Before the transaction was finally complete the last safeguard and complement of the system had been adopted, in fixing the relation of the gold coinage to the new silver issue. On the 22nd September
1698, a report was given in to the House of Commons, signed by four names, including that of John Locke, stating that the value of gold in Holland and the neighbouring countries was, as near as could be computed upon a medium, 15:1 in silver; and that, according to this value, the currency of the guinea at 22s. was too high, and occasioned a disproportionate importation of gold and an exportation of silver. The bringing down of the guinea to 21s. 6d. would make the value of English gold and coin very near 15 1⁄2:1 to silver, which, though not so low as the rate in Holland, would in their opinion be sufficient to correct the error.
In consequence of this report the Commons resolved that, under the Act 7 and 8 William III. chap. 19, no person was obliged to take guineas at 22s. a piece. The price then fell to 21s. 6d., at which rate they were received by the officers of the revenue. With the exception of this merely declaratory tariffing of the guinea, it is to be borne in mind that this recoinage of William's reign was carried out on the principle enunciated by Montague, and backed by the authority of Locke, namely, that of a retention of the old standard, although in the face of a clearly established advance in the value of silver, and in face of quite irrefutable answers to all Locke's arguments. Momentarily the scheme succeeded; the adverse exchange was instantly redressed, while the renewal of the coinage and the ratio of 1698 was sufficiently above the continual ratio to turn the flow of gold, as
doubtless was the (unexpressed) design in adopting it. According to Burnet the packet-boat from France seldom came over during the following winter without bringing 10,000 louis d'or, and often more. "The nation was indeed filled with them, and in six months a million of guineas was coined out of them. The merchants in fact said that the balance of trade was then so much turned to our side that whereas we were wont to carry over a million of our money in specie, we then sent no money to France, and had at least half that sum sent over to balance the trade."
ENGLAND: EFFECTS OF THE RATIO OF 1698
The circulation of French and other foreign gold became so great that on the 5th February 1701 the Council issued a proclamation that the louis d'or and Spanish pistole should not pass for above 17s. Such action at once brought those coins to the Mint, and nearly 1 1⁄2 millions were coined out of them.
It was not seen at the moment that the establishment of this ratio so favourable to gold was pari passu unfavourable to silver. The idea was entertained that the French gold came over to bribe English members, i.e., on mere political causes. The hypothesis was needless as it was incorrect. Gold came over because it was higher priced in England than abroad through the ratio of 1698, and for the same reason silver left the country to pay for the gold. The one movement was the essential counterpart of the other, and made itself at last only too visible.
As early as the seventh year of Anne's reign—only nine years after the completion of this great recoinage,
it was found necessary to give further encouragement to the coinage of silver by offering a premium on every ounce of foreign coins which should be brought to the Mint within a limited time. The premium was not to exceed 2 1⁄2d. per oz., and the time limited was from the 17th April to the 1st December 1709.
Such a measure has been already noticed in the history of France; it was indeed a design frequently employed there under the title of Surachat, and it always proved as futile as the Government of Anne found it to be. As the drain continued, representations were made by the officers of the Mint to the Treasury, and in 1717 the House of Commons requested these representations to be laid before it (December 20th). On the same and following day a remarkable speech was made by a member, Mr. Aislabie, who took notice of the great scarcity of the silver species, and proposed the remedy of lowering the gold species. On the second day he was seconded by Mr. Caswall, who suggested that the overvaluation of gold in the current coins of Great Britain had caused the export of great quantities of silver species, "and to that purpose [i.e. the purpose of his argument] laid open a clandestine trade, which of late years had been carried on by the Dutch, Hamburgers and other foreigners, in concert with the Jews and other traders here, which consisted in exporting silver coins and importing gold in lieu thereof; which being coined into guineas at the Tower, near 15 pence was got by every guinea,