depends on the quantity of money in the country. and tho’ the bank
had never failed, yet it could not have kept its credit much longer.
because, the quantity of money in Scotland is not sufficient to give
a circulation to such a sum of notes, as will pay the charges of the
bank, and the interest to the owners.
’Tis thought the proprietors of the bank design to apply to the
parliament for further priviledges: but as their design is not yet made
publick, I shall only say in general, that if other priviledges are
to be given, then it is not the same bank; at least not on the same
establishment it was: in either of these cases, every person should be
allowed to share in it.
When a bank is establish’d every person may have a share, upon the
terms of the act of parliament; and he that offers first is preferred.
suppose upon the setting up of the bank, A. B. and C. did not subscribe
to it, because they thought the establishment not favourable enough: so
long as they who did subscribe can support the bank upon the terms of
the act of parliament, none will pretend to any share in it; unless the
subscribers are pleased to sell. but if other priviledges are given,
A. B. and C. as any others of the country may desire the books to be
opened, that they be allowed to share in it; and any other set of men
who offer the same security, may at the same time be allowed to set
up a bank with the same priviledges: so every shire in Scotland will
desire one. and if new priviledges are given to this bank, it were a
hardship to refuse the same to others, who are able and willing to give
the same security, especially when the nation stands in need of more
money than this bank would be allowed to give out.
CHAP. V.
_That any measures proposed for increasing the silver money or
establishing a credit promising a payment of silver money are
ineffectual. that silver money has fallen much from the value it had.
that land is of greater value. that silver may lose the additional
value it received from being used as money._
National power and wealth consists in numbers of people, and magazines
of home and foreign goods. these depend on trade, and trade depends on
money. so to be powerful and wealthy in proportion to other nations, we
should have money in proportion with them; for the best laws without
money cannot employ the people, improve the product, or advance
manufacture and trade.
The measures have been used to preserve and increase money, or such
as are now proposed, are attended with difficulties; and tho’ the
difficulties were removed, are ineffectual, and not capable to furnish
money so as to improve the country, or extend trade in any proportion
to the improvements and trade of other nations.
Credit that promises a payment of money, cannot well be extended
beyond a certain proportion it ought to have with the money. and we
have so little money, that any credit could be given upon it, would be
inconsiderable.
It remains to be considered, whether any other goods than silver, can
be made money with the same safety and convenience.
From what has been said about the nature of money, chap. 1. it is
evident, that any other goods which have the qualities necessary
in money, may be made money equal to their value, with safety and
convenience. there was nothing of humour or fancy in making silver to
be money; it was made money, because it was thought best qualified for
that use.
I shall endeavour to prove, that another money may be establisht, with
all the qualities necessary in money in a greater degree than silver;
with other qualities that silver has not: and preferable for that use,
tho’ silver were the product of Scotland. and that by this money, the
people may be employed, the country improved, manufacture advanced,
trade domestick and foreign be carried on, and wealth and power
attained.
What I propose, will I hope be found safe, and practicable;
advantageous in general to Scotland, and in particular to every
Scots-man.
But as I offer to prove, that what I shall propose is more qualified
for the use of money than silver: so before I come to the proposal, I
shall shew some defects in silver money; and that it has not, nor does
not answer the design of money.
Money is the measure by which goods are valued, the value by which
goods are exchanged, and in which contracts are made payable.
Money is not a pledge, as some call it. it’s a value payed, or
contracted to be payed, with which ’tis supposed the receiver may, as
his occasions require, buy an equal quantity of the same goods he has
sold, or other goods equal in value to them: and that money is the most
secure value, either to receive, to contract for, or to value goods by;
which is least liable to a change in its value.
Silver money is more uncertain in its value than other goods, so less
qualified for the use of money.
The power the magistrate has to alter the money in its denomination or
fineness, takes away the chief quality for which silver was made money.
in countries where the money is often changed in the denomination or
fineness, ’tis more uncertain to contract for money, than it was in the
state of barter to contract for goods. if a 100 ounces of silver are
lent, or contracted for, and a bond given for them denominat pounds,
payable in a year: in that time half a crown is raised to a crown, and
50 ounces pays the 100 lent, or contracted for.
