.?'V'I\''
 
 ESSAY 
 
 ON THE PRINCIPLE 
 Of 
 
 COMMERCIAL EXCHANGES, 
 
 AND 
 
 MORE PARTICULARLY OF THE EXCHANGE 
 BETWEEN 
 
 GREAT BRITAIN AND IRELAND: 
 
 WITH AN INQUIRY INTO THE PRACTICAL EFFECTS 
 OF 
 
 THE BANK RESTRICTIONS. 
 
 BY JOHN LESLIE FOSTER, ESQ. 
 OF Lincoln's inn. 
 
 LONDON : 
 
 miNTED FOR J. HATCHARD, BOOKSELLER TO HER MAJESTT^ 
 
 NO. 190, OPPOSITE ALBANY HOUSE, PICCADILLY. 
 
 1804.
 
 ;MOITDlJaOHTMi 
 
 
 moasooo
 
 INTRODUCTION. 
 
 It was the original intention of the Author to 
 have confined the following pages to a brief exa- 
 mination of the system of commercial intercourse, 
 which for eome time has subsisted between Great 
 Britain and Ireland ; but in the prosecution of the 
 inquiry, it appeared indispensable previously to 
 establish fixed and general principles on the sub- 
 ject. Hence this Essay has assumed the form of 
 a general treatise. The original intention has, 
 however, been so far retained as to make the 
 intercourse between Great Britain and Ireland 
 more particularly the object of investigation, than 
 the mere illustration of general principles might 
 perhaps have required. 
 
 Few of the difficulties which have occurred in 
 our political system, have occasioned a greater 
 A3
 
 VI INTROBUCTION. 
 
 interest among those who have felt their pressure, 
 than the embarrassments now experienced in Ire- 
 land. Fortunately they have attracted the serious 
 attention of the Legislature, and been fully^ in-; 
 vestigated by a Select Committee of the House 
 of Commons. Tb^ exchange against Irelandj 
 the most prominent symptom of her distress, 
 and which had attained a height five times 
 more unfavorable than had been experienced 
 during the various fluctuations of half a century 
 preceding, became the first object of their inquiry. 
 The almost total disappearance of coin of every 
 description, by which it was accompanied, seems 
 to have been considered as an inferior evil. Per-, 
 haps, indeed, the fact was hardly known, except 
 to those whose residence in Ireland had forced the 
 melancholy truth upon their observation. 
 
 The general theory of exchange was necessarily 
 investigated by the Committee ; and as it is per- 
 haps the subject of political economy which 
 has been the least discussed, it is the less sur^ 
 prising that such a variety of opinians were ad- 
 vanced. .
 
 INTRODUCTrON. Vil 
 
 The acts for restraining the cash pajTnents of the 
 national banks of England and Ireland have had so 
 great an influence upon the political systems of 
 the countries, that in any inquiry like the present 
 their operations must receive the fullest considera- 
 tion ; they have therefore necessarily occupied a 
 considerable portion of the following pages. 
 
 It is by their practical effects alone that we can 
 presume to judge measures of so unprecedented 
 a nature. 
 
 Perhaps it may be necessary, for the information 
 of such readers as have not been in Ireland, here 
 to explain the nature of the difference between the 
 currencies of England and Ireland, as without a 
 clear conception on this point many of the follow- 
 ing pages must be unintelligible. At the time of 
 the great recoinage, in the reign of King William, 
 it was determined that the English shilling should 
 pass for thirteen-pence in Ireland * ; that is, for 
 
 one shilling and one penny Irish. Any sum' of 
 u.).u:'j> ]>) yfi >nfiv f» iijUfi iK(\i ^^tuanq 
 
 * The reason of this determination does not siifficrertfl^i^Y 
 appear, 
 
 A 4
 
 Viii INTRODUCTION. 
 
 English currency, therefore, is now equivalent to 
 the same sum of Irish, together with one twelfth 
 more: 12/. English is equal to 13/. Irish; 100/. 
 English is equal to 108/. 6s. 8d. Irish. Hence 
 8/. 6s. 8d. or 8t, is said to be the par of exchange 
 between Great Britain and Ireland ; and at what^ 
 ever rate the exchange is stated in the following 
 pages. Si must always be subducted, in order to 
 exhibit the amount in which it is favorable or 
 unfavorable; for instance, when the exchange is 
 said to be IQ, it is lOl per cent, against Ireland. 
 
 ERRATA. 
 
 Page 8, line i6, yiir value of some kind, reaJ, some consideration. 
 
 i3» — 2, Jor the commodities to be bought with .t, read, theif 
 
 commodities. 
 6i, — 3, yor raised, reaJ, received. 
 69, — Z4, yor expected, read, expo' ted. 
 99> — 5j/»'" i7^7> read, 1797- 
 121, — 23, yir and which has, read, which have. 
 '35> — 4, /or draws, read, obtains. 
 
 i43> — 18, ybf interest — is, read, interests — are. < , . 
 
 144, — 16, /or which, read, whom. 
 
 21, /or pays, read, pay. 
 I47> — 2» /"■ date, read, sight. 
 348, — '8, /or \s. lod. read, -t 
 
 fd hointjeaiq ^JnoraonadSl iwiT— aJioq/nl bats, s^ioq
 
 
 c Q ¥'f ;'te'g;^^^ 
 
 Introduction - . _ Page v 
 
 chapti:r I. 
 
 GENERAL NATURE AND EFFECTS OF THE BALANCE 
 :' . OF DEBT. 
 
 Distinction between the Balance of Trade and the Ba- 
 lance of Debt — The Balance of Debt can never con- 
 tinue favorable or unfavorable to any Country — How 
 prevented from continuing favorable — How prevented 
 from continuing unfavorable — Connexion between fo- 
 reign Expenditure and Balance of Trade — How far the 
 Balance of Trade is connected with national Wealth — 
 Instanced in Great Britain during the late War — Ob- 
 servations on Lord King's Hypothesis — Foreign Ex- 
 penditure of Ireland divisible into Remittanctrs for Ab- 
 sentees, and Payments of Interest to England — Effects 
 of these Remittances different from what is generally 
 supposed — Their Effects on the Exports and Imports 
 of Ireland — On her national Wealth — On the Quan- 
 tity of her circulating Medium — Important Error pre- 
 vailing upon this Subject — Contradicted by Experience 
 as much as by Reason — The natural Effects of Ireland's 
 foreign Expenditure counteracted by the Remittance of 
 the Loans — Operation of the Loans on Ireland's Ex- 
 ports and Imports — ^The Phenomena presented by the
 
 X CONTENTS. 
 
 Cfttntnerce of Ireland thus accounted for — otherwiieife- 
 explicable — Future Prospects of Ireland in consequence 
 of this System — Similar Effects produced by the Bank 
 Restriction — Operation of the Restriction on theBalance 
 of Debt between Great Britain and foreign Countries 
 — Are the Effects beneficial — Operation of the Re- 
 striction on the Exports of (jreat Britain — Tendency of 
 the Restriction to perpetuate itself — Effects of the Re- 
 striction on the Balance of Debt against Ireland— Its 
 Operation on her Exports and Imports — Policy of the 
 System pursued by the Traders in the North of Ire- 
 land - - -.,1? ,yi^^-,,<\_1a '^^HR : Page r 
 
 CHAPTER II, . ^^ 
 
 OPERATION OP THE BALANCE OF DEBT UP03S^- 
 EXCHANGES. 
 
 Operation of a Balance of Debt against a Country on the 
 Rates of its foreign Exchanges — Instanced in Ireland on 
 the Supposition that theBalance of Debt is unfavorable 
 — No Connexion between the Amount of the Balance 
 and the Rates of the Exchange — Limit of the Opera- 
 
 , tion of the Balance of Debt upon Exchange — Never 
 did nor never could rise beyond this Limit until per- 
 mitted by the Bank Restriction — How Specie regulated 
 the Exchange-r-Instanced in Ireland in 1672 — Yet not' 
 by leaving the Country — The Balance of Debt not re-' 
 dressed by the Operation of Exchange — Operation of 
 an Ejjchange arising from a Balance of Debt on Ex-- 
 ports and Imports^ — .Limits of its Operation— The 
 Excharjge against Ireland does riot arise from a Balance 
 ofp^tr-rBalanGe;of Debt atpresertt in<5fiavor <if Irei-^
 
 CONTB^TS-. XI 
 
 land— Xhe Exchange, unfavorable, iiot to the Debtor, 
 .but to the Creditor Country — Proofs of the Fact of the 
 Balance of Debt being in favor of Ireland — Presump- 
 ^tion that great Remittances to Ireland would not reduce 
 the Exchange to par - - - Page 57 
 
 CHAPTER III. 
 
 CAUSES UNCONNECTED WITH THE BALANCE OF 
 DEBT REGULATING THE NOMINAL RATES OF 
 EXCHANGES. 
 
 The nominal Rates of foreign Exchanges regulated by the 
 Value of the Medium in which the Payments are made 
 — The Measure of Value itself liable to Fluctuations — 
 Its Value may be augmented or depreciated — Aug- 
 mented by a Seignorage — Depreciated if a Medium 
 consisting of the precious Metals, by Degradation or 
 Adulteration — If of Paper, by Discredit or Excess — 
 Instance of an Exchange arising from Seignorage—- 
 Instance of an Exchange arising from Degradation — 
 Remarkable Instance of an Exchange arising from 
 Adulteration — Mode in which Excess produces Depre- 
 ciation — Its Operation on Industry — Observation of 
 Mr. Hume — Advantages of the Banking System — In- 
 accuracy of Dr. Smith upon this Subject — A circu- 
 lating Medium of Specie cannot be excessive — Nor a 
 circulating Medium of Paper convertible into Specie — 
 A Paper not convertible may — In what Cases it has 
 been so — Instanced in France — Its Effects on the 
 Quantity of Specie in Circulation — On Prices — On 
 foreign Exchanges — Sole Security against Depreciation 
 through Excess — Has been destroyed by the Bank Re-
 
 Xll CONTENTS. 
 
 striction — Inquiry whether it is possible that the Paper 
 of Great Britain should become excessive^ — Security on 
 ' which it is issued cannot prevent it — Nor the Eager- 
 ness of the Demand to obtain it — Security may be per- 
 fect, and yet Excess take place — Difficulty the Direc- 
 tors experience to avoid excessive Issues — Favorable 
 Exchanges united with a high Market Price of Gold 
 and Silver, complete Proof of the Depreciation of 
 Paper - - - , Page 82 
 
 CHAPTER IV. 
 
 CAUSES AND EFFECTS OF THE EXCHANGE 15E- 
 TWEEN GREAT BRITAIN AND IRELAND. 
 
 Proofs a posteriori of an excessive Issue of Paper having 
 taken place in Ireland — Market Price of Bullion — Dis- 
 count on Paper — Exchanges of Dublin on London^ 
 Belfast on London, and Dublin on Belfast — Disappear- 
 ance of Silver Coin — Proof of the Depieciation of 
 English Paper, from a Consideration of the Exchange 
 of Dublin on London, and Belfast on London — Rates 
 of the Depreciation of English Paper resulting from 
 this Calculation — Farther corroborated by Facts — 
 Proofs a priori of the excessive Issue of Paper m Ire- 
 land — Increase of Bank of Ireland Notes — Opinion of 
 the Directors as to their Excess — Issues of the Dublin 
 Bankers — Issues of the Silver Note Bankers in the 
 South of Ireland — Effects of the Depreciation of Paper 
 — Who are the Losers — Who are the Gainers^ — ^Ex- 
 amination of the Nature of the Commerce in Exchange
 
 -CONTENTS,- Xiii 
 
 .j^,.,^ingular Principle on which it is founded — Esti- 
 ^nttiate of the various Rates of Profit which attend it 
 Ip. Page.uS 
 
 CHAPTER V. 
 
 jceneral remedy for unfavorable exchanges. 
 
 The present Exchange between Great Britain and Ireland 
 has no Tendency to redress itself — Does not operate as 
 a Bounty on Exports and a Duty on Imports — Neces- 
 sity of seeking for a Remedy — Danger of temporary 
 Expedients — Excess not the necessary Consequence of 
 the Restriction — The Limitation of the circulating Me- 
 dium the specific Remedy for unfavorable Exchanges 
 —Necessity imposed upon the Bank of applying this 
 Remedy previous to the Restriction — This Necessity 
 removed by the Restriction — The present and past 
 Principles and Conduct of the Directors opposed to 
 each other — Modern Theory of Banking suggested by 
 the Restriction — General Principle of Limitation of 
 the circulating Medium regulating Exchange examined 
 in Theory — Remarkable Instances of its Application in 
 Practice — In Scotland anno 1770 — In Ireland 1753 
 —Necessity of the Directors resuming their former 
 Principles of Conduct . _ - Page 1 56 
 
 CHAPTER VI. 
 
 APPLICATION OF THE REMEDY IN IRELAND. 
 
 Difficulty of limiting the circulating Medium of Ireland 
 — Doubts whether the mere Limitation of the Bank
 
 of Ireland Paper could effect it — Mode in tvhich the 
 Directors of the Bank of Ireland might possess them- 
 selves of the Power requisite — Examination of the 
 Remedy proposed by Lord King — Probable Effects of 
 its being adopted — Light in which it is regarded by 
 the Bank Directors — Their Objections considered— « 
 Opinion of the Select Committee as to these Objec- 
 tions — ^The Expense would be inconsiderable and tem- 
 porary — Instanced in Scotland — Criterion which it 
 would afford to the Directors of the proper Extension 
 of their Issues — Consequences of too extensive Dis- 
 counts — to the Merchants — to the Public— Change of 
 System introduced by the Restriction — ^The Principle 
 of the Remedy proposed by Lord King fully adopted by 
 the Select Committee — Mode in which they propose to 
 carry it into Practice — Advantages and Disadvantages 
 of this Plan — Examination of the Consequences that 
 might result from the Bank Directors applying these 
 new Powers according to their present Principles 
 
 Page 179 
 
 CONTENTS OF THE APPENDIX. 
 
 No. I. A Table shewing the Rates of ExchaHges of Lon- 
 don on Dublin and Dublin on London for six 
 Months, ending March 1804 - - Page 203 
 
 No. II. Tables of the Rates of Exchanges of Belfast on 
 London and of Newry on London during the 
 same Period . - _ . Page 204 
 
 No. III. An Account of the official Value of Imports and 
 Exports of Ireland for fifteen Years, ending the 
 5th of January 1804 - - Page 205
 
 CONTENTS. XV 
 
 jNo. IV. An Account of the current V^lueof Imports and 
 
 Exports of Ireland for such Years as the same 
 
 has been ascertained - - Page 206 
 
 No. V. An Abstract of all Sums remitted to Ireland from 
 
 ^^ Great Britain for Loans, Lotteries, and other 
 
 public Purposes, since January i, 1797 
 
 Page 206 
 1*^,0. VI. Daily List of the Exports and Imports of the 
 ^. ,^ ; , Port of Dublin - - _ Page 207 
 
 No. VII. Calculation to shew why there must exist aDif- 
 ference between the Exchanges of London on 
 Dublin and Dublin on London - - Page 208 
 No. VIII. Account of Bank of Ireland Notes in Circula- 
 tion at different Periods, with the average Rates 
 of Exchange for the same Time - - Page 209
 
 AN 
 
 ESSAY, 
 
 CONTENTS OF THE FIRST CHAPTER. 
 
 GE<NERAL NATURE AND EFFECTS OF THE BALANCE 
 OF DEBT. 
 
 Distinction hetiveen the Balance of Trade and the 
 Balance of Debt — The Balance of Debt can 
 never continue favorable or unfavorable to any 
 Country — How prevented from continuing favor^ 
 able — How prevented from continuing unfavorable 
 — Connexion between foreign Expenditure and 
 Balance of Trade — How far the Balance of 
 Trade is connected ivith national JVealth — In^ 
 stanced in Great Britain during the late JVar—^ 
 Observations on Lord King's Hypothesis — Fo" 
 reign Expenditure of Ireland divisible into 
 Remittances for Absentees, and Payment of In^ 
 terest to England — Effects of these Remittances 
 different from what is generally supposed — Their 
 -8
 
 2 ESSAY ON THE PRINCIPLE OP 
 
 Ejects on the Exports and Imports of Ireland — 
 On her national Wealth — On the Quantity of 
 her circulating Medium — Important Error pre- 
 vailirig on this Subject — Contradicted by Expe^ 
 rience as much as by Reason — The natural Ejects 
 of Ireland's foreign Expenditure counteracted by 
 the Remittance of the Loans from England — 
 Operation of the Loans on Ireland's Exports and 
 Imports — The Phenomena presented by the Com- 
 merce of Ireland thus accounted for — othenvise 
 inexplicable — Future Prospects of Ireland in con- 
 se{juence of this System — Similar Effects produced 
 hy the Bank Restriction — Operation of the Re- 
 striction on the Balance of Debt betiveen England 
 and foreign Countries — udlre these Effects benefcial 
 "—Operation of the Restriction on the Exports of 
 > . Great Britain — Tendency of the Restriction to 
 \. perpetuate itself — Effects of the Restriction on the 
 - Balance of Debt against Ireland — Its Operation on 
 ! her Exports and Imports — Policy of the System 
 '. pursued by the Traders in the North of Ireland. 
 
 .JLhe excess of exports above imports was long 
 -the criterion by which poHtical economy appreciated 
 ..the wealth of nations. 
 
 The first opposers of this theory appear to have 
 . been satisfied with exposing its error, in attempting 
 •to accuiiiulate. in any country a greater quantity of
 
 COMMERCIAL EXCHANGES. 
 
 the precious metals, than the demands of its 
 commerce and expenditure required. Some of its 
 more modern antagonists have carried their hos- 
 tility still further, and assert that the balance of 
 trade is purely ideal, and, in rerum naturd, cannot 
 possibly exist. It appears that the uncertain ap- 
 plication of words, more than any inherent diffi- 
 culty, has rendered this a subject of controversy: 
 but it is necessary that the nature and effects of 
 the balance of trade should be clearly determined 
 previous to entering on the following inquiry, as 
 it is by all admitted considerably to influence the 
 rates of exchange, and is by many supposed to be 
 their exclusive cause. 
 
 The balance of trade is so generally understood 
 to signify the excess of exports above imports, that 
 a writer who attaches to it any other meaning 
 -must som.etimes fail to make himself intelligible ; 
 for it often happens that the balance of money to 
 be paid by one country to another, by no means 
 corresponds with the excess of its imports above its 
 exports. Ireland's remittances for absentees, the 
 interest of her debt paid in London, Great Britain'6 
 remittances for her foreign expenditure, are all 
 operations unconnected with commerce, but which, 
 influence the wealth of the countries,' and tlie 
 rates of their exchanges, at least as much as th§ir 
 exports and imports. 
 
 B 2
 
 ESSAY ON THE PRINCIPLE OF 
 
 In the following inquiry, to avoid confusion, 
 two distinct terms shall be used as expressive of 
 these two distinct ideas. By the balance of trade, 
 the difference between commercial exports and im- 
 ports shall always be understood ; by the balance of 
 debtj the difference between money to be jmid, 
 and money to be received. The balance of trade 
 necessarily forms a part of the balance of debt. 
 
 .If, instead of denying the existence of a balance 
 of trade, the writers alluded to, had confined their 
 arguments to the balance of debt, they would have 
 revolted a smaller number by their positions ; for it 
 must be admitted that exports mai/ exceed imports, 
 and we know have actually exceeded them to 
 a great amount, during the whole of the last 
 century in favor of England; yet it does not follow, 
 that the balance of debt, as distinguished from 
 trade, can be permanently favorable or unfavoi-able 
 to any country on the whole of its transactions. 
 
 This general proposition, a truth of the utmost 
 importance in the present inquiry, must be guard- 
 ed by some exceptions, before it can be admitted. 
 
 1st. It is to be observed, that it is possible that 
 the balance of debt may continue permanently favor- 
 able or unfavorable to any country, between it and 
 any other country, though not between it and the 
 whole world.
 
 COMMERCIAL EXCHANGES. 5 
 
 2dly. The balance of debt may be for or against 
 any one country with the whole world, for a limited 
 time: great foreign expenditure, bad harvests, 
 sudden emigrations of the proprietors, may all 
 make the value that must be sent out greater than 
 the value immediately to be received ; the difference 
 in this case must be paid in the precious metals. 
 
 3dly. As the commerce of the country increases, 
 it may demand an additional quantity of the pre- 
 cious metals for its circulation, and therefore a part 
 of the surplus brought in by the balance of debt 
 will be retained for that purpose. 
 
 These propositions, announced thus generally, 
 are liable to much misconstruction ; their meaning 
 will be more fully explained in the course of this 
 chapter. 
 
 In every commercial country there must be a 
 circulating medium proportionate to its demand; 
 we have no data to state the terms of this propor- 
 tion, but we may be certain that the quantity * 
 
 * This has been pointed out by Mr.Thornt^oii, in his vahiable 
 Essay on Paper Credit ; it has been stated still more distinctly 
 by tlie Edinburgh reviewers : " The qtiantity of money ne- 
 cessary for performing a certain number of exchanges in a 
 given time, may be considered as nearly in tlie inverse ratio of 
 its velocity of circulation." No. I. page 1/b. " It 'km (julic true 
 B 3
 
 6 ESSAY ON THE PRIXCIPLE OF 
 
 required, will be great in proportion to the extent 
 of. its commerce, and small in proportion to the 
 velocity of its circulation. A nation which con- 
 fined itself to domestic commerce, might adopt 
 for its circulating medium any substance and form, 
 which it found most convenient ; but if it is to sup- 
 port commercial relations with the rest of the world, 
 it must have recourse for a certain extent to the 
 precious metals, as affording the only circulating 
 medium common to them all. 
 
 The greater we suppose the entire amount of 
 the circulating medium, in any country, while the 
 velocity of circulation and the extent of its com- 
 merce continue the same, of the less value any 
 given portion of it must obviously become. 
 
 that the number of exchanges bears no ratio to the mere quan- 
 tity or amount of circulating medium, because the quantity 
 required, varies, as we have often observed, with the rate or 
 velocity of circulation. But the amount of circulating me- 
 dium, and the rate of circulation, may be taken together, and 
 considered as forming a complex quantity ; and then there can 
 be no doubt,, that this complex quantity bears a ratio to the 
 number and value of exchanges. This ratio, it is evident, may 
 be fixed and constant, though the two component parts of that 
 complex quantity are perpetually varying" ; because, while trade 
 continues the same, they must vary inversely as each other ; 
 nor does it affect the truth of this proposition, as thus stated 
 abstractedly, that the present resources of political arithmetic 
 ifio not yet enable us to assign the ratio." No. IV. page 418. 
 2
 
 COMMERCIAL EXCHANGES. P- 
 
 For instance, rf we suppose that the commerce 
 of a country required 10,000,000 of circulating 
 medium ; if, by any possible operation, another mil- 
 iion could be added to the 10,000,000, while the 
 commerce remained the same ; the 1 1 ,000,000 re^ 
 presenting exactly tlie same value as the 10,000,000 
 did before; each million and each pound must 
 have lost one tenth of its value, that is, represent 
 one tenth less than it did before such increase took, 
 place. 
 
 But so long as the circulating medium of asy 
 country consists of the precious metals, such ex- 
 cess of their quantity and consequent depreciation 
 of their value, never can take place. The precious 
 metals, like every other commodity, seek a market 
 where they are dear, and retire from one where they 
 are cheap. The trade of the bullion-merchant for 
 ever prevents their value becoming permanently less 
 or greater in any one country than in the rest; and 
 distributes their quantity to each, in such a pro- 
 portion to its demand, tliat their value continues' 
 every wl"iere nearly equal * : for ijistance, in Great 
 Britain, if, in consequence of a favorable balance 
 of debt in any one year, the balance is paid to it in 
 
 * Their iulrinsic value is least in those countries wliich 
 linve the most direct coinniunication with the mines j in all, 
 it is compounded of their value at the mincg, and of the riC- 
 pense of their <;arriagc. 
 
 B 4
 
 S ESSAY ON THE PRINCIPLE OP 
 
 bullion, as there will be a greater quantity in the 
 country than there can be a demand for, it necessarily 
 will sink in price, and the bullion-merchant will im- 
 mediately find it his profit to purchase it for export- 
 ation, until the quantity remaining shall bear the 
 same proportion to the demands of Great Britain, 
 that it did before the payment of such balance. But 
 the only mode in which this bullion can be export- 
 ed, is in exchange for commodities. The export- 
 ation of the redundant bullion, and the importation 
 of the commodities for which it is ultimately ex- 
 clmnged, are carried on by different hands and dis- 
 tinct capitals : the latter is however the necessary 
 consequence of the former, as it is impossible for 
 any country to part with bullion, or any other 
 commodity, without receiving value of some kind 
 in return . The operations of the bullion-merchant 
 therefore augment the quantity of imports in the 
 year following, and thus restore that equality of the 
 imports to the exports, which the tendency of the 
 precious metals to preserve every where an equality 
 of value must necessarily occasion, unless some 
 other mode of their application is provided. 
 
 Yet a balance of trade may certainly continue; 
 and in the instance of Great Britain, we know that 
 during the whole of the last century the balance 
 of trade has been permanently favorable, and to 
 an immense amount. From the year 1700 to the
 
 COMMERCIAL EXCHANGES: 9 
 
 year 1800, the amount of the respective balances 
 of each year, stated at their official value, exceeds 
 348 millions sterling ; the real value is much 
 greater. 
 
 But in the foreign expenditure * of Great Britain, 
 during that period, we find an easy mode of ac- 
 counting for the application of the bullion brought 
 in by the balance of trade, and at the same time 
 the cause which gave rise to that balance. 
 
 No one can suppose, that Great Britain's foreign 
 expenditure has not counteracted the balance of 
 trade; but equally erroneous is an opinion w^hich 
 some appear to entertain, that, had it not been for 
 the foreign expenditure, this balance of trade could 
 have existed in her favor; for it will be found that 
 this balance owed its existence solely to that expen- 
 diture. Had it not been for the foreign expenditure, 
 the balance of trade could not have been in her 
 favor during the century, to a greater amount than 
 the demand of the country for plate and coin. 
 
 The trade of the bullion-merchant would have 
 made it impossible that any greater accumulation 
 
 * The necessary connexion between foreign expenditure 
 and an excess of exports above imports, as well as the loss 
 attending such a balance of trade, are stated wiih great force 
 by Dr. A. Smith, book iv, chap. 1.
 
 s 
 
 10 ESSAY ON THE PRINCIPLE OP 
 
 could take place; for, however great might have been 
 thq excess of exports during any limited time, pro-» 
 portionate must have been the subsequent increase 
 of imports, which the trade of the bullion-mer-. 
 chant would necessarily have occasioned ; and thus 
 the difference between the exports and imports 
 would have been annihilated. In short, it was 
 that foreign expenditure which occasioned that 
 balance ; had it not been for that foreign expendi- 
 ture, that balance could not have existed, The 
 total amount of exports and imports would probably 
 have been immensely greater^ hut the difference 
 between them much less, and, instead of amounting 
 to the immense sum of 348 millions, would have 
 been equivalent only to the demand for plate and 
 coin in Great Britain during that time. 
 
 Thus it is that the trade of the bullion-mer- 
 chant for ever prevents the balance of debt being 
 permanently in favor of a country, by continually 
 exporting in exchange for commodities the surplus 
 quantity of the precious metals which a temporary 
 balance of debt had introduced. There are other 
 causes equally powerful, whiph prevent the balance 
 of debt ever being permanently w favorable to a 
 country, by rendering it impossible permanently 
 to exhaust it of the quantity of the precious metals 
 wecessary to its circulation. In a word, it will be 
 found quite as impossible to draiii a country of the
 
 COMMERCIAL EXCHANGES. 11 
 
 specie necessary for its circulation, as to fill it 
 with specie beyond wliat that necessity requires. 
 
 When an unfavorable balance of debt lias been 
 paid in the precious metals, the demand for the 
 precious metals which will be universally felt, 
 in consequence of the exportation of a part of 
 what was necessary to circulation, immediately 
 enhances the value of that portion which has 
 been left; but the dearness of the precious metals, 
 and the cheapness of commodities, are exactly the 
 same : the want of the precious metals, which will 
 be generally felt *, must give birth to an increase 
 of produce and manufactures, by which alone they 
 can be obtained ; and the cheapness of these cx>m- 
 modities, which necessarily ensues on the demand 
 for the precious metals, attracts the foreign market. 
 The productions of that country, by their cheapness, 
 compared to the precious metals, will be forced 
 
 * It is observed by Mr. Thornton, that " in consequence of 
 the scarcity of circulating medium, produced by tlie failures of 
 1795, the price of com fell in a few places no less than 20 
 or 30 per cent. ; the fall arose from the necessity of sellirig com 
 under which some farmers were placed in order to carry on 
 their payments ; much of the circulating medium leirig with- 
 drawn, the demand for it was in those places far greater than 
 the supply, and the few persons tlierefore who were in possession 
 of cash, having command of the market, oblic^cd the farmers 
 to sell at a price thus greatly reduced." — ^I'hornton's Essay on 
 Paper Credit, page 19G.
 
 12 ESSAY ON THE PRINCIPLE OP 
 
 out to foreign countries; as, on the other hand, 
 the dearness of the precious metals will invite them 
 to flow into that country, in exchange for its com- 
 modities: — exports therefore increase, until the 
 quantity of the precious metals required for 
 the commerce of the country is restored. The 
 trade of the bullion-merchant in this instance, as 
 in the former, regulates the amount of the precious 
 metals within the country. fVhen the balance of 
 debt is in favor of any country, his operatioiis in- 
 cT'ease its imports; when it is unfavorable, they 
 
 Such is the process by which any nation 
 recovers its specie, if any great emergency has 
 induced it actually to export it ; but perhaps no 
 nation ever actually exported a considerable part of 
 its specie, unless compelled by a sudden and violent 
 dearth, or invited by such a measuse as the Bank 
 restriction ; for, in fact, the balance of debt seems 
 to be redressed, not by compelling exportation to 
 recover, so much as to retain, the specie. In either 
 case, the demand for the precious metals, either to 
 export them, or to recover them when exported, 
 equally enhances their value, by causing their scarcity 
 in proportion to the demand-, that is, reduces the 
 price of commodities, and thus attracts the foreign 
 market. The willingness of foreign nations to buy, 
 is increased just as much as the necessity of those
 
 COMMERCIAL EXCHANGES. 13 
 
 at home to sell. The first find their gold cheap, 
 and the commodities to be bought with it dear ; 
 the second find specie dear, and their commodities 
 cheap. 
 
 The motives for foreign nations to carry on such 
 a commerce, will be similar to those which induce 
 our East India Company constantly to export 
 specie to India, in exchange for its commodities, 
 and not vice versa, because that specie has a greater 
 relative value to commodities in India, than in 
 Europe. 
 
 It must however be observed, that it is far from^ 
 true, when stated as a general proposition, that 
 xmiuersally the " greater is the scarcity of cir- 
 culating medium, the more effectual is the stimu- 
 lus applied to industr}^ to produce those commo- 
 dities, by which alone that circulating medium 
 can be obtained." Almost every stimulus, when 
 applied in excess, produces an effect opposite 
 to that which follows from its being applied 
 in moderation ; and in a highly commercial country 
 like England, it is certainly possible that too great, 
 and, above all, too sudden a reduction of the 
 circulating medium, instead of exciting industiy, 
 may give it a most fatal check, and occasion difficul- 
 ties still greater than those w hich it was intended to 
 remove. It has beofi fully explained by Mr, Thorn-
 
 14 ESSAY ON THE PRIN^CIPLE OF 
 
 ton, in his excellent Essny on Paper Credit, how the 
 impolitic redaction of the Bank of England notes, 
 to the amount of 20 per cent, in one month, 
 rendered the circulating medium of the country 
 absolutely inadequate to effect the daily payments 
 even of the metropolis; and to the universal alarm 
 that ensued, Mr. Thornton attributes, still more, 
 than to any preceding imprudence of the Bank, the 
 memorable run on them for gold, which ended in 
 the suspension of the cash payments of that great 
 •company. In support of this proposition, Mr. 
 Thornton has combated, with great justice, an opi- 
 nion too prevalent at that time, that in every case 
 it was the duty of the Bank to diminish the quantity 
 of their " notes in circulation, in any regular 
 proportion to the run on them for gold ; and tliat it 
 was the severity of the pressure ivhichivas to produce 
 the remedy.'''' Mr. Thornton has proved, that 
 where the demand arose from sudde^i alarm, which, 
 by impeding the velocity of circulation, rendered 
 a greater amount of circidating medium temporarily 
 necessary, to augment that alarm tenfold, and to 
 bring circulation altogether to a stand, was obviously 
 an aggravation, instead of a remedy for' the evil. 
 But it certainly never was Mr. Thornton's inten- 
 tion to deny that a reduction of the quantity of 
 circulating medium enhanced its value, and, by the 
 demand that was occasioned for it, gaive existence 
 to those productions of industry, which alone could
 
 COMMERCIAL EXCHANGES. 15 
 
 obtain it ; aiid it certainly was not Mr. Thornton's 
 opinion, that where such a demand was allowed to 
 operate gradually, and not suddenly, moderately 
 and not with violence, it \\'ould produce any of 
 the inconveniences on which he dilates. 
 
 The commercial situation of Great Britain 
 during the last century, and especially during the 
 last war, so clearly illustrates the necessary con- 
 r^exion between the balance of trade and foreign 
 expenditure, as to deserve particular attention, more 
 especially as, when considered in this light, it may 
 fead to conclusions very different from those which 
 have sometimes been entertained. 
 
 For the eight years of peace, ending 1793, the 
 amount of the balance of trade in favor of Great 
 Britain was in all 13,085,746/. official value. For 
 the eight years of war which succeeded, it was 
 46,905,169/. ollicial value; or, if estimated 70 per 
 cent, higher, to give its real value, 79,738,787/- *• 
 Thus we find a prodigious increase of foreign ex- 
 penditure, accompanied by a prodigious increase of 
 fjalance of trade. In no other mode could the 
 quantity of specie requisite to Great Britain be 
 
 ♦ See Mr. living's evidence before the Secret Committee 
 of the Lords^ appointed to iiivcsstigate the Artairs of the Bank, 
 1797-
 
 l6 ESSAY ON THE PRINCIPLE OP 
 
 kept in circulation than by exporting her produce 
 to, the amount of her foreign expenditure. If we 
 could ascertain the amount of her foreign expendi- 
 ture during the war, it might probably appear at 
 least equivalent to the balance of trade in her favor. 
 The amount of the foreign expenditure was for- 
 tunately ascertained *, during the first four years of 
 the war, and appears to have been 33,510,779'- 
 
 It may be added, as a remarkable circumstance, 
 that the exports were principally increased to those 
 countries which were the theatre of our expenses. 
 The exports to Germany were more than quadru- 
 pled J ; during peace they were not above 1,900,000/. 
 per annum; but annis 1 795 and 179^. they we're 
 above 8,000,000/. per annum each year. 
 
 The proposition which it is wished to establish, 
 is, that if the exports to all the world could be added 
 ta the amount of specie exported, they woidd be 
 found equal to the amount of imports, and of 
 foreign expenditure. 
 
 As the foreign expenditure can never enter into 
 the books of the Custom-house, those who looked 
 
 * See the Report of the Secret Committee of tlie House of 
 Lords, 1797, page 253. 
 + See Ditto, page 254.
 
 COMMERCIAL EXCHANGES. 17 
 
 TK) farther, were with reason astonished at the pro- 
 digious excess of exports above imports which they 
 exhibited ; not considering that the foreign 
 expenditure would have nearly balanced the ac- 
 count ; and many rejoiced at contemplating what 
 they considered as a certain symptom of increasing 
 prosperity: it certainly was a symptom, and a very 
 unequivocal one, of the prodigious wealth of the 
 countr)' which could afford to incur such enormous 
 expenses ; but regarded as a means of increasing 
 the wealth of Great Britain, nothing could be more 
 fallacious. The excess of her exports above her 
 imports was precisely that part of her produce for 
 which she received no value in return ; the only con- 
 sideration which the nation received for them, was 
 the services of her fleets and armies abroad, and 
 subsidies to foreign princes, the expense of the 
 maintenance of so much unproductive labor, and 
 the amount of British value for ever irretrievably 
 lost. 
 
 If it is asked, whether the merchants who ex- 
 ported that excess of her produce, received no value 
 in retm-n ; the answer will further illustrate what 
 has been advanced: it was no loss to the merchants, 
 but it was to the nation ; for it was the nation that 
 ultimately paid the merchants; the excess of their 
 exports above their imports was paid for ultimately 
 l)y Grent Bi-itain, and not by foreign nation^:. 
 c
 
 >8 ESSAY ON THE PRINCIPLE OP 
 
 The operation appears to have been practically 
 as follows :— a portion of British capital was bor- 
 rowed by the governmerft to defray the expenses 
 of the nation, and taxes imposed for the pay- 
 ment of the interest ; that part of the money 
 lent, which was destined for foreign expenditure, 
 was necessarily sent out either in specie or in 
 bills of exchange, but, in each case, 7iecessarily 
 forced the exportation of British produce to that 
 amount, to pay for these bills of exchange; for the 
 specie which was sent out, was to be recovered by 
 the export of manufactures, and the bills of ex- 
 change for the same reason could be answered only 
 by exportation to their amount. The bills drawn 
 on government by their agents abroad, and dis- 
 counted in the countries which were the theatre 
 of expense, represented the expenditure in the 
 first instance ; but these bills furnished the foreign 
 discounters at once with the means, and with the 
 temptation*, to become the purchasers of British 
 manufactures, and laid Great Britain under the- 
 absolute necessity of increasing her exports to the 
 amount of those bills. The foreign expenditure 
 may therefore he considered as having been paid for 
 in exports, in the first instance. 
 
