the question in England whether she has not "prospered rather in spite of than by reason of the Gold Standard," it is interesting to note that the great men who so sagely guided the policy of their country in es tablishing in permanence the convertibility of England's Paper Money had really never, in their own minds, clearly formulated the question of convertibility into Silver or convertibility into Silver and Gold as compared with convertibility into Gold alone.

Now, it is not surprising that this omission to pass upon the merits of the question, should have been the symptom or result of an entire lapse of knowledge of the relative position of the two metals, the nature of the demand for them, the causation of their value.

If it were assumed that the two metals were to all intents and purposes one, so that they formed, in fact, one great body of metal, white and yellow, of which each nation drew its quota in whichever color or mixture of colors it preferred, and that, in the main, either metal was a complete substitute for the other, it would be very easy and perfectly natural to pass by unobserved the problems heretofore examined.

The facts to which I have alluded, connected with the novelty of England's situation and of Lord Liverpool's theory, themselves suggest that an unconscious assumption of this kind would have been perfectly natural, but the following observations show that the lapse of knowledge went so far as to involve unconsciousness of the actual status of Silver in English law.

As is apparent from the preceding extracts from the English Statutes, Silver Coin was Legal Tender in 1810 for any sum whatsoever, although for a payment over £25 the payee could demand Coin enough to make up the legal weight of Silver pounds sterling. He would have had to do the same thing in Amsterdam.* This rule was a recurrence to the compensatio ad pensam which in older times had been in use, and was in fact the counterpart for Silver of the legislation of 1774, which restored the Gold Coins to their standard weight. No advocate of the Bi-metallic Policy to-day desires to see any other principle than that of honest weight regulate the Legal Tender of Silver Coin. (See pages 76, 130.) In the absence of efficient measures to maintain at standard weight the Silver Coin actually in circulation, the law was a legitimate one. The Legal Tender by tale of under-weight coins is an abomination. A legislator of to-day would not permit the condition of things to continue under which such a law became necessary, but the aim which he would have in view would be identical with that which animated the law making the Silver Coins Legal Tender by weight. The American legislator of 1792 (see page 103) met the difficulty in another way. He provided that Coins below full weight should be Legal Tender only in proportion

*The Dutch gross gelt, pieces of 3 guilders, 30 stivers, and 20 stivers, were legally subject, when offered in payment for more than 600 florins, to be bagged and weighed. A certain tolerance in weight was allowed, and if the bag was below this weight it was not Legal Tender. (See Steuart's Works, vol. III, ed. 1805, chap. viii. )—H.

to their weight; but the more effective, although more expensive, mode is that adopted for Gold by the British legislator in providing that Coins. worn below a certain limit should be cut up and cease to be Legal Tender. This limitation of Legal Tender by tale had, however, lasted only from 1774 to 1783, and as there had been no improvement, only a deterioration, of the condition of the Coins between 1774 and 1783, it is probable that the limitation was not a matter of much practical importance, because the amount of Silver in circulation was actually less than trade required. This expiration of the statute in 1783, is, by the way, not merely a matter to be ascertained from the statute books but is mentioned by Lord Liverpool on page 129 of his Treatise. Subsequently, and after the restriction of cash payments had taken place, when England was entering upon an experience of a paper standard, worth, in many cases, far less than even worn Silver Coins, this law was revived in connection with the prohibition of Silver Coinage.

What proportion of these facts were known to the authors of the Bullion Report? They say (see page366) that ever since 1774 Silver Coin had not been Legal Tender above £25.

How was it possible that the facts could have been ignored by such men? The following obvious explanation occurs to me: There were no full-weight Silver Coins in England in 1798, when Silver was coming to the mint, in spite of what the Bullion Report, ignoring that England had Gold, because Gold was cheaper than Silver, calls merely "the usage and commercial habits of the people." In 1798 the manufacture of fullweight Silver Coins had been prohibited. The authors of the Report had, therefore, never seen Silver Coins with which, under the law, one could pay a debt above £25 without losing a percentage on the excess so paid; for, by tale, twenty shillings of George II, worn to of their original weight, were a pound sterling; but when they were paid by weight one must put twenty-five of them into the balance in order with them to equal the weight of that Silver pound sterling which remained the monetary unit of Great Britain. But had they been freshly coined or of full weight, twenty shillings would have made a pound sterling for a payment of £25,000 as well as for £25.

