Is it not certain, that all nations will endeavour to throw their ready money, not necessary for their own circulation, into that country where the interest of money is high with respect to their own, and where consequently the value of property in land is low; since they may either draw a high interest from it, or make the acquisition of solid property? Forbidding therefore the acquisition of solid property to strangers, is, in effect, a prohibition upon the gratuitous importation of specie. I allow there may be examples of people who make such purchases, with a view to draw the rents of the lands bought, out of the country; but whatever be the intention at the time of purchase, such however is the effect of an established fortune in a country, that, sooner or later, it draws the proprietor to it; and when this does not happen, a subsequent alienation commonly takes place.
Were the purchase, therefore, of lands permitted universally, and were it established, that property in land, to a certain value, should give a right to naturalization, no doubt large sums would be brought into those countries, where lands are found cheapest; and as no exportable commodity is given in return, the specie of such countries might mark the quantity of lands sold, as well as that of merchandize exported. For want of a sufficient extension of these and many other combinations, which it would be easy to contrive, Mr. Belloni, in his Dissertation upon Commerce, Chap. I. Sect. 5. falls into several mistakes, when he judges of the exportation of commodities of a particular country, by the quantities of money found in it.
Essendo adunque da ciò[ciò] venuto (says he) che l’abondanza del danaro, ovunque si ritrovi, significa l’abodanza stessa delle cose, delle quali egli é misura[misura]: perciò diviziosi meritamente sono stati detti quegli uomini, e ricco altersi quel regno, dove si ritrova gran copia di danaro. Dal altro canto poi, se si considera lo stato di un regno, ed il danaro, che è dentro di esso, tenendo sempre salda l’essenza della moneta (che altro non sia, che misura di cose, e prezzo, che viene in compenso di mercanzie) ovunque di essa vedrasi affluenza, ognuno ben vede, doversi subito necessariamente arguire, un gran traffico di quel dominio, con esito di merci, in uso degli esteri, e all’incontro ovunque questa venga a mancare, doversene dedurre grande introito di merci, che sieno subentrate nel luogo della moneta, e che l’abbiano fatta uscire.
These consequences are only just so far as money comes into, or goes out of a country, as the price of merchandize exported or imported. But how much money has not this author himself drawn into Rome from England, for the exportation of nothing but the bills of travellers?
On the other hand, may not a country, which is actually in possession of great quantities of gold and silver, call in these metals, and circulate, in their place, a symbolical money? May not a nation then, as well as a private person, employ this specie in a profitable foreign trade, and gain daily by it? May she not, after some time, withdraw her stock, by calling in her debts? And may she not also call in her paper, and remain with an additional acquisition of specie in her pocket? Consequently, during the circulation of the paper, no judgment can be formed as to the balance of her trade, by examining the state of her specie; because I can suppose that at this time every shilling of it may be in the hands of strangers. Consequently, the richest nation in Europe may be the poorest in circulating specie.
“The writings of Mr. Gee (says Mr. Hume, in his Political Discourse upon the Balance of Trade) struck all the nation with a pannic fear, by shewing from a long enumeration of particulars, that the balance inclined so much against us, and for so considerable sums, that in the space of five or six years, there would not remain one shilling in England. But happily twenty years are elapsed since, we have supported a long and expensive foreign war, and nevertheless, it is commonly believed, that money is at present as plentiful in the kingdom as ever.” I quote from the French translation.
Mr. Gee was in the wrong to conclude, that the balance of trade would have the effect of carrying off the coin: and Mr. Hume has been misled by this mistake, to conclude, that Mr. Gee’s calculations were false. I know nothing as to the matter of fact; nor whether Mr. Gee was a good or a bad judge of the question he treated; but from what has been said, I hope it appears, that the state of the coin in England, at the time Mr. Hume wrote, was no proof on either side.
To judge of the balance of trade is one thing; to judge of the wealth of a nation as to specie is another. England may greatly increase her specie by her trade, and greatly diminish it by her wars: perhaps this may be the fact. She may also, at certain times, have a balance of trade against her; and great sums laid out in foreign wars, may be the means of making it return in her favour. Should that nation begin to pay off her debts to strangers, in ready coin, might she not soon diminish, perhaps exhaust, the specie she is now possessed of; yet surely none ever became poorer by paying off their debts. Nothing is so easy as to have specie, when one has solid property to pledge for it; and nothing can be worse judged, than to purchase specie from strangers, at the expence of paying an interest for it, when they can contrive a circulating value in paper money, representing the solid value which must have been pledged to strangers for the loan of their metals.
But still it may be asked, how it happens, that notwithstanding of the most unfavourable balance of trade, no nation is ever found to be entirely drained of her specie; and since we have proved, that the specie of a country may be diminished by a disadvantageous trade, what are the principles which prevent the total dissipation of it?
This is a very curious question, and opens a door to a multitude of new ideas, which will furnish abundant matter of speculation, when we come to treat more directly of credit. I shall here examine it in general, only for the sake of applying the principles we have laid down.