Tho’ the magistrate did never alter the money in its denomination or
fineness, yet it is more uncertain in its value than other goods.
Goods of the same kind and quality differ in value, from any change in
their quantity, or in the demand for them: in either of these cases
goods are said to be dearer, or cheaper, being more or less valuable,
and equal to a greater or lesser quantity of other goods, or of money.
Silver in bullion or money changes its value, from any change in its
quantity, or in the demand for it: in either of these cases goods are
said to be dearer, or cheaper; but ’tis silver or money is dearer or
cheaper, being more or less valuable, and equal to a greater or lesser
quantity of goods.
Perishable goods as corns, &c. increase or decrease in quantity as the
demand for them increases or decreases; so their value continues equal
or near the same.
More durable goods as mettals, materials for shipping, &c. increase in
quantity beyond the demand for them, so are less valuable.
Silver or money increases in quantity by so much as is imported to
Europe, more than is consumed or exported. the demand has encreased,
but not in proportion to the quantity; for, 1st. the same quantity of
silver or money, won’t purchase the same quantity of goods as before.
2dly. 10 per cent was payed for the use of it; now ’tis to be had at 6,
in Holland at 3 or 4.
An ounce of silver being worth 5 sh. and 2 pence, and a crown worth 60
pence, unless altered by the prince, makes most people insensible of
any change in the value of silver or money: but as one year the boll of
barley is sold for 2 crowns, and the year after for 3; this difference
comes from a change in the quantity or demand of the barley, or of the
money: and that of the money will occasion a difference in the price,
as well as that of the barley.
If last year a 100 sheep were sold for a 100 crowns, and the person
sold them desires this year to buy the same number of sheep; tho’ the
quantity of the sheep, and the demand for them be the same as last
year: yet if the money is increased in quantity, and the demand for
it not increased in proportion, the 100 sheep will be equal in value
to more money than the year before, so the money is cheaper. if the
quantity of the money, and the demand for it be the same as before; yet
if the sheep are lesser in quantity, or the demand for them greater:
the 100 sheep will be equal to a greater quantity of money, so the
sheep are dearer.
So tho’ the magistrate did never alter the money, yet ’tis liable to
a change in its value as silver; from any change in its quantity, or
in the demand for it: and the receiver is doubly uncertain whether the
money he receives or contracts for, will, when he has occasion, buy
him the same goods he has sold, or other goods equal in value to them;
because of the difference may happen in the value of the money, or the
goods he is to buy.
And this uncertainty is, tho’ both money and goods were certain in
their quality.
The difference of the prices of most goods, from changes in their
quantity, or in the demand for them, would be much prevented, if
magazines were kept; but the difference in their prices from the
greater or lesser quantity of, or demand for money; cannot be prevented
so long as silver is the money.
That money is of much lesser value than it was; will appear by the
value goods, land, and money had 200 years ago.
By the acts of the council of Edinburgh, it appears, that anno 1495,
the fiars for wheat was 6 sh. and 8 pennies Scots money the boll.
Anno 1520, claret and white French wines were ordered to be sold in the
taverns at 6 pennies Scots the pint, and ale at 20 pennies Scots the
gallon.
Anno 1526, the milns belonging to the town were lett for 400 merks
Scots, now they give 13000.
The petty customs at Leith then lett for 115 merks.
Anno 1532, the load of malt containing 9 firlots, was ordered to be
sold at 32 sh. Scots the load.
Anno 1551, ordered that the best mutton bulk be sold for 12 pennies
Scots, the 2d. sort for 10 pennies, and the worst sort for 8 pennies.
Anno 1553, the 9 firlots of malt old measure, with the charity, is
ordered to be sold for 36 sh. Scots. the landwart bread to weigh 40
ounces, and the townbread 36 ounces the 4 penny or plack loaf.
Anno 1555, the bakers are ordered for each boll of wheat, to deliver 7
score loafs, at 16 ounces the loaf.