Not having had actual experience of this fact, the authors of the Report ignored it, and spoke of Silver without being aware that Silver was legally, and, but for this prohibition of Coinage which they do not mention, might have been, in practice, as completely Money in England as it was in the Netherlands.

Again, the act of Parliament which ordained in perpetuity that any alien or stranger, native or foreigner, who should bring Silver to the mint should receive pounds sterling without charge and without delay, had never been formally repealed. It was nominally in force in 1810. It was an act of some importance at a time when every one was of opinion that Gold had risen greatly in value, for if Gold had risen greatly in value, it must, under the English law, transfer its function of

"Standard" to the metal that stood steady. And yet the Bullion Report does not mention it.

But, although not formally repealed, this law of Free and Gratuitous Coinage of Silver was in fact abrogated by the law of 1798-'99, which for bade in perpetuity the coinage of Silver in England. And yet the Bullion Report shows no knowledge of this fact. We hear much of the mint price of Standard Silver, as we do of the mint price of Standard Gold, and Mr. Horner, in one of his questions, says: "You know that at the time we are coining Gold at £3 17s. 1043d. per ounce we are coining Silver at 5s. 6d. per ounce!" (Compare section III, page 368.)

How to account for this triple lapse of knowledge?

Is it merely one of those anomalies which, at least in other departments of thought, English thinkers, manly in their self-examination, are not unwont to discover in the theories and practice of their countrymen?-H.

REPORT FROM THE SELECT COMMITTEE ON THE HIGH PRICE OF GOLD BULLION.

[Extracts.]

Ordered, by the House of Commons, to be printed, 8 June, 1810. THE SELECT COMMITTEE appointed to enquire into the cause of the High Price of Gold Bullion, and to take into consideration the state of the Circulating Medium, and of the Exchanges between Great Britain and Foreign Parts;-and to report the same, with their Observations thereupon, from time to time, to the House;-Have, pursuant to the Orders of the House, examined the matters to them referred; and have agreed to the following REPORT:

Your Committee proceeded, in the first instance, to ascertain what the price of gold bullion had been, as well as the rates of the foreign exchanges, for some time past; particularly during the last year.

Your Committee have found that the price of gold bullion, which, by the regulations of His Majesty's Mint, is 31. 178. 104d. per ounce of standard fineness, was, during the years 1806, 1807, and 1808, as high as 4. in the market. Towards the end of 1808 it began to advance very rapidly, and continued very high during the whole year 1809; the market price of standard gold in bars fluctuating from 4l. 98. to 4l. 128. per oz. The market price at 47. 10s. is about 15 per cent. above the Mint price.

Your Committee have found, that during the three first months of the present year, the price of standard gold in bars remained nearly at the same price as during last year; viz., from 47. 10s. to 4l. 12s. per oz. In the course of the months of March and April, the price of standard gold is quoted but once in Wettenhall's tables; viz., on the 6th of April last, at 41. 68. which is rather more than 10 per cent. above the Mint price. The last quotations of the price of gold, which have been given

in those tables, are upon the 18th and 22d of May, when Portugal gold in coin is quoted at 4l. 118. per oz.: Portugal gold coin is about the same fineness as our standard. It is stated in the same tables that in the month of March last the price of new doubloons rose from 41. 78. to 41. 98. per oz. Spanish gold is from 43 to 4 grains better than standard, making about 4s. per oz. difference in value.

