LI B RARY 
 
 OF THE 
 
 U N 1 VLR5ITY 
 
 or ILLINOIS 
 
 BftTS 
 V.I7
 
 ON THE 
 
 RELATION 
 
 OF 
 
 CORN AND CURRENCY 
 
 LONDON: 
 
 JOHN MUllRAY, ALBEMARLE-STllEET 
 1819.
 
 Observing many erroneous or very question- 
 able notions to be prevalent in respect of the 
 important topic of a paper-currency ; or for my 
 own part entertaining opinions which are not 
 precisely conformable to predominant ideas on 
 that subject ; I purpose to submit my sentiments 
 to the public as briefly and clearly as I am able 
 to express them. I shall offer no further preface 
 nor apology : premising only that I am no inex- 
 perienced theorist; nor yet an interested prac- 
 tical man ; though not altogether unused to the 
 study and application of political economy. 
 
 The actual depreciation of bank-notes and 
 paper-currency is not, as I apprehend, occa- 
 sioned by an excessive issue of notes of the Bank 
 of England, or of other banks, nor even exche- 
 quer-bills, much as these have been overdone; 
 but by the subsisting corn-laws : aivd the value 
 of paper-money must and will continue to fluctu-'
 
 ( 2 ) 
 
 ate, and very widely so, until one of two mea- 
 sures shall be adopted : resumption of cash-pay- 
 ments, or amendment of the corn-laws. It is to 
 be apprehended even, that the first of those 
 measures may not be entirely effectual to restore 
 the steadiness of a metallic standard of value, 
 without the other. 
 
 While cash-payments are suspended, and a 
 paper-currency maintained, which is not con- 
 vertible into gold or silver ; corn, and not gold 
 nor silver, is the real measure of value. There 
 is no other present standard of estimation in 
 Great Britain. The bank-note, together with 
 the exchequer-bill, and every other sort of paper 
 currency, now in circulation, is not to be con- 
 verted into bullion, nor exchanged for a deter- 
 minate quantity of gold or silver, unless at an 
 uncertain and indefinitely distant time. The 
 present exigible payment is a set-off or credit in 
 discharge of some debt to the bank or to the go- 
 vernment; and the paper-currency is presently 
 exchano-eable at market for marketable and vari- 
 able prices of bullion, or of other commodities. 
 The value of merchandise to be had in exchange 
 is not determined by that of gold and silver. 
 These are no longer requisite and indispensable 
 subjects of British commerce. Corn alone is now 
 the one indispensable article of traf^c in Great 
 Britain.
 
 ( s ) 
 
 There is, no doubt, a subsisting demand for 
 bullion amono- other materials of manufacture : 
 that is, for plate and for plated ware, for use and 
 for decoration. But this is a mere secondary 
 object in the commerce and dealings of the 
 empire. 
 
 There exists moreover a carrying trade of 
 bullion. The British commerce, in course of 
 its multifarious dealings, has to seek bullion in 
 one place, where it can be best spared, to convey 
 it thence to some other quarter where it is 
 more needed : or to transfer it in payment of 
 foreign debt; received in discharge of one, de- 
 livered in liquidation of another. A portion of 
 the carried bullion rests during its transit, con- 
 stituting a stock in hand. Important as this 
 traffic undoubtedly is, it yet can be but secon- 
 dary, when compared with the unceasing occa- 
 sion for bullion in any country where this is the 
 chief medium of circulation. 
 
 Wherever gold and silver occupy that promi- 
 nent place in the local currency, they must be 
 a main article of traffic. All internal commerce 
 there bears direct reference to species. External 
 commerce is intimately concerned w ith it. If 
 there be a deficiency of bullion coined or un- 
 coined, it must be sought for and fetched 
 from places where it may be procurable. If 
 
 B 2
 
 ( 4 ) 
 
 there be a redundancy, it must be carried away 
 to places that have greater need of it. Com- 
 mand of it enables the nation or the individual 
 to purchase what is wanted or desired; the fruit 
 or the performance of labour. Need of it in- 
 duces the nation or the individual to part with 
 something possessed, labour or fruit of labour, 
 whereby it may be obtained. 
 
 But in countries where gold or silver is not a 
 part of the circulating medium, each is wanted 
 only for its uses among materials of manufac- 
 ture, as a metal wrought or to be wrought ; or 
 for the carrying trade of bullion. 
 
 In Great Britain, while bullion furnishes no 
 part of the currency unless for small change, the 
 occasion for it is almost confined to its purposes 
 as merchandise, and is neither general nor in- 
 cessant. The principal and important article of 
 traffic, for which there is unceasing occasion, is 
 corn. It is the chief object of husbandry ; and 
 (if I may be allowed to use the term in a com- 
 prehensive sense for the sake of avoiding cir- 
 cumlocution, employing the single v^^ord to sig- 
 nify the vegetable nutriment of man, whether 
 cereal grains or farinaceous roots ;) it is the chief 
 means of sustenance of the people. Any thing- 
 else may be dispensed with and foregone. Corn 
 alone is always inevitably requisite : and there-
 
 ( 5 ) 
 
 fore it is the natural standard by which the 
 value of every other thing, unless among pasto- 
 ral and hunting tribes, is regulated, when there 
 is no other conventional standard possessing 
 intrinsic value. 
 
 It must be indeed admitted, tliat in long pe- 
 riods the chief article of human nourishment, or 
 in a word, corn, is a measure of the value of 
 other things, not excepting gold and silver: and 
 that bullion is not for a large period a standard 
 of the value of corn. But corn does measure, if 
 not with precision, yet with greater approach to 
 exactness than any other single mattei", the 
 worth of labour ; and this measures the cost of 
 production and value of commodities produced. 
 It is a true criterion of value, apart from the 
 consideration of rarity and predilection, 
 
 A bank-note, or other piece of currency, not 
 being convertible into gold or silver, but merely 
 conveying and assigning a credit in account or 
 right of presenting it in discharge of debt, is not 
 referrible for a measure of its value to the species 
 or denomination borne on the face of it; but to 
 the goods, merchandise or commodities, which 
 it can purchase in market ; and chiefly corn, 
 which is merchandise universally in request. 
 The currency, which has been described, docs 
 pot measure the value of commodities, though 
 
 B 3
 
 ( 6 ) 
 
 it serve for a medium of comparison between 
 goods of various sorts. The value of commodi- 
 ties in market measures that of the currency. 
 A bank-note at any given time is worth just so 
 much corn or merchandise as it will then pur- 
 chase. 
 
