Front Page Titles (by Subject) Of Mony, Credit and Interest. - A Discourse of Trade
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Of Mony, Credit and Interest. - Nicholas Barbon, A Discourse of Trade 
A Discourse of Trade. A Reprint of Economic Tracts, ed. Jacob H. Hollander (Baltimore: The Lord Baltimore Press, 1905).
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Of Mony, Credit and Interest.
MOny is a Value made by a Law; And the Difference of its Value is known by the Stamp, and Size of the Piece. |21|*
One Use of MONY is, It is the Measure of Value, By which the Value of all other things are reckoned; as when the Value of any thing is expressed, its said, It's worth so many shillings, or so many Pounds: Another Use of Mony is; It is a Change or Pawn for the Value of all other Things: For this Reason, the Value of Mony must be made certain by Law, or else it could not be made a certain Measure, nor an Exchange for the Value of all things.
It is not absolutely necessary, Mony should be made of Gold or Silver; for having its sole Value from the Law, it is not Material upon what Metal the Stamp be set. Mony hath the same Value, and performs the same Uses, if it be made of Brass, Copper, Tin, or any thing else. The Brass Mony of Spain, the Copper Mony of Sweeden, and Tin |22| Farthings of England, have the same Value in Exchange, according to the Rate they are set at and perform the same Uses, to Cast up the Value of things, as the Gold and Silver Mony does; Six Pence in Farthings will buy the same thing as Six Pence in Silver; and the Value of a thing is well understood by saying, It is worth Eight Farthings, as that it is worth Two Pence: Gold and Silver, as well as Brass, Copper and Tin Mony, change their Value in those Countries, where the Law has no Force, and yield no more than the Price of the Metal that bears the STAMP: Therefore, all Foreign Coins go by Weight, and are of no certain Value, but rise and fall with the Price of the Metal. Pieces of Eight, yield sometimes 4 sh. 6 d. 4 sh. 7 d. and 4 sh. 8 d. as the Value of Silver is higher or lower: |23| And so doth Dollars, and all Forreign Coin, change their Value; and were it not for the Law that fixeth the Value, an English Crown Piece would now yield Five Shillings and Two Pence, for so much is the Value of it, if it were melted, or in a Foreign Country. But the chief Advantage of making Mony of Silver and Gold, is to prevent Counterfeiting; for Silver and Gold, being Metals of great Value, those who design Profit by Counterfeiting the Coin, must Counterfeit the Metals, as well as the Stamp, which is more difficult than the Stamp. There's another Benefit to the Merchant, by such Mony; for Gold and Silver being Commodities for other Uses, than to make Mony; to make Plate, Gold & Silver Lace, Silks, &c. And Coins of little Bulk, in respect of their Value, the Mer|24|chant transmits such Mony from Place to Place, in Specie, according as he finds his Advantage, by the Rise of Bulloin; though this may be a Conveniency to the Merchant, it often proves a Prejudice to the State, by making Mony scarce: Therefore, there are Laws in most Countries, that Prohibit the Transportation of Mony, yet it cannot be prevented; for in Spain, though it be Capital, yet in Two Months after the Gallions are come home, there is scarce any Silver Mony to be seen in the Country.
Some Men have so great an Esteem for Gold and Silver, that they believe they have an intrinsick Value in themselves, and cast up the value of every thing by them: The Reason of the Mistake, is, Because Mony being made of Gold and Silver, they do not distinguish betwixt Mony, |25| and Gold and Silver. Mony hath a certain Value, because of the Law; but the Value of Gold and Silver are uncertain, & varies their Price, as much as Copper, Lead, or other Metals: And in the Places where they are dug, considering the smalness of their Veins, with the Charges of getting them, they do not yield much more Profit than other Minerals, nor pay the Miners better Wages for digging them.
And were it not for the Waste, made of Gold and Silver, by Plate, Lace, Silks, and Guilding, and the Custom of the Eastern Princes, to lay them up and bury them, that Half which is dug in the West, is buried in the East. The great Quantities dug out of the Earth, since the Discovery of the West-Indies, would have so much lessened the Value, that by this time, they would not have |26| much exceeded the Value of Tin, or Copper: Therefore, How greatly would those Gentlemen be disappointed, that are searching after the Philosopher's Stone, if they should at last happen to find it? For, if they should make but so great a Quantity of Gold and Silver, as they, and their Predecessors have spent in search after it, it would so alter, and bring down the Price of those Metals, that it might be a Question, whether they would get so much Over-plus by it, as would pay for the Metal they change into Gold and Silver. It is only the Scarcity that keeps up the Value, and not any Intrinsick Vertue or Quality in the Metals; For if the Vertue were to be considered, the Affrican that gives Gold for Knives, and Things made of Iron, would have the Odds in the Exchange; Iron being a much more Useful |27| Metal, than either Gold or Silver. To Conclude this Objection, Nothing in it self hath a certain Value; One thing is as much worth as another: And it is time, and place, that give a difference to the Value of all things.
