An Inquiry into the Principles of Political Oeconomy (Vol. 2 of 2): Being an essay on the science of domestic policy in free nations. In which are particularly considered population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxesSteuart, James, Sir
General
An Inquiry into the Principles of Political Oeconomy (Vol. 2 of 2): Being an essay on the science of domestic policy in free nations. In which are particularly considered population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxes
Steuart, James, Sir
Economics
That scale, therefore, is the only just one, which measuring the value
of the metals, like that of every thing else, renders every individual
of a state equally rich, who is proprietor of the same number of
denominations of specie; whether his wealth be in gold, silver, or any
other property or commodity.
[Sidenote: Explanation of this proportion]
Now I agree that, at any given time, this is the case when the scale is
properly attached to the metals; but it is not permanently so. A
determinate property in land bears sometimes a greater, sometimes a less
proportion to a determinate property in money. When the scale is
attached to the metals, he who is proprietor, for instance, of a
thousand denominations in coin, becomes richer or poorer, according to
the fluctuation of the value of that commodity, the metals. Whereas when
the scale is not attached to any species of commodity, nothing can
change his proportion of wealth, except the augmentation or diminution
of the value of the whole state. This idea is not so distinct as I could
wish: let me illustrate it by an example.
[Sidenote: by an example,]
Suppose then three partners (A), (B), (C). They form a common stock by
equal shares; (A) contributes a thousand pounds sterling in current
specie, (B) the same value in corn, (C) a like value in broad cloth. Let
me suppose the measures of these commodities to be expressed by their
proper denominations; the metals by grains, the corn by bushels, the
broad cloth by yards. I suppose that at the end of the year 20 _per
cent._ is gained upon each article of stock; that is, 20 _per cent._
increase upon the grains of metal, 20 _per cent._ on the bushels of
grain, 20 _per cent._ on the yards of broad cloth. This supposition may
be allowed. I ask, if it would not be a much more equal way of dividing
this profit, to reduce the whole value of the grains, bushels, and
yards, to the then actual value in pounds sterling, and so to divide;
than if every man were to take his 20 _per cent._ out of that commodity
he had furnished to the co-partnership? This method of reducing all to a
common measure, is what I understand by an ideal scale of money of
accompt.
[Sidenote: and by an application to the bank of Amsterdam.]
The bank of Amsterdam pays none in either gold or silver coin, or
bullion; consequently it cannot be said, that the florin banco is
attached to the metals. What is it then which determines its value? I
answer, That which it can bring; and what it can bring when turned into
gold or silver, shews the proportion of the metals to every other
commodity whatsoever _at that time_: such and such only is the nature of
an invariable scale.
[Sidenote: How the locking up the coin in that bank renders the value of
it more stable.]
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