for which credit had been given in the trans- the six months, or by neglecting to pay one fer books. What is thus paid for the keeping fourth or one half per cent. in order to obtain of the deposit may be considered as a sort of a new receipt for another six months. This, warehouse rent; and why this warehouse rent however, though it happens seldom, is said to should be so much dearer for gold than for sil-happen sometimes, and more frequently with ver, several different reasons have been assigned. regard to gold than with regard to silver, on The fineness of gold, it has been said, is more account of the higher warehouse rent which difficult to be ascertained than that of silver. is paid for the keeping of the more precious Frauds are more easily practised, and occasion metal. a greater loss in the most precious metal. Sil- The person who, by making a deposit of ver, besides, being the standard metal, the bullion, obtains both a bank credit and a restate, it has been said, wishes to encourage ceipt, pays his bills of exchange as they be nore the making of deposits of silver than come due, with his bank credit; and either those of gold. sells or keeps his receipt, according as he The holder of The owners of bank credits, and the holders of receipts, constitute two different sorts of creditors against the bank, a receipt cannot draw out the bullion for which it is granted, without re-assigning to the bank a sum of bank money equal to the price at which the bullion had been received. If he has no bank money of his own, he must purchase it of those who have it. The owner of bank money cannot draw out bullion, without producing to the bank receipts for the quantity which he wants. Deposits of bullion are most commonly judges that the price of bullion is likely to made when the price is somewhat lower than rise or to fall. The receipt and the bank credit ordinary, and they are taken out again when seldom keep long together, and there is no it happens to rise. In Holland the market occasion that they should. The person who price of bullion is generally above the mint has a receipt, and who wants to take out bul price, for the same reason that it was so in lion, finds always plenty of bank credits, or England before the late reformation of the bank money, to buy at the ordinary price; gold coin. The difference is said to be com- and the person who has bank money, and monly from about six to sixteen stivers upon wants to take out bullion, finds receipts always the mark, or eight ounces of silver, of eleven in equal abundance. parts of fine and one part alloy. The bank price, or the credit which the bank gives for the deposits of such silver (when made in foreign coin, of which the fineness is well known and ascertained, such as Mexico dollars), is twenty-two guilders the mark: the mint price is about twenty-three guilders, and the market price is from twenty-three guilders six, to twenty-three guilders sixteen stivers, or from two to three per cent. above the mint price. The proportions between the bank price, the mint price, and the market price of gold bullion, are nearly the same. A person can ge.his own, he must buy them of those who have nerally sell his receipt for the difference be- them. The holder of a receipt, when he purtween the mint price of bullion and the market chases bank money, purchases the power of price. A receipt for bullion is almost always taking out a quantity of bullion, of which the worth something, and it very seldom happens, mint price is five per cent. above the bank therefore, that anybody suffers his receipts to price. The agio of five per cent. therefore, expire, or allows his bullion to fall to the bank which he commonly pays for it, is paid, not at the price at which it had been received, either by not taking it out before the end of * The following are the prices at which the bank of Amsterdam at present (September 1775) receives bullion and coin of different kinds: SILVER. If he has none of for an imaginary, but for a real value. The Upon deposits of the coin current in the country, the bank grant receipts likewise, as well as bank credits; but those receipts are frequently of no value and will bring no price in the market. Upon ducatoons, for example, which in the currency pass for three guilders three stivers each, the bank gives a credit of three guilders only, or five per cent. below their current value. It grants a receipt likewise, entitling the bearer to take out the number of ducatoons depos buy at the market price, which generally corresponds with the price at which he can sell the coin or bullion it entities him to take out of the bank. ited at any time within six months, upon paying one fourth per cent. for the keeping. This receipt will frequently bring no price in the market. Three guilders, bank money, generally sell in the market for three guilders It might be otherwise during a public cathree stivers, the full value of the ducatoons, lamity; an invasion, for example, such as that if they were taken out of the bank; and be- of the French in 1672. The owners of bank fore they can be taken out, one-fourth per money being then all eager to draw it out of cent. must be paid for the keeping, which the bank, in order to have it in their own would be mere loss to the holder of the re-keeping, the demand for receipts might raise ceipt. If the