racter, independently of convertibility, between bank notes and a " Government compulsory paper," which he admits, however, that not only "the professed adherents of the currency principle, but a large proportion of the public overlook." This difference of character he states to arise from a difference in the manner and purpose of the issue. "When a Government issues paper money, inconvertible and compulsorily current, it is usually in payment for

"1. The personal expenditure of the Sovereign. "2. Public Works and Buildings.

"3. Salaries of Civil Servants.

"4. Maintenance of Naval and Military Establishments."

"It is quite clear," Mr. Tooke goes on to say, "that paper created and so paid away by the Government, not being returnable to the issuer, will constitute a fresh source of demand, and must be forced into and permeate all the channels of circulation. Accordingly, every fresh issue beyond the point at which former issues had settled in a certain rise of prices and wages, and a fall of the exchanges is soon followed by a further rise of commodities and wages, and a further fall of the exchanges, the depreciation being in the ratio of the forcibly increased amount of the issues."

I profess myself to partake of the blindness of the public in this matter, and to be wholly unable to perceive any other difference of character be

tween the two issues of paper money here described, than the point of convertibility, (to which I shall presently advert,) or in the phenomena which they are respectively capable of exhibiting. I can not understand why paper money, issued to defray the expenditure of the Sovereign, should be different in its effect when issued, from paper money paid away for the expenditure of private individualswhy a 51. note, issued to the builder of a barrack, should take a different course from a 51. note paid to the builder of a shop or warehouse-why notes, employed to defray the salaries of Government clerks, or the pay of soldiers and sailors, should be more disposed to "permeate all the channels of circulation," than if used to pay clerks in merchants counting-houses or workmen in a factory? I myself am totally at a loss to conceive of any one circumstance or quality, which might be predicated of the one, which might not with equal truth be predicated of the other.

The one sole difference is convertibility, a most important one no doubt; but is Mr. Tooke really prepared to affirm that there can be no excessive issue of paper money in any country in which legal convertibility exists? It would greatly surprise me if such were the deliberate opinion of so intelligent an observer of events. No one, I should have thought, more than that gentleman, would be aware, that, under certain conditions of the com

mercial and manufacturing interests of the country, a long interval may elapse before overtrading and prices unduly raised above the level of other countries, produce their natural corrective of increased imports, diminished exports, falling exchanges, with a consequent efflux of specie, and a collapse of those extended issues of paper money which had been, alternately, cause and effect of the previous excitement. Can Mr. Tooke really be persuaded that, during such a period, there would be no excessive issue of paper?-no difference of amount of the whole circulating medium from what would have existed, if, during such a period, the sole issue of notes had been in exchange for specie? The very terms of his own proposition imply that, at least an increase in the amount of the circulating medium follows on an advance of prices. Could such an increase occur, if notes were only issued in exchange for specie or bullion? On the contrary, the effect of a rise in the prices of commodities would be at once to check that influx of the precious metals into the country, by which alone, on the supposition, an increase of paper currency could be occasioned. Need it be added how salutary a check would thus, at the very outset, be given to the spirit of overtrading, or how different would be the condition of the country, under such a system, from its actual condition, when falling exchanges and the efflux of

bullion warn us too late of the dangers we have incurred, and when the reaction, by being delayed, operates with tenfold severity.

Of the foregoing propositions, indisputably true as it appears to me in theory,-the history of this country for the last twenty years endless illustrations, whether the

would furnish

conduct of the

Bank of England, or of the country banks be looked to; but to afford such illustrations would distend this treatise to a volume. The evidence, moreover, on the subject is familiar to all who take an interest in such questions. The main facts indeed on which our judgment must be formed are not disputed-neither the country bankers, nor the Directors of the Bank of England-contending that the variations in the amount of their issues respectively, have conformed to what would have been the fluctuations in amount of a purely metallic currency, the former justifying the divergence. by the necessity of affording accommodation to their customers-the latter-by the "special circumstances" which have so frequently induced them to depart from their own rule. I prefer in proof of the proposition I seek to establish, namely, that the issue of notes can be safely entrusted to the State alone, to refer briefly to the monetary history of America, both because the events of that history may be less familiar to my readers, and because, for reasons hereafter to be noticed, they afford a far more striking illustration of the working of a

D

system of Paper Money than the analogous incidents of our own history-so striking, indeed, that if I might judge of their effect on others by the impression they have produced on my own mind, I should entertain not the least doubt or anxiety as to the conclusion at which the public would arrive on the important questions about to be submitted to the consideration of the Legislature.