 ) 
 
 manufactures in confequence of our admif- 
 fion of their wines. But if conceffions are 
 given conceffions would be hereafter de- 
 manded ; and upon the whole of our com- 
 mercial fpeculations, I would rather give 
 a free fcope to the energy of the Britifh cha- 
 rader, in whatever line it may be found 
 moft beneficial to dired our induftry, than 
 reprefs it by mutual prohibitions. 
 
 In the event of a treaty, however, it ap- 
 pears to me both in a commercial and po- 
 litical light, that this fubje6l is highly de- 
 ferving the ferious attention of the public. 
 Though I by no means wifh to convey an 
 opinion, that the caufe of Portugal fhould 
 be deferted if any alteration fhould be found 
 neceflary in the Methuen treaty. 
 
 It is remarked by Mr. Hume> that the more 
 opulent the furrounding nations are with 
 whom we trade, the more beneficial it is to us ; 
 but this entirely depends upon the produce 
 which forms their opulence. If their wealth 
 
 confifted
 
 { 129 ) 
 
 confifted of the fame produce with our own, 
 it would be highly detrimental, as we could 
 get nothing by the exchange ; but the more 
 opulent they were in different produce, the 
 more would exchange for the fame quantity 
 of our own, and the more beneficial it would 
 be to us. It is therefore for the intereil of 
 England to encourage the cultivation of 
 different, inftead of rival manufactures ; and 
 admit the wines of France, unlefs political 
 reafons intervene, that would render it, at a 
 particular juncture, prejudicial. Some ap- 
 prehenfions have been at times exprefTed, that 
 the influence of France might be fo great, 
 as to caufe the various nations on the con- 
 tinent to exclude us from their ports ; but 
 as all commerce is an exchange of equiva- 
 lents, if our produce were rejected, their 
 produce could not be purchafed; and as their 
 trade would necefTarily flagnate, fuch a pro- 
 je6l would never receive their concurrence. 
 
 In the management of our home trade, 
 
 therefore, particular attention fhould be paid 
 
 K to
 
 ( 130 ) 
 
 to the capabilities of different countries, in 
 order that there may be a reciprocal encou- 
 ragement of the domeflic produce of each, 
 and that no particular favour be fhewn to 
 afty, merely for the purpofe of attaining a 
 greater quantity of bullion, unlefs political 
 confiderations point out the benefit of the 
 partiality. 
 
 The next important branch of our com- 
 merce confifts in the Colonial trade which 
 arifes from our fettlem.ents in the Weft and 
 Eaft Indies ; and it is this trade which has 
 been moft expofed to the contra6led princi- 
 ples of the theory which I confidered in the 
 preceding chapter. 
 
 The produce of our Weft India iflands 
 was not till lately, by the penetration of 
 Mr. Irving, regarded as fimilar in principle 
 to the domeftic produce of Great Britain}, 
 it was profcribed among the general imports 
 that had a tendency to impoverifti the coun- 
 try by diminiihing the favourable Balance 
 
 of
 
 ( 131 ) 
 
 of Trade. It was not exempted from their 
 odium, as it efcaped the obfervation of the 
 fupporters of this theory, that no equivalent 
 was given for it, and that no money could b^ 
 withdrawn in confequence of its importa- 
 tion, as the proprietors of the efiates refided 
 in this country, and as much conduced to 
 our opulence by its introdu6lion, as if it 
 were a natural produce of the foil of Great 
 Britain. But every confideration was loft 
 in the popular tenet of the Balance of Trade ; 
 and as it was evident that the import of 
 Weft India produce contributed to fwell 
 the general account, every effort was made 
 on the part of government to prevent this 
 feemingly prejudicial efre6l to the general inte- 
 refts of the country. To remedy this apparent 
 evil, and to make the Balance of Trade fome- 
 what lefs unfavourable, the project of feed- 
 ing and clothing the inhabitants from this 
 country was formed and enforced by fevere 
 prohibitory regulations againft foreign fup- 
 ply. The iflands were thus put upon 
 the footing of a foreign nation -, and were fo 
 
 V -.
 
 { 132 ) 
 
 far feparatcd from their connecliorl with the 
 mother country, as their produce was to be 
 purchafed for an equivalent, inftead of being 
 received as a component part of the aggre- 
 gate produce of the Britifh empire. Such 
 is the ingenuity of this fyftem, that we 
 thought ourfelves in the poU'eflion of greater 
 weahh by being difpoflefTed of a part for the 
 purchafe of their produce, than if we had 
 received it for nothing, as the genuine ap- 
 purtenance of the parent country. 
 
 By the principles which I have endeavour- 
 ed to eflablifh, and which are in this inflance 
 fanflioned by the authority of Mr. Irving, 
 the nation is only enriched by its colonial 
 trade, In proportion to the excefs of its im- 
 ports above its exports. If then fome pro- 
 portion of the produce now forced out to 
 our colonies, were diverted to an indepen- 
 dent ftate, for an equivalent in foreign mcr- 
 chandife, and the fame quantity of colonial 
 produce were notwithftanding imported, the 
 nation w^ould be enriched by the proportion '
 
 { '33 ) 
 
 directed to the continent for a foreign equi- 
 valent. If by a forced exportation of feven 
 millions of produce to the Wefl Indies, we 
 received only eight millions in return, which 
 is the prefent flate of our trade, the nation 
 gains but one million by the bargain. But 
 if, inftead of this policy, we exported four 
 millions ©ut of the feven to the continent, 
 to be returned in an equivalent of foreign 
 produce, and the eight miUions of fugar 
 were received with the aid of only three 
 millions from home, the nation would gain 
 five miUions by this trade, inftead of one. 
 I have no means of eftimating the propor- 
 tion of fupply which the planter would 
 draw from this country, if he were at liberty 
 to choofe his market j but it is obvious, that 
 the lefs exports he take from us, and the 
 more produce he bring to us, the more he 
 advances the interefls of his country; and 
 not by the more he take from us, and the 
 lefs he bring to us, as the Balance of Trade 
 lias endeavoured to pcrfuade us. 
 
 It
 
 ( 134 ) 
 
 It may be laid down as a fundamental 
 principle, to which I know no exception^ 
 that in whatever mode a grower can raife his 
 produce, or a manufa(5lurer work his pro- 
 duce, with moil advantage to himfelf, he 
 raifes it with moft advantage to the public. 
 If a Wefl India planter could procure fub- 
 fiftence from America, or any other country, 
 at half the price that he could from this, it 
 would not only be for his benefit, but it 
 would be greatly for the benefit of the pub- 
 lic, who would necelTarily receive a greater 
 fupply of colonial produce at a cheaper 
 price. The furplus which would arife from 
 an extended cultivation, in confequence of 
 the refort of the planter to a cheaper market, 
 w^ould much more than pay the iiland ex- 
 pences, and a greater quantity would be in- 
 troduced into this country for home con- 
 fumption. 
 
 Another regulation highly injurious to 
 the intereft of the planter, and therefore in- 
 jurious
 
 ( '35 ) 
 
 jurious to the intereft of the public, is the 
 forced importation of colonial produce into 
 this country, previous to its exportation to 
 foreign ports. This regulation was eflab- 
 liflied from an opinion, that the planter 
 would not import his fugar into this coun- 
 try, in confequence of the duty, if he were 
 at Hberty to take it elfewhere, and that th« 
 public revenue would be injured. 
 
 Nothing can be more abfujxl than this re- 
 gulation ; for the moment it has been im- 
 ported, and paid the duty, it is not only en- 
 couraged out again, as faft as poITible, by a 
 drawback of the whole duty, but a bounty is 
 given in addition, to pay the expences of the 
 circuitous voyage, leaft we fliould be under- 
 fold on the continent by a rival trade. But 
 a permilTion to the planter to take his fugars, 
 in the firil inftance, to a foreign port, would 
 not operate injurioufly, and prevent the fame, 
 or any greater quantity, being introduced 
 for our home confumption, upon which 
 
 alone
 
 ( 136 ) 
 
 alone the duty is ultimately paid, than is 
 now imported. The quantity confumed in 
 this country is regulated by the prices in the 
 home and the foreign market, under the 
 prefent fyflem; and it would be regulated 
 by the fame criterion, v/hatever alteration be 
 effe6led. So far therefore from a more 
 liberal policy having any tendency to reduce, 
 it would materially augment the revenue j 
 as it would increafe the powers of cultiva- 
 tion, and caufe a greater quantity to be ex- 
 ported from the iflands to the continent, 
 than is now re-exported from this country, 
 and would neceflarily increafe the return of 
 foreign equivalents, upon which for the moft 
 part a duty is impofed. And as it would 
 likewife introduce a greater quantity for 
 home confumption than is now imported, 
 which would necelfarily pay a greater duty, 
 it would confiderably axigment the general 
 amount of the impofts of the country. It 
 would be likewife for the benefit of the pub- 
 lic j for unlefs the fugar fo exported to the 
 
 continent
 
 ( 137 ) 
 
 contment could return a foreign merchan- 
 dize more valuable to the importer, and 
 confequently a greater defideratum with the 
 public, than the fugar itfelf, it would be 
 brought into our ports inilead of being fent 
 to the ports of the continent. 
 
 It is materially eflential at the prefent 
 moment, that the intereft of the planter 
 fliould be particularly guarded j as our Weft 
 India produce is that part of our commercial 
 fyftem which is moft expofed to the fuccefs- 
 ful rivalry of France. If it be an acknow- 
 ledged fa6t, that France is capable of rai- 
 fmg her fugar, in confequence of lefs reftric- 
 tion, at a cheaper rate than we can, which I 
 believe cannot be difputed, there is no 
 doubt but that fhe may be capable of under- 
 felling us in the foreign market, unlefs our 
 export trade be aflifted by enormous bounties 
 to the prejudice of the revenue. 
 
 The whole of our commercial regulations 
 relative to the conduct of our colonial trade, 
 
 appear
 
 ( 138 ) 
 
 appear to me to be inconilflent with the 
 principles of true policy, and to demand the 
 ferious attention of the pubhc at the prefent 
 moment. The reftrictions upon this com- 
 merce originated in the fophillry of the Ba- 
 lance of Trade, which inculcated the indif- 
 criminate exportation of produce, from a 
 general perfuafion, that an excefs of exports 
 above imports was an infallible criterion of a 
 favourable balance, and, that whatever tended 
 to this excefs, promoted the welfare of the 
 country. Little reference was made to the 
 object for which it was exported. The pene- 
 tration of Mr. Irving difcovered that there 
 was fome error in the mode of computing 
 this balance ; and as the colonial trade was a 
 trade of remittance, and not of exchange, 
 that the excefs of imports above exports 
 conftituted our gain inftead of our lofs ; the 
 forced exportation, therefore, of Britifh 
 produce to the Weft Indies is highly injuri- 
 ous, both to the public and the planter, and 
 ought to be difcontinued. If the capital 
 now employed in feeding this trade gradually 
 
 received
 
 ( 139 ) 
 
 received a new dire(5lion, and were occupied 
 in forming a fui*plus for the introduction of 
 foreign equivalents, the nation would be en- 
 riched in proportion to the quantity that was 
 thus diverted into a different channel. The 
 forced importation of colonial produce ap- 
 pears to me to be equally injurious. But I 
 by no means wifh to open our V/eft India 
 ports to foreign fliips ; the principle of the 
 Navigation A61s fliould be fcrupuloufly obeyed, 
 and all fupplies, from whatever market, and 
 all exports, to whatever country, fhould be 
 carried in Britilh bottoms. 
 
 Though our Eaft India trade be not pro- 
 perly a colonial trade, as the Eaft Indies are 
 a fettlement and not a colony, yet, as it par- 
 takes of the nature of colonial intercourfe, in 
 being more a trade of remittance than ex- 
 change, I (hall examine it under this head. 
 Our policy towards thefe fettlements does not 
 appear to me to be regulated by purer princi- 
 ples than our conduft towards the Weft In- 
 dies. In my examination of this fubje6t I 
 
 Ihall
 
 ( I40 ) 
 
 fliall make no reference to the principles 
 which originally dictated the charter to the 
 Eafl India Company; nor take any review of 
 the circumftances which have led to a varia- 
 tion from its fpirit. I fliall merely ohferve, 
 what I think will be univerfally admitted, 
 that if the integrity of the Indian empire 
 had been but lately ceded to us in its prcfent 
 extent, with a population of five-and-twenty 
 millions, we fhould not have vefted its trade 
 and revenue in a joint-flock company, con- 
 trary to every principle of private and pub- 
 lic intereft ; we ihould not have fufFered its 
 trade to be monopolized by a few individuals, 
 pofTefTed of funds wholly incompetent to 
 embrace its extent, and wholly incapable of 
 advancing its profperity ; nor fliould we have 
 fufFered its revenue amounting to ten mil- 
 lions of pounds ftei'ling, to be poflefTed by a 
 corporation of merchants, however refpecl- 
 able, and appropriated at their will, however 
 honourably applied to the fupport and well- 
 being of their eflablifliment. This fubjedt 
 naturally divides itfelf into tv/o queflions re- 
 lative
 
 ( H' ) 
 
 lative to the policy of a commercial mono- 
 poly, and the policy of a difconnccled re- 
 venue, which I lliall conlider under feparate 
 heads. 
 
 I fliall not enter into a particular invefti- 
 gati on of the policy of a commercial mono- 
 poly > it is fufficient for the prefent purpole 
 to obferve, that if the joint-ftock company 
 poflefs fufficient funds to draw forth all the 
 capabilities of the fettlement to which they 
 traffic, it is not very material to the public, 
 whether the trade be clcfe or open. But if 
 its capabilities be greater than the means of 
 the company can embrace, the public lofe in 
 proportion to the quantity of produce, which 
 a more liberal policy would encourage. Now 
 it is not only admitted that a large furplus 
 is annually cultivated in India, beyond what 
 the funds of the company are capable of 
 bringing home, but that an enlargement of 
 the private trade would ftill further augment 
 this furplus. Whatever additional quantity, 
 therefore, an encouragement of the private 
 
 tr::de
 
 f H^ ) 
 
 trade would be capable of raifing, is necefia- 
 rily loft to this country in confequence of 
 the exclufive monopoly to the company. 
 
 But the privation of the augmented fur- 
 plus is not the only evil attendant upon this 
 fyftem. The main evil confifts in the means 
 which are taken to remit the exifting fuplus 
 to this country. This furplus far exceeds 
 what the (hips of the company are capable 
 of bringing home, and in future years, by 
 the correfpondence of the Marquis of Wei- 
 lefley, it is likely to be ftill greater. As pri- 
 vate fhips belonging to this country are ex- 
 cluded from the ports of India,, the proprie- 
 tors of the furplus neceflarily remit it in fo- 
 reign bottoms ', during the late war it was 
 brought to the ports of Europe in the fhips 
 of Denmark and America. But now there 
 is httle doubt but that France will make 
 every effort to participate in the profits of 
 this trade. By this policy we encourage the 
 navy of thofe ftates which are always rival, 
 
 and
 
 ( 143 ) 
 
 and frequently hoflile powers, in preference 
 to our own. 
 
 But what forms the flrongeft feature in 
 this policy, is, that we not only encourage 
 the fhips of our enemies, but encourage 
 them with Britifli capital. The furplus pro- 
 duce with which they are freighted, confli- 
 tutes for tl:ie moft part the private fortunes 
 of individuals, who take thefe means as the 
 moft eligible that offer to remit their pro- 
 perty to this country. This employment of 
 Britifli capital in foreign bottoms, is the mofl 
 flagrant violation of the fpirit of the naviga- 
 tion a6ls, which has been known to take 
 place from their origin to the prefent times. 
 The fundamental principle upon which they 
 are founded, is to give encouragement to 
 our own in preference to a rival navy, though 
 fupported by foreign capital. Yet our pre- 
 fent policy authorifes and promotes the ad- 
 vancement of their marine by the allifl:ance 
 of our own capital, contrary to the whole 
 tenor of the a6ls upon which our naval pre- 
 eminence is founded j and after an hundred 
 
 and
 
 { 144 ) 
 
 and fifty years experience of the beneficial 
 efFe6ls that have refulted from obedience to 
 their principle. 
 
