The first clause after declaring that it is expedient to establish and ascertain by law the rates at which certain coins shall hereafter pass current in this province, and to prohibit the circulation of certain notes and other negotiable securities, enacts, that from and after the passing of this act, the silver coins commonly known by the name of pistareens, shall pass current at the rate of ten pence currency each, and no more, and the silver coins commonly known by the name of half pistareens or sixpences, shall pass current at the rate of five pence currency and no more.

The 2d clause enacts that after the expiration of three months from and after the passing of this act, no bank note or other note whatsoever made payable to "bearer," nor any note under the nominal value of five dollars, issued by any bank or joint stock company, or persons trading as bankers, save and except only such bank notes as may be issued by any bank incorporated by law in this province, shall be offered or given in payment on pain of forfeiting the nominal amount of such note, which amount shall be recovered on information and conviction in any court of competent jurisdiction in this province.

On the 23d Feb., 1831, his Excellency was pleased to send a message to the House of Assembly to the following effect:

"AYLMER, GOVERNOR IN CHIEF.

"With reference to the answer of the Governor in Chief to the address of the House of Assembly of the 5th instant, regarding the currency, his Excellency now informs the House of Assembly that Mr. Commissary General Routh has returned to Quebec.

A."

Neither the Legislative Council or the Assembly seem to have further occupied themselves with the matter. Having thus brought together the leading principles had by the Legislature upon the subject, I shall proceed in the next number to examine the nature and effect of the above mentioned law relative to the currency passed in 1830, and state some considerations which induce me to think that the time of the Legislature would have been advantageously employed in its last session in regulating the currency, and shall enquire into the principles upon which it ought to be regulated.

123

NO. XI.

CURRENCY.

CHARACTER PECUNIÆ EST EX JURE GENTIUM.

Molin. Tract. cont. Usur. de Mat. Monet. Quæst.

THE SUBJECT RESUMED.

In the whole of the internal policy of state, there is no one subject which calls for more vigilant and unremitting attention on the part of the first Executive Magistrate and the Council of State, than the matter of coin and currency. It is an imperious duty upon them to devise such measures as may secure its purity, and render it an exact standard of value in the mutual transactions of the members of the community, and in the liquidation of dues to the state.

The Executive Council of Lower Canada being, by the Colonial Constitution, the Council of State of the province, this matter ought regularly to have been first referred to them; and there might have advantageously been submitted to them, for their consideration, any communication upon the subject, received by the Captain General and Commander in Chief, from the officer at the head of the military money department, who, as is well known, is the Commissary General of British North America. That officer was called upon, by his duty, to consider the subject, solely in relation to the interests and wants of his department. The Executive Council, as a Council of State, were bound to embrace and look at it, in

connection with the particular interests of the province, so far as its trade and public impositions were concerned, and the relation which the province bears to its parent state. It is, therefore, perhaps to be lamented, that instead of making this measure a purely military one, so as even to be influenced by the occasional absence of the gentleman at the head of the military money department, it had not been regularly brought under the consideration of his Majesty's Executive Council for the Province, who are, as high civil officers of the Government, responsible to the civil authorities for the due exercise of the civil powers confided to them. Besides that proper regard which such a course of proceeding would have shewn to these high depositaries of civil state authority, and which belongs to them of right, we should have been entitled to expect a mature plan to be subjected to the useful ordeal of a scrutinizing examination of it in the several branches of the Legislature.

According to the course which has been pursued, this subject of infinite difficulty, nicety and complexity, has been thrown afloat without chart or compass upon two deliberative bodies, to be guided by whomsoever should choose to volunteer to take the helm, and without any one public officer or public body being responsible for the measures proposed. Thus making those separate bodies or casual individuals in them, to perform the functions of a Council of State, and depriving the public of the benefit which it ought to have had, of having the subject in the first instance examined by one responsible public body, and the result of the labours of that public body, checked and revised by the two several branches of the Legislature. From the unfortunate course thus pursued it was hardly to be expected that any beneficial effects could follow, still no one could have foreseen the extent of the errors to which it gave birth.

There are some general principles which now assume the rank of axioms in that branch of the political economy which

relates to the coin and the currency, and which were either unknown or entirely overlooked by the gentlemen composing the Committee of the Assembly of 1830.

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All admit that money can, under no circumstances, made to circulate beyond its intrinsic value. Where the nominal value is increased beyond the intrinsic value, a corresponding increase takes place in the prices of all commodities, and amongst these of Bills of Exchange. On the other hand, where the nominal rate is less than the real rate of value, there also a corresponding change takes place in the price of commodities, and amongst these of Bills of Exchange also. It is further to be observed, that if there be two or more coins forming a part of the legal currency of the country, and the nominal value of the one be higher than the nominal value of the other, the latter will be displaced by the former, and entirely disappear, or be obtainable only by the payment of a premium.

These principles admitted, it is manifest that the holders of any given coins are not affected by any change in the currency, although the relation of creditor and debtor may be affected by the augmentation or diminution of the nominal rates of the coin, the holders of them with the solitary exception of the Fisc, are not affected thereby :-The Legislature assuming that the intrinsic value of the Pistareen was 10d. whilst its nominal value was 12d. took away not one iota of the intrinsic value of that piece. If eggs had been selling at 12d. previous to the passing of the law, they would ceteris paribus have sold for 10d. after its passing, but they would in both instances have been paid by the same identical quantity of silver or other precious metal, and it might have been of the same identical form. So also supposing no other circumstance to influence the rate of wages, or the rate of rent, or the price of commodities, the same quantity of labour, the same use of land and the same quantity of commodities could have been obtained for any given number of these pieces of silver called Pistareens, before as after the passing of this

law. In point of fact the holders of these Pistareens had given no more labour for them than was equal in value to the quantity of silver which they contained; in other words, no more labour than was equal to their intrinsic value. Now by the bill, as reported by the committee, all the pistareens in the country were to be called in and paid for out of the public chest, allowing 12d. for each of them, the whole to be thus paid for in coins whose nominal value did not exceed their intrinsic value. By this process there would have been given to each holder of a pistareen 12d. for that for which he had only given 10d. and the public chest would thus have been charged with the loss of 2d. upon each pistareen held by him, and a bonus to that amount would have been given to the holders of pistareens, without any consideration whatsoever. But the evil did not stop here-no machinery was attempted to be provided, perhaps none could successfully have been framed to prevent pistareens from coming in from abroad after the passing of the law. It is marvellous that gentlemen of the experience and knowledge of those who composed that committee did not see that the effect of paying out of the public chest 12d. for an article which was worth only 10d., was to make of that chest a reservoir of all the pistareens, not only in this and the adjoining British provinces, but also of the whole of this North American continent, nay, of the whole world, whence pistareens could be imported, and leave a profit on the 2d after paying the expenses of transport and insu

rance.

It has been seen that the diminution of the nominal value of the pistareen, to which we shall confine our attention at present, for the purpose of simplifying the subject, did not, as was erroneously supposed by the committee, affect the holders of pistareens. It did affect, however, a large class of persons in a manner whereof the committee appear to have been wholly unconscious; and this brings us to the second branch of the subject, which involves the consideration of the effect of any change in the denomination of coins upon the two