MONEY

Money. THE term MONEY* is used to designate whatever commodity the inhabitants of any particular country, either voluntarily or by compulsion, accept as an equivalent for their labour, and for all the commodities they have to dispose of.

SECT. I.—Circumstances which led to the use of money—Principal properties that every commodity used as such ought to possess—Not a sign or a measure of value, but a real equivalent.

A country in which the division of labour was unknown, and where every individual or family directly produced the commodities necessary for his or their consumption, would have no exchanges, and consequently no money. But, after the division of labour has been established, the introduction of money becomes necessary, or, at least, highly advantageous. In such a state of society, a very small part only of a man's wants are directly supplied from the produce of his own labour. The greater part are indirectly supplied by exchanging that surplus part of the produce of his own labour which exceeds his own consumption, for such parts of the produce of other men's labour as he has occasion for, and they are willing to part with. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

"But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of, and the latter to purchase, a part of this superfluity. But, if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each be willing to purchase a part of it; but they have nothing to offer in exchange except the different productions of their respective trades, and the butcher is already provided with all

the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconvenience of such situations, every prudent man, in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or another, such as he imagined few people would be likely to refuse in exchange for the produce of their industry."—(Wealth of Nations, Vol. I. p. 31. 8vo Ed.)

This commodity, whatever it may be, is money.

An infinite variety of commodities have been used as money in different countries and states of society. Those nations who chiefly subsist by the chase, such as the ancient Russians, and the greater part of the Indians who now occupy the uncultivated portion of America, use the skins of wild animals as money.† In the pastoral state of society cattle are most commonly used for that purpose. Homer mentions that the armour of Diomed cost only nine oxen, while that of Glaucus cost one hundred. (Ilias, lib. 6, lin. 235.) The etymology of the Latin word (pecunia), signifying money, and of all its derivatives, proves that cattle (pecus) had been the primitive money of the Romans.‡ They had also been used as such by the ancient Germans; for their laws uniformly fix the amount of the penalties to be paid for particular offences in cattle. (Storch in loco citato.) In remoter ages corn was very generally used, in agricultural countries, as money; and even now, it is by no means uncommon to stipulate for corn rents and wages. Other commodities have been used in different countries. Salt is said to be the common money of Abyssinia (Wealth of Nations, I. p. 35); a species of shells, called cowries, gathered on the shores of the Maldive Islands, are used in smaller payments throughout Hindostan, and form the only money of extensive districts in Africa.§ Dried fish forms the money of Iceland and Newfound-

* Etymologists differ in opinion respecting the derivation of the word money. Some contend that it comes from Monere,—to admonish, to inform,—because the stamp impressed on coined money indicates its weight and fineness. (Bouteroue, Recherches sur les Monnoyes de France, p. 1.) And others that it originates in the circumstance of silver being first coined at Rome in the temple of admonishing Juno—Juno Moneta. (Suidas, in voce Μονητα.)

† Storch, Traité d'Economie Politique, Tome III. p. 16; and Ulloa, Mémoires Philosophiques sur l'Amérique, Tome II. p. 100.

‡ Morellet, Prospectus d'un Nouveau Dictionnaire de Commerce, p. 115.

§ "Dans les pays où le cuivre a trop de valeur pour pouvoir représenter celle des plus menues denrées, on est encore obligé de lui substituer quelque autre matière plus commune. C'est cette circonstance qui a fait adopter aux Indiens l'usage des cauris en guise de petite monnaie. Cet usage pourroit paroître étranger dans les pays aussi riches et d'une civilisation aussi ancienne que le Bengale et l'Indoustan: mais le cuivre y est si rare, et les vivres y sont à si bon marché, qu'une pièce de la valeur de 1 cop. et $\backslash frac\{1\}\{2\}$ (about a halfpenny

land; sugar of some of the West India islands; and Dr Smith mentions that there was, at the period of the publication of the Wealth of Nations, a village in Scotland where it was customary for a workman to carry nails, as money, to the baker's shop or the alehouse. (Wealth of Nations, I. p. 35.)

But these commodities are universally deficient in some of the principal requisites which every commodity used as money ought to possess. Products must frequently be brought to market worth only half an ox, or half a skin; but as an ox could not be divided, and as the division of a skin would most probably deprive it of the greater part of its value, it would be impossible to exchange them for such money. Divisibility is not, however, the only indispensable requisite in a commodity used as a medium of exchange. It is necessary that it should admit of being kept for an indefinite period without deteriorating; that it should, by possessing great value in small bulk, be easily transported; and that one piece of money, of a certain denomination, should always be precisely equivalent to every other piece of money of the same denomination. But none of the commodities we have just named as having been used as money possess these properties. Though cattle had been sufficiently divisible, they could neither be preserved, nor transported from one place to another, without a great deal of trouble and expence; while, owing to the difference in their qualities, one ox might be worth two or three oxen of an inferior species. It is plain, therefore, that they could not serve as money except in a very rude state of society, when the arts were almost unknown, and when the rearing of cattle formed the principal employment. Corn was sufficiently divisible; but its bulk was far too great in proportion to its value to admit of its easy transportation, and it also was of very different and not easily appreciated qualities. Salt, sugar, shells, and fish, are all liable to insuperable objections. The values of equal quantities of all of them differ very greatly; some of them cannot be divided, and others cannot be preserved or transported without great loss.

But the commodities in question were deficient in a still more important particular. Their value was not sufficiently invariable to permit of their being advantageously used as money. They were not durable commodities, nor was it possible to adjust their supply so as to avoid sudden fluctuations of price. The occasional abundance and scarcity of pasture has a powerful influence on the price of cattle, which is still more seriously affected by the prevalence of epidemical diseases, and other contingencies. The fluctuations in the price of corn, arising

from the variations of the seasons, are too striking and obvious to require to be pointed out. And in the islands where cowries are picked up, a strong gale from a particular point of the compass has frequently, in a few hours, sunk their value considerably. It was impossible, therefore, that such commodities could ever be either generally or permanently used as money in civilized societies. No person would willingly exchange the produce of his industry for a commodity which might, in a few weeks, or even days, lose a third, or a half, of its value.

The desire of uniting the different qualities of in-variability of value, divisibility, durability, facility of transportation, and perfect sameness, doubtless formed the irresistible reasons which have induced mankind, in every civilized society, to employ gold and silver as money. The value of these metals is certainly not invariable, but it changes only by slow degrees; they are divisible into any number of parts, and have the singular property of being easily reunited, by means of fusion without loss; they do not deteriorate by being kept; and, from their firm and compact texture, they are very difficult to wear; their cost of production, especially of gold, is so considerable, that they possess great value in small bulk, and can, of course, be transported with comparative facility; and an ounce of pure gold and silver, taken from the mines in one quarter of the world, is precisely equal, in point of quality, to an ounce of pure gold or silver dug from the mines in any other quarter. No wonder, therefore, when almost all the qualities necessary to constitute money are possessed in so eminent a degree by the precious metals, that they have been used as such, in civilized societies, from a very remote era. They became universal money, as M. Turgot has observed, "not in consequence of any arbitrary agreement among men, or of the intervention of any law, but by the nature and force of things."

A considerable period must, however, have elapsed after the introduction of the precious metals into commerce, before they were generally used as money. But, by degrees, the various qualities, which so peculiarly fit them for this purpose, would become obvious; and every individual, in consulting his own advantage, would endeavour to exchange a part, at least, of the produce of his industry for commodities which could be easily concealed or carried about, which did not deteriorate by being kept, and of which he could give a portion equal in value to the value of any other commodity he might afterwards wish to obtain. When first brought to market, gold and silver, like copper, iron, or any other metal, were in an unfashioned state in bars or ingots. A sheep,

English) peut y acheter une quantité des denrées suffisante pour la subsistance journalière d'un homme du peuple. On est donc obligé de diviser la plus petite monnaie de cuivre en plusieurs fractions; et comme une monnaie d'aussi peu de valeur couterait plus à fabriquer qu'elle ne pourroit valoir, on la remplace par un coquillage dont la nature fait presque tous les frais. Quelque mince que soit la valeur d'un cauris, elle suffit dans ces contrées fertiles pour acheter une pièce des bananes ou quelque autre fruit commun." (Le Goux de Flaix, Essai sur l'Indoustan, Tom. I. pp. 143—226. quoted by Storch, Economie Politique, Tom. III. p. 133.)

* Smith, ubi supra; and Horrebow, Description de l'Islande, Tome II. p. 99.

Money. an ox, a bushel of wheat, &c. was then bartered for a piece of gold or silver, exactly as they would have been bartered for iron, copper, cloth, or any other commodity. The parties first agreed upon the quality of the metal to be given for the goods, and the quantity, which the possessor of the metal had bound himself to pay, was next ascertained by weight. Nor is this a mere conjectural statement, advanced in a later age to explain appearances, and resting on probability only. Aristotle (Polit. Lib. 1, cap. 9) and Pliny (Hist. Nat. Lib. 33, cap. 3) tell us, that such was, in fact, the original method by which the precious metals were exchanged in Greece and Italy; and the sacred writings present us with a striking and remarkable example of the prevalence of the same primitive practice in the East. We are there told that Abraham weighed 400 shekels of silver, and gave them in exchange for a piece of ground he had purchased from the sons of Heth (Genesis, Chap. xxiii. ver. 16). It is also mentioned, that this silver was "current money with the merchant," an expression which evidently refers to its quality only. For, had this silver been coined, or marked with a stamp, indicating both its weight and fineness, it would have been unnecessary to have weighed it. These ancient practices still subsist in various countries. In many parts of China gold and silver do not circulate as coin under the authority of a public stamp, but their value is always ascertained by weight. When exchanged, they are cut into pieces, supposed to be nearly proportioned to the value of the commodity they are to be given for; and the pieces are then weighed, to ascertain their precise value. This practice is also prevalent in Abyssinia and Tonquin.*

Before the art of metallurgy was well understood, the baser metals were frequently used as money. Iron was the primitive money of the Lacedemonians, and copper of the Romans. But both iron and copper deteriorate by being kept; and, besides this defect, the rapid improvement of the arts, and the consequent reduction of their price, speedily rendered their bulk in proportion to their value too great to permit of their continuing to be used as money. Copper, however, is still advantageously used in the form of tokens, convertible into silver, in very small payments. In Great Britain, copper pence and halfpence are at present rated at about 72 per cent. above their real value; but as the issue of them is exclusively in the hands of government, and as they are only a legal tender to the extent of one shilling in any one payment, this over-valuation has not, for reasons which we shall afterwards explain, had any bad effect.†

Coinge of Gold and Silver. The trouble and inconvenience attending the weighing of the quantity of metal in every exchange of gold and silver for commodities must have been very early experienced. But the greatest obstacle to the use of unfashioned metals as money, would undoubtedly be found in the difficulty of determining

their quality, or the degree of their purity, with sufficient facility and accuracy. The operation of assaying is one of great nicety and delicacy; and, notwithstanding all the assistance derived from modern art, it is still no easy matter to ascertain the precise degree of purity of a particular piece of metal. In early ages, such an operation must have been performed in a very clumsy and bungling manner. It is most probable, indeed, that when the precious metals were first used as money, their quality would be appreciated only by their weight and colour. A very short experience would, however, be sufficient to show the extreme inexactness of the conclusions derived from such loose and unsatisfactory criteria; and the devising of some method, whereby the fineness of the metal might be easily and correctly ascertained, would very soon be felt as indispensable to the general use of gold and silver as money. Such a method was not long in presenting itself. It was early discovered, that, to ascertain the purity of the metal, and also to avoid the trouble and expence of weighing it, no more was necessary than to mark each piece with a stamp, declaring its weight and fineness. Such seem to have been the various steps which led the ancients to the introduction of coined money (Goguet, De l'Origine des Loix, &c. Tom. I. p. 269),—an invention of the very greatest utility, and which has, perhaps, contributed more than any other to facilitate commerce, and to accelerate the progress of civilization and the arts.

* Without some article of known exchangeable value, such as coin, readily received as an equivalent for other things, the interchange of commodities must have been very limited, and consequently the divisions of labour very imperfectly established. Now, money obviates these evils, and, by a twofold operation, augments production. In the first place, it saves all that time and labour which, while the intercourse between man and man is carried on by barter, must frequently intervene before a person can be supplied with the quantity of the commodity which he wants. In the second place, and in consequence of its saving the time and labour which must otherwise be spent in effecting exchanges, it multiplies the transactions of mercantile industry, and thus allows the divisions of employment to be more thoroughly established. By the first operation, it disengages a very considerable portion of labour from an unproductive occupation, and enables it to receive a more useful direction. By the second operation, it increases in a very high degree the productive powers of the labour already usefully employed. It assists every man in availing himself of the skill and dexterity which he may have acquired in any particular calling, and promotes cultivation in a manner suitable to the climate and soil of different districts, and of different countries. And by both these operations, coined money increases to an extent, not easy to be

* Goguet, De l'Origine des Loix, &c. Tom. I. p. 268, 4to edit. See also Park's Travels, Vol. I. p. 464, 8vo edit.

† See Memorandum on the late Silver Coinage by the Master of the Mint, p. 378 of the Appendix to the Lords' Report on the Resumption of Cash Payments by the Bank.

Money. calculated, the wealth of civilized communities." (Torrens on the Production of Wealth, p. 305.)

Coined Money not a sign, or a measure of value. But, whatever may be the advantages attending the use of coined money, and they are great and obvious, it is necessary to observe, that its introduction does not affect the nature of exchanges. Equivalents are still given for equivalents. The exchange of a quarter of corn for an ounce of pure unfashioned gold bullion, is undeniably as much a real barter, as if it had been exchanged for an ox, or a barrel of beer. But, supposing the metal to have been formed into a coin,—that is, marked with a stamp indicating its weight and fineness, it is plain that circumstance could have made no change in the terms of the barter. The coinage would save to both parties the trouble of weighing and assaying the bullion, but it could do nothing more. A coin is merely a piece of metal of a known weight and fineness; and the commodities exchanged for it are always held by the parties to be of equal value. And yet these simple and obvious considerations have been very generally overlooked. Coined money, instead of being viewed in the same light as other commodities, has been looked upon as something quite mysterious. It was said to be both a sign and a measure of value. In truth, however, it is neither the one nor the other. A guinea is not a sign, it is the thing signified. A promissory note, payable at some stated period, may not improperly be considered as the sign of the specie which is to be paid for it; but that specie is itself a commodity possessed of real exchangeable worth. It is equally incorrect to call money a measure of value. Gold and silver do not measure the value of commodities, more than commodities measure the value of gold and silver. Every thing possessed of value may either measure, or be measured by, every other thing possessed of value. When one commodity is exchanged for another, each is the measure of the value of the other. If the quarter loaf sold for a shilling, it would be just as correct to say, that a quarter loaf measured the value of a shilling, as to say that a shilling measured the value of a quarter loaf.

Use of Gold and Silver as a standard for estimating the relative value of forming a standard, by which to compare the values of other and more variable commodities.

The quality of serving as a measure of value is, therefore, equally inherent in every commodity. But the slow degrees by which the precious metals change their value, renders them peculiarly well fitted for forming a standard, by which to compare the values of other and more variable commodities. To this standard reference is almost always made in estimating the value of the products of every civilized country. We do not say, that one man is worth a thousand acres of land, and that another is worth a thousand sheep; but we ascertain for how much gold or silver the land and the sheep would exchange, and then say, that their proprietors are worth so much money. In this, however, there is certainly nothing mysterious. We merely compare the value of one commodity with the value of another commodity; and as coin or money has been found to be the most convenient standard of comparison, the value of all other commodities is usually estimated in it.

Proof of the non-existence of an It is obvious, from this statement, that the terms of the exchange of one commodity, or set of commodities, for another may be adjusted, with reference

Money. to money, without any money being actually in the possession of either of the parties making the exchange. If a horse, for example, had commonly sold for ten pieces of silver, an ox for five pieces, and a sheep for one piece, it would mark their relative values to each other, and the animals might be exchanged, on this footing, without the intervention of money. The frequent recurrence of transactions of this kind seems to have given rise to the notion of an abstract or ideal standard of value. Thus, instead of saying that a horse is worth ten pieces of silver, an ox five pieces, and a sheep one piece, it has been contended that it might equally have been said that they were respectively worth ten points or units, five points or units, and one point or unit; and that, as the proportional values of commodities might be as clearly expressed in these arbitrary terms as in money, or any commodity possessed of real value, the use of the latter, as a standard, might be advantageously dispensed with, and a set of abstract terms adopted in its stead. This, however, is entirely and completely mistaking the nature and object of a standard. A standard is not intended to mark the known relations between different commodities, but to enable us easily to discover those which are unknown. Now, although a series of arbitrary terms may serve extremely well for the first of these purposes, it is utterly impossible that they can ever serve for the second. This, however, is exclusively the object of a standard; and it is quite plain that nothing can be used as such which is not possessed of the same properties with those with which it is to be compared. To measure length, a standard must have length, to measure value it must have value. The value of commodities is ascertained by separately comparing their cost with the cost of money, and we express their relation to each other by simply stating the result of our inquiries; that is, by mentioning the number of livres, of pounds, or of fractions of a pound, they are respectively worth. And, when any new commodity is offered for sale, or when any change is made in the cost of an old one, we ascertain their relation to the rest, by merely comparing them with a livre or a pound. It is plainly impossible, however, that we could have done this, had the terms livre, or pound, been purely arbitrary, and referable to no really valuable commodity! We might as well try to estimate distances by an imaginary inch, or an imaginary foot, as to estimate prices or values by an imaginary shilling, or an imaginary guinea. When we say that an ox is worth five pounds, and a sheep only one, we really mean no more than that, when an ox and a sheep are compared together, that is, when the one serves as a standard by which to estimate the value of the other, one ox is found to be worth five sheep. But, suppose that we wish to ascertain what is the relative value of some other commodity,—of a pound of tea, for example,—to oxen or sheep, of what use would it be to be told that one ox was worth five sheep, or that, when the value of an ox was represented by the imaginary term "five pounds," the value of a sheep was represented by the imaginary term "one pound?" It is not the relation between oxen and sheep, but the relation between these animals and tea, that we are desirous of learning. And, al-

Money. though this relation may be learned by comparing the cost of producing oxen and sheep with the cost of producing tea, or by ascertaining for how much of some other commodity an ox, a sheep, and a pound of tea, will respectively exchange, it is obvious it could never be learned by comparing them with a set of arbitrary terms or symbols! It would not, in truth, be more absurd to attempt to ascertain it by comparing them with the hieroglyphics on an Egyptian sarcophagus. Nothing that will not exchange for something else, can ever be a standard, or measure of value. Commodities are always compared with commodities, and not with abstract terms. Men go to market with real values, and not with the signs of values, in their pockets. And it is to something possessed of real worth—to the gold contained in a guinea, and not to the word guinea, that they always have referred, and must continue to refer, in estimating value.*

In common mercantile language, the exchanging of

money for a commodity is termed buying, and the exchanging of a commodity for money selling. Price, unless when the contrary is particularly mentioned, always means the value of a commodity, estimated in money.

Having thus endeavoured to explain the circumstances which led to the introduction of money, and to show what it really is, and what it is not, we shall now proceed to investigate the laws by which its exchangeable value is regulated. It is chiefly from the prevalence of erroneous opinions on this subject, that the true theory of money has been so long misunderstood.

SECT. II.—Circumstances which Regulate the Exchangeable Value of Money.

This branch of our subject naturally divides itself into two parts; 1st, An inquiry into the principles which regulate the exchangeable value of money

* The following passage of Montesquieu has been often referred to in proof of the existence of an ideal standard:—"Les noirs de la côte d'Afrique ont un signe des valeurs sans monnaie; c'est un signe purement idéal fondé sur le degré d'estime qu'ils mettent dans leur esprit à chaque marchandise, à proportion du besoin qu'ils en ont—une certaine denrée, ou marchandise vaut trois macutes; une autre, six macutes; une autre, dix macutes: c'est comme s'ils disoient simplement trois, six, dix. Le prix se forme par la comparaison qu'ils font de toutes les marchandises entre elles: pour lors, il n'y a point de monnaie particulière, mais chaque portion de marchandise est monnaie de l'autre."—(Esprit des Loix, Livre XXII. cap. 8.)

But, instead of giving any support to the notion of an abstract standard, this passage might be confidently referred to in proof of its non-existence. Had Montesquieu said that the blacks determined the relative values, or prices, of commodities, by comparing them with the arbitrary term macute, the statement, though false, would have been, at least, in point. But he says no such thing. On the contrary, he states distinctly, that the relative values of commodities (marchandises) are ascertained by comparing them with each other (entre elles), and that it is merely the result of the comparison that is expressed in arbitrary terms!

So much for the weight to be attached to this statement, supposing it to be well-founded. The truth is, however, that the term macute is not really arbitrary, and employed only to mark an ascertained proportion, but that it has a reference to, and is, in fact, the name of an intrinsically valuable commodity. "On a bien dit," says l'Abbé Morellet, "que ce mot macute étoit une expression abstraite et générale de la valeur, et cela est vrai au sens où nous l'expliquerons plus bas; mais on n'a pas remarqué que cette abstraction a été conséquente et postérieure à l'emploi du mot macute pour signifier une marchandise, une denrée réelle à laquelle on avoit longtemps comparé toutes les autres.

"Macute en plusieurs lieux de la côte d'Afrique, est encore le nom d'une certaine étoffe—'Chez les negres de la côte d'Angola,' dit le voyageur Angelo, 'les macutes sont des pieces de nattes d'une aune de long,'—Jobson dit aussi que les macutes sont une espèce d'étoffe.

"Les étoffes ont toujours été l'objet d'un besoin très-pressant chez des peuples aussi barbares, dépourvus de toute espèce d'industrie.—Les nattes en particulier leur sont de la plus grande nécessité. Elles sont divisées en morceaux peu considérables et d'une petite valeur—elles sont très-uniformes dans leurs parties, et les premières qu'on a faites auront pu être semblables les unes aux autres, et d'une bonté égale, sous la même dénomination—toutes ces qualités les ont rendu propres à devenir la mesure commune des valeurs."—(Prospectus d'un Nouveau Dictionnaire de Commerce, p. 121.)

