The value of the pound sterling, as we have seen, has been declining ever since the year 1601, the standard being fixed to silver during all that century, while the gold was constantly rising. No sooner had the proportion taken another turn, and silver begun to rise, than the government of England threw the standard, virtually, upon the gold, by regulating the value of the guineas at the exact proportion of the market, whether at the instigation of the bank, or not, I shall not pretend to determine. By these operations, however, the company has constantly been a gainer (in its quality of debtor) upon all the paper in circulation; and therefore has lost nothing by not having established a bank-money.
The interest of this great company being established upon the principles we have endeavoured to explain, it is very evident that the government of England never will take any step in the reformation of the coin, which in its consequences can prove hurtful to the bank. Such a step would be contrary both to justice and to common sense. To make a regulation which, by raising the standard, will prove beneficial to the public creditors, to the prejudice of the bank (which I may call the public debtor) would be an operation upon public credit, like that of a person who is at great pains to support his house by props upon all sides, and who at the same time blows up the foundation of it with gun-powder.
We may therefore conclude, that with regard to the bank of England, as well as every other private banker, the notes which are constantly payable upon demand, must be made liable to a conversion at the actual value of the pound sterling at the time of the new regulation.
That the bank will gain by this, is very certain; but the circulation of their notes is so swift that it would be absurd to allow to the then possessors of them, that indemnification, which naturally should be shared by all those through whose hands they have passed, in proportion to the debasement of the standard during the time of their respective possession.
Having now shortly examined the several interests within the state, according to that combination of circumstances, which, with lame information, I can form to myself, I must again observe that other circumstances, to which I am a stranger, will nevertheless operate their effects. These must be carefully examined, and strictly attended to, before the proper regulation can be established.
My reasoning has proceeded entirely upon the supposition that the reformation of the standard implies a change upon the intrinsic value of the unit of money of accompt, and that strict justice is to be done to every one, so as to render the change neither profitable or hurtful to any, but such as have been unjustly gainers or losers by the former disorder in the coin.
Inconveniences attending all innovations.
No quality in a statesman is more amiable or more admirable, than justice and impartiality in every step which can affect the complicated interests of the people he governs. Such however is the nature of human society, that the inconveniences resulting from every innovation, do frequently more than overbalance all the advantages which are obtained from the closest attention to material and distributive justice upon such occasions. For this reason, innovations are to be avoided as much as possible, especially when by their nature they must be sudden.
Argument for preserving the standard at the present value.
Were the pound sterling preserved at its present value, it would, no doubt, be a plain adulteration of the former standard, and yet I do not know if it would be a more unpopular measure than another which might restore it, and at the same time do justice to every interest within the state; because I apprehend that the greatest hurt done to most people, with regard to their pecuniary interest, consists in the change. Every one feels a sudden change, but those only who reflect and who combine, perceive the consequences of a gradual one.