Chapter IV: Part 4

Sir _Charles Whitworth_, in his _State of the English Trade_, rates the annual balance due by _Holland_ to _Great Britain_, at 1,372,258_l._ upon an average of 10 years: This is the most considerable. There can be no illusion, in regard to the effect this balance has upon the money in _England_; it is well known that it does not increase it; nay, it is thought that the debt due to _Holland_, lessens it annually, not only by the whole amount of the _favourable balance_ which would revert to _England_ were she not indebted to the _Dutch_, but of one million more, which must be found to pay them off.

I have already said, and repeated, that in every circumstance where it is necessary to borrow or to displace a capital, it is better to borrow, even at 5 _per cent._ than to remove a capital which returns double that sum; and that, on the other hand, it is more advantageous to lend any sum abroad upon good security at 5, or even at 3 _per cent._ than to lend the same sum at home, where it would yield only 2 _per cent._ or to bury it in the abyss of a Bank, whence nothing returns. Now what proves that _Great Britain_ and _Holland_ are in this case with regard to each other, is, that _England_ seldom or never opens a loan, but what the _Dutch_ take a share in. What do they give for the purchase? Nothing more than the surplus of the ordinary profits arising from a trade, which they cannot extend sufficiently to employ the whole amount of their savings. And why has this part of the _English_ loan been given up to the _Dutch_ by the national capitalists? Because the latter could find in their own trade, susceptible of a farther extension, a way of employing their capitals to greater advantage, that is to say, of reaping a benefit superior to the interest offered by the loan: How can this be doubted, when we see that the loan falls into the hands of a small number of merchants, who soon afterwards make over their debt? Would they transfer it to any one, were not the interest it brings in, interest secured by the nation, inferior to the ordinary profits of their commerce?

Therefore, if the balance due to the _Dutch_ is thought _burdensome_, only in the supposition that it serves to pay _burdensome_ interests, it cannot be looked upon in the same light, when the matter rests upon a debt, by which the borrower clears a benefit superior to the interest that he has to pay.—I shall present this question under another point of view.

In the war which was terminated by the treaty of _Paris_, the most considerable part of the debt contracted for its support, was acquired by the _Dutch_: Why so? Because the _English_, carrying on, without any opposition, an exclusive trade with every part of the world open to them alone, found therein the opportunity of employing their capitals to a far greater advantage, than that held out by government in the interest of the loan. During the last war, on the contrary, the _English_, being more narrowly circumscribed in regard to their commercial operations, by a navy, the possibility of which they did not even suspect, much less its real existence, and being kept more circumspect by a new system which opened a free navigation to all the powers not involved in war, thought themselves happy to find, in the national loan, an employment for that portion of their capitals, which, from circumstances, was become useless. The interests of the last debt are then due and paid within, and by _Great Britain_; but will it be said, that _England_ would not be so rich, were the 3 millions additional interest, with which she is burdened, due to _Holland_, and had the _English_, instead of employing their capitals, as they have done, in support of the last war, made use of them in the same profitable manner as in the year 1755? had that money, for instance, been laid out in the improvement of their waste lands in _Europe_, _whilst Dutch cash should have fought against French money, to determine how many European nations ought to be permitted to carry to North America, the goods of the other parts of the globe_!

As to the full acquittal in money, _real_ and _effective_, of the 2,000,000_l._ interest, due to _Holland_ for her previous loan, it is improbable, impossible, and useless.

_It is improbable_, because _Holland_, being already overstocked with money, and carefully intent on getting rid of her surplusage in this particular, at the first opportunity of placing it with security, would still lower the price of it at home, were she to increase its mass; and that, on the contrary, whilst _Holland_ takes in goods instead of money, she keeps up the interest of the one, by securing to herself a benefit upon the other.

_It is impossible_, because _England_ importing bullion from _Spain_ and _Portugal_, to the amount only of one third, and being very cautious, as observed before, not to import more than _one third_ of what she owes to the _Dutch_, and this, not to pay them, but because this third answers sufficiently to the five articles of which I have spoken before;—_England_, then, cannot give to the _Dutch_ what she has not received from another, and which she has not of her own.

_It is useless_, in fine, because all accounts whatever are balanced with more ease, in the age we live in, by bills of exchange, than with cash, and because the claims of _Holland_ are more naturally paid off, by another debt due to _Great Britain_, for the produce of her exports to some other parts of _Europe_, from whence the _Dutch_ carefully avoid, as much as possible, to import any thing but merchandise.

But _would it not be better to owe nothing to foreign nations_? For to this one point we ought to confine all the lamentations about _Dutch_ creditors.