The following extract from Park's Travels gives an example of a similar kind: "In the early intercourse of the Mandingoes with the Europeans, the article that attracted most notice was iron. Its utility in forming the instruments of war and husbandry made it preferable to all others; and iron soon became the measure (standard) by which the value of all other commodities was ascertained. Thus a certain quantity of goods, of whatever denomination, appearing to be equal to a bar of iron, constituted, in the trader's phraseology, a bar of that particular merchandise. Twenty leaves of tobacco, for instance, were considered as a bar of tobacco; and a gallon of spirits (or rather half spirits and half water) as a bar of rum; a bar of one commodity being reckoned equal in value to a bar of another commodity. As, however, it must unavoidably happen, that, according to the plenty or scarcity of goods at market, in proportion to the demand, the relative value would be subject to continual fluctuation, greater precision has been found necessary; and, at this time, the current value of a single bar of any kind is fixed by the whites at two shillings Sterling. Thus, a slave, whose price is L.15, is said to be worth 150 bars."—Travels in the Interior of Africa, 8vo edit. Vol. I. p. 39.)

when the power to supply is not monopolized; and,
2d, An inquiry how far these principles are liable to
be affected by the operation of monopoly.

I. There does not now seem to be much room for
difference of opinion respecting the circumstances
regulating the value of the precious metals, and their
distribution throughout the various countries of the
globe. Bullion is a commodity, on the production
of which competition operates without restraint. It
is not subjected to any species of monopoly, and its
value in exchange must, therefore, be entirely regu-
lated by the cost of its production, that is, by the
comparative quantities of labour necessary to bring
a given quantity of it to market.

If, in every stage of society, it required precisely
the same quantity of labour to produce a given quantity
of bullion, its value would be invariable; and it
would constitute a standard by which the variations
in the exchangeable value of all other commodities
could be correctly ascertained. But this is not the
case either with bullion or any other commodity.
And its value, in the same way as the value of any
other commodity, fluctuates not only according to
the greater or less productiveness of the mines from
which it is extracted, but also according to the com-
parative skill of the miners, and the improvements
of machinery.

M. Say has, in his valuable work on Political
Economy, a chapter, "De la valeur que la qualité
d'être monnaie ajoute à une marchandise." But a
little reflection will convince us, that M. Say is mis-
taken, and that the circumstance of the precious me-
tals being used as money, or as a circulating me-
dium, cannot affect their exchangeable value. M.
Say reasons on the common hypothesis, that an in-
crease of demand is always productive of an increase
of value,—an assumption totally at variance with
principle and with fact. Value depends exclusively
upon the cost of production; and it is obvious,
that the cost of producing a commodity may be di-
minished at the same time that the demand for it is
increasing. This is so plain a proposition, as hardly
to require to be substantiated by argument. And
a reference to the case of cotton goods, the price
of which has, notwithstanding the vast increase
of demand, been constantly on the decline during
the last half century, is enough to convince the
most sceptical of the extreme erroneousness of M.
Say's conclusion. But, with regard to the particu-
lar case of the precious metals, it is clear the capital
devoted to the production of gold and silver must
yield the common and ordinary rate of profit; for,
if it yielded more than this rate, there would be an
influx of capital to the mining business; and, if it
yielded less, it would be withdrawn, and invested in
some more lucrative employment. And hence, though
the demand for gold and silver should, from the
adoption of some other commodity as an instrument
of exchange, gradually become less, the value of the
precious metals would not, on that account, be re-
duced. A smaller supply would, indeed, be an-
nually brought to market, and a portion of the capi-
tal formerly engaged in the mining, refining, and
preparing of the metals would be disengaged; but as
the whole stock thus employed yielded only the aver-

age rate of profit, the portion which is not withdrawn
must continue to do so,—or, which is the same
thing, gold and silver must still continue to sell for
the same price. It is no doubt true, that where
mines are, as they almost always are, of different de-
grees of productiveness, any great falling off in the
demand for bullion might, by rendering it unneces-
sary to work the inferior mines, enable the proprie-
tors of the richer mines to continue their work, and
to obtain the ordinary rate of profit on their capitals,
by selling their bullion at a reduced price. In this
case the value of bullion would be really diminished;
but it would be diminished, not because there was a
falling off in the demand, but because there was a
greater facility of production. On the other hand,
an increased demand for bullion, whether it arose
from the general suppression of paper money, or
from a greater consumption of gold and silver in the
arts, or from any other cause, would not—unless it
was necessary, in order to procure the increasing
supply, to have recourse to mines of an inferior de-
gree of productiveness—be accompanied by any rise
of price. If the mines from which the additional
supplies were to be drawn were less productive than
those already wrought, more labour would be neces-
sary to procure the same quantity of bullion, and, of
course, its price would rise. But, if no such increase
of labour was required, its price would remain sta-
tionary, though a thousand times the quantity for-
merly required should be demanded.

After gold and silver have been brought into the
market, whether they shall be converted into coin
or into manufactured commodities, depends entirely
on a comparison of the profits that may be derived
from each operation. No person would take bullion
to the mint if he could realize a greater profit by dis-
posing of it to a jeweller; and no jeweller would
work up bullion into plate, if he could turn it to
greater account by converting it into coin. The
value of bullion and coin must, therefore, in countries
where the expences of coinage are defrayed by the
state, nearly correspond. When there is any un-
usual demand for bullion in the arts, coin will be
melted down; and when, on the contrary, there is
any unusual demand for coin, plate will be sent to
the mint, and the equilibrium of value maintained by
its fusion.

It appears, therefore, that while competition is al-
lowed to operate without restraint on the production
of gold and silver, they are, like all other commodities,
produced in similar circumstances, valuable only in
proportion to the cost of their production,—that is,
in proportion to the quantity of labour necessarily
expended in bringing them to market. And hence,
while they constitute the currency of the commer-
cial world, the price of commodities, or their value
compared with gold or silver, will vary, not only ac-
cording to the variations in the exchangeable value
of the commodities themselves, but also according to
the variations in the exchangeable value of the gold
or silver with which they are compared.

II. But if competition was not allowed to operate
on the production of the precious metals, if they could
be monopolised and limited in their quantity, their
exchangeable value would no longer be regulated by

Money. the same principles. If, after the limitation, they
still continued to be used as money, and if, in consequence of the improvement of society, manufactured commodities and valuable products should be very much multiplied, the exchanges which this limited amount of money would have to perform would be proportionably increased; and, of course, a proportionably smaller sum would be appropriated to each particular transaction; or, which is the same thing, money prices would be diminished. Whenever the supply of money is fixed, the amount of it, given in exchange for commodities, must vary inversely as the demand, and can be affected by nothing else. If double the usual supply of commodities were brought to market in a country with a limited currency, their money price would be reduced one-half; and if only half the usual supply were brought to market, it would be doubled; and this, whether the cost of their production had increased or diminished. No one would, in these circumstances, exchange the produce of his industry for money, on the ground that money was itself a commodity capable of being advantageously used in the arts, or that an equal quantity of labour had been expended on its production; but because it was the universal equivalent used by the society, and because, as such, it would be willingly received in exchange for the produce of the industry of others. The remark of Anacharsis, the Scythian, that gold and silver coins seemed to be of no use but to assist in numeration and arithmetic (Hume's Essay on Money), would, if confined to a strictly limited currency, be as just as it is ingenious. Guineas, sovereigns, livres, dollars, &c. would then really constitute mere tickets or counters, to be used in computing the value of property, and in transferring it from one individual to another. And as small tickets, or counters, would serve for this purpose quite as well as large ones, it is unquestionably true, that a debased currency might, by first reducing, and then limiting its quantity, be made to circulate at the value it would bear if the power to supply it was unrestricted, and if it were possessed of the legal weight and fineness; and that, by still further limiting its quantity, it might be made to pass at any higher value.

Thus it appears, that whatever may be the material of the money of any country, whether it consist of gold, silver, copper, iron, leather, salt, cowries, or paper, and however destitute it may be of all intrinsic value, it is yet possible, by sufficiently limiting its quantity, to raise its value in exchange to any conceivable extent.

Suppose the money of Great Britain to consist of 50,000,000 or 60,000,000 of one pound notes, and that we are prevented from increasing or diminishing this sum, either by issuing additional notes or coins, or by withdrawing the notes already in circulation, it is obvious that the quantity of commodities for which such notes would exchange, would increase or diminish precisely according to the increase or diminution of the quantity of commodities brought to market. If we suppose that ten times the amount of products that were offered for sale when the limitation of the currency took place, are offered for sale

ten or twenty years afterwards, and that the rapidity of circulation has continued the same, prices will have fallen to one-tenth of their former amount; or, which is the same thing, the exchangeable value of the paper money will have increased in a tenfold proportion:—and, on the other hand, if the products brought to market had diminished in the same proportion, the exchangeable value of the paper money will have been equally reduced.

The principles we have now stated are of the utmost importance to a right understanding of the real nature of money. Previously to the publication of Mr Ricardo's great work, every writer of authority on political economy had maintained that the value of money depended entirely on the relation between its amount and the demand. But this is true only of a gold or silver currency when its quantity is limited, and of a currency formed of materials having little intrinsic worth, as paper, when its quantity is limited, and when it is not made convertible, at the pleasure of the holder, into some more valuable commodity, whose production is under no restraint. It is obvious, indeed, without any reasoning on the subject, that the value in exchange of a currency possessed of little or no real value, can only depend on the proportion which its total amount bears to the amount of the commodities brought to market, or to the demand. And wherever a currency of this kind, or a limited gold currency, is in circulation, the common opinion that the prices of commodities are regulated exclusively by the proportion between the quantity of them brought to market, and the supply of money, and that any considerable increase or diminution of either will proportionably affect prices, is quite correct. It is altogether different, however, with a currency consisting of gold or silver, or of any other commodity possessed of considerable value, and the supply of which may be increased to an unlimited extent by the operation of unrestricted competition.

The fluctuations in the supply of, and demand for, such money, can have no permanent effect on its exchangeable value; this depends exclusively on the comparative cost of its production. If a guinea commonly exchanges for a couple of bushels of wheat, or a hat, it is because the same labour has been expended on its production, as on that of either of these commodities; while, if with a limited and inconvertible paper money, these commodities exchange for a guinea note, it would only be because such was the proportion which, as a part of the general mass of commodities offered for sale, they bore to the supply of paper or money in the market. This proportion would, it is evident, be not only immediately, but permanently, affected by an increase or diminution of the supply either of paper or of commodities. But the relation which commodities bear to a freely supplied metallic currency, could not be permanently changed, except by a change in the cost of producing the commodities or the metals.

Our readers must not conceive from what we have now stated, that we mean to contend that the value of gold or silver is never affected by variations in the supply and demand. Such an opinion would be al-

Money. together erroneous. At the same time it must be admitted, that their value is much less affected by such variations, than the value of almost any other commodity. Their great durability precludes the possibility of any sudden diminution of their quantity, while the immense surface over which they are spread, and the various purposes to which they are applied, prevent any unusual productiveness of the mines from speedily lowering their value. An extraordinary event, such as the discovery of America, or the establishment of an intercourse between a country where bullion bore a high value, and one where its value, from the greater facility of its production, was comparatively low, would, by causing a sudden exportation and importation, raise its value in the one country, and sink it in the other. But such events must necessarily be of very rare occurrence. And although the value of gold and silver must, because of the different degrees of productiveness of the mines, to which, in the progress of society, recourse must be had,—and because of the successive improvements in the art of mining and working metals, be very different at distant periods—it is abundantly uniform to secure us against all risk of sudden and injurious fluctuations.

Such are the circumstances which regulate the value of money, both when the power to supply it is not subjected to any species of monopoly, and when it is monopolised and limited. In the former case, its value depends, like the value of all other commodities, on the cost of its production; while, in the latter case, its value is totally unaffected by that circumstance, and depends entirely on the extent to which it has been issued, compared with the demand.

The conclusions deducible from the fundamental principle we have thus endeavoured to establish, are of the utmost importance. A metallic currency, on the coinage of which a high seigniorage or duty was charged, and a paper currency not convertible into the precious metals, were occasionally seen to circulate at the same value with a metallic currency of full weight, and which had been coined at the expence of the state. But no rational, satisfactory, or consistent explanation of these apparently anomalous results could be given until the effects produced by limiting the supply of money had been accurately observed and appreciated. Now, however, that this has been done, all these difficulties have disappeared. The theory of money has been perfected, and we are enabled to show what, under any given circumstances, would be the effect of imposing a seigniorage, or of issuing an inconvertible paper currency.

SECT. III.—A moderate Seigniorage on Coined Money shown to be advantageous.—Principles which should regulate its amount.*

Reasons why The government of almost every country has re-

tained the power of coining exclusively in its own hands. In antiquity this privilege was reserved merely to prevent the confusion that must have attended the too great multiplication of coins of different denominations, had individuals been permitted to issue them at their pleasure, and to give the public a greater security that the stamp should truly indicate the weight and fineness of the metal.† But in modern Europe it has been used not only as a means of affording a better guarantee to the public, but also of increasing the revenues of the state. Of the expediency of deriving a revenue from this source, much difference of opinion has, however, existed. Many able economists have contended that the state ought in no circumstances to charge any duty on coined money; and that the expences of the mint ought always to be defrayed by the public. In this opinion we cannot concur; and we think the reasoning of Dr Smith, in favour of a moderate seigniorage, quite unanswerable. No good reason has yet been given why those who want coins should not have to pay the expences of manufacturing them. Coinage, by saving the trouble and expence attending the weighing and assaying of bullion, indisputably adds a real value to the precious metals. It renders them fitter to perform the functions of a circulating medium. A guinea is of greater real value than a piece of pure unfashioned gold bullion of the same weight; and for this plain reason, that while it is equally well adapted with the bullion for being used in the arts, it is much better adapted for being used as money, or in the exchange of commodities. Why then should the Government be prevented from charging a seigniorage, or duty on coined money, equal to the expences of the coinage, or, which is the same thing, to the value which it adds to the bullion? Those who contend that the State ought to defray the expence of the coinage, might, with equal cogency of reasoning, contend that it ought to defray the expence of manufacturing gold and silver tea-pots, vases, &c. In both cases, the value of the raw material, or bullion, is increased by the cost of workmanship. And it is only fair and reasonable, that those who carry bullion to the mint ought, equally with those who carry it to the jewellers, to be obliged to pay the expences necessarily attending its conversion into coin.

But there are other reasons why a seigniorage, to this extent at least, ought to be exacted. In countries where the expences of coinage are defrayed by the State, an ounce of coined gold or silver, and an ounce of gold or silver bullion, must be very nearly of the same value. And hence, whenever it became profitable to export the precious metals, money, in the coinage of which a considerable expence had been incurred, would be sent abroad indifferently with bullion. It has indeed been attempted, by pro-

* Seigniorage, strictly speaking, means only the clear revenue derived by the state from the coinage; but it is now commonly used to express every deduction made from the bullion brought to the mint to be coined, whether on account of duty to the state, or of the expence of coinage (properly brassage). We always use the phrase in its more enlarged sense.

† Le Blanc, Traité Historique des Monnoyes de France, p. 90, ed. Amst. 1692.

Money. Money. Inhibiting the exportation of coins, to prevent the loss which might thus be occasioned to the public; but these efforts have proved singularly ineffectual. Admitting, however, that it is possible, which most certainly it is not, to prevent or even materially to limit the clandestine exportation of coins, it is conceded, on all hands, to be quite nugatory to attempt to prevent their conversion into bullion. In this there is almost no risk. And the security with which their fusion can be effected, and the trifling expences attending it, will always enable them to be melted down and sent abroad whenever there is any unusual foreign demand for the precious metals. This exportation would, however, be effectually prevented by the imposition of a seignorage or duty, equal to the expence of the coinage. The coins being, by this means, rendered more valuable than bullion, they would be always kept at home in preference: And if, as Dr Smith has observed, it became necessary, on any emergency, to export coined money, it would be again reimported. Abroad the coins would be only worth so much bullion; while at home they would be worth this much and the expence of coinage besides. There would, therefore, be an obvious inducement to bring them back, and the supply of currency would be maintained at its proper level, without its being necessary for the mint to issue fresh coins.

Besides relieving the country from the useless expences attending the coinage of such money as may be melted down and exported to other countries as an article of commerce, the imposition of a moderate seignorage would either totally prevent, or at least lessen that fusion of the heavier coins, which must always take place whenever a currency, the supply of which is not restricted, becomes degraded or deficient in weight. Previous to the great recoinage in 1773, the quantity of bullion contained in the greater proportion of the gold coins in circulation was reduced nearly 2 per cent. below the mint standard; and, of course, the price of gold bullion, estimated in this degraded currency, rose 2 per cent., or from L.3, 17s. 10$\backslash frac\{1\}\{2\}$d., its mint price, to L.4. This, however, was too minute a difference to be taken into account in adjusting the ordinary business of buying and selling. And the possessors of coins fresh from the mint, or of coins of full weight, not obtaining more of the general mass of commodities in exchange for them, than they obtained for the lighter coins in circulation, sent the former to the melting pot, and then sold them as bullion. But it is easy to see that this fusion of the coins would have been effectually prevented had they been loaded with a seignorage of 2 per cent. The heavy coins could not then have been melted without losing the additional value given them by the seignorage; and as we have supposed this to have been equal to the excess of the market price of bullion above the mint price, nothing would have been gained by the melters. Had the seignorage been less than the average degradation of the coin, or 2 per cent.,—had it, for example, been only 1 per cent., all those coins whose value was not more than 1 per cent. degraded below their mint standard, might have been advantageously melted; but if the seignorage had exceeded 2 per cent., no

coins whatever could have been melted until the degradation had increased to the same or a greater extent.

This reasoning proceeds throughout on the supposition that the coins on which a seignorage had been charged are not issued in excess. If they were, these consequences would not follow. Their too great multiplication might sink them even below their value as bullion, and occasion their immediate fusion. So long, however, as the State only coins the bullion brought to the mint by individuals, there is no risk of this happening. No one, we may depend upon it, will ever carry bullion to that establishment, and pay the expences of its coinage, unless when the coins are thereby rendered so much more valuable than the unfashioned metal.

Should the Government choose to buy bullion, and coin money on its own account, it might, by a very little attention, easily avoid all over-issue. Suppose the seignorage were 2 per cent., then any given weight of coins of the mint standard ought, provided the currency be not over redundant, to purchase 2 per cent. more than the same weight of bullion. So long, therefore, as this proportion is preserved between coined money and bullion, it shows that the proper supply of currency has been issued. When the relative value of the coins declines below this limit, it shows that too many of them have got into circulation; and when, on the contrary, their relative value increases, it shows that the supply is too limited, and that an additional quantity may be advantageously issued.

But it is easily seen, from the principles we have already established, that it is not at all necessary that the charge for seignorage should be limited to the mere expences of coinage. It may, without injury to any individual, be carried considerably farther. Provided the amount of the coins on which a seignorage is imposed, is limited to the precise amount of those that previously circulated in the country, its imposition to whatever height it might be carried will not affect their exchangeable value. The State being, by the supposition, in the exclusive possession of the privilege of coining, no additional supply of money could be brought to market. And supposing the business of the society to continue the same—that is, supposing the same quantity of commodities to be brought to market, and exchanged for the same quantity of coins of the same denomination, it is plainly impossible that prices could be in any way affected. Invariability of value is the great desideratum in money; and provided this is maintained, as it always may be, by properly limiting the quantity in circulation, it is of no consequence whether the weight of the coins is increased or diminished. A hat that had previously to the imposition of the seignorage sold for a guinea, would still fetch one. The guinea, it is true, would now be diminished in size; but as its value would be increased in proportion to this diminution, and as small coins are equally well adapted to serve every purpose of a circulating medium as those that are larger, the society would not suffer the smallest inconvenience from that circumstance. It is certain, indeed, that if the monopoly were not rigorously enforced, or if individuals were

permitted to issue supplies of money from private mints, free from the charge of seigniorage, the increase of quantity would speedily sink the value of the whole coins in circulation to a level with the expence necessary to indemnify those who could produce them on the lowest terms; so that those on which a high seigniorage had been charged, would not have any greater value than those which had been exempted from that charge. But, wherever the supply of money is limited, and competition excluded, this principle ceases to have any operation; and its value is then regulated exclusively by the proportion which the total quantity in circulation bears to the total demand. This principle is farther elucidated in a very able article on seigniorage, by Mr Tooke, printed in the Appendix (p. 180) to the Lords' Report of 1819.

It must not, however, be concealed, that if an attempt were made to charge a very high seigniorage, it would be extremely difficult to limit the supply of coins. The inducement to counterfeit money would, in such circumstances, be very greatly increased, while the chances of detection would at the same time be very much diminished. It would not then be necessary, in order to derive a profit from the issue of counterfeit coins, that they should be manufactured of a baser metal. The saving of a heavy charge on account of seigniorage would of itself afford a sufficient profit; and this could be derived, though the metal contained in the forged coins was of the standard purity. But, although it might, for this reason, be quite impossible to limit the supply of currency, and consequently to sustain its value, if an exorbitant seigniorage were charged, the same difficulty would not stand in the way of the imposition of a moderate one. The nefarious business of counterfeiting could not be carried on if it did not yield a sufficient premium to the forgers to indemnify them for the risks and odium to which they are exposed. Now, it is plain, that if the seigniorage were less than this premium, it could afford them no encouragement to the issue of counterfeit coins. And although it might be difficult to form any very precise estimate of what this premium might be, yet it is abundantly certain that it could not amount to less than from 5 to 7 per cent.

