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currency, and from their increased amount, as well as the increasing issues of private bankers' notes of every other description, prices had risen greatly. That the bad currency had been increasing most mischievously during the last twelve months, that there was still a very good supply of good silver in the south which was hoarded on account of these silver notes; but if they were suppressed, it would come into circulation again. He said all sorts of traders, as well as bankers, issued notes for 3s. 94d. and 6s., payable at twenty-one days after date. He thought that the increase of the paper circulation augmented the state of exchange against Dublin. That the premium on guineas was a proof of the depreciation of the Bank notes; and that as the exchange rose the depreciation continued. That the premium on guineas was then 7 or 8 per cent. He himself had bought large quantities of guineas at a premium of 2s. 6d. each. In the north of Ireland, however, all bills were payable in gold; they would have nothing to do with any paper currency, and while the exchange on Dublin was 16 (7 two-thirds below par), the exchange on Belfast was 7 or 8 per cent. (one-third above par). He argued that, since the exchange in gold was favourable to Ireland, the real exchange must be in her favour, and that if any considerable quantity of gold came into circulation, it would at once tend to diminish the premium on guineas, and lower the rate of exchange. However, he thought that the high state of the exchange was a clear proof that the balance of payments was against Ireland annually. While no Bank of Ireland or private Bank notes could be exchanged for guineas, except on paying a premium of 2s. 6d. each, Bank of England paper bore exactly the same premium as guineas, and were received in every transaction as equivalent to guineas. And yet the directors of the Bank of Ireland maintained that their notes were not depreciated!
19. In the north of Ireland, where nothing but gold was current, and paper was tabooed, the exchange at Belfast with London had always continued favourable to Belfast, and even while the exchange at Dublin was progressively sinking, the exchange at Belfast continued to rise; thus, the state of the exchanges during the years 1803 and 1804, when the Committee were appointed, was as follows:
Lire, at that time, a difference of 12 per cent. mange at Dublin and at Belfast. Consequently, the Directors of the Bank of Ireland were true, vere being made from Dublin to London, and men was due from London to Belfast. However, Inspector General of Imports and Exports at adferent opinion with respect to Irish Bank ends to the table of exchanges prepared by him
been heretofore held as a maxim of commerce, rade has in a great measure regulated the rate and if specie was equally in circulation in England rmerly, the criterion would, no doubt, stiil be Est the issue of paper in Ireland is so great as to
heavy discount, whilst in England it circulates Leciation at all. I imagine the rate of exchange tries, therefore, is very much influenced by the in Irish Bank notes."
cely necessary to observe that if the opinion of the Bank of Ireland were true, that the rate of
in on London was due entirely to the heavy Ireland to England, their townemen must have amptons to purchase bills on London in Dublin at Les sacrifice, when they could have got them at - per cent. cheaper. But it appeared that specie m of 10 or 12 per cent. in Dublin, wo that the bwd for in cash, were exactly the same rate in Duben
r to test the furt as the rate of edg
that so far from the balance of payments being against Ireland, there was a very large balance in her favour. The witnesses differed as to the precise sum, but they agreed as to the fact of there being a large sum due to Ireland, and, consequently, that the exchange ought to be in her favour, which was precisely the case at Belfast, where payments were made in specie. With this incontrovertible evidence before them, the Committee did not hesitate to express their conviction that the real balance of pecuniary transactions was greatly in favour of Ireland, and that, consequently, the real exchange was and ought to be under par, and that they felt themselves compelled to seek in other causes than the balance of debts for the unfavourable exchange then existing between them.
