at prefent in Dublin: And therefore better, it may be thought, that a company fhould enjoy the benefit that paper-credit, which always will e place in every opulent kingdom. to endeavour artificially to increase La credit, can never be the intereft day trading nation; but muft lay them ar difadvantages, by increasing mo. beyond its natural proportion to laand commodities, and thereby height their price to the merchant and maaacturer.” And in this view, it must be sed, that no bank could be more adtageous than fuch a one as locked up the money it received *, and never agmented the circulating coin, as is uby returning part of its treasure incommerce. A public bank, by this pedient, might cut off much of the angs of private bankers and moneybes; and though the state bore the age of falaries to the directors and Lets of this bank, (for, according to Le preceding fuppofition, it would have →profit from its dealings), the national antage, refulting from the low price our, and the destruction of paper-crewould be a fufficient compenfation, At to mention, that fo large a fum, lyag ready at command, would be a great enience in times of public danger and res; and what part of it was used Fight be replaced at leifure, when peace dtranquillity were restored to the nation. But of this fubject of paper-credit, we all treat more largely hereafter. And all finith this effay on money, by proping and explaining two obfervations, ich may, perhaps, ferve to employ the foughts of our fpeculative politicians, Er to thefe only I all along addrefs my It is enough, that I fubmit to the rule fometimes, in this age, attached the character of a philofopher, without ng to it that which belongs to a pro

L It was a fhrewd obfervation of Anathe Scythian, who had never money in his own country, that gold fiver feemed to him of no ufe to the Perks, but to affift them in numeration arithmetic. It is indeed evident, oney is nothing but the reprefen an of labour and commodities, and es only as a method of rating or eftiing them. Where coin is in greater play; as a greater quantity of it is reThis is the cafe with the bank of Amfterdam. Fim. Quomodo quis fuos profectus in virtute

quired to reprefent the fame quantity of goods; it can have no effect, either good or bad, taking a nation within itself; ne more than it would make any alteration on a merchant's books, if instead of the Arabian method of notation, which requires few characters, he should make use of the Roman, which requires a great many. Nay, the greater quantity of money, like the Roman characters, is rather inconvenient; and requires greater trou◄ ble both to keep and trnafport it. But notwithstanding this conclufion, which must be allowed juft, it it certain, that, fince the difcovery of the mines in Ame rica, industry has increased in all the nations of Europe, except in the poffeffors of thofe mines; and this may justly be afcribed, amongst other reafons, to the increafe of gold and filver. Accordingly we find, that in every kingdom, into which money begins to flow in greater abundance than formerly, every thing takes a new face; labour and industry gain life; the merchant becomes more enterprifing, the manufacturer more diligent and skillful,“ and even the farmer follows his plough, with greater alacrity and attention. This is not eafily to be accounted for, if we confider only the influence which a greater abundance of coin has in the kingdom itself, by heightening the price of commodities, and obliging every one to pay a greater number of thefe little yellow or white pieces for every thing he purchafes. And as to foreign trade, it ap pears, that great plenty of money is ra ther difadvantageous, by raising the price of every kind of labour.

To account, then, for this phænomenon, we must confider, that though the high price of commodities be a neceffary confequence of the increase of gold and filver, yet it follows not immediately upon that increafe; but fome time is requi red before the money circulate through the whole state, and make its effects be felt on all ranks of people. At first, no alteration is perceived; by degrees, the price rifes, firft of one commodity, then of another; till the whole at last reaches a juft proportion with the new quantity of fpecie which is in the kingdom. In my opinion, it is only in this interval or intermediate fituation, betwixt the acquifition of money and rife of prices, that the increasing quantity of gold and filver is favourable to induitry. When any quan tity of money is imported into a nation, it is not at firft difperfed into many hands

but

but is confined to the coffers of a few perfons, who immediately feek to employ it to the best advantage. Here are a fet of manufacturers or merchants, we fhall fuppofe, who have received returns of gold and filver for goods which they fent to Cadiz. They are thereby enabled to employ more workmen than formerly; who never dream of demanding higher wages, but are glad of employment from fuch good paymasters. If workmen become fcarce, the manufactu⚫ rer gives higher wages; but at first requires an increafe of labour; and this is willingly fubmitted to by the artisan, who can now eat and drink better to compenfate his additional toil and fatigue. He carries his money to market, where he finds every thing at the fame price as formerly, but returns with greater quantity and of better kinds, for the use of his family. The farmer and gardener, finding, that all their commodities are taken off, apply themselves with alacrity to the raising of more; and at the fame time can afford to take better and more cloths from their tradefimen, whofe price is the fame as formerly, and their induftry only whetted by fo much new gain. It is eafy to trace the money in its progrefs through the whole commonwealth; where we fhall find, that it must first quicken the diligence of every individual, before it increase the price of labour. And that the fpecie may increase to a confiderable pitch, before it have this latter effect, appears, amongst other inftances, from the frequent operations of the French King on the money; where it was always found, that the augmenting the numerary value did not produce a proportional rife of the prices, at least for fome time. In the last year of Louis XIV. money was raifed three fevenths, but prices augmented only one Corn in France is now fold at the fame price, or for the fame number of livres, it was in 1683; though filver was then at 30 livres the mark, and is now at 50*. Not to mention the great addition of gold and filver, which may have come into that kingdom fince the former period.

