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securities. Persons now take bills of exchange to be discounted at the bank, because the credit of the bank is more current in the market than their own; and the discount charged upon these bills is the return which private parties make for this advantage. But if the bank declined to afford this species of accommodation, it would be supplied by other individuals of known wealth and responsibility. If the Bank of England,

therefore, ceased to exist, or its paper ceased to circulate, the vacuum occasioned by this means in the currency of the country would be filled up principally by private bills of exchange. This latter species of paper currency would increase in proportion to the diminution in the amount of Bank paper; and very little would be added to the metallic medium actually circulating in the country. Whether the paper circulation of the Bank of England amount, therefore, to six or twenty-six millions per annum, is, we conceive, a circumstance in which the interests of the public are little concerned-as long as the notes of that establishment are convertible into specie at the will of the holder, and the bank possesses capital enough to pay off the whole of the demands upon it in a metallic standard. The amount of paper which it circulates will, no doubt, affect the profits of that establishment-the dividends annually made among the proprietors of stock but it can neither diminish the quantity, nor deteriorate the quality, of the gold which the pound sterling contains; and, consequently, it could neither lower nor enhance the market price of commodities beyond the degree in which the new demand for a certain quantity of bullion to be coined into money in order to replace a part of the paper withdrawn from circulation, might: aise the price of gold as an exchangeable commodity.

We apprehend, indeed, that the only useful and practical question which can be agitated respecting the currency of this country at the present or any future period, is the propriety of adhering to the resolution which the legislature has formed, of suppressing any future issue of one-pound notes. Upon this, like every other mooted point of political economy, much difference of opinion prevails: some persons have argued, and we believe still argue, that because the mass of the small circulation of the country con sisted of one-pound local notes during what is called the prosperity of agriculture, the former was the cause of the latter; and the other party ascribes all the commercial panics which have taken place in this country to the existence of paper one-pound notes. Here we have two parties at the antipodes of each other to the circulation of paper one-pound notes one ascribes all the commercial sunshine of the last five and thirty years; and to the same cause the other refers all the pecuniary derangements of


the same period. That both parties cannot be right is quite certain that both may be wrong is also possible. That commercial convulsions or panics may take place without the intervention of a bank note circulation, whether of one pound, five pounds, or of any other amount, is quite clear. The circulating medium at Hamburg consists entirely of bullion and negotiable bills of exchange; and yet it is notorious to all men that violent panics frequently rage in that emporium of commerce.

The real inconvenience of a one-pound note circulation appears to arise from their tendency to increase very greatly the fluctuations consequent upon the panics which must occur where credit is so extended as it is in this country. It is now experimentally proved, that a metallic currency and paper one-pound notes will not, to any extent, circulate together; the latter will gradually drive the former out of circulation: when paper one-pound notes fill up this channel of circulation, gold becomes more valuable abroad than at home; it is, therefore, exported as a commodity. A panic takes place then the demand for gold revives the paper notes are poured back upon the banks, and the issuers are ruined in re-purchasing the gold which their paper had displaced. There seems to exist some sort of natural antipathy between a one-pound note currency and the precious metals, so that one cannot circulate to any extent worth consideration in conjunction with the other. In whatever country onepound notes are issued, without restriction, a very small portion only of the whole circulation will be made up of coined gold or silver. We have experienced the truth of this assertion in England; and the circulating medium of Scotland at this moment bears abundant proof of its correctness: on the other side of the Tweed the mass of the circulating medium consists of paper, eked out by a very insignificant proportion of silver and gold coin. The disappearance of the precious metals, when expelled by a paper currency, is attended with no very material ill-consequence, as long as commercial credit and confidence remain unimpaired; but the moment doubt and distrust begin to agitate the public mind, the unreal character of a paper currency becomes apparent in the general confusion and distress which it produces. All paper securities cease to be negotiable, and every man who has a claim upon his neighbour calls for gold: in the home market there is no supply, or at least but a very inadequate supply, of this metal; to meet the new and sudden demand, large importations must be made from foreign countries, into which it had been driven by one-pound notes. Even supposing that a considerable quantity of this metal should be found hoarded up at home in the chests of bankers or the stores of private individuals, still the


general and urgent call for the metal greatly outruns this supply: the unavoidable consequence of this excess of demand over the supply which can be immediately furnished, is an instant and great rise in the exchangeable value of gold; or, what is precisely the same thing, a fall of equal amount in the market price of commodities. The public mind is thrown into an universal state of agitation and alarm; credit is suspended; the Gazette is crowded with the names of bankrupts and insolvents; and during the dreadful period of excitement and anxiety, a crowd of opulent and innocent families are pushed from their station in society, and thrown destitute and pennyless upon the world.

