"What do you say to an excessive currency, though not forced?"

"I do not conceive the thing possible."

"What do you mean by a forced paper currency?"

"A paper which I am obliged to take against my will, for more than its value; it is not forced so long as people take it willingly, which they will naturally do whilst undepreciated.”

"May not the quantity of metallic currency be increased in proportion to payments which it has to effect, by an increased issue from the mines; and will not that have the effect of raising the money prices of all commodities?"

"I conceive an increase or abundance of silver or gold would have the same effect upon those precious metals, as a glut of any other commodity upon the market."

"And, in the same matter, may not that paper currency which continues to preserve its credit unimpeached, and which commercial people are perfectly willing to receive, be so augmented in quantity as to raise the local prices of commodities?"

"I do not conceive that that piece of paper, for which I am obliged to give a valuable article of merchandise, can be increased beyond the want of it; nobody will give a valuable article for a piece of paper that does not want it."

"Have you ever happened to pay any attention to the history of the paper currency of Scotland between 30 and 40 years ago, or to that of Ireland about the year 1804?"

"Some years ago I remember reading something about them, but the recollection is rather faint upon my mind."

"Do you call that paper, in your sense of the word forced, a forced paper currency, which either by law as it stands, or by the force of public opinion, is not convertible into specie at the option of the holder?"

"If it be convertible into other objects of my gratification without depreciation I do not consider it forced."

"At the Mint price of standard gold in this country how much gold does a Bank of England note for £1 represent?"

"Five dwts. three grns."

"At the present market price of standard gold, of £4 12s. per ounce, how much gold do you get for a Bank of England note for £1?"

"Four dwts. eight grns."

"Do you consider that a Bank of England note for £1, under these present circumstances, is exchangeable in gold for what it represents in that metal?"

"I do not conceive gold to be a fairer standard for Bank of England notes than indigo or broadcloth."

(Question repeated.)

"If it represents twenty shillings of that metal at the coinage price, it is not."

"Will you state to the Committee, in your opinion, to what cause is referable the present unfavourable state of exchange between England and the continent?"

"To the balance of payments being against this country."

"Can you give cases to illustrate the fact that you have assigned of the balance of payments being against this country?"

"Large British armies upon the continent; slow returns for exports; quick payments for imports; and very large stocks of imported goods now on hand in the country."

"Is there any other cause to which you attribute the present state of exchange?"

"I know of none other that can affect it, excepting that of a forced depreciated paper."

"Is it your opinion that the currency of England is depreciated?"

66

"Certainly not."

50. Upon this, Mr. Huskisson remarks-"In these answers this leading doctrine is manfully and ingeniously asserted, and maintained; and all who stand up for the undepreciated value of Bank paper, however disguised their language, must ultimately come to the same issue." It was, in fact, as the same writer just before states, that these persons had persuaded themselves, and endeavoured to persuade others, that Bank paper is the real and fixed measure of all commodities, and that gold is only one of the articles, of which in common with others, the value is to be ascertained by a reference to this invariable standard and universal equivalent, Bank paper.

51. It is certainly amazing to think how persons of ordinary intelligence, could seriously make such answers as Mr. Chambers

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did, and that these views pervaded the whole of the mercantile evidence adduced, the reply to which is so obvious. A Bank note was a promise to pay a certain specified weight of gold of standard fineness, and it did not profess to represent any amount of indigo or broadcloth whatever. A £1 Bank note professed to represent 5 dwts. 3 grns. of standard gold and nothing else, and if it was only really equivalent to 4 dwts. 8 grns., those who maintain that it was not depreciated must also assert that 4 dwts. 8 grns. is the same thing as 5 dwts. 3 grns. There is no escape from this conclusion. Those who maintained that a £1 Bank note, which was a promise to pay 5 dwts. 3 grns. of gold was still a "pound" when it was only worth 4 dwts. 8 grns., ought also to have maintained that if the fifth part were to leak out of a pint bottle of wine, it was still a "pint of wine" because it was contained in a pint bottle. In each case the "promise to pay" and the "pint bottle" were only the outward sign of what the contents ought to be; in either case, it was the quantity of the substance, either of gold or wine, they actually did contain, that was their true value.