agio of the bank, however, their price to an exorbitant height. The should at any time fall to three per cent. such holders of them might form extravagant expecreceipts might bring some price in the mar-tations, and, instead of two or three per cent. ket, and might sell for one and three-fourths demand half the bank money for which credit per cent. But the agio of the bank being now had been given upon the deposits that the regenerally about five per cent. such receipts ceipts had respectively been granted for. The are frequently allowed to expire, or, as they enemy, informed of the constitution of the express it, to fall to the bank. The receipts bank, might even buy them up, in order to which are given for deposits of gold ducats prevent the carrying away of the treasure. In fall to it yet more frequently, because a higher such emergencies, the bank, it is supposed, warehouse rent, or one half per cent. must be would break through its ordinary rule of mak paid for the keeping of them, before they can ing payment only to the holders of receipts. be taken out again. The five per cent. which The holders of receipts, who had no bank the bank gains, when deposits either of coin money, must have received within two or or bullion are allowed to fall to it, may be three per cent. of the value of the deposit for considered as the warehouse rent for the per- which their respective receipts had been grantpetual keeping of such deposits. ed. The bank, therefore, it is said, would in this case make no scruple of paying, either with money or bullion, the full value of what the owners of bank money, who could get no receipts, were credited for in its books; paying, at the same time, two or three per cent. to such holders of receipts as had no bank money, that being the whole value which, in this state of things, could justly be supposed due to them. The sum of bank money, for which the receipts are expired, must be very considerable. It must comprehend the whole original capital of the bank, which, it is generally supposed, has been allowed to remain there from the time it was first deposited, nobody caring either to renew his receipt, or to take out his deposit, as, for the reasons already assigned, neither the one nor the other could be done without loss. But whatever may be the amount Even in ordinary and quiet times, it is the of this sum, the proportion which it bears to interest of the holders of receipts to depress the whole mass of bank money is supposed to the agio, in order either to buy bank money be very small. The bank of Amsterdam has, (and consequently the bullion which their refor these many years past, been the great ceipts would then enable them to take out warehouse of Europe for bullion, for which of the bank) so much cheaper, or to sell their the receipts are very seldom allowed to ex- receipts to those who have bank money, and pire, or, as they express it, to fall to the bank. who want to take out bullion, so much dearer; The far greater part of the bank money, or of the price of a receipt being generally equal to the credits upon the books of the bank, is sup- the difference between the market price of posed to have been created, for these many bank money and that of the coin or bullion years past, by such deposits, which the dealers in bullion are continually both making and withdrawing. for which the receipt had been granted. It is the interest of the owners of bank money, on the contrary, to raise the agio, in order No demand can be made upon the bank, either to sell their bank money so much dearbut by means of a recipice or receipt. The er, or to buy a receipt so much cheaper. To smaller mass of bank money, for which the prevent the stock-jobbing tricks which those receipts are expired, is mixed and confounded opposite interests might sometimes occasion, with the much greater mass for which they the bank has of late years come to the resolu are still in force; so that, though there may tion, to sell at all times bank money for curbe a considerable sum of bank money, for rency at five per cent. agio, and to buy it in which there are no receipts, there is no speci- again at four per cent. agio. In consequence de sum or portion of it which may not at any of this resolution, the agio can never either time be demanded by one. The bank cannot rise above five, or sink below four per cent. ; be debtor to two persons for the same thing; and the proportion between the market price and the owner of bank money who has no re- of bank and that of current money is kept at ceipt, cannot demand payment of the bank all times very near the proportion betweer. till he buys one. In ordinary and quiet times, their intrinsic values. Before this resolution he can find no difficulty in getting one to was taken, the market price of bank money used sometimes to rise so high as nine per the bank; and allowing them to have, one cent. agio, and sometimes to sink so low as with another, the value of L. 1500 sterling ly par, according as opposite interests happened ing upon their respective accounts (a very to influence the market. large allowance), the whole quantity of bank money, and consequently of treasure in the bank, will amount to about L.3,000,000 ster. ling, or, at eleven guilders the pound sterling, 33,000,000 of guilders; a great sum, and sufficient to carry on a very extensive circula. tion, but