Part 9
Should another reason be wanted to strengthen my argument in its most essential part, I could adduce an incontestable fact, as little controverted in _France_ as it is in _England_, namely, that in both countries the whole of the landed property does not yield three fourths of what it ought to produce.—Then, either the respective industry of the two nations ransoms agriculture, and binds her up, without being suspected of doing so, to that state of mediocrity to which she is reduced; in which case, single out of your regulations, those which favour industry at the expence of cultivation, and endeavour to expunge them, since agriculture stands clearly in want both of hands and capitals; or your industry and agriculture are neither of them nearly arrived to that degree of perfection which they are calculated to reach; that is to say, you have not the number of cultivators which your land can nourish, nor of course, so many artificers as your land can maintain; in this case also, revise your regulations; there is not one of them which does not affect your agriculture in a direct or indirect manner; by her you must begin: cultivators, unthinkingly and without regret, give birth to a race of artisans;—it is, on the contrary, as it were in spite of industry, and by a kind of reaction which she spares no endeavours to retard, that cultivators are produced by artisans. _Never will industry lay out a shilling upon the land if she can employ it in any other enterprise._
But, would the inland trade, without which agriculture cannot subsist, flourish, if foreign commerce should not be encouraged in a particular manner? And were any circumstances whatever, combined together so as to occasion such an alteration in the price of necessaries, as would deprive industry of the proper means to support abroad a competition which cannot possibly subsist but by an equality of means; would it not then become necessary for government, to shew a special favour to commerce, intrusted with the care of that competition? _The manufacturers, in all countries, insist so forcibly on such a necessity! The ruling powers in every nation are so convinced of the truth of the above maxim!_
This question, truly important, requires some details on the different causes productive of the alteration in the prices.
Although I may often appear, in the following suppositions, to lose sight of the revenue arising from industry, and pay attention to that of the land only, we must not forget the mechanical principle, or rather the force of Nature, who, sooner or later, in spite of all the subtilty of man, keeps an exact balance between those two sources of national wealth, and causes all the revolutions of the one to be unavoidably felt by the other.
_Various Causes of the Alteration in the Prices._
As long as we shall suppose, in a country standing by itself, the same products, the same consumption, the same quantity of money, the same freedom, no reason can ever be assigned for an increase or falling-off in the price of any article generally known, and of general use; but,
_Second Hypothesis_,
Let us suppose, that population is doubled as well as the revenue; no alteration can certainly take place in the real value of things;—that value will remain for each article, the same as it was before; that is, _the sum of the labour requisite for the production of that article_:[5] neither will the relative value undergo any change; the quantity of labour known, or supposed, in two different objects of a certain consumption, will remain, as at first, the sole criterion for fixing the difference of value in the one and the other. The essential relation of general correspondence between the wants, and the real resources, remaining also the same, there can likewise be no real difference in the situation of any individual whatever; if there are every where two _consumers_ to one, the same increase will be found in the number of _productors_. The only palpable, and unavoidable alteration, always grievous when it is sudden, is that which, in the present hypothesis, must have taken place in the nominal value, that is to say, in the money-price of every thing; for the quantity of coin which was in circulation, being always the same in that country, standing by itself as we have supposed, and without mines, whilst the objects representing the said quantity, had successively doubled, it had been indispensable, successively, either by degrees, or by starts, to come to the point of giving for 2 in money, that which could not be given before for less than 4, or rather of denominating 4, that same quantity of money which hitherto had been denominated 2.—If you look for a precedent of the first effects of a disproportion too considerable or too rapid, between the wants and the demands, or between the mass of coin in circulation, and the number of articles to be circulated, it will be found, in the revolutions which took place in _England_, during the space of two years _only_, 1288, 1289, the quarter of wheat rose from 1_s._ to 2_s._ then to 3_s._ 9_s._ 12_s._ came down again to 2_s._ was then raised all at once to 20_s._ and fell at last to 16_s._ where it seemed to support itself for some years (see the excellent _Inquiry_ of Mr. _Smith_, _into the Nature and Causes of the Wealth of Nations_); this is the man truly capable of dissecting, as it were, that subject, of which I can, at best, but mangle the _epidermis_.
