cafionally confidered as equivalent, in fome of CHA P. the colonies, to a hundred and thirty pounds,

and in others to fo great a fum as eleven hundred pounds currency; this difference in the value arifing from the difference in the quantity of paper emitted in the different colonies, and in the distance and probability of the term of its final discharge and redemption.

No law, therefore, could be more equitable than the act of parliament, fo unjustly complained of in the colonies, which declared that no paper currency to be emitted there in time coming, fhould be a legal tender of pay

ment.

PENSYLVANIA was always more moderate in its emiffions of paper money than any other of our colonies. Its paper currency accordingly is faid never to have funk below the value of the gold and filver which was current in the colony before the firft emiffion of its paper money. Before that

emiffion, the colony had raised the denomination of its coin, and had, by act of affembly, ordered five fhillings fterling to pafs in the colony for fix and three-pence, and afterwards for fix and eight-pence. A pound colony currency, therefore, even when that currency was gold and filver, was more than thirty per cent. below the value of a pound fterling, and when that currency was turned into paper, it was feldom much more than thirty per cent. below that value. The pretence for raifing the denomination of the coin, was to prevent the exportation

II.

of

BOOK of gold and filver, by making equal quantities of thofe 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 raifed the denomination of their coin, so that their gold and filver were exported as fast 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 use fome additional value, over and above what it would have had, from the real or fuppofed diftance 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 discharge 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 eafily be employed in this manner, the demand for it might be such as to make it even bear a premium, or fell for fomewhat

II.

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 say, 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 those metals, or occafion equal quantities of them to exchange for a fmaller 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 VOL. I. particular

K k

II.

BOOK particular time to fupply the great market of the commercial world with those 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 fuch bank notes as foon as prefented, their trade may, with fafety 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 themselves against thofe 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 fmaller 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, must sometimes

happen,

II.

happen, becomes of less confequence to the C HA 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.

END OF THE FIRST VOLUME.