Observations On The Principles Which Regulate The Course Of Exchange: And On The Present Depreciated State Of The Currency (1810)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1810 Excerpt: ...would be no profit whatever, unless its depreciation were greater than the expenses attending its export; and therefore were there no other remedy for a depreciated currency than the export of specie, the nominal exchange might for any length of time continue unfavorable, to an extent somewhat less than the expenses of the transit of bullion. But the fact is, that no such continuance of an unfavorable exchange, even to that extent, can take place, so long as the currency is capable of being converted into bullion: for as soon as the depreciation is evinced by an elevation of" the liiarkef, price of bullion above the mint price, that moment the Conversion of the superfluous currency commences 5 and it depends upon the comparative demand for bullion, in this country, and the demand, upon the continent, whether the melted specie be exported or not. « It must be admitted, thatj as soon as the depreciation has exceeded the expenses of the transit of specie and thus afforded an option as to the mode of converting it into bullion, the foreign merchant by buying abroad the bills upon England, which will necessarily be at a discount, and ordering his correspondent to whom he sends the bills, to invest3 them in English specie, will be enabled to procure bullion at the English mint price. So that as long as he Can dispose of the bullion at that price abroad, he will derive a profit equal to the excess of the discount at which he has bought the English bills, above the expenses of the transit of specie. But it having been already shewn, that the profit on melting always exceeds the profit oh exporting, by the amount of the expenses attending the export, it can never be believed that a merchant would collect the current coin, and by exporting it, subject himse...