The Flaws of Silver Money

As the Quantity of Money has encreas’d since that time, much more than the Demand for it; and as the same Quantity of Silver has receive’d a higher Denomination, so of Consequence Money is of lesser value: A lesser Interest is given for it: A greater Quantity of it is given for the same Quantity of Goods, and the Land is worth more years purchase.

The value of such Land now, the Acre rented at 2 Bolls, victual at 8 lib. 6 sh and 6 pence, Money at 6 per cent, so land at 20 years purchase, would be 8000 lib. By this Computation Money is only worth the 20th part of Goods, and the 57th part of Land, it was worth 200 years ago. Part of this difference is from the Improvement made on Land, and the greater Demand for Land, the Quantity being the same, whereby its value is greater: The rest of the Difference is, from the Money being more enceas’d in quantity, than in Demand, whereby its Value is lesser, and its use lower: As likewise from its being alter’d in the Denomination.

There was then a greater Quantity of Silver in the same number of pence thanthere is now: Which appears by several Acts of Parliament made about that time.

Anno 1475, in the 8 Par. of K. James the 3. The Ounce of Silver was order’d to be sold for 12 sh. Scots and 12 Groats was made of the Ounce of Silver.

The 3d. of November 1554, by an Act of the Town Council of Edinburgh, the Ounce of Silver was order’d to be sold at 18 sh. and 8 pennies Scots; But these Acts does not mention the Fineness the Silver was of. Suppose the same number of pence had twice or 4 times the Value of Silver in them that they have now: Then Silver is only fallen to one Tenth, or one Fifth of the Value it had to Goods; and to one 28th, or one 14 of the Value it had to Land. But still Money is fallen to one 20th of the Value it had to Goods, and to one 57th of the Value it had to Land.

The Manner of lending Money in France, and I suppose in other Roman Catholick Countries; is by way of perpetual Interest, redeemable by the Debitor, and which the Creditor may dispose or assign, but can never demand the Principal. And it is Usury by Law to take any Interest for Money, if the Crditor has power to call for the Principal, tho the Term of payment be many years after the Money is lent. Suppose the manner of lending in Scotland was the same 200 years ago, and that A.B. having 768 Acres of Land, rented at a Boll of Victual the Acre, the yearly Rent 48 Chalder, at 5 lib. Scots the Chalder, 20 lib. sterl. C.D. worth a 100 lib: in Money, tohave lent it to A.B. and Interest being at 10 per cent, to have received an annual interest of 10 lib. which he left to his Son, and thought he provided sufficiently for him, 10 lib. being equal to, or worth 24 Chalder of Victual. But Interest being lowered to 6 per cent, Money being rais’d in the Denomination, and of less value by its greater Quantity: the 6 lib. now payed for the Annual Interest of that 100 lib. is not worth one Chalder of Victual. And 384 Acres, or the half of A.B.’s Land 200 years ago only equal to a 100, or a 140 lib; is now worth 57 times that Sum, the Rental supposed to be doubled, and its value at 20 years purchase.

In France it has been observ’d, that about 200 years ago, the same Land was in 30 years worth double the Money it was worth before. So Land worth a 100 lib. anno 1500, was worth 200 lib. anno 1530. 400 lib. anno 1560. and so on, till within these 50 or 60 years it has continued near the same Value.

In England, 20 times the Quantity of Money is given for Goods, that was given 200 years ago. In these Countries ’tis thought Goods have rose; but Goods have kept their value, ’tis Money has fallen.

Most Goods have increas’d in Quantity, equal or near as the Demand for them has encreas’d; and are at or near the Value they had 200 years ago. Land is more valuable, by improvement producing to a greater Value, and the Demand increasing, the quantity being the same. Silver and Money are of lesser value, being more increas’s in Quantity, than in Demand.

Goods will continue equal in Quantity as they are now to Demand, or won’t differ much: For the increase of most Goods depends on the Demand (Ex.) If the Quantity of Oats be greater than the Demand for Consumption and Magazines what is over is a Drug, so that Product will be lessen’d, and the Land imployed to some other use: If by a Scarcity the Quantity be lesser than demand, that Demand will be supply’d from Magazines of former Years; or if the Magazines are not sufficient to answer the Demand, that Scarcity cannot well be suppos’d to last above a year or two.

Land will continue to rise in value, being yet capable of Improvement; And as the Demand increases, for the Quantity will be the same.

