Front Page Titles (by Subject) Chap. XII.: The undervaluing of our Money which is delivered or received by Bills of Exchange here or beyond the Seas, cannot decrease our treasure. - A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others
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Chap. XII.: The undervaluing of our Money which is delivered or received by Bills of Exchange here or beyond the Seas, cannot decrease our treasure. - John Ramsay McCulloch, A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others 
A Select Collection of Early English Tracts on Commerce from the Originals of Mun, Roberts, North, and Others, with a Preface and Index (London: Printed for the Political Economy Club, 1856).
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The undervaluing of our Money which is delivered or received by Bills of Exchange here or beyond the Seas, cannot decrease our treasure.
THe Merchants Exchange by Bills is a means and practice whereby they that have money in one Countrey may deliver the same to receive it again in another Countrey at certain times and rates agreed upon, whereby the lender and the borrower are accommodated without transporting of treasure from State to State.
These Exchanges thus made between man and man, are not contracted at the equal value of the moneys, according to their respective weights and fineness: First, because he that delivereth his money doth respect the venture of the debt, and the time of forbearance; but that which causeth an under or overvaluing of moneys by Exchange, is the plenty or scarcity thereof in those places where the Exchanges are made. For example, when here is plenty of money to be delivered for Amsterdam, then shall our money be undervalued in Exchange, because they who take up the money, seeing it so plentifully thrust upon them, do thereby make advantage to themselves in taking the same at an undervalue.
And contrariwise, when here is scarcity of money to be delivered for Amsterdam, the deliverer will make the same advantage by overvaluing our money which he delivereth.Plenty of Mony makes the Exchange cheap, and all other things dear. And thus we see that as plenty or scarcity of mony in a Common-wealth doth make all things dear or good cheap: so in the course of exchange it hath ever a contrary working; wherefore in the next place it is fit to set down the true causes of this effect.
As plenty or scarcity of mony do make the price of the exchange high or low, so the over or under ballance of our trade doth effectually cause the plenty or scarcity of mony: And here we must understand, that the ballance of our trade is either General or Particular. The General is, when all our yearly traffique is jointly valued, as I have formerly shewed; the particular is when our trade to Italy, France, Turkey, Spain, and other Countreys are severally considered: and by this latter course we shall perfectly find out the places where our mony is under or overvalued in Exchange: For although our general exportations of wares may be yearly more in value than that which is imported, whereby the difference is made good to us in so much treasure; nevertheless the particular trades do work diversly:What kinds of plenty or scarcity of money make the Exchange high or low. For peradventure the Low Countreys may bring us more in value than we sell them, which if it be so, then do the Low Countrey Merchants not only carry away our treasure to ballance the accompt between us, but also by this means mony being plentiful here to be delivered by exchange, it is therefore undervalued by the takers, as I have before declared; And contrariwise if we carry more wares to Spain, and other places than we consume of theirs, then do we bring away their treasure, and likewise in the Merchants exchange we overvalue our own money.
Yet still there are some who will seem to make this plain by Demonstration, that the undervaluing of our money by Exchange doth carry it out of the Kingdom: for, say they, we see daily great store of our English Coins carried over, which pass current in the Low-Countries, and there is great advantage to carry them thither, to save the loss which the Low-Countrymen have in the Exchange; for if one hundred pounds sterling delivered here, is so much undervalued, that ninty pounds of the same sterling money carried over in specie shall be sufficient to make repayment and full satisfaction of the said hundred pounds at Amsterdam: Is it not then (say they) the undervaluing of our Mony which causeth it to be carried out of the Realm?
To this objection I will make a full and plain Answer, shewing that it is not the undervaluing of our money in exchange, but the overballancing of our trade that carrieth away our treasure. For suppose that our whole trade with the Low-Countries for wares brought into this Realm be performed onely by the Dutch for the value of five hundred thousand pounds yearly; and that all our commodities transported into the said Low-Countries be performed onely by the English for four hundred thousand pounds yearly: Is it not then manifest, that the Dutch can exchange only four hundred thousand pounds with the English upon the Par pro Pari or equal value of the respective Standards? So the other hundred thousand pounds which is the over ballance of the trade, they must of necessity carry that away in mony. And the self same loss of treasure must happen if there were no exchange at all permitted: for the Dutch carrying away our money for their wares, and we bringing in their forraign Coins for their commodities, there will be still one hundred thousand pounds loss.
Now let us add another example grounded upon the aforesaid proportion of trade between us and the Low Countreys. The Dutch (as aforewritten) may exchange with the English for four hundred thousand pounds and no more upon the equal value of the monies, because the English have no further means to satisfie. But now suppose that in respect of the plenty of money, which in this case will be here in the hands of the Dutch to deliver by exchange,The undervaluing of our mony in Exchange is the Strangers loss and our gain. our mony (according to that which hath been already said) be undervalued ten per cent. then is it manifest that the Dutch must deliver four hundred and forty thousand pounds to have the Englishmans four hundred thousand pounds in the Low Countreys: so that there will then remain but 60000. pounds for the Dutch to carry out of the Realm to ballance the accompt between them and us. Whereby we may plainly perceive that the undervaluing of our money in exchange, will not carry it out of the Kingdom, as some men have supposed, but rather is a means to make a less quantity thereof to be exported, than would be done at the Par pro pari.
Further let us suppose that the English Merchant carrieth out as much wares in value as the Dutch Merchant bringeth in, whereby the means is equal between them to make their returns by exchange without carrying away of any mony to the prejudice of either State. And yet notwithstanding the Dutch Merchant for his occasions or advantage will forsake this course of exchange, and will venture to send part of his returns in ready mony.
To this the answer is, that hereupon it must follow of necessity, that the Dutch shall want just so much means in exchange with the English, who therefore shall be forced to bring in the like sum of mony from beyond the Seas, as the Dutch carried out of this Realm; so that we may plainly perceive that the monies which are carried from us within the ballance of our trade are not considerable, for they do return to us again: and we lose those monies only which are made of the over-ballance of our general trade, that is to say, That which we spend more in value in forraign wares, than we utter of our own commodities. And the contrary of this is the only means by which we get our treasure.1 The Canker of Englands Commonwealth. In vain thereforefore hath Gerard Malynes laboured so long, and in so many printed books to make the world beleeve that the undervaluing of our money in exchange doth exhaust our treasure, which is a mere fallacy of the cause,2 Free trade. attributing that to a Secondary means, whose effects are wrought by another Principal Efficient, and would also come to pass although the said Secondary means were not at all. As vainly also hath he propounded a remedy by keeping the price of Exchange by Bills at the par pro pari by publick Authority,3 Lex Mercatoria. which were a new-found Office without example in any part of the world, being not only fruitless but also hurtful, as hath been sufficiently proved in this Chapter, and therefore I will proceed to the next.4 The Centre of trade.