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that they need not here be infifted on. All the money he can pretend to raise, must be from his principal cities, where alone it circulates ; and these, 'tis evident, cannot afford him so much as the whole state could, did gold and silver circulate thro' the whole. But besides this obvious diminution of the revenue, there is also another cause of the poverty of the public in such a situation. Not only the sovereign receives less money, but the same money goes not so far as in times of industry and general commerce. Every thing is dearer, where the gold and silver are supposed equal; and that because fewer commodities come to market, and the whole coin bears a higher proportion to what is to be purchased by it; whence alone the prices of every thing are fixed and determined.

Here then we may learn the fallacy of the remark, often to be met with in hiftorians, and even in common conversation, that any particular state is weak, tho' fertile, populous, and well cultivated, merely because it wants money. It appears, that the want of money can never injure any state within itself: For men and commodities are the real strength of any community. 'Tis the simple manner of living which here hurts the public, by confining the gold and silver to few hands, and preventing its universal diffusion and circulation. On the contrary, industry and refinements of all kinds incorporate it with the whole state, however small its quantity may be : They digest it into every vein, so to speak; and make it enter into every transaction and contract. No hand is entirely empty of it. And as the prices of every thing fall by that means, the sovereign has a double advantage: He may draw money by his taxes from every part of the state ; and what he receives, goes farther in every purchase and payment.

We may infer, from a comparison of prices, that money is not more plentiful in China, than it was in EUROPE three centuries ago : Bụt what immense power is that empire poffeffed of, if we may judge by the civil and military list maintained by it? POLYBIUS * tells us, that provisions were so cheap in ITALY during his time, that in some places the fated club in the inns was a remis a-head, little more than a farthing? Yet the Roman power had even then subdued the whole known world. About a century before that period, the CARTHAGINIAN ambassador said, by way of raillery, that no people lived more sociably amongst themselves than the ROMANS; for that in every entertainment, which, as foreign miniIters, they received, they still observed the same place at every table t. The absolute quantity of the precious metals is a matter of great indifference. There are only two circumstances of any importance, viz. their gradual increase, and their thorow concoction and circulation thro' the state ; and the influence of both these circumstances has been here explained.

In the following Essay we shall see an instance of a like fallacy as that abovementioned ; where a collateral effect is taken for a cause, and where a consequence is ascribed to the plenty of money; tho' it be really owing to a change in . the manners and customs of the people.

• Lib. 2. cap. 15.

+ Plin. lib. 33. cap. 11.

22

. ESSAY

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TOTHING is esteemed a more certain sign of the flourishing condition

of any nation than the lowness of interest: and with reason; tho? I believe the cause is somewhat different from what is commonly apprehended. The lowness of intereft is generally aferibed to the plenty of money. But money, however plentiful, has no other effect, if fixed, than to raise the price of labor. Silver is more common than gold; and therefore you receive a greater quantity of it for the same commodities. But do you pay less interest for it? Interest in BATAVIA and JAMAICA is at 10 per cent. in PORTUGAL at 6; tho' these places, as we may learn from the prices of every thing, abound much more in gold and silver than

either LONDON or AMSTERDAM. · WERE all the gold in ENGLAND annihilated at once, and one and twenty Thil

lings substituted in the place of every guinea, would money be more plentiful or: interest lower? No surely : We should only use silver instead of gold. Were gold rendered as common as silver, and silver as common as copper ; would money be more plentiful or interest lower? We may assuredly give the same answer. Our shillings would then be yellow, and our halfpence' white; and we should have no guineas. No other difference would ever be observed ; no alteration on commerce, manufactures, navigation, or interest ;, unless we imagine, that the color of the metal is of any consequence.

Now, what is so visible in these greater variations of scarcity or abundance of the precious metals, must hold in all inferior changes. 'If the multiplying gold and silver fifteen times makes no difference, much less can the doubling or tripling them. All augmentation has no other effect than to heighten the price of labor and commodities ; and even this variation is little more than that of a.name. In the progress towards these changes, the augmentation may have fome influence, by exciting industry; but after the prices are fettled, suitable to the new abundance of gold and silver, it has no manner of influence..

An effect always holds proportion with its cause. Prices have risen about four times since the discovery of the Indies; and 'tis probable gold and silver have multiplied much more: But intereft has not fallen much above half. The rate of interest, therefore, is not derived from the quantity of the precious metals.

