Currency fallacies refuted, and paper money ... - University Library

64 PAPER MONEY VINDICATED.following remark ofDr. Adam Smith, made atthis period.'* By issuing too great a quantity of paper, ofwhich theexcess was continually returning inorder to be exchanged for gold and silver, theBank of England was, for many years together,obliged to coin gold to the extent of between800,000/. and 1,000,000/. a-year ;or, at an average,about 850,000/. For this great coinage,the Bank (in consequence of the worn and degradedstate into which the gold coin had fallena few years ago) was frequently obliged to purchasegold bullion at the high price of 4/. per oz.which it soon after issued in coin at 3/. 17*. lOhd'per oz., losing in this manner between 2| and 3per cent, upon the coinage of so very large asum. Though the Bank, therefore, paid noseignorage, though the government was properlyat the expense of the coinage, this liberality ofgovernment did not prevent altogether the expenseof the Bank. 'The circumstances in which the Bank wasplaced at this period, are precisely like those inwhich it was placed at the close of the latewar, when, in consequence of the great differencebetween the taxation and natural price ofcorn, compared with its natural price only, whichdifference had been represented by paper money,the Bank could not keep up the supply of gold,in exchange for notes, equal to the demand.In the former period, they bore the loss for