I ,.:.'^v THE UNIVERSITY OF ILLINOIS LIBRARY 3875 W<'' CONSIDERATIONS ON THE PRESENT STATE OF BANK NOTES, SPECIE, AND BULLION; IN A SERIES OF LETTERS, ADDRESSED TO THE RIGHT HONORABLE - IN TWO PARTS. BY MEJRCATOH. L ONDON: PRINTED FOR THE AUTHOR, Aiid sold by David Arnot, 9, Ball-Alley, Lombaid-Stre6tj John Lake, 15, Tokenhouse-Yard ; Sherwood and Co. 20, Paternoster-Row ; And all other Booksellers. r. Mttulen, Printer, Shtrbiurn Lmt. 1811. IPrice Two Shillings.'] APOLOGY. ^I^HE following Letters were (anonymously) addressed to a Right Honorable Gentle- man of high Consideration in the Councils of the State, at a Period when the Public Mind was much agitated on the Subject ; hoping that some of the Writer's Suggestions might have been thought worthy of Adoption : But, on the contrary, a Bill has since been brought into Parliament, and passed, the Enactments whereof are so opposite to his Opinions, that he now feels an irresistible Impulse to commit them to the Press, somewhat modified and curtailed ; acknowledging, at the same Time, the inadequacy of his Abilities to treat upon so delicate a Subject* He therefore most respectfully submits them to the Peers and Members of Parliament, for whose perusal they are chiefly designed, pre- vious to the next Session ; when, he still pre- sumes to think, the Bill will either be repealed^ or amended, so as to restore our banished Coin, which has passed into othear States, where its Value is better appreciated; or, at any Rate, to prevent what yet remains, together with our Silver Tokens, from vanishing like- wise ; and which alone can support the Credit of our Bank Notes. ^ MERCATOR. London, 3\st Oclobtr, 1811, PART I. CONSIDERATIONS ON THE PRESENT STATE OF Bank Notes^ Specie^ &c. No. I. London, %Ut May, 1811. SIR, Much has been lately said and written respecting the alarming Increase of our Bank Notes, and the like Decrease of our Specie, which has pro- duced a consequent Deterioration of the former, when compared with the price of Bullion ; whilst it is nevertheless contended, (by some,) that there is no difference between Bank Notes and our own Coinage : but that is a Paradox, because the cur- rent value thereof is fixed by Law. In all those discussions upon so momentous a subject, it does not appear to me, that any Remedy has yet been suggested, or at any rate acted upon ; and we therefore remain just where we were, lioping that every thing will yet go well. I hope so too; but it is like the hope of a Dying man, who dislikes, and therefore will not take. Medicine, because his Recovery is possible without it. I believe, however, it is generally admitted, that the present scarcity of the precious Metals has ari- sea from the two following causes. s First, the Restriction laid upon the Bank of Eng- land from issuing Specie ; which, however necesr sary, has also had the effect of locking up what was in the hands of Individuals; whilst the Bank were the only gainers, by lending their Btdlion to the Government, and their ISlotes to the Public^ upon Interest; and this without the responsibility of redeeming them by CasJi, and for which high ( if not dangerous) Privilege, the State receives no adequate return. And, secondhj, from the unavoidable Exportation of Bullion, and Foreign Specie^ (also cur own Coinage clandestinely,) to pay for Corn, and other articleij of necessity, (or luxury,) formerly paid for by our Manufactures, Colonial and Foreign Productions; and has now brought a very great l)alance of Trade against us, which, in the present circumstances of Commerce, can only be liqui- dated by the iirccious Metals: and to this may be added the Payment and Supplies of our Forces abroad, together with many large Subsidies of Foreign Troops, which must chiefly be made in Specie or Bullion, and are all likely to continue during a protracted War, In order, therefore, to meet this continual dimi- nution of our precious Metals, ai,d the like increase of our Paper currency ; which can only be effected by restoring (as far as possible) their foi^mei^ Equa- lity, I would humbly propose the two following Expedients. First, to prevent the Exportation of Bullion and Foreign Specie, excepting for the purposes of Government, whilst the Price continues above the present value of our own Coinage : and, to oTaviate any Evasion, I would also recommend the same pro- hibition of manufactured Plate, unless the work- manship exceeded the value of the Metal, and then only to be permitted upon the oath of two compe- tent persons in the Trade. And, secondly, to raise (or lower, when the case may require it) the Value of our oiicn Coinage somewhat above the Price o{ Bullion in the Market, from time to time, (say at three months each, or oftcner,) so that it may keep pace with the latter, and thereby alone prevent the former from beii;g Melted, or dandeslindjj Exported. And the more effectually to accomplish