received a gradual improvement. The exchange with Hamburgh rose gradually from 29. 4. to 31.; that with Amsterdam from 31. 8. to 33. 5.; that with Paris from 19. 16. to 21.11. Since the 3d April last to the present time, they have remained nearly stationary at those rates, the exchange with Hamburgh, as stated in the tables printed for the use of the merchants, appearing as much against this country as 91. per cent. below par; that with Amsterdam appearing to be more than 71. per cent. below par; and that with Paris more than 14, per cent. below par.

So extraordinary a rise in the market price of gold in this country, coupled with so remarkable a depression of our exchanges with the continent, very early, in the judgment of your Committee, pointed to something in the state of our own domestic currency as the cause of both appearances. But before they adopted that conclusion, which seemed agreeable to all former reasonings and experiences, they thought it proper to enquire more particularly into the circumstances connected with each of those two facts; and to hear, from persons of commercial practice and detail, what explanations they had to offer of so unusual a state of things.

With this view, your Committee called before them several merchants of extensive dealings and intelligence, and desired to have their opinions, with respect to the cause of the high price of gold and the low rates of exchange.

I.

ALLEGED SCARCITY OF GOLD.

It will be found by the evidence, that the high price of gold is ascribed, by most of the witnesses, entirely to an alleged scarcity of that article, arising out of an unusual demand for it upon the continent of Europe. This unusual demand for gold upon the continent is described by some of them as being chiefly for the use of the French armies, though increased also by that state of alarm, and failure of confidence, which leads to the practice of hoarding.

Your Committee are of opinion, that, in the sound and natural state of the British currency, the foundation of which is gold, no increased demand for gold from other parts of the world, however great, or from whatever causes arising, can have the effect of producing here, for a considerable period of time, a material rise in the market price ' of gold. But before they proceed to explain the grounds of that general opinion, they wish to state some other reasons which alone would have led them to doubt whether in point of fact, such a demand for gold, as is alleged, has operated in the manner supposed.

PRICE OF GOLD IN CONTINENTAL MARKETS.

If there were an unusual demand for gold upon the continent, such as could influence its market price in this country, it would of course influence also, and indeed in the first instance, its price in the continental markets; and it was to be expected that those who ascribed the high price here to a great demand abroad, would have been prepared to state that there was a corresponding high price abroad. Your Committee did not find that they grounded their inference upon any such information; and so far as your Committee have been enabled to ascertain, it does not appear that during the period when the price of gold bullion was rising here, as valued in our paper, there was any corresponding rise in the price of gold bullion in the markets of the continent, as valued in their respective currencies. Mr. Whitmore, indeed, the late governor of the bank, stated, that in his opinion it was the high price abroad which had carried our gold coin out of this country; but he did not offer to your Committee any proof of this high price. Mr. Greffulhe, a continental merchant, who appeared to be remarkably well informed in the details of trade, being asked by the Committee, if he could state whether any change had taken place in the price of gold in any of the foreign markets within the last year, answered, No very material change that I am aware of." Upon a subsequent day, having had time to refer to the actual prices, he again stated to the Committee, I beg leave to observe, that there has been no alteration of late in the Mint price of gold in foreign places, nor have the market prices experienced an advance at ali relative to the rise that has taken place in England; one of the papers I have delivered shews the foreign prices reduced into sterling money at the present low rates of exchange, and the excess above our market price may be considered as about equal to the charges of conveyance." The papers he refers to will be found in the Appendix; and this statement made by Mr. Greffulhe throws great light upon this part of the subject; as it shews, that the actual prices of gold in the foreign markets are just so much lower than its market price here, as the difference of exchange amounts to. Mr. Greffulhe's paper is confirmed by another, which has been laid before your Committee. Mr. Abraham

Goldsmid has also stated to your Committee, that during that part of last year when the market price of gold here rose so high, its price at Hamburgh did not fluctuate more than from 3 to 4 per cent.