22. We have already seen that when in 1696 the silver coinage was being recoined, a difference arose between Bank notes and specie of 20 per cent., and between tallies and specie of 40 per cent., it was universally said that Bank notes and tallies were at a discount of 20 and 40 per cent. There is no trace of any other language but that being applied to them. In the year 1804 Irish Bank notes were exchanged for specie at a difference of 10 per cent., so that, with a guinea in specie, any one might purchase a guinea note and 2s. or more in silver. The merchants of 1696 would have expressed such a state of things by saying that the note had fallen to a discount of 10 per cent. But at this period a new mode of expressing it was discovered; it was stoutly maintained that it was not the paper which was depreciated, but the guinea which had risen in value! Thus, one witness being asked-" Do you know that the Bank of Ireland paper is depreciated?" said "I am not aware of it, because I should not say paper was depreciated, unless there was a forced issue of it, and that it was offered at a discount on all occasions. I should rather now say that gold is increased in value than the paper is depreciated." When asked-" What do you consider to be the best criterion of the depreciation of paper currency, an alteration of its value compared with the general property of any country, or its alteration compared with a given article, viz., guineas?" he says "I think the first the best criterion, because guineas may be wanted, as in the present case, for special purposes." It is somewhat surprising that the witness did not remember that
Bank notes are a "promise to pay" guineas, and they are not a promise to pay another kind of property. When asked-" Do you not conceive that the fact of a premium existing on English Bank notes in Ireland and exchanged for Irish Bank notes, affords some indication that it is Irish paper which is depreciated, and not the price of gold which is locally raised?"-"I do not." Other witnesses agreed in these opinions. When we consider the nature of an exchange, and the state of facts proved with regard to the Irish coinage, at that time, we might almost smile at these ideas, and attribute them to the peculiar methods of thinking which are sometimes prevalent on the western side of St. George's Channel; but we shall find that when a precisely similar state of things took place in England, with regard to the foreign Exchanges, the very same doctrines were long and stoutly asserted by a very numerous party in this country, and would probably be so again under similar circumstances.
23. There was one witness, however, who held very different opinions Mr. Marshall, the Inspector General of Imports and Exports. He said that there were shops in the principal streets of Dublin for buying and selling guineas, and that the retail price of a guinea then was a paper guinea and 2s. 2d. He said that at the end of December, 1803, the price of a bill in Dublin upon London for £100 British was £116 10s., if bought with Irish Bank notes, but if purchased with specie the price was only £106 10s. Irish. The same thing was observable in all domestic transactions. The man with a gold guinea in his pocket, going to market, had the advantage of the same premium over the man with the paper guinea, so he could go to a specie shop, and with his gold guinea buy a paper guinea and the premium; then he had a paper guinea of the same value as the other man and the premium besides. Bank of England notes were exactly equivalent to guineas. From all these facts, it appeared that the Irish Bank note wanted 10 to 12 per cent. of the value of specie. It was contended that this was due to the rising in value of specie, and not to the depreciation of notes; but if specie had risen so much in value, or, which was the same thing, if commodities had fallen so low as 10 or 12 per cent., such a state of things could not have continued for any length of time, because such a degree of cheapness would have attracted specie from Great Britain, where it had not risen.
Moreover, Bank notes had been issued at par with specie, at its current value, whatever it was, and they ought to have risen pari passu with it, so as to be exchangeable with it, and, therefore, whatever they wanted of this exchangeable property must be considered as a falling off from their original value, or a depreciation to that extent. And, therefore, he was clearly of opinion that the Irish paper currency was depreciated.
24. After shewing that the balance of payments had been for a long series of years favourable to Ireland, but that the exchange had never ceased to be greatly depressed, he was asked
"Do you also mean, on the whole of your evidence, to give it as your decided opinion that there is and has been a depreciation in the paper currency in Ireland, and that the high rates of exchange, which have prevailed and still prevail, have arisen from the depreciation?"
"I do; the high exchange in Dublin which has now continued for some years, MUST, NO DOUBT, HAVE ARISEN, LIKE ALL OTHER PERMANENTLY HIGH EXCHANGES WHICH HAVE EVER EXISTED, FROM THE DEPRECIATED STATE OF THE CURRENCY WITH WHICH
BILLS OF EXCHANGE ARE PURCHASED, and the same remedy might, perhaps, be resorted to with success in the present case, which has never failed to be effectual on all former occasions, namely, a removal of the depreciation."
These are the ideas of the men of 1696; we shall find a long dreary period elapse before their truth was again generally recognised in this country. The amazing absurdity of supposing that the exchange could have fallen to 118, on account of the balance of payments alone, can be easily shewn. We cannot suppose that the cost of transmitting the specie from Dublin to London could have been more than £2 at most. Consequently, as £108 6s. 8d. was the par of exchange, if the rate of the exchange fell below £110 6s. 8d., it would have been cheaper to send the specie itself. Surely, the Irish would never have been so foolish as to pay £118 in Dublin to purchase a debt in London of £100, when they could place the cash itself on the spot for £110 6s. 8d.
25. The directors of the Bank of Ireland had admitted that before the Restriction Act they were obliged to regulate their