123

NO. XI.

CURRENCY.

CHARACTER PECUNIÆ EST EX JURE GENTIUM.

Molin. Tract. cont. Usur. de Mat. Monet. Quæst.

THE SUBJECT RESUMED.

In the whole of the internal policy of a state, there is no one subject which calls for more vigilant and unremitting attention on the part of the first Executive Magistrate and the Council of State, than the matter of coin and currency. It is an imperious duty upon them to devise such measures as may secure its purity, and render it an exact standard of va lue in the mutual transactions of the members of the commu. nity, and in the liquidation of dues to the state.

The Executive Council of Lower Canada being, by the Colonial Constitution, the Council of State of the province, this matter ought regularly to have been first referred to them; and there might have advantageously been submitted to them, for their consideration, any communication upon the subject, received by the Captain General and Commander in Chief, from the officer at the head of the military money department, who, as is well known, is the Commissary General of British North America. That officer was called upon, by his duty, to consider the subject, solely in relation to the interests and wants of his department. The Executive Council, as a Council of State, were bound to embrace and look at it, in

connection with the particular interests of the province, so far as its trade and public impositions were concerned, and the relation which the province bears to its parent state. It is, therefore, perhaps to be lamented, that instead of making this measure a purely military one, so as even to be influenced by the occasional absence of the gentleman at the head of the military money department, it had not been regularly brought under the consideration of his Majesty's Executive Council for the Province, who are, as high civil officers of the Government, responsible to the civil authorities for the due exercise of the civil powers confided to them. Besides that proper regard which such a course of proceeding would have shewn to these high depositaries of civil state authority, and which belongs to them of right, we should have been entitled to expect a mature plan to be subjected to the useful ordeal of a scrutinizing examination of it in the several branches of the Legislature.

According to the course which has been pursued, this subject of infinite difficulty, nicety and complexity, has been thrown afloat without chart or compass upon two deliberative bodies, to be guided by whomsoever should choose to volunteer to take the helm, and without any one public officer or public body being responsible for the measures proposed. Thus making those separate bodies or casual individuals in them, to perform the functions of a Council of State, and depriving the public of the benefit which it ought to have had, of having the subject in the first instance examined by one responsible public body, and the result of the labours of that public body, checked and revised by the two several branches of the Legislature. From the unfortunate course thus pursued it was hardly to be expected that any beneficial effects could follow, still no one could have foreseen the extent of the errors to which it gave birth.

There are some general principles which now assume the rank of axioms in that branch of the political economy which

relates to the coin and the currency, and which were either unknown or entirely overlooked by the gentlemen composing the Committee of the Assembly of 1830.

All admit that money can, under no circumstances, be made to circulate beyond its intrinsic value. Where the nominal value is increased beyond the intrinsic value, a corresponding increase takes place in the prices of all commodities, and amongst these of Bills of Exchange. On the other hand, where the nominal rate is less than the real rate of value, there also a corresponding change takes place in the price of commodities, and amongst these of Bills of Exchange also. It is further to be observed, that if there be two or more coins forming a part of the legal currency of the country, and the nominal value of the one be higher than the nominal value of the other, the latter will be displaced by the former, and entirely disappear, or be obtainable only by the payment of a premium.

These principles admitted, it is manifest that the holders of any given coins are not affected by any change in the currency, although the relation of creditor and debtor may be affected by the augmentation or diminution of the nominal rates of the coin, the holders of them with the solitary exception of the Fisc, are not affected thereby :-The Legislature assuming that the intrinsic value of the Pistareen was 10d. whilst its nominal value was 12d. took away not one iota of the intrinsic value of that piece. If eggs had been selling at 12d. previous to the passing of the law, they would ceteris paribus have sold for 10d. after its passing, but they would in both instances have been paid by the same identical quantity of silver or other precious metal, and it might have been of the same identical form. So also supposing no other circumstance to influence the rate of wages, or the rate of rent, or the price of commodities, the same quantity of labour, the same use of land and the same quantity of commodities could have been obtained for any given number of these pieces of silver called Pistareens, before as after the passing of this

law. In point of fact the holders of these Pistareens had given no more labour for them than was equal in value to the quantity of silver which they contained; in other words, no more labour than was equal to their intrinsic value. Now by the bill, as reported by the committee, all the pistareens in the country were to be called in and paid for out of the public chest, allowing 12d. for each of them, the whole to be thus paid for in coins whose nominal value did not exceed their intrinsic value. By this process there would have been given to each holder of a pistareen 12d. for that for which he had only given 10d. and the public chest would thus have been charged with the loss of 2d. upon each pistareen held by him, and a bonus to that amount would have been given to the holders of pistareens, without any consideration whatsoever. But the evil did not stop here-no machinery was attempted to be provided, perhaps none could successfully have been framed to prevent pistareens from coming in from abroad after the passing of the law. It is marvellous that gentlemen of the experience and knowledge of those who composed that committee did not see that the effect of paying out of the public chest 12d. for an article which was worth only 10d., was to make of that chest a reservoir of all the pistareens, not only in this and the adjoining British provinces, but also of the whole of this North American continent, nay, of the whole world, whence pistareens could be imported, and leave a profit on the 2d after paying the expenses of transport and insu

rance.

It has been seen that the diminution of the nominal value of the pistareen, to which we shall confine our attention at present, for the purpose of simplifying the subject, did not, as was erroneously supposed by the committee, affect the holders of pistareens. It did affect, however, a large class of persons in a manner whereof the committee appear to have been wholly unconscious; and this brings us to the second branch of the subject, which involves the consideration of the effect of any change in the denomination of coins upon the two

classes of persons, which comprise the whole, or nearly the whole, of human society-and these are debtors and creditors.

Any change in the denomination of coin materially affects all pre-existing engagements :-If the nominal value be augmented, the creditors-if it be diminished, the debtors, are prejudiced. Having received upon law 100 pistareens, which would be denominated £5, and being called upon to pay the law £5 after the passing of it, I should be constrained to give one-sixth more than I received for them, besides the interest. Any law which disturbs the relation of debtor and creditor, is fundamentally unjust. The converse of this process, which is the augmentation of the nominal value beyond the real value, has the same disturbing effect, but is not exactly the same as to its consequences, because it bears upon the rich, who suffer less from the injustice, whilst a provision like the present one comes with overwhelming weight upon the poor.

Fortunately for England, her institutions have secured her from the frequent, sudden and injudicious transitions in her currency, to which the continental states of Europe were, till within a comparatively modern period liable, and of which the law of this province of 1830 affords the only example in any portion of the civilized world for more than a century past. The effect of these sudden transitions has, therefore, not attracted the same attention in England at any time, nor upon the European continent, in latter days, that was given to it by the European writers of the sixteenth and seventeenth centuries; and it is to these writers that we must refer, if we wish to understand the multiplied injustice which a process of this kind is calculated to inflict upon the people, and the utter impossibility of regulating the just rights of debtors and creditors, where the state itself is guilty of the crime of ren. dering the standard of value fluctuating and uncertain.

The first of the feudist lawyers and second amongst the civilians, to Cujas only, was Dumoulin, who rendered in his day the same service to his country and to the cause of truth and justice, in relation to money, which Locke long afterwards did to England. None of the economists of his day