 But we have gone one fiep farther in fup- 
 port of our enemy. We have not only fup- 
 ported their navy with Britifh capital, but 
 we have given them privileges, denied to 
 ourfelves, to prevent our interference even 
 as a rival. According to the fame policy 
 by which our Weft India trade is dire6led, 
 the Eaft India Company is compelled to 
 bring their fiiips to our ports without break- 
 ing bulk, and land their merchandife in this 
 country, previous to its exportation to the 
 continent J but our enemies are permitted to 
 be the carriers of India produce to any 
 European port, without being fubje6led to 
 3. fimilar difability ; by which they are ena- 
 bled to underfell us in the foreign market, 
 and exclude us from all competition. We 
 have not only therefore permitted the fliips 
 of our enemy to trade in the Indian feas, to 
 the exclufion of our own j but we have fup- 
 
 portcd
 
 ( H5 ) 
 
 ported them with our capital in preference 
 to our own ; and, as if thefe advantages were 
 not enough, we have given them privileges 
 .greater than our own, to prevent the appear- 
 ance of our merchandize in the market. 
 Had we exprefsly intended to give up this 
 trade, and refign it into the hands of our ene- 
 mies, we could not have reforted to any 
 means more efficacious for the purpofe. 
 
 It is highly requifite therefore, for the fal- 
 vation of our Eaft India trade, that fome 
 alteration fhould be effe6led in our prefent 
 policy. The only effectual means for its 
 recovery appear to me to be, to allow th^ 
 building of fhips in India,, to grant the fame 
 privileges to Britifli fubjecfts which are gran* 
 ted to our enemies, and to encourage an 
 extenfion of the private trade. 
 
 And firft, as to the liberty of building fliips 
 
 in India. It is faid that this indulgence 
 
 would lead to a diminution of Ihipwrights in 
 
 this country, and to a breach of the navi- 
 
 L gation
 
 ( 146 ) 
 
 gation acts by the employment of Lalcars, 
 inHead of Britifli failors. That it would 
 lead to a diminution of artificers in the 
 Thames, is too unimportant a confideration, 
 even if it were likely to have this efFe6l, to 
 have much weight in the difcuffion of the 
 prefent queHion : but it appears to me that 
 it would have a contrary tendency. It is 
 aflerted by Mr. Henchman, in a work 
 which he has publifhed upon this fubje6L, 
 that five and twenty thoufand tons would 
 be required for the private trade of India, in 
 addition to the forty thoufand employed by 
 the company. It is well known that the 
 repairs which the fhips are compelled to un- 
 dergo, after fo long a voyJige, would confi- 
 derably add to the number of artificers, in- 
 ftead of tending to their diminution. With 
 refpe<5l to the navigation of the ihips by 
 Lafcars, it is to be remarked, that it was 
 never intended by the fupporters of the pri- 
 vate trade of <ndia, that their fliips fhould 
 be exclufively navigated by them. It was 
 ixpreislyilated, that they fliouldbe navigated 
 
 by
 
 ( HI ) 
 
 yBritifh Tailors, if Britifli Tailors could 
 poflibly be procured. In the policy of this 
 preference, no man can entertain a doubt. 
 But if no Britifh Tailors are to be had, can 
 there be any doubt whether we fhould em- 
 ploy the Lafcars or our enemies ? Can there 
 be any doubt whether we fliould employ 
 thofe who, by remaining a fubje6t and auxi- 
 liary power, would ftrengthen us by fupport, 
 or whether we fliould employ thofe who 
 mufl ever remain our competitors, and, 
 in the courfe of human events, mufl fre- 
 quently be our enemies ? Can there be any 
 doubt which is the moft flagrant violation 
 of the navigation a6ls. So far from there 
 being any impolicy in employing India built 
 fhips, it appears to me that it would mate- 
 rially tend to the fecurity of our Indian em- 
 pire, if a large naval arfenal were erected, 
 under certain regulations that were calculated 
 to give effe6l to any offeniive or defenfive 
 operations upon tlie commencement of a 
 war, and if by a ready converfion of fhips 
 in the fervice of merchants into fliips of war, 
 L 2 a naval
 
 ( 148 ) 
 
 a naval force could be eafily pi-eparcd upon 
 a fudden emergency. 
 
 Upon the fecond queftion whkh bears 
 upon this fubjefl, that the fame privileges 
 fhould be granted to Britifh fubjefts, which 
 are granted to our enemies, it appears to me, 
 that little difference of opinion can be enter- 
 tained. I attempted to fhew, in the difcuf- 
 fion of the Weil India trade, that the re- 
 moval of this difability would have no ten- 
 dency to prejudice the revenue, as the fame, 
 or a greater quantity of produce, would be 
 introduced for home confumption, upon 
 which alone the duty is paid into the ex- 
 chequer. This difability is fo injurious to 
 the Indian trader, that, unlefs it be removed, 
 foreign nations would be enabled to under- 
 fell us by embaiking in this fpeculation 
 alone upon their own capital. But if we 
 grant the fame privileges to ourfelves, and it 
 be permitted to the Britifli refidents in India 
 to fit-out fliips from the Ganges, there is no 
 doubt but that this trade would be fpeedily 
 recovered from our enemies, as the fervants 
 
 of
 
 ( H9 ) 
 
 of the company always look to the remit- 
 tance of their fortune to this country, and 
 would greatly prefer the inveflment of their 
 capital in Britifh, inftead of foreign, bot- 
 toms. This indulgence, therefore, would 
 immediately deprefs the marine of our enemy, 
 and advance our own. 
 
 I fhall now attempt to fhew, that an ex- 
 tenfion of the private trade of India would 
 materially conduce to the general profperity 
 of the country. If the trade between this 
 country and India be limited to the means 
 of the company, and foreign Ihips be per- 
 mitted to vifit its ports, advantage will be 
 taken of this concefTion to cultivate a fur- 
 plus for their inveftment, and no adequate 
 meafure can be adopted to prevent the con- 
 fequences that now refult from it under the 
 cxifting policy. But if the private trade be 
 encouraged by building India fliips, which 
 are, to all intents and purpoies, the property 
 of Great Britain, not only the trade now 
 carried on by Britifh capital in foreign bot- 
 toms
 
 ( 150 ) 
 
 toms would ceafcj but a vafl accefTioii of 
 wealth would be annually remitted to this 
 country above our prefent receipts. By the 
 whole of our commercial and political regu- 
 lations for the government of India, accord- 
 ing to Mr. Irving's computation, the nation 
 now gains no more than two millions annually. 
 But by the calculations of a refpectable indi- 
 vidual in Calcutta, nine millions might be re- 
 mitted by the private trade alone, in addition 
 to the inveftments of the company : and that 
 further aid from home would ilill further 
 augment the furplus, the correfpondenceof the 
 prefent governor general fatisfa6lorily evinces. 
 
 The principal arguments which are urged 
 againft the extenfion, are, that it would lead 
 to the departure of bullion from home, and 
 to the promotion of colonization in India. 
 After the foregoing obfervations of this 
 work, it is needlefs to remark, that the de- 
 parture of bullion would not be neceffary 
 for this purpofe; and, if neceffary, would 
 pot be injurious. If bullion afforded a bet- 
 ter
 
 ( '5' ) 
 
 ter fpeculatlon than any other merchandize, 
 it would be remitted ; but it would not be 
 exported from this country unlels its expor- 
 tation could be attended with a profit in con- 
 fequence of our poiTelfmg at the time a re- 
 dundant currency. That bullion is fomc- 
 vvhat cheaper in Europe than in India is 
 true, and that it generally forms a proh table 
 fpeculation 5 but from what part of Europe 
 it would-be purchafed, mufl depend upon the 
 greater or lefs relative currency of the dilfer- 
 ent countries. It is ufually bought of Portu- 
 gal and Spain, in confequence of its fuperior 
 cheapnefs from their American returns. 
 The apprehenfion refpedling the departure of 
 money arofc from a conception that it con- 
 ftituted the exclufive wealth of the country. 
 
 That it would lead to a fyftem of coloni- 
 zation muft depend upon the regulations 
 which may be eilabliilied to promote or op- 
 pofc it. But that it would lead to a greater 
 number of Britilh refidents, who would 
 more materially conduce to our opulence and 
 
 fccurity»
 
 ( 152 ) 
 
 fecurity, there can be little doubt. By iht 
 recent lofs of America, our fears are fome- 
 what excited by the term colonization j and 
 it may appear to thofe who have not con- 
 fidered the fubje6t, that the fame policy 
 might lead to the lofs of India 3 but no two 
 cafes can be mere oppofite. Not only all 
 intermarriage with the natives is prohibited, 
 but the poffefTion of lands is illegal, which 
 are complete bars to an extended coloniza-* 
 tton. The prefent number of European in- 
 habitants over the united empire of India, 
 amounts to two thoufand, two hundred and 
 ninety-two, a number little calculated to ex- 
 cite alarm from this fyftem. But even if 
 colonization jfhould be efFe6ted to a partial 
 extent, it would be {o decidedly the in- 
 terefl of the colony to connetl itfelf with the 
 mother country, that it would be abfurd to 
 imagine the poffibility of an infurre(5lion. 
 The inllant they were feparated from us, 
 they would be cruflied by the native powers : 
 but the private trade of India would necef- 
 farily lead to no fuch extenfion of numbers. 
 
 In
 
 ( '53 ) 
 
 In my opinion it would be politic to aug- 
 ment the prefent number, as, from the ac- 
 tivity of the Britiih character, more produce 
 would be remitted to us j and as our pof- 
 feflions would be more fecure from the en- 
 terprize of native powers through the in- 
 trigues of European rivals. 
 
 In a commercial point of view, therefore, 
 it appears, that, fo far from the exclufive 
 monopoly of the company conducing to our 
 intereft, it materially obflru6ls itj not only 
 by preventing the return of a greater furplus 
 than is now remitted, but by the meafures 
 which are taken, from the infufficiency of its 
 funds, to return the exifting furplus in op- 
 pofition to our naval and commercial ad- 
 vancement. 
 
 I (hall now make fome remarks upon the 
 policy of a difconneftcd revenue. The vaft 
 income now arifmg from our eailern empire, 
 is appropriated by the Eaft India diredlion, 
 fubjcd to the controul of the commiflioners 
 
 for
 
 ( 'J4 ) 
 
 for the affairs of India, and is feparated from 
 the public revenue of this country, appro- 
 priated according to the eftabUflied princi- 
 ples of the conllitution by parliament. In 
 the earlier charters of the company, no men- 
 tion is made of any income from taxation, 
 becaufe no conquefts were then projefted; 
 they are fmiply regarded as a trading corpo- 
 ration, without any view to their political 
 afcendancy. But, with the commencement 
 and gradual extenfion of their conquefts, 
 their revenue arofe and augmented; and as 
 thefe fettlements were not regarded in the 
 light of a colony, n© oppofition was made, 
 as in behalf of America, to the contributions 
 that were exa6led. Thefe contributions 
 now amount to ten millions ; but, by our 
 prefent regulations, they are appropriated 
 by the Eaft India direftion, under the con- 
 troul of the commiffioners, becaufe it is 
 thought that the patronage neceffarily con- 
 nected with its collection, would endanger 
 our liberties if pofTefTed by the crown. But 
 
 it
 
 ( 155 ) 
 
 it appears to me, that the crown would pjfiefs 
 no greater influence, and that our liberties 
 would be in no greater danger from an 
 united than feparate revenue. 
 
 I think it will be admitted by all who are 
 in the habit of refle6ling upon political in- 
 fluence, that the fuperior patronage necefla- 
 rily includes the inferior. And as the com- 
 miffioners now pofTefs the political afcen- 
 dancy, and in reality dire6l the revenue, 
 fubjeft to the controul of the diredtion, that 
 our liberties would not be more endangered, 
 if they were compelled, on the contrary, to 
 adminifler it according to the cuRom of the 
 country, and the principles of theconftitution, 
 fubjeft to the controul of parliament. Upon 
 the prefent fyftem too, all refponfibility for 
 the conduct of our affairs in India is divided 
 between the diieclion and tlie commifTioners, 
 and may be transferred from one to the 
 other, as belt fuits the intereft of either: 
 which is another realon for fubje(5ting their 
 adminiftration to the immediate controul of 
 
 parliament.
 
 ( 156 ) 
 
 parliament. So far then from our liberties 
 being endangered, they would be more firmly 
 fecured by the alteration, without breaking 
 in upon the conftitutional prerogative of the 
 crown, in the appointment and removal of 
 the commiffionerb. I do not mean in the 
 molt diftant manner to infmuate, that there 
 has been any mifapplication of the public 
 money, or any evafion of refponfibility ; 
 but it is one of the principles of our confti- 
 tution, to provide againft poffible mifcon- 
 du6l. Some doubt however may arile, 
 whether any alteration can be made in the 
 prefent political fyftem, till the expiration 
 of the term during which the charter is 
 current. 
 
 The advantages of a connected revenue, 
 would materially tend to the benefit of both 
 countries. During the profecution of hofti- 
 lities in India, the expences, in confequence 
 of a difconnefted income, muft be paid by 
 borrowing money at an exorbitant intereft 
 al the feat of war ^ when, by an united reve- 
 nues
 
 ( 157 ) 
 
 nue, It might be raifed upon much more 
 advantageous terms at home. During the 
 Jate war, the company were compelled to 
 borrow money at nine and twelve per cent, 
 when it might have been raifed in this coun- 
 try, at half the intereft by the guarantee of 
 Parliament -, by which a confiderable furplus 
 would have remained to be applied to other 
 purpofes. 
 
 Should the public eventually look to a 
 conne6led revenue, the debt in India may be 
 now paid oiF by borrowing the money at 
 legal intercft in this country, by which a 
 clear furplus of one million would be an- 
 nually remitted to us, applicable to the pur- 
 pofes exprefled in the charter. This liqui- 
 dation of their debt would materially benefit 
 the company during the currency of their 
 charter, and would afterwards benefit the 
 public. 
 
 Some objection has been made to the pay- 
 ment of this debt, from an apprehenfion that 
 
 the
 
 ( is8 ) 
 
 tlie transfer of money would be necefTary for 
 the purpofe. But it appears to me, that the 
 tranfaftions of the company would imme^ 
 diately enable them to effect it by bills of 
 exchange. In the event of a conne6led 
 revenue, fome difficulty might perhaps be at 
 firft experienced in remitting the farplus to 
 this country, after the payment of our India 
 expenditure ; but, in the courfe of a {hort 
 time, the remittance would be made with 
 facility and expedition by bills of exchange. 
 
 But the moft important obje6l for which 
 I am defirous of exciting the intereft of the 
 public, is not fo much that we may be ex- 
 onerated from the weight of taxation, by 
 the contributions we draw from India, but 
 that we may be capable of dire6f ing a more 
 difmterefted attention to the condition of the 
 people whom the chance of v/ar has put;^ 
 under our prote6lion. And that we may not 
 deliver up an empire of five-and-twenty mil- 
 lions to a company of merchants, in order 
 that, like a bale of their own goods, they 
 
 may
 
 ( 159 ) 
 
 may make as much of them as polTible. 1 
 do not mean to mfinuate, that individually, 
 either in themfelves or their fervants, there 
 is the fmallefl tendency to avarice or opprcf- 
 fion ', but that the needinefs of the company, 
 from the heavy expences attending the pro- 
 fecution of their wars, in which from a ne- 
 cefiary connection of intereft, the political 
 difTentions of Europe, and not their own 
 ambition, have involved them, has in fome 
 inftances compelled them to refort to a fyf- 
 tem of extortion repugnant to their feelings. 
 A connected revenue would prevent the 
 neceflity of thefe exa6lions, and v/ould ena- 
 ble us to contribute to their fupport in the 
 time of war, with the fame liberality as they 
 would contribute to ours in the interval of 
 peace. Should this junftion at no diftant 
 period take place, it appears to me that the 
 generous prote6tion of the Britifh parliament 
 would materially conduce to an amelioration 
 of the condition of the unhappy natives. 
 And that the mildeft and molt inoffenfive 
 beings that people the globe would expe- 
 rience
 
 ( i6o ) 
 
 rience greater contentment than they have 
 hitherto known from the oppreflive authority 
 of a more northerly power, to whom it has 
 ever been their pecuUar lot to be fubje61:ed. 
 
 By the terms of the charter, by the letter 
 of the bond, no change can perhaps be yet 
 made in the political regulations, fliould the 
 public upon deliberation acquiefce in its pro- 
 priety. The only point that immediately 
 preiTes upon their attention is the fupport of 
 our own or an hoflile marine by a permiffion 
 or refufal to the Britilh refidents in India to 
 fit out fhips from its ports ; and as I have 
 endeavoured to fhew that the exclufive mo- 
 nopoly of the company is injurious to our 
 intereft, and that the pubhc would be bene- 
 fitted by encouraghig an extended commerce, 
 I trull that the queflion will be decided in 
 the affirmative. Should this disability be 
 removed, the confequences that will refult 
 from it, during the currency of the prefent 
 charter, will enable the public to form their 
 judgment upon the policy of its renewal for 
 
 any
 
 ( i6i ) 
 
 any other purpofe than the trade with 
 China. 
 
