Chapter IV. Causes and Effects of the Exchange between Grt. Britain and Ireland.

In Irland die  Foster: excessive issue of paper
depreciation der Banknoten
grösser als in England.

Die depreciation-symptoms des Papers:

1) [»]A high and permanent excess of the market price, above the mint price of bullion.« (119)

No regular bullion market [in] Ireland. Aber proved durch the rate at which the bank are forced to issue their new dollars in order to keep them in circulation. (120) Excess of the market price over the mint price operates as a bounty on the melting of the coin. Daher die coin inevitably disappears, unless protected by a seignorage, degradation, adulteration, or by being issued at a nominal value, greatly above its mint price. (120, 121) The new dollars are to be issued in Ireland at a nominal value of 6 Irish shillings, but their value at the mint price, is only 4s. 81/2d. Irish; they are issued therefore at a rate of 27% above their mintprice. The paper may not be depreciated to that extent. The B. o. Ireland may issue at a rate higher than sufficient for their present protection. Aber it proves that bullion is far more valuable in Ireland, than the price at which it is issued in coin by the mint – that is, the price at which the Bank directors promise to pay their notes. (121)

2) An open discount upon paper, as compared with coin. (119) Das Premium for Guineas (nach dem Appendix to the Evidence, p. 44) has progressively advanced (along with the increase of Irish Banknotes) from 3/4 to 10%, since the beginning of 1799. (121)|


3) Exchange unfavourable to the country when computed in Banknotes, yet possibly favourable when computed in specie; unfavourable to those parts of the country, where the circulating medium is paper; yet favourable, or at least much less unfavourable, to other parts, whose circulating medium is specie. (119) Sieh Evidence, Appendix, A 1 und A 2, p. 44–47 . As the paper circulating medium of Dublin has progressively increased, the exchange has gradually risen to 10% against it; though, during the same time, it has never been above 2% against Belfast, where the circulating medium was gold. On the contrary, it has generally been in its favour. In Newry, where both paper and gold circulate (the paper at a current discount), there are two rates of exchange, one when the bills are to be purchased or paid in paper, and the other where they are to be purchased or paid in gold[:] the difference of the rates is of course equal to the discount of the paper. (122, 123)

 Bei Foster das fünfte Symptom.
The entire disappearance of the smaller coin, which had been in circulation along with specie, but which cannot continue in  Foster: circulation along with
circulation with
any other circulating medium of less value.

Nach dem Bericht des Committee  Hervorhebung in der Quelle.
»it does not appear that there is a single mint shilling or halfpenny circulating in any part of Ireland«
, except in that district of the North where gold still the medium of circulation. (124)

 Bei Foster das vierte Symptom.
An Exchange between the different parts of the same country whose circulating media are different. (119)

Z.B. zwischen Belfast und Dublin, the Dublin rates so unfavourable that they nearly (their rates) correspond with the premium for guineas paid in Dublin. (123)

6) Near agreement of these different tests of depreciation, so daß the discount upon the paper, and the unfavourable notes of foreign exchanges, and the rates of the exchanges between the different parts of the same country, and the excess of the market above the mint price of bullion, should all be equal, or very nearly so, to each other. (119, 120)

Appendix to the Evidence shows, that though there has occasionally been a slight difference, it has never been of long duration, and that it may be affirmed generally that they rise and fall together. (124)

Die slight difference differences zeigen, daß das English bank paper auch depreciated. (124) If the B.o.E. notes depreciated, and the real exchange is at par, the premium paid for Guineas in Dublin must equal the unfavourableness of the nominal exchange + the depreciation of English paper. Da der exchange against Dublin is not of Irish paper against gold, but of Irish paper against English paper. (125)

If the Bk. of E. notes depreciated, and the real exchange  Hervorhebung in der Quelle.
in favour
of Ireland, the premium paid for guineas in Dublin must equal the depreciation of English paper + the unfavourableness of the nominal exchange ÷ the real exchange in favour of Ireland. Hence, if we add the premium to the real exchange, and substract the nominal exchange from their amount, the remainder must be the depreciation of the English paper. (125)

Premium = depreciation of English paper + nominal exchange - real exchange

∴ Premium + real exchange = depreciation of English paper + nominal exchange

∴ Premium + real exchange - nominal exchange = depreciation of English paper. (125 Note)

Aus dem Appendix zur Evidence folgende Tafel:

