Advantages resulting from the use of the former ..

129

The amount of paper money can never exceed that of the coin it displaces 129

All excess immediately drawn in coin

129

Absurdity of such assumptions

130

Disproved by reference to the currencies of England and Scotland.

130

Paper money used in foreign as in domestic commerce .

Only the excess of paper money issued returns to the issuer

The coin liberated will go abroad

Increased cost of maintaining excessive issues

There can be no excess of symbolic money

All regularly returns for redemption

132

132

132

132

133

133

The amount of notes issued has nothing to do with their return

A currency not symbolic is in excess to its whole amount.

133

133

Cost of maintaining a currency in ratio to its amount

134

The advances that Banks may make to merchants never to exceed the

amount of coin which would otherwise be in circulation

135

Advances to be made to merchants only as the representatives of manu-

facturers..

135

To equal the amount of merchandise entering into consumption.

Paper money does not supersede, but supplements the use of coin

A community will "absorb " all the money it can get

135

136

136

The promptness in payment of merchants would show that an excess of

currency had not been issued

Such promptness for a time rather a proof of excessive issues

136

137

All reserves, and all gold and silver used as currency, dead stock

The object of banking to convert this dead stock into active capital

Paper money a wagon-way through the air..

Increase of money increases the price of commodities

The quantity of paper money added to the circulation, always to equal

the amount of coin taken from it

The assumed science of Political Economy a modern one.

138

139

139

The Greeks, though addicted to commerce, seldom speculated upon subjects

coming within the range of the economic sciences

140

The Romans never a commercial or manufacturing people

The overthrow of the Empire by the Northern races

140

140

Commerce and trade highly regarded by the latter

140

Freedom the necessary condition and result of the commercial spirit

Contempt of the Greeks and Romans for the useful industries

The error not in the importance attached to them, but in the modes in which

Sketch of the history of usury (note).

1st, That wealth consisted in gold and silver.

143

Principles of the Mercantile System.

2d, That these can be brought into a country having no mines, only by a

favorable" Balance of Trade

Hence it became the great object of Political Economy to increase expor-

tations and diminish importations

1st, By restraints upon the importation of such articles as could be pro-

duced at home

2d, By restraints upon importations from countries with which trade

was considered disadvantageous

Exportations to be encouraged,

2d, By bounties .

144

144

144

147

147

3d, By treaties of commerce

147

4th, By planting of colonies.

147

The six preceding provisions the means for increasing the "Balance of

Trade"

The idea that they were arose from the double function of money

Illustration of this distinction

Money the measure of value and money the instrument of commerce, the

A person rich in proportion to the amount he holds

149

150

Absurdity in asserting the universal object of acquisition to possess no

Doctrines of Smith and the Economists in reference to "Balance of Trade

the necessary sequence of those held by them in reference to the

value of money

Would not allow that to be an object of commerce which was not even a

subject of commerce

Importance of an equilibrium of the precious metals the world over

How this is to be maintained . .

Its action a triumphant vindication of the correctness of the doctrine of

"Balance of Trade"

Illustrated by the action of the Bank of England

Governments incompetent to control the movements of the precious metals 158

The Bank competent

Smith assumed to have demonstrated the superiority of the former

No such demonstration possible . . .

The opposing doctrines not the result of natural laws, but of conditions

Those possessed of superior capital and skill, Free-traders.

Those lacking and seeking to acquire them, Protectionists

The same parties Free-Traders in one country and Protectionists in

The age of Protection, the heroic one.

That of Free-Trade, one of realization or enjoyment

Free-Trade constantly gaining at the expense of Protection
The question as at present treated, insoluble

Smith had the same contempt for merchants and manufacturers as Plato

and Aristotle

162

"The sneaking arts of underling tradesmen erected into maxims for the

conduct of a great empire."

162

"The mean rapacity and monopolizing spirit of merchants and manu-

facturers

162

"The capricious ambition of kings and ministers not more fatal to the

repose of Europe'

Merchants always the champions of commercial and political freedom

Merchants the authors of the spirit of protection and monopoly

Teach the doctrine of buying in the dearest, and selling in the cheapest

markets

"Their interested sophistry has confounded the common sense of man-

kind"...

163

Their interest directly opposed to that of the great body of the people

If these assertions be true, the greater the freedom of trade, the greater the

monopoly

"The sneaking arts of underling tradesmen " have made England what

she is..

Absurdity of his tirade

Wholly ignored moral laws as the chief factors in civilization

The heresies of country gentlemen taught them by merchants

Smith incapable of conducting a scientific discussion

Wholly unfitted for the work he undertook.

