Money Circulation

8/4/2019 Money Circulation

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Robert E. GrossColleftlon

A Memorial to the Founderof the

Business Administration Library

Los Angeles


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A METHODOF

Increafing the ^luantityOF

CIRCULATING-MONEY:Upon a new andfolid Principle*

LETTER I.


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CONTENTS.

Sect. I.^^jIssumes the Neceffity cf an Ex-tenfion of the Circulating Medium, Page 7

Sect. II. Bafis of a Plan for Juch an Ex^tenjion^ - - - _ t^

Sect. III.-The Planjlated, - - ii.Sect. IV. Confequences of the Plan to Stock-

Proprietors, - - - 13Sect. V. No Banger to them, - 15Sect. VI. They might gain too much by it, ih.Sect. VII. Government muji "partake with

them in the Profits, - - - iSSect. VIII. So mufi the Bank of England. 19Sect. IX. ^ejlion Juggefied. - 20Sect. X. The Plan may be improved, 21Sect. XI. General Obfervations, - 12Sect. XII. Originality of the Plan, - 23

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INTRODUCTION.

THE Principle of this Propofal is to puta NEW and great Capital into circu-lation, by Loans of Money, to be created inthe manner and upon the foundation defcribedin the following Letter, addrefled to a Memberof the late Secret Committee of the House ofipoMMONs on Bank Affairs.

The gentleman, to whom the Letter was ad-^drefled, (whofc name, ifl thought myfelf at libertyto mention it, would add much authority to thewhole propofal,) being himfelf (Iruck with the no-velty of the meafure, and its apparent tendency topublic utility, has been the means of procuringa confiderable degree of favour to it elsewhere.?:But, if I were to fay more of this, it could onlybe with a view to obtain attention,not to in^MtviZt \\it publicjudgmenti which alone can de-cide in this cafe, as in all others where publiccredit is concerned.Therefore, I (hall only fay,I have good reafon to think that the firfi

m^rejfionsy


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( 6 )tmpreJJiottSi made in the quarter to which I allude,are flill retained.

It is my intention to point out in a futureLetter, for which I have prepared materials, howI propofe to confine the increafe of money, in itsfirft application, to the afliftance of the LandedInterest; and I (hall, at the fame time, anfwerfuch Objections as I may hear of, or which myown thoughts may fugged to mej for, I (halldifguife nothing.In the mean time, I admit thatit is necefifary to the practical execution of theplan, that the notes in queftion Ihould be ex.-changeable for all commodities,by no meansexcepting Gold J and exchangeable at par : other-wife they cannot perform the office of Money.I beg permiflion to add, that I think this may beaccomplished. And I (hall Ihew how the Se-curity may be doubled, both in its nature andamounty without lefifening the fimplicity of the ori-ginal defign ; and this to the extent of proving itto be absolutely impossible that the Note-Creditors fhould be defrauded^ or even di/appointedfso long as any notion of Law and Propertyfhall continue pra6lically to prevail in GreatBritain.

LONDOM,Z^d j^^ril 1799.


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METHOD,tsfc, ^c. ^c.

Sect. I. AJfumes the NeceJ/iiy of an Extenfion ofthe Circulating Medium

SIR,Of late, we have heard but little of the plans

for a New Circulating Medium, with whichthe public attention was much engaged about thelime of the Bank's ceafing to make payments incalh. No plan of that kind fecms yet to have ob-tained general approbation; and, perhaps, thatwhich I am about to fubmit to your confiderationmay not be free from objedion.

I HAVE entered thus upon the fubjed withoutceremony ; becaufe. Sir, the indulgence you haveIhewn me in the feveral conferences you have ho-noured me with on the occafion, has fuperfededthe necclTitf of any introdudory matter, unlefs I

had


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( 8 )had attempted to exprefs the feeling I have o^yourobliging attention in this inftance, which I decline,as a tafk not eafy in itfelf, and ftill lefs (o, in con-neflion with other ads of condefcenfion which Icannot fail to recolleft, though I am not able toacknowledge them in the manner I Ihould wifhto do.