 * With the temptation, as they were necessarily discounted 
 at an unfavorable exchange. In this instance, the unfavorable 
 exchange was the cause of the balance of trade, and not the 
 effect of it,
 
 COMMERCIAL EXCHANGES. IQ 
 
 It is obvious that the capital of the British ex- 
 porters was replaced not by the capitals of foreign 
 consumers, but by the capital of the British nation; 
 and the only return the nation received, was the 
 unproductive labor of her soldiers and sailors, and 
 the still more unproductive labor of the princes 
 whom she subsidized. This capital was therefore 
 50 much loss, not so much gain ; it was usefully 
 employed in a political view, so far as the mischief 
 done to the enemy is regarded ; but considered in a 
 financial or commercial light, it operated no other- 
 wise on the wealth of Great Britain, than if, at the 
 expense of the nation, it had been purchased by 
 the government, and thrown into the sea. 
 
 Lord King has accounted in another manner for 
 the balance of trade being permanently in favor of 
 England, in that commerce of which the Tables of 
 Exports and Imports take notice. According to Lord 
 King, the possession of the Indian commerce, which 
 is carried on by the exchange of European silver 
 for Indian commodities, " involves the necessity of 
 maintaining a favorable balance with the continent 
 of Europe ;" by which alone that silver can be ob- 
 tained. When the subject is considered in tliis 
 view, it will appear, that in one quarter of the 
 globe our exports must always exceed our imports, 
 and that in another our imports must exceed our 
 c.\p(;rt?, but that in the aggregate amount of the
 
 20 ESSAY ON THE TRINCIPLE OP 
 
 commerce of this country with all the worlds 
 " the balance juill be reduced on an average to the 
 most perfect equality. If the accounts of the im- 
 ports and exports between Great Britain and all 
 other countries could be obtained, it is probable, 
 thatj notwithstanding all the inaccuracy of the 
 Custom-hcus3 books, the truth of this opinion 
 would be sufficiently apparent. But the Tables of 
 Exports and Imports which are printed for the use 
 of Parliament, usually exclude the trade with the 
 East Indies." 
 
 The novelty and ingenuity of this hypothesis- 
 having attracted the particular attention of the 
 Edinburgh reviewers. Lord King, in a second 
 edition of his work, has paid that attention to- 
 their criticism, to which it is so well entitled, 
 and has supported his former opinion at some 
 length, and, if I may be permitted ,to judge, with 
 success, against the objections which they had 
 urged. 
 
 But as it is obvious, that Lord King's theory 
 is entirely incompatible with that offered in this 
 chapter, it becomes incumbent on me to examine 
 how far it is founded. 
 
 On this I s};iall make but two observations..
 
 COMMERCIAL EXCHAXGES. 21 
 
 The ofHciiil balance of trade in favor of Great 
 Britain with all countries, except the East Indies, 
 during the last century, amounted to 348 millions}- 
 the real value was possibly above 500 millions. 
 Yet certainly Great Britain did not export 500 mil- 
 lions worth of silver to India during that period, 
 or even the difference between this balance of 
 trade and her demand for plate and coin ; yet this 
 supposition seems necessary to the maintenance of 
 jLord King's hypothesis. 
 
 2dl}-. If Great Britain had amj foreign expendi- 
 ture during the last century (and we kno\v that 
 during four years of it her expenditure abroad was 
 no less than 33 millions*), in what conceivable 
 manner \\as that expenditure suppli(?d, except by 
 an excess of her exports above her imports in her 
 commerce with all the world, the J'Uist Indies in- 
 cluded? But if the foreign expenditure of Great 
 Britain be added to her imports, and it be admitted 
 that the exports of Great Britain are on the ave- 
 rage equal to her imports and foreign expenditure 
 taken together, then it certainly appears to follow, 
 that the trade with India involves the necessity of 
 a favorable balance w ith the re^t o{' Euro])e. 
 
 *Tliis cunous fact was atccrtainod by the Secret CommiKt'o, 
 appointed, in 179/, to examine the affairs of the Eaiik. — rai;o 
 253^ Lords' Rcpoit, 
 
 C 3
 
 22 ESSAY ON THE PRINCIPLE OP 
 
 It may perhaps be imagined, that the con- 
 nexion of the balance of trade and foreign expendi- 
 ture of Great Britain, however important in itself, 
 has been stated more at length than was demanded 
 by the subject of this Essay. It was, however, an 
 example of the effects of foreign expenditure, much 
 more capable of illustrating the principle than the 
 foreign expenditure of Ireland, which remains to 
 be considered. 
 
 The foreign expenditure of Ireland at present 
 may be reduced to two articles, — the remittances 
 to absentees, and the interest of her debt pay- 
 able in London : the former have been stated at 
 2,000,000/. per annum*; but are probably less on 
 the average. The interest for loans payable in 
 London is 1,275,000/. per annum, to which about 
 250,000/. ^will be added by the expenses of this 
 year. 
 
 This foreign expenditure must operate on the re- 
 sources of Ireland in the same manner as has been 
 already stated in the case of England ; forcing 
 a balance of trade in her favor to the amOunt of 
 the expenditure, unless counteracted by causes as 
 powerful as unfortunate ; and making to Ire- 
 land no valuable return for that excess of ex- 
 ports, but consuming so much of her revenue, if 
 
 * See the Evidence, page 2o
 
 COMMERCIAL EXCHANGES. 23 
 
 not of her capital. It may be necessary to examine 
 this operation of the foreign expenditure of Ire- 
 land on her resources rather in detail, as it is a 
 subject on which great errors appear to be exten- 
 sively entertained, more especially in that country. 
 
 The absentees have ever been considered as the 
 great grievance of Ireland ; but the mode of their 
 operation, and the effects that they produce, seem 
 very different from those which are generally at- 
 tributed to them. Let us first consider the opera- 
 tion which they exerted previous to the system of 
 raising the Irish loans in England, and which they 
 must exert again whenever that system is laid 
 aside ; we shall next consider in what manner their 
 operation is influenced by that system. Supposing 
 then no loans to be raised in England, it appears 
 that the first and immediate effect which their re- 
 sidence abroad produces is to force an excess of 
 Irish exports above imports, to the same value as 
 the remittances which are to be made to them. 
 
 Let us suppose the case of a single absentee 
 proprietor, who has an estate in Ireland of the value 
 of 20,000/. per annum ; his rents must be remitted 
 to him either in gold, or in bills of excliange ; if 
 they are remitted in gold, an increase of Irish pro- 
 duce must be sent out to recover specie to an equal 
 ^jnount, as indispensable to the circulation of Ire- 
 c I
 
 24 ESSAY ON THE PRINCIPLE OP 
 
 land ; and therefore may be considered as having 
 been sent out, in tlie first instance, in discharge of 
 that remittance : the reason that such should be the 
 inevitable consequence of a balance of debt has 
 been already so fully stated, that it is unnecessary te 
 repeat it ; but the fact is, that the remittances to 
 absentees seldom or never are made in specie. This 
 was fully admitted in the evidence taken by the 
 JSelect Committee. Even in the north of Ireland, 
 where the rents are paid in gold, the gold does not 
 leave the country ; the remittances, for a reason 
 which shall be stated hereafter, are made in bills 
 at a course of exchange not sufficiently high 
 to tempt the gold out of the country ; but when 
 the remittances are made in bills of exchange, 
 it is so obvious that they are ultimately paid for 
 in Irish produce, that it is scarcely necessary to 
 illustrate it ; for if the bill of exchange be drawn in 
 Ireland upon London, and bought by the agent in 
 Ireland to be remitted to the proprietor, it has ne- 
 cessarily been drawn in consequence of a demand 
 which the Irish exporting merchant has upon Eng- 
 land. If, on the (^her hand, the bill be drawn by the 
 absentee in London, on his agent or banker "in 
 Dublin, it cannot be sold on the Exchange in Lon- 
 don,- unless to some merchant who has imported, or 
 is going to import, com.modities from Ireland :. or 
 if we suppose, that, for want of a purchaser in Lon- 
 don, the bill is remitted to Ireland in the first' in-
 
 COMMERCIAL EXCHANGES. 25 
 
 Stance for payment, and that specie in consequence 
 is exported, still that must occasion an exportation 
 of produce to recover specie to an equal amount. 
 
 Perhaps the most correct mode of considering 
 the effect of the absentees in the abstract would Ix?, 
 that, had they continued in Ireland, they would have 
 given birth to a quantity of produce equal in value 
 to their rents, and consumed it in Ireland ; but that, 
 living in England, they still give birth to an equal 
 amount of Irish produce, hut consume it in England, 
 The productions of Irish industry, and the con- 
 sumption of it, are equal in both cases ; but in the 
 latter the produce passes through the Custom^ 
 house in its way to the consumer, and therefore 
 falls under observation. But though the quantities 
 produced and consumed in both cases appear to be 
 the same in value, they are certainly diflrerent in the 
 nature of the items of which they are composed. 
 The Irish produce, which would have been con- 
 sumed in Ireland had the proprietor remained at 
 home, would have been such as his taste and plea- 
 sure should have dictated ; but on his emigration 
 they become such as the foreign market shall de- 
 mand. The consumers also arej:lifferent ; for it 
 is not to be supposed that the absentee spends hif^ 
 income in the purchase of Irish commodities ; on 
 the contrary, he spends his Irish rents in the en- 
 couragement of English industry ; but then he i$
 
 26 ESSAY ON THE PRINCIPLE OF 
 
 the cause that others become the consumers of 
 Irish produce of another description, and to an 
 equal amount. The Irish producers are also dif- 
 ferent. Had the proprietor remained at home, he 
 would have called forth industry, probably on hi» 
 own estate, and in its immediate neighbourhood ; 
 hat when settled in England, the proprietor of an 
 estate m Munster may perhaps, to a much greater 
 degree, encourage the industry of Ulster. It is he, 
 indeed, that gives birth to the quantity of produce; 
 but the quality must be decided by the demand of 
 the foreign market. It is this circumstance, per- 
 baps more than any other, which has made the ab- 
 sentee the object of jealousy in Ireland. The tra- 
 veller who sees the neglected fields and miserable 
 habitations of his tenants, often can trace out by 
 ditches and hedges the line of demarcation be- 
 tween the estates of the absentee and the resU 
 dent*; but as he cannot see, so he omits to recoU 
 lect the circumstance, that the prosperity of the 
 tenants of the resident may possibly be in conse- 
 quence of the demand for their produce occasioned 
 by the absentee. 
 
 Of the few who have been aware that the effect 
 o( the absentees was to force an increase of exports 
 
 * It would be veiy easy to point out examples j but this 
 soode of illustration would be too invidious.
 
 COMMERCIAL EXCHANGES. 27 
 
 to the amount of their remittances, some have 
 fallen into an extraordinary error, and concluded, 
 that the absentees were therefore so far hene- 
 Jicial ! But the supporters of so strange a paradox 
 might have observed a distinction between the ex- 
 ports which are exchanged for imports, and those 
 which are to discharge the foreign expenditure of 
 the country — a distinction no less important than 
 that the former ure paid for, but the latter not. 
 The exporting merchants, indeed, are paid alike 
 for all that they export ; but it is Ireland, and not 
 another nation, that pays for that portion which is 
 sent in discharge of her foreign expenditure. The 
 capital of the Irish merchant, who exports the 
 produce which is to answer for the remittances to 
 absentees, has his capital replaced, not by British 
 capital, but by the rents of the absentees. It is 
 Ireland paid by Ireland to work for England. It is 
 the part of England to enjoy, and of Ireland to labor. 
 The only value that Ireland receives in return, is 
 the permission to keep at home her circulating me- 
 dium. Let the case be supposed, for greater clear- 
 ness, that of an individual tradesman : if he found 
 that of what he sold two thirds were regularly paid 
 for, but the remaining third never, he would cer- 
 tainly consider his balance of trade as the only part 
 of it that did not enrich him. The case of the na- 
 tion is the same as of the individual.
 
 28 K5SAY ON THE PRINCIPLE OF 
 
 Many who have felt the general grievance of the 
 absentees, yet knew not how it operated, have riot 
 €arried their views so far as to consider its effects on 
 Ireland's commerce, but have adopted a mode of 
 reasoning much more compendious. 
 
 After computing the greatest quantity of specie 
 that could be supposed to exist in Ireland, and the 
 least supposable amount of remittances to ab- 
 sentees, they have subtracted the balance of trade, 
 if favorable, from the latter, and divided th© 
 quantity of specie by the remainder ; and thus pre- 
 dicted the inevitable period at which Ireland would 
 be left without a shilling. The period has arrived, 
 yet it has generally happened that it found Ireland- 
 possessing more circulating medium than at the 
 time of making the prediction. 
 
 They who have perused the Irish })amplilets and 
 speeches of the last century have seen, that, during 
 the whole of that period, it was their constant com- 
 plaint then, as at present, that their gold was about 
 to leave them, that the absentees ?/;o?z/(/ carry it all 
 away, and leave poor Ireland without money :-— 
 a. prediction annually made, never fulfilled, yet still 
 repeated. 
 
 Even the superior genius of Swift fell into this^ 
 error ; or, perhaps, he only availed himself of a,
 
 COMMERCIAL EXCHANGES. 2C) 
 
 popular prejudice to excite discontent from party 
 motives. The following may serve as an amusing 
 specimen of the terrors of our great-grandfathers, 
 and as a proof that the apprehensions at present 
 entertained are at least not new. It is an extract 
 from a writer, who does not appear to have been 
 actuated by any party motives, but to have been a 
 sober-minded, well-meaning man, who could reason 
 calmly on the subject. 
 
 In an anonymous treatise on the state of Ireland, 
 written in the year \72Q, and which seems to have 
 been of authority in its day, the author, after enter- 
 ing into a detailed enumeration of the sums annu- 
 ally remitted to absentees, which he estimates at 
 just 627, 77 g I. 3s. }d. proceeds to observe, 
 
 " That it appears plainly from this list of ab* 
 sentees, and the estimate of the quantity of species 
 they may be supposed to draw out of the kingdom^ 
 that no other country labors under so wastful a 
 drain of its treasure as Ireland does at present by 
 an annual remittance of above 6oO,000/. to our 
 gentlemen abroad. 
 
 *' It is believed by many who understand our 
 money affairs, that there is less species *now in 
 the kingdom than there was at any one. time 
 since tlie Revolution, if not since the Restora-
 
 30 ESSAY ON THE PRINCIPLE OP 
 
 tion. The most sanguine do not reckon that we 
 have 400,000/* now remaining ; if so, 'tis impos- 
 sible to subsist much longer under such a drain; 
 for if the quantity of money exported vastly over- 
 balances any income or gain we have by trade 
 (as plainly appears by examining the said list, the 
 balance of our trade herein set forth, and a con- 
 stant course of exchange against us), it evid.entljf 
 follows, that all our remaining species 2viU in a 
 little time be carried off-, — the consequence 
 whereof will be, that we shall be utterly disabled 
 from carrying on our foreign and domestic com- 
 merce, paying rents, or discharging the public 
 establishment. It is to he feared this misfortune 
 will fall upon us much sooner than could be thought 
 of, since we are credibly informed that Miss 
 Edwards's estate in this kingdom, said to be 
 worth 150,000/. is immediately to be sold, and 
 the purchase-money sent away ; that a noble 
 Lord of the greatest fortune here is to have 
 80,000/. remitted to him by sale of part of his 
 estate, and that several others are selling or 
 mortgaging their lands for large sums. If all 
 these designs should take place, they ivill he suf" 
 Jicient to carry off all the circulating cash of the 
 kingdom in a very short time. When things 
 come to this extremity, great must be the ca- 
 lamity of all."
 
 COMMERCIAL EXCHANGES. 31 
 
 After the revolution of near eighty years, we 
 may now observe, that, notwithstanding Ireland 
 possessed only 400,000/. in specie, and had an an- 
 nual subtraction of ()00,000/. according to the 
 author, from that sum ; notwithstanding the con- 
 stant course of exchange complained of; and not- 
 withstanding the sale of Miss Edwards's estate ; 
 Ireland never was exhausted of its specie until the 
 measure of the restriction rendered it superfluous z 
 on the contrary, though the absentees have greatly 
 increased since 17^9, and though estates, greatly 
 superior to Miss Edwards's, have since been dis- 
 posed of, Ireland had increased her stock of specie 
 from four hundred thousand pounds, which ap- 
 pears to have been its amount in 17^9, to five 
 millions *, at which it was estimated in 1797. 
 
 Severe as it must be confessed is the situation 
 of Ireland, compelled to export the value of 
 above 3,000,000/. sterling of its produce annu- 
 ally to another country more than it receives 
 from it in return, yet it is clear that such a 
 system, though it certainly tends to impede its 
 advances to prosperity, can never ruin it, nor 
 even exhaust it of that portion of specie necessary 
 to its demand ; the effect of such a balance, of 
 debt not being to cause an exportation of specie, 
 
 * See the Evidence, page Q7 and 129.
 
 32 ESSAY ON THE pniWC'lM-rfe OP 
 
 but an exportation of jjroduce without return, and 
 the grievance consisting not in any tendency to ruin 
 Ireland, but to force that country to labor severely, 
 and to little purpose, to save a great portion of her 
 annual produce, not for the purpose of accumu- 
 lating a capital for herself, but of sending it to in- 
 crease both the revenue and capital of another 
 country.. 
 
 It must, however, alv/ays be recollected, that the 
 balance of debt against Ireland will equalize her ex- 
 ports to her imports and foreign expenditure, taken 
 together, only when permitted to exert its operation 
 uncontrolled. It certainly is possible that an arti- 
 ficial system may counteract the operation of the 
 balance, so far as to allow it to retain all its mis- 
 chiefs, and yet pj-event its tendency to produce its 
 own remedy. 
 
 The expedient of raising the loans in EngJan(i. 
 for the service of Ireland seems to be of this na- 
 turei It may be replied, that this practice is un- 
 avoidable, for that they cannot be raised in Ireland : 
 that may be ; it is not, however, the less pernicious 
 on that account. 
 
 The mischiefs it will pccasion to Ireland by the 
 permanent drain of money, or produce for the pay- 
 ment of the interest, have often been pointed out :
 
 COMMERCIAL EXCHANGES. 33' 
 
 it seems, however, to exert a more immediate ope* 
 ration less observed, but far more pernicious. 
 
 In the first instance, it enables Ireland to dis*- 
 charge the balance of debt in another manner 
 than by the exportation of her own produce and 
 manufactures. By the unnatural supply of cir- 
 culating medium which it occasions in Ireland, it 
 entirely counteracts that demand for circulating 
 medium which the balance of debt would other- 
 wise occasion, and the scarcity of which would, ia 
 the manner already detailed, give existence to such 
 an increase of produce. Preventing the scarcity of 
 circulating medium, it necessarily prevents the 
 existence of all that increased produce which the 
 scarcity of circulating medium would otherwise 
 have occasioned. At the moment when it is most 
 for the interest of Ireland that the circulating me- 
 dium should be as dear as possible, it renders it as 
 cheap ; when increase of produce is most necessary, 
 it takes away not only the necessity, but in a great 
 measure even the temptation, of calling that 
 produce into existence. As far as the balance 
 of debt goes, the loan discharges it, and immedi- 
 ately returns to England in payment of that 
 amount ; which balance, had it not been for the 
 remittance of the loan to Ireland, would have beeiif 
 paid for in produce, which luould have existed. 
 s
 
 34 ESSAY ON THE PRINCIPLE OP 
 
 But aa the loan remitted to England may perhaps 
 exceed the amount of the balance of debt due by 
 Ireland, in \vhat manner the excess is applied be- 
 comes an interesting subject of inquiry. It has al- 
 ready been stated, that no countiy can retain a 
 greater quantity of specie than it can employ as the 
 representative of its commerce, at the same value as 
 specie is employed by the adjoining nations. Now 
 .in whatever manner the loan is remitted to Ire- 
 landy the medium in which it is remitted must be 
 a representative of value also in England ; and not 
 finding in Ireland any value to represent (for the 
 value of commodities in Ireland is, as will hereafter 
 appear, most abundantly represented in another 
 manner), it can no more continue in Ireland, than 
 if it were so much specie : it therefore instantly 
 leaves Ireland, and returns to England ; but after 
 having discharged the demand of England against 
 Ireland, it can return to England only in exchange 
 for commodities. 
 
 :-r*rhe English loan therefore diminishes the exports 
 of Ireland by the ainount of the balance of debt , and 
 increases the imports of Ireland by the excess of the 
 loan above the balance of debt. The operation is 
 practically this : — Whew the loan is to be remitted, 
 theTreasury in Dublin draw bills on their agent in 
 L.ond0n, and sell them to persons wanting to remit
 
 COMMERCIAL EXCHANGES. 35 
 
 in Dublin : but the purchaser of their bills in Dub- 
 lin has but two possible modes of applying them, 
 either in liquidation of a demand against him in 
 England, or, as is probably more frequently the 
 case^ in purchase of commodities in England to 
 be sold at a profit in Ireland. If he applies the 
 note for the first purpose, it obviously discharges 
 the same office which exports to the amount must 
 otherwise have performed ; but if applied for the 
 second, it is so positive an increase of imports, 
 tliat it is unnecessary to dilate on it. In the first 
 case the Treasury draught allows the holder to 
 spare the circulating medium of Ireland, and 
 thereby prevents the exports that must either have 
 gone in its place, or to recover it, if actually sent. 
 In the second instance, the Treasury draught allows 
 the holder to have a demand upon London, which 
 the quantity of the circulating medium in Ireland 
 could not otherwise have permitted. It shall pre- 
 sently be shewn that the actual state of the com* 
 merce of Ireland is such as this theory would lead 
 us to expect ; and perhaps no other conceivable 
 hypothesis can explain the phenomena which that 
 commerce now presents. 
 
 Thus, instead of increasing the capital of Ireland, 
 as has sometimes been supposed, the loan in- 
 creases nothing but her expenditure. By swell- 
 D 1
 
 36 ESSAY ON THE PRINCIPLE OP 
 
 ing her list of imports, it encourages j or ratlier 
 compels her to consume foreign articles, which 
 she could not otherwise have purchased ; at the 
 same time, by diminishing her Hst of exports, it 
 prevents the existence of those articles, the produc- 
 tions of her industry, which, were it not for the 
 loan, the balance of debt would have occasioned* 
 How the loan prevents exportation to the amount 
 of the balance of debt, has been sufficiently stated. 
 The excess of the loan above the amount of the 
 balance of debt does not merely encourage but 
 compel importation to the amount of tWt ekcess t 
 it in fact goes over in imports, for in no othef 
 manner can it be remitted: Remitted in the first 
 instance in specie, or in Bank notes, or in bills> 
 neither the specie, nor the Bank notes, nor the 
 bills can continue in Ireland *, where there is no 
 
 * Even on the supposition that these loans are so much addi- 
 tion to the capital of Ireland, still the amount of money, in 
 which they are sent over, could not continue in the country, 
 since the quantity of circulating medium, which any capital 
 demands, is probably not -f^o^h part of that capital. The 
 capital of Great Britain has been estimated at four thou* 
 isand millions : the circulating medium of Great Britain is 
 probably not -roo*^^^ of that sum j therefore, if a loan of two 
 millions is remitted to Ireland, supposing that circulating me- 
 dium bears the same ratio to capital in Ireland as in England, 
 they who imagine it possible for the money to continue in Ire- 
 ^and, must contend that it has operated an increase, notof t\r0 
 millions, but of two hundred millions of capital.
 
 COMMERCIAL EXCHANGES. 37 
 
 \:tli»e Jor them to represent; they immediately 
 leave Irelaad, and return to England; but they 
 can return only in exchange for articles of im- 
 portation into Irelaad. Thus it is easy to acn 
 count for those daily lists of imports and ex-, 
 ports of the port of Dublin, whose formidable 
 balance of imports excites at once the asto- 
 nishment * and despair of Irish merchants.—* 
 One of these is inserted as a specimen in the 
 Appendix, and the attention of the reader is par-* 
 ticularly requested to this curious document, as a 
 proof of the extent to which the course of trade 
 may be inverted by financial regulations. The 
 Dublin merchants refer to these tremendous 
 lists as sufficient causes to account for the ex- 
 change ; but they have omitted to state how any 
 nation can purchase from the rest of the world 
 more than it is able to pay for ; for even allowing 
 them their supposition, that the balance of debt 
 may be greater than it is possible to discharge^ 
 still we must be permitted to deny, that any nation 
 will be allowed to purchase from others without 
 •giving value in return. These daily lists may be 
 ^considered (if I may be permitted the expression) 
 
 * Their astonishment, because, as they hold that the present 
 «xchange operates as a duty of no less than ten per cent, on all 
 imports, they may with reason be surprised at their continual 
 increase, 
 
 P 3
 
 3B> ESSAY ON THE PRINCIPLE OF 
 
 as the journal of the loan travelling into Ireland. 
 Should the loans cease, these daily lists iwottld^ 
 assume a very different appearance. When com- 
 mercial credit had recovered the first shock that 
 might ensue, the exports would exceed still more 
 than the imports do at present *. In the mean 
 time, so long as Ireland continues to borrow morei 
 than the balance of debt due by her, this excess of 
 imports is inevitable ; it is the only mode in which 
 human ingenuity can transmit the loan into Ire- 
 land. So long as a nation is allowed to trade, 
 unfettered by regulations, the quantity of im- 
 ports should be a subject of her pride, and not of 
 her alarm. It is a symptom of her actual wealth, 
 and not of the diminution of her riches. The 
 fears of her patriots, that she is rurming her- 
 iself in debt, are superfluous, and all the restraints 
 they can lay upon her imports are as impertinent 
 an interference with her expenditure, as sumptuary 
 laws with that of individuals. It must be confessed,, 
 however, .tha^; Ireland is differently situated ; her 
 
 * As there is reason to presume that the balance of trades^ 
 notwithstanding the lean, was last year in favor of Ireland, it 
 may appear inconsistent to talk of the excess of imports j but 
 it is the commerce of Dublin that is under consideration. The 
 excess of exports at Cork and Belfast may more than counter- 
 baance ; and it appeais a confirmation of this theory, when 
 we observe that the same part of Ireland which leceives th^ 
 lo^ is the place where the imports so much predominate.
 
 COMMERCIAL EXCHANGES. SQ 
 
 Jinancial system forces her commerce into a channel 
 directly opposite to that in which it would wa^. 
 turally have Jloived. Her expenditure seems in- 
 creased nearly in the proportion in which her 
 capacity of paying is dimijiished ; prevented from 
 producing, and forced to consume, she has the 
 certain prospect of seeing this artificial system one 
 day abandoned, and of being left at last to compare 
 the demands against her with the means she pos- 
 sesses of discharging them. 
 
 If this system could go on for ever, something 
 might be said in its favor; but when these loans 
 cease, and cease they must, for it is impossible 
 for ever to borrow at compound interest *, and 
 Ireland is fast advancing to that mode of raising 
 her proportion of the supplies ; Ireland will then 
 have an immense balance of debt remaining to be 
 paid, while the loans are withdrawn, which have 
 
 * If the system on which the Irish finances have beea 
 carried on of late years is persevered in, Ireland must next year 
 borrow to pay the interest of her national debt. Perhaps it is a 
 fact, which few Englishmen are aware of, that after paying 
 the interest and charges of the debt, including that of this 
 year, the revenue of Ireland will yield little more than two 
 hundred thousand pounds into the Treasury. Ireland pays two 
 parts, and Great Britain fifteen, of the national expenditure ; 
 yet Ireland this year has borrowed half as much as. Great 
 Britain ! 
 
 D 4
 
 49^ ESSAY ON- THE PKINCIPLE t>P 
 
 hitherto supplied the destructive mode of making 
 the payment. Ireland will then feel what at pre- 
 sent seems to her no subject of alarm, that her 
 industry has been diminished in the same ratio 
 as the demands against her have increased, and 
 that, in considering the balance of debt, Sihe 
 contemplates but one half of her difficulties. 
 
 Not to dwell upon the financial inconvenience 
 which' may result from the country possessing no 
 revenue beyond what must be applied to the pay- 
 ment of the interest of the national debt, her com- 
 mercial situation may be still more distressing. The 
 balancfe of debt, long checked in its operation, will 
 then be allowed suddenly to act in all its vigor, 
 and it is to be apprehended that its action may 
 prove the same as that of any other stimulus, dp- 
 plied in excess. 
 
 We haye no data to determine a priori the 
 precise effects which may be produced on the 
 coHflrfierce, credit, and industry of Ireland, by 
 afbandqning this system ; yet I suspect that those 
 who foretel the ruin of that country will find 
 themselves mistaken *. The balance of debt, 
 
 * Sir John Sinclair, in his History of the Revenue of Great 
 Britain, has collected one-and-twenty passages from respect^
 
 COMMERCIAL EXCHANGES. <1 
 
 whenever it is allowed to operate against Ireland, 
 cannot ruin the country so. long as its exports can 
 be increased, or its imports diminished. The 
 current Talue of the imports in the year ending 5th 
 January J 803, was 7,654,1 13/. and of the exports 
 8,571,412/.; leaving a balance of 917,299/. iff 
 favor of Ireland. If we suppose the loans now 
 to cease, the imports would certainly be dimi- 
 nished, and the exports increased ; but if we 
 suppose the imports diminished to six milliohs, 
 and the exports increased to ten, it is impos- 
 sible to suppose that the balance of trade in fa- 
 vor of Ireland should not be at least equal to any 
 conceivable remittances that would remain for Ire- 
 land to make for her absentees, and the interest of 
 her debt due to England: and whenever the practice 
 of making the loans in England shall cease, the 
 effect will be a diminution of Ireland's imports, 
 and an increase of exports, sufficient to create a 
 balance of trade in favor of Ireland, equivalent to 
 the demands against her ; but in what proportion 
 the imports will increase, or the exports diminish, 
 
 able writerf?, all men of authority in their day, tending te 
 prove that England was actually undone in I68O, and has been 
 in a progressive state of deterioration ever since. The prophet 
 of destruction, in every age, has had a claim to the attention of 
 his hearers, which, by a mere appeal to their reason, he never 
 had possessed.
 
 42- ESSAY ON THE PRINCIPLE OF 
 
 it is impossible to predict. The only grounds- 
 of apprehension which it appears can reasonably 
 be entertained of Ireland's ability to meet the 
 balance of debt, whenever the loans shall be with- 
 drawn, are, lest so sudden a change as might 
 thereby be made in the direction of her trade should 
 create commercial embarrassments ; yet even this 
 may be obviated, by withdrawing them gradually. 
 
 Let us now see how far this theory is supported 
 by fact: — it would lead us to expect to find that 
 the real value of Ireland's exports at present, to- 
 gether with the loans remitted to her from Great 
 Britain, are equal in amount to Ireland's imports, 
 along with her remittances for absentees, and for 
 the interest of her debt due in England. Yet it is 
 to be observed, that if it should appear that there 
 was at' any one time a considerable balance on 
 either side of the account, still it would not be 
 conclusive evidence, that this theory was unfounded, 
 because it has been admitted, that a country may 
 for a. limited time receive more money than it 
 pays, or vice versa, > 
 
 A return was made to the Committee of the real 
 value of exports of Ireland, for the year ending 
 5th of January 1804 j but unfortunately no'return 
 could be procvired of the real value of the im-
 
 COMMERCIAL EXCHANGES. 4a. 
 
 ports ; we must therefore be contented with a 
 comparison in the year ending 5th of January 1803. 
 
 * Current value of Ireland's exports for £. £, 
 
 the year ending 5th January 1 303 8j571,412 
 
 X All money transmitted to Ireland from 
 Great Britain for loans, lotteries, and 
 other public purposes, within the 
 year ... - 1,459,550 
 
 Total value received by Ireland 10,03 1,002 
 
 On the other hand we find: 
 % Current value of Ireland's imports for 
 
 that year - . . 7,654,113 
 
 f j Remittances to absentees, computed at 2,000,000 
 
 Total value paid by Ireland 9,654,1 li 
 
 Leaving a balance in favor of Ireland 376,889 
 
 Thus the value given and received within the 
 year, was nearly equal; the difference bemg so 
 trifling as 37(>,000/.^. I do not mean to attach 
 
 * See Appendix, No. IV. 
 
 X See Appendix, No. V. 
 
 § See Appendix, No. IV. 
 
 Jl See Evidence, page 2. 
 
 ^ The interest paid by Ireland for the debt payable, in 
 London, has no place in this account, because it is re- 
 tained in London out of the loan made for Ireland } but if any 
 one should choose to consider it as an item, it may be set down 
 to the debtor side, adding an equal sum on the creditor side, as 
 an increase of tlie loan transmitted : the result will of course 
 be the same.
 
 4>^ ESSAY ON THE PRINCIPLE OP 
 
 wiuch consequence to this account, founded on na 
 bettS^ data thari the returns of the Custom-house; 
 it must however be allowed, that it has a singular 
 coincidence with the theory proposed, and leads to 
 conclusions very different from those which repre-^ 
 sent the balance of debt, as the jsource of Ireland'^ 
 misfortunes. 
 
 ^'Biit this theory may be put to a much more 
 decisive trial, and to w:hich it appears that we have 
 sufficient means of submitting it. .Although the 
 returns of the Custom-house are not sufficient to 
 decide thfe teal value of exports or imports in any 
 ^e year, they are, fully adequate to determine the 
 relative value of the exports and imports of one 
 year, as compared with another. And if this theory 
 fe triieV w^e must- expect to find, that some re- 
 markable changes have taken place in the relative 
 value of the exports to the imports, in the different 
 years, for a considerable time past. 
 
 First. We should expect to find, that previous 
 to the practice of Ireland borrowing frOm England, 
 her exports must have exceeded her imports, nearly 
 by the amount of her remittances to absentees, 
 which were Bodoubt very considerable, 
 
 J: fSeconiM/! That when the practice of borrowing 
 commenced, the excess of her exports must have
 
 feeh reduced, as the loan^ provided rmotherri*ii3 
 'an easier_, mode of making those remittances.' '^'-^ 
 
 ^''■Thirdly. That as the loans lAcr^as^i tfe re- 
 duction of that excess of exports must have beeii 
 still greater; or perhaps j that' 'it W'as entirely di^- 
 stroyed, and a b^alance of imports substituted lA 
 its place. - j ,.j •. ^ 
 
 And first, \ve find that on aA''^vera:g6 ojT live 
 years, ending March 25, I'JQA, before' the prat- 
 tice of raising the loans in England- had com" 
 menced, that the exports exceeded the imports 
 1,195,810/. 5s. Qd. per annum *, official value. 
 
 Secondly, we find that on an av^^^'^of th4. 
 five succeeding years, ending Maix^h 25, 1799) 
 after the practice of making the loans in England 
 had comitiencM^, that the excess of exports over 
 imports was no longer 1,195,8 10/. per annum, but 
 only 466,466/. 125. 
 
 Thirdly, we find that on an average of the 
 five succeeding years, ending January 5, \SOAf, 
 
 * See the Appendix, No. III. 
 
 § Itbegan aniio 1795. Vide Appendix to die Evidence, p. 52. 
 
 I An alteration was made at the time of the Union, iij.thg 
 
 mode of stating the Irish acpfiuntp^.the year having since been
 
 46 ESSAY ON ^HE PRtNClPLE OF 
 
 when the loans had become muck greater; that 
 the excess of exports over imports was not only 
 annihilated, but the imports came to exceed the 
 exports by 1,071,428/. per annum. It must be 
 recollected, that this is stated according to Hm' 
 official value ; for, if stated according to the real, 
 there is reason to believe, that the balance of trade 
 Tvould, even during these latter five years, appear 
 in favor of Ireland ^ ; this however in no degree 
 affects the argument, as the official value must 
 suffice for the comparison of one year with anor 
 ther, which is all that is here necessary. 
 
 This theory will receive an additional confirma- 
 tion, if it should appear, that in the present, or rather 
 the succeeding year, the excess of imports, stated 
 according to the official value, shall be considerably 
 increased ; which we may be led to expect, since 
 the sum to be transmitted this year to Ireland,, 
 amounting to about three millions, is so much- 
 greater than at any time preceding. 
 
 Such appear to be the direct effects of the 
 system of raising the loans in England> upon the 
 commerce of Ireland: another system seems to 
 
 stated to end on the 5th of January, instead of the 2Sth of 
 March : this will not materially affect the result. 
 
 § See tlie evidence of Mr. Marshall^ Inspector-general of 
 
 Exports and Import^.
 
 CX)M3HEKCIAL EXCHANGES. 47 
 
 have ejierted upon Irish industry a similar opera- 
 tion, and which has been perhaps still less, noticed 
 x^an the former. 
 
 ^^.^ The Bank restriction has allowed, if not com- 
 pelled, a considerable portion of the specie of the 
 country to be applied to the liquidation of the 
 demands against her ; the restriction therefore, as 
 far as this specie has gone, has prevented the ex- 
 istence of so much of the produce of Irish industry, 
 while it has increased the ultimate * demand against 
 the country, by the amount of the specie exported. 
 But as this effect of the restriction is not peculiar 
 to Ireland, it may be proper first to consider its 
 operation in Great Britain. 
 