 I am not incHned to favour any parallel 
 between ancient and modern times, as poli- 
 tical regulations mufl vary with a variation 
 of circumflances j yet it is natural to enquire 
 what meafures have been purfued by one 
 power, and what by another, for the advance- 
 ment of the fame objeft, in order to afcertain, 
 by comparifon, the moft enlightened policy. 
 If an examination be made of the principles 
 which directed the condu6l of the Roman 
 Senate towards her provinces, we fliall dif- 
 cover no traces of the fyflem by which our 
 own is particularifed. 
 
 They did not infift upon fupplying their 
 Afiatic, African, and European provinces 
 from Italy, in order to accumulate money by 
 the Balance of Trade. 
 
 They did not imagine tliat they increafed 
 
 their wealth by parting with it for the pur- 
 
 M pofc
 
 ( i62 ) 
 
 pofc of purchaiing produce which they could 
 procure for nothing. 
 
 They did not endeavour to augment their 
 revenue by making their fliips bring their 
 cargoes to Rome to payaduty, which was in- 
 ftantly returned, with a bounty in the bar- 
 gain, to defray the expences of the circuitous 
 voyage. 
 
 They did not permit a company of mer- 
 chants to rule over the greateft portion of 
 their empire, and receive its revenue, becaufe 
 it would have endangered their liberties to 
 have received it themfelves. 
 
 They did not inveft in a fmall corporation 
 the monopoly of the trade of a vafl: province, 
 to which its funds were wholly inadequate. 
 
 They did not prefer raifmg money at an ex- 
 orbitant intereft at the feat of war, v/hen they 
 could raife it at a lower by borrowing it at 
 
 home. 
 
 They
 
 ( '63 ) 
 
 They did not difpute whether their fhips 
 (hould be built on the Nile or the Tiber, 
 provided they could be employed 'beneficially 
 to themfelves. 
 
 They did not, at an earlier period, beflow 
 upon their enemies greater privileges than 
 they allowed to themfelves, for the purpofe 
 of deftroying their own trade. 
 
 Nor did they prefer employing their capi- 
 tal in the fupport of an hoflile navy, inftead 
 of employing it in fupport of their own. 
 
 But by a general union of interefts, by a 
 liberal protedlion, a connected revenue, and 
 unadulterated policy, they advanced the 
 common profperity of their empire. 
 
 As I have in fome degree examined the 
 policy of our regulations refpefting the home 
 and colonial trade, I fliall now make fome 
 obfervations on the tranfit trade, the remain- 
 ing branch of our commerce. This trade 
 M 2 confiils
 
 ( «64 ) 
 
 confilk in the intermediate agency of an en- 
 trepot, and its profits arife from the depofit 
 of foreign merchandize in its tranfit from 
 one foreign port to another. But from the 
 contra6led principles of the Balance of 
 Trade, which has vifited every part of our 
 fyftem, it iias hitherto formed comparatively 
 vi^ith the great extent of our commerce, a 
 fmall conftituent part. 
 
 To fupply all the world, with produce, and 
 to receive nothing but money in return, is 
 the leading principle of this theory. To in- 
 creafe our exports and diminifh our imports 
 is thence the great obje6l of our policy. 
 Exports are therefore encouraged by boun- 
 ties, and imports prohibited by duties. And 
 as the immediate payment of the duties is 
 exa6led the inftant the merchandize is landed, 
 this policy has certainly operated with due 
 effe6l to lefTen the amount of our imports ; 
 not of thofe which are received for home 
 confumption as an equivalent for our ex- 
 ports, but of thofe which would have other- 
 
 Tin /%
 
 ( «65 ) 
 
 wife been temporally depofited in this countiy 
 for re-exportation. 
 
 I before noticed that the only trade by 
 which a nation could be properly faid to 
 gain, was the trade of an entrepot j becaufeas 
 the exchange was from one foreign produce 
 to another, the commiffion was paid by the 
 foreign inftead of the domeftic confumer. 
 But as the immediate payment of the heavy 
 duties upon importation would occupy too 
 large a portion of the capital of the mer- 
 chant, though a drawback to their whole 
 amount be given upon its departure, foreign 
 merchandize is for the moft part depofited in 
 foreign ports inflead of our own -, and this 
 lucrative branch of trade is in a great mea- 
 fure prohibited to the country. 
 
 Great inconvenience, as well as great lofs, 
 refults from this difability, without any one 
 advantage to compenfate the evil. It pre- 
 vents the accommodation which the mer- 
 chant would receive from the depofit of 
 
 foreign
 
 ( i66 ) 
 
 foreign merchandize for home confamption, 
 as well as deprives him of the profits that 
 refult from its tranfitory detention for fo- 
 reign confumption. Previous to the war it 
 was a frequent cuftom with merchants to 
 depofit their ftores appropriated for home 
 confumption in the ports of Oflend and 
 Amllerdam ^ till, by the fale of their ftock in 
 hand, or by an immediate demand for 
 further fupply, they had a profpe6i: of a 
 fpeedy return cf the money advanced to go- 
 vernment for the payment of the duties. In 
 the mean time they paid a confiderable profit 
 to foreign nations for the care of their 
 flores. It is well known, that, on account 
 of the high duties on wines, the merchants 
 are compelled to depofit their flock in Guern- 
 fey and Jerfcy j though it would be precifely 
 the fame thing to government, if» ware- 
 houfes were ereciled on the Thames for their 
 reception, inftead of this diftant repofitory. 
 The duties wotild be paid upon the diminu- 
 tion of their ftock in hand, in the fame man- 
 ner as they are at prefentj and the merchant 
 
 would
 
 ( i67 ) 
 
 would have the benefit of the transferable 
 warrant, if neceffary, with the advantage of 
 pofleffing their ftores more immediately 
 under their infpe6lion. By the adoption of 
 this poUcv, the fpirit of fmugghng, which 
 now prevails fo much to the detriment of 
 the revenue, would be in a great degree fup- 
 preffed. 
 
 But the material benefit which the coun- 
 try would derive from this policy, would 
 confifl in the profits of the tranfit trade, 
 by its eftablifhment as an entrepot; mofl: of 
 the great commercial (lates have hitherto 
 acquired their principal wealth by this fyf- 
 tem. The fmall republics of Italy, upon 
 the fuhverfion of the Reman empire, for 
 the moll part attained their opulence by their 
 intermediate agency between Europe and 
 Afia. They poifeffed but few manufa6f ures 
 of their own ; and acquired the greater pro- 
 jx)rtion of their wealth by the baiter of one 
 foreign produce for another. The eftabliih- 
 ment of free ports in Holland was the 
 
 pr'm-
 
 ( i68 ) 
 
 principal fource of its opulence. Like the 
 Italian flates, it united the carrying trade 
 with this policy, and enhanced its profits in 
 confequence. Hamburgh is the great in- 
 flance of a fimple entrepot; and by her 
 opulence an inference may be deduced of the 
 policy of the principle. Were free poits 
 eftablifhed in this country, our agency bufi- 
 nefs would be confiderably augmented j and 
 London would be the great entrepot for fo- 
 reign produce, as well as the great depot for 
 our domeflic manufactures. The principal 
 part of the profits which were attained before 
 the war by Oftend and Amfterdam, through 
 the difabilities of this country, would now 
 concentrate with us. The profits are efli- 
 mated by fome as high as twenty per cent. 
 upon the capital depofited; but if they 
 amount to half, or a quarter of that interefl, 
 this principle is highly deferving the atten- 
 tion of the public, both as an accommoda- 
 tion to the merchant, and as an accelTion of 
 wealth to the nation. 
 
 It
 
 ( i69 ) 
 
 It has been objefted that the eftablifhment 
 of free ports would occafion forae delay in 
 the colle(5lion of the revenue, But as we 
 muft confume as much as we grow, the fame 
 duties would continue to be paid in the fame 
 fucceffion. 
 
 In almofl every inftance, except upon the 
 principles of the navigation a6l, whsre go- 
 vernment has interpofcd to violate the free- 
 dom of trade, and give it a forced direftion 
 from its natural courfe, its interference has 
 been injurious to cur intereits. 
 
 I have endeavoured to fhew, that in the 
 regulations of the colonial trade, v/here we 
 enforce the exportation of produce that 
 would not otherwife be exported, and where 
 we enforce the importation of produce that 
 would not otherwife be imported, and that 
 in this inftance of the tranfit trade, where 
 we prevent its introducliDn when it would 
 otherwife be admitted, we act in diredl op- 
 pofition to the dictates of Ibund policy. We 
 
 have
 
 ( ^7^ ) 
 
 have done every thing in our pov/er to force 
 this country to be an emporium for colonial 
 produce, contrary to our interefts ; and have 
 done every thing in our povi^er to obftrufl its 
 eftablifhment as an emporium for foreign 
 produce, wdien it v^ould materially conduce 
 to our interefts. If the prior obfcrvations of 
 this v^^ork be correct, our prefent commercial 
 regulations will remain an ever memorable 
 inftance of the error into whicli the collec- 
 tive ability of a great nation may be drawn, ' 
 by the too eafy admiiTion of an illufive 
 theory. ^. 
 
 ON
 
 ON THE 
 
 BEFMECIATION OF MONEY. 
 
 CHAP. IV. 
 
 Through every period of hiflory, from 
 the conqueft to the prefent times, the value 
 of moaey has been progreiTively depreffed, 
 though in a greater or lefs degree, in pro- 
 portion to the adulteration of the coin, the 
 increafe of fpecie, or the increafe of paper. 
 In the ruder ages of fociety, from the reign 
 of William the Conqueror to Elizabeth, 
 when the diftrelles of the monarch became 
 too burthenfome for regular payment, and 
 no pra6ticability cxifted of increafmg the 
 currency j the perilous and impolitic expe- 
 dient
 
 ( m ) 
 
 dient was adopted of raifmg the denomina- 
 tion, or adulterating the quahty of the coin, 
 which, for the purpofe of efcaping the 
 prefTure of the moment, never failed to aug- 
 ment the diftrefs which it was intended to 
 alleviate, by a proportionate depreffion, in- 
 ftead of a proportionate elevation of the 
 value of money. 
 
 The value of all money is, in reality, efti- 
 mated by the weight, and not by the tale. 
 If, therefore, the conftituted authority of 
 the ilate were to alter the denomination of 
 money, by ordaining, that a fixpence fliould 
 efFe6l the payment of a {hilling, the price 
 of produce would be inftantly doubled in 
 nominal value, and goverment would lofe 
 half its revenue. Exclufive, therefore, of 
 the injuftice of the alteration, in defrauding 
 the creditors of the ftate of their equitable 
 claims, government would be eventually 
 involved in greater difficulties, by the fame 
 nominal revenue polTeffing no more than half 
 the power which it poifTefled before. 
 
 The
 
 ( 173 ) 
 
 The adulteration of the coin has the 
 fame efFeft with the rife of its denomina- 
 tion. 
 
 Thefe expedients have not been latterly 
 reforted to by any country, as paper has, 
 for the moil part, fupplied the requifite 
 increafe to aflift the operations of govern- 
 ment. 
 
 In the reign of Elizabeth, America firil 
 made its regular remittances to Europe, and 
 necefTarily augmented the currency of this 
 country in a fimilar proportion with the 
 currency of others. Thefe fupplies pro- 
 duced at firft- a powerful fenfation, and 
 raifed the price of produce during her reign 
 one third, as the exiiling ftock of fpecie was 
 at that time comparatively inconfiderable ; 
 but as money is imperifhable they gradually 
 became of lefs and lefs moment, as every 
 fuccefTive year they had a lefs eftedi than the 
 year preceding, from bearing a lefs propor- 
 tion to the aggregate quantity; but they
 
 ( 174 ) 
 
 ftill operated to a dcprelTion of money, 
 though in a lefs ratio* From her reign, 
 therefore, to the reign of WilUam the Third, 
 the value of money continued to decline, 
 liioiLTgh with abated acceleration. 
 
 In his reign the increafe of currency, by 
 fa6titious money, was firft effecSled to fome 
 extent. The efl-ablifliment of the bank of 
 England co-operated with the banks on the 
 continent, and the annual remittances from 
 America, to augment the geneial depreffion 
 of money. 
 
 The banks of Venice and Amflerdam had 
 been already inftituted, and had, in fome 
 degree, contributed to its, depreffion, by the 
 facility which they gave to the fulfilment of 
 engagements without the intervention of 
 money. Tn whatever infiance a fa6i"itious 
 money performs the office of real money, 
 and a6ls at the medium of exchange in the 
 transfer of commodities, it operates to an 
 increafe of currency, and a confequent de- 
 preffion
 
 ( ^75 ) 
 
 predion of money, in proportion to the ex- 
 tent of its agency, and the number of pay- 
 ments which it is capable of tranfa6Ving. 
 It is of no confequence by what fubftitute the 
 facilitation is efFe6ledj whether by the transfer 
 of credit in the books of the bank, as at Am- 
 fterdam, or by tlie iflue of paper for general 
 circulation, as in the inftance of the bank of 
 England ; they both operate to the depref- 
 fion of money in proportion to the faciUties 
 which they afford ; but the facilities are 
 much greater in the one inftance than in 
 other, and necelTarily occafion a greater de- 
 prelTion. By the transfer of credit in the 
 books of the bank, the accomodation is 
 principally afforded to merchants, and the 
 payments are for the moil part limited to 
 commercial tranfaclions. But the notes 
 of the bark of England, though, in the firft 
 inflance, for the mofl part advanced to 
 merchants, have a wide and extenfive cir- 
 culation, and mix equally with fpecie in 
 the cuflomary relations of domeftic intcr- 
 courfe. All other factitious money condu- 
 ces,
 
 ( 176 ) 
 
 ces, in the fame manner, to the general de- 
 prefTion of fpecie, in proportion to the free- 
 dom of its circulation, and the quantity of 
 money which it is capable of fparing for the 
 tranfaflion of other payments. Though 
 bills of exchange, promiffory notes, and the 
 notes of goldfmiths had contributed, previous 
 to the inflitution of the bank of England, 
 to this depreflion, yet their circulation was 
 principally limited to the negotiations of 
 commerce, and were feldom admitted as 
 current payment, in the ordinary bufmefs of 
 retail trade j their circulation, therefore, was 
 lefs extenfive, and their fubftitution for fpecie 
 lefs general. From the reign of William 
 the Third to the prefent times, not only the 
 paper of this country, but the paper of the 
 continent, has confiderably augmented from 
 the numerous banks which have been efta- 
 blifhed in the principal towns. The vaft 
 iiTue of this paper has tended, in a greater 
 degree than the influx of bullion, to acce- 
 lerate the deprefTion of money j and fucli 
 
 has been its powerful operation during ttie 
 
 prefent
 
 ( >77 ) 
 
 piefent reign, that it has depreciated the va- 
 lue of money to a greater extent than the 
 firft fertihty of the American mines in the 
 reign of EUzabeth; 
 
 It is fomewhat fingular that this remark- 
 able depreiTion of money, which has exceeded 
 the depreciation of any former period, Ihould 
 have efcaped the acute obfervation of Dr. 
 Adam Smith. But he had aflumed the prin- 
 ciple that tlie price of corn was the befl 
 ftandard of its value, and by an exclufive 
 attention to the price of this commodity, 
 without inquiring into the advance of others, 
 he was inadvertently led to conclude, that 
 money had not materially depreciated during 
 the laft century. He did not fufficiently re^ 
 fle6l upon the extended cultivation of this 
 produce from the improvement of agricul- 
 ture, which nccelfarily prevented the advance 
 of its price in comparifon v/ith other com- 
 modities that had not increafed in a fimilar 
 proportion. In addition to this circum- 
 flance, he was unaccountably inaccurate in 
 N his
 
 ( >78 ) 
 
 his review of the efFe61:s of paper circulation, 
 which Mr. Thornton, in his late pubhcation, 
 has fatisfa6lorily explained. He had formed 
 a conclufion, that a factitious money could 
 only fupply the place of that quantity of 
 gold which would have otherwife circulated 
 in its ftead j and as he was of opinion that it 
 caufed no augmentation of the general circu- 
 lation of the country, he of courfe concluded 
 that it had no tendency to depreciate the va- 
 lue of money. His refie6lions, therefore, 
 were folely confined to the influx of bullion 
 from America, and as he thought that the 
 annual fupply did not materially exceed the 
 annual confumption, he drew the inference 
 that no depreffion had taken place in the 
 courfe of the century. 
 