It appears from an account inserted in the appendix to the Report drawn up by the Lords in 1819, that new gold coins, of the value of L.74,501,586, had been issued by the mint between the 1st January 1760, and the 13th April 1819. To this sum we have to add 5½ millions since issued, making in all an issue of about eighty millions of gold coins since the accession of his late Majesty. But the seigniorage was remitted in the reign of Charles II.; and it appears, from the accounts published by Mr Ruding and others, that L.28,172,149 of new gold coins were issued in the period between the accession of James II. (1685) and the demise of George II.; so that, in all, upwards of 108 millions of gold coins have been

coined at the expence of the State, and issued since the remission of the seigniorage. We shall be considerably within the mark, if we estimate the average annual expence attending this coinage at L.12,000,* and on this supposition, it will be found, that the expence of the coinage of gold only has amounted, during the 136 years which have elapsed since the accession of James II., to L.1,632,000. But, if a low seigniorage of no more than 3 or 4 per cent. had been charged on the gold coins, it would have produced three or four millions—a sum which might have been collected, without occasioning the least injury to any individual, and which, besides defraying the entire expences of the coinage, would have left a considerable surplus revenue.

In his evidence before the Lords' Committee in 1819, Mr Mushet stated, that, with the improved machinery now in use in the mint, gold coin could be manufactured for about 10s. per cent. (Minutes of Evidence, p. 207.) And the expence of the manufacture of the silver coin may, we believe, be taken at about three times as much, or 1½ per cent. In France the coinage of gold costs 0.29 per cent., and of silver 1.50 per cent.: In Russia the gold costs 0.85, and the silver 2.95 per cent. (Storch, Tom. VI. p. 74.)

The precise period when a seigniorage first began to be charged on the English silver coins has not been ascertained. It must, however, have been very early. Mr Ruding mentions, that, in a mint account of the 6th Henry III., one of the earliest he had met with, the profit on L.3898, 0s. 4d. of silver coined at Canterbury, is stated to be L.97, 9s., being exactly 6d. a-pound, of which the King had L.60, 18s. 3½d., and the Bishop the residue. (Annals of the British Coinage, Vol. I. p. 179, 4to ed.) In the 28th Edward I. the seigniorage amounted to 1s. 2½d. per pound, 5½d. being allowed to the master of the mint, to indemnify him for the expences of coinage, and 9d. to the crown as its profit. Henry VI. increased the master's allowance to 10d. and 1s. 2d., and the King's to 1s. and 2s. In the reign of Edward IV. the seigniorage varied from 4s. 6d. to 1s. 6d. It was reduced to 1s. in the reign of Henry VII.; but was prodigiously augmented in the reigns of his successors, Henry VIII. and Edward VI., whose wild and arbitrary measures produced, as we shall afterwards have occasion to show, the greatest derangement in the state of the currency. During the long and glorious reign of Elizabeth, the seigniorage varied from 1s. 6d. to 2s. per pound; at which sum it continued, with very little variation, until the 18th of Charles II. (1666), when it was totally remitted.

From this period down to 1817, no seigniorage was charged on the silver coin; but a new system was then adopted. The value of silver relatively to gold, having been underrated in the mint proportion of the two metals fixed in 1718, all the heavy silver coins were withdrawn from circulation, and gold only being used in all the larger payments, it became,

* Lord Liverpool states, that the entire expences of the mint, from 1777 to 1803, amounted to L.488,441, which gives an average expenditure of L.18,786 a-year. (Liverpool on Coins, p. 156.)

Money. in effect, what silver had formerly been, the standard of the currency. The act 56th Geo. III., regulating the late silver coinage, was framed so as not to interfere with this natural arrangement, and to render the new silver coins entirely subsidiary to gold. For this purpose silver is made a legal tender only to the extent of 40s.; and 66s. instead of 62s. are coined out of a pound of troy, the 4s. being retained as a seignorage, which, therefore, amounts to $6\backslash frac\{1\}\{2\}\backslash \%$ per cent. The power to issue silver is vested exclusively in the hands of Government; who have it, therefore, in their power to avoid throwing too much of it into circulation, and consequently to prevent its fusion, until the market price of silver shall have risen to above 5s. 6d. an ounce.

This arrangement was censured by Lord Lauderdale, Mr J. P. Grant, and others, in the debates on the question of returning to cash payments in 1819. They contended that the overvaluation of silver with respect to gold would render it the interest of every debtor to discharge his debts with silver, and that the gold coins would in consequence be driven from circulation, and exported to other countries. It is plain, however, that this opinion is altogether founded in error. Debtors cannot discharge their debts by silver payments, for, it is only a legal tender to the extent of 40s.; and no creditor could be compelled, or would be disposed to take it in payment of a larger debt, except at its real value.*

In the 18th year of the reign of Edward III., the period when we begin to have authentic accounts of the gold coinage, a pound troy of gold bullion was coined into florins, of the value of L.15: Of this sum only L.13, 16s. 6d. were given to the person who had brought the bullion to the mint to be coined, L.1, 3s. 6d. being retained as seignorage, of which 3s. 6d. went to the Master, and L.1 to the King. But it appears, from the mint indentures, that the seignorage on the coinage of nobles for the same year only amounted to 8s. 4d. And, from this remote period to the accession of the Stuarts, with the exception of the coins issued in the 4th and 5th Edward IV. and the 34th, 36th, and 37th Henry VIII., the total charge of coining a pound weight of gold bullion seldom exceeded 7s. or 8s. money of the time. In the 2d James I., a pound weight of gold bullion was coined into L.40, 10s.; a seignorage of L.1, 10s. being deducted, 6s. 5d. of which went to the Master, and L.1, 3s. 7d. to the Crown. The seignorage on gold was remitted at the same time (18th Charles II.) with the seignorage on silver, and has not since been revived.†

As the regulation of the seignorage depended en-

tirely on the will of the sovereigns, we cannot be surprised at the variations in its amount at different periods, or that it should have fluctuated according to their necessities and caprices. It was, indeed, hardly possible that it should have been otherwise. Our ancestors were totally ignorant of the principle, by a strict adherence to which the imposition of a seignorage can alone be rendered advantageous. They considered it as a tax which might be increased and diminished at pleasure. And, far from taking any steps to limit the quantity of coin in circulation, so as to maintain its value, they frequently granted, to corporate bodies, and even to individuals,‡ the privilege of issuing coins, not subjected to this charge. No wonder, therefore, that the seignorage should have been considered as a most unjust and oppressive tax, and that its abolition should have been regarded as a very advantageous measure.

Besides the revenue arising from the seignorage, Remedy or our kings formerly derived a small revenue from the Shere. remedy or shere. It having been found impossible to coin money to correspond in every particular, both of weight and purity, with a given standard, a small allowance has always been made, in the different mints, to the master, whose coins are held to be properly executed, provided their imperfections do not exceed this allowance, or remedy. The amount of the remedy has varied very little since the reign of Edward III.; having, during this long period, been almost always one-eighth of a carat, or 30 grains of pure gold per pound of gold bullion, and two penny weight of pure silver per pound of standard silver bullion. By the law of 1815, the remedy for gold coins is fixed at 12 grains per lb. in the weight, and one-sixteenth of a carat in the fineness. The remedy for silver continues the same as before.

It does not appear that our princes derived any considerable advantage from the remedy previously to the reign of Elizabeth. But she, by reducing the master's allowance for the expence of coinage from 1s. 2d. to 8d. obliged him to come as near as possible to the lowest limit allowed by the remedy. Had the coins been delivered to those who brought bullion to the mint by weight, the queen, it is plain, would have gained nothing by this device; but, in the latter part of her reign, and the first seventeen years of that of her successor, James I., they were delivered by tale, so that the Crown saved, in this way, whatever additional sum it might otherwise have been necessary to pay to the master, for the expences of coinage. In the great recoinage in the reign of William III., the profit arising from the remedy amounted to no more than 8s. on every hundred

* Those who wish for a farther elucidation of this subject, will do well to have recourse to Mr Mushet's evidence in the Appendix to the Lords' Report "on the Expediency of the Bank's resuming Cash Payments," where it is discussed at great length, and in the most able manner.

† In the tables annexed to this article, the reader will find a detailed account of the amount of the seignorage and its fluctuations in different periods.

‡ Ruding's Annals of the Coinage, Vol. I. p. 185. When the right of seignorage was abolished, there was a pension, payable out of the profits derived from it, granted under the great seal, for twenty-one years, to Dame Barbara Villiers, which the legislature ordered to be made good out of the coinage duties imposed by that act. See Ruding, in loco citato, and Leake's Historical Account of English Money, 2d ed. p. 356.

Money. pounds weight of bullion; and the coinage is now conducted with so much precision, and the coins issued so near to their just weight, that no revenue is derived from this source.

Seignorage in France. The continental princes have, we believe, without any exception, charged a seignorage on the coinage of money. In France, this duty had been levied at a very early period. By an ordonnance of Pepin, dated in 755, a pound of silver bullion is ordered to be coined into twenty-two pieces, of which the master of the mint was to retain one, and the remaining twenty-one were to be delivered to the merchant who had brought the bullion to the mint. (Le Blanc, p. 87.) There are no means of ascertaining the amount of the charge made by the successors of Pepin, on account of seignorage, until the reign of Saint Louis (1226-1270), who coined the marc of silver into 58 sols, while he only delivered 54 sols, 7 deniers, to the merchant; at this period, therefore, the charge on account of seignorage must have amounted to one-sixteenth of the marc, or to 6$\backslash frac\{1\}\{2\}$ per cent. The seignorage was subsequently increased or diminished without regard to any fixed principle. In the great recoinage in 1726, it amounted, on the gold coin, to 7$\backslash frac\{1\}\{2\}$ per cent., and to 5$\backslash frac\{1\}\{2\}$ per cent. on the silver. In 1729, the mint price, both of gold and silver, were augmented, and the seignorage on the former reduced to 5$\backslash frac\{1\}\{2\}$ per cent., and on the latter to 4$\backslash frac\{1\}\{2\}$ per cent. A further reduction took place in 1755 and 1771, when the seignorage on gold was fixed at 1$\backslash frac\{1\}\{2\}$ per cent., and on silver at 1$\backslash frac\{1\}\{4\}$ per cent. At this moment, the seignorage in France hardly covers the expence of coinage, being only about $\backslash frac\{1\}\{2\}$ per cent. on gold, and 1$\backslash frac\{1\}\{4\}$ per cent. on silver.*

SECT. IV.—Expence of a Currency consisting of the Precious Metals.

The imposition of a moderate seignorage has, however, but a very inconsiderable effect in reducing the expence of a currency consisting of the precious metals. This expence, which is vastly greater than is generally imagined, really consists not in the coinage, for that is comparatively trifling, but in the high value, or, which is the same thing, in the difficulty of the production of the gold and silver of which the coins are manufactured. If, for example, the currency of Great Britain amounted to 50 millions of gold sovereigns, and if the customary rate of profit were 10 per cent., this currency, it is plain, could not cost less than five millions a-year. For, had this 50 millions not been employed as a circulating medium, it would have been invested in branches of industry, in which, besides affording employment to many thousands of individuals, it must have yielded 10 per cent. or five millions a-year, of net profit to its possessors. But this is not the only loss. The capital of 50 millions would not be merely withheld from the great

work of production, and the country deprived of the large revenue it would have derived from its employment, but it would be perpetually diminished. The ordinary tear and wear of the coins is by no means inconsiderable; and supposing the expences of the coinage to be defrayed by a moderate seignorage, the deficiency of the weight of the old worn coins must, when they are called in to be recoined, be paid by the public. There is, besides, a constant loss from shipwrecks, fire, and other accidents. And, when due allowance is made for these different causes of waste, we do not think that it would be too much to suppose, that a country which had 50 millions of gold coins in circulation, would have annually to import the 50th part of this sum, or one million of coins, to maintain its currency at its proper level.

Money. Thus it appears, that if the customary rate of profit in Great Britain were 10 per cent., it would cost us six millions a-year to maintain 50 millions of gold coins in circulation! It is indeed true, that a reduction of the rate of profit would cause a proportionable reduction in the amount of this expence, yet as the reduced expence would still bear the same proportion to the total income of the country that the higher expence did, the real cost of the currency would not be at all diminished. The case of France furnishes a still more striking example of the heavy charges attending the general use of a metallic currency. The total amount of the gold and silver currency of that kingdom has been estimated by Necker at 2200 millions of francs, and by Peuchet at 1850 millions. (Statistique Elementaire de la France, p. 473.) Now, supposing the lowest estimate to be the most correct, and taking the rate of profit at only eight per cent., this currency must cost France 148 millions of francs a-year, exclusive of the tear and wear, and loss of the coins, which being taken, as before, at a 50th part of the entire mass, will make the whole annual expence amount to the prodigious sum of 185 millions of francs, or to about seven and a half millions Sterling! This enormous expence certainly forms a very material deduction, from the advantages which have resulted from the use of a currency consisting entirely of the precious metals, and has doubtless been the chief cause why, in an advanced state of society, all civilized and highly commercial countries have endeavoured to fabricate a portion of their money of less valuable materials. Of these substitutes, paper has been by far the most generally resorted to, and is in every respect the most eligible. By using paper instead of gold, we substitute the cheapest in room of the most expensive currency; and enable the society, without loss to any individual, to exchange all the coins which the use of paper money has rendered superfluous, for raw materials, or manufactured goods, by the use of which both its wealth and its enjoyments are in-

* Administration des Finances, &c. par Necker, Tom. III. p. 8.—Dr Smith has stated (Vol. II. p. 335), on the authority of the "Dictionnaire des Monnoies, par Abot de Bazinghen," that the seignorage on French silver coins, in 1775, amounted to about 8 per cent. The error of Bazinghen has been particularly pointed out by Garnier, in the Supplemental Volume (p. 234), added to his translation of the Wealth of Nations.

Money. creased. Ever since the introduction of bills of exchange, almost all great commercial transactions have been adjusted by means of paper only. It has also been used to a very great extent in carrying on the ordinary business of society. And a plan has recently been suggested, the adoption of which would render it a very easy matter to substitute a paper for a metallic currency, and to keep its value on a par with the value of gold or silver, without making the paper exchangeable for coined money, and, consequently, without requiring the circulation of a single gold or silver coin. This is a very important discovery. It gives us all the security of gold money, without any portion of its expence; and the currency of any country in which it was adopted, would certainly approach very near the limits of perfection. The discussion of the principles of this plan is perhaps the most important part of our subject, and will require to be treated at considerable length.*

SECT. V.—Paper Money.—Principle on which its Value is maintained.

In the earliest periods of society, subsequent to

the invention of alphabetic characters, the pecuniary engagements of individuals would be reduced to writing. This was necessary to give security to the creditor, that he should be able to claim the full amount of his debts, and to the debtor, that he should not be liable to any overcharge; in a word, to avoid all those differences which never fail to arise where the terms of contracts are not particularly and distinctly specified. But a very short time only could elapse before individuals, who were in possession of written obligations from others, would begin to transfer them to those to whom they were indebted,—and after the advantages derivable from employing them in this way had been ascertained, it was an obvious source of emolument for individuals in whose wealth and discretion the public had confidence to issue their obligations to pay certain sums, in such a form as might fit them, to be easily applied to perform the functions of a circulating medium in the ordinary transactions of life. No one would refuse to accept the promissory note or obligation of an individual of large fortune, and of whose solvency no doubt could be entertained, in payment of any debt that might be due to him. But as full value must have been originally

* The following estimate of the value of the gold and silver coins, now current in the principal European states, will, we believe, be found to be nearly correct:

We regret we have no means of forming any tolerably correct estimate of the value of the gold and silver currency of Portugal, Italy, Switzerland, Germany, Belgium, Denmark, Sweden, and Turkey in Europe. It is most probable, however, that we shall be within the mark, if we estimate it at two-thirds of the value of the coins in circulation in the other countries, or at 92½ millions, which would give 231½ millions as the value of the aggregate currency of Europe. The expence of this currency, supposing profits to be 10 per cent. and one-fiftieth to be annually wasted, would rather exceed 27 millions a-year!

The value of the gold and silver annually dug from the mines of the Old and New World has been estimated (Bullion Report, Appendix of Accounts, No. 33) at 45½ millions of dollars, or L.10,237,500. We subjoin the general results of this estimation.

given for the promissory note, it is clear that while its continuance in circulation could be no loss to the public, it would be a very great source of profit to the issuer. Suppose, for example, that a merchant issues a promissory note for L.10,000, he must, previously to his putting it in circulation, either have received an equivalent sum of ready money, or of some sort of commodities possessed of real value, or, which is the most common case, he must have advanced it to an individual who had given him security for its repayment, with interest. In point of fact, therefore, the issuer has exchanged his promise to pay L.10,000 for the profits to be derived from the employment of a real capital of L.10,000; and so long as the promissory note, the intrinsic worth of which cannot well exceed a sixpence, remains in circulation, he will, supposing profits to be 10 per cent., receive from it a revenue of L.1000 a-year. It is on this principle that the business of banking is conducted. A banker could make no profit if he were obliged to keep as much dead stock in his coffers as was equal to the amount of his notes in circulation. But if he is in good credit, a fourth or a fifth part of this sum will perhaps be sufficient; and his profits, after the expences of the establishment, and of the manufacture of his notes, are deducted, will be measured by the excess of the profit derived from the notes he has in circulation, over that of the profit he might have realised by the employment of the stock he is obliged to keep in his coffers to meet the demands of the public. "A bank would never be established, if it obtained no other profits but those derived from the employment of its own capital: its real advantage commences only when it employs the capital of others." (Proposals for an Economical and Secure Currency, p. 87.)

As no means have been devised to limit the supply of the promissory notes issued by private individuals, their value, it is plain, could not be maintained if those by whom they were issued fell into discredit, or if they were relieved from their promise to pay them. But it is otherwise with the promissory notes issued by the state, or by an exclusive company acting under its control. The quantity of such notes may be effectually limited; and we have shown that, when this is the case, intrinsic worth is not necessary to a currency, and that, by properly regulating the supply of paper money which has been declared to be a legal tender in all payments, its value may be sustained on a par with the value of gold, or of any other commodity. It was by acting on this principle of limitation, or, which was in effect the same thing, by restricting the issues of the Bank of England, and not from any vague and confused idea that its notes would at some future and indefinite period be paid in gold, that their value was maintained in the interval between the passing of the restriction act in 1797, and the commencement of bullion payments in 1820. No rational or intelligible explanation of this circumstance—a circumstance so much at variance with all the old theories of paper money—can be deduced from any other principle. The circumstance of their being depreciated never creates any indisposition on the part of the public to apply for ac-

commodation to a bank whose notes are a legal tender. The presenter of a bill for discount is quite indifferent whether the notes which are given to him in exchange for it are payable in specie or not. His object, in resorting to the bank, is to exchange his promissory note for money—that is, for paper that will be received in payment of his debts, or of whatever commodities he may be desirous of purchasing. It is, therefore, of no moment to him, whether those who are entrusted with the power of issuing paper, have issued so much as to depress its value relatively to gold, or whether they have restricted their issues so as to sustain its value on a level with the value of that metal. These circumstances, it is true, affect the permanent interest of every class of society, whose incomes cannot be made to vary with every variation in the value of money: but, in as much as the money prices of goods rise and fall with every increase or diminution of the supply of paper, merchants, who are the principal demanders of discounts, are comparatively but little affected by its fluctuations. The merchant who presents a bill for L. 500 or L. 1000 to a bank, has acquired this bill, if it has arisen out of a real commercial transaction, in lieu of a certain quantity of goods, which, at the then value of money, were worth L. 500 or L. 1000; and it is this L. 500 or L. 1000 which, by presenting the bill to the bank, he wishes to obtain. If the value of money had been different, the price of the goods, and consequently the sum for which the bill was drawn, would also have been different. It is to this market value of money at the time that, in all commercial transactions, attention is exclusively paid. When, in 1809, 1810, 1811, 1812, 1813, and 1814, the Bank of England issued such a quantity of paper, as to depress its value from 10 to 25 per cent. below the value of bullion, the circumstance of an act of Parliament having declared, that its notes should be paid in cash at the restoration of peace, had as little effect in raising their value, as their depreciation had in diminishing the applicants for discounts. The truth is, that individuals never resort to a bank for a supply of paper money, unless they have immediate occasion for its services. After it has been obtained, they throw it into the market for whatever it will bring; and as they purchased it on the same terms (for it is seldom that the value of money can be materially affected in the short interval between the time that a bill is discounted and when it becomes due), they generally get as much for it, and perhaps more, than it cost. We shall immediately explain what it is which constitutes the natural limit to the applications for paper money; but we have said enough to show, that it has nothing whatever to do with the convertibility of notes into cash.

Those who have recourse to a bank to obtain discounts of accommodation bills, like the presenters of real bills, consider only the present value of money. Accommodation bills are never discounted, except with the view of immediately employing the money so obtained, either in the purchase of commodities, or of labour, or in the payment of debts: and, whether one pound notes are of the value of 10s. or 20s.

Money. is obviously of no consequence; in as much as the amount of the bill presented for discount is regulated accordingly.

The circumstance of the circulation of country bank notes ceasing as soon as any general suspicion is entertained of the solvency of those by whom they are issued, is nowise inconsistent with this principle. Country bank notes are rendered exchangeable, at the pleasure of the holder, for Bank of England notes; but since the epoch of the restriction down to 1820, the latter not being exchangeable for any other commodity, have constituted the real standard of exchangeable value. When a country bank lost credit, the circulation of its notes was stopped, because a suspicion was entertained that it would be impossible to exchange them for paper of the Bank of England; or, in other words, for that species of paper which constituted the real medium of exchange. But, it is impossible to imagine, that the paper constituting this medium should itself be affected by a want of credit. Every individual knew that it had no intrinsic worth; and, as we have already shown, its value was regulated, and must, whenever it is not rendered exchangeable for a given quantity of some other commodity, continue to be exclusively regulated, by the amount of it in circulation compared with the demand.

