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buy with a clipt guilder containing about twelve penny-worth of silver, the quantity of twenty penny-worth of silver. This may be proved by going into any silversmith's shop in London, who deals in foreign coins, and who will give as much (and ask as much) for one of the old Dutch guilders, which has nearly one third of its silver clipt away, as he will for one with nearly all its original quantity of silver remaining in it: the reason of this is, because he can sell it for as much to a Dutchman or to any person going to Holland, where the clipt guilder passes for an equal value in all payments, with one of nearly its original full weight of silver
If this clipt money in Holland were now to be cried down, or not permitted to pass any longer by law, or to pass only for the value of the quantity of silver actually remaining in each guilder, each individual who happened at the time to bold a few, would lose the value of a few shillings by them, (an act of hardship, as they had received them as of full value, by their being hitherto permitted to pass current by the government); but there the loss would-stop, and all prices and all transactions between man and inan would remain the same afterwards as before. Or, if the government were to call them in, receiving them as of full value, and recoining them of their original weight, (which they are about to do), supposing the quantity now in circulation to be three millions of guilders, and that on an average they had lost by clipping and long wear one third of their original weight of silver, this sum would only coin into two millions of new guilders, and the government would have to bear the loss of one million or the expense of the recoinage ; which would be done by a tax upon the community at large, (the same as was the case on the recoining of the clipt silver money in William the Third's reign in this country,) and those who happened to hold none of the clipt guilders, would bear an equal proportion of the expense of the recoinage, the same as those who did possess some; which would be the more just, as the secoinage would be for the general advantage and good. But after such recoinage, the value of property would remain the same—the new guilders would pass for no more commodities, although containing perhaps 50 per cent. more of silver in them, than the clipt guilders did before, and all taxes, debts, and contracts, would remain
upon the same basis after such recoinage, as before it. This was the sort of recoinage or reformation of the currency which took place in William the Third's time; and the depreciated or clipt state of the silver currency then, was not at all analogous to the disordered or depreciated state of the whole of our currency or circulating medium, (gold as well as silver) of late years.
It has been the more necessary to explain particularly this part of the subject, to sbow, that a currency may be greatly deteriorated by clipping and long wear, and be again restored to its original value, without affecting the real value of the money standard, as long as that clipt or deteriorated money will pass for its original value, and as long as the price of silver in it bad not been permitted generally to rise above the price at which the coin was originally made. Although to preserve the currency or standard of value as undisturbed and as perfect as possible, it were better at all times that clipt money should be made illegal in payments, and forfeited upon being tendered; there would be then no templation at the beginning, to the clipping of the coin, which by this means would be totally prevented.
It therefore appears, that the real value of a piece of money is not upon all occasions to be measured by the quantity of gold or silver that is actually contained in its composition, but by the quantity of gold or silver which such piece of money can be exchanged for, or converted into, calculated at the price of gold or silver.
This is the case with the pound note, which does not contain a particle of gold or silver in its composition, and the wtrinsic value of which can only be ascertained by the quantity of gold or silver which can be bought with it. Let it be supposed, for instance, that the Bank of England were compelled by law to purchase gold at any given price, and to sell it also, at the same price--say at 61. an ounce; it would then be found, that the pound note or paper pound sterling, would be uniformly worth 80 grains of gold, or one sixth part of an ounce, neither more nor less ; for, as a person who had gold to sell, by taking it to the Bank could demand 61. an ounce for it, he would not sell his gold to any one else for less. And when any person was desirous to buy gold for any purpose, as he could, by going to the Bank, demand an ounce of gold for 61, in notes, he would never give more than 61. an ounce for gold. The pound note would then be constantly worth 80 grains of gold, and it would be equal in value to a piece of gold money, made of the weight of 80 grains of gold; and gold would invariably remain at the price of 61. an ounce.
The same would be the case with silver, if the Bank were compelled by law to buy and to sell silver at any one fixed pricesay at 8s. an ounce; the pound note would then be uniformly worth 2 ounces of silver, neither more nor less, and it would then be equal to a piece of silver money containing 2 ounces of silver, in its intrinsic value, or to a piece of silver money coined of the weight of 24 ounces of silver. And either gold or silver, whichever was then made the standard metal, and money of account, would never rise or fall in money price, but would constantly remain at either 61. an ounce for gold, or 8s. an ounce for silver, and the money system would thus approach as near to perfection as a paper money circulation could do.