_Third Hypothesis._
To remedy the evil in such circumstances, how many expedients are tried, which only serve to increase it! How many avowed depredations upon pretended usurers, before the Sovereign boldly ventures to partake with them in the public execration by ordering a re-coinage, which, under the same denomination, will give but a part of the weight, or of the quality of the former coin! Yet this cannot be avoided. But by ascertaining, as we have done before, a two-fold increase in the revenue, and supposing one million and a half to have been sufficient to the circulation of the first revenue; if the Prince with his 1,500,000_l._ instead of a coinage of three millions, should have struck only 2,400,000_l._—after some fluctuation, the balance will be restored between the price or nominal value of the negociable articles, and the quantity of money in circulation;—but what had been sold for 5 heretofore, will then go for 4; the prices will have fallen one fifth, and the circulation will be clogged:—But above all, it should be observed, that _no one will be the poorer, notwithstanding the diminution of the nominal value_.
_Fourth Hypothesis._
If the re-coinage has been in the proportion necessary to re-establish exactly the former facility in all the channels of circulation, the former prices will return after the inevitable fluctuations; the quarter of wheat, for instance, which at some period of the revolution, will have been raised to 20_s._ will fall back to 5_s._ as it was at the beginning, although the shilling contains only half the silver that it contained at that time, 130 grains we shall say, instead of the 260 or 264 it contained in the year 1300.
_Fifth Hypothesis._
Now let us suppose, what has happened in all countries, that the Prince and his Ministers have laid hold of the opportunity, the former, to pay the debts he had incurred in the time of national distress and confusion, the latter, to procure a more rapid increase of their fortunes, and that, with the 1,500,000_l._ supposed in circulation, they have struck 6 millions, instead of the 3 wanted to answer the real increase of the revenues and of population;—certainly when the calm returns, 10_s._ will be the price of a quarter of wheat, which sold for 5_s._ in the _first hypothesis_;—a most decisive argument this, for the manufacturer to sell at 8 that very cloth which went for 4, and an uncontrovertible ground of right in the working people to charge 4_d._ for that which before they performed at 2_d._—In these two points center all the practical inferences in which any individual in the State can be concerned: yet the shilling will contain only 65 grains of silver, instead of 260;—and if the price of every thing be doubled, it is not on account of the shilling containing only 65 grains in lieu of 260, since, upon this principle, the quarter of wheat must have fetched 20_s._ instead of 10_s._—but it is because, in all cases, there are two pieces of money to answer the purpose of one, and that _it was necessary, in order that the second might acquire one half of its former value, that the first should lose that very half_.
_Sixth Hypothesis._
At this period, let it be supposed, that an epidemical distemper sweeps off three-fourths of the inhabitants, and consequently takes away as much from the revenue:—After the terrors usual in such cases, and a score of prophecies, foretelling that Doomsday is at hand, yet will it appear that the world is not destroyed: it will also appear, that the epidemical disorder has not carried off the money, and that it would be wrong not to make use of it.—The specie must of course, lose nearly three fourths of its value if the whole should continue in circulation, because 4 pieces will present themselves to do the office which 1 could perform before the time of the distemper;—the quarter of wheat, at first rated at 5 shillings, sunk to 4 in the _second hypothesis_, then sold for 10 in the _fifth_, will in the present one, rise up to 40, _without any one growing richer or poorer for it; for_, most assuredly, _the price of labour will have increased in proportion to that of its own produce_.
_Seventh Hypothesis._
The effect would have been the same, if, instead of the distemper just supposed, the general enthusiasm on the discovery of a gold or silver mine, had induced the Sovereign to add to the circulation three times the quantity of specie which had hitherto been sufficient.
_Eighth Hypothesis._
In the supposition of an event the most opposite to that of an epidemic disease, viz. of the revenue being increased one half, one third, nay, three fourths, if you please, as well as the population; yet the mine yielding a great deal above what is necessary to answer to an increase in all kinds, and the Sovereign being resolved upon a recoinage of the specie, on principles entirely different from the former, that is, by preserving exactly the same number, standard, and denomination of the coin; the number, because it is sufficient; the denomination, because there must be one, and that it is indifferent which it bears; and the standard, because there is no further danger in fixing it; but, by advancing the weight of a shilling from 65 to 86 grains, there will certainly be no alteration in the prices; the wheat will keep up at 40 shillings, and other articles in the same proportion;—and _none will be richer or poorer for it_, although, at the price of 40_s._ the quarter of wheat, they give, without hesitation, 3440 grains of silver for an article for which they gave 650 only, previous to the epidemic disease, or the opening of the mine, which has produced the same effect.
