The Online Library of Liberty

A project of Liberty Fund, Inc.

• Advertisement By the Editor.
• Plan of Lectures On Political Economy, For Winter 1800-1801.
• Outlines of Moral Philosophy. Part Third. [political Science.]
• Part III. *: of Man Considered As the Member of a Political Body. †
• Chapter I.: Of the History of Political Society.
• Chapter II.: Of the General Principles of Legislation and Government.
• Lectures On Political Economy.
• Errata.
• Introduction. of the Objects and Province of Political Economy. *
• [chapter I.]: [of the Title and Comprehension of the Science, In Its Most Extensive Meaning.]
• Chapter II. *: [of the Contents and Distribution of Political Economy Proper,—or of Part First.]
• [ Population. ]
• [ National Wealth. ]
• [ the Poor:—their Maintenance. ]
• [ Education.—prevention, Reformation, Correction of Crime. ]
• [chapter III.]: [preliminary Distinction of Positive Laws Into Two Classes; and the Relation of These to Political Economy Proper,—or to Part First.]
• Part First.—: of Political Economy Proper.
• [book First.]: [of Population.]
• [chapter I.]: Of Population Considered As an Article of the Natural History of Man.
• [chapter II.]: [of Population Considered As an Article of Political Economy.]
• [sect. I.—: Of Population As Affected By the Political Institutions Which Regulate the Sexual Connexion.]
• [sect. II.—: Of Population As Affected By the State of Manners Relative to the Connexion Between the Sexes.]
• [sect. III.—: Dependence of Population On the Means of Subsistence Enjoyed By the People.]
• [ Appendix. —: of the Means Which Have Been Employed to Ascertain the State of Population In Particular Instances. ]
• [book Second.]: [of National Wealth.]
• [chapter I. * ]: [of Productive and Unproductive Labour.]
• [sect. I.—: On the Circumstances Which Render Labour More Effective.]
• Chapter II.: [of Money, the Circulating Medium.]
• [sect. I.—: Of the Origin and Use of Money.]
• [sect. II.—: Of Real and Nominal Prices.]
• [sect. III.—: On the Effects of Plenty Or Scarcity of the Precious Metals Upon Prices.]
• Sect. IV.—: Of Money As the Standard of Value.
• [sect. V.—: Of Interest.]
• Appendices to Books First and Second.
• Appendix I.—: To B. I. Ch. II. § 3.
• Quotation On Population From Pinto.
• Appendix II.—: To B. II. Ch. II.
• Notes On the [ Parliamentary ] Bullion Report. ( Sent By Mr. Stewart to Lord Lauderdale, In February, March, and April, 1811.)

[SECT. I.—

OF THE ORIGIN AND USE OF MONEY.]

The Division of Labour, wherever it has been carried to any considerable extent, presupposes the establishment of some common medium of exchange. Without this previous arrangement it would be impossible for an individual to devote himself exclusively to a particular species of employment; divesting himself of every care for the supply of his other wants, and trusting to the fruits of his own labour for the power of commanding the produce of that of his neighbours; and it is thus that the use of money becomes a powerful, and indeed necessary auxiliary to the other circumstances which lay the foundation of the progressive improvement of the species. It would lead me into a detail inconsistent with my present plan, to attempt the slightest historical sketch with respect to the origin of this invention, and to the successive forms which it assumes in proportion as the operations of commerce become more extensive and complicated. These different stages in this history, from the first and simplest operations of barter, to the refinements of paper credit, have been traced by various writers, particularly by Mr. Harris in his Essay upon Money and Coins,* and by Mr. Smith in the Wealth of Nations.†

In process of time, among all civilized nations, gold, silver, and copper have supplanted all other commodities as the great instruments of commerce. For this purpose, indeed, these metals are so admirably adapted, that we may justly consider them, particularly the two first, as destined for it by nature, independently of all convention or of all laws.1