Here your Committee must observe, that both at Hamburg and Amsterdam, where the measure of value is not gold as in this country, but silver, an unusual demand for gold would affect its money price, that is, its price in silver; and that as it does not ap pear that there has been any considerable rise in the price of gold, as valued in silver, at those places in the last year, the inference is, that there was not any considerable increase in the demand for gold. That permanent rise in the market price of gold above its Mint price, which appears by Mr. Greffulhe's paper to have taken place for several years both at Hamburg and Amsterdam, may in some degree be ascribed, as your Committee conceive, to an alteration which has taken place in the relative value of the two precious metals all over the world; concerning which, much curious and satisfactory evidence will be found in the Appendix, particularly in the documents laid before your Committee by Mr. Allen. From the same cause, a fall in the relative price of silver appears to have taken place in this country for some time before the increase of our paper currency began to operate. Silver having fallen in relative value to gold throughout the world, gold has appeared to rise in price in those markets where silver is the fixed measure, and silver has appeared to fall in those where gold is the fixed measure.

PRICE OF GOLD IN ENGLAND.

With respect to the alleged demand for gold upon the continent for the supply of the French armies, your Committee must further observe, that, if the wants of the military chest have been latterly much increased the general supply of Europe with gold has been augmented by all that quantity which this great commercial country has spared in consequence of the substitution of another medium of circulation. And your Committee cannot omit remarking, that though the circumstances which might occasion such an increased demand may recently have existed in greater force than at former periods, yet in the former wars and convulsions of the continent, they must have existed in such a degree as to produce some effect. Sir Francis Baring has very justly referred to the seven years' war and to the American war, and remarks, that no want of bullion was then felt in this country. And upon referring for a course of years to the tables which are published for the use of the merchants, such as Lloyd's lists and Wettenhall's Course of Exchange, your Committee have found that from the middle of the year 1773, when the reformation of the gold coin took place, till about the middle of the year 1799, two years after the suspension of the cash payments of the Bank, the market-price of standard gold in bars remained steadily uniform at the price of 3. 178. 6d. [being, with the small allowance for loss by detention at the Mint, equal to the Mint price of 37. 178. 104d.] with the exception of one year, from May, 1783, to May, 1784, when it was occasionally 3l. 188. During the same period, it is to be noticed, the price of Portugal gold coin was occasionally as high as 47. 28.; and your Committee also observe, that it was stated to the Lord's Committee in 1797 by Mr. Abraham Newland, that the bank had been frequently obliged to buy gold higher than the Mint price, and upon one particular occasion gave as much for a small quantity, which their agent procured from Portugal, as 4l. 88. But your Committee find, that the price of standard gold in bars was never for any length of time materially above the Mint price, during the whole period of 24 years which elapsed from the reformation of the gold coin to the suspension of the cash payments of the bank. The two most remark able periods prior to the present, when the market price of gold in this country has exceeded our Mint price, were in the reign of King William, when the silver coin was very much worn below its standard, and in the early part of his present Majesty's reign, when the gold coin was very much worn below its standard. In both those periods, the excess of the market price of gold above its Mint price was found to be owing to the bad state of the currency; and in both instances, the reformation of the currency effectually lowered the market price of gold to the level of the Mint price. During the whole of the years 1796 and 1797, in which there was such a scarcity of gold, occasioned by the great demands of the country bankers in order to increase their deposits, the market price of gold never rose above the Mint price.

Your Committee have still further to remark upon this point, that the evidence laid before them has led them to entertain much doubt of the alleged fact, that a scarcity of gold bullion has been recently experienced in this country. That guineas have disappeared from the circulation, there can be no question; but that does not prove a scarcity of bullion, any more than the high price proves that scarcity. If gold is rendered dear by any other cause than scarcity, those who cannot purchase it without paying the high price, will be very apt to conclude that it is scarce. A very extensive home dealer who was examined, and who spoke very much of the scarcity of gold, acknowledged that he found no difficulty in getting any quantity he wanted, if he was willing to pay the price for it. And it appears to your Committee, that, though in the course of the last year there have been large exportations of gold to the continent, there

have been also very considerable importations of it into this country from South America, chiefly through the West Indies. The changes which have affected Spain and Por tugal, combined with our maritime and commercial advantages, would seem to have render d this country a channel through which the produce of the mines of New Spain and the Brazils pass to the rest of the world. In such a situation, the imports of bullion and coin give us the opportunity of first supplying ourselves; and must render this the last of the great markets in which a scarcity of that article will be felt. This is remarkably illustrated by the fact, that Portugal gold coin is now sent regularly from this country to the cotton settlements in the Brazils. Pernambuco, and Maranham, while dollars are remitted in considerable quantities to this country from Rio Janeiro.