_Ninth Hypothesis._
When such revolutions are brought about by slow degrees, no one is sensible either of the effect, or of the cause; but, at last, both are attended to. Let us then suppose, that the generality of the people reflect that gold and silver, considered as coin, derive all their value from imagination;—that money is, strictly speaking, nothing more than a medium adopted to facilitate the division and transport of all other kinds of property;—that it is but a sign, the place of which may be easily supplied by any other, which by general consent may be honoured with the same distinction, or ordered for the same use;—that its value, in this point of view, rises or falls unavoidably, according to its quantity, _without influencing the intrinsic or relative value of the articles it represents, a value constantly determined by the sum of the labour that produces them_, just as their relative, _common_ quantity follows, servilely and closely, the demand.—All these remarks cannot prevent us from observing a value far more essential in gold and silver, considered as metals susceptible of all the forms that can be useful, or can please the eye, while the nature and texture of their parts secure them from accidents equally disagreeable and dangerous, to which all other metals are liable: we should not therefore be surprised, if some reflexions, suggested by wisdom and humanity, were to lead us to that point which first originated in the extravagance of ambition, and the rage of politics; I mean, that, after having considered that no manner of good was produced by that disparagement of coin, which always resulted from its multiplication, and that the health of man was, on the contrary, interested in putting to a better use those metals, the quantity of which, being doubled in circulation, only served to double the price of every thing;—we should not be surprised, I say, not only that nothing was spared to encourage the goldsmith’s trade, but even, that half of the coin was melted down, and transformed into plate, and the _deficit_ supplied by a quantity of _paper-currency_, answering to that of the coin thus employed; a _paper-currency_, which it would be sufficient to distinguish by some mark or token agreed upon, to give it in circulation, exactly the same properties as that part of the metals which was transferred to a more advantageous purpose.
In regard to the danger of paper-currency increasing above the quantity wanted, it is as little to be feared, and its superabundance would soon be made as sensible by its effect, as that of a superfluity of coin.—If you double the mass of money intended for circulation, how will you prevent such articles as sold for 4 only, from rising to 8, or the additional 4 from becoming useless?—And if paper-currency be in question, how will you prevent the extravagantly-avaricious wretch, who envies others the enjoyments he denies to himself, how can you prevent him, I say, from observing that paper rots in the ground, and that to bury his wealth he must exchange it for cash?—how will you prevent this want of money, immediately felt, from destroying, without resource, the credit which that mass of buried money had hitherto given to paper-currency? So long, therefore, as the paper keeps up its credit, one may rest assured that the public is not over-loaded with it. I shall, in the sequel, venture some reflexions on the true cause of that part of the increase in prices, which is attributed to the quantity of paper-currency in circulation; contenting myself here with a recapitulation of what I have just said on the different causes of the alteration in prices, according to the foregoing hypothesis, by concluding,
First, That a nation which should rejoice in being possessed (for the convenience of covetous individuals) of a _vortex_, into which they could cast, at pleasure, without profit, but also without anxiety, an immense treasure, which was the produce of the pains taken by so many useful and industrious hands, would, in fact, only congratulate herself on being possessed of the effectual means of robbing the present and succeeding ages, of all the advantages that must have accrued from the use made of that money, _in any part of the world_, where it might have produced, and encouraged a new branch of industry, _the reaction of which would have turned to the profit of the nation in possession of such ~vortex~._
Secondly, That a nation, which should rejoice in being the owner of an immense quantity of coin in circulation, would, in fact, congratulate herself on that want of credit which renders such quantity indispensable.
Thirdly, That as soon as government, in such a nation, should have solemnly given up the right, supposed to be unalienable, of paying its debts, from no other motive but that of extreme honour and benevolence, the nation might then part with half her coin, and without impeding the circulation, increase her enjoyments and her wealth, which can be nothing more than _the total of her annual labour, together with the monuments still subsisting of the labour of preceding years_: a total, which could not but increase in the case now supposed.
Fourthly, That, in regard to the coin, the most wretched paper-factory, assisted with that credit which is founded, not on kindness, but on justice and interest, is far preferable to the richest mine in _America_.
Fifthly, That the difference in the real value between one article and another, is only the difference of the labour which produces it; and that _all regulation, tending to throw a veil on the quantity of labour contained in one article, is unjust_; since it turns to the prejudice of any individual in the community, _who is not the author of this unknown labour_.
