Money and trade considered

by John Law

Domestick trade depends on the money. a greater quantity employs more people than a lesser quantity. a limited sum can only set a number of people to work proportioned to it, and ’tis with little success laws are made, for imploying the poor or idle in countries where money is scarce; good laws may bring the money to the full circulation ’tis capable of, and force it to those employments that are most profitable to the country: but no laws can make it go further, nor can more people be set to work, without more money to circulate so, as to pay the wages of a greater number. they may be brought to work on credit, and that is not practicable, unless the credit have a circulation, so as to supply the workman with necessaries; if that’s supposed, then that credit is money, and will have the same effects, on home, and foreign trade.

An addition to the money adds to the value of the country. so long as money gives interest, it is imployed; and money imployed brings profit, tho’ the imployer loses. if 50 men are set to work, to whom 25 shillings is payed per day, and the improvement made by their labour be only equal to, or worth 15 s. yet by so much the value of the country is increased. but as it is reasonable to suppose their labour equal to 40. s. so much is added to the value of the country, of which the imployer gains 15 s. 15 may be supposed to equal the consumption of the labourers, who before lived on charity, and 10 s. remains to them over their consumption.

If a stone of wooll is worth 10 s. and made into cloth worth 2 pound; the product is improved to four times the value it had in wooll: the workmen may be supposed to consume more than when they were not imployed; allow one 4th, the nation is gainer double the value of the product. so an addition to the money, whether the imployer gains or not, adds to the national wealth, eases the country of a number of poor or idle, proportioned to the money added, enables them to live better, and to bear a share in the publick with the other people.

The first branch of foreign trade, which is the export and import of goods, depends on the money. if one half of the people are imployed, and the whole product and manufacture consumed; more money, by imploying more people, will make an overplus to export: if then the goods imported ballance the goods exported, a greater addition to the money will imploy yet more people, or the same people before employed to more advantage; which by making a greater, or more valuable export, will make a ballance due. so if the money lessens, a part of the people then imployed are set idle, or imployed to less advantage; the product and manufacture is less, or less valuable, the export of consequence less, and a ballance due to foreigners.

The 2d and 3d branches of foreign trade, called the trades of carriage; are monopolized out of Europe, by these countries who have colonies; and in Europe, by these who sell cheapest.

Scotland has advantages for trade by which the merchants might undersell merchants in Holland, as cheapness of living, paying less to the publick, having workmen, seamen, and provisions for victualling cheaper: but if the Dutch merchant’s stock is 10000 lib. and his yearly expence 500; he can trade at 10 per cent profit, and add yearly 500 lib. to his stock. whereas a Scots merchant, whose stock is 500 lib. and his yearly expence 50; cannot trade so cheap.

If ’tis ask’t how a Dutch merchant trades who has only 500 lib. stock? he restricts his expence so as he can afford to trade at 10 per cent profit: or money being in greater quantity in Holland, whereby it is easier borrowed, and at less use; he gets credit for more at 3 or 4 per cent, by which he gains 6 or 7. and unless money be in greater quantity in Scotland, or expence retrench’d, we cannot trade so cheap as the Dutch; tho’ we have advantages for trade that they have not, and tho’ they be under disadvantages we are not lyable to. by a greater quantity of money and oeconomy, the Dutch monopolize the trades of carriage even from the English.

The 4th branch of foreign trade, bringing home the product of other countries, and exporting it in manufacture, depends on the quantity of money. we are so far from competing with the Dutch in this trade, that our wooll was sent to Holland, and imported from thence in manufacture; under the difficulty of a prohibition on the export of the wooll, and on the import of the manufacture. yet besides the advantages already named, which we have for trade over the Dutch, the material is the product of our country, and greater privileges are granted to manufacturers here, than in Holland.

’Tis alledged, if the prohibition had continued, manufactures might have come to perfection.

The advantage some men made by manufacture, may have occasion’d the setting up of more, while the money has been diminishing; but that money so imployed, has been taken from some other use it was before imploy’d in: for money cannot serve in two places at one time.