The price of bullion, like that of every other merchandize, is regulated by the value of the money it is paid with.
If bullion, therefore, sells in England for 65 pence an ounce, paid in silver coin, it must sell for 65 shillings the pound troy; that is to say, the shillings it is commonly paid with, do not exceed the weight of 2⁄65 of a pound troy: for if the 65 shillings with which the pound of bullion is paid weighed more than a pound troy, it would be a shorter and better way for him who wants bullion, to melt down the shillings and make use of the metal, than to go to market with them in order to get less.
We may, therefore, be very certain, that no man will buy silver bullion at 65 pence an ounce, with any shilling which weighs above 1⁄65 of a pound troy.
We have gone upon the supposition that the ordinary price of bullion in the English market is 65 pence per ounce. This has been done upon the authority of some late writers on this subject[R]: it is now proper to point out the causes which may make it deviate from that value.
R. This was writ in Germany, anno 1759, when I was not well informed of certain facts, and it is not worth while to make any alterations, as it is only a supposition.
I. It may vary and certainly will vary in the price according as the currency is better or worse. When the expences of a war, or a wrong balance of trade, have carried off a great many heavy guineas, it is natural that bullion should rise; because then it will be paid for more commonly in light gold and silver; that is to say, with pounds sterling, below the value of 113 grains fine gold, the worth of the pound sterling in new guineas.
II. This wrong balance of trade, or a demand for bullion abroad, becoming very great, may occasion a scarcity of the metals in the market, as well as a scarcity of the coin; consequently, an advanced price must be given for it in proportion to the greatness and height of the demand. In this case, both the specie and the bullion must be bought with paper. But I must observe, that the rise in the price of bullion proceeds from the demand for the metals, and the competition between merchants to procure them, and not because the paper given as the price is at all of inferior value to the specie. The least discredit of this kind would not tend to diminish the value of the paper; it would annihilate it at once. Therefore, since the metals must be had, and that the paper cannot supply the want of them when they are to be exported, the price rises in proportion to the difficulties in finding metals elsewhere than in the English market.
III. A sudden call for bullion, for the making of plate. A gold-smith can well afford to give 67 pence for an ounce of silver, that is to say, he can afford to give one pound of gold for 14 pounds of silver, and perhaps for less, notwithstanding that what he gives be more than the ordinary proportion between the metals, because he indemnifies himself amply by the price of his workmanship: just as a tavern-keeper will pay any price for a fine fish, because, like the goldsmith, he buys for other people.
IV. The mint price has as great an effect in bringing down the price of bullion, as exchange has in raising it. In countries where the metals in the coin are justly proportioned, where all the currencies are of legal weight, and where coinage is imposed, the operations of trade make the price of bullion constantly to fluctuate between the value of the coin and the mint price of the metals. This shall afterwards be sufficiently explained, in the second part.
Now let us suppose that the current price of silver bullion in the market is 65 pence the ounce, paid in lawful money, no matter of what weight, or of what metal. |Their rule for melting the coin.| Upon this the money-jobber falls to work. All shillings which are above 1⁄65 of a pound troy, he throws into his melting pot, and sells them as bullion, for 65d. per ounce; all those which are below that weight he carries to market, and buys bullion with them, at 65 pence per ounce.
What is the consequence of this?
That those who sell the bullion, finding the shillings which the money-jobber pays with perhaps not above 1⁄66 of a pound troy, they on their side raise the price of their bullion to 66 pence the ounce.
This makes new work for the money-jobber; for he must always gain. He now weighs all shillings as they come to hand; and as formerly he threw into his melting-pot those only which were worth more than 1⁄65 of a pound troy, he now throws in all that are in value above 1⁄66. He then sells the melted shillings at 66 pence the ounce, and buys bullion with the light ones, at the same price.
This is the consequence of ever permitting any species of coin to pass by the authority of the stamp, without controlling it at the same time by the weight: and this is the manner in which money-jobbers gain by the currency of light money.