Silver will continue to fall in value, as it increases in quantity, the Demand not increasing in proportion; for the increase does not depend on the Demand. Most People won’t allow themselves to think that Silver is cheaper or less valuable, tho it appears plainly, by comparing what Quantity of Goods such a weight of fine Silver bought 200 years ago, and what Quantity of the same Goods it will buy now. If a piece of wine in France is equal in value to 20 Bolls of Oats there, that Quantity of Oats can never be worth more or less Wine; so long as the Quality, Quantity and Demand of Both continues the same: But any Disproportion’d Change in their Quality, Quantity or Demand, will make the same Quantity of the one, be equal to a greater Quantity of the other. So if a piece of Wine in France, is equal to or worth 40 Crowns there; it will always continue so, unless some disproportion’d Change happen in the Quantity, Quality or Demand of the Wine, or of the Money.

The Reason is plain, why Silver has encreas’d more in Quantity than in Demand: The Spainiards bring as great Quantities into Europe as they can get wrought out of the Mines, for it is still valued tho not so high. And tho none of it comes into Brittain, yet it will be of less Value in Brittain, as it is in greater Quantity in Europe.

It may be objected that the Demand for Silver is now greater than the Quantity. It is answered, tho the Demand is greater than the Quantity; yet it has not increas’d in Proportion with the Quantity. 200 years ago Money or Silver was at 10 per cent, now from 6 ot 3. If the demand had increas’d als much as the Quantity, Money would give 10 per cent as then, and be equal to the same Quantity of Victual, or other Goods that have kept their Value. If A.B. having a 1000 lib. to lend, should offer it at 10 per cent Interest, and desired Land of 240 Chalder of Victual Rent for his Security, as was used to be given 200 years ago: Tho no Law regulat the Interest of Money, A.B. would find no Borrowers on these Conditions; Because Silver having encreas’d more in quantity than in Demand, and the Denomination being alter’d, Money is of less Value, and is to be had on easier terms. If the Demand had encreas’d in the same proportion with the Quantity, and the Money had not been rais’d, the same Interest would be given now as then, and the same Quantity of Victual to pay the Interest; for Money keeping its Value, 8 sh and 4 pence would be equal to a Chalder of Victual, as it was then.

If 2000 lib. was laid out on Plate 200 years ago, it is thought the Loss on the Plate was only the Fashion, and the Interest; but if the 2000 lib. had been laid out on Land, the Rent of that Land would be more than the Value of such Plate.

Tho Money or Silver is so much fallen from the Value it had, yet it’s given as a value for one half, or two Thirds more than its value as Silver, abstract from its use as money.

Suppose Silver to be no more us’d as Money in Eurrope, its Quantity would be the same, and the Demand for it much lessr; which might lower it 2 Thirds or more; for besides that the Demand would be less, it’s Uses as Plate, etc. are not near so necessary, as that of Money.

Goods given as a Value, ought for their other Uses to be valuable, equal to what they are given for. Silver was barter’d as it was valued for its Uses as a Metal, and was at first given as Money, according to the value it had in barter. Silver has acquir’d an additional Value since, that additional Use it was applyed to occasioning a greater Demand for it; which Value People have not been sensible of, the greater Quantity making it fall more: But it has kept it from falling so low as it would have fall’n, if it had not been used as Money, as the same Quantity had come into Europe.

‘Tis uncertain how long Silver may keep that additional Value: If England set up a Money of another kind, Silver will not fall to one Third, because used in other places as Money; but the lesser Demand besides the ordinary fall from the greater Quantity coming into Europe, would occasion an extraordinary fall perhaps of 10 per cent: If the new Money then in England did not encrease beyond the Demand for it, it would keep its Value, and be equal to so much more Silver at Home or Abroad than it was Coin’d for; as Silver would be of less Value, from the ordinary and extraordinary fall.

If England chang’d their Money, other Countries may do the same. If Holland alone kept to Silver Money, the Price of Silver may be supposed to fall immediately 50 per cent, from the lesser Demand for it as Money. And a 100 lib. in Holland be worth no more than 50 lib. new Money in England, whether sent in Specie or remitted by Exchange; and as more Silver came into Europe, it would fall yet lower, because of its greater Quantity.

It may be Objected, That in Scotland the Quantity of Goods are proportioned to the Demand as they have been some Years ago; and Money scarcer, the Demand for it the same or greater. So if Goods and Money are higher or lower in Value, from their greater or lesser Quantity in proportion to the Demand for them; Money should by its great scarcity be more valuable, and equal to a greater Quantity of Goods. Yet Goods differ little in Price, from what they were when Money was in greater Quantity.

