PART I. THE PRINCIPLES OF MONEY DEDUCED AND APPLIED TO THE COIN OF GREAT BRITAIN. (continued 2)

The disorder, therefore, of the English coin has rendered the standard of a pound sterling quite uncertain. To say that it is 1718.7 grains of fine silver, is quite ideal. Who are paid in such pounds? To say that it is 113 grains of pure gold, may also not be true; because there are many currencies worse than the new guineas.

Value of a pound sterling current.

What then is the consequence of all this disorder? What effect has it upon the current value of a pound sterling? And which way can the value of that be determined?

Determined by the operations of trade.

570The operations of trade bring value to an equation, notwithstanding the greatest irregularities possible, and so in fact a pound sterling has acquired a determinate value over all the world by the means of foreign exchange. This is a kind of ideal scale for measuring the British coin, although it has not all the properties of that described above.

To the mean value of all the currencies.

Exchange considers the pound sterling as a value determined according to the combination of the values of all the different currencies, in proportion as payments are made in the one or the other; and as debtors generally take care to pay in the worst species they can, it consequently follows, that the value of the pound sterling should fall to that of the lowest currency.

Were there a sufficient quantity of worn gold and silver to acquit all bills of exchange, the pound sterling would come down to the value of them; but if the new gold be also necessary for that purpose, the value of it must be proportionally greater.

All these combinations are liquidated and compensated with one another, by the operations of trade and exchange: and the pound sterling, which is so different in itself, becomes thereby, in the eyes of commerce, a determinate unit, subject however to variations, from which it never can be exempted.

Here is then the proof of what was said in the end of the first chapter, that the wearing of one shilling had the effect of contributing towards the diminution of the value of the pound sterling every where; a proportion which, at first sight, has the air of a paradox, though, when it is understood, nothing is more consistent with the ruling principles of commerce.

Exchange a good measure for the value of a pound sterling.

Exchange, therefore, in my humble opinion, is one of the best measures for valuing a pound sterling, present currency. Here occurs a question.

Does the great quantity of paper money in England tend to diminish the value of the pound sterling?

The use of paper money not hurtful in debasing the standard.

571I answer (according to my weak conceptions) in the negative. Paper money is just as good as gold or silver money, and no better. The variation of the standard, we have already said, and I think proved, must influence the interests of debtors and creditors proportionally every where. From this it follows, that all augmentation of the value of the money-unit in the specie must hurt the debtors in the paper money; and all diminutions on the other hand must hurt the creditors in the paper money, as well as every where else. The payments, therefore, made in paper money, never can contribute to the regulation of the standard of the pound sterling; it is the specie received in liquidation of that paper money which alone can contribute to mark the value of the British unit; because it is affixed to nothing else.

The pound sterling not regulated by statute, but by the mean value of the current money.

From this we may draw a principle, That in countries where the money-unit is entirely affixed to the coin, the actual value of it is not according to the legal standard of that coin, but according to the mean proportion of the actual worth of those currencies in which debts are paid.

Why exchange appears so commonly against England.

From this we see the reason why the exchange between England and all the trading towns in Europe has long appeared so unfavourable. People calculate the real par, upon the supposition that a pound sterling is worth 1718.7 grains troy of fine silver, when in fact the currency is not perhaps worth 1638, the value of a new guinea in silver, at the market proportion of 1. to 14.5; that is to say, the currency is but 95.3. per cent. of the silver standard of the 43d of Elizabeth. No wonder then if the exchange be thought unfavourable.

How the market prices of bullion marks the value of the pound sterling.

From the principle we have just laid down, we may gather a confirmation of what we advanced concerning the cause of the advanced price of bullion in the English market.

When people buy bullion with current money at a determinate price, that operation, in conjunction with the course of exchange, ought naturally to mark the actual value of the pound sterling with great exactness.

Shillings at present weigh no more than ¹⁄₆₅ of a pound troy,

572If therefore the price of standard bullion in the English market, when no demand is found for the exportation of the metals, that is to say, when paper is found for paper upon exchange, and when merchants, versed in these matters, judge exchange (that is remittances) to be at par, if then, I say, silver bullion cannot be bought at a lower price than 65 pence the ounce, it is evident that this bullion might be bought with 65 pence in shillings, of which 65 might be coined out of the pound troy English standard silver; since 65 pence per ounce implies 65 shillings for the 12 ounces or pound troy.

This plainly shews how standard silver bullion should sell for 65 pence the ounce, in a country where the ounce of standard silver in the coin is worth no more than 62; and were the market price of bullion to stand uniformly at 65 per ounce, that would shew the value of the pound sterling to be tolerably fixed. All the heavy silver coin is now carried off^[T]; because it was intrinsically worth more than the gold it passed for in currency. The silver therefore which remains is worn down to the market proportion of the metals, as has been said, that is to say, 20 shillings in silver currency are worth 113 grains of fine gold, at the proportion of 1 to 14.5 between gold and silver. Now,

as 1 is to 14.5, so is 113 to 1638.

so the 20 shillings current weigh but 1638 grains fine silver, instead of 1718.7, which they ought to do according to the standard.

Now let us speak of standard silver, since we are examining how far the English coin must be worn by use.

and are worn 4.29 troy grains light of their standard weight.f

The pound troy contains 5760 grains. This, according to the standard, is coined into 62 shillings; consequently, every shilling ought to weigh 92.9 grains. Of such shillings it is impossible that ever standard bullion should sell at above 62 pence per ounce. If therefore such bullion sells for 65 pence, the shillings with which it 573is bought must weigh no more than 88.64 grains standard silver; that is, they must lose 4.29 grains, and are reduced to ¹⁄₆₅ of a pound troy.

But it is not necessary that bullion be bought with shillings; no stipulation of price is ever made farther, than at so many pence sterling per ounce. Does not this virtually determine the value of such currency with regard to all the currencies in Europe? Did a Spaniard, a Frenchman, or a Dutchman, know the exact quantity of silver bullion which can be bought in the London market for a pound sterling, would he inform himself any farther as to the intrinsic value of that money-unit; would he not understand the value of it far better from that circumstance than by the course of any exchange, since exchange does not mark the intrinsic value of money, but only the value of that money transported from one place to another.

The price of bullion, therefore, when it is not influenced by extraordinary demand (such as for the payment of a balance of trade, or for making an extraordinary provision of plate) but when it stands at what every body knows to be meant by the common market price, is a very tolerable measure of the value of the actual money-standard in any country.

A pound sterling worth at present no more than 1638 grains troy fine silver, according to the price of bullion;

If it be therefore true, that a pound sterling cannot purchase above 1638 grains of fine silver bullion, it will require not a little logic to prove that it is really, or has been for these many years, worth any more; notwithstanding that the standard weight of it in England is regulated by the laws of the kingdom at 1718.7 grains of fine silver.

and according to the course of exchange,

If to this valuation of the pound sterling drawn from the price of bullion, we add the other drawn from the course of exchange; and if by this we find, that when paper is found for paper upon exchange, a pound sterling cannot purchase above 1638 grains of fine silver in any country in Europe, upon these two authorities, I think, 574we may very safely conclude (as to the matter of fact at least) that the pound sterling is not worth more, either in London or in any other trading city, and if this be the case, it is just worth 20 shillings of 65 to the pound troy.

shillings coined at 65 in the pound troy, would be in proportion with the gold,

If therefore the mint were to coin shillings at that rate, and pay for silver bullion at the market price, that is, at the rate of 65 pence per ounce in those new coined shillings, they would be in proportion to the gold: silver would be carried to the mint equally with gold, and would be as little subject to be exported or melted down.

It may be inquired in this place, how far the coining the pound troy into 65 shillings is contrary to the laws of England?

which shews that the standard has been debased,

The moment a state pronounces a certain quantity of gold to be worth a certain quantity of silver, and orders these respective quantities of each metal to be received as equivalents of each other, and as lawful money in payments, that moment gold is made a standard as much as silver. If therefore too small a quantity of gold be ordered or permitted to be considered as an equivalent for the unit, the silver standard is from that moment debased; or indeed more properly speaking, all silver money is from that moment proscribed; for who, from that time, will ever pay in silver, when he can pay cheaper in gold? Gold, therefore, by such a law is made the standard, and all declarations to the contrary are against the matter of fact.

and that the preserving it where it is, is no new debasement.

Were the King, therefore, to coin silver at 65 shillings in the pound, it is demonstration that by such an act he would commit no adulteration upon the standard: the adulteration is already committed. The standard has descended to where it is, by slow degrees, and by the operation of political causes only, and nothing prevents it from falling lower, but the standard of the gold coin. Let guineas be now left to seek their value as they did formerly, and let light silver continue to go by tale, we shall see the guineas up at 30 shillings in 20 years time, as was the case in 1695.

