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mpared with existing ancient Stand
Exchequer bushel of 1091. Old Rufus.
of Henry VII. without rim.
of Elizabeth, 1601.
3.6 Winchester bushel at the Exchequer.
by act of 13 William III.
Note, on the proportional value of the pound sterling and the dollar.
The whole amount of the commercial intercourse between two countries, within a given time, say a year, may be considered as the barter of an equivalent portion of their respective productions. The balance of trade is the excess of exportation from the one, and of importation to the other, beyond the equivalent value of specific articles of the trade.
In the practice of commerce, all the articles of the trade are valu. ed in the established currencies of both countries ; each article first in the country from which it is exported, and secondly in that to which it is imported. The balance of the trade must be discharged by some article of equal agreed value to both parties. There are two precious metals gold and silver, which, by the common consent of all commercial nations, are such articles; and there is no other.
These two metals constitute also the principal basis of the money, or specie currency of all commercial countries; and as they are variously modified by weight and purity in the coins of different countries, a common standard must be resorted to, by which the relative value of the coins of the two countries may be ascertained and settled in their commercial dealings with each other.
Some one specific coin or money of account on each side is assumed between which a proportional value is established as the conventional par of exchange. Thus, between the United States and Great Britain, the dollar of the former and the pound sterling of the latter, with their respective subdivisions, are assumed as the standards of comparative value, and the conventional proportion of value between them, commonly used in their commercial intercourse, and sanctioned by several acts of Congress, has settled the par of exchange at one pound sterling for four dollars and forty-four cents in the United States, while, in Great Britain, it is at four shillings and six pence for the dollar.
First, That here are already two different bases of exchange the American, which assumes the pound sterling for the unit, and estimates it in the proportional parts of the dollar, and the English, which assumes the dollar for the unit, and values it in the proportional parts of the pound sterling. This would have been immaterial, if the calculations upon which the exchange was originally settled, had been correct. But the results of the two estimates are not the same. If the dollar is worth four shillings and six pence, the pound sterling is equivalent to four dollars forty-four cents four milles, and an endless fraction of four decimal parts. If the pound sterling is worth four dollars and forty-four cents, four shillings and six pence, or fifty-four pence, are equal only to ninety-nine cents and nine milles. The difference is of one mille in a dollar, or one thousand dollars in a million.
Secondly, That the elements of this exchange, the two objects of comparative estimated value, are not homogeneous. The dollar of the United States is at once a money of account, and a specific silver coin, while the pound sterling, at the time when the exchange was settled, was only a money of account, having no coined representative in one piece of either of the precious metals. Since that time, indeed, the pound sterling has found a spurious representative in paper notes of the Bank of England, and of late a more truly sterling representative in the piece of gold which is called a sovereign. So that the pound sterling in England is an indefinite term, represented by three different materials, that is, in gold, by the sovereign, or by the guinea, with deduction of a shilling; in silver, by twenty shillings, or four crowns, or in paper, by a bank note.
In the United States, their coins, both of gold and silver, are legal tenders for payments to any amount; but in England silver coin is a legal tender for payments only to an amount not exceeding forty shillings, and by the restrictions of cash payments by the bank, the only actual currency, the only material in which an American merchant having a debt due to him in England can obtain payment is Bank of England paper. So that at this time the materials of exchange between the United States and England are, on the side of the United States gold or silver, on the side of Great Britain, bank paper.
Suppose an American merchant has a debt due to him in England, which is remitted to him in gold bullion, or coins of the English standard, say £10,000. He receives of pure gold 196 pounds, 2 ounces, 3 pennyweights, 22 grains, for which, when coined at the mint of the United states, he receives 45,657 dollars 20 cents. The pound sterling, therefore, yields him 4 dollars 56.572 cents. And such is the value of the pound sterling, if the par of exchange be estimated in gold, according to the standard of purity common to both countries.
If the payment should be made in silver bullion, at 66 shillings the pound troy weight, according to the present English standard of silver coinage, he would receive only 43,489 dollars and 43 cents, and the pound sterling would only nett him 4 dollars 34.8943 cents.
The pound sterling, therefore, estimated in gold, is worth
$4 56.5720 In silver 4 34.8943
Added to $4 34.8943
And deducted from 4 56.5720 Makes what is called the medium par of exchange, $4 45.7331. It is contended by some writers upon the commercial branch of political economy, that this medium is the only equitable par of exchange; but this is believed to be an error. It is, perhaps, of as little im
portance what the conventional par of exchange is, as whether a piece of linen or of broadcloth should be measured by a yard or an ell. The actual exchange is never regulated by the medium or any other par, but by the relative value of bullion in the two countries at the time of the transaction ; by the relative proportions between the value of gold and silver established in their respective laws; by the prohibitions of exportation of bullion sometimes existing, and the duties upon its exportation levied at others; by the laws, which, in some countries, make gold alone, in others silver alone, in others again both silver and gold, legal tenders for the payment of debts ; by the existing condition of the commerce of the two countries, and of each of them with all the rest of the world; and last, and most of all, by the substitution of paper currency instead of the precious metals, in one or both of the countries, and the existing depreciation of the paper.
But the law of the United States, first enacted on the 31st July, 1789, sect. 18, prescribing that, for the payment of duties, the pound sterling of Great Britain shall be estimated at 4 dollars 44 cents, (U. S. Laws, Bioren's edition, vol. 2, page 22] is not so indifferent. This provision of the law has been continued in both the collection laws, since enacted, and, by that of 2d March 1799, [3 U. S. Laws, sect. 61, page 193] is still in force.
By section 30 of the act of Congress of 31st July, 1789, the duties were made receivable in gold and silver coin only; the gold coins of France, England, Spain, and Portugal, and all other gold of equal fineness, at 89 cents per pennyweight; the Mexican dollar at 100 cents; the crowns of France and England at one dollar and 11 cents each, and all silver coins of equal fineness at one dollar and eleven cents per ounce.
As this was one of the first experiments of legislation under the present constitution of the United States, it is unnecessary to make upon it many of the remarks which suggest themselves ; but, with regard to those of its provisions which are still in force, let us observe,
That, on the 31st July, 1789, there had been no suspension of specie payments by the Bank of England. The pouad sterling, if paid in gold, yielded 113.0014 grains of pure metal. If paid in silver, 1718.72 grains of pure silver.
That the dollars and cents in which this pound sterling was estimated by the act of 31st July, 1789, were not the dollars and cents of the standard now established, but of the standard established by the resolution of the old Congress of 8th August, 1786, and their ordinance of 16th October of the same year, (1 U. S. Laws, page 646] by which the dollar was to contain 375.64 grains of pure silver, and the eagle 246.268 grains of pure gold.
This dollar had been assumed as the money unit of the United States, upon a report from the Board of Treasury, dated 8th April, 1786, from which report it appears that the board intended and believed that it would be of equal value with the Spanish dollar, then