It is no argument against this exposition of the matter to say, that silver bullion is seldom bought with silver coin; because the pence in new guineas are worth no more than the pence of shillings of 65 in the pound troy: that is to say, that 240 pence contained in 20⁄21 of a new guinea, and 240 pence contained in 20 shillings of 65 to the pound troy, differ no more in the intrinsic value than 0.88 of a grain of fine silver upon the whole, which is a mere trifle[S].
Whenever, therefore, shillings come below the weight of 1⁄65 of a pound troy, then there is an advantage in changing them for new guineas; and when that is the case, the new guineas will be melted down, and profit will be found in selling them for bullion, upon the principles we have just been explaining.
It would be very tedious to enumerate all the fraudulent operations which are occasioned by this defect of proportion between the metals in the coin, and by the unequal weight of coins carrying the same denomination.
We have already given a specimen of the domestic operations of the money-jobbers; but these are not the most prejudicial to national concerns. The jobbers may be supposed to be Englishmen; and in that case the profit they make remains at home; but whenever there is a call for bullion to pay the balance of trade, it is evident that this will be paid in silver coin, never in gold, if heavy silver can be got; and this again carries away the silver coin, and renders it at home so rare, that great inconveniencies are found for want of the lesser denominations of it. The loss, however, here is confined to an inconvenience; because the balance of trade being a debt which must be paid, I don’t consider the exportation of the silver for that purpose as any consequence of the disorder of the coin. But besides this exportation which is necessary, there are others which are arbitrary, and which are made only with a view to profit of the wrong proportion.
When the money-jobbers find difficulty in carrying on the traffic we have described, in the English market, because of the competition among themselves, they carry the silver coin out of the country, and sell it abroad for gold, upon the same principles that the East India company send silver to China, in order to purchase gold.
It may be demanded, what hurt this trade can do to England, since those who export silver bring back the same value in gold? I answer, that were this trade carried on by natives, there would be no loss; because they would bring home gold for the whole intrinsic value of the silver. But if we suppose foreigners sending over gold to be coined at the English mint, and changing that gold into English silver coin, and then carrying off this coin, I think it is plain that they must gain the difference, as well as the money-jobbers. But it may be answered, that having given gold for silver at the rate of the mint, they have given value for what they have received. Very right; but so did Sir Hans Sloane, when he paid five guineas for an overgrown toad: he got value for his money; but it was value only to himself. Just so, whenever the English government shall be obliged to restore the proportion of the metals, (as they must do) this operation will annihilate that imaginary value which they have hitherto set upon gold; which imagination is the only thing which renders the exchange of their silver against the foreign gold equal.
But it is farther objected, that foreigners cannot carry off the heavy silver; because there is none to carry off. Very true; but then I say they have carried off a great quantity already: or if the English Jews have been too sharp to allow such a profit to fall to strangers, (which may or may not have been the case) then I say that this disorder is an effectual stop to any more coinage of silver for circulation.
From what has been said, it is evident, that there must be found in England two legal pounds sterling, of different values; the one worth 113 grains of fine gold, the other worth 1718.7 grains of fine silver. I call them different; because these two portions of the precious metals are of different values all over Europe.
But besides these two different pounds sterling, which the change in the proportion of the metals have created, the other defects of the circulating coin produce similar effects. The guineas coined by all the Princes since K. Charles II. have been of the same standard weight and fineness, 44½ in a pound troy of standard gold 11⁄12 fine: these have been constantly wearing ever since they have been coined; and in proportion to their wearing they are of less value.
If, therefore, the new guineas are below the value of a pound sterling in silver, standard weight, the old must be of less value still. Here then is another currency, that is, another pound sterling; or indeed more properly speaking, there are as many different pounds sterling as there are guineas of different weights. This is not all; the money-jobbers having carried off all the weighty silver, that which is worn with use, and reduced even below the standard of gold, forms one currency more, and totally destroys all determinate proportion between the money-unit and the currencies which are supposed to represent it.
