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BOOK gold and filver, by making equal quantities of those metals pafs for greater fums in the colony than they did in the mother country. It was found, however, that the price of all goods from the mother country rose exactly in proportion as they raised the denomination of their coin, fo that their gold and filver were exported as faft as ever.

The paper of each colony being received in the payment of the provincial taxes, for the full value for which it had been iffued, it neceffarily derived from this ufe fome additional value, over and above what it would have had, from the real or fuppofed distance of the term of its final discharge and redemption. This additional value was greater or lefs, according as the quantity of paper iffued was more or lefs above what could be employed in the payment of the taxes of the particular colony which iffued it. It was in all the colonies very much above what could be employed in this manner.

A prince, who fhould enact that a certain proportion of his taxes fhould be paid in a paper money of a certain kind, might thereby give a certain value to this paper money; even though the term of its final difcharge and redemption fhould depend altogether upon the will of the prince. If the bank which iffued this paper was careful to keep the quantity of it always fomewhat below what could easily be employed in this manner, the demand for it might be fuch as to make it even bear a premium, or fell for fomewhat



fomewhat more in the market than the quan- CHA P. tity of gold or filver currency for which it was iffued. Some people account in this manner for what is called the Agio of the Bank of Amfterdam, or for the fuperiority of Bank money over current money; though this bank money, as they pretend, cannot be taken out of the bank at the will of the owner. The greater part of foreign bills of exchange must be paid in bank money, that is, by a transfer in the books of the bank; and the directors of the bank, they allege, are careful to keep the whole quantity of bank money always below what this use occafions a demand for. It is upon this account, they fay, that bank money fells for a premium, or bears an agio of four or five per cent. above the fame nominal fum of the gold and filver currency of the country. This account of the Bank of Amfterdam, however, it will appear hereafter, is, in a great measure, chimerical.

A paper currency which falls below the value of gold and filver coin, does not thereby fink the value of thofe metals, or occafion equal quantities of them to exchange for a smaller quantity of goods of any other kind. The proportion between the value of gold and filver and that of goods of any other kind, depends in all cafes, not upon the nature or quantity of any particular paper money, which may be current in any particular country, but upon the richness or poverty of the mines, which happen at any particular




BOOK particular time to fupply the great market of the commercial world with thofe metals. It depends upon the proportion between the quantity of labour which is neceffary in order to bring a certain quantity of gold and filver to market, and that which is neceffary, in order to bring thither a certain quantity of any other fort of goods.

If bankers are reftrained from iffuing any circulating bank notes, or notes payable to the bearer, for less than a certain fum; and if they are fubjected to the obligation of an immediate and unconditional payment of such bank notes as foon as prefented, their trade may, with safety to the public, be rendered in all other respects perfectly free. The late multiplication of banking companies in both parts of the United Kingdom, an event by which many people have been much alarmed, instead of diminishing, increases the fecurity of the public. It obliges all of them to be more circumfpect in their conduct, and, by not extending their currency beyond its due proportion to their cash, to guard themfelves against those malicious runs, which the rivalship of fo many competitors is always ready to bring upon them. It reftrains the circulation of each particular company within a narrower circle, and reduces their circulating notes to a smaller number. By dividing the whole circulation into a greater number of parts, the failure of any one company, an accident which, in the course of things, muft fometimes happen,

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happen, becomes of lefs confequence to the CHA P. public. This free competition too obliges all bankers to be more liberal in their dealings with their customers, left their rivals fhould carry them away. In general, if any branch of trade, or any divifion of labour, be advantageous to the public, the freer and more general the competition, it will always be the more fo.


Strahan and Preston, Printers-Street, London.

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