I come now to the proposal of restoring the standard to that of the statute of Elizabeth, which is in other words the same with what has been proposed in bringing down the guineas to 20 shillings; only that it implies a new coinage of all the silver specie and of all the old gold. Nothing is more easy than to execute this reformation.

I. The first step is to order all coin, gold and silver, coined preceeding a certain year, to pass by weight only.

II. To preserve the mint price of silver as formerly, at 5 s. 2 d. the ounce, and to fix that of gold at 3 l. 14 s. 2¼ d.

III. To order the pound troy standard silver to be coined as formerly, into 62 shillings, and the pound of gold into 44½ guineas.

IV. And last of all, to order these guineas to pass for 20 shillings.

Thus the standard is restored to the value of the silver by the statute of Elizabeth, the metals are put at within a mere trifle of the proportion of 1 to 14½: all the coin in the kingdom is brought to standard weight: no profit will be found in melting or exporting one species preferably to another: exchange will answer, when at par, to the real par (when rightly calculated) of either silver or gold, with nations, such as France, who observe the same proportions: and the pound sterling will remain attached to both the gold and silver, as before.

The consequences of this reformation will be, that the pound sterling will be raised from 1638 grains fine silver (the value of the present worn silver currency) to 1718.7; and from 113 grains fine gold (the present gold currency) to 118.644; that is to say, the value of the pound sterling will be raised upon both species 4.9 per cent. above the value of the present. This all creditors will gain, and all debtors will lose. From the day of the regulation, the exchange upon all the places in Europe will rise 4.9 per cent. in favour of England, and every man who is abroad, and who draws for the rents of his estate, will yearly gain 4.9 per cent. upon his draughts or remittances made to him. Whether prices in England will fall in proportion I do not know; one thing is pretty certain, that every article bought for foreign exportation will fall; for this good reason, that merchants will not be the dupe of this innovation, nor will they buy with heavy money at the same rate they were in use to buy with light. Justice will be done to all gentlemen whose ancestors let their lands in the reign of Queen Elizabeth, or at any time since, when gold and silver were at the proportion of 1 to 14½, and when the silver coin was at its standard weight. All taxes imposed by pounds, shillings, and pence, will be raised; all those imposed at so much per cent. of the value will stand the same, but will appear to sink in the denomination; that is, they will produce as much value, but fewer pounds, shillings, and pence, than before. The nation will lose 4.9 per cent. upon the whole capital and interest of the public debts; this the creditors will gain. The bank will gain in its quality of creditor upon the public, and will lose (together with all the bankers in England) 4.9 per cent. upon all their circulating paper. All annuitants, landlords, and creditors of every denomination, whose contracts are under 30 years standing, will gain. All debtors, mortgagors, tenants, whose contracts are of a fresher date, will lose. All merchandize whatsoever ought to fall 4.9 per cent. in its value; and every farthing any thing falls less in its price is lost to the consumers.

These are some of the most evident consequences which must result from this plan of reformation, and the nation is the best judge how far they will contribute to her advantage.

Either this reasoning is just, or all the principles I have laid down are false from the beginning.

A wise nation, I apprehend, is actuated by a spirit of justice. Every class, every denomination of inhabitants is equally entitled to the protection of a good government. Whatever step of administration can profit one set of men, to the detriment of another, is ill combined: whatever step can do justice to one set of men who have wrongfully suffered loss, to the detriment of another who have unjustly gained, is well combined. Upon these principles it is impossible to approve of the operation we have described. It is a political hodge-podge: it is, as it were, throwing all the interests of Great Britain into a bag, and drawing them as in a lottery.

We must, therefore, enter into a more particular examination of those opposite and jarring interests; we must inquire into the interests which have suffered, and which continue to suffer, from the actual debasement of the standard, and into those which must suffer upon a restitution of it according to the plan proposed. When we are informed concerning the sufferers, we shall easily perceive who must be the gainers.

Those who suffer by the debasement of the standard, are

1mo. Every person who is creditor in a contract entered into before the debasement of the standard.

2do. In proportion as the disorder in the coin continues, and as the currency becomes lighter, every man who sells to merchants is a loser.

In a trading nation such as England, it is not possible that any currency can long sustain itself by virtue of the stamp, at a higher value than its intrinsic worth. Whoever therefore, from a habit of selling any particular merchandize, continues to consider a currency which is daily becoming lighter as remaining at the same value, is deceived in his dealings by every man who is instructed in the matter of fact.

Those, I think, are the only persons who are really losers by the debasement of the standard, and who have a right to be redressed.

I must not omit however, to mention another set of people infinitely more considerable than both, who think fit to rank themselves in this class, without having the smallest pretension to enter into it.

