such a proclamation would have had the same effect, tho’ the stop of
payment had then happen’d. in that case, the support of the bank might
have been the narrative of the proclamation; the security being good,
few or none would have kept their money to loss, rather than return
it to the bank. and if in 3 days money had not come in so fast as
expected, their lordships by a 2d. proclamation might have lowered the
crown to 5 sh. to take place then, and 6 pence more in 3 days. when the
credit of the bank had been re-established, the money might have been
cryed up, if that had been necessary, the crown to 5 sh. and 5 pence,
and the other money in proportion as it was before.
Some are against all banks where the money does not lie pledged equal
to the credit. 1. they say the demand may be greater than the money in
bank. secondly, if we are declining in our trade, or money, we are not
at all, or are less sensible of it: and if the bank fail, we are in a
worse condition than before.
To the first it’s answered, Tho’ the nation had no benefit by the
addition the bank makes to the money; nor the people by being supply’d
with money when otherwise they could not, and at less interest; and
tho’ the proprietors had no gain by it: the other conveniencies, as
quicker and easier payments, &c. are more than equal to that hazard; or
bank notes, gold-smiths and bankers notes, would not be preferred to
money, every body knowing such a stop may happen to the bank, and that
gold-smiths and bankers may fail.
The other objection is the same as to say, a merchant who had a small
stock, and was capable of imploying a greater; if a sum were offered
him without interest, equal to what he had, and more as his own
increased, should refuse it, because he might fancy himself richer than
he was, and if his own stock decreased, that sum lent would be taken
from him.
If 15000 is supposed the money in bank, and 75000 lib. of notes out;
60000 lib. is added to the money of the nation, without interest: for
what is payed by the borrowers, is got by the proprietors. as the money
of the nation increases, the credit of the bank increases, and the
sum of notes out is greater; and so far from making the people less
sensible of the condition of the country, a surer judgment of the state
of trade and money may be made from the books of the bank, than any
other way.
If trade can be carried on with a 100000 lib. and a ballance then due
by foreigners; the same measures, and a greater quantity of money,
would make the ballance greater. nor is that additional money the bank
furnishes, to be supposed will be lost, if by a ballance due from trade
the silver money increases: that credit may fail from an accident when
money is plentiful, and would soon be recover’d; ’tis only lost by a
scarcity of money. such a credit may support trade, in cases where
without it trade would sink, but cannot do prejudice.
Another objection is made against the bank. that it encouraged the
exportation of money, by furnishing sums in such species as were
of most value abroad. to answer this objection, I shall make a
supposition. A. B. merchant has occasion for a 1000 lib. in Holland,
and desires C. D. banker to give him a bill for that value; there is
no money due in Holland to Scots merchants, so C. D. must export the
money to pay the bill he draws: but, there being no bank, nor any
possibility of getting a 1000 lib. in 40 pence pieces, he sends out
money of different species. this does not hinder the money to go out,
but makes the exchange dearer by 2 or 3 per cent, than it would have
been if 40 pence pieces could have been got. and tho’ no other money
were left, but old marks, if a ballance is due, these will go out, tho’
not worth 10 pence: the exchange will be so much higher, the profit of
exporting is the same; and so far from doing hurt to the country, the
bank by furnishing such pieces as could be exported to least loss, kept
the exchange 2 or 3 per cent lower than otherwise it would have been,
and saved yearly the sending out a considerable sum to pay a greater
ballance, the higher exchange would have occasioned.
CHAP. IV.
_The several measures now proposed, considered. as, raising or
allaying the money. coyning the plate. regulating the ballance of
trade. or, re-establishing the bank._
When I use the words, raising the money, I desire to be understood
raising it in the denomination; for I do not suppose it adds to the
value.
There is no way silver can be made more valuable, but by lessening
the quantity, or increasing the demand for it. if the export and
consumption of silver be greater than the import, or the demand be
increased; silver will be of more value. if the quantity imported be
greater than the quantity exported or consumed, or the demand lessened;
silver will be of less value.