The circumstances which recommend silver and gold as the fittest materials for money, are chiefly the following.—First, When pure, and unmixed with base metals, they have everywhere the same characteristics, and in all respects the same qualities. Secondly, They are divisible into minute parts, which are again susceptible of a complete re-union by fusion. Thirdly, They are durable, portable, easily kept, and not liable to injury from want of use. Fourthly, They are susceptible of any form, and any impression. Fifthly, They are not too common, nor to be obtained without a valuable consideration in land and labour. To the provision which nature has thus made for facilitating commerce, in the qualities which so remarkably characterize these metals, it may be worth while to add the advantages which we derive from the variety of metals in which these qualities are to be found. In rich and commercial countries, coins of gold and silver alone would by no means answer all the purposes of exchange. Coins of gold and silver are not well adapted for that retail trade in which, however, the greatest number of subjects are principally concerned. Coins of silver, again, are too bulky for larger payments. It is necessary, therefore, that coins should be made of different metals. Accordingly, in all such countries, this has taken place sooner or later in the progress of commercial refinement. With respect to the history of the coins in England, a great deal of very curious information has been lately brought together, and very perspicuously stated by Lord Liverpool, in his Treatise on the Coins of the Realm, [1805.]

The enumeration which has been already given of the qualities which so peculiarly fit the precious metals to perform the function of media of exchange, seems of itself fully sufficient to account for the universal use made of them in commerce, abstracting altogether from the useful purposes to which they are applicable in the various arts. In stating this remark, it is scarcely necessary for me to add, that I would by no means be understood to deny the important uses of which gold and silver are susceptible, or the intrinsic value which they derive from their beauty and subserviency to the arts of decoration. On this subject I am ready to admit all that has been urged by Mr. Smith, in that part of his work where he attempts to shew that, except iron, they are more useful than any other metal. He says—“The demand for those metals arises partly from their utility and partly from their beauty. If you except iron, they are more useful than perhaps any other metal. As they are less liable to rust and impurity, they can more easily be kept clean; and the utensils either of the table or the kitchen are often upon that account more agreeable when made of them. A silver boiler is more cleanly than a lead, copper, or tin one; and the same quality would render a gold boiler still better than a silver one. Their principal merit, however, arises from their beauty, which renders them peculiarly fit for the ornaments of dress and furniture. No paint or dye can give so splendid a colour as gilding. The merit of their beauty is greatly enhanced by their scarcity. . . . These qualities of utility, beauty, and scarcity, are the original foundation of the high price of those metals, or of the great quantity of other goods for which they can everywhere be exchanged. This value was antecedent to, and independent of, their being employed as coin, and was the quality which fitted them for that employment. That employment, however, by occasioning a new demand, and by diminishing the quantity which could be employed in any other way, may have afterwards contributed to keep up or increase their value.”*

In the whole of this passage I certainly agree with Mr. Smith, excepting where he says, that the intrinsic value of gold and silver was the quality which fitted them for their employment as coin. It appears to me, that this intrinsic value, which I shall allow to gold and silver in its fullest extent, ought to be regarded in the theory of money as merely accidental circumstances, from which it is proper to abstract with all possible care, as tending only to embarrass our conceptions; for the same reason, that in studying the theory of mechanics, we abstract from the effects of friction, the rigidity of ropes, and the weight of the materials of which machines are composed. The considerations, undoubtedly, mentioned by Mr. Smith, add to the exchangeable value of money, by increasing the demand for the materials of which it is made, in the very same manner as this value would be increased by a deficiency to the same extent, in the ordinary supply coming from the mines. But I cannot help thinking, that the quantity of gold and silver employed in the arts, bears but a very trifling proportion to that which circulates in the shape of money or bullion over the commercial world, so trifling, indeed, as to render it of little moment in the present argument, or at most to place it on the same footing with those circumstances in mechanics, from which, though it is necessary to attend to them in practice, it is nevertheless convenient to abstract in theory, in studying the principle on which any of the simple mechanical powers produces its effect. At any rate, when gold is converted into coin, its possessor never thinks of anything but its exchangeable value, or supposes a coffer of guineas to be more valuable, because they are capable of being transformed into a service of plate for his own use; whatever satisfaction the possessor of a service of plate may derive from the consideration that it may be converted into guineas. Why, then, should we suppose, that if the intrinsic value of gold and silver were annihilated completely, they might not still perform, as well as now, all the functions of money, supposing them to retain all those recommendations formerly stated, which give them so decided a superiority over everything else which could be employed for the same purpose. Supposing the supply of the precious metals, at present afforded by the mines, to fail entirely all over the world, there can be little doubt that all the plate now in existence would be gradually converted into money, and gold and silver would soon cease to be employed in the ornamental arts. In this case, a few years would obliterate entirely all idea of the intrinsic value of these metals; while their value would be understood to arise from those characteristical qualities which recommend them as media of exchange. But so far from sinking in their exchangeable value, they would every day become more valuable in the market than before, in proportion as their quantity was diminished by the slow waste occasioned by commercial circulation. Mr. Smith’s doctrine, at the same time, I must own, coincides with the general opinion on this subject; and Mr. Harris carries it so far, as to propose it as a questionable point, whether coins would have preserved their value and been continued as money, if silver and gold had not been applicable to other purposes. I confess I can see no good reason for this observation; as, independently of the intrinsic value of these metals, their peculiar adaptation to their different ends, as signs or measures of value, could not have failed to have given them an exclusive title to this employment. I am therefore disposed to think, that Bishop Berkeley was not wide of the truth, (for I would not go so far as to adopt his idea in its full extent,) when he proposed the following doubts in his pamphlet, entitled The Querist, “Whether money is to be considered as having an intrinsic value, or as being a commodity, a standard, a measure, or a pledge, as is variously suggested by writers? And whether the true idea of money, as such, be not altogether that of a ticket or counter?”* The ingenious author certainly did not mean, in this query, to deny that gold and silver have an intrinsic value, but only to insinuate, that this is an accidental or secondary consideration from which we ought to abstract entirely in forming a precise idea of their function as money. This is perfectly evident from the qualifying words “as such,” which he introduces into the Query.

