Money and trade considered

by John Law

So that what 5 lib. bought 200 years ago, will not be bought now for a 100 lib. nor were goods in greater plenty, or of less value than now: on the contrair, as these acts were made to regulate the prices of goods, ’tis reasonable to think they were in lesser quantity than now, proportioned to the demand, so of more value. but money having increased in quantity, more than in demand, and having been altered by the prince; is fallen in value: and a 100 lib. now is not worth what 5 lib. was worth before.

Land may be computed to have been improved in 200 years, that what pays now two bolls the acre, payed then but one boll: which may be known from old rentals.

Money gave then 10 per cent interest, and as 384 acres, rented at a boll the acre, victual at 8 sh. and 4 d. the chalder; so the property of these acres was equal to, or worth a 100l. for a 100 lib. gave 10 lib. interest, and the 384 acres payed only such a quantity of victual, as was sold for 10 lib. but as land (being preferable to money for many reasons) is valued now at 20 years purchase, tho’ money is at 6 per cent: so that land then may have been valued 14 years purchase or 140 lib.

As the quantity of money has increased since that time, much more than the demand for it; and as the same quantity of silver has received a higher denomination, so of consequence money is of lesser value: a lesser interest is given for it: A greater quantity of it is given for the same quantity of goods, and the land is worth more years purchase.

The value of such land now, the acre rented at 2 bolls, victual at 8 lib. 6 sh. and 6 pence, money at 6 per cent, so land at 20 years purchase, would be 8000 lib. by this computation money is only worth the 20th part of goods, and the 57th part of land, it was worth 200 years ago. part of this difference is from the improvement made on land, and the greater demand for land, the quantity being the same, whereby its value is greater: the rest of the difference is, from the money being more encreased in quantity, than in demand, whereby its value is lesser, and its use lower: as likewise from its being altered in the denomination.

There was then a greater quantity of silver in the same number of pence than there is now: which appears by several acts of parliament made about that time.

Anno 1475, in the 8 par. of K. James the 3. the ounce of silver was ordered to be sold for 12 sh. Scots, and 12 groats was made of the ounce of silver.

The 3d. of November 1554, by an act of the town-council of Edinburgh, the ounce of silver was ordered to be sold at 18 sh. and 8 pennies Scots; but these acts do not mention the fineness the silver was of. suppose the same number of pence had twice or 4 times the value of silver in them that they have now: then silver is only fallen to one tenth, or one fifth of the value it had to goods; and to one 28th, or one 14 of the value it had to land. but still money is fallen to one 20th of the value it had to goods, and to one 57th of the value it had to land.

The manner of lending money in France, and I suppose in other Roman Catholick countries; is by way of perpetual interest, redeemable by the debitor, and which the creditor may dispone or assign, but can never demand the principal. and it is usury by law to take any interest for money, if the creditor has power to call for the principal, tho’ the term of payment be many years after the money is lent. suppose the manner of lending in Scotland was the same 200 years ago, and that A. B. having 768 acres of land, rented at a boll of victual the acre, the yearly rent 48 chalder, at 5 lib. Scots the chalder, 20 lib. sterl. C. D. worth a 100 lib. in money, to have lent it to A. B. and interest being at 10 per cent, to have received an annual interest of 10 lib. which he left to his son, and thought he had provided sufficiently for him, 10 lib. being equal to, or worth 24 chalder of victual. but interest being lowered to 6 per cent, money being raised in the denomination, and of less value by its greater quantity: the 6 lib. now paid for the annual interest of that 100 l. is not worth one chalder of victual. and 384 acres, or the half of A. B’s land 200 years ago only equal to a 100, or a 140 lib; is now worth 57 times that sum, the rental supposed to be doubled, and its value at 20 years purchase.

In France it has been observed, that about 200 years ago, the same land was in 30 years worth double the money it was worth before. so land worth a 100 lib. anno 1500, was worth 200 lib. anno 1530. 400 lib. anno 1560. and so on, till within these 50 or 60 years it has continued near the same value.