It is important also to observe, that the rise in the market price of silver in this country, which has nearly corresponded to that of the market price of gold, cannot in any degree be ascribed to a scarcity of silver. The importations of silver have of late years been unusually large, while the usual drain for India and China has been stopped.

For all these reasons, your Committee would be inclined to think, that those who ascribe the high price of gold to an unusual demand for that article, and a consequent scarcity, assume facts as certain of which there is no evidence. But even if these assumptions were proved, to ascribe the high price of gold in this country to its scarcity, seems to your Committee to involve a misconception, which they think it important to explain.

In this country, gold is itself the measure of all exchangeable value, the scale to which all money prices are referred. It is so, not only by the usage and commercial habits of the country, but likewise by operation of law, ever since the act of the 14th of his present Majesty [finally rendered perpetual by an act of the 39th year of the reign] disallowed a legal tender in silver coin beyond the sum of 25. Gold being thus our measure of prices, a commodity is said to be dear or cheap according as more or less gold is given in exchange for a given quantity of that commodity; but a given quantity of gold itself will never be exchanged for a greater or a less quantity of gold of the same standard fineness. At particular times it may be convenient in exchange for gold in a particular coin, to give more than an equal quantity of other gold; but this difference can never exceed a certain small limit; and thus it has happened that the bank, while liable to pay its notes in specie, has under particular emergencies been put to the necessity of purchasing gold at a loss, in order to keep up or to repair its stock But generally speaking, the price of gold, being itself measured and expressed in gold, cannot be raised or lowered by an increased or diminished demand for it. An ounce of gold will exchange for neither more nor less than an ounce of gold of the same fineness, except so far as an allowance is to be made, if the one ounce is coined or otherwise manufactured and the other is not, for the expense of that coinage or manufacture. An ounce of standard gold bullion will not fetch more in our market than 3l. 178. 104d., unless 37. 178. 104d., in our actual currency is equivalent to less than an ounce of gold. An increase or diminution in the demand for gold, or what comes to the same thing, a diminution or increase in the general supply of gold, will, no doubt, have a material effect upon the money prices of all other articles. An increased demand for gold, and a consequent scarcity of that article, will make it more valuable in proportion to all other articles; the same quantity of gold will purchase a greater quantity of any other article than it did before: in other words, the real price of gold, or the quantity of commodities given in exchange for it, will rise, and the money prices of all commodities will fall; the money price of gold itself will remain unaltered, but the price of all other commodities will fall. That this is not the present state of things is abundantly manifest; the prices of all commodities have risen, and gold appears to have risen in its price only in common with them. If this common effect is to be ascribed to one and the same cause, that cause can only be found in the state of the currency of this country.

PRICE OF BULLION COMPARED WITH COIN.

Your Committee think it proper to state still more specifically, what appear to them to be the principles which govern the relative prices of gold in bullion and gold in coin, as well as of paper circulating in its place and exchangeable for it. They cannot introduce this subject more properly, than by adverting to those simple principles and regulations, on which a coinage issuing from the King's mint is founded.

The object is to secure to the people a standard of a determinate value, by affixing a stamp, under the royal authority, to pieces of gold, which are thus certified to be of a given weight and fineness. Gold in bullion is the standard to which the Legis. lature has intended that the coin should be conformed, and with which it should be identified as much as possible. And if that intention of the legislature were completely fulfilled, the coined gold would bear precisely the same price in exchange for all other commodities as it would have borne had it continued in the shape of bullion; but it is subject to some small fluctuations.