These are such who would be gainers, were the government of England to restore the standard upon the supposition that justice required it, without giving themselves the trouble to examine into the merits of that important question.

Of this class are all the public creditors, all enjoying any salary, pension, or pay whatsoever for personal service; all annuitants, landlords, &c. In short, every man in the kingdom, so far as he is a creditor upon any public or private interest.

But to this class I must beg leave to put a question: What title has any person to receive in payment one grain of silver or gold more than he had stipulated from his debtor at the time of contracting, because the government of Great Britain thinks proper to make a new regulation with respect to their coin? If it be true that every man has a right to complain of the debasement of the standard so far as he is thereby defrauded of that weight of the fine metals which he was entitled to receive, surely every man has a right to complain of the rising of the standard, who thereby becomes obliged to repay more weight of the fine metals than ever he received value for.

In justice and in common sense, the raising of the standard of the coin ought never to be allowed to benefit any person but those who have been unjustly sufferers by the debasement of it, nor ought it ever to be prejudicial to any person but to such as by the debasement have been unjustly gainers.

In every contrast where neither of the parties can produce any palpable loss sustained by the former debasement of the standard, the alteration ought to have no manner of effect. All debts of whatever kind, ought to be liable to a fair conversion, as much as those contracted in guilders, florins, livres, &c. when they come to be paid in pounds sterling. The old and the new standards are not the same, because they carry the same denominations of value, any more than a piastre is a pound, because they begin with the same letter.

All the world must agree that the standard of queen Elizabeth is debased, and that a pound sterling is no longer worth 1718.7 grains troy fine silver. Every body must also agree that were the standard restored, merchandize of every kind ought to fall in value.

If therefore, after the restitution, a person who has merchandize to buy, shall have the privilege to proportion his price according to the change of money, why should another who is a debtor be in a worse situation? Why should permanent contracts be obligatory according to language, and momentary contracts, such as sale, be obligatory according to things?

Two people hire each a servant, the one stipulates to pay twenty guineas wages, the other stipulates twenty-one pounds sterling: the standard is in a short time after restored in the manner we have been describing; can any thing be more absurd, than that he who stipulated the twenty guineas, shall be quit after the restitution, on paying the twenty guineas as before, and that he who stipulated the twenty-one pounds sterling, shall be obliged to pay twenty-one guineas?

What pretension therefore can any man who is possessed of a salarysalary, an annuity, or of a bond or other security for a sum due to him by another, have to be paid the same number of pounds sterling stipulated at first, when the pound comes to be increased in its intrinsic value 5 per cent. above the value it had when the obligation was contracted?

CHAP. XII.
Objections stated against the Principles laid down in this Inquiry, and Answers to them.

I hope it will be remarked, that I do not pretend that the coining the pound troy standard silver into 65 shillings, or the making a new coinage upon the old footing of 62, reducing the guineas to 20 shillings, and then allowing conversions from the old to the new standard at a deduction of 5 per cent. upon permanent contracts formerly entred into, is not a manifest debasement of the value of the pound sterling, from what it was while affixed to the silver according to the statute of Elizabeth. All I pretend to allege is, that neither of these operations (which are nearly the same thing) would be a debasement of the present value of the pound sterling, or of what it has been worth for these thirty years past at least.

But as this opinion is by no means generally adopted, I must now do justice to its adversaries, and set before the reader the several objections which may be opposed to it.

Objection I. That the force of habit is so strong in uniting the ideas of value to the denominations of coin, that a pound sterling, whether it be raised or no, will always carry along with it the same measure of value: that merchandize will not sink in price according to the due proportion of the rise: that if conversions are suffered, the confusion will be endless; and that in the main, the diminution thereby operated upon the numerary, will turn out a real diminution upon the intrinsic value.

Obj. II. That the disorder in the proportion of the coin, and the wearing and lightness of the currency are not a real debasement of the standard. That the money-unit preserves its intrinsic value, in virtue of the statute of Elizabeth which establishes it. That it is false to allege that the English standard is solely affixed to the coin, or that it has no invariable measure to be compared with. That the pound sterling is really fixed to that statute not to the coin; and therefore that no variation of the coin, but only a variation of that statute, can change the standard.

Obj. III. That the pound sterling is still virtually, and in many respects worth the silver statute of Elizabeth, although traders in bills of exchange, and jobbers in the metals may make it appear otherwise. That consequently a new regulation either by the coinage of silver at 65 shillings in the pound troy, or by admitting deductions of 5 per cent. upon the old standard, on pretence that a pound sterling is worth no more at present than 1638 grains of fine silver, is not preserving the standard at what it has been these thirty years, but really a debasement of it from the present value.