In common wich all thofe who have precededme in this track, I begin with afluming that therewould be found great convenience in the eftablifli-ment of a good, folid, circulating medium, upona more enlarged fcale than any that exifls at pre-fent, and adapted to the extended and extendingftate of our National Commerce, and particu-larly to the wants of the lXnded interest. Ifthis was denied, oc generally doubted, I fliould havelittle to fay at prefent ; for, if the neceflity or uti-lity of fuch an eftablifhment is not felf-evidentj IIhould think the time for it is not yet come.

My experience in bufinefs, however, informs methat it is wanted.Permanent loans of money arenow, and for a long time have been, difficult to beobtained J and this difficulty muft, from obviouscaufes, continue to increafe fo long as the war lafts.

Sect.


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Sect. II. Bafis of a Plan forfuch an Extenfion.Having premifed this, I proceed to ftate my

plan for the eftablifhmcnt of a New CirculatingMedium.

The bafis of it, as I have remarked in what youhave heard from me already, I fix upon the Na-tional Debt, which is the Wealth of Indivi-duals.For commercial purpofes at leafl:, I con-ceive this may be deemed folid fubftantial propertyto a limited extent.

Suppose the National Debt due to individualsto be equal to Four Hundred Millions (ormore) of 3 per Cent. Annuities of the value of 50per cent.i that is, Two Hundred Millionsfterling. This fuppofition is fufficiently accuratefor my prefent purpofe.

Sect. 111.-21^^ Pknjlaied,

Now, my fcheme goes to the putting of a largeportion. Fifty Millions, or more, of this pro-perty into circulation, if fo much could be em-

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( to )ployed J and this I propofe to be done in the follow-

Let any (lock-holder, who would wifh to cir-culate fome part of his Stock, without felling it,transfer a certain quantity of it, fuppofe twentythoufand pounds 3 per Cents, to the Governorsand Directors of the Bank. The Bank is thento deliver to him fifty certificates, or notes of thetransfer, each of them to be marked as of the valueof jT.ioo, or a greater quantity in number, and oflefs value refpedively j but the whole together tobe of the amount of j^,5ooo fterling.

By this means every particular quantity of Hockmight produce a fourth part of its nominal amountfor the purpofes of circulation. For, I make whatI believe to be a well-grounded fuppofition, that themercantile world, who now take Bank-Notes inpayment, would, with equal confidence, receiveand circulate thefe Stock-Notes j the Governorsand Diredors of the Bank of England being, in re-fpefl to the ftock to be transferred to them, trufteesfor thofc who transfer the ftock, and for thofe whotake the ftock- notes in payment, (as they now aretruftees for the Bank-Proprietors and the holders ofBank-notes,) and the fecurity being fully equal to

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( II )

that upon which the credit of Bank-notes is found-ed :for, the capital and ucher efFeds of the Bank(reckoning its property in flock at the prefentmarket-rate) is certainly fliort of twice the amountof its debts. But the ftock, transferred as I pro-pofe, would be double in value to the notes circu-lated upon its credit.

In the cafe I have fuggefted, the 3 per Cents,would be taken at 25 j a fuppofition low enough,I fhould fuppofe, for ihofe who give any degree ofcredit whatever to the Public Funds. There canbe no doubt that bankers and others would allow;f.ioo ftock to be a fufficient fecurity for ,2$money, notwithftanding all the poflible fluduationsto which the Hocks are fubjed.

The notes I have defcribed might be ufed forloans or for capitals to trade upon j their ufe intrade, and for other purpofes, being fuppofed thefame as fpecie or Bank-notes.

These notes being, by fuppofition, of the famevalue, and palTing with the fame facility as Bank-notes do, will be confidered as cash, and confe-quently, if lent by the original holders, or byany others who may become the holders of them,would entitle the lender to rcceiv interest on

B 2 the


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( 12 )the loan, in like manner as the lender of bank-notes now receives intereft on the loan of thofenotes.

The fuppofition that thefe notes would be circir-lated like bank-notes is elTential to my plan.That foundation taken away, the whole would bean unfubftantial vifion ; and therefore, if this benot aflented to, it would be of no ufe for me to goon. But, that point granted, (fubjedt to re-con-fideration,) I fay that every particular quantity offtock, transferred in the manner I have ftated,would yield a profit to the ftock-transferrer equalto 5 per cent, on the amount of (lock-notesobtained by him.