 It has been already observed, that the foreign 
 expenditure of Great Britain, during the last war, 
 operated as a stimulus to her industry, in the,|ajne 
 manner as the balance of debt should do to that of 
 Ireland. One of the many effects of the Bank 
 restriction appears to have been to deaden that 
 stimulus. 
 
 The foreign expenditure of Great Britain forced 
 a balance of trade in her favor, to the amount of 
 
 * Whenever the specie is to be recovered.
 
 4§^ ESS3lT*'^6Tff^''nrE WINCME- ^ 
 
 i\&^'f6Mgh expencfifiife, ^kwi'-'tH^'qiiaHttt^^'f** 
 s^cfe •wi»ch was exported, and whrch tKe bonn'try • 
 wa^ at)fe to dispense with. The greater 'tfie^quan-'* 
 tity of spe'eie that tould he dispensed ivftlf,'- the less; 
 tKefe?o^Svakthe^afence of trade in fatt)i't)f'Great'^ 
 Britain ; thatis, 'YheiesVthe prodiictionB 'of Bri-"^ 
 tfsh' industry r ' "The^anjc 'restrietion/ 'fey~en^blingf 
 tne'ilafrdhlcrclispens'e with' a vei-y great proportiorr 
 of its specie, diminished therefore the balalTCef cr* 
 trade to that amount. Had it continued abso- 
 liitdy indispensable 'to recover the" specie that had 
 been exported, previous to the restriction, or tb 
 retain "t"hat which remained in circulation aftdf 
 it had been resorted to, British produce would 
 been forced into existence to that amount ; bvlt 
 the Bank restriction pointing out to the coun- 
 try a mode by which that loss could be endured, 
 the stimulus which would otherwise have been 
 given to industry, was destroyed, and it was found 
 rinich easier.* to * substitute paper in the place 
 of specie, than to recall it by exertion. This 
 may to some" appear a great saving ; and if it could 
 Be permanent, it would be liable to less objection. 
 But rf these, countries are ever to have specie again, 
 to form its 'pi-oportion of their circulating medium, 
 if that ^ specie will not return without being paid 
 for by exports, and if one of the effects of the 
 restriction Has been to adjourn to one future ex- 
 4
 
 COMMERCIAL EXCHANGES. 4^ 
 
 ertion the production of those exports, which, had 
 it not been for the restriction/ would gradually 
 have been called into existence hy that portion of 
 British labor which the restriction has prevented 
 froTn existing; we must admire the impolicy 
 of a measure, which, to satisfy the wants of a day, 
 sold the most valuable utensil of commercial in* 
 dustry, and adjourned indefinitely the consideration 
 of recovering it again. 
 
 Whatever may have been the gain to the nation, 
 in parting with its specie, equal must be the loss 
 inseparable from its recovery. Whenever the 
 restriction is taken off, the immense expense 
 of recovering the specie must be incurred. Some 
 indeed appear to think, that the specie will 
 return of itself, or that the Bank, by some mystical 
 secret, can produce it at their pleasure ; they think 
 it is the business of the Bank, and not of the na- 
 tion, and so they are satisfied : it certainly is the 
 business of the Bank ; but still the Bank cannot 
 perform an impossibility, even if it should be 
 thought their duty to undertake it. Can any one 
 supjx)se that the tenth part of the specie that will 
 be necessary now exists in their coffers? 
 
 In short, if one good effect of the restriction has 
 been to permit the nation to " substitute a very 
 
 K
 
 5Qv ESSAY .ON THE PRINCIPLE OF 
 
 cheap 'ii\stefid of -a ^ry expensive medium of cireU^ 
 Utioiy^ ;" wiieiii^^r it shall prove necessary agaia 
 to suhstituie the very expensive in the place of the 
 T^ry cheap mediunij it will be impossible, without 
 submitting .to a loss in the latter operation equiva^ 
 lent to the gain of the former, or, in other words,- 
 until Great Britain has fully paid for her former ex- 
 travagam;e,— yuntil she shall give the manufactures 
 and produce which the exportation of her specie 
 prevented her from producing. Thus alone the 
 specie can return, and then the Bank can assist, as 
 the agent, in settfng it in motion : but he that pro- 
 poses to postpone the removal of the restriction 
 until a favorable balance of debt shall have brought 
 in -the specie necessary for the purpose, zvaitsfor a 
 period which never can arrive ; for, however great 
 the balance of debt may be at any time in favor 
 of the country, all the specie which it brings in 
 must be exported as fast as it appears. Before 
 the restriction was imposed, all superfluous specie 
 was exported ; but during the continuance of the 
 restriction, almost all specie is superfluous. The 
 same causes which formerly prevented the coun- 
 try possessing too much specie, now operate to 
 prevent its possessing any. The restriction must 
 first be taken off, and then the increased exports 
 and diminished imports which its removal must 
 
 * Dr. Adam Smith. 
 5
 
 COMMERCIAL EXCHANGES. Ji5 1 
 
 occasion, wWl supply the country with the specie 
 required. ■ • 
 
 Every system of banking displaces a certain pro- 
 portion of the precious metals as unnecessary, and 
 the Bank restriction, for the same reason, tends to 
 displace them entirely. The first is as beneficial 
 to a country, as the latter is pernicious; for it 
 is improbable that the banking system, unaided by 
 a restriction, will ever displace any portion that 
 really is requisite for its purposes ; all therefore 
 that can be spared is so much clear gain, since the 
 specie exported will certainly obtain value in re- 
 turn, and since the expense of maintaining the cir- 
 culating medium will be so much diminished *. 
 
 * The reader will recollect, that it was the opinion of Mr. 
 Hume tliat Bank notes were an addition to the circulating me- 
 dium of the country j and on this is founded his attack on the 
 banking system. The fallacy of such a supposition has been 
 abundantly demonstrated by Adam Smith : he is of opinion 
 t\x2iX.Bank notes are not an addition to the precious metsls ; but 
 a suhstitution for them, and that paper credit is therefore bene- 
 ficial, as it supplies " a very cheap, in the place of a very ex- 
 pensive medium of circulation." It may be observed, how- 
 ever, that even supposing the banking system acts only by sub- 
 stituting, and not by adding, still it Is attended with a loss toa 
 certain degree j for instance, if we suppose that the banking 
 system in England has displaced twenty millions of gold, still 
 these twenty millions mvist be applied, in some manner, in 
 ether countries j but as, wherever it is applied, it must depre- 
 E 2
 
 Thfe was thfi opmion^of Adam Smith ; but he cer- 
 -tajnly may be excused for not having foreseen thart, 
 4he -Syfitettv of banking was one day to be aided by 
 atn ally, \^ith^ whose assistance it should deprive 
 the oountry of the precious metals altogether. ? -. i 
 'DO yd: \-'j :.;-'.:^C'. ■;'■;.,; ':: -^ Di-y^ 'rir' • 
 eCo;TheTneasureof the restriction in Ireland seems 
 '^ have exerted an operation in this respect* per- 
 fectly similar to that 'W'hich we have attributed to. it 
 ;ia:jSngliyid^;..::,;:ui- . 
 
 \o ^he' amount of .specie . exported from Ireland 
 D^ince the restriction: has been estimated by Mr. 
 iFra&ksJsor low asihree millions: every ontemust 
 acknowledge, thatj^hitd'it not:been:for the restrie- 
 
 -^fcJatif &i vaiiie', "afirdf as ihe Value ^oftlie"pfccteiikaelkW-fe^^^ 
 
 -finally equal in neighbouHng couhtries>" ^he" gold that has re- 
 mained in England >vill- also b^ deprechited : yet Grreat Britain is 
 
 . a gainer by the opexatian ;-.for the loss has-been divided with all 
 the world, but the jgain has been exclusively to her. But if 
 we could conceive it possible that all countries should adopt 
 the banking system in proportion to their commerce, tliey nOrie 
 of them would have substituted the cheap in place -of Jtheiik- 
 pensive medium^ but have made a raeEe:J»<iditio'ix ttyiiieiji'sA^'- 
 culating media, and depreciated them nearly in the same 
 proportion. j^-, .-.,.r , ,'»•:,;.. \i: '»rii ^o2 • 
 
 ,,,. ■,.* Jn other respectfitw^l her^tg^apj}^^,;t^h^]P felleu 
 with peculiar and most partial severity pa,Ijfgl^j!i»^j;(,'i3i(j, g^ 
 I Sre the Evidence, page 130L _^. , ;^;i d/nudrl yi «
 
 Hon,: -Specie to this amoiirit: could not. have be^ 
 sfpared from: cirnolntion; -.b© tit is SBignVr-enpHgii 
 that-sonie persons appear to- icQnsider.thJaj3S\Qn§;-pi 
 the.recommcnclatioasi)f the measure; ' -^ [^he ^Ke- 
 tension :of Ireland's .paper^ : the/. iiTfdnn\'USi:ailk)Bied 
 her to export her gold * in liquidation of the de- 
 mand against her.". Protrsfcing; in the first place, 
 that the exportation of specie;:c//^(?r i/?ie jsiecyare q/* 
 restriction icas resorted to^ furnishes no presum|i- 
 tion of any balance of debt subsisting against the 
 country (since the measure of the restriction would 
 cause its exportation even to 'create a balance of 
 debt in its favor, or, in other words, in. exchange 
 for articles of import J), we shall observe, that in 
 either case the permission to export her gold was 
 not of advantage, but singularly detrimental. 
 Whether the exportation of the specie of Ireland 
 was in liquidation of a balance of debt actually ex- 
 isting against her, or in exchange for commodities 
 which Ireland was to receive in return ; in either 
 case, but especially in the former, had it not been 
 for the restriction, Ireland's produce,, and not Ire- 
 land's specie, must have been exported ; ike export^ 
 ution of the specie therefore prevented the existence 
 
 * See the Evidence, page 102. 
 
 I The restriction may thus have tended in the same manner 
 as the loans to increase Iieland's impoits in proportion/ as well 
 as to diminish her exports. 
 
 E 3
 
 5^. 
 
 ESSAY ox THB PRINCIPXB OF 
 
 of SO muck produce *. The Bank restriction has 
 in this manner prevented the existence of Irish 
 produce to the extent of three millions : it has, 
 however, operated to the detriment of Leland, not 
 merely to the extent of three millions, but of six ; 
 for whenever the restriction shall be taken off, it 
 
 - was - 
 
 * The quantity of plain linen, the staple manufacture of 
 Ireland, exported from Ireland, 
 
 Yards. 
 39,718,706 
 45, 58 i, 667 
 43,312,057 
 43,257,764 
 42,780,840 
 46,705,313 
 36,559,746 
 33,497.171 
 38,466,289 
 35,676,908 
 
 In the year end- 
 ing 25th March" 
 
 1791 
 
 1792 
 
 1793 
 
 1794 
 
 1795 
 
 1796 
 
 1797, 
 
 1798 
 
 1799 
 
 1800 
 
 year of the restriction, 
 
 From 25 th of ^ 
 March ISOO l 
 
 1801 
 
 25,041,516 
 
 to 5 th January-' 
 In the year end- ^ 1802 - - - - 37,7<57,077 
 
 ing5thJanu-l 1803 - - - - 35,491,13i 
 
 ary - - - J 1804 - - - - 37,432,365 
 See tlie accounts laid before Parliament. 
 
 It is scarcely necessary to point out the striking diminution 
 which has taken place since the restriction. I am aware that 
 this may be attributed to other causes. Coupling this fact, 
 however, with No. VI. in the Appendix, a suspicion may be 
 entertained that Ireland has been exporting specie instead of 
 exporting linen.
 
 will be necessary to recall these three millions of *- 
 specie ; but it will be impossible to recall them, ex- " 
 cept by giving value in return : go that the restric- 
 tion has rendei-ed industry indispen'sable, exactly ift- 
 proportion as it has prevented its-existence: first," it ■ 
 has prevented the exertions of the indii^ry <>f^ 
 Ireland to the value of three millions,- by allow^iitg ' 
 the exportation of so much specie ; ne^t, it reride1r& 
 it ultimately necessary to recall three millions of 
 specie, which nothing but an increased industry, 
 to the extent of three millions, can effect. Thus 
 rendering an increase of industry, to the extent of 
 three millions, indispensable, it has operated as a 
 diminution of it to the same extent. 
 
 It may be observed, that its mischievous opera- 
 tion would have extended much further, that is, 
 caused to be exported a much greater quantity of 
 specie, had it not been counteracted in the North 
 cf Ireland by the steady resolution of the linen- 
 manufacturers and merchants to refuse Bank notes, 
 and make all their payments in gold, followed by the 
 practice of several absentee landlords, who required 
 payment of their rents in specie. A considerable 
 quantity of specie has thus been retained in the 
 North of Ireland as its medium of circulation, which, 
 had it not been for this custom, would infallibly 
 have been exported by the Bank restriction, like the
 
 d6: ESSAY?QN;^HE rRFNGIiBLE ?OF 
 
 rest of the specie, in lieu of produce, and creating 
 a future debt against Ireland to the same amount. 
 It follows, that those merchants and landlords have 
 acted for the benefit of the public still more than 
 of themselves ; and that, had the other merchants 
 and-kndlprd« of Ireland fdtewed their example, 
 these effects of the restriction, and the necessity of 
 the appJ)iiittnent of the Select Committee^r jnight 
 have been averted. i^c-iAj*c/itA 

 
 rCOMiEEUGlAt SSCHXKGES.="'T 57' 
 
 ■-:.-.-. J i^/::- .^...cci.. v- .-be ... ,:..35qo t>:ij :c :.■! 
 
 rii a^ofii Hi:? oiici/q siii \o ihonsd srij idi hsjoE 
 
 CONTENtS OF TOE SECON0 (!^A>m?P'^^ 
 
 OPERATION' OP -^E'^B-^IAtJCfr 0-i^nȣfi.i: qVi^Jf 
 EXCHANGES- '~:r- -v . aSr^O dV^f: 
 
 Operation of a Balance of Debt against a Coixfitnj 
 on the Rates of its foreign Rxchanges — Instanced 
 in Ireland on the Supposition tliat the Balance 
 of Debt is against it — No Connexion between 
 the Amount of the Balance and the Motps of 
 Exchange — Limit of the Operation of the Ba- 
 lance of Debt upon Ea^change — It Tiever did nor 
 ever could rise beyond this Limit, fmiil permitted 
 by tlie Bank Restriction — How Specie regulated 
 the Exchange — Instanced^n Ireland in 1672 — 
 Yet not by leaving the Country — The Balance of 
 Debt not redressed by the Operation of Exchange 
 — Operation of an Exchange arising from a 
 Balance of Debt on Exports and Imports — Limit 
 of it<i Operation — 77ie Exchange agaiiisi Ireland 
 does not arise from a Balance of Debt — The Ba- 
 lance of Debt at present is in favor of Ireland 
 — The ExJiange unfavorable not to the Debtor 
 hut to the Creditor Country — Proofs of the Eact
 
 5^ ESSAY ON TH'B PRIWtfrPLE OF 
 
 of the Balance of Debt being in favor of Ireland 
 » — Presumption that immense Remittances to Ire- 
 lcf,nd would not reduce the Exchange to Par, 
 
 jl HE preceding inquiry into the nature of the 
 balanceof debt seemed-^ necessary, before entering 
 into an examination of its effects upon the rates 
 of exchange, 
 
 Although no balance of debt can continue per- 
 manent' against a country, yet it often takes place > 
 for a limited time, and to a great amount. In 
 euch circumstances, the money to be drawn from 
 it exceeds the money to be transmitted to it ; the 
 bills drawn on the debtor country therefore ex- 
 ceed the bills drawn on the creditor country ; but 
 the merchants on 'Change in the debtor country, 
 wanting to' remit, are more numerous than those 
 who want to draw ; while those on 'Change in the 
 creditor country, who want to draw, are more 
 numerous than those who want to remit. In each 
 case, the supply of bills is inversely as the demand ; 
 but the value of a bill of exchange, like that of 
 every other article, being regulated by the pro- 
 portion of the supply to the demand, the bills 
 drawn on the debtor country, being more than 
 are demanded, must be sold cheap, and the bills 
 drawn on the creditor country, being fewer than 
 are demanded, must be sold dear.
 
 * This may be made clearer by an example : — ^if 
 Dublin has. to remit more money to London, iiir 
 payment of her imports, remittances to absentees, 
 and payments for the interest of her loans^ than 
 Dublin has to receive from London, in payment' 
 of her various exports, and of the loans made to 
 Ireland ; the; remitters in Dublin are mOre numerous 
 than the dra^vers, and the drawers in London more ' 
 numerous than the remitters. On 'Change ia 
 Dublin there are fewer bills on London than are 
 required ; the holders therefore demand for them a- 
 greater sum of Irish money than they sell for when 
 at par*; and the buyers- are obliged to give it, iH' 
 
 * Some difference of opinion has arisen, about the precise 
 signification df the words " par of exchange ;" the merchants' 
 have certainly a right to attach to it whatever signification 
 they think proper. When the para of the various exchanges 
 were first settled, it was with a reference to the quantity of 
 silver or gold contained in tlie respective currencies, as 
 issued from the mint: 2Q^d. English, was found to contain 
 as much silver as a French half-crown ; 2Ql^d. therefore 
 has been considered the par with France. The pound- 
 sterling of Great Britain should contain as much silver as 
 33 schillings 8 grotes Banco of Hamburgh j 33:8 there- 
 fore is said to be the par with Hamburgli. One hundred 
 pounds British should contain as much silver as 108 1. 6s. 8d. 
 Irish ; 8^ is thei^fore said tcyVje the par with Ireland. If (he 
 currency of , any country should comd to contiin inore or les^ 
 silver than formerly, ihe real, ^ar of exchange would certainif 
 be altered ; the merchsots, ]iq\\<;ycr, would probably contiou* 
 to speak in the manner to which tlaey" had been a9CUstomed, 
 9<!fetlie Evidence, 'pigs 41'.'^'* ''-' ' *' •"^•- '^ " '"' "" ^ ''
 
 66 wkr b^'^Mz^'^Hi^tWik^or 
 
 ord^r ixy^fkbciiTQ' "themt iri "this ^iit^tAticgj ' i^6 
 exchange is said to be urifa>/ordHlfe-tB tM&ri^,^^^ 
 <mse any given sum of Irish ttidney wHf ejicWhgii 
 for a less sum of English money than it is really 
 
 'On the other hand, in London, the persons 
 who want to draw from Dublin, are more humerOii^ 
 than those who want to remit: there are morebill^ 
 on Dublin to be sold, than are demanded; and 
 the sellei-s therefore must give them for less tha« 
 they would demand, if the buyers and sellers were 
 equally numerous : here again the exchange is 
 unfavorable to Ireland for the same reason. It is 
 obvious, that if there were no mode of making 
 the remittances, except in bills of exchange, the 
 price of these bills must proportion itself exactly 
 to the supply, and that if Dublin had to remit 
 twice as much as it was to receive, the exchange 
 must be 50 per cent, against Dublin; for the re- 
 mittance being absolutely indispensable, and tliere 
 being by supposition no other means of making it 
 than by bills on London, as there is but half as 
 many of these to be had as would transmit the 
 debt of Ireland at par, each bill on London 7}iHst 
 represent just twice as much Irish money as was 
 equivalent to it at par. In this case it would fol- 
 low as a necessary consequence, that there mu&t 
 be a constant proportion between the balaJice of- d^t
 
 fi?^4 th^^zaie,^,pf,.tfhfi cyc/iaa^e^f ;^4n.\viifit&vjer^ pro- 
 
 ^0s^qii:^st .be ^^^^ Y*i!^M^. ^^^ ^^^.?^^^9??g}: » ; ^^ 
 nothing can be more certain than that, in fiict, jio 
 such connexion between the amount of the ba- 
 Ij^^cp^^pf ^dj^bt ,,;afi4 ^^c rates of, ,t]tie .^xchaqge 
 fi^^U,^ . ,Jf^henr:the hq.hnce of, debt, ha^ raisedAh^. 
 ^pckange. to a certain limit, it ceases to operate on 
 tfie.exchauge; and the balance may afterwards be 
 greatly, increased, yet the exchange continue sta- 
 tionary: this point is of great importance in the 
 consideration of this subject. 
 
 This limit of the unfavorableness of an exchange, 
 as produced by the balance of debt, is the ejcpense 
 of transmitting the precious metals from the debtor 
 to the creditor country, that is, the cost of its 
 carriage, the price of its insurance, and, in som^ 
 cases, a compensation for the. risk incurred ia 
 violating the laws of the country, v.hich prohibit 
 its exportation; to which are to be, added, in most 
 foreign ejichanges^ such,reasonabJe prv^ts as will 
 induce, the buiiipn-merchants :j: to invest their p^« 
 
 -...if. Ifce t^g^^cijr »s-jcq\,i<i-te4:to oSs&x\<"^ tJbat in .this.ch'a^t^r 
 tlie exchau|^ j^ _ copsi^ered ^^l^y, ,a*_ i^ ^j^ ii5|flue2ic«d,-Ja}; .^^ 
 
 J The !i tiinata coinie^von oetvecn the (ormerce in btu? 
 Hon anri 't V" \-trii eV&''Tn'^<i^c'^iJ^\e\lv67"dfer§r sts^ei' ^> 
 U)t^ King... /.irfy Xe-l^li •iicoisd.edk'^^ iso'-V.^Oi d A
 
 i&2. ESSAY ON THE I'RIKCIPLfi OP 
 
 -prtal in^that'vtranch <)f commerce.'* tetus again, 
 'for the sake of illustration, advert to tii^ exchange 
 fcetween Dublin and London, as it existed previoiis 
 <o the restriction, while commerce was still con- 
 ducted on the principles which experience and rea- 
 son had established, and before its general rules 
 were so signally violated. 
 
 While gold was in circulation, no person in Ire- 
 land, having a debt to discharge in England, would 
 give for an English bill of 100/. British, much more 
 than 108/. Qs. 8d. Irish, together with the expense 
 of sending and insuring 108/. 6s. 8d. in gold from 
 Dublin to London, because he could make the re- 
 mittance by demanding gold at the Bank for 
 108/. 6s. 8d. and paying for its carriage to London, 
 and insurance against the risk of its being lost ; 
 but since the establishment of the mail-coaches, 
 the price of carriage and insurance is from one 
 to one and a half per cent. *. No one, therefore, 
 
 * See the Evidence, page 3, The expense of transmitting 
 money from England to Ireland : 
 
 s. d. 
 
 ' Carriage and insurance to Holyhead^ per cent. 7 6 
 
 Freight to Dublin - - - - -20 
 
 9 & 
 
 with a commission of five shillings per cent, on Bank and 
 Government accounts, but of ten on smaller ones. If insured 
 m the packet, it is an extra expense of five or seven shillings 
 more.
 
 COMMERCIAL B« CHANGES. ©^ 
 
 SO long as gold was Xo be had, would give .much" 
 more tlian lOg or 110/. Iri&h for a bill on London 
 for 100/. British *. A trifle more might occa- 
 sionally be given, because many persons would pay 
 a few shillings rather than be at the trouble of <le- 
 manding gold at the Bank, and packing it for it-s 
 journey. Accordingly we find, by a reference to 
 the rates of exchange, that, for four years previous 
 to the restriction, 109/. 5s. Irish was the greatest 
 price paid in Dublin for 100/. British ; and if we 
 may be allowed to estimate the exchange of Dublinr 
 onLondon by the exchanges of London and Dublin, 
 which we possess since 1728, it does not appear 
 that the exchange had ever risen beyond the ex-- 
 pense of sending gold from one country to another^ 
 since that period J. 
 
 The same limit which the power of procuring* 
 gold imposed upon the rates of exchange in Dublin^ 
 
 * When the exchange is with a distant country, a moderate 
 profit for the bullion -merchant must be added to the price of 
 carriage and insurance, to give the limit of exchange. Many, 
 would take charge of sending gold from Dublin to London 
 who could not think of sending it to Hamburgh or Cadiz. The 
 bullion-trade with foreign countries is distinct even from the 
 trade of the general merchant. 
 
 :f llie year 1753 excepted, when the high exchange arose 
 from otlier cauies, which will be discussed in their proj>er 
 pl^ce. ,
 
 $4 ESSAY GSt tlTB MIKCIPLE OF 
 
 tqiiaUy confined the exchange in London.; for no 
 person Oft 'Char»ge in London would refuse to give 
 100^. British for an Irish bill for 109/. * , with one 
 per cent, additional for the interest of his money, 
 because^ by sending that bill to his correspondent in 
 Dublin, and having the amount remitted to him in 
 gold, he might receive a sum in London equivalent 
 to 100/. British: to suppose that he should de- 
 mand more, would be to suppose he could obtain a 
 profit which the competition of the dealers in ex- 
 diange must for ever prevent. 
 
 Accordingly we find, that from the year 1728 J 
 ittitil the mea^sure of the restriction was resorted 
 tOi the exchange of London, on Dublin never 
 exceeded IJi §, except in the year 1753, when 
 it arose from circumstances which will hereafter 
 be explained, and which will be found to confirm 
 the theory proposed in this Essay. .,:, 
 
 * The exchange of London on Dublin, previous to the re» 
 Striction, was generally about one percent, higher than Dublin 
 on London ; but one per cent, of this was interest, and not ex- 
 change. See Appendix, No. VII. 
 
 ^ See Appendix, A. 2, of the Report of the Select Com- 
 iBoittee. 
 
 ' § The real exchange, properly speaking, was one per cent. 
 lesSjfOT the reason explained in the Appendix, No. VII. This 
 reduces the hiijhestrate of the exchange to lOj-, which was 
 6ot higher-than the price of the carriage of gold at the time 
 "•rheathdse high rates prevailed,- i. e. from I720 to l/Sf;-'.
 
 on IFll^expcn^ofi^itKiDil^ir^ gt>Uh6'(«n Di^blm 
 
 jdebt^was dtie by Dublin, .tKe Qi.chaeg^.n>ightjrise 
 tQ;th£mmai.iiit of tloat.cspcuee ;. fliuhHi'yecftftooi^- 
 .ceire. the; expense of seniling. gpM: ff.QP^ cD.^fe^^P 
 -London 30 percent, a v.ervvynfiiv.ocable balance -^f 
 debt would calainly. raiseetl^ty^xch^nge-.^gaii^t 
 Inelandto that-amx)iiat.,^.;5 . • .vii.}? H \Q'M o} 
 
 -• We are indebted to Sir.W. Petty fbrj.he know- 
 ledge of a curious fact, tliat in his tiiiie the ex- 
 cliange was 15 per cent.* against Ireland, in con»- 
 sequence of -an ingenious system of re^i/Zai/oT?, 
 which provided that the remittances from Dublin 
 to London should pass through Barbadoes i and it 
 is not surprising that the expense of carrying and 
 insuring the money was proportionate to the 
 length of the journey^ We are told by SirWilv- 
 liam 1 
 
 ** That to remit so many great sums out of Ire- 
 land into England, 2vhen ail trade is prohibited be^ 
 tiveen the said tivo kingdoms, must be very charge- 
 
 * This w.ls all a real exchange against Irclaiid ; for there 
 was thep;no dificreirce i© the cjirj:e9cie^,.-..'yh». ppvuid sterling 
 in Ireland CDhtaineti\0S .oiuch ailyer ,8jrjhiC, pqundstcfUng in 
 Great Britaia. ThejgottndjS.terlmg.ot'jJrejaad was, reduced al 
 the lime of I he great cot«9g« ijili^e:.rftigi^.-crf',,^VUlia^.JtI^-r 
 Pr'mdte Boul fir's Letters. . '=>. • -.-. ■ .. - '.-<^;r ---.r
 
 66 ESSAY OX THE PRINCIPLE OP 
 
 able ; for now Che goods which go out of Ireland^ in 
 order to furnish the said sums in England, must, fo^ 
 example, go into the Barbadoes, and there bo 
 sold for, sugars which^ brought into England, arO 
 sold for money to pay there what Ireland owes : 
 which way being so long, tedious, and hazardous, 
 must necessarily so raise the exchange of money, as 
 we have seen ! 5 per cent, frequently given annis. 
 1671 and 1672; — although, in truth, exchange 
 can never be naturally more than the land and 
 water carriage of money between the two king- 
 doms, and the insurance of the same upon the v/ay, 
 if the money be alike in both places. - But men 
 that have not had the faculty of making these 
 transmissions with dexterity have chose rather to' 
 give 15 per cent, exchange as aforesaid than t6 put 
 themselves upon the hazard of such undertakings,, 
 and the mischief of being disappointed : — '* 
 
 It is impossible to deny, that so long as gold can 
 be procured, the exchange can never rise beyond 
 the expense of sending it ; but it may possibly be 
 imagined, that in time an unfavorable balance of 
 debt might exhaust a coimtry of its gold, and that 
 then the rates of exchange would be regulated .ex- 
 actly in proportion to the balance of debt: yet 
 nothing can be more certain, than that art nnfa- 
 vorable balance of debt has no such effecjt' j 'ttia^' ^ 
 
 ,■ - '; ■■■'■; •',' ' sO '.'if;t' tW 
 
 its cpsfatioa is to force exports, and dwdni^j^.i.a^-f\<f^
 
 COMMERCIAL EXCHANGES. 6/ 
 
 ports ; I'ut neither to raise the exchange ind'e- 
 Jimtelij^ nor yet exhaust the country of its circu- 
 lating medium > 
 
 If gold wefe a necessary paft of the cii'culation of 
 Ireland, no conceivable balance of debt could wring 
 from it that portion which was necessary to its cir- 
 culation. Even an unfavorable exchange * of 1 per 
 eent. has not been able to deprive the North of Ire- 
 land of its gold t not a guinea :j: leaves the North of 
 Ireland in consequence of the exchange. If it is an- 
 swered, that theNortherns haveaffixed an additional 
 and artificial value to the guinea sufficient to retain 
 it, this is all that is contended for, and in the same 
 manner an artificial value would be added to it in 
 every part of Ireland, if gold was the necessary me- 
 dium of its circulation ? Why does the demand for 
 it, as the medium of circulation in the North, add 
 to it a value, in every circumstance, just sufficient to 
 retain it? And why, if it was in demand as the ne- 
 
 * If it is answered, that the cxchancje is not against tlie 
 North of Ireland, where gold is in circulation, this will equally 
 establish the principle contended for ; which is, that where 
 gold continues in circulation, tlie exchange cannot be greater 
 than tlie expense of its carriage, 
 
 ♦ It was fully admitted in evidence, that the guineas do net 
 leave the North of Ireland ; the remittances are made entirely 
 in bills, which are purchased or paid in Belfast with guineas 5 
 and the exchange of Belfast on London is almost always ii^ 
 favor of Belfast. 
 
 F 2
 
 6'B Z!i»AX • t>If -TKE -mzffeiTlrJ^ : OF 
 
 cessary medium in ^'very -part of Irelmcl, should -ij; 
 not acquire the same value throughout the country ? 
 -The proposftion which it is wished to establish is, 
 that were gold the necessary medium of circula- 
 tion, it must, from the nature of things, receive 
 an artificial vakie in the country exactly propor- 
 tionate to the balance of debt, and sufficient, in 
 every instance^ to retain it witliin the country. 
 And thus it is, that e\'ery balance of debt carries 
 with it the pov/erful and certain principle of its own 
 
 . destruction, not in the unfavorable exchange which 
 it produces (whose feeble operation must be as con- 
 fined* as the limit by which it is restrained), but 
 by the value which it gives to the precious metals ; 
 — a value seen only in the cheapness of commodi- 
 ties that ensues, and the quantity of them that is 
 thereby forced into existence for exports; — a qiian-r 
 tity and a cheapness both proportionate to the ha- 
 
 Jance of debt, though bearing no^ proportion what- 
 ever to the rates of exchange, which continue fixed 
 at the expense of transmitting gold, and which 
 
 , gold confines within that limit, not by actually 
 going in the place of bills, but by its constant 
 readiness to go. Whatever the balance of debt 
 
 * As the real exchange can never now be above one or two 
 per cent, against Ireland, the bounty which it grants to exports 
 neves can be above one or two per cent, j an encouragement 
 too trifling e\-er to Tncrease them sufficiently to discharge the 
 balance. ..i;
 
 against Ireland might be, gold, no doubt, would 
 be exported so far as it could be spared trcm cir- 
 culation ; but after that the bills on Ireland must 
 be exchanged for those on England at a loss limited 
 to the expense of carriage of gold from Ireland to 
 England ; and to whatever value the amount of the 
 bills on England was less than the demands on 
 Ireland, exports must be called, or rather forced 
 into existence ; unless the demand was sudden 
 and violent, in which case it is probable that im- 
 ports would diminish, as well as exports increase/: 
 but in either case a balance of trade would be cre- 
 ated sufficient to discharge the demand against the 
 country. It may even be observed, that under 
 such circumstances gold would have a positive tend- 
 ency to flow into the debtor country, and not to 
 kave it ; the same increase of value which it has 
 received from the demand to retain it will attract 
 it from abroad, as gold, like every other commodity, 
 will seek the best market. 
 
 It may be said, that though such might be the 
 effect, if no national Bank were established, yet 
 that so long as there is a Bank obliged to furnish 
 gold, gold will be expected until the Bank is ruined : 
 but the Bank, in undertaking this oblijration, has 
 not left itself without remedy. The Directors 
 well know, that their conduct, under such circum- 
 stances, would be to reduce the amount of their
 
 fO ESSAY ON THE PRINCIPLE OP 
 
 ii^^^s in circulation until the drain on them was dis* 
 continued; that is, until the circulating medium had 
 from its scarcity attained such a value, that exports 
 were called into circulation sufficient to discharge 
 the balance, /Thus the Directors formerly used to 
 adopt the same remedy which, had there been no 
 Bank, the balance of debt would itself have pro- 
 duced. Since the restriction has been imposed, 
 they appear to have changed their principles as 
 much as they have changed their practice ; for their 
 evidence * seems now to infer, that it is proper 
 that an , unfavorable balance should not render 
 money scarce, and that they act as the friends of the 
 country in supplying it with a quantity of circu- 
 lating medium in proportion to its scarcity. 
 
 It is evident that an unfavorable exchange, pro-r 
 ceeding from a balance of debt, must operate as a 
 bounty on the exports, and duty on the imports of 
 the debtor country. When a sum of foreign money 
 can purchase more English money than usual, it is ^ 
 a temptation to the foreigner to purchase com- 
 modities in England, because he purchases them 
 just so much cheaper, as his money has increased 
 
 * See the Evidence, 101, 102, 99. The practical effect* 
 ■which the restriction has produced by thus suggesting to tho 
 Directors a new theory of banking, shall be discussed more at' 
 length in the fifth chapter, where the general remedy for unfi^n 
 vorable exchanges shall be considered, .'■;'> 
 
 5
 
 , :«bStMBfiClAi EXCHANGES. 71 
 
 in value, compared to that of England. The unfa- 
 vorable exchange thus contains within it a tendency 
 to redress itself, by encouraging exports to dis- 
 charge the balance ; but this tendency never can be 
 greater than the encouragement it offers to exports ; 
 and this is confined to the price of sending gold or 
 silver from the debtor to the creditor country. Be- 
 tween England and the Continent this may amount 
 to five or eight per cent. ; between England and 
 Ireland it cannot much exceed one per cent. Their 
 vicinity to each other, and the ease of communica- 
 tion between them, have happily confined the ex- 
 pense of carriage within such narrow limits. So far 
 then as one or two per cent, the balance of debt 
 against Ireland may be considered as tending to re- 
 dress itself through the medium of exchange ; but 
 beyond that, disregarding the efforts of so inefficient 
 an agent, it exerts its own more povv^erful energy, 
 an energy always commensurate to the difficulty to 
 be removed. The balance of debt is not redressed 
 by the puny operations of exchange^ but by the 
 scarcity of money which ensues On the extensive 
 demand for it, by the artificial value whicll money 
 obtains within the debtor country cl'Onsequent to 
 such demand, and which is not marked h\ its fo- 
 reign exchanges^ but by the cheapfics^^ of a{l com- 
 modities which follows on tht increased va(uc of 
 money; and by the exertions of indas;try'Avithin the 
 jcountry to produce these/^ominocjitics, as the only 
 F 4.
 
 fi ESSAY ON THE PRINCIPLE. OP , 
 
 means of obtaining it. Such a situation occasicc's 
 the increased value of the precious metals as com- 
 pared with commodities, more than the increased or 
 diminished value of the circulating medium of one 
 country as compared with anotlier. 
 
 We have no data to determine the precise time 
 in which any given balance of debt will increase tl^a 
 exports to a sufficient amount for its discharge » 
 much must depend on the peculiar circumstances 
 of the case ; but it may be asserted generally, that 
 its operations cannot be long delayed, since its tend-* 
 ency appears to be to raise the exports as coeval 
 with itself, rather than as its subsequent effect. 
 
 Thus limits may be assigned, both of tiiJie and 
 amount, beyond which the real exchange, or in 
 other words the exchange, so far ^. it depends 
 upon the balance of debt, can never rise. Jn Ire^ 
 land it has risen far above both these limits, a^d.must 
 therefore be sought for in other causes ; it hasex-r 
 .ceeded the limit of time ; for though that limit 
 cannot he accurately defined, it is impossible tp sup-r 
 poseit. thiS half of the time that the exch^iige h^s 
 continued against Ireland. It has exceeded the 
 limit' iif ainounty for the real exchange cannot be 
 much above one per cent, against Ireland ; hot the 
 ,^e:^hange complained of has been near twelve*, 
 
 *■ * In September 1903"/ the exchange of London <in Dublin 
 .vas20; that isj ll}"pefcenf. against Ireland.
 