Date. Premium paid for gold in Dublin, P.Ct. Nominal Exchange, i.e. of Irish Banknotes against Engl. Banknotes; i.e. Dublin on London against Ireland P.Ct. Exchange of Engl. Banknotes against Irish Gold, i.e. Exchange of Belfast on London.
1803. In favour of Belfast. In favour of London.
January 3 35/12 7/12
February 3 32/3 5/6
March 33/4 41/6 7/12
April 41/4 42/3 7/12
May 41/2 51/6 1/2
June 43/4 411/12 5/12
July 6 65/12 5/12
August 8 85/12 27/12
September 8 61/6 25/6
October 71/2 61/6 21/3
November 9 75/12 25/6
December 9 711/12 31/12
January 91/2 72/3 21/3
February 10 819/24 7/12
March 9 62/3 27/12. (p. 126)
Zeigt (Monat August seems sudden fluctuation) daß seit September the depreciation of the English Banknote produced a sensible effect upon the exchange, for 8 + 1 - 61/6 = 25/6 = Depreciation of the English paper. Und dieß result nicht – nicht nur in that single month, sondern permanent since that time. (127)|


By this mode of calculation, the depreciation of English paper has been:

1803. Premium for Gold. Real Exchange. Nominal Exchange. Depreciation of English Paper.
September 8 + 1 ÷ 61/6 = 25/6
October 71/2 + 1 ÷ 61/6 = 21/3
November 9 + 1 ÷ 75/12 = 27/12
December 9 + 1 ÷ 711/12 = 21/12
January 91/2 + 1 ÷ 72/3 = 25/6
February 9 + 1 ÷ 811/12 = 25/24
March 9 + 1 ÷ 62/3 = 31/3. (p. 127)

This result agrees with  Hervorhebung in der Quelle.
the fact
mentioned by Mr. Burrowes (p. 14 Evidence, that 21/2 p.ct. is now paid to procure gold in London. It agrees also with the excess of the market above the mint price of gold, which gives a depreciation of somewhat less than 3 P.Ct. (127, 128)

Daher auch exchange so much in favour of Belfast, sometimes even 3 P.Ct.; for this was an exchange of gold against B. o. Engl. paper. (128)

Amount of notes issued by Bk. o. Ireland now nearly 5 × as great as when the restriction was imposed; die der Bk.o.E. not quite doubled in the same time. (130) In Irland [»]an issue of small notes was rendered necessary to fill the void left by the gold …« Probably »the entire loss of gold in Ireland, in consequence of the restriction, was 3,000,000l., but that part which was withdrawn from circulation in the country was of course supplied by the notes of country bankers.[«] (130) In Dublin small note in circulation … about 1,200,000. (l.c.) The alarm which prevails in Ireland from political causes, by rendering circulation slower, renders a greater amount of circulation necessary. (130, 131) Something … may be allowed for the increase of commerce and expenditure in Ireland. (131)

The Bank of Ireland does not possess the same control over the country banks as is possessed by the Bk.o.E. in this country: even in Dublin the private bankers are by many supposed equally to divide the market with it. … Zwar: every private banker must pay in Bank of Ireland notes,  Hervorhebung in der Quelle.
if called on;
but unfortunately the holders at present have little inducement to wish to change the note of a respectable private banker for a note of the Bk. of Ireland. (133)

Every bill which is discounted has a two-fold operation; it increases not merely the capital of the merchant who draws it, but also the amount of circulating medium of the country. (135)

Whatever exertions the private bankers in Dublin may have made, the private bankers in the country have far outstripped them in the race. As the measure of restriction had driven gold out of circulation, so the depreciation of the Irish paper expelled silver; and as the banishment of the gold had operated such a prodigious increase of profit, and opened such new opportunities in the banking system, so the annihilation of silver gave birth to a new race of bankers, with new principles and with new gains. Degraded as the silver currency of England is, such counters as pass for shillings here could not afford to circulate in Ireland; if sent into Ireland they must instantly return; they obtain a better price when exchanged for the pounds of England than for the depreciated pounds of Ireland: like every other commodity, therefore, they seek the best market; they leave Ireland, and return to England. (135)

I speak of those shillings which are to be exchanged for Irish paper; for in the North of Ireland, where gold continues in circulation, the silver is at least as good as in England. (136) Paper shillings were at length resorted to  Zusatz von Marx.
(in Ireland)
, perhaps as a substance cheaper than base metal. (136)

In Dublin, where, from the extent of the retail business, paper shillings were inadmissible, the base metal continued as the medium of circulation until its currency was annihilated by an hasty order of the Irish treasury. Dublin then presented the phenomenon of a great city literally deprived of all circulating medium of less denomination than one pound, and the distress that has ensued may be more easily conceived than described. (137)

In the country it was deemed more eligible to substitute paper shillings than to continue to receive the base metal: it accordingly disappeared, and promissory notes for all sums, so low as sixpence, took place. Banking on a small scale soon became not only one of the most lucrative, but one of the most common trades. When once it was discovered that coining was no longer illegal, provided it was executed on paper, many … applied themselves to so profitable a business. The towns and villages of Ireland swarmed with bankers, issuing their promissory notes for crowns, half-crowns, shillings, and sixpences, promising to pay the same in B. o. Ireland notes whenever a sufficient sum should be tendered. (137)

