4. Sir Thomas Gresham on the Fall of the Exchanges [Burgon's Life and Times of Sir Thomas Gresham, Vol. I, Appendix No. XXI, pages 483-486]. 1558.
To the Queen's most excellent Majesty.
It may please your Majesty to understand, that the first occasion of the fall of the exchange did grow by the King's Majesty, your late father, in abasing his coin from vi ounces fine to iii ounces fine. Whereupon the exchange fell from xxvis. viiid. to xiiis. ivd. which was the occasion that all your fine gold was conveyed out of this your realm.
Secondly, by the reason of his wars, the King's Majesty fell into great debt in Flanders. And for the payment thereof they had no other device but pay it by exchange, and to carry over his fine gold for the payment of the same.
Thirdly, the great freedom of the Steelyard and granting of licence for the carrying of your wool and other commodities out of your realm, which is now one of the chief points that your Majesty hath to foresee in this your common weal; that you never restore the steads called the Steelyard again to their privilege, which hath been the chief point of the undoing of this your realm, and the merchants of the same.
Now, for redress of these things, in an. xvcli [1551] the King's Majesty, your late brother, called me to be his agent, and reposed a more trust in me, as well for the payment of his debts beyond the seas, as for the raising of the exchange, being then at xvs. and xvis. the pound; and your money current, as it is at this present, being not in value xs. First, I practised with the King and my lord of Northumberland to overthrow the Steelyard, or else it could not be brought to pass, for that they would keep down the exchange by this consideration; whereas your own merchants payeth outwards xivd. upon a cloth custom, they pay but ixd.; and likewise, for all such wares as was brought into your realm, your own mere merchants payeth xiid. upon the pound, the Steelyard paid but iiid. upon the pound, which is vs. difference upon the hundredth: and as they were men that ran all upon the exchange for the buying of their commodities, what did they pass to give a lower price than your own merchants, when they got vl. in the hundred by your custom? Which in process of time would have undone your whole realm, and your merchants of the same.
Secondly, I practised with the King's Majesty, your brother, to come in credit with his own mere merchants: and when time served, I practised with them at a set shipping, the exchange being still at xvis., that every man should pay the King xvs. upon a cloth in Antwerp, to pay at double usage xxs. in London; which the King's Majesty paid them royally, which did amount to the sum of lxml. And so, vi months after, I practised the like upon their commodities for the sum of lxxml. [£70,000] to pay for every pound sterling xxiis.: so by this means, I made plenty of money, and scarcity, and brought into the King's hands, which raised, the exchange to xxiiis. ivd. And by this means I did not only bring the King's Majesty, your brother, out of debt, whereby I saved him vi or viis. upon the pound, but saved his treasure within the realm, as therein Mr. Secretary Cecil was most privy unto.
Thirdly, I did likewise cause all foreign coins to be unvalued, whereby it might be brought into the mint to his Majesty's most fordle[304]; at which time the King your brother died, and for my reward of service, the Bishop of Winchester sought to undo me, and whatsoever I said in these matters I should not be credited: and against all wisdom, the said Bishop went and valued the French crown at vis. ivd., and the pistole at vis. iid., and the silver royal at vid. ob. Whereupon, immediately, the exchange fell to xxs. vid. and xxis., and there hath kept ever since. And so consequently after this rate and manner, I brought the Queen's Majesty, your sister, out of debt of the sum of ccccxxxvml. [£435,000].
Fourthly, by this it may plainly appear to your Highness, as the exchange is the thing that eats out all princes, to the whole destruction of their common weal, if it be not substantially looked unto, so likewise the exchange is the chief and richest thing only above all other, to restore your Majesty and your realm to fine gold and silver, and is the mean that makes all foreign commodities and your own commodities with all kind of victuals good cheap, and likewise keeps your fine gold and silver within your realm. As, for example to your Highness, the exchange being at this present at xxiis., all merchants seek to bring into your realm fine gold and silver; for if he should deliver it by exchange, he disburses xxiis. Flemish to have xxs. sterling: and to bring it in gold and silver he shall make thereof xxis. ivd.—whereby he saves viiid. in the pound: which profit, if the exchange should keep but after this rate of xxiis. in few years you should have a wealthy realm, for here the treasure should continue for ever; for that all men should find more profit by vl in the hundred to deliver it per exchange, than to carry it over in money. So consequently the higher the exchange riseth, the more shall your Majesty and your realm and common weal flourish, which thing is only kept up by art and God's providence; for the coin of this your realm doth not correspond in fineness not xs. the pound.
Finally, and it please your majesty to restore this your realm into such state, as heretofore it hath been; first, your Highness hath no other ways, but when time and opportunity serveth, to bring your base money into fine of xi ounces fine, and so gold after the rate.