If raising or allaying the money could add to its value, or have any
good effect on home or foreign trade; then no nation would want money.
a 100 lib. might be raised or allayed to 2, to 10, to a 100 times the
denomination it had, or more as there were occasion. but as ’tis unjust
to raise, or allay money; because, then all contracts are payed with
a lesser value than was contracted for; and as it has bad effects on
home or foreign trade: so no nation practises it, that has regard to
justice, or understands the nature of trade and money. if A. B. sell
12 chalder of victual for a 100 lib. payable in 6 months, with which
he is to pay bills of exchange of that value, to be drawn on him then
from France for wine he has commission’d; and in that time the money
is raised or allayed to double, the 100 lib. A. B. receives will only
pay half the bill he has to pay, being only equal to 50 lib. of the
money he contracted for. nor will that 100 lib. buy the same quantity
of goods of the country, that a 100 lib. bought before: it will pay
where money is due, and satisfie past contracts made upon the faith of
the publick, because the prince says every man shall take half what is
owing him in full payment. but in bargains to be made, the value of
the money will be considered; goods will rise, tho’ perhaps not to the
proportion the money is raised; and such persons as do not raise their
goods, equal to the money, are imposed on.
When 6 pence is raised to 12 pence, the 6 pence is worth 12 pence; but
the value of the pence is lowered to half-pence.
To explain this matter better, I shall suppose when money is raised,
goods rise, or not.
If goods rise, then raising the money has not the effect designed. if
a piece of serge is sold for 40 sh. and the shilling be raised to 18
pence, the piece of serge will be sold for 3 lib. this adds to the tale
of the money, and pays debts with two thirds of what is due, but does
not add to the money. this is the natural consequence of raising the
money; for, it is not the sound of the higher denomination, but the
value of the silver is considered.
If, when money is raised, goods keep the prices they had before: then
all goods exported are sold for a lesser value abroad, and all goods
imported are sold dearer. a half-crown is raised to 40 pence, and that
half-crown buys the same quantity of goods 40 pence bought before;
then the merchant who sends goods to Holland, to the value of 300 lib.
which are sold for 390 lib. there, would gain 220 lib. on the value of
300 lib. exported: because, 390 lib. in Holland, would be equal to, or
worth by exchange at the par, or sent in bullion, 520 lib. in Scotland.
that trade would bring no more profit to the nation, than when the
return of the goods yielded only 390 lib. for, 390 lib. before it was
raised, had the same quantity of silver, that 520 lib. rais’d money
would have; and bought as great a quantity of foreign goods. but that
trade would be so profitable to the merchant, that more people would
deal in it than could get goods to buy; and as more buyers than sellers
would raise the prices here, so one merchant under-selling the other
would lower the prices in Holland. but tho’ the prices kept low here,
and our merchants kept up the prices abroad: the Dutch knowing the
goods were so cheap in the country, would buy none from our merchants,
but commission them in return of goods they sent.
Suppose the yearly export first cost 300000 lib. sold abroad 390000
lib. the import, and expence abroad 410000 lib. and 20000 lib. sent in
money, to pay the ballance. the money raised one third, and goods to
keep the prices they had before, 225000 l. sent to Scotland in foreign
money, or goods, or by exchange, would buy what was sold abroad for
390000 lib. the export, import, and expence abroad continuing the same,
Scotland would be due a ballance of 185000 lib. for, tho’ Scots goods
were sold under the value, yet other nations would not sell their goods
for less than before; or than they could have in other places.
It may be alledged, we have more product and manufacture, than is
consumed, or exported; and selling cheaper, would occasion a greater
demand for our goods abroad.
The product and manufacture might be much increased, if we had money to
imploy the people: but, I’m of opinion we have not any great quantity
of goods, more than what is consumed or exported. allow selling cheaper
would occasion a greater demand; that the greater demand, would
occasion an increase in the product, and manufacture, to the value of
a 100000 lib. and allow that the extraordinary cheapness of goods, did
not occasion a greater consumption in the country: yet, we would be in
the same condition as before; 20000 l. would be still due of ballance,
and the improvement would be given to foreigners for nothing. but this
improvement is imaginary, for tho’ the demand increased, yet without
more money more people could not be imployed, so no further improvement
could be made: we would be forced to retrench near one half of the
ordinary consumption of foreign goods, and expence abroad; not having
money to pay the great ballance would be due.
