(31)
of the kingdom from its natural channels into forced channels? and will not national income, ceteris paribus, be increased by being eniployed in its natural channels, rather then in forced channels?——
If this reasoning is plainly unanswerable, when we are thinking of a measure or rule, for the amount of a currency, we must turn our thoughts to the income of a country in its most extended sense,—and as we must admit that currency ought to be augmented proportionably with income, whatever be the amount of debts and taxes and levies, we must also admit that a greater currency is necessary now than in 1809 or 1810, or in any other year, if our income on the whole is greater. A tax, or a levy is not an addition of income, but a diversion of it from its natural employment. Extension of capital, and credit and profits thereupon make and increase income, and income will increase more rapidly in proportion as the resources of industry are not diverted from their natural employment by state necessities.—When I first heard the argument for the diminution of our currency, founded on the diminution of levies and taxes, which has taken place since 1810, I was puzzled from not having reflected on the subject. But upon a short consideration, the fallacy became evident; by reflecting that the amount of income is the criterion for the amount of a currency, and that taxes and levies discourage the increase of income, and that in proportion as they cease, income will probably augment, and the want of currency augment also, all obscurity vanished. Income is naturally promoted by increase of currency, and increase of taxes is made more easy by it; whilst a decrease of taxes generally advances income, and by increasing income, augments the deamnd for currency.
It is said that the apparently small present amount ofcirculation.