By an act of the 5th parliament of Queen Mary, anno 1551. ’tis
ordained, that wines imported upon the east and north coast, should
not be sold dearer than 20 lib. Scots the tun of Bourdeaux wine, and
16 lib. the tun of Rochel wine. the pint of Bourdeaux wine 10 pennies,
and the pint of Rochel wine 8 pennies. and that wine imported upon the
west coast, be sold no dearer than 16 lib. Scots the tun of Bourdeaux
wine, and 12 or 13 lib. the tun of Rochel wine. 8 pennies the pint of
Bourdeaux wine, and 6 pennies the pint of Rochel wine.
So that what 5 lib. bought 200 years ago, will not be bought now for
a 100 lib. nor were goods in greater plenty, or of less value than
now: on the contrair, as these acts were made to regulate the prices
of goods, ’tis reasonable to think they were in lesser quantity than
now, proportioned to the demand, so of more value. but money having
increased in quantity, more than in demand, and having been altered by
the prince; is fallen in value: and a 100 lib. now is not worth what 5
lib. was worth before.
Land may be computed to have been improved in 200 years, that what pays
now two bolls the acre, payed then but one boll: which may be known
from old rentals.
Money gave then 10 per cent interest, and as 384 acres, rented at a
boll the acre, victual at 8 sh. and 4 d. the chalder; so the property
of these acres was equal to, or worth a 100l. for a 100 lib. gave 10
lib. interest, and the 384 acres payed only such a quantity of victual,
as was sold for 10 lib. but as land (being preferable to money for many
reasons) is valued now at 20 years purchase, tho’ money is at 6 per
cent: so that land then may have been valued 14 years purchase or 140
lib.
As the quantity of money has increased since that time, much more than
the demand for it; and as the same quantity of silver has received a
higher denomination, so of consequence money is of lesser value: a
lesser interest is given for it: A greater quantity of it is given for
the same quantity of goods, and the land is worth more years purchase.
The value of such land now, the acre rented at 2 bolls, victual at
8 lib. 6 sh. and 6 pence, money at 6 per cent, so land at 20 years
purchase, would be 8000 lib. by this computation money is only worth
the 20th part of goods, and the 57th part of land, it was worth 200
years ago. part of this difference is from the improvement made on
land, and the greater demand for land, the quantity being the same,
whereby its value is greater: the rest of the difference is, from the
money being more encreased in quantity, than in demand, whereby its
value is lesser, and its use lower: as likewise from its being altered
in the denomination.
There was then a greater quantity of silver in the same number of pence
than there is now: which appears by several acts of parliament made
about that time.
Anno 1475, in the 8 par. of K. James the 3. the ounce of silver was
ordered to be sold for 12 sh. Scots, and 12 groats was made of the
ounce of silver.
The 3d. of November 1554, by an act of the town-council of Edinburgh,
the ounce of silver was ordered to be sold at 18 sh. and 8 pennies
Scots; but these acts do not mention the fineness the silver was of.
suppose the same number of pence had twice or 4 times the value of
silver in them that they have now: then silver is only fallen to one
tenth, or one fifth of the value it had to goods; and to one 28th, or
one 14 of the value it had to land. but still money is fallen to one
20th of the value it had to goods, and to one 57th of the value it had
to land.
The manner of lending money in France, and I suppose in other Roman
Catholick countries; is by way of perpetual interest, redeemable by the
debitor, and which the creditor may dispone or assign, but can never
demand the principal. and it is usury by law to take any interest for
money, if the creditor has power to call for the principal, tho’ the
term of payment be many years after the money is lent. suppose the
manner of lending in Scotland was the same 200 years ago, and that A.
B. having 768 acres of land, rented at a boll of victual the acre, the
yearly rent 48 chalder, at 5 lib. Scots the chalder, 20 lib. sterl. C.
D. worth a 100 lib. in money, to have lent it to A. B. and interest
being at 10 per cent, to have received an annual interest of 10 lib.
which he left to his son, and thought he had provided sufficiently
for him, 10 lib. being equal to, or worth 24 chalder of victual.
but interest being lowered to 6 per cent, money being raised in the
denomination, and of less value by its greater quantity: the 6 lib. now
paid for the annual interest of that 100 l. is not worth one chalder
of victual. and 384 acres, or the half of A. B’s land 200 years ago
only equal to a 100, or a 140 lib; is now worth 57 times that sum, the
rental supposed to be doubled, and its value at 20 years purchase.
