The theory which is here advanced respecting the dependence of the rates, as well as the par of exchange, upon the value of the circulating medium, removes at once the whole difficulty of comprehending this subject. It exposes the errors which have been fallen into by attributing the high exchange between Dublin and London to any balance debt due by Ireland to England, and it points out the manner in which an unfavourable exchange may be produced, notwithstanding every circumstance may apparently. exist, which is calculated to give rise to a favourable one. It is in fact this distinction which has been taken between the effects of currency, and of a balance of trade, and remittances upon the rates of exchange, that places the cause, the consequences, and the remedy of it, as existing between Great Britain and Ireland, in its true light, and affords both in theory and in practice the most satisfactory proof of the impossibility of accounting for the very high rates of it by any other method than the depreciation of Bank paper.

f

ON THE DEGREE OF DEPRECIATION OF

IRISH CURRENCY.

In support of the fact of the currency of Ireland being depreciated, reference has as yet only been had to the known discount upon Bank paper; which circumstance, with every reasonable mind, will be considered as decisive proof. But, as the reasoning is not admitted by many, and particularly by the directors of the Bank of Ireland, it is further necessary to investigate other means by which the extent of the evil may be calculated; these are, the price of bullion, as compared with the mint price of it, and the rates of exchange. The rates of exchange being, according to the true theory of exchange, direct evidence of the value of currency, will explain the reason for postponing the discussion of the actual degree of the depreciation until this theory had been previously examined. What we have hitherto urged will be greatly supported, if, upon examining these tests, the result should be a corresponding proof by

1

each of nearly the same degree of depreciation.

The price of bullion becomes a criterion of the depreciation, as it is affected equally with the price of any other article. The mint price of it being of a certain established amount, it follows, that if the bullion price advances without the actual quantity of bullion brought to market throughout Europe having diminshed, or the demand for it having increased---that the advance is nominal, and arises from the diminution in value of the currency with which it is purchased; and it therefore becomes a just measure of the depreciation of that currency. There is not the same opportunity in Ireland of investigating the prices of bullion at different periods as there is in England, because there is not any regular return of its prices published there, as in Lloyd's List. It has, however, been ascertained, that the price of silver in Dublin has experienced an advance, having varied from 5s. 8d. to 6s. 8d. Irish currency per ounce; from which

B

it

may

be inferred, that the increase is 17 per cent.

By the state of exchange between Dublin and London, there is reason to conclude that the depreciation of Irish currency, compared with the currency of England, is at least 8 per cent. the exchange now being seldom under 14, and frequently 18, and even 19 per cent. making 16 about the average.

It is very evident, that the rates of exchange fall very far short of explaining the exact depreciation of paper. The real balance of trade being in favour of Ireland, justifies a belief, that the depreciated currency has not only operated, so as to raise exchange 8 per cent. above par, but also to counteract the natural tendency of the trade of Ireland, to produce an exchange two, three, or four per cent. in favour of it.

Nor is the rate of exchange between England and Ireland the exact measure of the depreciation for another reason; namely,

that the paper currency of England is itself depreciated.

In resorting to the rates of exchange for evidence, an accurate idea of the extent of the depreciation can alone be formed by comparing the currency of Ireland with the currencies of those countries where specie still is current; and by examining the exchanges between Dublin and London, and between London and them.* Thus, if a Dublin merchant have to make a remittance to Hamburgh, and the exchange between London and Hamburgh, is 8 per cent. as was the case in 1801, against London, and at the same time the exchange between

* 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 course of exchange will perform with the greatest exactness.

Sir J. Stewart's Political Economy, vol. ii. B. III. P. 110.