2d, That these can be brought into a country having no mines, only by a

favorable "Balance of Trade"

144

Hence it became the great object of Political Economy to increase expor-

tations and diminish importations

144

1st, By restraints upon the importation of such articles as could be pro-

duced at home . .

147

2d, By restraints upon importations from countries with which trade

was considered disadvantageous

147

The six preceding provisions the means for increasing the "Balance of

Trade" ..

The idea that they were arose from the double function of money

Illustration of this distinction

147

148

Money the measure of value and money the instrument of commerce, the

A person rich in proportion to the amount he holds

Money an instrument of commerce by reason of its value

Absurdity of Smith's propositions and conclusions

A sale of goods for money an exchange of equal values

Absurdity in asserting the universal object of acquisition to possess no

value...

Doctrines of Smith and the Economists in reference to "Balance of Trade"

the necessary sequence of those held by them in reference to the

value of money

Would not allow that to be an object of commerce which was not even a

subject of commerce

Importance of an equilibrium of the precious metals the world over

How this is to be maintained . . .

Illustrated by the action of the Bank of England

Governments incompetent to control the movements of the precious metals 158

The Bank competent

Its action a triumphant vindication of the correctness of the doctrine of

"Balance of Trade"

Smith assumed to have demonstrated the superiority of the former

The opposing doctrines not the result of natural laws, but of conditions

Those possessed of superior capital and skill, Free-traders.

Those lacking and seeking to acquire them, Protectionists

The same parties Free-Traders in one country and Protectionists in

another

160

Absurdity of his tirade

The age of Protection, the heroic one.

That of Free-Trade, one of realization or enjoyment

Free-Trade constantly gaining at the expense of Protection

The question as at present treated, insoluble . . .

Smith had the same contempt for merchants and manufacturers as Plato

and Aristotle

"The sneaking arts of underling tradesmen erected into maxims for the
conduct of a great empire."

"The capricious ambition of kings and ministers not more fatal to the
repose of Europe"

Untruthfulness of such assertions

Merchants always the champions of commercial and political freedom
Merchants the authors of the spirit of protection and monopoly
Teach the doctrine of buying in the dearest, and selling in the cheapest
markets

"Their interested sophistry has confounded the common sense of man-
kind".

Their interest directly opposed to that of the great body of the people.

If these assertions be true, the greater the freedom of trade, the greater the

monopoly

"The sneaking arts of underling tradesmen” have made England what
she is ..

Wholly ignored moral laws as the chief factors in civilization

160

160

161

"The mean rapacity and monopolizing spirit of merchants and manu-

facturers"

162

163

The heresies of country gentlemen taught them by merchants

Smith incapable of conducting a scientific discussion

167

168

Wholly unfitted for the work he undertook.

His ignorance and want of method.

Cause of his influence

The great obstacle to progress in the subjects upon which he wrote

Whatever vigor and originality he possessed wholly lost in his followers

DUGALD STEWART.

One of the most distinguished disciples of Smith.

Reduces Smith's statements to precise and logical terms

Agrees with him as to the invention of money, but denies value to be a

useful attribute of it..

Were England insulated, her currency might as well be paper as coin

Value complicates the theory of money

172

172

Stewart, in denying all value to money, more logical than Smith

Absurdity of his conclusion drawn from an assumed insulation of Eng-

land

172

174

His argument puerile to the last degree

Divisibility the attribute fitting gold and silver to serve as money

175

176

Coins render ideas of value more precise than mathematical statements.

If value be no attribute of money, then divisibility is of no importance.

Rapidity of circulation.

The value of money is in ratio to the rapidity of its circulation
Money possesses no more activity than any other kind of property
Stewart a striking example of the weakness and folly of the Schoolmen

BANK OF ENGLAND - THE BULLION REPORT, 1810.

Act of 1708 making it the manager and regulator of the currency

Authorized to issue notes to any amount.

183

183

183

184

184

No other association having more than six members to issue notes

Beneficent influence of the Bank

The foundation of England's commercial and manufacturing supremacy

Sketch of early banking in England

185

186

Private and country Banks

186

Issue of notes a right at common law .

187

Number of country and private Banks in operation from 1809 to 1832, in-

Operations of the Bank of England from 1814 to 1832, inclusive (note)

Amount of commercial bills under discount at the Bank, from 1795 to 1813,

inclusive (note)

Mr. Pitt secures such authority, but without limit as to amount.

The necessities of Mr. Pitt impair the ability of the Bank to loan to mer-

The bullion of the Bank, on the 21st of February, 1797, reduced to

£1,272,000.

