That inland dealings cannot support the standard where there are money-jobbers or foreign commerce.
Answ. VII. It has been said, and I think proved, that in a trading nation, such as England is, nothing can long support the value of the money-unit (while affixed entirely to the coin, and while coinage is free) above the intrinsic value of the metals contained in it. I must now shew how the operations of foreign trade have the effect of regulating the value of the currency, in the hands even of those who consider coin merely as money of accompt; who give it and receive it by tale; and who never attend to the circumstances of weight, or proportion between the metals.
The price of commodities, in a trading nation, is not settled by private convention, but by market prices. Foreign markets regulate the price of grain, which regulates, in a great measure, that of every other thing; and the price of grain is regulated by the value which other nations pay for the pound sterling, by which the grain is bought. If, therefore, the lightness of the coin debases the value of the pound sterling in foreign markets, it must, for the same reason, raise the price of the grain bought with these pounds sterling; because the value of the pound sterling has no influence upon the value of grain abroad. The domestic competition between the merchants in the buying of the grain at home, informs the farmers of its value abroad; and they, without combination of circumstances, esteem it and sell it for inland consumption, at a value proportioned to what it bears in foreign markets; that is to say, proportioned to the actual value of the coin. Thus English farmers, although in buying and selling they do not attend to the weight of the coin, regulate their prices exactly as if they did.
I ask, What is meant by this expression, that the lightness of the coins is no ways considered in any of our internal dealings with one another. Currency by tale refers only to the legal standard, as currency by weight doth to the coins themselves? (Essay upon money, Part 2d, p. 79.) Will a person who considers his light shilling as a standard coin, buy more with it than if he considered it by its weight? Will any man in England sell cheaper to a porter, who never considered his shilling farther than to look at the King’s head, than he would to a Jew, who has had his shilling in a scale, and who knows to the fraction of a grain what it weighs? Which way, therefore, (in a trading nation) can money possibly be worth more than its weight? I comprehend very well how one shilling may be better than another to a money-jobber; but I cannot conceive how any shilling whatever, which passes by tale, be it light or weighty, can ever be worth more than according to the mean weight of the present currency. People, therefore, who know nothing of the value of money, may lose by giving away their heavy coin; but I cannot see how ever they can gain in their inland dealings, or how they can ever circulate their light coin for more than the value of the present currency.
We may, therefore, lay down the following principles: 1mo, That, in a trading nation such as Great Britain, where coinage is free, the value of tale-money is exactly in proportion to the mean weight of the whole currency. 2do, That the money-unit being only affixed to the coin, is exactly in proportion to its weight. 3tio, That when the intrinsic value of all the coin is not in the exact proportion of its denomination[denomination], the operations of trade will strike the average, or mean proportional. 4to, That when this is done, those who pay by tale, in coin which is worth more than the mean proportion, are really losers; and those who pay by tale in coin below that value, are really gainers, whether they know it or not.
That public currency supports the authority of the coin, not the value of the pound sterling.
Answ. VIII. The authority given to coin, by its being every where received in the King’s offices, is entirely confined to its currency, and not to its value. The consequence of its being received at the exchequer according to tale; makes coin which is not worth a pound sterling pass as if it were so. This debases the value of the pound, but gives no additional value to the coin. Is not this debasing the standard by authority, since it may oblige a creditor who lent 100 l. to accept of 95⁄100 of the value, as a legal payment.
The pounds sterling paid into the exchequer are no better, nor will they buy more of any commodity, than the worst pound sterling that ever came out of the hands of a money-jobber; and therefore contribute nothing to keep up the value of the coin. Merchants who know the value of coin, are those who regulate prices; and the public sale of one hundredth, nay of one thousandth part of a commodity sold by retail through all the nation, is sufficient to regulate the price of it every where. If this be true, to suppose that a pound sterling being regulated by statute, can add any thing to its value; or that my right is left unviolated, when I have been every day for these forty years giving my pound for what I ought to buy for 19 shillings of Queen Elizabeth’s standard, is as ideal a representation of the value of right as any thing I have ever heard.
If it be said, that this right implies a title to be indemnified by a reformation, or a restitution of the standard, for the loss I have sustained by the gradual debasement of it: I reply, that a state must examine the nature of my claim, and do me justice, without all doubt; but it does not follow as a consequence, that because a creditor in an old contract has been a loser by his debtor, that therefore all the creditors in the nation should share in the benefit of his restitution, at the expence of debtors, from whom they have suffered no loss.
That the scheme is similar to, tho’ not the same with that of Lowndes.