vastly below the extravagant ideas which some people have formed of this trea sure. The The bank of Amsterdam professes to lend out no part of what is deposited with it, but, for every guilder for which it gives credit in its books, to keep in its repositories the value of a guilder either in money or bullion. That it keeps in its repositories all the money or bullion for which there are receipts in force, for which it is at all times liable to be called upon, and which in reality is continually go- The city of Amsterdam derives a considering from it, and returning to it again, cannot able revenue from the bank. Besides what well be doubted. But whether it does so like-may be called the warehouse rent above menwise with regard to that part of its capital for tioned, each person, upon first opening an acwhich the receipts are long ago expired, for count with the bank, pays a fee of ten guilders; which, in ordinary and quiet times, it cannot and for every new account, three guilders be called upon, and which, in reality, is very three stivers; for every transfer, two stivers; likely to remain with it for ever, or as long as and if the transfer is for less than 300 guildthe states of the United Provinces subsist, ers, six stivers, in order to discourage the mul may perhaps appear more uncertain. At Am- tiplicity of small transactions. The person sterdam, however, no point of faith is better who neglects to balance his account twice in established than that, for every guilder circu- the year, forfeits twenty-five guilders. lated as bank money, there is a correspondent person who orders a transfer for more than is guilder in gold or silver to be found in the upon his account, is obliged to pay three per treasures of the bank. The city is guarantee cent. for the sum overdrawn, and his order is that it should be so. The bank is under the set aside into the bargain. The bank is sup. direction of the four reigning burgomasters, posed, too, to make a considerable profit by the who are changed every year. Each new set sale of the foreign coin or bullion which some. of burgomasters visits the treasure, compares times falls to it by the expiring of receipts, it with the books, receives it upon oath, and and which is always kept till it can be sold delivers it over, with the same awful solemnity, with advantage. It makes a profit, likewise, to the set which succeeds; and in that sober by selling bank money at five per cent. agio, and religious country, oaths are not yet dis- and buying it in at four. These different emoregarded. A rotation of this kind seems alone luments amount to a good deal more than a sufficient security against any practices which what is necessary for paying the salaries of cannot be avowed. Amidst all the revolutions officers, and defraying the expense of mawhich faction has ever occasioned in the go- nagement. What is paid for the keeping of vernment of Amsterdam, the prevailing party bullion upon receipts, is alone supposed to has at no time accused their predecessors of amount to a neat annual revenue of between infidelity in the administration of the bank. 150,000 and 200,000 guilders. Public utiNo accusation could have affected more deeply lity, however, and not revenue, was the orithe reputation and fortune of the disgraced ginal object of this institution. Its object was party; and if such an accusation could have to relieve the merchants from the inconve been supported, we may be assured that it nience of a disadvantageous exchange. would have been brought. In 1672, when revenue which has arisen from it was unforethe French king was at Utrecht, the bank of seen, and may be considered as accidental. Amsterdam paid so readily, as left no doubt But it is now time to return from this long of the fidelity with which it had observed its digression, into which I have been insensibly engagements. Some of the pieces which were then brought from its repositories, appeared to have been scorched with the fire which happened in the town-house soon after the bank was established. Those pieces, therefore, must have lain there from that time. The led, in endeavouring to explain the reasons why the exchange between the countries which pay in what is called bank money, and those which pay in common currency, should gene rally appear to be in favour of the former, and against the latter. The former pay in a speWhat may be the amount of the treasure in cies of money, of which the intrinsic value is the bank, is a question which has long em- always the same, and exactly agreeable to the ployed the speculations of the curious. No- standard of their respective mints; the latter thing but conjecture can be offered concerning is a species of money, of which the intrinsic it. It is generally reckoned, that there are value is continually varying, and is almost about 2000 people who keep accounts with always more or less below that standard. dealings. If these should annually amount to L. 100,000, for example, or to L. 1,000,000, PART II.