CHAPTER V.

Negative advantage to be obtained by being no longer liable to the losses which a denial of discount

must always occasion

Positive advantage to be derived from the issue of

inconvertible paper

...

Conclusion addressed to the reader

PAGE

96 to 99

....

100 to 103 104 to 106

APPENDIX.

I.

Review of the Bullion Report of 1810, shewing the numerous instances in which the principles advocated in the foregoing are confirmed thereby.. 107 to 110 Reasons for thinking the Bullion Report in error

Remarks on the Bill now before Parliament for renewing the Bank of England Charter, and the opinions expressed in the debates thereon in reference to the principles advocated in the foregoing

114 to 129

III.

Form of daily and weekly return of the transactions of the commissioners of issue for the information of the public...

130

THE EVILS INSEPARABLE

FROM A

MIXED CURRENCY,

ETC. ETC.

Definitions of the following terms according to the sense in which they are used in the following treatise.

I. CAPITAL is that which enables its possessor to command the labour or the produce of the labour of others. Whatever possesses this power is Capital, no matter how it may be invested; whether lodged in the Bank under the name of a deposit, or invested in the funds, Exchequerbills, bills of exchange, bank-notes, specie, or fixed or floating property, or in short in any way whatever; whilst it continues to command the labour or the produce of the labour of others, it continues to be Capital, according to this definition.*

II. Currency is that which is currently received as a measure of value or used as a medium of exchange, whe

Under this definition also it appears that a cash credit with a banker or any other credit which may be made available to command the labour or the produce of the labour of others is for the time being capital. This is evident, for it enables the possessor to make himself the proprietor of any kind of valuable commodity to the full amount it extends to.

ther it may be so constituted by legal enactment, general convention, or particular agreement.

Thus specie or Bank of England notes are currency, being a legal tender by enactment, whilst other banknotes, which are convertible into specie or Bank of England notes, are currency by general convention, and bank cheques, bills of exchange, or notes of hand, &c. &c. are eurrency whenever they become a medium of exchange by particular agreement, being, when so used, substitutes for Bank of England notes, in like manner as these are substitutes for specie, the time of their becoming payable being no impediment to their efficiency as a medium of exchange, and of no importance, except to the parties immediately concerned, by whom that point must have been satisfactorily adjusted before the exchange was agreed upon.*

If these definitions be correct, then it appears evident that one and the same thing may be changed from capital into currency, according to circumstances; for example-we see that capital may be invested in a deposit, but may become currency, by being drawn out by cheques; and the same may be said of Exchequer Bills, or Bills of Exchange, being, in fact, only another name for Bank notes or specie, with the difference of being payable at a certain specified period.

But if it is true, according to the foregoing, that what is capital may become currency by being used as a medium of exchange, it is equally true that currency may also become capital when it is not so used, because it will still possess that which constitutes capital, viz., the power of commanding the labour or the produce of the labour of others. Thus, any person having more specie or Bank notes than he has occasion to use, this surplus becomes equally a deposit of capital, whether it is retained in his own custody or placed in the custody of a banker, agreeing equally with the definition of capital in either case.

The truth of this may be rendered more intelligible in the case of

III.-Mixed currency consists of specie and paper convertible into specie on demand.

IV.-National inconvertible paper currency may be said to be a paper coin, upon which is stamped the amount of currency it is equivalent to, for which amount it is a legal tender; in like manner as the value of any metallic coin is denoted by the stamp it bears.

V.-Circulating medium is the active portion of the currency into which the other portions thereof last enumerated are convertible, and forms the basis upon which they rest, their value mainly depending upon the facility and practicability of that conversion being carried into effect. In a mixed currency the circulating medium may be said. to consist of such specie or notes as are constituted a legal tender, and of such paper as may be immediately convertible thereinto.

VI.-Balance of trade is said to be favourable when the exports of any country are greater than the imports, leaving a balance to be received in bullion. It is said to be unfavourable when the contrary takes place, and a balance has to be paid in bullion. In the former case, the trade is commonly said to be beneficial, because specie is received, and in the latter case it is said to be a losing trade, because specie is paid; these modes of expression seem to have been derived from the now long exploded

bullion. It is capital so long as it continues so invested, but it becomes currency the moment it is used as coin; and it becomes capital again until required for use, whether it is placed in the Bank or the strong box, just as much as if it were again melted into bullion.

notion that the precious metals formed the real wealth of a country. In reality, however, every trade must be mutually beneficial, or it will not be carried on, let the balance be paid or received in specie or in any other way, for the merchant engaged in the trade must be either on one side or the other the loser in the first instance before the country he belongs to can suffer, and he will not long persist in carrying on any trade that is not advantageous.

VII.-Exchange is said to be favourable when the rate is such as to promote the importation of bullion.

VIII.-Exchange is said to be unfavourable when the rate is such as to promote the exportation of bullion.

IX.-Exchange is said to be at par when the rate corresponds with the intrinsic value of the respective currencies of any two countries, and is such, therefore, as neither to encourage an import or export of bullion to or from either one or the other.

X.-Standard as applied to coin is used to express that degree of purity and weight which by law the coins of any country ought to possess, from a comparison of which, with what is contained in the coins of other countries, a relative value is fixed on each, and a par of exchange between the said countries is calculated.

XI.-Value, as applied to commodities, is that power which any article confers upon its owner of commanding in exchange for it the labour or the produce of the labour of others. It appears, therefore, according to this defini