XVII.: The quantity of money every where, will naturally find a certain level or proportion.

49. It is a received opinion, at least with many people, that a certain specific quantity of money, is necessary for the carrying on of foreign commerce; and that any nation not abounding in money, will trade to a great disadvantage with the rest of the world: Were this the case, those nations who have most money, should reap most advantage by trade; and Spain and Portugal ought to carry the prize from all the world. But if this matter be examined, ever so slightly, it will appear in a different light; and it will appear also, that no trading nation can be long in want of money, or be able to keep above a certain quantity of circulating cash, in proportion to its trade. What is hoarded and kept out of the market, either in cash, bullion, plate or furniture of any sort, is out of the present question.

Suppose that the present stock of circulating cash in England, was at once reduced to one half, by each person’s losing a moiety of his own share. This would strike a great consternation in all, and be matter of real calamity to many; as the prices of things would not at once abate, in proportion to this great loss of money. But those distresses would not last long: The prices of all commodities, and of labour, would fall by degrees; this cheapness would give them a quicker vent in all foreign markets, and all sorts of manufactures would be carried on here brisker than ever; whilst at the same time, and for the same cause, the consumption of foreign commodities with us would be greatly diminished. By the cheapness of labour, England becoming the best market for bullion; that is, bullion fetching more labour and commodities here than in other countries, it would naturally be sent hither preferable to other things; and bullion would not cease flowing in upon us, till it became as cheap, that is, in as great plenty here, in proportion to our traffic, as in other places.

This supposed sudden loss of money would at first, as hath been before illustrated, create many disorders: By the sudden change it would cause in the proportion of property, a damp would be thrown upon manufactures, until the price of labour could be duly reduced; and the nation would be under a great disadvantage, in the purchasing of foreign commodities for ready cash. But these disadvantages would not last long; and whilst things were advancing towards their former state, it is probable that people in general, especially the lower class, who are the most numerous, would abound more in affluence than at any other period. Labour would be more valuable here, in proportion to commodities; because of the great demand for those commodities, in those countries where money was cheaper, and labour dearer; until at length the equilibrium of money was again restored. Had we supposed the loss of money to have been less, as only, for instance, the tenth part; the consequences thereupon, though less perceptible, would have been, upon the whole, the same in a proportionable degree.

Let us suppose our former stock of money to be now completely restored to us, and it would not be long before it returned again: If we think to increase this stock much farther, we shall be disappointed; the causes that brought it to a certain level, will prevent its rising much above that level. Where money is grown into great plenty, whatever be the causes of that over-plenty; labour, and all sorts of manufactures will grow dear, too dear for foreign markets: And at the same time that the exportation of home-commodities is decreasing, that of bullion for foreign goods will be increasing; till at length the tide of the over-plenty of money hath spent its self; leaving behind it perhaps, too much the marks of profusion, and disorders of various kinds.

In order to illustrate this subject, I have supposed cases that are not likely to happen; the state of things, altho’ ever fluctuating, yet change by slow degrees. Riches are comparative things; and one nation’s growing or declining in wealth, is to be reckoned either with respect to its former state, or the present state of its neighbours. But the question before us being solely about money, which ever way that is turned, it seems to me evident, that commerce will settle the due proportion of money every where; I mean the proportion in respect to the whole wealth and traffic of any country, and not the proportion between one country and another; for this last will be ever different and ever variable. Every one sees that an increase of his own cash would be an advantage to him, and hence money is universally coveted; but no one sees or considers, that his own peculiar advantage would cease, if every body’s cash was increased in the same proportion with his own. Another hath in his eye some beneficial trade, which he could enter into if he had but money: It is none of his business to consider, that the trade of the world is limited; that his entering into it, would not extend trade in general. It is the want of vent, and not the want of money, that limits trade; and sometimes also the want of able and skilful workmen removes trade from one province or kingdom into another.

All that hath been here advanced, is well illustrated and corroborated, by the course that manufacturies have taken in our own country. They have been first erected in parts that had but little money in common currency; that is, in places where labour, provisions, and all the necessaries of life were cheap: By degrees they enriched those provinces, till at length provisions of all sorts, and consequently labour, became very dear; too dear to sustain, or to be sustained by those manufacturies any longer. This naturally carried them to other places, where money was in less plenty: And this will ever be the case, unless part of the increased stock of money is kept out of the common circulation, and is either hoarded or directed into some new channel; without this, not only trade will move to different provinces of the same country, but it will move also into different countries.