Proof that the standard has been debased by law,

575It is as absurd to say that the standard of Queen Elizabeth has not been debased by enacting, that the English unit shall be acquited with 113 grains of fine gold, as it would be to affirm that it would not be debased from what it is at present, by enacting, That a pound of butter should every where be received in payment for a pound sterling; although the pound sterling should continue to consist of 3 ounces, 17 penny weights, and 10 grains of standard silver, according to the statute of the 43 Elizabeth. I believe in that case most debtors would pay in butter, and silver would, as at present, acquire a conventional value as a metal, but would be looked upon no longer as a standard, or as money.

If therefore, by the law of England, a pound sterling must consist of 1718.7 grains troy of fine silver, by the law of England also, 113 grains of gold must be of the same value, but no law can establish that proportion; consequently, in which ever way a reformation be brought about, some law must be reversed; consequently, expediency, and not compliance with law, must be the motive in reforming the abuse.

and is at present reduced to the value of the gold.

From what has been said, it is not at all surprising that the pound sterling should in fact be reduced nearly to the value of the gold. Whether it ought to be kept at that value is another question; and shall be examined in its proper place. All that we here decide, is, that coining the pound troy into 65 shillings would restore the proportion of the metals, and render both species common in circulation. But restoring the weight and proportion of the coin is not the difficulty, as I conjecture, which prevents a reformation of the English coinage.

I have dwelt longer, perhaps, than what was necessary upon this estimation of the present value of the pound sterling, and in setting the matter in different lights, have been forced into repetitions. The importance of that point in the present inquiry must plead my excuse.

576

CHAP. IX. Historical account of the Variations of the British Coin.

Purport of this treatise not to dictate, but to inquire

The whole purport of this part of my inquiry, is, to examine and investigate the principles relating to money; to range them in order, and to render them easily applicable to any combination of circumstances which may occur. If I have applied my reasoning to the state of the British coin, it has been with no intention to erect myself as a judge of the interests of that nation, or with a design to point out to them what measure is the most expedient to be followed. I am a stranger to the true state of the question, and I reason only upon suppositions, not from exact information; upon this footing I intend to proceed.

I shall take a view of every scheme which I think may be proposed as a remedy against the disorder, and examine all the consequences which can result from each, according to the influence of the different principles under which they fall. Circumstances hid from me will nevertheless work their full effect, and may render the best deduced principles quite delusive, when, without attending to them, we pretend to draw conclusions.

how the disorder in the coin may be remedied without inconveniences,

We have examined the nature of the disorder of the coin of Great Britain, and such it certainly is, as demands some reformation. A nation so justly renowned for knowledge, so thoroughly versed in the arts of commerce, and so expert in every matter of calculation, cannot be supposed to be at any loss for a method to remove the cause of the disorder. The question is not, therefore, how to fix the standard, how to restore the proportion between the metals in the coin, nor how to render all the current money of its just weight. But the question is, how to execute this without incurring greater inconveniences than those at present felt.

577If the smallest change should be made upon the present value of the pound sterling, the operation is arbitrary; and those who either advise it or execute it, would be answerable for every consequence. If the consequences should prove salutary to the nation, the projector will meet with applause; but if they should be attended with injustice, he will merit blame; if with perplexity and confusion, he may very possibly never see himself approved of.

The present disorder has proceeded from neglect on the part of government; a neglect however which admits of an apology, for reasons afterwards to be assigned. When an abuse creeps in by degrees, no particular person can be charged with it: when it is to be corrected, some person or other must undertake the work; and few are found who incline to be volunteers in the service of the public, upon an occasion where the interest of the nation is not clear and evident.

by making the nation itself choose the remedy.

The best way therefore to accomplish such a work, is, to put it into the hands of the nation itself. When the people are fully instructed in the matter, when the state of the question is laid before them in a clear light, and stripped of all money-jargon, they will see the natural consequences of every innovation; and when they have well considered of them, they may resolve whether they will keep the pound sterling they have, or whether they will take another.

If the present standard is departed from, every other to be pitched upon is arbitrary.

The question to be determined, is, what the weight of the pound sterling now is, and what it ought to be. If it be made different from what it is at present, that operation must be conducted with justice and impartiality. If a new standard is to be pitched upon, the choice is quite arbitrary, as has been said; and were any weight to be preferred to another, the best of any, no doubt, would be the pound troy of standard silver. This was the pound sterling for many ages, and the most that can be said for Queen Elizabeth’s act, is, that it is the last deliberate adulteration by law of the English coin.

578The next question is, how to conduct that operation so as to do justice to every man in the nation in contracts already entred into; how to do justice to the creditors of Great Britain; how to do justice to Great Britain with respect to her creditors; how to do all this, I say, and at the same time to make an innovation upon the present state of the coin.

People imagine the present standard is the same with that of Queen Elizabeth.

Debasing the standard is odious in the opinion of every mortal; and it seems also to be the opinion of many, that every regulation which shall not carry the value of a pound sterling, to the value of the silver appointed to enter into it by the statute of Queen Elizabeth, is a debasing of it from what it is at present.

In order to cast more light upon the historical part of the English coinage, I shall here lay together some short observations upon the state of that question from the reformation to the present time.

Debasements of the standard during the reformation.

Henry VIII. and Edward VI. during the violent convulsions of the reformation, so sophisticated the fineness of the coin, and so curtailed the weight of it, that all proportion of value was lost.

Raised by Edward VI.

This run the whole nation into inextricable confusion, and forced the ministers of the young King Edward, in 1552, to restore the purity of the metals, and to raise the weight of the coin in the pound sterling, from 220 grains troy of fine silver, to which it was then debased, to 1884. Mary reduced it to 1880 grains, at which it stood during her reign. |Debased by Elizabeth.| From this Elizabeth raised it in the second year of her reign to 1888 grains; and in the 43d she passed the famous statute by which it was debased to 1718.7, the present legal silver standard. |Supported by her successors,| During the reign of James I. trade began to take root in England; and this pointed out the necessity of preserving the standard of their money invariable. The confusions occasioned by the former adulterations left a strong impression on the minds of the English nation in the succeeding reigns, a statute which had been preserved without alteration for many years acquired in time great authority, and the standard continued constantly attached to the silver. Gold was occasionally coined; but 579circulated only under a conventional value, and was not made a legal money. The interests of trade at last required a more extensive circulation, and King Charles II. when he first coined guineas, determined a value for their currency, in order to compass that end: but very well observing that without fixing the gold at a price below its true proportion to the silver, there was no possibility of preventing it from becoming also a standard for the pound sterling, and thereby introducing a confusion, the guinea was valued no higher than 20 shillings, and allowed to find its own value above that price.

The guinea accordingly fluctuated in its value; sometimes at 22 shillings, which marks the proportion of the metals at 1 to 15.84, sometimes at 21s. 6d. which marks the proportion at 1 to 15.6, at last at 21 shillings, which marks the proportion as 1 to 15.2, and now it is worth no more than its original statute value, to wit, 20 shillings, which marks the proportion as 1 to 14.5. These conversions are formed upon the supposition, that in all the variations the shillings are of the statute weight, and that the guinea circulated according to the market proportion of the metals; two circumstances which are by no means to be depended on.

until it was debased by the clipping after the revolution.

About the time of the revolution, silver money had begun to be coined with the wheel, or fly-press, (which prevented the frauds to which coin was formerly exposed from clipping and washing) and then the custom of weighing the current money went into disuse. But as at that time there were still great quantities of the hammered money remaining, the clippers profited of the inattention of the public, and fell to work with the hammered money. The consequence of this was, that those who were obliged to pay, paid in clipped money; the value of the pound sterling fell to the rate of the then currency; all weighty coin was locked up or melted down; the guineas rose to 30 shillings, and 100l. sterling, which in silver ought to weigh above 32 pounds troy, did not commonly exceed one half.

580The kingdom at this time was involved in a war, and was annually obliged to borrow large sums, paid in those pounds sterling currency, which were worth no more than ²⁄₃ of a guinea, or 14 shillings of such currency as the present of 65 to the pound troy. This is evident, since the guinea was then worth 30 shillings, or 1½ pound sterling; and that at present it is worth 21 shillings of 65 to the pound troy.

Lowndes’s scheme refuted by Locke, the standard raised to that of Elizabeth, and the consequences of that measure.