Z.B. a village habe 10 bankers, 1000 inhabitants. Besizt jeder inhabitants inhabitant 19s. von jedem der Banker  Zusatz von Marx.
(also jeder 190sh. in den verschiednen Notes)
, so zusammen 95,000l. sent into circulation. Dannach unmöglich to call on any one banker for payment.  Zusatz von Marx.
(da das geringste £ of Ireland Bank Note = 1£ = 21sh.)
… besides, these bankers are sufficiently ingenious to issue notes of such amounts that it is very difficult to combine them into pounds: and finally, if pressed for payment, notwithstanding all these defences, the resource of bankruptcy is still left to them; and it is melancholy to hear how many have resorted to it. ([137,] 138) According to the system pursued in Ireland, the number of banks issuing notes … in every place inversely as the extent of its commerce. London is supplied by one, Dublin by four; 12 … insufficient for Skibbereen; 23 … in Yonghal, a town … which it may be doubted whether there are 23 persons who follow any other trade … Auch female bankers … not uncommon. (138, 139)

All persons deriving their subsistance from a fixed income, are reduced in circumstances, in the ratio of the depreciation of the Irish paper, that is, about 8 or 10%. All persons engaged in foreign trade, in order to ensure themselves from the immense losses which they might incur, in consequence of the frequent fluctuations of exchange, must charge an extra profit on their transactions, falling on the consumer, in the import trade, and tending to exclude Ireland from the foreign market in the export. (140) All retail dealers, manufacturers, labourers, and all the lower classes, are reduced to difficulties … impossible to describe, by the depreciation and uncertain value of silver-notes in most parts of Ireland, or by the absolute annihilation of all circulating medium less than one pound. (140, 141)

All persons forced to pay in gold, and to receive payment in paper, a grievance too common in North Ireland, are sufferers. (141)

Dann die holders der vielen forged notes, which arise from the universal system of banking pursued in Ireland; all holders of the silver notes of the petty bankers in the villages of Ireland, lose when the issuers become bankrupt. (141)

All persons who had in their possession the base coin, which passed current in Dublin etc losers when that coin was cried down. Some master manufacturers who possessed great quantities (often so much as 500£ worth), incurred a loss from 50 to 80 P.Ct. on that account. (141)

Wer gewinnt durch das System? 1) The absentees. For the rents paid in paper to their agents in Ireland, purchase bills in Dublin, which, when remitted to London, produce a quantity of gold greater than what they would have exchanged for in Ireland. This arises from the real exchange; i.e., the exchange calculated in gold being favourable to Ireland. (142)|


 Nummerierung von Marx.
The proprietors of the Bank of Ireland stock. The Directors have increased their dividend von 61/2 to 71/2%, und bonus of 5% last year, zusammen 121/2%.

 Nummerierung von Marx.
The merchants who obtain such extensive discount … extended to an amount which the Directors themselves confess could not exist were the restriction taken off. (143)

 Nummerierung von Marx.
The Government, durch die advances, die ihnen ohne die restriction nicht gemacht werden könnten. (143)

 Nummerierung von Marx.
The private bankers in Dublin. (144)

 Nummerierung von Marx.
The silver note bankers in the South of Ireland. They are mere coiners … denen sogar ihr Material costs nothing, not even the expense of stamps, of which they have hitherto defrauded the revenue. (144)

 Nummerierung von Marx.
All agents in the North of Ireland, possessing sufficient influence to force the tenants of the absentee proprietor to pay in gold, and who pays them the next day in paper, gain 8 or 10% at the expense of the tenants; and if those agents remit the rents, paid in gold, through Dublin and not through Belfast, they then become gainers of 8 or 10% at the expense of the landlords. (144)

 Nummerierung von Marx.
The dealers in Exchange.

They who conceive that the profits of such dealers arise from remitting capital at a high exchange, in order to draw it back again when low, have formed a very inadequate idea of the subject. Such a speculation would be mere gambling, and might be productive of loss, as probably as of gain; but the commerce in exchange is founded not on the probable variation of exchanges at different times, but on its actual variation at the same time in different places. (145)

When the rates of exchange are low, both in London and Dublin, the difference between them would afford rather a greater profit to the dealer, than he could obtain from the same difference existing between higher rates. … Aber er findet from experience, that the difference of exchange is generally greater, when the rates are high than when they are low; and therefore, although he would prefer a difference of 21/2 or 3% on a low rate of exchange, yet as such a difference does not occur, except when the exchange is high, he prefers the high rate; the gain resulting from the greatness of the difference being infinitely more important than the loss occasioned by the hight height of the rate. The following calculations founded on the supposition of high rates, and of course states the gains of the dealers as still less than they would have appeared on the supposition of the rates being low. (145, 146)

First suppose the exchange in London is 117, and in Dublin 115. Difference = 2%, which very frequently occurs. (146)

The dealer in London invests 1000£ British in the purchase of a bill on Dublin, at 21 days date, of the amount of 1170l. Irish. He makes this purchase on Monday morning, and sends the bill to Dublin for payment in that night’s mail; it arrives there on Thursday morning, and is discounted on that day.