 A real exchange has also a constant tendency to 
 diminish ; but this has for years continued pro- 
 gressively to increase. The causes, the cfFccts, 
 and the remedy of that excliange, shall be inv^ti- 
 gated in the succeeding chapters. Those c^u^es,'it 
 will be found, owe their origin exclusively to the 
 measure of the Bank restriction ; and thongli 
 nothing but the removal of that great evil -can 
 prove an effectual remedy for the mischiefs it 
 occasions, yet perhaps it may appear, that while it 
 shall be deemed expedient to suffer its continuance, 
 some means may be devised to palliate, at least m 
 Ireland;, the severity of its operation. 
 
 It has hitherto been admitted in argument, that 
 the balance of debt is at present against Ireland, in 
 order that an opportunity might be afforded of 
 proving, that even on that supposition the present 
 exchange is of a nature not to be attributed to such 
 a cause ; and no doubt can be entertained, that if 
 the loans made to Ireland from this country were to 
 cease, the balance of debt would at first be greatly 
 against Irelaiid ; but it may well be doubted,so long 
 AS this country sends annually* into Ireland aioaiiof 
 
 ,1 ■ -r • ■ 
 
 * It has been said, that the whole of this loan is jiol aclu- 
 plly sent ; but if a part of the loan is retained in England to 
 pay the interest of tlie debt already contracted, an equal sum is 
 retained in Irelanc?, which would othcrwlsfc •ha\''e Ijldert trans- 
 mitiod for tlie payment of the ini,cre:,t. , The balance pf J>ajr. 
 ments therefore i^. in, no decree affected.'
 
 ft ESSAY ON THE PRIKCIPXE ®F 
 
 *2 ,000,000/. or 2,500,000/. whether Eo great a 
 payment is not at least equivalent to the annual 
 balance of debt due from Ireland. If it should 
 appear that, in consequence of these remittances, 
 the balance of payments is actually in favor of 
 Ireland, that the exchange is therefore umfiivorable, 
 not to the debtor; but to the creditor country/ ; the 
 phenomena the exchange presents more loudly de-i. 
 mand investigation, since the conclusion must then 
 be, that llie operation of the balance, so far as it has 
 gone, has been to lower the rates of an exchange pro- 
 ceeding frQm other causes, and ^hich, were it not 
 repressed by this circumstance, would shew itself 
 under a still more formidable aspect. 
 
 That the balance of payments, is actually, and 
 has been all along, in favor of Ireland, is the 
 opinion of Mr. Marshall, the Inspector-general of 
 Eixports and Imports in that country, whose clear 
 and satisfactory evidence proves thathehas. givepi 
 the- greatest attention to this subject*- ^f«i <;ii2o; .' 
 
 ;ji:^ie Cfenliniltee-iiaturally directed 4heip J^tetltkm 
 to ascertain tlie important fact wihether Ireland or 
 England was the debtor country ; they disregarded 
 the ctempr' which, referring to the absentees, as- 
 sumed without examination, that the balance must 
 be against Ii;elan4« The Committee knew, that, 
 however great was that evil, it was still not inde-
 
 COMMERCIAL. ':^XCHANOES.:,r 7^ 
 
 finite ; aiid -they- found no ground to stippose thai 
 the annual remittances, on account of absentees, 
 exceeded 2,000,000/. Tothistliey should naturally 
 have added the interest of Ireland's debt, payable in 
 London, in order to ascertain the total foreign ex- 
 penditure of Ireland: but finding that the money 
 requisite for this purpose was, in fact, never di-awn 
 from Ireland, bat retained in England out of the 
 loan, and the surplus only sent into Ireland, they 
 added this surplus to the balance of trade in favour 
 of Ireland, and found that it exceeded the sum 
 computed to be due to absentees. The necessary 
 conclusion was, that more money has been trans- 
 mitted into Ireland than drawn from it. 
 
 From the documents laid before the Committee, 
 it appears that the account, debtor and creditor, of 
 Ireland, may be stated as follows ; first, for the year 
 ending the 5 th of January 1803 : 
 
 CREDITOR. 
 
 By balance * of trade in favour 
 
 of Ireland, stated according ' 
 
 to the c-wrre/i/ value r- - .^.gi7,2p9 . 
 
 Amount :j: of all sums trans- 
 mitted to Ireland on account 
 of loans, lotteries, and public 
 services - - - , - 1,459,590 
 
 ■ .€.2,3^6,889 
 * Appendix, No. IV. J" Xppcndlx^ Nd. V.
 
 Brought crv^er (creditor)' v^if;u v>'» i 5^J^i!jj376;S8<> 
 To remittances to a1>sente^"- -^- ' ^i^ * 2,000^0 
 
 ./, -......-'■. -■ /." ■ , •' . r 
 
 ii ^Balance in favor of li eland - - . 3/6,889! 
 
 Biit if Mr. Marsliairs estimate be adopted, tlie 
 smount will be near a million greater, for reasons 
 too long to be inserted, but to which the reader is 
 'parl!icularly referred*. Mr. Marshall estimated 
 the balance of trade in favor of h-eland in that year,' 
 not, according to the current value, at C) 17, 299 /i- 
 butat l,8l6,S14/. 
 
 For the year ending Jan. 5, 1804, suf- 
 ficient documents could not be pro- 
 cured. It appeared that the real 
 value:}: of the exports of Ireland for 
 that year was -,----. j^. 8,241,487 
 
 And that the sum ^ transmitted to Ire- 
 land for loans, lotteries, and other 
 public purposes, was - - - - 1,145,111 
 
 Making together a sum to be set down 
 
 to the credit of Ireland of - - - ^.9,38(),5Q8 
 
 Against this should be set en the debit side of the 
 account, ine remittances to absentees, and the value 
 
 * See the Evidence, page 126. 
 
 X See the Appendix to the Evidence, page QQ. 
 
 ^ See Appendix, No. V,
 
 of the .imports ; bui unfortunately the value of the 
 imports was not ascertained. We may, however, 
 conclude from tlie official rates ?=,Avhich answer 
 sufficiently for comparing one year with another, 
 that the balance of trade was still more favorable 
 than in the preceding year, and consequently also 
 the balance of debt. 
 
 As for the present year, of course no data can be 
 procured untilJanuary 1805 : but when we con- 
 sider the great increase of the loan to be transmit- 
 ted to Ireland, it is impossible to suppose that the 
 balance of debt should nOt be still more in favor of 
 Ireland tlian in the preceding years. 
 
 Such are the reasons a priori to conclude, that 
 the balance of debt is, and has been, in favor of 
 Ireland. To oppose these reasons, the persons 
 who supported the contrary opinion could bring 
 forward no one fact, iter any data of any kind, on 
 which to found this supposition of the balance of 
 debt being against IrcLmd. They rested their 
 assumption solely on the fact of lUe unfavorable ex- 
 change. An unfavorable CMChange, according to 
 tliem, was an infallible criterion of the stiite of the 
 
 •'' See ApponJtx, No. fl!". Stated according to the officiar 
 value, tlie balinct.' of t.-idewns, in the yenr ending 5ih January 
 1S03, 996, S5S/. ng.iinst'Lchni; but iii the /ear 'endiug 5ih 
 January Itioi/^^MfsOS^lOil:''- .^ >:bn q:r/v e.v 1.. J
 
 '^8 ESSAY OJT-tSB l>l«NClPr.E OP 
 
 ' b^Aftde of debt: but a mOre con)plete begging of 
 the-qaestiOft'^anndt be irfiagined ; for it assumes, 
 that An unfavorable exchange can be occasioned 
 solely by a balance Of debt : whereas many other 
 Causes shall be assigned which would occaigiOn such 
 an exchange as now exists against Ireland : besides, 
 it has already been proved, that a balance of debt is 
 totally inadequate to create an exchange so high 
 and so permanent. But even conceding this, 
 ^till, upon pointing out any other possible causes, 
 thdf conclusion is necessarily destroyed ; but if, in 
 addition to pointing out a possible cause, it can be 
 shewn that it has actually operated, and that ex- 
 tensively in Ireland, the proof that the exchange 
 is not attributable to the balance of debt will be 
 still farther confirmed. 
 
 However decisive the arguments drawn a priori 
 may appear, arguments a posteriori are not want- 
 ing, which seem still more clearly to evince that 
 the balance of debt is in favor of Ireland, and that 
 the present exchange is of a nature not to be much 
 affected thereby. 
 
 Nothing can be more certain than that every 
 debtor country has a tendency to increase its ex- 
 potts, and every creditor country to increase its 
 imports ; but Ireland has done the latter. The 
 reader is referred to Appendix, No. III. by which
 
 ^ it •& cv-fdjiit-ho^V pi-ac%iou% te imports of Irc-- 
 larKl, >frithift^-f(he Jast t<-lx. y^ been in. 
 
 : ereasedbeyond t^ Exports. An individual it)ny buy 
 more than he can pay for,- but a mtion caniwt"^; for' 
 what foreign, merchants will give their commodi- 
 ties without t'^iue in return ? Should they lose one 
 jifear,. will they run a siihlky hazard tlieyear foliov^^- 
 i4i^, or father for ten years together ? To imagine 
 tliat they should continue to supply a nation that 
 did not^pay, and allow a balance of unaccountecf 
 miUions to accumurate, is so extravagant k suppo-' 
 sition ag not to merit a serious refutation. Yet 
 such a supposition must necessarily be made by' 
 those who coi^cend that the balance of debt ha^- 
 been against Ireland. 
 
 A paper presented to the Committee ascertains a 
 reiDarkable fact, from, which we are led to con- 
 clude, that a balance of debt in iayor of Ireland, 
 although prodigiously great, would not much affect 
 ihe,ratfi;^ro( ex,cj(;ange. 
 
 ^ In the m6ht1i of March last the treasury '6r]ffei' 
 kftd dre\V the iffimenge 'sufii 6fb^hMot~^(r6m' 
 
 Di^avvn and remitted from England, " " ' ^ ' ' ' 
 J9©4'.' From'March 3 talSfarch 10' - - - £.g^,7\3i§-'^^%Vi.1 
 
 ■ '^ II ^" 77", '^'^ - - - ' 145,094^14; 3 
 
 535,960 IG 7
 
 60 ESSAY ON THE PRINCIPLE OP 
 
 England, yet the exchange was never lower than 
 16 1. Add this 585,960/. to the other pay- 
 ments made to Ireland during the month, and is 
 it possible to suppose that the payments made by 
 Ireland in that short time so far exceeded as to 
 keep the exchange 8 per cent, above par against 
 Ireland ? The presumption is, that if the Treasury 
 drew seven millions during the year, they would 
 not lower the exchange below 1 6 | ; for we see 
 they drew, during an entire month, at the rate 
 of seven millions per annum, without effecting a 
 greater reduction. If a remittance of seven mil- 
 lions could not reduce the exchange below l6|,- 
 it might require twenty or fifty millions to bring 
 it to par.. 
 
 Yet they who consider the balance of debt as the 
 sole efficient cause of exchange, must contend, that 
 however great the remittances might be, which 
 should be required to reduce the exchange to par, 
 equal in amount must be the balance of debt due 
 by Ireland. Are they then prepared to say, that 
 they conceive it possible that that balance is so 
 enormous that seven millions a year (that is, a sum 
 almost as great as the whole imports of Ireland) 
 should form but a small part of it ? Does not the 
 supposition appear to them extraordinary, as well 
 as melancholy ? Yet I have heard it gravely an- 
 swered, that such must be the fact, for that the
 
 '^commercial" EXCHANGES. 8 I 
 
 exciiang^^proy,ed it.~ ItJcertalnTy Is a strange mode 
 oi", reasoning, when tlie 'icionclusidn is found to 
 involve "an impossibility, "to contend, that still that 
 conclusion must be adopted fatliei' than the pre-. 
 mises rejected from which it fo^ows.
 
 P2 ESSAY ON THE PRINCIPLE OF 
 
 CONTENTS OF THE THIRD CHAPTER. 
 
 CAUSES UNCONNECTED WITH THE BALANCE OP 
 
 fiEBT REGULATING THE NOMINAL RATES 
 
 OP EXCHANGES. 
 
 The nominal Rates of foreign Exchanges regulated 
 by the Value of the Medium in which the 
 Payments are made — The Measure of Value 
 itself liable to FluctuationS'~~Its Value may be 
 augmented or depreciated — Augmented by a Seig- 
 norage — Depreciated, if a Medium consisting 
 of the precious Metals, by Degradation or Adul- 
 teration — If of Paper, by Discredit or Excess 
 -^Instance of an Exchange arising from Seig- 
 norage-^^Instance of an Exchange arising from 
 Degradation — Remarkable Instance of an Ex- 
 change arising from Adulteration — Mode in which 
 Excess produces Depreciation — Its Operation on 
 Industry — Observation of Mr. Hume — Advan- 
 tages of the banking System — Inaccuracy of 
 Dr. Smith on this Subject~^A circidating Me- 
 dium of Specie cannot be excessive — Nor a 
 circulating Medium of Paper convertible into 
 Specie — A Paper not convertible may — In tvhat 
 Cases it has been so-^Instanced in France — la 
 4
 
 Commercial exchanges. 83 
 
 Ejects on the Quantity of Specie in Circulation 
 ^—On Prices — On foreign Exchanges — Sole Se^ 
 curity against Depreciation through Excess — 
 Has been destroyed by the Bank Restriction — 
 Inquiry whether it is possible that the Paper of 
 Great Britain should become excessive — Security 
 on which it is issued cannot prevent it-^Norr the 
 Eagerness of the Demand to obtain it — Security 
 may be perfect y and yet Excess take place — Dif- 
 Jicnlly tJie Directors experience to avoid excessive 
 Issues — The Restriction destroyed the Criterion 
 by ivhich they used to judge — At present they dis^ 
 regard all otJier known Criteria — Favorable 
 Exchanges, united with a high Market Price of 
 Gold and Silver, complete Proof of the Depre- 
 ciation of Paper, 
 
 In considering the operation of the talance of 
 debt upon exchange, we have hitherto supposed^ 
 for greater clearness, that the payments on each 
 side are made in bullion, or in a coin whose value 
 is fixed ; but the exchange, or rather the norriinal 
 rates of it, must farther be affected by any fluc- 
 tuation in the value of the medium in which the 
 payments are made. Much of the evidence 
 offered to the Select Committee, appears to have' 
 entirely omitted this consideration ; and taking 
 it for granted, that the rate of exchange w«ia 
 G 2
 
 84 ESSAY ON THE PRINCIPLE OF 
 
 exclusively regulated by the balance of debt, seems 
 to 'have imagined it perfectly immaterial, in what 
 manner that balance was discharged ; whether in 
 paper or in gold ; whether in paper of unexcep- 
 tionable security, or in paper of no security at all ; 
 whether in pure gold, or in adulterated gold ; 
 whether in a coin entire as when issued from the 
 mint, or in a clipped and mutilated currency ; 
 whether in a mint currency, or in a currency of 
 tokens*, that is, of silver pieces, professing to 
 represent a greater weight of silver than they 
 contain. 
 
 The present pars of exchange J were originally 
 computed with a reference to the quantity of the 
 
 * The Spanish dollars issued by the Bank, at 5 shillings, 
 contain no more pure silver than 4s. 6 d. English, ought to 
 contain j they are therefore called not 5 shillings, but tokens 
 for 5 shillings. It has been contended that this is no proof of 
 the depreciation of Bank paper, for that they are only pro-* 
 missory notes, and that the Bank might have called them 15 
 shillings as well as 5 j but a promissory note should either 
 have intrinsic value itself, or else be merely the representative 
 of it : if it is issued as the value itself, it can be no more valua- 
 ble ^than the silver it contains ; if issued mei-ely as the repre- 
 sentative of value, why go to the expense of having it of such 
 precious materials ? if it is to be considered merely as a Bank 
 note, why not make it of paper ? 
 ■ X See tW Lords* Report, Committee of Secrecy, 1797,
 
 COMMEnCIAL EXCHANGES. 85 
 
 precious metals contained in the currencies of 
 the different countries. If the currency of any 
 country has since been altered in its value, the 
 original par of exchange can be no longer the real 
 par, and, if still adhered to in computation, is 
 merely nominal ; for the currency of every country 
 is nothing but its measure of value ; the measure 
 of value is itself liable to variation, and, if altered, 
 can no longer bear the same ratio to the measure 
 of value, in any other country which has not 
 undergone a similar alteration. If the English 
 measure of length were to be altered, the nominal 
 length of all objects measured by it must be 
 increased, and the proportion of the English 
 measure to that of any other country must be 
 changed. It is exactly the same, as to the English 
 measure of value : if a power of regulating the 
 length of our measure of length was given to 
 any corporation, in the same manner as, since the 
 restriction, the Bank regulates the value of our 
 measure of value ; and if they should think proper 
 to reduce the English foot to 41 of its present 
 length ; 1 4 French feet would no longer be equal 
 to 15 English feet, as at present, but to l6 
 English feet and 4 inches: in that case, some 
 persons would possibly be astonished at the 
 alanning superiority which the French feet had 
 attained; but at the same time it is likely that 
 llicy ^\ould consider as " speculative men, men 
 G 3
 
 86 BSSAY ON THE rRINCIPLB QP 
 
 \yho had no idea of practice," those who should 
 suggest to them as probable, that restoring the 
 English foot to its original length, might once 
 more render 15 English feet equal to 14 French 
 feet. 
 
 The par of exchange with Hamburgh * is not 
 accurately fixed ; it seems however pretty generally 
 agreed among merchants, that 33 schillings 8 
 grotes is about par: 33 schillings 8 grotes Banco 
 of Hamburgh were thought to represent nearly 
 the same quantity of the precious metals as a 
 pound sterling in London; but if, in time, the 
 pound sterling of Great Britain, that is, since the 
 restriction, a pound note of the Bank of Eng- 
 land, becomes purchasable for a less quantity 
 of the precious metals, than when 33 schillings 
 8 grotes of Hamburgh were reckoned equivalent 
 to it; if, instead of being purchasable for font 
 Spanish dollars and two English shillings, it should 
 become purchasable for four Spanish dollars; 
 
 • .*r^t seems difficult to deteimiBe the precise par of exchange 
 between Lopdon a;id Hamburgh ; men who from their situa- 
 tion should be tlie best informed, vary in their opinions. It 
 was stated to the Secret Committee of the House of Lords, 
 in 1797, by Mr, Eliason and Mr. de Mattos, at 33 schiUings 
 8 grotes ; and Castaigne's Tables proceed on this computation., 
 Mr. Boyd was of opinion, that, computed on tlie price of gold,^ 
 it was 34 : 3i, and on the price of §ilver 35 : 1|, and that th^ 
 ^piedium par \vas 34 : 8^.
 
 COMMERCIAL EXCHANGES. 8^ 
 
 whether we say, that the paper is depreciated or 
 the silver has risen in its value, it is equally impos- 
 sible that the English note should purchase as 
 much silver abroad as formerly, when it can no 
 longer purchase it at home*. If the merchants 
 of Hamburgh would formerly give 33 schillings 8 
 grotes of their money for the pound sterling, 
 when it was exchangeable in London for as much 
 silver as is contained in four Spanish dollars, and 
 also in two shillings; they will no longer give 
 as many of their schillings for it, when it can only 
 purchase four Spanish dollars. When the pound 
 
 * Of course this reasoning does not apply to eveiy fluctua- 
 tion in the price of silver at home : the merchants abroad can 
 neither know the price of silver in London, at any given time, 
 nor is it material to them, so long as the market price is some-* 
 times greater and sometimes less, than the mint price j but when 
 the market price is steadily and permanently above the mint 
 price, that is, when the English pound note can no longer pro- 
 cure the weight of silver which 20 shillings should contain, 
 it is depreciated. Silver is not only tlie representative of value, 
 but value itself : if the pound sterling of Great Britain fthat 
 ii, during the restriction, a poxaul note of the Bank of EnglandJ 
 becomes purchasable for a less weight of silver than before, it 
 has become less valuable ; nor can it be replied, that the value 
 of the Bank note may be constant, while silver rises in its 
 value, for it must be recollected, that tlie Bank note does not 
 profess to represent any certain value, hut a certain weight of 
 bilver ; and therefore if silver had risen cent, per cent, if die 
 Bank note did not rise cent, per cent, along with it, it would 
 be depreciated. 
 
 G 4
 
 68 ESSAY ON THE PRINCIPLE OF 
 
 note can no longer obtain, even from English 
 patriotism, the same quantity of gold or silver as 
 formerly, it is in vain that it should expect to be 
 more successful in a foreign country : and if, under 
 guch circumstances, it should at any one time 
 obtain the same quantity at Hamburgh as formerly, 
 that is, if it should obtain a greater quantity of silver 
 abroad, than it could at home, the only conclusion 
 to be drawn is, that the exchange really is in our 
 favor, though nominally at par; and that if the 
 pound note could procure in exchange the same 
 quantity of silver at home as formerly, it would 
 procure a still greater quantity abroad. 
 
 In short, whatever cause should operate to 
 reduce the value of the English pound note, as 
 compared with gold and silver, the same must 
 make it lose in its value, as compared with any 
 foreign currency ; that is, the exchange, calculated 
 according to the present par, must be against 
 England: — or to state the proposition generally, 
 if the currency of ciny country becomes less valuable 
 than formerly, it becomes exchangeable for a less 
 quantity of the currency of any other country , 
 %vhich continues a,s valuable cls formerly^ 
 
 Let us now consider the different manners in 
 which the currency of any country may suffer ^ 
 change in its value, and a consequent change in
 
 COMMERCIAL EXCHANGES. 89 
 
 its ability to procure a certain quantity of any 
 foreign currency. 
 
 First, if any nation should impose a seignorage 
 on its coinage, the coin becomes of greater 
 value than the quantity of the precious metals it 
 contains; for it equals the value of the precious 
 metals, and also the amount of the seignorage*. 
 
 * That is, provided the seignorage does not exceed the ex- 
 pense of coinage 5 the value of the coin will tlien be like that 
 of every other article of manufacture, the price of the material 
 together vt'ith the price of the labor employed in producing 
 it. Such was the decided opinion of Dr. Smith : it must be 
 recollected howeveir; that this has been controverted by Mr. 
 Thornton, though, if I may be permitted to judge, not with 
 the same success which has distinguished other parts of his 
 valuable Essay. Mr. Thornton, speaking of the inefficacy of a 
 seignorage, to prevent the exportation of the coin, observesj 
 " Guineas not only circulate at home, but are liable to be sent 
 abroad in the event of any unfavorable balance of trade ; they 
 are worth, in that case, just as much as the foreign country 
 will give for them j and the foreign country, in estimating tlieif 
 value, since it means to melt them, does not at all take into its 
 calculation the expense of the coinage of the piece of metal ; it 
 acts like a buyer not of new but of old plat , who destines it 
 to the melting-pot, and therefore refuses to allow any thing for 
 the fashion^ — ^Thornton, page 208. Now if this reasoning 
 be just, it would appear equally to follow that an unfavorable 
 exchange might occasion tlie melting of gold watch-work, in 
 order to be exported in the shape of bullion ; but the value of 
 the watch-work is resolvable into two parts v — -first, the price 
 of the gold, and secondly the price of the labor employed in
 
 §0 ESSAY ON THE PRINCIPLE OP 
 
 A poimd weight of silver in English coin, on 
 which there is no seignorage, would no longer 
 be able to procure a pound weight of silver in 
 the coin on which the seignorage was imposed. 
 
 The exchange would therefore appear to be 
 against England, by the whole amount of the fo- 
 reign seignorage, when it was really at par. This 
 will account for the exchange* formerly appearing 
 
 converting it into watch-work ; and this latter part of the price 
 must ever countervail any possible encouragement to the 
 exportation of bullion. In the same manner it seems that 
 if a seignorage of 5 per cent, was paid on our coinage, 109 
 guineas would then cost the original mint price of the bullion, 
 and also 5 guineas, as the expense of having been converted 
 from bullion into guineas : the first purchaser must evidently 
 give this value for it, and he would never part with it, 
 except for an equivalent consideration j so that, however un- 
 willing the foreign country might be to " take into calculation 
 the expense of the coinage of the piece of metal,'' it would find it 
 impossible to obtain the piece on any other terms j the foreign 
 Bation could then obtain neither our guineas nor our watch* 
 work, without paying first the value of the materials, and 
 secondly the price of the labor exerted in giving them their 
 form. 
 
 * Vide Sir James Stewart's Pol. Econ. book iv. chap. 11, 
 page 320. In another place. Sir James draws a striking picture 
 of the anxiety of England to discharge this ideal balance ac- 
 cording to the modes prescribed b)' the mercantile theory : 
 " England may lay as many restiictions, duties, and clogs as 
 she pleases v;pon the French trade, and' may even reduce it to 
 j^othing, without ever remroving the cau^e of complaint, while
 
 COMMERCIAL EXCHANGES. Ql 
 
 to be constantly in fav^or of France, and against 
 this country, to the infinite alarm of our 
 merchants and statesmen, who considered the ex- 
 change as a certain symptom of a balance of debt 
 due to France, and who perplexed themselves in 
 vain to discover how that debt had been incurred, 
 how it might be prevented from increasing, and 
 how it might be discharged. 
 
 Secondly, If the coin of any country in which 
 the bills of exchange drawn on it are to be 
 paid, should become worn and degraded, the 
 exchange must appear to become unfavorable 
 to that country, to the extent that its coin has 
 lost in its value * ; and if that country should 
 reform its currency by the issue of a new 
 coinage, the exchange would cease to be against 
 
 at the same time she may be ruining a trade which pays her 
 upon the whole a great balance^ and upon which trade she has 
 it in her power, ly folloiving a different system inker mint, to 
 render her exchange as favorable as with any other nation in 
 Europe." Book iii. chap. 11, page 24. 
 
 * Where a country employs both gold and silver in its coin, 
 its foreign exchanges must be calculated on one or other, and 
 not on both ; in almost all foreign nations it is calculated on 
 silver, in England on gold : the debased silver currency of 
 England and Ireland can never affect their exchanges, so long 
 as tlie pound sterling contains the same quantity of gold as 
 formerly j because the silver bullion to be remitted in payment 
 of tlie balance of debt against England, is purchased by the 
 gold coin, and not by the silver.
 
 0*2 ESSAY ON THE PHINCIPLE OP 
 
 that country. A remarkable instance * of the 
 extent to which the rates of exchange can be 
 influenced by this cause is exhibited in the Com- 
 mercial History of Great Britain, though apparently 
 no longer in the recollection of British merchants. 
 We are informed by Dr. Adam Smith J, " that 
 before the reformation of the silver coin in King 
 William's time, exchange between England and 
 Holland, computed according to the standards of 
 their respective mints, was Jive and twenty per 
 cent, against England; but the value of the cur- 
 rent coin of England, as we learn from Mr. 
 Lowndes, was at that time^f e and twenty per cent, 
 below its standard value," 
 
 Thirdly, If the coin of a country in which the 
 bills of exchange drawn on it are paid, should 
 become adidteratedj that is, ifa greater quantity of 
 base metal should be mixed with the precious metals 
 in its coin, the same comparative loss of value must 
 ensue ; that is, the rates of exchange must be 
 against that country, in proportion to the depre- 
 ciation of its currency. A nation from whom we 
 are hot to learn the elements of political economy, 
 but who at least by their errors are capable of 
 giving instruction to more enlightened people, 
 have had recourse to financial operations, whose 
 
 * This was referred to by Mr. Marshall in his Evidence. 
 I Vol. ii. page 288.
 
 COM^!KRCrAL EXCHAXGES. 9^ 
 
 effects so strongly illustrate the effects of adulte- 
 ration of the coin, on foreign exchanges, as to 
 be worthy particular attention. The Turkish 
 Sultans have sometimes attempted, though of 
 course without success, to augment their revenues 
 by the adulteration of the coin. The operation 
 of this fraudulent and oppressive measure upon 
 their foreign exchanges, was exactly such as this 
 theory would lead us to expect. Three great adul- 
 terations have taken place in the Turkish currency, 
 the first in 1770, the second in 17S7, and the 
 third in 1796. Before these frauds were resorted 
 to, the Turkish piastre contained nearly as much 
 silver as Is. 6d. English ; and in the year 1 767, 1 
 find that by the course of exchange, 8 of thein 
 were given for the pound sterling of England: 
 that is, 800 for a bill of exchange on London for 
 100/. The three great adulterations which have 
 taken place since that time, have reduced the 
 amount of silver contained in the piastre, to less 
 than one half of the quantity contained in 1767; 
 and at the present course of exchange *, lO 
 Turkish piastres are to be obtained for a pound 
 sterling; that is, 1600 are paid by a banker at Con- 
 stantinople, for a bill of exchange of 100/. on 
 London. It is evident, that if the rates of eic- 
 
 * Or rather in the summer of last year: it is not probable 
 that the exchange has much wied since fhat time.
 
 94 ESSAY ON THE PRINCIPLE OF 
 
 change are computed according to the par of 17 67, 
 the exchange is now^ one hundred per cent, in 
 favor of London. The same sum of English 
 money that would have exchanged for one hundred 
 Turkish piastres in 1 7 67 5 can now exchange for 
 two hundred piastres, or rather tokens for piastres. 
 It is unnecessary to state the authority on which 
 these facts are here asserted : if the author is mis- 
 informed, it will be in the power of any merchant 
 of the Levant Company to correct his error*. 
 
 How prodigious then must be the balance of 
 debt due from Constantinople to London, in the 
 Opinion of those who consider the rates of ex- 
 change as the infallible criterion of its amount; 
 and what bounties on exports, what duties on 
 imports, would they not advise the Turkish 
 statesmen to adopt, in order to avert its fatal 
 influence ! The merchants of the Levant Com- 
 pany may, however, be disposed to doubt the 
 
 * The author had hoped to have been able to procure the 
 exact degrees of depreciation of the different Turkish coinages, 
 and to have compared them with the rates of their exchanges, 
 with which he has reason to believe they would be found re- 
 markably to coincide. A gentleman, who, by his indefatigable 
 researches in the Levant, has collected every information rela- 
 tive to those countiies, and who is in possession of specimens 
 of all the Turkish coins issued during the last century, had in- 
 tended to assay them in order to ascertain this curious fact:— • 
 the assay, howeveiv had not taken place when this work was 
 J)ut to press.
 
 COMMERCIAL EXCHANGES. Qo 
 
 fact of the balance being unfavorable to Turkey : 
 they know and feel, that, notwithstanding an 
 exchange of 100/, per cent, in favour of this 
 country, it is tJiis country wJiich is tite debtor ; they 
 know, that from the nature of their commerce this 
 country 7nust be the debtor, since the general cha • 
 racter of the trade with Turkey is a barter of a 
 small quantity of English manufactures for a large 
 quantity of Levant produce : the difference is ne- 
 cessarily sent out by England in bullion, and the 
 real exchange therefore necessarily in favor of 
 Constantinople. 
 
 There seems to be a singular analogy between 
 the exchange of London on Dublin, and Londor^ 
 on the Levant : in each case the real exchange, 
 that is, the exchange computed in gold and 
 silver, is against London ; in each case London 
 is the debtor. In each case the nominal ex- 
 change is notwithstanding immensely in favor of 
 the debtor country. In each case the cause of the 
 nominal exchange is the currency of the creditor 
 country having ceased to contain or represent the 
 same quantity of the precious metals as when the 
 par of exchange was computed. In each case no 
 balance of trade, debt, or remittance, could bring the 
 nominal and real exxhanges to agree; — for instance, 
 if the debt of London to Constantinople was of
 
 96 ESSAY ON THE PRINCIPLE OF 
 
 ally assignable magnitude, still eight Turkish 
 piastres would not exchange for a pound ster- 
 ling, as in 17^7; and for this simple reason, 
 •that such a balance of debt could never restore to 
 the piastre the quantity of silver it contained at that 
 time. It is the same with the Irish Bank note. 
 The Turkish piastre and the Irish Bank note differ 
 only in the degree of their depreciation*. 
 
 These three appear to be the principal modes in 
 which the value of a circulating medium consisting 
 of the precious metals may be affected. Coin may 
 receive an accession of value by the imposition of a 
 seignorage, or suffer a loss of value either from 
 degradation by a loss of weight, or from adultera- 
 tion, by the mixture of a greater quantity of alloy. 
 A circulating medium, consisting entirely of paper 
 (a phenomenon which it was reserved for these 
 islands to exhibit), is exempt from the influence of 
 any of these causes ; neither seignorage, nor degra- 
 dation, nor adulteration, can in any degree affect 
 it ; but it is on the other hand subject to be depre- 
 ciated in two manners, neither of which can 
 operate on a circulating medium of the precious 
 metals : and it is scarcely necessary to observe, that 
 if a paper medium should be reduced to represent, 
 
 * This, it must be confessed, is an anticipation of what 
 remains to be demonstrated.
 
 COMMERCIAL EXCHANGES. 97 
 
 that is, to be able to procure a less quantity of th^ 
 precious metals, it must influence the rates of ex- 
 changes of bills payable in that paper exactly in the 
 same manner as the degradation or adulteration of 
 a circulating medium of the precious metals. 
 
 A paper circulating medium may be depreciated 
 either through discredit or excess. How discredit 
 may produce depreciation is too obvious to be 
 dwelt on ; neither is it necessary in this inquiry, 
 as no one attributes discredit to the Bank paper 
 either of England or Ireland. 
 
 It will, however, become a serious consideration, 
 whether they are also exempt from the second caus^ 
 of depreciation (that is, excess), whether it is 
 possible that they can be excessive, what are the 
 guaranties of the public woz^; against their becoming 
 so, and whether such depreciation has not actually 
 taken place both in Great Britain and in Ireland, but 
 especially in the latter ? But before entering on 
 the inquiry as to the fact of excessive issue, it will 
 be proper to examine at some length the neces- 
 sary connexion that exists between excess and 
 depreciation, and the operation of depreciation 
 through excess upon the rates of exchanges. 
 
 If it is possible that the whole amount of the cir- 
 culating medium of any country can be increased, 
 
 H
 
 g8 ESSAV ON THE IPBINCIPLE OF 
 
 while its commerce and expenditure continue 
 stationary, or increase faster than they require ; 
 for instance, that its circulating medium shall be 
 doubled, while its commerce and demands for 
 money continue stationary; or trebled, while its 
 commerce and demands have been augmented but 
 one half: in either case, any given sum of that cir- 
 culating medium will obviously represent but one 
 half as much value as it did before such increase of 
 the whole amount took place. 
 
 Therefore any sum of it which formerly was 
 deemed equivalent to any given sum of the cur- 
 rency of a foreign nation, for example, to 100/. 
 British sterling, will be worth only 50/. British 
 sterling, after such increase of it has taken place. 
 
 To make this plainer by an example: If we sup- 
 pose that 108/. Si*. 8d. Irish currency, was in the 
 year 1797 equivalent to 100/. British sterling; but 
 that since that time the circulating medium of Ire- 
 land had been doubled, while the commerce and de- 
 mands of Ireland had continued stationary ; or had 
 been quadrupled, while the commerce and demands 
 of Ireland ^ad only doubled : in either case, 
 1 08/. 6s. 8d. Irish currency Would now represent 
 only one half of the value it did in 1797 ; it would 
 purchase now only one half of the quantity of Irish 
 CQmmodities that it did then ; but in 1797, lOO/,
 
 . COMMERCIAL EXCHA>f<JE5^^. 9?) 
 
 British was equivalezit to 108/. 6s. 8«?; Irish, ift the 
 purchase of Irish commodities : whatever cause; 
 therefore, reduces 108/. 6^. Sd. Irish to exchange 
 for only half the quantity of Irish commodities that 
 It did in 1787, will also reduce it to exchange for 
 only one half of 100/. British ; for whatever causes 
 shall make the possessor of cattle, linen, corn, bul- 
 lion, guineas, or any other object of intrinsic value, 
 to consider the Irish Bank note as equivalent to but 
 one half of its nominal value, in exchange for 
 them, will produce the same effect* in the pos- 
 sessor of an English Bank note, or of a bill of ex- 
 change on London. 
 
 In this case it will require 21 6/. 13^. 4c?. Irish 
 sterling to be deemed equivalent to 100/. British 
 sterling, and the exchange will be said to be cent, 
 per cent, in favor of Great Britain. 
 
 In the same manner, if the circulating medium 
 of Ireland has received an addition of only ^*^th of 
 its whole amount beyond what its commerce and 
 demands have required, the exchange must become 
 unfavorable to Ireland in proportion to that ad- 
 
 * Self-evident as this appears, it is continually denied or 
 doubted in the evidence. It was adntiitted, tliat excess of paper 
 must raise prices j but the consequent operation on exchange 
 seems to have been considered as a point of high mystery. 
 