Credit is a Value raised by Opinion, it buys Goods as Mony doe's; and in all Trading Citys, there's more Wares sold upon Credit, then for present Mony.
There are Two Sorts of Credit; the one, is Grounded upon the Ability of the Buyer; the other, upon the Honesty: The first is called a Good Man, which implys an Able Man; he generally buys upon short Time; to pay in a Month, which is accounted as ready Mony, and the Price is made accordingly. The other is accounted an Honest Man; He may be poor; he Generally |28| buys for three and Six Months or longer, so as to pay the Merchant by the Return of his own Goods; and therefore, the Seller relys more upon the Honesty of the Buyer, than his Ability: Most of the Retail Traders buy upon this Sort of Credit, and are usually Trusted for more than double they are worth.
In Citys of great Trade, there are publick Banks of Credit, as at Amsterdam and Venice: They are of great Advantage to Trade, for they make Payments easie, by preventing the Continual Trouble of telling over Mony, and cause a great Dispatch in Business: Publick Banks are of so great a Concern in Trade, that the Merchants of London, for want of such a Bank, have been forced to Carry their Cash to GoldSmiths, and have thereby Raised such a Credit upon Gold|29|smiths Notes, that they pass in Payments from one to another like Notes upon the Bank; And although by this way of Credit, there hath been very Vast Sums of Mony lost, not less then too Millions within five and Twenty Years, yet the Dispatch and Ease in Trade is so great by such Notes, that the Credit is still in some Measure kept up.
Therefore, it is much to be wondered at, that since the City of London is the Largest, Richest, and Chiefest City in the World, for Trade; Since there is so much Ease, Dispatch, and Safety in a Publick Bank; and since such vast Losses has Happened for want of it; That the Merchant and Traders of London have not long before this time Addressed themselves, to the Government, for the Establishing of a Publick Bank.
The Common Objection, that |30| a Publick Bank cannot be safe in a Monarchy, is not worth the Answering; As if Princes were not Governed by the same Rules of Policy, as States are, To do all things for the Well-fair of the Subjects, wherein their own Interest is concerned.
It is True, in a Government wholly Dispotical, whose Support is altogether in it's Millitary Forces; where Trade hath no Concern in the Affaires of the State; Brings no Revenue, There might be a Jealousy, That such a Bank might tempt a Prince to Seize it; when by doing it, he doth not Prejudice the Affairs of his Government: But in England, where the Government is not Dispotical; But the People Free; and have as great a Share in the Soveraign Legislative Power, as the Subjects of any States have, or ever had; where the Customs |31| makes great Figures, in the Kings Exchequer; where Ships are the Bullworks of the Kingdom; and where the Flourish of Trade is as much the Interest of the King as of the People, There can be no such Cause of Fear: For, What Objections can any Man make, that his Mony in the Bank, may not be as well secured by a Law, as his Property is? Or; Why he should be more afraid of Losing his Mony, than his Land or Goods?
Interest is the Rent of Stock, and is the same as the Rent of Land: The First, is the Rent of the Wrought or Artificial Stock; the Latter, of the Unwrought, or Natural Stock.
Interest is commonly reckoned for Mony; because the Mony Borrowed at Interest, is to be repayed in Mony; but this is a mistake; For the Interest is |32| paid for Stock: for the Mony borrowed, is laid out to buy Goods, or pay for them before bought: No Man takes up Mony at Interest, to lay it by him, and lose the Interest of it.
One use of Interest: It is the Rule by which the Trader makes up the Account of Profit and Loss; The Merchant expects by Dealing, to get more then Interest by his Goods; because of bad Debts, and other Hazards which he runs; and therefore, reckons all he gets above Interest, is Gain; all under, Loss; but if no more than Interest, neither Profit, nor Loss.
Another use of Interest, is, It is the measure of the Value of the Rent of Land; it sets the Price in Buying and Selling of Land: For, by adding three Years Interest more than is in |33| the Principle, Makes the usual Value of the Land of the Country; The difference of three Year is allowed; Because Land is more certain than Mony or Stock. Thus in Holland, where Mony is at three per. Cent. by reckoning how many times three is in a Hundred Pounds, which is Thirty Three; and Adding three Years more; makes Thirty Six Years Purchase; the Value of the Land in Holland: And by the same Rule, interest being at six per Cent. in England, Land is worth but Twenty Years Purchase; and in Ireland, but Thirteen; Interest being there at Ten per Cent: so that, according to the Rate of Interest, is that Value of the Land in the Country.
Therefore, Interest in all Countrys is setled by a Law, to make it certain; or else it could not |34| be a Rule for the Merchant to make up his Account, nor the Gentleman, to Sell his Land By.
[*]Double vertical bars, ||, denote page breaks in the original 1690 Barbon text, with page numbers when available (e.g., |2|). The bars and numbers were inserted by Hollander and are preserved in this Econlib edition.—Econlib Ed.