this, I would also recom- mend that our Rtfiners s\\o\\\A be prohibited from Melting our oicn Cold, as iiitlicrto^ when light; t)ut that the Holders should receive an eqiial weight 10 (allowing for re-coinage) at the Bank of England, or the Mint, in the same Coin, unless they prefer- red Bank Notes ; by which means we shall keep in Circulation what otherwise would be converted into Bullion. For at present, a Guinea, weighing five pennyweights and eight grains, passes current by law for ordy twenty-one shillings; but when it (for- tunately) weighs half a grain less, will then also le- galli/ sell for twenty-five or twenty-six shillings as Bullion. But it may be said, that my first Proposition, *"' of preventing the Exportation of Bullion and Foreign Specie, wculd have a tendency to lessen the Importation tlvereof .1 answer, that whilst we continue to hold good Faith with the individuals of other nation^o, this Country will be considered as the only safe depositary of their wealth during the present Tyranny on the Continent; and whilst there is such a redundancy of Colonial and Foreign pro- ductions in our Warehouses, there is no fear but that the precious Metals will continue to be remitted from those Countries where they are obtained, or may circulate, in preference to their other Products, for which there is at present no demand here ; and at any rate, we shall be securing for our own use what we actuallij have, instead of suliering it to 11 pass any longer into the hands of our Enemies; who, I fear, will otherwise, and in a very short time, deprive us of every Guinea v^e have left, excepting what may be locked up ia the Bank of England, or the coffers of Alarmists. In order, however, to meet such objection far- ther, and to obtain, if possible, the desired end (of all good subjects) in a more palatable way; let the Exportation go on upon principles similar to our Corm Laws ; for in the War wherein we are engaged, our Specie and Bullion are also of vital importance ; subject it, therefore, to a Duti/ equal to the Price it bears in the market ahove ^4 per oz. for Gold, and 5s. 6d. per oz. for Silver, which would make it an article of Trade too dear for any one to Export, excepting, perhaps, the Agents of Buonaparte ; and even ihey would soon get tired of it. The same principle I would apply to Plate; and if to that of our own Sideboards also, it would be very appropriate, when Silver is so scarce. On the other hand, I would recommend an even-, tual Bounty upon Importation, which should secure to the Importer (as has been done in other articles of Necessity) the like value of £^ peif oz. for 12 Gold, and 5s. 6d. per oz. for Silver; that is, Go- vernment would have the Option of taking the Eullion and Foreign Specie at those Prices, if the Importers could not obtain more in the Market; this bounty to continue during the War, or plea- sure of Parliament, on giving sufficient notice of •its discontinuance. It may also be said, that my second Proposition^ of " raising the present Value of our own Coin- age, would consequently depreciate the Notes of the Bank of England ;" to which I reply, the objec- tion can no more then hold good than it does at present in respect to Bullion, from which our Coin is made; for they would still remain a Legal tender, £. for £. to prevent Arrest; and in all transactions of business pass, as they do now, for the sum they f,-pccijij. Indeed, I am persuaded, that, whilst they are taken by Government in payment of Duties and Taxes, they will suffer no farther diminution in value,- but, on the contrary, "would then be prefer- red, as their circulation is so indispensiUy necessary to carry on our Home trade, because they are much more commodious than Specie; and I make not the smallest doubt that our Bankers, Merchants, and all other Persons of property and respectability. 13 would (as formerly) declare their readiness to take them in Payments, without any regard to the in- creased value of our own Coinage, or the price of Bullion, which would soon fall to their former level ; and the Public at large, convinced thereof, (and under the influence of such example,) would be eager to take the Bank Notes again in exchange for their hoarded Specie, whilst they could make a Profit thereby, to compensate them for the loss of Interest they have already sustained by their own folly ; which, to those who may have been doing so for the last fourteen years, is equal to the origi- nal sum, if they had laid it out upon Securities at five per cent, payable half yearly, and re-invested the interest ; for they may rest assured, that when- ever our own Gold re-appears^ (as it assuredly would,) the Price of Bullion will /a//, and that of their Guineas therewith. Should this my second Proposition still be thought too strong, (for I am aware that something must often be given xip to Public feeling, although ivot always correct, ) I would then, and only then, recommend its being made optional with the Recei- ver^* to take our own Coinage at any Price above • With the Bank it should always he optional, whilst ihi-i/ arc Tcstricted from paying in Specie. 