in every opulent kingdom. But to endeavor artificially to increafe fuch a credit, can never be the intereft of any trading nation; but muft lay them under difadvantages, by increafing money beyond its natural proportion to labor and commodities, and thereby heightening their price to the merchant and manufacturer. And in this view, it must be allowed, that no bank could be more advantageous than fuch a one as locked up all the money it received *, and never augmented the circulating coin, as is ufual, by returning part of its treasure into commerce. A public bank, by this expedient, might cut off much of the dealings of private 'bankers and money-jobbers; and tho' the ftate bore the charge of falaries to the directors and tellers of this bank, (for, according to the preceding fuppofition, it would have no profit from its dealings,) the national advantage, refulting from the low price of labor and the deftruction of paper-credit, would be a fufficient compenfation. Not to mention, that fo large a fum, lying ready at command, would be a great convenience in times of public danger and distress; and what part of it was ufed might be replaced at leifure, when peace and tranquillity were reftored to the nation.

BUT of this fubject of paper-credit, we fhall treat more largely hereafter. And I fhall finish this effay on money, by propofing and explaining two obfervations, which may, perhaps, ferve to employ the thoughts of our fpeculative politicians.. For to thefe only 1 al along addrefs myfelf. 'Tis enough, that I fubmit to the ridicule fometimes, in this age, attached to the character of a philofopher, without adding to it that which belongs to a projector.

It was a fhrewd obfervation of ANACHARSIS † the SCYTHIAN, who had never feen money in his own country, that gold and filver feemed to him of no use to the GREEKS, but to affift them in numeration and arithmetic. 'Tis indeed evident, that money is nothing but the reprefentation of labor and commodities, and ferves only as a method of rating or eftimating them. Where coin is in greater plenty; as a greater quantity of it is required to reprefent the fame quantity of goods; it can have no effect, either good or bad, taking a nation within itfelf; no more than it would make any alteration on a merchant's books, if instead of the ARABIAN method of notation, which requires few characters, he should make use of the ROMAN, which requires a great many. Nay, the greater quantity of money, like the ROMAN characters, is rather inconvenient, and requires greater trouble both to keep and tranfport it. But notwithstanding this conclufion, which must be allowed juft, 'tis certain, that, fince the difcovery of the mines in AMERICA, induftry has increased in all the nations of EUROPE, except in the poffeffors of thofe mines; and this may juftly be afcribed, amongst other reasons, to the increase of gold and filver. Accordingly we find, that in every kingdom, into which money begins to flow in greater abundance than formerly, every thing takes a new face; labor and induftry gain life; the merchant becomes more enterprifing, the manufacturer more diligent and fkilful, and even the farmer follows his plough with greater alacrity and attention. This is not eafily to be accounted for, if we confider only the influence which a greater abundance of coin has in the kingdom itself, by heightening the price of commodities, and obliging every one to pay a greater number of these little yellow or white pieces

*This is the cafe with the bank of AMSTERDAM.

+ PLUT. Quomodo quis fuos profectus in virtute fentire poffit.

for

for every thing he purchases. And as to foreign trade, it appears, that great plenty of money is rather difadvantageous, by raifing the price of every kind of labor.

To account, then, for this phaenomenon, we must confider, that tho' the high price of commodities be a neceffary confequence of the increase of gold and filver,. yet it follows not immediately upon that increafe; but fome time is required before the money circulate thro' the whole ftate, and make its effects be felt on all ranks of people. At first, no alteration is perceived; by degrees, the price rifes, firft of one commodity, then of another; till the whole at laft reaches a juft proportion with the new quantity of fpecie which is in the kingdom. In my opinion, 'tis only in this interval or immediate fituation, between the acquifition of money and rife of prices, that the increafing quantity of gold and filver is favorable to induftry. When any quantity of money is imported into a nation, it is not at firft difperfed into many hands; but is confined to the coffers of a few perfons, who immediately feek to employ it to the best advantage. Here are a fet of manufacturers or merchants, we fhall fuppofe, who have received returns of gold and filver for goods which they fent to CADIZ. They are thereby enabled to employ more workmen than formerly, who never dream of demanding higher wages, but are glad of employment from fuch good paymasters. If workmen become scarce, the manufacturer gives higher wages, but at first requires an increafe of labor; and this is willingly fubmitted to by the artifan, who can now eat and drink better to compenfate his additional toil and fatigue. He carries his money to market, where he finds every thing at the fame price as formerly, but returns with greater quantity and of better kinds, for the ufe of his family. The farmer and gardener, finding, that all their commodities are taken off, apply themselves with alacrity to the raifing more; and at the fame time can afford to take better and more cloths from their tradefmen, whofe price is the fame as formerly, and their industry only whetted by fo much new gain. 'Tis eafy to trace the money in its progrefs thro' the whole commonwealth; where we fhall find, that it muft firft quicken the diligence of every individual, before it increase the price of

labor.

