redundant at home from excessive issue, be maintained at anything like an equality with gold and silver. The mandates were, in truth, a reduction of assignats to a thirtieth part of their value; but, to be on a par with the precious metals, they should have been issued at one-thousandth part, being the rate of discount to which the original paper had now fallen.

"The excessive fall of the paper at length made all classes perceive that it was in vain to pursue the chimera of upholding its value. On the 16th July, 1796, the measures, amounting to an open confession of a bankruptcy which had long existed, were adopted."

28. We have quoted these passages for the purpose of shewing how completely Sir Archibald Alison, when he is speaking of the paper currency of France, acknowledges the great principle, that the value of the paper currency is only to be estimated at the value it will purchase in specie, that the measure of that difference between the real and the nominal value is its depreciation, and that a payment in coin at the current value of the paper currency is a NATIONAL BANKRUPTCY. Yet, such is the amazing inconsistency of this writer, that when he comes to speak of the paper currency of England, which exhibited exactly the same phenomena, only on a smaller scale, he resolutely denies that it was depreciated. When the French assignat had lost one-third of its value compared to specie, in 1791, he acknowledges that it was depreciated; when the Bank of England note in 1811 had lost one-fourth of its value compared to specie, it was not the note which had fallen, but gold which had risen! ! When assignats were made legal tender in France at their nominal value, specie disappeared from circulation. When Bank of England notes were substantially legal tender in England, and had lost a quarter of their nominal value, specie disappeared from circulation. Sir Archibald Alison estimates the depreciation of the assignat by the difference between the current and the nominal value of the assignat; but when the Bullion Committee estimated the depreciation of the Bank note by the difference between its nominal and its current, or market value, he reads a homily to them upon their ignorance and folly, talks of the "general delusion which so long had prevailed upon the subject, when it is recollected not only that the true principles

of this apparently difficult, but really simple, branch of national economy, which are now generally admitted, were at the time most ably expounded by many men both in and out of Parliament, but that, in the examination of some of the leading merchants of London before the Parliamentary Committee on the subject, the truth was told with a force and precision, which it now appears surprising any one could resist." This truth, which was told with such irresistible force and precision, was, that twenty-seven was equal to twenty-one! He then acknowledges that it was a national bankruptcy of the French Government to pay its notes with a less amount of specie than their nominal value; but nothing can exceed the bitterness of his invective against the Currency Act of 1819, which provided that the Bank of England should pay its notes at their full nominal value in specie. Just as if it was less a bankruptcy to pay 15s. in the pound than to pay 1s. in the pound. He sees clearly that in France the paper currency is to be estimated by the value of gold; but in England he maintains that gold is to be estimated by the value of the paper currency!! Just as if the eternal truths of science are different, on different sides of the Channel; or that they are reversed according to the language they are expressed in!

29. Sir Archibald Alison's doctrines, when he speaks of English and the French inconvertible paper currency, are clearly inconsistent. He fully allows that any difference between the nominal and the current value of the assignat was a depreciation of the assignat. He never dreams of saying that the paper assignat was the standard, and that the coin had risen in value. But when he discusses the question of-What is a pound? he says, "In truth, a pound is an abstract measure of value just as a foot or a yard of length, and different things have at different periods been taken to denote that measure, according as the conveniency of men suggested. It was originally a pound weight of silver, and that metal was, till the present century, the standard in England, as it still is in most other countries. When gold was made the standard, by the Bank being compelled by the Act of 1819 to pay in that metal, the old word denoting its original signification of the less valuable metal was still retained. During the war, when the metallic currency dis

appeared, the pound was a Bank of England pound notethe standard was the paper-for gold was worth 28s. the pound, from the demand for it on the Continent." It is scarcely necessary to point out the ridiculous absurdity of this passage. The pound an abstract thing indeed! Our ancestors had very few abstract ideas at all, and certainly an abstract idea of a pound was not one of them. They meant nothing abstract, but, on the contrary, a very substantial pound weight of silver bullion, and nothing else. To say that a paper pound was the standard during the war, is a misconception of the fact. Instead of a "promise to pay" on demand, the Bank note during the war was a “promise to pay specie six months after peace.' It is not true that gold during the war was worth 28s. paid in silver money, but only in depreciated bank notes. But Sir Archibald Alison admits that an excessive issue of paper would have depreciated the bank note, but he, of course, denies that the issues were excessive. Now, as a depreciation from an excessive issue could only be manifested by a continuous rise of gold above 28s. the pound, it would be difficult to understand where the turning point would be at which the depreciation would commence. At what figure should we have to reverse our expression-at what figure are we to say that gold has ceased to rise, and paper begun to fall?

