prevent
the importation of money, the exchange with France, Holland, and Spain,
might be 5, 10, or 20 per cent. against those countries.

Whenever the current of money is forcibly stopped, and when money is
prevented from settling at its just level, there are no limits to the
possible variations of the exchange. The effects are similar to those
which follow, when a paper money, not exchangeable for specie at the
will of the holder, is forced into circulation. Such a currency is
necessarily confined to the country where it is issued: it cannot, when
too abundant, diffuse itself generally amongst other countries. The
level of circulation is destroyed, and the exchange will inevitably be
unfavourable to the country where it is excessive in quantity: just so
would be the effects of a metallic circulation, if by forcible means, by
laws which could not be evaded, money should be detained in a country,
when the stream of trade gave it an impetus towards other countries.

When each country has precisely the quantity of money which it ought to
have, money will not indeed be of the same value in each, for with
respect to many commodities it may differ 5, 10, or even 20 per cent.,
but the exchange will be at par. One hundred pounds in England, or the
silver which is in 100_l._, will purchase a bill of 100_l._, or an
equal quantity of silver in France, Spain, or Holland.

In speaking of the exchange and the comparative value of money in
different countries, we must not in the least refer to the value of
money estimated in commodities, in either country. The exchange is never
ascertained by estimating the comparative value of money in corn, cloth,
or any commodity whatever, but by estimating the value of the currency
of one country, in the currency of another.

It may also be ascertained by comparing it with some standard common to
both countries. If a bill on England for 100_l._ will purchase the same
quantity of goods in France or Spain, that a bill on Hamburgh for the
same sum will do, the exchange between Hamburgh and England is at par;
but if a bill on England for 130_l._, will purchase no more than a bill
on Hamburgh for 100_l._, the exchange is 30 per cent. against England.

In England 100_l._ may purchase a bill, or the right of receiving
101_l._ in Holland, 102_l._ in France, and 105_l._ in Spain. The
exchange with England is, in that case, said to be 1 per cent. against
Holland, 2 per cent. against France, and 5 per c