 Its worth would be as variable, as the fluctua- 
 tions of market, were this entirely unrestricted. 
 No guide of estimation could, in such case, be 
 indicated, besides experience of the past, and 
 probable conjecture of the future, market prices. 
 But laws, regulating importation of corn, do 
 furnish some points of a scale for estimation of 
 a currency, relatively to which its importation 
 is regulated. Under subsisting rules, which 
 sanction the vend of imported corn, when the 
 price of wheat is eighty shillings per quarter; 
 barley forty shillings ; rye, &c. lifty-three shil- 
 lings ; and oats twenty-seven shillings, a bank- 
 note of one pound sterling is, in ordinary cir- 
 cumstances, or at a mean, worth two bushels of 
 wheat; four of barley; nearly six of oats ; and 
 about three of rye, &c. 
 
 If the home growth of corn, or those sorts in 
 particular, which are chiefly consumed, be just 
 sufficient, or very nearlj' so, the value of a bank- 
 note in exchange for corn may be expected to 
 conform pretty exactly to that standard. In
 
 ( 7 ) 
 
 such circumstances the value of bulHon will be 
 regulated by the carrying trade of it ; disregard- 
 ing, as comparatively insignificant, the demand 
 for gold and silver among materials of manufac- 
 ture, or as metals wrought or to be wrought. 
 
 But if the home growth be insufficient, the 
 price must rise above the standard fixt by the 
 corn-laws, to legalize supply by importation. 
 A bank-note of a pound sterling no longer re- 
 presents two bushels of wheat and four of barley ; 
 or six of oats and three of rye : but a certain 
 other proportion of each of them. It represents 
 perhaps one and a half, or one and three quarters 
 of the bushel of wheat, or such other ratio as the 
 enhanced price manifests. 
 
 The value of the bank-note is now altered 
 with reference to gold and silver, although no 
 change should, in other respects, have taken 
 place in the commerce of bullion. For a change 
 must be produced in that trade and in its general 
 market, although no other circumstance should 
 occur to produce it, besides unusual importation 
 of corn. 
 
 Since that importation takes place in no ordi- 
 nary but extraordinary state of commercial re- 
 lations, it must be met by an uncounnon export 
 of merchandise; bullion or other commodities. 
 The goods must be sold unusually cheap to in- 
 
 B 4
 
 ( s ) 
 
 duce an unusual demand for them. An uncom- 
 mon impulse is given to the trade of bullion. 
 It must be sought and procured with the offer 
 of goods at reduced prices. Hence the anomaly 
 of increased demand tending to diminution of 
 price of all exportable goods. Bulhon is in re- 
 quest at advanced rates. A vent for other com- 
 modities is open at lowered prices. The bank- 
 note then purchases less gold and less corn than 
 before; but as much or more of other goods, 
 than it previously did. Every thing is depre- 
 ciated except bullion and corn. 
 
 This course does necessarily take effect, not 
 only when all sorts of agricultural produce are 
 scarce by reason of scanty harvests ; but also 
 when any one species of corn is deficient which 
 can be deemed indispensable. Though wheat be 
 abundant, yet if barley or oats be deficient, then 
 the value of the paper-currency is determined 
 by that deficient sort. The bank-note of one 
 pound sterling, which continues to represent 
 two bushels of wheat, now represents less than 
 four of barley, or than six of oats. It is equi- 
 valent to some other proportion ; perhaps three 
 and a half, or three and three quarters of the 
 bushel of barley ; possibly five, or five and a half 
 of oats. The paper-currency then is depreciated 
 in respect of an imported species of corn ; and
 
 ( 9 ) 
 
 in respect of bullion also: while it continues to 
 maintain its value relatively to other and unim- 
 ported corn: and this therefore, with every othCT 
 species of agricultural production, is conse- 
 quently depreciated equally and at the same 
 time with the paper currency and exported com- 
 modities. 
 
 If the home growth of every sort of corn be in 
 any season more than adequate to the national 
 wants, then indeed the bank-note will represent a 
 larger quantity of corn. The surplus of produce 
 now causes a glut in the domestic market. It 
 is not likely to find a vent into foreign countries; 
 where corn is habitually cheaper than in Great 
 Britain. The surplus must be stored here for fu- 
 ture use; and meantime it overstocks the gra- 
 naries, and lowers the price of grain below the 
 standard of the corn-laws; and very much so, if 
 the excess of the supply above the demand be 
 great. 
 
 In this case the bank-note of one pound ster- 
 ling no longer represents two bushels of wheat, 
 and four of barley ; or six of oats and three of rye, 
 &c. : but some other ratio ; perhaps three bushels 
 of wheat; possibly five of barley ; mayhap seven 
 of oats, or four of rye. Sec. The value of the 
 bank-note is a mean of the several proportions, 
 at which the various sorts of grain find pur- 
 chasers at market.
 
 ( 10 ) 
 
 The carrying trade of bullion, now experienc- 
 ing no unusual impulse, is pushed with no extra- 
 ordinary briskness. Gold and silver are mode- 
 rately in demand for their uses as metals. There 
 is not any circumstance operating, that should 
 enhance the price of bullion. It is therefore re- 
 duced to the rate, which the demand for it 
 throughout the commercial world may just then 
 assign to it, and of which it linds the level by 
 means of the carrying trade. 
 
 The value of the paper-currency relatively to 
 corn has now been increased: and the bank-note 
 can purchase a greater proportion of bullion 
 than it previously did. The price then of all 
 sorts of commodities, as reckoned in the paper 
 currency, m.ust decline; but without inducing 
 an increased demand for them. Since the foreign 
 trade is diminished, and the means of the agri- 
 culturist unaugmented. 
 
