To apply this now to Money, as capable of different Rates of Interest. To Money considered in its proper use, as a Commodity passing in exchange from one to another, all that is done by Interest, is but the adding to it by agreement or publick Authority, a faculty, which naturally it has not, of increasing every Year Six per Cent. Now if publick Authority sink Use to Four per Cent. 'tis certain it diminishes this good quality in Money one Third. But yet this making the Money of England not one Farthing more than it was, it alters not the Measures upon which all changeable Commodities increase or sink their price, and so makes not Money Exchange for less of any Commodity, than it would without this alteration of its Interest. If lessening Use to Four per Cent. should at all alter the quantity of Money, and make it less, it would make Money, as it has the Nature of a Commodity, dearer, i.e. a less quantity of Money would Exchange for a greater quantity of another Commodity, than it would before.
This perhaps will appear a little plainer by these following particulars.
1. That the Intrinsick Natural worth of any Thing, consists in its fitness to supply the Necessities or serve the Conveniencies of human Life; and the more necessary it is to our Being, or the more it contributes to our Well-being the greater is its worth: But yet,
2. That there is no such Intrinsick Natural settled value in any Thing, as to make any assign'd quantity of it, constantly worth any assigned quantity of another.
3. The Marketable value of any assign'd quantities of two or more Commodities, are pro hic & nunc, equal, when they will Exchange one for another. As supposing one Bushel of Wheat, two Bushels of Barley, Thirty pound of Lead, and one Ounce of Silver, will now in the Market be taken one for another, they are then of equal worth: And our Coin being that which Englishmen reckon by, an Englishman would say, that now one Bushel of Wheat, two Bushels of Barley, thirty Pound of Lead, and one Ounce of Silver, were equally worth five Shillings.
4. The change of this Marketable value of any Commodity in respect of an other Commodity or in respect of a standing common Measure, is not the altering of any Intrinsick value or quality in the Commodity; (for musty and smutty Corn will Sell dearer at one time than the clean and sweet at another) but the alteration of some proportion, which that Commodity bears to something else.
5. This proportion in all Commodities, whereof Money is one, is the proportion of their quantity to the vent. The Vent is nothing else, but the passing of Commodities from one owner to another in Exchange; and is then call'd quicker, when a greater quantity of any species of Commodity, is taken off from the Owners of it, in an equal space of time.
6. This Vent is regulated, i.e. made quicker or slower, as greater or less quantities of any Saleable Commodity are remov'd out of the way, and course of Trade; separated from publick Commerce; and no longer lie within the reach of Exchange. For though any Commodity should shift Hands never so fast, and be Exchanged from one Man to another; yet if they were not thereby exempted from Trade and Sale, and did not cease to be any longer Traffick, this would not at all make, or quicken their Vent. But this seldom or never happening, makes very little or no alteration.
7. Things are removed out of the Market or Hands of Commerce, and so their Vent altered three ways; 1. By Consumption, when the Commodity in its Use is destroy'd, as Meat, Drink, and Cloths, &c. all that is so consumed is quite gone out of the Trade of the World. 2. By Exportation; and all that is so carried away, is gone out of the Trade of England, and concerns Englishmen no more in the price of their Commodities among themselves for their own use, than if it were out of the World. 3. By buying and laying up for a Man's private Use. For what is by any of these ways shut out of the Market, and no longer moveable by the Hand of Commerce, makes no longer any part of Merchantable Ware, and so in respect of Trade, and the quantity of any Commodity, is not more considerable than if it were not in being. All these three terminating at last in Consumption of all Commodities, (excepting only Jewels and Plate, and some few others which wear out but insensibly) may properly enough pass under that Name. Ingrossing too has some influence on the present Vent: But this inclosing some considerable part of any Commodity, (for if the ingrossing be of all the Commodity, and it be of general Use, the price is at the will of the Ingrosser) out of the free common of Trade only for some time, and afterwards returning again to Sale, makes not usually so sensible and general an alteration in the Vent as the others do: But yet influences the price, and the Vent more, according as it extends its self to a larger portion of the Commodity, and Hoards it up longer.
8. Most other portable Commodities (excepting Jewels, Plate, &c.) decaying quickly in their Use, but Money being less consumed or increased, i.e. by slower Degrees removed from, or brought into the free Commerce of any Country, than the greatest part of other Merchandize; and so the proportion between its quantity and Vent, altering slower than in most other Commodities, it is commonly look'd on as a standing measure to judge of the value of all Things, especially being adapted to it by its Weight and Denomination in Coinage.
