Money and trade considered

by John Law

If notes given out after that manner, were equal in value to silver money; then every landed man in Scotland, would desire a share of this great and certain advantage: and I don’t see how it is practicable to give every landed man a share.

Supposing it practicable, 45 years purchase in these notes, will not be of so much value, as 20 years purchase of silver money.

No anticipation is equal to what already is. a years rent now is worth 15 years rent 50 years hence, because that money let out at interest, by that time will produce so much. and tho’ the parliament would force these notes, yet they would not have currency, any more than if the government coin’d pieces of gold equal in weight and fineness, with a guinea, and ordered them to pass for 5 lib.

These bills are propos’d to be repay’d and cancell’d in a term of years, without paying any interest, but only so much as would defray the charges of the office, which would not be above one half per cent.

There would then be many lenders, but few if any borrowers, except from the land bank: for as ’tis the landed man borrows of the money’d man, he would satisfie his creditor, and have bills to lend. the money’d man would likewise have of these bills to lend, but there would be no borrowers; or if any desired to borrow, they would have these bills at a very low use. suppose at 2 per cent, then these bills would be considerably less valuable than silver.

Any thing that is propos’d to have a currency as money, and is given for a lesser interest than silver money, will be of less value.

It is not to be suppos’d any person will lend silver money at 2 per cent, when they can have 6 per cent in England. so a 100 lib. silver money, will yield as much as 300 lib. of these bills would: and 100 lib. in silver, will be equal to 300 lib. in bills. the 6 lib. the 100 lib. of silver yields, being silver, and the 6 lib. the 300 of bills yields, being payed in these bills: and 1 lib. silver, being worth 3 lib. in bills; so the 6 lib. interest of the 100 lib. in silver, would be equal to 18 lib. or the interest of 900 lib. in bills.

And tho’ they were given out to be repay’d in 20 years, at 5 per cent for that time; or in 10 years, at 10 per cent: they would not be equally valuable with silver. the difference would not be so great, as when given out for 45 years.

The advantage the nation would have by the Dr’s proposal is; that tho’ these notes sell under the value of silver money, and 500 lib. in notes were only equal to a 100 lib. in silver; yet the nation would have the same advantage by that 500 lib. in notes, as if an addition of a 100 lib. had been made to the silver money.

So far as these bills fell under the value of the silver money, so far would exchange with other countries be rais’d. and if goods did not keep their price. (i. e.) if they did not sell for a greater quantity of these bills, equal to the difference betwixt them and silver: goods exported would be undervalued, and goods imported would be overvalued, as has been explain’d page 43 and 44 about exchange.