, as it might well be, for undergraduate
reading.

There is even a third hypothesis, to which Mr. Harris has directed my
attention. There may have been, before the note issue, an actual dearth
of currency, or a growing disproportion between the amount of the
currency and the work that it had to do. Mr. Harris infers from his
reading that such a stringency had been actually experienced in
Guernsey, and that it was for this reason that successive attempts were
made to prevent foreign coins from being gradually withdrawn from the
island. Such a stringency, the economist would infer, would produce a
progressive fall of prices, leading, by the silent operations of
external trade, to a gradual readjustment of the amount of currency in
circulation, by influx of gold from outside, until a new equilibrium had
been reached. If the Guernsey Government's note issue happened to be
made at such a moment, it may well have taken the place of the
hypothetical inflow of gold, so far as the island currency was
concerned. It may even have averted a fall in prices that would
otherwise have taken place, the economic effect on the consumer's
pockets being in that case much the same as if an actual rise had
occurred. But the Guernsey Government, on this hypothesis, would, by
substituting paper for gold, have gained for the community the
equivalent of the cost of the addition to the gold currency which
expanding population and trade were making necessary; and this gain was
expended in building the Market House.

Unfortunately we do not know how prices behaved to the Guernsey
housekeeper between 1815 and 1837. Perhaps another student will look
this up. What is interesting to us in this argument is the fact that,
_if prices generally did rise_, in consequence of the issue of the paper
money, even by only one half-penny in the shilling--if eggs, for
instance, sold twenty-four for a shilling, instead of twenty-five--this
represented a burden laid on the Guernsey people as consumers, exactly
analogous to a tax (say an octroi duty) of four per cent. on all their
purchases. On this hypothesis, which I carefully abstain from presenting
as anything but hypothetical, because we are unable to verify it by
comparison with the facts, the economist would say that this burden or
tax was what they imposed on themselves, and notably upon the poor, by
increasing the currency, instead of borrowing the capital from
elsewhere. Instead of paying interest on a loan