of Mr. Lowndes, who was one of the few individuals in congress who had studied the subject of the coinage, appeared to suspend the action of that body in regard to the alteration of the mint regulations, and although several propositions were at different periods subsequently submitted, yet nothing was done until the 28th of June, 1834, when the law usually known as the gold bill was passed. A short history of these propositions was drawn up by the author in the last named year, and as it may be of service to those who have a desire to study the subject, extracts therefrom have been placed in the Appendix marked B.

In connection with this subject, it may not be amiss to remark, that the proportion of one to fifteen or sixteen in the relative value of gold to silver, does not by any means warrant the inference that there is just fifteen or sixteen times as much silver as gold in existence. Adam Smith advances conclusive arguments to show that the quantity of silver at the time he wrote was far greater than the proportion which it bore to gold called for, and indeed any one may be convinced of this fact if he will reflect upon the very small value of gold compared with silver, that is consumed in plate and ornaments. The relative value of no two commodities determines their relative quantities, and it is easy to be perceived, that if a barrel of flour were worth ten dollars, and a box of Spanish segars twenty dollars, it would not necessarily follow that there were in existence only twice as many barrels of flour as there were boxes of segars.

CHAPTER IV.

OF THE BALANCE OF TRADE, OR OF THE CAUSES WHICH OCCASION THE TRANSMISSION OF THE PRECIOUS METALS FROM ONE COUNTRY TO ANOTHER.

In a preceding chapter, it was stated that the precious metals are distributed by the operations of commerce throughout the trading world, in such a way as to establish what is called a general level of currencies. I shall now proceed to show the mode by which this distribution is accomplished, which is according to the laws of what is termed the balance of trade.

It must be manifest to every observant mind, that even under the most perfect level which the currencies of all commercial nations can attain, that is, under such a state of things as may be imagined where no motive of profit could lead to the importation or exportation of the precious metals, except as relates to the annual production of the mines, the prices of other commodities will not be in all countries the same. Were this the case there could be no commerce, for the only object of commerce is to transport commodities from countries where they can be purchased for a comparatively small quantity of gold and silver; that is, at a comparatively low price; to other countries where they can be sold for a greater quantity of gold and silver; that is, at a higher price.* Any one can

The reader will be pleased to keep in mind, that price in political economy is the value of a thing expressed in money only, and therefore differs from the term value, which expresses the worth of things as compared with other things than gold and silver. Thus we would say that five dollars is the price of a hat, where money is to be paid for it, but we would say that five pairs of shoes are the value of a hat, if the hat is to be paid for in that many shoes.

perceive that iron would not be imported into the United States from England unless it could be sold here at a higher price than it cost at the place of production, and that cotton would not be exported from the United States to Europe unless it could be sold there at a higher price than it could be purchased for here. The prices of different articles, it is self-evident, in every country, are regulated by causes peculiar to themselves, such as the soil, climate, wages of labor, degree of skill required, extent of population, capital, and taxation; and this it is which sets in motion the whole machinery of commerce. Even in the case of barter with savage nations, although gold and silver be absent, yet the trader has reference in his calculations to the metallic standard, in order to enable him to determine how much he can afford to give of what he has to dispose of, in exchange for the commodities which he is to receive in payment.

The foreign commerce of a nation is usually of two kinds. The first is that wherein the export and import trade are carried on by the same individual, in the same vessel, and in the prosecution of the same voyage. Such is the trade of the United States with most parts of the West Indies, South America, Africa, some parts of India, and some other countries. The imports from those regions consist of the articles purchased with the proceeds of the outward cargoes, and this trade is strictly an exchange of equal values, and although it may exhibit what is called a balance of trade on one side or the other, yet it calls for no payment. The same is true of the whale and other fisheries, wherein although the amount imported may farexceed in value the amount exported, yet no balance of trade is left to be paid, the difference being made up by the value of the labor expended by the crew, of the freight earned by the ship, and by the profits of the enterprise.

The second trade is that wherein the exports and imports are made by different classes of merchants,

without any previous consultation or agreement with one another. Such is our trade with Great Britain and most of the other maritime nations of Europe. The exporters of cotton, rice, tobacco, flour, and the other commodities which form the bulk of our exports to Europe, are very rarely the same individuals who import the dry goods, hardware, and the infinite variety of other manufactures and productions which constitute the bulk of our imports from Europe. The former ship their cargoes to foreign countries, without any knowledge of the quantity or value of the commodities which the importing merchants intend to order from abroad, and the latter send their orders abroad for goods without any knowledge of the amount for which the exported cargoes will be sold. The former class, that is, the exporters, get paid for their cargoes by drawing bills of exchange upon the proceeds in the hands of their foreign correspondents; and the latter class, or the importers, pay for their goods by purchasing and remitting these same bills.

Under a course of operations carried on by so many independent traders, it would indeed be miraculous if the exports and imports should be so exactly equal as to leave no balance one way or the other. In truth, experience shows that the exports will sometimes exceed the imports, and that sometimes the imports will exceed the exports, leaving a balance of trade in the former case in favor of the country, and in the latter case against it.

Let us now suppose, that in a given country where the currency is at its proper level, where no gold or silver flows out or flows in, and where consequently exchange would be at par, an excess of imports should take place. What would be the first effect? The answer must be, a demand for more bills of exchange than are for sale in the market, the effect of which is a rise in the rate of exchange above par, which obviously holds out an inducement for the exportation of commodities for which a sufficient inducement did not

previously exist. A rise in the exchange of one or two per cent. may sometimes determine shipments, which without such rise would not have been thought of; not that so small a profit would of itself induce shipments, but because one or two per cent. added to the profit which might have been made without such addition, would elevate the gain to the height of the average mercantile rate of profit requisite to warrant a shipment. A profit in advance is a powerful stimulus to exportation, especially where two thirds or three fourths of the capital employed in the purchase of the exported commodities can be immediately replaced by the sale of a bill of exchange. The additional demand, therefore for bills, to assist towards paying the balance is met, we will suppose, at once by additional exports, it sometimes even happening that the remitting merchant, to save, as it is called, the premium on bills, becomes himself an exporter.

Thus far it is manifest that the balance of trade occasions no exportation of the precious metals, and that consequently the general level ef currencies is not disturbed. But it may happen that the increased demand for exportable commodities arising from the augmented premium on exchange, may raise their price to an extent equal to the rise in the price of bills, and thus put an end to their exportation, by taking away the additional profit. A new expedient is then resorted to by capitalists to take advantage of the premium on exchange, which is to obtain a credit abroad upon which they may draw bills, under the calculation that at some future, not very distant period, they will be able to replace the funds at a lower rate of exchange, and thereby realise a profit by the operation. The transmission, too, of public securities, bank, railroad, and canal stocks, and the extension of credits by the consent of the foreign creditors upon allowing interest for the extended term, are all well known levers in the mechanism of trade, (to say nothing of bankruptcy), by which the tendency of an unfavora