bullion as a commercial commodity, but also is liable to be operated on by the financial regulations of other states, so as to compromise the prosperity of our national commerce and manufactures, and with them the wealth and power of the empire.*

If this should be considered as made perfectly clear by the foregoing, there would seem to be no further reason necessary to be adduced for changing such a state of things; for, if our national prosperity is to continue subject to the influence of circumstances over which we have no control, or liable to the regulations of other states to whom we cannot dictate, it is plain we are then no longer an independent nation.

28. But besides these causes of derangement from the contraction of our circulating medium by the stoppage of discount, our monetary system is liable to be disturbed by its undue extension: for the Bank Directors, (when the

* This cannot be said to be any imaginary cause of apprehension; for suppose during the American panic the government of France had wished to increase our embarrassments when the Bank of England was forced to apply to the capitalists of Paris for assistance, or suppose during the late failure of the wheat crops the Emperor of Russia had been hostilely inclined, and for the purpose of increasing our financial difficulties had exported to Great Britain the large supplies of wheat he is said to have constantly in store, and was to call on the Bank of England for payment in specie, who will be bold enough to put limits to the embarrassments which might have been the consequence? Nay, the junction of two or three great banking houses might have brought the Bank of England at that period into such straits, and given such a blow to commercial credit, as would have required perhaps years to restore, and might have most materially affected both the power and resources of the state, and paralysed our means of either attack or defence.

expedient of contracting their issues already alluded to has removed the danger of a drain on their stock of specie,) have a direct interest in extending their circulation for the benefit of their constituency: and thus the circulating medium of the country, which ought always to be permanently maintained to such an extent as its exchangeable commodities and commercial transactions (No. 9,) required, is diminished or increased, according to circumstances which have no connection therewith, and which often act in direct opposition thereto-contracting the currency at a time when commerce and manufactures are in the highest degree of activity and extension, and again increasing it at a time when that very contraction has reduced them to the lowest state of depression.

29. As it is evident, however, that, if Bank notes are to be the representative of any metallic basis, they must represent some given quantity thereof, and of a given purity, it does not seem possible to avoid settling the said quantity by law; and, therefore, it would appear the disadvantages which have been stated are inherent in the employment of any mixed currency, as it must of necessity be perpetually liable to fluctuations from the causes alluded to, (Nos. 26 and 27,) from which fluctuations a perfect circulating medium ought evidently to be free; and it is therefore submitted, that whilst this mixed currency does exist, it is impossible to rely upon that settled state of our monetary system which the prosperity of our commerce and manufactures, and, of course, the good of the empire requires.

30. It will be readily admitted that Great Britain, hav

C

ing no mines of the precious metals within her territory, could never for any length of time supply such a quantity thereof to other countries as would form any material item in the amount of exports, so as in itself to make any great . alteration in the balance of imports and exports, upon which the exchanges depend.

It would, therefore, appear that the exchanges are not and cannot be regulated by the actual export or import of specie, but that the influence over the course of the exchanges, under the present state of things, is placed in the contraction of the currency by the Bank lessening their discount, which they are forced to when an export of specie takes place, in order to be able to provide for the payment of their own notes.

The causes which influence the exchanges are thus explained by me in "The Claims of the Landed Interests," from which I am induced to quote the following passage from the chapter on the Monetary System, page 104, in corroboration of what has been now advanced :

"The reason of the unfavourable exchange, for instance, with Hambro', or any other place, is this-That there is not enough of British property there to furnish funds for a sufficient number of bills to be drawn as the demand requires-so that a bill for any certain amount of their currency, which, in ordinary cases, could be bought for £100 in London, costs £102, £105, or £110, as the case may be. But it will be readily conceded that the scarcity of British goods there must naturally have arisen from their leaving no profit to the exporter; for otherwise, if they could have been exported to advantage, there would always be plenty of goods to be sent, and plenty of merchants to send them. But the unfavorable exchange alters

the case. The exporter who had no profit, when he only got £100 for his bill, may have an excellent profit when he is able to sell it for £110. Thus more goods are sentmore bills come into the market-and the equilibrium is restored, or perhaps the scale is turned the other way, by the numerous shipments which have taken place;" and the bill for the identical same sum of foreign currency falling in value to £95, or £90-(specie, or failing it, commercial goods) will be imported as being the best remittance, until by degrees that equalization is arrived at which finally is sure to take place if trade is left to itself.

If a metallic basis was laid aside, then a difference of 5 to 10 per cent.* in the foreign exchanges could make no difference whatever in the accommodation afforded by the Banks to commercial transactions, and in this respect all would go on as usual; but if this took place under a metallic basis, the profit to be derived by transmitting bullion would forthwith drain the specie from the Bank of England-put a stop to discount, and throw the entire commercial and manufacturing interests into distress and bankruptcy.

31. Specie or bullion is first resorted to as a remittance

I merely say 5 to 10 per cent., in order to give the objection combated every possible extent; but it must always be kept in mind that, although specie may be no longer used as currency, it does not follow that bullion cannot be had. We do not now export specie to buy the bullion we now have; we might as well export wheat in bags, in order to increase our stock by bringing it back in bulk. We get our bullion by the export of goods, and, unless this export is to be destroyed, there is nothing else can prevent us getting bullion whenever there may be a demand for it; in proof of which see Bullion Report of 1810.

owing to the slight expense attending its transmission, which occasions a profit to arise on the export upon a very trifling alteration in the rates of exchange. But supposing there was no specie or bullion to be had, the exchanges would be regulated with equal certainty by the imports and exports of the country, as has been shewn by the foregoing extract referring to the case of the exporting merchant; to which may be added an equally strong argument, by taking into account the case of the importer, who, when he comes to buy bills to remit in payment of his investments, if he is obliged to pay £110 for the same amount of foreign currency which he used to obtain for £100, of course the alteration in the exchange takes 10 per cent. off his profits, or perhaps renders him a loser by the importation, and in either case he will be proportionably discouraged from making further importations until circumstances change. Thus the same alteration in exchange, which, by encouraging export, tends to make bills plenty-tends likewise, by discouraging import, to cause less demand for them; and thus both effects operate together to restore the rate of exchange to its natural level.

32. But a drain on the Bank for specie, which has been alluded to, may arise, not from any general balance of trade, but from some temporary commercial cause which has turned the balance of imports and exports against us for the time being, as in the case of large imports of grain, &c. owing to a failure in our crops,-or it may arise from the financial operations of other countries, as in the late case of the United States,-or in loans made to foreign Governments, or from domestic alarm,-or it may arise from