Twenty thousand pounds, 3 per Cent, ftock,would, as obferved before, produce . 5000 ofllock- notes, the intereft of which would be , 250,to be added to . 600, the amount of the divi-dends on . 20,000 of that ftock. Thus . 850would be gained annually, inftead of , 600, byevery proprietor of , 20,000 ftock, who fliouldavail himfelf of the opportunity of procuringftock-notes, as above mentioned.

What I have faid of 3 per Cent, ftock, is tobe applied to the oSber public funds in the like

proportion j


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( 3 )proportion; the j per Cents, being mentioned onlyby way of example.

Sect* IV. Confeqtiences of the Plan to Stock"Proprietors,

I SHALL purfue the fuppofition thus made, andihall trace its confequences to the (lock- proprietor,treating the matter at prefent as if no other intereftthan his was to be confulted j difregarding, there-fore, at this moment, the interefts of Govern-ment and the Bank of England, both of whichI fhall feparately confider in what I have farther tofay. In this point of view, I fuppofe the wholedividends on the flock are to continue payable tothe (lock- transferrers i a fuppofition to be correctedin the farther progrefs of this difcuffion.

^. 850 being gained annually inftead of ^. 600,the value of (lock may be expefled to rife in pro-portion to the increafe of gain.

In the fubfequent details on this point, I fhallfuppofe the flock- proprietor would transfer hisftock to the truftees, upon my plan, for the fakeof much lefs advantage thai what 1 have abovedefcribed ; for, out of the great profit abovealluded to, it is neeeflary to provide inducements

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( 14 )to Government and to the Bank of England tocountenance the plan.

At prefent I fhall proceed to attend farther tothe interefts of the ftock-proprietor.

What objeflion can he naake ? Can he fay hisftock is tied up and put out of his power ? No :he may redeem it by bringing in to the Bank aquantity of ftock-notes equal in amount to thofeoriginally obtained by him. Thefe being can-celled, his ftock would be again entirely free : orhe may fell the ftock fubjel to the charge upon itthis would make it Ughi to hold j which, by ren-dering the ftock more marketable, would increafeits value.

Merchants, bankers, country-gentlemen, farm-ers, and in general ftock-holders of all defcriptions,would be benefited by the plan, and particularlythe timid would derive encouragement to hold oniht'wjlock. For if they withdraw half the amountof the prefent price of ftock, they may realize thatpart on land, by procuring purchafes or mort-gages. This would alfo accommodate thofe whowant to fell land, or borrow money on it, or toborrow on other fecurity,

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( IJ )The transferrer would retain to himfelf the

advantage of future increafe of price, juft as if hehad not taken the ftock-notes.

Sect. V.iVi? Danger to them.But is there no final danger of lofs to the flock-

proprietors upon this plan ? I^onCt I think. Forfuppofe the holders of the ftock-notes fhould be-come alarmed for their fecurity by the falling offtock to 25 i and fuppofe the plan fhould provide,that then the flock fhould, at that price, becomethe property of the holders of the flock- notes, andbe transferred to them in proportion to the amountof the notes held by them refpe


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( 6 )quantity of the flock at the reduced price, fuppofingit below 25, or prevent a lofs if the price is 25, orupwards; and, upon both fuppofitions, five thoufandpounds, or thereabouts, would replace his twentyihoufand pounds ftock.

Four things mufl concur in order to occafionany a6lual lofs to the transferrer of ftock uponthis plan. Firft j the ftock muft fall below 25.Secondly -, the transferrer muft be unable to re-deem it at that reduced rate. Thirdly j the ftockmuft afterwards rife to a higher price. Fourthly";if there be (as of courfe there muft be) an intervalof time between the fall and the rife, the transferrermuft continue, during the whole interval, unableto purchafe a quantity of ftock equal to what hehad when he obtained the notes.

