LETTER II. TO MR. COBBETT. Dear Cobbett; What I have to observe on the subject you have desired me to consider exceeding the limits of a postscript to a letter, I have made it the subject of a second to you. My observation upon it I shall enter on without further preface. The market value of the dollar, being 4s. 9d. here, and being to be made current at 58. as above; now passes in Ireland, at 5s. 6d., as appeared by a letter from Dublin, dated Apr. 24, in your Register of last week. Therein also referring to a former letter of mine you desire to know whether I can account for that still higher advance of the current value of the dollar in that country; and from a cause" other than the depreciation of bank paper." The letter from Dublin contains also a second argument, distinct from that of the advance of the dollars, to shew that the Irish bank paper has undergone a great depreciation; if that cannot be shown to be erroneous, the assigning such a cause would be useless, it must therefore come in its place to be considered. The cause required (after what I had said in my letter) does not seem difficult to assign. The silver coin in Ireland was in so bad a state, that it was necessary to call in, at least, a great part of it; and it was determined to supply the vacuity so caused with dollars. These were to be purchased of the bank, or other holders, in England, where they were current, or determined immediately to be made cur rent at 5s, each. The operation was taken up ultimately by the Irish bank: the exchange with England had long been against that country; therefore all the Irish stock of dollars (if any such ever existed) had found its way to England, where they were to be purchased at 5s. each. It follows from the letter of your Dublin correspondent, that the exchange between the two countries was £.5 per cent. against Ireland, at that time, as will be presently shown: for he paid in Dublin £105 British for a bill of £.100 on London; or, which is the same thing, 63d. British must have been paid in Ireland for a bill to receive 60d. or a dollar in England; the prime cost of the dollar to the Irish bank was 58. 3d. as its prime cost to that of England is 4s. 9d.; or, as it rose to that value in its coffers, as soon as it became the rate of the market. Now the bank of Dublin, being a com. pany of monied men, whose object is profit, it may be conceived that it would not undertake the trouble and expence of agency and transport, and the hazard of the sea, to be consequent on the operation, without a profit; which must be paid them either by the state, or by the persons for whose necessary accommodation (after the debased silver was called in) the import was made; that is, by the public at large, which profit they would de rive from issuing their dollars, at a higher value than 5s. 3d., the prime cost to them. And if £.44 per cent. with the minute addition of one hundredth more, be admitted to be a proper rate of profit, then was the bank entitled to put the value of (5s. 5d. and 99 hundredths) 5s. 6d. British upon each dollar, or 5s. 114d. Irish. This supposes the dollars never to be called in. If Ireland had continued a separate kingdom, and the state had taken the operation upon itself, this would have been a proper and just rate of seignorage. And it is precisely the same thing, with respect to the receivers of the new coin, considered as such only, that a great monied company has engaged in this operation. And here the case is precisely the same in Ireland as in England; the banks of each circulate dollars at 3d. above the market value, in each country, of the silver they contain. And if they be received at the bank and exchequer, and continue current at that rate, or be so allowed for when they shall be called in, a seignorage is effectively imposed upon them in Ireland of £. 44 as in England of £.5 per cent. And in the latter case the bank will reimburse to the ultimate holders, the greater part of the profit it made on the original emission. § 2. The bank of Dublin is here understood to have come to a resolution " to pay "and receive dollars, at 5s. 11d. Irish "each", and to act up to either part thereof. This resolution appeared in all the Dublin papers, as published by authority. If no such authority had been given by the bank, it was very faulty in availing itself of the public error to sell its dollars at a profit; and as the refusal to receive them back again at the same rate as expected would create great public confusion, they ought to have proceeded against the original author of the falsity, for a misde meanour; or on the old statute as a spreader of false news. But if it was authorised, the breach of its engagement seems to admit of no palliation, even in the most " British Currency, I must have carried to "market £. 116 Irish in the national bank "notes: but I did carry £. 105 only in quiet times. And the charge against the company is very much aggravated, when the difficulties then existing from the calling in of the bad silver is considered." specie, and I obtained £. 100 British. But I hope the bank is able to give some better account of this: If the charge shall" obtain an extensive belief, it will be incumbent upon them 30 to do, if in their power. "I insist therefore, that the depreciation of bank paper is nearly 11 per cent." This passage in several particulars is vaguely worded: what the writer obtained evidently was a bill of £. 100 upon England, the consideration paid for it was £. 105 in specie: he does not state whether the £105 was Irish or British, yet circumstances prove that he paid for it £. 