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.
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 mademore 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 valuethan 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 thefaith 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. andthe 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 soldfor 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 priceskept 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 underthe 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 theextraordinary 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 whichall 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 10per 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 bankmoney; 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 theclipt 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 theexchange 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 skellingswhich 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 offeringabove 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 percent 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 takenfrom 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 thecountry 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 begot 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; andher 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 peoplewere 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 avery 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 morethan 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.
The bank will add little to the money; for as credit is voluntary, it depends on the quantity of money inthe 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 theterms 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 givento 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.