necessarily attending it, more than counterbalance the advantages.

First, then, as to the chances of failure in the issuers of paper money, and the loss to the holders consequent thereon. From this chauce a metallic currency is exempt, and the disadvantage great or small incident to such chance is entirely on the side of paper money. Mr. Mill says, (p. 147.)" the failure of the par ties by whom notes are issued is an evil, against which, under good institutions, the most powerful securities are spontaneously provided;" and among these he reckons freedom of competition, numerous banks, and numerous partners in each bank. Besides these, he suggests the propriety of the Government periodically inspecting the concerns of the banks, with powers to protect the public from loss as far as possible. I admit that by the expedient pointed out by Mr. Mill, the chances of failure would be much diminished. By the multiplication in the number of banks, the circulation of the notes of each bank would be greatly narrowed, and in case of the failure of any bank, the loss to the country would be but small; and as the parties in the banks are supposed to be numerous, the risk of loss, Mr. Mill supposes, would be still more reduced, as all the partners would be more or less opulent, and the profits of banking being very considerable, he thinks that there would be motive sufficient to engage the principal noblemen and gentlemen of the county or other district to hold shares in the local bank, and add to the security of the public. In such competition, banks of doubtful credit, he says, would be unable to circulate their notes; and the interest which banks, where numerous, have in supplanting one another, makes them excellent guardians over each other.

The object of every man is to obtain pleasure, and to avoid pain. The means to such an end is found in the power to do what we wish, and to prevent that from being done that we dis like; but this can be completely compassed only by our being able effectually to control the actions of others. This control can only be secured by the possession of the means of conferring rewards, or inflicting punishment, To compass these objects, the employment of wealth has always been found most effective. The possession, then, of wealth must be an object of desire to every man; and as there is no limit to the desire of pleasure, there seems, in the nature of thiugs, no bounds to the desire of wealth as the chief, if not the only, means in the power of mankind to obtain the objects of desire. These things being premised, let us try how they will apply in the case of the issuers of paper money. Banking is allowed by Mr. Mill to be a profitable business; but it can only be profitable in proportion to the quantity of paper issued; it will therefore be the interest of every banker to issue as many of his notes as he can; the question of security for his notes will be a reason for restraining him within

due limits; but the experience of the world in the banking system has furnished us with many melancholy proofs how often the calculations of prudence have been overcome by the hopes of gain; and the greater the gain, the greater will be the inducements, in general, to issue notes. In such cases, as what is the interest of one banker, will be the interest of every banker, is it not reasonable to infer, that the more numerous the banks, the more numerous will be the issues? And the greater the quantity of notes afloat from one bank, the greater the risks of failure of that bank, for there cannot be as unexceptionable securities taken for great sums as there can for small ones; and this case, which applies to one bank, applies to every bank, the issues of which are disproportioned to its actual capital. Freedom of competition will also reduce profits, and it is one among the many effects of small profits to produce an increase in the quantity of commodities, in order to make up for the diminished profits; and if such be the case in other articles of commerce, will it not also be the case in the banking system? What then will be the consequence of large issues? A rise in prices; paper comes to a discount; then follow runs; thence failures. In every case but one, which I will notice hereafter, it seems to me to be the natural tendency of a paper currency to produce failures more or less extensive as the securities against the undue issues of paper are relaxed or tightened. A metallic currency is exempt from these risks.

Mr. Mill thinks that the establishment of numerous banks would be a great protection against forgery, or at least against its evil consequences to the public, for as each bank would supply only a small district, a forgery upon it could not be very extensive, and banks in the neighbourhood of, and in competition with, other banks, would, to support their own credit, honour the forged notes, and exert themselves to detect the forgery, and limit its amount. "In this manner," says Mr. Mill," the public are exempted from loss, and if a loss is willingly sustained by the banks, it is because they find compensation." If this were the case, paper would, in this respect, be superior to gold and silver, and ought certainly to be preferred as a currency. But unfortu nately this reasoning is founded on a gratuitous assumption. One would think that seven hundred or eight hundred banks in a country like Great Britain would be sufficiently numerous, and have proximity enough to each other to ensure to us all the benefits of competition and vigilance. But it does not prevent either the forgery of country notes, or the evil consequences to the public. When, amidst the many forgeries of provincial paper, do we find a country bank supporting its own credit by honouring the forged notes? Nay, it seems to me that the very payment of forgeries by a bank would operate very powerfully to augment forgeries. Traders would take notes with much less scruple, as they would not be interested in detecting the forgery, or even in

strictly examining the notes. If they should feel any reluctance at all in receiving the notes of any bank, which should honour forgeries, it would extend as well to the genuine as to the forged notes. A metallic currency is as liable to be counterfeited, as bank notes are to be forged, with this difference that ordinary care will enable any person to detect a counterfeit sovereign or a shilling, but it is very difficult for any one, unconnected with the bank upon which a forgery is committed, to discover the fraud in a well executed note. Besides there is an inducement to the forger, beyond what there is to the counterfeiter, and that is in the cheapness of the commodity he has to provide as a substitute for the genuine note. The paper of both costs comparatively nothing; the only difficulty the forger has to surmount is the resemblance to the engraving and hand-writing upon the genuine note, and then his note is as complete as the banker's. But he, who counterfeits the coin of the precious metals, besides producing an imitation of the workmanship, is obliged to produce the semblance of the metal, and the nearer the resemblance the more costly must be the substitute. The greater facility there is also in the detection of counterfeit coins than of forged paper, it operates more powerfully to the discouragement of the counterfeiter, than it can possibly do to the forger; so that here also, it follows, that the precious metals are preferable to paper as a medium of barter.