It appears, therefore, that if there was perfect security, that the power of issuing paper money would not be abused; that is, if there was perfect security for its being issued in such quantities, as to preserve its value relatively to the mass of circulating commodities nearly equal, the precious metals might be entirely dispensed with, not only as a circulating medium, but also as a standard to which to refer the value of paper.

Unfortunately, however, no such security can be given. This is a point, respecting which there can be no difference of opinion. We have it in our power to appeal to a widely extended and uniform course of experience—to the history of Great Britain, and of every other state in Europe, and to that of the United States—to show that no man, or set of men, have ever been invested with the power of making unrestricted issues of paper money without abusing it; or, which is the same thing, without issuing it in inordinate quantities. If the power of supplying the state with paper money be vested in a private banking company, such as the Bank of England; then, to suppose that they should, by limiting their issues, endeavour constantly to sustain the value of their paper, would be to suppose that they should be extremely attentive to the public interest, and extremely inattentive to their own private interest! The re-enactment of the restriction act, and the rendering of it perpetual, would not have the least effect on the value of our paper currency, provided its quantity was not at the same time increased. But that, in such circumstances, it would be increased, is abundantly certain. Such a measure would enable the Bank of England to exchange bits of engraved paper, not worth perhaps 5s. a quire, for as many, or the value of as many hundreds of thousands of pounds. And is it to be supposed, that the

directors and proprietors of the bank would not avail themselves of such an opportunity to amass wealth and riches? Is it to be supposed, that if the government enables a private gentleman to exchange a bit of paper for an estate, he will be deterred from doing so by any considerations about its effect in sinking the value of the currency of the country? In Loo Choo we might perhaps meet with such a disinterested individual, but if we expect to find him in Europe, we shall assuredly be disappointed. In this quarter of the globe, we are far too eager in the pursuit of fortune to be at all affected by such scruples. It is essential, therefore, that the issuers of paper money should be placed under some check or control; and the comparative steadiness of the value of the precious metals, at once suggests that no check can be so effectual as to subject the issuers of paper money to the obligation of exchanging their notes, at the pleasure of the holder, for a given and unvarying quantity either of gold or silver.

But it has been contended, that there is a material difference between paper money issued by a government in payment of the debts it has contracted, and that which is issued by a private banking company in discount of good bills. In regard to the former, it is admitted, on all hands, that it may be issued in excess; but, in regard to the latter, it has been strenuously urged, that "notes issued only in proportion to the demand, in exchange for good and convertible securities, payable at specific periods, cannot occasion any excess in the circulation, or any depreciation." As every one of the arguments advanced by those who contend that the paper currency of Great Britain has not been depreciated since 1797 involve this principle, it will be necessary to examine it a little minutely.

In the first place, it may be observed, that the demand for discounts does not depend on the nature of the security required for the repayment of the sums advanced by a bank, but on the rate of interest for which these sums can be obtained, compared with the ordinary rate of profit which may be made by their employment. If an individual can obtain £10,000, £100,000, or any greater sum, from a banker, at 4, 5, or 6 per cent., and if he can realise 7, 8, or 10 per cent. by its employment as capital, it is evidently his interest, and it would be the interest of every other person similarly situated, to borrow to an unlimited extent. But a banking company, which was relieved of all obligation to pay its notes in cash, and which, of course, was not obliged to keep any unproductive stock or bullion in its coffers, would be able to issue its notes at the lowest possible rate of interest; and the demand for its paper would, therefore, be proportionably great.

"The interest of money," says Mr Ricardo, "is not regulated by the rate at which the bank will lend, whether it be 5, 4, or 3 per cent., but by the rate of profit which can be made by the employment of capital, and which is totally independent of the quantity or of the value of money. Whether the bank lent one million, ten millions, or a hundred millions, they would not permanently alter the market rate of interest; they would alter only the value of the mo-

ney which they thus issued. In one case, ten or twenty times more money might be required to carry on the same business than what might be required in the other. The applications to the bank for money, then, depend on the comparison between the rate of profit that may be made by the employment of it, and the rate at which they are willing to lend it. If they charge less than the market rate of interest, there is no amount of money which they might not lend; if they charge more than that rate, none but prodigals and spendthrifts would be found to borrow of them. We accordingly find, that, when the market rate of interest exceeds the rate of 5 per cent., at which the bank uniformly lends, the discount office is besieged with applicants for money; and, on the contrary, when the market rate is even temporarily under 5 per cent., the clerks of that office have no employment." (Principles of Political Economy, p. 511.)

From 1809 to 1815 inclusive, the period in which the value of our paper currency relatively to gold was lowest, the market rate of interest considerably exceeded the rate (5 per cent.) at which the Bank of England and most of the country banks invariably lend. Although, therefore, the amount of the paper currency of the country had, in that interval, been very much increased, the applicants for fresh discounts continued as numerous as ever. And there seems no reason to doubt, that, had the directors not been apprehensive, that, ultimately, they might be called upon to pay their notes in specie, the number of them in circulation would have been very much increased; at least, such would most unquestionably have been the case, had the directors acted to the full extent of their avowed opinion, that it was impossible to issue too much paper, or to reduce its value, by engrossing into the circulation such quantities as could be issued in discount of good bills. The wants of commerce are altogether insatiable. Paper money, provided the rate of interest at which bills are discounted is less than the market rate, can never be too abundant. As long as this is the case, million after million may be thrown into the market. The value of the currency may be so reduced as to require a one pound note to purchase a quarter loaf; but the circumstance of its value being diminished in proportion to the increase of its quantity, would render the demand for additional supplies as great as ever.

If the Bank of England were alone in the possession of an alchemical process, whereby guineas could be manufactured with the same facility as notes, it could not be disputed that it would then be in the power of the bank to depreciate the former value of gold, by issues of what had been produced at so very little cost. Now, in what respect would this fictitious case differ from the actual situation of the Bank of England, if the restriction act were rendered per-

petual? The bank would then be enabled, without check or control, to exchange its paper for landed property, manufactured goods, government securities, &c. But we have shown, that the value of this paper, like the value of gold, in the hypothetical case, would depend entirely on the proportion which the supply bore to the demand; and, as the demand is not affected by an increase of quantity,—for that increase, by diminishing its value, renders the larger quantity of as little efficacy as the smaller quantity was before,—it is abundantly clear, that if the bank lent at a sufficiently low rate of interest, there could be no limit to its issues.

In the second place, if it were true, which most certainly is not, that the notes of a private banking company, issued in discount of good mercantile paper, could not be depreciated from excess, that will not apply to the case of the Bank of England; for, the greater part of its paper is issued in payment of the interest of the national debt, amounting to about thirty-two millions a-year, exclusive of the sinking fund!—and really, when such is the fact, it was a little too much to contend, as the apologists of the restriction act have almost always done, that Bank of England paper could not be depreciated; because it was only issued in discount of legitimate mercantile paper, payable sixty days after date! *

On the whole, therefore, it is plain, that whether the power of issuing paper money be vested in the hands of a private banking company, or of the government, it must be placed under some efficient check or control, such as the obligation to pay their notes in gold or silver. It is easy to discover the manner in which a check of this kind would limit the issue of paper, and sustain its value. Whenever the bank had issued so much paper as to sink its value relatively to bullion, its notes would be returned upon it, to have them exchanged for a higher value; and the bank would, in consequence, be obliged, in order to prevent the exhaustion of its coffers, to contract its issues, and thus to raise its paper to a level with gold. An extremely small profit, or an extremely small depreciation of paper, as compared with gold or silver, would be sufficient to induce the holders of bank paper to send it to be exchanged for those metals; and, hence, the value of bank notes convertible at pleasure into a given and unvarying quantity of gold or silver, can never differ considerably from its value. The issues of the Bank of England were for more than a century limited by the very principle, and in the very manner we have now explained, and during that whole period, they were hardly ever depreciated $\backslash frac\{1\}\{2\}$ per cent., and never more than 2 per cent., and that but for a few days only.

But, although it is thus imperatively necessary, in

* Mr Baring must be excepted from this remark, for, in a debate on the 1st of May 1816, he distinctly stated in his place in the House of Commons, "that the great mass of the bank paper was issued compulsorily in payment of the public creditor, and in the other great transactions of government."

Money. order to avoid all sudden and injurious fluctuations in the value of money, that paper money should be made exchangeable for gold or silver, it does not follow that it should be made exchangeable for gold or silver coins. A currency would be in its most perfect state, if it consisted wholly of paper money; but of paper money of equal value with gold or silver. It is impossible, however, to attain to this degree of perfection, so long as paper is made convertible into coin. Such convertibility renders the paper money of the same value as metallic money; but it is defective, inasmuch as it does not banish the latter from circulation, and does not, therefore, save the whole of the heavy expense of a metallic currency. The proximity of the period (7th May 1821), when the Bank of England recommended paying in coins, has not afforded time for engrossing any considerable quantity of them into circulation. But, in 1819, Mr Baring stated, before a Committee of the House of Commons, that it was his opinion, that, in the event of the Bank of England paying their notes, at the pleasure of the holder, in a good and perfect coin, such as the sovereign, all the one pound notes would be driven from circulation, and that from 40 to 45 millions of sovereigns would ultimately be absorbed into the circulation.* But, notwithstanding the deference due to Mr Baring's authority, we have no hesitation in thinking, with the Committee, that this estimate is much too high. In corroboration of this remark, we may observe, that Messrs Whitmore (Appendix, Bullion Report, p. 121, 8vo ed.) and Harman (Commons' Report, 1819, Minutes of Evidence, p. 40), late Governors of the Bank of England, join in estimating the amount of the gold coins in circulation, during the three years previous to 1797, at 20 millions; and although this estimate is probably rather underrated, there are good grounds for concluding, that it is the most accurate of any that have hitherto been framed, and that it has come as near the truth as it is perhaps possible to attain in such matters.† But, whatever may have been the amount of the gold coin in circulation in 1797, there does not seem to be any good reason whatever for supposing that more of it will now be demanded: On the contrary, the extraordinary increase in the number of country banks, and the almost exclusive use of paper money for the last twenty years, must evidently form very considerable obstacles to the reintroduction of the former amount of metallic money. But, on the reasonable hypothesis, that 20 millions of coin were in circulation in 1797, and that an equal quantity will now be required for that purpose, it is plain the rendering of Bank of England notes exchangeable for coin cannot cost less than two millions a year! For the interest of a capital of 20 millions, including a moderate allowance for the tear and wear of the coins, would, at least, amount to 10 per cent.: And if Ireland were taken into account, the total annual cost of rendering the notes of the two great Banks exchangeable for coined money, could not be estimated at less than from two and a half to three millions.

Money. It is in vain to contend, that the greater part of this loss must fall on the banks, and that, there-

* Report on the Resumption of Cash Payments by the Bank, Minutes of Evidence, p. 182.

† There was coined in the period of the great recoinage, from 1773 to 1777, both inclusive, of gold,

Now, supposing six millions of gold coin to have been locked up in the coffers of the Bank of England, of the country banks, and of individuals, in 1796, and estimating at other ten millions the quantity of guineas exported by the Government and individuals during a period of twenty years, including the greater part of the American war, and the three first years of the late war, which, considering that no seigniorage is charged on the gold coin of this country, and that, therefore, it might, when melted down, be exported without any loss, is surely not a very exaggerated allowance, it results that Mr Whitmore's and Mr Harman's estimate may be justly considered as coming pretty near the truth. Had the estimate been 25 instead of 20 millions, it would, we think, have been as much above the mark, as it is now probably below it.

Mr Chalmers (Comparative Estimate, p. 349) estimated the aggregate amount of the gold and silver coins in circulation, in 1786, at 24 millions. Mr Rose (Brief Examination, App. No. 4) estimated the amount of the gold coins in circulation, in 1799, at 44 millions; and, in 1805, Lord Liverpool supposed there were 30 millions of guineas in circulation. (Treatise on Coin, p. 177.) It is quite unnecessary to enter into any argument, to show the gross and palpable exaggeration of the two last estimates. The author of an able critique on Lord Liverpool's work, in the 7th volume of the Edinburgh Review, says, "We have no desire to hazard a computation on a subject, where the data are necessarily so imperfect; but, rather than call the quantity of gold now in circulation thirty millions, we should be disposed to deny that it can possibly amount to one million!"

fore, its only effect will be to lessen the profit of these establishments. The wealth of the state is made up of the wealth of individuals; and if the bank proprietors were not obliged to employ twenty or thirty millions, or the value of twenty or thirty millions, in the purchase of gold, they would employ it in some other manner,—in the cotton or woollen manufacture, in the construction of docks, warehouses, &c. or in such a way as would be productive of wealth to themselves, and consequently to the community. It cannot be denied that the wealth of the bank proprietors is essentially national wealth; and as whatever has a tendency to increase their fortunes, without diminishing those of others, must be advantageous, the circumstance of the expence of providing a gold currency falling principally on them, ought not to be held as a valid reason for declining to adopt any expedient for diminishing that expence. Besides it is not true, that the expence of providing a gold currency would fall entirely on the bank proprietors. As the law now stands, the whole expence of coinage, amounting to about £15,000 a year, is paid by the state; and although a seignorage were charged to cover this expence, still, when it becomes necessary to call in the coins in circulation, the difference between the value of the old money brought to the mint to be recoined, and the coins of full weight which are given in exchange for them, has to be made up by the public.

We may, therefore, conclude, that, by continuing to act on the system now established, and obliging the Bank of England, and the Bank of Ireland, to exchange their notes for coined money, it will be necessary for these establishments to purchase and issue from twenty to thirty millions worth of gold coins. And the loss attending the abstraction of so great a sum from the productive industry of the country, added to the expence of mintage, and the loss that must be occasioned by the decay of the coins, ought certainly to induce us to adopt any other system, which, at the same time that it affords us equal security against fluctuations in the value of paper money, by constantly keeping it on a par with gold, would save all this expence.

To Mr Ricardo we are indebted for the discovery of such a system. This able Economist has shown how paper money may be kept constantly on a par with gold, without requiring the circulation of a single gold coin. His contrivance for accomplishing this desirable object is equally admirable for its simplicity and effect. It consists in making bank-notes exchangeable for bars of assayed bullion of the standard purity, at the mint price of £3, 17s. 10½d. an ounce; or, which is the same thing, Mr Ricardo proposes, that for every sum of £3, 17s. 10½d. of paper presented to the bank for payment, it should be obliged to give, not three guineas and 14s. 10½d., but an ounce of standard gold bullion.

"To secure," says Mr Ricardo, "the public against any other variations in the value of the cur-

rency than those to which the standard itself is subject, and, at the same time, to carry on the circulation with a medium the least expensive, is to attain the most perfect state to which a currency can be brought; and we should possess all those advantages by subjecting the bank to the delivery of uncoined gold or silver at the mint standard and price, in exchange for their notes, instead of the delivery of guineas; by which means paper would never fall below the value of bullion, without being followed by a restriction of its quantity. To prevent the rise of paper above the value of bullion, the bank should be also obliged to give their paper in exchange for standard gold at the price of £3, 17s. an ounce. Not to give too much trouble to the bank, the quantity of gold to be demanded in exchange for paper at the mint price of £3, 17s. 10½d., or the quantity to be sold to the bank at £3, 17s., should never be less than 20 ounces. In other words, the bank should be obliged to purchase any quantity of gold that was offered to them, not less than 20 ounces, at £3, 17s. an ounce, and to sell any quantity that might be demanded, at £3, 17s. 10½d. While they have the power of regulating the quantity of their paper, there is no possible inconvenience that could result to them from such a regulation.

"The most perfect liberty should be given, at the same time, to export or import any description of bullion. These transactions in bullion would be very few in number, if the bank regulated their loans and issues of paper by the criterion which I have so often mentioned, namely, the price of standard bullion, without attending to the absolute quantity of paper in circulation.

"The object which I have in view would be in a great measure attained, if the bank were obliged to deliver uncoined bullion in exchange for their notes at the mint price and standard; though they were not under the necessity of purchasing any quantity of bullion offered them at the prices to be fixed; for that regulation is merely suggested to prevent the value of money from varying from the value of bullion, more than the trifling difference between the prices at which the bank would buy and sell, and which would be a near approximation to that uniformity in its value which is acknowledged to be so desirable." (Proposals for an Economical and Secure Currency, p. 25.)

This original and well-digested scheme was first brought under the notice of the public in 1816; and its adoption as a temporary measure, to facilitate the return to payments in coin, was recommended, in 1819, by the committees of the Legislature appointed to inquire into "The Expediency of the Bank's resuming Cash Payments." In conformity with this recommendation, a bill was brought into Parliament by Mr Peel, which enacted, that, on the 1st February 1820, the Bank of England should be bound to deliver gold bullion, properly stamped and assayed, in bars of not less than 60 ounces each, in

* "The price of £3, 17s., here mentioned, is, of course, an arbitrary price. It might be fixed either a little higher or a little lower. In naming £3, 17s., I wish only to elucidate the principle."

Money. exchange for a proportionate number of its notes, when demanded, at the rate of L. 4, 1s. per ounce; that, on the 1st October 1820, they should be bound to deliver bullion in a similar manner, at L. 3, 19s. 6d. per ounce; that, on the 1st May 1821, they should be bound to deliver bullion for notes at L. 3, 17s. 10½d. per ounce, being the standard mint price; and that this system should continue for two years more, when payments in coin were to be resumed. This last part of the arrangement has not, however, been permitted to take effect; an act having been passed last session (1820-21), enabling the bank instantly to resume cash payments of its one and two pound notes, which it has resolved to withdraw entirely from circulation; and it has since been stated by the Governor of the Bank, that the directors have commenced paying their other notes in coin, and that they are anxious to facilitate the employment of a large quantity of specie as money.*

In practice Mr Ricardo's plan worked extremely well; while the over issue of paper was effectually prevented, only a very few bars were demanded from the bank, and it was generally supposed, that, instead of its operation being thus prematurely checked, it would have been rendered perpetual, and the further circulation of gold coins prevented. Even as a device for preserving paper on a par with gold, it was, in some material respects, obviously preferable to the old method of exchanging notes for coins. When a currency consists partly of paper, and partly of the precious metals, any over issue of the former depresses, not merely the value of the paper money, but of the coins which circulate along with it. These coins are, therefore, immediately converted into bullion. Bullion, however, cannot be accumulated in any one country, without losing its relative value; and hence the ultimate effect of an over issue of bank paper, in a country whose currency partly consists of coins, is an exportation either of coin or of bullion formed out of the coin. But, on Mr Ricardo's system, as there could be no coin in circulation, there could be no employment for the melters, and no loss thereby occasioned to the state. As soon as the bullion merchants found that a profit might be made by sending notes to the bank to be exchanged for bullion, they would do so; and as the exportation of bullion is now perfectly free, it would, like sugar or coffee, be sent abroad, whenever it was more valuable there, and less valuable here, than any other commodity; that is, whenever its exportation was sure to be advantageous.

As the maintaining of paper on a par with gold, at the least possible expence to the country, and with the least inconvenience to all parties concerned, is the great object to be effected by Mr Ricardo's plan, there does not seem to be any good reason why the bank should have been obliged to give so small a quantity as sixty ounces of bullion, as fixed by the act of 1819, in exchange for a proportionable quantity of their paper. Should the plan be

again adopted, it would save a great deal of trouble, or at least obviate a great deal of cavilling, were the minimum quantity of bullion, which could be demanded from the bank, fixed at 500 or 1000 ounces; and as, according to the plan in question, the value of paper would be prevented from falling below, or rising above, the value of gold, by the operations of respectable bullion merchants, a class of men remarkable for their shrewdness, and generally possessed of large capitals, this regulation, while it would be productive of benefit to the bank, would not, in a public point of view, be attended with any ill effects.

Though it certainly is against the interest of the directors of the bank, to reduce their paper below its proper level, still it cannot be denied, even by those who contend that they have no power indefinitely to add to their issues, that they have the power to refuse to discount, and that, consequently, they have it in their power to reduce the currency to the narrowest limits. Such a power ought not to be entrusted to the state itself, and still less to the managers of a private banking company; for there can be no security for uniformity in the value of the currency, when its augmentation or diminution depends solely on the will of the issuers. But, under the operation of Mr Ricardo's system, the bank would not only be prevented from reducing the value of its notes below the value of bullion, but it would also be prevented from raising them above its value. Should the directors capriciously limit the quantity of its paper, they would raise its value; and bullion would forthwith be carried to the bank, and exchanged for notes, at the rate of L. 3, 17s., or of L. 3, 17s. 6d. an ounce. The minimum quantity of bullion to be offered to the bank in exchange for its paper, ought also, in order to save trouble, to be limited to 500 or 1000 ounces. And, as it is the interest of the bank to furnish the circulation with such a quantity of paper as would keep its value from rising above the value of bullion, it could not complain of being subjected to a restraint which would never be felt except when its issues had been improperly reduced.

With a paper currency convertible into bullion the bank would, in a great measure, be secured against the ill effects of any sudden panic amongst the holders of its notes. Panics generally operate with the greatest effect on the lower classes, or on the holders of small notes; and it is they that, on such occasions, press to the bank to demand payment. Extensive merchants and money-dealers are aware that no bank, however wealthy, could retire all its notes in the short space of eight or ten days; and they are also aware that the maintenance of their own credit is intimately connected with the prosperity of the bank. But such considerations do not influence the holders of small notes; and accordingly we find that the drain upon the bank, in 1783, and the crisis of 1797, were chiefly brought about by the prevalence of a panic among the retail traders and small farmers. But, to such persons, a bar of gold

* Governor's Speech at a Court of Bank Proprietors, 20th September 1821.

could be of very little service; and, even if it were, by fixing the minimum quantity of bullion to be given by the bank in exchange for its notes at 500 or 1000 ounces, it would not be possible for them to make any sudden run. Before sending notes to be exchanged, they would have to concert measures, to join together, and to make a demand in common. A considerable time being thus necessarily expended in the adjustment of the preliminary steps of the business, the bank would be enabled to make the necessary preparations to meet the run; and, what is of still more consequence, since the panic could not operate immediately, it is probable, that, by the time preparations had been made for demanding payment from the bank, it might have altogether subsided. This certainly forms a very strong recommendation of the plan in question; and it is one which was not originally in the contemplation of Mr Ricardo.