Thefe facts I give upon the authority of Monf. du Tot in his Reflections politiques, an author of reputation. Though I must confefs, that the facts which he advances on other oc cafions, are often fo fufpicious as to make his authority lefs in this matter. However, the general observation, that the augmenting the

From the whole of this reafoning w may conclude, that it is of no manner confequence, with regard to the domesti happiness of a state, whether money b in a greater or lefs quantity. The goo policy of the magistrate confifts only i keeping it, if poffible, ftill increafing becaufe, by that means, he keeps alive fpirit of industry in the nation, and in creases the ftock of labour, in which con fifts all real power and riches. A nation whofe money decreases, is actually, a that time, much weaker and more mife rable, than another nation, who pof feffes no more money, but is on the in creafing hand. This will be easily ac counted for, if we confider, that the al terations in the quantity of money, either on the one fide or the other, are not immediately attended with proportionable alterations in the prices of commodities There is always an interval before matters be adjusted to their new situation and this interval is as pernicious to induftry when gold and filver are diminishing as it is advantageous when thefe metal are increafing. The workman has not the fame employment from the manufac turer and merchant; though he pays the fame price for every thing in the market. The farmer cannot difpofe of his corn and cattle; though he must pay the fame rent to his landlord. The poverty, and beggary, and floth, which must enfue, are easily foreseen. money in France does not at first proportionably augment the prices, is certainly just.

By the by, this feems to be one of the bef reasons which can be given, for a gradual and univerfal augmentation of the money, though it has been entirely overlooked in all thofe vo lumes which have been wrote on that queftion by Melon, Du Tot, and Paris de Verney. Were all our money, for instance, recoined and a penny's worth of filver taken from every fhilling, the new fhilling would probably purchas every thing that could have been bought by the old; the prices of every thing would thereby be infenfibly diminished; foreign trade enlivened; and domeftic industry, by the circulation of a greater number of pounds and fillings, would receive fome increafe and encouragement. In executing fuch a project, it would be better to make the new fhilling pafs for 24 half-pence, in order to preferve the illefion, and make it be taken for the fame. And as a recoinage of our filver begins to be requifite, by the continual wearing of our fhillings and fixpences, it is doubtful, whether we ought to imitare the es. ample in King William's reign, when the clipt money was raised to the old itandard.

IL The

II. The fecond obfervation which I proposed to make with regard to money, may be explained after the following manner. There are some kingdoms, and many provinces in Europe, (and all of them were once in the fame condition), stere money is fo scarce, that the landlard can get none at all from his tenants; but is obliged to take his rent in kind, and either to confume it himself, or. tranfport it to places where he may find a market. In thofe countries, the prince can levy few or no taxes, but in the fame manner: And as he will receive very fmall benefit from impofitions so paid, it is evident, that fuch a kingdom has very little force even at home, and cannot maintain fleets and armies to the fame extent, as if every part of it abounded in gold and filver. There is furely a greater disproportion betwixt the force of Germany at present and what it was three centuries ago, than there is in its industry, people, and manufactures. The Auftrian dominions in the empire are in general well peopled and well cultivated, and are of great extent; but have not a proportionable weight in the balance of Europe; proceeding, as is commonly fuppofed, from the fcarcity of money. How do all these facts agree with that principle of reafon, that the quantity of gold and filver is in itself altogether indifferent? According to that principle, where-ever a fovereign has numbers of subjects, and thefe have plenty of commodities, he fhould of course be great and powerful, and they rich and happy, independent of the greater or lefs abundance of the precious metals. Thefe admit of divifions and fubdivifions to a great extent; and where they would become fo fmall as to be in danger of being loft, it is easy to mix them with a bafer metal, as is practifed in fome Countries of Europe; and by that means raife them to a bulk more fenfible and convenient. They ftill ferve the fame purposes of exchange, whatever their sumber may be, or whatever colour they may be fupposed to have.