It may be asked, how, at this rate, any silver at all has remained in England? I answer, that the few weighty shillings which still remain in circulation, have marvellously escaped the hands of the money-jobbers; and as for the rest, the rubbing and wearing of these pieces has done what the slate might have done; that is to say, it has reduced them to their due proportion with the lightest gold.
The disorder, therefore, of the English coin has rendered the standard of a pound sterling quite uncertain. To say that it is 1718.7 grains of fine silver, is quite ideal. Who are paid in such pounds? To say that it is 113 grains of pure gold, may also not be true; because there are many currencies worse than the new guineas.
What then is the consequence of all this disorder? What effect has it upon the current value of a pound sterling? And which way can the value of that be determined?
The operations of trade bring value to an equation, notwithstanding the greatest irregularities possible, and so in fact a pound sterling has acquired a determinate value over all the world by the means of foreign exchange. This is a kind of ideal scale for measuring the British coin, although it has not all the properties of that described above.
Exchange considers the pound sterling as a value determined according to the combination of the values of all the different currencies, in proportion as payments are made in the one or the other; and as debtors generally take care to pay in the worst species they can, it consequently follows, that the value of the pound sterling should fall to that of the lowest currency.
Were there a sufficient quantity of worn gold and silver to acquit all bills of exchange, the pound sterling would come down to the value of them; but if the new gold be also necessary for that purpose, the value of it must be proportionally greater.
All these combinations are liquidated and compensated with one another, by the operations of trade and exchange: and the pound sterling, which is so different in itself, becomes thereby, in the eyes of commerce, a determinate unit, subject however to variations, from which it never can be exempted.
Here is then the proof of what was said in the end of the first chapter, that the wearing of one shilling had the effect of contributing towards the diminution of the value of the pound sterling every where; a proportion which, at first sight, has the air of a paradox, though, when it is understood, nothing is more consistent with the ruling principles of commerce.
Exchange, therefore, in my humble opinion, is one of the best measures for valuing a pound sterling, present currency. Here occurs a question.
Does the great quantity of paper money in England tend to diminish the value of the pound sterling?
I answer (according to my weak conceptions) in the negative. Paper money is just as good as gold or silver money, and no better. The variation of the standard, we have already said, and I think proved, must influence the interests of debtors and creditors proportionally every where. From this it follows, that all augmentation of the value of the money-unit in the specie must hurt the debtors in the paper money; and all diminutions on the other hand must hurt the creditors in the paper money, as well as every where else. The payments, therefore, made in paper money, never can contribute to the regulation of the standard of the pound sterling; it is the specie received in liquidation of that paper money which alone can contribute to mark the value of the British unit; because it is affixed to nothing else.
From this we may draw a principle, That in countries where the money-unit is entirely affixed to the coin, the actual value of it is not according to the legal standard of that coin, but according to the mean proportion of the actual worth of those currencies in which debts are paid.
From this we see the reason why the exchange between England and all the trading towns in Europe has long appeared so unfavourable. People calculate the real par, upon the supposition that a pound sterling is worth 1718.7 grains troy of fine silver, when in fact the currency is not perhaps worth 1638, the value of a new guinea in silver, at the market proportion of 1. to 14.5; that is to say, the currency is but 95.3. per cent. of the silver standard of the 43d of Elizabeth. No wonder then if the exchange be thought unfavourable.
From the principle we have just laid down, we may gather a confirmation of what we advanced concerning the cause of the advanced price of bullion in the English market.
When people buy bullion with current money at a determinate price, that operation, in conjunction with the course of exchange, ought naturally to mark the actual value of the pound sterling with great exactness.
If therefore the price of standard bullion in the English market, when no demand is found for the exportation of the metals, that is to say, when paper is found for paper upon exchange, and when merchants, versed in these matters, judge exchange (that is remittances) to be at par, if then, I say, silver bullion cannot be bought at a lower price than 65 pence the ounce, it is evident that this bullion might be bought with 65 pence in shillings, of which 65 might be coined out of the pound troy English standard silver; since 65 pence per ounce implies 65 shillings for the 12 ounces or pound troy.
