Of Coin.

FIRST then I am to Observe, that Men in Order to relieve one anothers Wants with Ease and Justice, found it necessary to fix on one or two Things, and agree, by giving them Values, to make them universal Commodities, which all trading Nations may take as Equivalents, in Exchange for all other Commodities they have to part with.

The Things agreed upon, by the Consent of all Nations, for this Purpose are Gold and Silver, two Metals which are well fitted for this End, by their being beautiful, durable, scarce, not easily counterfeited, of equal Goodness in all Places when free from the Mixture of other Metals, and by their being easily divided into small Pieces of different Sizes and Weights.

All which Qualities taken together, make small Quantities of these Metals of great Value, when compared with other Things; and therefore fit to be chosen as Equivalents to pass in Exchange for them: By this Means Gold and Silver are the Measures of the Value of all other Commodities, which are dear or cheap, as they can be exchanged for greater or lesser Weights of these Metals.

As these Metals are naturally soft, it was found convenient to mix certain Proportions of some baser Metal with them, to give them such a Hardness as may hinder their wearing too fast. And to prevent their being adulterated with too great a Mixture of baser Metals, every Nation took Care to ascertain the Proportion which the baser Metals should bear to the Gold or Silver in their Coins; and to avoid the Trouble of proving every Piece, affixed certain Stamps thereon, as publick Vouchers of their Fineness and Weight; and this obtained the Name of Money or Coin.

The Values of these Metals, as of all other Commodities, are proportional to their Scarcity and Demands for them, or rather to their Scarcity alone, for since they are made Equivalents for all other Commodities, we may suppose the Demands for them to be everywhere much the same.

All the Uses and Conveniences of Money could not so conveniently be answered by any one Metal alone: But required several Metals of very different Values to make all Payments easy, and without Trouble. For the great Scarcity of Gold, as it made it of great Value, and fit for the Payment of large Sums, so at the same Time rendered it unfit to be divided into Pieces small enough for the Conveniencies of low Commerce: and though Silver by Reason of its Plenty, may be parcelled out into Pieces of small Value, yet too great a Weight and Bulk thereof would be required to make large Payments with any tolerable Conveniency. It was therefore found necessary to introduce both those Metals into Coin, especially when Trade increased; the first to answer large, and the second small Payments; and also to bring Copper into Coin, for making Payments for Commodities under the Value of the lowest Silver Pieces, and for the more convenient Change of the Coins of the finer Metals.

Gold and Silver being agreed upon, as Equivalents for all things which Men want from one another: they very well answer this Intention without occasioning any Confusion or Disturbance in Commerce; nay will be much more convenient than either Metal alone; provided a just Proportion be preserved in their respective Values. For in Order to constitute a Measure in Commerce, ’tis not necessary to confine that Measure to one Thing, or to make that one Thing invariable in its Value; since several Things may at the same Time, by general Consent, be equally Measures of the Value of all Commodities, and it may be altogether indifferent which of them are used for that Purpose. And in Fact we find that Gold and Silver, and even Copper in some Places, are equally Measures of the Value of Things, for as much as all Things can be exchanged for them. And there is no other Difference in these Metals considered as Measures, but that a greater Weight of Copper, than of Silver, of Silver than of Gold, is required to equal the Value of one and the same Thing. In like Manner an Inch, Foot and Yard are all Measures of Length, with this Difference only, that more Inches than Feet, and more Feet than Yards, are required to measure the same Length.

Herein I differ from Mr. Lock, who in his Further Considerations concerning the raising the Value of Money, pag. 20. of the Octavo Edition, says, Silver therefore, and Silver alone, is the Measure of Commerce. Two Metals, as Gold and Silver, cannot be the Measure of Commerce both together in any Country; because the Measure of Commerce must be perpetually the same, invariable, and keeping the same Proportion of Value in all its Parts. But so only one Metal does or can do to it self: So Silver is to Silver, and Gold to Gold, an Ounce of Silver is always of equal Value to an Ounce of Silver, and an Ounce of Gold to an Ounce of Gold. But Gold and Silver change their Value one to another. This Assertion, if I understood him right, carries this Sense with it, that one Metal only, and that Silver, can be the Measure of Commerce, and the same must be perpetually of the same Value.