9. Money, whilst the same quantity of it is passing up and down the Kingdom in Trade, is really a standing measure of the falling and rising value of other Things in Reference to one another: and the alteration of price is truly in them only. But if you increase or lessen the quantity of Money current in Traffick in any place, then the alteration of value is in the Money: And if at the same time Wheat keep its proportion of Vent to quantity, Money to speak truly alters its worth, and Wheat does not, though it Sell for a greater or less price than it did before. For Money being look'd upon as the standing measure of other Commodities, Men consider and speak of it still, as if it were a standing measure, though when it has varied its quantity, 'tis plain it is not.
10. But the value or price of all Commodities, amongst which Money passing in Trade is truly one, consisting in proportion, you alter this, as you do all other proportions, whether you increase one, or lessen the other.
11. In all other Commodities, the Owners when they design them for Traffick, endeavour as much as they can to have them vented and gone, i.e. removed out of the reach of Commerce, by Consumption, Exportation, or laying up: But Money never lying upon Peoples Hands, or wanting Vent, (for any one may part with it in Exchange when he pleases;) the provident publick, and private care, is to keep it from Venting or Consuming, i.e. from Exportation which is its proper Consumption; and from Hoarding up by others, which is a sort of Ingrossing. Hence it is that other Commodities have sometimes a quicker, sometimes a slower Vent: For no body lays out his Money in them but according to the use he has of them, and that has bounds. But every body being ready to receive Money without bounds, and keep it by him, because it answers all things: Therefore the Vent of Money is always sufficient, or more than enough. This being so, its quantity alone is enough to regulate and determine its value, without considering any Proportion between its quantity and vent, as in other Commodities.
12. Therefore the lessening of Use, not bringing one Penny of Money more into the Trade or Exchange of any Country, but rather drawing it away from Trade, and so making it less, does not at all sink its Value, and make it buy less of any Commodity, but rather more.
13. That which raises the natural Interest of Money, is the same that raises the Rent of Land, (i.e.) its aptness to bring in Yearly to him that manages it, a greater Overplus of Income above his Rent, as a Reward to his Labour. That which causes this in Land is the greater quantity of its Product, in proportion to the same Vent of that particular Fruit, or the same quantity of Product, in proportion to a greater Vent of that single Commodity: but that which causes increase of Profit to the Borrower of Money, is the less quantity of Money, in proportion to Trade, or to the Vent of all Commodities, taken together, &vice versa.
14. The natural Value of Money, as it is apt to yield such an yearly Income by Interest, depends on the whole quantity of the then passing Money of the kingdom, in proportion to the whole Trade of the Kingdom, (i.e.) the general Vent of all the Commodities. But the natural Value of Money, in exchanging for any one Commodity, is the quantity of the Trading Money of the Kingdom, design'd for that Commodity, in proportion to that single Commodity and its Vent. For though any single Man's Necessity and Want either of Money, or any species of Commodity, being known, may make him pay dearer for Money, or that Commodity: Yet this is but a particular Case, that does not at the same time alter this constant and general Rule.
15. That supposing Wheat a standing Measure, that is, That there is constantly the same quantity of it in proportion to its Vent, we shall find Money to run the same variety of Changes in its Value, as all other Commodities do. Now that Wheat in England does come nearest to a standing Measure, is evident, by comparing Wheat with other Commodities, Money, and the Yearly Income of Land in Hen. 7. time and now. For supposing that primo Hen. 7. N. let 100 Acres of Land to A. for 6 d per An. per Acre, Rack-rent; and to B. another 100 Acres of Land, of the same Soil and yearly worth with the former, for a Bushel of Wheat per Acre, Rack-rent, (a Bushel of Wheat about that time being probably sold for about 6 d.) it was then an equal Rent. If therefore these Leases were for Years yet to come, 'tis certain that he that paid 6 d. per Acre, would pay now 50 s. per An. and he that paid a Bushel of Wheat per Acre, would pay about 25 l. per An. which would be near about the yearly Value of the Land, were it to be let now. The reason whereof is this, That there being ten times as much Silver now in the World, (the Discovery of the West-Indies having made the Plenty) as there was then, it is Nine Tenths less worth now than it was at that time; that is, it will exchange for Nine Tenths less of any Commodity now, which bears the same proportion to its Vent as it did 200 years since; which, of all other Commodities, Wheat is likeliest to do. For in England, and this part of the World, Wheat being the constant and most general Food, not altering with the Fashion, nor growing by chance; but as the Farmers sow more or less of it, which they endeavour to proportion, as near as can be guessed, to the Consumption, abstracting the Over-plus of the precedent Year in their Provision for the next; and vice versa, it must needs fall out, that it keeps the nearest Proportion to its Consumption, (which is more studied and designed in this than other Commodittes) of any thing, if you take it for 7 or 20 Years together: Tho' perhaps the Plenty or Scarcity of one Year, caused by the Accidents of the Season, may very much vary it from the immnediately precedent, or following. Wheat therefore, in this part of the World, (and that Grain which is the constant general Food of any other Country) is the fittest Measure to judge of the altered Value of things in any long tract of Time: And therefore Wheat here, Rice in Turkey, &c. is the fittest thing to reserve a Rent in, which is designed to be constantly the same for all future Ages. But Money is the best Measure of the alter'd Value of things in a few Years: Because its Vent is the same, and its quantity alters slowly. But Wheat, or any other Grain, cannot serve instead of Money: Because of its Bulkiness and too quick Change of its quantity. For had I a Bond, to pay me 100 Bushels of Wheat next Year, it might be three Fourths Loss or Gain to me; too great an Inequality and Uncertainty to be ventured in Trade, Besides the different Goodness of several Parcels of Wheat in the same Year.