This plainly shews how standard silver bullion should sell for 65 pence the ounce, in a country where the ounce of standard silver in the coin is worth no more than 62; and were the market price of bullion to stand uniformly at 65 per ounce, that would shew the value of the pound sterling to be tolerably fixed. All the heavy silver coin is now carried off[T]; because it was intrinsically worth more than the gold it passed for in currency. The silver therefore which remains is worn down to the market proportion of the metals, as has been said, that is to say, 20 shillings in silver currency are worth 113 grains of fine gold, at the proportion of 1 to 14.5 between gold and silver. Now,
so the 20 shillings current weigh but 1638 grains fine silver, instead of 1718.7, which they ought to do according to the standard.
T. This was writ during last war.
Now let us speak of standard silver, since we are examining how far the English coin must be worn by use.
The pound troy contains 5760 grains. This, according to the standard, is coined into 62 shillings; consequently, every shilling ought to weigh 92.9 grains. Of such shillings it is impossible that ever standard bullion should sell at above 62 pence per ounce. If therefore such bullion sells for 65 pence, the shillings with which it is bought must weigh no more than 88.64 grains standard silver; that is, they must lose 4.29 grains, and are reduced to 1⁄65 of a pound troy.
But it is not necessary that bullion be bought with shillings; no stipulation of price is ever made farther, than at so many pence sterling per ounce. Does not this virtually determine the value of such currency with regard to all the currencies in Europe? Did a Spaniard, a Frenchman, or a Dutchman, know the exact quantity of silver bullion which can be bought in the London market for a pound sterling, would he inform himself any farther as to the intrinsic value of that money-unit; would he not understand the value of it far better from that circumstance than by the course of any exchange, since exchange does not mark the intrinsic value of money, but only the value of that money transported from one place to another.
The price of bullion, therefore, when it is not influenced by extraordinary demand (such as for the payment of a balance of trade, or for making an extraordinary provision of plate) but when it stands at what every body knows to be meant by the common market price, is a very tolerable measure of the value of the actual money-standard in any country.
If it be therefore true, that a pound sterling cannot purchase above 1638 grains of fine silver bullion, it will require not a little logic to prove that it is really, or has been for these many years, worth any more; notwithstanding that the standard weight of it in England is regulated by the laws of the kingdom at 1718.7 grains of fine silver.
If to this valuation of the pound sterling drawn from the price of bullion, we add the other drawn from the course of exchange; and if by this we find, that when paper is found for paper upon exchange, a pound sterling cannot purchase above 1638 grains of fine silver in any country in Europe, upon these two authorities, I think, we may very safely conclude (as to the matter of fact at least) that the pound sterling is not worth more, either in London or in any other trading city, and if this be the case, it is just worth 20 shillings of 65 to the pound troy.
If therefore the mint were to coin shillings at that rate, and pay for silver bullion at the market price, that is, at the rate of 65 pence per ounce in those new coined shillings, they would be in proportion to the gold: silver would be carried to the mint equally with gold, and would be as little subject to be exported or melted down.
It may be inquired in this place, how far the coining the pound troy into 65 shillings is contrary to the laws of England?
The moment a state pronounces a certain quantity of gold to be worth a certain quantity of silver, and orders these respective quantities of each metal to be received as equivalents of each other, and as lawful money in payments, that moment gold is made a standard as much as silver. If therefore too small a quantity of gold be ordered or permitted to be considered as an equivalent for the unit, the silver standard is from that moment debased; or indeed more properly speaking, all silver money is from that moment proscribed; for who, from that time, will ever pay in silver, when he can pay cheaper in gold? Gold, therefore, by such a law is made the standard, and all declarations to the contrary are against the matter of fact.
Were the King, therefore, to coin silver at 65 shillings in the pound, it is demonstration that by such an act he would commit no adulteration upon the standard: the adulteration is already committed. The standard has descended to where it is, by slow degrees, and by the operation of political causes only, and nothing prevents it from falling lower, but the standard of the gold coin. Let guineas be now left to seek their value as they did formerly, and let light silver continue to go by tale, we shall see the guineas up at 30 shillings in 20 years time, as was the case in 1695.