With Submission to so great an Authority, I think it to be quite otherwise in Fact; for unless we should suppose an extraordinary Interposition of Providence to prevent the Silver current among us from being diminished, or increased, I do not see how it is possible that Silver should continue always of the same Value, since its Value must vary as its Quantity, and Demands for it vary. ’Tis Certain that by the vast Importation of Silver into Europe, since the Discovery of the West-Indies, the Value thereof has greatly lessened among us: In the Reign of Henry the VII. a Bushel of Wheat was sold in England for Sixpence, which then had as much Silver in it, as Nine Pence of our present Money, and the said Bushel now sells for about 4s. ’tis very probable that the Quantity of Corn, raised yearly in those Days, bore the same Proportion to the Number of People then in England, that the Quantity of Corn now raised, bears to our present Number; and if so, it follows, since one Ounce of Silver could purchase five times as much Wheat in that Reign as it can at present, that therefore Silver was five times more valuable then, than it is now.

If two Metals cannot be the Measure of Commerce both together, because they may at different Times change their Value one to another; the same Argument will hold good against one Metal, which at different Times may also vary in its Value; for though one Ounce of Silver will always be equal in Weight to another Ounce of Silver, yet it may differ in its Value at different Times, if compared with the Value of other Commodities, for which it is Exchanged.

There is a Change in the Values of these two Metals, as often as there is a Change in their Quantities, and yet this does not hinder them from being Measures of the Values of Things. If there be five or six times as much of these Metals in Europe now, as there was 200 Years ago, this Increase of Quantity will lessen their Value, and by Consequence cause more of them to be given for other Commodities, than when they were scarcer. For they are not Measures by their Weights alone, but by their Weights and Scarcities taken together, to which their true Values are proportional. And the not attending to this, was the Cause of Mr. Lock’s Mistake in his Reasonings on this Subject; which however did not affect his Argument against Mr. Lowndes, which he maintained with great Strength and Clearness.

Gold and Silver, which are pure and without any Mixture of baser Metals, are called Fine Gold, and Fine Silver.

The Gold and Silver, out of which the Coins of Nations are made, are Mixtures of Fine Gold and Fine Silver with certain Proportions of baser Metals, called Allays; which Mixtures, appointed by Law in each Nation, make the Standard Gold and Standard Silver of it.

A Pound Weight of the Standard Gold of England contains 22 Carrats of fine Gold, and two Carrats of Allay, or 11 Parts of fine Gold and one Part of Allay, and is cut into 44 Guineas and an half: And a Pound Weight of Standard Silver contains 11 Ounces 2 Penny-weight of fine Silver, and 18 Penny-weight of Allay, and is coined into 62 Shillings.

In estimating the Weight of Gold and Silver Pieces, we make use of the Troy-Pound, and divide it into 12 Ounces, each Ounce into 20 Penny-weight, and each Penny-weight into 24 Grains: And in Assaying Silver, we use the same Division of this Pound: But in Assaying Gold we divide the same Pound into 24 equal Parts, called Carrats, and each Carrat into 4 equal Parts called Carrat Grains, so that a Carrat is half an Ounce, or Ten Penny-weight, and a Carrat-Grain is Two Penny-weight and a half, or 60 ordinary Grains.

Any one that desires to know the Standards of the Coins of other Countries, may satisfy himself by looking into the Tables of the Assays, Weights and Values of foreign Coins herein published; where in the Column of Assays, he will see the Fineness of several Gold Coins, expressed in Carrats and Carrat-Grains, either Worse or Better than the English Standard: For Instance, if he would know the Standard of the Old Luidore, he will find in the Table that it is half a Grain in a Pound Weight worse than our Standard, and to express the same in Numbers, he may make Use of the small Table of Carrats and Carrat-Grains inserted here; for by substracting .125 (which is half a Carrat-Grain in Decimals) from 22 Carrats (the English Standard) there will remain 21.875 Carrats, the Standard of the Old Luidore.

It would be a great Advantage to Commerce, if Gold and Silver bore the same Proportion in Value to one another in all Parts of the World; for where this Proportion fails, there will be a Want of a sufficient Quantity of one or other of these Metals to carry on Trade in an easy and convenient Manner: For ’tis observed that these Metals constantly follow the best Market, and consequently every Country will lose all those Coins that are undervalued with Respect to other Countries, and abound with such as are over-rated, which in Time will become the only current Species.

