Thiswouldbetrueatatimewhenthecurrencyconsistedwhollyofpapernotconvertibleintospecie，butnotwhilespecieformedanypartofthecirculation。Inthelattercasetheeffectofanincreasedissueofpaperwouldbetothrowoutofcirculationanequalamountofspecie；butthiscouldnotbedonewithoutaddingtothequantityofbullioninthemarket，andtherebyloweringitsvalue，orinotherwords，increasingthebullionpriceofcommodities。Itisonlyinconsequenceofthisfallinthevalueofthemetalliccurrency，andofbullion，thatthetemptationtoexportthemarises；andthepenaltiesonmeltingthecoinisthesolecauseofasmalldifferencebetweenthevalueofthecoinandofbullion，orasmallexcessofthemarketabovethemintprice。Butexportingofbullionissynonymouswithanunfavourablebalanceoftrade。Fromwhatevercauseanexportationofbullion，inexchangeforcommodities，mayproceed，itiscalled（Ithinkveryincorrectly）anunfavourablebalanceoftrade。
Whenthecirculationconsistswhollyofpaper，anyincreaseinitsquantitywillraisethemoneypriceofbullionwithoutloweringitsvalue，inthesamemanner，andinthesameproportion，asitwillraisethepricesofothercommodities，andforthesamereasonwilllowertheforeignexchanges；butthiswillonlybeanominal，notarealfall，andwillnotoccasiontheexportationofbullion，becausetherealvalueofbullionwillnotbediminished，astherewillbenoincreasetothequantityinthemarket。
4。Strictlyspeaking，therecanbenopermanentmeasureofvalue。
Ameasureofvalueshoulditselfbeinvariable；butthisisnotthecasewitheithergoldorsilver，theybeingsubjecttofluctuationsaswellasothercommodities。Experiencehasindeedtaughtus，thatthoughthevariationsinthevalueofgoldorsilvermaybeconsiderable，onacomparisonofdistantperiods，yetforshortspacesoftimetheirvalueistolerablyfixed。Itisthisproperty，amongtheirotherexcellencies，whichfitsthembetterthananyothercommodityfortheusesofmoney。Eithergoldorsilvermaytherefore，inthepointofviewinwhichweareconsideringthem，becalledameasureofvalue。
5。Whenthegoldcoinwasdebased，previouslytothere-coinagein1774，goldandsilverbullionroseabovetheirmintprices，andfellimmediatelyonthegoldcoinattainingitspresentperfection。Theexchangeswere，owingtothesamecauses，frombeingunfavourablerenderedfavourable。
6。Anexcessinthemarketabovethemintpriceofgoldorsilverbullion，may，whilstthecoinsofbothmetalsarelegaltender，andthereisnoprohibitionagainstthecoinageofeithermetal，becausedbyavariationintherelativevalueofthosemetals；
butanexcessofthemarketabovethemintpriceproddingfromthiscausewillbeatonceperceivedbyitsaffectingonlythepriceofoneofthemetals。Thusgoldwouldbeatorbelow，whilesilverwasabove，itsmintprice，orsilveratorbelowitsmintprice，whilstgoldwasabove。
Inthelatterendof1795，whentheBankhadconsiderablymorenotesincirculationthaneithertheprecedingorthesubsequentyear，whentheirembarrassmentshadalreadycommenced，whentheyappeartohaveresignedallprudenceinthemanagementoftheirconcerns，andtohaveconstitutedMrPittsoledirector，thepriceofgoldbulliondidforashorttimeriseto4l。3s。
or4l。4s。peroz。；butthedirectorswerenotwithouttheirfearsfortheconsequences。InaremonstrancesentbythemtoMrPitt，datedOctober1795，afterstating，\"thatthedemandforgoldnotappearinglikelysoontocease，\"and\"thatithadexcitedgreatapprehensioninthecourtofdirectors，\"theyobserve，\"Thepresentpriceofgoldbeing4l。3s。to4l。4s。
[Itisdifficulttodetermineonwhatauthoritythedirectorsmadethisassertion，asbyareturnlatelymadetoparliamentitappearsthatduringtheyear1795theydidnotpurchasegoldbullionatapricehigherthan3l。17s。6d。]perounce，andourguineasbeingtobepurchasedat3l。17s。101/2d。，clearlydemonstratesthegroundsofourfears；itbeingonlynecessarytostatethosefactstotheChancelloroftheExchequer\"ItisremarkablethatnopriceofgoldabovethemintpriceisquotedduringthewholeyearinWetenhall\'slist。InDecemberitistheremarked3l。17s。6d。
