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government, or at least on public opi. turies, at which period the shillings
nion; and that these can raise its ex and sixpences passed without difficul.
changeable value as currency above ty or scruple for their nominal value,
the exchangeable value which the ma though their real value was very much
terials of which it is formed possess as depreciated by their lightness.
commodities. This position is abso Here, then, on this point, we have
lutely denied by others : and both par a fresh instance of contrariety of opi.
ties, as is usual in all practical ques nion among Political Economists; and
tions on Political Economy, appeal to each party appealing to facts in sup-
facts and exp ence. “ The money of port of his peculiar doctrine. There
Lacedæmon," observes Say," is a proof must be some fundamental error some-
of the position, that public authority where in the discussion of the subject
is incompetent of itself to give curren of the theory of money; the two broad
cy to its money. The laws of Lycur- and directly opposite positions, that

directed the money to be made of public authority can give currency to
iron, purposely to prevent its being its money,—and that it cannot, cannot
easily hoarded or transferred in large each rest on facts: one or other must
quantities; but they were imperative, be erroneous, or there must be some
because they went to defeat these, the modifications in the positions them-
principal purposes of money. Yet no selves, and some peculiar and opera-
legislator was ever more rigidly obeyed tive circumstances connected with the
than Lycurgus.” The very frequent facts, which ought to be taken into ac-
and repeated attempts also made by count, but which are not.
the most despotic sovereigns during But can a nation itself invest with
those periods of history, and in those the character and uses of money any
countries in which the subjects were article which does not possess real and
most disposed to implicit obedience, exchangeable value as a commodity ?
and when the uses of money were com This question seems to require an an-
paratively few, are appealed to in sup swer in the affirmative, from the evi-
port of the position, that public autho dence of the facts already stated ; for,
rity is incompetent of itself to give by them, we perceive, that silver coin,
currency to its money.

worn down twenty or thirty per cent
Those who support the contrary in value, still retained all its powers
doctrine, though they modify it in as currency in the interchange of
some degree, and thus think they re goods. This fact, however, is repre-
move the objections deduced from the sented as not bearing so directly and
facts we have just stated, still uphold powerfully on the question, as to de-
in reality the doctrine—that the value cide it in the affirmative. Those who
of money does not depend exclusively embrace the opposite opinion, contend
on the value of the commodity of that silver coin being only used as a
which it is formed, but that it may be substitute for gold, where the pay-
fixed at first, or raised above that value ments are small, its diminution of
by the influence of government, or of weight, while its exchangeable power
public opinion, or of both combined. remains the same, does not prove that
They allege, that government can give custoin or consent can invest money
currency to articles, as money, above with more value than the market-
their real value, not from the exercise price of the article out of which it is
of despotic authority, but from ano formed, will warrant and support. If,
ther cause. The power of a govern- they add, gold coin, much worn, still
ment to select arbitrarily the material were received for its original value,
of its money, depends principally upon this would be a much more applicable
the frequency and amount of its deal and decisive fact. But, they appeal to
ings with individuals. On this prin- experience as witnessing, that when-
ciple, they account for the currency of ever and wherever gold coin has been
inconvertible paper, and of what were much worn, it has ceased to retain its
called tokens, that is, silver stampt by nominal value. To this, a rejoinder
government, as of a value considera is made, that as even gold coin is de-
bly above the market value of the me clared by law legally current, below
tal of which it was formed. They its full weight, and as it has often,
likewise appeal to the silver currency of and for a length of time, passed by
this country at the end of the eighteenth common consent for its full value, ale
and beginning of the nineteenth cen though weighing less than the law de-

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clares it to be legally current at, these cumstance of its either supplanting a
facts prove the general proposition, portion of labour, that would other-
that the power of the government, and wise be performed by the hand of
the consent of the people, can invest man, or of its executing a portion of
money with a greater value than the labour, beyond the reach of the pow-
metal of which it is composed bears in ers of man to accomplish.
the market.

Say observes, that money is emThus we perceive that the farther ployed as a mere intermediate object we enter into Political Economy, and of exchange between an object in posthe more, we extend our views of it, session, and the object of desire ; it is as it is taught by the most celebrated not desired as an object of food of writers on the subject, the more nu household use or of personal covermerous and impressive are the proofs ing, but for the purpose of re-sale, as and instances of diversity of opinion, it were, and re-exchange for some ob- each opinion supported by plausi- ject of utility, after having been orible and ingenious arguments, and ap ginally received in exchange for one pealing to incontestable and apparent such already. Money is, therefore, ly decisive facts. But the subject of not an object of consumption; it passes money will supply us with still more through the hands without sensible proofs of this diversity of opinion. diminution or injury, and may per.

