therefore, exceed their true amount, granting his formula of computation to be true, by more than 41. per cent. and his rule proves guineas to have fallen in the terms he confiders, in refpect to English paper, at a different rate, from fomewhat above 1. to the like amount above 11. per cent; that fuch is the confequence of this mode of eflimation, is enough to fhow its fallity in all cafes. We now come to the confideration of what here is faid on the fluctuation of the numerical value of the dollar, and its causes. We had attempted to fhow before*, in oppofition to Mr. Thornton, that its market price would be fubject to rife above the value of the filver it contained, if there exifted no bank notes, it therefore is wrongly taken for granted of their multiplication; and the like might be fhown of the fufpenfion of the payments of the bank, fet up here as the fole cause of fuch a rife, and by the fame mode of argument; but if we were to concede to Mr. F. that the variations of the value of that piece depend folely on the reftriction of the bank, he would be much embarraffed with the confequence of the conceffion; in one part of the year 1803, the market value of the dollar was 4s. 10d. here he will contend is an evident proof of its raifing their nominal price, but at that period of the fame year, when they were at 4s. 41d. he must admit the fame cause reduced them below their par, or produced contrary effects at different times in the laft inftance, however, we see a proof, that neither the fufpenfion, nor any increafe of bank paper it might have caufed fo late as 1803, were at the period mentioned able to fupport the felling price of the dollar at part. The See Brit. Crit. Dec. 1804, vol. xxiv. p. 614. + What is faid in the text, is folely against thofe who afcribe the variation of bullion from the mint price, or any other conftant rate; exclufively to the existence of bank paper, or the fufpenfion of cash payments. Its value in the market, we conceive, may be fomewhat mo dified by the former, and probably rather more by the latter; and fhall here explain how we imagine this will take place. When coin only is current, and an adverfe balance comes to be paid, the merchant who is debtor to a foreign cour try, and whom we will conceive as remitting his payment himself, if he determine to pay it in coin, which fome from the rife of bullion will hazard, must referve it as it comes in; his payments being made to him in coin: but if there be a national bank, he will have received them mostly in paper, which he must carry into the bank exchange for coin; a part of its hoard the debtors can thus obtain, but the bank will find means to limit this refource; and thus the total of the coin and bullion in the ftare, every part of which was equally The iffuing dollars, as tokens for 5s. is a measure here condemned; with what propriety of language they were firft called equally applicable before to the total balance, will be diminished by the ultimate referve of the bank; for if there existed no fuch hoard, the whole coin and bullion in the ftate would be fo applicable: but only one part of this diminished ftore will increafe in price in the market, as estimated in paper or commodities, and that is the bullion, and it will receive all that augment of price, that the ultimate hoard of the bank coin caufe. But if a confiderable quantity of the coin of a ftate be in its bank, and intirely inacceffible at fuch a time, the fum of coin and bullion, applicable to the payment, will be further diminished; the quantity of the latter remaining the fame: and its price in the market, for the former reafon rife ftill higher; but in both cafes when the balance is paid off, or a favourable balance is flowing in, it may return to mint price, or fall below it; but as it now has a capacity at certain periods, of rifing higher than it otherwife would have been, the expectation thereof will always keep it fomewhat above the rate it would otherwise have stood at, even when it fhall fall actually below par; and in like manner, when it fhall be above par, such a suspension shall have added fomething to its price, but not the whole or even perhaps a confiderable part. And it must be acknowledged, that when an adverfe balance exists, and coin cannot be demanded by the holders of bank notes, it may come to bear a premium against them; for a man who determines to pay his own foreign debt without the intermiffion of an exchanger, and cannot obtain foreign bills, and has only bank paper paid into him; if the price of bullion be high, may find a confiderable advantage in allowing a certain inferior rate of commiffion for collecting coin for this purpofe; or, which is the fame thing to him, allow an equal fum in the first inftance for the