The occurrence and operation of thefe numerouscaufes is a moft improbable fuppofition ; efpeciallyconfidering that the transferrer muft be underftoodto have received an equivalent in property of fomckind on parting with his notes, and, therefore, maybe expefted to be able to redeem his ftock, or tobuy an equal quantity at the fuppofed price of 25,

But perhaps the ftock-notes may have beenapplied to purchafe land cr land-tax. /F^//, at

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( '7 )leaft the transferrer has then realized half theamount of his ftock at the prefent price, befidesthe annual increafe of , 250 upon his , 20,000and he muft confider that, if he had continued tohold his ftock till the fuppofed period of ultimatedepreciation, his lofs would be greater than it canbe upon any fuppofition afFe


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( '8 )

Sect. VII. Government mujl partake with themin the Profits,

Therefore I come now to confider the intereftsof Government and the Bank of England.

It may be thought proper that fo much of thedividends as is equal to 5 per cent, on the ftock-fiotes (hould be kept back by Government : thatis, that the payment of fo much of the dividendsfhould be fufpended during the war, and that theamount of thefe dividends (hould at the end of thewar be divided between the ftock-holders, theGovernment, and the Bank of England, in fuchproportions as may be agreed upon. In fpeakingof the (lock-holder in this place, 1 mean theperfon who Ihould aflually polTefs the (lock acthat period ; and his (hare of the accumulateddividends (liould then be added to his capital, andthe future intereft of it provided for by taxes,unlefs Government (hould then be able to pay thearrears of dividends; I mean the (lock-holder'sfliare of thofe dividends. In cafe a fufpenfion ofdividends (hould be thought improper, fome otherarrangement might be adopted, as the mutualinterefts of Government and the ftock -proprietorsmight diflate.

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( 19 )If Government could, by this means, fufpend

during the war the payment of dividends to theamount of two millions five hundred thoufandpounds, or even half of that fum, fuch a poft-ponement, or any equivalent advantage to Govern-ment, would be attended with important confe-quences.Future Loans might be negociated on better

terms, the price of (locks being fuppofed to rife aswell in confequence of the advantages given to theftock-transferrers, as of the taking of a greatquantity of ftock out of the market. The Re-demption of the Land-tax would be facilitated,and the neceflity to fell ftock would be very muchdiminilhed, at the fame time that there wouldbe a great increafe of inducements to buy andhold ftock.

Sect. VIII, So muji the Bank of England,In regard to the Bank of England, the advan-

tages to be allotted to that company would be fuchas might be agreed upon between them and theftock-transferrers, by way of an annual increafe ofthe Bank Profits j and alfo as a compenfationfor the charges of management. But there is nooccafion at prefent to enter into details upon thispart of the fubjed.

c 2 Sect.


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( 20 )

Sect. IX. ^eftion fuggejied.

After all, however, there remains the queftionbefore fuggefted : ' Could thefe Stock-Notes be


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( 21 )

But if, in fad, the fecurity for the NationalDebt is not to be efteemed good for a fourth partof its nominal amount, then, I fear, our cafe ishopelefs indeed. This, however, appears tO me tobe a groundlefs apprehenfion.

At all events, the caution of the moft fearfulmufl: have fome limits j and if, through the pre-valence of diftruft, the notes defcribed could not becirculated at 25, they might undoubtedly at fomelower rate. Therefore, the objedion founded onfuppofed infecurity, does not reach the principleof the meafure, and can only at the utmofli confineits operation.

Sect. X. The Plan may he improved.

This fcheme, if it has any thing of value in it,may undoubtedly be improved i and., perhaps, theindirect and collateral refults from it may be as con-fiderable as its dire6b and immediate effeds.

I AM not, however, fo fond of my plan as tomake an unqualified fuppofition that it is capableof producing fuch great advantages as I have de-fcribed. Yet I do not mean to conceal that 1 havea ftrong confidence in itj and I own, if I were to

indulge


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( 22 )indulge my prefent thoughts, I Ihould fay muchmore of the advantages I expeft from it.