 But the table of Sir George Schuckburgh 
 Evelyn is a mallerly refutation of this opi- 
 nion. In the conllruction of his table, the 
 learned author has taken the price of many 
 oihcr commodities as well as corn for the di- 
 rection of his judgment, and has formed a 
 
 more
 
 ( ^79 ) 
 
 more accurate conclufion on the depreflion 
 of money, by the mean appreciation of all, 
 than could have been formed By an exclufive 
 attention to the particular value of a fmgle. 
 article. The table exhibits, in a comprehen- 
 five view, the value of money, in arithme- 
 tical proportions, from the conquefl to the 
 prefent times. Its publication is an honour- 
 able acceilion to the literature of the age ; 
 it is executed with an ability and judgment 
 worthy of the diftinguilhed talents of its 
 fcientific and accomplifhed author, who has 
 dire6led the hiftorical reader through a mafs 
 of matter, before inacceffible, and has ena- 
 bled him to eftimate, with a near approxima- 
 tion to truth, the private wealth and the public 
 refources of the country through every reign. 
 But, important as it is to the hiflorian in the 
 review of paft events, it is ftill more impor- 
 tant to us, at the prefent period, for the di- 
 re<!:l:ion of our future policy. 
 
 If the arithmetical proportions of this ta- 
 ble be examined, it will be feen that the va- 
 
 N 2 lue
 
 ( 'So ) 
 
 lue of money depreciated to a greater exterit ' 
 from 1750 to 1800 than from 1550 to 1600, 
 in the reign of Elizabeth. 
 
 In the firft chapter of this work 1 attempt- 
 ed to prove that an increafe of currency was 
 not an increafe of wealth; and that wherever an 
 augmentation occurred aproportionate depref- 
 fion of money enfued, by caufing the fame quan- 
 tity of produce to exchange for more money, 
 and not the additional money to exchange for 
 more produce. If this pofition be corre6l, the 
 increafe of currency by paper muft caufe the 
 fame redu6lion in the value of money, in pro- 
 portion to the aftivity of its circulation as an 
 increafe of currency by fpecie. But a redu6lion 
 in the value of money and an advance in the 
 price of produce, are fynonimous terms .; one 
 cffe6l cannot take place without the other ; 
 and if paper depreciate money, it muft ad- 
 vance in a fimilar proportion the prices of 
 the articles of fubfiftence and luxurv. 
 
 In
 
 ( iSi ) 
 
 In the recent publication s~on the tendency 
 of paper to deprefs the value of money, the 
 difcuiTion has been generally limited to the 
 particular paper of this country, and the 
 prices of produce of the two or three lall 
 years of the prefcnt period, when the fluctu- 
 ation of feafons, and the variation of fupply, 
 make it extremely difficult to fubftantiate the 
 advance from an increafe of paper by parti- 
 cular ilkiftration. But if a furvey be taken 
 of thefe laft fifty years, and it be found that 
 the value of money has almoft depreciated 
 one half, that five hundred pounds in 1750, 
 would have nearly commanded the fame 
 quantity of produce that a thoufand pounds 
 would in i8co, and an enquiry be made 
 into the caufe of this depreciation, no doubt 
 whatever can exift but that the increafe of 
 paper has been the great and leading caufe 
 of its reduction. 
 
 There is every rcafon to conclude, that the 
 late peculiar high price of provifions was oc- 
 /rafioned by a fuccefllon of unfavourable fea- 
 fons
 
 ( l82 ) 
 
 fons, as the exifling flock, at the time of the 
 advance, was confumed without any reduc- 
 tion in its value, and as the former prices 
 were refumed upon the fubfequent return of 
 the cuflomary fupply. The depreciation of 
 money moves not with fuch fudden advance- 
 ment ; it has a filent and inlenfible courfe, 
 and, " like the inaudible and noifelefs foot 
 of time," it fteals upon the vvorld without 
 their perception of its progrefs. 
 
 But that the general depreciation of money, 
 during thefe laft fifty years, has more par- 
 ticularly originated from an increafe of pa- 
 per than an increafe of bullion, there can be 
 no doubt, or the depreiTion of this period, 
 when the fupplies from America have been 
 no greater than ufual, would not have been 
 equal to, much lefs have exceeded, the de- 
 prelTion of former periods. 
 
 An increafe of paper has the fame influ- 
 ence on prices as an increafe of fpecie, if it 
 be capable of tranfafling the fame quantity 
 
 of
 
 ( i83 ) 
 
 of payments, and circulate at par, as its 
 power mufl be eftimated at its current, and 
 not at its nominal value. If the currency 
 of the world confifted of two hundred mil- 
 hons of fpecie, and two hundred millions of 
 paper, circulated in the fame manner as 
 fpecie, the price of produce would be doubled 
 by the addition of paper. Dr. Adam Smith 
 had conje6lured, that paper could only fup- 
 ply the place of the gold that would other- 
 wife circulate in its flead. But, in a6ling as 
 a fubflitute for gold, it does not withdraw 
 its equivalent in fpecie from the general 
 purpofes of circulation, though it may lead 
 to its departure elfewhere to maintain the 
 equilibrium of the meafure of value. 
 
 If it be true, as remarked in the firft chap- 
 ter, that money is conftantl) dire^led by in- 
 dividual intereft to an uniformity of ftan- 
 dard, it is obvious, that it cannot be dep relied 
 in one country to a much greater extent 
 than it is in another; and that no na- 
 tion, either by fpecie or by paper, can poliefs 
 
 a greater
 
 ( i84 ) 
 
 a greater relative currency than another. 
 The currency of one country may confift of 
 a greater proportion of paper than the cur- 
 rency of another. It is even pofiible that 
 one may confiil: entirely of paper and another 
 entirely of fj)ecie, as is almofl in (lanced in 
 the prefent ftate of the currency of this 
 country and France. As we augmented our 
 currency above its relative proportion, by a 
 vaft ifTue of paper, v^hich France, from the 
 total failure of credit, during the revolution, 
 was incapable of meeting by a fmiilar policy, 
 though many attempts were made, great part 
 of our furplus currency has found its way 
 thither, to bring the meafure of value to a 
 common ftandard. We can no more retain 
 our money under this augmentation of pa- 
 per, than Spain and Portugal could retain 
 theirs under an increafe of fpecie. 
 
 The paper of one country has the fame 
 
 I tendency to deprefs the value of money as the 
 
 paper of another; it is of no confequence 
 
 where
 
 ( >S5 ) 
 
 where the increafe originates : whether Lon- 
 don, Lifbon, Paris, or Vienna. But where^ 
 ever it takes place, and augments the cur- 
 I'cncy of the country above its due propor- 
 tion, it will either lead to the departure of 
 fpecie, or wdll circulate at a difcount pro- 
 portionate to the excefs. 
 
 It has been contended, hj Mr. Thornton, 
 that country bank notes have no tendency 
 to raife the price of fubfiftence ; or, in other 
 words, to deprefs the value cf money to a 
 greater extent in this counti-y than elfewhere, 
 and augment our currency above its due pro- 
 portion. He fupports his argument by 
 proving, that country notes have no local in- 
 fluence to raife the price of provilions in the 
 place in which they circulate above their 
 price in other parts of the kingdom. But I 
 endeavoured to prove, in the firfl chapter, 
 that it was not only not in the power of any 
 one particular diftri^l to advance the price of 
 its produce above the prices of other dif- 
 tridls, but that it was not in the power of 
 
 any
 
 ( i86 ) 
 
 any one nation to advance its prices above 
 others, except by prohibition of intercourfe. 
 If the markets of the various nations of the 
 world have a reciprocal adion on each other 
 to maintain the general equilibrium of money, 
 ftill more mufc the markets of the fame na- 
 tion have a ftronger influence on each other 
 to the fame end. It is not by their local 
 influence, but by their general influence, as a 
 part of the general circulation of the v\^or]d, 
 that country notes have the fame tendency 
 with the notes of London, Paris, or Vienna, 
 to deprefs the value of money. From what- 
 ever quarter the paper ifliae, the efle6l is jufl: 
 the fame. It may be faid of every note fent 
 into circulation, what philofophers fay of a 
 pebble thrown into the ocean, that the fen- 
 fation extends to the fliores of the world. 
 
 Almoft all the nations of Europe have 
 augmented their currency by fome addition 
 of paper. The courfe of exchange is the beft 
 criterion how far the currency of one is 
 increafed beyond the currency of another. 
 
 By
 
 ( i87 ) 
 
 By the recent ilate of our unfavourable ex- 
 changes, it is evident, that our currency has 
 been augmented in a greater proportion than 
 any. But if all augmented it in the fame 
 proportion, the paper currency of the v/orld 
 may be carried to any extent, and the value 
 of money be deprefled in a much greater ra- 
 tio than it has hitherto been. 
 
 Having thus curforily flated the means by 
 which the value of money has been deprefltd 
 to a greater extent, within thefe laft fifty 
 years, than at any prior period of hif- 
 tory, I fliall now make fome inquiry into the 
 cfFefts of this depreHion upon the private 
 and public revenue of this country. 
 
 If, upon a general increafe of currency, 
 and a confequent alteration of the meafure of 
 value, the incomes of all are not advanced in 
 a fimilar ratio, an injury is fullained in every 
 inftance where an exception can be found. 
 As the firfl: efFe6l of an augmentation of cur- 
 rency is experienced in a proportionate ad- 
 vance
 
 ( i88 ) 
 
 vance in the price of produce, all thofe whole 
 incomes ariie immediately from its fale, fuf- 
 fer little inconvenience, as the prices of all 
 are nearly advanced in a iimiiar proportion. 
 The agricultural, the manufafturing, and 
 the mercantile clafles of the community, 
 therefore, for the moil part, augment their 
 incomes in the fame ratio in which the value 
 of money is deprefied ; but all thofe who re- 
 ceive a fixed income, by flipulated contrails, 
 invariably fufFer in proportion to the depref- 
 fion, as the fame nominal fum no longer re^- 
 tains the fame real value. 
 
 It is thus that the public revenue is 
 materially injured in all its branches j that 
 the property of the public creditor is di- 
 miniflied; and that the private rents and 
 annuities of individuals are in reality re- 
 duced, though they fVill confift of the fame 
 fam. 
 
 The general power of the revenue is dimi- 
 nifhed by the very means that are taken for its 
 
 increafc.
 
 ( i89 ) 
 
 Increafc, as the efFefl of taxation in advan- 
 cing the price of prockice, and caufmg an 
 increafe of currency, necefiarily depreffcs the 
 vahie of money. Upon this efFecl of taxa- 
 tion, I fliall treat in the fubfequent chap- 
 ter. 
 
 The moft material fufferer by the de- 
 preciation of money is the public creditor, 
 who has no power of renewing his contract 
 at ftated periods, and whofe intereft is paid 
 in the fame fum, whatever alteration bs 
 cfFe(5fed in the value of money. The pov/er- 
 ful agency of this principle in the real, 
 though not nominal, reduction of the na- 
 tional debt, will be the fubjecl of a feparate 
 chapter. 
 
 In the various other purpofes to which the 
 public revenue is appropriated, no doubt, 
 a partial injury is fuftained. The effect of 
 the depreciation of money, on that part 
 which is particularly applied to the payment 
 of the civil lift, v/as dillcuded v>'ith 2;rcat 
 
 ability
 
 ( 190 ) 
 
 ability In the lall: parliament ; and a fliort 
 addrefs to the pubHc has been written by- 
 Mr. Rofe, explanatory of its operation. 
 
 In the civil and military offices of ftate, 
 feme reda6lion of falary is likewife experi- 
 enced from this diminution of the meafure 
 of value, though in many inflances an in- 
 creafe has been effected proportionate to the 
 deprelTion. In the pay of the army and navy, 
 the advance has nearly held pace with the 
 alteration j and in the augmentation of the 
 falaries of the judges, the increafe is, in fome 
 degree, commenfurate ^ but from the ob- 
 loquy, that never fails to be attached to 
 minifters, vvho augment the falaries of the 
 various officers in the public departments of 
 the ftate, where the places are more imme- 
 diately under their pecufiar patronage, no 
 adequate compenfation has been made ; and 
 as a popular outcry againfc places and pen- 
 fions is the neceiTary confequence of the 
 jealoufy that charaderizes our conxlituton, 
 
 there
 
 ( 191 ) 
 
 there is little chance that any redrefs will be 
 granted. 
 
 In the private incomes of individuals, an 
 injury is fuftained in every inftance, where 
 a perfon has rendered himfelf, by contra6l, 
 incapable of increafing his income in pro- 
 portion as money depreciates, and who is 
 annually paid in the fame fixed fum, though 
 it no longer retains the fame power. Thefe 
 contracts are, more or lefs, general through 
 all the relations of fociety ; the rents of 
 land, the intereft of annuitants, and the 
 wages of labour, are univerfally eftimated 
 by their equivalent in money ; wherever, 
 therefore, a variation is effedted, a partial in- 
 jury necelfarily refults. 
 
 A partial injury is fuflained by the land- 
 lord, in proportion to the extent of the term 
 for which he grants his leafe. During thefe 
 laft twenty years, by the proportions of Sir 
 George Schuckburgh Evelyn's table, the value 
 of money has depreciated five fliillings in 
 
 the
 
 ( 192 ; 
 
 the pound, or five and twenty per cent. If, 
 therefore, a leafe of a farm had been granted 
 at the rent of four hundred a year for this 
 term, the landlord would have received at 
 the clofe of his leafe what was only equiva- 
 lent to three hundred at its commencement, 
 though he ftill continued to receive the fame 
 nominal rent. Upon the renewal of his 
 leafe he is generally fufficiently attentive to 
 his intereft, to laife his rent commenfurate 
 with the depreffion of moneys but during its 
 currency he is conftantly fuftaining a greater 
 and a greater lofs. Yet, as long leafes are not 
 very ufual, th^ proprietors of land fuffer lefs 
 injury than any clafs of the community, who 
 receive a fixed income by the medium of mo- 
 ney. 
 
 The advantage which is gained by the 
 tenant againfl the landlord, has no tendency 
 to efFe6l the real valufe of the land. Land 
 will ever retain its relative value, whatever 
 variation takes place in the ftandard of 
 money. It has often been remarked, that 
 
 taxation
 
 ( 193 ) 
 
 taxation, has a tendency to break down the 
 middle ranks of fociety, and that a perfon 
 cannot now live upon five hundred pounds 
 per annum, as he could formerly. When a 
 particular fum is mentioned, the remark is 
 jullj but the fame landed property that 
 formerly produced five hundred pounds a 
 year, will now produce a proportionate fum 
 to enable the proprietor to live with pro- 
 portionate comfort. Government certainly 
 takes fomewhat more than formerly i but 
 the difference is too unimportant to give any 
 countenance to this reflexion. 
 
 A comparifon has frequently been made 
 between the advantages of landed and fund- 
 ed property ; and the preference has in many 
 inftances, though with very little reafon, been 
 given in favour of the funds. The public 
 creditor is compelled to receive the fame no- 
 minal intercft, whatever deprefiion take place 
 in the value of money. lie has no means 
 of renewing his C()ntra6l, and demanding an 
 advance of income proportionate to tlie in- 
 O creafc
 
 ( 194 ) 
 
 creafe of currency. His capital fufFers the 
 fame diminution as his intereil. The rife or 
 fall of flocks is problematical, and cailiiot 
 fairly be brought into the comparifon, as it 
 may be at any given moment as much againft 
 as in favour of the proprietor. Erom 1780 
 he has loft one fourth of his principal and 
 interefl, without any poiiibility of recovery. 
 But though a landlord certainly fulfers dur- 
 ing the currency of his leafe, at the expira- 
 tion of the term he may invariably raife his 
 rent commenfurate with the alteration of the 
 meafure of value, and maintain himfelf in 
 the fame relative pofition in fociety : his 
 property will ever continue of the fame va- 
 lue. The perfon who twenty years ago 
 invefled his money in the funds, will find, 
 that, if he had invefted it in land, he would 
 have pofleifed one fourth more in income 
 and capital, than he can now command j 
 and the further he goes back, the greater will 
 be the difference, 
 
 A?
 
 ( ^95 ) 
 
 As tlie price of corn has not augmented in 
 the fame proportion with other produce, it 
 may perhaps be conjecbured, that landlords 
 do not receive the fame proportionate rent as 
 formerly : but by the improvements of agri- 
 culture, not only a greater quantity of ground 
 has been brought into tillage, but the fame 
 quantity is made to yield a greater produce • 
 which enables the proprietor of an efcate to 
 receive the fame income, though the fame 
 quantity of corn will not exchange for the 
 fame proportionate value. The augmented 
 fupply of corn is the beft teft of the improved 
 ftate of fociety. Another caufe of tlie com- 
 parative cheapnefs of corn, is, that its im- 
 port is not prohibited, unlcfs it be fold at a 
 very reduced price. It is therefore impracti- 
 cable to raife it to any extent above the 
 prices of the continent, unlefs, as fometimes 
 happens, its export from foreign nations is 
 refi:ri6lcd. 
 