Some think foreign money being raised, would bring in money to Scotland.
Tho’ the crown were rais’d to 10 s. yet if a ballance is due by
Scotland, the exchange will be above the par, and, ’tis not to be
supposed an English merchant will bring crowns to Scotland, when for a
100 payed in at London, he can have 105 or 6 of the same crowns payed
him at Edinburgh.
If the ballance of trade was equal, foreign money raised, and Scots
money not raised in proportion; foreign money would be brought in, and
a greater value of Scots money would be carried out. ’tis the same loss
to a country when money is raised, and goods do not rise in proportion:
if foreigners send in money to buy goods, and this money when exported
is not valued so high as here; the return in goods will be so much
less, besides the want of the profit we would have had on the export of
our goods.
If all import, and foreign expence were discharged, Scotland would then
be so much richer, as there was bullion or money imported: but, if that
prohibition be supposed, Scotland would be richer by keeping the money
at the value it has; because, a greater quantity would be brought in,
to buy the same quantity of goods.
If we could be supposed to be without any commerce with other nations,
a 100 lib. may be allayed and raised to have the same effect in trade
as a million: but, if a stranger were suffered to come to Scotland, he
might purchase a great part of the land or goods with a small sum. and
a rich man here would make a very small figure abroad.
Money is the measure by which all goods are valued; and unless goods
rise to the full proportion the money is raised, the goods are
undervalued. if the yearly value of Scotland in product and manufacture
be 2 millions, at 20 years purchase 40 millions. the money a 100000
lib. raising the money 20 per cent, makes it pass for a 120000 lib.
suppose the goods rise only 10 per cent, then that a 120000 l, is equal
in Scotland to a 110000 l. of the money before it was raised; and buys
the same quantity of goods. so, an addition is made of 20000 lib. to
the tale and of 10000 lib. to the value of Scots or foreign money,
compared with the value of Scots goods: but the measure by which goods
are valued, being raised in the denomination 20 per cent; and the goods
rising only 10 per cent: Scotland is near 4 million, or one tenth less
valuable than before. and any man who sells his estate, will receive a
tenth less silver, or of any other foreign goods for it, than if he had
sold it before the money was raised.
France and Holland are given as examples of raising and allaying the
money. in France the money is higher in the denomination than in other
countries, but that does not hinder the money of France to be exported.
when the lued’ore was at 12 livres, the ballance was against France,
exchange 10 per cent above the par: and a 110 lued’ores at 12 livres
were payed then at Paris, for a 100 lued’ores of the same weight and
fineness at Amsterdam, and passing there for 9 guilders bank money; so
10 per cent was got by exporting money from France. when the lued’ore
was raised to 14 livres, that did not make the ballance against France
less; the exchange continued the same, 110 lued’ores tho’ at 14 livres
were payed for a bill of a 100 at Amsterdam, and the same profit was
made by exporting money. if the exchange happened to be lower, it was
from the ballance of trade due by France being less, and that would
have lowered the exchange whether the money had been raised or not.
but the raising the money, so far from bringing the ballance to the
French side, keeps the ballance against France: for, as their goods do
not rise to the full proportion the money is raised, so French goods
are sold cheaper, and foreign goods are sold dearer, which makes the
ballance greater, occasions a greater export of money, sets idle so
many of the people as that money employed, lessens the product or
manufacture, the yearly value of the country, and the number of the
people.
’Tis thought the Dutch coin lued’ores, and send them to France, where
they pass at 14 livres. and, that guineas were sent from Holland to
England, in the time of the clipt money; because they past there for 30
s. but these people are misinformed. ever since I have known any thing
of exchange, a lued’ore at Amsterdam whether new or old, has been of
more value by exchange, than a new lued’ore at Paris. and in the time
of the clipt money, a guinea in Holland was worth more by exchange,
than a guinea in England. these who were ignorant of the exchange,
might buy up guineas or lued’ores, to carry to England or France,
but they would have got more by bill. there was a profit then upon
exporting guineas and lued’ores from England and France to Holland. the
pound English at that time was given for 8 guilders, or under; and the
exchange from Amsterdam to Paris has been these 8 or 10 years for the
most part, considerably above the par on the Dutch side. I have known
the pound English at 7 guilders 13 stivers, and the French crown of 3
livres bought in Holland for 37 stivers, in London for 39 pence half
penny.