Sect. ILL'General Ohfervations.But I fliall now only make a few general Ob-

servations, which fhall conclude this Letter, andthe trouble which, Sir, you have allowed me togive you,

Firji, In a commercial Country thereSHOULD be as little DEAD OR UNPRODUCTIVECapital as possible: but the wealth of indivi-duals colleded in the funds is dead to trade and ge-neral ufe, except only fo far as the dividends arefpent and circulated, and not invefted in the famefunds by way of farther accumulation.

And, fecondlyy There ought to be no suchTHING known as WANT OF MONEY jand, in myopinion, no fuch want could be known in a perfedlywell-regulated commercial ftate : I mean no wantof that kind fhould be known or felt by thofe whopoflefs property of any kind, whether it confifts ofiands, merchandize, or credits well fecured. Allfuch property fhould enable the owner to procurea REPRESENTATIVE SiGN Capable of general cir-culation. I fay this, fubjedt to many obviousRESTRICTIONS.

Sect,


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( 23 )

Sect. 'X\l,-~Originality of the Plan,

It was, by thinking for a long time upon thefetwo principles, and by turning over in my mindfeveral plans for procuring money for fome perfonsof property, who found it difficult to obtain Loans,that I was led to the prefent Discovery, if it isone, as I believe it to be. To me, at leafl: it is new,and fo it has appeared to thofe friends to whom Ihave communicated it : but if any one fhall difputethe abfolute originality of the thought, I Ihall notbe much concerned about that, becaufe it is quitecertain that in its operation it will be new, and,what is infinitely more material, the advantages of icwill be confined, almoll exclufively, to our owmCountry, where alone fuch a great capital as Ihave propofed to put in circulation is to be. found,

I have the honor to be,SIR,

London, &C. &C. &C.Sept, 27, 1798.

^c^


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A METHODOF

Increaftng the ^luantityOF

CIRCULATING-MONEYUpon a new and /(Aid Principle.

LETTER II.


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ADVERTISEMENT.

1 HE meafure fuggefted in the Firft Letteron this fubjedt having been approved of bya very great number of thofe who are beftqualified to judge of it,including perfons ofALL ranks and parties, without diftindtion;I confider it as a tribute of refpe^t due tothofe who have given their fanlion to thegeneral idea of the plan, to fubmit to themthe following detail of its propofed pra6licalapplication, together with anfwers to fomeobje6tions :my defign, in refpe6t to thediftribution of this Letter, being to hmit it,for the prefent, to thofe perfons whofe opi-nions and fiiggeftions upon it, as a fkctch ftilladmitting of improvement, I am defirousof obtaining.

24th JUNF I79Q


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( 28 )taxes, perfons of fixed incomes would have thefatisfadion of feeing their own advantage conneftedwith the public welfare j a circumftance which Ihave before alluded to, and which I have greatpleafure in thus explaining and confirming : for Iam anxious that my propofal fhould producenothing but good j if that can be.

r I allow, that^fo far as the produce of the SinkingFund and that of the Income Tax are called in aid ofthis redudion of the annuity, the redudion wouldnot be gratuitous -, it is true :but this does nothinder my firft fuggeftion on this point from beingalfo true, namely, that the redudion in queftionmight be brought about merely and folely by thehelp of this plan.-I believe it might, confideringthe cominand over the rate of interejl which itwould give to thofc who hold the reins of govern-ment: a moft important control in the hands ofthoje who are to manage on the ;part of the debtor !

Yet it ftill may be proper to make the SinkingFund and Income Tax co-operate to the fame end jby which means a greater ajid more fpeedy efFedwill be produced towards leflening the nationaldebt, than could be managed by the unafliftedoperation of this plan.

There


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( 29 )THER.E certainly is not any thing that can (b ef-

feflually promote this redu


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( 3* )encourage the abundant circulation which a low rateof intereft would tend to promote.How foon, under the prefent circumftances, the

Bank nnay again think, fit to leflen the amount oftheir difcountSf I do not pretend to conjefturebut fome confiderable effed in that way might pro-bably be produced by a repeal of the prefent rcftric-tion on the ifilie of cajh,

I NOW come to fhew how my plan may be con-neded with the eftablilhment of the Bank ofEngland,

I SUBMIT that THAT Bank, though it has peculiarinterefts of its own, may be moulded to purpofesof public utility within the limits of a juft andreafonable regard to thofe its interefls. It oughtNOT to ftand in the way of the general good ofthe community.