7。TherelativevalueofgoldandsilverisontheContinentnearlythesameasinLondon。
8。ItmustbemeantthateveryguineaintheBankwouldleavethecountry，thetemptationoffifteenpercentisamplysufficienttosendthoseoutwhichcanbecollectedfromthecirculation。
9。Theymight，onsomeoccasion，displaceBankofEnglandnotes，butthatconsiderationdoesnotaffectthequestionwhichwearenotdiscussing。
10。Inthefollowingobservations，Iwishittobeunderstood，assupposingalwaysthesamedegreeofconfidenceandcredittoexist。
11。IhavealreadyallowedthattheBank，asfarastheyenableustoturnourcoininto\"materials，provisions，etc。\"haveproducedanationalbenefit，astheyhavetherebyincreasedthequantityofproductivecapital；butIamherespeakingofanexcessoftheirnotes，ofthatquantitywhichaddstoourcirculationwithouteffectinganycorrespondingexportationofcoin，andwhich，therefore，degradesthenotesbelowthevalueofthebullioncontainedinthecoinwhichtheyrepresent。
12。Atthatperiodthepriceofgoldkeptsteadilyunderitsmintprice。
APPENDIX
Thepublichavingcalledforaneweditionofthispamphlet，IavailmyselfoftheoccasiontoconsidertheobservationswhichtheEdinburghReviewers，inthelastnumberoftheirpublication，havedonemethehonourtomakeonsomeofthepassagescontainedinit。Iaminducedtodothisfromtheconvictionthatdiscussiononeverypointconnectedwiththisimportantsubjectwillhastentheremedyagainsttheexistingabuse，andwilltendtosecureusagainsttheriskofitsrecurrenceinfuture。
Inthearticleonthedepreciationofmoney，theReviewersobserve，\"ThegreatfaultofMrRicardo\'sperformanceisthepartialviewwhichhetakesofthecauseswhichoperateuponthecourseofexchange。Heattibutes，\"theysay，\"afavourableoranunfavourableexchangeexclusivelytoaredundantordeficientcurrency，andoverlooksthevaryingdesiresandwantsofdifferentsocieties，asanoriginalcauseofatemporaryexcessofimportsaboveexports，orexportsaboveimports。\"TheythencommentonthepassageinwhichIhavemaintained，thatabadharvestwillnotoccasiontheexportofmoney，unlessmoneyisrelativelycheapintheexportingcountry，andconcludetheirobservationsbygivingitastheirdecidedopinion，thattheexportationofmoneyinthesupposedcaseofabadharvest，\"isnotoccasionedbyitscheapness。Itisnot，asMr。Ricardoendeavourstopersuadeus，thecauseoftheunfavourablebalance，insteadoftheeffect。Itisnotmerelyasalutaryremedyforaredundantcurrency:butitisowingpreciselytothecausementionedbyMrThornton-theunwillingnessofthecreditornationtoreceiveagreatadditionalquantityofgoodsnotwantedforimmediateconsumption，withoutbeingbribedtoitbyexcessivecheapness；anditswillingnesstoreceivebullion-thecurrencyofthecommercialworld-withoutanysuchbribe。Itisunquestionablytrue，asstatedbyMrRicardo，thatnonationwillpayadebtinthepreciousmetals，ifitcandoitcheaperbycommodities；butthepricesofcommoditiesareliabletogreatdepressionsfromaglutinthemarket；whereasthepreciousmetals，onaccountoftheirhavingbeenconstitutedbytheuniversalconsentofsociety，thegeneralmediumofexchange，andinstumentofcommerce，willpayadebtofthelargestamountatitsnominalestimation，accordingtothequantityofbullioncontainedintherespectivecurrenciesofthecountiesinquestion，and，whatevervariationsbetweenthequantityofcurrencyandcommoditiesmaybestatedtotakeplacesubsequenttothecommencementofthesetransactions，itcannotbeforamomentdoubtedthatthecauseofthemistobefoundinthewantsanddesiresofoneofthetwonations，andnotinanyoriginalredundancyordeficiencyofcurrencyineitherofthem。\"