By lessening the danger to be apprehended from sudden runs, and by preventing all demand for bullion, for the purpose of internal circulation, except as small change, this plan would enable the bank to carry on business with a comparatively small supply of bullion in its coffers. In ordinary cases, indeed, no bullion would ever be demanded, except when the directors had fairly overstepped the proper limit in issuing; and the country would not only be benefited by the profitable employment of the capital, which would otherwise be invested in coin, but it would also be benefited by the profitable employment of the greater part of that capital, which, previously to the restriction, was locked up in the coffers of the bank.

The circumstance of no alteration being required in the law relating to country banks, is also a considerable recommendation in favour of Mr Ricardo's plan. It would be enough that these should then, as now, be required to pay their notes, when demanded, in Bank of England notes, or in the legal currency of the country. If the value of the latter is sustained, it is impossible that the interchangeable paper of the country banks can ever be depreciated from over issue.

It appears, therefore, as well from reasoning as from experience, that, by the adoption of this plan of making notes payable in bullion, we should have all the security against fluctuation in the value of the currency that we possess under our present system; while we should possess this security, without incurring any part of the expense of a gold or silver currency, except what might be required for small payments below the value of one pound, thereby effecting a saving, which, on account of the united kingdom, cannot be estimated at less than two and a half or three millions a year. And it further appears, that the security of the bank against the per-

nicious effects of sudden panics among the holders of its notes would be greatly increased by its adoption, and that the banking business might henceforth be carried on with a much less amount of unproductive capital.

The unprecedented and alarming increase of the crime of forgery,—a crime which was scarcely known in this country previously to the restriction act, *—and the general belief that it could not be prevented otherwise than by the suppression of the smaller notes of the Bank of England, appears to have been the sole reason why a plan, which promised to be productive of so many advantages, has been abandoned, and the country again subjected to the heavy expense of a metallic currency; nor, provided this had really been the only means by which so desirable an object as the prevention of forgery could be effected, should this sacrifice have been deemed too great. We are satisfied, however, that such is not the case; and that it is not to the increased issue of Bank of England notes, but to their shamefully defective execution, that the prevalence of forgery ought principally to be ascribed. It is now nearly twenty-five years since Bank of England paper has constituted the legal currency of the country, and during the whole of that period, and for many years previously, there has been no visible improvement in its manufacture. Apparently satisfied with the security derived from private marks, the directors have continued to issue notes, engraved in so wretched a style, and which afford so few distinguishing peculiarities, or points, on which the eye can rest when comparing them with each other, that they almost seem to have been intended to stimulate the efforts of forgers! But, although no improvement has been made for nearly half a century in the manufacture of the notes of the Bank of England; and although they are executed in so rude and clumsy a manner, as to be easily imitated by every engraver's apprentice, it would be rather rash to conclude from thence that the arts have all the while been stationary, and that it is impossible to render their imitation a work of comparative difficulty! It is, we admit, no easy task to manufacture a note which may not be counterfeited, even by ordinary engravers, with sufficient exactness to deceive the mass of those into whose hands it might be supposed to come in the course of circulation. But, that this is not an insurmountable difficulty is certain. The experience, both of Ireland and the United States, shows that notes may be engraved in such a manner, as to exclude all dangerous competition on the part of forgers. Previously to 1814, the period when the Directors of the Bank of Ireland adopted Mr Oldham's plan for engraving their notes, their forgery was carried on to a very great extent. But, since then, it has almost entirely ceased; and it appears from a paper printed last session (1821), by

* It appears, from returns made to an order of the House of Commons, that, in the eight years previous to the restriction, no individual was capitally convicted of forgery, while, in the succeeding eight years, one hundred and forty-six individuals were capitally convicted and executed! Only four prosecutions for forgery were instituted by the Bank of England from 1783 to 1797: In the equal period, from 1797 to 1811, they instituted 469 prosecutions! And this frightful progression has since increased even more rapidly.

Money. order of the House of Commons, that only seventeen persons had been convicted of issuing forged notes in Ireland in the three years ending with 1820. "In Dublin, where forgeries prevailed to the greatest extent, they have been for a long time comparatively banished. It may indeed be affirmed that there are no forged notes in circulation. Occasionally attempts are made to issue them, but they are immediately detected. Scarcely a single forged note has, during the last three years, found its way to the bank."* The improvement of the engraving of the American notes has had precisely the same effects. Although, therefore, we do not pretend to be acquainted with the nature of the obstacles which have hitherto prevented the Directors of the Bank of England from issuing the improved notes, of which so much has been said, there are certainly very strong reasons for doubting whether they can be so formidable as has been represented. It is a very mistaken notion to suppose, as the Directors of the Bank of England seem to have done, that nothing less than the issue of inimitable notes can be of any real service. This is a degree of perfection to which it is in vain to expect to attain. Whatever has been executed by one set of artists, may be imitated by some other set. But, provided this imitation be rendered, as it may be, a work of very great difficulty, the public interests will be sufficiently protected. Notes, which can only be counterfeited by the best engravers, will very rarely be counterfeited at all, and never in such numbers as to be productive of any seriously injurious consequences. First rate talent is seldom, or never, found among forgers. It is by the inferior class of artists that the practice of counterfeiting has been principally carried on. Artists of superior genius, and of superior skill in their profession, have higher objects in view; and only a very small proportion of those who have the prospect of rising to distinction, by the fair and honourable exercise of their talents, will be found profligate enough to prostitute them for the sake of defrauding their fellow citizens. But, not to insist on this point, it is plain that what has been done in Dublin and New York, may be done in London. And although the Directors of the Bank of England cannot justly be blamed for not having produced inimitable notes; it is not easy to see how they can be vindicated from the charge of culpable negligence, and inattention to the interests of the public, in having persisted for so long a period, and after so many improvements had been effected, in issuing notes executed in so slovenly a manner, as really to act as a species of premium on forgery.

But, even if it could be shown that the suppression of the smaller Bank of England notes was the only way by which an effectual check could be given to the crime of forgery, it may be fairly doubted, whether this advantage would not be more than compensated by the increased facilities that would, in

Money. consequence, be given to the issuers of base coins. Forgery, it must be remembered, is an evil inseparable from the use of money—an abatement from the innumerable advantages of which it has been productive. Whatever commodity may be adopted as a circulating medium, it must, in the nature of things, be a hopeless task to attempt completely to guard against the efforts of the issuers of spurious money. If the currency consists of paper, it will be counterfeited, and if it consists of the precious metals, they will be adulterated and debased.† All that can be done, is to throw obstacles in the way of forgery—to render it, if possible, a work of extreme difficulty; and there is no good reason for supposing that it would be more difficult to do this with notes than with coins. Indeed, the very contrary seems to be established. No scheme for the improvement of the coinage has had the same success in preventing the issue of spurious coins, that Mr Oldham's inventions have had in preventing the issue of forged notes. In reasoning on this subject, we have been led into error by referring exclusively to the paper of the Bank of England. But the difficulties opposed to the issue of forged paper must be estimated by the success which forgers have had in imitating the best, and not the worst, notes in circulation. And if we refer to this proper criterion—if, for example, we take the improved notes of the Bank of Ireland, instead of the unimproved notes of the Bank of England, as a standard, it will be found that the security of the public against fraud and imposition is any thing but impaired by the issue of paper.

We do not, therefore, think that the plea of its being necessary to the prevention of forgery, forms any valid reason for the adoption of the measure now in progress for withdrawing the smaller notes of the Bank of England, and reverting to specie payments. To counterfeit a guinea is as great a crime as to counterfeit a guinea note; and the withdrawing of one species of money, without taking any steps to guard against the forgery of that by which it is to be supplied, merely gives a different, and, perhaps, a more profitable direction to the perverse ingenuity of those who exist only by the plunder of the public. The prevention of forgery might have been better accomplished by obliging the Bank of England to improve the fabric of its notes. And had this been done, the country would have saved an unprofitable and useless expenditure of two millions and a half, or three millions a-year.

Should the plan for sustaining the value of paper profit that money, suggested by Mr Ricardo, be again adopted—ought to be taken for enabling the public to participate in the profits made by the Bank of England. In a general point of view, it is, indeed, of no importance whether the paper declared by Government to be a legal tender, and made exchangeable for bullion, is issued by the State, or on account of a private bank-

* Williams On the Increase of Forgery on the Bank of England, &c., p. 83.

† Notwithstanding the diminution of coined money during the restriction, the convictions for false coinage increased from 380 in the seven years preceding 1797, to 558 in the seven years following that epoch.

Money. ing company. In either case, the country will be benefited by the substitution of a cheap for an expensive species of money, and its productive capital will be increased by the whole amount of the sums that would otherwise have been employed in the effecting of exchanges. But although the national wealth would be equally increased, whether the power to issue paper were placed in the hands of the Government or of a private company, it is plain the wealth of individuals would be very differently affected by each of these measures. By declaring Bank of England notes to be a legal tender, and by obliging the Bank to give bars of bullion to those only who made a demand for L.1000 or L.2000, it is nearly certain that the Bank would be able to keep 25 millions of notes afloat with not more than one or two millions of bullion in its coffers as dead stock. But supposing that the stock of bullion amounted to five millions, and deducting this sum from the Bank's issues, there would remain a sum of 20 millions, which, supposing them to be lent at 5 per cent., the rate at which the Bank uniformly lends, would yield one million a-year. And if, from this sum, we deduct the expenses of the establishment, which, on the highest estimate, cannot be taken at more than L.150,000 a-year, there would remain a clear surplus profit of L.850,000 a-year. Now, admitting that this immense sum might be as profitably and as prudently expended by the bank proprietors as it could be by any other class of individuals, yet there can be no possible reason why the government should gratuitously concede to any private company privileges calculated to enable them to realise such prodigious gains. In any circumstances, such a proceeding would evince a very culpable inattention to the interests of the public, and, in the present financial situation of the country, would be a degree of wanton and unjustifiable profusion which could not be tolerated. If, therefore, Mr Ricardo's plan were to be carried into effect, the public ought, undoubtedly, to be permitted to share in the profits of the bank. And, besides the advantages to be derived from the adoption of the plan in disengaging a large capital from a comparatively unproductive employment, it would have the additional advantage of yielding a considerable revenue—L. 500,000 a-year perhaps—to the public treasury.

Necessity of a Legislative Enactment to prevent the Circulation of Country Bank-Notes of a Lower Value than the Notes of the Bank of England. Whether, however, the measure now in progress for withdrawing the smaller notes of the Bank of England, and supplying their place with gold coins, should be persevered in, or whether the plan which we have endeavoured to elucidate and explain should be adopted in its stead, it appears to be equally necessary to prohibit the issue of local notes of a less value than the lowest notes issued by the Bank of England. Uniformity of value, and security against sudden and dangerous fluctuations, are the great requisites in a currency; and they can never be more than imperfectly attained, while the country banks are permitted to issue notes of a lower value than the metropolitan bank. It is true, that, so long as the obligation to give gold coin or Bank of England notes in exchange for country notes is enforced, the latter cannot be permanently, nor even for any considerable period, depreciated from over issue. The

Money. circulation of depreciated country notes is not, however, the danger that ought to be chiefly guarded against. The great risk incurred by the holders of such notes does not consist so much in the chance of their value falling two, three, four, &c. per cent. below the value of the standard, as in the chance of their losing their value altogether, and becoming perfectly worthless.

From the principle on which the banking business is conducted, that is, from the circumstance of the profits of a banking company depending mainly on the excess of the value of their notes in circulation above the value of the dead stock retained in their coffers to meet the demands of the public, it is obvious, that no company, however wealthy, and however well their affairs may be managed, can avoid being considerably distressed and embarrassed by sudden runs, or demands for payment of their notes. But panics, which are the great cause of runs, seldom or never become general, except when the banks issue notes of so low a value as to fit them for being used in retail trade, and in the ordinary business of society. Previously to 1797, neither the Bank of England, nor any of the English country banks, were permitted to issue notes for less than five pounds. The currency used in small payments was thus made to consist exclusively of the precious metals; and as there was no opportunity for a panic taking place among the holders of small notes, only very few runs were made on the banks, and very little loss was sustained by their failure. In 1797 this system was changed. The Bank of England was then, for the first time, empowered to issue one and two pound notes, a privilege which was soon after granted to the country banks. Bank paper having, in consequence of this arrangement, and of the restriction on cash payments, become the only currency of the country, and being in the hands of almost every individual, the chances of runs, and, what is more to the purpose, runs themselves, were multiplied to an unprecedented extent. Every subsequent period of considerable commercial distress has been marked by the ruin of several country banks; and in some districts these establishments have been almost entirely swept away, and the inhabitants involved in a degree of misery and suffering of which no adequate idea could have been previously formed.

From an account in the Appendix to the Lords' Report, "On the Resumption of Cash Payments by the Bank," it appears, that, in the period from 1797 to 1818, 230 commissions of bankruptcy had been issued against country bankers in England and Wales. Of these the far greater proportion were issued in 1814, 1815, and 1816. In 1814, 29 banks failed, out of 699 that were then in existence; in 1815, 26 failed out of 543; and, in 1816, 37 out of 585: so that, in the short space of three years, ninety-two country banks, or one out of every seven and a half of the total number of these establishments, existing in 1814, became bankrupt, besides a much greater number that stopped payment, for a longer or shorter period. Nor did the mischief cease here. The currency was not only diminished by the sudden withdrawing of the notes of the insolvent banks, but the issues of all

Money. the rest were very greatly contracted. The Board of Agriculture estimated, that, in the county of Lincoln only, above three millions of country bank paper had, in the course of eighteen months, been withdrawn from circulation. And, in a variety of other extensive districts in England, and in the south of Ireland, no money was to be found in circulation,—credit was totally annihilated; and so great was the panic, that even the notes of the Bank of England would hardly pass current, except at a discount. These failures were the more distressing and calamitous, as they chiefly affected the industrious classes, and frequently swallowed up in an instant the fruits of a long life of unremitting and laborious exertion. That support, on which too many of the agriculturists and manufacturers rested, gave way at the moment when it was most necessary. Prices instantly fell; and thousands, who, but a moment before, considered themselves affluent, found they were destitute of all real property, and sunk, as if by enchantment, and without any fault of their own, into the abyss of poverty. The late Mr Horner, the accuracy and extent of whose information on such subjects cannot be called in question, stated, in his place in the House of Commons, that the destruction of English country bank paper in 1814 and 1815 had given rise to a universality of wretchedness and misery, which had never been equalled, except, perhaps, by the breaking up of the Mississippi scheme in France!

It is certain, however, that if the country banks are still permitted to continue their issue of small notes, their liability to runs will, in future, be very much increased. From 1797, down to last year, the notes of the Bank of England, for which the country notes were made exchangeable, were not convertible into gold or silver; and those who then made a run on a country bank merely got one species of paper in exchange for another. It is obvious, that this circumstance must have operated in a very powerful manner, to diminish the tendency among the poorer classes to runs. But, now that

Money. the Bank of England has ceased issuing small notes, and begun paying its large notes in cash, the country bankers will be obliged to give cash for their small notes; and there can be no doubt, that, in all periods of difficulty and alarm, many who would never have thought of making a demand on them for Bank of England notes, will be disposed to make such a demand for coins.

In order to diminish the chances of runs arising from the new position in which the country banks are now placed, the directors of several of these establishments have adopted the ingenious device of making their notes payable in London, and not in the place where they are issued! This is a good deal similar to the clause that was formerly inserted in the notes issued by some of the Scots banks, which made it optional for them either to pay the bearer when the note was presented, or six months after such presentment, allowing legal interest for these six months. The effects of this clause, which was abolished by act of Parliament, in degrading the value of the Scots notes, are detailed by Dr Smith; and there can be no question that the clause inserted in the English notes will have similar effects. A note, which cannot be converted into cash, unless it is carried two or three hundred miles, perhaps, from the sphere of its circulation, is plainly not so valuable as a note payable at the place where it is issued; and if the Legislature do not interfere to check this practice, we shall certainly have as many different values of paper, as there are different distances between the principal country towns and London! An abuse of this kind cannot be tolerated.

It appears, therefore, that, to give uniformity to the value of the currency, and as far as possible to guard the public against the risk of sudden and injurious fluctuations in the value of money, the circulation of all local notes, for a smaller sum than the lowest notes issued by the Bank of England, should be prohibited. It is in vain to urge the respectability and the wealth of the individuals engaged in the banking business, in opposition to this regulation.

* The number of country banks in England and Wales, to which licences had been granted to issue promissory notes, in 1797, is not exactly known. They are stated by Mr Thornton, in his Essay on Paper Credit (p. 154), to have amounted to 350; but other accounts reduce this number to 230.—(Appendix Bullion Report, p. 213, 8vo. ed.) They have since been prodigiously multiplied. We subjoin an account of their number, of the number of their partners, and of the number of the commissions of bankruptcy issued against them from 1808 to 1818, both inclusive.—(See Appendix Lords' Report, 1819, pp. 416, 426.)

There were thirty banking companies in Scotland, in 1818, possessed of licences to issue promissory notes; which, in addition to their head offices, had ninety-eight subordinate offices, or agencies, in different parts of the country.

This consideration might have been equally urged previously to the failures in 1814, 1815, and 1816; and, as we have already shown, no bank can be secure against runs, and consequently against embarrassments, if it issues notes of a low value. Neither can it be justly objected that this measure would interfere with the freedom of industry. It is admitted on all hands, that, in order to prevent the confusion that would arise from the currency of coins of different values, but of the same denomination, it is expedient the government should interfere to prohibit the circulation of private tokens, and of all coins which are not struck at the public mint, and which are not of a certain weight and purity. But, if this regulation be expedient, why should it not also be expedient to set limits to the values for which bank-notes shall be issued? The issue of low notes, by private banking companies, has, both in this country and in America, been productive of the greatest mischiefs; and the government is not only warranted, but it is their duty, and they are called upon to adopt such regulations as may be necessary to prevent a repetition of the calamities we have so lately experienced. Women, mechanics, and labourers of all descriptions—persons who are nowise qualified to judge of the comparative stability of banking companies, are all dealers in money; and they have a right to expect protection from such an obvious cause of loss as the granting of permission to every individual to undertake, without restraint or limitation of any kind, to supply the currency destined to carry on the ordinary business of the country.

If Mr Ricardo's plan were adopted, and bank-notes made exchangeable for bullion, and not for coins, it would be still more desirable that all country notes for less than five pounds should be prohibited, and their place exclusively supplied with Bank of England small notes. This would greatly diminish the chances of runs on the country banks; while it would, at the same time, give a uniformity of value, and a degree of cheapness and security, to the currency, to which it is, we apprehend, almost visionary to expect that it should otherwise attain.

As a farther means of increasing the respectability, and of adding to the stability of the country banks, the act of 1708, prohibiting more than six persons from entering into any association, or co-partnership, for carrying on the trade of private bankers in England and Wales, ought to be repealed. It is, indeed, astonishing how so oppressive and so absurd a regulation should have been so long permitted to disgrace the Statute Book. We are inclined to think, that the superior wealth and solidity of the Scots banks, is in no inconsiderable degree owing to their being exempted from the operation of this regulation.

SECT. V.—Whether Gold or Silver ought to be adopted as the Standard of the Currency, or whether it ought to consist of both.

As the value of gold and silver, or the cost of their production, is perpetually varying, not only relatively to other commodities, but also relatively to each other, it is impossible arbitrarily to fix their relative value. Gold may now, or at any given period, be to

silver as 14 or 15 is to 1; but were guineas and shillings coined in that proportion, the discovery of either a gold or silver mine of more than the ordinary degree of productiveness, or the discovery of any abridged process, by which labour might be saved in the production of one of the metals, would derange this proportion. As soon, however, as the mint proportion between the different metals ceases to be the same with that which they bear to each other in the market, then it becomes the obvious interest of every debtor to pay his debts in the metal whose mint valuation is highest.

In 1718, in pursuance of the advice of Sir Isaac Newton, the value of the guinea was reduced from twenty-one shillings and sixpence to twenty-one shillings; the value of fine gold to fine silver being then rated, in our mint, at 15 $\backslash frac\{1\}\{2\}$ to 1. But, notwithstanding this reduction, the guinea was still rated at a higher value, compared with silver, than it ought to have been. This over-valuation is estimated, by the late Lord Liverpool, to have been, at the time, equal to fourpence on the guinea, or to 1 $\backslash frac\{1\}\{2\}$ per cent.; and as the real value of silver relatively to gold continued to increase during the greater part of last century, this difference, which, even in the reign of George I., caused all considerable payments to be made in gold, became afterwards much greater. This error in the mint valuation of silver and gold was the cause that, during the long period from 1718 down to the late recoinage, no silver currency, of the legal weight and fineness, would remain in circulation. The real value of silver coins, relatively to gold coins, which were, equally with the former, made a legal tender by the proclamation of 1718, being underrated, they were no sooner issued than they found their way to the melting-pot. None, therefore, but very light coins remained in circulation; and when, in 1797, the further coinage of silver was forbidden, the silver currency was very much debased. But, as this currency existed only in a limited quantity, it did not, according to the principle already explained, sink in its current value. Though so debased, it was still the interest of debtors to pay in the gold coin. If, indeed, the quantity of this debased silver coin had been very great, or if the mint had issued such debased pieces, it might have been the interest of debtors to pay in this debased money. But its quantity being limited, it sustained its value; and gold, therefore, was in practice the real standard of the currency.