Therefore, with due regard to the Bank inte-refts, I go on to fay that there ought to be aPROPORTION between the Bank capital and efFefts,and the amount of the notes circulated on thecredit thereof.

I PRESUME to fuggeft, that that proportionfhould be publicly known and regulated by law.

This


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( 3< )This ^uhlicity would at all times proteifl the Bankagainlt a run upon it, which can only proceed frompanic fears and a diftruft of its fecurity, occafionedby ignorance of its adual fituation.

The amount of the circulating notes of theBank, that is to fay, circulating on the credit of theBank capitalt ought never to exceed 2i fixed fumjlet us fuppofe twelve millions.

All circulating bank paper beyond that amountought to reft on other fecurity.

Now to apply thefe principles; let the Bankiflue its own notes inftead of the notes I havecalled flock-notes. Let there be no diltindion.

But let the Bank be permanently protected bylaw againft paying cash beyond the amount of itsown proper or re(lri(fled quantity of notes itsown debtthe twelve millions above mentioned.Now fuppofe twenty millions to be in circulation,

or any given fum exceeding twelve millions, theBank might be liable (fuppofing the prefent re-ftri


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( 3 )cafh; therefore they could not fay theirown cftablifh-tncnt was endangered by the additional quantity ofnotes circulated on the credit of (lock.

But if twenty millions were in circulation, the ge-neral call on the Bank for caHi nnay be fuppofed tobe proportionablygreater than ifonly twelve millionscirculated j therefore the Bank muft keep a greaterproportion of gold in their treafury to carry on itsbufinefs ; and for this, as well as for the manage-ment of the additional ifTue of notes, the Bankfliould receive a compenfation, including a reafon-able profit.I fhall for the prefent reft the matterhere fo far as concerns the Bank, conceiving thatall its eflential interefts are thus fully taken care of.

Sect. X. the Security and Convenience to thePublic under this Plan.

In refpecl to the Pubmc, I cannot difcover anyobjedion that they can make to the increafcd cir-culation of bank notes upon the principles nowlaid down. They have been content with an almofttotal reftri(5lion of the ifTue of gold in payment ofbank notes, and why Ihould they not be equallywell content with having a moderate proportion ofthofe notes permanently exempted from beingpaid


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( 33 )paid in cafh, there being other and mofl: abundantfecurity for their amount ?To fuppofeany incon-venience, one muft make a previous fuppofitionthat all the notes of the Bank of England, circu-lating upon the credit of their own capiral, are re-quired to be paid in cafh, with a fettled purpofe notto let it return there. But this fuppofes the naturaldeath of the Bank ; a perpetual ceflation of its ufeas a bank : a mod chimerical fuppofition ! Buteven granting this infinitely improbable event totake place, iVill the furplus quantity of notes wouldbe reprefented by a fourfold quantity of ftock anda double value in land, and thefe remaining noteswould then be more convenient and neceflTary thaaever: for the Bank of En2;land notes, its ownproper and reftrided quantity, being fuppofed ex-tinguifhed, the furplus notes would be effentiallyneeelfary to the purpofes of commerce, if any werefuppofed to remain.These notes would therefore continue

TO circulate } and by fuitable provifions tobe made by the LegiQature at that time, mightbe liquidated in gold and filver as occafionmight require. To fuppofe the contrary, isto fuppofe trade annihilated and all occafions forremittances from place to place within Great Britainto be put an end to for ever. So that it is onlyby imagining fcveral events to take place, eachof them involving, if not contradidlions, at

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( 34 )lead very high degrees of improbability, that thecirculation of the propofed notes once begun can beexpeded ever to ceafe.