 H 2
 
 100 ESSAY 0?7 THE PRINCiPtfiOF 
 
 dition ; that is, it will requii^e about Il^/.ln8itt0 
 be given in exchange for 100/. British. ' .'*'^^'>^ ^fb 
 
 It is not meant to assert, that depreciatrottiWifmer^ 
 diately follows on an addition to the circulating 
 medium, nor even ever takes place in proportion to 
 the entire extent of the addition. The reader will 
 recollect, that it was the opinion of Mr. Hume, that 
 it was not until a considerable time after such ad- 
 dition that the consequent depreciation ensued, and 
 that the interval was favorable to industry by the in- 
 creased power of commanding labor, which was 
 given to the holders of the additional circulating me- 
 dium. He might have added, that when the depreci- 
 ation did at last ensue, it did not bear an exact pro- 
 portion to the amount of the addition which had been 
 made, because the increased industry which it had 
 produced demanded an increase of circulating me- 
 dium ; but it is plain that depreciation must be the 
 ultimate consequence of such addition, unless the 
 increase of industry produced in consequence of it 
 should be sufficient to create a capital sufficient to 
 employ the whole of the circulating medium added; 
 for the circulating medium which the capital of 
 Great Britain requires is probably not one hun- 
 dredth part of the capital itself: suppose then a 
 million added to her circulating medium, unless 
 this million can create one hundred millions o( 
 capital previous to the time when depreciation
 
 - COMMERCIAL EXCHANGES. 101 
 
 would ensue, the depreciation is unavoidable. If 
 the addition of circulating medium is made in the 
 precious metals, as soon as depreciation ensues 
 they leave the country in exchange for articles of 
 import ; and this seems to be the case with Spain 
 and Portugal : but if the addition be made in a 
 paper which cannot leave the coiuitry, the depre- 
 ciation becomes permanent. It was on these 
 groui-tds that it was formerly observed, that the 
 loans made by Great Britain to Ireland ought not 
 to be considered as an increase of the capital of 
 Ireland ; they are an increase of her circulating me- 
 dium, and not of her capital*. They operate in the 
 game manner in Ireland as the remittances from 
 South America do in Spain and Portugal : and 
 no one now imagines that the millions annually 
 imported from the mines operate a continued in- 
 crease of the capitals of those impoverished coun- 
 tries. It seems, that as moderate additions of cir- 
 culating medium may contribute to excite an in- 
 crease of industry, so, on the other hand, im- 
 moderate and continual additions may produce the 
 direct opposite effect, their depreciation , that is, 
 the encouragement to import, taking place before the 
 increase of industry has been called for. The in- 
 crease of industry, which the first introduction of 
 
 * The dist'mction between currency and capital has been 
 well pointed out by Mr. Wheatley in his Essay on Currency 
 lind Commerce. 
 
 H 3
 
 102 ESSAY ON THE PRINCIPLE OP 
 
 silver into Europe from America is allowecl to have 
 occasioned, may serve as an illustration of the 
 former effect. The increase of poverty so visible 
 in Spain and Portugal, attributable tq the contintiai 
 and steady increase of (he circulating medium, yvi\i 
 illustrate the latter. 
 
 It follows, that there is a happy mean betweenar 
 very small and an immoderate increase, which, while 
 it encourages industry, does not give rise to depre-v 
 ciation. Perhaps the system of banking pursued 
 in Great Britain previous to the restriction, pos- 
 sessed the rare advantage of practically ascertaining 
 this quantum of beneficial increase, which no rea- 
 sonings ^ /)mri could possibly have determined. We 
 may be led to this supposition from observing, that 
 it was always the interest, both of the bankers and 
 the merchants, tp increase the circulating medium 
 as much as possible ; but that as often as depre- 
 ciation through excess ensued, it became , the in- 
 terest of the merchants to force the bankers, by a 
 run on them for gold, to diminish the circulating 
 medium until that depreciation ceased. 
 
 It seems, therefore, that Dr. Smith was too hasty 
 in forming his opinion ; that the banking system 
 operated merely as a substitution of a cheap in 
 place of an expensive medium of circulation. It 
 seems to haye a necessary tendency to in^ease the
 
 COM!ltERClAt EXr:HA^(}©B.': ^ I<53 
 
 quantity of circulating medium ; but with this rare 
 advantage, that so long as it is well regulated it 
 never can increase it beyond the amount demanded 
 by the increased industry, which it likewise, wiil 
 have occasioned. ^ "'^ 
 
 To determine a priori this limit of beneficial in- 
 crease, would be certainly a very desirable object ; 
 but possibly the resources of political economy wilt 
 never be equal to the task. If the system of 
 banking pursued before the restriction practically 
 ascertained it, it was sufficient to compensate for 
 our ignorance of its theory, and sufficient to make 
 us regret, that a system so advantageous should 
 ever have been abandoned to substitute in its place 
 another, whose effects may be not only depre- 
 ciation through excess, but a general bankruptcy in 
 consequence. 
 
 What then is the amount of circulating medium 
 in every country, beyond which if it extends, it is 
 excessive ? Excess is merely a relative term,- and 
 means, that the circulating medium is so much 
 more abundant in proportion to its effective dc* 
 mand * than in other countries ; that, like every 
 other commodity of which the supply exceeds the 
 
 * It is to be recollected^ that the demand is. a, coEp^^x 
 quantity, varying directly as the antiount pf coipm^r(;ei an;^ ex- 
 penditure/ arid inverselyas the velocity of circulation; * ^- * ' * 
 H 4.
 
 J04 ESSAT ON THE PRINCIPLE OP 
 
 demand, it loses in its value. Just as an increased' 
 quantity of commodities lose in their value as com- 
 pared with a given quantity of money ; so an in- 
 creased quantity of money loses in its value as com- 
 pared with a given quantity of commodities. 
 
 A country which adopts the precious metals as 
 its circulating medium, or, what is the same thing, 
 a paper convertible into them at the will of the 
 holder, can by no possibility ever have its circu- 
 lating medium permanently increase beyond the 
 demands of its commerce and expenditure; for the 
 loss of value which immediately ensues upon its 
 superabundance, causes it to be exported out of the 
 country to seek for a better market, as has been 
 already stated in the first chapter. But a country 
 which employs as a part of its circulating medium, 
 a paper not convertible into the precious metals, 
 possesses no such security against its accumulation; 
 and if an over-issue of it by any means takes place, 
 as the paper cannot leave the country, it must con- 
 tinue in circulation ; and any given portion of it 
 must suffer a loss of value nearly in the proportion 
 that the entire amount of it has been increased.- ' ' 
 
 Almost all the nations on the continent have de- 
 preciated their paper more or less by an excessive 
 issue. The governments ai*e there the issuers, and 
 they have generally been tempted by thei^- necessities.
 
 COMMERCIAL. EXCHANGES, 105 
 
 The consequences have ahvays been the same— a 
 discount of the paper as compared with the pre- 
 cious metals, and a most unfavorable exchange of 
 that paper, when compared with the circulating 
 medium of other nations. France affords the most 
 decisive example of the extent to which an exces- 
 sive issue may depreciate the circulating medium. 
 The progress of this depreciation is worthy of ob- 
 servation. In the commencement of the revolu- 
 tion, when these excessive issues took place, the 
 specie first diminished, and then disappeared. The 
 most violent cries of indignation were directed by 
 popular prejudice against the emigrants for having 
 carried the specie out of the country, though they 
 were as innocent of the charge as the absentees of 
 Ireland are of having drained that country of its 
 gold. The true cause was, the quantity of paper in 
 circulation in France, against which the precious 
 metals could not afford to stand in competition. 
 When the specie had all disappeared in France, as 
 the amount* of the paper increased, so did its de- 
 preciation, that is, the price of all articles gradually 
 rase ; and as the depreciation increased, the rates 
 of foreign exchanges became proportionably unfa- 
 vorable to France J. It appears from Lord King's 
 
 * The total amount of paper issued in France during" the 
 Revolution was about three hundred njillions sterling. ■ ' * • 
 
 t This has been successfully urged by Lord King ^jiltlii^ 
 baweverj'imibrUinatelyt necessary to repeat it. .v-tHV^-f*:
 
 i06 ESSAY ON THE PRINCIPLE OF 
 
 tables, that the exchange in February 17 8() wis 
 not quite 8 per cent, against Paris ; it fell gradually 
 until March 1793 ; and in the course of these four 
 years it rose from 8 per cent, to rather more than 
 cent, percent.* in favor of England; that is, a 
 hundred pounds sterling would exchange for a bill 
 for more than double the sum of French money, 
 which formerly was esteemed equivalent to Oiiie* 
 hundred pounds British at par. The exchange was 
 still rising, when war put an end to the commu- 
 nication between the two countries. Had it been 
 in' the power of man to have counteracted the 
 necessary consequences of this operation, the de* 
 preciation in France would have been arrested: 
 The revolutionary rulers of the day, in the same 
 spirit in which they appointed a maximum for the 
 price of corn (a measure which here also, as well 
 as the Bank restriction, has been strenuously re- 
 commended), condemned to death the unpatriotic 
 citizen who should demand more for his goods lii' 
 paper than in specie. Notwithstanding this san-^- 
 guinary measure, one thousand livries soon be* 
 came no uncommon price for a, dinner irl^a.. tavern 
 at Paris. When the French paper had at leng^f-j 
 lieen increased to such a degree as, to become 
 of no value at all, it disappeared, and the conse-- 
 
 * The exchange with ?arBi«' computed iti the Fr'ettchcl'mv^ 
 qf . three livres,,esfcuriateda(t'*2r)|</;-Ettglfeh' m'oney, Which is the" 
 par between the two covintries. — Lor<^iivwlf,"pagel5l, secorid'' 
 edition.
 
 /COMMERCIAL EXCHANGES. 107 
 
 quences that ensued are not a little remark- 
 able. First, the old specie, which the paper had 
 driven out of circulation, again made its ^pear- 
 ance, though the emigrants, who were accused 
 of carrying it away, had not returned. The 
 rates of exchange * once more were reduced to 
 such as had been common before the excess of 
 paper. In the same manner, though the Irish ab- 
 sentees should for ever continue in this country, 
 we may venture to predict, that gold will once 
 more appear in Ireland as specie did in France ; and 
 the exchange again become favorable, whenever 
 such a diminution of the quantity of Ireland's cir- 
 culating medium shall be effected, as will permit 
 it : and until that takes place, we may be equally 
 certain, that though every Irish proprietor should 
 return to his country, and though the Irish debt 
 payable in England were extinguished, the depre- 
 ciation of Irish paper, and consequent scarcity of 
 specie, and unfavorable rates of exchange, must 
 still continue. 
 
 There is bu4i one possible security which any 
 country can possess against its circulating me- 
 dium becoming excessive. When the circulating 
 medium consists of the precious metals, it has 
 
 * The present exchange of London an Paris is about 25 ; 
 that is, about 14 per cent, against Paris^ according to the com* 
 puled par of exchange.
 
 108 ESSAY ON THE PRINCIPLE OP 
 
 already been sufRciently pointed out, that no 
 accumulation of them beyond the demands of 
 the country can possibly be effected. All tliat is 
 superfluous will go abroad to seek a better market. 
 The same security may be attained by a, country 
 which has adopted a paper circulation, provided 
 that paper is convertible into the precious, metals at 
 the will of the holder. Such a paper can no more 
 become abundant than the precious metals them-, 
 selves ; for all that is superfluous of it will imme- 
 diately be converted into the precious metals, and 
 go abroad. This appears to be the principal use of 
 gold and silver in the circulating medium of a great 
 Commercial country; — merely to keep steady the 
 ^ measure of value.' When Bank notes are made the 
 measure of value, there seems no other certain 
 mode of preventing those notes from representing 
 sometimes a greater, sometimes a less value, than 
 by a constant interchange of them with gold and 
 silver ; and even this can be effected only so far ^s. 
 gold and silver are constant in their value. The less 
 gold and silver required for this purpose, the better 
 for the nation. If the Bank restriction, which de- 
 stroyed the interchange, had provided any other 
 means of keeping the value of the pound sterlings 
 a constant quantity, most of the objections that 
 have been urged against it would have been obvi- 
 ated. It was this convertibility into gold whicK 
 used to distinguish the English, papier. .^om ;to
 
 COMMEI^CIAL exchanges; "" lO^ 
 
 paper 6f the continent, and secured to this country 
 all the numerous advantages derived from a paper 
 currency, while at the same time it was a guarantee 
 against the equally great inconveniences that may 
 attend it. 
 
 So long as the paper of the Bank of England 
 was convertible into gold, so long the nation had ^ 
 guarantee that the quantity of it in circulation never 
 could exceed the proportion required by its de- 
 mands. Whenever the Directors, through- inad* 
 vertence, as it sometimes happened by the too great 
 increase of their discounts or advances to govern- 
 ment, augmented the circulating medium of the 
 country to such a degree, that gold began to be 
 here of less value than in other countries, their 
 notes returning rapidly for payment, admonished 
 them of their error ; they restrained the amount, 
 and the evil ceased ; but now that the converti- 
 bility is taken away, the Directors themselves are 
 deprived of their criterion by which to judge vvheo 
 their notes are excessive, and the nation of their 
 guarantee against the evils which such excess 
 must occasion. The noLCs once issued now, ves^ 
 tigia nulla retrorsum ; they remain in circulation ; 
 and their amount being thus increased, the value 
 of any given portion then becomes diminished. 
 No blame is here imputed to the Directors : all 
 that is contended for is, that since the measure 
 4
 
 no tSSAY ON THE PRINCIPLE OF 
 
 of the restriction, their discretion is become the 
 sole regulator of the amount of the circulating 
 medium, and that, like all other men, they are 
 liaj)le to be mistaken. 
 ■:.jrt iioiiRiuOT. 
 
 An opinion, however, appears to be by some en- 
 tertained, that the convertibility into gold was use- 
 less, at least as a criterion of the proper quantity of 
 paper to be kept in circulation, for that the mode 
 observed by the Directors made the case of over- 
 issue absolutely impossible. The persons who are 
 of this opinion ground it on two suppositions ; 
 first, that so long as the paper is issued solely on 
 good security, it can suffer no loss in value. If this 
 be true, it must be admitted the paper of Great Bri- 
 tain cannot be excessive or depreciated : but these 
 persons do not consider that the value of the paper, 
 though it must, no doubt, depend, in the first 
 instance, on its security, is yet farther to be regu- 
 lated by the amount of it in circulation, compared 
 to the amount of the objects it is to circulate. Had 
 they considered that gold and silver themselves are 
 subject to this inevitable law, they would certainly 
 not have exempted the paper representatives of 
 those metals from its operation. 
 
 It is well known, that after the discoveiy of 
 the mines of South America, the quantity of
 
 COMMERCIAL EXCHANGES. • III 
 
 silver which they produced reduced its value to 
 one fourth, that is, about 75 per cent. : yet 
 surely not even the notes of the Bank of Eng- 
 land can possess a greater security than tlie 
 ;silver which was poured into circulation from 
 America : the silver carried with it a security which 
 paper never can, for its security was inseparable 
 from it. The silver was value itself, and not merely 
 the representative of it ; so that if the most perfect 
 security imaginable could have furnished an ex- 
 emption from depreciation through excess, the 
 discovery of America would not have lowered: the 
 value of silver. The Bank of England, exempted 
 from the obligation of paying in cash, has the power 
 of becoming to this country a Neiv Peru, pos- 
 sessing mines of inexhaustible fertility, which 
 enable it at its pleasure to augment in amount, 
 and reduce in value, the circulating medium of this 
 country in any conceivable ra^/o ; and this it may 
 effect without ever issuing its paper, except upon 
 tlie most perfect security. 
 
 Another ground of the opinion which has been 
 advanced, that the Bank issues cannot be excessive 
 according to the present mode in which they are 
 made, is, that the supply/o/Zozr.?, and docs not pre* 
 cede the demand ; that the Bank, so far from over- 
 stocking the market, reject many and most pressing 
 demands on them for discounts. To tlus it may
 
 13 2 ESSAY ON THE PRINCIPLE OP 
 
 be answered, in the first place, that the discounting 
 of merchants' bills is not the only mode in which 
 the notes of the Bank of England come into circu- 
 lation : but supposing, as the most favorable sup- 
 position for this opinion, that the Bank issued its 
 Botes solely in the way of discount, still it will ap- 
 pear that they may never exceed, nor even satisfy 
 the demand, and yet issue notes to any assignable 
 amount. 
 
 If the supply of the circulating medium falling 
 short of the demand for it, could prevent its depre- 
 ciation, silver would not have lost its value in con- 
 sequence of the discovery of Peru, since, abundant 
 as the supply was, it certainly fell short of the de- 
 mand of the Spaniards ; and if the demand of the 
 Spaniards had been the measure of the supply, per- 
 fect as the security of the silver would always have 
 continued, its depreciation, through excess, would 
 have been so great that a pound weight of silver 
 could not now purchase a pound weight of bread. 
 CircmTJStances in the legislative arrangement of this 
 country tend to excite in persons, capable of giving 
 the most perfect security, a demand for a quan- 
 tity of Bank notes similar to that which the Spa- 
 niards felt for silver. 
 
 Without looking farther than the impolitic laws 
 against usury, we may discover the source of a de-
 
 i, ^ ■.''coMMpRCii.ii Exchanges. 113 
 
 inand on the Bank for discounts, wjhich, if complied 
 with, might at length reduce the value of their 
 notes to that of the paper on which they are en- 
 .graved, and yet without those notes ever being 
 issued, except on perfect security. By law the Bank 
 are obliged to discount at 5 per cent. ; but daring 
 war it is almost always possible to make more than 
 5 percent, of money. If a merchant, under such 
 circumstances, could obtain discounts to the amount 
 of the security he could give, the issues of notes 
 would soon amount to all the security that could be 
 given*; that is, to the value of the fee-simple of 
 all the lands in the kingdom, to the purchase of all 
 the personal property, including the amount of the 
 national debt ; nay, even to ten times this amount, 
 as would easily appear, if it was 5vorth while to 
 pursue the ultimate consequences of a system which 
 must ruin the country before it ;had proceeded to 
 such lengths, n^t is bjextreiine cases tliat- princi- 
 ples are to be judged j it is not possible to suppose 
 the Bank would ever proceed to such lengths ; it is 
 only contended, that if their discounti-rr^ according 
 to demand, so long as secUrity was given, could be 
 productive of such utter ruin, that their discounts, 
 granted to a much less extent, maystill be pra^uctiv^ 
 of evil in proportion ; and that though the; Bank 
 Directors have constantly shewn a desire to prevent 
 
 * The . restriction is now si!ip|>b'3ea'to" ddfrtinue.
 
 114 ESSAY ON THE PRINCIPLE OP 
 
 their being in excess, still the question recurs, whe- 
 ther their desire has always been successful ; and see- 
 ing that neither the security on which their issues are 
 ifiade,nor the eagerness of demand for discounts, are 
 the criteria, what are the criteria by which the Bank 
 Directors judge ? and are they of that nature as to 
 enable them to be certain that they have never been 
 mistaken ? Previous to the restriction, they some- 
 times perceived that their issues were excessive, and 
 corrected their error : now that the restriction is 
 imposed, how are they to know whether their 
 issues are excessive, or how are their errors to be 
 corrected ? 
 
 But though the infallible test of over-issue which 
 the convertibility into gold formerly afforded is now 
 taken away, yet it may be supposed tha| the Bank 
 have not left themselves without some means of de- 
 termining whether their paper really is excessive. 
 There are but two other criteria which the writers 
 on these subjects have yet proposed, which can 
 assist us in judging whether paper really is ex- 
 cessive : the first, the average t-market price of 
 gold ; and the second^ the average rate of foreign 
 exchanges. It must be, indeed, supposed that the 
 Bank possess a third, for they entirely disregard 
 these two*. 
 
 * Not only in practice^ but in their reasonings as will full/ 
 appear from the evidenee-in the Report of the Seiect Committee.
 
 COMMERCIAL EXCHANGES. 115 
 
 We suspect depreciation from the first, when 
 we find that the Bank paper constantly exchanges 
 in the market for a less quantity of gold than it pro- 
 fesses to contain: if the gold so given for the paper 
 is in guineas, the discount is open, and cannot be 
 denied. Now it is difficult to see why, when it is 
 given in bullion, it is not as real a discount as when 
 given in guineas. 3/. 17^. lOff/. of Bank paper 
 professes to represent an ounce of gold : yet an 
 ; ounce of gold cannot be procured for less than 
 aI. Is, of Bank paper. As no seignorage is paid 
 in England for the coinage, the difference between 
 Al. Is. and 3/. 17^. lO^d. seems to be the measure 
 of the depreciation of English Bank paper, as com- 
 J)ared with gold ; that is, not quite 3/. per cent. 
 
 It may, indeed, be imagined, that a cdmparison 
 wllh the excess oi the market above the mint price 
 of silver would afford a fairer criterion ; but the re- 
 sult of this would be still more unfavorable to the 
 Bank. Silver bullion is always an article of com- 
 merce ; but the quantity of gold bullion in the 
 English market is extremely small (vide Evidence 
 Rep. Set. Com. page 6), and only sufficient for the 
 supply of the goldsmiths. If the Bank were to 
 become extensive purchasers of gold now as for- 
 merly, the bullion-merchants would immediately 
 enter into speculations to procure it ; and it is im- 
 possible to foresee whether, in consequence of their 
 I 2
 
 ]l6 ESSAY ON THE PEINCIPLE OP 
 
 efforts, it would be obtained at a higher or lower 
 price than at present, though we may be almost 
 certain, that the present is not the price at which 
 it would continue. But now the bullion-merchants 
 do not employ their capital in bringing into the 
 English market a commodity which w^ould be so 
 entirely superfluous, since the Bank has shewn it- 
 self too wise to incur the unnecessary expense of 
 purchasing gold, and the mint to take the still more 
 unnecessary trouble of giving it a form, which they 
 know it must instantly lay aside. 
 
 If this depreciation should however increase, if 
 it should become JO per cent, greater, it may be 
 supposed by some, that the Bank Directors will 
 then at least see their error, and suspect there is a 
 discount on their paper. Far from it : whenever 
 that arrives, they must, to be consistent, tell the 
 people of England, as they have already told the 
 people of Ireland (where paper is depreciated near 
 10 percent, more than that of England), that this 
 inconvenience arises from the balance of debt being 
 against England, and that the discount on paper 
 or exchange (for in this instance they mean the 
 same thing) " is a symptom, and no unfavorable 
 one, of their situation;" and should we doubt 
 the fact of the balance being unfavorable, they 
 will reply, '^ that the balance must be against us,/or 
 that the exchange proved it."
 
 COMMERCIAL EXCHANGES. 11/ 
 
 When we find it denied that the excess of 
 the market price of bullion, above the mint price, 
 that is, the qitantity of gold which can he procured 
 by a Bank note being less than ichat that note pro- 
 fesses to represent, is any proof of the depreciation 
 of that note, we naturally become curious to in- 
 quire to what this excess of market price is to be 
 attributed, and we are told, that it is " the un- 
 favorable state of foreign exchanges, which, by 
 giving a bounty on the exportation of bullion, 
 enhances it above its natural value in the country; 
 it certainly must be admitted, that an unfavor- 
 able exchange produces this effect : but when we 
 see, as at present is the case with Great Britain, 
 exchanges on the average favorable with all the 
 world =**=, and the excess of tiie market price /jer- 
 . manently continue-, when the only cause assigned 
 for this excess of the market price has been re- 
 moved ; when, on the contrary, a favorable exchange 
 should encourage the importation, and consequent 
 cheapness of bullion ; and when we find, not- 
 withstanding, the excess of the market price steadily 
 continue, to what cause, except to the depreciation 
 of the paper medium of purchase, can the excess 
 of the market price be attributed J ? 
 
 * Such was the opinion of the gentlemen examined before 
 ihe Select Committee. 
 
 \ See Lord King's Thoughts, &c. page 35. 
 
 I 3
 
 118 ESSAY ON THE PHINCIPLE OP 
 
 CONTENTS OF THE FOURTH CHAPTER.^,.. 
 
 CAUSES AND EFFECTS OP THE EXCHANGE BE-e. 
 TWEEN GREAT BRITAIN AND IRELAND. 
 
 JProofs a posteriori of an excessive Issue of Paper 
 having taken place in Ireland — Market Price of 
 Bullion — Discount on Paper— Exchanges of Dub" 
 lin on London, Belfast on London, and Dublin on 
 Belfast — Disappearance of Silver Coin — Proof 
 tf the Depreciation of English Paper, ' from a 
 Consideration of the Exchange of Dublin on 
 London, and Belfast on Dublin — Rates of the 
 Depreciation of English Paper resulting from 
 this Calculation — Further corroborated by Facts — 
 Proofs a priori of the excessive Issue of Paper 
 in Ireland — Increase of Bank of Ireland Notes 
 — Opinion of the Directors as to their Excess-—^ 
 Issues of the Dublin Bankers — Issues of Silver 
 Note Bankers in the South of Ireland — Ejffects^ 
 of the Depreciation of Paper — Who are the 
 Losers — PVho are the Gainers — Examination of 
 the Nature of the Commerce in Exchange — 6'm- 
 gular Principle on which' it is founded — Estimate 
 of the various Rates of Profit which attend it. 
 
 The operation of an excessive issue of paper 
 upon exchange, and the reasons for presuming 
 that such excess is not only possible, but probable.
 
 COMMERCIAL EXCHANGES. IIQ 
 
 in the actual situation of these countries, have 
 been examined in the preceding chapter; in the 
 present, I shall attempt to prove, from authen- 
 ticated facts, that an excessive issue has actually 
 taken place in both, but more especially in 
 Ireland. .i^o-;^;' 
 
 The folloA\ing appear to be the principal, if not all 
 the symptoms of the depreciation of paper through 
 excess, which it is possible for any country to ex- 
 hibit. First, a high and permanent excess of the 
 market price, above the mint price of bullion : ^e- 
 condly, an open discount upon paper, as compared 
 v.'ith coin : thirdly, an exchange unfavorable to the 
 country, when computed in Bank notes, yet 
 possibly favorable when computed in specie; un- 
 favorable to those parts of the country, where 
 the circulating medium is paper; yet possibly fa- 
 vorable, or at least much less unfavorable, to other 
 parts, whose circulating medium is specie: and, 
 fourthly, an exchange between the different parts 
 of the same country, whose circulating media 
 are different: Jifthly, the entire disappearance of 
 all tlie smaller coin, which had been in circulation 
 along with specie, but which cannot continue 
 in circulation, along with any other circulating 
 medium of less value : and lastly, and above all, 
 we should be led to expect, that these different 
 tests of depreciation nearly agreed with each 
 1 4
 
 120^ ESSAY ON THE PRINCIPLE OF 
 
 other, that is, that the discount upon the paper, 
 and the unfavora,ble rates of foreign exchanges^ 
 and the rates of the exchanges between the different 
 parts of the same country, and the excess of the 
 market above the mint price of buihon, should. 
 all be equal, or very nearly so, to each other : 
 these are all the tests of depreciation*, which can 
 l^e expected ; and they are all exhibited by Ire- 
 land, on no trifling scale, not at a rate of 1 or 2 
 per cent, but of 8 or 10; not in a moment of 
 difficulty, or arising on a sudden, but constant 
 and permanent, and prevailing alike in peace and 
 in war. 
 
 As to the first test of depreciation, the high 
 market price of bullion ; though there is no 
 regular bullion market in Ireland, nothing can 
 jprove more effectually that it exists, than the rate 
 at which the Bank are forced to issue their new 
 dollars in order to keep them in circulation. 
 Every excess of the market price above the mint 
 price of bullion, operates as a bounty on the 
 
 * A general rise in the nominal price of all commodities 
 would also ensue /but. the prices of commodities are influenced 
 by so many causes, as well as the intrinsic value of the medium 
 of purchase, that it is difficult to draw conclusive inferences 
 from such a fact, however certain. The general rise of prices 
 throughout Ireland, within the last few years, and the fact of 
 two prices existing in the No-th of Ireland, for all commodities, 
 the gold price and the paper price, cannot be denied. — See Ap-^ 
 pendix to the Evidence^ pr.ge 108.
 
 COMMERCIAL ^EXCHANGES. 121 
 
 melting of the coin ; and the operation is so easy, 
 that the coin inevitably disappears, unless protected 
 by a seignorage, degradation, adulteration, or by 
 being issued at a nominal value, greatly above its 
 mint price. The new dollars are to be issued in 
 Ireland at a nominal value of 6 Irish shillings, but 
 their value, at the mint price, is only 4s. 8|</. * 
 Irish; they are issued therefore at a rate of 27 
 per cent, above their mint price: — this does not 
 necessarily prove, that the paper of Ireland is 
 depreciated to that extent ; for tlie Bank may have 
 had good reasons for issuing them at a rate rather 
 higher than was sufficient for their present pro- 
 tection; it howev'^er proves indisputably, that 
 bullion is far more valuable in Ireland, than the 
 price at which it is issued in coin by the mint — 
 that is, the price at which the Bank Directors 
 promise to pay their notes. 
 
 Secondly, as to the discount upon paper, the 
 reader is referred to the Appendix to the Evidence, 
 page 44 ; where there is a Table of the Rates of 
 Premiums given for guineas, since the beginning 
 of the year 1799} ^"d which has progressively ad- 
 vanced (along with the increase of Irish Bank 
 notes) from | to 10 per cent. 
 
 A distinction has been attempted by the advo- 
 cates of the Bank, that it is not their paper 
 
 * See Evidence, page 84.
 
 J 22 ESSAY ON THE PRINCJ[J»L^ OT 
 
 which has fallen, but the gold which- has risen in 
 its value. Perhaps this objection might have been 
 passed over, had it not been for the confidence 
 with which it has been urged. In reply, it niay be 
 observed, first, that as the Bank note is a pro- 
 mise to pay not a certain value, but a certain 
 weight of gold, the moment that that weight of 
 gold can no longer be obtained for it, it must be 
 depreciated: — secondly, that though the value of 
 gold, as well as of every thing else, is continually 
 fluctuating throughout the world, yet its value 
 CQ.li never be much greater in any one country, 
 than in those adjoining ; and that if it was really 
 10 per cent, more valuable in the North of Ire- 
 land, than in Scotland or England^ it would 
 immediately flow into that country, where it was 
 iji such extraordinary demand, until its level of 
 value was restored : — lastly, that if the Bank of 
 Ireland note has continued of its original value, it, 
 must be contended, that Bank of England notes 
 have risen in their value, as well as gold, since 
 the Bank of Ireland note can no longer purchase 
 the same quantity of English paper. 
 
 As to the third test of depreciation, the unfa- 
 vorable rates of foreign exchanges, it is sufficient 
 merely to refer to the Tables of Exchange in the. 
 Appendix to the Evidence, A f and A 2, pages M, 
 45 J 46 J and 47, As the paper circulating medium
 
 COMMERCIAL'^ EXCHANGES. 123 
 
 of Dublin has progressively increased *, the ex- 
 change has gradually risen to the height of 10 per 
 cent, against it ; though, during the same time, it 
 has never been above 2 per cent, against Belfast, • 
 where the circulating medium was gold ; that, on 
 the contrary, it has generally been in its favor. 
 And we have a still stronger example in Newry, 
 where both paper and gold circulate (the paper 
 at a current discount), there are two rates of ex- 
 change :}:, one when the bills are to be purchased 
 or paid in paper, and the other where they are to 
 be purchased or paid in gold : the difference of 
 the rates is of course equal to the discount on the 
 paper. 
 
 The fourth test of depreciation, an exchange be- 
 tween the different parts of the same country, 
 whose circulating media are different, is also ex- 
 hibited in Ireland. No table of the rates of ex- 
 change of Belfast on Dublin was submitted to the 
 Committee ; it is, however, sufficiently notorious 
 that such an exchange has always existed since the 
 exchange has become so unfavorable to Dublin, 
 and that its rates nearly correspond with the pre- 
 mium for guineas paid in Dublin. 
 
 * See Appendix, No. VIII. where the amount of Bank of 
 Engbnd notes is compared with the rates of exchange. 
 ^ See Appendix, No. II.
 
 324 ESSAY ON THE PRINCIPLE OP 
 
 The jifth test of depreciation, the entire disap- 
 pearance of the coin of the smaller denominations 
 which used to circulate in company with gold, has 
 also taken place in Ireland. The Committee have 
 reported the astonishing and alarming fact, that it 
 does not appear that there is a single mint shilling 
 or halfpenny circulating in any part of Ireland, 
 except in that district of the North where gold 
 has still been retained as the medium of circulation. 
 
 It will not be necessary to dwell on the coinci- 
 dence of these diiferent tests of depreciation with 
 each other. An inspection of the tables in the 
 Appendix to the Evidence will evince, that though 
 there has occasionally been a slight difference, it 
 has never been of long duration, and that it may 
 be affirmed generally that they rise and fall to- 
 gether. The apparent differences v/hich have ex • 
 isted will be found on examination to confirm this 
 theory, and may deserve some attention, as pos- 
 sibly they demonstrate the depreciation, not merely, 
 of Irish, but of English Bank paper. 
 
 It is evident, that if the Bank of England notes 
 have suffered no depreciation, and that the real ex- 
 change between England and Ireland is at par, the 
 premium paid for guineas in Dublin must equal the 
 unfavorableness of the nominal exchange.
 
 COMMERCIAL EXCHANGES. 125 
 
 But if the Bank of England notes are depreci- 
 ated, and the real exchange is at par, the premium 
 paid for guineas in Dublin must equal the unfa- 
 vorableness of the nominal exchange * plus the 
 depreciation of English paper. 
 
 But if the Bank of England notes are depre- 
 ciated, and the real exchange J in favor of Ire- 
 land, the premium paid for guineas in Dublin must 
 equal the depreciation of English paper plus the 
 imfavorableness of the nominal exchange, minm 
 the real exchange in favor of Ireland ; — hence^ by 
 a simple equation <§> it will appear, that if we add the 
 premium to the real exchange, and subtract the 
 nominal exchange from their amount, the remaindLT 
 must be the depreciation of English paper. Let 
 us apply this plain general truth to the rates of ex-- 
 change and premiums for gold, as extracted from 
 the different tables contained in the Appendix to 
 the Evidence. 
 
 * It mu5t be recollected, that the exchange against Dublin 
 is not of Irish paper against gold, but of Lish paper againsj: 
 English paper, .^ J ,. 
 
 X The reasons for presuming tliat the real exchange^ is irji, 
 favor of Ireland have. already been fully stated in the second/ 
 (;hapter. 
 
 § Premium rrdeprec. of E. pa per -f nominal exch..*-reBl." eai. 
 
 .• . Prem. + real exch. ^depreciation of E. paper -friorpjnal exjC)i, 
 
 .*. Prem.-}- real exch. — nominal exch. = deprecia. of E. paper. 
 
 4
 
 126 
 
 ESSAY ON THE PRINCIPLE OF 
 
 
 Nominal Kxchange,| 
 
 f 
 
 1 
 
 Premium paid T* 
 for Gold in 
 Dublin, per 
 
 Cent.* 
 
 , e. of Irish Bank ,- u I 
 JotesagainstEnglish Krchange of Engltsh 1 
 B^knote.; i e. Bank Notes agamstltish 
 Sabln on London Gold i.e. Exchange of 
 a-^ainst Ireland per Belfast on Londont- 
 
 
 
 " Cent.t- 
 
 
 , - '1 
 
 
 
 In favor of 
 
 in tavor or 
 
 1803. 
 
 
 
 Belfast. 
 
 London. 
 
 
 
 January 
 
 3 
 
 3^T 
 
 
 
 February 
 
 3 
 
 3| 
 
 
 March 
 
 H 
 
 4^ 
 
 
 AprU 
 
 H 
 
 4| 
 
 -i^ 
 
 z 
 
 May 
 
 44 
 
 ^fr 
 
 ■" 
 
 5 
 
 June 
 
 4^ 
 
 414 
 
 "" 
 
 TT 
 J, 
 
 July 
 August 
 
 6 
 
 8 
 
 6A 
 
 eh 
 
 2rV§ 
 
 5 
 
 TT 
 
 September 
 
 8 
 
 3tV 
 
 
 October 
 
 n 
 
 
 November 
 
 9 
 
 7tV 
 
 
 December 
 
 9 
 
 7H 
 
 
 1804. 
 
 
 
 
 
 January 
 
 91 
 
 11 
 
 H 
 
 
 February 
 
 10 
 
 fit^ 2^^ 
 
 
 March 
 
 9 
 
 0^ -^iT • » 
 
 * Extracted from table L, Appendix to the Evidence^ 
 
 ^^EKiracted from ditto, by subtracting 9^ from the average 
 monthly rates of exchange, as given in that table. 
 
 + Extracted from the table M, in the Appendix to the Evi* 
 aetlce, page 45, by subtracting the average monthly rates 
 (taking the average of the rates at the middle of each month) 
 from 84 It appears that this has been too hastily termed (he 
 real exkange ; for it is to be recollected, that it is not an ex- 
 change of Irish gold agaiiist English gold, but against Enghsl. 
 
 ^'fTB^'appears to have been a sudden fluctuation, frot» 
 ..^hich nathing can be concluded... ^^^^i io vovf : ,v. *:; l";
 
 COJIMERCIAT. EXCHANGES. 
 
 127 
 
 ' From this table it will appear that the depreci- 
 \sktion of English Bank notes first prodnced a sen- 
 sible effect upon the exchange about the month of 
 , September last ;, for adding the premium on gold to 
 |IKe>eal exchange, and subtracting the nominal 
 exchange 8 + 1 — ^i= 2^, the depreciation of 
 English paper. , If such a result had appeared only 
 in that month, y,e might seek for some other cause 
 of the sudden fluctuation ; but it has, on the con- 
 trary, continued permanent since that time — and a 
 permanent effect must be referred to a permanent 
 cause. It appears then by this mode of calcula- 
 tion, that the depreciation of English paper has 
 been as follows ; 
 
 ^■6 
 
 
 ^^ 
 
 ^ ^« 
 
 Depreciation of 
 English Paper. 
 
 1803. 
 