 The private annuitants by bond, mort- 
 gage or jointure, fuffer in tlie lame manner 
 O 2 as
 
 ( 196 ) 
 
 as the public creditors, by the general de- 
 prefTion of money. They have no power of 
 renewing their contra6ls j and no means of 
 redrefs, whatever alteration enfue. 
 
 In the wages of labour fome difcrimina- 
 tion is necefTary. The means of combina- 
 tion among the manufa6luring clafTes form 
 an evil to be redreffed, inftead of a remedy to 
 be encouraged : but the labourers in huf- 
 bgjidry have not the fame power. The late 
 enormous increafe of poor rates is in fome 
 degree evidence, that their wages have not 
 been advanced in an adequate proportion; 
 but the difficulty of elevating the labouring 
 poor, of whatever clafs, to a ftate of compa- 
 rative comfort is infuperable. An adjufb- 
 ment of the due proportion of the wages of 
 labour is among the moft difficult branches 
 of legiflative fcience j as an advance in the 
 price of labour is affixed on the produce, and 
 eventually renders the increafe unavailing. 
 The exertions which the leading chara(51crs 
 pf the country are now making to augment 
 
 the
 
 ( ^97 ) 
 
 the quantity of produce, are the moft ef- 
 fectual means for their relief ^ as it will 
 enable their labour to exchange for more 
 fubfiftence, and, in proportion to the excefs, 
 ameliorate their condition. 
 
 NO
 
 ON THE 
 
 HEFOmMATION 
 
 PAPER CURRENCY OF THIS COUNTRY, 
 
 CHAP. V. . 
 
 •*■ HE increafe of the public revenue appears 
 to me to have been the principal caufe of 
 the progrefTive increafe of the paper cur- 
 rency of this country during the preceding 
 century. 
 
 It is an ^ftabhrtied principle in taxation,, 
 that all duties fliould be paid by the con- 
 fumer. For this purpofe, whenever a tax is 
 ioipofed on any particular produce, an ad- 
 vance
 
 ( 199 ) 
 
 vance is made in its price, commenfai.jite w'th 
 the impofl. But as the exifting cuiTqncy qf 
 the country is no more than adequate to cir- 
 culate its produce at the exifting prices, if 
 the price cf any particular commodity be 
 advanced, more money will be requifite for 
 its movement, and an increafe of currency 
 mufl: be effected to fupport its transfer. But 
 an increafe is not only neceffary to enable 
 the grower to raife the price of the produce 
 on Vvhich the duty is impofed j but an ad- 
 ditional increafe is requifite to enable the 
 confurner to pay for it. If the income of 
 the confurner continued the fame, it could 
 only be occupied in effe6ling the fame pay- 
 ments which it previoufly made. If larger 
 payments be required, a greater currency is 
 neceffaiy to facilitate their tranfa6lion. In 
 order therefore to remove the liability of the 
 grower, and to give effccl to the principle 
 that the duty flhould fall on confumption, it 
 is not only requifite that an increafe of cur- 
 rency fliould take place to raife the produce 
 
 of
 
 ( 200 ) 
 
 of the grower; but an increafe is likewife re- 
 quifite to raife the produce or labour, from 
 which the income of the confumer proceeds. 
 It is thus that the partial impofition of a 
 duty on any one particular commodity re- 
 fembles, in its operation, a general impoft on 
 all, by occafioning a general advance of ex- 
 ifting prices. 
 
 It may perhaps be imagined that an in- 
 creased rapidity of circulation may be capa- 
 ble of fupporting the advance, without an 
 augmented currency ; but, whenever there is 
 the fmallefl tendency to an infufficiency of 
 currency, an immediate ftagnation of trade 
 will enfue from the difficulty of carrying on 
 the cuflomary fales ; and fo far from an in- 
 creafed demand of money operating to an 
 accelerated circulation, it never fails to im- 
 pede its a61ivity by retarding the exchange 
 of commodities. Circulation will always 
 be mofl rapid when the fupply is moft 
 abundant. 
 
 In
 
 ( 201 ) 
 
 In the infancy of the prefent fyilem of our 
 revenue laws in the reign of William and 
 Mary, the nation was peculiarly embar- 
 rafTed, by the inadequacy of its currency to 
 fupportthe advance of prices, in confequence 
 of the increafe of taxes. Previous to the 
 eftablifhment of the bank of England, when 
 no power exiiled of augmenting our curren- 
 cy in proportion to our exigencies, there 
 was great difficulty in effe6ling their pay- 
 ment. It is fele6led by Mr. Chalmers from 
 Davenant, that, upon the impofition of a 
 duty, the burthen relied upon the grower, 
 by a diminution of price proportionate to 
 the impoft, inllead of an advance. This 
 partial prefTure was pecuharly injurious, as 
 it precluded his indemnification, and caufed 
 a redu6lion of income at tlie time that his 
 contributions to the flate were augmented. 
 Had not the fpirit of the times been re- 
 markably zealous in fupport of the new con- 
 flitution, it would have been fcarcely prac- 
 ticable, to have carried on the regular ope- 
 rations
 
 ( 202 ) 
 
 rations of government under fucli circum- 
 ilances. 
 
 This eftecl of taxation originated in the 
 infufficiency of our currency to circulate the 
 exifting produce at the advanced prices, 
 which the impofition of duties made necef- 
 faryj but the eftabhfliment of the bank of 
 England had an immediate and fenfible ope- 
 ration, notvvithftanding the difficulties atten- 
 dant on a new inftitution, to relieve the 
 nation from the embarralfments with which 
 it was oppreffed. From the foundation of 
 this company, an increafe of the revenue has 
 been attended with lefs oppreffion, as the 
 currency of the country has invariably 
 augmented in proportion to its neceffities. 
 Upon every fubfequent addition to our pub- 
 lic burthen, the grower or manufaflu^er 
 has uniformJy advanced the price of the 
 produce on which the duty was levied, for 
 the purpofe of impofmg the ultimate lia- 
 bility on the confumer j and the confamer 
 has advanced the price of the produce from 
 
 which
 
 ( 203 ) 
 
 which his income arofe for additional means 
 to accomplifli its payment. The facility 
 which the bank gives . to thef© advances 
 conftitutes one of its chief utilities ; as with- 
 out an increafe of currency, it would be 
 impra6ticable to augment the incomes of in- 
 dividuals at the fame time with the revenue 
 of government. 
 
 This eventual tendency of taxation to 
 extend the operation of the duty beyond the 
 produce on which it is impofcd, has hitherto 
 been infufficiently noticed by the public. It 
 has been generally concluded, that it only 
 necefiarily occafioned an advance on the 
 commodities fcibjefted to the duty ; and that 
 a tax on luxuries had no influence, im- 
 mediate or remote, on the neceiTaries of life. 
 But fmcc, by fubfequent extenfion, an ad- 
 vance is made in the produce exempted frorn 
 duty for the purpofe of fupporting the rife 
 on the produce on v.hich it is Icned, a par- 
 tial tax on one produce becomes a general 
 tax on all) and. that, which, in the firft 
 
 inllance,
 
 ( 204 ) 
 
 inflance, appeared to have an exclufive bear- 
 ing on the rich, is eventually diftributed in 
 a fimilar proportion on the poor ; and, un- 
 lefs the wages of labour be advanced in an 
 adequate ratio, it is evident that the public 
 burthen prefTes with more feverity on them, 
 than on the opulent. 
 
 But though the increafe of tlie public re- 
 venue appears to me to have been the moft: 
 efficient caufe of the progredive increafe of 
 paper, yet it has been frequently remarked, 
 and was much relied upon, by all the com- 
 mercial chara6lers who were examined be- 
 fore the Secret Committees of the Houfes of 
 Lords and Commons, that the increafed 
 fcale of tranfa(5lions in this country required 
 an augmented currency ; though none were 
 defired to define the extent. There is no 
 doubt but that an increafe of produce would 
 have required an increafe of currency, fo far 
 as to have maintained the equity of exifling 
 engagements, by preventing a reduction of 
 prices, which might have turned the con- 
 tract
 
 ( 2CS ) 
 
 tra6l as much in favour of thofe who receive 
 then' equivalent in money, as it now is in 
 favour of thofe who pay. But the incrcafe 
 for this purpofe would not have been confi- 
 derable. It forms* fo fmall a part of the 
 augmentation which has taken place, that it 
 is hardly neceflary to mention it as one of 
 the efficient caufes : fo far from increafing 
 only in the fame proportion with produce, 
 our currency has increafed to fuch an extent, 
 as to advance its price in a ratio far beyond 
 all former precedent. To what extent the 
 increafe was neceflary, for the purpofe of 
 fupporting our fyflem of taxation, it is im- 
 poflible for me to calculate : but, in order to 
 fupport the increafed fcale of o'lr tranfac- 
 tions, it was only neceflary fo far as to pre- 
 vent a reduftion of exifl:ing prices. 
 
 Having thus fl:ated what appear to me the 
 neceffary caufes of an increafe of currency, 
 I fliall now make fome inquiry into the 
 paper circulation of this country, and en- 
 
 foxir 
 
 deav(
 
 ( 2C6 ) 
 
 deavour to point out the mod eligible means 
 of its reformation. 
 
 The greater part of our paper currency is 
 iflued by the Bank of England. No doubt 
 whatever can be entertained refpedling the 
 utility of this efLablifliment. It was infli- 
 tuted at a difficult and dangerous period, 
 when a great increafe of taxation made an 
 increafe of currency neceflary to fupport the 
 revenue, and relieve the nation from the 
 difficulties under v/hich it laboured. During 
 a period of an hundred years, and through 
 the variable fuccefs of five wars, it has uni- 
 formly contributed its fupport to the ftate, 
 and preferved the confidence of the public s 
 unlefs the momentary prefiiire in the year 
 1745 can be faid to form an exception. 
 During this time it pofi^efled the exclufive 
 refponfibility of fupplying the nation with 
 fpecie, and from its firfl inftitution to the 
 termination of the American war no fear- 
 city was experienced. 
 
 From
 
 .( -207 ) 
 
 From its refponfibility to exchange its 
 paper for fpecie, previous to the fufpenfioii 
 of cafh payments, it was materially iiite- 
 refled in preventing our currency from being 
 augmented above its relative proportion. 
 As the courfe of exchange is the exclufive 
 criterion how far the currency of one coun- 
 try is augmented above the currency of 
 another, the bank was careful to regulate its 
 paper in proportion to its variation. When- 
 ever exchange was adverfe, it immediately 
 felt the effedl by a drain upon its houfe for 
 fpecie to be remitted to the continent. It 
 was inftantly fenfible that our currency was 
 augmented above its proportion 3 and by 
 contrafting its paper, and reducing the ge- 
 neral means of payment, it forced out a 
 certain quantity of produce, to reftify the 
 balance of trade, and bring exchange to a 
 par, as was noticed in the fecond chapter of 
 this work, in treating on the fubjecl of coin- 
 age. Though the fpecie of the country was 
 clandeftinely exported, pending the unfavour- 
 able
 
 ( 2CS ) 
 
 able exchange, yet the flores of the bank 
 were frequently adequate to fupply the 
 quantity demanded, and throw into circula- 
 tion a fufficiency of coin to uphold the credit 
 of its paper, till the reftification of the ba- 
 lance was effe6l"ed; or, if inadequate, it 
 purchafed, though at a lofs, a competent 
 quantity for the purpofe. But it fo far 
 limited the general amount of its paper, as 
 to prevent the frequent recurrence of unfa- 
 vourable exchanges, which might lead to a 
 departure of fpecie to fuch an extent, as to 
 caufe an alarm at the fcarcity, and fhake the 
 foundation of its credit, by a confequent 
 drain upon its depofits. 
 
 But the peculiar excellence of this efta- 
 blifhment confided in its exclufive regulation 
 of the whole paper currency of the country, 
 by which it was enabled to effefl its increafe 
 or reduction in proportion to the exigency of 
 the times, without much embarrafsment to 
 itfelf or the public. Though, by a liberal 
 application of its refources, it promoted the 
 
 private
 
 ( 209 ) 
 
 jirivate interefls of individuals, and relieved 
 the financial difficulties of government ; yet, 
 by a judicious and temperate ufe of its power^ 
 it kept the currency of this country in 
 fuch a proportion with the currency of 
 others, as to leave a fufficient quantity of 
 fpecie in conftant circulation for all the com- 
 mon purpofes of domeflic intercourfe. The 
 ability with which it regulated our currency 
 fecured the ftability of its credit, for, 
 though during the depreffion of exchange, a 
 demand was made for fpecie from the profit 
 attainable by its clandefline remittance 
 abroad, yet, throughout the ^whole of the 
 preceding centuiy, no drain was made from, 
 the flighted afperfion on its credit. 
 
 Its difficulties commenced with the efta- 
 blifhment of country banks ; and, during the 
 circulation of their paper, its difficulties 
 muft continue. It appears to me that all 
 the commercial and financial embarrafsments 
 which harrailed the country during the late 
 P war.
 
 ( 210 ) 
 
 war, exclufively originated in the fufFerancc 
 of their notes. 
 
 In order therefore to point out the means 
 of reform, it is neceffary to inveftigate the 
 poUcy of this indulgence. 
 
 In this review, I (hall endeavour to prove 
 that ,the paper of country banks muft ever 
 form an inefficient and dangerous medium 
 of circulation, from its liability to fudden 
 contra6tion in the period of alarm j and its 
 tendency to as fadden an increafe in the 
 moment of fecurity ; and that its continu- 
 ance is inconfiftent with the {lability of the 
 national bank, and the general interefls of 
 the country. 
 
 Between the termination of the American 
 and the commencement of the late war, 
 country banks were inftituted in all the prin- 
 cipal towns of the kingdom ; and up to tlie 
 year 1793, ^^^^^^' i"^otes had a free and eafy 
 circulation, without exciting much public 
 
 uneafinefs^
 
 { 211 ) 
 
 uneafmefs ; though the bank entertamcd 
 an early prejudice againft them, from the 
 difficulties which were likely toenfue to their 
 own eftablifhment. Upon the breaking out 
 of the war, and the firft tendency to alarm 
 in the public mind, their {lability was put 
 to the tcft. Tlic mere agitation occalioned 
 by fuch an event, was fufficient to excite a 
 fufpicion of their credit : and, when once ex- 
 cited, its fuppreffion was impracticable : 
 though at firil partial and infignificant, it 
 fpread with irrefiftible rapidity, and increafed 
 in force as it increafed in extent. The 
 greater part of their notes was inftantiy con- 
 tracted, and the currency of the country was 
 reduced to fuch a degree, as to caafe the ut- 
 moft diftrefs from an infufficiency of means 
 to efFe6t the cuftomary payments. It is im- 
 p:)ffible for me to calculate the quantity 
 withdrawn from the purpofes of circulation: 
 but I fliould not think that the reduftion 
 would be overftated at three millions. This 
 fuddcn contraction of (o large a propoition 
 of our circulating medium, neccilarily dif- 
 P 2 ablcd
 
 ( 212 ) 
 
 abled the fulfilment of engagements, and 
 produced an extent of calamity unparalleled 
 in the hiftory of this, or any other countiy. 
 No lefs than * one thoufand three hundred 
 and four bankruptcies were the confequence 
 of the redu6lion. 
 
 In this crifisy they riiade application to 
 tlie Bank of England for relief. But as the 
 directors were alarmed at the difRculties that 
 threatened their own inftitution, from the 
 preceding ilTue of their paper, affiftance was 
 refufed. The metropolis foon became dif- 
 trefled in the fame proportion with the 
 country towns j as great part of its currency 
 was withdrawn to fill the chafm which had 
 been made in the currency of the other parts 
 of the kingdom. The mifehief, already 
 extenfive beyond all former precedent, was 
 likely to be produ<^ive of flill greater cala- 
 mity, had not government interpofed to 
 arreft its progrefs : the ifTue of exchequer 
 bills was peculiarly neceflaryat this jun6lure, 
 
 Vide Clulracrs.. p. 290. 
 
 thev
 
 ( 213 ) 
 
 they provided the couiitiy with its due pro 
 portion of currency, and prevented any fur- 
 ther extenfion of the mifchief. 
 
 Though many country banks efcaped vs'ith- 
 out injury in the general fliock, yet none 
 were free from alarm. None could tell how 
 foon the blow might be repeated, nor what 
 degree of injury it might be capable of effect- 
 ing. As foon as the public confternation 
 fubfided, they took the only means in their 
 power to provide againft the evil v*^hich might 
 refult from its return, by fecuring a con- 
 nedlion with the London bankers. By this 
 conne6lion, they were enabled to procure 
 the fupport of the Bank of England, not- 
 withflanding its repugnance to ailift them. 
 Though, previous to the fufpenfion of caHi 
 payments, no private London banker applied 
 for affiftance in his own name, as the appli- 
 cation might have hem deemed a refle6lion 
 on his credit ; yet afTiflance was eafily pro- 
 cured, by requeuing his cudomors to fend 
 bills in theirs to be difcountcd fur him. By 
 
 this
 
 ( 214 ) 
 
 this intermediate agency, the London bank- 
 ers were capable of extending the loans of 
 the bank to their country connexions, and 
 of giving them that fupport which had been 
 refufed to their direcl application: they 
 thus fecured to themfelves the power of 
 offering a certain quantity of bank notes, or 
 fpecie, upon any fudden afperiion on their 
 credit. 
 
