Scotland has a very inconsiderable trade, because she has but a very small part of the money. there is a little home trade, but the country is not improv’d, nor the product manufactur’d. there is a little of the first branch of foreign trade, and that is carried on with great disadvantage to the people, who pay dearer for most foreign goods, and are worse serv’d, than other nations: if they have any cheaper, ’tis from the lower duty on the import. in Scotland low prices are given for goods bought up to be exported, the merchants profit being great: if a 100 stone of wooll is worth in Holland ten piece of linen cloth, these ten pieces are sold in Scotland for the value of a 180 or 200 stone of such wooll. such goods as do not yield that great profit, are not exported; and these that do, are not exported in any quantity, the merchant’s stock being small. Scotland has no part of the other branches of foreign trade, not being able to trade so cheap as other nations.
Some think if interest were lower’d by law, trade would increase, merchants being able to employ more money and trade cheaper. such a law would have many inconveniencies, and it is much to be doubted, whether it would have any good effect; indeed, if lowness of interest were the consequence of a greater quantity of money, the stock apply’d to trade would be greater, and merchants would trade cheaper, from the easiness of borrowing and the lower interest of money, without any inconveniencies attending it.
Tho’ interest were at 3 per cent in Holland, and continued at 6 in Scotland; if money were to be had equal to the demands at 6, the advantages we have for trade, which the Dutch have not, would enable us to extend trade to its other branches, notwithstanding the difference of interest.
If money in Scotland were equal to the demands at 6 per cent, the Dutch could not trade so cheap in herring; the hinderances of that trade being the consequences of the scarcity of money. the materials for carrying on the fishing are cheaper in Holland, but the cheapness of victualling alone would ballance that. and the dearth of these materials, as of other foreign goods, coming from the scarcity of money; that being remeded, these materials, and other foreign goods that are not the product of Holland, would be sold as cheap in Scotland.
Exchange, is when a merchant exports to a greater value than he imports, and has money due abroad; another importing to a greater value than he exported, has occasion for money abroad: this last by paying in money to the other, of the weight and fineness with that is due him, or to that value, saves the trouble, hazard, and expence, to himself of sending money out, to the other of bringing money home, and to both the expence of re-coyning.
So long as foreign trade, and expence kept equal, exchange was at the par: but when a people imported for a greater value, or had other occasions abroad, more than their export, and the expence of foreigners among them would ballance; there was a necessity of sending out the ballance in money or bullion, and the merchant or gentleman who owed, or had occasion for money abroad, to save the trouble, expence and hazard of sending it out, gave so much per cent to another, as the trouble, expence and hazard was valued at. thus exchange rose above the par, and became a trade.
Mr. Mun on trade, page 100, says, the exchange being against a nation, is of advantage to that nation. and supposes, if a 100 lib. at London is worth no more than 90 lib. of the same money at Amsterdam, the Dutch to send 500000 lib. of goods to England, and the English 400000 lib. of goods to Holland; it follows, that the money due the English at Amsterdam, will ballance 440000 lib. due to the Dutch at London: so 60000 lib. pays the ballance. Mr. Mun does not consider, that the Dutch goods worth 500000 lib. when exchange was at the par, are worth at London 555555 l. when 90 lib. at Amsterdam is worth a 100 lib. at London. and the 400000 lib. of English goods in Holland, are only worth 360000 lib. that sum being equal by exchange to 400000 lib. in England. so in place of England’s having an advantage of 40000 lib. as he alledges by the exchange being against her: she pays 95555 lib. more, than if exchange had been at the par.
When exchange is above the par, it is not only payed for the sums due of ballance, but affects the whole exchange to the place where the ballance is due. if the ballance is 20000 lib. and the sums exchanged by merchants who have money abroad, with others who are owing, or have occasion for money there, be 60000 lib. the bills for the 60000 lib. are sold at or near the same price, with the 20000 lib. of ballance.
It likewise affects the exchange to countries where no ballance is due. if the exchange betwixt Scotland and Holland is 3 per cent. above the par against Scotland, betwixt England and Holland at the par, tho’ no ballance is due by Scotland to England, yet the exchange with England will rise; for, a 100 lib. in England remitted to Scotland by Holland, will yield 103 lib. so betwixt Scotland and England it may be supposed to be had at 2 per cent, being less trouble than to remit by Holland.
Goods are sold to foreigners, according to the first cost. if goods worth a 100 lib. in Scotland, are worth 130 lib. in England, these goods will be exported, 30 per cent being supposed enough for the charges and profit. if the price of these goods lower in Scotland from a 100 lib. to 80, the price in England will not continue at a 130; it will lower proportionably, for either Scots merchants will undersell one another, or English merchants will export these goods themselves. so if they rise in Scotland from a 100 lib. to 120; they will rise proportionably in England, unless the English can be served with these goods cheaper from other places, or can supply the use of them with goods of another kind. this being supposed, it follows that,