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If then the private Bankers have issued their paper in the proportion of 800l. to every 100%. of Bank of Ireland paper, the total amount of Paper in circulation would be 20,607,3991. And as Dr. Smith supposes, that a Banker with 10,000l. capital, may issue 40,000l. in paper, though payable in specie, it is not assuming too much to estimate, that, under the circumstance of payment in National Bank paper, and the present system of discounting, the proportion of issues may be advanced from four, as high as to eight to one. It will not, therefore, appear so very extraordinary, taking the capital of all the private Bankers at 2,911,6281. to suppose, that the amount of paper actually in circulation in Ireland exceeds twenty millions.

Though this sum may appear to exceed the limits of possibility, yet the reasoning and facts upon which is estimated, convey a tolerable accurate idea of the extent to which the paper

Wealth of Nations, Vol. i. 450.

system may be carried; and with respect immediately to Ireland, whereof the circulating medium, before the restriction of cash payments, has never been estimated at above 5,000,000l.* there is every ample proof obtained of the paper in circulation being vastly disproportionate with the efficient demand.

By the fact of a discount of 10 per cent. having been the consequence of an excessive issue of paper in Ireland, the danger of removing the optionary power of the holder of it to convert it into, specie, is fully exemplified; and though the conduct of the directors of the Bank of Ireland may be considered the proximate cause of the depreciation, the primary cause is evidently the abolishing of this power by the Bank restriction law.

The advocates for continuing the restriction in Great Britain will do well to examine with attention, what has been al

Evidence of Irish Exch. Com. p. 97.

ready the result of this measure in Ireland; for, if they compare the relative situations of both countries, they will find that there does not exist any real protection from the same consequences attending it in this country. The national Bank of England is precisely similar as to its institution, to the national Bank of Ireland; and no doubt the directors of the former are as much alive to their private interests as the directors of the latter. The trade and revenue therefore of the whole kingdom, and the property of every one, is totally.dependent upon them. And so long as the restriction continues, the value of every thing rests entirely upon the upright or selfish manner in which they may please to regulate the circulating medium.

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THE plainest understanding might have foreseen, that a depreciation of Bank paper, and a discount upon it, would have been the consequence of multiplying its quantity in any considerable degree, beyond the actual demand; the effect of this upon the course of exchange is next to be considered. What are the facts? Previous to May, 1796, the exchange between London and Dublin had fluctuated, during eight years, between 74 and 9 per cent.* During the. latter months of 1797, exchange was so low as 6 per cent. The amount of notes

This period is taken, as the rates in the Appendix refer only to 1789.

† See Note to Appendix, No. I..

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in circulation the beginning of that year was only 621,9177. In April, 1801, the amount of notes had advanced to 2,266,4717. and exchange to 14 per cent.; in November, 1803, the notes advanced in amount to 2,911,6287. and exchange to 19 per cent. steadily remaining above 16 per cent. for the last six months of 1803; except during the periods in which it was influenced by the Treasury drawing for the Loan on London.

By this statement it appears, that the exchange previous to the restriction was, on an average, below par; that it had not been so high as 14 per cent. until the year 1801, when the amount of the notes in circulation wanted little more than 200,000l. of being four times greater than it was when the restriction first took place; that in 1803, the amount was near five times greater than it was at that period, and exchange 19 per cent.

Apparently, therefore, there is every reason to think, that the depreciation of

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