The same functions might be performed by a variety of other metals, but by none which unites so many advantages; and hence the general consent of mankind in applying them to this purpose; in consequence of which they have come to be essentially distinguished from those local media of exchange to which accidental circumstances have given currency in particular nations. It is this general consent alone which distinguishes them, when employed as money, from anything else which circulates in a country; from the paper currency, for instance, which circulates in Scotland and England. Were this island insulated from the rest of the world, the former, as a medium of exchange, would possess no advantage over the latter, excepting in so far as it diminished the opportunities of fraud; nor would it make the smallest difference on the national wealth, whether the circulating medium consisted of gold or paper, or whether the materials were abundant or scanty. This observation, self-evident as it may appear to some, may perhaps to others require a little illustration.

In a country which had no communication with others, it is obvious and indisputable, that the precious metals, when formed into money, would be useful only as a medium of exchange and scale of valuation. On this supposition, the observation of Anacharsis the Scythian, quoted by Mr. Hume in one of his Political Discourses, seems to be perfectly just, that gold and silver appeared to be of no use to the Greeks, but to assist them in enumeration and arithmetic.* I shall afterwards, however, endeavour to show, that Mr. Hume carried this principle a great deal too far, when he concluded, that the prices of commodities are regulated entirely by the plenty or scarcity of the coin in circulation.†

In a country which has commercial dealings with others, the case is very different; the precious metals being, by those essential qualities formerly mentioned, so much distinguished from the other media of exchange that have been occasionally employed, that they are objects of universal request among mankind; influencing in a great variety of ways, by their local plenty or scarcity, the relative condition of nations.

Among the other commodities which have been used for the same purpose, the small shells, called Cowries, which are employed in Africa and some parts of Asia, are perhaps the most deserving of attention, when we consider, notwithstanding their total inutility in every other respect, the value set upon them as media of exchange over such extensive regions of the earth. “I am informed from good authority,” says Major Rennell, “that about a hundred tons of Cowries are annually shipped from England alone to Guinea. These are originally shipped from the Maldive Islands to Bengal, and from Bengal to England. In Bengal, twenty-four hundred more or less are equal to a shilling, and, notwithstanding, some articles in the market may be purchased for a single cowry. But in the inland parts of Africa, they are about ten times as dear, varying from two hundred and twenty to two hundred and eighty. M. Beaufoy was told that in Kassina they were at the rate of about two hundred and fifty; and Mr. Park reports, that they are about the same price at Sego, but cheaper at Timbuctoo, which is about the centre of the cowry country; dearer towards Manding, which is the western extremity of it. Hence they are probably carried in the first instance to Timbuctoo, the gold market, and thence distributed to the east and west.”1