In France it has been observed, that about 200 years ago, the same land
was in 30 years worth double the money it was worth before. so land
worth a 100 lib. anno 1500, was worth 200 lib. anno 1530. 400 lib. anno
1560. and so on, till within these 50 or 60 years it has continued near
the same value.
In England 20 times the quantity of money is given for goods, that was
given 200 years ago. in these countries ’tis thought goods have rose;
but goods have kept their value, ’tis money has fallen.
Most goods have increased in quantity, equal or near as the demand for
them has increased; and are at or near the value they had 200 years
ago. land is more valuable, by improvement producing to a greater
value, and the demand increasing, the quantity being the same. silver
and money are of lesser value, being more increased in quantity, than
in demand.
Goods will continue equal in quantity as they are now to the demand,
or won’t differ much: for the increase of most goods depends on
the demand. if the quantity of oats be greater than the demand for
consumption and magazines, what is over is a drug, so that product will
be lessened, and the land imployed to some other use: if by a scarcity
the quantity be lesser than the demand, that demand will be supplyed
from magazines of former years; or if the magazines are not sufficient
to answer the demand, that scarcity cannot well be supposed to last
above a year or two.
Land will continue to rise in value, being yet capable of improvement;
and as the demand increases, for the quantity will be the same.
Silver will continue to fall in value, as it increases in quantity, the
demand not increasing in proportion; for the increase does not depend
on the demand. most people won’t allow themselves to think that silver
is cheaper or less valuable, tho’ it appears plainly, by comparing what
quantity of goods such a weight of fine silver bought 200 years ago,
and what quantity of the same goods it will buy now. if a piece of wine
in France is equal in value to 20 bolls of oats there, that quantity
of oats can never be worth more or less wine; so long as the quality,
quantity and demand of both continues the same: but any disproportioned
change in their quality, quantity or demand, will make the same
quantity of the one, be equal to a greater quantity of the other. so
if a piece of wine in France, is equal to or worth 40 crowns there; it
will always continue so, unless some disproportioned change happen in
the quantity, quality, or demand of the wine, or of the money.
The reason is plain, why silver has encreased more in quantity than in
demand: the Spaniards bring as great quantities into Europe as they can
get wrought out of the mines, for it is still valued tho’ not so high.
and tho’ none of it come into Britain, yet it will be of less value in
Britain, as it is in greater quantity in Europe.
It may be objected that the demand for silver is now greater than the
quantity. it is answered: tho’ the demand is greater than the quantity;
yet it has not increased in proportion with the quantity. 200 years ago
money or silver was at 10 per cent, now from 6 to 3. if the demand had
increased as much as the quantity, money would give 10 p. cent as then,
and be equal to the same quantity of victual, or other goods that have
kept their value. if A. B. having a 1000 lib. to lend, should offer it
at 10 per. cent. interest, and desired land of 240 chalder of victual
rent for his security, as was used to be given 200 years ago: tho’ no
law regulate the interest of money, A. B. would find no borrowers on
these conditions; because silver having increased more in quantity than
in demand, and the denomination being altered, money is of less value,
and is to be had on easier terms. if the demand had encreased in the
same proportion with the quantity, and the money had not been raised,
the same interest would be given now as then, and the same quantity of
victual to pay the interest; for money keeping its value, 8 sh. and 4
pence would be equal to a chalder of victual, as it was then.
If 2000 lib. was laid out on plate 200 years ago, it is thought the
loss on the plate was only the fashion, and the interest; but if the
2000 lib. had been laid out on land, the rent of that land would be
more than the value of such plate.
Tho’ money or silver is so much fallen from the value it had, yet it’s
given as a value for one half, or two thirds more than its value as
silver, abstract from its use as money.