It is as absurd to say that the standard of Queen Elizabeth has not been debased by enacting, that the English unit shall be acquited with 113 grains of fine gold, as it would be to affirm that it would not be debased from what it is at present, by enacting, That a pound of butter should every where be received in payment for a pound sterling; although the pound sterling should continue to consist of 3 ounces, 17 penny weights, and 10 grains of standard silver, according to the statute of the 43 Elizabeth. I believe in that case most debtors would pay in butter, and silver would, as at present, acquire a conventional value as a metal, but would be looked upon no longer as a standard, or as money.
If therefore, by the law of England, a pound sterling must consist of 1718.7 grains troy of fine silver, by the law of England also, 113 grains of gold must be of the same value, but no law can establish that proportion; consequently, in which ever way a reformation be brought about, some law must be reversed; consequently, expediency, and not compliance with law, must be the motive in reforming the abuse.
From what has been said, it is not at all surprising that the pound sterling should in fact be reduced nearly to the value of the gold. Whether it ought to be kept at that value is another question; and shall be examined in its proper place. All that we here decide, is, that coining the pound troy into 65 shillings would restore the proportion of the metals, and render both species common in circulation. But restoring the weight and proportion of the coin is not the difficulty, as I conjecture, which prevents a reformation of the English coinage.
I have dwelt longer, perhaps, than what was necessary upon this estimation of the present value of the pound sterling, and in setting the matter in different lights, have been forced into repetitions. The importance of that point in the present inquiry must plead my excuse.
The whole purport of this part of my inquiry, is, to examine and investigate the principles relating to money; to range them in order, and to render them easily applicable to any combination of circumstances which may occur. If I have applied my reasoning to the state of the British coin, it has been with no intention to erect myself as a judge of the interests of that nation, or with a design to point out to them what measure is the most expedient to be followed. I am a stranger to the true state of the question, and I reason only upon suppositions, not from exact information; upon this footing I intend to proceed.
I shall take a view of every scheme which I think may be proposed as a remedy against the disorder, and examine all the consequences which can result from each, according to the influence of the different principles under which they fall. Circumstances hid from me will nevertheless work their full effect, and may render the best deduced principles quite delusive, when, without attending to them, we pretend to draw conclusions.
We have examined the nature of the disorder of the coin of Great Britain, and such it certainly is, as demands some reformation. A nation so justly renowned for knowledge, so thoroughly versed in the arts of commerce, and so expert in every matter of calculation, cannot be supposed to be at any loss for a method to remove the cause of the disorder. The question is not, therefore, how to fix the standard, how to restore the proportion between the metals in the coin, nor how to render all the current money of its just weight. But the question is, how to execute this without incurring greater inconveniences than those at present felt.
If the smallest change should be made upon the present value of the pound sterling, the operation is arbitrary; and those who either advise it or execute it, would be answerable for every consequence. If the consequences should prove salutary to the nation, the projector will meet with applause; but if they should be attended with injustice, he will merit blame; if with perplexity and confusion, he may very possibly never see himself approved of.
The present disorder has proceeded from neglect on the part of government; a neglect however which admits of an apology, for reasons afterwards to be assigned. When an abuse creeps in by degrees, no particular person can be charged with it: when it is to be corrected, some person or other must undertake the work; and few are found who incline to be volunteers in the service of the public, upon an occasion where the interest of the nation is not clear and evident.
The best way therefore to accomplish such a work, is, to put it into the hands of the nation itself. When the people are fully instructed in the matter, when the state of the question is laid before them in a clear light, and stripped of all money-jargon, they will see the natural consequences of every innovation; and when they have well considered of them, they may resolve whether they will keep the pound sterling they have, or whether they will take another.