Lowndes contended strongly for having the pound sterling reduced 20 per cent. Locke insisted upon the old standard of Queen Elizabeth: the latter carried his point. A new coinage was made in 1695, and the government acquitted a great part of the debts they had contracted from the revolution (which had been paid them at the value of between ten and fourteen shillings present currency) at the rate of 20 shillings of the standard of Queen Elizabeth. This is the matter of fact: whether this was doing justice to the nation, I leave every man to determine. It must not however be believed that there was no reason for this extraordinary step. By the raising of the standard, the state gained considerably upon the score of taxes, as well as the creditors upon their capitals and interest; and the nation, which was the principal loser, was pleased; because their standard was not debased: thus all the three parties were satisfied.

Upon this coinage in 1695, the coin was once more set upon a solid footing: all money was of weight, and the pound was rightly attached to the silver standard. Upon that footing it remained, until the guinea was made a legal coin, and fixed at its then supposed intrinsic worth: here is the æra of the present confusion.

Silver has been rising from the beginning of this century.

From the beginning of this century, silver has been rising in its price. In 1709, the French found it as 1 to 15, in the great coinage, by edict of the month of May; and so early as 1726, they found the proportion to be nearly as 1 to 14½, and fixed their coinage accordingly.

The English standard has been debased by law, since 1726.

We may therefore conclude, that from 1726, at least, if not several years before, a pound sterling ought to have been worth at 581least 118½ grains troy of fine gold, according to the proportion of the silver standard; and yet from the inattention of government, it has constantly been suffered to be acquitted with 113. Has not this been a plain debasement of the standard for near 40 years, which we can ascertain? If it is at this time restored to where it was, will not that be raising it from what it is at present?

The trading interest chiefly to be blamed for this neglect.

We have seen, from a deduction of the plainest principles, the utter impossibility of keeping an unit, which ought to be invariable, attached at once to the two metals, which are constantly varying between themselves. To this the state has not attended, nor has it probably been sufficiently informed of it, by those who were most capable, but least interested to point out the consequences.

Debasing the standard chiefly affects permanent contracts,

The variations of the standard affect chiefly those who are engaged in permanent contracts, which is not the case of trading men: the obligations they contract are in a perpetual fluctuation, and by the assistance of their pen, they avoid the inconveniences which other people, who do not calculate, are liable to.

The rising of the value of silver has been all along advantageous to this class; and it would be still more advantageous to them were government to allow guineas at this time to seek their own value; as we shall observe in its proper place. Every thing which tends gradually and insensibly to debase the value of the money unit, and promote confusion, is advantageous to merchants. When this debasement proceeds by slow degrees, it is not to be discovered but by foreign exchange; because at home there is no invariable standard for money, as there is for every other kind of measure. This shall be proved.

The unit therefore being solely attached to the coin, must vary as it does.

and prevents prices from rising as they should do.

Now the value of the coin has varied imperceptibly; and this is the reason why people imagine that such variations or debasements of the standard are not of great consequence. The greatest mistake any person can labour under! By this imperceptible debasement, 582prices do not rise as they ought to do; the ignorant, and those who do not perceive the gradual diminution, keep to the same nominal prices as formerly, and the merchants profit in the mean time. Is not this sacrificing the interest of all the people of England to that of the trading part of it?

The competition between the merchants betrays the secret to the multitude from time to time; but they ascribe the appearances to a wrong cause; they think every thing is growing dearer, whereas the reason is, that price (i. e. coin) is growing lighter: and as this disorder is always going on, the merchants, being the first informed of the progress of the decline of the value of the coin, must constantly be in the way to profit of the ignorance of those who have not the opportunity of measuring the value of the coin they receive by any standard measure.

This being the case, it is no wonder that the trading part of the nation has not informed government of a disorder which has brought, by slow degrees, the pound sterling to about 95 per cent. of its former value. This is a short review of the vicissitudes of the English coin from the reformation to this day: and it is at the same time an apology for the neglect of the British administration in a matter of so great consequence.

CHAP. X. Of the disorder of the British Coin, so far as it affects the Circulation of Gold and Silver Coin; and of the Consequences of reducing Guineas to Twenty Shillings.

I must now take notice of the inconveniences which this disorder has occasioned to the public, and of the consequences which might follow upon adopting the remedy proposed^[U] for removing 583it, to wit, by fixing the currency of guineas at 20 shillings, without recoining the silver at the standard of Elizabeth.

Why silver coin is so scarce.

The great inconvenience felt by the public is the scarcity of silver coin, occasioned by the disproportion of the metals. No mortal will ever, as matters stand, carry silver to be coined; that which is worn by circulation, is not sufficient, even for changing gold, much less for all those small payments which, in the course of business, are absolutely necessary. This being the case, all considerable payments must be made in guineas; and as there are great numbers of these already become light by use, all the weighty are picked up, and either exported, or perhaps frequently melted down: so that, in general, the current specie of England is not sufficient for the occasions of the nation.

Consequences of fixing the guinea at 20 shillings, with regard to circulation,

The great scarcity of silver coin in England, being evidently occasioned by the disproportion between the metals in the coin, it has been proposed to remedy that disorder all at once, by crying down the value of guineas to 20 shillings, without making a new coinage, or taking any measures for preventing the horrid consequences which would follow upon such a step, as matters stand at present. Whoever inclines to read all that may be said in favour of this operation, may consult Mr. Harris’s Essay upon Money and Coins, Part II. p. 84. et seq.

My intention is not to refute the sentiments of particular people, but to trace out the principles I have laid down, and to apply them to the removing such objections as I think either plausible in themselves, or which may appear plausible to people who do not thoroughly understand those matters.

I shall then, in the first place, examine what consequence this bringing down the legal currency of guineas to 20 shillings would have upon common voluntary circulation; that is to say, buying and selling, abstracting from unvoluntary circulation which takes place when people are about to pay, or acquit obligations; two 584things totally different in themselves, and which ought carefully to be set asunder.

will make coin disappear altogether.

The consequences of reducing guineas to 20 shillings, without a re-coinage of the silver, will be, 1. To fix the standard of the pound sterling to the mean proportion of the worn out silver money in present currency. 2. To make the light guineas, which are below the value of 20 old shillings, to pass by tale for pounds sterling; though intrinsically not worth the new guineas. 3. To occasion the melting down of all the new guineas. And 4. When once the coin is brought to consist of nothing but old unequal pieces, to occasion the heaviest of these to be melted down in their turn, until at last coin must disappear altogether.

If to supply specie, government shall send silver or gold to be coined at the mint at the legal standard, the moment it appears, the old shillings and the light gold will buy it up, and it will be thrown into the melting pot. This will stop even the melting down of the more weighty pieces of the old specie; because (by this trade) they will become more valuable; since in currency they will be an equivalent for the new specie of full standard weight. No private person surely will carry either of the metals to the mint, because there they would receive but 62 shillings or 44½ guineas for their troy pound of the respective metals, whereas in the market they will get a greater number of old shillings and guineas to buy, weight for weight, which will serve the same purpose in circulation.

How light shillings are bought by weight.

Let not my reader laugh at the scheme of buying old shillings at the market by weight. The thing is done every day. For whether I sell my silver bullion for 65 shillings per pound (paid in shillings, guineas, or bank-notes) or buy old shillings weight for weight, it is quite the same thing. The reason why people do not sell the old shillings by the pound, is only because they are not all of the same weight, although they be all of the same value in circulation; but they sell their bullion, as it were, against old worn shillings reduced 585to a mean proportion of value; which sale of bullion is virtually buying old shillings at market by weight. A man, therefore, who can with a pound of silver bullion buy the value of 65 old shillings, will certainly never employ it to buy 62 heavy ones from the mint, which are no where worth more, except in the melting pot. The same is true of the gold.

Consequences as to circulation with merchants and bankers.

I have endeavoured to shew by the plainest arguments, that no silver coin, the value of which is above the value of any other currency within the kingdom, can remain in circulation, or can escape the money-jobber and the melting pot. I think this is a point pretty well agreed on all hands; because it is the argument made use of against those who propose to introduce shillings of base metal into circulation, as an expedient for procuring change for the gold: a scheme so entirely repugnant to all the principles of money, that I have taken no notice of it.

That guineas would still pass current for 21 shillings:

If, therefore, it be true, that the shillings are really worth no more than ¹⁄₂₁ of a guinea, what effect would the law, reducing guineas to 20 shillings, have as to merchants? Guineas would pass as before with every banker in London for 21 shillings, and 21 shillings for a guinea.

That the standard would be affixed to the light silver, as it was in 1695:

But as we suppose no new coinage set on foot, and that the light silver would continue to pass current by tale, as at present, what security would there be for the pound sterling not falling every year lower? The standard would then be entirely affixed to the old silver; and no man would pay in guineas at 20 shillings, any more than he will now pay in silver of standard weight. The only expedient then to obtain coin would be, to allow guineas to seek their own value. Upon this they would rise to 21 shillings, which is their intrinsic worth. In this case, would not the shillings, by becoming lighter, become of less value in proportion to the guinea? Was not this the case 1695? Did not this abuse raise the price of guineas, and proportionally debase the worth of the pound sterling?