Sixthly, That the nominal price of the _essential_ article, to which that of the others must finally revert and conform, fixed at first by its proportion in the quantity of articles to be represented, and by the divisions and subdivisions of the mass of money then existing for that use, this nominal _common_ price will certainly rise or fall, constantly, and _without the least inconvenience_, just as that first quantity of coin shall cease to answer, by more or by less, to the quantity of the objects of which it was calculated to transfer the property.
Seventhly, That, supposing it to be a fact, proved incontestably by the mint-registers, and the average price at _Windsor_, that from the year 1300 to 1309, wheat, at its highest rate, was not above 7_s._ _per_ quarter, the shilling weighing 264 grains of silver, which made the quarter come only to 1848 grains; that in the year 1551, the same sold for 8_s._ the shilling containing then only 60 grains, which made it exactly 160 grains _per_ quarter; and that the same sells now, I will say, at 40_s._ the shilling containing 86 grains, which is 3440 grains for a quarter of wheat; yet, from these facts no inference can be drawn that could affect any individual whatever, unless it should be proved, that money makes part of our food, or that it is impossible, at this present time, to procure, with any _given_ labour, more or less wheat than that identical labour could procure at that period.
Eighthly, That the _real_ difference between 1848 grains of silver, and 3440, which is perceivable between the prices of the years 1300 and 1785, would not even be sufficient, were it considered by itself, to invalidate, or confirm this futile proposition, that the mass or stock of money is nearly doubled in _England_; for we have already found, that, supposing the case of an epidemic distemper, which would have carried off three fourths of the people, and consequently reduced the revenue in the same proportion, the price of every thing must have increased fourfold, if the three fourths of the coin had not been buried under ground; we have seen, on the contrary, that it has been possible to withdraw from circulation half of the current cash, and make good this substraction in a very advantageous manner, by introducing scraps of paper in its stead, without making any alteration in the general prices, or in the least affecting the circumstances of any one, poor or rich, unless some collateral incident should intervene to bring about a change; and the least reflexion will convince us, that the mass of specie might be quadruplicated in a nation, without any material variation in the prices, _if the sum of labour, and of its products, as well as of the consumption, should augment proportionably_.
But, in stating that the only—the infallible reason for the variations of _common_ prices in the foregoing hypotheses, is the change of proportion between the mass of specie, or of the paper-currency which represents it, and the articles of which the one, or the other, is to transfer the property, there is no inconsistency in persisting to pretend that taxes add to the former prices, both the amount of the impost, and the profit due to the trader who advances it. But, in both cases the progress is different: in the former, it is the quantity of the specie actually in being which necessitates and fixes the prices; in the latter, it is the necessary advance in the prices, that _necessitates_ and _fixes_ the quantity of specie, or paper-money which is substituted to it.—Luckily, as we have already observed, it has been enough for _England_ to find, once for all, money to the amount of 5 millions sterling, (cash and paper) for discharging to the end of time, the interest of a debt computed at 238 millions, the same currency.—But upon a supposition that the debt incurred by _France_, from the year 1774, should amount to 15 or 1600 millions _tournois_, and the yearly produce of _French_ industry in all its branches, (at the common rate of 1775) be of 2,400,000,000_l._—the interest of 80 millions and upwards, to be paid for such a debt, requires an adequate increase of taxes:—now, 80 millions _tournois_ constitute about the 30th part of the annual revenue produced by _French_ industry, the nominal value of which must be increased by those taxes;—but as paper-money does not supply in _France_ the place of cash, it has been, of course, necessary to augment by one 30th, the mass of specie, which proved sufficient before the rise in the prices, occasioned by the impost;—this mass, it is said, was rated at 2,400,000,000 of _livres_, the 30th part of which is 66,666,666 13_s._ and 4_d._ _tournois_, a very considerable sum indeed; but nevertheless nothing more has been necessary, to prevent any inquietude on the subject, than to procure that sum, once for all; and, _once for all likewise_, to add thereto the effect of some re-actions, of which I shall speak presently; nothing more, I say, was wanted to secure, in an indefensible manner, the interest of a loan of 1500 millions, and to secure it so as to raise in the minds of the holders of stock to so immense an amount, no other apprehension than that of their being reimbursed.