The act of 1774, declaring that silver should not be a legal tender for any debt exceeding L.25, unless by weight according to the mint standard, had not, as has been supposed, any effect in causing the general employment of gold as money, in preference to silver. For, to use the words of Mr Ricardo, "this law did not prevent any debtor from paying any debt, however large its amount, in silver currency fresh from the mint. That the debtor did not pay in this metal was not a matter of chance, nor a matter of compulsion, but wholly the effect of choice. It did not suit him to take silver to the mint, but it did suit him to take gold hither. It is probable that if the quantity of this debased silver in circulation had been enormously great, and also a legal tender, that

Money. a guinea would have been, as in the reign of William III., worth 30 shillings; but it would have been the debased shilling that had fallen in value, and not the guinea that had risen." (Principles of Political Economy, &c. p. 520.)

Contrary effect produced by the over-valuation of Silver in the French Mint.

In France a different valuation of the precious metals has had a different effect. The louis d'or which, previously to the recoinage in 1785, was rated in the mint valuation at 24 livres, was really worth 25 liv. 10 sols. Those, therefore, who chose to discharge the obligations they had contracted, by payments of gold coin in preference to silver, plainly lost 1 liv. 10 sols on every sum of 24 livres! The consequence was, that very few such payments were made, that gold was almost entirely banished from circulation, and that the currency of France consisted almost exclusively of silver. (Say, Tom. I. p. 393.) In 1785, a sixteenth part was deducted from the weight of the louis d'or, and since that period the proportional value of the precious metals, as fixed in the French mint, has more nearly corresponded with the proportion they bear to each other in the market. Indeed, Mr Baring stated, in his evidence before the Committee of the House of Commons in 1819 (Report, p. 192), that the difference between the mint and market proportions of gold and silver at Paris in 1817 and 1818, had not exceeded from one-tenth to one-fourth per cent. There is, however, no reason to presume that this coincidence, which must have been in a great degree accidental, can be maintained under any arbitrary system. To ensure the indifferent use of gold and silver coins in countries where they are both a legal tender, their mint proportion would require to be every now and then adjusted, so as to correspond with their real proportion. But as this would obviously be productive of much trouble and inconvenience, the preferable plan undoubtedly is to make only one of the metals a legal tender, and to allow the relative worth of the other to be adjusted by the unrestricted competition of the sellers and the buyers.

The absurdity of employing equally two metals as a legal tender for debts, or as a standard of value, was unanswerably demonstrated by Mr Locke and Mr Harris, and has been noticed by every subsequent writer; but so slow is the progress of improvement, that it was not till 1816 that it was enacted that gold only should be a legal tender for any sum exceeding 40s.

Silver preferable to Gold as a Standard.

Whether, however, gold should have been adopted as the standard of exchangeable value, in preference to silver, is a question which is not so easy of solution, and on which there is a great diversity of opinion. Mr Locke, Mr Harris, and Mr Ricardo, are decidedly of opinion that silver is much better fitted than gold for a standard; while Dr Smith, although he has not expressed himself explicitly on the subject, appears to think that gold ought to be adopted in preference; and this opinion has been very ably supported by the late Lord Liverpool, in his valuable work On the Coins of the Realm.

It would be presumption in us to attempt to decide on a matter of this kind, respecting which the ablest political economists differ thus widely. We are inclined, however, to concur in opinion with those

who think silver ought to be adopted as the standard. Whatever metal is set apart for this purpose, it will be a very difficult task to preserve the currency from falling into a deranged state, if it be not used in small as well as in large payments.

"The integer," says Mr Harris, "and its several parts, should bear an exact and due proportion of value to each other; and this would be impossible, if they were made of different materials. There must be coins of about the value of shillings and sixpences; and it would be better if we had some that were still smaller. Those sort of coins are the most frequently wanted, and there is no doing without them. But a coin of a shilling, or even of half a crown value, would be too small in gold; and, therefore, at present gold is much too valuable for a standard of money. And it would be a ridiculous and vain attempt to make a standard integer of gold whose parts should be of silver; or to make a motley standard, part gold and part silver." (Harris On Coins, Part I. p. 60.)

Silver is, besides, as steady in its value as gold. Almost all foreign countries have adopted it as their standard; and the demand and supply is comparatively regular. The use of paper, as the principal circulating medium, entirely removes the great objection against silver—its being too bulky to be advantageously used in large payments.

Whether gold or silver be adopted as the standard of our currency, will not affect its total cost or value; for, the quantity of metal employed as money, or the quantity of metal for which paper is the substitute, must always be in an inverse proportion to the value or cost of that metal. If gold be continued as the standard, fourteen or fifteen times less of that metal than of silver will be required; or, what is the same thing, if the denomination of a pound were given to any specific weight of gold or silver, fifteen times more of such silver pounds would be required to serve as currency, or as bullion to exchange for notes—fifteen to one being about the proportion which gold bears in value to silver; and hence the expense of a currency consisting of gold coins, or of silver coins, is the same; and the expense is also the same, whether the currency consists of paper convertible into gold bullion or silver bullion. But, as gold is too valuable, in proportion to its bulk, to be coined into pieces of the value of a shilling or a sixpence, and as it is desirable to have the subsidiary currency necessary in small payments, formed of the same metal as the principal currency, or as the bullion for which paper is made exchangeable, silver ought, in preference, to be adopted as the standard.

If Mr Ricardo's plan should be again adopted, and if it should be deemed inexpedient to change the standard, it would not be proper to make any alteration on the late act, allowing a seigniorage of 6 per cent. on the silver coin; for, without some very great change in the present comparative value of gold and silver, the imposition of this seigniorage will prevent all risk of the fusion or exportation of the subsidiary currency. Neither, on the supposition that silver were to be assumed as the standard, could there be any valid objection against continuing the seigniorage. For, as notes would be exchangeable for bul-

lion, and not for coin, it would not cause any reduction of the standard, while it would have the beneficial effect of preventing the too great multiplication of the subsidiary currency, and of relieving the country of the expences of coinage.

Were a seignorage charged on the gold coins, paper, it is obvious, might be depreciated to the full extent of that seignorage, before it would be the interest of the holders to demand coin for the purpose of melting it into bullion, and consequently before the check of specie payments could begin to operate. But, even with such a seignorage, the risk of paper being depreciated, might be completely avoided, by making it obligatory on the bank to pay their notes, either in bullion, at the mint price of L. 3, 17s. 10$\backslash frac\{1\}\{2\}$d. an ounce, or coin, at the pleasure of the holder. A regulation of this kind could not be justly considered as imposing any hardship on the bank; for it is plain, that no bullion would ever be demanded from it, except when, by the issue of too much paper, its value had been sunk below the standard.

SECT. VI.—Standard of Money.—Degradation of the Standard in Italy, France, Great Britain, and other Countries.—Pernicious Effects of this Degradation.

By the standard of money is meant the degree of the purity or fineness of the metal contained in the coins of a particular country, and the quantity or weight of such metal contained in these coins. Twelve ounces of the metal, of which standard English silver coins are made, contains 11 ounces 2 dwts. fine, and 18 dwts. alloy; and of a pound Troy of this standard silver, our money pound, called the pound Sterling, contains 66 shillings, or $\backslash frac\{20\}\{66\}$ parts of $\backslash frac\{1\}\{12\}$ of a pound Troy of fine silver, that is, 1614$\backslash frac\{5\}\{6\}$ grains. From the 43d of Elizabeth down to 1816, when the act 56th Geo. III. cap. 68, imposing a seignorage of about 6 per cent. on the silver coin, was passed, the pound weight of standard silver bullion had been coined into 62 shillings. All the English silver coins have been coined out of silver of 11 oz. 2 dwts. fine, from the Conquest to this moment, except for a short period of sixteen years, from 34th Henry VIII. to the 2d Elizabeth.

The purity of gold is not estimated in Great Britain, and in most other European countries, by the weights commonly in use, but by an Abyssinian weight, called a carat. The carats are subdivided into four parts, called grains, and these again into quarters; so that a carat grain, with respect to the common divisions of a pound Troy, is equivalent to 2$\backslash frac\{1\}\{2\}$ penny-weights. Gold of the highest degree of fineness, or pure, is said to be 24 carats fine. When gold coins were first made at the English mint, the standard of the gold put in them was of 23 carats 3$\backslash frac\{1\}\{2\}$ grains fine, and $\backslash frac\{1\}\{2\}$ grain of alloy; and so it continued, without any variation, to the 18th Henry VIII.,

who in that year first introduced a new standard of gold of 22 carats fine, and 2 carats alloy. The first of these standards was called the old standard; the second was called the new standard, or crown gold, because crowns, or pieces of the value of five shillings, were first coined of this new standard. Henry VIII. made his gold coins of both these standards under different denominations; and this practice was continued by his successors until 1633. From that period to the present, the gold of which the coins of this kingdom have been made has been invariably of the new standard, or crown gold; though some of the coins made of the old standard previously to 1633 continued to circulate till 1732, when they were forbidden to be any longer current. (Liverpool On Coins, p. 27.)

The standard of our present gold coins is, therefore, 11 parts of fine gold, and 1 part of alloy. The pound Troy of such standard gold is divided into 44$\backslash frac\{1\}\{2\}$ guineas, each of which ought, consequently, when fresh from the mint, to weigh $\backslash frac\{1\}\{44\backslash frac\{1\}\{2\}\}$ of 12 ounces, or 5

dwt. 9$\backslash frac\{5\}\{6\}$ grains. The sovereign, or twenty shilling piece, weighs 5 dwts. 3$\backslash frac\{1\}\{2\}$ grains of standard gold, or 4 dwts. 17$\backslash frac\{1\}\{2\}$ grains of pure gold.

The alloy in coins is reckoned of no value. It is allowed, in order to save the trouble and expence that would be incurred in refining the metals, so as to bring them to the highest degree of purity; and because, when its quantity is small, it has a tendency to render the coins harder, and less liable to be worn or rubbed. If the quantity of alloy were considerable, it would lessen the splendour and the ductility of the precious metals, and would add too much to the weight of the coins.

Having thus ascertained what the standard of money really is, we shall now proceed to examine the effects produced by variations in the standard. This is, both in a practical and historical point of view, a very important inquiry.

To make any direct alteration in the terms of the contracts entered into between individuals, would be a degree of barefaced oppression, and of wanton and tyrannical interference with the rights of property, that could not be tolerated. Those, therefore, who have hitherto endeavoured to enrich one part of society, at the expence of another, have found it necessary to act with greater caution and reserve. They have been obliged to substitute artifice for open and avowed injustice. Instead of directly altering the stipulations in contracts, they have ingeniously bethought themselves of altering the standard, by a reference to which these stipulations had been adjusted! They have not said, in so many words, that 10 or 20 per cent. should be added to or deducted from the mutual debts and obligations of society, but they have really effected the same thing, by making a proportional change in the value of the currency. Men, in their bargains,

* The carat is a bean, the fruit of an Abyssinian tree, called Kuara. This bean, from the time of its being gathered, varies very little in its weight, and seems to have been, in the earliest ages, a weight for gold in Africa. In India it is used as a weight for diamonds, &c. Bruce's Travels, Vol. V. p. 66.

Money. do not, as we have already shown, stipulate for signs or measures of value, but for real equivalents. Money is not merely the standard by a comparison with which the relative value of commodities is ascertained at any given period; but it is also the equivalent by the delivery of a fixed amount of which, the stipulations in almost all contracts and engagements may be discharged. It is plain, therefore, that no variation can take place in its value, without essentially affecting all these stipulations. Every addition to the value of money must make a corresponding addition to the debts of the state, and of every individual; and every diminution of its value must make a corresponding diminution of these debts. Suppose that, owing to an increased difficulty of production, or to the increase of the quantity of bullion contained in coins of the same denomination, the value of money is raised 20 per cent., it is plain that 20 per cent. is, in consequence, added to all the various sums in which one part of society is indebted to the other part. Though the nominal rent of the farmer, for example, is not increased by this means, his real rent is increased: He continues to pay the same number of pounds or livres as formerly; but the pound or the livre is become more valuable, and requires the sacrifice of one-fifth part more of corn, of labour, or of any other commodity whose value has remained stationary, to obtain them. On the other hand, had the value of money fallen 20 per cent., the advantage, it is plain, would have been all on the side of the farmer, who would have been entitled to claim a discharge from his landlord, when he had paid him only four-fifths of the rent he had really bargained for.

But, notwithstanding it is thus obviously necessary, in order to prevent the pernicious subversion of private fortunes, and the falsifying of all precedent contracts, that the standard of money, when once fixed, should be religiously kept sacred, there is nothing that has been so frequently changed. We do not here allude to those variations which affect the value of the material of which the standard itself is composed, and against which it is impossible to guard, but to the changes which have been made in the quantity of that material contained in the same nominal sum of money. In almost every country, debtors have been enriched at the expense of their creditors. The necessities, or the extravagance of governments, have forced them to borrow; and to relieve themselves of the incumbrances they had contracted, they have almost universally had recourse to the disgraceful expedient of degrading the coin; that is, of cheating those who had lent them money to the extent of the degradation, and of enabling every other debtor in their dominions to do the same.

The ignorance of the public in remote ages facilitated this species of fraud. Had the names of the coins been changed when the quantity of metal contained in them was diminished, there would have been no room for misapprehension. But, although the weight of the coins was undergoing perpetual, and their purity occasional reductions, their ancient denominations were almost uniformly preserved; and the people who saw the same names still remaining after the substance was diminished,—who saw coins

of a certain weight and fineness circulate under the names of florins, livres, and pounds, and who saw them continue to circulate as such, after both their weight and the degree of their fineness had been lessened, began to think that they derived their value more from the stamp affixed to them, by authority of government, than from the quantity of the precious metals they contained. This was long a very prevalent opinion. But the rise of prices which invariably followed every reduction of the standard, and the derangement that was thereby occasioned in every pecuniary transaction, undeceived the public, and taught them, though it has not yet taught their rulers, the expediency of preserving the standard of money inviolate.

Before proceeding to notice the changes made in the currency of this and other countries, it may be proper to observe, that the standard is generally debased in one or other of the undermentioned ways.

1st, By simply altering the denominations of the coins, without making any alteration in their weight or purity. Thus, suppose sixpence, or as much silver as there is in sixpence, should be called a shilling, then a shilling would be two shillings, and twenty of these shillings, or ten of our present shillings, would constitute a pound sterling. This would be a reduction of 50 per cent. in the standard.

2d, The standard may be reduced, by continuing to issue coins of the same weight, but making them baser, or with less pure metal and more alloy.

3d, It may be reduced, by making the coins of the same degree of purity, but of diminished weight, or with less pure metal: or it may be reduced partly by one of these methods, and partly by another.

The first of these methods of degrading the standard was recommended by Mr Lowndes in 1695, and if injustice is to be done, it is certainly, on the whole, the least mischievous mode by which it can be perpetrated. It saves all the trouble and expense of a recoinage; but as it renders the fraud too obvious, it has been but seldom resorted to. In inquiries of this kind, however, it is rarely necessary to investigate the manner in which the standard has been degraded. And by its reduction or degradation, we uniformly mean, unless when the contrary is distinctly expressed, a diminution of the quantity of pure metal contained in coins of the same denomination, without regard to the particular mode in which such diminution may have been effected.

In conformity with what we have observed in the first section of this article, relative to the universality of the ancient practice of weighing the precious metals in every exchange, it is found that the coins of almost every country have the same names as the weights commonly used in them. To these weights the coins at first exactly corresponded. Thus the talent was a weight used in the earliest periods by the Greeks, the as or pondo by the Romans, the livre by the French, and the pound by the English and the Scotch, &c.; and the coins originally in use in Greece, Italy, France, and England, received the same denominations, and weighed precisely a talent, a pondo, a livre, and a pound. The standard has not,

Money. however, been preserved inviolate, either in ancient or modern times. But the limits within which an article of this kind must be confined, prevents us from tracing the various changes in the money of this and other countries, with the minuteness which the importance of the subject deserves, and obliges us to notice only those that were most prominent.*

History of the Money of Rome. ROMAN MONEY.—We learn from Pliny, that the first Roman coinage took place in the reign of Servius Tullus, that is, according to the common chronology, about 550 years before Christ. The as or pondo, of this early period, contained a Roman pound of copper, the metal then exclusively used in the Roman coinage, and was divided into twelve parts or unciae. If we may rely on Pliny, this simple and natural system was maintained until 250 years before our era, or until the first Punic war, when the revenues of the state being insufficient, the government attempted to supply the deficiency, by reducing the weight of the as from 12 to 2 ounces! But it is extremely improbable, that a government, which had maintained its standard inviolate for 300 years, should have commenced the work of degradation, by at once reducing their standard to a sixth part of its former amount; and it is equally improbable that so sudden and excessive a reduction could have been made in the value of the current money of the state, and, consequently, in the debts due by one individual to another, without occasioning the most violent commotions. Nothing, however, is said in any ancient writer, to entitle us to infer that such commotions actually took place, and we, therefore, concur with those who think that the weight of the as had been previously reduced, and that its diminution, which, it is most probable, would be gradual and progressive, had merely been carried to the extent mentioned by Pliny during the first Punic war. In the second Punic war, or 215 years before Christ, a further degradation took place, and the weight of the as was reduced from two ounces to one ounce. And by the Papyrian law, supposed to have passed when Papyrius Turdus was Tribune of the people, or 175 years before Christ, the weight of the

Money. as was reduced to half an ounce, or to $\backslash frac\{1\}\{2\}$ of its ancient weight, at which it continued till Pliny's time and long after.†

The denarius, the principal silver coin in use among the Romans, for a period of 600 years, was coined five years before the first Punic war, and was, as its name imports, rated in the mint valuation at 10 asses. Mr Greaves, whose dissertation on the denarius has been deservedly eulogised by Gibbon (Decline and Fall, Vol. III. p. 89), shows that the denarius weighed at first only one-seventh of a Roman ounce,‡ which, if Pliny's account of the period when the weight of the as was first reduced was correct, would give the value of silver to copper in the Roman mint as 840 to 1, which Mr Greaves very truly calls a "most unadvised proportion." But if we suppose, with Mr Pinkerton (Essay on Medals, Vol. I. p. 132, edit. 1789), that when the denarius was first issued, the as only weighed 3 ounces, the proportion of silver to copper would be as 252 to 1;—a proportion which, when the as was soon after reduced to 2 ounces, would be as 168 to 1, or about a third more than in the British mint. When, in the second Punic war, the as was reduced from 2 ounces to 1, the denarius was rated at 16 asses.

During his stay in Italy, Mr Greaves weighed many of the consular denarii, that is, as he explains himself, of the denarii that were struck after the second Punic war, and previously to the government of the Cæsars, and he found, by frequent and exact trials, the best and most perfect of them to weigh 62 grains English Troy weight. (Greaves' Works, Vol. I. p. 262.) Now, as the English shilling (new coinage) contains very nearly 87½ grains standard silver, this would give 8½d. for the value of the consular denarius. We should, however, fall into the grossest mistakes, if we indiscriminately converted the sums mentioned in the Latin authors by this or any other fixed proportion. It is not enough to enable us to judge of the real value of a coin, that we know its weight; we must also know the degree of its purity, or the fineness of the metal of which it is made. But Mr Greaves did not assay any of the denarii weighed

* It is impossible for us to enter in this place into any discussion relative to the value of the Grecian money. It is, however, a subject of no little interest and curiosity. M. Romé de l'Isle, in his Traité de Métrologie, published in 1789, has given an account of the weight, and of the degree of fineness of an immense number of attic drachmas and tetradrachmas. But he does not seem to have been more fortunate than his predecessors, in deducing the value of the talent from the weight of the drachmas. The errors and absurdities into which modern critics and commentators have fallen, in estimating the value of the sums mentioned in ancient authors, is indeed astonishing. They are ably pointed out in a short essay, De la Monnaie des Peuples Anciens, in the supplemental volume added by Garnier to his translation of the Wealth of Nations.

† "Servius rex primus signavit æs. Antea rudi usos Romæ Remeus tradit. Signatum est nota pecudum unde et pecunia appellata. * Argentum signatum est anno urbis DLXXXV. Q. Fabio Cos. quinque annos ante primum bellum Punicum. Et placuit denarius pro X. libris æris, quinarus pro quinque, sestertium pro dipondio ac semisse. Libræ autem pondus æris imminutum bello Punico primo cum impensis resp. non sufficeret, constitutumque ut asses sextentario pondere ferirentur. Ita quinque partes factæ luci, dissolutumque æs alienum. * Postea, Annibale urgente, Q. Fabio Maximo Dictatore, asses unciales facti: placuitque denarium XVI. assibus permutari, quinarum octonis, sestertium quaternis. Ita resp. dimidium lucrata est. Mox lege Papyria semunciales asses facti."—(Plinii, Hist. Nat. Lib. 33, cap. 3. Ed. Lugd. Bat. 1669.)

‡ This is indeed decisively proved by a passage in Celsus. "Sed et antea sciri volo in uncia pondus denariorum esse septem." (Cels. Lib. 15, cap. 17.)

by him. And although it were true, as most probably it is, that, from the first coinage of silver in the 485th year of the city to the reign of Augustus, the weight of the denarius had remained constant at $\backslash frac\{1\}\{2\}$th of a Roman ounce, or about 62 grains; and that, from the reign of Augustus to that of Vespasian, it only declined in weight from $\backslash frac\{1\}\{2\}$th to $\backslash frac\{1\}\{3\}$th of an ounce; still it is abundantly certain that its real value had been reduced to a much greater extent. Of this fact the authority of Pliny is decisive; for he expressly states, that Livius Drusus, who was Tribune of the people in the 662d year of the city, or 177 years after the first coinage of silver, debased its purity, by allaying it with $\backslash frac\{1\}\{4\}$th part of copper. (Lib. 33, cap. 3, previously quoted.) And in a subsequent chapter (the 9th) of the same book, he informs us that Anthony the Triumvir mixed iron with the silver of the denarius; and that, to counteract these abuses, a law was afterwards made providing for the assay of the denarii. Some idea of the extent to which the debasement of the purity of the coins had been carried, and of the disorder which had in consequence been occasioned, may be formed from the circumstance, also mentioned by Pliny, of statues being every where erected in honour of Marius Gratidianus, by whom the law for the assay had been proposed! But this law was not long respected; and many imperial denarii are now in existence, consisting of mere plated copper. (Bazinghen, Dictionnaire de Monnoies, Tom. II. p. 64.)