Raising the money in France is laying a tax on the people, which is
sooner payed, and thought to be less felt than a tax laid on any other
way. when the King raises the lued’ore from 12 livres to 14, they are
taken in at the mint for 13 livres, and given out for 14; so the King
gains a livre on the lued’ore, and this tax comes to 20 or 25 million
of livres, sometimes more, according to the quantity of money in the
country. but so far from adding to the money, it stops the circulation:
a part being kept up till there is occasion to export it to Holland,
from whence a return is made by bill, of a sum of livres equal to the
same quantity of new lued’ores that were exported of old ones, and 8
or 10 per cent more, according as the exchange is on the Dutch side.
others who won’t venture to send the money out, keep it till the new
money is cryed down, so save a 13th part, which the King would have
got if they had carried the money to the mint to be recoined. this tax
falls heavy on the poorer sort of the people.
’Tis generally thought the Dutch money is not worth half what it passes
for. but it will prove otherwise when examined. the bank by which most
payments are made, receive and pay in bank money, which is better
than the English, ducatdowns are at 3 guilders, and other bank money
in proportion; and I’m informed the current money has silver in it
to the value or near, except some of their skellings which are worse
than others: the making them worse was not design’d, it was an abuse
occasioned by too many towns having power to coin: which abuse was
stopt so soon as known, and that species cryed down to 5 stivers and a
half.
Some propose the money may be raised, to give the little we have left
a better circulation, and to bring out hoarded money. the lowering it
by degrees to take place in 3 or 4 months, will have the same effect;
and other good consequences: for, from what has been said, page 54
and 55. there is reason to think, if the money were lowered to the
English standard, exchange would be on our side, and a ballance due us:
providing the export, the import, and expence abroad continued as now.
There is another argument for raising the money, which is, that some
goods don’t yield profit enough abroad, so are not exported. if serges
worth in Scotland a 100 lib. are worth 120 in Holland, the merchant
won’t export them for 20 per cent profit: but if the money is raised 20
per cent, and goods keep at the prices they had before, the same money
that bought 100 lib. of serges, buying now to the value of 120 lib. and
these goods being worth in Holland 144 lib: that addition to the profit
by raising the money, will occasion the export of them.
This is the same as if a merchant who had a 100 different sorts of
goods, and was offered 30 per cent profit upon 90 of them; but no body
offering above 20 per cent profit for the other 10 sorts, should add
a quarter to the measure by which he measured his goods, and sell all
the 100 sorts for the same price he sold them before: as this merchant
would find himself a considerable loser by this expedient, so will a
nation who raises their money.
For the same reason, it would be a great loss to Scotland if all goods
were allowed to be exported without duty; some ought to be free of
duty, and some not, according to their value abroad.
The true and safe way to encourage the export of such goods, as do
not yield great enough profit; is by a draw-back. if serges sent to
Holland give only 20 percent profit, 10 per cent given as a draw-back
will encourage their export: the draw-back given to the merchant is not
lost to the nation, and what is got by the manufacture or export of the
goods, is gained by the nation.
A draw-back is the best method yet known for encouraging trade, and it
may be made appear, that 10 or 15000 applyed that way, will occasion
an addition to the export to the value of a 100000 lib. nor is any
part of that 10 or 15000 lib. lost to the nation; for, if A. B. and C.
Scots-men get such draw-back, it is the same thing to the nation, as if
it had not been given. when draw-backs are paid out of funds for the
support of the government, little money is applyed that way; because,
so much is taken from the prince: but, if there was a national fund
for the encouragement of trade, that nation might improve trade, and
undersell other nations that did not follow the same measures. but this
is supposing there was money in the country to imploy the people.
