countries¡¡between¡¡which¡¡it¡¡is¡¡estimated¡£¡¡It¡¡is¡¡therefore
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twenty¡¡standard¡¡shillings£»¡¡can¡¡never¡¡be¡¡exported¡¡from¡¡London¡¡to
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¡¡¡¡¡¡¡¡It¡¡would¡¡be¡¡as¡¡reasonable¡¡to¡¡contend£»¡¡that¡¡when¡¡the¡¡price¡¡of
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¡¡¡¡¡¡¡¡This¡¡we¡¡have¡¡neglected¡¡to¡¡do¡£
¡¡¡¡¡¡¡¡Parliament£»¡¡by¡¡restricting¡¡the¡¡Bank¡¡from¡¡paying¡¡in¡¡specie£»
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¡¡¡¡¡¡¡¡In¡¡tracing¡¡the¡¡present¡¡evils¡¡to¡¡their¡¡source£»¡¡and¡¡proving
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¡¡¡¡¡¡¡¡Mr¡¡Thornton¡¡tells¡¡us£»¡¡¡¨That¡¡if¡¡at¡¡any¡¡time¡¡the¡¡exchanges¡¡of
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tempt¡¡it¡¡out¡¡of¡¡the¡¡kingdom£»¡¡the¡¡directors¡¡of¡¡the¡¡Bank¡¡naturally
diminish£»¡¡in¡¡some¡¡degree£»¡¡the¡¡quantity¡¡of¡¡their¡¡paper¡¡through¡¡an
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raise¡¡also¡¡the¡¡value¡¡in¡¡England¡¡of¡¡the¡¡current¡¡coin¡¡which¡¡is
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¡¡¡¡¡¡¡¡The¡¡necessity¡¡which¡¡the¡¡Bank¡¡felt¡¡itself¡¡under¡¡to¡¡guard¡¡the
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the¡¡restriction¡¡from¡¡paying¡¡in¡¡specie£»¡¡a¡¡too¡¡lavish¡¡issue¡¡of
paper¡¡money¡£
¡¡¡¡¡¡¡¡Thus¡¡we¡¡find¡¡that£»¡¡for¡¡a¡¡period¡¡of¡¡twenty¡three¡¡years
previously¡¡to¡¡the¡¡suspension¡¡of¡¡cash¡¡payments¡¡in¡¡1797£»¡¡the
average¡¡price¡¡of¡¡gold¡¡bullion¡¡was¡¡3¡¡l¡£¡¡17s¡£¡¡7¡¡3/4d¡£¡¡per¡¡oz¡£¡¡about
2¡¡3/4d¡£¡¡under¡¡the¡¡mint¡¡price£»¡¡and¡¡for¡¡sixteen¡¡years¡¡previously¡¡to
1774£»¡¡it¡¡never¡¡was¡¡much¡¡above¡¡4¡¡l¡£¡¡per¡¡oz¡£¡¡It¡¡should¡¡be
remembered¡¡that¡¡during¡¡these¡¡sixteen¡¡years¡¡our¡¡gold¡¡coin¡¡was
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such¡¡debased¡¡money¡¡did¡¡not¡¡weigh¡¡as¡¡much¡¡as¡¡the¡¡ounce¡¡of¡¡gold¡¡for
which¡¡it¡¡was¡¡exchanged¡£
¡¡¡¡¡¡¡¡Dr¡¡A¡£¡¡Smith¡¡considers¡¡every¡¡permanent¡¡excess¡¡of¡¡the¡¡market
above¡¡the¡¡mint¡¡price¡¡of¡¡gold£»¡¡as¡¡referrible¡¡to¡¡the¡¡state¡¡of¡¡the
coins¡£¡¡While¡¡the¡¡coin¡¡was¡¡of¡¡its¡¡standard¡¡weight¡¡and¡¡purity£»¡¡the
market¡¡price¡¡of¡¡gold¡¡bullion£»¡¡he¡¡thought£»¡¡could¡¡not¡¡greatly
exceed¡¡the¡¡mint¡¡price¡£