The question to be determined, is, what the weight of the pound sterling now is, and what it ought to be. If it be made different from what it is at present, that operation must be conducted with justice and impartiality. If a new standard is to be pitched upon, the choice is quite arbitrary, as has been said; and were any weight to be preferred to another, the best of any, no doubt, would be the pound troy of standard silver. This was the pound sterling for many ages, and the most that can be said for Queen Elizabeth’s act, is, that it is the last deliberate adulteration by law of the English coin.
The next question is, how to conduct that operation so as to do justice to every man in the nation in contracts already entred into; how to do justice to the creditors of Great Britain; how to do justice to Great Britain with respect to her creditors; how to do all this, I say, and at the same time to make an innovation upon the present state of the coin.
Debasing the standard is odious in the opinion of every mortal; and it seems also to be the opinion of many, that every regulation which shall not carry the value of a pound sterling, to the value of the silver appointed to enter into it by the statute of Queen Elizabeth, is a debasing of it from what it is at present.
In order to cast more light upon the historical part of the English coinage, I shall here lay together some short observations upon the state of that question from the reformation to the present time.
Henry VIII. and Edward VI. during the violent convulsions of the reformation, so sophisticated the fineness of the coin, and so curtailed the weight of it, that all proportion of value was lost.
This run the whole nation into inextricable confusion, and forced the ministers of the young King Edward, in 1552, to restore the purity of the metals, and to raise the weight of the coin in the pound sterling, from 220 grains troy of fine silver, to which it was then debased, to 1884. Mary reduced it to 1880 grains, at which it stood during her reign. |Debased by Elizabeth.| From this Elizabeth raised it in the second year of her reign to 1888 grains; and in the 43d she passed the famous statute by which it was debased to 1718.7, the present legal silver standard. |Supported by her successors,| During the reign of James I. trade began to take root in England; and this pointed out the necessity of preserving the standard of their money invariable. The confusions occasioned by the former adulterations left a strong impression on the minds of the English nation in the succeeding reigns, a statute which had been preserved without alteration for many years acquired in time great authority, and the standard continued constantly attached to the silver. Gold was occasionally coined; but circulated only under a conventional value, and was not made a legal money. The interests of trade at last required a more extensive circulation, and King Charles II. when he first coined guineas, determined a value for their currency, in order to compass that end: but very well observing that without fixing the gold at a price below its true proportion to the silver, there was no possibility of preventing it from becoming also a standard for the pound sterling, and thereby introducing a confusion, the guinea was valued no higher than 20 shillings, and allowed to find its own value above that price.
The guinea accordingly fluctuated in its value; sometimes at 22 shillings, which marks the proportion of the metals at 1 to 15.84, sometimes at 21s. 6d. which marks the proportion at 1 to 15.6, at last at 21 shillings, which marks the proportion as 1 to 15.2, and now it is worth no more than its original statute value, to wit, 20 shillings, which marks the proportion as 1 to 14.5. These conversions are formed upon the supposition, that in all the variations the shillings are of the statute weight, and that the guinea circulated according to the market proportion of the metals; two circumstances which are by no means to be depended on.
About the time of the revolution, silver money had begun to be coined with the wheel, or fly-press, (which prevented the frauds to which coin was formerly exposed from clipping and washing) and then the custom of weighing the current money went into disuse. But as at that time there were still great quantities of the hammered money remaining, the clippers profited of the inattention of the public, and fell to work with the hammered money. The consequence of this was, that those who were obliged to pay, paid in clipped money; the value of the pound sterling fell to the rate of the then currency; all weighty coin was locked up or melted down; the guineas rose to 30 shillings, and 100l. sterling, which in silver ought to weigh above 32 pounds troy, did not commonly exceed one half.
The kingdom at this time was involved in a war, and was annually obliged to borrow large sums, paid in those pounds sterling currency, which were worth no more than 2⁄3 of a guinea, or 14 shillings of such currency as the present of 65 to the pound troy. This is evident, since the guinea was then worth 30 shillings, or 1½ pound sterling; and that at present it is worth 21 shillings of 65 to the pound troy.