 In the year 1797, another alarm gave rife 
 to another ful'picion of their fValpility. But 
 by the meafures which they had taken, the 
 prefs was in reality dire6led againft the 
 Bank of England inftead of themfelves. Im- 
 mediately that a run was m.ade upon them, a 
 drain was made upon the bank for fpecie 
 through their London connexions, and vaft 
 fums were remitted for their fupport. In 
 proportion as the a arm became prevalent, 
 and paper became contraXed, fpecie was tjie 
 more and more demanded to fupply the va- 
 cuum. The bank, apprehenfive of being ex- 
 hauiled of its - depofits, purfued its accuf- 
 
 tomcd
 
 ( 215 ) 
 
 tomed" policy, and reduced the amount of its 
 notes. By this diminution it augmented, in 
 a greater degree, the general diftrefs, without 
 any relief to itfelf, as the fmalleft quantity of 
 paper which it continue permanently in cir- 
 culation would be fufficient, by frequent 
 exchanges, to draw out any given fum of 
 money, and eventually to drain it of its 
 flores. As this policy, therefore, had no 
 other efFe6l than to aggravate the evil which 
 it was intended to remedy i and as, by an 
 increafed demand for fpecie, great danger 
 exifted of a totarprivation of its depofits, it 
 was reduced to the neceffity of applying to 
 government for fupport, and fufpending its 
 cafh payments. But no blame is imputable 
 to the directors ; they found their houfe in- 
 volved in difficulties by no imprudence of 
 their own, and adopted the line of con- 
 duct which exilling circumftances, in their 
 opinion, demanded. No doubt whatever 
 can be entertained, but thai tbe order of 
 council was necellary at the time to prevent 
 worfe confequences. 
 
 But
 
 ( 2i6 ) 
 
 But thoagh the order of council was 
 neceflary at the preffure of the moment, yet 
 the dirc6lors appear to me to have mifunder- 
 flood the nature of the evil with which they 
 had to contend. They did not difcriminate 
 between the caufe that ufually led to a drain 
 upon their houfe for fpecie, and the caufe 
 that led to it in this particular inftance. It 
 has already been repeatedly remarked, that 
 when the currency of the country was aug- 
 mented above its due proportion, exchange 
 became unfavourable, and caufed the depar- 
 ture of fpecie to maintain the common ftan- 
 dard of money j and as, during the depref- 
 fion, a demand was made upon the banl^ 
 for ipecie, that it contracted the amount 
 of its notes,, and, by reducing our currency 
 to its relative pioportion, prevented the 
 further demand for gold by preventing the 
 profit attainable upon its remittance. They 
 found, therefore, that whenever there was 
 an unufual drain, the moil efFeftual means 
 of counteradling the prefiure, v\^as by a di^ 
 minution of its paper in circulation > and hi 
 
 everv
 
 ( 217 ) 
 
 every infl^nce, which had hitherto occurred, 
 this poHcy was corre6V, becaufe the drain 
 had been occafioned by a redundant cur- 
 rency. But their difficuhies, in the prefent 
 inftance, in reality arofe from too great a 
 diminution of currency, in confequence of 
 the I'udden difappearance of the countiy 
 notes, and not from too great an incrcafe, 
 as a refercrice to the pourfe of exchange 
 would have fatjsfadlorily explained to them. 
 Upon the firfl commencement of the con- 
 traftion, and for fome months previous to the 
 order of council, the courfe of exchange had 
 been favourable, which afforded conclufive 
 teftimony, that the drain could not be <)c- 
 cafioned by a redundant currency 3 but, with- 
 out adverting to the difference of the caufes, 
 their minds were fo prepoffefled with the 
 idea, that a further contraction was necef- 
 fary , that they urged government to pay up 
 the advances which it had received, in order 
 that they might ftill further diminifh their 
 notes, from a conviction, that the more they 
 were diminifhed, tlie kfs would be the drain. 
 
 But
 
 ( 2i8 ) 
 
 But they now found, what had never hither- 
 to happened, that the more they contra6led 
 their paper the more the demand for fpecie 
 increafed j and as this was a fituation which 
 baffled all their experience, they were totally 
 incapable of applying the proper remedy. 
 Mifunderftanding, therefore, the nature of 
 the evil, and contracting their notes, when 
 they v/ere in reality called upon to fill the 
 chafm, which the reduftion of the country 
 paper had made, they neceilarily augmented 
 their difficulties. They did not difcriminate 
 between the drain occafioned by an aug- 
 mented, and the diain occafioned by a di- 
 miniflied, currency j but, purfuing the fame 
 policy in the one cafe as in the other, they 
 aggravated the evil to their own difad- 
 vantage. 
 
 It thus appears, that the two great failures 
 with which we had to contend, amidft the 
 I difficulties of war, originated in the circula- 
 / tion of the paper of country bajiks, in v/hich 
 / the public never repofed a fatisfaclory con- 
 fidence i
 
 { 219 ) 
 
 fidence; and which; from its peculiar lia- 
 bility to fiifpicion, and fiidden contraction 
 in the moment of alarm, miift ever form a 
 dangerous and inefficient medium of circu- 
 lation. 
 
 Another evil attending the circulation of 
 their paper, is, its tendency in the period of 
 fecurity, to increafe the currency of the 
 country above its relative proportion. From 
 the refponfibility of the Bank of Eng- 
 lanl to exchange its notes for gold, previ- 
 ous to the fufpenfion of ca(h payments, 
 its paper was always regulated by the rela- 
 tive amount of our currency. But there is 
 no controul on the ilfue of the paper of 
 country banks. It is faid, by Mr. Thornton, 
 that they are, in fome degree, necelfitated to 
 limit their notes in proportion to the amount 
 of the paper of the Bank of England. But 
 this controul appears to me more fpecious 
 than efficient. During tlie pubhc confi- 
 dence in their paper, few bank notes ai'e 
 w.uitcd, and little variation is experienced 
 
 i]i
 
 ( 220 ) 
 
 in its amount, whether the difcounts 6f the 
 bank are increafed or diminifhed. The only 
 efficient controul is its liability to fufpiclon; 
 but as, during the interval of fecurity it cir- 
 culates with the fame freedom as the paper 
 of the bank, whatever quantity the public 
 will endure is piiflied into circulation with- 
 out any regard to the amount of bank notes, 
 with which it then has little concern. 
 
 Ill December, 1795, betv/een the two dif- 
 aftrous periods of 1793 and 1797, the bank 
 was as much diftrefled by the fudden increafe 
 of their paper, as in the two years above al- 
 luded to by its fudden contraftion. As the 
 colle«5live currency of the country cannot be 
 increafed in any confiderable extent above its 
 relative proportion, the greater the amount 
 of country notes, the lefs muft be the 
 amount of the paper of the Bank of Eng- 
 land: and as, in the year 1795, the countiy 
 banks had, in a great degree, recovered from, 
 the fliock of 1793, and gained additional fe- 
 curity by their London conne6lions, they 
 
 again
 
 { ^21 ) 
 
 again preffed their notes into circulatioii 
 with fimilar avidity, and nccelFarily produced 
 a redundant currency. The courfe of ex- 
 change in confequence became unfavourable j 
 and, as pending its deprellion, a drain was 
 made upon the bank for the clandeftine re- 
 mittance of fpecie to the continent, it was 
 reduced to the neceflity of Hmiting its dif- 
 counts, to prevent any further demand. It 
 was thus compelled to afford a partial and 
 fcanty afliftance in fupport of the mercantile 
 credit of the city, from the onus to which it 
 was liable of fupplying any given quantity 
 of fpecie in exchange for its paper, v/hile the 
 country banks were profiting by the unli- 
 mited ilfue of their notes, without any fub- 
 jeclion to a fxmilar refponfibility. The em- 
 barraffinent which this refolution occafioned, 
 has been too repeatedly noticed to require 
 any comment from me. It is thus, that, in 
 the moment of alarm, they diitrefs the bank 
 by the fudden contradlion of their paper, 
 and in the moment of fccurity by its fud- 
 den increafe. 
 
 In
 
 ( 222 ) 
 
 In the fccond chapter of this work, I at- 
 tempted to prove, that it was materially 
 efiential to our commercial interefts, that 
 our currency fliould have a tendency to be 
 relatively lefs, inftead of relatively greater, 
 than the currency of other countries j but as 
 country notes, in the intci-val of fecurity, 
 countera6l this })olicy, it is obvious that 
 they lefTen our means of competition in the 
 foreign market, and retard our export trade 
 by the frequent recurrence of unfavourable 
 exchanges. 
 
 The total diiappcarance of our fpecie, in 
 confequence of this depreffion of exchange, 
 may not, by feme, be thought an evil, as it 
 may be faid to be of little confequence, 
 whether a piece of paper or a piece of gold 
 be given as tlie mcafare of value. But I am 
 conviiKcd, that it would, be a greater grati- 
 fication to all, if, inilead of receiving a 
 medium of no intriiiiic worth, they received 
 one of real value. It is .likewife to be re- 
 marked, that the notes of counti:y banks dc- 
 
 prefs
 
 ( 223 ) 
 
 prefs the value of money in proportion to 
 the fpecie, which they fpare for the tranf- 
 a6lion of other payments j which, if the cal- 
 culations of the fubfequent chapter be cor- 
 real, will not be thought an immaterial ob- 
 je6lion. 
 
 I before ftated, that the fpecie of this 
 country did not amount to five millions of 
 pounds fterling. If Mr. Newland's evidence, 
 relative to the excefs of the paper * above the 
 cafli payments of the Bank of England, in 
 the city of London, and if the excefs of the 
 paper of country banks above our fpecie, in 
 the other parts of the kingdom, be confidered, 
 I am confident that this afTertion will not 
 appear extraordinary. I was informed, not 
 long fince, by a country gentleman, whofe 
 half yearly rents amounted to one thoufand 
 fix hundred pounds, that he literally i-eceived 
 no more than one guinea in their payment. 
 This may be a fmgular inllance ; but every 
 
 * \ ;Jc Rcj)ori of llii; L'ommiUce ol' Sec.e:-y of llie Muule 
 ul Lords, page C'3. 
 
 pcrfbn
 
 ( iH ) 
 
 Jrerfon muil' be fenfible, from his own re- 
 ceipts, that the paper of country banks far ex- 
 ceeds thea mount of the fpecie in cuxulation. 
 
 From their firfl eftablifhment, therefore, to 
 the prefent moment,, the circulation of their 
 paper has involved this country in a con- 
 tinued feries of difficulties, without effeflihg 
 any one advantage to compenfate the evil. 
 The bankruptcies of 1793, the limitation of 
 difcounts in 1795, ^^^ fufpenfion of cafli pay- 
 ments in 1797, and the total difappearance 
 of fpecie, from the fubfequent unfavourable; 
 exchanges, in confequence of the ftibfequent 
 inif reafe of their paper, exclufively originated 
 in the fufferance of their notes, as a confli- 
 tuent part of the permanent currency of the 
 country, for which they are wholly inefficient. 
 
 But, through the various critical periods 
 of the preceding century, no event had any 
 cffe^ to lelfen the confidence of the public 
 in the ff abiUty of the bank of England 5 and 
 had not the country banks, by a mafterly 
 
 flrokc
 
 ( 225 ) 
 
 ftroke of policy, involved it in difgrace for 
 their own fecurity, there is no doubt but that 
 it would have difcharged its duties to the 
 public, without any imputation on its credit 
 through the late eventful conteft. In the 
 direftion of their attention to this fubjeil, I 
 truft that the public will confider, that there 
 is a material difference in thti inftitution of a 
 national bank, which circulates its paper for 
 tlie fupport of the public revenue and public 
 Credit, and the inftitution of private banks 
 that circulate their paper for individual ad- 
 vancement, and detriment the country for 
 their own exclufive benefit. 
 
 In order, therefore, to obviate the danger 
 which threatens the Bank of England upon 
 a return of cafh payments, and to prevent 
 the probable recurrence of the calamities of 
 1793 and 1797, it appears to me abfolutely 
 necelTary, that the circulation of country 
 notes ftiould be prohibited. But previous to 
 a difculTion of the moft eligible means of 
 effecling their abolition, it is neceliary to 
 (i_ make
 
 ( 226 ) 
 
 make iome obfervations on a contra6llon of 
 currency. 
 
 The effc6l that attends a variation of cur- 
 rency, whether by increafe or diminution, 
 feems not to have been hitherto fufficiently 
 confidered by the public. Though it be of 
 no confequence whether the produce of a na- 
 tion be moved by a currency of five miUions, 
 or a currency of fifty, yet it is of confequence, 
 that whatever be its amount, it fliould 
 fuffer as Httle variation as poffible. Every 
 variation in its amount efFe6ls a proportio- 
 nate variation in the value of money, and a 
 proportionate alteration in the fpirit of all 
 the exifting contra6ls of fociety, in which 
 money forms the meafure of equivalency 
 between the contra6ling parties. If currency 
 increafe from the commencement of a con- 
 trail, the receiver mud have lefs than his 
 equivalent, and the alteration would be in 
 favour of the payer : if currency be dimi- 
 nifhed from its commencement, the receiver 
 would have more than he ought, and the 
 
 variation
 
 ( 227 ) 
 
 variation would be againft the payer j be- 
 caufe, in the firft inftance, the fame quantity 
 of money would command lefs, and in the 
 fecond inftance, more than was intended by 
 the original agreement. In order, therefore, 
 to maintain the equity of exifting contrails, 
 it is effential, that currency fhould vary as 
 little as poflible. But the evil attending a 
 diminution is much greater than the evil at- 
 tending an increafe. As the exilling cur- 
 rency of a country is no more than adequate 
 to circulate its produce, at the exifting prices, 
 it is obvious, that if any redu6lion be made, 
 the remainder will be infufficient for the 
 purpofe. Either prices muft fall, or trade 
 muft ftagnate ; and as the fame fums would 
 not be attainable by the fame produce, it 
 would be impra6licable for the public to 
 make their ftipulated payments and fulfil their 
 engagements. The calamities of 1793 fuf- 
 ficicntly point out the mifchief that would 
 enfue. But in an increafe of currency, all 
 contra6ls are performed with greater facility, 
 and though the receiver be injured, the in- 
 Q^ jury
 
 ( 128 / 
 
 jury, for the moil part, efcapes obfervation j 
 or, if obferved, is filently endured. The 
 evils are only apparent in the flow and gra- 
 dual depreiTion of the value of money. 
 
 Great care, ther^ore^ fiiould be taken in 
 the plan propofed for the reformation of our 
 currency^ that no confiderable redu6lion be 
 effefted. The moft eligible mode appears to 
 me to be, that the bank of England fliould 
 poffefs the exclufive privilege, v^hich it fo 
 long exercifed, and with fo much utility to 
 the public, of regulating the whole paper cur- 
 rency of the country) that the circulation 
 of the notes of country banks fhould be de- 
 clared beyond a given period illegal 3 and 
 that the bank fhould fubflitute the fame 
 or nearly the fame quantity of paper in their 
 •ftead, till, by a gradual contraftion, and a 
 long courfe of favourable exchanges, it be 
 capable of providing a fufhcient quantity of 
 fpecie to fupply its place. By thefe means 
 the abolition of their paper would be effefted 
 without the embarrafiinent which a fudden 
 
 reduction
 
 ( 229 ) 
 
 reduclion wCuld occafion. This appears to 
 me the leaft objeftionable plan of reform, as 
 it efFe61:s the leaft change of exifling circum- 
 ftances, and creates the leaft injury to the 
 banking line. 
 
 I am not aware that any well-founded 
 reafon can be urged againft it by the fup- 
 porters of country banks. It will certainly 
 prevent the circulation of their notes, which 
 ought to be prevented, but it will not ope- 
 rate againft the fair profits of their trade, 
 by a proper ufe of the depofits in their 
 hands ; but whatever objeftions may be 
 urged againft this particular meafure, it ap- 
 pears to me abfolutely requifite, for the fe- 
 curity of the bank of England and the 
 general interefts of the country, that fome 
 check fliould be impofed on the ifiue of 
 their notes. 
 
