that the ordinary state of debt and credit is in favor of that country which feems to have, or which is supposed to have, the ordinary courfe of exchange in its favor: or, in other words, the real exchange may be, and, in fact, often is fo very different from the computed one, that from the course of the latter no certain conclufion can, upon many occafions, be drawn concerning that

of the former.

When for a fum of money paid in England, containing, according to the standard of the English mint, a certain number of ounces of pure filver, you receive a bill for a sum of money to be paid in France, containing, according to the standard of the French mint, an equal number of ounces of pure filver, exchange is faid to be at par between England and France. When you pay more, you are supposed to give a premium, and exchange is faid to be against England, in favor of France. When you pay lefs, you are supposed to get a premium, and exchange is faid to be against France, and in favor of England. · { ⠀⠀

But, firft, we cannot always judge of the value of the current money of different countries by the standard of their respective mints. In fome it is more, in others it is lefs worn, clipt, and otherwise degenerated from that standard. But the value of the current coin of every country, compared with that of any other country, is in proportion not to the quantity of pure filverwhich it ought to contain, but to that which it actually does contain. Before the reformation of

the filver coin in king William's time, exchange between England and Holland, computed, in the ufual manner, according to the ftandard of their refpective mints, was five-and-twenty per cent. against England. But the value of the current coin of England, as we learn from M. Lowndes, was at that time rather more than five-and-twenty per cent. below its standard valué. The real exchange, therefore, may even at that time have been in favor of England, notwithstanding the computed exchange was fo much against it; a fmaller 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 Englifh gold coin, much lefs 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 favor. Since the reformation of the gold coin, the exchange has been conftantly in favor of England, and against France.

Secondly, in fome countries, the expenfe 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 eyen derives some revenue from the coinage. In England, it is defrayed by the government, and if you carry a pound weight of ftandard filver to

1

the mint, you get back fixty-two fhillings, containing 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 expense 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 containing 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 standards of their refpective 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 consequently 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 expense 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 favor of France. If lefs than this was paid, the real exchange might be in favor of England, while the computed was in favor of France.

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, Lifbon, 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 thoufand guilders in the bank of Amfterdam, for example, are of more value than a thousand guilders of Amfterdam currency. The difference between them is called the agio of the bank, which, at Amsterdam, is generally about five per cent. Suppofing the current money of the two countries equally near to the standard of their refpective 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 favor of that which pays in bank money, though the real exchange fhould be in favor of that which" pays in current money; for the fame reafon that' the computed exchange may be in favor of that which pays in better money, or in money nearer to its own ftandard, though the real exchange fhould be in favor 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

coin, it has been in favor of London even with those places. The computed exchange has generally been in favor of London with Lifbon, Antwerp, Leghorn, and, if you except France, I believe, with moft other parts of Europe that pay in common currency; and it is not improbable that the real exchange was so too.

Digreffion concerning Banks of Depofit, particu larly that of Amsterdam.

HE 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 otherwise degraded below its ftandard value, the ftate by a reformation of its coin can effectually re-establish its currency. But the currency of a small state, such as Genoa or Hamburgh, can seldom confift altogether in its own coin, but must be made up, in a great meafure, of the coins of all the neighbouring states with which its inhabitants have a continual intercourse. Such a ftate, 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 so 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.