The doctrine of Hume is, that mo form its office equally well, whether ney is nothing but the representative its material be gold or silver, leather of labour and

commodities, and serves or paper: only as a method of rating or estima Ricardo, and some other writers, ting them; and he quotes what he maintain, that the charges of obtain calls the shrewd observation of Ana. ing the metal, wholly determine its charsis, the Scythian, who had never price or relative value, in exchange seen money in his own country, that for all other commodities. gold and silver seemed to him of no Is money then to be regarded mereuse to the Greeks, but to assist them ly as counters, to rate and numerate in numeration and arithmetic. He commodities, and can it have no effect, farther observes, money is not, pro either good or bad, as Hume mainperly speaking, one of the objects of tains, where it is in greater plenty, commerce, but only the instrument any more than as it would make an which men have agreed upon to faci. alteration in a merchant's books, if, litate the exchange of one commodity instead of the Arabian method of nofor another. It is not one of the tation, which requires few characwheels of trade; it is the oil which ters, he should make use of the Rorenders the motion of the wheels more man, which requires a great many? smooth and easy ! An Italian Political Hume allows this conclusion to be Economist, of considerable repute, de- just, and indeed, it follows from the fines money, “a commodity-a me doctrine, that money serves only to tal, whose value is represented by the rate and enumerate commodities; and commodity for which it is exchanged; yet he adds, it is certain that, since the universal merchandize, that is, the discovery of the mines iu Amerithe merchandize which, on account of ca, industry has increased in all the the smallness of its volume, (which nations of Europe, except in the posrenders its transport easy, and on ac sessors of those mines; and this, he count of its divisibility and incorrup says, may be justly ascribed, amongst tibility,) is universally acceptable, other reasons, to the increase of gold and taken in exchange for any other and silver. He then explains how merchandize."

this consequence follows; but it is “In all civilized nations," says Adam not our present purpose to enter on, Smith,“money has become the univer or examine his explanation. The resal instrument of commerce, by the mark, however, forces itself upon us, intervention of which goods of all when contrasting his doctrine with his kinds are bought and sold, or exchan- facts--that Hume's love of paradox ged for one another."

which, to his credit, he seldom perLord Lauderdale considers money mitted to influence his Essays on Por as part of capital, and, consequently, litical Economy-here breaks out. as agreeing with capital in being use It is singular, that those who justly ful or profitable to man, from the cir- object to his definition of money, and

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regard it as something more than a is destined for the maintenance of inmethod for rating and estimating com dustry.” modities, should controvert his posi According to his system, gold and tion, that an increase of money in silver are quite useless to the forma creases industry.

tion, progress, and increase of wealth; The question, whether an increase their plenty or scarcity is indifferent of money is beneficial, injurious, or in themselves, and destitute of any indifferent to the progress of social influence on the wealth of nations. wealth, is united with another ques. The increase of the quantity of gold tion, on which also there are different and silver in Europe, and the increase opinions-whether there be a known of its manufactures and agriculture, and fixed proposition between money he adds, are two events which, though and the commodities which it is to they have happened nearly about the circulate.

same times, yet have arisen from very Sir W. Petty and Davenant thought different causes, and scarcely have any that England required a quantity of natural connexion with one another. currency equal to half the rent of her How is this opinion reconcilable with lands, the fourth of the rent of houses, what he states respecting the Scotch the weekly expenses of the people, and banks?-—by means of the cash accounts, the value of the fourth of all the com which merchants keep with them, he modities exported. Cantillon was of asserts, and asserts truly, that every opinion, that the money which circu merchant can, without imprudence, lates in Europe, is generally equal to carry on a greater trade than he other at least half the produce of the soil, wise could do ; and yet these cash acand, at the utmost, to two-thirds of counts enable the merchant to extend that produce. Montesquieu thinks his business solely by increasing the that the quantity of money is pretty circulating medium of a country. His nearly indifferent, because the rising opinions on this subject are therefore and sinking of its value proportionates contradictory. it to all wants. On this branch of the The doctrine, that an increased cirquestion, it is obvious, and it is surpri. culating medium does not increase insing it did not seem so to the authors dustry, has lately been supported by just referred to, that all is vague con an argument, at once at variance with jecture, and that it is a question of no fact, and inconsistent with itself. If practical or theoretical importance. an increase of money, it is alleged, Yet, how often in treatises on Politi does not increase price, it cannot incal Economy, are the thoughts of the crease industry and produce; if it reader diverted from what is attain, does increase price, the value of moable and important to such trifling in- ney must by this very operation be divestigations.