 If a reformation be made in the paper 
 currency of this country, it would, in my 
 oj)inion, be equally politic to regulate the 
 
 paper
 
 ( 230 ) 
 
 paper of Scotland and Ireland upon a fimllar 
 principle, by the eftablifhment of national 
 banks at Edinburgh and Dublin, Gonne6led 
 with the bank of England. Such has been 
 the extent of the paper circulation of Scot- 
 land, that five {hilling notes have been iflued 
 for the tranfaftion of inferior payments j 
 and, by the information v^hich 1 have re- 
 ceived refpe6ling the paper of Ireland, the 
 diforder of their currency has exceeded our 
 own, and more immediately requires the 
 interpofition of parliament. The vaft con- 
 cerns of the bank of England will enable it 
 to regulate, with facility, the comparatively 
 fmall amount of its currency. This con- 
 ne6tion will, at the fame tim.e, conduce to 
 its commercial profperity, and materially 
 promote the advantages refulting from the 
 union. 
 
 ON
 
 ON THE 
 
 REDUCTION 
 
 OF THE 
 
 NATIONAL JDEBT 
 
 BY THE 
 
 JDEPRESSIOJV OF MOJVJEY. 
 
 CHAP. VI. 
 
 Previous to the publication of sir 
 George Schuckburgh Evelyn's table, no au- 
 thor had attempted to afcertain the regular 
 progrefs of the depreciation of money in 
 arithmetical proportions j and, without an 
 accurate knowledge of the gradation, no ap- 
 plication of the principle could be made. In 
 the various publications, therefore, which 
 have appeared on the policy of our funding 
 
 fvftci»
 
 ( 232 ) 
 
 fyfVem, no one was capable of invefligating 
 the reduction which had been made in the 
 debt by the operation of this principle, as 
 without a knowledge of the comparative 
 value of money, during a confiderable pe- 
 riod, it was impra6licable to point out the 
 extent. 
 
 Though, therefore, the depreciation was 
 known to exift, yet, in treating on the fub- 
 je6l, all authors reafoned as if the flandard of 
 money were invariable, and regarding every 
 augmentation, immediate or remote, as a 
 permanent addition at the exifting flandard, 
 they imagined that the period was not far 
 diftant when no further accumulation could 
 be borne. They did not confider that the 
 very means to which government reforts 
 for an increafe of revenue, in a great degree, 
 makes the evil of taxation bring its own 
 remedy, as the impofition of duties, by the 
 confequent advance of prices, necefTarily oc- 
 cafions an increafe of currency, which re- 
 duces the flandarci of money, and makes the 
 
 pujDlic
 
 ( 23] ) 
 
 public, in part, regain what they contri-^ 
 buted, as the revenue is no fooner aug- 
 mented, than a diminution is effe6led in the 
 fame proportion in which the value, of mo- 
 ney is deprefled 3 and if, through any given 
 period, the depreinon hold pace witli the in- 
 creafe, it is obvious that the debt and re- 
 venue, though nominally augmented, would 
 really continue the fame, as any given pro- 
 portion of them would only exchange for the 
 fame quantity of produce. 
 
 From the inattention of our bell political, 
 writers, Mr. Hume and Dr. Adam Smith not 
 excepted, to the operation of this principle 
 they were uniformly deceived in the view 
 v/hich they took cf the increafmg magni- 
 tude of the national debt. At the com- 
 mencement of the funding fyftem, it was 
 generally imagined that the nation would 
 link under the preflure of the burthen which 
 it then endured 5 but all were unanimoufly 
 of opinion, that any confidcrable increafe 
 
 would
 
 ( 234 ) 
 
 would inevitably lead to convulfion, from 
 the incapability of effe6ling the payment of 
 taxes. Yet accumulation has been added to 
 accumulation, and, to the aftonifhment of 
 the nation and the world, every fucceiTive 
 addition has been fupported with the fame 
 facility as the preceding one, and the bur- 
 then, with all its accumulations j is now fuf- 
 tained with no greater apparent prefTure 
 than the firft inconfiderable debt upon the 
 adoption of the fyflem. But had the value 
 of money remained at one invariable ftan- 
 dard, as they had afTumed in reafoning on 
 the fubje6l, the conclufions which they 
 formed might, perhaps, have long fmce been 
 realized. 
 
 The fecret agency of this principle will, 
 in fome degree, explain the myflerious means 
 by which this country has hitherto main- 
 tained fuch numerous wars with inexhaufted 
 refources. Properly fpeaklng, the refources 
 of a country confift in its produce ; but the 
 
 expedient
 
 ( ^35 ) 
 
 expedient to which we have had recoarfe 
 for the raifmg of fuppHes, may be almoft 
 faid to conftitute inexhauftible means ; for 
 fo long as the depreflion of money keep 
 pace with the increafe of revenue there is 
 little danger of diminution, as the inter- 
 vals of peace, for the moft part, repair 
 the privations of war. A retrofpe6live view 
 of the effe61:s which this principle has pro- 
 duced, will remove our furprife at the 
 patience with which the public have en- 
 dured, and the facility with which they 
 have difcharged fo great an increafe of 
 taxation. For fuch has been the depref- 
 fion of money, that notwithftanding the 
 apparent increafe of the public burthen, 
 it preffed with nearly an equal weight upon 
 the people through the greater part of the 
 preceding century -, and as the exactions 
 of one period did not far exceed the exac- 
 tions of another, however nominally aug- 
 mented, there was little difficulty in efFeft- 
 ing their payment, as little alteration was 
 made in the cuftomary contributions. 
 
 Durins:
 
 ( 236 ) 
 
 During the preceding century, according 
 to Sir George Schuckburgh's table, the value 
 of money was deprefi'ed in the following 
 ratio, putting its value, in the year 17CO, at 
 two hundred and thirty-eight. 
 
 noo 
 
 238 
 
 In 
 
 1760 
 
 342 
 
 mo 
 
 247 
 
 
 1770 
 
 384 
 
 1720 
 
 257 
 
 
 1780 
 
 427 
 
 nso 
 
 272 
 
 
 1790 
 
 495 
 
 1740 
 
 287 
 
 
 1800 
 
 562 
 
 1750 
 
 314 
 
 
 
 
 Two hundred and thirty-eight pounds, 
 Ihillings or pence, therefore, in 17C0, were 
 equal to five hundred and fixty-two pounds, 
 fhillings or pence, in i8ooi that is, would 
 have purchafed the fame quantity of pro- 
 duce ', and all the different fums were, at 
 the year to which they are appropriated, 
 equal to each other, or would have ex- 
 changed at the particular period to which 
 they belong for the lame value. Thefe pro- 
 portions being given, any perfon acquainted 
 
 with
 
 ( 237 ) 
 
 with the rule of three, without the aid of 
 decimal fra6lions, may make whatever cal- 
 culations he may deem necefTary to elucidate 
 the fubje6t to his own fatisfaction. 
 
 By the application of the proportions of 
 this table, to the progrelTive increafe of the 
 revenue, it will be feen, that through the 
 greater part of the preceding century it di- 
 minifhed in value nearly in the fame ratio 
 in which it increafed in magnitude, as the 
 following calculation will illuftrate. 
 
 The revenue of Queen Anne, at the time 
 of the union in 1707, according to Sir John 
 Sinclair's hiftory, was five million fix hun- 
 dred and ninety thoufand pounds j which, by 
 taking the flandard of money in that year, 
 at two hundred and forty-five, and the flan- 
 dard of money in 1 800, at five hundred 
 and fixty-two, will make her revenue 
 equal to thirteen million and fifty thoufand 
 pounds, of the money of 1800. The re- 
 venue
 
 ( 2:8 ) 
 
 Venue of the different reigns of the lall 
 century, eflimated upon this principle, by a 
 common rule of three fum, viz. as 245 is to 
 562, fo is jf .5,690,000 to jT. 1 3^050,000, will 
 ftand thus t 
 
 Q. Anne, 1707, *245=:t562=: + 5,690,000=:§13,050,00(y 
 Georgel. 1727, 267= 562= 6,760,000= 14,228,000 
 Geo. II. 1760, 342= 562= 8,520,000= 14,000,000 
 "Geo. III. 1770, 384= 562= 9,500,000= 13,900,000 
 Geo.III. 1780, 427= 562=12,300,000= 16,000,000 
 Geo. III. 1790, 496= 562=15,500,000= 17,500,000. 
 
 By this calculation, it appears, that the 
 depreffion of money, from 1707 to 1770, for 
 the moft part, kept pace with the increale of 
 the revenue, and, in fome inftances, advanced 
 with greater rapidity. That the revenue of 
 Queen Anne, though nominally four, was in 
 
 ^ This column flievvs the ftandard of money at the yeav to 
 tfbbicb the proportions are appropriated. 
 
 t The value of money at the flandard of 1 800. 
 
 X The revenue at the year to which It is appropriated. 
 
 § Th6 value of that revenutf in the money of 1800. 
 
 reality 
 
 4
 
 ( 239 ) 
 
 reality only one million lefs than the revenue? 
 of his prefent Majefty in 1770 ; that the 
 revenue of George II. at the commencement 
 of his reign in 1727, was fuperior to his 
 revenue in 1760, though nominally two 
 millions lefs, and fuperior to the revenue of 
 his prefent Majefty in 1770, though nomi- 
 nally three millions lefs ; and that the re- 
 venue of 1760 was greater than the revenue 
 of 1770, though nominally one million lefs. 
 It is evident, therefore, that the public bur- 
 then preiTed with nearly an equal weight 
 upon the people through the greater part of 
 the preceding century ; and that the nation 
 was more feverely taxed in 1727, than in 
 1760 or 1770, though the preflure was fup- 
 pofed to be confiderably greater in the latter 
 periods. According to Sir John Sinclair, 
 the total expenditure of Queen Anne's reign 
 was one hundred and twenty-two millions, 
 which, by taking the medium ftandard of 
 money in her reign, at two hundred and 
 forty-feven, will be equal to two hundred 
 and feventy-feven miUipns of 1 800, and ^s 
 
 her
 
 ( 240 ) 
 
 her annual average expenditure was ten mil- 
 lions, equal to twenty-two millions of 1 800, 
 it equalled the annual average expenditure 
 of the prefent reign. 
 
 But the following calculation, conftru6ted 
 on the fame principle, will give a general 
 view, in round numbers, of the comparative 
 value of the revenue during the eighteenth 
 century. 
 
 £- I- 
 
 1700, 238rr562z: 4,000,000:= 9,400,000 
 niO, 247 = 562:= 5,500,000 = 12,500,000 • 
 1720, 257 = 562= 6,000,000 = 13,100,000 
 1730, 272=562= 6,500,000=13,400,000 
 1^40, 287 = 562= 7,000,000=13,700,000 
 1750, 314=562= 7,600,000=13,400,000 
 1760, 342 = 562= 8,500,000=13,900,000 
 1770, 384 = 562= 9,500,000 = 13,900,000 
 1780, 427 = 562 = 12,000,060=15,700,000 
 1790, 496 = 562=15,500,000=17,500,000 
 1800, 562 = 562 = 30,000,000 = 30,000,000 
 
 It is true, that if money had remained at 
 a fixed ftandard, previous to 1800, the re- 
 venue
 
 ( Ht ) 
 
 venue would not have been nominally fo 
 great as it is at prefent, becaufe fuch large 
 fums would not have been required for the 
 public fervice. But as money has been de- 
 prefTed to fuch an extent, it is neceflary, for 
 the direflion of our future policy, to afcer- 
 tain what diminution the revenue has fuf- 
 tained by the depreciation ; which the follov/- 
 ing table, by fliewing its gradual increafe 
 at the exifting flandard of the times, and the 
 value of that increafe in the money of 1800, 
 will, in fome degree, explain. 
 
 In the year 1 700, our revenue, at the ftan- 
 dard of the times, was four millions j which, 
 according to the proportions of Sir George 
 Schuckburgh's table, was equal to nine mil- 
 lions four hundred thoufand pounds of the 
 ftandard of 1800 ; and the increafe from 1700 
 to 1710 being one million five hundred thou- 
 fand pounds, was equal to three millions four 
 hundred thoufand pounds of the flandard of 
 1800. The progrefTive increafe of the re- 
 R venue.
 
 ( 242 ) 
 
 venue, eftimated upon this principle, will be 
 in the following ratio. 
 
 In nOO, 4,000,000 equal to 9,400,000 
 
 From nOO to niO, 1,500,000 3,400,000 
 
 niOtollSO,. 500,000 1,090,000 
 
 . 1720 to 1730, 500,000 1,030,000 
 
 1730 to 1740, 500,000 970,©00 
 
 1740 to 1750, 500,000 890,000 
 
 1750 10 1760, 1,000,000 1,640,000 
 
 1760 to 1770, 1,000,000 1,460,000 
 
 1770 to 1780, 2,500,000 3,290,000 
 
 1780 to 1790, 3,500,000 3,960,000 
 
 1790 to 1800, 14,500,000 14,500,000 
 
 30,000,000 41,630,000 
 
 By this table it is evident, that if money- 
 had been at the ftandard of 1800 throughout 
 the whole century, the revenue would have 
 been, in that year, forty-one millions of 
 pounds inftead of thirty millions. If mo- 
 ney had remained flationary at 1700, the 
 revenue, though nominally lefs, would have 
 then been equal to forty-one millions, and 
 
 if
 
 ( Hi ) 
 
 if it had been flationary at a fubfequent 
 period, in proportion as that period was 
 nearer to the ftandard of 1700, the revenue 
 would have been more nearly equal to forty- 
 one millions, and have fufi'ertd lefs dimi- 
 nution J but as the depreflion continued 
 throughout the whole century, it has ex- 
 perienced the entire lofs of eleven millions. 
 
 The greater part of this lofs has been 
 fuftained by the public creditors. There is 
 no doubt but that many "other claffes among 
 whom the public revenue is appropriated, 
 have fufFered a partial injury, as was ex- 
 plained in the fourth chapter of this work ; 
 but the great and leading fufferers are the 
 proprietors of national ftock. The fubfe- 
 quent calculation fhewing the gradual in- 
 creafe of the debt at the exifting iiandard of 
 tlie times, according to the proportions of 
 Sir George SchuckburglVs table, and the 
 value of that increafc at the ftandard of 
 1800, will, in fome meafure, point out the 
 extent of their lofs 
 
 R 2 A. D.
 
 244 
 
 /V.D. 
 
 Amount of the Deb* 
 at the ftated Pe- 
 
 Gradual incrcafe of 
 the Debt. 
 
 value oftheincreaf. 
 at the ftandard of 
 1800. 
 
 1700 
 
 1 6,000,000 
 
 16,000,000 
 
 37,700,000 
 
 1710 
 
 4-4-,000,0OO 
 
 28,000,000 
 
 63,700,000 
 
 J 750 
 
 72,000,000 
 
 28,000,000 
 
 50,100,000 
 
 1760 
 
 88,000,000 
 
 ] 6,000,000 
 
 26,200,000 
 
 1770 
 
 126,000,000 
 
 38,000,000 
 
 55,600,000 
 
 1780 
 
 142,000,000 
 
 1 6,000,000 
 
 21,000,000 
 
 1790 
 
 238,000,000 
 
 96,000,000 
 
 103,700,000 
 
 1800 
 
 451,000,000 
 
 213,000,000 
 
 213,000,000 
 
 
 
 451,000,000 
 
 576,000,000 
 
 By this table it appears that the national 
 creditors have, in reality, advanced five hun- 
 dred and feventy-fix millions to government, 
 for v^hich now^ only four hundred and fifty- 
 one are put to their credit, and that they have 
 fuftained the lofs of one hundred and twen* 
 ty-five millions in the courfe of the cen- 
 tury. 
 
 But it muft be admitted that thefe calcula- 
 tions are extremely loofe. The itate of the 
 
 revenue
 
 ( 245 ) 
 
 revenue is taken in round numbers from 
 Sir John Sinclair's Hillory, but in too im- 
 perfe6l a manner for any other purpofe than 
 merely to iliew the general effe6l of the de- 
 preiTion of money. The flate of the public 
 debt is taken from an account made out 
 by the order of the Houfe of Commons, 
 and is extra6led from the Appendix to Mr. 
 M' Arthur's political fa6ts. Though the debt 
 amounted to more than forty-four millions 
 in 1710, I have only taken it at that fum, 
 becaufe it was afterwards reduced to it ; but 
 this calculation is only formed upon a ftatc- 
 ment of the funded debt of the times, and no 
 allowance is made for the fums that were 
 paid off after many years duration, which 
 would have made the account much greater. 
 But as I pofTefled not fufficient documents 
 to make an exa<Sl: account, I thought it bet- 
 ter to give a mere general view of the fub- 
 je6l from documents already publifhed, and 
 keep within the fact, than endeavour to pre- 
 pare a more accurate ffatement, in which I 
 might have committed gicatcr errors. 
 