We have a remarkable Instance of this in Spain, where Gold is higher valued in Proportion to Silver than it is in other Parts of Europe; hence it follows, that Spain pays all its Ballances of Trade to other Nations in Silver, rather than Gold; and other Nations make their Payments to Spain in Gold, rather than in Silver; nay, will send their Gold thither to purchase Silver. By this Means Spain, which furnishes Europe with most of its Silver, is frequently overstocked with Gold, and wants a sufficient Quantity of Silver to carry on its Trade with Ease, and when this Scarcity happens, a Præmium of near 6 per Cent is given for Payments in Silver, which Præmium continues till a new Plate-Fleet comes in, and then it ceases, till the flowing away and Scarcity of Silver make it necessary again.

This may in some Measure account for the sending of great Quantities of Gold at this Time from all Parts of Europe to Spain; for the great Treasure brought from the West-Indies being lately distributed among the Proprietors, Silver may now be had there for Gold without a Præmium, or rather a Præmium may be expected for Payments in Gold; this Silver being carried to other Countries, will give a Profit of above 6 per Cent; for since Gold in Spain is of 16 Times more Value than Silver, and but of 15 Times more Value in other Countries, Traffickers in Money will get above 6 per Cent by sending Gold to Spain, to purchase Silver, and carrying it thence to other Countries where ’tis of more Value: And there may be a farther Profit of about 4 per Cent, which may be got from the East-India Companies for Silver in Bullion; and therefore ’tis no Wonder that Gold now flows in great Quantities to Spain, and that the Value of it has risen of late very considerably among us.

As long as Gold in Proportion to Silver is produced in greater Plenty in Asia, Africa, and Brazil, than in the Spanish West-Indies it will follow, that the Value of Gold in Proportion to Silver will be different in those Countries. And farther, these Metals being scarcer in the East-Indies than in Europe, the Prices of Labour and Manufactures will consequently be lower there than with us, and for this Reason we export very few Manufactures to that Part of the World; but to purchase their Commodities are obliged to send Specie thither: And Silver in Proportion to Gold being higher valued there by above 40 per Cent than with us, we yearly export thither Silver in great Quantities: And the Demands of the East-India Company’s for this Exportation being at certain Times very great, the Price of Silver in Bullion at those Times rises considerably above the Value of Silver in Coin. But when the usual Supplies of Silver from the West-Indies are yearly imported into Europe without Interruption, we then find little Difference in the Value of Bullion and coined Silver. Whenever there is a Stop put to the coming Home of the Plate-Fleet, the price of Silver in Bullion rises 2, 3, or 4 Pence in an Ounce above Silver in Coin, and the Price of Gold Bullion to 8, 10, or 14 Pence an Ounce above coined Gold; so that the Exportation of Silver to the East-Indies never failing yearly, and the Supply from the West-Indies having been of late Years frequently interrupted; ’tis no Wonder that the Value of Bullion is much raised above that of Coin. And when this happens to be the Case we find that no Laws, how severe soever, are sufficient to prevent the melting down our new or heavy Coin, and turning it into Bullion; for where there is a strong Temptation to violate a Law, and the Violation of it can be performed with great Secrecy and Safety, no Penalty can be sufficient to secure the Observation of it.

The Values of Gold and Silver being, as I have observed, proportional to their Weight and Scarcity, it plainly follows, that at one and the same Time, in which we can suppose no Change to be made in the Scarcity, the Value of each will be proportional to its Weight; or to its Quantities of fine Metal, in Case any baser Metal be mixt with it. But as, at different Times, there happens to be a considerable Difference in the Scarcity of these Metals, their Values will become different on this Account, and the same Weight of each, will in Proportion as its Scarcity is increased or lessened, become more or less valuable than it was before, and this is the Market Value, which is the Price that a given Weight can sell for.

The Legal, Nominal, or Mint-Value of Gold and Silver, is the Value put upon it by the Laws of each Country.

It is very probable that when the legal Values were first established, they were the same with the Market Values. The legal Values of the English Coins are such, that Silver is worth 5s. 2d. an Ounce in England, and something more than 5s. 7d. in Ireland; and the Market Values of Silver in Bullion in England and Ireland are at present about 5s. 5d. and 5s. 10d. an Ounce.