It would be a curious speculation to examine the combinatious of circumstances which thus affect the value of an article that derives its whole worth from its arbitrary application to facilitate commercial operations. The facts which have been stated are sufficient to show, that the minute subdivision of value which these shells are fitted to express, has created a demand for them even where the precious metals are in abundance; and this demand would manifestly be much greater if the precious metals did not exist at all. These last, however, abstracting entirely from their application in the useful arts, are incomparably better adapted for the purposes of exchange than cowries, or any other substitute which has yet been thought of, and therefore I have not the smallest doubt, that their employment as media of exchange would have been as universal as it now is, though they had possessed no intrinsic utility or value whatever. In consequence, indeed, of these qualities, the attention of men was directed to them at an earlier period than it otherwise would have been; and the estimation in which they were held as articles of merchandise, may have suggested their advantageous properties as media of exchange. But the only utility which is essential to gold and silver as media of exchange, is their peculiar adaptation to that purpose; and though I would not take it upon me to say that their uses in the arts detract from their value in this respect, yet these are so far from being essential to their qualities as money, that they are in some respects disadvantageous, by rendering the theory of money more complicated than it otherwise would have been.

Having mentioned the extensive use of Cowries as a medium of exchange, I cannot help taking notice here, though the subject is not immediately connected with our present inquiry, of some particulars concerning the current prices of some commodities estimated in this way, extracted from the last communication which was received in this country from Mr. Mungo Park, and which is dated 16th November 1805. The particulars which I have to state, are copied from a letter received by me some time ago from a friend in London, who had an opportunity of perusing the original document. In this letter Mr. Park states, that in Manding, a town containing eleven thousand inhabitants, he opened a booth for the sale of European commodities, of which he took down some of the prices in cowries. Thus, a piece of gold worth in our currency twelve shillings and sixpence, sold for three thousand cowries. A dollar, sold by Mr. Park as a piece of European manufacture, brought from six to twelve thousand cowries. Currency for currency, a cowrie is stated to be worth the twentieth part of our penny. A prime male slave brought forty thousand cowries; a prime female slave ninety thousand; one young female slave brought forty thousand; a horse, from two to ten prime male slaves; a fat cow, fifteen thousand cowries; an ass, seventeen thousand; a sheep, from three to five thousand.

The doctrine which the foregoing observations tend to establish is, if I mistake not, agreeable to the opinion of Mr. Locke, who observes, “that the general consent of nations has placed an imaginary value on silver, because of the qualities fitting it for the purposes of exchange.”* This remark of Locke’s has been severely commented on by Mr. Law, in a small treatise entitled Money and Trade Considered.† “It is reasonable to think,” he says, “silver was bartered, as it was valued, for its uses as a metal, and was given as money according to its value in barter. The additional use of money to which silver was applied, would add to its value, because, as money, it remedied the disadvantages and inconveniences of barter; and consequently the demand for silver increasing, it received an additional value equal to the greater demand its use as money occasioned.

“And this additional value is no more imaginary than the value silver had in barter, as a metal; for such value was because it served such uses, and was greater or less according to the demand for silver as a metal, proportioned to its quantity. The additional value silver received from being used as money, was because of its qualities which fitted it for that use, and that value was according to the additional demand its use as money occasioned.

“If either of these values be imaginary, then all value is so; for no goods have any value, but from the uses they are applied to, and according to the demand for them, in proportion to their quantity.”‡

I confess, it does not appear to me that Mr. Law’s reasonings are precise or conclusive. In as far as his criticism refers to Mr. Locke’s use of the word imaginary, I do not think it necessary to enter into any argument concerning its justice, but I own that the idea which Mr. Locke meant to express, appears to me clear and unquestionable. That idea was, that the general consent of men, by adopting silver as the medium of exchange, bestows on it, in addition to the recommendations which it derives from its subserviency to the arts, a value which it did not intrinsically possess. This ideal value is precisely of the same kind with that which the credit of a bank stamps on paper currency, with this difference, that the latter is local, while the former is universal. Mr. Locke’s remark farther intimates, that the general consent of men was not the effect of caprice, but of certain peculiarities in the nature and qualities of silver, which have eminently fitted it for the purposes of exchange; a proportion which coincides exactly with an assertion formerly quoted from Turgot, [p. 334,] that gold and silver seem destined by nature to be the great instruments of commerce, independently of all law and of all convention.