 In either case, then, of the price of corn ex- 
 ceeding or falling short of the standard assigned 
 to it by the corn-laws, a reduction of the price 
 of merchandise adapted to foreign trade, is the 
 result; attended however with diminution of 
 the demand for such merchandise in the one in- 
 stance, and with enhancement of the price of 
 bullion in the other. 
 
 It is only while corn of every sort continues to
 
 ( 11 ) 
 
 bear a mean price, that the level of trade can be 
 maintained ; and matters may proceed in an even 
 course. Then and then only can the value of 
 bullion and currency be the same; and the 
 prices of the necessaries of life, and of merchan- 
 dise adapted to exportation, be equable and uni- 
 form. 
 
 The subject has been thus far viewed as from a 
 British station. The purpose of elucidation may 
 be served by next contemplating it for a mo- 
 ment, as from a remoter and foreign point of 
 view. 
 
 The value of British paper-currency being re- 
 ferrible to definite quantities of corn, its worth 
 in foreign countries is deducible from that of 
 corn which can be sent thence to Great Britain. 
 The foreign debtors of England, or the pur- 
 chasers of its merchandise, can discharge their 
 debts, or make good their purchases, w ith conti- 
 nental corn subject to the charges of transport, 
 and worth in England more than the mean rate 
 of the paper-currency, whenever the ports may 
 be open for corn to be forthwith sold; but less 
 than that rate, when import is admissible only 
 for storing in granaries, to await during an inde- 
 finite term permission for the sale of it. 
 
 If the admission of corn for an immediate sale
 
 ( 12 ) 
 
 were a rare occurrence, the remote contingency 
 of its admissibility would greatly aft'ect that re- 
 sult; so as to do away perhaps the consequences 
 of inequality. But, if admission be so frequent 
 as to be counted upon as a proximate event, the 
 deduction to be made for contingency will be 
 less considerable, and the value of the paper-cur- 
 rency will more nearly approximate at all seasons 
 to the cost of foreign corn sent from abroad to 
 England. 
 
 When the ports of Great Britain are actually 
 open, the value of the British currency in foreign 
 exchanges must be governed by the cost of 
 foreign corn sent to England. The purchaser of 
 British commodities, or the debtor abroad, can 
 liquidate the debt, or complete the purchase, 
 with such foreign corn: and the value of the 
 debt is no greater than the cost of so much as 
 will serve to effect its discharo-e. 
 
 While the ports are closed to imported corn 
 for immediate sale, the foreign exchanges must 
 still be influenced by the cost of foreign corn, 
 subject however to a deduction for the contin- 
 gency of the early or distant admissibility of it. 
 
 The foreign trader then can estimate the Bri- 
 tish paper-currency at no more than the cost of 
 corn in a foreign market, whence he could cause
 
 ( 13 ) 
 
 a sufficient quantity of it to be conveyed to Eng- 
 land for the purpose of a remittance, subject to 
 charges of transport as incident to such remit- 
 tance, and subject likewise to a suitable deduc- 
 tion for the period that is to run before the remit- 
 tance becomes effectual. Tliat period is a short 
 one when the ports of England are open to im- 
 portation for immediate sale. It is longer, inde- 
 finite and contingent, when they are closed. 
 
 Foreign exchanges must be influenced, if not 
 primarily regulated, by the difference of the 
 price of corn in Great Britain, and at the mar- 
 kets whence its foreign supply is chiefly sup- 
 plied. 
 
 It may be here remarked, by way of incidental 
 observation, not however altogether foreign to 
 the main subject, that the subsisting rules, 
 which regulate the importation of corn in Great 
 Britain, operate as a grant of a premium, and a 
 very large one, upon imported corn, whenever 
 the vend of this for domestic consumption be- 
 comes lawful. The cost of its production in 
 foreign countiies being much less than it is in 
 England, the price at which it may be imported, 
 so as to afford competent profit in ordinary 
 course, is very much short of the rate which au- 
 thorizes the vend. The difference is a premium
 
 ( H ) 
 
 to the importer, shared between the British trader 
 and foreign suppher. So much of it, as is ob- 
 tained by tlie latter, is a tribute, which Great 
 Britain pays to the foreign granary. So much as 
 remains with the former, is an impost levied on 
 the consumer for the benefit of the speculator. 
 
 Before we proceed to consider the probable 
 effect of the same causes, as they will operate 
 after the resumption of cash-payments, it may 
 b€ advisable to pause over a few observations 
 concerning the necessary preparation for it. 
 
 To that end it is requisite, not only that the 
 Bank should be provided with a sufficient fund 
 of coined money to face the probable demand for 
 it, upon ordinary estimates of banking, with re- 
 ference to the quantity of bank-notes to be kept 
 in circulation ; but it is likewise necessary, that a 
 sufficient amount of coined money should be 
 further provided, to supply the general wants of 
 circulation concomitantly with a currency of 
 bank-notes; and over and above the ordinary 
 stock of bullion in hand, for the carrying trade 
 of it, and for the supply of wrought gold and 
 silver. 
 
 The amount, which will be now requisite for 
 that purpose, must assuredly be greater than the 
 whole quantity of circulating coin as current 
 before the enactment of a restriction on cash
 
 payments. That has been estimated at twenty 
 miUions of pounds sterling: and it will not be 
 thought an extravagant supposition, that half as 
 much more, or thirty millions sterUng of gold 
 and silver, may be now requisite for the same 
 purpose. Coined money must take the place, 
 not only of notes of the Bank of England, but 
 likewise of notes of country banks in districts 
 of Great Britain, where notes of the Bank of 
 England have none or scarcely any circulation. 
 The amount of coined money, which will be 
 wanted, cannot therefore be estimated from the 
 circulation of the Bank of England alone. 
 
 The smaller part of that amount will suffice 
 for the banking stock of the Bank of England. 
 The greater part is requisite for more general 
 wants of circulation. 
 
