STATE PAPERS. 



457 



were at any time to become very 

 much worn and lessened in 

 weight, or if it should suffer a 

 debasement of its standard, it is 

 evident that there would be a 

 proportionable rise of the market 

 price of gold bullion above its 

 mint price : for the mint price is 

 the sum in coin, which is equiva- 

 lent in intrinsic value to a given 

 quantity, an ounce for example, 

 of the metal in bullion ; and if the 

 intrinsic value of that sum of coin 

 be lessened, it is equivalent to a 

 less quantity of bullion than be- 

 fore. The same rise of the market 

 price of gold above its mint price 

 will take place if the local cur- 

 rency of this particular country, 

 being no longer convertible into 

 gold, should at any time be issued 

 to excess. That excess cannot 

 be exported to other countries, 

 and not being convertible into spe- 

 cie, it is not necessarily returned 

 upon those who issued it ; it rc- 

 mainsinthe channel of circulation, 

 and is gradually absorbed by in- 

 creasing the prices of all com- 

 modities. An increase in the 

 quantity of the local currency of 

 a particular country, will raise 

 prices in that country exactly in 

 the same manner as an increase in 

 tlie general supply of precious 

 metals raises prices all over the 

 world. By means of the increase 

 of quantity, the value of a portion 

 of that circulating medium, in ex- 

 change for other commodities is 

 lowered ; in other words, the 

 money prices of all other com- 

 modities are raised, and that of 

 bullion with the rest. In this man- 

 ner, an excess of the local cur- 

 rency of a particular country will 

 occasion a rise of the market price 

 of gold above its mint price. It is 

 no less evident, that, in the event of 

 the prices of commodities being 



raised in one country by an aug- 

 mentation in the circulating me- 

 dium, while no similar augmenta- 

 tion in the circulating medium of a 

 neighbouring country has led to a 

 similar rise of prices, the currencies 

 of those two countries will no 

 longer continue to bear the same 

 relative value to each other as 

 before. The intrinsic value of a 

 given portion of the one currency 

 being lessened, while that of the 

 other remains unaltered, the ex- 

 change will be computed between 

 those two countries to the disad- 

 vantage of the former. 



In this manner, a general rise 

 of all prices, a rise in the market 

 price of gold, and a fall of the 

 foreign exchanges, will be the 

 effect of an excessive quantity of 

 circulating medium in a country 

 which has adopted a currency, 

 not exportable to other countries, 

 or not convertible at will into a 

 coin which is exportable. 



It appears to your committee 

 to have been long settled and 

 understood as a principle, that 

 the difference of exchange re- 

 sulting from the state of trade 

 and payments between two coun- 

 tries is limited by the expence 

 of conveying and insuring the 

 precious metals from one country 

 to the other : at least, that it 

 cannot for any considerable 

 length of time exceed that limit. 

 The real difference of exchange, 

 resulting from the state of trade 

 and payments, never can fall lower 

 than the amount of such expence 

 of carriage, including the insu- 

 rance. The truth of this position 

 is so plain, and it is so uniformly 

 agreed to by all the practical 

 authorities, both commercial and 

 political, that your committee will 

 assume it as indisputable. 

 Your committee arc disposed to 



