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money be invested in Spanish products, the cargo might have the additional value of $27,500, on its arrival at an American port, and what originally cost $ 47,500, might thus be worth $ 102,500. In this latter case, the importation would be considered ruinous to the country, although it had made the fortune of the merchant. Whereas, in the former instance, that of a direct payment in specie, Secretaries of the Treasury would felicitate the country on our favorable balance.

It is not our intention to investigate the principles of commerce further than they are necessarily connected with our subject; but even this favorable balance of trade, as it is called, is not always paid in specie. When the real exchange on Paris is two per cent. above par, the London merchant would prefer sending hardware, or some other commodity, if by incurring an expense of £101, instead of £102, he could purchase such a quantity as would sell in Paris for £100. We might appeal to the present state of our own country, against which,

according to custom-house language, there has been a constant balance of trade, since our establishment as colonists, to prove the entire fal. lacy of the doctrine of those who make wealth consist in the precious metals, did not the obvious principles of reason render recourse to facts unnecessary. Indeed, the hoarding of gold and silver, the retaining of a large portion of the capital of the country in an unproductive state, operates as one of the most efficient causes of the poverty of India.

To facilitate the use of gold and silver, as a medium of exchange, and to save the time and labour of assaying them in ordinary transactions, a mark was placed upon the metals to denote their value. The right of coining was almost invariably assumed as an attribute of sovereignty. “A coin is merely a piece of metal of known weight and fineness,” and, as well after the introduction of the stamp, as when they passed by weight and not by tale, gold and silver exchanged for other commodities of equal value. The expense of the mint, unless it be gratuitously borne by government, will increase the value of coin over bullion, by the amount of labour added to the metal in order to prepare it for the currency. The seignorage, if no bounds are imposed on the quantity of money coined, can never exceed the difference between the labour worked up in equal weights of coined and uncoined metal.

In tracing the history of money, we find a common error to have pervaded the monetary regulations adopted by governments. They have gone on the principle, that the authority of the sovereign, and not the cost of the metal, constituted the value of the coin. They have thus arbitrarily reduced the quantity of

silver and gold contained in pieces of different denominations. They have conceived, that if the name of the coin was retained, it would continue to exchange for the same value of other commodities, even though its debasement should cause the currency of the country to be doubled. Heliogabalus was better acquainted with the true theory of money.

The Romans being bound to pay in taxes, not a certain weight of gold, but a certain number of aurei or pieces of gold, the Emperor increased the quantity of metal contained in the aureus, and thus, without appearing to add to their contributions, assumed to himself a command over a much larger portion of the means of his subjects.

The fluctuations of the coin have in general been of the opposite character. The Roman as or pondo, which contained in the reign of Servius Tullius 12 ounces, was, 175 years before Christ, reduced to half an ounce, The history of the currency of most of the states of modern Europe is analogous. The pound or livre, at first, contained the weight of metal corresponding with its denomination. By the tables annexed to the essay before us, it

appears that the livre current in France from A. D. 800 to 1103, was worth in the money of 1789, 78 livres 17 sols. In England, a pound weight, containing 11 oz. 2 dwts. pure silver, was, at the time of the conquest, coined into a pound sterling. A quantity of silver of the same weight and assay, in 1816, made £36s. of the legal coin. In 18 Edw. III, (1344) a pound weight of gold of the fineness of 23 crts. 3; grs. was coined into £13 3 4 ; in 1816, the same quantity, of the fineness of 22 crts., was contained in £46 14 6, of the current coin at the mint. The name given to the money is altogether arbitrary, and after the debasement of the coin becomes known, is productive neither of good nor evil. The temporary effects are decidedly injurious. Embarrassments must be occasioned in traffic, till the relation which the degraded money has to the value of other articles is regulated. The state not only pay their creditors a less value than was originally stipulated, but every debtor has legal permission to cheat those by whom he has been trusted. The gain of the government is also very transitory. In all new contracts, the value of articles will not only be estimated in the existing currency, but every person dealing with the state, or individuals, will add so much to the amount of his demand as will indemnify him against a further reduction in the current money, a risk always incurred in a nation where alterations of this nature are once adopted.

The commercial history of the Greeks and Romans would form an interesting subject of investigation. The wants of

trade are similar in all ages, and there is little doubt that the nummularii and argentarii of ancient times performed most of the functions of modern bankers. So far is the origin of bills of exchange from being attributable to the revival of trade, that we find both Isocrates and Cicero speaking of travellers? obtaining orders from creditors on their foreign debtors, in order to avoid the danger of risking their fortunes on the seas. Such, indeed, is the convenience to all parties of making an assignment of a debt, in a distant country, to one who has occasion for foreign funds, on receiving an equivalent at the place of the creditor's residence, that it must have attracted the attention of every people concerned in extended trade. The condition of the world during the middle ages, the indignities imposed upon the Jews, who alone possessed any circulating capital, went far to annihilate every species of credit. Instead, however, of considering the use of bills of exchange an evidence of the embarrassments of commerce, we should rather regard the resort to them by the Lombards an indication of its revival. By rendering the transportation of the medium of exchange from one place to another almost unnecessary, bills liberate a great amount of labour, as well as enable a much less quantity of gold and silver to perform the functions of a universal currency.