exchange of coin for paper; but this will ceafe with its original caufe, the adverfe balance. Something like this at one time of the last year, as ftated by Mr. Fofter, took place; but the evil redrefled itself in a very fhort time, in the manner described: and fuch a merchant will, at fuch a time, difpofe of any commodities he may have by him, with an abatement equal to the premium he allows to obtain coin for his notes, in expectation of making the fame illegal gain thereby; but here, coin rifes at the fame time, against commodities as well as paper; therefore the paper has not loft real value, which is always estimated by the quantity of commodities it will procure, and which remains fixed. It is the coin which has gained it, as now actually exchanging for a greater quantity; thefe depreflions, temporary in their nature, of the value of paper relatively to coin, can affect only the illegal exporter, unless they generate an unfounded alarm; and fuch tranfitory depreciation differs intirely in its caufe and natural confequences, from that arifing from profufe and fudden emiffions of notes, a distinction which ought to be kept in mind, when great ad called promiffory notes, we know not; but against them, as fuch, Mr. Fofter thus reafons: "a promiffory note fhould have either intrinfic value, or elfe be merely a reprefentative of it": properties, he muft further fay, which do not belong to the bank token; paffing over the lax mode of reafoning, which tacitly denies to the token all intrinfic value, when a few lines. before he had admitted that value to be 4s. 6d. we come to the principle; that a note or bill, is the reprefentative of fuch value, or of money. The error of confidering a bill as the reprefentative of money, does not originate with this writer; Montefquieu has faid, Comme l'argent eft le figne des valeurs des merchandises. le papier eft un figne de la valeur de l'argent. (Efp. des loix, l. 22, c. 2) and Price followed him almoft literally:" Paper", fays he, "represents a coin, and coin reprefents real value": (Cov. lib. p. 75) making the former the reprefentative of a reprefentative. To raife the dignity of the language of abftract fubjects, by using metaphors as technical terms, is dangerous; efpecially when there are points, in which the fimilitude on which the metaphor is founded does not hold; and it come by fome to be taken literally, and applied to thofe points. Mr. Thornton has shown that a good bill, paid for commodities fold, has nothing in it of the nature of a reprefentative of their value; for as fuch goods may be fold many times in a fhort period, and each time for an equal and good bill, the fame value will have many reprefentatives, which is abfurd: and in like manner it might have been shown, that the fame fum of money by being paid fucceffively for divers fets of commodities, each equal in price, becomes the reprefentative of the value of them all, or of many times its own amount; and the like abfurdity will follow, if we fuppofe it the reprefentative of the commodities for which it may in future be given. Nor, by a like reafon, is good paper a reprefentative of money; for if we fuppofe 100l. verse mercantile balances may be expected; as, for inftance, when extraordinary imports of corn become neceffary in a year of fcarcity, and on that account we have gone into a longer confideration to the fubject of this note, than we otherwife fhould. The paper of a bank may also be depreciated, by ftrong apprehenfions of invafion and internal commotion, for in fuch a cafe a premium will be given for money to hoard; and when fuch a depreciation takes place, the three caufes enumerated, an adverfe balance, profufe emiffions, and the apprehenfion of internal war, may be in operation, either feparately or conjointly; we are inclined to attribute the depreciation of the Irith paper to the joint effect of all the three, each operating with that degree of force which prefent circumftances give it. brought brought to the shop of A a banker, whofe paper is duly pro portioned to his hoard (and let this proportion be four to one) and he fell to B who brings it, a hundred pound note for it, his hoard now exceeds its proportion; and he lends to C, D, and E, at intereft, three other notes of 100l. each, the currency of the four notes is fupported, and adequately supported by the 100l. A has received of B, they are each paid as foon as obtained to other parties, the purpose for which they were demanded; the new holders all become the creditors of A, and hence, according to the doctrine of representation, the 100l. in the coffer of A, has four reprefentatives, or if one only, of what are the three remaining notes representatives; befide nothing can be faid to have a reprefentative, at the time