To thefe difficulties I answer, that the effect here fuppofed to flow om fcarcity of money, really arifes from the manners and cuftoms of the inhabitants; and that we mistake, as is too ufual, a collateral • The Italians gave to the Emperor Maximilian, the nick-name of Pocchi-danari. None of the enterprises of that prince ever fucceeded, for want of money. VOL. XXIV.

effect for a caufe. The contradiction is only apparent; but it requires fome thought and reflection to discover the principles, by, which we can reconcile reafon to experience.

It feems a maxim almost self-evident, That the prices of every thing depend on the proportion betwixt commodities and money, and that any confiderable alteration on either of thefe has the fame effect, either of heightening or lowering the prices. Increase the commodities, they become cheaper; increase the money, they rife in their value. As, on the other hand, a diminution of the former and that of the latter have contrary tendencies..

It is alfo evident, that the prices do not fo much depend on the absolute quantity of commodities and that of money, which are in a nation, as on that of the commodities, which come or may come to market, and of the money which circulates. If the coin be locked up in chefts, it is the fame thing with regard to prices, as if it were annihilated: if the commodities be hoarded in granaries, a like effect follows. As the mo ney and commodities, in thefe cafes, never meet, they cannot affect each other. Were we, at any time, to form conjectures concerning the price of provifions, the corn which the farmer must referve for the maintenance of himself and family, ought never to enter into the etti.. mation. It is only the overplus, compared to the demand, that determines the value.

To apply thefe principles, we must confider, that in the first and more uncultivated ages of any state, ere fancy has confounded her wants with thofe of nature, men, contented with the productions of their own fields, or with those rude preparations which they themselves can work upon them, have little occafion for exchange, or at least for money, which, by agreement, is the common meafure of exchange. The wool of the farmer's own flock, fpun in his own family, and wrought by a neighbouring weaver, who receives his payment in corn or wool, fuffices for furniture and cloathing. The carpenter, the fmith, the malon, the tailor, are retained by wages of a like nature; and the landlord himself, dwelling in the neighbourhood, is contented to receive his rent in the commo dities raifed by the farmer. The greateft part of thefe he confumes at home, in F

rustic

ruftic hofpitality: The reft, perhaps, he difposes of for money to the neighbouring town, whence he draws the few materials of his expence and luxury.

But after men begin to refine on all thefe enjoyments, and live not always at home, nor are contented with what can be raised in their neighbourhood, there is more exchange and commerce of all kinds, and more money enters into that exchange. The tradesmen will not be paid in corn; because they want fomething more than barely to eat. The farmer goes beyond his own parifh for the commodities he purchases, and cannot always carry his commodities to the merchant who fupplies him. The landJord lives in the capital, or in a foreign country; and demands his rent in gold and filver, which can easily be transported to him. Great undertakers, and manufacturers, and merchants arife in every commodity; and thefe can conveniently deal in nothing but in fpecie. And confequently, in this fituation of fociety, the coin enters into many more contracts, and by that means is much more employ ed than in the former.

The neceffary effect is, that, provided the money does not increafe in the nation, every thing must become much cheaper in times of industry and refinement, than in rude, uncultivated ages. It is the proportion betwixt the circulating money, and the commodities in the market, which determines the prices. Goods that are confumed at home, or exchanged with other goods in the neighbourhood, never come to market; they affect not in the leaft the current fpecie; with regard to it they are as if totally annihilated; and confequently this method of using them finks the proportion on the fide of the commodities, and in creases the prices. But after money enters into all contracts and fales, and is eyery where the meature of exchange, the fame national cafh has a much greater talk to perform; all commodities are then in the market; the sphere of circulation is enlarged; it is the fame cafe as if that individual fum were to ferve a larger kingdom; and therefore, the proportion being here leffened on the fide of the money, every thing muft become cheaper, and the prices gradually fall.

By the most exact computations that have been formed all over Europe, after making allowance for the alteration in the numerary value or the denomination, it is found, that the prices of all things

have only rifen three, or at most four times, fince the difcovery of the Weft Indies. But will any one affert, that there is no more than four times the coin in Europe, that was in the fifteenth century, and the centuries preceding it? The Spaniards and Portuguese from their mines, the English, French, and Dutch, by their African trade, and by their interlopers in the Weft Indies, bring home about fix millions a-year, of which not above a third part goes to the East Indies. This fum alone in ten years would probably double the ancient ftock of money in Europe. And no other fatisfactory reafon can be given, hy all prices have not rifen to a much more exorbitant height, except that derived from a change of cuftoms and manners. Befides that more commodities are produced by additional induftry, the fame commodities come more to market, after men depart from their ancient fimplicity of manners. And though this increase has not been equal to that of money, it has, however, been confiderable, and has preferved the proportion betwixt coin and commodities nearer the ancient standard.