105 British, for otherwise the exchange between the countries, at the time must have been in favour of Ireland, which is contrary to the fact and his own admis Upon the face of your correspondent's account also, no slight blame will attach itself to the Irish treasury; for an attempt, at a period of embarrassment in the national coin, to issue dollars at so high a rate as 6s. sterling, when their value in bullion in the Irish market was only 5s. 3d. This was in effect the same as imposing a seignorage of £. 14 5s. 8d. persion; as at the par, £. 100 English is cent. upon them. Under the French Monarchy, its rate was £.8 per cent. which, perhaps, may be regarded as the maximum. The fault of the measure, according to this account, soon demonstrated itself in a week's time the dollar could be passed for 5s. 6d. only but in this the good sense of the people deserves praise: silver coin they greatly wanted, and although they refused to allow so high a rate as £. 14 5s. 8d. per cent. profit on the importation; yet by a tacit universal assent, evidenced in the value at which they received the dollar, they agreed still to leave a profit of £. 44 per cent. for the encouragement of further importation. I have hitherto considered the argument for the depreciation of the paper in Ireland from the current value of the dollar, and on a more limited ground than you required; showing not only that its price had a cause "other than the depreciation of paper," but also that it was the same cause, operating in the same manner, raised that value by the same sum, 3d., above its market price in Ireland and England. § 3. But your correspondent by another argument, endeavours to show the depreciation of the bank paper to be nearly £.11 per cent. He gives the elements from which he draws this conclusion but in his process there is an error singular in its magnitude, for first it appears, even on his own statement, that it does not exceed £.1 19s. 6d. per cent. I repeat his reasoning. "The Exchange between this country "and England during last week, was "about £. 16 per cent.; so that had I "wanted £. 100 payable in London of worth £. 108 Irish, exceeding £.105 money of that country, whence the addititious £.5 was for the difference of the Exchange and the rate of the day against Ireland; and the sum £.105 British. He therefore paid for his order £.105 British, or which is the same thing £.113 15s. Irish, being equal thereto, but he admits that he could have purchased the same order for .116 Irish in the national bank notes: whence if there were any real disparity between them, £.100 Irish money would then have purchased £.101 19s. 6d. only in Irish paper, which would thus appear to have been depreciated (£.1 19s. 6d.) £.2 per cent. only. § 4. But there does not appear to me to be precision enough in his statement, to conclude the existence of this disparity, or any other. He says that the Exchange of Irish paper for British money payable in London, was ABOUT £.16 per cent. against the former. And in the first place it is to be noted that the accurate rate might differ from this by no small fraction, reducing the depreciation of £.2 the paper £2 found by the corrected process, by no inconsiderable part of so small a rate. Let this be omitted: still it is to be noted, that an adverse balance subsisting for a considerable term, has its average; from which it varies by temporary rises and falls. On the day on which your correspondent purchased his bill of £.100 on England, the exchange against Ireland might be lower than such average, and in the course of the week higher; and at each time by £.1 per cent., and this will amount to a variation of £.2 per cent, in the term. The statement not pre cluding the possibility of these suppositions decides nothing certainly. And we frequently see as great variations as this follows. If the issuing dollars here at 5 take place in the English stock market, shillings has any effect to depreciate bank from no very powerful causes, in as little paper, that effect would not be done away time and then Irish money and notes by increasing the amount of that issue; would have been absolutely at par: for or the proportion it shall bear to the whole if immediately after he had obtained his of the other silver coin, in any assignable bill for £.100, during such temporary rate. Let now the silver money of a state depression; it should have come to the be one million, and in a condition perknowledge of the exchangers, that there fectly like our own; which let us admit was a very considerable unforeseen deto be so good, that the bullion contained mand to come into the market for re- in every 20 shillings, would on the avemittances to England; it would raise the rage, be worth 15 shillings in the market. price of such a bill to more than £.105 I have not before me the trials relating to British or £.113 Irish; or even than the state of the silver coinage lately made £116 of the latter, either in paper or at the Tower, or a nearer value might be specie. Neckar has said enough of the assumed which would be much inferior to "imperious necessity" which such cir- this; while this money is current, nocumstances impose on merchants who thing less than a Bank note of £.10 will have payments to make, to comply with exchange for 200 such shillings; the real the demand of the exchanger; who will value of which is £.7 10s. only. And make his full advantage thereof, to render their nominal value, £.10, is neither their this clear; and nothing but the transac- value by the standard, which they have tion of the same day will serve the pur-long ceased to possess; nor their legal pose to which your correspondent applies his elements, and even the average of several such, would be necessary to decide any thing as to the real existence of such small differences. § 5. It may be here added, that Banks whose obligations to discount their paper in money are in a state of temporary suspension, may be willing during such a period to purchase coin to assist an embarrassed circulation: but as they are not