gives no account of the interest on capital in England possessed by foreigners; or on capital abroad belonging to inhabitants of Great-Britain; or of the money-transactions between the governments of England and Ireland; or of contraband trade, and of exported and imported bullion, of which no account is rendered at the custom house. It likewise omits a most important article, the variations of which would probably nearly correspond with the fluctuations of the apparently favorable balance, namely, the bills drawn on the British government for their naval, military, and other expenses in foreign parts. Under these circumstances, as the real value cannot be obtained, and as the computed value of the imports is considerably swelled beyond its actual amount by including their freights inwards, and by rating them at their price in the English instead of the foreign market, while the computed value of the British exports is reduced much below its actual amount by excluding their freights outwards; a nearer approximation to the truth is effected by stating the official than the real value at the custom-house; because the official value bears a closer proportion to the quantity of goods imported and exported, than the real value does, if computed in the manner above stated. A given quantity of imports or exports being rated at a given price, the official value as fixed in the custom-house books ever since the year 1696. But state it which way we will, the balance is greatly in favor of England, that is to say, her exports far exceed her imports; consequently the course of exchange between Britain and Continental Europe being against Britain cannot be owing (as the merchants examined before the committee think and assert,) to her imports being greater than her exports, seeing that they are less.

Official value of Imports and Exports between Britain and Continental Europe.

"A favorable balance of trade on the face of the account of exports and imports annually presented to parliament, is a very probable consequence of large drafts on government for foreign expenditure, an augmentation of exports and a diminution of imports being promoted and even enforced by such drafts. For if the supply of bills drawn abroad, either by government-agents or private individuals, is disproportionate to the demand, the price of them in foreign money falls until it is so low as to invite purchasers, who being generally foreigners, and not wishing to transmit their property permanently to England, have a reference to the terms on which the bills on England will purchase those British commodities, which are in demand either in their own country or in intermediate places, with which the account may be adjusted, insomuch that an actual exportation nearly proportionate to the amount of the bills drawn, can scarcely fuil to take place. Of course cash and bullion are considered as forming a part of exported and imported articles. When the computed exchange with Hamburgh was 29, i. e. from 16 to 17 per cent. below par, the real difference of exchange, resulting from the state of trade and balance of payments, was only 5 per cent. against England, when the computed exchange with Amsterdam was 31-6, about 15 per cent. below par, the real exchange was 7 per cent. against England, when the computed exchange with

Paris was 20, i. e. 20 per cent. below par, the real ex change was 84 against England. There is therefore, a fall of 11 per cent. in exchange with Hamburgh, of 8 in exchange with Holland, of 11 in exchange with Paris, to be explained in some other way than by the mercantile theory of the balance of trude and the balance of payments. Hence, in the first six months of 1810, although the computed exchange with con-tinental Europe was against, yet the real exchange was in favor of England.

"Your committee upon inquiry found, that the directors of the Bank of England did not consider the foreign exchanges, as being in any manner liable to be influenced by the amount of their Bank paper currency in circulation throughout England. But your committee are persuaded that the more minute and ordinary fluctuations of exchange are generally referable to the state of commerce; that political events operating on the state of trade may contribute to the rise as well as to the fall of exchange; and in particular, that the first remarkable depression of it in the beginning of 1809, is to be ascribed to the commercial events arising out of the occupation of the North of Germany by the troops of the French Emperor. The evil is, that the exchange when fallen has not had the full means of recovery under the present system, to wit, the suspension of cash payments at the Bank of England. The restoration of the exchange used to be effected by the clandestine transmission of guineas, which improved it for the moment by serving as a remittance, but much more extensively by the reduction of the total quantity of the remaining circulating medium, to which reduction the Bank of England was led to contribute by the caution which every drain of gold naturally excited. Under the present suspension-system, the former of these remedies must more and more fail, the guineas in circulation being even now so few as to form no important remittance, and

the reduction of Bank of England paper is the sole corrective to be resorted to. It is a great practical error to suppose, that the exchanges with foreign countries and the price of bullion are not liable to be affected by the amount of paper currency which is issued without the condition of payment in specie, at the will of the holder. That the exchanges will be lowered and the price of bullion raised by an issue of such paper to excess, is not only established as a principle by the most eminent authorities upon commerce and finance, but its practical truth has been illustrated by the history of almost every state in modern titues which has used a paper currency.

"In the history of foreign countries, the excess of paper has been usually accompanied by a want of confidence in the sufficiency of those funds upon which the paper had been issued. Where excess and want of confidence are conjoined, they co-operate and produce their effect much more rapidly than when it is the result of the excess only of a paper in good credit, and in both cases an effect of the same sort will be produced upon the foreign exchanges and the price of bullion. A depreciation in the exchanges has always taken place whenever a paper currency not convertible into cash has been put into circulation. Witness the continental paper of the Americans issued during their revolutionary war, the assignats in France, the present paper money of Austria, Denmark, Russia, Portugal, &c. where a forced paper circulation exists, in conséquence of which the exchanges upon those countries have varied in proportion to the difficulties they have labored under, and in proportion to the confidence founded in public opinion, respecting the credit due to such paper. There is no paper on the European continent, which is not convertible at all times into cash, that is founded on a system equally solid and substantial as that on which the paper currency of England rests, where although it does

not represent what it professes on its face to represent, it represents something real, but not enough to equalize the balance of trade. Most of the banks on continental Europe are government banks; those not under the control of government are obliged to fulfil their engagements. In the campaign of 1809, the Austrian government made so large an additional issue of paper, that the exchange on Austria fell an additional fifty per cent. and gold coin fetched there from three to four times its nominal value.

"In Scotland, about the end of the seven years' war, banking was carried to a great excess; and by inserting in their notes an optional clause of paying at sight, or in six months after sight with interest, the convertibility of the paper into specie at the will of the holder was suspended. These notes accordingly became depreciated in comparison with specie; and the exchange between London and Dumfries (in Scotland) was 4 per cent. against Dumfries, while the exchange between London and Carlisle, (in England) which is not thirty miles distant from Dumfries, was at par. The excess of paper was removed by granting bills on London at a fixed date, the optional clauses were prohibited, and 10s. and 5s. notes suppressed by Parliament, and the exchange between England and Scotland was speedily restored to its natural rate, and has since continued stationary. The Bank of England also, soon after its establishment, ran the same course. A depreciation of the coin by wear and clipping was coupled with an excessive issue of paper, and bank-notes fell to a discount of 17 per cent. Yet there was then no failure of public confidence in the funds of the bank, for its stock sold for £110 per cent. though only £60 per cent. on the subscriptions had been paid in. By the conjoint effect of the depreciation of bank-paper from excess, and of the silver coin from wear and clipping, gold bullion was so high that a guinea sold for 30s. all the good silver disappeared from the