¡¡¡¡¡¡¡¡Mr¡¡Thornton¡¡contends¡¡that¡¡this¡¡cannot¡¡be¡¡the¡¡only¡¡cause¡£¡¡¡¨We
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exchanges£»¡¡and¡¡correspondent¡¡variations¡¡in¡¡the¡¡market£»¡¡compared
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the¡¡same¡£¡¨¡¡Mr¡¡Thornton¡¡should¡¡have¡¡reflected¡¡that¡¡at¡¡the¡¡time¡¡he
wrote£»¡¡specie¡¡could¡¡not¡¡be¡¡demanded¡¡at¡¡the¡¡Bank¡¡in¡¡exchange¡¡for
notes£»¡¡that¡¡this¡¡was¡¡a¡¡cause¡¡for¡¡the¡¡depreciation¡¡of¡¡the¡¡currency
which¡¡Dr¡¡Smith¡¡could¡¡never¡¡have¡¡anticipated¡£¡¡If¡¡Mr¡¡Thornton¡¡had
proved¡¡that¡¡there¡¡had¡¡been¡¡a¡¡fluctuation¡¡of¡¡ten¡¡per¡¡cent¡£¡¡in¡¡the
price¡¡of¡¡gold£»¡¡while¡¡the¡¡Bank¡¡paid¡¡their¡¡notes¡¡in¡¡specie£»¡¡and¡¡the
coin¡¡was¡¡undebased£»¡¡he¡¡would¡¡then¡¡have¡¡convicted¡¡Dr¡¡Smith¡¡of¡¡¡¨
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unsatisfactory¡¡manner¡£¡¨¡¡£¨6*£©
¡¡¡¡¡¡¡¡But¡¡as¡¡all¡¡checks¡¡against¡¡the¡¡over¡issues¡¡of¡¡the¡¡Bank¡¡are¡¡now
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bullion¡¡has¡¡risen¡¡from¡¡3¡¡l¡£¡¡17s¡£¡¡7¡¡3/4d¡£¡¡the¡¡average¡¡price
previously¡¡1¡¡to¡¡1797£»¡¡to¡¡4¡¡l¡£¡¡10s¡£¡¡and¡¡has¡¡been¡¡lately¡¡as¡¡high¡¡as
4¡¡l¡£¡¡13s¡£¡¡per¡¡oz¡£
¡¡¡¡¡¡¡¡We¡¡may¡¡therefore¡¡fairly¡¡conclude¡¡that¡¡this¡¡difference¡¡in¡¡the
relative¡¡value£»¡¡or£»¡¡in¡¡other¡¡words£»¡¡that¡¡this¡¡depreciation¡¡in¡¡the
actual¡¡value¡¡of¡¡bank¡notes¡¡has¡¡been¡¡caused¡¡by¡¡the¡¡too¡¡abundant
quantity¡¡which¡¡the¡¡Bank¡¡has¡¡sent¡¡into¡¡circulation¡£¡¡The¡¡same¡¡cause
which¡¡has¡¡produced¡¡a¡¡difference¡¡of¡¡from¡¡fifteen¡¡to¡¡twenty¡¡per
cent¡£¡¡in¡¡bank¡notes¡¡when¡¡compared¡¡with¡¡gold¡¡bullion£»¡¡may¡¡increase
it¡¡to¡¡fifty¡¡per¡¡cent¡£¡¡There¡¡can¡¡be¡¡no¡¡limit¡¡to¡¡the¡¡depreciation
which¡¡may¡¡arise¡¡from¡¡a¡¡constantly¡¡increasing¡¡quantity¡¡of¡¡paper¡£
The¡¡stimulus¡¡which¡¡a¡¡redundant¡¡currency¡¡gives¡¡to¡¡the¡¡exportation
of¡¡the¡¡coin¡¡has¡¡acquired¡¡new¡¡force£»¡¡but¡¡cannot£»¡¡as¡¡formerly£»
relieve¡¡itself¡£¡¡We¡¡have¡¡paper¡¡money¡¡only¡¡in¡¡circulation£»¡¡which¡¡is
necessarily¡¡confined¡¡to¡¡ourselves¡£¡¡Every¡¡increase¡¡in¡¡its¡¡quantity
degrades¡¡it¡¡below¡¡the¡¡value¡¡of¡¡gold¡¡and¡¡silver¡¡bullion£»¡¡below¡¡the
value¡¡of¡¡the¡¡currencies¡¡of¡¡other¡¡counties¡£
¡¡¡¡¡¡¡¡The¡¡effect¡¡is¡¡the¡¡same¡¡as¡¡that¡¡which¡¡would¡¡have¡¡been¡¡produced
from¡¡clipping¡¡our¡¡coins¡£