It appears by the evidence, that the price of foreign gold coin is generally higher than that of bar gold, on account of the former finding a more ready vent in foreign markets. The difference between Spanish and Portugal gold in coin and gold in bars, has of late been about 28. per ounce. Your Committee have also to state, that there is said to be at present a difference of between 38. and 48. per ounce between the price of bar gold which may be sworn off for exportation as being foreign gold, and the price of such bar gold as the dealer will not venture to swear off: while the former was about 4l. 10s. in the market, the latter is said to have been about 41. 68. On account of these extrinsic differences, occasioned either by the expense of coinage, or by the obstructions of law, the price of standard gold in bars, such as may be exported, is that which it is most material to keep generally in view through the present inquiry.

It appeared to your Committee, that it might be of use, in judging of the cause of this high price of gold bullion, to be informed also of the prices of silver during the same period. The price of standard silver in his Majesty's Mint is 5s. 2d. per ounce; at this standard price, the value of a Spanish dollar is 48. 4d. or, which comes to the same thing, Spanish dollars are, at that standard price, worth 48. 114d. per ounce. It is stated in Wettenhall's tables that throughout the year 1809, the price of new dollars fluctuated from 5s. 5d. to 58. 7d. per ounce, or from 10 to 13 per cent. above the Mint price of standard silver. In the course of the last month, new dollars have been quoted as high as 58. Sd. per ounce, or more than 15 per cent. above the Mint price.

[Page 4.]

It will be found by the evidence, that the high price of gold is ascribed, by most of the witnesses, entirely to an alleged scarcity of that article, arising out of an unusual demand for it upon the continent of Europe. This unusual demand for gold upon the continent is described by some of them as being chiefly for the use of the French armies, though increased also by that state of alarm, and failure of confidence, which leads to the practice of hoarding.

Your Committee are of opinion, that, in the sound and natural state of the British currency, the foundation of which is gold, no increased demand for gold from other parts of the world, however great, or from whatever causes arising, can have the effect of producing here, for a considerable period of time, a material rise in the market price of gold. But before they proceed to explain the grounds of that general opinion,

they wish to state some other reasons which alone would have led them to doubt whether in point of fact, such a demand for gold, as is alleged, has operated in the manner supposed.

[Page 6.]

Here your Committee must observe, that both at Hamburgh and Amsterdam, where the measure of value is not gold as in this country, but silver, an unusual demand for gold would affect its money price, that is, its price in silver; and that as it does not appear that there has been any considerable rise in the price of gold, as valued in silver, at those places in the last year, the inference is, that there was not any consid erable increase in the demand for gold. That permanent rise in the market price of gold above its Mint price, which appears by Mr. Greffulhe's paper to have taken place for several years both at Hamburgh and Amsterdam, may in some degree be ascribed, as your Committee conceive, to an alteration which has taken place in the relative value of the two precious metals all over the world; concerning which, much curious and satisfactory evidence will be found in the Appendix, particularly in the documents laid before your Committee by Mr. Allen. From the same cause, a fall in the relative price of silver appears to have taken place in this country for some time before the increase of our paper currency began to operate. Silver having fallen in relative value to gold throughout the world, gold has appeared to rise in price in those markets where silver is the fixed measure, and silver has appeared to fall in those where gold is the fixed measure.

[Page 10.]

In this country, gold is itself the measure of all exchangeable value, the scale to which all money prices are referred. It is so, not only by the usage and commercial habits of the country,* but likewise by operation of law, ever since the act of the 14th of his present Majesty [finally rendered perpetual by an act of the 39th year of the reign] disallowed a legal tender in silver coin beyond the sum of 251.

[Page 11.]

Your Committee think it proper to state still more specifically, what appear to them to be the principles which govern the relative prices of gold in bullion and gold in coin, as well as of paper circulating in its place and exchangeable for it. They cannot introduce this subject more properly, than by adverting, to those simple principles and regulations, on which a coinage issuing from the King's mint is founded.

The object is, to secure to the people a standard of a determinate value, by affixing a stamp, under the royal authority, to pieces of gold, which are thus certified to be of a given weight and fineness. Gold in bullion is the standard to which the legislature has intended that the

*See page 323.