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RJ has bought William Jacob's book with him [presumably his 'An Inquiry into the Production and Consumption of the Precious Metals', 2 vols., 1831] and will write some political economy about it - 'which may or may not keep your speculations or laudable attempt to get at calculations on the subject which we much need'. Jacob's book 'is amusing[,] ingenious[,] plausible from the variety of facts he introduces but a moderately severe criticism shews at once that he has no sound foundation for the amount he assumes as that of the precious metals at different eras'. However on many other points RJ has re-read the book with pleasure and profit: 'But I assume (you have not told me exactly) that you are trying to get at the laws which determine the effect of the fluctuations in the amount of the metallic circulating medium on prices - now I doubt if the actual state of our knowledge we should be equal to more than a hypothetical determination of such questions even if we could substitute real quantities of metals for Jacob's imaginary ones. The effect of a circulating medium upon prices depends on two facts 1st its amount 2ndly on its rate of circulation. The influence of this second fact is great even when the circulating medium consists of the precious metals alone'. This 'influence becomes however (the rate of circulation) overpowering and indefinitely greater when credit as for instance bills of exchange form a large part of the circulating medium and here let me digress and remark that the late Lord Ashburton who understood such subjects better than any one I ever met checked me once for talking of bills and their circulation as including all but exclusively the circulating paper used as money and he enumerated various other securities known to merchants and used as money whose rate of circulation he said was affected by peculiar causes not to be neglected if the whole subject was to be comprehensively treated'. Nonetheless bills are adequate for RJ's present purpose: 'Let us suppose then - that bills to the amount of 100 millions are circulating and that each bill by endorsements liquidates 4 transactions or that the whole circulate goods to the amount of 400 millions. It would be vain obviously to limit the causes which determine prices in such a country solely the amount of the precious metals from time to time in use . But now suppose from difficulties in getting discount and other causes which create mistrust the bills are received in payment less freely and that each liquidates only 2 transactions instead of 4 - they would suffice then to circulate commodities to the amount of 200 millions instead of 400 - the effect of this decrease in the efficiency of a circulating medium must not be reidentified with any result of the fluctuations of the metallic circulation. Can we measure the effects of such panics? No. we have very imperfect knowledge of the amount of bills in circulation we have really no knowledge at all which enables us to trace the changes always more or less going on in their rate of circulation and with absence of such knowledge we can only get into error by fancying that fluctuations in the amount of the precious metals will alone explain fluctuations in prices'. If WW has not already read the supplement on 'Credit' to the Encyclopedia Metropolitana then he should - it 'contains some account of the clearing house now abolish the clearing house and all similar expedient and you would produce an effect on prices which any variations in the actual amount of the precious [metals] would go a very little way towards explaining'. 'All these expedients for substituting other things for metallic money and the average results of them are of secular growth and different nations of the world may be seen adopting them and so adding to their average effects at very different paces. The secular variations in European prices must be viewed surely in connection with this general progress'. Variations which are occasional or sudden 'in the rate of circulation of these substitutes depend on local and temporary causes. Such variations are a great evil and I very much fear that our actual legislation influences the evil occasionally instead of mollifying it but I will not talk politics and I have talked enough surely to shew you that I think I have good reason for considering variations in prices secular or temporary as not corresponding with or limited by variations in the amount of the metallic currency'.

Itchenstoke - William's letter of invitation to stay at the Lodge followed him to his new home living on the banks of the river Itchen - 'which I owe to the kindness of Lord Ashburton'. If Mrs Trench can leave their home and seven children it will be a pleasure to accept WW's invitation.