Obj. IV. That if the rubbing and wearing of the coin be said to debase the standard in spite of all statutes, and if every new coinage is to be regulated by the weight of the former grown light, in order to support the actual value of the money-unit, it is plain, that in time that unit must be reduced to nothing.

Obj. V. That were the measures in common use, by wear and by fraudulent practices, rendred less than the standard measures kept in the exchequer, it would appear manifestly absurd, for that reason, to diminish these standard measures. That for the same reason, while the statute of Elizabeth subsists, it would be equally absurd to diminish the silver standard of the pound sterling.

Obj. VI. That debasing the standard by law is violently invading every man’s property; that when the coin is debased by circulation, the loss only falls upon him who happens to be in possession of any part of it at the time it is cried down.

Obj. VII. That although merchants and money-jobbers may consider the value of a pound sterling according to its weight of silver or of gold; and although exchange and the price of bullion may make it appear to be at present of no greater value than 113 grains of fine gold, and 1638 grains of fine silver; yet still in inland dealings it is worth its standard weight, to wit, 1718.7 grains of silver; because the inhabitants of England never consider their money by its weight, but by tale. The currency by tale regards the standard, as currency by weight regards the coins themselves.

That the quantity of money which goes abroad, or even the quantity of foreign dealings, is so inconsiderable, when compared with domestic circulation, that the value foreigners put upon English money can but very little affect the value of it in the country.

Obj. VIII. That the coin, though light, being received by the King in all the public offices for its value, keeps up that value to the standard, notwithstanding its being under the weight.

Obj. IX. That the scheme proposed is the same with that proposed by Lowndes in 1695, so fully refuted by Mr. Locke, and rejected by the decision of the nation on a parallel occasion.

In order to leave nothing unsaid which can tend to set this matter in a clear light, I shall briefly give an answer to all these objections, in the most distinct manner I am capable of. I have gathered them from every quarter, particularly from Mr. Harris. I have endeavoured to state them in all their force, and I shall answer them with candor, according to the principles laid down, and according to uncontroverted matters of fact.

Answer to Objection I. Here I reply, that no habit any people can contract, is strong enough to blind them with regard to their interest. Nothing is so familiar in many countries, as to raise and sink arbitrarily the numerary value of the several denominations of coins; but no sooner is the change made, than it becomes familiar, even to the children of twelve and fourteen years old; and any person who has had occasion to travel, must have been astonished at the acuteness of the common people in their knowledge of the value of coins. The habit of uniting ideas to old pounds sterling will, upon a restitution of the standard only, be found in the heads of sellers and creditors; buyers and debtors will very quickly learn to profit of a deduction of 5 per cent. provided they are legally authorised to do it. It will greatly depend upon government to oblige commodities to follow the just proportion of their worth, by making conversions of the taxes, new regulations of assize, for bread, beer, &c. and by putting into the hands of the people convenient tables for that purpose. When the thing is once understood, the execution will be easy.

Answ. II. Could it be made out that the standard of the pound sterling is affixed to the statute of Elizabeth, and not to the coin, this objection would be invincible. But were the matter so, the payment of all obligations might be exacted by weight of silver; because the statute regulates nothing else. A man owes me a thousand pounds, he makes me a legal offer of silver or gold coin to the current value, were the standard affixed to that statute, I should have the privilege to refuse both the current species, if light or ill proportioned, and demand of him to weigh me down 1718700 grains of fine silver, or 1858060 grains weight of the nation’s silver coin.

As this is not the case, the standard is not affixed to the statute of Elizabeth; consequently, not affixed to an invariable measure; consequently, must vary according as the coin varies, to which alone it is by law attached.

Answ. III. That if it is said, that the pound sterling is in any case of the value of 1718.7 grains of fine silver, I am entitled to ask who can force any man in Great Britain to pay him at that rate? But if it be true on the contrary, that there is not any pound sterling due within that kingdom which may not be legally acquitted with 113 grains of fine gold, or with 1638 grains of fine silver, then I am authorised to state the present value of the pound sterling at that rate. If this be the case, then the addition of one grain of silver or of gold more, in a new coinage, necessarily implies a raising of the standard.

Answ. IV. This objection lies against the rubbing of the coin, not against the regulation of the mint. I have frequently observed, that it is the rubbing of the coin which of itself debases the standard, in spite of the statute as it stands, but not in spite of what it might be.