Were the question proposed, Which of these methods of living in the people, the fimple or the refined, is the most advantageous to the state or public? I fhould, without much fcruple, prefer the latter, in a view to politics at leaft; and fhould produce this as an additional reafon for the encouragement of trade and manufactures.

When men live in the ancient fimple manner, and fupply all their neceflities from domestic industry or from the neighbourhood, the sovereign can levy no taxes in money from a confiderable part of his fubjects; and if he will impofe on them any burdens, he must take his payment in commodities, with which alone they abound; a method attended with fuch great and obvious inconveniencies, that they need not here be infisted on. All the money he can pretend to raise, must be from his principal cities, where alone it circulates; and thele, it is evident, cannot afford him much as the whole ftate could, did gold and filver circulate through the whole.. But befides this obvious diminution of the revenue, there is alfo another cause of the poverty of the public in fuch a fituation. Not only the fovereign receives lefs money, but the fame money goes not fo far as in times of industry and general

commerce.

commerce. Every thing is dearer, where the gold and filver are fuppofed equal;

and that because fewer commodities come to market, and the whole coin bears at higher proportion to what is to be purchafed by it; whence alone the prices of every thing are fixed and determined. Here then we may learn the fallacy of the remark, often to be met with in hiftorians, and even in common converfation, that any particular ftate is weak, though fertile, populous, and well cultivated, merely because it wants money. It appears, that the want of money can never jure any state within itfelf: for men and commodities are the real ftrength of any community. It is the fimple manner of living which here hurts the public, by confining the gold and filver to few hands, and preventing its univerfal diffusion and circulation. On the contrary, industry and refinements of all kinds incorporate it with the whole state, however fmall its quantity may be: They digeft it into every vein, fo to fpeak; and make it enter into every transaction and contract. No hand is entirely empty of it. And as the prices of every thing fall by that means, the fovereign has a double advantage He may draw money by his taxes from every part of the ftate; and what he receives, goes farther in every purchase and payment.

We may infer, from a comparison of prices, that money is not more plentiful in China, than it was in Europe three centuries ago: But what immenfe power is that empire poffeffed of, if we may judge by the civil and military lift mainained by it? Polybius tells us, that provifions were fo cheap in Italy during his time, that in fome places the ftated club in the inns was a femis a-head, little more than a farthing: Yet the Roman power had even then fubdued the whole known world. About a century before that period, the Carthaginian ambaflador faid, by way of raillery, that no people lived more fociably amongst themselves than the Romans; for that in every entertainment, which, as foreign ministers, they received, they still obferved the fame plate at every tablet. The abfolute quantity of the precious metals is a matter of great indifference. There are only two circumstances of any importance, viz. their gradually increafe, and their thorough concoction and circulation through the fate; and the influence of both thefe circumstances has been here explained.

* Lib. 2. cap. 15. † Plin. lib. 33 cap it.

Confiderations relating to the late order of the two banks aftablished at Edinburgh, by which they have recalled one fourth of their cafb-accounts. Edinburgh, Martin & Wotherspoon.

Some weeks ago [54], the two banks

of Scotland at Edinburgh fent a circular letter to the feveral mechants and other gentlemen who had cath-accounts in the books of either bank, acquainting them, that from henceforth they were to confider their caflr-accounts as reduced one fourth; and if they had drawn money beyond three fourths of their former account, that they must immediately pay it, without any further notice.

It may be proper to confider the motives of this order, and the effects it may produce; and, at the fame time, to inquire, whether or not it be poffible to invent any remedy against the danger which may attend future proceedings of this fort.

This is an inquiry of the utmost confequence to the trade and profperity of Scotland, and it is a caufe in which every man, from the lowest to the highest, is interested. It is an evil, however, which, we hope, may admit of a speedy and effectual cure.

It will be proper to premife, for the information of thofe who may not have had occafion to bestow much thought upon this fubject, That a bank is a fociety or company of men, whofe credit is fo eftablished, that their notes or bills have a currency, and fully fupply the place of money in common tranfactions.

:

Agreeable to the strictest meaning of a bank, thole who iffue the notes, ought to have money equal to the full value of each note, lying ready in the bank and when that is the cale, the paper is entirely equivalent to the money, with the advantage of being much more easily transported and counted over.

The bank of Amfterdam is upon this footing. No notes are iffued by that bank, except when money is paid in; and then an atteftation is given, that fuch a fum is lodged in the bank. The money is understood to be there kept: and this is the plan of the inftitution; though there may be reafon to fuspect, that much of it has been again fecretly ifiued out, and applied to the purposes of government but however this may be, it is certain, that every perfon is willing to take the attestation of the bank in F2 payment