AND that the fpecie may increase to a confiderable pitch, before it have this latter effect, appears, amongst other inftances, from the frequent operations of the FRENCH king on the money; were it was always found, that the augmenting the numerary value did not produce a proportional rife of the prices, at least for fome time. In the last year of Louis XIV. money was raised three fevenths, but prices augmented only one. Corn in FRANCE is now fold at the fame price, or for the fame number of livres it was in 1683; tho' filver was then at 30 livres the mark, and is now at 50*. Not to mention the great addition of gold and filver, which may have come into that kingdom fince the former period.

THESE facts I give upon the authority of Monf. du ToT in his Refections politiques, an author of reputation. Tho' I must confefs, that the facts which he advances on other occafions, are of ten fo fufpicious as to make his authority lets in this matter. However, the general opfervation, that the augmenting the money in FRANCE does

FROM

not at firft proportionably augment the prices, is certainly juft.

By the by, this feems to be one of the best reafons which can be given, for a gradual and univerfal augmentation of the money, tho' it has been entirely overlooked in all thofe volumes which have been wrote on that question by ME

LON

FROM the whole of this reafoning we may conclude, that 'tis of no manner of confequence, with regard to the domeftic happiness of a state, whether money be in a greater or lefs quantity. The good policy of the magiftrate confifts only in keeping it, if poffible, ftill increafing; because, by that means, he keeps alive a fpirit of industry in the nation, and increases the ftock of labor, in which confifts all real power and riches. A nation whofe money decreases, is actually, at that time, much weaker and more miferable than another nation, who poffeffes no more money, but is on the increafing hand. This will be easily accounted for, if we confider, that the alterations in the quantity of money, either on the one fide or the other, are not immediately attended with proportionable alteratiors in the prices of commodities. There is always an interval before matters be adjufted to their new fituation; and this interval is as pernicious to industry when gold and filver are diminishing, as it is advantageous when these metals are increafing. The workman has not the fame employment from the manufacturer and merchant; tho' he pays the fame price for every thing in the market. The farmer cannot difpofe of his corn and cattle; tho' he muft pay the fame rent to his landlord. The poverty, and beggary, and floth, which muft enfue, are eafily foreseen.

II. THE fecond obfervation which I propofed to make with regard to money, may be explained after the following manner. There are fome kingdoms, and many provinces in EUROPE, (and all of them were once in the fame condition) where money is fo fcarce, that the landlord can get none at all from his tenants; but is obliged to take his rent in kind, and either to confume it himself, or tranfport it to places where he may find a market. In thofe countries, the prince can levy few or no taxes, but in the fame manner: And as he will receive very fmall benefit from impofitions fo paid, 'tis evident that fuch a kingdom has very little force even at home; and cannot maintain fleets and armies to the fame extent, as if every part of it abounded in gold and filver. There is furely a greater difproportion betwixt the force of GERMANY at prefent and what it was three centuries ago †, than there is in its industry, people, and manufactures. The AUSTRIAN dominions in the empire, are in general well peopled and well cultivated, and are of great extent; but have not a proportionable weight in the balance of EUROPE; proceeding, as is commonly fuppofed, from the fcarcity of money. How do all thefe facts agree with that principle of reason, that the quantity of gold and filver is in itself altogether indifferent? According to that principle, where-ever a fovereign has numbers of fubjects, and these have plenty of commodities, he should

LON, du ToT, and PARIS de VERNEY. Were all our money, for instance, recoined, and a penny's worth of filver taken from every fhilling, the new fhilling would probably purchase every thing that could have been bought by the old; the prices of every thing would thereby be infenfibly diminished; foreign trade enlivened; and domeftic industry, by the circulation of a greater num ber of pounds and fhillings, would receive fome increafe and encouragement. In executing fuch a project, 'twould be better to make the new fhilling pafs for 24 half-pence, in order to preferve

the illufion, and make it be taken for the fame. And as a recoinage of our filver begins to be requifite, by the continual wearing of our fhillings and fixpences, 'tis doubtful, whether we ought to imitate the example in king WILLIAM's reign, when the clipt money was raised to the old standard.

The ITALIANS gave to the emperor MAXIMILIAN, the nick-name of POCCHI-DANARI. None of the enterprises of that prince ever fucceeded, for want of money.

of courfe be great and powerful, and they rich and happy, independent of the greater or lefs abundance of the precious metals. Thefe admit of divifions and fubdivifions to a great extent; and where they would become fo fmall as to be in danger of being loft, 'tis eafy to mix them with a bafer metal, as is practised in fome countries of EUROPE; and by that means raise them to a bulk more fenfible. and convenient. They ftill ferve the fame purposes of exchange, whatever their number may be, or whatever color they may be fuppofed to have.

To thefe difficulties I anfwer, that the effect here fuppofed to flow from scarcity of money, really arifes from the manners and cuftoms of the inhabitants; and that we mistake, as is too ufual, a collateral effect for a caufe. The contradiction is only apparent; but it requires fome thought and reflection to difcover the principles, by which we can reconcile reafon to experience.....