In further prosecution of the same argument, Mr. Law adds, “that he cannot conceive how different nations could agree to put an imaginary value on anything, especially upon silver, by which all other goods are valued; or that any one country would receive that as a value, which was not valuable equal to what it was given for; or how that imaginary value could have been kept up.”* The extensive use which is made of cowries in Africa, and some parts of Asia, may serve as a sufficient answer to these observations. Nor is the fact less applicable, though we admit, that these shells, being used in countries where gold and silver are also employed, are therefore to be considered merely as tokens or representatives of the precious metals; for if articles possessing no intrinsic value, should possess a value as representing the precious metals, why might not gold and silver derive their value from the useful commodities which they represent and enable us to purchase?

“But,” says Mr. Law, “for the same reasons a crown passing in France for seventy-six sols, should pass in Scotland for seventy-six pence, and in Holland for seventy-six stivers. But on the contrary, even in France where the crown is raised, it is worth no more than before when at sixty sols.”† I must confess that I do not understand the scope of this argument, nor can I conceive how it applies to the question under discussion. According to the literal interpretation of this passage, Mr. Law is combating a phantom of his own imagination; for, by whom was it ever supposed that one nation adopted the money of another, ascribing to the precious metals an imaginary value for no other reason than that others had done the same? I have before said, that the general use of the precious metals is the obvious result of those circumstances which so peculiarly adapt these metals for the purposes of money. This general coincidence Mr. Locke expresses by the word consent. But it is perfectly evident from the context, that he did not mean consent arising from any stipulation or imitation among nations; but a consent analogous to that which Cicero ascribes to the human race, in the fundamental principles of religion and virtue. If this observation be just, it affords a sufficient explanation of the fact, that a crown may pass in France for seventy-six sous, while in Scotland it may not bring seventy-six pence, nor in Holland seventy-six stivers. The properties which universally belong to the precious metals, account completely for the universality of their use as media of exchange; but it would be surprising, indeed, if all nations had adjusted their values agreeably to some common standard. The case of the precious metals is similar to measures of longitudinal extension. In taking the standard of these from the human body, there has been a pretty general consent among nations. But it would not follow from this, that the Paris foot, and London foot, &c., should be exactly of the same length. Such a coincidence could have resulted only from an express compact. The truth however is, that in consequence of the commercial connexions of different nations, the relative values of the coined metals have been pretty accurately adjusted in the general market of the world; and it is owing to this that all arbitrary operations in the mints of particular States are unjust, inexpedient, and in many respects ineffectual; a consequence which has not escaped the notice of Mr. Law himself.*

It must not, therefore, be imagined, when I lay so great stress on the properties of the precious metals, abstracting from their intrinsical value, in studying the theory of money, that I would mean to insinuate any apology for those arbitrary operations on the coinage, which have been so often practised by different princes. If gold and silver possessed no intrinsic value, such operations might be no less iniquitous than they always have been; for their iniquity arises, not from the useful purposes to which the precious metals are subservient in the arts, but from the universality of their employment as media of exchange. And, indeed, one of my chief reasons for dwelling so long on the present subject, was to prevent so very important a truth as that which relates to the good faith that ought to be maintained with regard to the coinage, from being placed on what I conceive to be an unsound foundation. The pains which Mr. Law has bestowed on this argument is the more surprising, that the doctrine which he wishes to refute would have accorded better with the general scope of his book than that which he supports; and indeed, in one passage, he seems to give up completely the very point for which he had been so long contending. “Money is not the value for which goods are exchanged, but the value by which they are exchanged; the use of money is to buy goods, and silver, while money, is of no other use.”* An observation which coincides entirely with that above quoted from Mr. Hume, [p. 338.]

From the function of the precious metals as media of exchange, they gradually and naturally came to form the common scale of valuation. For this end, indeed, they are admirably adapted, from the mathematical exactness with which metals, in consequence of their divisibility and fusibility, are fitted to express every conceivable variation of value; a quality, indeed, of so much importance in their use as money, that it probably contributed more than anything else to establish their employment among commercial nations. The existence, too, of such a standard, would necessarily render the ideas of relative value much more precise and definite than they otherwise would have been; by leading men to an arithmetical statement of relations, which probably, in the infancy of commerce, would have been estimated in a very gross and inaccurate manner.

The two great functions, then, of the precious metals, when employed for the purposes of Money, are to furnish, first, a universal medium of exchange; and secondly, an accurate scale of valuation. The truth is, that the second idea is, in some measure, involved in the first; and it is for this reason that I have not included it in my definition; for although in rude nations articles have been used as media of exchange, which are incapable of expressing all the different gradations of value, such could not possibly have furnished the means of carrying on the business of a great commercial country; it is therefore implied necessarily in the nature of money, that it furnishes an accurate scale of valuation; and consequently this last function of money is to be considered as inseparably connected with that universality of its use, to which I have directed your attention as its leading and fundamental property.

