The Online Library of Liberty

A project of Liberty Fund, Inc.

• Notice.
• Mr M C Culloch’s Publications.
• Treaties and Essays On Subjects Connected With Economical Policy; With Biographical Sketches of Quesnay, Adam Smith, and Ricardo
• A Treatise On Money. 1
• Sect. I.—: Circumstances Which Led to the Use of Money. Principal Properties Which Every Commodity Used As Such Ought to Possess. Not a Sign Or a Measure of Value, But a Real Equivalent.
• Sect. II.—: Circumstances Which Regulate the Exchangeable Value of Money.
• Sect. III.—: A Moderate Seignorage On Coined Money Advantageous. Principles Which Should Regulate Its Amount. 1
• Sect. IV.—: Expense of a Currency Consisting of the Precious Metals.
• Sect. V.—: Paper Money. Principle On Which Its Value Is Maintained.
• Sect. VI.—: Whether Gold Or Silver Should Be Adopted As the Standard of the Currency, Or Whether It Should Consist of Both.
• Sect. VII.—: Standard of Money. Degradation of the Standard In Rome, France, Great Britain, and Other Countries. Effects of This Degradation.
• Tables Relative to the Money of the United Kingdom.
• Treatise On the Circumstances Which Determine the Course of Exchange.
• Inland Exchange.
• Foreign Exchange.
• Sect. I.—: Nominal Exchange.
• Sect. II.—: Real Exchange.
• Sect. III.—: Computed Exchange.
• History and Influence of Bills of Exchange.
• Essay On Interest and Usury Laws.
• A Treatise On the Letting and Occupancy of Land.
• 1.: Money Rents.
• 2.: Proportional Rents.
• 3.: Produce Rents.
• 4.: Service Rents.
• An Essay Showing the Erroneousness of the Prevailing Opinions In Regard to Absenteeism.
• Sketch of the History of Commerce, to the Sixteenth Century.
• Sect. I.—: PhŒnician Commerce.
• Sect. II.—: Grecian Commerce.
• Sect. III.—: Roman Commerce.
• Sect. IV.—: Italian Commerce In the Middle Ages.
• Sect. V.—: Vasco De Gama and Columbus.
• An Essay On the Rise, Progress, and Decline of Commerce In Holland.
• An Essay On the Rise, Progress, and Decline of the Hanseatic League.
• Essay On the Origin of the Compass.
• Sketch of the Progress of Maritime Law.
• An Essay On the Colonial System of the Ancients.
• Sketch of the Life and Writings of Francis Quesnay.
• Sketch of the Life and Writings of Adam Smith, Ll.d.
• Sketch of the Life and Writings of David Ricardo, Esq., M.P.

1.

Money Rents.

With respect to the first of these methods, or the payment of fixed sums of money, it would be one of the least exceptionable, were money always of the same value. This, however, is not the case; and all variations in its value necessarily affect, to the same extent, the value of the fixed payments to be made in it. Supposing the rent of a farm to be £100 a year, a rise in the value of money to the extent, say of 10 or 15 per cent., would occasion a corresponding rise in its amount; for, though the number of pounds sterling, to be paid as rent, continues the same, the value or cost of these pounds is increased. The converse of this takes place when money falls in value. In this case the rent is proportionally reduced, the tenant being benefited at the expense of the landlord, whereas, in the other, the landlord is benefited at the expense of the tenant. At present these considerations are entitled to more than ordinary weight; for we are now, most probably, on the eve of a very considerable alteration in the value of the precious metals. In leases for short periods, or for three, five, or even seven years, it may not, perhaps, be worth while to lay much stress on any change in the value of bullion which may be likely to take place in the interval. But in leases for nineteen or twenty-one years, or any greater period, it would be most unwise, under existing circumstances, to stipulate for money rents without providing some means of correcting any variation that may take place, during their currency, in the real value of money.

The discovery of the American mines, in the early part of the sixteenth century, sunk the value of the precious metals (and, consequently, of all payments that were fixed and rated in money), in the seventeenth century, to about a fourth part of their value at the former epoch. Many suppose that a similar reduction, in the value of these metals, has already commenced. But it is useless to form any à priori conjectures in regard to the ultimate influence of the late extraordinary discoveries of gold in California and Australia. Much must depend, not only on the permanence of the new supplies, but also on the progress of civilisation, and the demand for bullion. There is, however, quite enough in the existing state of things to put all prudent parties on their guard, and to make them provide, whether in the letting of farms for considerable periods, or in the purchase of perpetual annuities, or of those terminable at distant dates, against the loss which they may otherwise sustain from a fall in the value of money. In so far as respects rents, this desirable object may be easily effected, as will be afterwards seen, by rating them in fixed quantities of produce.

Besides the fluctuations incident to the value of the precious metals, money rents may be affected by changes in the weight and purity of coins, and in the value of such paper money as is made legal tender. Our experience, as well as that of most other countries, has shown that these are not mere speculative contingencies. The heavy depreciation of paper money between 1808 and 1815, occasioned a corresponding diminution in the rent of the farms let previously to 1808; while, on the other hand, the rise which took place in the value of paper in 1815, and subsequently, added proportionally to the rents of the farms which had been let during the depreciation.

It is not, perhaps, very likely that we shall witness a repetition of changes in the value of paper money similar to those experienced between the Restriction Act in 1797 and the restoration of specie payments in 1821. But there is no real security that such may not be the case; and as these changes, when they do occur, are injurious to the landlord or tenant, or both, it is for the interest of all parties to provide, in as far as possible, against their recurrence.