First, there is some expense incurred in converting bullion into coin. They who send bullion to be coined, and it is allowed to any one to send it, though they are charged with no seignorage, incur a loss of interest by the detention of their gold in the mint. This loss may hitherto have amounted to about 17. per cent., but it is to be presumed that the improvements of the system of the new Mint will cause the detention and consequent loss to be much smaller. This 17. per cent. has formed the limit, or nearly the limit, to the possible rise of the value of coin above that of bullion; for to suppose that coin could, through any cause, advance much above this limit, would be to assume that there was a high profit on a transaction, in which there is no risk, and every one has an opportunity of engaging.

The two following circumstances conjoined account for the depression of the coin below the price of bullion, and will show what must have been the limit to its extent before 1797, the period of the suspension of the cash payments of the Bank of England. First, the coin, after it had become current, was gradually diminished in weight by use, and therefore, if melted, would produce a less quantity of bullion. The average dimi nution of weight of the present current gold coin below that of the same coin when fresh from the mint appears by the evidence to be nearly 17. per cent. This evil, in more ancient times, was occasionally very great It was particularly felt in an early period of his present Majesty's reign, and led to the reformation of the gold coin in 1773. But it is now carefully guarded against, not only by the legal punishment of every wilful deterioration of the gold coin, but also by the regulation of the statute, that guineas. of which the full weight when fresh from the mint is 5 dwts. 933 grains, shall not be a legal tender if worn below 5 dwts. 8 grs.; the depreciation thus allowed being at the utmost 1. 11 per cent. A still more material cause of depression is the difficulty under which the holders of coin have been placed when they wished to convert it into bullion. The law of this country forbids any other gold coin than that which has become light to be put into the melting pot, and, with a very questionable policy, prohibits the exportation of our gold coin, and of any gold, unless an oath is taken that it has not been produced from the coin of this realm. It appears by the evidence that the difference between the value of gold bullion which may be sworn off for exportation and that of the gold produced or supposed to be produced from our own coin, which, by law, is convertible only to domestic purposes, amounts at present to between 38. and 48. per

ounce.

The two circumstances which have now been mentioned have unquestionably constituted, in the judgment of your Committee, the whole cause of that depression of the value of the gold coin of this country in exchange for commodities, below the value of bullion in exchange for commodities, which has occasionally arisen or could arise at those times when the Bank paid in specie, and gold was consequently obtainable in the quantity that was desired; and the limit fixed by those two circumstances conjoined, to this excess of the market price of gold above the Mint price, was therefore a limit of about 5 per cent. The chief part of this depression is to be ascribed to that ancient but doubtful policy of this country, which, by attempting to confine the coin within the kingdom, has served, in the same manner as permanent restrictions on the export of other articles, to place it under a disadvantage, and to give to it a less value in the market than the same article would have if subject to no such prohibition.

HAMBURGH CURRENCY METHODS.

The truth of these observations on the causes and limits of the ordinary difference between the market and Mint price of gold, may be illustrated by a reference to the mode, explained in the evidence, of securing a fixed standard of value for the great commercial payments of Hamburgh. The payments in the ordinary transactions of life are made in a currency composed of the coins of the several surrounding states; but silver is the standard there resorted to in the great commercial payments, as gold is in England. No difference analogous to that which occurs in this country, between the Mint and market price of gold, can ever arise at Hamburgh with regard to silver, because provision is made that none of the three causes above specified [the expense of coinage, the depreciation by wear, or the obstruction to exportation], shall have any operation. The large payments of Hamburgh are effected in Bank money, which consists of actual silver of a given fineness, lodged in the Hamburgh bank by the merchants of the place, who thereupon have a proportionate credit in the bank-books, which they transfer according to their occasions. The silver being assayed and weighed with scarcely any loss of time, the first mentioned cause of fluctuation in the relative value of the current medium compared with bullion is avoided. Certain masses of it being then certified (without any stamp being affixed on the metal) to be of a given quantity and fineness, the value is transferred from individual to individual by the medium merely of the bankbooks, and thus the wearing of the coin being prevented, one cause of depreciation is removed. A free right is also given to withdraw, melt and export it; and thus the other and principal source of the occasional fall of the value of the current medium of pay

ment, below that of the bullion which it is intended to represent, is also effectually precluded.