That merchants would gain by it;

586As every thing, therefore, which gradually debases the standard, must be advantageous to those who can avail themselves of it, so the making gold a merchandize, while the bulk of the nation has no standard to measure it with, must be advantageous to those who have a sure one, to wit, the foreign exchange.

debtors would be ruined.

Besides the evident tendency such a measure would have to debase the standard, below the present value, it would be accompanied with the most ruinous consequences to all the class of debtors. I shall beg leave to state an example. A person is debtor, I shall suppose, for a great sum, 100,000l. his creditor demands payment. He offers guineas at the current and conventional value of 21 shillings, the creditor refuses the offer; he offers bank notes, refused: it is no excuse to say that 100,000l. of silver coin cannot be picked up; he who owes must find it. The creditor tells him that the mint is open. Here the debtor is obliged either to part with his guineas at 20 shillings value, or to carry silver, which costs him 65 shillings the pound troy, to the mint, and to pay it to his creditor at the rate of 62. There would be still some consolation, if, from such a hard necessity, the state were to be provided with weighty coin; but that is not the consequence. The creditor is no sooner paid in silver, than he throws his coin into the melting pot, and then sends the bullion to market to be sold at 65 pence the ounce in bank notes.

Consequences as to the bank.

He next goes to the bank, and demands payment of his notes, It is not to be supposed that there is old worn silver enough there to pay all the notes in circulation. The bank must be in the same situation with every debtor, it must send silver to the mint; not as perhaps at present to be afterwards exported, or to furnish work for the mint and then to be melted down again, but to acquit the notes which it had issued in lieu of light silver, or guineas at 21 shillings. The creditor melts down his new silver again, sells it as bullion for bank notes as before, and returns upon the hank with a new demand.

Reducing guineas to 20 shillings, is the same as making them a commodity.

587It is the same thing as to this last supposition, whether the guineas be left as merchandize to seek their value, or be fixed at 20 shillings; for no man upon earth will give a heavy guinea for 20 shillings present currency; and if debtors were obliged to pay at that rate, the hardship would be exactly the same as in the foregoing supposition; for the difference in paying with heavy silver or with good guineas at 20 shillings, is no more than that of 1718.7 to 1719.9; a guinea, which weighs 118½ grains fine gold, being worth 1719.9 grains of fine silver, according to the proportion of 1 to 14½, and a pound sterling, according to statute, is worth no more than 1718.7 grains of the same metal.

We may therefore conclude, that the scheme of reducing guineas to 20 shillings must proceed upon the supposition of a new coinage of all the silver: without this, the same confusion as to the coin would remain as formerly; a new disproportion of the metals would take place; no body would pay in gold, as at present no body will pay in silver.

CHAP. XI. Method of restoring the Money-unit to the Standard of Elizabeth, and the Consequences of that Revolution.

How to fix the pound sterling at the standard of Queen Elizabeth.

I come now to the proposal of restoring the standard to that of the statute of Elizabeth, which is in other words the same with what has been proposed in bringing down the guineas to 20 shillings; only that it implies a new coinage of all the silver specie and of all the old gold. Nothing is more easy than to execute this reformation.

I. The first step is to order all coin, gold and silver, coined preceeding a certain year, to pass by weight only.

588II. To preserve the mint price of silver as formerly, at 5 s. 2 d. the ounce, and to fix that of gold at 3 l. 14 s. 2¼ d.

III. To order the pound troy standard silver to be coined as formerly, into 62 shillings, and the pound of gold into 44½ guineas.

IV. And last of all, to order these guineas to pass for 20 shillings.

Thus the standard is restored to the value of the silver by the statute of Elizabeth, the metals are put at within a mere trifle of the proportion of 1 to 14½: all the coin in the kingdom is brought to standard weight: no profit will be found in melting or exporting one species preferably to another: exchange will answer, when at par, to the real par (when rightly calculated) of either silver or gold, with nations, such as France, who observe the same proportions: and the pound sterling will remain attached to both the gold and silver, as before.

The consequences of this reformation will be to raise the standard 5 per cent.

The consequences of this reformation will be, that the pound sterling will be raised from 1638 grains fine silver (the value of the present worn silver currency) to 1718.7; and from 113 grains fine gold (the present gold currency) to 118.644; that is to say, the value of the pound sterling will be raised upon both species 4.9 per cent. above the value of the present. This all creditors will gain, and all debtors will lose. From the day of the regulation, the exchange upon all the places in Europe will rise 4.9 per cent. in favour of England, and every man who is abroad, and who draws for the rents of his estate, will yearly gain 4.9 per cent. upon his draughts or remittances made to him. Whether prices in England will fall in proportion I do not know; one thing is pretty certain, that every article bought for foreign exportation will fall; for this good reason, that merchants will not be the dupe of this innovation, nor will they buy with heavy money at the same rate they were in use to buy with light. Justice will be done to all gentlemen whose ancestors let their lands in the reign of Queen Elizabeth, or at any time since, when gold and silver were at the proportion of 1 to 14½, and when the silver coin was at its standard 589weight. All taxes imposed by pounds, shillings, and pence, will be raised; all those imposed at so much per cent. of the value will stand the same, but will appear to sink in the denomination; that is, they will produce as much value, but fewer pounds, shillings, and pence, than before. The nation will lose 4.9 per cent. upon the whole capital and interest of the public debts; this the creditors will gain. The bank will gain in its quality of creditor upon the public, and will lose (together with all the bankers in England) 4.9 per cent. upon all their circulating paper. All annuitants, landlords, and creditors of every denomination, whose contracts are under 30 years standing, will gain. All debtors, mortgagors, tenants, whose contracts are of a fresher date, will lose. All merchandize whatsoever ought to fall 4.9 per cent. in its value; and every farthing any thing falls less in its price is lost to the consumers.

These are some of the most evident consequences which must result from this plan of reformation, and the nation is the best judge how far they will contribute to her advantage.

Either this reasoning is just, or all the principles I have laid down are false from the beginning.

Every interest in a nation equally entitled to protection,

A wise nation, I apprehend, is actuated by a spirit of justice. Every class, every denomination of inhabitants is equally entitled to the protection of a good government. Whatever step of administration can profit one set of men, to the detriment of another, is ill combined: whatever step can do justice to one set of men who have wrongfully suffered loss, to the detriment of another who have unjustly gained, is well combined. Upon these principles it is impossible to approve of the operation we have described. It is a political hodge-podge: it is, as it were, throwing all the interests of Great Britain into a bag, and drawing them as in a lottery.

Those who suffer by the debasement of the standard,

We must, therefore, enter into a more particular examination of those opposite and jarring interests; we must inquire into the interests 590which have suffered, and which continue to suffer, from the actual debasement of the standard, and into those which must suffer upon a restitution of it according to the plan proposed. When we are informed concerning the sufferers, we shall easily perceive who must be the gainers.

Those who suffer by the debasement of the standard, are

1mo. Every person who is creditor in a contract entered into before the debasement of the standard.

2do. In proportion as the disorder in the coin continues, and as the currency becomes lighter, every man who sells to merchants is a loser.

In a trading nation such as England, it is not possible that any currency can long sustain itself by virtue of the stamp, at a higher value than its intrinsic worth. Whoever therefore, from a habit of selling any particular merchandize, continues to consider a currency which is daily becoming lighter as remaining at the same value, is deceived in his dealings by every man who is instructed in the matter of fact.

ought only to benefit by the restitution,

Those, I think, are the only persons who are really losers by the debasement of the standard, and who have a right to be redressed.

I must not omit however, to mention another set of people infinitely more considerable than both, who think fit to rank themselves in this class, without having the smallest pretension to enter into it.

These are such who would be gainers, were the government of England to restore the standard upon the supposition that justice required it, without giving themselves the trouble to examine into the merits of that important question.

and not the whole class of creditors,

Of this class are all the public creditors, all enjoying any salary, pension, or pay whatsoever for personal service; all annuitants, landlords, &c. In short, every man in the kingdom, so far as he is a creditor upon any public or private interest.

591But to this class I must beg leave to put a question: What title has any person to receive in payment one grain of silver or gold more than he had stipulated from his debtor at the time of contracting, because the government of Great Britain thinks proper to make a new regulation with respect to their coin? If it be true that every man has a right to complain of the debasement of the standard so far as he is thereby defrauded of that weight of the fine metals which he was entitled to receive, surely every man has a right to complain of the rising of the standard, who thereby becomes obliged to repay more weight of the fine metals than ever he received value for.

