SECT. 3.-Means and Instruments by which Commerce may be facilitated and carried on. 1. MONEY.-The circumstances that occasioned the introduction and use of gold and silver coins in all civilised societies have been repeatedly elucidated. They serve both as standards by which to measure the value of other things, and as the universal equivalent, or marchandise bannale, the employment of which serves, in no ordinary degree, to facilitate exchanges. In England, a pound troy, or 12 oz. of the metal of which silver coins are made, contains 11 oz. 2 dwts. pure silver, and 18 dwts. alloy. Since 1816 this pound has been coined into 66 shillings, so that each of our current shillings contains 80-727 grains fine silver, and 87.27 grains standard silver; and the money pound, consisting of 20 such shillings, contains 1614-545 grains pure silver, and 1745-454 grains standard silver. All the English silver coins have been coined out of silver of 11 oz. 2 dwts. fine from the Conquest to this moment, except for the short period of 16 years, from the 34th Henry VIII. to 2nd Elizabeth. The fineness of gold is estimated by carat grains, equivalent to 24 dwts. troy; gold of the highest degree of fineness, or pure, being said to be 24 carats fine. The purity of our present gold coins is 11 parts fine gold and 1 part alloy. The sovereign, or twenty-shilling piece, contains 113·001 grains fine gold, and 123-274 grains standard gold. The pound troy of standard gold is coined into 46 sovereigns andths of a sovereign, or into 46l. 14s. 6d. The mint or standard price of gold is, therefore, said to be 46/. 14s. 6d. per pound troy, or 31. 17s. 10 d. an ounce. The alloy in coins is reckoned of no value: it is allowed in order to save the trouble and expense that would be incurred in refining the metals to their highest degree of purity; and because, when its quantity is small, it renders the coin harder, and less liable to be worn or rubbed. Were the quantity of alloy considerable, it would lessen the splendour and ductility of the metals, and would add too much to the weight of the coins. Originally, the coins of all countries seem to have had the same denominations as the weights commonly used in them, and contained the exact quantity of the precious metals indicated by their name. Thus the talent was a weight used in the earliest period by the Greeks; the as, or pondo, by the Romans; the livre by the French; and the pound by the English and Scotch; while the coins originally in use in Greece, Italy, France, and England, bore the same names, and weighed precisely a talent, a pondo, a livre, and a pound. The standard has not, however, been preserved inviolate, either in ancient or modern times. The necessities of governments, and the unfounded notion so generally diffused that coins derived their value rather from the coinage than from the quantity of metal contained in them, have everywhere led to their degradation. They have been less enfeebled in this than in any other country; but even here the quantity of silver in a pound sterling is less than the third part of a pound weight, the quantity it contained down to 1300. At the union of the crowns, in 1604, the coins current in Scotland contained the twelfth part only of the silver they contained in 1296. In France the livre, current in 1789, contained less than one sixty-sixth part of the silver implied in its name, and which it had contained previously to 1103. In Spain, and some other countries, the degradation has been carried even further. When two metals, as gold and silver, are formed into coins, and may be used indifferently as legal tenders in all payments, the proportion which the one bears to the other must be fixed by authority. But how accurately soever this proportion may be made to correspond with the real value of the metals when it is fixed, it will not continue to be accurate for any considerable period. Each of the metals is liable to have its value affected by circumstances which may not influence the other; and whenever any variation of this sort takes place, it becomes the interest of all debtors to use that metal only which is overvalued, so that it becomes the only currency. In the French mint silver was for a long period overvalued, as compared with gold; and in England gold was for a long period overvalued, as compared with silver; and hence the reason that silver coins form almost the sole currency of France; and that from the accession of George I. gold coins have been the principal currency of England. The following table, calculated by Martin Folkes, Esq., exhibits in a brief space the various alterations that have been made in our money standard, from the Conquest down to 1816. Table showing the Fineness of the Silver in English Coins, the Weight of Twenty Shillings in tale, the Value of such Twenty Shillings in present Money, &c., from the Conquest to 1601. • The Saxon, or Tower pound, which was then the common weight, and continued to be the money weight till the 18th Henry VIII., was but 11 oz. 5 dwt. troy; so that 20 shillings in tale was then exactly a pound in weight. From the 43rd of Elizabeth no change was made in the silver coinage for more than two centuries, or till 1816, in the 56th of George III., when the pound of silver was coined into 66 instead of 62 shillings; the additional 4 shillings being retained by govern ment as a seignorage or duty (amounting to 6 per cent.) on the coinage. This, however, did not really in any degree affect the standard of our currency, which for about a century previously had in fact consisted of gold and not of silver. This system, which had grown up in the way stated above, was, in 1816, established by law. Gold was then declared to be the only legal tender in all payments of more than 40s.; and the weight of the silver coins being at the same time reduced, they became a merely subsidiary species of currency, the supply of which was retained exclusively in the hands of government. This system has been found to answer extremely well. No seignorage is charged on the coinage of gold, the expense of which amounts to about 10s. per cent. The quantity of gold coin at present in circulation in Great Britain, exclusive of that in the coffers of the Bank of England and of her branches, is supposed to amount to about thirty millions. Value of Foreign Coins in Sovereigns.