John Law

“ The merchant who deals in English goods gains no more than when exchange was at the par, tho’ he sells dearer; nor the merchant who deals in Scots goods less, tho’ he sells cheaper; they have both the same profit as when exchange was at the par. [Pg 45] Scotland pays 2 per cent more for English goods, and England 2 per cent less for Scots goods: all, or a great part of the loss falls at last on the landed man in Scotland, and it is the landed man in England has all, or a great part of the benefit. ”

“ If East-India goods that sell for a 1000 lib. in England, are only worth abroad 800 lib, the duty payed at their entry being return’d, and more given as a draw-back to encourage the export, their vent abroad will be more profitable than in England.
A people may consume more of their own or foreign goods, than the value of the product, manufacture, and profits by trade; but their trade is not disadvantageous, it is their too great consumption: and the too great consumption of the product and manufacture of the country, may be as hurtful as that of foreign goods ”

“ So long as foreign trade, and expence kept equal, exchange was at the par: but when a people imported for a greater value, or had other occasions abroad, more than their export, and the expence of foreigners among them would ballance; there was a necessity of sending out the ballance in money or bullion, and the merchant or gentleman who owed, or had occasion for money abroad, to save the trouble, expence and hazard of sending it out, gave so much per cent to another, as the trouble, expence and hazard was [Pg 39] valued at. thus exchange rose above the par, and became a trade. ”

“ But numbers of people, the greatest riches of other nations, are a burden to us; the land is not improv’d, the product is not manufactur’d; the fishing and other advantages for foreign trade are neglected: and the reason generally given is, that laziness and want of honesty are natural to us.
If want of honesty and laziness were natural, they would be so to [Pg 210] mankind; or if peculiar to a people, this would be so to the Dutch rather than to us: the air of Holland is grosser which inclines to laziness ”

“ If ’tis ask’t how a Dutch merchant trades who has only 500 lib. stock? he restricts his expence so as he can afford to trade at 10 per cent profit: or money being in greater quantity in Holland, whereby it is easier borrowed, and at less use; he gets credit for more at 3 or 4 per cent, by which [Pg 26] he gains 6 or 7. and unless money be in greater quantity in Scotland, or expence retrench’d, we cannot trade so cheap as the Dutch; tho’ we have advantages for trade that they have not, and tho’ they be under disadvantages we are not lyable to. ”

“ The first branch of foreign trade, which is the export and import of goods, depends on the money. if one half of the people are imployed, and the whole product and manufacture consumed; more money, by imploying more people, will make an overplus to export: if then the goods [Pg 24] imported ballance the goods exported, a greater addition to the money will imploy yet more people, or the same people before employed to more advantage; which by making a greater, or more valuable export, will make a ballance due. ”

“ That any measures proposed for increasing the silver money or establishing a credit promising a payment of silver money are ineffectual. that silver money has fallen much from the value it had. that land is of greater value. that silver may lose the additional value it received from being used as money.
National power and wealth consists in numbers of people, and magazines of home and foreign goods. these depend on trade, and trade depends on money. so to be powerful and wealthy in proportion to other nations, we should have money in proportion with them ”

“ A nation may gain where the merchant loses, but wherever the merchant gains, the nation gains equal, and so much more, as the maintenance and wages of the people employ’d and the duty on the goods amounts to. if a ship insur’d is lost, the nation loses, and the merchant loses nothing; but in that case the insurer is the merchant, and loses equal to the nation.
As trade depends on money, so the encrease or decrease of the people depends on trade. ”

“ From whence it is evident, that land is more qualified for the use of money than silver; and preferable for that use tho’ silver were the product of Scotland: being more certain in its value, and having the qualities necessary in money, in a greater degree: with other qualities that silver has not; so more capable of being the general measure by which goods are valued, the value by which goods are exchanged, and in which contracts are taken. ”

“ What buys land, will buy every thing the land produces; and what buys the product of land, will buy [Pg 193] all other goods whether home or foreign. if wine is brought from France, the merchant designs to lay out his money on goods, at interest, or on land: the commission does not receive silver money, so he cannot have a bond from the commission, unless he give the value in paper; and many of the landed men won’t take silver for their goods or lands, having occasion for paper to pay the commission. ”

“ Considering the present state of Europe, France and Spain being masters of the mines, the other nations seem to be under a necessity of setting up another money. the only reason can be given why it has not yet been done, is, that the nature of money has not been rightly understood: or they would not have continued buying silver from Spain above its value as a metal, when they had a more valuable money of their own ”

“ Silver in bullion or money changes its value, from any change in its quantity, or in the demand for it: in either of these cases goods are said to be dearer, or cheaper; but ’tis silver or money is dearer or cheaper, being more or less valuable, and equal to a greater or lesser quantity of goods. ”