Money having merely a fictitious value, arising from the agreement and convention of men, the greater or less plenty of it is of no consequence, if we con-sider a nation within itself; and the quantity of fpecie, when once fixed; tho''never so large, has no other effect, than to oblige every one to tell out a greater · number of those shining bits of metal, for cloaths, furniture, or equipage, without increasing any one-convenience of life. If a man borrows money to build a house, he then carries home a greater load ; because the stone, cimber, lead, glafs, &c. with the labor of the masons and carpenters, are represented by a greater quantity of gold and silver. But as these metals are considered merely as representations, there can no alteration arise, from their bulk or quantity, their

weight or color, either upon their real value or their interest. The same interest, in all cases, bears the same proportion to the fum. And if you lent me so much labor and so many commodities; by receiving five per cent. you receive always proportional labor and commodities, however represented, whether by yellow or white coin, whether by a pound or an ounce. 'Tis in vain, therefore, to look for the cause of the fall or rise of interest in the greater or less quantity of gold and silver, which is fixed in any nation. 1 High interest arises from three circumstances: A great demand for borrowing ;. 'little riches to supply that demand; and great profits arising from commerce. And these circumstances are a clear proof of the small advance of commerce and industry, not of the scarcity of gold and silver. Low interest, on the other hand, proceeds from the three opposite circumstances: A small demand for borrowing; great riches to supply that demand ; and small profits arising from commerce. And these circumstances are all connected together, and proceed from the increase of industry and commerce, not of gold and silver. We shall endeavor to prove these points as fully and distinctly as possible ; and shall begin with the causes. and the effects of a great or small demand for borrowing.

When a people have emerged ever so little from a savage ffate, and their num-. bers have increased beyond the original multitude, there must immediately arise: an inequality of property; and while some possess large tracts of land, others are · confined within narrow limits, and some are entirely without any landed property..

Those who possess more land than they can labor, employ those who possess none,, and agree to receive a determinate part of the product. Thus the landed interest is immediately established; nor is there any settled government, however rude, in which affairs are not on this footing. Of these proprietors of land, some must presently discover themselves to be of different tempers from others; and while one would willingly store up the product of his land for futurity, another desires to consume at present what should suffice for many years. But as the spending a settled revenue is a way of life entirely without occupation; men have fo much need of somewhat to fix and engage them, that pleasures, such as they are, will be the pursuit of the greatest part of the landholders, and the prodigals amongst them will always be more numerous than the inisers. In a state, therefore, where there is nothing but a landed interest, as there is little frugality, the borrowers must be very numerous, and the rate of interest must hold proportion to it. The

difference depends not on the quantity of money, but on the habits and manners ( which prevail. By this alone the demand for borrowing is increased or diminished.. Were money fo plentiful as to make an egg be sold for sixpence; so long as thereare only landed gentry and peasants in the state, the borrowers must be numerous, and interest high. The rent for the same farm would be heavier and more bulky :: But the same idleness of the landlord, with the higher prices of commodities,, would diffipate it in the same time, and produce the same necessity and demand for borrowing*.

NOR? Nor is the case different with regard to the second circumstance which we proposed to consider, viz. the great or little riches to supply this demand. This effect also depends on the habits and ways of living of the people, not on the quantity of gold and silver. In order to have, in any state, a great number of lenders, 'tis not sufficient nor requisite that there be great abundance of the precious metals. 'Tis only requisite that the property or command of that quantity, which is in the state, whether great or small, should be collected in particular hands, so as to form considerable sums, or compose a great monied interest. This begets a number of lenders, and sinks the rate of usury; and this, I shall venture to affirm, depends not on the quantity of specie, but on particular manners and customs, which make the specie gather into separate sums or masses of considerable value.

* I have been informed by a very eminent law. SCOTLAND, and probably in other parts in Er. yer, and a man of great knowlege and observa- Rope, was only at five per cent. and afterwards tion, that it appears from antient papers and re- rose to ten before the discovery of the WEST-INcords, that, about four centuries ago, money, in DIES. This fact is, curious; but might easily be .

seconciled. reconciled to the foregoing reasoning. Men, in few, the borrowers were still fewer. The high that age, lived so much at home, and in so very rate of interest among the early Romans is acfimple and frugal a manner, that they had no occounted for by historians from the frequent losses casion for money; and tho' the lenders were then sustained by the inroads of the enemy.