Ir feems a maxim almoft felf-evident, That the prices of every thing depend on the proportion between commodities and money, and that any confiderable alteration on either of these has the fame effect, either of heightening or lowering the prices. Increase the commodities, they become cheaper; increase the money, they rife in their value. As, on the other hand, a diminution of the former and that of the latter have contrary tendencies.

'Tis alfo evident, that the prices do not fo much depend on the abfolute quantity of commodities and that of money, which are in a nation, as on that of the commodities, which come or may come to market, and of the money which circulates. If the coin be locked up in chefts, 'tis the fame thing with regard to prices, as if it were annihilated: If the commodities be hoarded in granaries, a like effect follows. As the money and commodities, in these cafes, never meet, they cannot affect each other. Were we, at any time, to form conjectures concerning the price of provifions, the corn which the farmer muft referve for the maintenance of himself and family, ought never to enter into the eftimation. 'Tis only the overplus, compared to the demand, that determines the value.

To apply thefe principles, we muft confider, that in the first and more uncultivated ages of any ftate, ere fancy has confounded her wants with those of nature, men, contented with the productions of their own fields, or with those rude preparations which they themselves can work upon them, have little occafion for exchange, or at least for money, which, by agreement, is the common measure of exchange. The wool of the farmer's own flock, fpun in his own family, and wrought by a neighboring weaver, who receives his payment in corn or wool, fuffices for furniture and cloathing. The carpenter, the fmith, the mafon, the tailor, are retained by wages of a like nature and the landlord himself, dwelling in the neighborhood, is contented to receive his rent in the commodities raised by the farmer. The greatest part of these he confumes at home, in ruftic hofpitality: The reft, perhaps, he difpofes of for money to the neighboring town, whence he draws the few materials of his expence and luxury.

BUT after men begin to refine on all thefe enjoyments, and live not always at home, nor are contented with, what can be raised in their neighborhood, there is more exchange and commerce of all kinds, and more money enters into that exchange. The tradefmen will not be paid in corn; because they want foniething more than barely to eat. The farmer goes beyond his own parifh for the commodities he purchafes, and cannot always carry his commodities to the merchant Ꮓ who

who fupplies him. The landlord lives in the capital, or in a foreign country; and demands his rent in gold and filver, which can eafily be tranfported to him. Great undertakers, and manufacturers, and merchants arife in every commodity; and these can conveniently deal in nothing but in fpecie. And confequently, in this fituation of fociety, the coin enters into many more contracts, and by that means is much more employed than in the former.

THE neceffary effect is, that, provided the money does not increase in the nation, every thing muft become much cheaper in times of industry and refinement, than in rude, uncultivated ages. 'Tis the proportion between the circulating money, and the commodities in the market, which determines the prices. Goods that are confumed at home, or exchanged with other goods in the neighborhood, never come to market; they affect not in the least the current fpecie; with regard to it they are as if totally annihilated; and confequently this method of using them finks the proportion on the fide of the commodities, and increases the prices. But after money enters into all contracts and fales, and is every where the measure of exchange, the fame national cash has a much greater task to perform; all commodities are then in the market; the sphere of circulation is enlarged; 'tis the fame cafe as if that individual fum were to ferve a larger kingdom; and therefore, the proportion being here leffened on the fide of the money, every thing must become cheaper, and the prices gradually fall.

By the most exact computations that have been formed all over EUROPE, after making allowance for the alteration in the numerary value or the denomination, 'tis found, that the prices of all things have only rifen three, or at most, four times, fince the difcovery of the WEST INDIES. But will any one affert, that there is not four times the coin in EUROPE, that was in the fifteenth century, and the centuries preceding it? The SPANIARDS and PORTUGUESE from their mines, the ENGLISH, FRENCH, and DUTCH, by their AFRICAN trade, and by their interlopers in the WEST INDIES, bring home about fix millions a-year, of which not above a third part goes to the EAST INDIES. This fum alone in ten years would probably double the antient ftock of money in EUROPE. And no other fatisfactory reafon can be given, why all prices have not risen to a much more exorbitant height, except that derived from a change of customs and manners. fides that more commodities are produced by additional industry, the fame commodities come more to market, after men depart from their antient fimplicity of manners. And tho' this increase has not been equal to that of money, it has, however, been confiderable, and has preferved the proportion betwixt coin and commodities nearer the antient ftandard.

Be

WERE the question propofed, Which of thefe methods of living in the people, the fimple or the refined, is the most advantageous to the ftate or public? I fhould, without much scruple, prefer the latter, in a view to politics at leaft; and fhould produce this as an additional reason for the encouragement of trade and manufactures.

WHEN men live in the antient fimple manner, and fupply all their neceffaries from domeftic industry or from the neighborhood, the fovereign can levy no taxes in money from a confiderable part of his fubjects; and if he will impofe on them any burthens, he must take his payment in commodities, with which alone they abound; a method attended with fuch great and obvious inconveniencies,