ised, either by taxation, or by the influx of the
precious metals, you prevent a part of the dead stock of the society
from being turned into active stock--you prevent a greater quantity of
industry from being employed. But this is the whole amount of the evil;
an evil never felt by those countries where the exportation of silver is
either allowed or connived at.

The exchanges between countries are at par only, whilst they have
precisely that quantity of currency which in the actual situation of
things they should have to carry on the circulation of their
commodities. If the trade in the precious metals were perfectly free,
and money could be exported without any expense whatever, the exchanges
could be no otherwise in every country than at par. If the trade in the
precious metals were perfectly free, if they were generally used in
circulation, even with the expenses of transporting them, the exchange
could never in any of them deviate more from par, than by these
expenses. These principles I believe are now no where disputed. If a
country used paper money not exchangeable for specie, and therefore not
regulated by any fixed standard, the exchanges in that country might
deviate as much from par, as its money might be multiplied beyond that
quantity which would have been allotted to it by general commerce, if
the trade in money had been free, and the precious metals had been used,
either for money, or for the standard of money.

If by the general operations of commerce, 10 millions of pounds
sterling, of a known weight and fineness of bullion, should be the
portion of England, and 10 millions of paper pounds were substituted, no
effect would be produced on the exchange; but if by the abuse of the
power of issuing paper money, 11 millions of pounds should be employed
in the circulation, the exchange would be 9 per cent. against England;
if 12 millions were employed, the exchange would be 16 per cent.; and if
20 millions, the exchange would be 50 per cent. against England. To
produce this effect it is not however necessary that paper money should
be employed: any cause which retains in circulation a greater quantity
of pounds than would have circulated, if commerce had been free, and the
precious metals of a known weight and fineness had been used, either for
money, or for the standard of money, would exactly produce the same
effects. Suppose that by clipping the money, each pound did not contain
the quantity of gold or