The above question, so apparently simple, so readily to be resolved in the affirmative, would grow perhaps more intricate, were it ushered in by some previous queries, which might permit us to foresee the effect of the national wish, when accomplished, if it could be obtained by the easiest answer that could be given; for the case, no doubt, is not to examine, whether it would not be better to have borrowed, without being obliged to return, than to pay an interest after the money has been borrowed. In the state of things, the question alluded to, to be fair and within the pale of common sense, must mean nothing more than this: _Would it not be better, that the proprietors of the two millions interest, paid to a foreign nation, should make their residence in England?_ And in this case it leads us, by degrees, to the following query: _Would it not be better, if all and every man in the world, who has money to spare, should come to spend it in London?_ Then indeed _London_ would be a dear place to live in! And this is, methinks, the most dreaded effect arising from taxes. _O ye, whose covetousness knows no limits but the bounds of the earth! do ye pretend to be the sole inhabitants thereof?_ Can ye draw off the capitalists of a country, without completing its ruin? Can ye effect its ruin, without losing both that portion which the produce of your soil secures to you in the produce of that nation’s industry, and the share which the produce of your industry has secured for you in those of her soil?

What then appears to me to be the result of this _fatal_ interest of two millions due annually to _Holland_?—That the latter is essentially interested, not in an increase of the power of _England_, who might make a bad use of it; not in an increase of specie in _England_, which, by lowering its value, must compel her to return that of the _Dutch_, already so much disparaged in their country; but to a further extension of the _English_ trade, or rather of the general commerce, which can alone, by advancing constantly, and every where, the quantity and price of the objects that are to circulate, increase in the same proportion the necessity of the _instruments_ indispensable to every kind of circulation and undertaking, and keep up in every part, _for the interest of Spain and Portugal, as well as for that of Holland_, the value of the sign intended for a general representation, which _Holland_ in her proportion will ever have in greater plenty than all other nations, thanks to the narrow limits of her territories, and to the manners of her inhabitants, which, in all probability, are the consequence of that limitation.

_Balance of ~France~ with ~England~._

Of all the balances of _England_ summed up by Sir _Charles Whitworth_, that which is most to be wondered at every where but in _Japan_ and _China_, where foreign trade is but poorly encouraged, is the balance between _England_ and _France_, these two nations being parted, as they are, only by a simple brook.

The wonder cannot but increase, if we consider with what eagerness those two countries are intent upon improving their trade.

The wonder will still increase, when it is observed, that the _French_ carry to the highest pitch their rage for _English_ modes, whilst the _English_ experience the same kind of frenzy for _French_ fashions.

The wonder must increase still further, when it is observed, that the same nations, in possession of the most active and most intelligent industry, are also possessed of all the cash necessary to give an additional activity to that _industry_, which might be required to carry on a branch of trade, as it were, at their door, but which is neglected, out of regard for old and absurd prejudices.

Still must the wonder increase, if it is observed, that a first capital of 200,000_l._ laid out in that trade by the two nations, would occasion in both, more work in cultivation, as well as in the arts, than 600,000_l._ which each of them might employ in a trade to _China_, if it were possible to lay out such a sum upon it?

The wonder will be still greater, when we consider that, _by favouring, with equal care, the imports and exports to and from one country into the other, the two nations would, without the least inconvenience, acquire the means of increasing the revenue of their customs respectively, according to their wants, by agreeing mutually upon a tarif, which would be rated upon the average of those wants_; a tarif, which the rest of _Europe_ might adapt to its circumstances, if it were the general intention to increase, every where, the revenue of the State and the industry of the people, in a like proportion.

This is certainly what the two nations might have compassed. That which follows, is what they have done.

In the year 1699 the exports of _England_ to _France_ amounted to 287,050_l._ and her imports from _France_ to 94,641_l_:—

In 1773, the period at which Sir _Charles Whitworth_ closes his statements, the exports from _England_ were rated at 285,776_l._ and the imports from _France_ at only 44,484_l._—On this the enthusiastic admirers of the Balance _in favour_ bless their stars that their country imports now 50,157_l._ less in _French_ goods, than it did in 1699, and that, in order to secure this advantage, _England_ experiences no other damage than that the _French_ are fallen in their imports from _England_ only 1274_l._ since the year 1699.

_Further Reasons why all Ideas of a favourable Balance in Money, different from that which I have supposed, should be rejected._

_Great-Britain_ is not the only nation that claims a right to that kind of _favour_, which would reduce all _Europe_, in all transactions, to the use of paper-money; but I only speak of _England_ in this place.

Money is not hid under ground in a country where administration is convinced, both of the impossibility of the people paying exorbitant taxes, without proportionable riches, and of the impossibility of being as rich as is requisite for the discharge of enormous taxes, when individuals are compelled to appear less rich, that they may be less burdened with imposts.

Money is not laid under ground in a country, where the smallest sum, as it were, equally with the largest, may be placed most securely, till the very moment, when, led by fancy or want, one may think well to withdraw it, and which, from the time when it has been placed, to that of recalling it, produces nevertheless a sure interest, which never was delayed a single minute; an interest, which is a matter neither of reproach nor of shame.

Money is not laid under ground in a country, where the reputation of being rich exposes not the subject to an arbitrary taxation, nor to demands equally ruinous, to informations, extortions, or at least to some injustice in case of a refusal.

Money is not laid under ground in a country, where regard is the appendage not only of wealth, but of credit also, which carries the appearance of, and can procure the former.

