B R I T A I N. 



sarily employed in the purchase of cuiunioJities at 



"v home. The prater amount of notes there is in the 



'*^?J market to purchase tins.- comnnu'.i::.-!, the p: 



them will gradually rise till the increased value of the 

 tilings to be pine' . bs all the notes in circu- 



lation. Nor is this evil confined to articles of our own 

 growth and nviiattucture, but extends to our foreign 

 commerce, by its influence on the foreign exchanges; 

 for, when the currency of a country is depreciated, 

 it will no longer purchase the same amount of foreign 

 money as before, to be invested in foreign commodi- 

 ties ; but such an increased amount of the deprecia- 

 ted currency must be given as will counterbalance the 

 extent of the depreciation. Or, to put the case in 

 the opposite v.-ay, if a merchant on the Continent is 

 offered a bill of exchange upon London, for which 

 he is to receive bank notes not convertible into specie, 

 those notes can only be invested in commodities here 

 at an advanced price, and therefore he will only take 

 a bill of exchange at such a depreciated rate as in- 

 demnifies him for the advanced price of the commo- 

 dities. Thus, in consequence of this over- issue of 

 paper currency not convertible into specie, indivi- 

 duals pay a higher price for articles both foreign and 

 domestic ; a heavy loss is sustained by government in 

 every purchase made for the public service, and in the 

 expenditure of the army and navy on foreign stations, 

 all of which must be made good by additional taxes 

 imposed at home. Hence, too, arises the tempta- 

 tion to melt down and to export specie; for gold, while 

 circulated here as current coin, passes only at the 

 mint price of L.3 : 17 : 10i per. ounce, but, melted 

 down into bullion, sells for L.4, 12s. per ounce. In 

 proportion as the exchange falls, the value or bul- 

 lion rises ; for the greater the loss on making remit- 

 tances of bills is, the higher price will the merchant 

 give for bullion as a substitute for bills of exchange. 



In support of the theory laid down in the report 

 of the bullion committee, statements have been given 

 of the amount of the bank notes in circulation, with 

 the rates of exchange at corresponding periods. In 

 January 1795, the amount of bank notes in circula- 

 tion was nearly thirteen millions, and the exchange 

 between Hamburgh and London was from three and 

 a half to six per cent, against England. In Febru- 

 ary 1797, the amount of bank notes in circulation 

 was only 8y millions, and the exchange between 

 Hamburgh and London was between 6 and 7 per 

 cent, in favour of England. By the last returns laid 

 before Parliament, the bank notes in circulation were 

 21 millions ; and the exchange between Hamburgh 

 and London was L. 16, 9s. per cent, against Eng- 

 land. Statements have also been given, in order to 

 shew that the quantity of bank notes in circulation 

 affects the market price of gold. In February 17i)7, 

 it was 9s. 7id. per ounce below the mint price: as 

 the bank increased their issue of notes, it soon rose 

 above the mint price, and now it exceeds it by 15 

 per cent. Counter statements have been produced 

 by the bank directors, with the view of shewing that 

 the increased issue of their notes has net been follow- 

 ed by a correspondent change in the rate of foreign 

 exchanges, and the difference between the mint price 

 and the marktt price of gold. It is obvious, that 

 these effects of an increased paper circulation, may 



voi. iv, FAKT u. 





be retarded, or even counteracted, ! >- liritu'i. 



;; than our excess of paper ; but tl. >; ; - v - ' 



facts and rcasoi 



smiling that such i- fleets will, in course of time, 

 evitably follow. 



It is laid down in the report of the bullion com- 

 mittee, that while the paper currency oi a country it 

 convertible into specie, the greatest depreciation in 

 the rate of foreign exchangee that can continue fur 

 any length of time, is the amount of the cxpcncc of 

 conveying bullion from one country to another j and 

 the average expence of transporting it between Great 

 Britain and the Continent of Euiopc, is stated, m 

 the evidence before the bullion committee, to be 5 

 per cent. The actual depreciation is estimated, by 

 Mr Huskisson, at 15 per cent. : if, then, the differ- 

 ence, or 10 per cent, and a corresponding increase in 

 the price of all commodities, be considered as the ef- 

 fect of the present over issue of paper, it will be found 

 that the bank restriction bill costs the public as much 

 as the property-tax, or 12 millions per annum ; and 

 that the continuance of this restriction, while it thu* 

 oppresses the individual, does no benefit to the state. 



The advocates for the bank, without denying the 



feneral correctness of the theory advanced by the 

 ullion committee, contend, that it is not applicable 

 to the present case, a:id that the high price of bullion, 

 together with the law rate of foreign exchanges, ought 

 not to be attributed to the increased issue of paper 

 currency, but to an unfavourable balance of trade 

 and payments, occasioned by the great foreign ex- 

 penditure of government, and the unprecedented re- 

 strictions imposed by the enemy on our commerce 

 to the continent. Mr Hill, (in his Inquiry into the 

 Causes of the present high price of Gold Bullion,) 

 says, " I am decidedly of opinion, that since the 

 year 1797, we have drained England by foreign ex- 

 penditure, of 3 very considerable part of the specie 

 and bullion, which at that time remained in it ; that 

 though the bank restriction bill, by reducing the do- 

 mestic demand, prevented us from being sensible of 

 the deficiency fir some years afterwards, yet our 

 stock is now reduced so low as to be inadequate to 

 the limited demand which at present continues for it ; 

 and that this real scarcity of the precious metals in 

 the country, is the genuine cause ot the present high 

 price of bullion." Mr Cock, treating of the same sub- 

 ject, observes, " As therefore we are not exporting 

 gold from the cheap to the dear, but from the dear 

 to the cheap country, all the usual observations about 

 the expence of transmission, and the commonly adopt- 

 ed theories on the subject, are inapplicable to the 

 case, which is evidently an unnatural one, occasioned 

 by unnatural circumstances ; and those arising, not 

 out of the stoppage of payment in specie at the 

 bank, but the stoppage of importation of British 

 goods on the continent by Bonaparte." Mr Jasper 

 Atkinson, in his pamphlet on the same subject, says, 

 " It is in evidence before the committee, that the 

 unfavourable situation in which we stand, both in re- 

 t to our metallic currency and ojlr foreign ex- 

 changes, arises out of the state of our payments 

 abroad ; and yet they make no mention of such a 

 cause in thi'ir n medial recommendation." Some of 

 the arguments of the advocates of the bank, prove 