virtually compelled to provide it as at other seasons, they will demand a profit in the first instance on the advance of it, partly for the sake of the gain by keeping it in their hands until the new money be called in; and partly for the greater gain on the sum which never will return to them. And all the effect of the issue of such coin which I can see is, that by increasing the quantity of the national currency it may depress its value in proportion to its amount, but this depression will fall equally on paper and coin. Except that it is of the nature of a seignorage, and therefore in time of public alarm, money current at such advanced rate will be of less value to hoard; of less value to the workers in the metals, and the counterfeiters of coin to melt down, than if it had been of the standard weight, and will therefore remain longer in circulation and be less subject to frauds. § 6. But there is another mode in which may be shown, that there has no fall taken place in the value of paper against coin from the cause assigned; It is as it value, for if each be of equal weight which must be supposed, having suffered other reductions than waste from wearing, all are liable by law to be cut and defaced when tendered in payment; nor is it their market value in bullion, as is the undeniable fact. It is therefore barely their nominal though current value; and a million in Bank notes so employed, will purchase or exchange against the whole of the debased silver. The current although nominal value thereof is one million also; but its real market value £.750,000, and this coin debased £.25 per cent, circulating with the paper and exchanged by tale for it, the latter must, according to the prin ciple of argument I am considering, be debased £.25 per cent also. Let this debased silver be now all called in; and instead thereof, let one million be issued in dollars and convenient fractions of dollars, at 5 shillings each: And first by royal authority: And let the market value of the metal each contains be 4s. 9d. A note of £.10 will purchase 40 such dollars, the market value of which is £.9 10s.; exceeding that of the old silver it would have purchased by £.2: their value indeed is not equal to the standard, but the old coin is far less so, and in that they are superior. The law having provided, that the king can by proclamation fix the value at which foreign coin shall legally pass, their legal value is £.10 also; which cannot be said of 200 of the old shillings each of the average weight as shown above: and in this they are also superior. It is admitted that the bullion | be said that the bank paper circulating they contain is not in market value £.10; but is is much more nearly so than £.10 of the old silver coin, to which therefore in all these circumstances they are superior. If in their standard and their market value they are somewhat deficient, the old silver was more so their value is not purely nominal, for it is legal also; and when they are gotten into circulation they will instantly acquire a current value equal to the legal. And if as before, we take a million of Bank notes to be employed in the purchase of these dollars, it must indeed be admitted that the market value of the silver so purchased will be only £.950,000, and here according to the principle of the argument considered, the depreciation of the paper circulating with them will be only £.5 per cent; therefore in this mode of reasoning, this substitution of the dollars at 3d. each above their market value, in the place of the whole of the old coinage, would diminish the depreciation of Bank paper £.20 per cent nearly; or, which is the same thing, relatively raise their value at that rate: so by the mode of reasoning here considered an appreciation is proved from the issuing of the dollars, it is therefore erroneous. with it is thereby depressed £.4 per cent; the principle of the argument will lead us to reason thus: the Letter from Dublin states, " That the value of the best of the late silver coin was on the average 8s. in the pound only;" Now let it be taken that the average state of the whole of the silver was equal to that of the best; then the market value of £108 Irish silver (£100 British) or 2000 such shillings was £.43 Irish (£.40 British) or 800 good shillings, the notes therefore circulating before with coin, debased £.60 per cent. must according to the principles of this argument have been depreciated £.60 per cent. also; but it proceeds on a tacit assumption joined with that principle, that at that very time they were not depreciated at all: but that the bringing the whole of the silver coin £.55 per cent. nearer the market value of the metal, or reducing its deficiency from £.60 to £.4 per cent. set the depressing power of that deficiency free, and that it instantly and not before began to act. § 8. These observations have already run to a great length; but it must be added, in the mode in which the dollars are to be issued, there is another proof This consequence from the principle of that they cannot depreciate the value of the argument which attempts to show, the paper with which they circulate. If from the issue of dollars in England of the bank had flung into circulation a the present value of 4s. 9d. for 5 shillings, number of five shilling notes equal to that that its Bank paper is depreciated one of the dollars to be re-stamped at Birtwentieth, must be admitted. Or a clear mingham; no one from that would have reason must be assigned,why legal money, inferred, that their paper was at a diaone twentieth below the value of the bul-count, relatively either to gold or silver ; lion it contains (to which the standard any more than if they had issued the itself ought to be made as nearly as pos- same amount in larger notes, although sible to conform) circulating with Bank