Nor is money hid under ground in a country, where it shews the value of a man as positively as that of a piece of goods; in a country, where it is frankly said, _this man is worth a million_; whether this expression be made use of to signify that the possessor of a million is, at least, by the whole extent of that million, far from being guilty of meanness and injustice, or that it be understood that nothing but the offer of another million could tempt him to commit anything base or unjust. Money is never buried under ground in a country, where it acts so essential a part; it cannot then be its fate in _England_: all the money in the possession of _England_ stands in full evidence; it consists,—1st, in objects of private luxury, the quantity of which is by no means extravagant;—2dly, in the mass of cash in circulation. Now this very _mass_ is despotically determined by the number of affairs transacted, and likewise by the prices and quantity of the property which is to be circulated; yet this mass is, perhaps, in _England_ one half less than it would prove any where else, supposing the same objects to be attained; that universal _mobile_ is too justly appreciated there, to be lavished, that is to say, to be _turned into cash_, beyond what is required to give credit to the paper currency substituted to _cash_.

I shall therefore ask, In what public funds abroad the _English_ merchants vest annually the four or five millions of that pretended _favourable_ balance in money, since they do not bury it at home?—There might, it is true, still exist another resource; the general balance is only the aggregate of all private balances.⸺But is it very certain that, upon an average, the private balances of all the merchants in _Europe_, who correspond with _England_, are annually charged by one fourth of the amount accruing from that correspondence? For if the _English_ send them 16 every year, and every year import only 12, their correspondents are consequently indebted to them annually 4 more than they were the preceding year.

The _favourable balance_, as it is commonly understood, is then a mere chimera, which, if realised, would produce no other effect than to advance, at some period or other, the price of a pound of bread to that of a pound weight of gold; yet it results, methinks, from the exports of _England_, almost trebled within a century, that each nation, with whom the former has trebled her trade, has increased her own, at least, by the whole amount of the balance due by her to _England_; for it is beyond a doubt, that one must have three times more to sell, in order to be able to purchase constantly, and pay three times more than he used to do. But from this principle may it not be inferred also, that every nation, wishing to increase her trade, is interested in an increase of the commerce of all those with whom she means to correspond?—If, in order to reduce into practice, if to establish on the most equitable and most solid foundation, a system so truly advantageous to society, Nature had nothing more to combat than private _cupidities_—they balance each other. But how many national prejudices, how many maxims sacred to each nation, how many absurd regulations, springing from those very maxims and prejudices, is she not obliged to modify, as it were, underhand, in their effects! What a number of smugglers does that good mother employ, for the purpose of bringing all things nearer to that _equilibrium_, from which many are still persuaded it is so very material to deviate!

_Equilibrium necessary in all things.—On the surest means of establishing it._

It is a difficult matter to guard against a prejudice in favour of liberty, when we consider, that, thanks to the freedom which has always very generally prevailed in those parts of Science, wherein policy disdained to restrain it, we have been taught to weigh air, before any precise idea was obtained on the rule of proportion, which ought to regulate matters of exchange. Every thing, in this last particular, is even still merely mechanical; and perhaps if the matter were thoroughly examined, it would be found that there is never too much, nor too little in one of the scales of the balance, but from an effect of the means devised to establish or preserve the Equilibrium. I do not pretend to lay down, for an absolute principle, that the hand of man, like that of the harpies, is only capable of poisoning whatever comes within its reach, and that the wisest conduct would be, to keep it with care from every thing that one should wish to preserve from corruption; such a proposition would, no doubt, prove rather too general; yet one cannot help observing, that there are but few countries where administration has not often, owing to the grossest ignorance, or some principle of injustice, or of a cupidity almost equally blind, restrained some very lucrative _cultures_, to which the nature of the soil and of the climate would have given a perfection that could be attained no where else; or have not encouraged some costly produce, to which Nature refuses those qualities which she liberally bestows under another sky.

Neither can one refrain from remarking also, that from those regulations, and from many more of the same kind relative to manufactories, no other effect can result than that of buying up at home, very dear, and often of a bad or indifferent quality, that which might be purchased abroad of an excellent kind, and at a cheaper rate, and which might be paid for with the productions of the earth and industry, better suited to the climate of the purchaser.

It is also observed, that, without the interference of administration or of philosophy, the balance between want and the relative quantity of the different productions of the earth, is always, upon a medium, admirably supported by the sole interest of the cultivator, ever perfectly and solely guided by the common demand for each of these productions.