it performs its own active functions; but the 100l. in coin received by A the banker, and the note given for it to B may, and frequently will, be both actively employed at the fame time; and when fimilar functions are fo performed by two different things, neither can be faid to be the reprefentative of the other. This error, although Mr. Fofter has made it is his own, is not exclufively fuch; he has names of celebrity to bring forward in his defence. But there is one, and on the fame fubject, in which he will not be able to appeal to them. Silver, he fays, is not only the reprefentative of value, but is value itfelf: (p. 87) and fix lines after, that the bank note does not profefs to reprefent any certain value, but a certain weight of filver; which filver being value itself, as before, the bank note does, and does not profels, &c. &c. &c. but we are not at the end of his contradictions on this fubject; for further on (p. 122) he affirms, that the note is a promise to pay, not a certain value, but a certain weight of gold, the proportion of which, to a certain weight of filver, may vary in value. We are forry to have fuch errors to remark in a writer, who gives indifputable proofs that he is well able to have avoided them; an obfervation which, we prefume, we might have extended to some other errors lefs obvious. What he has faid alfo upon feignorage, does not feem at all to accord with the condemnation of the emiffion of re-ftamped dollars at 5s. each. While fuch pieces are current, the use which might be made of the authority of Mr. Thornton on this fubject, led us to confider, at fome length, the error into which we apprehended him to have fallen. Mr. Fofter has fet himfelf allo to refute it; and contends for the good confequences which would follow, from a feignorage or duty of 51. per cent. being impofed upon coinage; that is, that the current value of coin fhould exceed that of the bullion it contains in that proportion; it might very well perhaps be made 61. per cent. The rate rate in France was formerly 81. per cent. and Smith speaks of nothing but good confequences which refulted from it. During the last two years, dollars have been at various rates, from 4s. 4d. to 4s. 11d. if a feignorage at 51. per cent. were impofed upon them when re-flamped, and the first were the fixed value on which their current rates were fo computed, they would be iffued at 4s. 6d. if the fecond 5s. 2d. and if the feignorage were taken at 61. per cent. they would be made current at 4s. 7 d. and 5s. 2 d. refpectively; and as the bank is at the expence of coinage, that company may be very willing to try first a fyftem of coinage, better for the general state, converting an old fource of lofs into a new fource of gain, upon a small scale; and the difficulty muft have been to determine at what point between the two extreme market values, the mean fhould be taken to compute the feignorage upon. It became neceffary to take it fufficiently high. In two years, when corn had been relatively cheap, and it is prefumed we had no great balances to pay, the market value of the dollar had been at fometimes 4s. 11d. and if a year of fcarcity should come, by an adverse exchange it would be permanently, at the leaft, at that price; now the bank dollar, as far as its currency extends, is of great use in small purchases, and the larger part of the coin of the lower claffes; and if a heavy balance for corn in any year (and the present is not without its danger) fhould raife the value of the dollar above that fum, thofe pieces would come to be collected and exported; and every thing would be to be apprehended from the populace, when their earnings were unequal to their fupport, and the money vanished, in which thofe earnings were cuftomarily in many districts paid. For thefe reafons, the fixed value of the dollar was justly taken at 4s. 9d. and with the impofition of the 51. per cent. feignorage, the ftamped pieces circulated at 5s. although many other reasons alfo could be alledged. We have gone into this latter error at length, because it is taken up by many, and leads to confequences full of danger. A few others we fhall curforily remark, upon paffing over many we had noted. Mr. Fofter finds a premium for the increase of national product, where many have not fought for it before; "the dearnefs of the precious metals, and the cheapnefs of commodities", he fays, " are exactly the fame and the want of the precious metals", he directly goes on to fay, "will be felt", and producing cheapnefs of commodities as above, "must give birth to an increase of produce and manufactures". P. 11. From the effects of this negative bounty little is to be expected. He affirms, that by the trade of the bullion X BRIT. CRIT. VOL. XXV. MARCH, 1805. |