market for any commodity, many will speculate in that market, but if the market is very small and contracted, it will not attract any speculation at all; and want of demand may produce a scarcity and high price, for failure of competition and of quantity of the article.
I believe, in a mixt currency of Gold and Paper, the Gold will never continue its circulation with paper, unless the Gold actually preponderates; as was the case before the war, when Gold in circulation was in the ratio of 25 to 10. Upon this principle, a Bullion Bank, if made on a scale sufficiently extensive, may be productive of much benefit; and if the Bank be obliged to purchase all Gold at all times at a price which allows for the operation of our taxation, perhaps we may obtain our object, and it will produce no difference in point of profit to the country, whether a great mass of Gold be preserved in depot in the Bank, or dispersed in circulation instead of paper.
A little Gold, like little learning, is a dangerous thing; it is easily speculated upon; easily exhausted; and its price easily affected. But a very large fund of Gold, which can defy all speculation and all temporary vicissitudes of exchange, and all casual domestic panics, is in proportion to its mass a fund of security.
When I see 9 millions, as Lord Castlereagh states, vanishing from circulation at mint price, in the course of the year,—the idea of establishing a Bullion Bank at mint price immediately, is an obvious folly. Establishing it at 4 l. 1 s. an ounce may be a fair experiment; and if adhered to at that price, without any contraction of circulation, but with an encouragement to the banks to answer the demands of the home market in discount with liberality, and an assurance to the public that this principle will in no case be departed from; it might lead to a result, which would enable us to form a correct