In this manner at Hamburgh silver is not only the measure of all exchangeable value, but it is rendered an invariable measure, except in so far as the relative value of silver itself varies with the varying supply of that precious metal from the mines. In the same manner the usage, and at last the law, which made gold coin the usual and at last the only legal tender in large payments here, rendered that metal our measure of value; and from the period of the reformation of the gold coin down to the suspension of the Bank payments in specie in 1797, gold coin was not a very variable measure of value; being subject only to that variation in the relative value of gold bullion which depends upon its supply from the mines, together with that limited variation, which, as above described, might take place between the market and the Mint price of gold coin.

The highest amount of the depression of the coin which can take place when the Bank pays in gold has just been stated to be about 5 per cent, and accordingly it will be found that in all the periods preceding 1797, the difference between what is called the Mint price and market price of gold never exceeded that limit.

Since the suspension of cash payments in 1797, however, it is certain that, even if gold is still our measure of value and standard of prices, it has been exposed to a new cause of variation, from the possible excess of that paper which is not convertible into gold at will; and the limit of this new variation is as indefinite as the excess to which that paper may be issued. It may indeed be doubted whether, since the new system of Bank of England payments has been fully established, gold has in truth continued to be our measure of value; and whether we have any other standard prices than that circulating medium issued primarily by the Bank of England and in a secondary manner by the country banks, the variations of which in relative value may be as indefinite as the possible excess of that circulating medium. But whether our present measure of value, and standard of prices, be this paper currency thus variable in its relative value, or continues still to be gold, but gold rendered more variable than it was before in consequence of being interchangeable for a paper currency, which is not at will convertible into gold, it is, in either case, most desirable for the public that our circulating medium should again be conformed, as speedily as circumstances will permit, to its real and legal standard, gold bullion.

If the gold coin of the country were at any time to become very much worn and lessened in weight, or if it should suffer a debasement of its standard, it is evident that there would be a proportionable rise of the market price of gold bullion above its Mint price; for the Mint price is the sum in coin, which is equivalent in intrinsic value to a given quantity, an ounce, for example, of the metal in bullion; and if the intrinsic value of that sum of coin be lessened, it is equivalent to a less quantity of bullion than before. The same rise of the market price of gold above its Mint price will take place, if the local currency of this particular country, being no longer convertible into gold, should at any time be issued to excess. That excess cannot be exported to other countries, and, not being convertible into specie, it is not necessarily returned upon those who issued it; it remains in the channel of circulation, and is gradually absorbed by increasing the prices of all commodities. An increase in the quantity of the local currency of a particular country will raise prices in that country exactly in the same manner as an increase in the general supply of precious metals raises prices all over the world. By means of the increase of quantity, the value of a given portion of that circulating medium, in exchange for other commodities, is lowered; in other words, the money prices of all other commodities are raised, and that of bullion with the rest. In this manner an excess of the local currency of a particular country will occasion a rise of the market price of gold above its Mint price. It is no less evident that in the event of the prices of commodities being raised in one country by an augmentation of its circulating medium, while no similar augmentation in the circulating medium of a neighboring country has led to a similar rise of prices, the currencies of those two countries will no longer continue to bear the same relative value to each other as before. The intrinsic value of a given portion of the one currency being lessened, while that of the other remains unaltered, the exchange will be computed between those two countries to the disadvantage of the former.

In this manner, a general rise of all prices, a rise in the market price of gold, and a fall of the foreign exchanges, will be the effect of an excessive quantity of circulating medium in a country which has adopted a currency not exportable to other countries, or not convertible at will into a coin which is exportable.

II.

STATE OF FOREIGN EXCHANGES.

Your Committee are thus led to the next head of their inquiry: the present state of the exchanges between this country and the continent. And here, as under the former