Lowndes contended strongly for having the pound sterling reduced 20 per cent. Locke insisted upon the old standard of Queen Elizabeth: the latter carried his point. A new coinage was made in 1695, and the government acquitted a great part of the debts they had contracted from the revolution (which had been paid them at the value of between ten and fourteen shillings present currency) at the rate of 20 shillings of the standard of Queen Elizabeth. This is the matter of fact: whether this was doing justice to the nation, I leave every man to determine. It must not however be believed that there was no reason for this extraordinary step. By the raising of the standard, the state gained considerably upon the score of taxes, as well as the creditors upon their capitals and interest; and the nation, which was the principal loser, was pleased; because their standard was not debased: thus all the three parties were satisfied.
Upon this coinage in 1695, the coin was once more set upon a solid footing: all money was of weight, and the pound was rightly attached to the silver standard. Upon that footing it remained, until the guinea was made a legal coin, and fixed at its then supposed intrinsic worth: here is the æra of the present confusion.
From the beginning of this century, silver has been rising in its price. In 1709, the French found it as 1 to 15, in the great coinage, by edict of the month of May; and so early as 1726, they found the proportion to be nearly as 1 to 14½, and fixed their coinage accordingly.
We may therefore conclude, that from 1726, at least, if not several years before, a pound sterling ought to have been worth at least 118½ grains troy of fine gold, according to the proportion of the silver standard; and yet from the inattention of government, it has constantly been suffered to be acquitted with 113. Has not this been a plain debasement of the standard for near 40 years, which we can ascertain? If it is at this time restored to where it was, will not that be raising it from what it is at present?
We have seen, from a deduction of the plainest principles, the utter impossibility of keeping an unit, which ought to be invariable, attached at once to the two metals, which are constantly varying between themselves. To this the state has not attended, nor has it probably been sufficiently informed of it, by those who were most capable, but least interested to point out the consequences.
The variations of the standard affect chiefly those who are engaged in permanent contracts, which is not the case of trading men: the obligations they contract are in a perpetual fluctuation, and by the assistance of their pen, they avoid the inconveniences which other people, who do not calculate, are liable to.
The rising of the value of silver has been all along advantageous to this class; and it would be still more advantageous to them were government to allow guineas at this time to seek their own value; as we shall observe in its proper place. Every thing which tends gradually and insensibly to debase the value of the money unit, and promote confusion, is advantageous to merchants. When this debasement proceeds by slow degrees, it is not to be discovered but by foreign exchange; because at home there is no invariable standard for money, as there is for every other kind of measure. This shall be proved.
The unit therefore being solely attached to the coin, must vary as it does.
Now the value of the coin has varied imperceptibly; and this is the reason why people imagine that such variations or debasements of the standard are not of great consequence. The greatest mistake any person can labour under! By this imperceptible debasement, prices do not rise as they ought to do; the ignorant, and those who do not perceive the gradual diminution, keep to the same nominal prices as formerly, and the merchants profit in the mean time. Is not this sacrificing the interest of all the people of England to that of the trading part of it?
The competition between the merchants betrays the secret to the multitude from time to time; but they ascribe the appearances to a wrong cause; they think every thing is growing dearer, whereas the reason is, that price (i. e. coin) is growing lighter: and as this disorder is always going on, the merchants, being the first informed of the progress of the decline of the value of the coin, must constantly be in the way to profit of the ignorance of those who have not the opportunity of measuring the value of the coin they receive by any standard measure.
This being the case, it is no wonder that the trading part of the nation has not informed government of a disorder which has brought, by slow degrees, the pound sterling to about 95 per cent. of its former value. This is a short review of the vicissitudes of the English coin from the reformation to this day: and it is at the same time an apology for the neglect of the British administration in a matter of so great consequence.
I must now take notice of the inconveniences which this disorder has occasioned to the public, and of the consequences which might follow upon adopting the remedy proposed[U] for removing it, to wit, by fixing the currency of guineas at 20 shillings, without recoining the silver at the standard of Elizabeth.