There is no doubt, that as long as any nation permits her current coin to pass below the standard weight, by virtue of the stamp, she by that neglect, opens a door to the debasement of the standard, and totally disappoints that part of the statute which regulates the weight; consequently the act of making a new coinage afterwards, at the then debased value, is not of itself a new debasement.

The new coinage, in that case, is a temporary interruption put to the circulation of coin unequally worn, which is what occasions, more than any thing, the progressive debasement of the standard; but it is no new debasement in itself, nor is it any preservative against debasements for the future.

If it be not provided by statute, that debtors shall make good the weight of the coin with which they pay, in one way or other, of necessity the state must either go on regularly debasing her standard every new coinage, or be obliged to raise it by jerks, to the detriment of all the debtors who have contracted during the preceding debasement.

Answ. V. The comparison between the standard weights in the exchequer, with the standard of the pound sterling, is not just. If a merchant offers me grain, bullion, or cloth, by a measure which is not of the legal content, weight, or length, I may refuse it. I have even an action against him for fraudulent dealing, in case I shall have unwarily accepted of the merchandize. But I cannot reclaim (as has been said) the measure of the money-unit according to the statute.

Now let me suppose, that for 40 years no access could be got to the standard measures of the exchequer, that during this time all the measures of the nation should be debased; that notwithstanding this, the landlords over all England should continue to stipulate their rents in grain, by the debased bushel of their respective counties: if after 40 years of such confusion, the exchequer should be opened, and all measures fitted to the standards, would it not be a horrid piece of injustice not to allow both landlords and farmers who had entred into leases within the 40 years, the liberty of converting their rents from the debased to the standard bushel.

Answ. VI. This objection proceeds entirely on the supposition, that it is the altering the statute, and not the rubbing of the coin, or the changing the proportion of the market price of the metals which debases the standard.

Were that proposition true, the consequence drawn from it would be true also, to wit, that the loss by the wearing of the coin remains entirely suspended until the worn coin is all at once cried down. But if I can prove, that the wearing of the coin does not fall upon the person in whose hands it is found when cried down, except only so far as it happens to be below the mean weight of the whole currency, or so far as the person is a debtor, and unjustly obliged, by an arbitrary law, to pay what he had received in light, with heavy coin. If this, I say, be true, I hope it will follow, that there is not the least force in this objection. This consequence is plain.

It is certain, that by the wearing of the coin there is a loss incurred by somebody; if it be proved that it is not incurred by the person in whose hands the light coin is found when cried down, it must follow, that it has already fallen proportionally upon those who, in the mean time, have been considering it as of the standard value, while it has been really below it.

Here follows the proof of this proposition.

I shall suppose the silver coin of Great Britain is actually so worn as to be 5 per cent. lighter than its standard weight at a medium. If at that time the silver is ordered to be recoined of the standard weight, I say the currency, after the coinage, will be 5 per cent. better than before. Ought not then all merchandize to fall 5 per cent. in value upon this revolution.

Two men (A) and (B) have, the day before the calling in of the light specie, each a thousand pounds sterling of it in tale; (A) goes to market and buys corn with his thousand pounds, (B) keeps his coin, and next day is obliged to carry it to the mint, where he sells it at 5 per cent. discount; that is, for nine hundred and fifty pounds of new heavy silver coin. (B) after this operation goes to market; and finding grain fallen in the price 5 per cent. he with his nine hundred and fifty pounds, buys just as much as (A) had bought the day before with his thousand pounds. I ask what loss (B) has suffered in carrying his silver to the mint?

But if we suppose the thousand pounds in silver tale money, which (B) had, to be worn more than at the rate of 5 per cent. then he would lose all the difference; because the price of things would fall only according to the general proportion of the rise upon the value of the currency: but on the other hand, he would gain upon the supposition that his thousand pounds should happen to be less worn than the 5 per cent.

Can any thing, therefore, be more absurd, than to appoint by law, that one, who shall at this time happen to be indebted for a thousand pounds, shall be obliged to pay this thousand pounds in heavy money, when he had borrowed it in light.

We have seen how (B) in buying corn with nine hundred and fifty pounds of the new coin, got as much as (A) had got the day before with his thousand. But suppose they had both bought grain the day before the crying down of the coin, (A) with his money, (B) with a note payable next day, how absurd must any law be, which should oblige (B), for one day’s credit, to pay at the rate of 5 per cent. increase of price; and this because of the accident of calling in of the money: an event he could neither foresee or prevent.

We may, therefore, conclude, that while the coin of a nation is upon the decline from the standard value of the unit (as it ought to be preserved by some invariable measure) those only through whose hands it circulates, lose upon what they have, in proportion to the debasement of the standard, while the coin remains in their hands.

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 denominationdenomination, 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.

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.