To the conclusion which the foregoing reasonings tend to establish, I know it has been objected, that it is obviously contradicted by the perpetual variations that take place in the relative values of money and of commodities. When we see that silver, according to its plenty or scarcity, combined with other circumstances, fluctuates in its exchangeable value compared with that of corn, do we not ascribe an intrinsic value to the one as well as the other? and may not silver be considered as the commodity, and corn the price, with as little impropriety as the converse?—For my own part, I do not perceive the force of this objection. That gold and silver may be considered as commodities, I allow. But would not the case have been the same although they had possessed no intrinsical qualities whatever? and would not their adaptation to the purposes of commerce, and their employment as media of exchange, have occasioned a considerable demand for them? Indeed, may I not venture to add, that these circumstances would have rendered the demand for them as great as it is at present? Of what intrinsic utility, for instance, are cowries, which perform the functions of money over a great part of Africa and Asia? and does not even this local employment of them render them an article of commerce and a commodity for sale in the hands of those traders who, after bringing them from Bengal, ship them again to Guinea?

The same doctrine concerning the precious metals will be found perfectly consistent with the principles which regulate the Course of Exchange between different countries. Even when they exist in the shape of Bullion, what constitutes their exchangeable value is their convertibility into the current coins of the country; and any increased demand for these in a particular country may be regarded, not as a symptom of any new call for them for the purposes of the arts, but as a symptom of some accident in the course of trade which has drained the country of its circulating specie. The truth of all this indeed is virtually acknowledged in those countries where a paper currency forms the chief circulating medium; and accordingly, whatever objections may be made to bank notes, from their supposed tendency to raise the prices of commodities, or from their insecurity in case of a revolution, no one, abstracting from these and similar circumstances, would at any time wish to see silver and gold, when able to supply himself with paper. But of this subject of Paper Currency, I shall afterwards have occasion to treat fully. In the meantime, I shall only observe, that its advantages are necessarily confined to countries which enjoy the blessings of a free and settled government. Were such governments generally established, paper would everywhere supply more and more, except in the smaller operations, the ordinary medium of circulation; and the precious metals would be limited in a great measure to the functions of liquidating the debts of different nations, and regulating the quantity of the circulating medium by restraining the paper currency within its due limits.

The observations which I have hitherto made on the subject of metallic money, apply equally to Silver and Gold; both of which are used, without any discrimination, in common mercantile transactions. It is necessary, however, according to the opinion of all our latest and best writers on Political Economy, that one of these metals should be considered as the standard or level, or measure of value; with respect to which, the other is to be regarded as a mere commodity; for silver and gold, in their mutual relations, like other commodities, are variable in their value, according as the quantity of either is increased or diminished. Consequently, it is not possible that they should both be the measure of value at the same place and time. This doctrine is maintained by Sir William Petty, Mr. Locke, and Mr. Harris, the last of whom speaks of silver as the measure of value in this country. On the other hand, it is one great object of Lord Liverpool’s late publication on the Coinage, [1805,] to demonstrate, that gold coin has now become in this country the measure; and that this is the idea not only of the people of Great Britain, but of all the merchants of foreign countries who have any intercourse with it, and even of those who deal the most extensively in the precious metals.

“After full consideration of this subject,” says his Lordship, “I offer as the result of my opinion,—First, That the coins of this realm, which are to be the principal measure of property and instrument of commerce, should be made of one metal only. Secondly, That in this kingdom the gold coins only have been for many years past, and are now in the practice and opinion of the people, the principal measure of property and instrument of commerce. In a country like Great Britain, so distinguished for its affluence and for the extent of its commercial connexions, the gold coins are best adapted to be the principal measure of property; in this kingdom, therefore, the gold coin is now the principal measure of property and standard coin, or, as it were, the sovereign archetype by which the weight and value of all other coins shall be regulated. It is the measure of almost all contracts and bargains, and by it, as a measure, the price of all commodities, bought and sold, is adjusted and ascertained.”