For suppose, that, by miracle, every man in BRITAIN should have five pounds Nipt into his pocket in one night; this would much more than double the whole money that is at present in the kingdom; and yet there would not next day, nor for some time, be any more lenders, nor any variation on the interest. And were there nothing but landlords and peasants in the state, this money, however abundant, could never gather into sums; and would only serve to increase the prices of every thing, without any farther consequence. The prodigal landlord diffipates it, as fast as he receives it ; and the beggarly peasant has no means, nor view, nor ambition of obtaining above a bare livelihood. The overplus of borrowers above that of lenders continuing still the same, there will follow no reduction of interest. That depends upon another principle ; and must proceed from an increase of industry and frugality, of arts and commerce.

Every thing useful to the life of man, arises from the ground; but few things arise in that condition which is requisite to render them useful. There must, therefore, beside the peasants, and the proprietors of land, be another rank of men, who, receiving from the former, the rude materials, work them into their proper form, and retain part for their own use and subsistence. In the infancy of society, these contracts betwixt the artisans and the peasants, and betwixt one fpecies of artisan and another, are commonly entered into immediately by the persons themselves, who, being neighbors, are really acquainted with each other's necessities, and can lend their mutual assistance to supply them. But when mens industry increases, and their views enlarge, 'tis found, that the most remote parts of the state can affist each other as well as the more contiguous, and that this intercourse of good offices may be carried on to the greatest extent and intricacy. Hence the origin of merchants, the most useful race of men in the whole society, who serve as agents between those parts of the state, that are wholly unacquainted, and are ignorant of each other's necessities. Here are in a city fifty workmen in filk and linen, and a thousand customers ; and these two ranks of men, so necessary to each other can never rightly meet, till one man erects a shop, to which all the workmen and all the customers repair. In this province, grass rises in abundance : The inhabitants abound in cheese, and butter, and cattle ; but want bread and corn, which, in a neighboring province, are in too great abundance for the use of the inhabitants. One man discovers this. He brings corn from the one province, and returns with cattle ; and supplying the wants of both, he is, so far, a common benefactor. As the people increase in numbers and industry, the difficulty of their mutual intercourse increases : The business of the agency or merchandize becomes more intricate ; and divides, subdivides, compounds, and mixcs. to a greater variety. In all these transactions, 'cis necessary, and reasonable, that a considerable part of the commodities and labor should belong to the merchant, to whom, in a great measure, they are owing. And these commodities he will sometimes preserve in kind, or more commonly convert into money, which is their common representation. If gold and silver have increased in the state together with the industry, it will require a great quantity of these metals to represent a great quantity of commodities and labor. If industry alone has increased, the prices of every thing musi sink, and a very small quantity of specie will serve as a representation.

corn,

THERE is no craving or demand of the human mind more constant and insatiable than that for exercise and employment; and this desire seems the foundation of most of our passions and pursuits. Deprive a man of all business and ferious occupation, he runs restless from one amusement to another; and the weight and oppression which he feels from idleness, is so great, that he forgets the ruin which must follow from his immoderate expences. Give him a more harmless way of employing his mind or bo'y, he is satisfied, and feels no longer that insatiable thirst after pleasure. But if the employment you give him be profitable, especially if the profit be attached to every particular exertion of industry, he has gain so often in his eye, that he acquires, by degrees, a passion for it, and knows no such pleasure as that of seeing the daily increase of his fortune. And this is the reason why trade increases frugality, and why, among merchants, there is the same overplus of misers above prodigals, as, among the possessors of land, there is the contrary.

COMMERCE increases industry, by conveying it readily from one member of the state to another, and allowing none of it to perish or become useless. It increases frugality, by giving occupation to men, and employing them in the arts of gain, which foon engage their affection, and remove all relish for pleasure and expence. 'Tis an infallible consequence of all industrious professions, to beget frugality, and make the love of gain prevail over the love of pleasure. Among lawyers and physicians who have any practice, there are many more who live within their income, than who exceed it, or even live up to it. But lawyers and physicians beget no industry; and 'tis even at the expence of others they acquire their riches; so that they are sure to diminish the poffeffions of some of their fellow-citizens as fast as they increase their own. Merchants, on the contrary, beget industry, by serving as canals to convey it thro' every corner of the ftate; and at the same time, by their frugality, they acquire great power over that industry, and collect a large property in the labor and commodities, which they are the chief instruments in producing. There is no other profession, therefore, except merchandize, which can make the monied interest considerable, or, in other words, can increase industry, and, by also increasing frugality, give a great command of that industry to particular members of the society. Without

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