variation. The wisdom of the steady old course, and the imprudence of the new one, have not been exhibitedin the order we have seen-the wisdom first, the folly afterwards as an improvement upon it-without adequate cause. While it was the interest of those who were the masters of the choice to tread in the road of prudence, they steadily adhered to it; when by very strong means it was rendered their interest to travel in a different road, no wonder they have been drawn aside.

The fact, according to our author, is this. The Bank of England, as long as she continued subject to the obligation of paying her paper in cash on demand, was so immediately visited with loss the moment her paper became excessive, and by its excess depreciated, that she had always a prompt monitor and an effectual motive to avoid so mischievous a proceeding: The Bank of England, however, the moment she became exempt from the obligation of paying her paper in cash on demand, became, by the same operation, exempt from loss by the depreciation of her notes, and was rendered a gainer by the interest of all the notes which she could put into circulation: The Bank, accordingly, has forced into circulation an excessive quantity of notes; and the effects are such as we witness, and dread.

When the case, indeed, is temperately considered, the wonder is, not that the consequences of a superabundant paper, in the circumstances thus described, have at last and pretty strongly manifested themselves, but that they have not and still more strongly manifested themselves long ago. The prudence and self-restraint of the managers of the Bank (for there has been no other safe-guard), deserves to be ranked in the number of phænomena. It has been infinitely greater than was to be expected; infinitely beyond what in wisdom could have been calculated upon, by those who rashly committed the nation's credit to chances of so doubtful and so threatening a nature.

Every competent judge, we apprehend, will be ready to presume, e,that the reasonings, by which Mr. Ricardo has undertaken to prove that the high price of bullion is owing to the virtual (though not in every case visible) depreciation of Bank notes, sufficiently bear out the conclusion.

No one who has successfully studied this subject, which indeed is by no means a very obvious and easy one, can have any doubt that the price of the precious metals approximates to an equality all over the world: neither can he doubt that the peculiar portion of those metals, which is contained in the circulating medium of each country, follows in this respect the laws of the rest. But, if these two points be allowed, the

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conclusion, which Mr. Ricardo wishes to establish, follows as a matter of course. It is only necessary for the inquirer to become sufficiently familiar with the meaning of the terms that must be employed in expressing the propositions, to see the consequence, as it were, intuitively.

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If gold and silver are, all the world over, nearly of the same value, and can never in any particular place for any length of time be forced much above or below the general level, gold and silver in England must always be very nearly of the same value as gold and silver in other countries. If gold and silver in coin be always of nearly the same value as gold and silver in bullion, the gold and silver in the English coins can never differ in value, except in a very slight degree, from gold and silver in bullion. From this it demonstrably follows, that the mint price of gold and silver, i. e. the value of gold and silver in the coins, can never differ but in a very slight degree from the market price, i. e. the value in bullion, of these metals. Hence it follows, that the great difference, as it is called, between the market price and the mint price of the precious nietals, is an apparent difference only, and that appearance a delusive one.

As comprehensive propositions expressed in comprehensive terms are not easily followed in their applications by unexercised minds, it may be useful to trace the phænomena belonging to a particular case. Suppose that an ounce of pure gold is at the mint of England manufactured into 31. 17s. 10d. of coins. The ounce of gold in the coins, according to the principle above spoken of as established beyond the reach of dispute, viz. the perpetual and close approximation between the value of gold in coin and the value of gold in bullion, cannot be inferior in value to an ounce in bullion. It will naturally and necessarily be somewhat superior to it; as being put in a shape of somewhat greater utility. The natural state of the market or bullion price of gold is therefore, to this amount, which is but a small one, inferior to the mint price, or the value of the metal in coins. This is not only the natural, but the necessary state; no departure from it, but such a momentary one as has not left time to the strong natural tendency to redress it, can ever take place; every thing else that presents itself as a departure, is appearance merely. The price of silver in bars, and the price of silver in spoons, is ex. actly analagous to the price of gold in bars, and the price of it in coins, only that the expense of the workmanship necessary to bring silver into the shape of spoons is much greater, proportionally,than that necessary to bring gold into the shape of coins; yet who ever heard of a market price and a spoon price of silver?

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Such is the case while 37. 17s. 104d in coins actually contains, as it professes to contain, an ounce of gold. Suppose, however, that 31. 17s. 104d in coins comes by wearing or any other means to contain less than an ounce of gold, while it still professes notwithstanding to contain an ounce. It is evident, now, that 37. 17s. 104d in coins is not worth an ounce of gold in bullion. More in the market will be demanded for an ounce of gold in bullion than 31. 17s. 104d in coins. The market price of gold will thus, in name and appearance, rise above the mint price; but so far is this from being in reality the case, that it is solely because the value of the gold in the coins and the value in the bullion are the same, that a difference in the market price becomes necessary to correspond with the diminished quantity of the metals which remains in the coins. Nor is there any thing peculiar in the instance of the gold purchase. The coins have declined, in their power of purchasing, to exactly the same degree, with regard to all other commodities. A quarter of wheat cannot be purchased for the same number of pounds, shillings, and pence. It appears to have risen in price. The market price, if we may so speak, has risen above the mint price. But this is not the fact. The price of the wheat, by supposition, has remained the same. It is purchased for the same quantity of gold; but a greater number of coins must be counted out, before that quantity is afforded.