minished, and an increase of price can Smith perceived the vainness of be no motive to increased industry and such an inquiry; he says, “ It is per- produce. We have put this argument haps impossible to determine the pro in all its force of apparently strict and portion which the money of any coun logical reasoning; as it is, if we are try bears to the whole value of the an not much mistaken, a most illustranual produce circulated by means of tive instance of the manner in which it.” He adds, however, not very con questions on Political Economy are sistently with himself in other places, treated, even when close reasoning is “ that the circulating money must al

aimed at. * ways bear a very considerable

propor It is natural to suppose, that, if tion to that part of the produce, which increased industry does not flow

• See Mill's Elements of Political Economy, Chap. III. Sect 11. The former part of the reply to Mr Hume's doctrine is, if possible, still less deserving of the name of a demonstration, which, however, Mr Mill expressly calls it. “ This doctrine,” he says, a implies a want of clear ideas respecting production. The agents of production are the commodities themselves, not the price of them. They are the food of the labourer, the tools and machinery with which he works, and the raw materials which he works upon. These are not increased by the increase of money ; how then can there be more production ? This is a demonstration that the conclusion is erroneous at which Hume has ar. rived."

Here is assertion certainly, but no demonstration and here is also displayed an igno.

from increased money, when there sum, or its command in the market, is is no increase in price, it would flow no greater than that of the latter sum. from it when there was an increase Here again is a fallacy and a variof price, since this branch of the ar ance with fact. Increased demand progument, in fact, amounts to this, duces increased price ; increased price that the effect cannot exist where the is, in fact, diminution in the value of cause is absent. The two branches of money ; but, at first, the increased the argument, therefore, cannot co price, and diminution in the value of exist—they must destroy each other. inoney, have reference solely to the If increased industry is not produced article for which there is an increased by increased money, when increased demand ; and he who has this article money does not give rise to increased to sell, getting more for it, at a time price, it is natural and fair to con when money bears its former value clude, that, when it does give rise to with respect to other articles, is thereit, increased industry will follow. by enabled to purchase more of them,

But a little reflection, as well as an or, in other words, is richer. The falappeal to facts, will convince us, that lacy lies in confounding the diminuincreased money stimulates industry, tion in the value of money, compared even when no increase of price takes with one article which the labourer place. Let us suppose a demand for has to sell, with its general diminuan article which is obtained by the tion, compared not only with that, but rudest and simplest industry, and also with all the articles he has to buy. that the person who supplies this ar If the diminution instantaneously, ticle does not work more than eight and in the same degree, extended it. hours a-day, because, in that time, he self to the proportionate value of can obtain all of it that is needed. Let money, and all commodities, increaus next suppose that, from whatever sed price could be no stimulus to incause, he finds he could sell one half dustry ; because a person is not benemore, if he had it ;— will not this in fited by receiving two shillings where duce him to work twelve hours in. he used to receive one, if he has to stead of eight, even though the price pay two shillings where he used to of the article does not increase. This pay one: but if, by increased demand process is often going on, and must for his goods, he receives two shilhave been in operation in a striking lings instead of one, and at the same manner, especially in all the little vil time, purchases what he wants at the lages which have risen to wealth by old price, an increased circulating mebecoming sea-bathing quarters. diuin must act as a stimulus to in

