countries would buy the gold; i. e. it would be exported from the country where it was cheap, to those places where it was dearer, until its price was again restored to a level in the different parts of the world. If the circulation of a country were supplied, partly by gold, and partly by paper, and the amount of circulation were doubled by an augmentation of that paper, the prices of commodities at home would rise. But gold not becoming by such augmentation more abundant in such a country than in other parts of the world, as a commodity, its relative value to other commodities would remain unaltered; as a commodity also its price would rise in the same proportion as that of other commodities, although in the state of coin, of which the denomination is fixed by law, it could only pass current according to that denomination. When paper is thus augmented, the exportation of gold coin will take place, not because gold, as a commodity, is more abundant, and less valuable, in relation to other commodities at home, but because its value as currency remains the same while its price in that currency is increased in common with that of all other commodities. The exportation, by diminishing the total amount of the currency, keeps up the value of the remainder. An excess of paper produces at first the same effect of raising the prices of commodities, as an excess of the precious metals to the same amount would produce in any given country.

But it does not admit of the same remedy; it cannot be restored to its level of value by exportation; foreign countries will not buy the paper-currency of a nation, although they will purchase its gold. The currency of a country then is depreciated; 1st, If its standard coin contain less of gold or silver than it is certified to contain. Then the paper as representing that coin, is also depreciated in the same degree. 2d, If the paper be exchangeable for less of the coin than it represents, that coin still contain.

ing the quantity of gold or silver certified by law, Then the coin, though undiminished in value, partakes, as part of the currency, in the depreciation of the whole. Whence if the coin be itself as coin depreciated, the paper which circulates with it is equally depreciated. And if the coin be undepre ciated as coin, and there be a depreciation of general currency, it must be in the paper, and is caused by an excessive issue of that paper.

"The state of foreign exchange being against England from 15 to 20 per cent, will not account for the difference between the standard of her coin and the actual value of her currency. The real par of ex→ change between two countries consists in the equality of either of the precious metals measured in the respective currencies of the two countries. And the real depression of exchange can never long exceed the expense of transmitting bullion from the debtor to the creditor country. In 1809, when the quoted rates of exchange were most unfavorable, the real fall did not materially exceed this amount; whence the difference between the loss on the real and the nominal rates of these exchanges must be sought in some other cause than in the mere circumstance of foreign exchange being against England. If in consequence of purchases made by Britain on Continental Europe greater than those of Continental Europe in Britain, or in payment of any debt, service or demand, bills on Britain are for sale in the Continental market; and the supply of such bills exceeds the demand; their price, like that of any other article under similar circumstances, must fall; and the exchange if before at par will turn against Britain. But to this fall there are limits in the competition of the buyers. This competition commences as soon as those bills are offered at such a price as enables a buyer to use the credit which he obtains on England by the purchase of such bill, either as the means of

paying for goods already ordered, or of buying others, promising a profit on the capital vested in their purchase. Of all the articles of trade, bullion is the least likely to offer temptation to the purchaser of a bill of exchange, because its price is more steady and uniform, and always nearer to a level from which it never long departs, than that of any other commodity in the different markets of Europe. In proportion as those bills are bought at a greater difference below par, is any holder of them able to buy goods cheaper in England. For instance, if for 100 oz. of gold at Hamburgh of any given weight and fineness, he obtain an assignment for 105 oz. in London, it is a premium of 5 per cent. on the purchase of such goods. Hence an unfavorable course of exchange operates as a bounty on all exports, and as a tax on all imports. This bounty and this tax excite a competition to export, and a diminished disposition to import; by the joint effect of which in all ordinary cases, without any transmission of bullion, the real exchange is brought back to its par, and probably rises above it. In its turn, this rise is checked and counteracted by the operation of the same causes; and thus like the Mariner's Compass, the exchange is in a state of frequent variation; but of variation confined within certain natural limits. If a fall in the real exchange exceeds these limits, which are confined to the actual expense of transmitting bullion from the debtor to the creditor country, particular individuals will export bullion. But this exportation rarely occurs, and can never last long; because the transmission of a comparatively small quantity of that metal which forms the standard and currency of a country, not only operates like that of any other commodity, to diminish by so much the balance of debt to other countries, but likewise to force the exportation and to diminish the importation of all other goods; and thus more rapidly to improve the ex

change than the export of any other commodity to the same amount. As the exchange improves the exportation of bullion in course ceases. The principle and its application are the same in a single transaction, and in the aggregate result of all the different transactions in trade, and of all subsidies and government expenditure abroad on the one hand, and payments to be made at home on the other; as well as all other causes and speculations influencing the billmarket on both sides of the water.

"The exchange between Ireland and Great-Britain in 1803--4, is a striking illustration of this doctrine, and of the fallacy of that present fashionable theory, which refers all the variations of exchange to the balance of payments and the balance of trade. The commercial intercourse between Great-Britain and Ireland is exposed to no political interruption; the trade in bullion between them is free; the standard of both countries is the same; the transfer of coin from one to another is liable to no interruption or restraint; the actual expense of transporting it does not exceed one per cent. Yet the exchange was for several months in 1803--4, from 8 to 10 per cent. against Dublin; though what is called the balance of trade was in favor of Ireland; there was no transmission of guineas from Ireland to England; the exchange between London and the North of Ireland (Belfast) in which no paper-currency existed, instead of being from 8 to 10 against, was during the same months one per cent. in favor of Ireland; that is, the real exchange was in favor of Ireland, and consequently there could be no transmission of gold from it; the exchange between Dublin and Belfast, both places in Ireland, was from 9 to 11 per cent. in favor of Belfast. What caused all these seeming contrarieties? The excess and depreciation of bank of Ireland paper. For in 1805 the amount of paper-issues from that bank being reduced, the exchange with Dublin was improved, and

the Directors of Irish circulation have since kept the depreciation of their paper generally on a level with that of Bank of England paper. What the currency of Ireland was in 1804, compared with that of England, the currency of the United Kingdom now in 1810, is, with reference to that of Hamburgh or of Amsterdam.

"I have hitherto proceeded on the supposition of the monies of any two countries, between which an exchange is established, retaining their relative weight and fineness, according to the standard of their respective Mints, upon which the par between them was originally settled. If in either country the standard or the denomination be altered, whilst in the other they remain the same, the real par will be altered in the same proportion, although the alteration will probably be effected without any variation in the mode of stating the course of exchange, just as a shilling is still called a shilling in Ireland, although its current value has long since been raised from 12d. to 13d. This occasions, what in the "Report of the Bullion Committee," is called the computed par. Even without any change being made by law in the standard or the denomination of the currency of either country, this computed will seldom accord with the real par; because the degree of wear might be different in the two currencies, or even in different portions of the same currency. It is only when both contain the full quantity required by the Mint-regulations of the respective countries, or are equally diminished by wear, that the computed and real par are exactly the same. The real par will also vary where the standard of the one country is gold, and that of the other silver, with every fluctuation in the relative value of the two metals. The regulation by which English gold coin, if reduced to more than a small fraction above one per cent. in value, ceases to be a legal tender, would prevent the foreign exchange