*

See p. 250.

*

In 1635 musket bullets were used for change at a farthing apiece, legal tender for sums under 13d.

*

For this, and many other citations from the Colonial Records, I am indebted to Felt's Mass. Currency.

*

In 1873 the United States coined a “trade dollar” with the purpose of getting a share of the China banking and exchange business. The project was in every way fallacious, but the dollars were made worth $1.03 in gold and, coming into circulation in Nevada, were clipped.

*

“Bank,” as the word was used before the Revolutionary War, meant only a batch of paper money, issued either by the government or a corporation. The impression seems to have remained popular, that the essential idea of a bank is the issuing of notes. Gouge, accepting this definition, assailed all “ banking.” The notes issued in banks, or masses as loans, were pure paper money, and may be distinguished from the Treasury notes issued for the current expenses of government.

*

The great philosopher was not unbiassed in his judgment. He printed the bills, having written a pamphlet in favor of them, and he says, “ It was a very profitable job and a great help to me.” Looking back upon it later, he argues that it was a good thing, “ though I now think there are limits beyond which the quantity may be hurtful.”— Works, II. 254.

*

Potter, R. I. Paper Money in Phillips' Colon. and Contin. Parency, I. 100.

*

There are hints that it had made issues.

*

See Potter l. c. , and Arnold's Rhode Island.

*

Phillips' Colon. and Continent. Paper Money. Vol 1.

*

Albany, 1866, page 21.

*

Political Essays. Philadelphia, 1791.

*

Phillips: Colonial and Continental Paper Currency, II. 175.

Webster l. c. 175, note.

*

Sketch of the finances of the United States. 1796.

*

Extracts are given in the appendix to Raguet's Currency and Banking Philadelphia, 1840.

*

See Chapter II. p. 283.

*

See Chapter II. p. 302.

*

See table, p. 123.

*

Since 1844 the Bank is obliged by law to give its notes at £3 17 s . 9 d for all bullion offered, reducing the difference between coin and bullion.

*

Ernest Seyd: Suggestions in Reference to the Metallic Currency of the United States of America. London, 1871 (for private circulation). The best book on the general subject is the same author's Ballion and Foreign Exchanges. London, 1868.

*

See page 302.

*

Branches counted separately.

*

See page 253.

*

Finance Report, 1872, p. 374.

*

Gitbart's “Banking”; Macleod's Dictionary, art. “ Banking in England”; Tooke's “Prices,” Vol. II.

Wilkes, Wilde, and Wiggins, celebrated at the time as “the three W's.”

*

Macleod. I have not met with mention of this elsewhere.

*

See page 250.

There is a very erroneous opinion prevalent, that the English government allows the Bank of England to suspend in a crisis. There is nevel any question of the kind. The run on the Bank in a panic is not for gold, but for notes, that is, for discounts. If, however, there is an export of gold at the time, the notes are taken to the issue department and gold demanded According to the charter, the Bank can circulate only fifteen millions in notes on government security, and for all other notes it must have gold, sovereign for sovereign. If, therefore, there is a drain on its bullion, it must contract, or keep all notes handed in for gold. This heightens the panic. The action of the government is to recommend the Bank to disregard the clause governing circulation. It promises to ask Parliament for indemnity. The Bank then discounts freely for solvent parties, but at high rates. This always kills the panic as panic. The crisis runs its course. Erroneous assertions have been made to the effect that the whole crisis comes to an end. This is not the case. Also that the Bank never has to avail itself of the permission. This also is an error. In 1847 and 1866 there was no over-issue. Prices fell, the exchanges turned, gold came in, and the trouble died out in two or three days, but in 1857 the bank issued £900,000 more than the law would have allowed. They were retired again within a week. Evidently when a bank has over thirty million pounds' circulation, of which fifteen millions are secured on government debt, and the rest by coin, then,£900,000 over-issue cannot affect its credit. It has a reserve strength which it can put forth in a panic.

