so as to keep the Market price of Bullion, which is ever fluctuating, within that maximum, is totally irreconcileable to the true principles of a currency, and is the application of a rule which has no natural connexion whatever with the subject it has to govern.
Let it be asked of any common logician, whether there is any connexion between the necessity of supplying a circulating medium proportioned to the whole income and transactions of a wealthy community, and the identity of price between Coin of a fixt value and Bullion of a variable value. It is evident that any attempt to prove such a connexion must be preposterous.
An argument has, however, been made in this manner. Coin and Bullion are of the same purity: equal quantities of each must be therefore equally valuable: but if Coin is limited to a certain standard-price, and Bullion is not, in as much as Coin cannot follow the price of Bullion, Bullion must be made to submit to the price of Coin; otherwise, two pieces of Gold, which in weight and purity are the same, would not be equal in value to one another; which is absurd. Now the necessity to reduce Bullion to the price of Coin, arises from the circumstance, that, as Paper represents Coin, it will not also represent Bullion, unless Bullion be kept at the exact price of Coin: for if Bullion is allowed to be dearer than Coin, Coin will be melted to obtain the qualities and price of Bullion: and then Coin being driven from circulation by the superior value of Bullion, Paper will be no longer convertible into Coin; which would be ruinous. As, however, reducing the quantity of circulating medium will raise its price, and consequently the value of Coin, a proportionate reduction of that medium will equalize the prices of Coin and Bullion. Q. E. D.
Such is the pretended demonstration which has been