which the extensive trade of Amsterdam brought from all parts of Europe, reduced the value of its currency about nine per cent. below that of good money fresh from the Mint. Such money no sooner appeared, than it was melted down or carried away, as it always is in such circumstances. The merchants, with plenty of currency, could not always find a sufficient quantity of good money to pay their bills of exchange; and the value of those bills, in spite of several regulations which were made to prevent it, became in a great measure uncertain.

"In order to remedy these inconveniences, a Bank was established in 1609, under the guarantee of the city. This Bank received both foreign coin, and the light and worn coin of the country, at its real intrinsic value in good standard money of the country, deducting only so much as was necessary for defraying the expense of coinage, and the other necessary expense of management. For the value which remained after this small deduction was made, it gave a credit in its books. This credit was called Bank money, which, as it represented money exactly according to the standard of the Mint, was always of the same real value, and intrinsically worth more than current money.

"It was at the same time enacted, that all the bills drawn upon, or negotiated at Amsterdam, of the value of six hundred guilders and upwards, should be paid in bank money, which at once took away all uncertainty in the value of these bills; every merchant, in consequence of this regulation, was obliged to keep an account with the Bank, in order to pay his foreign bills of exchange, which necessarily occasioned a certain demand for bank money.'

In England we are not subject to any inconvenience from the circulation of foreign coins, and there is no uncertainty in the value of our coins relatively to each other or relatively to the standard of the Mint; our currency, considered as a national or domestic currency, is liable to neither variation nor uncertainty, but we are not free from the disadvantage arising from an uncertainty in the value of our currency, compared with the currency of foreign nations; the precious metals of gold and silver have a variable value relatively to each other, which inconvenience would not be, if England had the same standard of value as other countries, there would then be a par of exchange; the coins of any country may become worn or be clipped, and there would be a corresponding variation in the nominal exchange, but this variation can be detected by the diminished weight, and allowed in the calculation. If we had a silver

standard, while other countries have a silver standard, or if other countries had a gold standard, while we have a gold standard; or if an exchange Bank were established upon the plan which I venture to submit, there would be no uncertainty in the exchange from the variations in the relative value of gold and silver. In a pamphlet by John Gellibrand Hubbard, Esq.

He observes (p. 91.):

"Considered with reference to those qualities which constitute the superiority of gold and silver for the purposes of money over the baser metals, gold is in all of them superior to silver; and I do not see that the circumstance of other countries having adopted the less perfect, should determine this country to reject the more perfect metal as the standard of its currency. The disadvantage of having no permanent par of exchange is quite imaginary. The real exchange between two countries varies constantly, and in a degree far exceeding the mere relative variations of gold and silver; and the only practical inconvenience of a single standard here, is in the trifling additional labour of calculating (for exchange operations) the premium which gold may bear abroad."*

It appears to me that it is the essence of a par that it should be permanent; without a par there is no test, and in a commercial sense no exchange the "relative variations of gold and silver" in value have no necessary reference to the commercial exchanges: the exchanges vary according to the expense of transporting the precious metals from one country to the other; the relative value of gold and silver varies according to the productiveness of the respective mines, the cost of production relatively to each other, and to the demand and supply, without reference to the balance of payments which is the legitimate ground of variations in the commercial exchanges.

The evidence of P. H. Muntz, Esq., before the Committee of the House of Commons on commercial distress in 1848, shows that he did not treat, as a matter of indifference, the circumstance of our having a gold standard while other countries have a silver standard.

P. 105.:

"1322. Do you know, from any authentic source, that it was going out?-I know that gold was sent out in September, and I believe in October, and I believe there was a considerable drain in both metals.

"1323. To foreign parts?—Yes.

"1324. Perhaps you can furnish the Committee with information upon that which is certainly at variance with the returns that they have; are you aware that the exchanges at that time were in favour of this country?—I do not find that they were at the end of September, or the beginning of October; what you call the exchanges being in favour of this country depends upon the premium on gold abroad; I have known frequently the exchange to be apparently in our favour instead of against us, but the premium on gold has been 3 or 4 per cent. on the other side of the water."

I give this evidence to show how the difference of standard introduces confusion in the calculation of the exchange; and when so very great importance is attached to the exchanges, when upon the modern principle of Bank management, they are to be the rule in determining the issue of Bank notes, it would appear to be most desirable that all uncertainty should be removed, as to the exchanges being in our favour or against us.