 Sept, S 
 
 + 1 — 6^ = 
 
 2^ 
 
 
 Oct. 7i 
 
 + 1 — 6| = 
 
 H 
 
 
 Nov. g 
 
 + 1 — 7 A = 
 
 2/x 
 
 
 Dec. 9 
 
 + 1 — 7M = 
 
 2ix 
 
 
 Jan. g\ 
 
 + 1 — 7f = 
 
 n 
 
 
 Feb. 9 
 
 + 1 — 84^ =^ 
 
 2iV 
 
 
 , March 9 
 
 + 1 — 61 = 
 
 H 
 
 It is remarkable that the result of this calcu^r 
 lation agrees with the fact mentioned by: Mr. 
 
 * This column is the real exqhange, whic^^i^ h§jq .a^yrfinfcd 
 to be in favor of Ireland. For the reasons aljr'eaciy assigiiefl^i \tm 
 aniount cannot be much less or greater than l^^er cqiit,. . ,.a
 
 128 ESSAY ON THE PRINCIPLE DP 
 
 Burrowes*, that 1^ per cent, is now paid to pro- 
 4Cure gold in London. It agrees also with the ex* 
 cess of the market above the mint price of gold, 
 which gives a depreciation of somewhat leSs than 
 3 per cent. Seepage 115, antea. 
 
 Thus also it will be easy to account for the ex- 
 change having been of late so much in favor of 
 Belfast, sometimes even 3 per cent. ; for this was 
 an exchange of gold against Bank of England 
 paper ; and the reader will observe, that in Octo- 
 ber ] fe03 (that is, the month after the.depreciation 
 of English paper first appears to have been sen- 
 sibly felt), the exchange became suddenly 2| per 
 cent, in favor of Belfast ; and it is remarkable that 
 it has since continued in favor of Belfast:};, nearly 
 to the same amount that the English paper appears 
 to have been depreciated. 
 
 But even without entering into minute calcu- 
 lations, it seems that a bare inspection of these 
 tables might afford a demonstration to any reason- 
 ing person that depreciation has taken- place, at 
 least in one country, if not in both ; for on con- 
 sidering the exchange 3 per cent, irl favor of Bel- 
 
 ■ :.:.■'■ •'■■■ ■■- . '■■•'-■ -,- noi^i^i 
 
 * Page 14, Evidence. '. ■■ - ^ 
 
 ic:f vWitlt'llie fexdeption of ttd mT)tttii' dt fSiMarf, wtien it 
 eBipejienced a sudaiii faH to'-i^, but rosljigaih.'W 2i^ Ifl^e 
 following -ittonth. '••''•'"■'- *■
 
 COMMEPCIAL EXCKAXGES. I'iQ 
 
 fast, if it is der.i> J that the Eaiik ot England paper 
 is depreciated, it mast be contended that Ii'eland is 
 the creditor country, in order to account for the 
 exchange in favor of Belfast* : uut the moment 
 that this is conceded, the depreciation of Irish paper 
 becomes a necessary supposition lu order to account 
 for the exchange against Dublin. 
 
 But it is not merely from the consideration of 
 these certain symptoms of depreciation that we are 
 obliged to infer the fact of its having actually taken 
 place. The evidence contained in the Report of 
 the Committee discloses practices in Ireland, which 
 lead us so naturally to conclude a priori, that an 
 excessive issue must have been their consequence, 
 that our astonishment might have been excited, if 
 the symptoms of an excessive issue v/ere not ex- 
 hibited. The proofs a priori and a posteriori mu- 
 tually corroborate each other : first, we find all 
 the causes which could produce an excessive issue ; 
 next, all the effects which an excessive issue could 
 produce. 
 
 Of these facts, which might lead us a priori to 
 infer, that an excess of the pa|fcr circulation of Ire- 
 land must be their necessary consequence, th^ 
 
 * Yet even this supposition would not account for the ex- 
 change beiog so muck in favor of Belfast.
 
 130 ESSAY ON THE PRINCIPLE OF 
 
 most prominent, though not the most conclusive, 
 is the extraordinary increase in the amount of the 
 notes issued by the Bank of Ireland, which is 
 now nearly five times* as great as when the 
 restriction was imposed. The issues of the 
 Bank of England have not been quite doubled 
 in the same time. It is impossible to suppose 
 either that the commerce of England has been 
 doubled, or that of Ireland become five times as 
 great as it was in 1797. We should therefore at 
 first sight expect to find that the paper of England 
 had become excessive, and the paper of Ireland 
 excessive to a much greater degree. Farther con- 
 sideration, however, will lead us to abate much of 
 the severity of the inference which would follow. 
 First, it is to be recollected, that an issue of small 
 notes was rendered necessary to fill the void left 
 by the gold, which the Bank restriction had 
 '* diminished even to banishment ^ ." This in 
 Dublin may be estimated at the amount of their 
 small notes in circulation ; that is, about 
 1,200,000/. Secondly, the alarm which pre- 
 vails in Ireland from political causes, by rendering 
 
 * See the Appendix, No. VIIi: 
 
 X It appears probable, that the entire loss of gold in Ireland, 
 in consequence of the restriction, was 3,000,000/. ; but that 
 'part which was withdrawn from circulation in the country was 
 of course supplied by the notes of country bankers.
 
 COMMERCIAL EXCHANGES. 131 
 
 circulation slower*, renders a greater amount of 
 circulating medium necessary. Lastly, something, 
 though not much, may be allowed for the increase 
 of commerce and expenditure in Ireland. Thus of 
 five equal parts J into which the actual amount of 
 Bank of Ireland notes may be divided, one is ne- 
 cessary, as having existed before the restriction; 
 and two more, as supplying the place of the gold 
 which the restriction expelled from circulation. It 
 is impossible to suppose that the remaining two 
 have been rendered necessary by increased expendi- 
 ture and domestic alarm. 
 
 But it appears from the evidence of the Directors 
 themselves that their issues are excessive. — 
 " We are informed by Mr. Colville^, that it was 
 '' impossible for the Bank to make as large dis- 
 " counts during the rebellion, and before the re- 
 " striction bill took place, as they have been enabled 
 
 * This has been fully demonstrated by Mr. Thornton : much 
 of his reasoning, however, would not apply to Ireland, since 
 few hoard Bank notes in tliat country with a view to have them 
 in store against a day of rebellion or invasion : we must there- 
 fore be permitted to doubt whether the circulation oi paper 
 in Ireland is much slower now than in a period of greater 
 prosperity. 
 
 X See Report of the Committee, page p. 
 
 § Deputed by the Bank of Ireland to attend the Committee. 
 See Evidence, page gg. 
 
 * K 2
 
 132 ESSAY ON THE PRINCIPLE OF 
 
 ^' to do since, and which the necessities of the 
 " country made absolutely necessary." 
 
 Now while we entirely agree with Mr. Colville 
 as to the fact, that the Bank, has been enabled to 
 discount or issue more notes than it could have 
 done if the restriction had not taken place, we must 
 be permitted to deny the inference that he makes of 
 the necessity of such increase. 
 
 In treating of the remedy of exchanges, it shall 
 be made to appear that the quantity of circulating 
 medium which could be maintained in circulation, 
 were there no restriction, is in all cases that which 
 the true interest of the country requires ; and that 
 if the Bank, protected by a restriction, undertake 
 to lend their gracious assistance to the country, in 
 what they conceive to be the hour of its necessity, 
 and increase their issues by way of enabling it to 
 pay the debts which it either actually does owe, or 
 which they are pleased to attribute to it ; that in 
 either case such interference is to the last degree 
 pernicious, and, if persisted in, must end in ruin. 
 But even if it should be admitted that the issues of 
 the Bank of Ireland are not excessive*, still it 
 
 * In order to ascertain this point, it would be necessary 
 previously to determine what is the proportion which the notes 
 of the Bank of Ireland ought to bear to all the otlier banks of 
 the kingdom. 
 
 4
 
 COMMERCIAL EXCHANGES. , 133 
 
 will not follow that the whole circulating paper of 
 Ireland is not greater than its occasions require. 
 Unfortunately, the Bank of Ireland does not possess 
 the same control over the country banks as is 
 possessed by the Bank of England in this country: 
 even in Dublin the private bankers are by many 
 supposed equally to divide the market with it. The 
 Bank of Ireland is indeed as much favored by re- 
 gulation as the banks in this country : every private 
 banker must pay in Bank of Ireland notes, if called 
 on; but unfortunately the holders at present have 
 little inducement to wish to change the note of a 
 respectable private banker for a note of the Bank of 
 Ireland. Whether the Bank of Ireland could not, 
 by a veiy simple operation, give them an induce- 
 ment, and thus possess themselves of such control, 
 will be considered in its proper place*. 
 
 We must therefore direct our attention to the 
 private bankers. 
 
 And first in Dublin, we learn from the Evidence:}: 
 and from the Report, that the weekly issues from 
 the Treasury to the yeomanry agent, for the pay- 
 ment of the yeomanry, were from 20,000/. to 
 30,000/. a week, and that the monthly issues to 
 the army agents were from 1 50,000/. to 200,000/. ; 
 but that some of the army agents and the yeomanry 
 
 * See sixth chapter.^ ^'^ ^"' "^ See page 75. 
 * K 3
 
 134 ESSAY ON THE PRINCIPLE OF 
 
 agent depositing the Bank of Ireland notes with pri- 
 vate bankers, paid the army and yeomanry with pri- 
 vate paper; that (subsequent to the appointment of 
 the Committee) the Lords of the Treasury in Ire- 
 land, understanding that this practice prevailed " to 
 an extent which demanded their official interference, 
 by order, called for the attendance of the agents 
 for the army and yeomanry, and gave positive di- 
 rections that the whole of such military expendi- 
 ture should be remitted or paid in Bank of Ire- 
 land notes." It is scarcely necessary to observe 
 what a prodigious extension of private paper this 
 practice must have given rise to, or how strongly 
 it indicates the exertions of the private bankers to 
 force as much as possible of their paper into circu- 
 lation. A Dublin banker becoming possessed of 
 20,000/. worth of Irish Bank paper in this manner, 
 was enabled to increase his issues, not merely to 
 the extent of the sum deposited, but of all such 
 farther sums as a banker can issue upon a deposit; 
 with this additional advantage, that he was enabled 
 to send his paper, for example, to Cork, there to sup- 
 plant the notes of the Cork bankers, or into the most 
 distant villages of Ireland, from whence its return to 
 his counter must be necessarily slow. We are in- 
 formed also, that the bankers of Dublin have 
 adopted a practice of discounting bills at a very 
 long date, and to such an extent that an individual 
 was enabled to increase his imports from 10,000/.
 
 COMMERCIAL EXCHANGES. 135 
 
 •to 80,000/. It is obvious, that every bill which is 
 discounted has a two- fold operation ; that it in- 
 creases not merely the capital of the merchant who 
 draws it, but also the amount of circulating medium 
 of the country. The merchant feels the beneficia;! 
 effects which accrue to his private fortune from 
 extensive discounts. The public mischief that 
 ensues forms no part of his calculations*. 
 
 But whatever exertions the private bankers in 
 Dublin may have made, the private bankers in the 
 countr}^ have far outstripped them in the race. As 
 the measure of restriction had driven gold out of 
 circulation, so the depreciation of the Irish paper 
 expelled silver ; and as the banishment of the 
 gold liad operated such a prodigious increase of 
 profit, and opened such new opportunities in the 
 banking system, so the annihilation of silver gave 
 birth to a new race of bankers, with new principles 
 and with new gains. Degraded as the silver cur- 
 rency of England is, such counters as pass for shil- 
 lings here could not afford to circulate in Ireland ; 
 if sent into Ireland they must instantly return ; 
 they obtain a better price when exchanged for the 
 pounds of England than for the depreciated pounds 
 of Ireland : like every other commodity, therefore, 
 they seek the best market ; they leave Ireland^, and 
 return to England. 
 
 * See also the sixth chapter. 
 k4
 
 136 ESSAY ON THE PHlNCIPLfi OF 
 
 The coiners, from their competition with each 
 other, are reduced to more moderate gains than is 
 generally supposed, and they cannot afFord to pro- 
 vide as good counters for tlie depreciated pounds 
 of Ireland as for those of England, which are 
 not depreciated to so great a degree: so that even if 
 the shillings in England were not worth one penny 
 each, such would still be too good to exist in Irish 
 circulation ; for, however bad the English shilling 
 c^n be, the Irish must be worse. I speak of those 
 shillings which are to be exchanged for Irish paper; 
 for in the North of Ireland, where gold continues 
 in circulation, the silver is at least as good as in 
 England. The same principle of competition 
 wlXh exists between the English and Irish coiners 
 takes place to a still greater degree among the 
 Irish coiners themselves: having first expelled their 
 English brethren out of the market, they next 
 trle^^l their strength upon each other ; and the im- 
 punity they enjoyed soon made tlieir competition 
 so great, that it appears thirty-five of their shil- 
 lings were sometimes given in change for a giiinea 
 note ■*■ , Paper shillings were at length resorted to, 
 perhaps as a substance cheaper than base metal ; 
 and it is not Impossible that paper itself might in 
 its turn be obliged to disappear, if any substitute 
 cheaper than paper should be discovered. 
 
 * Scf. ti)e Evidence, page 83. 
 
 I
 
 COMMERCIAL l:XCHA>TGES. 137 
 
 In Dublin, whore, from the extent of retail busi- 
 ness, paper shillings were inadmissible, the base 
 metal continued as the medium of circulation mitil 
 its currency was annihilated by an hasty order of the 
 Irish Treasury*. Dublin then presented the phe- 
 nomenon of a great city literally deprived of all 
 circulating medium of less denomination than one 
 pomid, and the distress that has ensued may be 
 more easily conceived than describecU 
 
 In the country it was deemed more eligible to 
 substitute paper shillings than to continue to re- 
 ceive the base metal : it accordingly disappeared, and 
 promissory notes for all sums, so low as sixpence, 
 took place. Banking on a small scale soon became 
 not only one of the most lucrative, but oue of the 
 most common trades. When once it w<is dis- 
 covered that coining was no longer illegal, pi'O- 
 vided it was executed on paper, many, as may na- 
 turally be supposed, applied themselves to to pro- 
 fitable a busijiess. The towns and villages of Ire- 
 land swarmed with bankers, ij^suing their promis- 
 sory notes for crowns, half-crowns, shillings, and 
 sixpences, promising to pay the same in Bank of 
 Ireland notes whenever a sufficient sum should 
 be tendered. Let us now suppose a village sup- 
 })lied by ten bankers, and containing one thou- 
 sand inhabitants ; each of these may possess nine- 
 
 * See the Evidence, pajjc 77.
 
 138 ESSAY ON THE PRINCIPLE OP 
 
 teen shillings of each of the ten bankers ; and yet, 
 though 95,000/. may be thus sent into circulation 
 in that single village, it will not be possible to call 
 on any one banker for payment. This is certainly 
 an extreme case ; but it is put merely to illustrate 
 this principle, — that where a district is supplied 
 with silver notes by many bankers, they are secure 
 of being able to issue a much greater quantity than 
 they can be called upon to pay : so that the fabrica- 
 tion of silver notes seems to form an exception to 
 the general rule of Adam Smith, that in every 
 branch of manufacture it is the interest of the 
 dealer to narrow the competition : besides, these 
 bankers are sufficiently ingenious to issue notes of 
 such amounts that it is very difficult to combine 
 them into pounds : and finally, if pressed for pay- 
 ment, notwithstanding all these -defences, the re- 
 source of bankruptcy is still left to them ; and it 
 is melancholy to hear how many have resorted 
 to it *, 
 
 The Inquiries of the Committee proved very un- 
 satisfactory as to the number of private bankers in 
 Ireland, the returns made to them being very in- 
 complete : it would appear, however, from what 
 they did collect, that, according to the system pur- 
 sued in Ireland, the number of banks issuing notes 
 ought to be in every place inversely as the extent 
 of its commerce. London is supplied by one, 
 
 * See Evidence, page 85.
 
 COMMERCIAL EXCHANGES. 13^ 
 
 Dublin by four; but less than tiuelve *, it seems,, 
 are insufficient for Skibbereen ; and twenty-three 
 are required to satisfy the demands of Youghal, a 
 town in which it may well be doubted whether there 
 are twenty-three persons who follow any other 
 trade. So extensive indeed seems the demand for 
 labourers in this department, that female bankers 
 appear to be not uncommon ;[;. It would be easy 
 to dilate upon this system, but it is unnecessary to 
 pursue the disgusting topic. When we see so 
 many channels opened to inundate Ireland with 
 paper, it is needless to seek farther for the causes 
 of its depreciation, and in vain to suggest the 
 candid doubt, " whether it may not be gold which 
 has risen in its value." 
 
 Such seem to have been the consequences of the 
 Bank restriction on the circulating medium of Ire- 
 land ; having driven successively gold and silver, and 
 at length even plated bi^ass, out of circulation, as 
 all too expensive for its purposes, it has substituted 
 in their place a paper excessive in its amount, and 
 doubtful in its security, not regulated by a bank re- 
 sponsible to the nation, nor by any principle but the 
 boldness of its issuers. 
 
 A detailed inquiry into the various abuses, com- 
 mercial and financial, which have originated from 
 
 * See page 48, Appendix to tha Evidence. 
 X See the names of tbe bankers of Youghal, Middleton, 
 and Tallow, pages 50 and 51^ Appendix to the Evidence,
 
 140 ESSAY ON THE PKIXCIPLE OP 
 
 thi^ system, would be a speculation of considerable 
 curiosity, and which might be of some use; it is 
 one, however, of which the review here taken 
 must be very superficial. 
 
 We have heard it asked, who are the losers and 
 ■who are the gainers by the exchange ? 
 
 If the principles contained in the preceding 
 chapters are admitted, this becomes a question of 
 
 easy solution. 
 
 Every annuitant in Ireland, every possessor of 
 property in the funds, every landlord who has let 
 his land for a time certain, all persons deriving 
 their subsistence from a fixed income, are reduced 
 in circumstances, in the ratio of the depreciation 
 of Irish paper, that is, about eight or ten per cent. 
 
 All persons engaged in foreign trade, in order 
 to ensure themselves from the immense losses 
 which they might incurs in consequence of the 
 frequent fluctuations of exchange, must charge an 
 extra })rofit on their transactions, falling on the 
 consumer, iri the import trade, and tending to ex- 
 flude Ireland from the foreign market in the export. 
 
 All retail dealers, manufacturers, labourers, and 
 a-ii the lower classes, are reduced to difficulties.
 
 COMMERCIAL EXCHANGES. 141 
 
 ■which it is impossible to describe, by the depre- 
 ciated and uncertain value of silver notes in 
 most parts of Ireland, or b}' the absolute annihila- 
 tion of all circulating medium less than one pound^ 
 which has ensued in Others ; both which evils have 
 been the necessary consequence of this system. 
 
 All persons who are forced to pay in gold 
 and to -receive payment in paper, a grievance 
 too common in the North of Ireland, are suf- 
 ferers. 
 
 All persons who are holders of the numerous 
 forged notes, which arise from the universal system 
 of banking pursued in Ireland, suffer by the 
 system which encourages those forgers to carry 
 on their operations : and all persons who are 
 holders of the silver notes of the petty bankers in 
 the villages of Ireland, lose when the issuers be- 
 <:ome bankrupt. 
 
 All persons who had in their possession the base 
 coin, which passed current in Dublin and other 
 parts of Ireland, were losers ^\'hen that coin was 
 cried down. Some master manufacturers who 
 had in their possession great quantities (often sa 
 much as 500/. worth), incurred a loss of from 
 fifty to eighty per cent, on that amount.
 
 '|4'2 tSSAY ON THE PRINCIPLE OP 
 
 AU manufecturers who are thrown out of em- 
 ployment, from the impossibility their masters find 
 of procm'ing any circulating medium for their pay- 
 ment ; all persons who will not work because 
 they cannot sell — lose by this system. 
 
 These are the losers. It remains to consider who 
 are the gainers, since loss and gain must ever be 
 reciprocal. 
 
 The first, whom we shall consider as gainers, 
 are of a class which certainly has been the least 
 suspected of having profited by the exchange, the 
 Irish absentees : it is, however, demonstratively 
 true, that they have lost less than if they had con- 
 tinued in Ireland * ; for the rents paid in paper to 
 their agents in Ireland, purchase bills in Dublin, 
 which, when remitted to London, produce a 
 quantity of gold greater than what they would 
 have exchanged for in Dublin. This arises from 
 the real exchange ; that is, the exchange calcu- 
 lated on gold being in flivor of Ireland. This 
 has been generally true .since the year 1 800. The 
 absentee is therefore so far a gainer by his emigra- 
 tion, that, had he continued in Ireland, his rents, 
 paid in Bank notes, would have been convertible 
 
 * This was stated by Mr. Marshall^ to whose evidence the 
 reader is referred, pages II7 and 118, Evidence before the 
 Select Committee.
 
 COMMERCIAL EXCHANGES. J 43 
 
 into a smaller quantity of gold, than he can pur- 
 chase in London by the bills of exchange which 
 are procured by those notes. 
 
 The next class of gainers are the proprietors of 
 Bank of Ireland stock : the greater the amount of 
 notes issued, the greater of course their gains ; and 
 accordingly we observe, that the Directors of the 
 Bank of Ireland have increased their dividends from 
 6^ to 71 per cent, and added to that a bonus of 
 5 per cent, last year, making in the whole 12^ 
 per cent, interest, which their stock produced. 
 
 The merchants who obtain such extensive dis- 
 counts from the bankers are also gainers by the 
 system, that allows those discounts to be ex- 
 tended to an amount which the Directors them- 
 selves confess* could not exist were the restriction 
 taken off. It is greatly to be lamented that the 
 interest of the country and of the merchants is in 
 this point irreconcilable. 
 
 The government also are gainers, in a manner 
 which no subject, however loyal, can approve of, 
 if the Bank restriction has permitted the Directors 
 to make to them advances, which, were there no 
 restriction, would be incompatible with the safety 
 of their institution. 
 
 * See the Evidence, page gg. 
 4
 
 i44 ESSAY ON THE I'RIIfCIPLE OF 
 
 How far the private bankers of Dablia are 
 gainers, the evidence laid before the Committee 
 furnishes no data to determine ; but if it is. al- 
 lowed that their gains are in proportion to their 
 issues, we may conclude that tliey are not Vv'ithout 
 their shar^ of profit. 
 
 Bnt the gains of the silver note bankers of 
 Skibbereen and Yonghal, and otlier places in the 
 South of Ireland, are not so ambiguous. They 
 are mere coiners, with this advantage over all 
 who had formerly followed that pursuit, that their 
 materials cost them nothing, not even the expense 
 of stamps, of which they have hitherto defrauded 
 the revenue. 
 
 The numerous forgers of notes on the different 
 bankers, which the number of those bankers en- 
 courages, are also among the gainers by this 
 system. 
 
 All agents in the North of Ireland, possessing 
 sufHcient influence to force the tentmts of the 
 absentee proprietor to pay in gold, and who pays 
 them the next day in paper, gain eight or ten per 
 cent, at the expense of the tenants ; and if those 
 agents remit the rents, paid in gold, through 
 Dublin and not through Belfast, they then be- 
 come gainers of eight or ten per cent, at the ex- 
 pense of the landlords.
 
 COMMEBCIAL EXCHANGES. \49 
 
 But the most singular of all the gains wliich 
 originate from the system of supplying two parts 
 of the same united kingdom with circulating 
 medium in such a manner, that its value shall be 
 different in each, is the profit of the dealers in 
 exchange : however familiar this may be to men of 
 business, it is perhaps still little known to the public. 
 They who conceive tliat the profits of such deal- 
 mgs arise from rttoiitting capital at a high exchange, 
 in order to draw it back again when low, have 
 formed a very inadequate idea of the subject : such 
 a speculation would be mere gambling, and might 
 be productive of loss, as probably as of gain ; but 
 the commerce in exchange is founded not on the 
 probable variation of exchanges at different times, 
 but on its actual variation at the same time in 
 different places. 
 
 When the rates of exchange are low, both in 
 London and Dublin, the difference between them 
 will afford rather a greater profit to the dealer, than 
 he could obtain from the same difference existing 
 between higher rates*. It must not however be 
 concluded, that the dealer prefers low to high 
 rates ; he finds from experience, that the difference 
 of exchange is generally greater, when the fates 
 
 * See Evidence, page 24. 
 
 L
 
 146 ES^AY ON THE PRINCIPLE OF 
 
 are high than when they are low ; and therefore^ 
 although he would prefer a difference of 2i of 3 
 per cent, on a low rate of exchange, yet as such 
 a difference does not occur, except when the ex- 
 change is high, he prefers the high rate; the gain 
 resulting from the greatness of the difference 
 being infinitely more important than the loss 
 occasioned by the height of the rate. The fol- 
 lowing calculations arc founded o# the supposition 
 of high rates, and of course state the gains of the 
 dealers as still less than they would have appeared 
 on the supposition of the rates being low. 
 
 It will be necessary to consider this subject 
 rather in detail, especially as they who have not 
 given it their particular attention, little suspect 
 what a prodigious increase of profit ensues to the 
 dealer, on a very small increase in the difference 
 of exchange. 
 
 Let lis first suppose, for the sake of illustration^ 
 that exchange in London is 117, and in Dublin 
 1 15 ; this gives a difference of a per cent.*, which 
 very frequently occurs. The dealer in London 
 
 - * Compare the exchange of London on Dublin, and of 
 Dublin on London, for the last year.— See A 1 and A 2 in the 
 Appendix to the Evidence, also No. I. in tke Appendix to this 
 work. 
 
 1
 
 c6•!^^t■EK6lAL i::s:cHANGfES. 147 
 
 invests 1000/. British in the purchase of a bill on 
 DuWin, at twenty-one days date^ of the amount of 
 ^-1170/. Irish : he makes this purchase, let us sup- 
 pose, on Monday morning, and sends the bill to 
 4)ublin for payment in that night's mail ; it arrives 
 there on Thursday morning, and is discounted 
 on that day. '^ .. » 
 
 There will then be to be deducted 
 
 from - ^ - - (Irish) ^.1170 O O 
 Discount at 5 per cent. 2 1 
 
 days, 3 days grace ^.3 16 11^ 
 Expense of postage 2 2 
 
 Total to be deducted * 3 19 l| 
 
 H? receives therefore on Thursday 
 
 morning - - (Irish) 1 1 66 O 10| 
 
 With this he purchases the next day, Friday, a 
 bill on London, of twenty-one days date, which, 
 at an exchange of fifteen per cent, produces 
 (British) 1013/. 18^. 4c/. This bill leaves Dublin 
 on Saturday, and may arrive in London on Tues- 
 day morning ; but let us suppose the wind has 
 been contrary for two days, in order to allow for 
 all supposable delays ; and let us say it has at 
 length returfied to London on Thursday morn- 
 ing, that is, on the tenth day after the 1000/. 
 
 * No brokerage is charged in Dublin, nor nAy r&fiMn\s9\on 
 \n a transaction, of this nature^ which is between correspond- 
 ents having a joint account. 
 
 L 2
 
 148 ESSAY ON THE PRINCIPLE OP 
 
 had left London in the shape of a bill on Ire- 
 land. The dealer offers it that day to be dis- 
 counted ; 
 There will then be to be deducted 
 
 from - - (British) ^.1013 18 ^ 
 
 Discount at 5 per cent. 2 1 
 
 days date, 3 days grace ^.3 6 8 
 Brokerage at 1^. lOd. per 
 
 cent. - - - 10 3* 
 Postage . - > O^^ ^ g ^^ 
 
 loog 9 5 
 There remains above all expenses - j^. 9 9 ^ 
 This 9/. 9^. 5d. is^U profit, which the 1000/. has 
 cleared by its journey to Dublin ; and 9/. gs. 5d. 
 on 1000/. is at the rate of 18^. 1 Hd. per cent, for 
 ten days. Such pay is too great to allow the lOOO/. 
 to remain long idle, and it instantly sets out once 
 more for Dublin, to return again in ten days, 
 equally improved by its travels. It m^y thus return 
 thirty-six times to the owner in the course of a year, 
 without making any extraordinary expedition, and 
 each time (supposing the difference of exchange to 
 continue two per cent.) return 9/. 9^- 5^. ; that is, 
 in the course of a year, 341/. which is a profit of 
 34/. 2s. per cent, per annum. But let it bq 
 suppos.^4- that the exchange- dealer is so remiss 
 or so unfortunate, that he cannot make his J QOO^.
 
 COMMERCIAL EXCHANGES. 14^ 
 
 return to him once in ten days, but only once in 
 fourteen days ; this will give twenty-five returns in 
 the year, and this is certainly the smallest pos- 
 sible number that can be supposed. In this case 
 the profits of his capital so employed will be at the 
 rate of 23/. 13^. 6^d. per cent, per annum. 
 
 This sum of 341/. in case of thirty-six returns, 
 or '236/. 1 5^. 5c?. in case of only twenty -five, may be 
 considered as the pay and reward of 1000/. for 
 having performed a course, in one year, to the ex- 
 tent of 24,120 miles in the first instance, and of 
 1 6,7 50 in the second. Of which 24,120 miles, 
 19,800 have been performed in the mail-coach 
 between London and Holyhead, and the remain- 
 ing 4,320 in the packet-boat between Holyhead 
 and Dublin. 
 
 Mobilitate viget, viresque acquirit eukdo. 
 
 One thousand pounds, thus employed, may 
 therefore produce above thirty-four per cent, in 
 the course of one year; and, what is still more 
 surprising, without having once served as the me- 
 dium of exchange for any other commodity than 
 paper during the whole of th^t time. 
 
 It will, however, be necessary to examine the na- 
 ture of this profit still farther, for as yet we have 
 L 3
 
 150 ESSAY ON THB PRINCIPLE OP 
 
 not ascertained its extent. It has hitherto been 
 supposed that the bills in which the 1000/. ,has 
 been invested, have been drawn by merchants and 
 bankers ; but if they are drawn by persons not in 
 trade, for example, by the absentee proprietors^ 
 the profits become much greater. I^et us now, 
 suppose, that all the thirty- six bills drawn in 
 London, have been drawn by absentees. This is 
 certainly an improbable supposition ; but it is just 
 as improbable that they should all have been 
 drawn by merchants ; ^nd therefore, as we have 
 seen the profits which would arise where the bills 
 have been drawn solely by persons in trade, let us 
 now examine what they would amount to if drawn 
 solely by persons not in trade ; and as we may be cer- 
 tain that the actual profits are not as great as would 
 result from this latter supposition, so we may 
 pronounce, with equal certainty, t|iat they are 
 greater than we should conclude from tlie former. 
 When exchange, in London is seventeen, and in 
 Dublin fifteen, the person not in trade, for 100/. 
 English, paid to him by his banker, gives his bill 
 Oil Dublin, at twenty-one days sight, for 118/. 
 that jg, one per cent, more than the current 
 rate. 
 
 Let us examine the profits of exQJiaiiore pn such 
 a transaction « 5 „•. jr..;^
 
 COMMERCIAL EXCHANGES. 151 
 
 1000/. British, at exchange 118, pro- 
 duces a bill on Dublin for Irish ^. 1 1 80 O 
 Discount 24 days ^.3 17 7k 
 Postage ----022 
 
 Total to be deducted - . - - 3 IQ Qj 
 
 Total received in Dublin (Irish) 117^ 2| 
 
 1176/. Irish, at exchange 115, pur- 
 chases a bill on London for British 1 022 1 2 2 
 Discount 24 days ^.3 62 
 Brokerage - - - . 1 O 6 
 Postage ----020 
 
 Total to be deducted - - - - 4 8 8 
 
 •Total to be received in London ^.1018 3 6 
 
 The 1000/. British will therefore have cleared 
 18/. 3s. 6d. by its journey; so that travelling ak 
 the rate of twenty-five returns in the year, it will 
 clear 45/. 8^. 5d. percent. ; but if at the rate of 
 thirty-six, 64/. l6s. 
 
 It is, however, impossible to attempt to state the 
 actual profits of stock employed in this trade. 
 The gain is composed of different parts arising 
 from different causes, and these for ever varying : 
 it dependa principally on the diiference of ex- 
 change, which is perpetually shifting ; much on 
 the skillj and something on the luck of the dealer, 
 I- 4
 
 152 ESSAY ON THE PRINCIPLE OP 
 
 who is to avail himself of these changes i it de- 
 pends also on the velocity with which his capital 
 travels. From twenty-five to thirty-six returns in 
 the year seem to be the limits of its activity. It 
 depends also very considerably on the proportion 
 which the bills drawn by persons out of trade bear 
 to those drawn by persons in trade. 
 
 Nothing but the books of the exchange- dealer, 
 nor even those without much investigation, could 
 furnish the necessary data to determine the pro-, 
 portion which these component parts of the ex - 
 change-dealer's profit bear to each other when 
 united. 
 
 In the annexed note are stated the various pro- 
 fits * which would result under each of the prin- 
 cipal circumstances singly by which it can be in- 
 
 * I. When the exchange is London oh Dullin 3 16 
 Dullin on London 115, 
 
 Produces a Profit at 
 the Rate of per 
 Cent, per Annum. 
 
 1. A capital travelliog at the rate of 25 returns s£. s. d. 
 
 in the year - - - - - 205 
 
 2. But if the drawers in London are none of 
 
 them in trade 23 13 6| 
 
 3. A capital travelling at Ihe rate of 36 returns 
 
 ia the year 2 I? U 
 
 4. H" &e drawers are not in trade - - - 34 2
 
 COMMEKCIAL EXCHANGES. 153 
 
 fluenced. For determining in what probable pro- 
 portion these different circumstances are combined 
 
 II. If the exchange of London on Lullin w ll6| 
 
 Dullin on London 115, 
 
 Produces a Profit at 
 the Rate of per 
 Cent, per Annum. 
 
 1. A capital travellbg at the rate of 25 returns £. s. d, 
 
 in the year - • - - - 12 1/ 6 
 
 2. If the drawers in London are not in trade - 34 10 X 
 
 3. A capital travelling at the rate of 36 returns 
 
 in the year - - - - - 18 10 9 
 
 4. If the drawers in London are not in trade - 44 13 9 
 
 III. If the exchange of London on Dullin is 1 17 2 3 * 
 
 Dublin on London 115 8 7' 
 
 1. A capital travelling at the rate of 25 returns 
 
 in the year - - - - - 16 15 1^ 
 
 2. If the drawers in London are not in trade - 38 5 10 
 
 3. A capital at the rate of 36 returns - - 24 2 7 
 
 4. If the drawers are not in trade - - - 55 2 , p§ 
 
 IV. If the exchange of London on Dullin is liy, and 
 
 Dullin on London 115, 
 
 1. A capital travelling at the rate of 20 returns 
 
 in the year • - - - - 23 13 6| 
 
 2. If the drawers in London are not in trade - 45 8 4 
 
 3. A capital travelling at the rate of 86 returns 
 
 JB the year - - - - -34 20 
 
 4. If the drawers in London are not in trade - - 64 16 O 
 
 * These rates are inserted as having actually been the 
 average for three months together. — See Appendix to the 
 Evidenccj pages 14 and 30,
 
 •154 ESSAY ox THE PRINCIPLE OP 
 
 in practice, a table in the Appendix*, No. I. 
 shewing the difterences of exchange between Lon- 
 don and Dublin for the last quarter of the last year, • 
 will give great assistance. 
 
 High as these profits may appear, they are as fair 
 as in any other commercial speculation. Nothing 
 can be more illiberal than the reflections which 
 have sometimes been thrown out against the 
 dealers in exchange. So long as the system of 
 communication between two parts of the same 
 vipiited kingdoin sha|l allow them to make above 
 30 per cent, by so innocent a transaction as send- 
 ing bills frorn one to the other, it would be in vain 
 to expect that they should not avail themselves of 
 such extraordinary good fortune ; but wherever 
 there is profit, there must be correspondent loss ; 
 and though the gainers may be perfectly satisfied 
 with such a system, the losers must be permitted 
 to incjuire into the expedience of its cpjitinu^ncq* 
 
 * The actual differences which have prevailed for six months 
 may be seen by a reference to the Appendix, No. I. and more 
 at large in the Appendix to the Evidence A 1 and A 2. By 
 those tables it will appear that the average difference for tliree 
 months together was Xl. 13s, Sd.} from the 2d of October 1803 
 till the lOth the difference was 3 per cent. ; from the lOth till 
 the 22d it was 2i ; it then fell to 1^ 3 from the 14th of No- 
 vember till the 22d there was a difference of 2 per cent. 3 froln 
 the 13 til to the 31st of December the difference was 2^ 
 and 2,
 
 f20MI»t«R^IAi 1?XCHANGES. J55 
 
 If the money conjjnunications between London 
 ^nd Liverpool were shackled with such a hea\^ 
 tax, it is impossible to doubt, that not only the 
 communications between the two places, but their 
 respective monied capitals, would be diminished ; 
 but if Liverpool owed a great debt, for which it was 
 obliged to pay interest in London "; if the prin- 
 cipal citizens of Liverpool spent their lives in the 
 metropolis, and carried on their business at home 
 by factors, and agents ; and if Liverpool was there- 
 by co;w/jfe//e(^ to support a monied commu7iifation 
 -ivith London ; die loss to Liverpool in this case 
 would be the more vexatiouSj and the gain of the 
 dealers in exchange the more certain, and the call 
 on the LegisljaturCj, to put an end to both, the more 
 imperious.
 
 ^5(5 E^AT ON THE PRINCIPLE OP 
 
 CONTENTS OF THE FIFTH CHAPTER. 
 
