becomes 3 per cent. against the remitter. The bullion merchant then, to avail himself of this state of things under our mixed currency, comes upon 'Change and draws on his friend in Hamburgh, say for £100,000,-for which he receives payment in Bank of England notes, together with £3,000 (amount of 3 per cent. premium). He then takes the £100,000 to the Bank of England and draws out 100,000 sovereigns, which he sends to his friend in Hamburgh to pay his drafts, which this remittance will do at par, minus the expense of sending it there, which being supposed one-half per cent. the bullion merchant's account will stand thus

Received 3 per cent. prem. on bills for £100,000 £3,000 Paid cost of transmitting 100,000 sovereigns,

and this transaction may be repeated every 'Change day as long as the unfavourable exchange lasts, and the bullion in the Bank holds out.

Now let us examine the result of the same state of things under an inconvertible currency. The same scarcity of bills makes the exchange on Hamburgh equally unfavourable, say 3 per cent. against the remitter; but specie or bullion being a remittance at par will perhaps only bring 2 per cent. premium on account of the trouble and expense of sending it there. The bullion merchant then comes on 'Change and sells £100,000 in specie or bullion at 2 per cent. premium, producing £2,000; the purchaser remits it to Hamburgh, where the bullion merchant's friend has orders from him to purchase it and send it

back again to him in London, and is desired to draw for his reimbursement upon Lisbon, Cadiz, Rio Janeiro, &c., or any place upon which the exchange may be at par, desiring the person so drawn upon to draw bills upon the bullion merchant in London for the sum required to pay his acceptances. The influx of bullion into Hamburgh will probably make the price somewhat under but certainly not above par, and the exchanges being (from ports not affected by the importation of grain) generally in favour of London,-the bullion merchant will thus be able to get his £100,000 of bullion back again for the mere expense of freight and charges, and his account will stand thus

Premium received on £100,000 bullion . . . £2,000 Deduct cost of bringing back, one-half per cent.

Nett profit.

500

£1,500

and this transaction may be carried on every 'Change day, the same bullion or an equal amount being brought back as fast as it is sent away; and thus, as I have stated, in a short space of time one or two hundred thousand pounds will discharge a debt of millions, and without occasioning the slightest derangement of either trade or manufacture, or any denial of discount whatever. The instance just given is precisely a case in point to what actually took place for a considerable time in the north of Ireland during the Bank Restriction Act.

At that period gold bore a high premium, and the agents of estates for a long time succeeded in enforcing payment of rent in specie; but when specie began to get scarce, the tenants complained that it was not any longer

to be got; and to set aside this objection, the agent took care to lodge at some neighbouring shop, upon the receiving day, one or two hundred guineas, and the tenants were told they could be supplied with gold there. The tenants had accordingly to go to this shop and pay the premium, but when the guineas were brought to the agent or receiver they were only taken at par; and as fast as the guineas were in this way transferred from the shop to the agent, they were immediately sent back again to be re-sold; and thus it is evident one or two hundred guineas would have sufficed to have paid a rental of as many hundred thousands, exactly in the same manner as has been stated in the dealing of the bullion merchant in London with his correspondent in Hamburgh. If this is not sufficient to silence all opponents, I beg to refer to the certainty that, even in the entire absence of gold, the restoration of the exchanges, (which is tantamount to a stoppage of the export of specie,) would be accomplished by the export of goods alone.

The truth of this doctrine is at present fully proved by the fact, that in the United States, during the period of an inconvertible paper currency, the exchanges under the operation of the imports and exports were made so much in favour of that country as to leave a profit on the import of specie thereto,*—and from considering the matter atten

* The arguments here used, and the reference made to the case of the United States, written long previously to the present time, receive ample confirmation from the report of the speech of Mr. Buchanan, Senator for Pennsylvania, given in the city article of the Times, London newspaper, of the 25th May, 1838:-"He is therein stated to have declared his belief that the foreign debt, which, at the time of the Suspension, amounted to 40 millions of dollars, was then liquidated through the

tively, it will appear clearly that, as soon as the metallic basis is laid aside, the export of bullion will do no more injury to commerce or manufactures than the export of any other commercial article, and the export of £100,000 worth of bullion will have no more effect than the export of £100,000 worth of hardware. This receives further confirmation from the specie having been all exported from England during the war, without the slightest shock to commercial credit, which continued to be maintained in spite of every external opposition.

The force of this argument may be fully perceived by shortly considering that the scarcity of foreign bills is the thing to be got the better of. This scarcity in the existing mixed currency obliges the Bank, in order to preserve its gold, to force merchants and manufacturers to sacrifice their goods by forcing exportations, and thereby to bring a supply of bills to market, and prevent the export of bullion. But it has just been shewn (Chap. II. No. 33) that the greater amount of bills would have been brought

double operation of large exportations of produce and the reduced importation of goods, so that a balance in favour of America was now all returning in specie. By the advice then received, specie had become the most profitable mode of remittance to the United States, and was yielding a profit of 4 per cent. He remarked that in the meeting of Congress in September last the rate of Exchange in England was above 20 per cent. and it was at that time reduced to 6 per cent., which was 3 or 4 per cent. below the specie par." Here are authenticated facts taking place during the existence of an inconvertible currency, proving incontestibly that every thing did actually occur which it has been herein argued must occur; and shews satisfactorily that an inconvertible paper-currency is as effectual to fulfil the duties of a circulating medium in regard to foreign, as (our own experience under the Bank Restriction Act has shewn it to be) in regard to domestic commerce.

to market by the export of the identical same goods with a profit to the exporter, if commerce had been left to take its course-and the same may be said as to the import trade. The general import of foreign articles would have been stopped by the unfavourable exchange at which they would have to be paid for, and the same effect of restoring the exchanges would thus have been produced without the sacrifice of property which a denial of discount must always produce, and this is precisely what took place in America.

I trust, therefore, it will appear plain to every reader that no alarm need be felt as to our capability of paying for any supplies of grain that might be found necessary ; this being precisely a parallel case to that stated in the Bullion Report of 1810 as to the effect of the unfavourable exchange then existing.

56. The next objection I shall notice is, how will the country banks supply themselves with this new issue? The simple answer to which is-in the same way they supply themselves with Bank of England paper now ;— or, how did they supply themselves with specie after the Bank Restriction Act was repealed, there being but one mint? There is no hardship whatever imposed on them; they are bound now to pay their paper in specie or Bank of England notes: let them continue to do so, and no doubt the commissioners would be instructed to receive such payment for a reasonable time, after which the obtaining of the national paper will be found as easy as getting either the specie or Bank of England notes, which they are now obliged to furnish,