In justice and in common sense, the raising of the standard of the coin ought never to be allowed to benefit any person but those who have been unjustly sufferers by the debasement of it, nor ought it ever to be prejudicial to any person but to such as by the debasement have been unjustly gainers.

whose claim ought to be liable to a conversion,

In every contrast where neither of the parties can produce any palpable loss sustained by the former debasement of the standard, the alteration ought to have no manner of effect. All debts of whatever kind, ought to be liable to a fair conversion, as much as those contracted in guilders, florins, livres, &c. when they come to be paid in pounds sterling. The old and the new standards are not the same, because they carry the same denominations of value, any more than a piastre is a pound, because they begin with the same letter.

All the world must agree that the standard of queen Elizabeth is debased, and that a pound sterling is no longer worth 1718.7 grains troy fine silver. Every body must also agree that were the standard restored, merchandize of every kind ought to fall in value.

according to justice and impartiality.

If therefore, after the restitution, a person who has merchandize to buy, shall have the privilege to proportion his price according to the change of money, why should another who is a debtor be in a worse situation? Why should permanent contracts be obligatory according 592to language, and momentary contracts, such as sale, be obligatory according to things?

Two people hire each a servant, the one stipulates to pay twenty guineas wages, the other stipulates twenty-one pounds sterling: the standard is in a short time after restored in the manner we have been describing; can any thing be more absurd, than that he who stipulated the twenty guineas, shall be quit after the restitution, on paying the twenty guineas as before, and that he who stipulated the twenty-one pounds sterling, shall be obliged to pay twenty-one guineas?

What pretension therefore can any man who is possessed of a salarysalary, an annuity, or of a bond or other security for a sum due to him by another, have to be paid the same number of pounds sterling stipulated at first, when the pound comes to be increased in its intrinsic value 5 per cent. above the value it had when the obligation was contracted?

CHAP. XII. Objections stated against the Principles laid down in this Inquiry, and Answers to them.

I hope it will be remarked, that I do not pretend that the coining the pound troy standard silver into 65 shillings, or the making a new coinage upon the old footing of 62, reducing the guineas to 20 shillings, and then allowing conversions from the old to the new standard at a deduction of 5 per cent. upon permanent contracts formerly entred into, is not a manifest debasement of the value of the pound sterling, from what it was while affixed to the silver according 593to the statute of Elizabeth. All I pretend to allege is, that neither of these operations (which are nearly the same thing) would be a debasement of the present value of the pound sterling, or of what it has been worth for these thirty years past at least.

But as this opinion is by no means generally adopted, I must now do justice to its adversaries, and set before the reader the several objections which may be opposed to it.

That a pound will always be considered as a pound.

Objection I. That the force of habit is so strong in uniting the ideas of value to the denominations of coin, that a pound sterling, whether it be raised or no, will always carry along with it the same measure of value: that merchandize will not sink in price according to the due proportion of the rise: that if conversions are suffered, the confusion will be endless; and that in the main, the diminution thereby operated upon the numerary, will turn out a real diminution upon the intrinsic value.

That the standard is not debased at present, being affixed to the statute not to the coin.

Obj. II. That the disorder in the proportion of the coin, and the wearing and lightness of the currency are not a real debasement of the standard. That the money-unit preserves its intrinsic value, in virtue of the statute of Elizabeth which establishes it. That it is false to allege that the English standard is solely affixed to the coin, or that it has no invariable measure to be compared with. That the pound sterling is really fixed to that statute not to the coin; and therefore that no variation of the coin, but only a variation of that statute, can change the standard.

That the pound sterling is virtually worth 1718.7 grains fine silver.

Obj. III. That the pound sterling is still virtually, and in many respects worth the silver statute of Elizabeth, although traders in bills of exchange, and jobbers in the metals may make it appear otherwise. That consequently a new regulation either by the coinage of silver at 65 shillings in the pound troy, or by admitting deductions of 5 per cent. upon the old standard, on pretence that a pound sterling is worth no more at present than 1638 grains of fine silver, is not preserving the standard at what it has been these thirty years, but really a debasement of it from the present value.

That these principles imply a progressive debasement of the standard every new coinage.

594Obj. IV. That if the rubbing and wearing of the coin be said to debase the standard in spite of all statutes, and if every new coinage is to be regulated by the weight of the former grown light, in order to support the actual value of the money-unit, it is plain, that in time that unit must be reduced to nothing.

That the same argument holds for debasing the standard measures of weights, capacity, &c.

Obj. V. That were the measures in common use, by wear and by fraudulent practices, rendred less than the standard measures kept in the exchequer, it would appear manifestly absurd, for that reason, to diminish these standard measures. That for the same reason, while the statute of Elizabeth subsists, it would be equally absurd to diminish the silver standard of the pound sterling.

That the wearing of the coin falls on them who possess it at the crying down, but does not debase the standard.

Obj. VI. That debasing the standard by law is violently invading every man’s property; that when the coin is debased by circulation, the loss only falls upon him who happens to be in possession of any part of it at the time it is cried down.

That inland dealings, not the price of bullion, or course of exchange, regulate the standard.

Obj. VII. That although merchants and money-jobbers may consider the value of a pound sterling according to its weight of silver or of gold; and although exchange and the price of bullion may make it appear to be at present of no greater value than 113 grains of fine gold, and 1638 grains of fine silver; yet still in inland dealings it is worth its standard weight, to wit, 1718.7 grains of silver; because the inhabitants of England never consider their money by its weight, but by tale. The currency by tale regards the standard, as currency by weight regards the coins themselves.

That the quantity of money which goes abroad, or even the quantity of foreign dealings, is so inconsiderable, when compared with domestic circulation, that the value foreigners put upon English money can but very little affect the value of it in the country.

That public currency supports the value of the coin.

Obj. VIII. That the coin, though light, being received by the King in all the public offices for its value, keeps up that value to the standard, notwithstanding its being under the weight.

That this scheme is the same with that of Lowndes.

Obj. IX. That the scheme proposed is the same with that proposed by Lowndes in 1695, so fully refuted by Mr. Locke, and rejected by the decision of the nation on a parallel occasion.

Answers to these objections.

595In order to leave nothing unsaid which can tend to set this matter in a clear light, I shall briefly give an answer to all these objections, in the most distinct manner I am capable of. I have gathered them from every quarter, particularly from Mr. Harris. I have endeavoured to state them in all their force, and I shall answer them with candor, according to the principles laid down, and according to uncontroverted matters of fact.

That a pound will be considered at its worth by all debtors, and those who buy.

Answer to Objection I. Here I reply, that no habit any people can contract, is strong enough to blind them with regard to their interest. Nothing is so familiar in many countries, as to raise and sink arbitrarily the numerary value of the several denominations of coins; but no sooner is the change made, than it becomes familiar, even to the children of twelve and fourteen years old; and any person who has had occasion to travel, must have been astonished at the acuteness of the common people in their knowledge of the value of coins. The habit of uniting ideas to old pounds sterling will, upon a restitution of the standard only, be found in the heads of sellers and creditors; buyers and debtors will very quickly learn to profit of a deduction of 5 per cent. provided they are legally authorised to do it. It will greatly depend upon government to oblige commodities to follow the just proportion of their worth, by making conversions of the taxes, new regulations of assize, for bread, beer, &c. and by putting into the hands of the people convenient tables for that purpose. When the thing is once understood, the execution will be easy.

If the standard was affixed to the statute, people would be obliged to pay by weight.

Answ. II. Could it be made out that the standard of the pound sterling is affixed to the statute of Elizabeth, and not to the coin, this objection would be invincible. But were the matter so, the payment of all obligations might be exacted by weight of silver; because the statute regulates nothing else. A man owes me a thousand pounds, he makes me a legal offer of silver or gold coin to the current value, were the standard affixed to that statute, I should have the privilege to refuse both the current species, if light or ill 596proportioned, and demand of him to weigh me down 1718700 grains of fine silver, or 1858060 grains weight of the nation’s silver coin.

As this is not the case, the standard is not affixed to the statute of Elizabeth; consequently, not affixed to an invariable measure; consequently, must vary according as the coin varies, to which alone it is by law attached.

No body can be obliged to pay 1718.7 grains of fine silver for a pound sterling.

Answ. III. That if it is said, that the pound sterling is in any case of the value of 1718.7 grains of fine silver, I am entitled to ask who can force any man in Great Britain to pay him at that rate? But if it be true on the contrary, that there is not any pound sterling due within that kingdom which may not be legally acquitted with 113 grains of fine gold, or with 1638 grains of fine silver, then I am authorised to state the present value of the pound sterling at that rate. If this be the case, then the addition of one grain of silver or of gold more, in a new coinage, necessarily implies a raising of the standard.