14 it.s present Standard value, which might afford op- portunities of cheapening it in some few cases. But as my great object is to bring our own gold into more immediate Circulation^ by making it the in- terest of the Holders to part therewith, I think a positive Standard would be more effectual, as every man would then know what his Guinea was worth. And therefore, as I fear strong Measures will be necessary to remedy the growing evil, it is in my opinion better to apply them at first, than to he under ihe necessity of adopting them at last, when, through so much handling, they will be in danger of losing their intended effect, and, like a. Disease of long standing, (and bad treatment,) become incurable by any Prescription. For whilst the Enemy is pursuing (too successfully) every possible means to ruin our Commerce, shall we also continue to '' Choak him with Gold," filling his Cof- fers with our Bullion and Specie, as he boasts of Jiavliig likewise done from the spoils of the Con- tinent, because we seem unwilling to adopt what (in the language of some tender minds) maybe thou<'-ht a " strong measure ?*" But are not the Cir- cumstances of the present Times different from all * ]l'hat is this compared to the Bill since passed ? 16 that have preceded them ? Our Measures must therefore be adapted thereto, whilst those Circum- stances continue to affect us : and was not the Re- striction upon the Bank of England from issuing Specie in exchange for their Promissory notes a much stronger Measure ? Yet the Credit of the Bank was not in the least shaken thereby, (at home or abroad, ) and has now stood the Test of fourteen years ; during which Period they have not issued any Specie (excepting for fractional suras, when pay- ing dividends) to the Public, who well knew that they could not at any time pay all their Notes in Cash: but they also knew, that the Bank never issued them without Value, or Security, received from the Public, or from Government, thereon, and were therefore under no Alarm from the mo- ment it was promulgated by the Directors; be- cause it was obviously for the benefit of the 2vhok Community. Such, I am persuaded, would be the general sentiments in the present Case, upon adopt- ing either of these Propositions ; because the Neces- sity of the measure is equally obvious, although no one seems hold enough to propose it. In my opi- nion, however, no one has any reason to fear the Consequences, but Buonaparte, who would, in a very short time, feel the operation, by its defeat- 16 ing his last and onltf hope, to make us guilty of a *^ Fela de ser Let us not, tJierefoi-e, remain any longer in dur HammockSj whilst the Storm is threatening to send our Ship to the botto?n ! hut let All hands ("for in a mul- titude of Counsellors there is wisdom") turn out, trim the sails, and throw the Lumber (our Squeams and Heart-burnings) overboard, ere it is too late !! so that tae may yet have a Chance, as I hope we still have, of reaching Port (although much battered) with our Sea- manship unimpeached, and our precious Lading still on board; which is the Sinews of War, the Strength of all Governments, and the Touch-stone of Commerce !! ! for, " Money makes the Mare to go." I have the honor to be, &c. MERCATOR To the Eight Honorable 7 PART IL FURTHER CONSIDERATIONS ON THE PRESENT STATE OF OUR Bank Notes ^ Specie^ & Bullion; ARISING FROM, AND DURING THE PROGRESS OP, LORD STANHOPE'S late BILL in PARLLVMENT. ADDRESSED TO THE RIGHT HONORABLE , BY MEFvCATOFv. 19 No. II. London t ^d July, I S 1 1 . SIR. Having been upon a journey for the last eight days, I knew little of what was passing in Parliament, until I this day read the speeches of some Noble Lords upon the second reading of Lord Stanhope's Bill; which, if I understand it, is to make Bank Notes a legal Tender, or rather Payment, at the Sums specified, in all Cases; and that it shall be illegal to give (or take, I presume) more than Twenty-one Shillings for a Guinea, and so in propor- tion f(^r our other Gold Coin. The intention is doubtless truly patriotic, but the measure will not produce the benefit intended ; and therefore I cannot but express my humble sentiments to be in perfect unison with those Noble Lords who have spoken against the dangerous tendency of such a coercive measure; and that of a Prtper medium, in particular, not issued by the Government, (which in that case would be guaranteed by Parliament,) but by a Company, (chartered, it is true, and of the greatest respectability,) from whom, h(nvever, the Public have no better security than tliat of individuals of 20 known property and discretion in their engagements ; save