from which they are derived, Mr Wheatley obferves, that this does not explain the cause which prevents the currency of one country from being wholly withdrawn, and added to the currency of another. But although this is not Dr Smith's object; although his intention is merely to point out the effects which arise from the eafy transportation of the precious metals, does not Mr Wheatley perceive, that the principle for which he fo zealously contends is implied throughout the whole of Dr Smith's reasonings? and that, if an abundance of gold or filver in one part of the world is felt in the moft remote countries, that this muft arise from the fame caufes by which their value is preserved in a just balance in more contiguous markets?

The remainder of Mr Wheatley's remarks on Dr Smith, seem to be conceived in the fame spirit of captiousness and cavilling. He finds fault with the third position, which appears to us to be almoft felf-evident, that the quantity of the precious metals in any country, is regulated by the demand of thofe who are willing to pay for them; and he seems particularly displeased with the fourth and fifth pofitions, namely, that the quantity of gold and filver in every country, is limited by the ufe which there is for those metals, and that they can never be accumulated beyond what a nation can afford to employ. He is no doubt afraid, left Dr Smith fhould be thought to have anticipated him in the discovery of the profound axiom on which all his discoveries are built, "The fifth pofition' (he obferves) is so fingularly vague, that it is only neceffary to notice it, in order to show the perplexity of his mind, and the verfatility of his efforts to poffefs and elucidate the principle of the limit. It is really inconceivable, that Mr Wheatley fhould take it feriously into his head, that Dr Smith did not know that money, like all other commodities, must be constantly attracted to the best market, and that it cannot consequently remain, for any length of time, dear in one country, and cheap in another. This principle is in itself very plain and obvious; and it is, befides, the foundation of the whole of that author's reasonings on the fubject of currency. The anxiety, indeed, with which Mr Wheatley demonftrates what has long been familiar to every one, is truly Judicrous. It is recorded of Hudibras, that he could

१

-wisely tell what hour o' the day The clock did strike by algebra;

and we really think, that the speculations of a very numerous class of modern writers, terminate in results equally important. They seem to imagine, that, in order to be profound, they must be obscure; that they are penetrating into the mysteries of science,

* Wealth of Nations, Vol. I. p: 372

when

when they are only perplexing what preceding writers have made plain; and that their readers will be amply compensated for the toil and trouble they have encountered on a rugged road, by the poverty of the entertainment provided for them at the end of their journey.

The remaining part of the chapter is occupied with similar misconceptions of Dr Smith's meaning, into which we do not think it necessary to enter particularly, as we have already laid before our readers a sufficient specimen of our author's general inaccuracy.

The second chapter is intended to explain the functions of money;' although we do not see what can be added on this subject to the short statement of Dr Smith, namely, that money is the measure of value, and the instrument of commerce. It seems to be, in a great measure, a transcript of what Mr Wheatley had published in his preliminary work, which, as we have already examined at sufficient length, it will be superfluous to reconsider in this place.

The third chapter relates to the course of exchange; and although the subject has, in our opinion, been explained by a va riety of writers with equal clearness and simplicity, Mr Wheatley seems to imagine, that it has been very generally misunderstood. His theory is here very amply detailed and illustrated; and it seems to differ considerably from that which was published in his preliminary observations. In his former work, we understood him to state, that an excess of currency, by leading to an excess of imports, or to what has been called an unfavourable balance of trade, produced an unfavourable exchange. In the work before us, a partial augmentation or diminution of currency, is still stated as the sole cause of a favourable, or of an adverse exchange; but he now maintains, that the exchange has no connexion with the balance of trade; that the exchange may be favourable, when the balance is adverse; and adverse, when the balance is favourable.' In support of this opinion, he supposes the case of a nation, where the balance of trade is favourable, and where there is at the same time an excess of currency. In which case, Mr Wheatley contends, it is impossible that the exchange can be favourable with those countries where a similar excess of currency has not taken place. If at the time that a considerable balance was due from Hamburgh to London, 1001. in London were, owing to a relative excess of currency in this country, worth no more than 951, in Hamburgh, it appears to Mr Wheatley absurd, to suppose that a Hamburgh merchant would give a premium for a bill for 1001. on this country, when it was in reality worth only 951.

T 4

The

The conclusion is certainly very sound and logical; but the case from which Mr Wheatley deduces it, is evidently impossible. Gold and silver, like other commodities, always seek the best market. If there were already an excess of currency in the market of Britain, the British merchants would not surely import a greater quantity, in order still further to depress its value. Whatever commodities he might send to Hamburgh, he would order such commodities in return, as he might suppose were in request in Britain, not such as were already in too great abundance. It is evident, besides, that an excess of currency, by raising prices, necessarily leads to an excess of imports, or to an unfavourable balance of trade. The balance of trade may indeed be favourable to a country in some particular branches of its commerce, even during the continuance of an excess of currency; but, on the average amount of its whole transactions, it must be unfavourable; because it is in this way only that the excess of its currency can be taken off.