30. Such is a plain statement, founded upon incontrovertible facts, of the results of the greatest experiment the world ever saw of issuing a paper currency secured upon commodities or property-the most complete example of LAWISM. When the issues of assignats were at their height, they were certainly not anything equal to the value of the fee-simple of France expressed in silver money. And, according to the predictions of Law and Mirabeau, it was a matter of impossibility that they should ever become depreciated, and what was the result? Even though the experiment was not carried out to its fullest extent, the value of the paper assignat sank to one 30,000th part of its value in silver ! There were 2,400 millions of promises of mandates issued against property valued at 3,785 millions, and yet, in July, 1796, the note for 100 livres was only 5 centimes! Such was the inevitable consequence of basing a paper currency upon property or securities, and such it ever must be, because, if such

issues are once begun, there is no legitimate conclusion whatever, until all the property in the country is coined into notes. Pass the legitimate limits of a circulating medium by one hair's breadth, and there is no logical conclusion but in the French assignats.

31. The next example we shall cite is the Bank of Norway, which was founded on the 14th June, 1816, with its head office at Drontheim, and branches in the provincial towns. Its capital was originally raised by a forced loan or tax upon all landed property, and the landholders became shareholders according to the amounts of their respective payments. This Bank was especially for the purpose of forwarding agricultural improvements, and only discounted mercantile bills and personal securities, as a secondary part of its business. Its principal business consisted in advancing its own notes, upon first securities over land, to any amount not exceeding two-thirds of the value of the property according to a general valuation taken in the year 1812. The borrower paid half-yearly to the Bank the interest of the sum that may be at his debit, at the rate of 4 per cent. per annum, and is bound also to pay off 5 per cent. yearly of the principal, which is thus liquidated in twenty years. Mr. Laing bestows great commendation upon this institution, and describes it as well-imagined and well-managed, and there cannot be a better example to test the truth of Law's principles. We must bear in mind that Law especially declares that on his principle his paper currency would not fall below the value of silver. Now, let us mark what took place with regard to the Bank of Norway, which was founded purely on his principle. By the fundamental law of this Bank, it should, after a certain time, have begun to pay its notes in specie, but in 1822 they could only be exchanged at Hamburg for silver at the rate of 187 dollars in paper for 100 dollars in silver!! That is, in 6 years the notes had fallen to about 45 per cent. discount! Was there ever a more striking or conclusive example of the entire fallacy of Law's predictions than this Bank? In 1822 the Storthing passed a law that the Bank should only be compelled to give 100 silver dollars for every 190 paper dollars, but that the directors might at their own discretion reduce the rate to 175, without a new law. In Travellers' Library.

Laing's Norway, p. 184.

1824 the value at Hamburg rose to 145; in 1827 it rose to 125; and in 1835, when Mr. Laing wrote, it stood at 112, which could only have been done by a contraction of its issues. Now, it is quite evident that if the Bank had been called upon to pay its notes at par at any moment, it would infallibly have been ruined. This happened in Paris in 1803, when the Land Bank stopped payment, and J. B. Say observes that all Banks founded upon this principle have uniformly failed.

32. The last example we shall cite is the case of America. That country was unhappily deeply bitten with the currency mania of basing issues of paper on "securities." In most of the States the Legislature passed Acts permitting any individual, or any banking associations, to issue notes to any amount, upon depositing with a "public comptroller," securities of equivalent value. These "securities" might be public stock, or mortgages upon improved, productive, and unencumbered lands. Now, as these "securities" remained the property of the vendors, and they might appropriate the revenues from them, as long as payment of the notes was not demanded from the comptroller, people saw that they might derive a profit from the security as well as from the currency which represented its value. There was, accordingly, a prodigious rush to deposit securities—an enormous issue of paper, during the years 1834-5-6. The prices of everything rose immensely. The people of the Western States, with their "pockets full of paper currency, gave very large orders for goods to the merchants of New York, Boston, and Philadelphia, who duly executed them. The bills given for the purchases were payable in these eastern cities; and, when the western debtors went to their own bankers for bills of exchange on these places, in return for their own local currency, the bankers discovered that their home customers had bought more from the eastern cities than they had sold; that they had already drawn on the east for every dollar which the east was indebted to them, and could draw no more. The western merchants then sent their own currency notes to the eastern cities in payment but, unfortunately for them, the merchants there had already paid all they owed to the west, and nobody in New York or

1 A very graphic account of the currency vagaries of the United States is given in two Articles of the "Scotsman," Nov. 21 and 24, 1855. See also "The Progress of America, by John Macgregor, Esq., M.P., vol. 2, p. 1768.