CERTAIN DOCTRINES OF POLITICAL ECONOMY. [7] 



is a derivative and exponent of the effect of the tendency of the metallic current from 

 one country to another. The rate of exchange may be looked upon as an instrument which 

 measures the force of that current, and does not add anything to the force, or produce any 

 effect of its own, except, it may be, to regulate and reduce to steadiness the casual and 

 transient impulses. 



86. It may serve to illustrate the bearing of the above hypothetical discussions upon 

 the actual facts, if I state some of the numbers which Mr. Jacob has given in his Historical 

 Inquiry into the Production and Consumption of the Precious Metals. The result of his 

 investigations is, that the annual produce of all the gold and silver mines in the world, from 

 1700 to 1809, was 8 millions sterling a year: that of this sum, two-fifths went regularly 

 to Asia, to pay for tea, silk, spices, and the like ; that of the remaining three-fifths, two- 

 thirds, or two-fifths of the whole, were employed for other purposes than coin ; and thus 

 there is, for the coin of the whole of Europe, an annual supply of ,£ 1,600,000. The annual 

 wear of the coin he estimates at about one-400dth. And the annual supply being much more 

 than the annual wear, the amount of coin has gone on increasing. He reckons that the 

 amount of coin in Europe in 1700 was 226 millions, which was in 1809 increased to 380 millions. 



87- In the former memoir, Art. 20, I divided commodities into four classes, according to 

 the relations of supply, demand and price. In three of these classes, when the price falls, 

 the money demand either falls, or at least does not rise. These three classes included most 

 cases ; and therefore in most cases, the money demand for our new export (F), even if that 

 commodity be offered by us somewhat cheaper than it was offered by other sellers, will only be 

 so much taken from the demand for the same commodity at the hands of others. In these 

 cases, it does not appear likely that the extension of demand, F, will increase with greater 

 rapidity than the price falls. But in the fourth class of commodities, popular luxuries, the 

 money demand increases with a fall of price. In these cases, the extension of demand for 

 the new commodity may increase much more rapidly than the fall of the price, and a different 

 formula instead of F = mG may be needed. 



W. W. 



Trinity Lodge, 

 Nov. 11, 1850. 