It is also remarked, that a second balance, and a very necessary one, between the mean price of those different productions, is also mechanically established, on the difference of labour and of the capitals, which the same cultivator lays out upon each of them, without any other motive but that of employing with discernment, his hands and his capital, to derive from them the greatest benefit. He never thinks of restoring the equilibrium between the general prices, when the price of the product A has fallen, and when a continued advance on the product B invites him to multiply the latter, by transferring to its cultivation, a more considerable share of his labour and of his capital. Nor does he think of it, when laying out new supplies of labour and money if the price of the product B keeps up whilst that of the product A goes on increasing; he does not think of it; and yet, without any other reason or motive than his own interest, he restores that necessary equilibrium. Much less still does he think that an increase maintained in the price of one object, without diminution in that of other articles, bespeaks an increase of the general consumption, which soon must raise the price of every thing. Nay, it is very probable that he will not take notice that he _sells_ all his goods at a higher rate, and that he will soon complain of the general advance in the price of all those which he buys, because his interest is his only guide: but this interest is opposed by that of industry; and from this clashing, in spite of the two opponents, arises a new balance, more loaded, no doubt, than the first, but not less necessary, not less equitable, and yet no one has meddled with it.

All these things may be easily observed; but what ought to be more particularly attended to, and what is most overlooked, is the impossibility of ascertaining the difference between the hand-labour and capitals to which we owe the productions of the earth, the knowledge of which is within the reach of every one, and the labour and capitals to which we owe the productions of industry, in which the workmanship of an article often constitutes the half, and sometimes 99 hundredths of its value: it is a disadvantage against which agriculture cannot be effectually protected but by a competition, which can be the result only of the greatest freedom. The absolute _passiveness_, which, in the above stated circumstances, is sufficient, on the part of Government, to effect the greatest good, appears here indispensable, to avoid acts of injustice. Why should the trading part complain of that _passiveness_, whilst a number of cultivators, proportioned to that of the artisans, produce in the State a revenue equal to the maintenance and support of industry? Now the fact appears the more certain, as, upon the least reflexion, one may be sensible, that if an epidemic disorder should break out amongst the husbandmen only, and thus deprive cultivation of one half of its proper number of hands, the survivors would not fail to increase the price of their labour, and the farmer that of his farm, by so much as would indemnify agriculture for the loss which she might have sustained, and that the advance in her prices would fall off only in proportion as the handicraftsmen without employment, by the uselessness of that portion of the produce of industry, hitherto consumed by the cultivators who fell victims to the disease, would themselves turn cultivators; an operation which would soon restore the proper balance between the two revenues, as well as between the prices of labour, from which all kinds of produce originate. Let the effects of the disease be transferred from the cultivators to the handicraftsmen, the same manœuvre will be played off by those who preside over industry.

Should another reason be wanted to strengthen my argument in its most essential part, I could adduce an incontestable fact, as little controverted in _France_ as it is in _England_, namely, that in both countries the whole of the landed property does not yield three fourths of what it ought to produce.—Then, either the respective industry of the two nations ransoms agriculture, and binds her up, without being suspected of doing so, to that state of mediocrity to which she is reduced; in which case, single out of your regulations, those which favour industry at the expence of cultivation, and endeavour to expunge them, since agriculture stands clearly in want both of hands and capitals; or your industry and agriculture are neither of them nearly arrived to that degree of perfection which they are calculated to reach; that is to say, you have not the number of cultivators which your land can nourish, nor of course, so many artificers as your land can maintain; in this case also, revise your regulations; there is not one of them which does not affect your agriculture in a direct or indirect manner; by her you must begin: cultivators, unthinkingly and without regret, give birth to a race of artisans;—it is, on the contrary, as it were in spite of industry, and by a kind of reaction which she spares no endeavours to retard, that cultivators are produced by artisans. _Never will industry lay out a shilling upon the land if she can employ it in any other enterprise._

But, would the inland trade, without which agriculture cannot subsist, flourish, if foreign commerce should not be encouraged in a particular manner? And were any circumstances whatever, combined together so as to occasion such an alteration in the price of necessaries, as would deprive industry of the proper means to support abroad a competition which cannot possibly subsist but by an equality of means; would it not then become necessary for government, to shew a special favour to commerce, intrusted with the care of that competition? _The manufacturers, in all countries, insist so forcibly on such a necessity! The ruling powers in every nation are so convinced of the truth of the above maxim!_

This question, truly important, requires some details on the different causes productive of the alteration in the prices.

Although I may often appear, in the following suppositions, to lose sight of the revenue arising from industry, and pay attention to that of the land only, we must not forget the mechanical principle, or rather the force of Nature, who, sooner or later, in spite of all the subtilty of man, keeps an exact balance between those two sources of national wealth, and causes all the revolutions of the one to be unavoidably felt by the other.

_Various Causes of the Alteration in the Prices._

As long as we shall suppose, in a country standing by itself, the same products, the same consumption, the same quantity of money, the same freedom, no reason can ever be assigned for an increase or falling-off in the price of any article generally known, and of general use; but,

