19 Dec r 1800

Paper Mischief

Ch. < > Government Hoard g

II. Prices

7

II. Secondly in regard to prices -

Like the effects of addition, the three effects of defalcation may in this view be prejudicial /beneficial/, beneficial /prejudicial/ or indifferent according to circumstances.

If the ratio of money to wealth be on the encrease and to such a degree upon the encrease as to produce a rise of prices, the operation of the defalcation in question will be in that respect beneficial so far as the effect of it is to check the rise or stop it altogether without producing any such fall as shall be productive as such of a small inconvenience.

If the ratio of money to wealth be not on the encrease, still more if it be on the decrease, the effect of the defalcation in question will be to produce a fall of prices more or less sensible according to the proportion of the money defalcated to the mass from which it was defalcated.

In respect of commercial credit it can have no effect analogous to that with which paper money is apt to be attended by reason of the sudden though temporary defalcations to which the mass of it is exposed. In the case of thesaurization, the defalcation always nor from the mass in circulation is always gradual, nor can ever be otherwise

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