than a superfluous number of mills would contribute to the production of flour. CAROLINE. I had always imagined that the more money a country possessed, the more affluent was its condition. MRS. B. The error lies in And that usually is the case. mistaking the cause for the effect. A great quantity of money is necessary to circulate a great quantity of commodities. Rich flourishing countries require abundance of money, and possess the means of obtaining it; but this abundance is the consequence, not the cause of their wealth, which consists in the commodities circulated, rather than in the circulating medium. Specie, we have just said, constitutes wealth, so far as it is required for circulation; but if a country possess one guinea more than is necessary for that purpose, the wealth which purchased that guinea has been thrown away. CAROLINE. Yet what a common observation it is, that plenty of money animates the industry of a country, and encourages commerce; and this seems to be proved by the miserable and barbarous state of Europe previous to the discovery of the American mines. MRS. B. The discovery of America was certainly a very efficient cause in rousing the industry of Europe from the state of stagnation into which it was sunk by ignorance and barbarism. But had America possessed no mines, I doubt whether the advantages we have derived from our connection with that country would not have been almost equally great: we could easily find a substitute for the specie with which she supplies us, but never for the abundance and variety of wealth which she is incessantly pouring in upon us. The increase of European comforts, of affluence, of luxury, is attributed to the influx of the treasures of the new world and with reason; but those treasures are the sugar, the coffee, the indigo, the tobacco, the drugs, &c. which America exports, to obtain which we must send her commodities that have been produced by the employment of our poor. Gold and silver, though they have greatly excited our avarice and ambition, have eventually contributed but little to stimulate our industry. It is not to the multiplication of the precious metals that we are indebted for our improved agriculture, our prosperous commerce, and the variety and excellence of our manufactures; nor do I believe that it was their scarcity which deprived our ancestors of these advantages. It was because they were ignorant and barbarous, and that we are com ON MONEY. paratively enlightened and civilised; - comparatively I may indeed say, for error is still active in retarding the progress of improvement, and this is no where more evident than in the anxiety of governments to prevent the exportation of specie, although it is now nearly forty years since Adam Smith fully proved the impolicy of this prohibition. CAROLINE. If the exportation of specie be prohibited, the only use that can be made of a superfluous quantity of it, is to melt it down and re-convert it into bullion. MRS. B. But melting the coin is, in this country, equally illegal. A superfluous quantity of money, therefore, (were these laws never infringed,) would be necessarily added to the circulation, and depreciate the value of the whole. How different is the situation of a country where no such prohibitory laws exist! There, no sooner does money accumulate so as to occasion a depreciation of its value, or, in other words, an advance in the price of commodities, than the merchants of that country export specie, and purchase with it foreign goods; while at the same time foreign merchants send their goods to the country where prices have risen, and exchange them, not for other goods, which are dear, but for money, which is cheap. CAROLINE. That is to say, they will sell, but not purchase? MRS. B. Precisely it is thus that a country is drained of its superfluous specie; as this traffic goes on, money rises in value, commodities fall in price, and foreign merchants again exchange their goods for commodities of the country, instead of receiving payment for it in specie. No apprehension need therefore be entertained of ill consequences arising either from the melting down or exporting the coin of the country. This exportation will take place secretly whenever there is a superfluity, however severe the law may be against it; the only difference is, that instead of being carried on in an open and regular manner by merchants of respectability, it is thrown into the hands of men of despicable character, who are tempted by extraordinary profits to engage in this illicit traffic. Could Spain and Portugal, countries which receive all the precious metals imported from America to Europe, have carried into effect the absurd restrictive laws by which they attempted to keep eventually have become of little more value to them than lead and copper. If you have understood what I have said, you will now be able to tell me what effect will be produced in the mercantile transactions of a country, which is not shackled by restrictive laws, when a scarcity of money produces a fall in the price of commodities. CAROLINE. In that case the very reverse will happen of what we before observed. Foreign merchants will come and buy goods, and instead of offering merchandise in exchange, will bring money in payment; for they will be willing to make purchases, but not sales at a cheap market. MRS. B. It is thus that gold and silver are diffused throughout all parts of the civilised world, wherever there is a deficiency, it flows in from every quarter; and wherever there is a redundancy, the tide sets in an opposite direction. It is the regular diffusion of the precious metals, and their constant tendency to an equality of value, which renders them so peculiarly calculated for a general standard. Were money as liable to variation of value as the commodities for which it serves as a medium of exchange, it would be totally unfit for a standard. |