16. That supposing any Island separate from the Commerce of the rest of Mankind, if Gold and Silver, or whatever else, (so it be lasting) be their Money, if they have but a certain quantity of it, and can get no more, that will be a steady standing Measure of the Value of all other things.
17. That if in any Country they use for Money any lasting Material, whereof there is not any more to be got, and so cannot be increas'd; or being of no other use, the rest of the World does not value it, and so it is not like to be diminished; this also would be a steady standing Measure of the Value of other Commodities.
18. That in a Country where they had such a standing Measure, any quantity of that Money (if it were but so much that every body might have some) would serve to drive any proportion of Trade, whether more or less, there being Counters enough to reckon by, and the value of the Pledges being still sufficient, as constantly encreasing with the Plenty of the Commodity. But these three last, being built on Suppositions that are not like to be found in the Practice of Mankind, since Navigation and Commerce have brought all parts acquainted with one another, and introduced the use of Gold and Silver Money into all Trading parts of the World; they serve rather to give us some light into the nature of Money, than to teach here a new Measure of Traffick. Though it be certain, that that part of the World, which bred most of our Gold and Silver, used least of it in exchange, and used it not for Money at all.
19. That therefore in any Country that hath Commerce with the rest of the World, it is almost impossible now to be without the use of Silver Coin; and having Money of that, and Accounts kept in such Money, it is impossible to have any standing, unalterable measure of the value of things. For whil'st the Mines supply to Mankind more than wastes and consumes in its use, the quantity of it will daily grow greater in respect of other Commodities, and its value less.
20. That in a Country that hath open Commerce with the rest of the World, and uses Money made of the same Materials with their. Neighbours, any quantity of that Money will not serve to drive any quantity of Trade; but there must be a certain proportion between their Money and Trade. The reason whereof is this, because to keep your Trade going without loss, your Commodities amongst you, must keep an equal, or, at least, near the Price of the same Species of Commodities in the Neighbour Countries: Which they cannot do, if your Money be far less than in other Countries; for then, either your Commodities must be sold very cheap, or a great part of your Trade must stand still; there not being Money enough in the Country to pay for them (in their shifting of hands) at that high price, which the Plenty, and consequently low Value of Money makes them at in another Country. For the Value of Money in general is the quantity of all the Money in the World, in proportion to all the Trade: But the value of Money in any one Country, is the present quantity of the Current Money in that Country, in proportion to the present Trade. Supposing then, that we had now in England but half as much Money, as we had seven Years ago, and yet had still as much yearly Product of Commodities, as many Hands to work them, and as many Brokers to disperse them, as before; and that the rest of the World we Trade with, had as much Money, as they had before, (for 'tis likely they should have more by our Moiety shared amongst them) 'tis certain, that either half our Rents should not be paid, half our Commodities not vented, and half our Labourers not imployed, and so half the Trade be clearly lost; or else, that every one of these must receive but half the Money, for their Commodities and Labour, they did before, and but half so much as our Neighbours do receive for the same Labour and the same natural Product, at the same time. Such a state of Poverty as this, though it will make no scarcity of our Native Commodities amongst us, yet it will have these ill consequences.