Theyagreewithme，\"thatnonationwillpayadebtinthepreciousmetals，ifitcandoitcheaperbycommodities，butthepricesofcommodities，\"theysay，\"areliabletogreatdepressionsfromaglutinthemarket。\'\"ofcoursetheymustmeanintheforeignmarket，andthenthewordsexpresstheopinionwhichtheyareendeavouringtocontrovert，viz。thatwhengoodscannotbesentoutsoadvantageouslyasmoney，moneywillbeexported，-whichisanotherwayofsayingthatmoneywillneverbeexported，unlessitisrelativelyredundantwithcommodities，ascomparedwithothercounties。Yetimmediatelyaftertheycontend，thattheexportationofthe\"preciousmetalsistheeffectofabalanceoftrade，originatingincauseswhichmayexistwithoutanyrelationwhatevertoredundancyordeficiencyofcurrency。\"Theseopinionsappeartomedirectlycontradictory。
Ifhoweverthepreciousmetalscanbeexportedfromacountryinexchangeforcommodities，althoughtheyshouldbeasdearintheexportingasintheimportingcountry，whataretheeffectswhichwillfollowfromsuchimprovidentexportation？
\"Acomparativedeficiencyinonecountry，andredundancyintheother，\"saytheReviewers，p。343。\"andthisstateofthingscouldnotfailtohaveaspeedyeffectinchangingthedirectionofthebalanceofpayments，andinrestoringthatequilibriumofthepreciousmetals，whichhadbeenforatimedisturbedbythenaturallyunequalwantsandnecessitiesofthecountieswhichtadewitheachother。\"NowitwouldhavebeenwelliftheReviewershadtoldusatwhatpointthisre-actionwouldcommence，-asatthefirstviewitappearsthatthesamelawwhichwillpermitmoneytobeexportedfromacountry，whenitisnocheaperthanintheimportingcountry，mayalsoallowittobeexportedwhenitisactuallydearer。Itisself-interestwhichregulatesallthespeculationsoftrade，andwherethatcanbeclearlyandsatisfactorilyascertined，weshouldnotknowwheretostopifweadmittedanyotherruleofaction。Theyshouldhaveexplainedtoustherefore，why，ifthedemandforthecommodityimportedshouldcontinue，thecountryimportingmightnotbeentirelyexhaustedofitscoinandbullion。Whatisundersuchcircumstancestochecktheexportationofthecurrency？TheReviewerssay，because\"acountrywithadiminishedquantityofbullionwouldevidentlysoonbelimitedinitspowersofpayingwiththepreciousmetals。\"Whysoon？Isitnotadmitted\"thatexcessanddeficiencyofcurrencyareonlyrelativeterms；thatthecirculationofacountycanneverbesuperabundant，\"（andthereforecanneverbedeficient，）\"exceptinrelationtoothercountries。\"Doesitnotfollowfromtheseadmissions，thatifthebalanceoftrademaybecomeunfavourabletoacountry，thoughitscurrencybenotrelativelysuperabundant，thatthereisnocheckagainsttheexportationofitscoin，whilstanyamountofmoneyremainsincirculation；asthediminishedsum，（byacquiringanewvalue，）willasreadilyandaseffectuallymaketherequiredpaymentsasthelargersumdidbefore？Asuccessionofbadharvestsmight，onthisprinciple，drinacountryofitsmoney，whatevermightbeitsamount，althoughitconsistedexclusivelyofthepreciousmetals。Theobservationthatitsdiminishedvalueintheimportingcounty，anditsincreasingvalueintheexportingcountry，wouldmakeitrevertagaintotheoldchannel，doesnotanswertheobjection。Whenwillthishappen？andinexchangeforwhatwillitbereturned？Theanswerisobvious-
forcommodities。Theultimateresultthenofallthisexportationandimportationofmoney，isthatonecountywillhaveimportedonecommodityinexchangeforanother，andthecoinandbullionwillinbothcountrieshavereginedtheirnaturallevel。Isittobecontendedthattheseresultswouldnotbeforeseen，andtheexpenceandtroubleattendingtheseneedlessoperationseffectuallyprevented，inacountrywherecapitalisabundant，whereeverypossibleeconomyintadeispractised，andwherecompetitionispushedtoitsutmostlimits？Isitconceivablethatmoneyshouldbesentabroadforthepurposemerelyofrenderingitdearinthiscountryandcheapinanother，andbysuchmeanstoensureitsreturntous？