52. Those who maintained that the Bank note was not depreciated should also have maintained that the worn, the clipped, and degraded coin of William III. was not depreciated, when 6s. 3d. and 7s. only contained as much silver as 5s. 2d. ought to have done by law; so that 5s. 2d. was only equal in reality to 4s. 1d. of the legal standard currency.

53. It must be admitted, however, that there was one argument to show that there was no difference in transactions between specie and paper, for specie had totally disappeared from circulation; it had no existence. The Bank paper and tokens were the sole circulating medium of the country. When people found that they could get no more for their good golden guineas than for the depreciated Bank paper, they hoarded them; they either retained them locked up, or melted them down for exportation, the temptation to perjury being exactly 12s. per ounce. The explanation of these phenomena is very simple. When Bank notes were declared inconvertible, they took rank as a new substantive currency (being merely representative before), exactly like silver. Now, the relative value of gold and silver purely

depended upon their relative quantities, and when their relative values were fixed by law, if the legal value did not correspond to the market value, we have seen over and over again that the metal which was undervalued was driven out of circulation. So, also, when heavy and light coins circulated together, the heavy coins were driven out of circulation because the heavy coins were undervalued, and nobody would give 6 ounces of silver for what they might buy with 5 ounces. It was exactly the same with Bank notes. They could only preserve their relative value with gold by preserving certain relative proportions in their quantity; as soon as this quantity was exceeded, their relative value fell, and as their relative value to guineas was fixed by law, a change in their market value was followed by exactly the same consequences as a difference between the market and legal value of gold and silver. The guineas which were undervalued were driven out of circulation, as always has been done under similar circumstances, and as always will be done to the end of time. Nobody would give 5 dwts. 3 grns. of gold for what they could get for 4 dwts. 8 grns. Thus this iniquitous and ignorant law to force down the value of guineas, brought its own punishment with it: it destroyed their existence as a circulating medium; but then it became literally true that there was no difference between specie and paper; the power of making an invidious distinction between notes and gold was effectually cured,-solitudinem faciunt, pacem appellant; when the inhabitants were massacred, the Russians proclaimed-"l'ordre regne à Varsovie."

54. With respect to the second issue joined between these parties, the principal places with which London had established exchanges were Amsterdam, Hamburg, and Paris, in all of which the currency was metallic. The Committee examined witnesses, who proved that the whole expenses of freight, insurance, war risk, and every other charge, varied from about 4 to 5 per cent., but beyond these there was a depression of 12 to 14 per cent., totally unaccountable for by any of these causes. If it were true that this difference arose from a demand for gold on the continent, it is quite evident that gold should equally have risen in the continental markets; but those who alleged this cause should have been prepared with a proof of their

assertions, which, however, they were totally unable to produce. On the contrary, it was proved that there was no alteration in the Mint price of gold in foreign places, and that the market price had experienced no rise at all in proportion to the rise in England.

55. While the English merchants so strenuously maintained that the rate of exchange was entirely due to the balance of payments being against England, and that the Bank paper was not depreciated, it may be as well to compare the opinions of a foreign merchant, who looked at the same circumstances from a different point of view. After stating the difficulty of ascertaining the exact par of exchange between London and Hamburg, from the fact of one currency being silver and the other gold, he considered that the rate of exchange might be considered as 15 per cent. against England.

"Has not a large quantity of circulating specie a powerful tendency to steady the course of exchange?"

"Yes, certainly, when its importation and exportation is not prohibited, and as forming the only basis that regulated the par of exchange."

"Is not, then, any country whose chief circulation is in paper, likely to experience great fluctuations in the course of exchange with other nations?"

"When that paper is not convertible into cash, it only represents, in my opinion, an ideal and not a real value, subject to public opinion, and, consequently, liable to the very great fluctuations which public opinions are subject to."

"Is there not an agio (or premium) at Hamburg, for banco above the current money?"

"Not according to my ideas; but, on the contrary; it is the different current coins that bear an inferior value to the Bank money, and which vary daily, every thing there being valued according to Bank money, or a certain weight of fine silver."

"What is the extent to which you conceive that the exchange is capable of falling in any country in Europe at the present time, supposing it to be computed in coin of a definite value, or in something convertible into a definite quantity of gold or silver bullion?"