—Of the Unreasonableness of those on each side, each of them will afford an an. extraordinary Restraints, upon other Prin-nual revenue, in the one case, of L.100,000. ciples. and, in the other, of L. 1,000,000, to the inhabitants of the other. In the foregoing part of this chapter, I have endeavoured to show, even upon the principles of the commercial system, how unnecessary it is to lay extraordinary restraints upon the importation of goods from those countries with which the balance of trade is sup posed to be disadvantageous. If their trade should be of such a nature, that one of them exported to the other nothing but native commodities, while the returns of that other consisted altogether in foreign goods; the balance, in this case, would still be supposed even, commodities being paid for with commodities. They would, in this Nothing, however, can be more absurd than case too, both gain, but they would not gain this whole doctrine of the balance of trade, equally; and the inhabitants of the country upon which, not only these restraints, but al- which exported nothing but native commodimost all the other regulations of commerce, ties, would derive the greatest revenue from are founded. When two places trade with one the trade. If England, for example, should another, this doctrine supposes that, if the ba-import from France nothing but the native lance be even, neither of them either loses or commodities of that country, and not having gains; but if it leans in any degree to one such commodities of its own as were in deside, that one of them loses, and the other mand there, should annually repay them by gains, in proportion to its declension from the exact equilibrium. Both suppositions are false. A trade, which is forced by means of bounties and monopolies, may be, and commonly is, disadvantageous to the country in whose favour it is meant to be established, as to those of England. The whole French caI shall endeavour to show hereafter But that trade which, without force or constraint, is naturally and regularly carried on between any wo places, is always advantageous, though hot always equally so, to both. By advantage or gain, I understand, not the increase of the quantity of gold and silver, but that of the exchangeable value of the anVnual produce of the land and labour of the country, or the increase of the annual revenue of its inhabitants. sending thither a large quantity of foreign goods, tobacco, we shall suppose, and East India goods; this trade, though it would give some revenue to the inhabitants of both countries, would give more to those of France than pital annually employed in it would annually be distributed among the people of France; but that part of the English capital only, which was employed in producing the English commodities with which those foreign goods were purchased, would be annually distributed among the people of England. The greater part of it would replace the capitals which had been employed in Virginia, Indostan, and China, and which had given revenue and maintenance to the inhabitants of those disIf the balance be even, and if the trade be- tant countries. If the capitals were equal, or tween the two places consist altogether in the nearly equal, therefore, this employment of exchange of their native commodities, they the French capital would augment much more will, upon most occasions, not only both gain, the revenue of the people of France, than that but they will gain equally, or very nearly of the English capital would the revenue of equally; each will, in this case, afford a mar the people of England. France would, in this ket for a part of the surplus produce of the case, carry on a direct foreign trade of conother; each will replace a capital which had sumption with England; whereas England been employed in raising and preparing for would carry on a round-about trade of the the market this part of the surplus produce of same kind with France. The different effects the other, and which had been distributed of a capital employed in the direct, and of among, and given revenue and maintenance one employed in the round-about foreign trade to, a certain number of its inhabitants. Some of consumption, have already been fully expart of the inhabitants of each, therefore, will plained. directly derive their revenue and maintenance There is not, probably, between any two from the other. As the commodities exchanged, countries, a trade which consists altogether in too, are supposed to be of equal value, so the the exchange, either of native commodities two capitals employed in the trade will, upon on both sides, or of native commodities on most occasions, be equal, or very nearly equal; one side, and of foreign goods on the other. and both being employed in raising the native commodities of the two countries, the revenue and maintenance which their distribution will afford to the inhabitants of each will be equal, or very nearly equal. This revenue and maintenance, thus mutually afforded, will be greater or smaller, in proportion to the extent of their Almost all countries exchange with one an other, partly native and partly foreign goods That country, however, in whose cargoes there is the greatest proportion of native, and the least of foreign goods, will always be the principal gainer. If it was not with tobacco and East India goods, but with gold and silver, that England to be exhausted of gold and silver by this anpaid for the commodities annually imported nual exportation of those metals, than one from France, the balance, in this case, would which does not grow tobacco by the like an. be supposed uneven, commodities not being nual exportation of that plant. As a country paid for