7

Alteration in value is caused by the relative increase or decrease in the quantity of commodities. As a standard of value, the precious metals have been found the more steady, as they are less liable to augmentation or diminution than any other commodity. Their value, like that of every other commodity, is regu lated by the cost of production. Mr. Mill says, an alteration in the value of the currency is always an act of government, and is not peculiar to paper money. Either Mr. Mill is mistaken here, or I do not understand him rightly. Was it the act of government, that in 1810 and 1811, raised a guinea, or depressed the notes of the Bank of England, that a guinea sold for a one pound note and six or seven shillings? The evil seemed of such a magnitude as to require the intervention of the legislature. Mr. Mill will not surely deny that Bank of England notes were a part of the currency of the country. Yet so far was the diminution in the value of bank paper, or the rise in the price of guineas, from being an act of the government that it was evidently in spite of it, as the act subsequently passed proves. The precious metals are, in every case less liable to fluctuation than paper; they cannot be produced at pleasure, like paper; their value may be raised by diminishing the quantity, by exportation, and their 'value may be lessened by increasing the quantity by importation; but as neither of these circumstances can occur suddenly to any serious amount, except where they are mixed with a paper cur.

rency, the change in their value can only be small and gradual; and even such an inconvenience, should it ever happen, is quickly regulated, for the instant that gold becomes dearer in one country than another, it will, like any other commodity, (free trade being assumed) flow from where its value is less, till its level is found in both countries and vice versa. Paper on the other hand may be increased ad infinitum, and it is in this power of indefinite increase, that its principal evil lies; for every increase of paper lessons its value, and as it is a sort of money that is only current at home, the fall in value is permanent, till the additional issues are withdrawn from circulation. From this fall in the value of the currency (or rise in the price of other commodities, which is the same thing) the labourer suffers in the diminution of his wages, for they do not rise with the price of provision, apparel, &c., but always lag behind for a time. So that every increase in the currency is a mischief to the labourers (other commodities and population, are in this argument assumed as stationary.) In every sudden diminution of the currency, the labourer is always a great sufferer, for such diminution has the effect of throwing hands out of employment by lessening the demand for labour, in consequence of the decrease in the amount of capital appropriated to the payment of wages. So that every alteration in the value of the currency is a contraction of the labourer's comforts and an abstraction from his enjoyments.

The disadvantages naturally attendant on the use of paper money as a currency, as subject to failure in the issuers, forgery of the notes, and mischievous alterations in the value of such a currency, will then, I think, appear, quite sufficient to counterbalance any benefits derivable from its cheapness, portability and facility in accomplishing exchanges.ou But the cheapness of this kind of currency has been admitted, without sufficient attention to what it is that constitutes a cheap currency. It seems to be taken for granted that a currency like every thing else, of what nature soever, is to be estimated according to the cost of production, and in this sense paper is indeed an economical currency. But to whom is it cheap? Not to the people among whom it circulates; it is as dear to the public as gold and silver of the same nominal amount. Then how can it be a cheap curreucy? The only persons to whom it is cheap are the bankers, and they make the same, or greater interest by it, than if they used a metallic currency in their dealings. The banker then receives a two fold interest upon his capital, allowing that he has no more notes in circulation, than he has capital to answer, but it is well known that many bankers have had more notes afloat, than their capital would meet, as was proved by the recent convulsions, and consequently they were, so long as they were considered solvent, receiving more than double interest for their capital; for they were in the receipts of rents and profits upon their real capital, at the

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same time that they were receiving interest upon their fictitious capital. And who pays all this? The labourers, the great bulk of the people. I think, then, there is an end to the assumption of paper being a cheap currency, so far as the many are concerned. Even the most undisputed advantage of portability, which is conceded to the advocates of paper money, may in large sums, bet superseded hy merchant's bills of exchange, which are the representatives, and taken upon the strength of the real capital of the merchant, and do not circulate round a country like bank notes; but cease when the immediate purpose for which they are issued is answered. For the transmission of sinall sums, post office orders might be so regulated as to perform all the business of bank notes without the risk of loss by failure or forgery. As to the inconvenience of having to reckon large sums in gold and silver, it is one which I imagine might be submitted to without much reluctance.

I now come to the only cause, in which I conceive a paper currency may by possibility be beneficial to a country, and that is this where a government, truly and really responsible to the people for its acts, is invested with the whole power of issuing notes, the benefits arising from which shall be applied towards the expences of government and in diminution of taxation; but the difficulty of making any set of men, once invested with power, completely responsible, is such, that it is a great question whether it will be ever effected. The power of making money, even in a government where the offices were of short duration, is an engine of such mighty power, that the probability is that it would at some time or other he abused for the purposes of corruption and undue influence or other mischievous tendency. For as the writer of an article in the 86th number of the Edinburgh Review, page 226, observes, "The widest and most comprehensive experience shows, that no set of men have ever been invested with the power of making unrestricted issues of paper money without issuing it in inordinate quantities.The above case is mentioned by Mr. Mill and is the most unexceptionable of any that I have seen proposed, for establishing a system of paper currency; but after what has been said, I imagine that a metallic currency will, in every case be superior to paper, so

In addition to the arguments here used for the abolition of a paper currency, I may add, thats if Britain had not been cursed with a paper currency, it would not at this moment have been burdened with a debt of 800 millions; the interest of which absorbs about one half of the enormous yearly taxation of 60 millions. The resources of the nation would not have been so much forestalled as to make our ministers dread the possibility of another war, on the verge of which we seem to be trembling. How is the expenditure to be provided for a war pushed to consequences at the bare contemplation of which our foreign secretary shudders?