“ Silver will continue to fall in value, as it increases in quantity, the demand not increasing in proportion; for the increase does not depend on the demand. most people won’t allow themselves to think that silver is cheaper or less valuable, tho’ it appears plainly, by comparing what quantity of goods such a weight of fine silver bought 200 years ago, and what quantity of the same goods it will buy now. if a piece of wine in France is equal in value to 20 bolls [Pg 132] of oats there, that quantity of oats can never be worth more or less wine ”

“ The landed man, by having engaged his person and estate for the payment of a species, which is not in his power to perform; and having no alternative: by the law his person is at the mercy of the creditor, and his estate to be sold for so much of that species as it will yield. if 2 or 3 money’d [Pg 213] men call in their money, with a design to force their debitors to part with their estates, at what prices they please to impose: they may bring the price of land to 15 or 10 years purchase. for they would not take bonds in payment, and few or none would be in a condition to buy with money. ”

“ The seal of the office of draw-back ought to be apply’d to these goods that receive the draw-back; and these intrusted with the draw-back, should give security to pay the price of such goods, with all charges, if found insufficient.
When manufacture and trade prospers, the landed man’s rent is well payed, and increases: when they decay, his rent is ill pay’d, and decreases. a draw-back is so effectual a way to encourage and promote manufacture and trade; that it were the landed men’s interest to tax themselves, rather than a draw-back should not be given, where it is necessary. ”

“ It is objected that we are under a necessity of having goods from countries who will take none of ours. France does not allow money to be exported, nor any ship to import goods, unless French goods are exported from the same port, to the value of [Pg 197] the goods which were imported. by our law we are forbid to export money. but as I don’t think the example of nations a good answer, I shall endeavour to give a better. suppose our money is not valued abroad, and we have occasion for goods from Denmark, who takes none of ours. ”

“ Domestick and foreign trade may be carried on by barter; but not for so great a value as by money, nor with so much convenience.
Domestick trade depends on the money. a greater quantity employs more people than a lesser quantity. a limited sum can only set a number of people to work proportioned to it, and ’tis with little success laws are made, for imploying the poor or idle [Pg 21] in countries where money is scarce ”

“ This country is more capable of an extended trade than any other country of Europe, yet it is reduc’d to a very low state. trade is ruin’d; the national stock is wasted; the people forsake the country; the rents of land are unpay’d; houses in towns, and farms in the country are thrown upon the owners hands; the creditor cannot have the interest of his money to live upon ”

“ Most people think scarcity of money is only the consequence of a ballance due; but ’tis the cause as well as the consequence, and the effectual way to bring the ballance to our side, is to add to the money. ”

“ This is the same as if a merchant who had a 100 different sorts of goods, and was offered 30 per cent profit upon 90 of them; but no body offering [Pg 98] above 20 per cent profit for the other 10 sorts, should add a quarter to the measure by which he measured his goods, and sell all the 100 sorts for the same price he sold them before: as this merchant would find himself a considerable loser by this expedient, so will a nation who raises their money. ”

“ If trade can be carried on with a 100000 lib. and a ballance then due by foreigners; the same measures, and a greater quantity of money, would make the ballance greater. nor is that additional money the bank furnishes, to be supposed will be lost, if by a ballance due from trade the silver money increases: that credit may fail from an accident when money is plentiful, and would soon be recover’d; ’tis only lost by a scarcity of money. such a credit may support trade, in cases where without it trade would sink, but cannot do prejudice. ”

“ If money were given to a people in greater quantity than there was a demand for, money would fall in its value; but if only given equal to the demand, it will not fall in value.
At present perhaps 3 or 400000 lib. is more than there is a demand for; but as trade and manufacture increase, the demand for money will be greater. ”

“ The power the magistrate has to alter the money in its denomination or fineness, takes away the chief quality for which silver was made money. [Pg 115] in countries where the money is often changed in the denomination or fineness, ’tis more uncertain to contract for money, than it was in the state of barter to contract for goods. ”

“ Every thing receives a value from its use, and the value is rated, according to its quality, quantity and demand. tho’ goods of different kinds are equal in value now, yet they will change their value, from any unequal change in their quality, quantity, or demand. ”

“ Scotland is near 4 million, or one tenth less valuable than before. and any man who sells his estate, will receive a tenth less silver, or of any other foreign goods for it, than if he had sold it before the money was raised. ”

“ If a contract for paper-money could be satisfied by paying the same quantity of silver money, then that paper-money could not rise above the value of silver, and would fall with it. but as the paper money is a different species from silver, so it will not be lyable to any of the changes silver money is lyable to. ”