Itisparticularlyworthyofobservationthatsodeep-rootedistheprejudicewhichconsiderscoinandbullionasthingsessentiallydifferinginalltheiroperationsfromothercommodities，thatwritersgreatlyenlighteneduponthegeneraltruthofpoliticaleconomyseldomfail，afterhavingrequestedtheirreaderstoconsidermoneyandbullionmerelyascommoditiessubjectto\"thesamegeneralprincipleofsupplyanddemandwhichareunquestionablythefoundationonwhichthewholesuperstuctureofpoliticaleconomyisbuilt；\"toforgetthisrecommendationthemselves，andtoargueuponthesubjectofmoney，andthelawswhichregulateitsexportandimport，asquitedistinctanddifferentfromthosewhichregulatetheexportandimportofothercommodities。ThustheReviewers，iftheyhadbeenspeakingofcoffeeorofsugar，wouldhavedeniedthepossibilityofthosearticlesbeingexportedfromEnglandtothecontinent，unlesstheyweredearertherethanhere。Itwouldhavebeeninvaintohaveurgedtothem，thatourharvesthadbeenbad，andthatwewereinwantofcorn；theywouldconfidentlyandundeniablyhaveprovedthattowhateverdegreethescarcityofcornmighthaveexisted，itwouldnothavebeenpossibleforEnglandtosend，orforFrance（forexample）tobewillingtoreceive，coffeeorsugarinreturnforcorn，whilstcoffeeorsugarcostmoremoneyinEnglandthaninFrance。What！theywouldhavesaid，doyoubelieveitpossibleforustosendaparcelofcoffeetoFrancetoselltherefor100l。whenthatcoffeecosthere105l-whenbysending100l。ofthe105l。weshouldequallydischargethedebtcontractedfortheimportedcorn？And，Isay，doyoubelieveitpossiblethatweshallagreetosend，orFranceagreetoreceive（ifthetransactionisonheraccount）
100l。inmoney，when95l。investedincoffeeandexportedwillbeequallyvaluableasthe100l。whenitarrivesinFrance？ButcoffeeisnotwantedinFrance，thereisaglutofit；-allowed，butmoneyiswantedstillless，andtheproofis，thatahundredpoundsworthofcoffeewillsellformorethanahundredpoundsworthofmoney。Theonlyproofwhichwecanpossessoftherelativecheapnessofmoneyintwoplaces，isbycomparingitwithcommodities。Commoditiesmeasurethevalueofmoneyinthesamemannerasmoneymeasuresthevalueofcommodities。IfthencommoditieswillpurchasemoremoneyinEnglandthaninFrance，wemayjustlysaythatmoneyischeaperinEngland，andthatitisexportedtofinditslevel，nottodestroyit。Aftercomparingtherelativevalueofcoffee，sugar，ivory，indigo，andallotherexportablecommoditiesinthetwomarkets，ifIpersistinsendingmoney，whatfurtherproofcanberequiredofmoneybeingactuallythecheapestofallthesecommoditiesintheEnglishmarket，inrelationtotheforeignmarkets，andthereforethemostprofitabletobeexported？WhatfurtherevidenceisnecessaryoftherelativeredundanceandcheapnessofmoneybetweenFranceandEngland，thanthatinFranceitwillpurchasemorecorn，moreindigo，morecoffee，moresugar，moreofeveryexportablecommoditythaninEngland？
Imay，indeed，betoldthattheReviewer\'ssuppositionisnotthatcoffee，sugar，indigo，ivory，etc。etc。arecheaperthanmoney，butthatthesecommoditiesandmoneyareequallycheapinbothcountries，thatistosay，thatonehundredpoundssentinmoney，orinvestedincoffee，sugar，indigo，ivory，etc。etc。
willbeofequalvalueinFrance。Ifthevalueofallthesecommoditiesweresonicelypoised，whatwoulddetermineanexportertosendtheoneinpreferencetotheother，inexchangeforcorn；inrelationtowhichtheyareallcheaperinEngland？
Ifhesendsmoney，andtherebydestroysthenaturallevel，wearetoldbytheReviewersthatmoneywouldonaccountofitsincreasingquantityinFrance，anditsdecreasingquantityinEngland，becomecheaperinFrancethaninEngland，andwouldbere-importedinexchangeforgoodstillthelevelwererestored。