Such, then, are the principles on which the market price of gold depends; such is its necessary coincidence with the Intrinsic value of the circulating medium. It remains to be inquired, what explanation these principles afford of the high price of bullion which has lately been witnessed in the London market. The coins have by wearing, (there having been no coinage, except of the smaller pieces, since the Bank restriction,) become lighter than the standard, and that to no inconsiderable degree. This accounts for a rise in the market price of gold to a correspondent amount. But the market price of gold has risen greatly above that amount. What is the cause to which this enhancement should be traced? Mr. Ricardo answers, the excessive issues of paper by the Bank of England. The amount of notes forced into circulation by the Bank of England, under protection of the Restriction Act, exceeds the amount of pounds sterling in gold and silver that would circulate in the country, were gold and silver the sole medium of circulation. The consequence is, a depreciation of those notes; and, as the notes are in fact the circulating medium, a depreciation of that medium. A rise of the mar ket price of gold to a correspondent amount, is the event in

course,

It must be owned that the first appearance of these facts affords, itself, pretty strong indirect evidence of the truth of the inference. Here is an undeniable excess in the market price of gold; the state of the coins accounts for only part of it; the other part remains wholly unaccounted for; the market price of gold measures the intrinsic value of the circulation; nothing else has operated upon the intrinsic value of that circulation, unless it be the bank notes; the bank notes, therefore, it must be, which have raised the market price of gold; there is nothing else to which the effect can be ascribed. It will be owned, we think, that the links in this chain seem tolerably sound."

The direct proof, however, consists in exploring the operation of an excess of paper; in shewing the effects, which by its own laws it must of necessity produce,upon the phænomena of circulation. If an excess of paper can be shewn to operate with infallible certainty in the depreciation of whatever curreucy is subjected to its effects, the demonstration will hardly be considered as less than complete. That such is its operation, is what Mr. Ricardo undertakes to prove.

In the effects of a paper currency, though there is in reality nothing peculiarly difficult or hidden to the inquirer, yet, the points being multiplied, there is of course a degree of intricacy in the statement; and considerable pains are requisite to keep the estimating energy of the mind justly fixed upon all of them while drawing the inferences which they afford.

The fundamental proposition is -A defined quantity of cir culating medium, and a defined quantity of circulating operations to be performed by it, being supposed in any country u actually to exist, any addition made to the quantity of circulating medium, while no addition is made to the quantity of operations to be performed by it, must produce a correspondent rise in the price of commodities, or, which is the same thing in other words, a correspondent depreciation in the medium itself. The fictitious case, put by Mr. Hume, affords perhaps the easiest view of the evidence on which this propos sition rests. Suppose that England is closed round by Friar Bacon's wall of brass, and its people absolutely shut out from intercourse with all other human creatures. Suppose that its circulation is wholly performed by gold and silver, and that the quantity of those metals which it has long possessed has fixed at a certain rate the price of commodities. Suppose now that, in this settled state of circulation and prices, the whole money of the country is in one night doubled, every man finding in the morning two guineas, and so on, in his custody, instead of one. Here no more commodities exist than existed before; no more, therefore, can be bought. But every man

has twice as much money to buy them with; twice as much money will actually be given for them. A correspondent rise of prices, a correspondent depreciation of money, is the inevitable consequence.

Such is the law of an augmented currency; it remains to apply that law to the case modified by the operation of paper, and of such a paper as now circulates in England.

It has already been intimated, that a bank, subject to the obligation of paying her notes in specie, cannot, morally speaking, augment the currency. If she did, depreciation would be the immediate consequence. But as gold and silver in countries which have any intercourse with one another must be always of nearly the same value, the effects which are immediately produced very soon redress the mischief. The market price of gold rises; guineas become in demand; and the notes of the bank are rapidly carried to her for gold.

The links of this chain of consequences are these. By the augmentation of the currency, the value of the gold and silver in the coins, and with it the value of all the gold and silver in the country, is reduced somewhat below its usual standard, that is, somewhat below its value in other countries. But, in that case, the bullion merchants are enabled to make a profit by exporting it. The exportation raises the price of bullion, and the value of the metal both in bullion and in the coins. In exchange for bank notes, however, or in exchange for commodities which are rated in bank notes, the coins, so long as the force of their name prevails over that of their nature, are sunk to the level of the currency. They are more valuable as bullion than as specie. They are of course converted into bullion. Whoever wants bullion purchases a quantity of bank notes, repairs to the bank where he demands guineas for Chem, and then melts them down. The bank, in this course, receiving for her notes at their first issue only at the rate of the depreciated currency, and being obliged to pay for them at the bullion price of gold and silver, loses upon every note thus issued and retired, at the rate of the whole depreciation which the currency has undergone. This drain soon teaches her the necessity of issuing fewer notes; and, where the number is thus reduced to the due proportion, the depreciation of the currency is at an end.

The case, however, which, in the present instance, we are particularly called upon to consider, is that of a bank exempted, by the force of the legislature, from the obligation of paying her notes in cash. It is evident that, by this means, bank is effectually secured from the loss and inconvenience, attendant upon the payment of her notes when the notes are depreciated by excess. By exemption from this loss and in◄