_Second Hypothesis_,

Let us suppose, that population is doubled as well as the revenue; no alteration can certainly take place in the real value of things;—that value will remain for each article, the same as it was before; that is, _the sum of the labour requisite for the production of that article_:[5] neither will the relative value undergo any change; the quantity of labour known, or supposed, in two different objects of a certain consumption, will remain, as at first, the sole criterion for fixing the difference of value in the one and the other. The essential relation of general correspondence between the wants, and the real resources, remaining also the same, there can likewise be no real difference in the situation of any individual whatever; if there are every where two _consumers_ to one, the same increase will be found in the number of _productors_. The only palpable, and unavoidable alteration, always grievous when it is sudden, is that which, in the present hypothesis, must have taken place in the nominal value, that is to say, in the money-price of every thing; for the quantity of coin which was in circulation, being always the same in that country, standing by itself as we have supposed, and without mines, whilst the objects representing the said quantity, had successively doubled, it had been indispensable, successively, either by degrees, or by starts, to come to the point of giving for 2 in money, that which could not be given before for less than 4, or rather of denominating 4, that same quantity of money which hitherto had been denominated 2.—If you look for a precedent of the first effects of a disproportion too considerable or too rapid, between the wants and the demands, or between the mass of coin in circulation, and the number of articles to be circulated, it will be found, in the revolutions which took place in _England_, during the space of two years _only_, 1288, 1289, the quarter of wheat rose from 1_s._ to 2_s._ then to 3_s._ 9_s._ 12_s._ came down again to 2_s._ was then raised all at once to 20_s._ and fell at last to 16_s._ where it seemed to support itself for some years (see the excellent _Inquiry_ of Mr. _Smith_, _into the Nature and Causes of the Wealth of Nations_); this is the man truly capable of dissecting, as it were, that subject, of which I can, at best, but mangle the _epidermis_.

_Third Hypothesis._

To remedy the evil in such circumstances, how many expedients are tried, which only serve to increase it! How many avowed depredations upon pretended usurers, before the Sovereign boldly ventures to partake with them in the public execration by ordering a re-coinage, which, under the same denomination, will give but a part of the weight, or of the quality of the former coin! Yet this cannot be avoided. But by ascertaining, as we have done before, a two-fold increase in the revenue, and supposing one million and a half to have been sufficient to the circulation of the first revenue; if the Prince with his 1,500,000_l._ instead of a coinage of three millions, should have struck only 2,400,000_l._—after some fluctuation, the balance will be restored between the price or nominal value of the negociable articles, and the quantity of money in circulation;—but what had been sold for 5 heretofore, will then go for 4; the prices will have fallen one fifth, and the circulation will be clogged:—But above all, it should be observed, that _no one will be the poorer, notwithstanding the diminution of the nominal value_.

_Fourth Hypothesis._

If the re-coinage has been in the proportion necessary to re-establish exactly the former facility in all the channels of circulation, the former prices will return after the inevitable fluctuations; the quarter of wheat, for instance, which at some period of the revolution, will have been raised to 20_s._ will fall back to 5_s._ as it was at the beginning, although the shilling contains only half the silver that it contained at that time, 130 grains we shall say, instead of the 260 or 264 it contained in the year 1300.

_Fifth Hypothesis._

Now let us suppose, what has happened in all countries, that the Prince and his Ministers have laid hold of the opportunity, the former, to pay the debts he had incurred in the time of national distress and confusion, the latter, to procure a more rapid increase of their fortunes, and that, with the 1,500,000_l._ supposed in circulation, they have struck 6 millions, instead of the 3 wanted to answer the real increase of the revenues and of population;—certainly when the calm returns, 10_s._ will be the price of a quarter of wheat, which sold for 5_s._ in the _first hypothesis_;—a most decisive argument this, for the manufacturer to sell at 8 that very cloth which went for 4, and an uncontrovertible ground of right in the working people to charge 4_d._ for that which before they performed at 2_d._—In these two points center all the practical inferences in which any individual in the State can be concerned: yet the shilling will contain only 65 grains of silver, instead of 260;—and if the price of every thing be doubled, it is not on account of the shilling containing only 65 grains in lieu of 260, since, upon this principle, the quarter of wheat must have fetched 20_s._ instead of 10_s._—but it is because, in all cases, there are two pieces of money to answer the purpose of one, and that _it was necessary, in order that the second might acquire one half of its former value, that the first should lose that very half_.

_Sixth Hypothesis._

At this period, let it be supposed, that an epidemical distemper sweeps off three-fourths of the inhabitants, and consequently takes away as much from the revenue:—After the terrors usual in such cases, and a score of prophecies, foretelling that Doomsday is at hand, yet will it appear that the world is not destroyed: it will also appear, that the epidemical disorder has not carried off the money, and that it would be wrong not to make use of it.—The specie must of course, lose nearly three fourths of its value if the whole should continue in circulation, because 4 pieces will present themselves to do the office which 1 could perform before the time of the distemper;—the quarter of wheat, at first rated at 5 shillings, sunk to 4 in the _second hypothesis_, then sold for 10 in the _fifth_, will in the present one, rise up to 40, _without any one growing richer or poorer for it; for_, most assuredly, _the price of labour will have increased in proportion to that of its own produce_.

_Seventh Hypothesis._

The effect would have been the same, if, instead of the distemper just supposed, the general enthusiasm on the discovery of a gold or silver mine, had induced the Sovereign to add to the circulation three times the quantity of specie which had hitherto been sufficient.