That it is not the regulation of the mint, but the disorder of the coin which must debase the standard.

Answ. IV. This objection lies against the rubbing of the coin, not against the regulation of the mint. I have frequently observed, that it is the rubbing of the coin which of itself debases the standard, in spite of the statute as it stands, but not in spite of what it might be.

There is no doubt, that as long as any nation permits her current coin to pass below the standard weight, by virtue of the stamp, she by that neglect, opens a door to the debasement of the standard, and totally disappoints that part of the statute which regulates the weight; consequently the act of making a new coinage afterwards, at the then debased value, is not of itself a new debasement.

The new coinage, in that case, is a temporary interruption put to the circulation of coin unequally worn, which is what occasions, more than any thing, the progressive debasement of the standard; but it is no new debasement in itself, nor is it any preservative against debasements for the future.

597If it be not provided by statute, that debtors shall make good the weight of the coin with which they pay, in one way or other, of necessity the state must either go on regularly debasing her standard every new coinage, or be obliged to raise it by jerks, to the detriment of all the debtors who have contracted during the preceding debasement.

That people are obliged to measure by the standard weight, but are not obliged to pay by the standard pound.

Answ. V. The comparison between the standard weights in the exchequer, with the standard of the pound sterling, is not just. If a merchant offers me grain, bullion, or cloth, by a measure which is not of the legal content, weight, or length, I may refuse it. I have even an action against him for fraudulent dealing, in case I shall have unwarily accepted of the merchandize. But I cannot reclaim (as has been said) the measure of the money-unit according to the statute.

Now let me suppose, that for 40 years no access could be got to the standard measures of the exchequer, that during this time all the measures of the nation should be debased; that notwithstanding this, the landlords over all England should continue to stipulate their rents in grain, by the debased bushel of their respective counties: if after 40 years of such confusion, the exchequer should be opened, and all measures fitted to the standards, would it not be a horrid piece of injustice not to allow both landlords and farmers who had entred into leases within the 40 years, the liberty of converting their rents from the debased to the standard bushel.

That the loss upon light money when called in does not fall upon the possessors.

Answ. VI. This objection proceeds entirely on the supposition, that it is the altering the statute, and not the rubbing of the coin, or the changing the proportion of the market price of the metals which debases the standard.

Were that proposition true, the consequence drawn from it would be true also, to wit, that the loss by the wearing of the coin remains entirely suspended until the worn coin is all at once cried down. But if I can prove, that the wearing of the coin does not fall upon the person in whose hands it is found when cried down, 598except only so far as it happens to be below the mean weight of the whole currency, or so far as the person is a debtor, and unjustly obliged, by an arbitrary law, to pay what he had received in light, with heavy coin. If this, I say, be true, I hope it will follow, that there is not the least force in this objection. This consequence is plain.

It is certain, that by the wearing of the coin there is a loss incurred by somebody; if it be proved that it is not incurred by the person in whose hands the light coin is found when cried down, it must follow, that it has already fallen proportionally upon those who, in the mean time, have been considering it as of the standard value, while it has been really below it.

Here follows the proof of this proposition.

I shall suppose the silver coin of Great Britain is actually so worn as to be 5 per cent. lighter than its standard weight at a medium. If at that time the silver is ordered to be recoined of the standard weight, I say the currency, after the coinage, will be 5 per cent. better than before. Ought not then all merchandize to fall 5 per cent. in value upon this revolution.

Two men (A) and (B) have, the day before the calling in of the light specie, each a thousand pounds sterling of it in tale; (A) goes to market and buys corn with his thousand pounds, (B) keeps his coin, and next day is obliged to carry it to the mint, where he sells it at 5 per cent. discount; that is, for nine hundred and fifty pounds of new heavy silver coin. (B) after this operation goes to market; and finding grain fallen in the price 5 per cent. he with his nine hundred and fifty pounds, buys just as much as (A) had bought the day before with his thousand pounds. I ask what loss (B) has suffered in carrying his silver to the mint?

But if we suppose the thousand pounds in silver tale money, which (B) had, to be worn more than at the rate of 5 per cent. then he would lose all the difference; because the price of things would fall only according to the general proportion of the rise upon the 599value of the currency: but on the other hand, he would gain upon the supposition that his thousand pounds should happen to be less worn than the 5 per cent.

Can any thing, therefore, be more absurd, than to appoint by law, that one, who shall at this time happen to be indebted for a thousand pounds, shall be obliged to pay this thousand pounds in heavy money, when he had borrowed it in light.

We have seen how (B) in buying corn with nine hundred and fifty pounds of the new coin, got as much as (A) had got the day before with his thousand. But suppose they had both bought grain the day before the crying down of the coin, (A) with his money, (B) with a note payable next day, how absurd must any law be, which should oblige (B), for one day’s credit, to pay at the rate of 5 per cent. increase of price; and this because of the accident of calling in of the money: an event he could neither foresee or prevent.

We may, therefore, conclude, that while the coin of a nation is upon the decline from the standard value of the unit (as it ought to be preserved by some invariable measure) those only through whose hands it circulates, lose upon what they have, in proportion to the debasement of the standard, while the coin remains in their hands.

That inland dealings cannot support the standard where there are money-jobbers or foreign commerce.

Answ. VII. It has been said, and I think proved, that in a trading nation, such as England is, nothing can long support the value of the money-unit (while affixed entirely to the coin, and while coinage is free) above the intrinsic value of the metals contained in it. I must now shew how the operations of foreign trade have the effect of regulating the value of the currency, in the hands even of those who consider coin merely as money of accompt; who give it and receive it by tale; and who never attend to the circumstances of weight, or proportion between the metals.

The price of commodities, in a trading nation, is not settled by private convention, but by market prices. Foreign markets regulate 600the price of grain, which regulates, in a great measure, that of every other thing; and the price of grain is regulated by the value which other nations pay for the pound sterling, by which the grain is bought. If, therefore, the lightness of the coin debases the value of the pound sterling in foreign markets, it must, for the same reason, raise the price of the grain bought with these pounds sterling; because the value of the pound sterling has no influence upon the value of grain abroad. The domestic competition between the merchants in the buying of the grain at home, informs the farmers of its value abroad; and they, without combination of circumstances, esteem it and sell it for inland consumption, at a value proportioned to what it bears in foreign markets; that is to say, proportioned to the actual value of the coin. Thus English farmers, although in buying and selling they do not attend to the weight of the coin, regulate their prices exactly as if they did.

I ask, What is meant by this expression, that the lightness of the coins is no ways considered in any of our internal dealings with one another. Currency by tale refers only to the legal standard, as currency by weight doth to the coins themselves? (Essay upon money, Part 2d, p. 79.) Will a person who considers his light shilling as a standard coin, buy more with it than if he considered it by its weight? Will any man in England sell cheaper to a porter, who never considered his shilling farther than to look at the King’s head, than he would to a Jew, who has had his shilling in a scale, and who knows to the fraction of a grain what it weighs? Which way, therefore, (in a trading nation) can money possibly be worth more than its weight? I comprehend very well how one shilling may be better than another to a money-jobber; but I cannot conceive how any shilling whatever, which passes by tale, be it light or weighty, can ever be worth more than according to the mean weight of the present currency. People, therefore, who know nothing of the value of money, may lose by giving away their heavy coin; but I cannot see how ever they can gain in their inland dealings, or how they can ever circulate 601their light coin for more than the value of the present currency.

We may, therefore, lay down the following principles: 1mo, That, in a trading nation such as Great Britain, where coinage is free, the value of tale-money is exactly in proportion to the mean weight of the whole currency. 2do, That the money-unit being only affixed to the coin, is exactly in proportion to its weight. 3tio, That when the intrinsic value of all the coin is not in the exact proportion of its denominationdenomination, the operations of trade will strike the average, or mean proportional. 4to, That when this is done, those who pay by tale, in coin which is worth more than the mean proportion, are really losers; and those who pay by tale in coin below that value, are really gainers, whether they know it or not.

That public currency supports the authority of the coin, not the value of the pound sterling.

Answ. VIII. The authority given to coin, by its being every where received in the King’s offices, is entirely confined to its currency, and not to its value. The consequence of its being received at the exchequer according to tale; makes coin which is not worth a pound sterling pass as if it were so. This debases the value of the pound, but gives no additional value to the coin. Is not this debasing the standard by authority, since it may oblige a creditor who lent 100 l. to accept of ⁹⁵⁄₁₀₀ of the value, as a legal payment.