Value of the Aureus. Gold was first coined at Rome 62 years after silver, in the 547th year of the city, and 204 years before Christ. The aureus originally weighed $\backslash frac\{1\}\{10\}$th part of the pondo or Roman pound; but by successive reductions its weight was reduced, in the reign of Constantine, to only $\backslash frac\{1\}\{2\}$nd part of a pound. The purity, however, as well as the weight of the aureus was diminished. Under Alexander Severus it was alloyed with $\backslash frac\{1\}\{2\}$th of silver. We learn from Dion Cassius, who was contemporary with Severus, that the aureus was rated at 25 denarii; a proportion which Mr Pinkerton thinks was always maintained under the Emperors. (Essay on Medals, Vol. I. p. 148.)

Value of the Sester-tius. The want of attention to this progressive degradation has led the translators of, and commentators on, ancient writers, to the most extraordinary conclu-

sions. The sester-tius, or money unit of the Romans, was precisely the fourth part of a denarius. Nostri autem, says Vitruvius, lib. 3. cap. 1, primo decem fecerunt antiquum numerum, et in denario denos aereos asses constituerunt, et ea re compositio nummi ad hodiernum diem denarii, nomen retinet; etiamque quartam ejus partem, quod efficiabatur ex duobus assibus et tertio semisse SESTERTIUM nominaverunt. When, therefore, the denarius was worth 8$\backslash frac\{1\}\{2\}$d., the sester-tius must have been worth 2$\backslash frac\{1\}\{4\}$d. But the sester-tius being thus plainly a multiple of, and bearing a fixed and determined proportion to the denarius, and consequently to the as, the aureus, and the other coins generally in use, it must have partaken of all their fluctuations. When they were reduced, the sester-tius must have been reduced likewise; for if it had not been so reduced, or, which in effect is the same thing, if it had been necessary to increase the quantity of the degraded denarii and aurei contained in a given sum of sester-tii in proportion to their degradation, nothing, it is obvious, could have been gained by falsifying the standard. But as we know that on one occasion the republic got rid of one-half of its debts—respublica dimidium lucrata est—by simply reducing the standard of the as, it is certain that the value of the sester-tius must have fallen in the same proportion, just as in England we should reduce the pound sterling, our money unit, by reducing the shillings of which it is made up. †

But, although it had not been possible to produce such clear and explicit testimony to show the continued degradation of the Roman money, the obvious absurdity of many of the calculations which have been framed, on the supposition of its remaining stationary at the rates fixed in the earlier ages of the commonwealth, would have sufficiently established the fact of its degradation. Dr Arbuthnot's Tables of Ancient Coins, which, for nearly a century, have been considered in England, and in the greater part of the Continent, as of the highest authority, are constructed on the hypothesis that the denarii weighed by Mr Greaves were of equal purity with English standard silver, and that no subsequent diminution had been made either in their weight or fineness! The conclusions derived from such data are precisely of the same sort we should arrive at, if, in estimating

* Greaves, Vol. I. p. 331. Gibbon's Miscellaneous Works, Vol. V. p. 71.

† All the writers on ancient coins, with the single exception of Mr Pinkerton, agree in supposing the sester-tius to have been originally, and to have always continued to be, a silver coin. Mr Pinkerton has, however, denied this opinion, and on the authority of the following passage of Pliny, contends that the sester-tius was at the time when Pliny wrote, whatever it might have been before, a brass coin. "Summa gloria æris nunc in Marianum conversa, quod et Cordubense dicitur. Hoc a Liviano cadmiam maxime sorbet, et orichalci bonitatem imitatur in SESTERTIIS, DUPONDIARIISQUE, Cyprio suo ASSIBUS contentis." (Lib. 34, cap. 2.) That is, literally, "The greatest glory of brass is now due to the Marian, also called that of Cordova. This, after the Livian, absorbs the greatest quantity of lapis calaminaris, and imitates the goodness of orichalcum (yellow brass) in our SESTERTII and DUPONDIARI, the ASSES being contented with the Cyprian (brass)." (Pliny had previously observed, that the Cyprian was the least valuable brass.) This passage is, we think, decisive in favour of Mr Pinkerton's hypothesis. But, in the absence of positive testimony, the small value of the sester-tius might be relied on as a sufficient proof that it could not be silver. When the denarius weighed 62 grains, the sester-tius must have weighed 15$\backslash frac\{1\}\{2\}$, and been worth 2$\backslash frac\{1\}\{4\}$d.; but a coin of so small a size as to be scarcely equal to one-third of one of our sixpences, would have been extremely apt to have been lost; and could not have been struck by the rude methods used in the Roman mint with any thing approaching to even tolerable precision. It is, therefore, much more reasonable to suppose that it was of brass.

the value of a French livre previously to the Revolution, we took for granted that it weighed a pound of pure silver, as in the reign of Charlemagne. Among many other things even more extraordinary, we learn from Arbuthnot, that Julius Caesar, when he set out for Spain, after his prætorship, was just L.2,018,229 Sterling worse than nothing,—that Augustus received, in legacies from his friends, L.32,291,666,—that the estate of Pallas, a freedman of Crassus, was worth L.2,421,875, and, which is still better, that he received L.121,093 as a reward for his virtues and frugality,—that Æsop, the tragedian, had a dish served up at his table which cost L.4,843,—that Vitellius spent L.7,265,625 in twelve months in eating and drinking,—and that Vespasian, at his accession to the empire, declared, that an annual revenue of L.322,916,666 would be necessary to keep the state machine in motion! It is astonishing, that none of our scholars or commentators seem ever to have been struck with the palpable extravagance of such conclusions—conclusions which, to use the words of Garnier, "ont mis l'Histoire Ancienne, sous le rapport des valeurs, au même degré de vraisemblance que les contes de Mille et une Nuits!" They have, we believe, without any exception, slavishly copied the errors of Arbuthnot; and to this hour the computations in the works on Roman antiquities used in our most celebrated schools and universities, are all borrowed from his work! It ought to be remembered, that the value of gold and silver must, because of the greater poverty of the mines of the old world, and the comparatively small progress made by the ancients in the art of mining, have been much greater in antiquity than at present. But, without taking this circumstance into account, the computations referred to are too grossly and obviously erroneous to deserve the smallest attention.

Vespasian, we believe, would have been very well satisfied with a revenue of 20 millions; and there are good grounds for supposing that the Roman revenue, when at the highest, never amounted to so large a sum. (Gibbon, Vol. I. p. 260.)

FRENCH MONEY.—From about the year 800, in the reign of Charlemagne, to the year 1103, in the reign of Philip I., the French livre, or money unit, contained exactly a pound weight, or 12 ounces (poids de marc) of pure silver. It was divided into twenty sols, each of which, of course, weighed $\backslash frac\{1\}\{20\}$th of a pound. This ancient standard was first violated by Philip I., who made a considerable diminution of the quantity of pure silver contained in the sols. The example having been once set, it was so well followed up, that, in 1180, the livre was reduced to less than one-fourth part of its original weight of pure silver. In almost every succeeding reign there was a fresh diminution. "La monnoye," says Le Blanc, "qui est la plus precieuse et la plus importante des mesures, a changé en France presque aussi souvent que nos habits ont changé de mode!" And to such an extent had the process of degradation been carried, that, at the epoch of the Revolution, the livre did not contain a SEVENTY-EIGHTH part of the silver contained in the livre of Charlemagne! It would then have required 7885 livres really to extinguish a debt of 100 livres contracted in the ninth or tenth centuries; and an individual who, in that remote period, had an annual income of 1000 livres, was as rich, in respect to money, as those who, at the Revolution, enjoyed a revenue of 78,850 livres. (Paueton, Traité des Mesures, Poids, &c. p. 693.)

We subjoin an abridged table, calculated by M. Denis, exhibiting the average value of the French livre in different periods, from the year 800 to the Revolution:

Money. Those who wish for a full and detailed account of the various changes in the weight and purity of the French coins, may, besides the excellent work of Le Blanc, consult the elaborate and very complete tables at page 905 of the Traité des Mesures of Pauton, and at page 197 of the Essai sur les Monnoies of Dupré de St Maur.

It was not to be expected, that degradations originating in the necessities, the ignorance, and the rapacity of a long series of arbitrary princes, should be made according to any fixed principle. They were sometimes the result of an increase in the denomination of the coins; but more frequently of a diminution of the purity of the metal of which they were struck. A degradation of this kind was not so easily detected, and, in order to render its discovery still more difficult, Philip of Valois, John, and some of the other kings, obliged the officers of the mint to swear to conceal the fraud, and to endeavour to make the merchants believe that the coins were of full value! (Le Blanc, p. 212.) Sometimes one species of money was reduced, without any alteration being made in the others. No sooner, however, had the people in their dealings manifested a preference, as they uniformly did, for the money which had not been reduced, than its circulation was forbidden, or its value brought down to the same level with the rest. (Id. Introduction, p. 20.) In order to render the subject more obscure, and the better to conceal their incessant frauds, individuals were at one time compelled to reckon exclusively by livres and sols, at other times by crowns or ecus, and not unfrequently they were obliged to refer in computing to coins which were neither livres, sols, nor crowns, but some multiple or fractional part thereof. The injurious effects of these constant fluctuations in the value of money are forcibly depicted by the French historians. And so insupportable did they become, that, in the fourteenth and fifteenth centuries, several cities and provinces were glad to purchase the precarious and little respected privilege of having coins of a fixed standard, by submitting to the imposition of heavy taxes. (Le Blanc, p. 93.)

In the duchy of Normandy, when it was governed by the English monarchs, there was a tax on hearths paid every three years, called monetarium, in return for which the sovereign engaged not to debase his coins. This tax was introduced into England by our early kings of the Norman race; but Henry I. in the first year of his reign, was induced to abandon it, and it has not since been revived. (Liverpool On Coins, p. 107.)

According to the present regulations of the French Mint, the coins contain $\backslash frac\{2\}\{10\}$ths of pure metal, and $\backslash frac\{1\}\{10\}$th of alloy. The franc, which is equal to 1 livre, 0 sols, 3 deniers, weighs exactly 5 grammes, or 77.2205 English Troy grains. The gold piece of 20 francs weighs 102.96 English grains. (Peuchet, Statistique Elementaire de la France, p. 538.)

Of England. ENGLISH MONEY.—In England, at the epoch of the Norman Conquest, the silver, or money pound, weighed exactly twelve ounces Tower weight. It was divided into twenty shillings, and each shilling into twelve pence, or sterlings. This system of coinage, which is in every respect the same with that

established in France by Charlemagne, had been introduced into England previously to the invasion of William the Conqueror, and was continued, without any alteration, till the year 1300, in the 28th Edward I., when it was for the first time violated, and the value of the pound Sterling degraded to the extent of $1\backslash frac\{1\}\{2\}$ per cent. But, the really pernicious effect of this degradation did not consist so much in the trifling extent to which it was carried by Edward, as in the example which it afforded to his less scrupulous successors, by whom the standard was gradually debased, until, in 1601, in the reign of Queen Elizabeth, 62s. were coined out of a pound weight of silver. This was a reduction of above two-thirds in the standard; so that all the stipulations in contracts, entered into in the reigns immediately subsequent to the Conquest, might, in 1601, and since, be legally discharged by the payment of less than one-third of the sums that had been really bargained for. And yet the standard has been much less degraded in England than in any other country!

The tables annexed to this article give an ample account of these degradations, and also give the weight of the gold coins, and the proportional value of gold to silver, estimated both by the mint regulations, and by the quantity of fine gold and fine silver contained in the different coins.

SCOTTISH MONEY.—In the same manner as the Of Scotland. English had derived their system of coinage from the French, the Scots derived theirs from the English. From 1296 to 1355, the coins of both divisions of the island were of the same size and purity. But, at the last mentioned period, it was attempted to fill up the void occasioned by the remittance of the ransom of David II. to England, by a degradation of the coins. Till this time, the money of Scotland had been current in England, upon the same footing with the money of that country; and the preservation of this equality is assigned by Edward III. as a reason for his degrading the English coins. But this equilibrium was soon after deranged. In the first year of Robert III. (1390), the Scottish coin only passed for half its nominal value in England; and, in 1393, Richard II. ordered that its currency, as money, should entirely cease, and that its value should be made to depend exclusively on the weight of the genuine metal contained in it. "To close this point at once," says Mr Pinkerton, "the Scottish money, equal in value to the English till 1355, sunk by degrees, reign after reign, owing to succeeding public calamities, and the consequent impoverishment of the kingdom, till, in 1600, it was only a twelfth part of the value of English money of the same denomination, and remained at that point till the union of the kingdoms cancelled the Scottish coinage."—(Essay on Medals, Vol. II. p. 99.)

The tables at the end of this article exhibit the successive degradations both of the Scottish silver and gold coins.

At the Union, in 1707, it was ordered that all the silver coins current in Scotland, foreign as well as domestic, except English coins of full weight, should be brought to the Bank of Scotland, to be carried to the mint to be recoined. In compliance with this order, there was brought in,

Mr Ruddiman conjectures, apparently with considerable probability, that the value of the Scottish gold coins, and of the silver coins not brought in, amounted to about as much more. Much suspicion was entertained of the measure of a recoinage; and that large proportion of the people who were hostile to the Union, and who did not conceive it could be permanent, brought very little of their money to the bank. Only a few of the hoarded coins have been preserved, the far greater part having either been melted by the goldsmiths, or exported to other countries. (Preface to Anderson's Diplomata, p. 176.)

Of Ireland. IRISH MONEY.—The gold and silver coins of Great Britain and Ireland are now the same, and have been so for a considerable period. The rate, however, at which these coins circulate in Ireland, or their nominal value as money of account, is 8s. per cent. higher than in Great Britain. This difference of valuation, which is attended with considerable inconvenience in adjusting the money transactions between the two countries, has subsisted since 1689. For an account of the various species of metallic money which have at different times been current in Ireland, we must refer our readers to Mr Simons' Essay on Irish Coins, *—a work pronounced by Mr Ruding to be "the most valuable of all the publications on the coinage of any part of the united empire." (Annals of the Coinage, Preface, Vol. I. p. 11.)

Of Germany, &c. MONEY OF GERMANY, SPAIN, &c.—A similar process of degradation had been universally carried on. "In many parts of Germany, the florin, which is still the integer, or money of account of those countries, was originally a gold coin, of the value of about 10s. of our present money (old coinage). It is now become a silver coin, of the value of only 20d.; and its present value, therefore, is only equal to a sixth part of what it was formerly. In Spain, the maravedi, which was in its origin a Moorish coin, and is still the money of account of that kingdom, was in ancient times most frequently made of gold. Le Blanc observes, that, in 1220, the maravedi weighed 84 grains of gold, equal in value to about 14s. (old coinage) of our present money. But this maravedi, though its value is not quite the same in all the different provinces of Spain, is now become a small copper coin, equal in general to only $\backslash frac\{1\}\{2\}$ of an English penny! In Portugal, the re, or reis, is become of

no greater value than $\backslash frac\{1\}\{2\}$ of an English penny; it is so small, that, in estimating its value in other coins, it is reckoned by hundreds and thousands. The moeda, or moidore, is equal to 4800 reis; and this little coin has now, in fact, no existence but in name. Such has been the fate of all these coins, and such is their present state of their depreciation."—(Liverpool on Coins, p. 111.)

RUSSIAN MONEY.—The following, according to M. Of Russia. Storch, are the fluctuations in the weight and value of the rouble, or money unit of Russia, since 1700.

The principle of degradation has not, however, been uniformly acted upon. The quantity of bullion contained in coins of the same denomination has sometimes, though rarely, been increased, and creditors enriched at the expense of their debtors. This method of swindling his subjects is said to have been first practised by Heliogabalus. The Roman citizens being bound to pay into the imperial treasury, not a certain weight of gold, but a certain number of pieces of gold, or aurei, the Emperor, whose vices have become proverbial, in order to increase his means of dissipation, without appearing to add to the weight of the taxes, increased the quantity of metal contained in the aureus; and thus obtained, by a dishonest trick, what it might have been difficult for him to have obtained by a fair and open proceeding. † In France, the value of the coins has been frequently raised. During the early part of the reign of Philip le Bel, who ascended the throne in 1285, the value of the coin had been reduced to such an extent as to occasion the most violent complaints on the part of the clergy and landholders, and generally of all that portion of the subjects who could not raise their incomes proportionably to the reduction in the value of money. To appease this discontent, and in compliance with an injunction of the Popes, the king at last consented to issue new coins, of the same denomination with those previously current, but which contained about three times the quantity of silver. This, however, was merely shifting an oppressive burden from the shoulders of one class to those of another, who were less able to bear it. The degraded money having been in circulation for about sixteen

* Originally printed at Dublin in 1749, in 4to, and reprinted with some additions in 1810.

† Lamp. Vita Alex. Severi, Cap. 39.—Perhaps Heliogabalus took the hint from Licinius, a freedman of Cæsar's, who, in his government of the Gauls under Augustus, divided the year into fourteen months instead of twelve, because the Gauls paid a certain monthly tribute!—Dion Cassius, Lib. 72.

years, by far the largest proportion of the existing contracts must have been adjusted exclusively with reference to its value. No wonder, therefore, that those who were in the situation of debtors should have declared their repugnance to submit to so shameful an act of injustice as was done them by this enhancement of the value of money, and that they should have refused to make good their engagements, otherwise than in money of the value of that which had been current at the time when they were entered into. The labouring class, to whom every sudden rise in the value of money is always injurious, having joined the debtors in their opposition, they broke out into open rebellion. "The people," says Le Blanc, "being reduced to despair, and having no longer any thing to care for, lost the respect due to the edict of his Majesty;—they pillaged the house of the master of the mint, who was believed to have been the chief adviser of the measure, besieged the temple, in which the King lodged, and did all that an infuriated populace is capable of doing." (Traité Historique des Monnoyes de France, p. 190.) The sedition was ultimately suppressed; but it is not mentioned whether any abatement was made, by authority, from the claims of the creditors, in the contracts entered into when the light money was in circulation. It seems probable, however, from what is elsewhere mentioned by Le Blanc (Introduction, p. 30), that such was really the case.

The history of the French coinage affords several instances similar to the very remarkable one we have now brought under the notice of our readers; but, in England, the new coinage in the last year of the reign of Edward VI. is the only instance in which the value of money has been augmented by the direct interference of government. Previously to the accession of Henry VIII., the pound of standard silver bullion, containing 11 oz. 2 dwts. of pure silver, and 18 dwts. of alloy, was coined into thirty-seven shillings and sixpence. But Henry not only increased the number of shillings coined out of a pound weight of silver, but also debased its purity. The degradation was increased under his son and successor, Edward VI., in the fifth year of whose reign, seventy-two shillings were coined out of a pound weight of bullion; but this bullion only contained three ounces of pure silver to nine ounces of alloy; so that, in fact, twenty of these shillings were only equal to 4s. 7½d. of our present money, including the seigniorage. (Folkes's Table of English Coins, p. 34.) It appears from the proclamations issued at the time, and from other authentic documents, that this excessive reduction of the value of silver money had been productive of the greatest confusion. A maximum was set on the price of corn and other necessaries; and letters were sent to the gentlemen of the different counties, desiring them to punish those who refused to carry their grain to market. But it was soon found to be quite impossible to remedy these disorders otherwise than by withdrawing the base money from circulation. This was accordingly resolved upon; and, in 1552, new coins were issued, the silver of which was restored to the old standard of purity, and which, though less valuable than those in circulation during the early part of the reign of Henry VIII., were above four

times the value of a large proportion of the same denomination that had been in circulation for some years before.

It is clear to demonstration, however, that such a rise in the value of money could not have taken place without occasioning the most violent commotions, had all the coins previously in circulation been debased. Equal injustice, it must be remembered, is always done to the poorest, and not least numerous class of society, by increasing the value of money, as is done to the wealthier classes by depressing it. But, although government had been disposed to sanction so enormous an invasion of the right of property, it is altogether impossible that the country could have submitted to have had 400 or 450 per cent. added to its taxes and other public burdens, by a piece of legerdemain of this kind, or that individuals would have consented to pay so much more than they had originally bargained for. Instead of deserving praise for accomplishing such a measure, Edward VI., by whom the reformation of the coins was begun, and Elizabeth, by whom it was completed, would have justly forfeited the esteem of their subjects, and merited the deepest execration. The truth is, however, that almost no change had been made, during all this period, in the value of the gold coins; and there is, besides, abundance of evidence to show, that a large supply of the old silver coins had remained in circulation. Now, as there is no mention made of the issue of the new coins having been attended with any inconvenience, it is nearly certain, as Mr Harris has remarked, that, during the period of the debasement of the standard, individuals had regulated their contracts chiefly with reference to the gold or old silver coins; or, which is the same thing, that "they had endeavoured, as well as they could, to keep by the standard, as it had been fixed in the preceding times." (Harris On Coins, Part II. p. 3.)

We have been thus particular in examining this measure, because it has, of late, been much referred to. It is plain, however, that it can give no support to the arguments of those who have appealed to it as affording a striking proof of the benefits which they affirm must always result from restoring a debased or degraded currency to its original purity or weight. Invariability of value is the great desideratum in a currency. To elevate the standard after it has been for a considerable period depressed, is really not a measure of justice, but the giving a new direction to injustice. It vitiates and falsifies the provisions in one set of contracts, in order properly to adjust those in some other set!

This, however, as we have already remarked, is the only instance in which the government of England has ever interfered directly to enhance the value of money. In every other case, where they have tampered with the standard, it has been to lower its value, or, which comes to the same thing, to reduce their own debts and those of their subjects.