¡¡¡¡¡¡¡¡If¡¡one¡fifth¡¡were¡¡taken¡¡off¡¡from¡¡every¡¡guinea£»¡¡the¡¡market
price¡¡of¡¡gold¡¡bullion¡¡would¡¡rise¡¡one¡fifth¡¡above¡¡the¡¡mint¡¡price¡£
Forty¡four¡¡guineas¡¡and¡¡a¡¡half¡¡£¨the¡¡number¡¡of¡¡guineas¡¡weighing¡¡a
pound£»¡¡and¡¡therefore¡¡called¡¡the¡¡mint¡¡price£©£»¡¡would¡¡no¡¡longer
weigh¡¡a¡¡pound£»¡¡therefore¡¡a¡¡fifth¡¡more¡¡than¡¡that¡¡quantity£»¡¡or
about¡¡56¡¡l¡£¡¡would¡¡be¡¡the¡¡price¡¡of¡¡a¡¡pound¡¡of¡¡gold£»¡¡and¡¡the
difference¡¡between¡¡the¡¡market¡¡and¡¡the¡¡mint¡¡price£»¡¡between¡¡56¡¡l¡£
and¡¡46¡¡l¡£¡¡14s¡£¡¡6d¡£¡¡would¡¡measure¡¡the¡¡depreciation¡£
¡¡¡¡¡¡¡¡If¡¡such¡¡debased¡¡coin¡¡were¡¡to¡¡continue¡¡to¡¡be¡¡called¡¡by¡¡the
name¡¡of¡¡guineas£»¡¡and¡¡if¡¡the¡¡value¡¡of¡¡gold¡¡bullion¡¡and¡¡all¡¡other
commodities¡¡were¡¡rated¡¡in¡¡the¡¡debased¡¡coin£»¡¡a¡¡guinea¡¡fresh¡¡from
the¡¡mint¡¡would¡¡be¡¡said¡¡to¡¡be¡¡worth¡¡1¡¡l¡£¡¡5s¡£¡¡and¡¡that¡¡sum¡¡would¡¡be
given¡¡for¡¡it¡¡by¡¡the¡¡illicit¡¡trader£»¡¡but¡¡it¡¡would¡¡not¡¡be¡¡the¡¡value
of¡¡the¡¡new¡¡guinea¡¡which¡¡had¡¡increased£»¡¡but¡¡that¡¡of¡¡the¡¡debased
guineas¡¡which¡¡had¡¡fallen¡£¡¡This¡¡would¡¡immediately¡¡be¡¡evident£»¡¡if¡¡a
proclamation¡¡were¡¡issued£»¡¡prohibiting¡¡the¡¡debased¡¡guineas¡¡from
being¡¡current¡¡but¡¡by¡¡weight¡¡at¡¡the¡¡mint¡¡price¡¡of¡¡3¡¡l¡£¡¡17s¡£¡¡10
1/2d¡££»¡¡this¡¡would¡¡be¡¡constituting¡¡the¡¡new¡¡and¡¡heavy¡¡guineas£»¡¡the
standard¡¡measure¡¡of¡¡value£»¡¡in¡¡lieu¡¡of¡¡the¡¡clipped¡¡and¡¡debased
guineas¡£¡¡The¡¡latter¡¡would¡¡then¡¡pass¡¡at¡¡their¡¡true¡¡value£»¡¡and¡¡be
called¡¡17¡¡or¡¡18¡¡shilling¡pieces¡£¡¡So¡¡if¡¡a¡¡proclamation¡¡to¡¡the¡¡same
effect¡¡were¡¡now¡¡enforced£»¡¡banknotes¡¡would¡¡not¡¡be¡¡less¡¡current£»
but¡¡would¡¡pass¡¡only¡¡for¡¡the¡¡value¡¡of¡¡the¡¡gold¡¡bullion¡¡which¡¡they
would¡¡purchase¡£¡¡A¡¡guinea¡¡would¡¡then¡¡no¡¡longer¡¡be¡¡said¡¡to¡¡be¡¡worth
1¡¡l¡£¡¡4s¡£¡¡but¡¡a¡¡pound¡¡note¡¡would¡¡be¡¡current¡¡only¡¡for¡¡16¡¡or¡¡17
shillings¡£¡¡At¡¡present¡¡gold¡¡coin¡¡is¡¡only¡¡a¡¡commodity£»¡¡and
bank¡notes¡¡are¡¡the¡¡standard¡¡measure¡¡of¡¡value£»¡¡but¡¡in¡¡that¡¡case
gold¡¡coin¡¡would¡¡be¡¡that¡¡measure£»¡¡and¡¡bank¡notes¡¡would¡¡be¡¡the
marketable¡¡commodity¡£
¡¡¡¡¡¡¡¡¡¨¡¡It¡¡is£»¡¨¡¡says¡¡Mr¡¡Thornton£»¡¡¡¨¡¡the¡¡maintenance¡¡of¡¡our¡¡general
exchanges£»¡¡or£»¡¡in¡¡other¡¡words£»¡¡it¡¡is¡¡the¡¡agreemen
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