IV. BOOK the filver coin in King William's time, exchange between England and Holland, computed, in the ufual manner, according to the standard of their respective mints, was five and twenty per cent. against England. But the value of the current coin of England, as we learn from Mr. Lowndes, was at that time rather more than five and twenty per cent. below its standard value. The real exchange, therefore, may even at that time have been in favour of England, notwithftanding the computed exchange was fo much against it; a smaller number of ounces of pure filver, actually paid in England, may have purchased a bill for a greater number of ounces of pure filver 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 worn 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 conftantly in favour of England, and against France. Secondly, in fome countries, the expence 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 fome revenue from the coinage. In England it is defrayed by the government, and if you carry a pound weight of standard filver to the III. the mint, you get back fixty-two fhillings, con- CHA P. taining a pound weight of the like ftandard filver. In France, a duty of eight per cent. is deducted for the coinage, which not only defrays the expence of it, but affords a fmall revenue to the government. In England, as the coinage cofts 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 fame manner as to that of wrought plate. A fum of French money, therefore, containing a certain weight of pure filver, is more valuable than a fum of English money contain、 ing an equal weight of pure filver, and must require more bullion, or other commodities, to purchase it. Though the current coin of the two countries, therefore, were equally near the ftandards of their respective mints, a fum of English money could not well purchase a fum of French money, containing an equal number of ounces of pure filver, nor confequently a bill upon France for fuch a fum. If for fuch a bill no more additional money was paid than what was fufficient to compenfate the expence of the French coinage, the real exchange might be at par between the two countries, their debts and credits might mutually compenfate one another, while the computed exchange was confiderably in favour of France. If lefs than this was paid, the real exchange might be in favour of England, while the computed was in favour of France, Thirdly, BOOK Thirdly, and laftly, in fome places, as at Amfterdam, Hamburgh, 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 fame nominal fum of common currency. A thousand guilders in the bank of Amfterdam, for example, are of more value than a thoufand guilders of Amfterdam currency. The difference between them is called the agio of the bank, which, at Amfterdam, is generally about five per cent. Suppofing the current money of the two countries equally near to the ftandard 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 fhould be in favour of that which pays in current money; for the fame reason that the computed exchange may be in favour of that which pays in better money, or in money nearer to its own ftandard, 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 Amfterdam, Hamburgh, 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 III. coin, it has been in favour of London even with CHA P. thofe 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 fo too. Digreffion concerning Banks of Depofit, particularly concerning that of Amfterdam. THE currency of a great ftate, fuch as France or England, generally confifts almoft entirely of its own coin. Should this currency, therefore, be at any time worn, clipt, or otherwife degraded below its ftandard value, the ftate by a reformation of its coin can effectually re-establish its currency. But the currency of a fmall state, fuch as Genoa or Hamburgh, can feldom confift altogether in its own coin, but must be made up, in a great measure, of the coins of all the neighbouring ftates with which its inhabitants have a continual intercourfe. 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 fum, of what is in its own nature fo uncertain, muft render the exchange always very much against such a state, its currency being, in all foreign ftates, neceffarily valued even below what it is worth. BOOK In order to remedy the inconvenience to which this disadvantageous exchange muft have fubjected their merchants, fuch small states, when they began to attend to the interest of trade, have frequently enacted, that foreign bills of exchange of a certain value fhould be paid, not in common currency, but by an order upon, or by a transfer in the books of a certain bank, established upon the credit, and under the protection of the ftate; this bank being always obliged to pay, in good and true money, exactly according to the ftandard of the state. The banks of Venice, Genoa, Amfterdam, Hamburgh, and Nuremberg, feem to have been all originally established with this view, though some of them may have afterwards been made fubfervient to other purposes. The money of fuch banks being better than the common currency of the country, neceffarily bore an agio, which was greater or finaller, according as the currency was fuppofed to be more or lefs degraded below the standard of the ftate. The agio of the bank of Hamburgh, for example, which is faid to be commonly about fourteen per cent. is the fuppofed difference between the good standard money of the state, and the clipt, worn, and diminished currency poured into it from all the neighbouring states. Before 1609 the great quantity of clipt and worn foreign coin, which the extenfive trade of Amfterdam brought from all parts of Europe, reduced the value of its currency about nine per cent. below that of good money fresh from the |