The fuppofition of the extinflion of that quantityof notes which is peculiarly to belong to the Bank ofEngland, I need hardly fay is nnade by way of argu-ment, and not with any expedation of its everbeing realized. But the very putting of fuch a cafe,even in this way, may appear alarming tofonne ; therefore, I might propofe that thewhole profits to refult from the new quantityof notes fhould be, annually or half yearly, fub-jeded in the firft place to indemnify the Bank ofEngland againft fuch lofs or detriment as thisfcheme may bring upon them ; that indemnitybeing made good out of the dividends of thetranferred ftock. I believe fuch a guarantee(under circumftances fo very improbable) fromthe new fyftem to the old one, would not de-prive the former, the new fyftem, of any partof its efficacy, or caufe the ftock-proprietors toabate their expedations of gain from the operationof the fcheme. The effed of fuch arrangementwould be, that the Bank of England would haveconftantly a profit upon twelve millions, or what-ever might be the reftrifted or the aftual amountof their circulation, not exceeding twelve millions

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( 3i )and the (lock- transferers would have the profit uponwhatever might at anytime be the additional quan-tity -J fubjedV, in refpedt to the latter, to a properdeduflion out of the dividends of the transferredflock for the charges of management and otherwifein favour of the Bank.I believe this will appeareafily intelligible to thofe who will take the troubleof thinking a little upon the point : but I am fen-fible this part of the cafe requires rather moreattention than the reft. It is, however, of theleaft confequence, as it applies only to the moftimprobable of all the fuppofitions which the caferequires to be made : and if it creates a difficultyin the mind of any reader, it may be paiTed over,without any difadvantage to the right comprehen-fion of the fcheme : for it is only an anfwer to avery refined and even imaginary objedion.

Sect. XI. The ^eftions re-ftated.

BuTjtheoriginalqueftion recurs:Is there a wantof circulating-money ? And alfothe other queftion,Will \.\\t Public receive and circulate thefe notesas cap ?Concerning both of which queftions, ifI exprefifed naturally and without referve all that Ithink and feel, I fhould manifeft fuch a degree of

2 confidence


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C 36 )confidence of having made good what I have had inviev/, as would fcarcely feem confiftent with thatdeference with which I mean, Sir, to fubmit thewhole matter to your fuperior difcernment j as Imuft ultimately do to the judgment of the Public,

Sect. XII. Some particular ObjeSfions Jiatcd,To the Public, therefore, I fubmit all that I

have faid, together aljo with thtfollowing ohjeSlionSiwhich, having been communicated to me, I thusmake known, becaufe I have already faid, in theintroduflion to my Firft Letter, that I will difguifenothing. Indeed, it would be quite ufelefs to hideany fubftantial objedion, or to fuppofe that anydefers in my fcheme would efcape the clear-fighted judgment of thofe who are to decideupon it.

OBJECTIONS.X. The national debt is the wealth of indivi-

duals I but it is wealth already employedby the ftate, and not applicable to the pur^pofes of commerce*

2. There


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C 37 )a. There is a miftake in thinking, that perfons

who take bank-notes would take ftock-notes. The fornner are grounded on a verydifferent fecurity from the other j as theircirculation is occafioned by a belief thatthe Bank is pofTefled q{ Jpecie to anfwer thepayment of its notes when called upon.

3. The plan makes every ftockholder a banker,ifluing notes without funds, or preciousmetals, to anfwer them.

4. The ftock-notes would not, as reprefentedin the plan, be a mortgage on the induftryof the nation, but on the inadive capital ofindividuals and the debts of government.

J. It is faid, " the wealth in the funds is dead" and unproduclivei" Jo //;/? with refpeflto the proprietor j for it cannot be appliedto two purpofcs,

$. It is faid, that a want of money or a repre-fentative fign fhould not be known to thofewho poITcfs property or credits well fecured.But can they have both the property andits reprefentative ?

Sect.


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( 38 )

SCT. Xlll.'-^Replies to thoje OhjeElionSy andConclufion.

I DO not mean nnuch to lengthen this Letter byreplies to thefe objedions : for I Ihould think 1had employed my time to little purpofe in all theforegoing remarks, and (hould appear to havelittle confidence in the difcernment of thofe whowill read this and my former Letter,as well asmuch diftruft of the candour and opennefs to con-vidion of the perfon who made the objedions,if Iwere now to fpend any confiderable portion of timein pointing out how completely I have obviated allihefe objedions. But, without defigning to imi-tate the almoft oracular concifenefs of the objec-tions, I think it may be proper for me to hy a fewwords in anfwer thereto.