there might be other reasons against such paper, depreciates it in that proportion; an issue. while the same notes, circulating with the The paper itself on which a five shilling old money, which taken all as of the ave-note would be so drawn, may without rage value was depressed 5 twentieths be-doubt be said to have no saleable value. low the standard and therefore not legal Now I would ask whether any one of money, was not depreciated at 5 times these notes together with the total aggrethat rate, but as the argument tacitly as-gate of bank notes of all amounts which sumes, continued at par. § 7. And to infer a greater depression of the paper of Ireland, from the higher rate at which dollars pass in that country, involves a contradiction the same in nature and kind, but in magnitude much greater; for the market value of the bullion in a dollar being there 5s. 3d, and its current value 5s. 6d. British: if it circulate with it, would be depreciated; if the substance on which the obligation was written should have a saleable value after the writing was expunged, as a shiling, half a crown, four shillings and nine-pence, nobody, I presume, could or would answer in the affirmative. (To be continued.) Published by R. BAGSHAW, Brydges-Street, Covent Garden :-Sold also by J. BUDD, Pall-Mall, LONDON:-Printed by T. C. Hansard, Peterborough-Court, Fleet-Street. VOL. XVIII. No. 4.] LONDON, SATURDAY, AUGUST 4, 1810. [Price 18. They (the French Revolutionists) "forget that, in England, not one shilling of Paper Money of any description is received but of choice; that the whole has had its origin in cash, actually deposited; " and that it is convertible, at pleasure, in an instant, and without the smallest loss, into cash again. "Our Paper is of value in commerce, because in land it is of none. It is powerful on Change, because " in Westminster-hall it is impotent. In payment of a debt of twenty shillings a creditor may refuse all "the paper of the bank of England. Nor is there among us a single public security, of any quality or "nature whatsoever, that is enforced by authority. In fact it might be easily shewn, that our paper "wealth, instead of lessening the real coin, has a tendency to increase it; instead of being a substitute "for money, it only facilitates its entry, its exit, and its circulation; that it is the symbol of prosperity, "and not the badge of distress. Never was a scarcity of cash, and an exuberance of paper, a subject of "complaint in this nation."- -BURKE. Reflections, 1790. 129] [130 their favour? No: for we cannot allow that such people, who have openly 'railed at religion, should be the favourites of Divine Providence; and, besides, is there a Speech, made by the king to the parliament, during this long ' war, in which the king does not express his gratitude for the great aid which he has received and hopes to receive from Divine Providence? Is the cause to be looked for in the liking, which the peo SUMMARY OF POLITICS. PAPER-MONEY.-Look at the Motto, English Reader. Look at the Motto; and, when you have looked, well at it, you, too, will, I think, be disposed to nake some "REFLECTIONS;" or, if you are not so disposed, I beg leave to recommend to you to lay this paper aside at once; for, I will venture to affirm, that no reading whatever upon political subjects, can be of any use to you.It was justple of the several nations of Europe twenty years ago when Mr. Burke thus described the state of the bank-paper in England, and thus taunted (not altogether unjustly) the Revolutionists in France, who had just at that time set afloat a paper-money system. But, view the state of things now!The war, which Pitt began soon after these Reflections of Mr. Burke's were published, was, by Pitt and his followers, called a war of finance. How, But, as to the actors; as to those, who then, has that war succeeded thus far have had the management of things, on our The reader must remember Pitt's frequent part, we know them very well. Pitt and boasts of having reduced the French to his followers (for the poor Foxites were, the utmost distress as to pecuniary and in effect, quite sank into that same definancial matters. His notorious asser-scription of persons) have had the whole tion, that they were" in the very gulph of affairs of the nation in their hands from "bankruptcy," has frequently been quoted; 1790 to the year 1810, and in those hands and, the writings of Sir FRANCIS D'IVER- the nation's affairs are to this moment. NOIS and of GENTZ cannot be forgotten. Let not the OUTS pretend, that they Where are now all their foretellings?. would have done better; for, there is have had for the French Revolutionists in preference to their old rulers? No: for we all along have, and still do, aver most positively, that the people of the seve 'ral countries of Europe love their good old rulers and hate the French Revolu tionists, and especially Buonaparté.. Here, then, is, for once, a great, a tremendous, effect without a cause.. eulogized Pit, whose debts they voted The useful train of reflection for the Eng-not a single man of them, who has not lish reader, upon looking at the motto, is this: How changed are things since 1790! What a great, and, to us, what a 'fearful change, has taken place! Whence 'bas it proceeded? What has been the 'cause? Who have been the actors? Has the change proceeded from the superior wisdom and virtues of the French? No: that we will not allow. From the interposition of Divine Providence in that the nation should pay upon the score of his merits as a minister; and whose system of finance, in particular, every man of them has applauded.----No: there are no distinctions to make; but, to get rid of all ground for cavil,. upon this score, let us say, that, between 'them and amongst them, the two sets, the INS and the OUTS, have had in E |