It is unnecessary to enumerate in detail the various bad consequences that must have resulted from these successive changes in the standard of value. But, it deserves to be remarked, that an arbitrary reduction of the standard does not afford any real relief to the embarrassments of the governments by whom

it is practised. Their debts are, it is true, reduced in proportion to the reduction in the value of the currency, but their revenues are also reduced in the same proportion. A degraded piece of money will not exchange for the same quantity of commodities. To whatever extent the standard of money may be reduced, prices must, very soon, be raised to the same extent. If the degradation be 10 per cent., the government, as well as every one else, will, henceforth, be compelled to pay L.110 for those commodities which it might previously have obtained for L.100. To bring the same real value into the coffers of the treasury, it is necessary, therefore, that taxation should be increased whenever the standard is diminished—a measure always odious, and in some countries impracticable.

But a diminution of revenue is not the only bad effect which governments experience from reducing the standard of the currency. A state which has degraded its money, and cheated its creditors, is unable to borrow again on the same favourable terms as if it had acted with perfect good faith. We cannot expect to enjoy the reputation of honesty, at the same time that we are openly pocketing the booty earned by duplicity and treachery. Those who lend money to knaves always stipulate for a proportionably high rate of interest. They must not only obtain as much as they could have obtained from the most secure investments, but they must also obtain an additional rate or premium, sufficient to cover the risk they run in transacting with those who have given proofs of bad faith, and on whose promises no reliance can be placed. A degradation of the standard of value is, therefore, of all others, the most wretched resource of a bankrupt government. It will never, indeed, be resorted to, except by those who are alike unprincipled and ignorant. "It occasions," says Dr Smith, "a general and most pernicious subversion of the fortunes of private people; enriching, in most cases, the idle and profuse debtor at the expence of the frugal and industrious creditor; and transporting a great part of the national capital from the hands which were likely to increase and improve it, to those which are likely to dissipate and destroy it. When it becomes necessary for a state to declare itself bankrupt, in the same manner as when it becomes necessary for an individual to do so, a fair, open, and avowed bankruptcy, is always the measure which is both least dishonourable to the debtor, and least hurtful to the creditor. The honour of a state is surely very poorly provided for, when, in order to cover the disgrace of a real bankruptcy, it has recourse to a juggling trick of this kind, so easily seen through, and at the same time so utterly pernicious."—(Wealth of Nations, Vol. III. p. 435.)

Some of the bad consequences resulting from a change in the value of money might, indeed, be obviated, by enacting, that the stipulations in all pre-

cedent contracts should be made good, not according to the present value of money, but to its value at the time when they were entered into. This principle, which is conformable to the just maxim of the civil law—Valor monetæ considerandus atque inspicendus est, a tempore contractus, non autem a tempore solutionis—was acted upon, to a certain extent, at least, by the Kings of France, during the middle ages. Ordonnances of Philip le Bel, Philip of Valois, and Charles VI., issued subsequently to their having increased the value of money, or, as the French historians term it, returned from the foible to the forte monnoie, are still extant, in which it is ordered, that all previous debts and contracts should be settled by reference to the previous standard. But although the same reason existed, it does not appear that any such ordinances were ever issued when the value of money was degraded. It is obvious, indeed, that no government could derive any advantage whatever from reducing the value of money, if it were to order, as it is in justice bound to do, that all existing contracts should be adjusted by the old standard. Such a measure would reduce the revenue without reducing the incumbrances of the state; while, by establishing a new standard of value, and unsettling all the notions of the public, it would open a door for the grossest abuses, and be productive of infinite confusion and disorder in the dealings of individuals.

The odium and positive disadvantage attending the degradation of the value of metallic money, appears to have at length induced almost all governments to abstain from it. But they have only renounced one mode of playing at fast and loose with the property of their subjects, to adopt another and a still more pernicious one. The injustice which was formerly done by diminishing the quantity of bullion contained in the coins of different countries, is now perpetrated with greater ease, and to a still more ruinous extent, by the depreciation of their paper currency.*

In the long period from 1601 to 1797, no change was made in the standard of money in this country. A project for enfeebling the standard had indeed been entertained, both in 1626 and 1695; but, in the former instance, it was quashed by the celebrated speech addressed by Sir Robert Cotton to the Lords of the Privy Council, and in the latter by the opposition of Mr Montague, then Chancellor of the Exchequer, in the House of Commons, and by the impression made by the writings of Mr Locke, by whom the injustice of the scheme was admirably exposed, out of doors. It was reserved for Mr Pitt to set aside a standard which had been thus preserved inviolate for nearly two centuries. The Order in Council of the 25th February 1797, and the acts of Parliament by which it was followed up, effected a total change in our ancient monetary system; and, instead of the old standard, gave us the self-interest-

* In the sixth volume of the Cours d'Economie Politique of M. Storch, there is a very instructive account of the paper money of the different continental states. We can confidently recommend it as containing a great deal of new and important information.

Money. ed views and opinions of twenty-four irresponsible individuals. The circulation of Bank of England paper was secured, by its being exclusively issued in payment of the dividends, or of the interest of the public debt, and by its also being received as cash in all payments into the exchequer; but no attempt was made to sustain the value of this paper on a par with the value of gold or silver. Full power was given to the directors of a private banking company to raise or depress the value of money, as their interest or caprice might suggest. They were enabled to exchange unlimited quantities of bits of engraved paper, of the intrinsic worth, perhaps, of 5s. a quire, for as many, or the value of as many, hundreds of thousands of pounds. And, in such circumstances, our only wonder is, not that paper money became depreciated, but that its value was not more reduced—that a still greater quantity of bank-notes were not thrust into circulation.

For the first three or four years after the restriction, the Directors, ignorant, perhaps, of the nature of the immense power which had been placed in their hands, seem to have regulated their issues nearly on the same principles that they had regulated them by, while they were obliged to pay in coin. It appears, by the Tables of the Price of Bullion, published by order of the House of Commons, that, until 1801, bank-notes were on a par with gold. In 1801 and 1802, however, they were at a discount of from 8$\backslash frac\{1\}\{2\}$ to 7$\backslash frac\{1\}\{2\}$ per cent.; but they again recovered their value; and, from 1803 to 1809, both inclusive, they were only at a discount of L. 2, 13s. 2d. per cent. But, in 1809 and 1810, the Directors appear to have totally lost sight of every principle by which their issues had previously been governed. The average amount of bank-notes in circulation, which had never exceeded 17$\backslash frac\{1\}\{2\}$ millions, nor fallen short of 16$\backslash frac\{1\}\{2\}$ millions in any one year from 1802 to 1808, both inclusive, was, in 1809, raised to L. 18,927,833; and, in 1810, to L. 22,541,523. The issues of country bank paper were increased in a still greater proportion; and, as there was no corresponding increase in the business of the country, the discount on bank-notes rose from L. 2, 13s. 2d. in 1809, to L. 13, 9s. 6d. per cent. in 1810! The recommendation to return to cash payments, contained in the Report of the Bullion Committee, presented to the House of Commons in 1810, appears to have given a slight check to the issues of the Bank. All apprehensions from this quarter were, however, speedily dissipated; for, in May 1811, when guineas were notoriously bought at a premium, and bank-notes were at an open discount, as compared with gold bullion, of upwards of 10 per cent., the House of Commons not only refused to fix any certain period for reverting to cash payments, but actually voted a resolution, declaring that the promissory notes of the Bank of England had hitherto been, and were at that time, held to be, in public estimation, equivalent to the legal coin of the realm!

This ever memorable resolution—a resolution which took for granted, that a part was equal to a whole—that L. 90 and L. 100 were the same thing—relieved the Bank from all uneasiness respecting the interference of Parliament, and stimulated the Di-

rectors to increase the number of their notes in circulation. The consequence was, that, in 1812, they were at an average discount of 20$\backslash frac\{1\}\{2\}$; in 1813, of 23; and, in 1814, of 25 per cent.! This was the maximum of depreciation. The importation of foreign corn, subsequent to the opening of the Dutch ports in 1814, by occasioning a great decline of the price of the principal article of agricultural produce, produced an unprecedented degree of distress, first among the farmers, and latterly among the country bankers. It is estimated that, in 1814, 1815, and 1816, no fewer than 240 private banking companies either became altogether bankrupt, or, at least, stopped payment; and the reduction that was thus occasioned in the quantity of bank-notes in circulation, raised their value so rapidly, that, in October 1816, the discount was reduced to L. 1, 8s. 7d. per cent. In 1817 and 1818, the average discount on bank paper, as compared with gold, did not exceed L. 2, 13s. 2d. per cent. In the early part of 1819, it rose to about 6 per cent.; but it very soon declined; and, for the last two years, paper has been nearly on a level with gold. (See Table No. V. annexed to this article.)

Nothing that has ever happened in the history of the country has proved more injurious to its best interests than these fluctuations. From 1809 to 1815, the creditors of every antecedent contract, landholders whose estates had been let on lease, stockholders and annuitants of every description—all, in short, who could not raise the nominal amount of their claims or of their incomes proportionably to the fall in the real value of money, were robbed of a corresponding portion of them. The injustice that would have been done to the creditors of the state and of individuals, who had made their loans in gold or paper equivalent to gold, by raising the denomination of the coin 25 per cent., however gross and palpable, would not have been greater than was actually done them in 1814, by compelling them to receive payment of their just debts in paper depreciated to that extent. Circumstances which could neither be controlled by the Bank of England nor the Government, put an end, as we have just seen, to this monstrous system. But we are still suffering, and will long continue to suffer severely, for the folly and injustice of which we have been guilty. The mischief occasioned by the sudden reduction of the paper currency, and the consequent rapid augmentation of its value, has been still greater than what had previously been caused by its depreciation. The hardship occasioned by the subversion of private fortunes, and by the change in the debts and credits of individuals, might be, in both cases, nearly equal. A vast amount of public debt was, however, contracted during those years in which the depreciation was greatest; and the state is now paying this debt, borrowed when the bank-note was not worth more than 14s. or 15s., with bank-notes whose value is increased to 20s. The salaries, too, of all our public officers, and the expences of the army and navy, and of all our other public establishments, had been generally augmented proportionably to the reduced value of money. And as no corresponding reduction has been made from the sums voted on their account since the currency recovered its value,

Money. it is easy to perceive, that a very great addition has thus been made to the public expenditure. All those taxes, too, which were imposed when the currency was depreciated, must now, though not nominally, be really increased in the same proportion; so that, when sufficient allowance has been made for the difference in the value of money, it is doubtful whether the country be not more heavily burdened at this moment than it was in 1813 and 1814, though we have since got rid of the income-tax—a tax which produced about 14 millions a year!

Such is but a brief and imperfect outline of the very great and almost irreparable injury which the late fluctuations in the value of the currency have entailed on the country. And yet, strange to tell, there is a considerable party amongst us who, not satisfied with this pernicious transference of property from the pockets of those who ought to possess it, to the pockets of those who have no right to it whatever—are clamouring for a fresh reduction of the standard! And it is, indeed, unquestionably true, as we have already had occasion to show, that after a currency has been for a considerable period depreciated, equal injustice is done by again raising its value, as was done by first depressing it. There is good reason, however, to doubt, whether the depreciation from 1809 to 1815 (for the depreciation of 2½ per cent. during the seven preceding years is too inconsiderable to be taken into account) extended over a sufficiently lengthened period to have warranted the Legislature in departing from the old standard. But, without giving any opinion on this point, which is confessedly one of considerable difficulty, it is sufficient to remark, that the value of the currency was raised, independently altogether of the interference of Government. The destruction of country bank paper, occasioned by the renewed intercourse with the continent, and the consequent introduction of cheap foreign corn, had raised the value of paper currency, in October 1816, to within 1½ per cent. of par. Now, as the act 59th Geo. III. was not passed until 1819, and as the currency had not been depreciated in the interim, we frankly confess our inability to discover the grounds on which it is affirmed to have been the cause of that rise in the value of money which took place three years before it was in existence! The proceedings in 1819 did not really add 3 per cent. to the value of bank paper, nor were they intended to raise it. Their great object was to shut the door against a new depreciation, and to prevent the value of paper, which had, for three years, been nearly on a level with gold, from being again degraded. By maintaining the old standard, or, which is the same thing, by maintaining the currency at a value nearly corresponding to that to which it had attained in 1816, 1817, and 1818, Parliament certainly gave permanence to the serious injury which the rise in the value of money had occasioned to the debtors in all the contracts entered into between 1810 and 1815; but if, instead of maintaining this old standard, they had raised the mint price of bullion to its market

price in 1814, they would have done an equal injury to the far more numerous body of creditors, in all the contracts entered into previously to 1810, and in the three years subsequent to autumn 1816.

In these circumstances, it was impossible to adopt any measure capable of giving general satisfaction to those whose interests were so widely different; and against which many plausible, and even forcible objections, might not have been stated. We are firmly persuaded, however, that the Legislature followed that course which was, on the whole, the wisest and most advantageous. It must be remembered, that much of that inconvenience and distress, which must always result from every sudden rise in the value of money, had been got over in 1817 and 1818. The rents of such farms as had been let during the depreciation had been very generally reduced, a vast number of annuity bonds had been cancelled, and prices and wages had begun to accommodate themselves to the new scale of value. The adoption of Mr Peel's bill only gave stability to arrangements which had been brought about by the natural course of events; and, by fixing the standard at its former limit, secured us, as long at least as we have good sense and honesty to maintain it inviolate, against the risk of future derangement and fluctuation.

But, even if it could be shown that the act 59th Geo. III. was inexpedient at the time when it was passed, that would add but little real strength to the plea of those who are now contending for its repeal. Every objection which it was possible to make to the degradation of the standard in 1819, must apply with tenfold force to the scheme for degrading it in 1821; while, on the other hand, all the arguments that could have been urged in favour of the measure at the former period must now be proportionably weakened. Two years more have been afforded for the completion of those arrangements which had been begun in 1817 and 1818; and an immense variety of new contracts and engagements have been entered into, exclusively with reference to the present value of money. A fresh reduction of the standard would vitiate all these engagements, and plunge us of new into that confusion and embarrassment from which we have now nearly escaped. We should again witness the most pernicious subversion of private fortunes. Debtors would be again enriched at the expense of their creditors; the ignorant and unwary would again become the prey of the cunning and the crafty; and capitalists would be eager to transfer their stock from a country where it would be impossible to lend it, except at the risk of getting it repaid in a depreciated currency. "Whatever, therefore," to avail ourselves of the just and forcible expressions of Mr Harris, "may be the fate of future times, and whatever the exigency of affairs may require, it is to be hoped that that most awkward, clandestine, and most direful method, of cancelling debts by debasing the standard of money, will be the last that shall be thought of."—(On Money and Coins, Part II. p. 108.)

* At the period when Mr Peel's bill was passed, bullion was at L. 4 an ounce; consequently, the depreciation was only L. 2, 13s. 2d. per cent.

No. I. ENGLISH MONEY.—Account of the English Silver and Gold Coins; showing their Value; the Seigniorage or Profit upon the Coinage, and the Price paid to the Public by the Mint, for the Pound Troy of Standard Gold and Silver, from the Conquest to the year 1816. (This and the next Table, No. II., are taken from Part II. of Essays on Money, Exchanges, and Political Economy, by Henry James.)

* 1527—Henry VIII.] The Saxon or Tower-pound was used at the mint up to this time, when the pound Troy was substituted in its stead. The Tower-pound was but 11 oz. 5 dwts. Troy; so that, from the Conquest to the 28th of Edward I., twenty shillings in tale were exactly a pound in weight.

† 1666—18 Charles II.] The seigniorage on the coinage was at this time given up, and the gold bullion brought to the mint has ever since been coined free of expence. A seigniorage of 6½ per cent. was imposed on the coinage of silver by 56th Geo. III.

No. II. ENGLISH MONEY.—ACCOUNT of the Quantity of Fine Silver coined into 20s. or the Pound Sterling; the Quantity of Standard Silver, of 11 oz. 2 dwts. fine, and 18 dwts. alloy, contained in 20s. or the Pound Sterling, and the Quantity of Standard Silver which was delivered to the Mint, by the Public, for 20s. of Silver Money, in the different Reigns, from the time of Edward I. to the Reign of George III.—A similar Account with respect to Gold.—And an Account of the proportionate Value of Fine Gold to Fine Silver, according to the number of Grains contained in the Coins; and the proportionate Value of Fine Gold to Fine Silver, according to the Price paid by the Mint to the Public.—Calculated in Grains, and 1000 Parts, Troy-weight.

* 1551—5 Edward VI.] The coinage of debased silver money in the 5th year of Edward VI. of 3 oz. fine, ought more properly to be considered as Tokens. The sum of L.120,000 only was so coined. (See James's Essays, Chap. IV.)

† 1816—56 George III.] The Government having taken the coinage of silver into its own hands, there is at present no fixed price paid to the public, by the mint, for standard silver. And supposing the Government to continue the present mint regulations, and to keep gold at 77s. 10½d. an ounce, as the price of silver varies, the relative value of gold to silver will vary in like proportion.

No. III. SCOTS MONEY.—ACCOUNT of the Number of Pounds, Shillings, and Pennies Scots, which have been coined out of One Pound Weight of Silver, at different times; with the degree of Purity of such Silver, or its Fineness, from the year 1107 to the year 1601. (From Cardonnel's Numismata Scotiæ, p. 24.)

No. IV. SCOTS MONEY.—ACCOUNT of the Number of Pounds, Shillings, and Pennies Scots, which have been coined out of One Pound Weight of Gold; with the degree of their Purity, and the Proportion that the Gold bore to the Silver. (Cardonnel, p. 25.)

No. V. ENGLISH PAPER MONEY.—ACCOUNT of the average Market Price of Bullion in every year, from 1800 to 1821 (taken from Papers laid before the House of Commons), of the average Value per cent. of the Paper Currency, estimated from the Market Price of Gold for the same period, and of the average Depreciation of the Paper Currency.

Tables. No. VI. GOLD COINS OF DIFFERENT COUNTRIES.—A TABLE containing the Assays, Weights, and Values of the principal GOLD COINS of all Countries, computed according to the Mint Price of Gold in England, and from Assays made both at London and Paris, which have been found to verify each other. Tables.

The Publishers of this Work have purchased, at a very considerable expence, the right to publish this Table from the Proprietors of the Second Edition of Dr Kelly's Cambist, where it originally appeared.

* The London Assays in this Table have been made by Robert Bingley, Esq. F. R. S. the King's Assay Master of the Mint, and those at Paris by Pierre Frederic Bonneville, Essayeur du Commerce, as published in his elaborate work on the coins of all nations.

Specimens of all the foreign coins brought to London for commercial purposes have been supplied for this Table from the Bullion-Office, Bank of England, by order of the Bank Directors, and have been selected by John Humble, Esq., the chief of that office, who also examined the tables in their progress. It may likewise be added, that the Mint Reports of these commercial coins are chiefly from average assays; and that all the computations have been carefully verified by different calculators. (Note by Dr Kelly, to second edition of the Cambist, published in 1821.)

NO. VII. SILVER COINS OF DIFFERENT COUNTRIES.—A TABLE containing the Assays, Weights, and Values of the principal SILVER COINS of all Countries, computed at the rate of 5s. 2d. per Ounce Standard, from Assays made both at the London and Paris Mints.

* This value of the American Eagle is taken from average assays of the coins of twelve years.

No. VIII.—ACCOUNT of the Relative Value of Gold and Silver in the principal Trading Places of the World, computed from the proportional Quantity of Pure Metal, in their principal Coins, and the legal or current Price of those Coins respectively. (Given in by Dr Kelly to the Committee of the House of Lords, appointed, 1819, to inquire into the Expediency of the Bank's resuming Cash Payments.)

MONMOUTHSHIRE, a county of England, which, before the year 1535, was a portion of the principality of Wales. It is now no longer under the jurisdiction of the Welsh Judges, but it still is so far considered as not an English county, that the causes which are removed for trial from the principality to England are tried within it. The greater part of the inhabitants still speak one of the three dialects of the Welsh language; in some of the churches the worship is exclusively conducted in that tongue, in many it is celebrated in Welsh and English alternately, and only in the towns in English alone.

Monmouthshire is bounded on the north by Herefordshire, on the east by Gloucestershire, on the south by the river Severn, and on the west by the Welsh counties of Brecon and Glamorgan. Its greatest length is 33 miles, its greatest breadth 26, and its circumference 110 miles. The square extent is 516 miles, or 330,240 acres.

The face of the country is highly diversified, exhibiting every gradation from lofty and bleak mountains, to highly verdant and beautiful sequestered valleys. Some of the mountains, as the Sugar-loaf, of 1850 feet, the Blorege of 1720, and the Skyrid-vawr of 1498 feet, with some others, display their summits for many months covered with snow, whilst their sides, near the bottom, are cultivated with the different species of grain, and terminate in meadows of the most luxuriant fertility. Mr Fox, in his Agricultural Survey of this county, divides it into three

districts. The first, comprising the southern division, consists in part of large tracts of moor or marsh land, exhibiting in some parts of it a great depth of unctuous loamy soil, and in others a vast body of black peaty earth. In other parts of this district the soil is of a light loamy consistence, highly favourable to the growth of various trees. Another portion is a mixture of clay and loam, forming fertile meadows, and above them an excellent red soil, in which turnips, potatoes, and grain, liberally repay the cultivator. The second division comprehends the eastern part of the county, extending to a considerable, but varying distance on both sides the river Usk. The soil is of a faint red colour, highly grateful, and being carefully cultivated, the whole displays the appearance of great fertility. The third division comprises the western and most mountainous parts of the county. The soil on the hills is generally of a thin peaty nature, covering strata of stone, underneath which are mines of coal and iron ore, of most unbounded productiveness. The low lands in this division are chiefly in the state of meadow and pasture, whilst the middle lands are occupied partly by pasture and partly by arable husbandry.

The rivers of this county have been generally celebrated for the picturesque scenery which their banks display, and which, added to the many remains of antiquity that are to be seen near them, invite the visits of numerous parties in the summer months, and afford the highest gratification to travellers of taste. The most eminent of these rivers, in beauty as well as