number of ounces of pure silver to be paid in
Holland, and the man who was supposed to
give, may in reality have got the premium.
The French coin was, before the late reformation
of the English gold coin, much less
wore than the English, and was perhaps two
or three per cent. nearer its standard. If the
computed exchange with France, therefore,
was not more than two or three per cent.
against England, the real exchange might
have been in its favour. Since the reformation
of the gold coin, the exchange has been
constantly in favour of England, and against
France.
Secondly, In some countries the expense of
coinage is defrayed by the government; in
others, it is defrayed by the private people,
who carry their bullion to the mint, and the
government even derives some revenue from
the coinage. In England it is defrayed by
the government; and if you carry a pound
weight of standard silver to the mint, you get
back sixty-two shillings, containing a pound
weight of the like standard silver. In France
a duty of eight per cent. is deducted for the
coinage, which not only defrays the expense
of it, but affords a small revenue to the government.
In England, as the coinage costs
nothing, the current coin can never be much
more valuable than the quantity of bullion
which it actually contains. In France, the
workmanship, as you pay for it, adds to the
value, in the same manner as to that of wrought
plate. A sum of French money, therefore,
containing an equal weight of pure silver, is
more valuable than a sum of English money
containing an equal weight of pure silver, and
must require more bullion, or other commodities,
to purchase it. Though the current
coin of the two countries, therefore, were equally
near the standards of their respective mints,
a sum of English money could not well purchase
a sum of French money containing an
equal number of ounces of pure silver, nor
consequently, a bill upon France for such a
sum. If, for such a bill, no more additional
money was paid than what was sufficient to
compensate the expense of the French coinage,
the real exchange might be at par between
the two countries; their debts and credits
might mutually compensate one another,
while the computed exchange was considerably
in favour of France. If less than this was
paid, the real exchange might be in favour of
England, while the computed was in favour
of France.
Thirdly, and lastly, In some places, as at
Amsterdam, Hamburg, Venice, &c. foreign
bills of exchange are paid in what they call
bank money; while in others, as at London,
Lisbon, Antwerp, Leghorn, &c. they are paid
in the common currency of the country. What
is called bank money, is always of more value
than the same nominal sum of common
currency. A thousand guilders in the bank
of Amsterdam, for example, are of more value
than a thousand guilders of Amsterdam
currency. The difference between them is
called the agio of the bank, which at Amsterdam
is generally about five per cent. Supposing
the current money of the two countries
equally near to the standard of their respective
mints, and that the one pays foreign bills
in this common currency, while the other pays
them in bank money, it is evident that the
computed exchange may be in favour of that
which pays in bank money, though the real
exchange should be in favour of that which
pays in current money; for the same reason
that the computed exchange may be in favour
of that which pays in better money, or in money
nearer to its own standard, though the
real exchange should be in favour of that
which pays in worse. The computed exchange,
before the late reformation of the gold
coin, was generally against London with Amsterdam,
Hamburg, Venice, and, I believe,
with all other places which pay in what is
called bank money. It will by no means follow,
however, that the real exchange was against
it. Since the reformation of the gold
coin, it has been in favour of London, even
with those places. The computed exchange
has generally been in favour of London with
Lisbon, Antwerp, Leghorn, and, if you except
France, I believe with most other parts
of Europe that pay in common currency; and
it is not improbable that the real exchange
was so too.
Digression concerning Banks of Deposit, particularly
concerning that of Amsterdam.
The currency of a great state, such as France
or England, generally consists almost entirely
of its own coin. Should this currency, therefore,
be at any time worn, clipt, or otherwise
degraded below its standard value, the state,
by a reformation of its coin, can effectually
re-establish its currency. But the currency
of a small state, such as Genoa or Hamburg,
can seldom consist altogether in its own coin,
but must be made up, in a great measure, of
the coins of all the neighbouring states with
which its inhabitants have a continual intercourse.
Such a state, therefore, by reforming
its coin, will not always be able to reform its
currency. If foreign bills of exchange are
paid in this currency, the uncertain value of
any sum, of what is in its own nature so uncertain,
must render the exchange always very
much against such a state, its currency being
in all foreign states necessarily valued even below
what it is worth.
In order to remedy the inconvenience to
which this disadvantageous exchange must
have subjected their merchants, such small
states, when they began to attend to the interest
of trade, have frequently enacted, that