Adam Smith (b. iv. c. 3. v. ii. p. 279.):

"Those deposits of coin, or those deposits which the Bank was bound to restore in coin, constituted the original capital of the Bank, or the whole value of what was represented by what is called Bank money. At present they are supposed to constitute but a very small part of it. In order to facilitate the trade in bullion, the Bank has been for these many years in the practice of giving credit in its books, upon deposits of gold and silver bullion. This credit is generally about 5 per cent. below the Mint price of such bullion. The Bank grants, at the same time, what is called a recipice or receipt, entitling the person who makes the deposit, or the bearer, to take out the bullion again at any time within six months, upon transferring to the Bank a quantity of Bank money equal to that for which credit had been given in its books when the deposit was made, and upon paying one-fourth per cent. for the keeping, if the deposit was in silver, and one-half per cent. if it was in gold; but at the same time declaring, that in default of such payment, and upon the expiration of this term, the deposit should belong to the Bank at the price at which it had been received, or for which credit had been given in the transfer

books. What is thus paid for the keeping of the deposit may be considered as a sort of warehouse rent, and why this warehouse rent should be so much dearer for gold than for silver, several different reasons have been assigned. The fineness of gold, it has been said, is more difficult to be ascertained than that of silver. Frauds are more easily practised, and occasion a greater loss in the most precious metal. Silver, besides, being the standard metal, the State, it has been said, wishes to encourage more the making of deposits of silver than those of gold."

One reason for charging a higher commission on gold than on silver might have been the varying relative value of gold to silver, which might be considerable even in six months. There could be no loss on this account on silver deposits, as it was restoring the same commodity that was received; but the gold deposits being delivered back in silver, or calculated in silver money, there would be more uncertainty respecting its value at the time of delivery relatively to the gold received. The relative proportional value of gold to silver was not settled in 1609; the discovery of the American mines made the proportional value more uncertain, and gold was becoming more valuable relatively to silver.

P. 281.:

"A person can generally sell his receipt for the difference between the mint price of bullion and the market price. A receipt for bullion is almost always worth something, and it very seldom happens, therefore, that anybody suffers his receipt. to expire, or allows his bullion to fall to the Bank at the price at which it had been received, either by not taking it out at before the end of the six months, or by neglecting to pay one-fourth or one-half per cent. in order to obtain a new receipt for another six months. This, however, though it happens seldom, is said to happen sometimes, and more frequently with regard to gold than with regard to silver, on account of the higher warehouse rent which is paid for the keeping of the more precious metal."

"The owners of bank credits, and the holders of receipts, constitute two different sorts of creditors against the Bank. The holder of a receipt cannot draw out the bullion for which it is granted, without reassigning to the Bank a sum of bank money equal to the price at which the bullion had been received. If he

has no bank money of his own, he must purchase it of those who have it. The owner of bank money cannot draw out bullion without producing to the Bank receipts for the quantity which he wants. If he has none of his own, he must buy them of those who have them. The holder of a receipt, when he purchases bank money, purchases the power of taking out a quantity of bullion, of which the Mint price is five per cent. above the Bank price. The agio of five per cent., therefore, which he commonly pays for it, is paid, not for an imaginary, but for a real value. The owner of bank money, when he purchases a receipt, purchases the power of taking out a quantity of bullion, of which the market price is commonly from two to three per cent. above the Mint price. price which he pays for it, therefore, is paid likewise for a real value. The price of the receipt, and the price of the bank money, compound or make up between them the full value or price of the bullion."

B. iv. c. 3. v. ii. p. 284. :

The

"The sum of Bank money for which the receipts are expired must be very considerable. It must comprehend the whole original capital of the Bank, which, it is generally supposed, has been allowed to remain there from the time it was first deposited, nobody caring either to renew his receipt, or to take out his deposit, as, for the reasons already assigned, neither the one nor the other could be done without loss. But whatever may be the amount of this sum, the proportion which it bears to the whole mass of Bank money is supposed to be very small. The Bank of Amsterdam has, for these many years past, been the great warehouse of Europe for bullion, for which the receipts are very seldom allowed to expire, or, as they express it, to fall to the Bank. The far greater part of the Bank money, or of the credits upon the books of the Bank, is supposed to have been created, for these many years past, by such deposits which the dealers in bullion are constantly both making and withdrawing. No demand can be made upon the Bank, but by means of a recipice or receipt. The smaller mass of Bank money for which the receipts are expired, is mixed and confounded with the much greater mass for which they are still in force; so that, though there may be a considerable sum of Bank money for which there are no receipts, there is no specific sum, or portion of it, which may not at any time be demanded by one. The Bank cannot be debtor to two persons for the same thing; and the owner of Bank money who has no receipt, cannot demand payment of the Bank till he buys one. In ordinary and quiet times he can find no difficulty in getting one to buy at the market price, which generally corresponds with the price at which he can sell the coin or bullion it entitles him to take out of the Bank.

"It might be otherwise during a public calamity; an invasion, for example, such as that of the French in 1672. The owners of Bank money being then all eager to draw it out of the Bank, in