The pounds sterling paid into the exchequer are no better, nor will they buy more of any commodity, than the worst pound sterling that ever came out of the hands of a money-jobber; and therefore contribute nothing to keep up the value of the coin. Merchants who know the value of coin, are those who regulate prices; and the public sale of one hundredth, nay of one thousandth part of a commodity sold by retail through all the nation, is sufficient to regulate the price of it every where. If this be true, to suppose that a pound sterling being regulated by statute, can add any thing to its value; or that my right is left unviolated, when I have been every day for these forty years giving my pound for 602what I ought to buy for 19 shillings of Queen Elizabeth’s standard, is as ideal a representation of the value of right as any thing I have ever heard.

If it be said, that this right implies a title to be indemnified by a reformation, or a restitution of the standard, for the loss I have sustained by the gradual debasement of it: I reply, that a state must examine the nature of my claim, and do me justice, without all doubt; but it does not follow as a consequence, that because a creditor in an old contract has been a loser by his debtor, that therefore all the creditors in the nation should share in the benefit of his restitution, at the expence of debtors, from whom they have suffered no loss.

That the scheme is similar to, tho’ not the same with that of Lowndes.

Answ. IX. I own the scheme proposed is pretty much the same with that proposed by Mr. Lowndes; and I must here give a satisfactory answer how a project so solidly refuted in 1695, can possibly be eligible in 1760.

Lowndes reasoned upon wrong principles;

First then, I say, that the question was not then understood. Mr. Lowndes put it upon a wrong issue, and supported his argument upon wrong principles. He insisted, that his scheme implied no debasement of the former standard. He ascribed the rise of the price of bullion to the rise of the intrinsic value of silver, and not to the lightness of the coin with which it was bought. He always supposed, that the stamp, and not the substance, made the currency. A light shilling and a heavy one were both shillings, according to him. He proposed reducing the weight of the silver coin 20 per cent. below the standard of Elizabeth, because he was ashamed to propose more; but a reduction of 33 per cent. or rather 50, would hardly have brought the pound sterling to the mean value of the silver currency at that time.

Locke attended to supporting the standard, without attending to the consequences.

Mr. Locke, on the other hand, supposed the whole dispute to rest upon one point, to wit, Whether or not Mr. Lowndes’s scheme implied a debasement of the standard? He reasoned upon sound principles, and with good sense; but he did not turn his attention 603to the only object which fixes ours at present, to wit, the interests of those who are engaged in permanent contracts.

Mr. Lowndes’s great argument for reducing the standard was, that silver bullion was risen to 6 s. 5 d. per ounce, (that is, that it might have been bought with 77 pence of shillings of ¹⁄₇₇ part of a pound troy) and therefore he was of opinion, that the pound troy should be coined into 77 shillings; which was diminishing the value of the pound sterling about 20 per cent. or ¹⁄₅. Mr. Locke answered him very well, that the 77 pence were paid in clipped money, and that those 77 pence were not in weight above 62 pence standard coin. This answer is quite satisfactory. But I ask, whether Mr. Locke would have been of opinion that any man who had borrowed 1000 l. sterling in this clipped money, ought to have been obliged, upon a reformation of the standard, to pay back 1000 l. sterling in standard weight? These gentlemen, Mr. Lowndes and Mr. Locke, examined very slightly the influence which altering the standard might have upon the interest of debtors and creditors; which is the only consideration that makes the reformation difficult to adjust at present. So great an influence in every political matter has the change of circumstances! Credit then was little known; consequently the mass of debts in England was small: now it is universally established, and the mass of debts active and passive is very great, and forms a very considerable interest in Great Britain.

In those days the landed interest, and the interest of the crown, were only attended to. Trade at that time was almost at a stop, and had been ruined by a piratical war. The evil was past a remedy, consistent with justice. Credit was very low, and daily declining, and demanded an instant reformation of the coin. Restoring the standard was the most favourable, both for the landed interest and the exchequer; and so it was gone into. The nation, and every debtor, was robbed by their creditors; but they did not perceive it; and what we do not see, seems to do us no harm. The 604question, therefore, is very different: circumstances must constantly be examined, and according to these every political question must be decided.

I have already observed, how the introduction of milled coin had the effect of introducing the clipping of that part which had been coined with the hammer. Guineas, at the revolution, (if I am well informed) passed for 21 shillings and sixpence. Gold was then to silver, over all Europe, rather above the proportion of 1 to 15, as appears by the famous regulation in 1690, called the convention of Leipzick, when the German coinage was settled; and it appears also by the proportion observed in France; and in Spain it was still higher, being as 1 to 16. At this rate we may be certain, that at the revolution the English silver was standard weight; because the guinea being left to seek its own price above 20 shillings, the statute value, did not rise above 21 shillings 6 pence, which marks the proportion to have been as 15.6 is to 1. The guinea, therefore, would not have failed to have risen higher, had the silver coin been light.

From 1692 to 1695, that is, in three years time, (Locke’s Farther Consid. p. 74.) the progress of clipping went on with such rapidity, that guineas rose from 21 shillings 6 pence, to 30 shillings; and according to a very sensible letter which lies before me, signed G. D. and printed in 1695, intituled, A Letter from an English merchant at Amsterdam, to his friend in London, I find there was at that time no determinate value at all for the pound sterling: so great was the difference of the currencies! As a proof, he says, that 100 pounds sterling in silver, which ought to weigh 32 pounds troy, weighed then commonly between 14 and 18. At which rate guineas were very cheap at 30 shillings: they were worth above 40 shillings: and Davenant says, that five millions then borrowed by the state did not produce the value of two millions and a half.

Political circumstances are greatly changed.

It would be foreign to the present purpose to enter into a particular disquisition, in order to shew the difference between the political 605state of England then, and at present: let it suffice to remark in general,

I. That there was then no possibility of determining what the current value of a pound sterling was. It varied every month, and was daily declining. At present it is nearly of the same standard as it has been for many years.

II. The money-unit then had nothing to preserve it at any determinate value. The silver, to which it was affixed, was clipped three times in a year, while the gold sought its value as a commodity. At present the gold cannot vary: the guinea is fixed, and must pass for 21 shillings, let the silver be ever so light; and this gives a determinate value to the pound sterling.

III. In 1695, the whole disorder had been coming on with rapidity; at present it has advanced with imperceptible steps: consequently,

IV. At that time the number of permanent contracts which stretched beyond the æra of the debasement of the standard, were many; at present they are few.

V. In 1695, a money’d interest was hardly known. The rich had their money in their chests; now they have it in their pocket-book.

VI. The different between the currency and the legal standard in 1695, was one half: at present it is one twentieth.

VII. The debts of the nation did not then exceed 12 millions: now they exceed 140^[V].

VIII. Many sums then had been borrowed on assignments of certain branches of the excise, the amount of which was uncertain, and deficiencies (which in such cases are unavoidable) were not made good to the creditors. At present all is paid in determinate sums of pounds sterling.

IX. And lastly, the question was not understood. Locke and Lowndes felt, but did not see distinctly, wherein the difference of 606their sentiments consisted: and those who only feel never describe with perspicuity.

It was then generally imagined that a pound could never be more than a pound; but at present people know how to reckon coin by grains, and see clearly that 1718 is more than 1638.

For these reasons I apprehend, that a scheme, similar to that proposed by Mr. Lowndes, may now be mentioned without offence; that the people of Great Britain are just now as good judges of what is for their interest, as they were in 1695. And if the decision of a former parliament is alledged in favour of the old standard, I answer, that such arguments are only good, when people are disposed to pay a greater deference to the sentiments of their fathers than their own; which I am apt to believe is not the case at present.

Reconciliation of the two opinions.

If these answers are found satisfactory, we may conclude, that in whatever way the disorder of the British coin is removed, the change ought to be made in such a manner as neither to benefit or to prejudice any, but such as have lost or gained by the debasement of the standard. Lest, however, that these answers should be perplexing only, without drawing conviction along with them, (which in matters of dispute is frequently the case) I shall say something farther upon this subject, with a view to reconcile two opinions, which are perhaps more opposite in appearance than in reality.

I have already apprized the reader, that I pretend to reason only upon principles, not upon exact information of facts. Circumstances which are hid from me, will nevertheless work their full effect, and may render the best deduced principles delusive, when, without attending to them, we pretend to draw conclusions.

Now, such circumstances in the present case there must certainly be; otherwise every body in England would agree, that the standard is at present actually debased, and that the restitution of it would effectually be raising it from what it has been for these 607many years. Upon this supposition, the consequences we have drawn must be allowed by every body to be just and natural.

Nothing, I think, is more certain, than that all men would be of the same opinion upon every proposition, were such propositions well understood, and did all parties make the application of them to the same object, and in the same sense.