Suppose silver to be no more used as money in Europe, its quantity
would be the same, and the demand for it much lesser; which might lower
it 2 thirds or more; for besides that the demand would be less, its
uses as plate, &c. are not near so necessary, as that of money.
Goods given as a value, ought for their other uses to be valuable,
equal to what they are given for. silver was bartered as it was valued
for its uses as a metal, and was at first given as money, according to
the value it had in barter. silver has acquired an additional value
since, that additional use it was applyed to occasioning a greater
demand for it; which value people have not been sensible of, the
greater quantity making it fall more: but it has kept it from falling
so low it would have fallen, if it had not been used as money, and the
same quantity had come into Europe.
’Tis uncertain how long silver may keep that additional value: if
England set up a money of another kind, silver will not fall to one
third, because used in other places as money; but the lesser demand,
besides the ordinary fall from the greater quantity coming into Europe,
would occasion an extraordinary fall perhaps of 10 per cent: if the new
money then in England did not encrease beyond the demand for it, it
would keep its value, and be equal to so much more silver at home or
abroad than it was coined for; as silver would be of less value, from
the ordinary and extraordinary fall.
If England changed their money, other countries may do the same. if
Holland alone kept to silver money, the price of silver may be supposed
to fall immediately 50 per cent, from the lesser demand for it as
money. and a 100 lib. in Holland be worth no more than 50 lib. new
money in England, whether sent in specie or remitted by exchange; and
as more silver came into Europe, it would fall yet lower, because of
its greater quantity.
It may be objected, that in Scotland the quantity of goods are
proportioned to the demand as they have been some years ago; and money
scarcer, the demand for it the same or greater. so if goods and money
are higher or lower in value, from their greater or lesser quantity in
proportion to the demand for them; money should by its great scarcity
be more valuable, and equal to a greater quantity of goods. yet goods
differ little in price, from what they were when money was in greater
quantity.
To this it’s answered, the value of goods or money differs, as the
quantity of them or demand for them changes in Europe; not as they
change in any particular country. goods in Scotland are at or near the
same value with goods in England, being near the same in quantity in
proportion to the demand as there: money in Scotland is not above one
40th part of the money in England, proportioned to the people, land, or
product; nor above a 10th part proportioned to the demand. if Scotland
was incapable of any commerce with other countries, and in the state it
is now, money here would buy 10 times the quantity of goods it does in
England, or more: but as Scotland has commerce with other countries,
tho’ money were much scarcer than now, or in much greater quantity than
in England; if there were but 10000 lib. in Scotland, or a million, the
value of goods would not differ above 30 per cent, from what they were
abroad, because for that difference goods may be exported, or imported.
prohibitions may raise the difference higher.
Brittannia languens and others on trade and money, are of opinion that
goods in any country fall in value, as money in that particular country
grows scarcer. that, if there was no more than 500 lib. in England,
the yearly rent of England would not exceed 500 lib. and an ox would
be sold for a penny. which opinion is wrong, for as the ox might be
exported to Holland, it would give a price in England equal or near to
that it would give in Holland: if money were supposed to be equally
scarce in Holland, and other places as in England, the ox might give
no more than a penny, but that penny would have a value then equal to
5 lib. now; because it would purchase the same quantity of goods in
England or other places, that 5 lib. does now.
The same answer may be given to these who think an addition to the
money of any particular country would undervalue it so, that the same
quantity of goods would cost double the money as before.
If the money and credit current in England be 15 millions, Scotland
reckoned as 1 to 10, the money in Scotland encreased to a million and a
half, the demand in proportion to the demand in England; that addition
to the money of Scotland, would not make money of less value here, than
it is now in England. goods in Scotland would sell as they sell in
England, the product of the country would perhaps be 10 or 20 per cent
dearer, to bring it equal to what it sells in England; but all sorts
of manufacture would be cheaper, because in greater quantity: and all
goods imported would be cheaper, money being easier borrowed, merchants
would deal for a greater value, and men of estates would be capacitate
to trade, and able to sell at less profit. nor would land rise higher
than in England, the buyer having in his choice to buy elsewhere; the
better security of a register may be supposed to add a year’s purchase
or two to the value.