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comparatively small amount, and foreign exchanges high, the rate of discount sometimes falls to per cent."

The third says,

"The discount varies in ordinary times between 3 and 14 per cent. per month. For signatures in good repute, the current rate scarcely ever exceeds 1 per cent."

The fourth says,

"The discount is 1 per cent. a month, and frequently on first rate paper of merchants or retailers, but very often the notes of planters cannot be cashed at less than 2 per cent. a month.”

The fifth says,

"The ordinary discount upon good paper is from to 1 per cent. I have sometimes known the discount in our market to be § per cent., and rarely above 14. It may be said that there are every year two rates of discount in our market; the one from January to June, when the rate is from to 1 per cent., the other from July to December, when it is from to ."

Fourth. That at the market rate of discount there is never any difficulty to obtain money.

Fifth. That bills of exchange can always be sold at the current rate.

Sixth. That no such thing as a general scarcity of money is known.

Seventh. That individuals occasionally fail, but that such a thing as a general discredit may be said not to be known. The only exceptions were in 1836, occasioned by local speculation on sugars, and in 1829, when there was an extensive failure of the "retail dealers in dry goods, who had formed themselves into companies, the individuals of which made up for each other's deficiencies. In this way they acquired great credit, and were enabled to make purchases with long terms of credit, extending from six to twelve months. The less regular trusted to the

more, insomuch that the latter, after a series of increasing abuses, denied their liability for the former, and an almost general suspension of payments took place among them."

Eighth. That the ordinary derangements of commerce in foreign countries produce no effect, except upon the parties immediately connected with it, as drawers or endorsers of protested bills. A violent and general commercial crisis, however, such as that which took place in the United States in 1837, exercises a temporary influence. That crisis was felt in Cuba, as it was, in fact, almost over the whole commercial world, although the answers differ in regard to its intensity, one affirming that it did not "shake credit and confidence to such a degree as to stop the current business in those branches on which it weighed the most directly."

CHAPTER VII.

OF THE DIFFERENT KINDS OF DEPRECIATION TO WHICH A METALLIC CURRENCY IS LIABLE.

IN discussions upon a metallic currency, the term depreciation or diminution of value, is frequently employed, and as it is necessary that the reader should be acquainted with the different kinds of depreciation to which reference may be had, they will be here pointed out.

The first is that general and gradual diminution in the value of the precious metals, which has resulted, and which may possibly hereafter result, from the discovery of new mines, or from the discovery of economical modes of extracting and refining the ore, by which the aggregate mass of gold and silver in the

commercial world has been, or may be, augmented faster than the demand. The most remarkable depreciation resulting from this cause that has ever taken place, was that which commenced with the discovery of the mines of America about the middle of the sixteenth century, and which has been generally considered to have regularly continued, with some occasional interruptions, down to the present period."

The second species of depreciation is that to which the metallic currency of a country may occasionally be for a short time subject, by an extraordinary importation of coin, not in the course of its regular distribution throughout the commercial world, but by some unusual event. A memorable example of this species of depreciation occurred in the United States somewhere about the year 1805, at which time there was war between Great Britain and Spain. The Spanish government, not finding it easy to evade the British cruisers in the Gulf of Mexico, which closely watched the exports of coin from Vera Cruz, made a special contract with the house of Hope & Co. of Amsterdam, of whom it had obtained a loan, by which authority was furnished to that house to receive in Mexico large amounts. In order to procure this coin, bills on Vera Cruz were sold in the United States by Hope & Co. through their agent, David Parrish, upon terms favorable to the purchasers, with the privilege of importing cargoes of merchandise into Mexico, to a class of responsible merchants, who fitted out fast sailing vessels, which could elude the British ships of war, and by means of that arrangement, many millions of Spanish dollars found their way into the United States, not called for in the ordinary course of trade, and not merely in transitu on its way to Europe, for most of it was here exchanged

* Those who are desirous of being particularly informed on this subject, are referred to Smith's Wealth of Nations, Book I, chap. xi, Part III, where they will find the matter examined with great care and ability.

for coffee and other merchandise, and thus entering for a time into the circulation of the country, occa-sioned a depreciation of the currency to an extent plainly discernible.

A third species of depreciation is that which results from the wear and tear of the coins of a country, by which they lose in weight, and consequently in value. In some countries this diminution in the weight of the coins has been permitted to exist to such an extent before a new coinage has been ordered, as materially to affect the rate of exchange, the par of which calls for ounce against ounce, and consequently in such cases, the true par has differed from the nominal par, precisely to an extent equal to the depreciation.

A fourth species of depreciation is that which arises from the frauds of governments, by which their coins, whilst they retain the same denomination, are diminished in weight or in purity, or in both, so as to contain a less quantity of gold or silver in them than before, whilst they are declared to be legal tenders for the discharge of a debt for an equal number of pieces, contracted before the alteration took place. Many discreditable transactions of this species of fraud might be enumerated, amongst which are the following:

The successive frauds in France by which the livre or pound of silver has been reduced to the livre or franc, equivalent to less than one-fifth part of a Spanish dollar.

The successive frauds in England, by which the pound of standard silver, originally coined into twenty equal parts, called shillings, has been coined into sixty-six equal parts, also called shillings, of which twenty are made a legal tender for the payment of a debt contracted at a time when twenty shillings contained a pound of silver.

The recent fraud practised in the United States by the act of 28th June, 1834, by which the gold coin

called the eagle was reduced in weight and deteriorated in purity. Prior to that year the eagle contained 247 grains of pure gold. By that act it was reduced to 232 grains of pure gold. Prior to that act its standard was twenty-two carats, that is, eleven parts of pure metal to one of alloy. By that act its standard was reduced to about 21.58 pure metal to 2.42 of alloy, the two operations reducing its value 68 cents, that is, from ten dollars to nine dollars 32 cents, whilst it was made a legal tender for all debts contracted before the 28th of June, 1834, as well as for those contracted after that date for ten dollars. By the act of 18th January, 1837, this fraud was slightly rectified, by augmenting the weight of pure gold in the eagle to 232 grains, as will be seen in the first note to Chapter 2, Book 4.

Changes in the intrinsic value of the coins of a country made in the manner here referred to, necessarily show themselves in the rate of the foreign exchanges. A palpable example is now before our eyes, in the case of the late alteration of our gold coinage, by which the par of exchange on England, when measured by gold, became altered to the whole extent of the diminished weight of pure metal in the eagle. As for example: prior to the 28th June, 1834, the British sovereign, which is the metallic pound sterling, if coined at our mint, would have produced $4.56 and a fraction in gold currency, and consequently the latter would have been the true par of one pound sterling measured by gold. Under the present coinage, the same British sovereign can be converted into $4.86 and a fraction in gold currency, and consequently the latter is now the true par of one pound sterling, as was particularly shown at p. 32.

A fifth species of depreciation is that which results from the creation of paper money as a substitute for gold and silver, which operates upon the value of the total existing mass throughout the commercial world, precisely like the discovery of new

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