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their pit of exchange。 Thus the par of exchange between Holland
and England is stated to be about eleven florins； because the
pure silver contained in eleven florins is equal to the pure
silver contained in twenty standard shillings。
This par is not； nor can it be； absolutely fixed； because；
gold coin being the standard of commerce in England； and silver
coin in Holland； a pound sterling； or 20/21 of a guinea； may at
different times be more or less valuable than twenty standard
shillings； and therefore more or less valuable than its
equivalent of eleven florins。 Estimating the par either by silver
or by gold will be sufficiently exact for our purpose。
If I owe a debt in Holland； by knowing the par of exchange； I
also know the quantity of our money which will be necessity to
discharge it。
If my debt amount to 1100 florins； and gold have not varied
in value； 100 l。 in our pure gold coin will purchase as much
Dutch currency as is necessary to pay my debt。 By exporting the
100 l。 therefore in coin； or （which is the same thing） paying a
bullion merchant the 100 l。 in coin； and allowing him the
expences attending its transportation； such as freight；
insurance； and his profit； he will sell me a bill which will
discharge my debt； at the same time he will export the bullion；
to enable his correspondent to pay the bill when it shall become
due。
These expences then are the utmost limits of an unfavourable
exchange。 However great my debt may be； though it equalled the
largest subsidy ever given by this county to an ally； while I
could pay the bullion…merchant in coin of standard value； he
would be glad to export it； and to sell me bills。 But if I pay
him for his bill in a debased coin； or in a depreciated paper
money； he will not be willing to sell me his bill at this rate；
because if the coin be debased； it does not contain the quantity
of pure gold or silver which ought to be contained in 100 l。； and
he must therefore export an additional number of such debased
pieces of money； to enable him to pay my debt of 100 l。； or its
equivalent； 1100 florins。 If I pay him in paper money； as he
cannot send it abroad； he will consider whether it will purchase
as much gold or silver bullion as is contained in the coin for
which it is a substitute； if it will do this； paper will be as
acceptable to him as coin； but if it will not； he will expect a
further premium for his bill； equal to the depreciation of the
paper。
While the circulating medium consists； therefore； of coin
undebased； or of paper…money immediately exchangeable for
undebased coin； the exchange can never be more above； or more
below； par； than the expences attending the transportation of the
precious metals。 But when it consists of a depreciated
paper…money； it necessarily will fall according to the degree of
the depreciation。
The exchange will； therefore； be a tolerably accurate
criterion by which we may judge of the debasement of the
currency； proceeding either from a clipped coinage； or a
depreciated paper…money。
It is observed by Sir James Stuart； 〃That if the foot measure
was altered at once over all England； by adding to it； or taking
from it； any proportional part of its standard length； the
alteration would be best discovered； by comparing the new foot
with that of Paris； or of any other country； which had suffered
no alteration。
〃Just so； if the pound sterling； which is the English unit；
shall be found any how changed； and if the variation it has met
with be difficult to ascertain； because of a complication of
circumstances； the best way to discover it will be to compare the
former and the present value of it； with the money of other
nations which has suffered no variation。 This the exchange will
perform with the greatest exactness。〃 The Edinburgh reviewers； in
speaking of Lord King's pamphlet； observe； that 〃it does not
follow because our imports always consist partly of bullion； that
the balance of trade is therefore permanently in our favour。
Bullion；〃 they say； 〃is a commodity； for which； as for every
other； there is a varying demand； and which； exactly like any
other； may enter the catalogue either of imports or exports； and
this exportation or importation of bullion will not affect the
course of exchange in a different way from the exportation or
importation of any other commodities。〃
No person ever exports or imports bullion without first
considering the rate of exchange。 It is by the rate of exchange
that he discovers the relative value of bullion in the two
countries between which it is estimated。 It is therefore
consulted by the bullion…merchant in the same manner as the
price…current is by other merchants； before they determine on the
exportation or importation of other commodities。 If eleven
florins in Holland contain an equal quantity of pure silver as
twenty standard shillings； silver bullion； equal in weight to
twenty standard shillings； can never be exported from London to
Amsterdam whilst the exchange is at par； or unfavourable to
Holland。 Some expence and risk must attend its exportation； and
the very term par expresses that a quantity of silver bullion；
equal to that weight and purity； is to be obtained in Holland by
the purchase of a bill of exchange； free of all expence。 Who
would send bullion to Holland at an expence of three or four per
cent。 when； by the purchase of a bill at par； he in fact obtains
an order for the delivery to his correspondent in Holland of the
same weight of bullion which he was about to export？
It would be as reasonable to contend； that when the price of
corn is higher in England than on the Continent； corn would be
sent； notwithstanding all the charges on its exportation； to be
sold in the cheaper market。
Having already noticed the disorders to which a metallic
currency is exposed； I will proceed to consider those which；
though not caused by the debased state of either the gold or
silver coins； are nevertheless more serious in their ultimate
consequences。
Our circulating medium is almost wholly composed of paper；
and it behoves us to guard against the depreciation of the paper
currency with at least as much vigilance as against that of the
coins。
This we have neglected to do。
Parliament； by restricting the Bank from paying in specie；
have enabled the conductors of that concern to increase or
decrease at pleasure the quantity and amount of their notes； and
the previously existing checks against an over…issue having