 It is a mistake, and not an uncommon one, to 
 suppose, that, because the Bank has been a 
 gainer by the restriction of cash-payments, there- 
 fore that body must be the loser by the resump- 
 tion of such payment, and bear all the expense of 
 it. No doubt the Bank must defray the charge 
 of providing the quantity of species necessary to 
 the transaction of its ordinary business under the 
 circumstance of renewed liability to a call for 
 coined money. It is understood to have done so. 
 But the expense of providing the quantity
 
 ( 16 ) 
 
 needed for general circulation must and will 
 fall, as in justice it ought, upon the public or 
 the state. 
 
 To replace its issues of coined money, after 
 the restriction shall have been withdrawn, sup- 
 posing bullion to exceed the mint price, the 
 Bank has but to employ the means which it pos- 
 sesses, to leave no resource to its debtors, but 
 payment in species. It need but curtail the issue 
 of notes for a while, after recalling a portion of 
 outstanding notes by sale of exchequer-bills, or 
 other securities held by it ; and the rest of its 
 debtors must find metallic money to make good 
 their engagements. Now it is clear, that the 
 debtor, not the creditor, is the person who must 
 sustain the loss incident to the provision of 
 means of payment. It is he who is to pay, not 
 he who is to receive, who must bear the burden. 
 The Bank, it is true, must furnish coin in the 
 first instance to pay its notes upon demand. But 
 the public must furnish coin in the next in- 
 stance to pay the acceptances which the Bank 
 holds, and to discharge engagements at their 
 term. The Bank, as should be remembered, is 
 more a creditor than a debtor. Its own notes are 
 indeed payable at sight; and its purchased bills at 
 dates. But these come in course of payment 
 faster than any run upon the Bank, which can
 
 ( 17 ) 
 
 be anticipated, could exhaust its funds for an- 
 swering the call for coin. 
 
 What may be the opinion of the Directors of 
 the Bank, in regard to the interests cf that body, 
 as concerned in the question of resumption of 
 cash-payments, tlie author has not any preten- 
 sions to know : but to his apprehension it seems 
 evident, that the notions, with which this great 
 national question has been taken up in a spirit of 
 animosity against that body, are founded in error 
 and prejudice. 
 
 Were a metallic currency re-established, the 
 Bank would probably be enabled to maintain 
 nearly as great a circulation of its notes, as it 
 has of late years done: and might be able to do 
 so with a less stock of bullion than it has been 
 for some time pro\ided with. The Bank now 
 reaps a benefit from interest received upon an 
 amount equal to the sum of outstanding notes, 
 abating interest foregone upon the unprofitable 
 amount of gold and silver in its coffers. It would 
 reap a like benefit of interest upon the difference 
 between the circulation maintained and the 
 stock of coin and bullion kept up. As the Bank 
 is understood to have a greater store than it 
 would be necessary to retain as a current stock, 
 that difference, when matters shall have got into 
 
 c
 
 ( 18 ) 
 
 a regular course, would probably surpass the 
 actual excess. 
 
 A critical period must, no doubt, be gone 
 through by the Bank, and by the public at 
 large, while passiug from a paper-currency to a 
 metallic one. The Bank however has nothing to 
 apprehend from it : j^eyond a mere transitory oc- 
 casion to forbear a portion of its accustomed 
 gains. The public in general is likely to expe- 
 rience no small revulsion. Yet, as this must be 
 encountered some time or other, if the country 
 is ever to return to a wholesome metallic cur- 
 rency, it may as well be encountered now, as at 
 any future moment, if the period be not espe- 
 cially unseasonable for the public interests. The 
 Bank has not, as a distinct body, any separate 
 concern in this matter. 
 
 Among those, who deprecate an immediate 
 return to cash-payments, some appear to rely on 
 the argument of a supposed general scarcity of 
 bullion. Yet, if gold and silver be universally 
 scarce ; which, considering the disturbed state of 
 the countries in which the most productive 
 mines of gold and silver are situated, and the 
 consequent diminished supply of these metals, 
 may not improbably be true, the resumption of 
 cash-payments would but place England on a 
 par with the rest of the world. A general re-
 
 ( 19 ) 
 
 cluction of prices must ensue, if a general defi- 
 ciency of Ijullion exist. The main inconvenience, 
 which must arise from England's jDarticipation, 
 will be the contrast between British currency 
 and that of other countries, with reference to 
 corn, being thus rendered more glaring and more 
 burdensome. 
 
 With no great depth of sagacity it is easy to 
 foresee a future excess of supply, much surpass- 
 ing the present defect. When tranquillity shall 
 have been restored in Spanish America; and 
 when, as a consequence of its restoration, science 
 with its modern improvements, with the steam- 
 engine and with skilful metallurgy, shall have 
 penetrated into the mines of Mexico and Peru, 
 the supply of gold and silver will be as much too 
 abundant, as it is now too scanty. An eventful 
 change in the value of silver and gold may be 
 therefore anticipated, though its probable date 
 cannot yet be assigned. Every thing must then 
 become dearer, just as it now grows cheaper. It 
 cannot surely be proposed to postpone a return 
 to metallic currency in England, until that great 
 revolution shall have commenced. 
 
 If, indeed, there be a prevalent scarcity of gold 
 and silver at present in other countries, as in 
 England unquestionably there now is, that 
 
 c 2
 
 ( ao ) 
 
 scarcity, so far as England is concerned, must 
 be in part ascribed to a hoard of bullion, with- 
 drawn from commerce, and unprofitably laid up 
 in the coffers of the Bank. Let that be thrown 
 into the market, and the actual scarcity will be 
 relieved by it: and most likely bullion may ere 
 long be repurchased at more equal prices. 
 
 Much regret has been expressed repeatedl}', 
 and from divers quarters, that a large sum of 
 coined gold should have been issued from the 
 Bank, (no less than six millions sterling with- 
 in the last three years,*) which instantane- 
 ously disappeared from circulation. The promp- 
 titude, with which it vanished, has indeed been 
 not a little instructive. It has no doubt been 
 exported for bullion. But surely it has not been 
 therefore unserviceable. For it has gone towards 
 the liquidation of an unfavourable balance. Had 
 it remained in the coffers of the Bank, with the 
 rest of the gold and silver provided as a prepara- 
 tive for returning to cash-payments, just so much 
 of the unfavourable balance would have conti- 
 nued undischarged, burdening the commercial 
 relations of the country. The foreign exchanges 
 
 * See printed returns to Parliament. The amount seems to 
 be ^6,227,345. But there is some discrepancy in particulars.
 