This would also be the case, had we a gold or silver money standard in general circulation, and a paper money convertible, at the will of the holder, into such metallic money on demand. Suppose the mint by law to be compelled to pay 61. an ounce for goldthat is to say, to give 6 sovereigns, or 6 pieces of gold money called pounds, each piece of money or pound coined of the weight of 80 grains of gold, on demand, for every ounce of gold carried to the mint, it is obvious that no one would then sell gold for less. The Bank being also compelled to pay their notes on demand in this gold money--that is to say, to give a sovereign, or a piece of gold money containing 80 grains of gold, for every pound note demanded of them, it is also evident that gold would never rise in price above 61. an ounce. Gold would then never rise or fall in its money price, but would invariably remain at 61. an ounce, or at whatever other rate should be fixed wpon by law. The same arguments apply to silver, should silver at any time again be made the metallic money standard. In speaking of gold and silver here, it must be understood, that standard gold or silver, or one fixed fineness, is uniformly meant.
If the committees which have been repeatedly appointed, to examine into the state of the currency, instead of occupying so much of their time to show that the currency had become depreciated; a fact which ought to have been obvious to every man who pretended to judge of this question, or who could reason at all upon the subject, and which might have been clearly proved in a very short time; instead of devoting so much of their time to that part of the subject, after having agreed upon that fact, (a fact which even those who before denied it, have since been compelled to assent to,) they ought then to have applied themselves to a careful investigation of the effects wbich had been introduced into all the transactions of the country through that depreciation, and to have examined into the numerous and permanent, acts of hardship and injustice, which must be committed upon the community by returning to the ancient metallic standard, or by resturiug that depreciated paper-money currency again to its former value ; and they ought to have considered, whether or not, situate as the Country then was, and now is, overburthened with debt and taxes, it would not have been infinitely more just to have permanently continued that depreciation, as an act of necessity which the war had forced upon us.
By so doing, or by acting upon the principles of the plan recommended by Lord Lauderdale in 1813, they might have preveuted that terrible and ruinous fall in prices, and depreciation in the value of property, and have averted nine tenths of the ruin, misery, and distress, which have already taken place, and the still greater and more permanent injuries and evils, wbich will take place, if this measure be persevered in. And if the Parliament and the Ministers have the interest of the community at heart, and wish to do justice to the country at large, a committee will be instantly appointed, to inquire into the effects which had been produced by the previous depreciation of the money, and also to inquire into the contrary effects, which will be brought upon the community by returning permanently to the old metallic standard; and immediately adopt measures to avert the impending and general ruin which must otherwise inevitably take place.
There is no doubt but it is the acting upon the bullion payment plan, or the preparation by the Bank of Ireland to return to the ancient metallic standard, which is now producing the present ruin and distress in that country; and before it proceeds further, those members of Parliament, who are more particularly interested in the welfare of that country, ought to consider, if greater evils even are not being comınitted in Ireland, than will be committed in this country, through its unjust, ruinous, and cruel operation. The currency of Ireland was about 10 per cent. less in value, than the currency of England; but it would appear, that the Act of 59 Geo. 3rd. Chap. 99. which compels the Bank of Ireland to pay. in bullion, at the same price with the Bank of England, and at the old standard price of the English mint, is actually a raising of the standard of the Irish currency 10 per cent. more in value in proportion, than is so impolitically and unjustly being done in England; and will be virtually a raising of the taxes in Ireland, and of all debts and incumbrances, 10 per cent. more in value in proportion, than they ought to be.
There is not an instance in our history, (or in that of any country in the world) where the currency, that is, the whole circulating medium or standard of value, having once been depreciated in value, has ever afterwards been enhanced again, which may be proved from authentic documents; and Mr. Peel was equally unfortunate in his observations relating to the currency in Edward Sixth and in Elizabeth's reigns, as he has been in William the Third's, having very much mistated what actually did take place, as to the state of the currency, and the alterations made in it, at those periods; which shall be explained in a future letter, in which further arguments shall be adduced, to prove the great injustice and utter impracticability, at this time, of restoring the ancient metallic standard permanently to circulation,