11. As an immediate consequence of the preceding principles it follows that a political or monetary convulsion in any country will immediately turn the Exchanges in favour of that country, if such an event is not prevented by the issue of an Inconvertible Paper Currency. The reason is plain: any political or monetary convulsion is attended by a great destruction of Credit. This

Credit, while it existed, performed the functions of Money : but as soon as it is destroyed, there is an intense demand for Money to fill the void. Money rises enormously in value. Multitudes of persons are obliged to sell their goods at a sacrifice. The consequence is that Money, having risen greatly in value, both with respect to Goods and Debts, an immense quantity will flow in from neighbouring countries. Thus in 1799 there was a great commercial crisis at Hamburg. The Rate of Discount rose to 15 per cent. That immediately drained bullion from England. In 1825 there was a great commercial crisis in England. For a considerable period the bank, by making extravagant issues at a low Rate of Discount, had turned the Foreign Exchanges against the country. But no sooner did the crisis occur in December, than the Foreign Exchanges immediately turned in favour of it. Exactly the same thing happened in 1847. No sooner had the crisis in that year fairly set in than the Exchanges turned in favour of the country. And numerous other examples might be cited if necessary.