There will then be to be deducted from: £1170. (Irish)
Discount at 5% 21 days, 3 days grace £3, 16. 111/4
Expense of Postage 0. 2  2
Total: 3. 19. 11/4
He receives therefore on Thursday Morning: 1166. 0. 103/4 Irish.
With this he purchases the next day, Friday, a bill on London of 21 days date, which, at an exchange of 15% produces (British) 1013l. 18s. 4d.

This bill leaves Dublin on Saturday, and may arrive in London on Tuesday morning. Mit ungünstigem Wind say on Thursday morning, also on the 10th day after the 1000l. had left London in the shape of a bill on Ireland. (147[, 148])

( Zusatz von Marx.
It ought to be remembered:
No brokerage is charged in Dublin, nor any commission in a transaction of this nature, which is between correspondents having a joint account. 147 Note)

The dealer offers it on the same day (Thursday) to be discounted:

To be deducted from (British) £1013. 18. 4.
Discount at 5% 21 days date grace £3. 6. 8.
Brokerage at 1s. 10d.% 1. 0. 3
Postage 0. 2. 0
Total deducted: 4. 8. 11.
Rests: 1009. 9. 5.
This 9l. 9s. 5d. all profit, which this 1000l. has cleared by its journey to Dublin; it is 18s. 111/3d. P.Ct. for 10 days. Diese transaction dann fortwährend wiederholt mit den £1000. Wenn es returns 36 times to the owner in the course of a year, 341l. Profit = 34l. 2s. PCt. p. annum. Wenn die 1000£ nur einmal in 14 Tagen returniren, Profit 23l. 13s. 61/2d. p.a. (148, 149)

 Zusatz von Marx.
Dieser enorme Profit von
1000£, without having once served as the medium of exchange for any other commodity than paper during the whole of that time. (149)

It has hitherto been supposed that the bills in which the 1000l. have been invested, have been drawn by merchants and bankers; but if they are drawn by persons not in trade, f.i., by the absentee proprietors, the profits become much greater. Suppose all the 36 bills drawn in London, have been drawn by absentees. When exchange in London is 17, and in Dublin 15, the person not in trade, for 100£ English, paid to him by his banker, gives his bill on Dublin, at 21 days sight, for 118l., that is, one % more than the current rate. (150)

1000l. British, at exchange 118, produces a bill on Dublin for (Irish) £.1180. 0. 0
Discount 24 days £3. 17. 71/4
Postage 0. 2. 2.
Total to be deducted 3. 19. 91/4
Total received in Dublin 1176. 0. 21/4
1176£ Irish at exchange 115 purchases a bill on London for (British) 1022. 12. 2
Discount 24 days £3. 6. 2.
Brokerage 1. 0. 6.
Postage 0. 2. 0.
Total to be deducted 4. 8. 8
Total to be received in London £.1018. 3. 6.
The 1000£ British have cleared 18l. 3s. 6d. by its journey; at 25 returns in the year = 45l. 8s. 5d., at 36 returns: 64l. 16s. (151)|


The average difference for 3 months together was, 1£. 13s. 8d.; von 2 Oct. 1803 till 10t Difference = 3%, 10th – 22d = 21/2, it then fell to 11/2%; 14 Nov. – 22d = 2%, 13 – 31 Dec. = 21/4 und 2. (154 Note)

Two prices exist in the North of Ireland, for all commodities, the gold price and the silver price. (120 Note)


  • Inhaltsverzeichnis von Friedrich Engels
  • Heft II. 1869
  • The Daily News, 20. Mai 1869
    • Notiz
      • Kaufmannsrechnung. (Continuatio)
      • John Leslie Foster, (of Lincoln’s Inn): An Essay on the Principle of Commercial Exchanges. London. 1804.
      • Ch. Lyell. Principles of Geology. 7th ed. London 1847.
      • Otto Hausner: Vergleichende Statistik von Europa (Lemberg. 1865) II. Band.
      • Michael Thomas Sadler. M.P.: Ireland; its Evils and their Remedies. 2nd ed. London. 1829