In former Ages, the Eastern Parts of the World supplied the rest with most of their Gold and Silver: And during the Time of the Roman Empire, and before, Gold was generally ten or eleven times more valuable, than the same Weight of Silver; and in the Eastern Countries the same Proportion very nearly still continues; but the Discovery of the West-Indies about 240 Years ago, and the Importation from thence of vast Quantities of Silver, altered that Proportion in these Parts of the World; and made Gold to be about 15 Times the Value of Silver. And the late Discovery of Gold Mines in Brazil, and Importations from thence of about a Million of Gold yearly has a little lowered that Proportion; and in Time, in all Probability, will reduce it much lower; especially when we consider that about one Million in Silver is yearly exported from Europe to the East-Indies, which is much more than we formerly used to do; so that Silver becomes scarcer, and consequently of more Value among us. From hence ’tis evident that no certain Standard or Proportion between Gold and Silver can be settled, or continue long, since it must fluctuate and vary by the Increase or Decrease of either of those Metals.

It is observed, that near equal Values of Gold and Silver are brought yearly from the West-Indies to Europe, when Trade is free and open; and by Consequence since Gold at a Medium in Europe is worth about 15 Times its Weight of Silver, 15 Pounds Weight of Silver are brought from thence for every Pound Weight of Gold: Hence arises the Foundation in Nature for this Proportion; for since all Things are valuable in Proportion to their Scarcities, and the Demands for them; Gold from its being 15 Times as scarce as Silver, in the Mines from whence we have it, ought to be 15 Times as dear, if we suppose the Demands for these Metals to be equal.

This Proportion of Gold to Silver has of late Years been considerably altered by the Trade to the East-Indies, which carries thither near a Million yearly in Silver, and thereby creates a Scarcity of it in Europe. And if so much Treasure shall flow for any considerable Time in the same Channel, it may put an End to that Trade: For such large Remittances in Silver, must in Time make this Metal plenty in those Parts, and as its Quantity increases, its Value will lessen: so that by Degrees Silver may come to bear the same Proportion to Gold in the East-Indies, as it does in Europe, and their Commodities will rise in Proportion.

In England the Proportion of the Value of a Pound Weight of Gold to a Pound Weight of Silver at the Mint, is 15.072 to 1. but at present a Pound of Silver in Bullion sells for 66s. which Pound in Coin is worth but 62s. and by Consequence, the Proportion of Gold in Coin to Silver in Bullion is only 14.159 to 1. This Difference in the Value of Bullion and coined Silver, creates a Temptation to melt down the weighty Coin, prevents Bullion from being coined, and occasions a Scarcity of Silver Money.

This Scarcity will be farther increased by the Wear of Silver Coins, which has lessened their Weights considerably. It has been found here by Trials, that 100l. in Six-pences has lost 10l. 17s. 5d. in Shillings 8l. 10s. in Half Crowns 3l. 7s. 7d. and in Crowns 2l. 17s. 1d. and consequently, that 100l. in 25l. of each Species has lost 6l. 7s. Now if we suppose all the Silver Money in England, concerned in Trade, to have lost so much of its Weight by wearing, as to be 6 per Cent. worse now, than when it was first coined, then if the whole Quantity be five Million, as ’tis reasonable to suppose, the Loss will be 300000l. and if we suppose farther the Silver of England to be 25 Years old at a Medium, it then has lost about 5s. per Cent. in a Year; and by Consequence, if it was to wear equally every Year the Silver Coin of England would be worn out quite in 400 Years, half worn out in 200 Years, and quarter worn out in 100 Years.

Coins are according to the real Value, when the legal or nominal Values thereof are equal to the Values of pure Metal in them at Market, or only differ from them by the small Charge of Coinage.

The real or natural Values of Gold and Silver cannot be raised or lowered by the Authority of a Prince, being always governed by their Weights, Scarcities, and Demands for them.

Money may be raised by Law two Ways, either by giving higher Denominations to Coins, without altering their Weights of Gold or Silver; or the same Denominations to less Weights of those Metals. And on the contrary may be lowered, either by giving lower Denominations to the same Pieces, without altering their Weights; or the same Denominations to Pieces containing greater Weights of those Metals.