To this is Answered, The Value of Goods or Money differs, as the Quantity of them or Demand for them changes in Europe; not as they change in any particular Country. Goods in Scotland ar at or near the same Value with Goods in England, being near the same in Quantity in proportion to the Demand as there: Money in Scotland is not above one 40th part of the Money in England, proportion’d to the People, Land, or Product; nor above a 10th part proportion’d to the Demand. If Scotland was incapable of any Commerce with other Countries, and in the state it is now, Money here would Buy 10 times the Quantity of Goods it does in England, or more: But as Scotland has Commerce with other Countries, tho Money were much scarcer than now, or in much greater Quantity than in England; if there were but 10000 lib. in Scotland, or a Million, the Value of Goods would not differ above 3 per cent, from what they were abroad, because for that difference Goodsm may be Exported, or Imported. Prohibitions may raise the difference higher.

Brittannia Languens and others on Trade and Money, are of Opinion that Goods in any Country fall in Value, as Money in that particular country grows scarcer. That, if there was no more than 500 lib. in England, the yearly Rent of England would not exceed 500 lib. and an Ox would be sold for a penny. Which Opinion is wrong, for as the Ox might be Exported to Holland, it would give a Price in England equal or near to that it would give in Holland: If Money were supposed to be equally scarce in Holland, and other places as in England, the Ox might give no more than a Penny, but that Penny would have a value then equal to 5 lib. now; because it would purchase the same Quantity of Goods in England or other places, that 5 lib. does now.

The same Answer may be given to these who think an Addition to the Money of any particular Country would undervalue it so, that the same Quantity of Goods would cost double the Money as before.

If the Money and Credit current in England be 15 Millions, Scotland reckon’d as 1 to 10, the Money in Scotland encreas’d to a Million and a half, the Demand in proportion to the Demand in England; that Addition to the Money of Scotland, would not make Money of less Value here, than it is now in England.

Goods in Scotland would Sell as they Sell in England, the Product of the Country would perhaps be 10 or 20 per cent dearer, to bring it equal to what it Sells in England; but all sorts of Manufacture would be cheaper, because in greater Quantity: And all Goods Imported would be cheaper, Money being easier borrowed, Merchants would deal for a greater Value, and Men of Estates would be capacitate to Trade, and able to Sell at less Profit. Now would Land rise higher than in England, the Buyer having in his choice to Buy elsewhere; the better Security of a Register may be suppos’s to add a Years Purchase or two to the Value.

If the Money of an particular Country should encrease beyond the proportion that Country bears to Europe; it would undervalue Money there, or, according to the way of speaking, it would raise Goods: But as Money would be undervalued every where the same, or near to waht it were there; it would be of great Advantage to that country, tho thereby Money were less valuable:

For that Country would have the whole Benefit of the greater Quantity, and only bear a share of the lesser value, according to the proportion its Money had to the Money of Europe. When the Spaniards bring Money or Bullion into Europe, they lessen its value, but gain by bringing it; because they have the whole benefit of the greater Quantity, and only bear a share of the lesser value.

What has been said, proves:

1. That Silver Money is an uncertain value.

This is because it can be altered in the Fineness or Denomination by the Prince.

A Crown has no more Silver in it than half a Crown or 15 Pence had a 150 or 200 Years ago.

2. That as Silver it has fallen from the Value it had, the same Quantity not being worth the 5th or 10th part of what it was worth then.

A Money’d Man then worth a 1000 lib. was Richer at that time than a Landed Man of 240 Chalder of Victual Rent: But a Man of such a Money Estate, would not now be worth one 50th part of such a Land Estate.

3. That tho fallen so much, yet it is given as Money or Sold as Bullion, for much more than its Value as a Mettal; to which it will be reduced, so soon as another Money is set up.

Considering the present state of Europe, France and Spain being Masters of the Mines. The other Nations seem to be under a necessity of setting up another Money.

The only Reason can be given why it has not been rightly understood: Or they would not have continued buying Silver from Spain above its Value as a Mettal, when they had a more valuable Money of their own, and every way more fitted for that Use.

The Receiver of Silver can have no great hopes that the Value of it will be greater; For ’tis not to be supposed it will be apply’d to any other Uses, than it is now apply’d to, whereby the Demand for it may be encreas’d: Or that the Quantity Exported and Consum’d, will be greater than the Quantity Imported.

Tho it be scarce in any particular Country, yet the Mony’d Men will have no great Benefit by such scarcity, as has been shown: For unless the scarcity is the same in all places with which that Country Trades, Money will not be valued much higher there than in other Countries.

Some alledge that:

• the Mines in the West-Indies may fail
• this will cause the Interest of the Spaniards to give out that their Mines begin to fail to keep up the Price of Silver

But if that were true, France should not have engaged her self in a War, when by the Partition Treaty she could have got any other parts of that Monarchy that are valuable.

Allowing the Mines to fail, we should rather provide our selves with another Money.