1. It will make our Native Commodities vent very cheap.
2. It will make all Foreign Commodities very dear, both which will keep us Poor. For the Merchant making Silver and Gold his Measure, and considering what the Foreign Commodity costs him (i.e. how many Ounces of Silver) in the Country where Money is more Plenty, i.e. Cheaper; and considering too, how many Ounces of Silver it will yield him in another Country, will not part with it here, but for the same quantity of Silver, or as much as that Silver will buy here of our Commodity, which will be a great deal more than in another place. So that in all our exchange of Native for Foreign Commodities, we shall pay double the Value that any other Country does, where Money is in greater Plenty. This indeed will make a dearness, and, in time, a scarcity of Foreign Commodities; which is not the worst inconveniency that it brings upon us, supposing them not absolutely necessary. But,
3. It endangers the drawing away our People, both Handicrafts, Mariners, and Soldiers, who are apt to go where their Pay is best, which will always be where there is greatest plenty of Money; and in time of War, must needs bring great distress.
21. Upon this Measure too it is, That the variation of exchange of Money, between several Countries, does somewhat depend. For it is certain, that one Ounce of Silver is always of equal value to another Ounce of Silver considered in its Intrinsick worth, or in reference to the universal Trade of the World: But 'tis not of the same value at the same time, in several parts of the World, but is of most worth in that Country where there is the least Money, in proportion to its Trade: And therefore Men may afford to give 20 Ounces of Silver in one place, to receive 18 or 19 Ounces of Silver in another. But this is not all: To this then, (to find out the alteration of the exchange) the over-ballance of the Trade must be taken into consideration. These two together regulate the exchange in all the Commerce of the World, and in both the higher rate of exchange depends upon one and the same thing, viz. the greater plenty of Money in one Country, than in the other; Only with this difference, that where the over-ballance of Trade raises the exchange above the Par, there it is the plenty of Money, which private Merchants have in one Country, which they desire to remove into another: But where the Riches of the Country raises the exchange above the Par, there it is the plenty of the Money in the whole Country. In one the Merchant has more Money (or Debts, which is all one) in a Foreign Country than his Trade there will employ, and so is willing to allow upon exchange to him abroad, that shall pay him ready Money at home, 1, 2, 3, &c. per Cent. more or less, proportionably as his or his Countrymens plenty of ready Money abroad, the danger of leaving it there, or the difficulty of bringing it home in Specie, and his present need of Money at home is greater or less: In the other, the whole Country has more Money, than can well be imploy'd in the Trade thereof, or at least, the proportion of the Money to the Trade is greater than in the Neighbouring Country, where the exchange is below the Par.
For, supposing the ballance of Trade to be equal between England and Holland, but that there is in Holland a greater plenty of Money, than in England, (which will appear by the lowness of the Natural Use in Holland, and the height of the Natural Use in England; and also by the dearness of Food and Labour in general in Holland, and the cheapness of it in England.) If N. has Ten thousand pounds in Holland, which the greater Advantage he could make of it in England, either by Use, or Purchase, tempts him to transfer into England, 'tis probable he will give as much to a Merchant in Holland to pay him Ten thousand pounds in England, as the ensurance at that time between Holland and England is worth. If this happen to be in a Country, where the Exportation of Bullion is Prohibited, he must pay the more: Because his Venture, if he carry it in Specie, will be greater. And, upon this ground, perhaps, the Prohibiting the Exportation of Money out of England, under Penalties, may be of some use, by making the rate of the exchange greater to those Countries, which Import upon us more, than they Export in Commodities; and so retain some part of the Money which their over-ballance of Trade would carry away from us, though after all, if we are over-ballanc'd in Trade it must go.
But, since the Holland Merchant cannot receive N's Ten thousand pounds in Money in Holland, and pay him Ten thousand pounds in England, unless his over-ballance of Trade make English-Men indebted to him Ten thousand pounds in Money, which he is not like to take in Commodities. I think the over-ballance of Trade is that which chiefly raises the exchange in any Country, and that plenty of Money in any Country does it only for so much of the Money as is transfer'd either to be let out to Use, or to be spent there. And though Lending to Foreigners, upon Use, doth not at all alter the ballance of Trade between those Countries, yet it does alter the exchange between those Countries for so much as is lent upon Use, by not calling away the Money, that should follow the over-ballance of Trade, but letting it rest there, as if it were accounted for; all one as if the ballance of Trade were for so much altered. But this being not much in comparison of the general Traffick between two Nations, or at least varying slower, the Merchant too regulating the exchange, and not the Usurer. I suppose it is the present ballance of Trade, on which the exchange immediately and chiefly depends, unless some accident shall make a great deal of Money be remitted at the same time, from one place to another, which will for that time raise the exchange all one as an over-ballance of Trade; and indeed, when examin'd is generally very little different from it.
To be able to estimate the Par with the rise and fall of the exchange, it is necessary to know the intrinsick value, i.e. how much Silver is in the Coins of the two Countries, by which you reckon and charge the Bill of Exchange.