_Eighth Hypothesis._

In the supposition of an event the most opposite to that of an epidemic disease, viz. of the revenue being increased one half, one third, nay, three fourths, if you please, as well as the population; yet the mine yielding a great deal above what is necessary to answer to an increase in all kinds, and the Sovereign being resolved upon a recoinage of the specie, on principles entirely different from the former, that is, by preserving exactly the same number, standard, and denomination of the coin; the number, because it is sufficient; the denomination, because there must be one, and that it is indifferent which it bears; and the standard, because there is no further danger in fixing it; but, by advancing the weight of a shilling from 65 to 86 grains, there will certainly be no alteration in the prices; the wheat will keep up at 40 shillings, and other articles in the same proportion;—and _none will be richer or poorer for it_, although, at the price of 40_s._ the quarter of wheat, they give, without hesitation, 3440 grains of silver for an article for which they gave 650 only, previous to the epidemic disease, or the opening of the mine, which has produced the same effect.

_Ninth Hypothesis._

When such revolutions are brought about by slow degrees, no one is sensible either of the effect, or of the cause; but, at last, both are attended to. Let us then suppose, that the generality of the people reflect that gold and silver, considered as coin, derive all their value from imagination;—that money is, strictly speaking, nothing more than a medium adopted to facilitate the division and transport of all other kinds of property;—that it is but a sign, the place of which may be easily supplied by any other, which by general consent may be honoured with the same distinction, or ordered for the same use;—that its value, in this point of view, rises or falls unavoidably, according to its quantity, _without influencing the intrinsic or relative value of the articles it represents, a value constantly determined by the sum of the labour that produces them_, just as their relative, _common_ quantity follows, servilely and closely, the demand.—All these remarks cannot prevent us from observing a value far more essential in gold and silver, considered as metals susceptible of all the forms that can be useful, or can please the eye, while the nature and texture of their parts secure them from accidents equally disagreeable and dangerous, to which all other metals are liable: we should not therefore be surprised, if some reflexions, suggested by wisdom and humanity, were to lead us to that point which first originated in the extravagance of ambition, and the rage of politics; I mean, that, after having considered that no manner of good was produced by that disparagement of coin, which always resulted from its multiplication, and that the health of man was, on the contrary, interested in putting to a better use those metals, the quantity of which, being doubled in circulation, only served to double the price of every thing;—we should not be surprised, I say, not only that nothing was spared to encourage the goldsmith’s trade, but even, that half of the coin was melted down, and transformed into plate, and the _deficit_ supplied by a quantity of _paper-currency_, answering to that of the coin thus employed; a _paper-currency_, which it would be sufficient to distinguish by some mark or token agreed upon, to give it in circulation, exactly the same properties as that part of the metals which was transferred to a more advantageous purpose.

In regard to the danger of paper-currency increasing above the quantity wanted, it is as little to be feared, and its superabundance would soon be made as sensible by its effect, as that of a superfluity of coin.—If you double the mass of money intended for circulation, how will you prevent such articles as sold for 4 only, from rising to 8, or the additional 4 from becoming useless?—And if paper-currency be in question, how will you prevent the extravagantly-avaricious wretch, who envies others the enjoyments he denies to himself, how can you prevent him, I say, from observing that paper rots in the ground, and that to bury his wealth he must exchange it for cash?—how will you prevent this want of money, immediately felt, from destroying, without resource, the credit which that mass of buried money had hitherto given to paper-currency? So long, therefore, as the paper keeps up its credit, one may rest assured that the public is not over-loaded with it. I shall, in the sequel, venture some reflexions on the true cause of that part of the increase in prices, which is attributed to the quantity of paper-currency in circulation; contenting myself here with a recapitulation of what I have just said on the different causes of the alteration in prices, according to the foregoing hypothesis, by concluding,

First, That a nation which should rejoice in being possessed (for the convenience of covetous individuals) of a _vortex_, into which they could cast, at pleasure, without profit, but also without anxiety, an immense treasure, which was the produce of the pains taken by so many useful and industrious hands, would, in fact, only congratulate herself on being possessed of the effectual means of robbing the present and succeeding ages, of all the advantages that must have accrued from the use made of that money, _in any part of the world_, where it might have produced, and encouraged a new branch of industry, _the reaction of which would have turned to the profit of the nation in possession of such ~vortex~._

Secondly, That a nation, which should rejoice in being the owner of an immense quantity of coin in circulation, would, in fact, congratulate herself on that want of credit which renders such quantity indispensable.

Thirdly, That as soon as government, in such a nation, should have solemnly given up the right, supposed to be unalienable, of paying its debts, from no other motive but that of extreme honour and benevolence, the nation might then part with half her coin, and without impeding the circulation, increase her enjoyments and her wealth, which can be nothing more than _the total of her annual labour, together with the monuments still subsisting of the labour of preceding years_: a total, which could not but increase in the case now supposed.

Fourthly, That, in regard to the coin, the most wretched paper-factory, assisted with that credit which is founded, not on kindness, but on justice and interest, is far preferable to the richest mine in _America_.