Butwouldnotthesameeffectstakeplaceifcoffeeoranyoftheothercommoditieswereexported，whilsttheywereequallyvaluableinrelationtomoneyinbothcountries？Wouldnottheequilibriumbetweensupplyanddemandbedestroyed，andwouldnotthediminishedvalueofcoffee，etc。inconsequenceoftheirincreasedquantityinFrance，andtheirincreasedvalueinEngland，fromtheirdiminishedquantity，producetheirre-importationintoEngland？Anyofthesecommoditiesmightbeexportedwithoutproducingmuchinconveniencefromtheirenhancedprice；whereasmoney，whichcirculatesallothercommodities，andtheincreaseordiminutionofwhich，eveninamoderateproportion，raisesorfallspricesinanextravagantdegree，couldnotbeexportedwithoutthemostseriousconsequences。HerethenweseethedefectiveprincipleoftheReviewers。Onmysystem，however，therewouldbenodifficultyindeterminingthemodeinwhich，inacasesoextremelyimprobable，asthatofanequalvalueinbothcountries，forallcommodities，moneyincluded，andcornaloneexcepted，thereturnswouldbemadesoastopreservetherelativeamountandtherelativevalueoftheirrespectivecurrencies。
IfthecirculatingmediumofEnglandconsistedwhollyofthepreciousmetals，andwereafiftiethpartofthevalueofthecommoditieswhichitcirculated，thewholeamountofmoneywhichwouldunderthecircumstancessupposedbeexportedinexchangeforcorn，wouldbeafiftiethpartofthevalueofsuchcorn:fortherestweshouldexportcommodities，andthuswouldtheproportionbetweenmoneyandcommoditiesbeequallypreservedinbothcountries。England，inconsequenceofabadharvest，wouldcomeunderthecasementionedatpage[53]ofthiswork，ofacountryhavingbeendeprivedofapartofitscommodities，andthereforerequiringadiminishedamountofcirculatingmedium。
Thecurrencywhichwasbeforeequaltoherpaymentswouldnowbecomesuperabundantandrelativelycheap，intheproportionofonefiftiethpartofherdiminishedproduction；theexportationofthissum，therefore，wouldrestorethevalueofhercurrencytothevalueofthecurrenciesofothercountries。Thusitappearstobesatisfactorilyprovedthatabadharvestoperatesontheexchangeinnootherwaythanbycausingthecurrencywhichwasbeforeatitsjustleveltobecomeredundant，andthusistheprinciplethatanunfavourableexchangemayalwaysbetracedtoarelativelyredundantcurrencymostfullyexemplified。
Ifwecansupposethatafteranunfavourableharvest，whenEnglandhasoccasionforanunusualimportationofcorn，anothernationispossessedofasuperabundanceofthatarticle，\"buthasnowantsforanycommoditywhatever，\"itwouldunquestionablyfollowthatsuchnationwouldnotexportitscorninexchangeforcommodities:butneitherwoulditexportcornformoney，asthatisacommoditywhichnonationeverwantsabsolutely，butrelatively，asisexpresslyadmittedbytheReviewers。Thecaseis，however，impossible，becauseanationpossessedofeverycommoditynecessaryfortheconsumptionandenjoymentofallitsinhabitantswhohavewherewithaltopurchasethem，willnotletthecornwhichithasoverandabovewhatitcanconsumerotinitsgranaries。Whilstthedesireofaccumulationisnotextinguishedinthebreastofman，hewillbedesiroustorealisetheexcessofhisproductions，abovehisownconsumption，intotheformofcapital。Thishecanonlydobyemploying，himself，orbyloanstoothers，enablingthemtoemploy，anadditionalnumberoflabourers，asitisbylabouronlythatrevenueisrealizedintocapital。Ifhisrevenuebecorn，hewillbedisposedtoexchangeitforfuel，meat，butter，cheese，andothercommoditiesinwhichthewagesoflabourareusuallyexpended，or，whichisthesamething，hewillsellhiscornformoney，paythewagesofhislabourersinmoney，andtherebycreateademandforthosecommoditieswhichmaybeobtainedfromothercountriesinexchangeforthesuperfluouscorn。Thuswillbereproducedtohimarticlesmorevaluable，whichhemayagainemployinthesamemanner，addingtohisownriches，andaugmentingthewealthandresourcesofhiscountry。