In answer to Mr. Locke, who had said “that gold is not the money of the world and measure of commerce, nor fit to be so,” his Lordship observes, “It is difficult to determine what Mr. Locke means, when he asserts that gold is not fit to be the money of the world. Gold, as a metal, is equally homogeneous, equally divisible into exact portions or parts, and not more consumable, or more subject to decay, than silver; gold has some of those qualities even in a higher degree than silver. Mr. Locke must mean, therefore, that gold is, on account of its value, not fit to be the money of the world, or the measure of property and commerce. It cannot, I think be doubted, that the metal of which this principal measure of property is made, should correspond with the wealth and commerce of the country for which it is intended. Coins should be made of metals more or less valuable in proportion to the wealth and commerce of the country in which they are to be the measure of property. In very poor countries coins have been, and still are, principally made of copper, and sometimes even of less valuable materials. In countries advanced to a certain degree of commerce and opulence, silver is the metal of which coins are principally made. In very rich countries, and especially in those where great and extensive commerce is carried on, gold is the most proper metal, of which this principal measure of property and this instrument of commerce should be made; in such countries gold will in practice become the principal measure of property, and the instrument of commerce, with the general consent of the people, not only without the support of law, but in spite almost of any law that may be enacted to the contrary, for the principal purchases and exchanges cannot then be made, with any convenience in coins of less valuable metal.”

I must own I do not fully see the force of his Lordship’s reasoning upon this subject; but Lord Liverpool seems to have reflected so much upon it, and enjoyed such opportunities of being well informed in all things relating thereto, that I am doubtful of my own opinion, wherever I am forced to differ from him. Of the advantages, indeed, which he thus enjoyed, his Lordship appears to have been fully sensible; and in one place of his book, appears to express an opinion pretty strongly of the inability of speculative men, that is, men without his practical knowledge, to oppose or criticise his opinions.

Admonished by these hints, I shall not on this occasion prosecute the discussion of this complicated subject any farther.

I cannot, however, dismiss the subject altogether, without taking notice of an idea which has been suggested by many political writers, and which is well entitled to a careful consideration, though I do not mean to offer any decided opinion with regard to it;—that the stamp of the sovereign affixed to the metals which compose the current coin, ought alone to denote the degree of purity, and that their value ought to depend totally on their weight. The only inconvenience which would attend this measure, would be the difficulty of breaking through the present plan, and the trouble which would be occasioned by the necessity of weighing. Of these, the last only is permanent in its operation. The conveniences which would attend a general adoption of this plan, would be great. It would put an end to all clipping, washing, and paring of the coins, and to all that jobbing which proceeds from a minute knowledge of the state of the currency in different countries. In truth, such a regulation, if everywhere adopted, would secure to the world at large those advantages which Holland derived from the Bank at Amsterdam.

[* ] [In two parts. The first was published in 1757, the second in 1758. The work is anonymous: but by Mr. M’Culloch it is ascribed to Joseph Harris, Assaymaster of the Mint; whereas by Watt and the Catalogues in general, the author is called William Harris, D.D.,—which last is, I presume, an error.—Mr. Stewart’s reference will be found in Part I. chap. ii.]

[† ] [Book I. chap. iv.; Vol. I. p. 33, seq., tenth edition.]

[1 ] See Turgot, [Sur la Formation et la Distribution des Richesses, sect. xlv. Œuvres, Tome V. p. 48.]

[* ] [Book I. chap. xi.; Vol. I. p. 268, seq., tenth edition.]

[* ] [Query xxiii.]

[* ] [Essays, Vol. I. Of Money.]

[† ] [Ibid.]

[1 ] [Proceedings of the Association for promoting the Discovery of the Interior Parts of Africa, &c., 1798.] Appendix, p. 86.

[* ] [(First) Considerations on Interest and Money.]

[† ] [First published in 1705.]

[‡ ] [Chap. i. p. 15, seq., Glasgow edition, 1750.]

[* ] [Ibid.]

[† ] [Ibid.]

[* ] [Mr. Stewart probably refers to the following passage:—“It is unjust to raise or allay money, because, then all contracts are paid with a lesser value than was contracted for; and as it has bad effects on home or foreign trade, so no nation practises it that has regard to justice, or understands the nature of trade and money.”—(Money, &c. Chap. iv. p. 79, seq., Edit. 1750.) And so on throughout the chapter.]

[* ] [Chap. vii. p. 188. Edit. 1750.]