-Owing to the sovereign. or standard coin of this country consisting of gold, while the standard coins of most other countries consist of silver, the value of the one as compared with the others does not depend merely on the quantity of pure gold in the sovereign and the quantity of pure silver in the franc, dollar, &c., but partly on that circumstance, and partly on the relative values of gold and silver at the time. At present a franc is worth about 97d.; a Spanish dollar, 4s. 4d.; a Company's rupee, 28.; a Prussian rixdollar, 3s., and so forth. Copper coins are only legal tender to the extent of 1s.; being in respect of silver what silver coins are now in respect of gold. PAPER MONEY-BANKS.-Notwithstanding the precious metals are, in many respects, admirably fitted to serve as a medium of exchange, they have two very serious drawbacks, their cost, and the difficulty and expense of carrying them from place to place. If the currency of Great Britain consisted only of gold, it would amount to at least sixty millions of sovereigns; and the expense attending such a currency, allowing only per cent. for wear and tear and loss of coins, could not be reckoned at less than 3,250,000l. a-year. It is obvious, too, that were there nothing but coins in circulation, the conveyance of large sums from place to place, to discharge accounts, would be a very laborious process, and that even small sums could not be conveyed without considerable difficulty; and hence it is that most commercial and highly civilised nations have endeavoured to fabricate a portion of their money of less costly materials, and have resorted to various devices for economising the use of coin. Of the substitutes for coin hitherto suggested, paper is, in all respects, the most eligible. Instead of discharging their debts by a payment of the precious metals, individuals, on whose solvency the public may rely, pay them by giving a bill or draft for the sum, payable in coin at sight, or at so many days after date; and as this bill, or draft, passes currently from hand to hand as cash, it performs all the functions of coin, while it saves its expense to the public. A sense of the advantages that might be derived from the circulation of such bills or drafts led to the institution of banks for their regular issue. By a bank of this description, or a bank of circulation, is meant an establishment founded by one or more individuals, known or believed to be possessed of large property, for the accommodation of the public with loans. A banker, on being applied to for a loan, does not make the advance in gold or silver, or other valuable material, but in his own promissory notes or engagements, binding him to pay the sums specified in them at sight, when presented at the bank, or at some specified period. When a bank is in good credit, its notes are deemed by the public equivalent to a corresponding amount of gold or silver; and, being freely accepted in payment of debts of all sorts, and easily carried about or conveyed by post, they are even more useful to those who originally borrowed them from the bank, and to their subsequent holders, than an equal sum in coin. The borrowers, therefore, do not scruple to pay the same interest for the loan of a promissory note of 100%. or 1,000l. that they would do for a loan of a hundred or a thousand sovereigns. But the note costs the issuer comparatively little. He, in fact, deals in credit, or in obligations to pay, and not in real values; his profits consisting in the excess of interest derived from the notes or obligations he has issued over and above the interest of the cash or unproductive stock he is obliged to keep in his coffers to meet the demands of the public for payment of his notes, and the expenses of his establishment. Besides these sort of banks there are also banks of deposit, or banks for keeping the money of individuals. A merchant, or other person, using a bank of this sort, makes all his considerable payments by drafts upon his bankers, and sends all the bills due to him to them to be presented, and noted if not duly paid. By this means he saves the trouble and expense of keeping a quantity of unemployed money at home, avoiding, also, the risk of receiving coins or notes that are not genuine, and of making any mistakes with respect to the presentation of due bills; and in consequence of the saving of money that is thus effected, a much less quantity serves for the demand of the public. If a bank of circulation, or an establishment for the issue of notes, fall into discredit, its notes must obviously cease to circulate. Unless when guaranteed by government, or made legal tender, no one ever takes promissory notes, except on the supposition that they will be paid when presented or when due, and that they are substantially equivalent to cash. The moment any suspicion (whether well or ill-founded is so far of little consequence) arises that the issuers of notes are unable to meet their obligations, there is a run upon them for payment, and their notes are rejected by every one. All banks of circulation are necessarily almost at the same time banks of deposit; but there are in all commercial countries a good many of the latter class of banks only. English Banks.-Banking establishments for the issue of notes, and for taking care of people's money, have existed in this country since the latter part of the seventeenth century. The Bank of England was founded in 1694, and has long been the greatest bank of circulation and deposit in the world. From its foundation it has enjoyed several peculiar privileges. The principal of these was conferred upon it in 1708, by an Act which prohibited any company from being established for the issue of notes payable on demand in England |