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the drain to the United States, that I think it unnecessary to add any thing further to explain it.

Had this description been given after the drain to America had produced its full effects, it could not have more accurately painted them, and I have been careful to shew, in what has been there stated, that the Directors were necessitated, for their own safety, to adopt those measures which were so ruinous to the community, merely because they were obliged to retain specie for the payment of their own notes in circulation.*

Taking, therefore, the foregoing extract as a correct statement of the effects of the late drain on the Bank of England for specie under the mixed currency, which drain Mr. Palmer admits to have arisen from the transactions in America, I now come to answer the question how those transactions would have affected Great Britain, if she had been possessed of a national paper circulation and have parted with all specie currency.

It is evident that the transactions in America could not

Before the capture of Buenos Ayres by General Beresford and Sir H. Popham, it was the practice with the South American merchants to fix the prices of all their imported goods at the beginning of each year,to which prices they bound themselves to adhere throughout the following twelve months. Such a practice appears ridiculous enough to our ideas of commercial transactions. But can it be said in any degree to equal the absurdity of Great Britain regulating by Act of Parliament the price of gold, not for one year or two, but permanently, and not for the limits of Great Britain or Ireland or even for those dependencies under her control, but she fixes it for all the world,-the absurdity of which will be looked back upon in future times with wonder and astonishment. It is establishing a price, as I say, for all the world; for if the Bank must find gold at that price for all demands, there can be very little difference of price in any country connected with her,

in this case have disturbed our circulation at all. They wanted specie; Great Britain had none to give, as far as her circulating medium was concerned. The demand for specie, therefore, would have had no influence upon the course of mercantile accommodation, and neither commerce nor manufacture would have felt the slightest shock. The Americans might indeed buy bullion in England, and give us their cotton-wool or other produce in its place. But as to disturbing our trade or manufactures in any way whatever, it was totally impossible; on the contrary, it might have happened that our manufactures might have been materially benefitted thereby. Suppose, for example, that America had to go to the continent to procure her supply of bullion, and that her own exports of cotton, wool, and other articles, were not in demand there, then the consequence would be, that this cotton-wool would be sent to England for sale, with orders to invest the proceeds in bills on Hamburg, or in manufactured goods to be exported there, in order to obtain funds for the purchase of the bullion required.

If the investments were made in manufactured goods, it would be affording profitable employment for our population, by the DIRECT purchase of the articles manufactured; and if in bills, the effect would be precisely similar-the advance in the exchange, consequent upon the demand for bills for this purpose, being a bounty on the export by others of the same articles, because the selling price at Hamburgh, when drawn for, would produce so much more money in England than could have been otherwise netted-the effect then, in this case, would have been to lower the price of the raw material by forced sales, and to have advanced the price of the manufactured article, either

by a direct demand for it by the parties concerned, or indirectly, by the exchange giving more profit to the regular exporter-while under the existing circumstances of a mixed currency, the alteration in the exchange has led to the export of specie, with all its attendant evils. Thus, then, it appears, the American transactions, which under existing circumstances spread ruin and consternation throughout the empire, might, under the inconvertible circulating medium proposed to be substituted, have, in all probability, been the cause to us of mercantile and manufacturing advantage, but could in no case have done us the slightest injury whatever. And it is not to be lost sight of, that whilst these operations are supposed to be going on, the national currency has no cause to be contracted, and every accommodation is afforded to the manufacturers to satisfy the demand thus created; whereas, under the existing monetary system, the drain for gold from the Bank would have stopped all discount, and disabled the manufacturer to go on with his business.

44. It may still be enquired whether, if all other countries should adopt the same plan as here recommended, how the international intercourse might be carried onand how far the monetary system of any one nation might be affected by the imprudent over-issue of another? To which I reply, that any imprudence in this respect would only produce inconvenience and embarrassment to the parties who practised it. The consequence would be that it would raise prices so that the exports from any country, so over-issuing, would no longer pay a profit in other countries (No. 6); and if imports into that country were made, they would have to be sold so much higher as to

compensate for the loss on the return. The effect would be precisely similar to lowering the standard under a specie circulation. These effects might be injurious to those who had incurred them, but could in no way derange the monetary system of other countries. For example, England, under the Bank Restriction Act, ran into this error, without injuring other countries, and was obliged again to contract her circulation.

From the consideration of what has been said it appears to me, at least, quite clear that, under the inconvertible paper currency proposed, our foreign commerce and foreign exchanges would both be regulated by the operation of natural causes-and that any interference with the latter, by means of increasing or diminishing discounts now practised under a mixed currency, would have been both unnecessary and uncalled for-and all the violent effects upon our commercial and manufacturing interests, which have followed therefrom, might have been avoided; but if any of my readers think otherwise, and consider it requisite that the control over the currency might, perhaps, be required to be brought into action, this difference of opinion by no means militates against the plan I have recommended—because, by that plan, the Commissioners being the sole issuers of national paper, and none other being allowed, they have an absolute and immediate control over it, which the Bank of England Directors, it is universally admitted, do not fully possess, as things are at present. So that viewing the matter in either way, it appears to me clearly made out that the inconvertible paper currency, under the restrictions proposed, is calculated to uphold and improve our foreign commerce, as well as promote the prosperity of our home trade and manufactures.

45. Notwithstanding, however, the allusion just made to the superior power over the currency conferred by this plan upon the commissioners of issue, I must express my own entire assent to the truth of the doctrine insisted upon by the late Mr. Horner in the Bullion Report of the Committee of 1810, viz. page 24. "The most detailed knowledge of the actual trade of the country, combined with the most profound science in all the principles of money and circulation, would not enable any man or set of men to adjust and keep always adjusted the right proportion of circulating medium in a country to the wants of trade."

I shall, therefore, endeavour to make it clear that the plan proposed will possess that power of self-adjustment, wihout which every system of currency must be imperfect.

Suppose, for example, that from the commissioners having fixed upon too long a term or too low a rate of discount, (see No. 19,) money became too plenty, and prices were thereby advanced, or that by either this or some other tempting prospects in the home market merchants were induced to import too largely, and that, as a natural consequence, the foreign exchanges became unfavourable, and bullion was exported; its market price will advance no doubt for the time being, but no commercial embarrassment can possibly follow, because, gold not being a legal tender, it has no effect upon the discharge of mercantile engagements, and every thing goes on as usual, until by degrees the unfavourable exchange is corrected by natural causes in this way. The over-importation and consequent unfavourable exchange which occasions the export of bullion promotes in like manner the export of all kinds of commodities (see Nos. 30, 31, and 43.) The drawing for the amount of these goods brings

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