 ( 2: ) 
 
 would have so much the eailier grown to l)e still 
 more clisaflvantageous to Great Britain. 
 
 That issue of gold coin did not serve, as must 
 be confessed, the purpose for which it was put 
 forth — to commence a renewal of metallic cur- 
 rency. But it restored to the market gold which 
 had been withdrawn from it, and which was 
 needed in it. The supply did tend to keep 
 down the price of bullion in the market ; which 
 was a very desirable end. It enabled British 
 purchasers of bullion abroad to obtain gold, for 
 a while, at less advanced rates tlian they must 
 else have given in the sterling or nominal desig- 
 nation of British currency. 
 
 Has no part of the present hoard of gold at 
 the Bank been collected since that issue of gold 
 coin began ? Has none been accumulated during 
 its continuance ? To that very issue of coin 
 from the Bank, improvident as it has been 
 deemed, must be mainly ascribed a prolonged 
 moderation of the price of bullion; daring tlie 
 continuance of which, requisite supplies were 
 obtained from abroad ; and may or might have 
 contributed to replace to the Bank that una- 
 vailing issue of coin. 
 
 The national loss attendini^- the transaction 
 has consisted in the expense of coinage. It 
 is a dead loss to the state, or apj^arcntly is so, 
 
 (■ 3
 
 ( 22 ) 
 
 supposing the gold coin to have been melted 
 down. Much of it, however, was carried abroad 
 unaltered. A part of that export continues to 
 move in the foreign carrying trade of bulHon, 
 as Portugal gold and Spanish dollars do in our 
 own. Whatever remains unmelted will certainly 
 revert to England, whenever the foreign ex- 
 changes shall turn in its favour. No loss then 
 need ultimately to result from the export of 
 unmelted coin: which is but pledged or deposited 
 abroad, to be redeemed or recalled at a future 
 time. The detriment is confined to so much as 
 has been converted into another shape ; and 
 which is alienated under a loss of the whole 
 charge of coinage. 
 
 A question may here be proposed, not unde- 
 serving of consideration ; whether it might not 
 be expedient for the public interest, to draw 
 forth the store of gold and silver, which is at 
 present retained in the Bank ; although the re- 
 sumption of cash payments, with a view to 
 which it has been there accumulated, should 
 continue to be for a while deferred. The very 
 step, which was taken as a preparative for the 
 return to cash-payments, becomes in its turn an 
 obstacle to the accomplishment of that important 
 object. It has contributed to produce a scarcity, 
 which conversely prevents the completion of
 
 ( 23 ) 
 
 the purpose for which it was undertaken. Tiiat 
 hoard is now at best useless. According to the 
 subsisting- law, it is not to be applied to the pur- 
 pose for which it was laid by, until six months 
 hence ; and according to the intentions of the 
 ministers of the crown, until more than a twelve- 
 month from this time. Meanwhile public relief 
 would be afforded by lending it, in way of ac- 
 commodation, to be repaid in kind before the 
 appointed time for the discontinuance of the 
 Bank restriction. It is but necessary that the 
 public voice, through its legitimate organ, should 
 authorize the Bank so to apply its hoarded gold 
 to the relief of the public exigency. 
 
 The retention of a hoard of gold and silver, 
 while bullion bears an exorbitant price, (the des- 
 tined use of that fund being yet remote,) seems 
 to be much such policy, as the keeping of a well 
 stocked granary closed during an urgent famine, 
 and until an abundant harvest shall have been 
 reaped: not merely to a later period of the 
 dearth ; but purposely and professedly until the 
 scarcity shall, by other means, be relieved and 
 cease : not for more urgent exigency ; but for 
 use after the cessation of urgency. The store of 
 gold and silver is not to be employed until the 
 price of bullion shall fall ; when it might be 
 easily replaced, were it now issued. Mean time 
 
 c4
 
 ( 24 ) 
 
 it is withheld ; and the withholding of it helps 
 to prolong the scarcity, which originated in the 
 withdrawing of it. 
 
 That hoard of gold, however, is not alone an 
 adequate provision to enter at once upon the 
 re-estahlishment of metallic currency. Enough 
 of gold, as of silver, must be first provided to 
 serve all the purposes of that metallic circulation : 
 not a mere sufficiency for the ordinary course of 
 the business of the Bank after the complete 
 restoration of a gold currency. 
 
 When the wants of Great Britain, by the re- 
 establishment of metallic currency, shall have 
 been superadded to that of the rest of the w orld, 
 unquestionably this increase of occasion for bul- 
 lion must add to its value, and proportionally re- 
 duce the price of all other things ; not in Eng- 
 land alone, but in the market of other countries 
 likewise. Supposing, for illustration's sake, that 
 the resumption of cash-payments in England 
 raises a want of thirty millions sterling, and that 
 the whole quantity in circulation in countries 
 with which Great Britain extensively deals, is 
 three hundred millions: then bullion will be 
 enhanced one tenth; and all other things depre- 
 ciated in like proportion. 
 
 The whole requisite quantity not being 
 actually present in England, it must be pur-
 
 ( 25 ) 
 
 chased from abroad by an extraordinary export 
 of goods. This cannot be effected on the sud- 
 den, by merely wilhng it. The purpose must be 
 accompHshed by course of trade in a period of 
 years. Whether tliis can be done at the same 
 time that an unusual export of goods takes place 
 in payment of imports of corn, may seem proble- 
 matical. It would not perhaps be unreasonable 
 to surmise, that no period can on probable 
 grounds be assigned for the completion of such 
 an import of bullion, (divested as England has 
 been of its metallic currency,) as would place it 
 on a par with the rest of Europe (which has pre- 
 served one,) earlier than that of the British corn 
 trade having found its level. 
 