It therefore appears to be the wisest and soundest policy, not only to make the standard metallic, but to make as large a portion as possible of the medium actually circulating metallic. The former will prevent any depreciation in the intrinsic value of the standard, it will keep the pound sterling always of the same weight and fineness: the latter will prevent those sudden fluctuations in the exchangeable value of gold and silver as com→ modities, which must always arise from any sudden increase or diminution of the demand which exist for those metals. The perfection of a currency is, that its value should be certain, uniform, and invariable; but an invariable standard of value is still, and we suspect ever will be, a desideratum in political economy. All that the contrivance and ingenuity of man seem capable of effecting is no more than an approximation to this perfection mankind have hitherto been obliged to content themselves with selecting, as the material which is to composé the standard of value, that metal or those metals which experience has proved to be the least liable to fluctuation. The two metals which have been fixed upon for this purpose by the almost universal consent of all civilized nations are gold and silver. These possess various intrinsic qualities, which recommend them as materials for forming a circulating medium: they are less liable to have their weight diminished or their quality deteriorated, by friction, by the action of the atmosphere, or by any casualty or accident, than perhaps any other metal with which we are acquainted; they embrace a considerable value in a small space, and are, on this account, more easily and more cheaply transferred from one place to another than other commodities, which are less valuable and more bulky.


Our readers are well aware, that although more convenient and less variable, as a circulating medium, than any other commodities, still their exchangeable value with reference to other commo→ dities may be affected by various circumstances. It is a wellknown fact, that the exchangeable value of the precious metals


has been greatly reduced since the discovery of America; that event opened a new source of supply, which flowed plentifully into the markets of Europe; and an ounce of gold or silver will now command a much smaller quantity of any other commodity in exchange than it would have obtained in the beginning of the sixteenth century; and from that period down to the present time it would seem that they have experienced a gradual but constant depreciation. A supply from the American mines has been annually flowing into the European market, exceeding the usual average demand for the purposes of coinage or the arts. But this depreciation, although constant, is but gradual and slow; considerable when we take a whole century into the estimate-of no great magnitude when we limit our calculations to the fragment of a century, to a period of five or ten years. Hence it arises that this gradual and slow fall in the exchangeable value of the precious metals produces in practice but very little injurious effect upon the pecuniary relations of society. The bulk of our contracts are of very limited duration; very few, perhaps, extending, according to the present customs of this country, beyond a period of twentyone years. It is, no doubt, true, even during a period of this duration, some depreciation may take place in the value of the precious metals; and the creditor who has bargained for a fixed money payment may sustain some loss; but the expiration of the term soon puts an end to the contract, and the parties are placed in a situation to renew it on terms modified by the amount of the fall which may have taken place in the exchangeable value of the circulating medium. This saves all parties from sustaining any serious injury; there is no sudden alteration in the value of money, which unhinges all the relations of private life throws, the whole community into confusion, and violently transfers the property of one man into the possession of another.

In order that a country should be as free as possible from the ill effects of an alteration in the value of money, it appears indispensable that it should possess an adequate supply of the precious metals, to perform the functions of a circulating medium; and it is manifest that a due proportion of the precious metals cannot be retained in circulation contemporaneously with the unrestricted issue of one-pound notes. It is, indeed, to the functions performed by the one-pound note that one of the precious metals is mostly limited. The suppression of notes for five pounds and upwards would probably add very little to the actual amount of our metallic circulating medium; the place of these notes would be filled up chiefly, if not entirely, by checks and bills of exchange; hence they may be considered, as to their effects upon the currency, merely as so many ready-made checks, or


negotiable paper securities. They diminish very considerably the trouble of transacting business; while they reduce in a very small degree only the amount of gold and silver which their suppression would throw into the general circulation of the country. But with respect to one-pound notes, the case is widely different; no checks or bills of exchange would be drawn for one pound; such a mode of transacting business would be too troublesome and expensive: the precious metals must, therefore, be used; and the quantity of gold and silver added to the whole mass of our metallic circulation must be equal to the amount of the one-pound notes actually suppressed when the act of 1826 shall have been carried fully into effect.

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Upon the whole, we are inclined to think that when the act for the suppression of the one-pound note circulation has come into full operation-and when a period of sufficient length has elapsea to allow the public to perceive its practical effect-it will appear not only an indispensable but a very beneficial supplement to the act enforcing the resumption of cash payments. The act of 1819 created a demand for specie, and the small note suppression act will have the effect of retaining in the country an uniform and never-failing supply of the precious metals, in order to meet that demand.

ART. VIII.-1. On the Rise, Progress, and Present State of Public Opinion, in Great Britain and other parts of the World. London. Svo. 1828.

2. A Comparative View of the Social Life of England and France, from the restoration of Charles the Second to the French Revolution. By the Editor of Madame du Deffand's Letters. 2 vols.

8vo. 1828.

3. The Family Library, No. I. Being the first volume of the Life of Napoleon Bonaparte (to be completed in two volumes), with Engravings on Wood and Steel. London. 12mo. 1829.


N pursuing his journey through a varied and extensive country, the traveller arrives occasionally at certain turns or elevations of the road, where he involuntarily pauses to look back on the scenes he has left, or forward on those which he is about to traverse. Similar inducements to suspend our steps, and take a view of our past experience and present prospects, occur in the journey of human life. For a certain number of years a man may glide thoughtlessly onward in a course of uninterrupted pleasure or prosperity; but he is sure to meet at intervals with some shocks or reverses which rouse him from his security, and admonish him to take a true and comprehensive survey of his real situation. A portion of that reflection, which every considerate person is thus in


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