From foreign bills of exchange, the transition is easy to inland bills, and the promissory note of a person of undoubted wealth would soon be regarded as a convenient substitute for the metals, of which their possessor is liable to be robbed, and which have no ear-mark that might serve to identify them. Small states were much exposed to the introduction of clipt coin, and as the currency was not limited in quantity in proportion as it was debased in quality, great embarrassments were experienced in determining the value of the coins offered in large transactions. The banks of Venice and Amsterdam had the effect of remedying these inconveniences, and payments were made by orders on them. As these transferable certificates were regulated as to quantity, by being only issued to the actual depositors of bullion, the money of the bank always bore a premium over the circulating currency of the country. While the notes issued were only equal in denomination to the value of the specie deposited, the bankers could gain nothing by their extensive credit. These establishments were safe places of deposit. They afforded a more convenient medium of exchange, and preserved a regular standard of value. Experience would, however, soon show, that when an institution or individual issuing notes enjoys undoubted credit, little apVol. I.


prehension need be entertained that the bank would be called on to redeem, in specie, the whole amount of its paper, before an opportunity was afforded of converting into gold and silver the securities on which the loans had been negotiated. If there were, before the introduction of paper money, forty millions of coin in circulation, and a paper, convertible at pleasure into gold or silver, should be substituted as the medium of exchange, twenty millions of the precious metals, and in all probability, a very much smaller amount, would be sufficient to meet every demand. Twenty millions of value might thus be sent out of the country and replaced by reproductive capital. By thus cheapening an important instrument of trade, commerce is benefited, and by the setting free of an immense reproductive power, the nation's command over the comforts and conveniences of life is greatly augmented.

If so much paper be issued, as to increase the money of the country beyond the circulating medium, which would have been employed had gold and silver continued the currency, it will necessarily be degraded in value. On the other hand, if the paper currency is of a less amount than the metallic, which it replaces, every pound or dollar of paper money will exchange for more commodities than the gold or silver, which it represents, previously did. Had the Bank of England only is. sued such a sum in notes, as would have corresponded with the amount of paper and coin in circulation before the suspension of specie payments, their paper would have exchanged at par for gold and silver, and no alteration would have taken place in the monetary system. That the restriction on the bank's redeeming its bills in specie, was not the direct cause of the degradation of the currency, is apparent from the fact, that for several years subsequent to 1797, when the circulation nearly coincided in arount with the former currency, no depreciation was experienced. But when from 1809 to 1814, an increased quantity of notes were emitted, the paper money fell from 10 to 25 per

cent. In 1810, it was asserted that there were fifty-six millions of paper money in circulation, twenty-three millions of which were notes of the Bank of England; thirty millions is stated to have been the amount of currency in 1797. After making allowance for the increased quantity of coin which would'havebeen required for circulation in 1810, owing to the general augmentation of commodities, the difference of the amount of the currency between the two periods may be imputed to an excessive issue, the consequence of which was a proportionate depreciation in its value. In 1814, after the peace in Europe, but before

the resumption of specie payments, gold,estimated in the paper currency, was twenty-five per cent. above the mint price. It was not till individual cupidity prevailed over national considerations, that it became necessary for the bank to have recourse to parliament, to declare by law that their paper was of equal value with gold and silver. The parties concerned in such a legislative enactment, must have, forsooth, given a literal interpretation to the writings of the jurists, who contend for the omnipotence of parliament.—The ruin and bankruptcy, which were the consequence of the unlimited issue by the French government, during the revolution, of irredeemable paper, may be in some degree imagined, when it is recollected, that from the meeting of the constituent Assembly to the adoption of the constitution of '95, assignats for the sum of forty-five milliards, five hundred and eighty one millions of livres, were emitted. Nor did the experiment stop here; it was attempted to replace this currency, which literally was not of as much exchangeable value as the labour worked up in the engraved paper, by issuing at once two milliards, four hundred millions of mandats territoriaux, based upon the security of the royal and other confiscated domains. These latter bills of credit, emitted without any reference to the principles which regulate the current value of money, soon shared the fate of the assignats. Such, indeed, has ever since been the feeling of the French people with regard to the paper representative of coin, that the national bank has been limited to notes of the denominations of five hundred and a thousand francs. Though branches have been established by the Bank of France at Lyons and other commercial cities, its paper never has circulated in the interior of the country.

It is scarcely necessary to have recourse to foreign states for an illustration of the derangements to which a currency is exposed, when legislators lose sight of the true principle by which its value must be sustained. The continental money fabricated during our revolution may well be assimilated to the French assignats, and the land bank of Tennessee was no bad imitation of the mandats territoriaux. We had also, in our own section of the country, a suspension of specie payments, during a part of the late war. It is indeed upon the facts furnished by the history of that period in our country, as well as in England, that we would found our opinion, that by limiting the paper in circulation to the amount of specie which it replaces, paper money may be kept of the value of gold and silver; and that, consequently, the rules which apply to the metallic currency, in estimating by it the price of other articles, are equally opera

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