Money and trade considered

by John Law

4. It could be kept without loss or expence; taking up little room, and being durable.

5. It could be divided without loss, an ounce in four pieces, being equal in value to an ounce in one piece.

Silver having these qualities, ’tis reasonable to think it was used as money, before it was coined. what is meant by being used as money, is, that silver in bullion was the measure by which goods were valued: the value by which goods were exchanged: and in which contracts were made payable.

He who had more goods than he had use for, would choose to barter them for silver, tho’ he had no use for it; because, silver was certain in it’s quality: it was easie of delivery: it could be kept without loss or expence: and with it he could purchase other goods as he had occasion, in whole or in part, at home or abroad, silver being divisible without loss, and of the same value in different places. If A. B. had 100 sheep, and desired to exchange them for horses; C. D. had 10 horses, which were equal to, or worth the 100 sheep, and was willing to exchange: but as A. B. had not present occasion for the horses, rather than be at the expence of keeping them, he would barter his sheep with E. F. who had the value to give in silver, with which he could purchase the horses at the time he had occasion.

Or if E. F. had not silver, but was satisfied to give his bond for the silver, or the horses, payable at the time A. B. wanted them; A. B. would choose to take the bond payable in silver, rather than in horses: because silver was certain in quality, and horses differed much. so silver was used as the value in which contracts were made payable.

Silver was likewise used as the measure by which goods were valued, because certain in quality. if A. B. had a 100 weight of lead, and desired to exchange it for barley, the way to know what quantity of barley was equal in value to the lead, was by the silver. if the 100 weight of lead was equal to five ounces of fine silver, and 5 ounces of fine silver equal to 20 bolls of barley, then 20 bolls was the quantity of barley to be given in exchange for the lead.

Silver being easie of carriage, so equal in one place to what it was in another; was used as the measure by which goods to be delivered in different places were valued. If a piece of wine was to be delivered at Glasgow by A. B. merchant there, to the order of C. D. merchant in Aberdeen: and the value to be delivered in oats at Aberdeen by C. D. to the order of A. B. the wine could not be valued by the quantity of oats it was worth at Glasgow, nor the oats by the quantity of wine they were worth at Aberdeen. wine or oats might differ in quality, or be more or less valuable at the one place than at the other. the way to have known what quantity of oats was equal to the wine, was by the quantity of silver each was worth at the places they were to be delivered. if the piece of wine was worth at Glasgow 20 ounces of fine silver, and 20 ounces of fine silver worth 50 bolls of oats at Aberdeen; then 50 bolls was the quantity of oats to be given there in return for the wine.

Silver being capable of a stamp, princes, for the greater convenience of the people, set up mints to bring it to a standard, and stamp it; whereby its weight and fineness was known, without the trouble of weighing or fyning; but the stamp added nothing to the value.

For these reasons silver was used as money; its being coined was only a consequence of its being applied to that use in bullion, tho’ not with the same convenience.

Mr. Locke and others who have wrote on this subject, say, the general consent of men placed an imaginary value upon silver, because of its qualities fitting it for money.[1]