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twelve to sixteen millions； we may infer that the whole
circulation has increased one…third； if the districts in which
bank…notes circulate have neither been enlarged nor contracted。
The notes under 5l。 will be issued in proportion as the metallic
currency is withdrawn from circulation； and will be further
augmented； if there be also an augmentation of notes of a higher
denomination。
If I am correct in this view of the subject； that the
increase in the amount of our currency is to be inferred from the
increased amount of bank…notes of 5 l。 and upwards； and can by no
means be proved by an increase of 1 l。 and 2 l。 notes which have
been substituted in the place of the exported or hoarded guineas；
I must wholly reject the calculations of Mr Pearse； because they
are made on the supposition that every increase of this
description of notes is an increase of currency to that amount。
When it is considered that in 1797 there were no notes of 1 l。
and 2 l。 in circulation； but that their place was wholly filled
with guineas； and that since that period there have been no less
than seven millions issued； partly to supply the place of our
exported and hoarded guineas； and partly to keep up the
proportion between the circulation for the larger and for the
smaller payments； we shall observe to what errors such reasoning
may lead。 I can consider the paper in question of no authority
whatever as opposed to the opinion which I have ventured to give；
namely； that an unfavourable balance of trade； and a consequently
low exchange； may in all cases be traced to a relatively
redundant and cheap currency。 * But if the reasoning of Mr Pearse
were not incorrect as his facts are； he is no way warranted in
the conclusions which he has drawn from them。
Mr Pearse states the increase of bank…notes from January；
1808； to Christmas； 1809； to have been from 17 1/2 to 18
millions； or 500；000 l。； the exchange with Hamburgh during the
same period having fallen from 34s。 9g。 to 28s。 6g。 an increase
in the amount of notes of less than three per cent； and a fall in
the exchange of more than eighteen per cent。 But from whence did
Mr Pearse obtain this information； of 18 millions of bank…notes
only being in circulation at Christmas in 1809？ After looking at
every return； with which I have been able to meet； of the amount
of bank…notes in circulation at the end of 1809； I cannot but
conclude that Mr Pearse's statement is incorrect。 Mr Mushet in
his tables gives four returns of bank…notes in the year。 In the
last； for the year 1809； he has stated the amount of bank…notes
in circulation
at 19；742；998
In the Appendix to the Bullion Report； and in returns lately
made to the House of Commons； the amount of bank…notes in
circulation appears to have been on December 12； 1809
19；727；520
On the 1st January； 1810 2；669；320
On the 7th January； 1810 19；528；030
For many months previously to December it was not lower。 When
I first discovered this inaccuracy I thought Mr Pearse might have
omitted the bank post bills in both estimates； although they did
not in December； 1809； exceed 880；880 l。； but on looking at the
return of bank…notes in circulation； including bank post bills；
in January； 1808； I find Mr Pearse has stated it larger than I
can any where find it： indeed his estimate exceeds the return
made by the Bank for the 1st of January； 1808； by nearly 900；000
l。； so that from the 1st of January； 1808； to the 12th of
December； 1809； the increase was from 16；619；240 to 19；727；520； a
difference of more than three millions； instead of 500；000； as
stated by Mr Pearse； and of two millions if Mr Pearse's statement
for any time in January； 1808； be correct。
Mr Pearse's statement too； that from January 1803； to the end
of 1807； the amount of bank…notes had increased from 16 and a
half to eighteen millions； an increase of a million and a half
appears to me to exceed the fact by half a million。 The increase
of notes of 5 l。 and upwards； including bank post bills； did not；
during that period； exceed 150；000 l。 It is material that these
errors should be pointed out； that those who may； in spite of
what I have urged； agree in principle with Mr Pearse； may see
that the facts of the case do not warrant the conclusions which
that gentleman has drawn from them； and； indeed； that all
calculations founded on the particular amount of banknotes for a
day； or for a week； when the general average has been for some
time before； or some time after； greater or less； will be of
little avail in overturning a theory which has every other proof
of its tuth。 Such I consider the theory which asserts that the
unlimited multiplication of a currency which is referrible to no
fixed standard may and must produce a permanent depression of the
exchange； estimated with a country whose currency is founded on
such standard。
Having considered the weight which ought to be attached to Mr
Pearse's paper； I beg the reader's attention to the table which I
have drawn out from the statements in tbe Bullion Report； and
from the papers which have since been presented to the House of
Commons。 I request him to compare the amount of the circulation
of the larger notes with the variations in the exchange； and I
trust he will find no difficulty in reconciling the principle
maintained by me with the actual facts of the case； particularly
if he considers that the operations of an increased currency are
not instantaneous； but require some interval of time to produce
their full effect； … that a rise or fal1 in the price of silver；
as compared with gold； alters the relative value of the
currencies of England and Hamburgh； and therefore makes the
currency of one or other relatively redundant and cheap；…that the
same effect is produced； as I have already stated； by an abundant
or deficient harvest； either in this country or in those
countries with which we trade； or by any other addition or
diminution to their real wealth； which by altering the relative
proportion between commodities and money alters the value of the
circulating medium。 With these corrections； I have no fear but
that it will be found that Mr Pearse's objections may be refuted
without having recourse to the abandonment of a principle； which；
if yielded； will establish the mercantile theory of exchange； and
may be made to account for a drain of circulating medium； so
great； that it can only be counteracted by locking up our money
in the bank； and absolving the directors from the obligation of
paying their notes in specie。
Mr Pearse's statement； as presented to the Bullion Committee：
Total of Bank Notes； Millions； Rate of Hambro'
Exchange
17th February； 1797； 8 1/2； 35s 6g
Rose Gradually in 1797 and 1798 to； 13； 38s 0g
March 1799； 13 1/2； 37s 7g
After this period； great commercial distress； large importation
of corn； heavy subsidies； and the Hambro' Exchange continued
falling； and on the 2d January； 1801 wasas low as； ； 29s 8g
Between the end of the year 1799 to the end of 1802； an increased
quantity of 1 l。 and 2 l。 notes were issued； swelling the sum
total to all notes to； 13 1/2 to 16 1/2； Fluctuation from 33s 3g
to 29s 8g
From January； 1803； to the end of 1807； 16 1/2 to 18； Fluctuation
from 32s 10g to 35s 10g
From January； 1808； to Christmas 1809； 17 1/2 to 18； Fall from
34s 9g to 28s 6g
The rate of the Hambro' Exchange is taken from Lloyd's list。
I have omitted as much of Mr Pearse's paper as regarded the
amount of bank notes in circulation before the restriction on
bank payments； because whilst the public possessed the power of
obtaining specie for their notes； the exchange could not put be
momentarily lowered by the amount of the bank issues。
The average amount of bank notes from the year 1797 to 1809
inclusive； in the following table； is copied from the Report of
the Bullion Committee。 The rates of exchange are extracted from a
list presented by the mint to parliament。 There have been three
returns made to parliament by the Bank； of the amount of their
notes in circulation in the year 1810； the first for the 7th and
12th of each month； the second a weekly return from the 19th
January； 1810； to 28th December； and the third also a weekly