 That level it cannot find, until a large expe- 
 rience has determined the average import of 
 corn in respect both of time and of quantity. 
 This experience can be but slowly gained. 
 When it has been acquired, the trade, though 
 fluctuating: from brisker moments to a duller 
 condition, will partake of the nature of a perma- 
 nent though unsteady traffic. Mean time the 
 occasional recurrence of extraordinary import of 
 corn, and correspondent export of goods, inter- 
 rupts the progress of another but temporary traf- 
 fic, consisting of an extiaordinary export of 
 goods for a correspondent import of bullion.
 
 ( 26 ) 
 
 This brings us to the consideration of the re- 
 maining point proposed for examination, — The 
 effect of fluctuations in the price of corn after 
 the resumption of cash- payments at the Bank of 
 England. 
 
 If the price of corn do not exceed the standard 
 fixed by the corn-laws, no importation conse- 
 quently takes place. The price of bullion will 
 now be governed by the course of the carrying 
 trade of it. In ordinary times, as in peace, its 
 fluctuation cannot be very great : no such 
 urgency of commercial wants can be antici- 
 pated as should cause any great variation in the 
 price of bullion, unless some emergency occur 
 in another country that has extensive dealings. 
 An unusual demand being created elsewhere, 
 the prices may be here affected by it. But even 
 the difficulty of supplying an uncommon want 
 is no small check on it, tending to depress it and 
 keep it within bounds. 
 
 When the price of corn (intending by that 
 term what is convertible into meal for food of 
 man) does exceed that standard, a supply of the 
 necessaries of life must be sought, and will be so, 
 even on exorbitant terms : and, as the ordinary 
 price of corn in England exceeds even extraor- 
 dinary prices abroad, the advanced rate at home 
 can scarcely feil of commanding the supply.
 
 ( 27 ) 
 
 Payment of it must be effected by a more than 
 usual export of goods; and among the rest, and 
 perhaps foremost among them, with labour. 
 
 The frequent recurrence of this exigency can- 
 not but excite a continual expectation of it. The 
 course of trade will be adjusted consonanth^ to 
 that expectation. Goods will be taken upon cre- 
 dit at foreigJi markets with an indirect view to a 
 payment in corn, which shall be effected when 
 an opportunity occurs for doing so witli the 
 whole benefit of the premium, which our corn* 
 laws virtually grant upon importation. Goods 
 will be sold upon credit in contemplation of re- 
 mittances to be effected when the granaries shall 
 be open for the sale of foreign imported corn, 
 and when the ports shall be open to the impor-* 
 tation of corn for innnediate sale. 
 
 By corn then will the foreign exchanges be 
 regulated. The balance of trade, as concerns 
 other merchandise, must be made good with 
 corn. The balance of debts, when in favour of 
 Great Britain, must finally be licjuidated by re- 
 mittances of corn; when unfavourable to it^ 
 must provisionally be discharged with bullioiL 
 Corn becomes the ultimate object of transactions 
 of British conunerce, however circuitously: and 
 it ultimately determines the value of currency, 
 and necessarily governs foreign exchanges.
 
 ( 28 ) 
 
 But the ounce of gold, which in England, by 
 operation of law, represents little less than a 
 quarter of wheat, and the on nee of silver, which 
 in like manner represents a little more than half 
 a bushel of the same sort of grain, do not in any 
 other part of Europe stand for so much as two 
 thirds or half of that value. 
 
 There must be a constant tendency then of 
 those metals, easily transportable as they are, to 
 move from a country where they are under- 
 valued, to another in which they bring a greater 
 value. England therefore must always be un- 
 derstocked with bullion. No more can at any 
 time be willingly retained, than is quite unavoid- 
 able : and any the slightest unusual call for it, 
 must find a deficiency, and have the consequent 
 effect of inducing scarcity. As with other in- 
 dispensable things, a small degree of further de- 
 ficiency, coming upon an already scanty stock, 
 and meeting no prompt supply, must be produc- 
 tive of very great enhancement of price. 
 
 It is hence inferred, that, after the abrogation 
 of the restriction on issues of coin from the 
 Bank, and after the resumption of cash-pay- 
 ments there, and re-establishment of metallic 
 currency in the realm, England will j^et be sub- 
 ject to frequent and distressing fluctuation of the 
 price of bullion, compared to its currency con-
 
 C 29 ) 
 
 sisting of paper convertible into coin, and of 
 coin not convertible, without breach of the law, 
 into bullion. 
 
 Gold and silver, though universally serving 
 for their conventional as well as their intrinsic 
 value, are not the only measure of valuation. 
 Corn measures Avorth likewise, and more perma- 
 nently than they do. Undervalued, as they now 
 relativ^ely are, according to the standard here 
 fixed by the corn-laws, the country is, in respect 
 of its currency, much in the same predicament 
 with one that has a portion of debased currency 
 co-ordinate with one more really valuable. 
 
 The currency is by operation of law rendered 
 representative of certain average quantities of 
 corn. Paper-circulation, standing for debts which 
 may be discharged with the equivalent of those 
 quantities, does truly represent no more. But 
 gold and silver, having an intrinsic greater 
 value, as vendible abroad for more than the 
 equivalent of those quantities, is a currency of 
 more real worth. Both cannot long remain in 
 circulation together. The gold and silver must 
 give place to paper-currency, and leave it in sole 
 possession. 
 
 It has been thought and alleged, that the 
 Bank of England possesses the ability of restor- 
 ing, at any time, the par of paper-currency and
 
 ( 30 ) 
 
 bullion, by the simple expedient of contracting 
 its issue of bank-notes ; and would be compelled 
 by a prudent regard for its own interest to do so, 
 were its notes made convertible into coined 
 money : or, in other words, that the steps, which 
 must be taken by the Bank, whenever bullion 
 rises much above the Mint price, to make its 
 prompt resources of coined money suffice, and 
 to protect itself from a run upon it for gold, 
 would re-establish the par of foreign exchanges, 
 by raising the value of its paper-circulation to a 
 level with the price of bullion in market. 
 