 GENERAL REMEDY FOR UNFAVORABLE EXCHANGES^ 
 
 The present Exchange b^twemt^teat BHtain and 
 Ireland has no Tendency td redrew itself-^Does 
 riot operate as a Boimti/ on Exports, and a Duty 
 on Imports — Necessity of seeking for a Remedy 
 --^Danger of temporary Expedients — Excess not 
 the necessary Consequence (yf the Restriction — 
 The Limitation of the circidatirig Medium the 
 specific Remedy for unfavorahle Exchanges — Ne-^ 
 cessity imposed upon the Bank of applying this 
 Remedy previous to the Restriction— This Neces-, 
 sity removed by the Restriction — The present and 
 past Principles and Conduct of the Directors op- 
 posed to each other — Modern Theory of Banking 
 suggested by the Restriction — -General Principle 
 of Limitation of the circulating Medium regu- 
 lating Exchange examined in Theory — Remark- 
 able Instances of its Application in Practice — In 
 Scotlarid anno 17 70 —In Ireland 1753— iVece^-^ 
 sity of the Directors resuming their former 
 Principles of Conduct. 
 
 If the preceding examination has been successful 
 in the investigation of the causes of unfavorable
 
 COMMBRCIAI- EXCHANGES. 157 
 
 exchanges in general, arid more particularly of that 
 which prevails against Ireland, it will not be dif- 
 ficult to discover the remedy of the evil. 
 
 It has, indeed, been surmised, tliat every un- 
 favorable exchange carries within itself the prin- 
 ciple of its own destruction. It has been pro- 
 nounced, that the present exchange against Ire- 
 land operates as a bounty of 10 per cent, on Ire- 
 land's exports, and ^ a duty of 10 per cent, on Ire- 
 land's imports ; that the consequence must be an 
 augmentation of Ireland's exports, and a diminution 
 of her imports, until at length the sum to be remits 
 ted to Ireland, in payment of the balance of trade, 
 shall be equal to her foreign expenditure. It was 
 on these grounds that we have been informed that 
 there were " no grounds for the apprehension that 
 a high exchange could ever be injurious to Ire- 
 land," and " that it was a symptom, and no unfa- 
 vorable one, of her situation." 
 
 It is not a little unfortunate for the persons who 
 maintain this theory, that the fact has hitherto 
 been diametrically opposite to what they would 
 lead us to expect. Ireland has now had some 
 years experience of the benefits of a high ex-» 
 change, and even of an excliange continually rising 
 in its rate ; yet, so far from its having augmented 
 her exports, her exports have remained nearly
 
 155 ESSAY ON THE PRlNCfPLB ^P 
 
 stationary* ; so far from diminishing her intportsy 
 her imports have continually increased." 
 
 When we see that an exchange so permanently 
 and greatly against Ireland has failed to produce 
 these effects, which have been held forth" as its in- 
 evitable consequence; and this, although it has; 
 been allowed to operate for such a length of time ; 
 the question naturally arises, " When may it be ex- 
 pected to fulfil the splendid promises which have 
 been made for it ?" It may be confidently answered. 
 Never. Of all the delusions which have been 
 propagated on this subject, this is, perhaps, the 
 greatest. The present exchange Offers no encou- 
 ragement to export, no discouragement to im- 
 port. ^ 
 
 It has been said, that as 100/. British can now 
 exchange for 118/. Irish instead of 108/; as for- 
 merly, it is a temptation of 10 per cent, to the 
 British merchant to become a purchaser in Ireland; 
 but if 1 18/. Irish can now purchase no more com- 
 modities in Ireland than 108/. formerly, what he- 
 comes of this temptation ? It is the cheapness of 
 Irish commodities alone which could tempt the 
 British merchant ; bull in this instance he -finds 
 nothing cheap but Irish Bank notes, The value 
 
 * Seej^ppendlx, Ko.llL
 
 ' COMMERCIAL J6XCHANGES. ISQ 
 
 of the commodities, as purchased in British money, 
 is not in the least affected. 
 
 1£ the circulating medium of Ireland has lost 
 10 per cent, as compared with gold, cattle, linen, 
 and English Bank notes, it will require 1 1 0/. Irish 
 to purchase the same quantity of any of these that 
 100/. Irish did before ; but the gold, cattle, linen, 
 and English Bank notes, will retain the same rela- 
 tive value to each other as if the Irish paper had suf- 
 fered no deprecia;tion. An example will make this 
 very clear. 
 
 Suppose that 108/. 6s. 8d, Irish were equal in 
 value to 1 200 yards of Irish linen, and that ex- 
 change is at par, 100/. English will be able to pur- 
 chase 1200 yards of Irish linen. Now if the Irish 
 medium loses one tenth of its value, 100/. British 
 will, indeed, exchange for 1 1 8/. Irish ; but it will 
 still exchange only for 1200 yards of Irish linen, 
 because the linen will then be no longer pur- 
 chasable for 108/. 6s. 8d. Irish, nor for less tlian 
 118/. Irish. 
 
 The fallacy originates from assuming -that th^ 
 Irish medium has retained its value, as compared 
 with ever}- commodity, except gold, silver, copper, 
 and English Bank paper ; whereas it is because it 
 has lost its value, as compared with every other
 
 l60 ESSAY OK V (THE^^filNCU'EB OOF 
 
 commodity^ -4hat tit-dso- loses its ivahie,.iajr cbm- 
 pared with thege^van uilij \> iiuiWj^^x:^, i,ii is-^iyji 
 ::.^- -- ■• ''. :-:.•. .Y3n;g -grnafitJiorii op o; :trniffija ojr 
 \? iButiSfeimy feel:. it-difBcult to conceive howj-aii 
 high- exchange- can fail to operate as a bounty, it 
 may be allowed to them, provided, they recollect 
 that-tiie caiise of that exchmige , has< -previously 
 operated as a duty to the same extent. If the ex^ 
 change makes Irish commodities 10 per cent, 
 cheaper to the English consumer, the depreciajtion 
 of the Irish medium^ had first made them 10 per 
 cent, dearer ; so that the bounty only countervails 
 the duty 5 the price therefore remains exactly what 
 it would have l[)een, had neither depreciation nor 
 exchmige taken place* 
 
 It has already been aditiitted, that an unfavorable 
 exchange, when real, tliat is, an exchange com* 
 iputed in the value of the precious metals, operates 
 as a bounty on exports, though never to a greater 
 extent than the expense of carriage of the precious 
 metals to the creditor country.: but for the reasons 
 already stated, it is in vain to expect such aia effect 
 from 'a nominal exchange ; that is, an exchange 
 computed according to the nominal value. of Jh$ 
 circulating medium of the country, as distinguished 
 from the quantity of the precious metals whicK it 
 •really con tarns or represents.. : ti-'.^.
 
 - CJOMMEUCIAL kXCHANGES. l6l 
 
 It will be in vain, therefore, to continue any 
 longer in expectation of what never can arrive, and 
 to submit to an increasing grievance in the un- 
 founded hope of its tending to redress itself. The 
 necessity of seeking farther for a remedy must be 
 apparent, and a remedy, not founded on a system 
 of expedients *, which can only tend to aggravate 
 the evil. 
 
 As all the difficulties in which Ireland Is engaged 
 have evidently flowed from the restriction, we must 
 naturally look forward to its removal as the final 
 remedy : but it will be necessary also to take into, 
 consideration, that the effects which the restric- 
 tion has produced have the remarkable property of 
 rendering its continuance a measure of necessity ; 
 it is necessary therefore to take into consideration 
 the probability of its removal being speedily 
 effected, as well as the desirable consequences which 
 would ensue on that event. 
 
 ; But as that consummation, however devoutly to 
 be wished for, may be still far distant, it certainly 
 should become a subject of inquiry, whether, during 
 the continuance of the restriction, it is absolutely 
 
 * T^e reader will find in the 5th and'l5th pages of the 
 Evidence, a remarkable instance of the fate of an expedient! 
 adopted on a similar occasion. 
 
 M
 
 fiecesfeary tliat it shtjuld'contitine the parent of so 
 rftuch mischief ? whether it is impossible to curb 
 its 6peratiolis ? at least, Avhethcr a system different 
 from that which is pursued might not prevent the 
 depreciation of paper through excess ? 
 
 It has already been observed, that so long aS 
 there was no restriction the circulating medium 
 could not be permanently excessive ; but it does 
 not follow that its excess must be the necessary 
 consequence of the restriction ; the restriction 
 permits excess, but does not compel it ; and it is 
 difficult to conceive any obligation which it im- 
 poses upon the Directors to issue a greater quan- 
 tity of paper than would circulate if no restriction 
 was imposed. 
 
 Previous to the restriction the Directors con- 
 sidered the run on them for gold as the criterion 
 of the proper quantity of paper which they 
 should keep in circulation ; that is, when the de- 
 mand oh them for gold was great, they considered 
 it as a proof that the quantity of their notes in cir- 
 culation ought to be reduced ; and they nevei* 
 failed immediately to contract their issues, and 
 consequently to diminish the amount of ^ the, (yr- 
 culating medium of the couiati-i^ . j,.. j^^j ^ y^, » 
 . mi^h-^ £C©mi,<-fi; Hob .
 
 COMMERCIAL EXCHANGES. l6S 
 
 Tbis demand on them for gold they attributed 
 to various causes ; sometimes to the quantity of 
 their paper being too great, sometimes to political 
 alarm, but generally to the unfavorable state of 
 foreign exchanges ; and so much attention did 
 they pay to this last cause of demand, that in 
 all cases of unfavorable exchange, conceiving that 
 the gold must be flowing out of the country, they 
 lessened their issues as a measure of precaution. 
 That such was the practice of the Banks previous to 
 the restriction is so well known, that it is scarcely 
 necessary to adduce particular proofs of it. 
 The reader will find it continually avowed in the 
 examinations of the English Directors before the 
 Secret Committees of the Lords and Commons in 
 1797, and still more distinctly by Mr. Colville*, 
 an Irish Bank Director, in his recent examination. 
 It is further assumed in the Report of the Select 
 ^Committee. 
 
 *' Such has been the natural practice of banks 
 " previous to the restriction. Mr. Colville states 
 " it in very clear and forcible terms as to the Bank 
 *' of Ireland. Prior to 1797 they limited the 
 *^ amount of their issues as exchange rose. If pru- 
 <** dence has not dictated such a course, necessity 
 
 * Pnge 100, Evidence before Select Committee. 
 M 2
 
 ^64 ESSAY ON THE PRINCIPLE OP 
 
 " would have compelled a dimlnutioB^ of jtMr 
 " issues, by diminishing the stock of specie, \vl;»icfi 
 '^ could only be replaced at a loss proportionate \o 
 *' the existing rate of exchange ; and your Com- 
 *^ mittee observe, that, in fact as well as in theory, 
 *' the effect of such practice always was and must 
 " be the redress of the unfavorable exchange*." .^ 
 
 The general proposition which the Bank Di- 
 l-ectors seem formerly with so much justice to have 
 admitted, is, that in everij commercial country the 
 limitation oj the circulating medium is the efficient 
 remedy for redressing its unfavorable exchanges. 
 In pursuing the line of conduct which this prin- 
 ciple suggested, the Directors acted for the benefit 
 of the country as much as for the safety of their 
 establishment ; the effect of their measures having 
 been most powerfully to second the operation of the 
 balance of debt in producing the means for its dis- 
 charge. 
 
 As the first effect of an unfavorable exchange, 
 arising from a balance of debt, is to create a de-^ 
 mand for circulating medium in the debtor country, 
 and in many instances actually to export it, it.ris 
 evident that it tended to limit the amount of the 
 circulating medium, by creating a demand for that 
 
 * Report of the Select Committee^ page 4.
 
 -COMMERCIAL EXCHANGES. 105 
 
 :inedium wliich could not be supplied. The effects 
 4i)f this scarcity have, already been fully examined *; 
 it is sufficient now to observe, that, were there no 
 bank, the principle by \vhich the balan,ce of debt, 
 and consequent unfavorable exchange,, are r^ 
 moved, is by the limitation of the circulating me^ 
 dium ^N'hich thev occasion. 
 
 , But it is obvious that a bank may entirely 
 
 -counteract this tendency by increasing the cir- 
 culating medium of the country in proportion as 
 it is demanded ; and it is so natural that they 
 should be called upon to do it, that whenever 
 
 • it wtve possible we should not be surprised if 
 such were constantly their conduct; but for-^ 
 tunately for the nation, before the restriction, 
 
 ^heir mterest, as a private corporation, most re- 
 markably coincided with that of the nation at large ; 
 whichj so far from allowing them to increase their 
 issues at such a time, compelled them most re- 
 markably to diminish them, and create a scarcity 
 or limitation of circulating medium much greater 
 than the balance of debt, or unfavorable exchange, 
 could otherwise have occasioned. The interests of 
 the nation and of the Bank, thougli requiring the 
 atloption of the same measure, that is, the limitation 
 
 * In the first chapter. 
 M 3
 
 t66 ESSAY O&r THE PRINCIPLE OP 
 
 of the circulating medium, were founded on dlf^ 
 ferent motives ; it was the interest of the nation 
 that the circulating medium should be scarce, ii^ 
 order to encourage and compel an increase of ex- 
 ports in lieu of money to discharge the balance ; it 
 was the interest of the Bank that their outstanding 
 notes should be few, in order to diminish the run 
 upon them for gold ; so far therefore from there 
 being any danger of the Bank counteracting the 
 efficacy of the balance of debt, the public were se- 
 cure that the Bank would facilitate its operations ; 
 for the balance of debt, if left to produce its own 
 effect, could limit the circulating medium only in the 
 amount of the debt to be paid ; but the operations 
 of the Bank limited it much more, perhaps to 
 double that amount ; and by the superior scarcity, 
 that Is, value of circulating medium which they 
 thus created, they redressed the exchange in a still 
 shorter time. 
 
 Previous to the restriction, when an unfavorable 
 exchange produced a demand for the exportation of 
 gold, the Bank were called upon to furnish it in 
 payment of their notes. The Bank immediately 
 were compelled in prudence to diminish the 
 amount of their notes in circulation, and this di-j 
 minution they usually effected by not re-issuing in 
 place of those paid in.
 
 . . CP^f^l^/^L ^XCH AXGES. ^ ^ 1 Gj 
 
 Jp: ^^ya^^fil^j^J^adJ^t{ecl^mJhe eyide^ that in 
 the ^vevitof ^ riyi pi) the Bank for gold their jiote? 
 ivould be reduced to at least double the amo.unt o^ 
 the gold they were called upon to pay j first, to the 
 amount of the gold paid ; and secondly, to ai^ 
 equal amount by the diminution of their loans or 
 discounts which their prudence suggested to thejn 
 to make. Thus there *' was a two- fold cause of 
 " the limitation of the Bank paper, where the ex- 
 ^'^ change was unfavorable ; the one, which took 
 ^^ place through the cancelling the notes brought 
 *^. in for cash which was demanded and exported, the 
 ^^^other the limitation of paper produced through 
 ^' the reductiou of the loaus of the Bank of Tre- 
 " land * ." 
 
 * Vide page 100 and 101. 
 
 This is also distinctly stated in the Report of the Select Com- 
 mittee ; - 
 
 **■ When exchange is sounfovorable to a country as to draw 
 f^ gold out of it, it is obvious, tliat for every guinea drawn out 
 ^* of the Bank an equal amount of paper must be dra\^n out of 
 *' circulation to be paid for the guineas. The re-issue of paper 
 *^: to jJbat amount must be prevented by the decrease of thp 
 f* stock of specie : the same cause will most probably induce 
 V the Directors to diminish their discounts ; so that the quart- 
 '.*' tity of paper becomes diminhhed in a still greater amoujil 
 .**^ than the gold drawh out of the Bank in consequence of the 
 ff unfavorable exchange." ' ,_, 
 
 Report of the Select Contmilkf, page 8. 
 
 M 4
 
 1 68 ESSAY ON THE PEINCIPLE OF 
 
 The farther investigation of the connexion that 
 exists between the rates of foreign exchange and 
 the amount of circulating medium is become of 
 more importance ; since the Banks, at least the Bank 
 of Ireland, now that the restriction is ialforce, ap» 
 pear to reject this principle in theory and practice 
 as decidedly as they used to assert it in both 
 before the adoption of that measure. 
 
 What was the practice of the Bank before the 
 restriction, in case of an unfavorable exchange, has 
 been already seen ; they immediately reduced the 
 amount of their notes in circulation. That the 
 practice of the Bank of Ireland is now the reverse 
 will not be disputed, when it is recollecced, that 
 although the exchange was 10 per cent, against 
 Ireland, they augmented their notes to fiyel times 
 their amount at the time of the restriction: 
 But this practice we find is entirely sanctioned 
 by the theory which they lately have adopted: 
 We are informed by one of their Directors :Jr; 
 that antecedently to the restriction the Di- 
 rectors were accustomed to limit their pape^jas 
 a means of lessening the drain of guineas occa^ 
 sioned by an unfavorable exchange; but that 
 *' as far as the guineas so drawn out went to pay 
 
 * Vide page 101, in a questjoiv-yto the Evidence. 
 X Evidence, page iOl,
 
 COIIMERCIAL EXCHAKGES. 16Q 
 
 " the balance against the Cbuntfy; 60 far they 
 "operated tothe.reduction of the exchange against 
 ** the country, by paying off so much of its debt; 
 *^ and so far only. '^ It appears then that they en^^* 
 tirely exclude from consideration the vahw^ zi)1ii6h 
 such reduction added to the circulating ineditim 
 ivkich remained, and either hold tiiat this addition 
 of value did not take place, or had no operation 
 upon exchange. Entirely consistent with this 
 theory are the opinions which one of the Directors* 
 afterwards expressed, *' that it is a great error, in 
 *^ judging of this difficult subject, to think that the 
 *ljextension of paper in Ireland has been a cause of 
 ** raising the exchange ;" but that his ^'^^ opinion is 
 " directly the reverse, inasmuch, that as far as the 
 ** circulation of paper has supplied the circulating 
 ** medium, it enabled the gold, 7vhich before stood 
 *^ in its place, to be exported out of the country, 
 *' and, as far as it ivent in weight and measure, -so 
 ** fear'it was a clear and decided cause of prevent'- 
 ** ing the exchange from getting to a higher pitch 
 ■** tlian it has hitherto attained ; and that so far as 
 ^* the Bank extends its notes, it further enables 
 " a greater drctin of specie to take place ^ and con- 
 **^se^acntly to strengthen the cause v/hich kwps 
 ^* dowm the rate of exchange." 
 
 ♦ EvklcncCj page 102.
 
 170 ESSAY ON THE PRINCIPLE pF 
 
 How far this exportation of specie is b^?i5cial 
 to a country, has been already sufficiently discussed 
 in the first chapter*. It is satisfactory, however, 
 to perceive, that the Directors are sensible that the 
 extension of their notes has had that effect. It 
 appears that doubts are entertained, whether the 
 issue of this paper preceded or followed the ex- 
 portation of the gold ; yet this seems perfectly im- 
 material. If (as is most probable) it preceded, the 
 consequence was to send the specie into exile ; if 
 it was subsequent, the operation was to prevent its 
 return : but on one point no doubt can be enter- 
 tained. When the rapid extension of the Bank pf 
 Ireland paper first took place, the exchange was 
 rather favorable to Ireland. In proportion as the 
 Bank has lent this species of assistance, the ex^ 
 change has become unfavorable, until at length, 
 when the extension of their notes was greatest, 
 that is, when, according to their present theory, 
 they had fully, ^^ strengthened the cause which keeps 
 " down the rate of exchange^'' it became above 
 10 per cent, against Ireland. 
 
 As there appears much reason to apprehend thafc 
 these new principles of banking, suggested by tlie 
 restriction, if continued to be acted on, may end 
 in the ruin of the country, a more particular ex-., 
 amination of them becomes necessary. 
 
 * Page 54. ;
 
 COMMERCIAL EXCHANGES. 171 
 
 Let US then consider both in theoi*}- and prac- 
 tice this important principle, fhat the limitation 
 of the circulating medium is the remedy Jor an 
 unfavorable exchange ; and this equally iviicther the 
 exchange is real, proceeding from a balance of debt, 
 or nominal, arising from depreciation of paper 
 through excess. 
 
 If the depreciation of paper through excess be 
 the cause of the exchange, it is so clear, that a 
 reduction of that paper must be the remedy, that 
 it is unnecessary to endeavour to make it clearer 
 hy illustration. But it may not be quite so obvious 
 why a similar limitation must be the remedy, where 
 the exchange arises from a balance of debt. Perhaps 
 the most correct view that could be taken of this 
 subject would be, to consider exchange genei-ally as 
 thecomparison of value betAveen two circulating me- 
 dia, and that when the circumstances * attending a 
 balance of debt had added a superiority of relative 
 value to the circulating medium of the creditor 
 country, the limitation of the circulating medium of 
 the debtor country, making it also more valuable in 
 proportion as it made it more scarce, removed its 
 relative depreciation. Or, to put it in another 
 light, when the superior demand for bills on the 
 creditor country has added to its circulating me- 
 
 * Arising from tlic practice of making the jaymcots by 
 tills of exchange.
 
 1/2 ESSAY ON THE PKINCIPLE OF 
 
 diura an artificiar value, the limitation ofthe.cir- 
 culating medium'^ of the debtor country, by ia-. 
 creasing the demand for it as well as for the other^ 
 operates a similar artificial increiise of its v^lue 
 until it finally becomes as valuable as the. other.; 
 that \Sy until exchange is reduced to par. 
 
 The manner in which a scarcity of circulating 
 medium, by adding to its value, encourages, or 
 rather forces the productions of the industry of a 
 country, has been already stated at length in the 
 first chapter, and it is therefore unnecessary here 
 to repeat it. It was there also observed, that it is 
 no refutation of this proposition, that ^yhen, by 
 artificial and violent means, the remedy is applied 
 in excess, it produces the opposite eflfects. The 
 commercial history of these countries affords some 
 remarkable instances of the successful application 
 of this principle in practice. . ^ ^ ^ 
 
 ■'■■IT nr\h\'_ 
 
 We are informed by the evidence of Mr. Mans- 
 field, a banker of Edinburgh, that soon after the 
 peace of Versailles, and until the year 1 770., the ej;- 
 change between London and Edinburgh .was five or 
 six per cent, against Edinburgh ; thai, at this time, 
 ;*.' the currency of Scotland was principally .paper^ 
 '^ and that to a greater extent than the natural 
 *' trade- of the cmmtry required. The chartered 
 *^ banks of Scotia ndf finding that they hM gtven'
 
 COMMERCIAL EXCHANGES. 173 
 
 ** Imprudent credit to bankers and their agents, 
 ^ who issued notes, they curtailed them very 
 '^ much ': that the over-issue of paper was prior to 
 */ tfte unfavorahle' state of tlie exchange, arid that 
 ** it was the cause of the system being altered ; 
 *' and he certainly thinks, that the over-issue of 
 *' paper was the cause of the high exchange ;" that 
 the chartered banks, finding it proceeded from 
 artificial means, determined to put an end to it : 
 that,' foT this reason, " they began to think of 
 " collecting as much funds as they could bring to 
 " London of their oivn ; those funds they lodged 
 ** partly with the Bank of England, and partly with 
 " their own bankers ;" and the banks then began 
 to reduce the rate of exchange, by giving bills on 
 London at a rate of lialf per cent, or one per cent, 
 under that of the day : that in the course of years 
 they reduced it to half per cent, against Edinburgh, 
 at which rate it has continued invariably ever 
 since * ; and that it never fluctuated even in the 
 convulsion which credit experienced in 1793, nor 
 at the time of the restriction in 1797 : that the 
 demand for hills on Lojidon, though great at first, 
 gradually decreased as the ■ exchange ivas reduced; 
 that this change of system was adopted in conse- 
 quence of there being more paper in circulation 
 than the situation of the country required, and 
 
 * The custom is to give bills on London, at forty days date, 
 ci siuht, which, is about hajf per cept.
 
 X74 ESSAY ON- THE PRlNCrPli* OF 
 
 that it had ike effect of diminishing the ^ttmitity of 
 paper circulation ; and " that no inconvenience of 
 " any kind has resulted from it, except the tempo- 
 " rari/ one of the banks having to provide fund* 
 *' in London at the commencement of it ; that, 
 " on the contrary, it has been productive of the 
 *' greatest good." 
 
 Mr. Mansfield adds, that he thinks there is a 
 balance of trade and remittances against Scotland 
 with England ; but " that he apprehends that a 
 •' mutual communication of trade may exist be- 
 *' tween the two countries, without creating any 
 ** exchange at alL'* 
 
 But it is not necessary to resort to Scotland for 
 a precedent of that conduct which ought to be 
 pursued in Ireland. Ireland may find in her own 
 history a still more remarkable instance of the 
 practical effects of ino-easing and contracting her 
 circulating medium. 
 
 We are informed by Mr. Colville, ^\ Irish 
 Bank Director, deputed from the Bank to the 
 Committee, that he " remembers perfectly well, 
 *' that, in 1753, the circulation of paper in Dublin 
 ^^ from the private bankers was so general and ex~ 
 ** tensive, that in receiving ^000 L there was not 
 << 10/. in gold at that time. I remember thadfe
 
 ^CoM^ERCiXL Exchanges. 17^ 
 
 w "exchange was near three per cent, above par ; 
 " the consequence was, that the bankers of Dub- 
 " lin, of whom there were as many as at present, 
 f if not more, were in competition with one ano- 
 " ther to send their specie over to London, artd to 
 *' get back bills at four per Cent, above par, bring- 
 ** ing in a clear profit to that extent. The conse- 
 " quence of this shewed itself in the succeeding 
 *' year : all the banks failed except Messrs. La- 
 "^ touche's house, and Sir W. Newcomen's ; and 
 *' these two banks paid off their entire paper. 
 " There foUoiced a total annihilation of Bank 
 '^ paper in Ireland at that time ; and I remem- 
 ** her it was said with triumph, that Ulster, 
 " the great seat of our linen manufacture, wa« 
 *' safe, because she had no such thing as Bank 
 *' paper in that province. But see how this bears 
 " on the question asked me : the consequences 
 " were, that exchange fell two or three per cent^ 
 *^ under par, and the whole circulation of Ireland 
 *' ivas turyied from paper into gold ; but the result 
 "was, that multitudes of people were ruined; 
 ** the convulsion was exceedingly severe ; many 
 " tenants threw up their lands, and there was no 
 ** person connected with the three southern pro- 
 " vinces of Ireland that did not suffer severely." 
 
 It is unnecessary to-pcyut out to the reader the en- 
 tire confirmation wliich this theory receives from the 
 3
 
 i7^ ESSAY ON THE PRINCIPLE OF 
 
 above important statement. When the circalating 
 medium was rendered too general and extensive 
 by the over-issue of paper, exchange was three per 
 cent, against Ireland ; but when the circulating me- 
 dium was almost annihilated, the exchange became 
 two or three per cent, in favor of Ireland. The 
 sudden reduction thus appears to have reduced the 
 rate of exchange above five per cent. So long as the 
 circulating medium of Ireland consisted of a greatejr 
 number of pounds than her commerce could em- 
 ploy, at the same value as formerly, so long their 
 value, as compared with English pounds, was 
 diminished, that is, the exchange was against 
 Ireland ; but as soon as great part of the Irish 
 pounds were annihilated, tlce remainder becoming 
 vahmble in proportion to their scarcity y not only 
 recovered their value, as compared with English 
 pounds, but had much the advantage in the com" 
 parison, so that tlie exchange became as much ia 
 favor of Ireland as it had before been against it *. 
 As the limitation of the circulating medium of 
 Ireland was unfortunately sudden and violent, 
 
 * It is obvious, that all who admit the accuracy of tliis 
 Important statement, for which we have acknowledged ouf 
 obligations to Mr. Colville, but who, nevertheless, continue 
 of opinion, that the balance of debt exclusively regulates the 
 rates of exchange, must conteiid, that the failure of the Irish 
 banks discharged a balance of debt wliich existed against the- 
 cbuntry, and, what would be still more extraordinary, created a 
 balance in its favor.
 
 , . CQMMESCIAI. EXCHANGES. 177 
 
 greftt^itfivkUuili palamlty ap|3ears to, have ensued; 
 buf it i[a\j3t,1*e€p«iesbeJ,.tliat«^./^'<^>^'^ tfw. imfavor- 
 
 limitation been gradual, and the effect; of a judi- 
 cious arrangement^ tlie exchangee wou|d egually 
 have been remedjedy while the attending niconr 
 veniencies would not have been occasioned. It is 
 tilso v.'orthv of remark J that, notwithstanding the 
 misery of the country, gold poured ijitp it :. -the 
 reader will recollect the theoiy of the first chapter, 
 and observe hovv much it is confirmed by this fact. 
 It was there observed that gold would flow into 
 every country, in proportion to the demand for it, 
 as certainly as it would leave any country in which 
 it could be dispensed with. It was for this reason, 
 it was asserted, that the removal of the restriction 
 would cause the gold requisite for circulation to flow 
 into the country; and it was for this reason, it 
 was contended, that the balance of debt could 
 never be permanently favorable or unfavorable to 
 any country. 
 
 It seems uftheci^ssary to endeavour farther to 
 illustrate the , principle, ,tl)at the . {imitation of the 
 drculocting mediuiii. ?> the .speoijic remedy, for an un- 
 favorable eacch&n^e ; or ta dwell on' tiie necessity 
 of the Directors of the Bank of "Ifeknd- reswmin^ 
 those piinciples of conaucf, hy^ which ' tjie^ wefe 
 guided before the restriction, but whicK they' liai'e 
 
 N
 
 178 ESSAY ON THE l^INCIPLP, OP 
 
 abandoned since the adoption of that measure -, 
 and to which, by their own confession *, they 
 must again resort whenever that act shall be dis- 
 continued. 
 
 * Pages 9J and lOl.
 
 COMMERCIAL EXCHAifGES, 179 
 
 CONTENTS OF THE SIXTH CHAPTER. 
 
 APPLICATION OF THE. REMEDY IN IRELAND. 
 
 Difficulty of limiting the circulating Medium of 
 Ireland — Doubts ivhether the mere Limitation of 
 the Banh of Ireland Paper could effect it — Mode 
 in which the Directors of the Bank of Ireland 
 might possess themselves of the requisite Power — 
 Examination of the Remedy proposed by Lord 
 King — Probable Effects of its being adopted — 
 Light in which it is regarded by the Bank Direc- 
 tors — Their Objections co?isidered— Opinion of 
 the Select Committee as to these Objections — The 
 Expense ivould be inconsiderable and temporary 
 —-^Instanced in Scotland-^ — Criterion which it 
 would afford to the Directors of the proper Exten- 
 sion of their Issues — Cojisequences of too extensive 
 Discounts — to the Merchants — to the Public — 
 Total Change of System introduced by the Re- 
 striction — The Principle of the Remedy proposed 
 by Lord King, fully adopted by the Select Com- 
 mittee — Mode in ivhich they propose to carry it 
 into Practice — j^dvantages and Disadvantages 
 of this Plan — Examination of the Consequences 
 that might result from the Banh Directors apply^ 
 N •!
 
 ISO ESSAY ON* THE PKINCIPLE OP 
 
 . ing these new Powers according fa their present 
 Principles. 
 
 In the last chapter it has been attempted to 
 establish the necessity of the Directors of the 
 Bank of Ireland resuming those pri'^ciples of con- 
 duct, which they used to pursue previous to the 
 restriction ; but which they have abandoned since 
 the adoption of that measure. 
 
 The Select Committee, fully convinced of this 
 necessity, have expressed their opinion in terms as 
 decided as language can "afford. " Your Com- 
 ^^ mittee do, in express terms, declare their clear 
 *^ opinion, that it is incumbent on the Directory of 
 " the Bank of Ireland, and their indispensable duty, 
 ** to limit their paper, at all times of cni imfavor- 
 *' able exchange, during the continuance of the re- 
 *^ striction, exactly on the same principle as they 
 '^ u'ould and must have done in case the restriction 
 *' did not exist; and that all the evils of an high and 
 " fluctuating exchange must he imputable to them 
 " if they fail to do so*.'' 
 
 It appears, however, that some peculiar diffi- 
 culties occur in considering how this necessary 
 limitation can at present be practically carried into 
 effect in Ireland. If the limitation of the circu- 
 Jating medium of England slwuld be thought ex- 
 
 * Report of the Select Committee^ page 19.
 
 -&OMMERCIAL EXCHANGES. 181 
 
 -pedient, the Bank of England, by the control it 
 possesses, could easily effect it ; but it is not ascer^ 
 tained that the Bank of Ireland at present possess 
 any such povvei* ; and even though that Company 
 uere now to resume its former principles of con- 
 duct, yet, if unaided by farther regulations, some 
 doubt may be entertained whether the complete 
 limitation of the circulating medium of Ireland 
 would be the effect of such measures. Ireland is 
 at present inundated with circulating medium, from 
 three distinct sources almost unconnected with 
 each' other — the Bank of Ireland, the private 
 bankers, and the loans from England. 
 
 An important difference must, however, be 
 observed between the effects that they pro- 
 duce. The loans supply a circulating medium, 
 which can obtain value in another country * ; the 
 medium issued by the Irish banks must stay at 
 home. The ■ first, therefore, goes forth in ex- 
 change for imports, the other becomes depreciated 
 in proportion to its excess. The first produces the 
 same effects as have been attributed to a surplus 
 quantity of the precious metals poured into a 
 country, diminishing iUs industry and swelling its 
 imports ;J: . The second, : operating a nominalin- 
 
 * In whatever shape tlie loan is remkted from England, it 
 jaiust be able to obtain value there. .<*» 
 
 ] See page 100 and 101, aotea. -er, 
 
 n3
 
 182 ESSAY ON THE PRINCIPLE or 
 
 crease of the quantity of circulating medium, pro- 
 duces a corresponding diminution in the value of 
 any given portion of it; so that Ireland appears 
 to have the rare ill fortune of uniting in her 
 present system the various and opposite mischiefs 
 which ensue in Spain, on the importations from the 
 mines *, and which were experienced in France 
 from the emission of assignats^ 
 
 The reason that the Bank of Ireland does not 
 possess a control over the circulating medium of 
 the country is, that, at present, the holder of the 
 note of a respectable private banker has no suffi-t 
 cient inducement to call upon him to exchange it 
 for a note of the bank of Ireland ; the one is to 
 him just as good as the other ; and, therefore, 
 there appears some reason to apprehend, that if 
 the Bank of Ireland were at present greatly to 
 diminish their issues,, the consequence might be a 
 proportionate extension of private paper, to fill up 
 the void. In order, therefore, to possess them- 
 selves of the same salutary control as the Bank of 
 England exercises in this country, the Directors 
 of the Bank of Ireland must create a sufficient in- 
 
 * Vide page 101, antea. Mr. Hume has endeavoured to 
 refute the opinion, that the poverty of Spain and Portugal rs 
 attributable to their importation of gold and silver. He has 
 endeavoured to account for it by the folly of their political and 
 religious establishments j but this does not prove that the ujj-, 
 jr^atural influx of gold and silver has not also its operation.
 
 *e COMMERCIAL EXCHANGES. 183 
 
 ducement to tempt the public to prefer their paper 
 to that of private bankers. It will be found that 
 the present situation of Ireland affords thenri an 
 opportunity of creating such an inducement, with 
 perfect safety and great advantage to their institu- 
 tion, and at the same time with the greatest bene- 
 fit to the public. 
 
 It is obvious, that if the Bank of Ireland were 
 to pay their notes in Bank of England notes, 
 or, which is the same thing, in bills on England 
 at par, when the exchange is eighteen, such an 
 operation would immediately add ten per cent, to 
 the value of their notes in circulation ; that is, 
 their notes would become ten per cent, more valu- 
 able than those of the private bankers. The in- 
 evitable consequence must be a universal call on 
 the private bankers, for payment in Bank of Ire- 
 land notes. Any person possessed of a private 
 banker's note for 100/. which would then be equi- 
 valent in value to about g\l. of Bank of Ireland 
 notes, would immediately call upon the private 
 banker to pay him 1 00/. in Bank of Ireland notes, 
 because he would perceive that he should gain Ql. 
 by making the demand. This call on the private 
 bankers would be made not merely by those who 
 wanted to remit to England, but universally. • The 
 t<ame cause that formerly produced a run upon the 
 banks for gold, whenever tjie paper of the coun-
 
 184 ESSAY ON THE PrvINCIPLE O^ 
 
 try was excessive, would now create a simiiar de- 
 rnatld for pa}iTient in Bank of England, or, which 
 tvould then be the same thing, in Bank of Ireland 
 notes. In the present circumstances of Ireland, tho 
 convertibility of her paper into Bank of England 
 motes, would operate in the same manner as formerly 
 the convertibility into gold ;, that is, produce a de- 
 mand for the conversion, so long as the circulating 
 medium continued excessive: and as, formerly, 
 in consequence of th^ demand, the bankers were 
 forced to contract their issues to provide for their 
 safety ; so, in this instance, the private bankers 
 possessing no means of commanding Bank of Ire- 
 land-notes,- in pipportion to their excessive issues, 
 must instantly contract their paper, in order to 
 avoid inevitable bankruptcy. The Bank of Ireland, 
 by this simple operation, would at once become 
 possessed of such indisputable superiority, that 
 they might control the circulating medium of Ire- 
 land, without a rival. 
 
 It was first proposed by Lord King in the House 
 of Lords, that a clause should be introduced into 
 the Bank Restriction Bill, obliging the Bank of Ire- 
 land to pay their paper in notes of the Bank of 
 England. 
 