In the explanation of his hypothesis, Mr Wheatley also appears to us occasionally to confound the real with the nominal exchange. Ascribing an unfavourable exchange in all cases to a depreciation of the currency, he intimates, that the depreciation of the currency must be the exact measure of the unfavourableness of the exchange. During the late variation in the exchange between Dublin and London, he informs us, that 1151. in Dublin was worth no more than 1001. in London, and that, consequently, a premium of 151. was paid in Dublin for a bill on London. It is scarcely necessary to observe, however, that the real exchange with London could never have been 15 per cent. against Dublin, as bullion could have been remitted at considerably less expense. At the period to which Mr Wheatley alludes, the currency of Ireland consisted of paper not convertible into specie, and depreciated from an excessive issue. In these circumstances, it is evident that nothing certain can be inferred with respect to the real rate of exchange from its apparent rate. The real exchange is calculated on an accurate comparison of the quantity of pure gold or silver, which the currencies of different countries contain. When this quantity varies, the exchange may appear to be against a country, when it is really at par, or even in its favour. Neither is it true (except, indeed, when the real exchange is at par), that, when the currency of a country is depreciated, the computed exchange gives the measure of its de preciation. When the real exchange is in favour of a country of which the currency is depreciated, its whole amount must be added to the computed exchange, in order to ascertain the degree

of

of depreciation. A country with a depreciated currency may also have its computed exchange at par with all other countries; a circumstance which, of itself, might have satisfied Mr Wheatley, that there was a radical fallacy in his reasonings.

Mr Wheatley has committed another, though a more pardonable error, on the subject of exchanges. He observes, that where the expense of transmitting money between two countries is three per cent., the exchange might continue permanently unfavourable to either of them to that amount, because, after paying the necessary charges of freight and insurance, nothing is left for the profit of the bullion merchant. Unless, therefore, the exchange is so far unfavourable, as not only to pay for the transportation of bullion, but also to secure a reasonable profit to the bullion merchant, specie will not be exported, and the unfavourable 'exchange will not be redressed. Lord King, also, in the observations which he has added on this subject to the second edition of his valuable work, seems to maintain, that an unfavourable exchange cannot be redressed by the transmission of bullion, unless the discount on the bills drawn by the creditor country be sufficient to secure, besides paying other charges, an adequate profit to the bullion merchant.

It is no doubt true, that bullion cannot be exported for the purpose of relieving a country from the burden of foreign debt, unless a suitable profit be derived from the transaction. But it does not seem necessary, in order to render the exportation of specie profitable, that the discount on every bill should be equal to the charges of a remittance of bullion. The debtor country has generally claims to a considerable extent against the creditor country. A great part of their mutual transactions will still be settled, therefore, by bills, without the intervention of specie. The principal utility, indeed, of bills of exchange, consists in econcmising the use of specie, and in simplifying foreign payments, by rendering unnecessary a continual transmission of bullion between trading countries. It may not be necessary, therefore, for the debtor country to send abroad specie for above the tenth part of its debts; and it is evident, that a very small per centage on the whole of its foreign bills would amply defray this charge. If the exports of Hamburgh to London amount to 1,000,0001., and the exports of London to Hamburgh amount to 1,200,000l., it may be necessary to remit from Hamburgh to London 200,0001. in specie. There are bills on Hamburgh in the London market to the amount of 1,200,0001.; and they must fall to such a discount as will defray the charge of this remittance. But as the expence of sending abroad 200,0001. is to be charged on 1,200,000l., it is evident that the discount on each bill will not be

be nearly equal to the expense of remitting its own amount in specie.

The remaining part of the chapter is occupied with a very tedious explanation of the effects of a depreciated, or debased currency, on the exchange. There is more of inaccuracy and repetition here, than of positive error; or at least, the errors which occur are obviously the result of an idle ambition to say something original on subjects where nothing remains to be discovered. We should have imagined, for instance, that the variations between the market and the mint price of bullion, had been already explained with sufficient clearness; yet, Mr Wheatley dedicates a whole chapter to this subject. It appears to us to be very clear, that where no seignorage is charged on the coin, a pound of uncoined gold must be very nearly of the same value as a pound of coined gold; nor does it seem less clear, that a pound of gold cannot lose any of its value by being manufactured into coin. Where the charge of coinage, therefore, is defrayed by government, as in Britain, the market and the mint price of gold must be the same; except in the case of a debased or otherwise depreciated currency. This point is rendered particularly plain, in Locke's masterly treatise on this subject; and, if our author can resist the reasoning contained in several of the passages which he himself has quoted from that work, he has no chance to be convinced by any arguments which we can employ.

Mr Wheatley observes, however, that, in 1783, there was a remarkable advance in the market price of gold, above its mint price, although the gold currency was at that time perfect in its weight; and he informs us, that, with a few occasional interruptions, this inferiority has continued ever since; the maket price having been sometimes as high as 41. an ounce. Now, we may well be permit ted to inquire how this could have happened. Gold bullion must be either purchased with specie or with bank-notes; and it is for Mr Wheatley to explain, what imaginable motive could induce the holder of four guineas to part with them for an ounce of gold and four shillings, when, by converting them into bullion, he would receive an ounce of gold and 6s. 2d. in return; the market price of gold being 31. 17s. 10d. The same reasoning applies to bank-notes; as, previous to the restriction, they could be immediately converted into specie. The inaccuracy of the mint estimation of the precious metals, has also, Mr Wheatley observes, been stated as the cause of the excess of the market price over the mint price of gold or silver bullion. But although pound of silver bullion will exchange for a greater quantity of gold coin than a pound of silver coin, Mr Wheatley will not allow that this is any evidence of the inaccuracy of the mint esti