 That notes of the Bank of England, converti- 
 ble into gold coin upon demand, must keep 
 pace with the value of bullion, so long as confi- 
 dence in the solvency of the Bank endures, is a 
 position not to be controverted. That they 
 should continue to do so, down to the very last 
 note suffered to remain in circulation, is unde- 
 niable. The debtor of the Bank must purchase 
 its notes or else metallic currency at the price of 
 the latter, which is nearly the same with the 
 price of bullion, to fulfil his engagements to the 
 Bank. He must give nearly the same premium 
 on one as on the other. 
 
 In ordinary circumstances this may doubtless 
 suffice. If all the gold and silver, coined and 
 uncoined, which is present in the whole country,
 
 ( 31 ) 
 
 be more than adequate to the foreign demand for 
 bulHon, the par of exchange will assuredly be 
 restored, and probably be soon turned, and ex- 
 changes incline the other way, until a competent 
 quantity of gold and silver be brought back. 
 
 But if the foreign demand for bullion exceed 
 the actual quantity of gold and silver in the 
 realm ; if its resources of metallic money and 
 of bullion be inadequate to the craving of the 
 foreign market ; what then is to ensue ? Every 
 note of the Bank of England will certainly be 
 withdrawn from circulation. What then is to 
 follow ? 
 
 It is, however, contended, that, before mat- 
 ters could arrive at that point, the whole quan- 
 tity of the paper-circulation must have been 
 reduced in proportion to the reduction of the 
 Bank-circulation : and its value proportionately 
 augmented with its scarcity. Goods, conse- 
 quently falling in price, would become available 
 for exportation to satisfy the foreign debt. 
 
 The reasoning, which supports the argument 
 alluded to, may be quite satisfactory and con- 
 clusive, if all the data be conceded; if things 
 remain in other respects as they are ; or as, for 
 the argument, they are supposed to continue. 
 
 But it is not by any means clear, that the 
 paper-circulation in general, whereof bank-notes
 
 ( 32 ) 
 
 are but a part, shall precisely follow the lead of 
 bank-paper. 
 
 The paper-circulation of Great Britain, besides 
 notes of the Bank, consists chiefly of exchequer- 
 bills payable at a future and not precisely defi- 
 nite term ; and, in the next place, private ac- 
 ceptances payable at Ihiiited dates ; and lastly, 
 notes of private banks and of individuals, like- 
 wise payable on demand. 
 
 Exchequer-bills, which in their amount much 
 exceed the whole circulation of the Bank of 
 England, are not subject to an immediate exac- 
 tion of payment. They are liable to unlimited 
 depreciation : not being convertible into money 
 at the will of the holder and at his own time, 
 but at a period determined by the debtor instead 
 of the creditor. 
 
 Private acceptances at short dates are more 
 nearly on a footing with notes payable on de- 
 mand. At the expiration of the term they fall 
 into the same class with them. 
 
 These are indeed exigible forthwith: and must 
 be discharged either with coin, or with notes of 
 the Bank of England, or with the set-off of 
 some other transferable demand. 
 
 If this alternative did not exist, the expectation 
 entertained, that a diminution of amount in the 
 circulation of the Bank of England's notes shall
 
 ( 33 ) 
 
 enforce a like reduction of notes of country 
 banks and a general diminution of paper-circu- 
 lation, might be well founded : provided no 
 other expedient remain to the private circulator. 
 
 Without stopping to inquire whether other 
 expedients may probably be devised and are 
 likely to be adopted, it is enough for the argu- 
 ment to observe, that the alternative, which has 
 been mentioned, cannot be excluded. In a scar- 
 city of money, it is not impracticable to have 
 recourse to an exchange of debts and barter of 
 credits, for the liquidation and adjustment of 
 all pecuniary transactions, in like manner as 
 recourse is had to the barter of goods under cir- 
 cumstances of scarcity of currency. 
 
 The prevailing practice of country banks, and 
 their mode of dealing, together with the man- 
 ner in which a daily settlement of accounts is 
 effected among bankers in London, have paved 
 the way for the complete introduction of a 
 system of barter and exchange of debts and 
 credits: by which a common medium of curren- 
 cy, unless for small change, may be entirely 
 dispensed with. 
 
 Notes of country banks are payable in Lon- 
 don or by drafts on London. They are there 
 paid, like payments originating in London, at 
 the houses of bankers. The holder of the draft 
 
 D
 
 ( 34 ) 
 
 pays it to bis banker, bas credit for it, and draws 
 against it for any payments wbicb be himself is 
 to make good. Tbe London bankers mutually 
 settle daily their accounts of tbe day ; and tbe 
 fmal balance of tbe whole account among the 
 whole body, may as easily be adjusted by a 
 transfer of credit with the Bank of England 
 covered by unexpired bills previously deposited 
 with the Bank, as by actually passing notes of 
 the Bank from tbe hand of one banker's clerk 
 to that of another. Tbe practice of opening an 
 account with the Bank, and maintaining a credit 
 there by a deposit of discountable bills, is an es- 
 tablished one : and nothing can be easier than 
 such an use of it. 
 
 In the whole of these transactions not a piece 
 of money, nor a Bank of England's note, is 
 needed. All is effected by transfer of credit 
 among parties step b}^ step known to each other. 
 It is only for small payments, and between par- 
 ties not known to and trusted by each other, 
 that a current medium of circulation is indis- 
 pensable. 
 
 In every part of Great Britain, besides Lon- 
 don and its immediate vicinity, with a single 
 distant county, that want is supplied by notes 
 of- the country banks. It appears by no 
 means improbable, that as fast as notes of the
 
 ( 35 ) 
 
 Bank of Enolaiid shall be withdrawn, notes of 
 countiy banks will take their place in the more 
 distant as well as in the nearer range of the cur- 
 rency of the metropolis, if not within the metro- 
 polls itself. A much less circulation of Bank of 
 England's notes may suffice, as their place be- 
 comes supplied by circulation of country notes: 
 without any consequent diminution of the ag- 
 o-reoate amount. 
 