 This measure, founded in the strictest justice, 
 has since been fully adopted in principle by the
 
 Commercial exchanges. 185 
 
 Select, Committee : in one respect, however, it 
 appears that its consequences would be materially 
 different from those which were originally ex- 
 pected from it. Instead of compelling the Irish Di- 
 rectors to diminish their issues, it might enable them 
 eventually considerably to augment them ; and it 
 seems not to be the least of its recommendations, 
 that it would convey to the national Bank that con- 
 trol which it ought to possess, but which it does not. 
 The Bank of Ireland, at present, is one of the many 
 competitors for the supply of the Irish market ; and 
 although their issues to the amount of three mil- 
 lions may, in their present situation, be more than 
 fall to their share, yet it does not follow, that, if 
 their competitors were destroyed, three millions 
 would then be too great a proportion. The Bank 
 of Ireland is by rriany supposed to supply but one 
 half of the Dublin market : if those bankers, who 
 at present supply the rest, were, like the bankers 
 of London, to find it impossible to issue notes in 
 competition with the national bank, the Directors 
 of the Bank of Ireland would find not only an 
 opportunity, but a necessity, greatly to augment 
 their issues, for the demands of Dublin alone. 
 
 It is much to be regretted, that the peculiar 
 principles which the Directors of the Bank of 
 Ireland appear to have adopted, in judging of this 
 question, should lead them to consider this mea-
 
 J 86 ESSAY ON THE PRIN'CIPLE OF 
 
 sure in a different light. So far from admitting 
 the advantages that would result, either to the 
 public or to their establishment, they appear de- 
 cided in opinion, that the consequences of such 
 a measure would be equally efficacious " in de- 
 " stroying the exchange and the Bank together." 
 
 They have formed this conclusion on the un- 
 founded assumption, that an enormous balance of 
 debt exists against Ireland * ; that the present un- 
 precedented exchange is the necessary consequence 
 of this balance ; and that the effects of the pro- 
 posed measure would be to compel the Bank of 
 Ireland to pay out of their own funds, both now 
 and hereafter, the amount of the exchange on all 
 sums to be remitted to England ; an expense to 
 which they witli reason consider their funds as 
 inadequate; a remedy which must be temporary if 
 adopted, and which, when at last the Legislature, 
 convinced of their mistakes, should relieve the. un- 
 fortunate Bank, sinking under its hardships, would 
 permit the exchange to return with aggravated seve- 
 rity, more violent by having been unnaturally re- 
 pressed. This reasoning resting solely upon the 
 fact of an enormous balance of debt existing against 
 Ireland, a supposition which has been most fully 
 disproved; it seenis unnecessary more minutely to 
 
 - •* Even if this were the case,, tjbte directors would not be left 
 without a rpniedy, . See Chap,,V, .
 
 COMMERCIAL EXCIIAXGES. 187 
 
 reply to it. It must be confessed, however, that it 
 is very natural that the Directors should cling to 
 their conclusion, even after the destruction of the 
 premises from which it is deducedj since, if no ba- 
 lance of debt exists against Ireland, the depreci- 
 ation of their notes can no longer be disputed. 
 
 Another objection on which the Directors appear 
 to lay no small stress, is the difficulty of creating 
 the necessary fund in London on which to draw, 
 and the injustice of calling on them to be at what 
 they represent as so enormous an expense. Have 
 the Directors then so soon ceased to consider it as 
 a favor to be released from the fulfilment of their 
 engagements ? and do they already consider the 
 non-performance of their promises as among the 
 privileges of their charter ? Where are those funds 
 which formerly used to defray the " great expense 
 and inconvenience" of supplying them with gold*? 
 and why should it be more expensive now to pro- 
 cure credit in London than formerly to procure 
 guineas ? 
 
 * Anno J794, the expense of purchasing bullion amounted 
 
 to - - - ' " j£ .422,012 
 
 Anno 1795, to 214,389 
 
 Anno lygG, to 230,091 
 
 Anno 1798, to 23,170 
 
 Page 63, Appendix to the Evidence. 
 Qaery, the present application of those funds which for* 
 jncrly were employed for the purchase of bullion ?
 
 188 ESSAY ON THE PRINCIPLE OP 
 
 The Select Committee in their Report see none 
 of those difficulties which appear to excite the 
 alarms of the Directors ; on the contrary, they 
 declare*, that " the objection which has been 
 " made to this proposal is the difficulty and ex- 
 " pense to the Bank of Ireland, which would attend 
 *' the procuring a fund in London on which to 
 " draw. On this your Committee observe gene- 
 " rally, that neither the difficulty nor the expense 
 *' attendant on this measure would be so great as 
 ^'^ that to which the Bank, by its constitution, is 
 *' necessarily subject at all times, ivhen not protected 
 ^'- hy a restriction^ from performing its engage- 
 *^ ments ; and that whatever funds the Bank for- 
 *' merly applied, or intend again to apply, on the 
 ^'^ removal of the restrictiori, to provide for the dif- 
 ^^ ficulty and expense of providing a supply of gold, 
 *f 77iipht in the interim be applied to the procuring of 
 " English Bank notes. The evidence of Mr, 
 *^ Winthrop points out the practicability of obtain- 
 " ing a suffixcient supply of Bank of England notes 
 " with such a fund ; his expression is, * that the 
 *' Bank of Ireland, or any person, may procure 
 *' Bank notes to any extent^ if they will pay for 
 " them,'" 
 
 But the expense of providing this fund would be 
 neither great nor permanent ; at first, no doubt^ . 
 
 * Pages 15 and iQ, Report of the Select Committee. -^ ■_..>.
 
 COMMERCIAL EXCHANGES. 1 8C) 
 
 there would be a great demand on the Bank lor 
 bills on England; but as soon as the circulating 
 medium of Ireland had been reduced within proper 
 bounds the demand would cease ; and the Bank of 
 Ireland note becoming as valuable as the English 
 bill, no calls for payment would be made on spe- 
 culations of the profit of making remittances to 
 England ; and it is probable, that those who had 
 occasion really to remit would do it through the 
 medium of bills purchased on 'Change, and not 
 through the agency of the Bank, since it is obvious 
 that the bills on 'Change would necessarily be sold 
 at a price rather less than that demanded by the 
 Bank ; for if such a regulation was adopted, it 
 could not be expected that the Bank would give 
 bills exactly at par, but reserve a small percentage 
 to themselves as commission. In short, when 
 the rates of exchange should be once reduced, the 
 regulation would cease to be attended with loss, 
 •and might be made even productive of profit. That 
 such would be the consequence, is fully proved in 
 the ex.ample of Scotland. The regulation pro- 
 posed is exactly similar to that adopted in that 
 country, and referred to by Mr. Mansfield in his 
 valuable evidence. The Bank of Ireland are called 
 on to act on no new theory. The Bank of Scot- 
 land have already, at their own hazard, tried the 
 experiment, and fcuid, as they deserved, the ex- 
 pense trifling, and the success complete. 
 4
 
 igO ESSAY ox THE PRINCIPLE OF 
 
 If the Bank of Ireland were to adopt a similar 
 measure, it would be attended witli this farther ad* 
 vantage, that it would afford them a criterion 
 similar to that which they formerly possessed, by 
 which to judge when the circulating medium of 
 the country was sufficiently extended. The de- 
 mand for bills on England, so far as the notes of 
 the Bank of England were not depreciated, would 
 admonish them to contract their issues in the same 
 manner as formerly a run on them for gold. 
 
 The demand on them for discounts, even under 
 such circumstances, would probably become more 
 pressing than ever ; but they would then once more 
 become sensible, that the demand for discounts is 
 not the criterion by which they should regulate 
 their issues. It has already been observed, that 
 the interests of the persons obtaining discounts, 
 and of the public, are irreconcilable. The greater 
 the amount to which a merchant can obtain dis- 
 counts, the more his trade is extended, and Jhis 
 wealth augmented ; but the discount has a two- 
 fold operation : after having added to the capital 
 of the merchant, as soon as it is by him sent into 
 circulation, it increases the amount of the cir- 
 culating medium of the country ; and if already 
 •there is a sufficient quantity, that is, if specie is 
 equally valuable there as in other countries, any ad- 
 dition to it must produce excess and consequent
 
 COMMERCIAL EXCHANGES. IQI 
 
 depreciation * . Before the restriction the banking 
 system seems to have acted as a third power to ba- 
 lance these opposite interests of the mercliants and 
 of the public. The bankers granted discounts to 
 tlie merchants, let us suppose according to their 
 demand ; but the moment their facility became 
 prejudicial to the public, the run upon them for 
 gold which ensued compelled them to contract 
 their issues, and consult the interest of the public 
 as much as they had before considered the ad- 
 vantage of the merchants. 
 
 The public had thus a remedy in their own 
 hands, by which they were secure that the interest 
 of the merchants never should prevail. 
 
 This system has been subverted by the Bank re- 
 striction, and the equilibrium entirely destroyed. 
 By taking away the possibility of a demand for 
 gold, it has deprived the public of their defence, 
 and committed them to the care of the bankers : 
 it has at the same time changed the interest of the 
 bankers, and rendered it the same as that of the mer- 
 chants. The interest of the bankers formerly was 
 to preserve the equilibrium between the two par- 
 
 * It is admitted that the puWic receives a benefit as well as 
 aninjury ; the wealth of one of its members is increased j but 
 the injury is so infinitely greater than the benefit, lliat it is un- 
 necessary 10 take the latter into calculation.
 
 192 ESSAY ON THE PRINCIPLE OP 
 
 ties ; it is now their interest, if not their policy, to 
 unite with one to oppress the other. Such then 
 have been the effects of an act to suspend the per- 
 formance of engagements. Having deprived the 
 public of the defence they possessed, it has com- 
 mitted their interests to the protection of a guar- 
 dian, and then tempted liim to betray them. 
 
 But supposing the Directors were to regu- 
 late their issues, not by the demand - for dis- 
 counts, but by that for bills on England, would 
 they have done their duty when they had con- 
 tracted them until the demand ceased ? Certainly 
 not. If they perceived that the Directors of the 
 Bank of England had permitted their paper to de- 
 preciate*, they should contract their issues till the 
 ■exchange was favorable to Ireland, in a rate equal 
 to the depreciation of English paper : the Irish 
 Directors would then by their conduct exhibit a 
 more convincing argument against the consolida- 
 tion of the tv/o Banks than they have yet been able 
 to adduce* 
 
 It is admitted that this regulation was attended 
 witli loss in the first instance. In Scotland it cost 
 about 10,000/. ; in Ireland, if it were to cost ten 
 times that sum, it would be a small sacrifice for the 
 
 * See page 127, antea.
 
 COMMERCIAL EXCHANGES. 1 93 
 
 Bank to make to a public to which they are so 
 much indebted : the Bank should consider its past 
 gains, as well as its future loss, and place their 
 increased dividends and bonus in the scale against 
 the expense to be incurred. 
 
 The Committee, fully adopting the principle 
 that the limitation of Ireland's circulating medium 
 is the remedy for her difficulties, and that the most 
 eligible manner of carnying this into effect at present, 
 is by making the Bank of Ireland notes convertible 
 into those of the Bank of England, have proposed 
 a mode of putting it into practice, which obviates 
 every objection of the Bank of Ireland, removes 
 from their establishment all hazard and expense, 
 and demands from it nothing but its trouble, and 
 for that it is to be well paid. 
 
 The Committee have proposed, that whatever 
 may be the expense of providing the fund in 
 London, it should be thrown upon the revenue. 
 This may to some appear too generous to the 
 Bank: it certainly is a sacrifice, as well as an in- 
 dulgence ; but the expense will be trifling and 
 temporary, and among all the sacrifices which the 
 public has made for the Bank need scarcely be 
 esteemed an additional favor. A considerable part 
 of the loan still remains to be transmitted to Ire- 
 o
 
 ,^p4 ESSAY, -o;^.^^i|: prin^p^Xji^^ op 
 
 lap^d^^ it ^ prpposed* to lodge this in the Bank of 
 Engla|i3d to th^ credit of the Bank of Ireland, and 
 t|mt the Bank of Ireland should give to the Trea- 
 sury of Ireland a credit for the amount at an ex- 
 <^ange little higher than par. Here then is ^ 
 fund for them on which to draw, and which, by 
 proper management, must reduce the exchange to 
 par ^ above which if it were to rise again, the blame 
 must be solely imputable to the Bank of Ireland. 
 
 -Bin isqo'-q 
 , Yet it must be confessed that this remedy, 
 
 though its success appears certain, if the fund is 
 properly managed, is liable to one objection, from 
 which the measure, of making the Bank/)f Ireland 
 provide, the fund at their own expense is ex- 
 empted. 
 
 The latter would necessarily compel the Direc- 
 tors to diminish their notes, and along with theiij 
 Jthe circulating medium of Ireland : the forme?, 
 ^though it gives them every opportunity of doing ity 
 does not make the measure a matter of necessity ; 
 so |;hat if the Directors should continue to supply 
 Jrelaiid with an increase of circulating medium to 
 discharge an ideal balance of debt, or to relieve 
 what they conceive to be her distresses, such ^ 
 cpnductwQuld not only defeat the purpose of th^ 
 
 io 2a30.>Lp 5£ • . , ■-. '- ^,„ - ■ ■ . . - 
 
 * See the Report of the Committee, page i?. 
 
 5 "
 
 tteiSdfk^fcufadci^ eMiietv 3ifficulties to Ireland's 
 situation. It is probable tliaf -tHe'^Legislature; 
 should they adopt the suggestions of the Com- 
 ififtte^/Svill talce %oine ni^sme oF j)recautibA^td 
 prevent the possibility of such a misapplicaTKm of 
 their bounty. The most'obvious^ security '^eems 
 ibH^j that, ^ft^rlidvitig in the fiVst instance paid 
 the expense of providing the fund out of tlie re- 
 venue, the Bank should be obliged to continlte it 
 at their own : it is obvious that, with proper ma- 
 nagement, they need never !ncur the slightest ex- 
 pense on that account. ■ • -i: 
 
 It may not oe improper, however, to consider 
 what would be the consequence of the possible con- 
 duct of the Bank being in possession of this fund, and 
 following the suggestions of the Committee, so far 
 as paying their notes by bills on England at par, 
 yet permitting the eirculating medium of Ireland 
 to" continue at its present excessive height. Thie 
 'exchange would certainly be kept down to par; for 
 'a^ long as the Bank gave bills on England, it could 
 Wot rise, but other mischiefs would ensue ; in com- 
 parison to which those of the exchange are trifling. 
 '*nie'first: alftl^rrtcik C)bvi6^§"dTfe' of ' sufch a pro- 
 i:e(Sdirig ''^^dni'd' DC to'cdnfer on4he'pap'er cFrcu- 
 iating medium of Ireland a power of procuring 
 value out of that country.; and as all the excess of 
 circulating mediuih in' every co\intry has an ine-
 
 Ipb ESSAY ''on ¥h\ '^I^WMe op 
 
 sistible tendency to flow but of it if poisible*, all 
 that propo|"tion of Ireland's circulating medruin 
 which is excessive would be exchanged at the Bank 
 of Ireland for bills on England, and go to England 
 in exchange for articles of import ; the imports of 
 Ireland would therefore be increased, in the first 
 instajice, to the amount of that excess : but the in- 
 crease of imports would not stop here ; for as we 
 are at present supposing that the Bank of Ireland 
 continues to permit the circulating medium to main- 
 tain its present height, every Irish note (whether 
 Bank of Ireland or private banker's is perfectly im- 
 material :|;) that was exchanged for bills on England 
 would have its place immediately supplied by a new 
 
 * Where the circulating medium is of the precious metals, 
 on the first excess of circulating medium, they leave the 
 country } but where it has been of Bank paper, we know from 
 experience, as well as i-eason, that it has hitherto been obliged 
 to stay at home ; and it would be the extraordinary and novel 
 operation of the system here supposed to create a possibility of 
 that Bank paper going abroad. 
 
 X The demand for bills on England becoming universal, the 
 holdeVs of Bank of Ireland notes would apply them to that pur- 
 pose, and even the holders of the notes of private bankers would 
 find the same facility j for to suppose that the private bankers 
 should experience any difficulty^ would be to suppose that tlie 
 Bank of Ireland were exerting themselves to check the amount 
 of circulating medium. The happy eifects of such a system on 
 the profits, both of the Bank of Ireland and of the private 
 bankers, wouM be inconceivable; but the ruin of the country 
 would be tlie fatal purchase of their gains. 
 
 3
 
 COMMERCUL _^EXCHANGES. IQ7 
 
 one,which would follow in the tfack of its predecessor, 
 like it to be converted into bills on England, that is, 
 into increased imports into Ireland. 77/e increase 
 of imports would this become Utercilly iJide/inite { arid 
 if we should suppose it possible that such a system 
 could be permitted to continue, its consequences 
 must be such as to baffle all calculation. The in- 
 crease of imports could then be checked only by 
 one of two circumstances, either by the failure of 
 the fund in London, or by the Bank renouncing 
 those principles on which they have lately acted ; 
 but there might be reason to fear that such would 
 not be the consequence : for, according to the 
 theory which their Directors avow, fully sensible 
 of the mischiefs of these increased imports, they 
 would attribute them to another cause ; and so far 
 from suspecting that their own conduct was the 
 sole cause of such destructive extravagance, they 
 would continue to increase their issues, by way of 
 enabling Ireland to discharge the immense debts 
 which they must suppose she was contracting ; 
 thus applying as a remedy the aggravated cause of 
 the disorder. 
 
 The ejjtcts of endowing the paper of Ireland 
 with a power of exchanging for articles of import * 
 
 * An opinion has been expressed^ that tiip preseijt exces- 
 sive circulation of Ireland increases her imports j but surely a 
 little consideration must shew, tb^ jivilmever value it may 
 O 3 ..iij:^. .t:
 
 ygS, ESSAY , :pi^. THE PKlIfClPLE OP 
 
 woiild JulUtspteiyi fali upori the industry of the 
 country, ^i'IlM^, profits oi the operation of adding 
 ten per cenlv. to its vtiUie would accrue exclusivelyt 
 to the issuers t, the; Jmnien§e,^4:^e^^(?^Qf it wppI4[ 
 he daefi'ayed by th^ reyeaujs. . lO-gaBb on al a-isdt 
 
 Among all the errors of the mercantile system, 
 that of ^fantrnf ,' i^lte'ritionaHy^ > a §otfnty itpOrl ' iih- 
 j)orts can certainly no where he discovered ; yet 
 that theory never proposed nor even conceived a 
 bounty tipon exports so efficacious ^s >vou.ld; l^e 
 the operations of this measure upon the imports^ 
 Ireland would then present the new phenomenon 
 of a nation burdening herself with taxes^ and even 
 horrowing millions from another country, for thes, 
 purpose not of augmenting her revenue, but of,, 
 squandering it in bounties upon extravagance and 
 profusion. - ' -'"' ' ^'^i^^y^_ i- «< -^^ 
 
 If the expense of supplying the treasure sufficient 
 for such powerful destruction was to be defrayed 
 at the expense of the destroyers, nothing need be 
 apprehended from their measures. If the Bank of 
 Ireland should be obliged, at its own expense, to 
 defray the expense of supplying the demand for 
 bills on England, they will contract the circulating 
 medium until the demand sl>^- cease-, .j The ^o^n- 
 
 possess within the coutrtfy, it "{^^ |)r6Cut«:nb«B" Vithtmt r if 
 sent into any other, it might indeed increase Ireland's exports^ 
 but by no possibility her imports.
 
 CoMJVIERCill llXCia^'GES. 199 
 
 mittee propose that the nation shall pay the first 
 e^ipense, whatever it may be. If any future ex- 
 pense ensues, it must be the fault of the Bank of 
 Ireland ; and if they are to pay for their errors^ 
 there is no danger of their omitting to correct' 
 them *. 
 
 * It would swell this work too much to enter into a detailed, 
 refutation of various other remedies which have been proposed 
 for tlie exchange against Ireland, I shall briefly notice the- 
 three following : 
 
 1st, A tax upon the absentees, sufficient to send thdm-air 
 home to their country. — Not to dwell on the impolicy as w-eli;.a$ 
 injustice of such a measure, if the principles of this Essay are 
 admitted, it will be evident that it could have no effect upon the 
 exchange, for the exports of Ireland would be diminished by 
 the amount of their rents ; but even if such were not to be tlie 
 result, still their return could by no possibility add t6-£he: 
 amoant of silver represented by the too numerous bank 
 jiotes of Ireland j and consequently could not convey to them a 
 power to procure either more linen, more gold, or more English 
 notes than at present. ,.v.-;' * 
 
 2dly. It has been proposed to remit the loans "to Ireland in 
 English notes, to be paid at par by the public offices iri theii' 
 various disbursements. —-Ireland would then'j-ossess tVo circu-.. 
 lating media, equal in nominal, but difterent, in intrinsic, Value j. 
 and tlie consequence must be the same as tJl^t:^yl)ieh QY<y,h(i^; 
 ensued in such circumstances — the less valuable would expe^ 
 the other. A nation whose currency is in a de^l-aded cdS'ri, ' it 
 it issue a new coinage, without calling iil tlieH61fti~\Hil fihd ' 
 the good coin instantly disappeafr :> 'M.mBstJiti^iifthSanknoteai 
 issued at par in Ireland, so long as her circulating medium is 
 excessive. The issue of a jQew)CoiB3g©iC{»m){|tfa4dvg«>i4to ( 
 light and worn guineas. For the\iiime roason, tl^e,;i^tme ;«f>,; 
 O ,4^)i\<\vi r.ul xJilidi<--:oq Oil \d iud
 
 200 ESSAY ON COMMERCIAL EXCHANGES. 
 
 English notes at par in Ireland could not add to the gold re- 
 presented by Irish Bank notes, depreciated through excess. 
 Such a regulation, therefore, would produce gain to the for- 
 tunate persons who were paid in English notes j but could have 
 no effect upon the exchange. 
 
 3dly. It has been proposed to consolidate the Banks of Eng- 
 land and Ireland. — ^This would indeed destroy the exchange j 
 but who ran foresee its other effects ? It is, however, scarcely 
 worth consideration, as the evidence fully proves that it is to- 
 tally impracticable 3 neither party will consent. It appears, 
 liowever, tobe equally ineligiWe ;■ it is a permanent measure 
 for a temporary evil. If the Bank of England find it expedient 
 to limit their discounts, will not the English merchants obtain 
 them from the Irish branch, through the medium of their cor- 
 respondents ? Or is it to be laid down as a general rule, that 
 whenever the discounts must be limited in England, so must 
 they also in Ireland? How is the gold to be apportioned 
 between the English Bank and its branch in Ireland ? In case 
 of a run for gold in England, similar to that in 1797;. is it to 
 be expected that a guinea would be left in the Irish branch ?
 
 OTdAHDXa JAIDiiaMMO: 
 
 
 APPENDIX
 
 fsM ^iiii.. . -ol! ^nobnoJ 00 nilduQ bos 
 
 
 
 ^'i: 
 
 g^ ^1=? 
 
 1 oc 
 
 ■4> ! 
 
 
 -,l. S^
 
 APPENDIX. 
 
 No. I. 
 A Table * of the Rates of Exchanges of London on Dublin^ 
 and DubUn on London, for six Months, ending March 
 1804. 
 
 London on 
 
 Dublin on 
 
 Dublin. 
 
 London. 
 
 
 f I. — 17 
 
 
 r 3 - 17 
 
 
 4 
 
 . — i8 
 
 
 5- — 15 
 
 
 6 
 
 •— 18 
 
 
 7- — J5 
 
 
 8 
 
 — 18 
 
 r^ 
 
 10. — 14I 
 
 o 
 
 
 — 17 
 
 00 
 
 12. - i4i 
 
 
 
 — 17 
 
 — 17 
 
 5 " 
 
 14. - 14 
 
 17. - 13^ 
 
 18 
 
 — 16 
 
 ■f 
 
 21. - 13* 
 
 2 
 
 
 — 16 
 
 
 
 24. — 14 
 
 O 
 
 
 — 16 
 
 
 26. — 14 
 
 
 
 — 15I 
 
 
 28. - 14I 
 
 
 
 
 L3'- — 15 
 
 
 
 — »5* 
 
 
 
 -JL 
 
 — 15. 
 
 
 
 
 — 16 
 
 
 r 2. — 16 
 
 
 
 '52 
 
 
 7. - 16 
 
 • 
 
 
 — '75 
 
 ^ 
 
 9. — 16 
 
 o 
 
 
 ] ji 
 
 c 
 
 II. — 16 
 
 
 
 — 17I 
 
 
 
 
 
 - 
 
 H- - 15^ 
 
 sJ 
 
 
 - 174 
 
 5 
 
 16. — \^\ 
 
 1]'- 
 
 - ni 
 
 |i.8. - i5|| 
 
 t 
 
 '9 
 
 - I7A 
 
 
 21. — 1-;^ 
 
 1 
 
 22 
 
 - I7| 
 
 — 17 
 
 i 
 
 23. - i5| 
 25 - 15* 
 
 
 26 
 
 — 17 
 
 
 28. — 155 
 
 
 U9. 
 
 — • 17 
 
 
 L30. — 15I 
 
 
 r « 
 
 — 17 
 
 
 " 2. - 15^ 
 
 
 3 
 
 — 17 
 
 
 5. — 16 
 
 
 6 
 
 — >7 
 
 
 9- - i^i 
 
 
 8 
 
 — 17 
 
 
 
 12. — 165 
 
 ? 
 
 10 
 
 - 17A 
 
 00 
 
 14. - i6i 
 
 oo 
 
 13 
 
 — 18 
 
 5 I 16. — 16 1 
 
 i 
 
 >5 
 17 
 
 20 
 
 — 18 
 
 — 18 
 
 — 18 
 
 B 
 
 Q 
 
 19. — 16 
 21. — 16 
 
 =3- — 15^ 
 
 1 
 
 22. 
 
 — 18 
 
 26. — 16 
 
 24 
 
 — 18 
 
 
 28. — 15J 
 
 
 27 
 
 — i8 
 
 
 ^30. — i5i- 
 
 
 29 
 
 — 18 
 
 
 
 L3» 
 
 — 16 
 
 
 Aver. I 
 
 'Us.id. 
 
 Aver. 15/ 81 7,/. 
 
 London on 
 
 Dublin on | 
 
 Dublin. 
 
 London. j 
 
 
 r 3- - i7i 
 
 
 r 2. - i5f 
 
 
 5. - 17- 
 
 
 4- — 1.4 
 
 
 7. — i7§ 
 
 
 6. _ 1.4 
 
 •4- 
 
 10. — \lk 
 
 ^ 
 
 9.-1^ 
 
 
 00 
 
 12. l7 ID 
 
 II. — 15 
 
 
 14. _ 17 j^S 
 
 '3- — 15 
 
 3 
 
 .7. - 16.1 
 19. - 16 
 
 b 
 
 ifi. - ,5 
 
 18 - 16 
 
 1 
 
 21. — 16 
 
 rt 
 
 20. - 171 
 
 
 24- — 18 
 
 
 23. — 18 
 
 
 26. — 19^ 
 
 
 2S. — 18 
 
 
 28. — 184 
 
 
 27. -- 18 
 
 
 Lsi. - >S^! 
 
 L'o. — 17 
 
 
 r 2. — loi, 
 
 r 1- - yy 
 
 
 4.- 18 
 
 
 3. — i6i 
 
 
 7. - 17J 
 
 
 6. — i6i' 
 
 3- 
 
 9- — i7i 
 
 4- 
 
 8. _ 16-t 
 
 ^ 
 
 'I. - i7i <^ 
 
 10. — if^ 
 
 ii 
 
 14.- 18 - 
 
 13- — 17' 
 
 16. _ 18 ^<; i;;. _ 171 
 
 1 
 
 18. _ i8|| 1 .7.- .-1 
 
 ;^ 
 
 21. iS^I-O 1 20. — ,7 
 
 
 23. - 18^ 
 
 25- - iH 
 
 t*- 1 22. — 17 
 
 
 24. — 17 
 
 
 us. - i8i 
 
 27 — 17:^ 
 
 
 _U9- - 171 
 
 
 r 1. - 18^ 
 
 7 — 15 
 
 
 3. - i«4 
 
 
 6. — i'^ 
 
 1 9- — 15 
 
 
 8 - i7i 
 
 ^ 1 .2. - .4 
 
 4- 
 
 
 2 1 14. — 14 
 
 
 
 1'° - \e\ 
 
 ic. — 16I 
 
 .7.- irf 
 
 ^ i 19. - Hi 
 ;! 21. - ,6 
 
 X 
 
 20 - ,6i 
 
 23 — 16 
 
 >. 
 
 22. — \f,\ 
 
 ( 26. — \6l 
 
 
 IX. — I '5 V 
 
 L28 — 16^ 
 
 
 27. - 17{ 
 
 
 
 L?i" - ll'i 
 
 
 
 
 ^ver. 17/.I2J o</. 
 
 Aver.i/'/.-j 7,/. 
 
 » Extracted from the Appendix to the Evidence, pages 14 and 30.
 
 204 
 
 APPENDIX. 
 
 No. II. 
 
 A Table of the Rates of Exchanges (^Belfast on London, and 
 of Ncwry on London, for six Mouths, endmg March 1804. 
 
 Rates of Exchange of Beifast on London*. 
 
 
 "in' 
 
 u 
 
 5S 
 
 
 pq - 
 
 i-l 
 
 (-October - 
 
 6 
 
 6 
 
 1803<j November 
 
 5| 
 
 5h 
 
 Lr>ecember 
 
 5| 
 
 Ik 
 
 H 
 
 r January - 
 1804<[ FebruaiT 
 I March - 
 
 6 
 
 6} 
 
 Rates of Exchange of Newry on London, distinguishing 
 the Rates when the Bills were purchased in Specie, and 
 when in Bank Notes j. 
 
 ' 
 
 Rates when the Bills 
 
 Rates when the Bills 
 
 1 
 
 were purchased 
 
 were purchased 
 
 ' 
 
 witli Specie. 
 
 with Bank Notes. 
 
 
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 pq *- 
 
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 6 
 
 ^\ 
 
 15| 
 
 15 
 
 1803^ November 
 
 6^ 
 
 4 
 
 16 
 
 15 
 
 LOecember 
 
 5| 
 
 
 15| 
 
 IQ\ 
 
 r January - 
 
 Q 
 
 15| 
 
 16 
 
 1804^ Februar}' 
 
 8 
 
 7i 
 
 171 
 
 I March - 
 
 5| 
 
 7 
 
 14^ 
 
 16^ . 
 
 » Extracted from the Appendix to the Evidence, page 4^. 
 \ Extracted from ditto, pge 47.
 
 APPENDIX. 
 
 
 
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 205 
 
 APPENDIX. 
 
 No. IV.* 
 An Account of the current Value, from Time to Time, of Im|>orts andi 
 Exports of Ireland, for the following Years, to 5th January 1803 :—» 
 Distinguishing the Excess of one over the other j and each Year. 
 
 ri796 
 
 1 1797 
 
 Years ended j 1798 
 
 25th. March } 1799 
 
 I 18 o 
 
 Year ended 1 ,0^ 
 5th January j 
 
 Imports. 
 
 I' 
 
 <5,4i8,375 
 6,219,767 
 4,761,796 
 6,162,391 
 8,152,500 
 7,774.779 
 7,654,113 
 
 Exports. 
 
 6,894,167 
 6,285,748 
 6,133,177 
 6,380,456 
 
 5,881,339 
 5,281,881 
 
 8,571,412 
 
 Excess oflmports 
 over Exports 
 
 2,271,171 
 2,492,898 
 
 Excess of Export* 
 over Impoits. 
 
 I- 
 
 475.792 
 
 65,981 
 
 ,371,381 
 
 218,065 
 
 917,299 
 
 The current value was not estimated for any other years than those above 
 mentioned. 
 
 No. V. t 
 
 An Account of all Sums remitted to Ireland, for Loans, Repayments, Profits 
 
 on Lotteries, or for any public Purpose, since January 1, 1797 . 
 
 
 
 1 
 
 
 Produce by Ex- 
 
 Amount received in 
 
 
 British Currency. 
 
 M 
 
 Irish Currency. 
 
 ch.^^ge above Par. 
 
 the Exchequer. 
 
 ^•< 'k '■ 
 
 
 £.- ^' d- 
 
 £.• '- d- 
 
 £■ '- 'J. 
 
 Year 1797 
 
 ^Allyl^^ 6 5 
 
 H 
 
 1,600,912 9 6i 
 
 
 1,600,912 9 61 
 
 1798 
 
 1,875.843 I 9l 
 1,455,172 3 i^ 
 
 
 2,032,162 16 9 
 
 2,073 8 4j 
 30,276 4 5I 
 
 2,034,236 <; i§ 
 
 1799 
 
 — 
 
 1,576,436 9 9§ 
 
 1,606,712 14 2^ 
 
 1800 
 
 i,oz8,^66 4 10 
 
 — 
 
 1,114,063 8 6 
 
 19,700 11 7 
 
 1,133,764 I 
 
 1801 
 
 1,688,679 18 6i 
 
 — 
 
 1,829,403 4 6J 
 
 62,065 2 ir| 
 
 T,89i,4'^8 7 6 
 
 igoi 
 
 1,315,209 6 
 
 — 
 
 1,424,810 4 ii| 
 
 34,780 13 9i 
 
 1,459,590 18 9 
 
 X803 
 Totnl - - 
 
 >,oo3,353 H "i 
 
 — 
 
 1,086,966 11 3 
 
 58,145 I " 
 
 1,145,111 13 2 
 
 9,844,389 10 2^- 
 
 - 
 
 10,664,755 5 4f 
 
 207,041 3 0^ 
 
 10,871,796 8 5 
 
 * Taken from page 57 of the Appendix to the Evidence. 
 X Taken from page 92 of ditto. 
 
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 APPENDIX. 
 
 ao8 
 
 No. VII. 
 
 A Calculation to shew why the Exchange should be about 1 per 
 Cent, higher in London than in Dublin, and why the Ex- 
 change in Dublin should be considered as the true Exchange. 
 
 A. purchases a bill in Dublin on London for ^.loo 
 
 British, for which he pays Ex. ;^.i4per cent. 114 
 
 This bill has 30 days to run before it becomes 
 
 due, being drawn at ai days sight, or 30 
 
 date, which are deemed equivalent. — A. pays 
 
 ready money for the bill, and he does not 
 
 receive payment for it for a month, making 
 
 a loss of interest which A. sustains of 
 
 about 10,. -J 
 
 When the bill becomes due, B. the agent of 
 
 A. purchases a bill in London at;£".ii5,and 
 
 remits it to A. who does not receive the 
 
 money for another month, by which he 
 
 loses a month's interest - - iqs. 
 
 The sum which A. is obliged to pay for the bill in 
 Irish money ;C."5 per cent. 
 
 Suppose B. in London purchases a bill on Dublin for 
 
 Irish ,j^ 
 
 He pays ;C-ioo British, ready money; the bill 
 
 has 30 days to run, and of course he loses 
 
 a month's interest .... Iqj 
 
 His agent in Dublin buys a bill on London, 
 
 and remits it to him as a return, at the Ex.of 
 
 14; ready money is paid for the bill, and 
 
 he does not get it paid for a month, making 
 
 a month's loss of interest - - los. 
 
 The real value of the bill in Dublin in Irish money >f7«7per cent.
 
 i(f^ APPENDIX. 
 
 No. VIIL* 
 Amount of Bank of Ireland Notes in Circulation since the 
 
 EestrictJon. 
 
 Average Rates 
 
 of Exchange ; 
 
 Dublin on 
 
 London. 
 
 1798 
 
 1799 - 
 
 1800 
 
 1797 1st January" 
 April - 
 June - 
 September 
 
 - January 
 April - 
 June - 
 Septembe 
 
 - January - 
 April - 
 June - 
 September 
 
 - January 
 April - 
 June - 
 September 
 
 1801 - -January 
 April - 
 June - - 
 September 
 January - 
 April - - 
 June - - 
 September 
 
 - Januar) 
 April - 
 June - 
 September 
 
 - January 
 
 i6 10- 
 5 1 
 
 1803 - - 
 
 1803 - 
 
 1804 
 
 / 
 
 13 
 
 
 
 2 
 
 11 
 
 6 
 
 3 
 
 12 
 
 3 
 
 ,8 
 16 
 6 
 7 
 1 
 6 
 
 62i,gi7 o 
 737,268 13 11| 
 
 853,612 2 5 
 
 959,999 10 6 
 
 1/214,740 4 4 
 
 1/225,525 
 
 1,155,566 
 
 1,298,667 7 
 1,451,732 3 
 
 1,737,879 1 
 1,704,023 2 
 1,627,374 19 
 2,193,019 
 2,482,162 
 2,584,085 
 
 1,987,877 
 
 2,258,815 
 
 2,266,471 
 
 2,350,012 
 
 2,466,884 
 
 2,473,317 
 
 2,816,669 12 
 
 2,678,980 3 
 
 2,589,346 
 
 2,623,752 
 
 2,659,950 
 
 2,555,632 
 
 2,874,528 
 
 2,986,999 
 
 7 
 61 
 
 H 
 
 H 
 91 
 H 
 
 91 
 9i 
 101 
 lOi 
 I2i 
 10| 
 
 91 
 io| 
 12 
 
 13| 
 
 12| 
 
 12 
 
 121 
 
 114 
 
 10| 
 
 la 
 
 13 
 13J 
 14| 
 161 
 
 i\om page 44. 
 
 THE END^ 
 
 sTgosneli., Ivinter, Little Qutt:n Sucet, Holborn.
 
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