and except, that the Notes of the Bank may- be paid to the Gpyernment for taxes and duties, which so far indentifies them therewith. I therefore trust that this Bill will never pass the third reading in the House of Lords, ( indeed, I think it cannot, if there is a greater attendance,) and that, at all events, it will not receive the sancr tion of the Commons House; where, it is reason- able to presume, the effect will be better under- stood by commercial men ; and I am led the more to hope this, as it has not originated there, although, in fact, it may be called a Money Bill, if Paper is now to be considered such. The Noble Lord who has introduced this Bill, seems to have converted some of his Majesty's Mi- nisters in the present case ; and if the measure would prevent the buying or selling our Coinage at an advanced price, or of Bank Notes at a reduced price, it would indeed be most desirable ; but rest assured, ^lat the very idea of coercion will have a contrary effect ; for the value of our own Coinage wiU (notwithstanding any legislation thereon) beheld in proportion to the current value of Bullion; and 21 in like manner will that of Bank Notes to our Coinage. They will both be bought and sold clan- destinely iV^hihi the temptation remains so great, and the means of discovery so difficult to be come at. The best security, therefore, to maintain the Value of Bank Notes, is to take away the temptation to export our Coinage, by raising its value to the price of Bullion in the market; instead of lowering- it from the price it now bears at every silversmith's shop, (where it may be legally sold for Twenty- five or Twenty-six Shillings, if under five penny- weights and eight grains,) to that of Bank Notes, as this Bill proposes. I have the honor to be, &c. MERCATOR. To the Bight Honourable 22 ^ No. III. London, btli July, 18)1. SIR, Having attended the debates in the House of Lords last evening, I found that I had not fully comprehended the extent (and I know not u'hether I do now) of Lord Stanhope's Bill; but I believe it does not yet go to make Bank Notes a legal tender to prevent action, although pretty near- ly what amounts thereto ; that '' no one is to give or take less than twenty shillings for a one pound note." This is still forcing a value upon them, which has never been attempted even upon Govern- ment Securities; for instance. Exchequer Bills, which are this present moment selling at a discount. As to our Gold, although the measure is equally impolitic, it is" less obnoxious, because the holders may still keep it by them if they please. But, contrary to his Lordship's plan, if our Gui- neas were allowed to pass for what they would sell, (although I should prefer a siavdar.d value, ) they would again come into circulation, and the conse- quence of that would be a fcdl in the price, as is the case with every thing when pkniifrd. This 23 would also produce a competition against those who are now purchasing clandestinely for the purpose of exportation, and at the same time afford greater facilities of detecting them in so injurious a traffic to the State. And, in order to counteract them still farther, let our Exports of Bullion be stopped un- til the prices fall, as recommended in my Letter of the 21st of May last. But I would hope that the united wisdom of Par- liament, and of Ministers, will not suffer this Bill to pass into a law ; especially if it is to be the founda- tion (as I believe his Lordship says) of o^/jer mea- sures connected therewith, '' to make Bank Notes the same as standard Coin in Law;" by establishing Receiving Houses, if 1 may so call them, all over the kingdom, where deposits (I suppose in Bank Notes) are to be made for the discharge of debts. Was the Bank of England to undertake such a gigantic concern, the profits, I fear, would not pay the innumerable establishments requisite in every little district for the facility of payments, and to pretent litigious actions ; and it would often hap- pen, that the parties must first send to London for the Notes, to obtain certificates of credit at the Bank of England. 24 All this mavj however, seem very practicable to his Lordship, but it is not so easily to be accomplish- ed. And farther, it would be a competition which would greatly injure the Country Banks, who have been, and still are, (when well conducted, ) of the greatest benefit to the internal Trade and Manu- factures of the Kingdom : nor would it benefit the Bank of England, unless they carried on the busi- ness upon the same principles; by granting Bank Note Certificates for such other securities also, (of various descriptions, ) as the parlies in need may have to offer ; but which the Bank Agents might not be authorised to take, or could not be so com- petent judges of, as the Country Bankers, and would therefore very often refuse the accommoda- tion. If such a measure is to be