But it will more frequently occur dustry, so long as men wish to be that this increased demand produces richer than they are. It is evident increased price for the article. In this that the same operation and the same case, it is alleged that industry and effects will occur when he becomes a wealth cannot be increased, because purchaser : he is enabled to increase increase in price is, in fact, diminu- demand and price; this stimulates tion in the value of money; and it the industry of others; they in their can be no motive to industry to ob turn exert the same influence; but, tain one-and-sixpence, instead of one at length, the increased circulating shilling, if the value of the former medium, having divided itself among

rance of the mode in which money operates, as well as of orie of the modes in which in. creased produce may arise. If a labourer works one hour more than usual in a day, on the same quantity of food, with the same tools and machinery, and on the same raw material, (on the sea, for instance, in fishing,)—will not there be more production, though the food, the tools, and machinery, and the raw material, are not increased. “ These are not increased by the increase of money.” This is begging the question, not demonstration; this assertion is also contrary to fact ; a demand for more labourers is virtually, and in its consequences, a demand for more tools, food, machinery, and raw materials for them; and what is increased demand, but an increased power to purchase ; or, in other words, an augmented quantity of money—and yet this is put forth as reasoning, by one who bears the character of a sound logician, and an excellent Political Economist, and who, seemingly from confidence in his logical powers, is fond of throwing his doctrines into the form of what he calls demonstration.

all the articles, and increased the pro- ket prices of the two metals. All large duce of them all, ceases to have any payments are to be made in gold. farther effect; but, till this takes The question, whether one or two place, it cannot be inefficient, and it metals should be admitted as money, only ceases to operate when the whole in all payments, to whatever amount, increase of articles is equivalent to the is now almost universally decided by increase of the circulating medium. Political Economists in favour of the It must indeed be acknowledged, and unity of the currency: but the deit is proved by fact, that the increase pendent and subsequent question, of the circulating medium may be so whether silver or gold ought to be the rapid, or so great, as not to be attend- legal or governing coin, has not been ed with a corresponding increase of settled, although it was much agitaindustry.

ted a century ago, and lately, when We shall now turn from the theo. the mint-regulations of the silver coin retical questions respecting money, to were changed. The relative value of those which are of a practical nature gold and silver, it is evident, will be and bearing; and examine whether, affected by the change, in the quantiso far as these are concerned, the ty of both or either, in the great marwritings of Political Economists are ket of the world ; and it is equally more enlightened and safer guides plain, that that metal, the quantity than they have proved to be on the of which, in this market, is most theoretical division of this interesting nearly stationary, ought to be selectand important subject.

ed as the standard and regulating coin. The first practical question is, But this preliminary question has not Whether the quality of unity ought been satisfactorily solved; chiefly beto be reckoned among the requisites cause it is not easy, when the relative of money ;-in other words, whether value of two articles changes, to degold or silver alone ought to be ad termine whether the change is promitted as money, or whether both duced by an alteration in the compathese metals ought to be employed in rative supply of and demand for both, discriminately. The necessity of ha or whether an alteration in the supving silver to represent such small ply of, or of the demand for one, has values as could not be represented by produced the change in their relative gold coin, except by making it too value. Thus, if gold, instead of exsmall, is obvious: the question is, changing for sixteen times its weight whether the exchangeable rate of gold of silver, exchanges for fourteen- and silver coin should be. fixed by this may arise partly from silver be law, or permitted to fluctuate as the ing scarcer, and gold more plentiful, market value of these two metals or solely from gold being more plenmight happen to fluctuate?

tiful, or solely from silver being more The inconveniency of two metallic scarce; a single and identical effect, currencies was strongly pointed out arising from one of two causes, or by Locke; and his opinion has been from the combination of two causes, practically followed by most govern- puzzles Political Economists more than ments. On the continent, silver chief any other case in the practical applily performs the functions of money, cation of their science. and gold is regarded as a merchane The famous questions respecting the dize.“ In England,” observes Smith, alleged depreciation of the paper-cur“ gold was not considered as a legal rency, the

unfavourable state of the ex. tender for a long time after it was change, the fluctuations in the price of coined into money. The proportion corn and other commodities, besides between the values of gold and silver many other questions which agitated was not fixed by any public law or this country within the last half cenproclamation, but was left to be settled tury, afford proofs and illustrations of by the market.” In fact, it is only this position, and put it beyond a doubt since the year 1728 that England has that Political Economists are not sufgiven currency to gold. Silver is a le- ficiently attentive to that

process; gal tender, to a certain amount, and, of without attention to which, no science course, below and up to that amount, can be placed on a firm foundation, or it must be deemed and taken equiva- advance with regular and steady prolent to the sum of gold in coin fixed gress towards perfection, not only in by law, whatever be the relative mar its theoretical doctrines, but also in

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