The firfl: objeclion begs the queftion.It ad-mits the national debt to be the wealth of indivi-duals ; but adds, that it is wealth already employedby the State, and not applicable to the purpofes ofcon^pierce. No reafon, however, is afTigned for thisafiertion. On the contrary, I have given reafonsfor thinking, that Jome part of this acknowledgedwealth of individuals may be applied to purpofesof commerce, I have heard the objedion ftatedia


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( 39 )in this manner :" The wealth in the funds is" MONEY SPENT." But I fay, NO ; it is not m0jey/pent: it is, with respect to the creditor,MONEY LENT i and it is BY the creditor that I pro-pofe it to be now employed, by mortgaging his fe-curity. The objedor did not perceive that his po-fition, that this is money spent, is only true iarelation to the state, by whom it is not now to beemployed, but, as before obferved, by its creditors.And why may not this be ?Compare it with anyother mortgage, and it will appear that it may pro-cure credity and be the means of circulations in fa-vour of the mortgagee.

The fecond objection alfo begs the queftion jand dates incorredly the ground upon whichbank notes circulate, which is not a beliefthat the Bank is pojfejfed of fpecie to anfwer thepayment of its notes when called upon; or, if fucha belief were the ground of that circulation, it wouldbe a belief that delights in evident improbabilitiesand detefted errors.

Do we not all of us know, that on the 27th ofFebruary 1797, the Bank of England was not pof-fefTed of fpecie to anfwer its notes when calledupon ? Do we not alfo know, that from that pe-riod to the prefent we have not been able to obtainfrom


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( 40 )from the Bank of England either gold or filver fora ten pound bank note ? Yet this did not, even inFebruary 1797, when the panic was at its height,hinder the free circulation of bank notes j whichcirculation is not founded on the belief which theobjeftion fuppofes, but on other and Jirongergroundsy too obvious to need pointing out.

The third objedion afferts what is quite a miftakein point oi fa5fy in faying that the propofed noteswould be iffued " without funds j" unlefs it be truethat the property of the Bank of England in threepercent, confolidated Bank annuities is not a fundfor the fecurity of its own notes.

The fourth obje(5tion is inconfiftent with thethird, in reprefenting that to be inactive capital^which before had been dcfcribed as ng fund. Thisobje6lion alfo quotes innperfedly what I have faid,which was, that the fecurity upon which the notesare to circulate would be a first mortgage on thePROPERTY and INDUSTRY of the nation; and this Irc'-iffert* Why does the obje6lion drop the pro-perty of the nation as a part of the fecurity j andwhy call the national funds the dshts of govern-ment, when they are the debts of the wholeCOUNTRY ?

Debts


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( 41 )

Debts not funded may be called governmentdebts. Thefe, if contra6ted without parliamentaryauthority, the nation may decline to fandlion andadopt : but when once funds are provided to fecurcthem, by authority of the legislature, the debtsbecome from thenceforth debts of the nation,and are fecured upon the land, the money, thegoods, the commerce, and the induftry of thecountry j and, with all thefe, the public faith ispledged to the creditors.

The fifth objeflion again begs the queftionj forI have (hewn how the wealth in the funds may beapplied to two purpofes j if the principles which Ihave endeavoured to eftabliih by argument^ and notby mere aflertion, are found to be valid.

To the fixth objeflion I anfwer, that thofe whopoiTefs property of any kind may pofTefs that pro-perty in a mortgaged Jlate^ and alfo at the fametime a reprcfentative fign to the extent of the mort-gage.

For the fake of brevity, and for other reafons,I have omitted fome things that might be faid inconfirmation of my pofitions, and perhaps evenfoir.e explanations that may be thought necelTary bythofc who are fond of minute ftatementsj but I

F think


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( 42 )think it bed to leave the matter here.Permit me,therefore, to conclude with what I cannot but thinkvery honourable to myfelfI mean, a declarationof the fincere and refpedful attachment with whichI am bound ever to be,

SIR,Your devoted and faithful fervant,

&c. &c. &c.

^c^


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Money Circulation