CHAP. XXX. 



PAPER MONEY. 37-3 



as the latter in the twenty years had declined at 

 the rate of thirteen per cent., we might calculate 

 that the fall on the former would be at the same 

 ratio. If, as we know to be the fact, the mass of 

 commodities had been greatly increased in the 

 period, whilst the circulating medium had dimi- 

 nished, we should find an additional decline in the 

 prices of commodities. But that decline would be 

 liable to counteraction from several causes which 

 might give additional power to the circulating me- 

 dium, and enable a less portion of it to perform 

 the same office as in other circumstances would 

 require a larger portion. 



In 1810, from the state of the whole of Europe 

 being engaged in war, both the treasuries of the 

 several states and the military chests of the various 

 armies must have caused a large quantity of the 

 existing money to have been in a state of inac- 

 tivity. The difficulty of conveying money from 

 place to place was great, and the internal nego- 

 tiation of bills of exchange in most parts of the con- 

 tinent was suspended. Each man who had money 

 kept it by him, instead of lodging it in the hands 

 of banks or bankers, because none of them enjoyed 

 security or possessed credit. In 1830 the case 

 was altered. The conveyance of money was easy, 

 secure, and especially rapid. If gold was more 

 valuable in one place than in others, a few hours 

 could convey it by steam vessels to the spot where 

 it was wanted. Banks were established every 