His ignorance and want of method.

The great obstacle to progress in the subjects upon which he wrote

Whatever vigor and originality he possessed wholly lost in his followers

166

166

167

167

168

168

169

169

170

One of the most distinguished disciples of Smith.

Reduces Smith's statements to precise and logical terms

171

Agrees with him as to the invention of money, but denies value to be a

useful attribute of it

Were England insulated, her currency might as well be paper as coin

Value complicates the theory of money

Stewart, in denying all value to money, more logical than Smith

Absurdity of his conclusion drawn from an assumed insulation of Eng-

His argument puerile to the last degree

Divisibility the attribute fitting gold and silver to serve as money

172

174

Coins render ideas of value more precise than mathematical statements . 176

If value be no attribute of money, then divisibility is of no importance

Rapidity of circulation

177

178

Illustration: money employed at the siege of Tournay

Absurdity of the illustration .

The value of money is in ratio to the rapidity of its circulation.
Money possesses no more activity than any other kind of property
Stewart a striking example of the weakness and folly of the Schoolmen

BANK OF ENGLAND - THE BULLION REPORT, 1810.

180

180

181

Act of 1708 making it the manager and regulator of the currency

Authorized to issue notes to any amount. .

183

183

183

184

No other association having more than six members to issue notes

Beneficent influence of the Bank

185

..185

The foundation of England's commercial and manufacturing supremacy

Sketch of early banking in England

Private and country Banks

Issue of notes a right at common law .

Number of country and private Banks in operation from 1809 to 1832, in-

clusive (note) . .

186

187

189

Extent of their operations (note)

189

Operations of the Bank of England from 1814 to 1832, inclusive (note) . .

Amount of commercial bills under discount at the Bank, from 1795 to 1813,

Mr. Pitt secures such authority, but without limit as to amount

192

Controls the whole monetary power of the kingdom .

192

The tremendous struggle in which he was engaged

Financial condition of England at the time .

The necessities of Mr. Pitt impair the ability of the Bank to loan to mer-

The bullion of the Bank, on the 21st of February, 1797, reduced to

£1,272,000.

196

It appeals to the government .

196

Forbidden on February 25, 1797, to continue to pay specie

Statement showing the value of gold from 1797 to 1821, inclusive (note)

Committee of the House of Commons to inquire into its causes

When the Bank was upon a specie basis, it regulated its issues by the

b

200

If at any time the proper limit was incautiously exceeded, the excess

returned for coin

200

The suspension of specie payments exempted the Bank from such
check

201

The assumption of the Bank, that there could be no excess of issue so
long as it was made in the discount of short bills representing real
transactions, denied. .

201

Not the excess alone, but all the issues of the Bank speedily return for

redemption.

202

The excess acts upon the exchanges only through its effects

Mode in which it does act upon them

So long as specie payments are maintained, no difference in value between

the notes of the Banks and gold.

The Committee simply follow Smith in making the question of currency one

of quantity, not of quality

Number of days during which the bank-notes remain in circulation (note)

Years might elapse before excess of issue would be felt in the exchanges

The issues of the Bank, properly made, never in excess

To regulate issues, after suspension, by reference to exchanges, would be to

make none whatever

202

The proposition of the Committee an absurdity on its face

204

During suspension, the bills of the Bank could be paid only in its own

notes

204

The requirement of the Committee would have left the country wholly

without a currency

The rule acted upon by the Bank vindicated by the result

Adopted the only possible course open to it.

204

204

Gave the country, for a considerable time, a symbolic currency equal to its

wants, and of the value of coin

Error of the Bank in not seeing that suspension removed the real check to

overissues

Great wisdom and ability with which it was managed

Ignorance, and narrow scope of inquiry, of the Committee

Economists never able to master the reason why the Bank recovered so

speedily (note)

206

.

Distinction between "an advance of capital to merchants, and an addition

of currency to the general mass of circulation".

207

No limit to the former but the inability to find good borrowers

When the advances become circulation, the general mass of currency

inflated, and diminished in value

The amount of such currency permanently outstanding increases in

ratio to the loans that are made.

Notes representing capital the same in character till they are taken in

All issued fall alike into the channels of circulation, and all alike return to

the Bank for redemption

Assumptions of the Committee wholly groundless

The currency of a country bears no fixed proportion to the quantity of com-

modities.

209

Its effectiveness depends upon the quickness of its circulation

Contrivances by which the same quantity may be made to do an increased