 I regiet
 
 ( H(> ) 
 
 I regret that it is not in my power to 
 make any fatisfaclory calculations in which 
 fome reliance might be placed, in order to 
 trace the operation of the principle in a 
 clearer manner ; but fhould the attention of 
 the public be direfted to this fubjeft, I truft 
 that fome one with more ability and better 
 means of information, will explain its efFe6l 
 with greater perfpicuity. 
 
 But much as I regret the want of accura- 
 cy in the preceding ftatements, they are ftill 
 fufficient for pointing out the powerful ope- 
 ration of the principle. Th^ following 
 calculation, the accuracy of which is lefs 
 difputable, will convey a clearer conception 
 of the tendency of the depreflion of money, 
 to lefien the value of the revenue, and reduce 
 the principle and intereil of the national 
 debt. By applying the arithmetical pro- 
 portion of Sir George Schuckbui'gh's table, 
 to the value of the pound flerling, through 
 every ten years of the preceding century,
 
 ( 247 ) 
 
 the following ftatement will be the refult of 
 the calculation. 
 
 
 
 s. d. 
 
 Tn noo, 
 
 
 
 8 5i 
 
 mo, 
 
 
 
 8 91 
 
 1720,' 
 
 
 
 9 1| 
 
 ' 1730, 
 
 
 
 9 8 
 
 1740, 
 
 
 
 10 2i 
 
 1750, 
 
 
 
 11 2 
 
 1760, 
 
 
 
 12 2 
 
 1770, 
 
 
 
 13 7| 
 
 1780, 
 
 
 
 15 2^ 
 
 1790, 
 
 
 
 17 7^ 
 
 ISOO, 
 
 1 
 
 
 
 Were equal to a pound 
 fterline of 1800. 
 
 I fliall more particularly confine my rea- 
 foning upon this calculation, to the lafl 
 twenty years of the preceding century, as 
 the depreiTion of money during this period 
 is more immediately interelling to the great 
 body of proprietors now living. Since it is 
 evident by this table, that the value of the 
 pound fterling was nearly reduced one fourth 
 between 1780 and i8oc, it is obvious, that 
 any given fum in 1800 would only exchange 
 for three-fourths of the value for which it 
 would exchange in 1780J and that any'pcr- 
 fon receiving the fame fixed nominal fum in 
 1800, would only receive three-fourths of 
 
 the
 
 ( 248 ) 
 
 the value which it polTelled twenty years be- 
 fore. By this alteration in the flandard of 
 money, the public have been exonerated 
 from the payment of one-fourth part of the 
 revenue then exifling -, and the public credi- 
 tor has been deprived of one-fourth of the 
 principal and intereft of the ftock which was 
 at that tirne placed to his credit in the na- 
 tional debt. 
 
 As in an increafe of currency a general 
 augmentation is efFecled in the incomes of 
 individuals by an advance of prices, the pub- 
 lic regain from government in part what 
 they contribute; and leflen the revenue in 
 the fame proportion in which the value of 
 money is depreffed. If a perfon poiTeffing 
 forty pounds a year be taxed at eight pounds, 
 being a fifth of his income, and he after- 
 wards be taxed at two pounds more, making 
 his contribution a fourth 3 and by an advance 
 in the produce which he fell, he increafe his 
 income to fifty pounds a year, he again re- 
 duces his contribution to a fifth, and regains 
 
 the
 
 ( 249 ) 
 
 the two pounds which he gave 3 and as ten 
 pounds will exchange for no more after the 
 increale than eight pounds previous to it, 
 the revenue of government, though nominally 
 augmented, is reduced to the fame value 
 which it poffeifed before the additional duty. 
 By this operation, the depreflion of money 
 held fuch regular pace with the increafe of 
 the revenue through the greater part of the 
 preceding century, diminiiliing it in value 
 in the fame ratio in which it was augmented 
 in magnitude, and exonerating the public 
 from the increafed burthen, in the fame pro- 
 portion in which the value of money was 
 leflened. By this operation it has reduced 
 the revenue one-fourth iince 1780, and 
 is ftill continuing its redu5lion. 
 
 By the fame operation it has reduced the 
 principal and intcrefi: of the national debt. 
 I attempted to point out, by a loofe and very 
 inefficient calculation, the lofs which the 
 public creditor had fuffained from the com- 
 mencement of tlic funding fyflem ; but I 
 
 was
 
 ( 250 ) 
 
 was incapable of forming a fatisfactory ftate- 
 ment, from an ignorance of the exaft amount 
 of the debt at the ftated periods. The lafl 
 table, however, renders fuch a flatement lefs 
 necefTary, as it will enable any perfon to cal- 
 culate the injury which he has individually 
 fuffered from the continuance of his pro- 
 perty, during any given time, in the public 
 funds. The fame proportionate redu61ion 
 is efFe^led in any given number of pounds 
 which is effefted in a fmgle pound, and may 
 be afcertained in the fame manner. Though 
 I fhall principally confine my obfervations 
 to the particular period between 1780 and 
 i8co, yet any creditor may eftimate the lofs 
 which he has fuflained from the earliefl 
 period by an application of the fame prin- 
 ciple. 
 
 As the pound flerhng has been nearly re- 
 duced one-fourth, fmce the year 1780, and 
 as a fimilar reduftion has been effected in 
 any given number of pounds, it is obvious, 
 that the public creditors, in the receipt of 
 
 their
 
 ( 251 ) 
 
 their intereft, obtain now only three-fouitho 
 of the value which they then received ; that 
 the proprietor, who then had four hundred 
 a year, receives now no more than what 
 three hundred would have then commanded i 
 and that one-fourth of his income has been 
 regained by the public. The fame reduc- 
 tion has been efFe6led in the principal which 
 has been efFe6Ved in the intereft ; and in the 
 event of his felling-out, or being paid off 
 by government, he would receive only three- 
 fourths of the value which it poflefled in 
 1780. By this operation, though no reduc- 
 tion be made in the nominal amount of the 
 debt, yet a fimilar diminution is efFefted in 
 its real extent, as if an actual payment of 
 the part depreciated had been ac<:omplifhed. 
 A diminution in the value of the nominal 
 fum received, by a redu6lion of tlic ftaiidard 
 of money, is fimilar to a diminution of the 
 real amount, wlicj-e the ftandard has con- 
 tinued Vv'ilhout variation, as the fame nomi- 
 nal fum, at a icchiccd value, will exchan(j;c 
 
 for
 
 ( 252 ) 
 
 for no more than a propoitionably dimi- 
 niflied fum at the fame value. 
 
 If the proportions of Sir George Schuck- 
 burgh's table have a near approximation to 
 the truth, and little doubt can be enter- 
 tained of the accuracy of his refearches, it is 
 neceffary for the public to confider how far 
 they will encourage the further depredation 
 of this principle upon the property of their 
 creditors. Whether, by promoting an in- 
 creafe of currency, they will conduce to the 
 filent reduction of the national debt, and an 
 exoneration from the burthen, by the further 
 depreffion of money; or, whether by en- 
 deavouring to prevent its increafe, they will 
 take every means in their power to maintain 
 their faith with their creditors, and fupport 
 the equity of their contra(5l. By the arith- 
 metical proportions, the depreffion of money, 
 fnice the year 1780, has confiderably ex- 
 ceeded the deprelTion of the twenty years be- 
 fore it ; and, by the facility with which the 
 paper currency of Europe is now increafed, 
 
 the
 
 ( 253 ) 
 
 the deprellion of the next twenty is likely to 
 be ftill greater, unlefs fome meafures be 
 taken to retard its progrefs. By its prefent 
 ratio, a quarter of the debt will be liquidated 
 every twenty years, without any afliftance 
 from the fuiking fund -, and fliould the 
 ratio increafe, the redu61:ion will take place 
 with accelerated force. 
 
 There is no doubt, but that any attempt 
 to prevent the deprefiion of money has a 
 tendency to diminifh the refources of the 
 country, by impeding our exoneration from 
 our public burthen, and obftructing the re- 
 novation of our means, in the intervals of 
 peace, againft every renewal of hoililities. 
 It may be faid too, that the public are con- 
 ftantly gaining an ellential advantage from 
 their creditors, without efFe(5ling an injury 
 of material extent to the colle6live body, as 
 the depreciation hitherto has been too gra- 
 dual to occafion any important lofs in the 
 averao-e term of the life of man. 
 
 But,
 
 ( 254 ) 
 
 Bat, though the pubhc are certainy re- 
 lieved from the weight of taxation by this 
 deprefTion, it cannot be contended, that the 
 exoneration is effe6led by the moft honour- 
 able means. In the original contradl, be- 
 tween government and the pubhc creditor, 
 it was ftipulated, that he fhould receive the 
 fame intereft till the redemption of his debtj 
 and as that intereft is continued to be paid 
 in the fame nominal fum, no aftual breach 
 of faith is committed, but its faith is 
 virtually violated, as that fum no longer re- 
 tains the fame real value as at the com- 
 mencement of the contra6b. So far, there- 
 fore, as our political conduft fhould be re- 
 gulated by public principle, we are bound 
 in equity to take every precautionary meafure 
 in our power to prevent the progrefs of the 
 depreflion. 
 
 Againft the other objeftion it Is neceflary 
 to obferve, that though, during the average 
 term of a man's life, no material injury may 
 enfue, yet the property of the public creditor 
 
 is
 
 ( ^55 ) 
 
 is frequently Invefted in the hands of truflees 
 for a period of long duration j and that 
 many families fuftain confiderable lofs by the 
 redu(!:l:ion of its value. Should the depref- 
 fion proceed only in the fame ratio for thefe 
 next tv\^enty years, in which it has advanced 
 for thefe lad twenty, the value of the pound 
 fterling of 1780 will be diminiflied one half 
 by 1820, three quarters by 1840, and in 
 i860 its value will be no greater than that 
 of a French livre of 1780. For every pound 
 which a creditor poilefTed in the funds in 
 1780, he will receive no more than a (hilling 
 in i860. The fame reafoning will apply to 
 the augmentation of the debt during the late 
 war, which will then be diminiihed three 
 quarters, and to every fubfequent increafe. 
 
 However expeditious this mode may be of 
 leflening our revenue and liquidating our 
 debt, there can be little doubt refpe6ling its 
 injuftice. It is materially for the well-being 
 of the country, that the property of the 
 public creditor fliould be guarded by every 
 
 means
 
 ( 256 ) 
 
 means in our power, and fecured from fur- 
 ther diminution. His particular intereft is 
 fo intimately connected with the general in- 
 terefts of the community, that his profperity 
 can fcarcely be feparated from the common 
 profperity of every other clafs. Though the 
 impra6licability of our exoneration from the 
 prefTure of the national debt has been fre- 
 quently complained of, yet I truft that the 
 proportions of Sir George Schuckburgh's 
 table will give a turn to the current of alarm, 
 and that our fears will now be excited that it 
 will be paid too foon, inflead of not being 
 paid foon enough. 
 
 I fhall now, make fome inquiry into the 
 beft means of obviating the further depref- 
 fioti, not only of the public revenue and the 
 property of the public creditor, but of all 
 other annuitants, whofe peculiar cafes were 
 partially confidered in the fourth chapter of 
 this work. 
 
 All retribution appears to me impradica- 
 
 ble^
 
 ( ^Sl ) 
 
 ble J a great point will be gained by obvia- 
 ting future injury. The particular obje6l to 
 which the attention of the public fhould be 
 dire6led for this purpofe, is to prevent the 
 further increafe of currency. If currency be 
 not augmented, it is impoflible that money 
 can depreciate. During thefe laft twenty 
 years, it has been deprefTed beyond any 
 former period, becaufe the increafe of paper 
 in this country, by the circulation of the 
 notes of country banks, and the increafe of 
 paper from fimilar eftablifliments on the 
 continent, have accelerated its reduction. 
 
 It is not only therefore neceflary, as fug- 
 gefted in the former chapter, that the bank 
 of England fhould be reinftated in the ex- 
 clufive privilege which it poflelfed previous 
 to the inftitution of thefe banks, of regulat- 
 ing the whole paper currency of the country; 
 but that it fhould annually fubmit the 
 amount of its notes to the infpe6lion of 
 parliament, in order that the public may be 
 made acquainted witli the quantity of paper 
 S in
 
 ( 258 ) 
 
 in circulation, and adopt the regulations 
 which are neceflary to obviate the injury re- 
 fulting from its increafc. But nothing can 
 be more remote from my intention than to 
 tie the hands of the bank. Any reftricStion 
 upon its ifTues would counterafl the utility 
 of its inftitution, and prevent the increafe 
 which public expedience may require upon 
 the impofition of further duties. Our beft 
 Miterefts are fo united with it, that no appre- 
 nenfions need be entertained by the company 
 of any regulations prejudicial to its welfare, 
 in confequence of their public declaration of 
 the amount of its paper. 
 
 The adoption of this plan will materially 
 obftru6l the increafe of paper in this coun- 
 try, and in fome degree impede its growth 
 among other nations, by leading to the in- 
 trodu6lion of their gold upon any attempt 
 to increafe their currency above its propor- 
 tion. The fcarcity of fpecie would excite 
 fome fufpicion of the credit of their paper, 
 and neceirarily caufe its contraclion. 
 
 But
 
 ( 259 ) 
 
 But I am well aware that this regulation 
 will not prevent all increafe. Should the 
 public acquiefce in the juftice of the claim of 
 the public creditor to the fame real intereft 
 till the redemption of the debt, other means 
 may be ealily found to obviate the efFefts of 
 the deprefllon of money. The increafe of 
 currency is immediately experienced by an 
 advance of prices. In order therefore to 
 prevent the lofs of the public creditor, an 
 advance fhould be made in his intereft in 
 fome degree commenfurate with the increafe. 
 
 Different ftandards have been reforted to 
 at different times, to afcertain the variation 
 in the value of money. In the reign of 
 Elizabeth, corn was affumed as the beft 
 ftandard ; but from the fluctuation of feafons, 
 and the improvements of agriculture, it is 
 now perhaps more inefficient than any pro- 
 duce that could be felefted. By the propor- 
 tions of Sir George Schuckburgh's table, 
 meat is more nearly equal to the medium 
 S 2 ftandard
 
 ( 26o ) 
 
 ftandard than any other commodity. Pre- 
 vious to the invention of money, cattle were 
 the common meafure of value. The author 
 rity of Homer is frequently cited in fupport 
 of this fa(5l, where he mentions, that in the 
 exchange of armour between Glaucus and 
 Diomed, one was valued at an hundred, 
 and the other at nine oxen. Had this mea- 
 fure of value continued, the erroneous notions 
 that have fmce been entertained on the fub- 
 jeft of currency, would not perhaps have 
 been prevalent. But as moll of pur later 
 writers, from the policy of Ehzabeth, have 
 aflumed the price of corn as the beft ftand- 
 ard, it has been ufually admitted without 
 inveftigation. The computation of tithes 
 was not long fmce the fubje6t of much pri- 
 vate difculTion: and it was propofed to take 
 corn as the ftandard leaft liabie to error. A 
 further inquiry, however, into this fubjecSl 
 will ftiew that the plan adopted by Sir George 
 Schuckbargh, in taking the medium from the 
 price of various articles, is preferable to the 
 
 price
 
 ( 26i ) 
 
 price of any particular produce ; and fhould 
 the afcertainment of the comparative value 
 of money at different periods be neceffary 
 for any political meafure, this mode will be 
 found leafl objectionable. 
 
 Sir George Schuckburgh's table is pub- 
 lifhed in the philofophical tranfadlions for 
 the year 1758, part ift, page 176. The 
 proportions of which, from the Conqueil to 
 the prefent times, are in the following ratio. 
 
 A. D. 
 
 
 
 1050 . 
 
 
 26 
 
 1100 
 
 
 34 
 
 1150 
 
 
 43 
 
 1200 . 
 
 
 51 
 
 1250 
 
 
 60 
 
 1300 
 
 
 6S 
 
 1350 
 
 
 ^7 
 
 1400 
 
 
 83 
 
 1450 
 
 
 86 
 
 1500 
 
 
 94 
 
 1550 
 
 
 100 
 
 1600 
 
 
 144 
 
 1650 
 
 
 . 188
 
 f 262 ) 
 
 A. D. 
 
 In 1675 — 210 
 
 1700 238 
 
 1720 257 
 
 1740 — 287 
 1750 — — SU 
 
 1700 342 
 
 1770 384 
 
 1780 427 
 
 1790 -. 496 
 
 1795 531 
 
 1800 — 662
 
 
 m- 
 
 i: 
 
 «if»; 
 
 -•t-*
 
 T^S ■; < 
 
 ;. ■*■- 
 
 f^