 On the extreme supposition, which has been 
 before admitted, that the Bank of England may 
 be driven to withdraw the whole of its notes 
 from circulation, it yet does not follow, that no 
 device or contrivance may be hit upon by pri- 
 vate persons to furnish the metropolis with a 
 paper-currency in the absence of bank-notes and 
 metallic-circulation; or that the urgency of the 
 public wants may not give birth to the intro- 
 duction of a substitute, without deliberate art or 
 contrivance, and simply in a natural course as a 
 result of the emergency. 
 
 In less exigency, recourse has formerly been 
 had to the issue of tokens by individuals. Other 
 means, not contrary to law, might be now 
 pointed out as likely to be resorted to, if the 
 object of these speculations were to suggest a 
 prospective remedy for a contingent evil. 
 
 D ii
 
 ( 36 ) 
 
 Enough has been said to show, that it is far from 
 an admitted truth, that all the data, upon which 
 the reasoning here controverted was founded, 
 can be assumed as certain and inevitable. 
 
 If there were no other criterion and measure 
 of the value of paper-currency besides its scarcity 
 or abundance, then the argument for an expecta- 
 tion, that its value shall follow the scale of its 
 copiousness, might be just. Perhaps when that 
 argument was put forward, it might be entirely 
 correct; no other criterion existing, besides the 
 standard value of the denomination of money 
 borne on the face of that currency. But paper, 
 whether consisting of Bank of England's notes, 
 or exchequer-bills, or private acceptances, or 
 country notes, represents debt, or an obligation 
 of payment; which will be fulfilled by transfer 
 of a credit in nominal money, that is, the pound 
 sterling ; the value of which is now fixed at the 
 mean price of divers sorts of corn: two bushels 
 of wheat and four of barley; nearly six of oats 
 and three of rye, &c. 
 
 Bullion may fluctuate in price; gold and sil- 
 ver may be scarce or abundant; both may dis- 
 appear from circulation: bank-notes may follow 
 in the train, and be withdrawn from circulation : 
 all the while the mean worth of the pound of 
 sterling remains, amidst the vicissitudes of metal-
 
 ( 37 ) 
 
 lie currency, regulated and determined by the 
 average price of corn. 
 
 The pound sterhng is not a fourth part (more 
 a few grains) of an ounce of gold; nor is it a lit- 
 tle less than four ounces of silver; but it is the 
 mean price of two bushels of wheat, and certain 
 other proportions of other grain. 
 
 Vain then will every endeavour be to establish 
 and preserve a metallic cuiTency, while the real 
 standard of the value of money is corn, and not 
 gold nor silver. The endeavour may be attended 
 with serious inconvenience. It may produce 
 much uncertainty and confusion; much distress 
 and difficulty. It cannot be eflPectual : until the 
 corn-laws are altered, and the pound sterling is 
 measured by gold and silver, instead of wheat 
 and barley. 
 
 I am not unapprised of very cogent reasons 
 against re-agitating the important question of the 
 corn-laws. But, if indeed it be forbidden in pru- 
 dence to amend those regulations, we must be 
 content to abide their consequences: among 
 which the most prominent is an utter impossi- 
 bility of retaining gold or silver currency, while 
 the regulated price of corn materially differs 
 from its arbitrated price and true value in ex- 
 change for bullion; and an emergent call for
 
 ( 38 ) 
 
 importing a foreign supply of necessaries of life 
 is matter of occasional recurrence. 
 
 It is with a deep sense of the vital importance 
 of these topics, and the intimate relation be- 
 tween them, that I have ventured to touch upon 
 the subject. It is one that should be approached 
 with no bias or prejudice; with no party feeling, 
 nor personal animosity; with no selfish senti- 
 ment; no tincture of resentment of the past, nor 
 angry anticipation of the future. 
 
 If the public interests require, that an arbi- 
 trar}^ value of agricultural produce should be 
 maintained, to uphold the national income, and 
 support the revenue of the state which is de- 
 rived from it; and thus enable the nation to bear 
 its burdens and fulfil its engagements; be it at 
 the same time felt and remembered, that to 
 maintain that arbitrary value, an artificial cur- 
 rency must be supported. 
 
 If the public interests may be better consulted 
 by promptly returning to the wholesome con- 
 dition of a metallic currency, upon par with the 
 rest of the civilized and commercial world, be it 
 understood and recollected, that the price of 
 every other commodity, of labour and all its pro- 
 ductions, must adapt itself to the same level. By 
 that par, and by no arbitrary value, must be de-
 
 ( 39 ) 
 
 termined the worth of agricultural produce, the 
 amount of the national income derived there- 
 from, and the sum of the public revenue levied. 
 
 Whether the nation may be able to face its 
 engagements, and support the consequent bur- 
 dens, is matter for serious consideration. If it 
 be impracticable to accomplish the one object 
 consistently with the other, what course is to be 
 followed to shun impending evils? 
 
 To pursue this subject through all its bear- 
 ings, and thoroughly examine the momentous 
 question, is beside the purpose of this essay. 
 Profoundly impressed with the notion of an inti- 
 mate connexion between two matters, one of 
 which is a topic of universal disquisition, while 
 a prevalent disposition is apparent to blink the 
 other as a hazaidous and unwelcome question, I 
 have been desirous, with deference and caution, 
 to convey to the minds of others the impression 
 which is deeply felt by myself. 
 
 Let the option of prolonging an artificial state 
 of currency, or reverting to the more natural 
 condition of it, be well weighed and dispas- 
 sionately determined. But let it not be forgotten, 
 that another, and not less momentous, question is 
 involved in the decision; that the choice lies be- 
 tween artificial currency, together with a great 
 income drawn from sources raised to an artificial
 
 ( 40 ) 
 
 elevation, or the re-establishment of natural 
 prices with metallic currency and reduced na- 
 tional income. One part of the election is inse- 
 parable from the other. Let that be chosen, 
 which is most conducive to the public interests: 
 and let that option be made without fear or 
 favour. 
 
 Loiiduu: Printed bv C. Kowortli, 
 Bell Yard, Temple Bar^