with commodities, but with gold and which has wherewithal to buy tobacco will silver. The trade, however, would in this never be long in want of it, so neither wil case, as in the foregoing, give some revenue one be long in want of gold and silver which the inhabitants of both countries, but more has wherewithal to purchase those metals. Yo the inhabitants of both countries, England. It is a losing trade, it is said, whicn a work. It would give some revenue to those of Eng-man carries on with the alehouse; and the land. The capital which had been employed trade which a manufacturing nation would in producing the English goods that pur- naturally carry on with a wine country, may chased this gold and silver, the capital which be considered as a trade of the same nature. had been distributed among, and given reve- I answer, that the trade with the alehouse is nue to, certain inhabitants of England, would not necessarily a losing trade. In its own hereby be replaced, and enabled to continue nature it is just as advantageous as any other, bat employment. The whole capital of Eng- though, perhaps, somewhat more liable to be land would no more be diminished by this abused. The employment of a brewer, and exportation of gold and silver, than by the even that of a retailer of fermented liquors, exportation of an equal value of any other are as necessary divisions of labour as any goods. On the contrary, it would, in most other. It will generally be more advantacases, be augmented. No goods are sent geous for a workman to buy of the brewer the abroad but those for which the demand is sup-quantity he has occasion for, than to brew it posed to be greater abroad than at home, and himself; and if he is a poor workman, it will of which the returns, consequently, it is ex- generally be more advantageous for him to pected, will be of more value at home than buy it by little and little of the retailer, than the commodities exported. If the tobacco a large quantity of the brewer. He may no which in England is worth only L. 100,000, doubt buy too much of either, as he may of when sent to France, will purchase wine which any other dealers in his neighbourhood; of is in England worth L. 110,000, the exchange the butcher, if he is a glutton; or of the drawill augment the capital of England by per, if he affects to be a beau among his comL. 10,000. If L.100,000 of English gold, in panions. It is advantageous to the great body the same manner, purchase French wine, of workmen, notwithstanding, that all these which in England is worth L. 110,000, this trades should be free, though. this freedom exchange will equally augment the capital of may be abused in all of them, and is more VEngland by L. 10,000. As a merchant, who likely to be so, perhaps, in some than in others. has L. 110,000 worth of wine in his cellar, is Though individuals, besides, may sometimes a richer man than he who has only L. 100,000 ruin their fortunes by an excessive consumpworth of tobacco in his warehouse, so is he tion of fermented liquors, there seems to be likewise a richer man than he who has only no risk that a nation should do so. Though LAL.100,000 worth of gold in his coffers. He in every country there are many people who can put into motion a greater quanuty of in- spend upon such liquors more than they can dustry, and give revenue, maintenance, and afford, there are always many more who spend employment, to a greater number of people, less. It deserves to be remarked, too, that if than either of the other two. But the capital we consult experience, the cheapness of wine of the country is equal to the capital of all its seems to be a cause, not of drunkenness, but different inhabitants; and the quantity of in- of sobriety. The inhabitants of the wine dustry which can be annually maintained in countries are in general the soberest people of it is equal to what all those different capitals Europe; witness the Spaniards, the Italians, can maintain. Both the capital of the coun- and the inhabitants of the southern provinces try, therefore, and the quantity of industry of France. People are seldom guilty of exwhich can be annually maintained in it, must cess in what is their daily fare. Nobody afgenerally be augmented by this exchange. It fects the character of liberality and good felwould, indeed, be more advantageous for lowship, by being profuse of a liquor which is England that it could purchase the wines of as cheap as small beer. On the contrary, in France with its own hardware and broad cloth, the countries which, either from excessive heat than with either the tobacco of Virginia, or or cold, produce no grapes, and where wine the gold and silver of Brazil and Peru. A consequently is dear and a rarity, drunkenness direct foreign trade of consumption is always is a common vice, as among the northern na more advantageous than a round-about one. tions, and all those who live between the troBut a round-about foreign trade of consump-pics, the negroes, for example on the coast of tion, which is carried on with gold and silver, does not seem to be less advantageous than any other equally round-about one. Neither is a country which has no mines, more likely Guinea. When a French regiment comes from some of the northern provinces of France, where wine is somewhat dear, to be quartered in the southern, where it is very cheap, the |