Fifthly, That the difference in the real value between one article and another, is only the difference of the labour which produces it; and that _all regulation, tending to throw a veil on the quantity of labour contained in one article, is unjust_; since it turns to the prejudice of any individual in the community, _who is not the author of this unknown labour_.

Sixthly, That the nominal price of the _essential_ article, to which that of the others must finally revert and conform, fixed at first by its proportion in the quantity of articles to be represented, and by the divisions and subdivisions of the mass of money then existing for that use, this nominal _common_ price will certainly rise or fall, constantly, and _without the least inconvenience_, just as that first quantity of coin shall cease to answer, by more or by less, to the quantity of the objects of which it was calculated to transfer the property.

Seventhly, That, supposing it to be a fact, proved incontestably by the mint-registers, and the average price at _Windsor_, that from the year 1300 to 1309, wheat, at its highest rate, was not above 7_s._ _per_ quarter, the shilling weighing 264 grains of silver, which made the quarter come only to 1848 grains; that in the year 1551, the same sold for 8_s._ the shilling containing then only 60 grains, which made it exactly 160 grains _per_ quarter; and that the same sells now, I will say, at 40_s._ the shilling containing 86 grains, which is 3440 grains for a quarter of wheat; yet, from these facts no inference can be drawn that could affect any individual whatever, unless it should be proved, that money makes part of our food, or that it is impossible, at this present time, to procure, with any _given_ labour, more or less wheat than that identical labour could procure at that period.

Eighthly, That the _real_ difference between 1848 grains of silver, and 3440, which is perceivable between the prices of the years 1300 and 1785, would not even be sufficient, were it considered by itself, to invalidate, or confirm this futile proposition, that the mass or stock of money is nearly doubled in _England_; for we have already found, that, supposing the case of an epidemic distemper, which would have carried off three fourths of the people, and consequently reduced the revenue in the same proportion, the price of every thing must have increased fourfold, if the three fourths of the coin had not been buried under ground; we have seen, on the contrary, that it has been possible to withdraw from circulation half of the current cash, and make good this substraction in a very advantageous manner, by introducing scraps of paper in its stead, without making any alteration in the general prices, or in the least affecting the circumstances of any one, poor or rich, unless some collateral incident should intervene to bring about a change; and the least reflexion will convince us, that the mass of specie might be quadruplicated in a nation, without any material variation in the prices, _if the sum of labour, and of its products, as well as of the consumption, should augment proportionably_.

But, in stating that the only—the infallible reason for the variations of _common_ prices in the foregoing hypotheses, is the change of proportion between the mass of specie, or of the paper-currency which represents it, and the articles of which the one, or the other, is to transfer the property, there is no inconsistency in persisting to pretend that taxes add to the former prices, both the amount of the impost, and the profit due to the trader who advances it. But, in both cases the progress is different: in the former, it is the quantity of the specie actually in being which necessitates and fixes the prices; in the latter, it is the necessary advance in the prices, that _necessitates_ and _fixes_ the quantity of specie, or paper-money which is substituted to it.—Luckily, as we have already observed, it has been enough for _England_ to find, once for all, money to the amount of 5 millions sterling, (cash and paper) for discharging to the end of time, the interest of a debt computed at 238 millions, the same currency.—But upon a supposition that the debt incurred by _France_, from the year 1774, should amount to 15 or 1600 millions _tournois_, and the yearly produce of _French_ industry in all its branches, (at the common rate of 1775) be of 2,400,000,000_l._—the interest of 80 millions and upwards, to be paid for such a debt, requires an adequate increase of taxes:—now, 80 millions _tournois_ constitute about the 30th part of the annual revenue produced by _French_ industry, the nominal value of which must be increased by those taxes;—but as paper-money does not supply in _France_ the place of cash, it has been, of course, necessary to augment by one 30th, the mass of specie, which proved sufficient before the rise in the prices, occasioned by the impost;—this mass, it is said, was rated at 2,400,000,000 of _livres_, the 30th part of which is 66,666,666 13_s._ and 4_d._ _tournois_, a very considerable sum indeed; but nevertheless nothing more has been necessary, to prevent any inquietude on the subject, than to procure that sum, once for all; and, _once for all likewise_, to add thereto the effect of some re-actions, of which I shall speak presently; nothing more, I say, was wanted to secure, in an indefensible manner, the interest of a loan of 1500 millions, and to secure it so as to raise in the minds of the holders of stock to so immense an amount, no other apprehension than that of their being reimbursed.