Coining the plate were a loss of the fashion, which may be valued one
6th, and would add little to the money: the plate at the restauration
was inconsiderable, having been called in a little before. since there
may have been wrought one year with another about 60 stone weight; of
that a great part has been melted down, or exported, the remainder
won’t be of great value. what plate has been imported belongs to a few
men of quality, who will send it out of the country rather than lose
the fashion; and in that they do a service to the country, providing
they don’t spend it abroad, because wrought plate will sell for more
silver at London, than it will melt to here.
If ’tis proposed the money be allayed, and the advantage of the allay
be given to the owners of the plate. suppose the new money with allay
be raised to double the denomination; 5 sh. of plate with the fashion
worth 6 sh. will give at the mint 10 sh. allay’d money: but even then
the plate will not be brought in voluntarily, for that plate sold in
England, and the value brought back by bill, will yield from 11 to 12
sh. exchange being above the par, and 6 pence supposed to be got for
the fashion of the ounce of plate.
If it be necessary to coin the plate, such plate should be allowed to
be exported as can be sold abroad for more than its weight: security
being given to import money or bullion to the value.
Some propose a regulation of the ballance of trade, by retrenching the
consumption of foreign goods, and expence in England: so the ballance
being brought to be on our side, we may become rich by living within
our yearly value, as we became poor by spending beyond it.
Such a regulation will have its difficulties. 1. to discharge all
or a great part of the import, will lessen considerably the revenue
of the crown; and her majesty may not think good to give the royal
assent to such a regulation, unless an equivalent be given. 2. such
a regulation would not be so strictly kept, but a part of what was
used to be imported would be stole in. 3. the residence of our princes
being in England, we are under a necessity of having a ministry there:
imployments being at the disposal of the prince, and London being a
place of more diversion than Edinburgh, the gentry will continue to go
to London for places or pleasure.
But allowing the royal assent were given to such a regulation; either
with or without an equivalent; and the regulation could be so strictly
kept, that nothing were imported contrair to that law; and allow 20000
lib. could be saved of the expence in England, so that the import and
expence abroad should be 60000 lib. less than last year: yet there are
other difficulties, that I fear will make the regulation ineffectual.
1. Suppose the ballance last year due by us was 20000 lib. the import
and expence abroad lessened 60000 l. these who propose this regulation
may think a ballance will be due to us of 40000 lib. but as the bank
may have supplyed us with 60000 lib. of notes, more than the money in
bank: and as 20000 lib. is supposed to have been exported last year: so
our money being lessened 80000 lib. the next year’s export may be so
much less valuable, the want of that money having set idle a part of
the people were then imployed: and a greater ballance be due than last
year, notwithstanding of the regulation.
2. 40000 lib. first cost of goods imported, and 20000 lib. spent
abroad, lessened the consumption of the goods of the country; and the
export was by so much greater, as the consumption of the goods of
the country was lessened. but this regulation occasioning a greater
consumption of the goods of the country, the export will be less.
3. Several merchants may have exported goods, tho’ they had not much
profit upon the export of them; but because of the profit to be made
upon the import; which being lessen’d, may likewise lessen the export.
4. If Scotland discharge or put a very high duty on the goods of other
nations, other nations may discharge Scots goods.
Allowing there were no difficulties in regulating the ballance of
trade, and that the same measures were followed as are followed in
Holland; we would grow richer, but their riches would increase in the
same proportion: and 50 years hence Scotland would be as poor as now,
in comparison with Holland.
If two countries equal in their product, people, &c. the one with a
100000 lib. of money, and living within its yearly value; so that the
first year a ballance is due of 20000 l. the second year of 25000 lib.
and so on. the other country with 20 millions of money, and consuming
more than the yearly value; so that a million is sent out to pay the
ballance, the second year 1200000 lib. and so on. this country will be
soon poor, and the other be soon rich: but if that people who has 20
millions of money, will retrench in proportion to the other; they will
be rich and powerful in comparison with the other.
Considering how small a share we have of the money of Europe, and how
much trade depends on money: it will not be found very practicable to
better our condition, but by an addition to our money. or if it is
practicable without it, it is much more so with it.