Forbidden on February 25, 1797, to continue to pay specie

196

196

Statement showing the value of gold from 1797 to 1821, inclusive (note)

The high premium on gold in 1809 causes great alarm.

Committee of the House of Commons to inquire into its causes

Report of the Committee

When the Bank was upon a specie basis, it regulated its issues by the

price of gold and the state of the exchanges

b

If at any time the proper limit was incautiously exceeded, the excess
returned for coin.

The suspension of specie payments exempted the Bank from such

check.

The assumption of the Bank, that there could be no excess of issue so

long as it was made in the discount of short bills representing real

transactions, denied.

200

201

201

Not the excess alone, but all the issues of the Bank speedily return for

redemption.

The excess acts upon the exchanges only through its effects

Mode in which it does act upon them

202

202

So long as specie payments are maintained, no difference in value between

the notes of the Banks and gold

The Committee simply follow Smith in making the question of currency one

of quantity, not of quality

Number of days during which the bank-notes remain in circulation (note)

Years might elapse before excess of issue would be felt in the exchanges

The issues of the Bank, properly made, never in excess

To regulate issues, after suspension, by reference to exchanges, would be to

make none whatever

The proposition of the Committee an absurdity on its face

During suspension, the bills of the Bank could be paid only in its own.

notes . .

without a currency

The requirement of the Committee would have left the country wholly

The rule acted upon by the Bank vindicated by the result

Adopted the only possible course open to it.

Gave the country, for a considerable time, a symbolic currency equal to its

wants, and of the value of coin

Error of the Bank in not seeing that suspension removed the real check to

overissues

After suspension its reserves its own notes

Great wisdom and ability with which it was managed

Ignorance, and narrow scope of inquiry, of the Committee

205

205

205

Economists never able to master the reason why the Bank recovered' so
speedily (note)

Distinction between "an advance of capital to merchants, and an addition

of currency to the general mass of circulation".

No limit to the former but the inability to find good borrowers

When the advances become circulation, the general mass of currency

inflated, and diminished in value

207

207

The amount of such currency permanently outstanding increases in

ratio to the loans that are made. .

Notes representing capital the same in character till they are taken in

All issued fall alike into the channels of circulation, and all alike return to

the Bank for redemption . .

208

208

Assumptions of the Committee wholly groundless

208

The currency of a country bears no fixed proportion to the quantity of com-

modities ..

209

Its effectiveness depends upon the quickness of its circulation

Contrivances by which the same quantity may be made to do an increased

209

amount of work

209

The currency inflated, and the remedy convertibility

Money no more active than other kinds of capital

If the assumption of the Committee be correct, then money is not capital
No meaning can be attached to the phrase "rapidity of circulation"
Quantity of money always in ratio to the exchanges

No difference in principle between bank-notes and other instruments of ex-

change

211

Resolutions accompanying the report of the Committee rejected

Adoption of the counter resolutions of Mr. Vansittart

212

212

Lord Stanhope's bill...

212

High price of gold due to excess of issues by the Bank

213

No reduction in their amount would have increased their price, unless it had

increased their value

213

The great question, the proper manner of issue, never considered by the

Committee.

213

The report failed to establish a single principle in monetary science

Placed on still firmer foundations the greatest of all its errors.

"An Inquiry into the Nature and Effect of the Public Credit of Great Brit-

ain," 1802.

214

No distinction between business and fictitious paper as the basis of cur-

rency . . .

215

Difference between real and fictitious bills shown by the different effects of

the currencies based upon them

215

.

Lord King (note) . . .

215

"Thoughts on the Restriction of Specie Payments by the Bank of Eng-

land," 1803 (note)

215

Of little value but in keeping alive the opposition to the Restriction Act (note) 215

WILLIAM HUSKISSON.

"Question concerning the Depreciation of our Currency: a vindication of

The latter circulates not by its value, but by confidence or authority

Value no more a necessary attribute of money than of a foot-rule

Neither confidence nor authority can create values

216

216

217

A foot-rule not, like money, receivable in exchange for the articles it

measures..

217

If paper money be depreciated, the metallic money in circulation will also

be depreciated in reference to bullion

A repetition of Lowndes' argument refuted by Locke

Singular Confusion into which Huskisson fell in reference to money

"The Principles of Political Economy and Taxation," 1817 . .

Ricardo the central figure of the new school of Economists, as Smith of the

old . . .

221

221

.

to its logical result . .

As wanting in ideas as Smith in method and in knowledge of affairs

Pushes Smith's doctrine, that value is not a necessary attribute of money,

Value not an attribute of money