Nations which Trade with one another, regard only the Quantity of Gold and Silver, they give or take for their respective Commodities: If one Nation should raise or lower its Money, it cannot be imagined, that another Country will on that Account give more Gold or Silver for their Commodities, or take less for their own.

A Change made in the legal Value of Money will cause a proportional Change in the Values of Commodities; for Money is really and truly the Measure of the Values of Commodities, and Equivalent to them by its true and not its legal Value, and by Consequence the Value put upon it by Law will not affect it, considered as an Equivalent or a Measure.

Suppose, for Instance, all the Coins of Ireland raised 20 per Cent. so that 100 Moydores which now make 150l. will make 180l. the Irish Merchant who pays 100 Moydores for a Parcel of Foreign Goods, must after such Raising still pay the same Number of Moydores for the same Goods, which Moydores now make 180l. whereas before they made only 150l. and consequently the Price of Foreign Goods must rise in the same Proportion that the Coin is raised.

The Value of Goods at home must likewise rise in the same Proportion, because our Merchant who got at a Foreign Market one hundred Moydores for 100 Pieces of Linnen-Cloath, will after such raising of our Coin, still get the same Number of Moydores at the same Market for the same Quantity of Cloath, and consequently can afford the Farmer or Manufacturer the same Number of Moydores which he gave him formerly, which now after the supposed Change are worth 180l. and consequently the Price of those Goods will rise at home: For if our Goods did not rise in Proportion with our Coin, Foreigners would not fail to carry them off at 20 per Cent. less than their Value, and tho’ on such raising of the Coin, our Commodities may not immediately rise in the same Proportion, yet in a very little Time they will not fail to do it.

On the contrary, suppose our Coin lowered 20 per Cent. in which Case 100 Moydores will make only 120l. The Prices of all Goods in which we Trade with other Nations will fall; for all Goods carry’d to Foreign Markets or bought up there, will still sell for the same Number of Gold and Silver Pieces, as before, and by Consequence their nominal Values will be 20 per Cent. less than they were before.

The Irish Merchant who pays 100 Moydores for a Parcel of Foreign Goods must still pay the same Number of Moydores for the same Goods, which Moydores after the Reduction make but 120l. whereas before they made 150l. and therefore the Price of Foreign Goods will be less in the reduced Coin, tho’ they cost abroad as much Gold and Silver as before: The Price of all Goods must also fall at home, for a Foreigner, who gives 100 Moydores for 100 Pieces of our Cloath, will still give the same Number of Moydores and no more for the same Goods, and those Moydores after such Reduction being worth but 120l. which before were worth 150l. it is evident, the Price of those Goods must fall at home, in Proportion to the lowering of the Money.

Another general Effect of raising the Coin of any Nation is this: all Landlords, Creditors, and others, who by Contract are to receive any certain legal Sums, will by such raising lose in Proportion to the Alteration made. For suppose Money rais’d 20 per Cent. so that a Moydore shall pass for 36s. ’tis manifest that a Tenant who pays 120l. yearly Rent, can after such raising pay the said Rent with 66 Moydores and two thirds of a Moydore, whereas before, it required 80 Moydores to do it; by which, the Landlord who receives it, loses above 13 Moydores or Twenty per Cent. and the Tenant gets 20 per Cent. because his Goods will advance in Price as the Money is raised, and the Landlord must pay 20l. per Cent. dearer for all Commodities he has occasion for.

On the contrary, if we suppose the legal Value of Coins to be lowered 20 per Cent. so that a Moydore shall pass for 24s. we shall find the Effects to be the direct contrary, for the Tenant who now pays his yearly Rent of 120l. with 80 Moydores must after such Reduction pay 100 Moydores to discharge the said Rent, and to enable him to procure the 20 Moydores extraordinary, he must part with more of his Commodities to purchase so much more Gold; the Prices of all Things falling in Proportion as Money is lowered: By this Means the Tenant, Debtor, and all Persons who are obliged to pay any certain legal Sums, must lose 20l. per Cent. and so in Proportion for any other Reduction; and the Landlord or Creditor will gain 20l. per Cent. more than he ought, and at the same time may buy all Commodities so much the cheaper.

I shall now lay down some Rules for ascertaining the Proportion of the Value of Gold to Silver, and the English Values of foreign Coins.

The General Rule for determining the Proportion of the Mint or Market Value of allayed or fine Gold, to allayed or fine Silver, is this.