Some will say, perhaps, “this reasoning is frivolous, and founded on the absurd supposition of a general combination, a kind of universal conspiracy, in order to raise the price of every thing proportionably to the _taxes_.” I know that such a combination, such a conspiracy is impossible; I know that there is not in _France_ a single edict, nor any particular act of parliament in _England_, to enforce, or even to permit it; but I am sensible that such an act, and such an edict, would be perfectly useless, when I see, that in either of those countries there is not a rational being, capable of reflexion, who will not say, _Taxes occasion a dreadful advance in the prices of every thing_: it is true that the order is sometimes inverted, and then the cry is—_How cruel it is that the price of every article is increased, whilst the taxes diminish our means of purchase!_—But if every article rises in a due proportion, we must conclude that there is no alteration in the state of the balance; for if every individual in a nation buys up, every one sells also, one his labour, another his wares, a third his corn; and if every thing grows dearer, except the article you have to sell, you must own yourself completely in the wrong: luckily the landed proprietors are as little in the wrong as they possibly can be; for as often as they renew a lease, they increase their rental, just as if they had got possession of my _little_ secret, or as if there were _corporations_ also in agriculture.—The agents of industry are still less liable to be in the wrong, for all their operations are founded on the following rule:—_For purchase so much,—for freight so much,—so much for taxes,—to these add my commission or profit—The balance is so much, which I must be paid, as I shall settle with the members of my corporation._ Besides, the commercial part of the nation is too well persuaded how necessary it is to secure _a favourable general balance_, to be mistaken in the means of equipoising their private ones.

It is my opinion, therefore, that one may, without being a conjurer, foretell that the last dreadful and convulsive shock, almost generally felt all over the world, will finally, and in a very little time, end in the loose remembrance of some thousands of hands having been, foolishly enough, taken from their peaceable occupations, very favourable to population, to employ them in forwarding destructive plans, to which many thousands of men have fallen a sacrifice; one might also add, thousands of depredations, some of which, the most pardonable in their nature, have been punished at the gallows: perhaps even they will say modestly in _France_, _We have reduced the English, but we were four to one_—and then _England_ will proudly answer, _We have been reduced, but we were only one to four_; nor would it be at all unreasonable to lament, that the value of 4 or 5 millions sterling in gold and silver, fatuously ornamented with the escutcheons of _England_ and _France_, _to consolidate for ever the interest of 140 or 150 millions, which constitute the last debts contracted by the two rival nations_, be not humbly stamped with the puncheon made use of to mark the plate in _London_ and _Paris_ ... but, to suppose that there will be in _London_ or _Paris_ a single carriage less! that _France_ will lessen her importation of _English_ goods, or that the demand for _French_ wines will be less from _England_—is an idea which cannot, in my mind, coincide with that of a population and industry which, hitherto had sufficed in both nations to answer all those different purposes; of a population, I say, and of an industry, which will, in all likelihood, go on still increasing every day, wherever they shall not be checked by the laws.

One of the most fatal effects that spring from that increase in the prices, occasioned by the impost, is, as they say, the impossibility to which a country is reduced, of supporting abroad the rivalship, the competition of a nation less burdened with taxes, who of course can, they say, undersell every thing.

Such is, in fine, the question which I thought the fastidious details I have entered into, ought to preface, and might render of more easy solution. But I request the reader to examine previously,

1st, Whether an accession of wealth, an addition of gold and money to the circulation, would not increase the prices of every thing, as necessarily as taxes must do it;—2dly, If that increase in prices, procured by wealth, would not be accompanied with the same inconveniences in regard to the supporting of a competition abroad;—and, 3dly, If the stranger to whom we should declare ourselves compelled to sell him our goods dearer, _because we are grown richer than the rival nation_, would not have the same answer to give us, as if he were told, _that the cause of the advance in the price is, our being loaded more heavily with taxes_.

If these three questions cannot be answered but in the affirmative, we should then be obliged to suspect that there is something inexplicable, ill judged, and not better grounded in the clamours which resound in every part of _England_ on this subject; and this surmise might perhaps incline the reader to peruse, without prejudice, what I am going to set down, with no other view, than to find out some useful truths.

_On the Influence of the National Prices on the Sales in Foreign Markets._

The impossibility of a competition in trade with those who can afford cheaper, _in money_, the articles which are to be the object of such a trade, is so affirmatively maintained, and this principle is so self-evident, when applied to two manufacturers in the same town, circumscribed in their selling as well as their buying, within the precincts of the same country, where the one should always procure for 3, what the other would have the stupidity to buy constantly at 4, that it becomes pardonable (if one carries the examination no farther) to admit of this idea, taken in a most comprehensive manner, as one of those trivial truths, which are not worth being searched into. But I must own, that my reflexions on the pretended necessity of keeping the commercial balance constantly in _favour_, have made me rather circumspect in giving credit to opinions the most generally received.

It will not be in regard to the situation of a country, which might allege a difference of 7 or 8 _per cent._ in its prices, as an insurmountable bar to competition, that I shall examine in what manner that very competition might be established; I shall suppose a nation in the 6th, 7th, and 8th _hypotheses_, wherein wheat is rated at 40_s._ _per_ quarter, by a series of revolutions in the coin, or a multiplication of taxes, or by an increase in wealth; and I shall place it in opposition to another nation, considered as paying few or no taxes, and humbly consuming her wheat at the rate of 26 or 27_s._ the quarter.

In order to render the effects of the disproportion more sensible, I shall further suppose, that the shilling in both nations equally contains 86 grains of silver at the same standard.