resorted to, why should not the Government rather take it into their own hands, and reap the advantage of Bankers ? The Public would probably also be better satisfied with the security; for I can assure you, the country people in general prefer their own Bankers Notes to those of the Bank of England ; and I have heard them say, in reply to my arguments, " they know ivliere the property of the partners lays in land and houses, and they also know them personalli/, but they know nothing about the Bank of England, and 25 therefore are better satisfied with their own Banks." This must have been the result of every man's observation, who has had an opportunity, especially throughout the more distant parts of the Kingdom. To sum up the whole in a very few words, his Lordship must first ballast the Bank Notes with Guineas (at their /wZZ value) before he can make tliem " sail against the Wind." I have the honor to be, &c. MERCATOR. To the Right Honourable 26 IV. London, GtJiJuIj/, 1811. SIR, I addressed you on the 3d and 5th in- stant with reference to my general ideas of the 21st May last;, on the subject of our Bank Notes^ Specie, and Bullion ; I cannot but go on isoilli it, whilst the present Bill of my Lord Stanhope's is depending; in the hope of being enabled to add something dai- lij, to convince his Majesty's Ministers of the dan- gerous consequences which may result from it to' the public credit, especially in setting a value upon Bank Notes. Let them alone, and rest assured, they will maih'tain their present value much better than by any parliamentary interference. And as to the Gold, you will be enabled to keep it in the Kingdom (if his Lordship is desirous thereof) much more effectually by allowing it to pass " for what it, would," if Parliament does not think proper to Jix a value, than by making it illegal to give more than Twenty-one Shillings for a Guinea. For who would at present offer Guineas at that price, when they_ are worth from Twenty-five to Twenty-six Shillings as Bullion ? No one — But they will, nevertheless, be sold for Exportation or Melting ; and what is not so disposed of, will remain hoarded, whilst the Bank Notes will daily be sufiering dej>recialion from thq> want of a circulating Coinage. I have the honor to be, &c. MERCATOR. To the Bight Honourable 27 No. V. Lofidon, 24tJiJuIj/, ISl 1. SIR, My last Letter Kas dated the Gth instant, since ^vhich I have been silent, perceiving ijou also determined to support my Lord Stanhope's Bill ; under the apprehension (I presume) that another Noble Lord's example, of insisting upon Specie in a particular case, might be followed by others in a more general extent. But I really cannot allow myself to think that even the avowed apologists for that Noble Lord would be inclined to do so the??i- sclves; and if they did, their conduct would certain- ly be so reprobated by the good sense and patriot- ism of the Kingdom, that they could never expect to make any figure in the counsels of the ^tiite again. It is 7WU- to be wished that Parliament had ( for the present) gone no farther than to pass a Bill " for the relief ef Tenants," thereby putting them upon the same footing as other debtors; without inter- Bneddling with the lalve of Bank Notes or Cuiiicas, which would have equally defeated that Noble Lord's svstem oijhunice. Cut if Bank Notes urc to be made 28 a legal tender, to prevent action likewise, it coulcf not have been done at a more favourable period than the present moment, when the public senti- toient is, I trust, so much opposed to that of the Noble Lord. I think, however, that no necessity can everjustifi/ such a measure, and I hope it never will be attempted ; but if the present Bill is not to be repealed, it may be somewhat amended in the next session of Parliament, by the following pro- positions. First, allowing the Bank of England to pay their One Pound Notes (at any rate) in Gold Tokens, when called for, (as Guineas would now be imme- diately resold to the refiners,) and they could regu- late their issues of such Notes accordingly ; for in my opinion there are at present more in circulation than- necessary, which might be substituted by a small increase of Two Pound Notes. This would bring out some Gold, (although no Guineas,) in all probability equal to the wants of the public for internal circulation ; and w^hen they found that they could get a few Gold Tokens, they would soon be better reconciled to the Bank Notes. Secondlif, stopping the Expoj^ation of Bullion, until the ^Tice falls to the present standard Value (or nearly so) of our own Gold and Silver Coinage, as recommended in my letter of 21st May last. Thirdly, securing to the Importers of Bullion, a Price equal to the aforesaid Standard, or a little 29 more, say £ 4 per oz. for Gold, and 5s. 6d. per oz. for Silver; for the State would be gainers even- tually by any loss arising from the /