*

In a sketch of the life of James G. King in the Merchants' Magazine for January, 1854, it is said that he negotiated this loan from the Bank of England to enable the American banks to resume; and the object was the ultimate advantage from setting American business once more in operation.

*

Condy Raguet, Currency and Banking.

*

Gilbart, “ Banking,” 218.

*

Macleod.

*

Quoted by Benton.

*

Page 123.

Hunt's Magazine, July, 1844. The returns were probably incomplete.

*

See p. 263.

*

See page 55.

The text of it is McCulloch's Dict., Art, “ Funds.”

*

He said that the amount was not greater in 1853 than in 1829.

*

Merch. Mag.: December, 1854.

*

See p. 292.

*

Financial History of the War.

*

See the extracts from the debate of 1819, especially Lord Grenville’s speech, p. 296.

See Chapter III.

*

Preface to the last edition of the “ English Constitution.”

*

Finance Report, 1872.

*

Spaulding.

*

The annual aggregate clearings from 1853 to 1862 averaged 5,000,000,000. In 1863 they were 14,000,000,000 and rose steadily. This is introduced only as a general indication of the increase of transactions.

*

See the Diagram at the end of this Chapter.

*

See p. 23.

See*

P. 280.

*

Page 253.

*

The eager demand for bullion in England is shown by an incident mentioned by Chevalier. The French Treasury, by transactions with its agents in 1806, came into possession of drafts of the Spanish Government on bullion in Mexico, but since the battle of Trafalgar England controlled the sea, and France could not bring over the metal. A Dutch bank negotiated a transaction between the belligerents by which the French Treasury realized its drafts, and an English frigate brought the treasure to England.

*

On account of the interest attaching to this document and its historical and scientific importance, it is given in full in the Appendix. In the notes on the report the subordinate points in which it is regarded as erroneous or questionable are noticed.

*

Harriet Martineau's Hist of Eng. I. 294.

*

The reader who is curious to pursue this analogy is referred to Cobbett's Register, vols. 18 and 19. Cobbett's Paper vs. Gold goes over the whole subject of paper money in detail. The quotations from contemporaneous literature, the letters from persons who dissented from his views, and the allusions to current events, combine to form a picture of the times which is in striking analogy with all which we now see and experience.

*

The English quote exchanges by the amount of the foreign currency which £1 will pay. This is not without exception, any more than our own custom of quoting dollars and cents required to pay a unit of the foreign currency, but it is the prevailing usage. High and low are therefore used in an inverted application in the two countries. Low exchange in this usage tends to an exportation of bullion.

*

The appearance of the “middle-man” ought to be noticed.

Martineau's History of England, I. 329.

*

Republished from the “Financier” of October 25th, 1873.

*

See note on page 267.

*

This is the point on which Tooke differed from the Bullion Committee. Mr. Horner, in his speech, assumed that grain was a general measure of value, as between different periods, a notion now abandoned, and the same opinion underlies this passage. Grain was dear, but, as Tooko shows, many other things were “oppressively cheap.” Macleod's comment is, that they would have been much cheaper but for the depreciated currency, and that the Committee ought to have relied entirely upon the gold premium to prove their point. He also desires to have it remembered that “excess” of currency is a relative term, and that it must be understood to mean excess relatively to the wants of commerce at the time in question,—a limitation which is to be understood as of course. (See p. 221.)

*

See a short account of the Bank by Mr. Godfrey, one of the original Directors; and a Short History of the Last Parliament, 1699, by Dr. Drake; both in Lord Somers' Collection of Tracts.

Macleod (Dict, of P. E. I. 303) takes exception to this statement, and in the form in which it stands, it is liable to be misunderstood. The history of American currency shows how much nominal convertibility may differ from actual convertibility, but notes cannot fall to 17 per cent. discount, while the Bank offers to pay on demand. The Bank stopped payment in May, 1696, and then its notes fell to the discount named.