If this be true, let me try to give a reason how it happens that there are different sentiments in England upon the method of restoring the standard.

The question in dispute is not understood.

I. First then, the question is not understood; and the principal thing which obscures people’s ideas concerning it, is their constantly attending to the denominations of the money of accompt, instead of attending to the denominations of the coin. These two things are universally confounded. A pound sterling is always a pound sterling, no doubt; but the grains of silver which compose one pound sterling are not the same in number with those which compose every pound sterling. Now, the moment money is realized in the metals, and that the standard measure of value is affixed to them, let them be worn or not, it is very evident that nothing but the grains of the metal in the several pieces can represent the scale by which the coin becomes a measure of value. Whenever, therefore, people lose sight of this undoubted truth, and begin to measure by the denominations of the ideal money of accompt, without examining whether that value be exactly realized or not, it is just the same thing as if they were to measure a length upon a plan without adjusting their compasses to the scale, and upon a bare supposition that the opening they had, by accident might answer to the length they were to measure.

The true characteristic of a change in the standard is not attended to.

II. The state, in every country almost, is negligent in instructing the people of the consequences of every variation in the coin; and likewise negligent in providing against the inconveniences which result from all changes in those matters. It is not to be supposed that the common people can exactly comprehend the consequences 608of making a pound sometimes consist of more silver and sometimes of less. When the pieces are heavy however, they weigh them in their hand, and say this is good money; but when they find that they must give as much in tale of this good money to pay their debts, as if it had been light, they feel a regret, but they do not see the injustice of such a regulation.

Farther, when people find that upon a reformation of the coin they are still obliged to acquit their obligations with the same denominations as before, is it not very natural for sellers to insist upon having the former prices for all sorts of commodities. This is the reason why the universal experience of France (which nation has been more accustomed to variations in their coin, than England) proves that merchandize does not immediately rise and fall according to the variations of the coin. But the operations of foreign trade, which are immediately felt and profited of by the trading part of the nation, insensibly affect the dealings of the body of the people, and produce, after a certain time, those effects, which ought to have followed immediately upon the innovation.

Principles will not operate their effect without the assistance of the state.

Now it is very certain that the principles we have been laying down will not, in practice, answer, unless the state should lend a hand, both by instructing their subjects in the nature of the change intended, and by interposing their authority to see justice done among them.

When people understand one another, they soon agree.

Those who oppose the doctrine we have been laying down, go upon the supposition that the law ought to order all obligations to be acquitted according to their denomination after the reformation of the standard. I go upon the supposition that it is just they should be acquitted according to the intrinsic value. Where then lies the difference between our sentiments? We are of the same opinion, as to the main question: for were it true that prices were not to sink 5 per cent. after the reformation, I should be the last man to propose, that debtors ought to be allowed conversions in paying with the new standard; and I suppose that those who support the contrary 609sentiment would be just as little inclined to oppose a conversion, upon the supposition that ninety five pounds, after the supposed reformation, were to be equivalent, to all intents and purposes, to a hundred at present.

Permanent contracts are confounded with sale in this dispute.

III. The clearest and the best reasoners I have met with upon this subject, are apt upon some occasions to confound the two species of circulation which we have endeavoured carefully to distinguish; to wit, the involuntary which takes place in acquitting contracts already made, with the voluntary which takes place in common sales. As an example of this, and as a means of reconciling opinions, and not with any intention of entring upon refutations, I shall here extract a passage from Mr. Harris upon coins, Part II. p. 96. and insert in Italics what I think will explain the difference between our sentiments.

“You affirm (says he) that if the rate of a guinea be reduced one shilling, there would be a loss of the one and twentieth part upon all the guineas in the nation;” (yes, as often as debtors might be obliged to give them to their creditors for pounds sterling) “but that there would be no loss at all upon guineas, if they were ordered to pass for twenty one shillings, having in them no more silver than there is at present in twenty standard shillings.” (no, certainly; because the debtor would pay his debt with the same number of guineas which he had borrowed.) "Strange, very strange indeed, that there should be such magic in the word shilling, and the number twenty one, as to make the same thing, only calling it by different names, have such different effects! It is scarce necessary to take any farther notice of such a mere jingle of words; but out of tenderness to these young logicians, but more out of regard to those who may be deceived by them, if any such there can be, I shall endeavour to shew, that our scheme is more favourable to them than their own.

“It is self-evident that the nation would not lose one farthing upon all the gold it exported, by a reduction of the mint price of 610gold: for this reduction would not in the least debase the intrinsic quality of the gold, and every guinea that went into foreign parts, would fetch there as much afterwards, as it doth at present.”

What I have put in Italics clears up the opinion which the author endeavours to refute. He seems much surprized to find magic concealed under the word shilling, and twenty one, whereas there are no words more magical in all the jargon of astrology than in these, and in every term relating to the denominations of money of accompt. Is it not very magical, that the same quantity of silver at present found in twenty one light shillings, being coined into twenty standard shillings, should only acquit a pound sterling of debt, and that were it coined again into twenty one shillings, it would acquit one pound one shilling of debt? Nay more, were it coined into a hundred shillings, it would acquit a debt of five pounds.

The doctrine, therefore, which the author endeavours to combat in this place, is not so ridiculous as it appeared to him; but he has not, in this place, attended to the difference between paying what one owes, and buying merchandize in the course of foreign trade. Let me illustrate this by an example.

I come to my creditor with a guinea, and I say, I owe you twenty one shillings; there you have them. No, says my creditor, that piece is but twenty, by the new regulation; I must have one shilling more. There is no reasoning here, the denomination of the coin must decide between us, not the weight, not the intrinsic value of what I had borrowed. But I go to a shop to buy a hat, the hatter asks twenty shillings; I offer him a guinea and demand a shilling to be returned; says the hatter, That guinea is worth but twenty shillings: Very well, say I, if my piece of gold is worth no more than 20 shillings, your hat was, yesterday, worth a shilling less than it, and, consequently, to day is worth no more than 19 shillings.

611In the last example, magic has no effect, and to such cases Mr. Harris has only attended in the passage cited; but in the first, the magical word of a statute, is capable to undo one half of the nation; although their ruin does not imply the exportation of a shilling out of the kingdom, or any benefit to foreigners, unless they be creditors to Great Britain.

The interest of creditors is always the predominant, and determines the opinion of a nation.

IV. The sentiments which the people of England generally form upon this subject, are directed by those of the higher classes. These are all of the class of creditors, and very naturally retain sentiments analogous to their own interest. I am far from insinuating any thing here to the prejudice of this class; all I mean is, that upon an obscure point, people lean naturally to that side which favours themselves, especially when the nation’s interest, and the interest of justice, do not evidently declare against it.

I call the higher classes of a people creditors; because they live upon a fortune already made, and draw their income from permanent contracts: and those are the debtors, who are bound on the opposite side of such contracts. Besides these two interests, there is another which can never be at the mercy of any arbitrary regulation as to money: those, to wit, who live upon their industry, and who enter into no contract but that of sale: they regulate their prices according to the intrinsic value of the coin at the time; whereas the others who are engaged in permanent contracts, must regulate theirs according to the words of their contract, and the interpretation which the law puts upon those words. Every man therefore, whose fortune is already made, either in land, money, or salary, has an interest in seeing the standard raised, and those who are bound in permanent contracts with them, are those only who can be hurt by it.

Farther, the higher classes in Great Britain have always the penning of the law. Is it then surprising, to find the interest of creditors constantly attended to, in new regulations of the standard? When Princes arbitrarily debase the standard, they debase it because 612at such a time they are virtually in the class of debtors: their expence then exceeds their income. On the contrary, when wars come to cease, and when their expences are reduced within the compass of their revenue, they raise the standard: because they become then of the class of creditors.

This principle is a key to all the mystery of the raising and sinking of the numerary value of the French coin in former times, before public credit was established among them.

Now let us apply this reasoning to the present case.

Since in all changes upon the coin we find (of late) the interest of creditors constantly attended to in Great Britain, is it not very natural for people to reason upon the supposition that there is no injustice in raising the standard; and is it not natural to suppose that government will act upon the same principles in their future regulations of the standard, as upon the last occasion in 1695? Every one, therefore, whose fortune is made, finds it his interest to have the standard brought back to what it was formerly; and he does not perceive the injury such a regulation would do to his debtors. On the other hand, the merchants see plainly that if this standard should be restored upon an imaginary principle of justice, the prices of commodities will not fall as they ought to do, and as foreign trade requires they should; they are therefore against raising the standard, because it will be a prejudice to trade, a clog upon exportation, and therefore a loss to themselves.