Caroline. That is to say, they will sell, but not pur

chase?

Mrs B. Precisely it is thus that a country is drained of its superfluous specie; as this traffic goes on, money rises in value, commodities fall in price, and foreign merchants again exchange their goods for commodities of the country, instead of receiving payment for it in specie.

No apprehension need therefore be entertained of ill consequences arising either from the melting down or exporting the coin of the country. This exportation will take place secretly whenever there is a superfluity, however severe the law may be against it; the only difference is, that instead of being carried on in an open and regular manner by merchants of respectability, it is thrown into the hands of men of despicable character, who are tempted by extraordinary profits to engage into this illicit traffic.

Could Spain and Portugal, countries which receive all the precious metals imported from America into Europe, have carried into effect the absurd restrictive laws, by which they attempted to keep their gold and silver at home, those metals would evidently have become of little more value to them than lead and copper.

If you have understood what I have said, you will now be able to tell me what effect will be produced in the mercantile transactions of a country, which is not shackled by restrictive laws, when a scarcity of money produces a fall in the price of commodities.

897. Is any lasting evil to be apprehended from the melting down, or exportation of specie?——898. Does exportation ever take place if there are prohibitory laws?-899. What is the difference as to its being done, whether under the sanction of the laws or secretly?-900. What would be the effect, in those countries, were Spain and Portugal able to carry into effect their restrictive laws in regard to specie?

Caroline. In that case the very reverse will happen of what we before observed. Foreign merchants will come and buy goods, and instead of offering merchandise in exchange, will bring money in payment; for they will be willing to make purchases, but not sales at a cheap market.

Mrs B. It is thus that the value of gold and silver equalises itself in all parts of the civilized world; wherever there is a deficiency, it flows in from every quarter; and wherever there is a redundancy, the tide sets in an opposite direction. It is the regular diffusion of the precious metals, and their constant tendency to an equality of value, which renders them so peculiarly calculated for a general standard. Were money as liable to variation of value as the commodities for which it serves as a medium of exchange, it would be totally unfit for a standard.

CONVERSATION XVII.

SUBJECT OF MONEY CONTINUED.

Of the depreciation of Gold and Silver.-Of the adulteration and depreciation of coined money.-Of banks. Of paper money.-Effects of paper money when not payable in specie on demand.—Of the proportion of currency to the commodities to be circulated by it.

901. What does Caroline say will take place in the mercantile transactions of a country, which is not shackled by restrictive laws, when a scarcity of money produces a fall in the price of commodities?-902. How do silver and gold equalise themselves?903. What renders them so peculiarly calculated for a general standard?

CAROLINE.

I HAVE been reflecting much upon the subject of our last conversation, Mrs B.; and it has occurred to me that though there may be no permanent excess and depre-ciation of specie in any particular country, yet it must gradually decrease in value throughout the world: for money is very little liable to wear; a great quantity of the precious metals is annually extracted from the mines, and though a considerable portion of it may be converted into plate and jewellery, yet the greater part, I suppose, goes to the mint to be coined, and this additional quantity must produce a depreciation of value?

Mrs B. An increase of supply will not occasion depreciation of value, if there should be at the same time a proportional increase of demand, and we must recollect that the consumable produce of the earth increases as well as that of the mines-the commodities to be circulated as well as the medium of circulation; and it is not the actual quantity of money, but the proportion which it bears to the quantity of commodities for which it is to serve as a medium of exchange, that regulates the price of those commodities.

Let us suppose the price of a loaf of bread to be one shilling; and say, if 1000 more loaves of bread be produced every year by agriculture, and such an additional number of shillings be obtained from the mines as will be necessary to circulate them, the price of a loaf will then remain the same, and the value of money, will not by this additional quantity of specie, be depreciated.

Caroline. But, Mrs B., you do not consider that

904. What reason does Caroline give for supposing that there will be throughout the world a gradual decrease in value of money?

-905. What will prevent this decrease?-906. If not the actual quantity of money what does regulate the price of exchangeable commodities?- -907. What illustration is given of this?

when the thousand additional loaves are eaten, the addi-✅ tional shillings will remain.

Mrs B. The greater part of these loaves will be eaten by those who will not only reproduce them, but probably increase the number the following year.

Caroline. In that case it would be very possible that the progress of agriculture and manufactures should keep pace with, or even precede that of the mines.

Mrs B. If the quantity of the precious metals annually extracted from the mines be exactly what is required for the arts, and for the additional specie necessary to circulate the increasing produce of the land, there will be no change in the value of money, and commodities will continue to be bought and sold at their former prices. If less gold and silver be extracted than is requisite for these purposes, goods will fall in price; and if, on the contrary, a greater quantity be produced, goods will rise in price, the fluctuations in the price of commodities gradually and constantly conforming to the variations of the scale by which their value is measured.

Dr Adam Smith was of opinion that for many years past the supply of gold and silver did not exceed the demand; but several later writers conceive that he was mistaken on this point. I am very far from being a competent judge of such a question, but I confess that I feel inclined to favor the opinion of a general deprecia

tion.

Previous to the discovery of America the exchangeable value of money was certainly much greater than it

908. Caroline says, that when the 1000 additional loaves are eaten, the additional shillings will remain-What reply does Mrs B. make?- -909. Under what circumstances will the value of money remain the same?- -910. Under what circumstances, so far as the quantity of gold and silver is considered, will goods fall in price; and under what ones will they rise in price?--911. What was Adam Smith's opinion as to the existing quantity of gold and silver ? 912. What is said of the exchangeable value of money previous to the discovery of America?

has been since that period. Some notion may oe formed of the difference of the value of money in ancient and in modern times from the amount of the revenue which Xerxes king of Persia derived from his wealthy and extensive empire, and which enabled him to maintain his mighty fleets and armies: it is said in history to have amounted to only three millions sterling.

Caroline. The prodigality and extravagance of the Romans was then in fact still greater than it appears, since the immense sums they expended upon luxuries were then more valuable than they would be at the present times.

Mrs B. As the wealth of the Romans arose in a great measure from the spoliation of the countries they conquered, gold and silver formed an essential part of their plunder; specie, therefore, might possibly be of less value there than in any other parts of the world at the same period.

Independently, however, of the increase of quantity which produces a depreciation in the value of the precious metals themselves, there are causes quite foreign to this, which have considerable effect on the value of the money into which they have been coined. One of these is the adulteration of the coin. A pound sterling, or twenty shillings, originally weighed a pound of silver; hence its denomination. But sovereigns, in making new coinages, frequently found it convenient to adulterate the metal by mixing it with alloy. It was a means of increasing the value of their treasures, by paying their debts with a much less quantity of the precious metals,

913. What reference is made to Xerxes in illustration of the subject? -914. What does Caroline say of the prodigality and extravagance of the Romans?—-915. Why does Mrs B. think Caroline's opinion may be incorrect?- -916. Whence did a pound sterling receive its denomination ?- -917. Why has the metal been adulterated?