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yernment, never returns to it; because the government never pays. It is evident, therefore, that while there is no limit to the emiffions of government, but its own wants, or the extreme depreciation of its paper, and that, while this species of paper may be accumulated in the country to any excess, there is a visible and impassable limit to the emission of bank notes, in the desire of every individual to draw from it as small a quantity as possible; and to the accumulation of these, a still more remarkable limit, in the utility which every man finds in remitting them to the bank, whenever a quantity of them beyond his immediate occasions is collected in his hands.

When the nature of those limits is duly considered, and when we reflect upon the fact, that a gold and Glver currency can never fall below the level of the price of those metals in furrounding countries, is it not probable, that the emission of bank paper is, by its own nature, so restrained, that it cannot produce the general depreciation of currency which is supposed ? There is a remarkable fact, which seems entirely to confirm this inference. When the paper which was issued by the governments of Holland and America exceeded a certain amount, it began to depreciate, though the confidence in the governments which emitted it was then as great as when the iffue commenced. The depreciation arose, not from the credit of government having become less, but from the quantity of paper having become too great. But this depreciation, it is to be observed, affected not the gold and silver which at any time appeared,- that retained its antient value, and could at last command ten or twenty times the amount of the paper which it could have purchased before the depreciation commenced. How should this paper have become depreciated by its excess, without affecting the value of gold and Gilver; and the excess of bankers' paper have carried the depreciation of gold and silver along with it? The operation upon prices must have been exactly the-same in the one case as in the other. If this difference cannot be explained upon the principles of Mr Thornton, it follows that those principles are not just. ,

But, without proceeding further with these reasonings, which are rather argumenta ad hominem, than conclusions drawn from the nature of the thing, let us fee whether we cannot arrive at fome decisive evidence by aid of the principles which we have already discovered. We have seen that specie, and even bank notes, are commodities, which are bought and sold like other commodities. Now, were the commodity of notes obtained at the Bank of England for nothing,—did every man obtain thein merely for the asking,—there might very easily be an extraordinary quantity of them thrown into circulation. But it so happens, that a man



therefore carries the bill to the bank, where he receives money for it, only deducting interest for the time which it has to run. Is not this the very same thing, in reality, to the manufacturer who gets the bill discounted, as if he had sold his goods to the bank, allowing discount for prompt payment? It is with goods, therefore, in the last resort, that notes are always bought at the bank ; and it is observable, that nobody goes to the bank to receive notes for his bills, thereby losing the discount, to any greater amount than is necessary to make the payments for which he is immediately called upon. But if bank notes are never called into circulation but in the payment of goods, it would appear that they are never called but to answer the natural exigencies of business, and in this way cannot become superabundant. Their amount can never furpass that of the gold and filver coin, which would circulate if they were not in existence. This we seem now entitled to affume as an established propofition. When a man purchases bank notes with real goods, at the rate of gold and filver, he would certainly purchase gold and silver with these goods, if the notes were not present, or if they did not equally well answer his purpose. He only buys the notes because he has occasion for currency; and if the notes were not to be had, he would buy the only other fpecies of currency,-gold and silver coin : real goods being always able to command it at the market price of the contiguous countries.

The other peculiarity attending a currency in bank notes,-that they are perpetually returning to the bank-is likewise followed by consequences, of which it is of some importance to have a just conception. Let us suppose, that by any means a superabundance of paper money has come into circulation, Government, for example, being unable to wait for the slow influx of the taxes, prevails upon the bank, we shall suppose, to adyance some millions of bank notes, which are to be paid with interest when the taxes come in. But there was already a sufficient quantity of currency in ciroulation, both to pay the taxes, and to perform the other payments of the country. This advance therefore to go vernment, in bank notes, when it comes into circulation, is all surplus. The question is, what becomes of it? A considerable quantity of it- let us suppose, for the sake of simplicity, the whole--will be immediately paid away in discharging debts contracted by government in the purchase of goods. The indivi, duals into whose hands the additional currency is first paid, discover in it no symptoms of superfluity. They sold their goods to government, and they have received payment, as they would have received it from any other purchaser. They proceed again to market with the money come in, precisely as on any other occasion, But the next step, or a few more steps, produces a dif



cannot be the effect of an overissue ; but that, the channel of circulation being once full, whatever flows in must run over.

Let us put, however, an extreme case. Let us suppose, that government, not satisfied with one advance, goes on demanding, and the bank granting, faster than the retiring of the bills which it has discounted, can withdraw its notes from circulation. The consequence of this would speedily be, that all its bills would be retired, and few or none would be offered for discount; yet still, by means of government, it might continue to pour its paper upon the country; and if it was exempt from the obligation of paying in cash,--but not otherwise,-the amount of this paper might extend to any degree beyond that of the gold and silver which would circulate in the country. But it is very evident, that where this is the case, i. e. wherever government distributes a paper currency which cannot be converted into cash at pleasure, there is no difference between the paper thus issued, and the compulsory emissions of government itself. They must follow, therefore, similar laws. In the first place, the precious metals would entirely disappear from the circulation, and the notes would sink to any degree of depreciation ; but gold and silver would retain its price ; and the man who had preserved a guinea, might soon be able to purchase with it a bank note for a hundred pounds.

From what we have thus discovered, one practical consequence of great importance may be deduced. As a bank, which issues notes, while it emits them solely in the discounting of good bills at short dates to individuals, can never issue more than the demands of business require ; but, as it may, by advances to government, easily surpass the limit of those demands, it is evident that any general derangement, arising from a surplus of cur


-and there can be no depreciation of paper which circulates at par with coin—whatever be its quantity :-All depreciation of paper, it appears to us, is produced by suspicion of the credit of those who issue it. A suspension or postponement of cash payment, is obvi. ously a ground for such suspicion ; and the more that is issued while this continues, the more must this suspicion and depreciation accumulate. When it has once begun, it is easy to see how rapidly it must increase. But this is merely because the additional issue is an additional load on a credit already suspicious,-not because there is a surplus of currency in the country. No man receives Government paper, even in the first instance, but in exchange for something which he thinks worth the same sum in coin ;-and no man cver receives paper money from another, except when he chooses to receive it for his goods or his labour ;-consequently, he can never receive more than he wants; nor can there be any depreciation from more overissuing.

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