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more or less valuable, as is said before, according to its scarcity or plenty. As those metals have grown much more plentiful in Europe since the discovery of America,* so they have sunk in value exceedingly; for, to instance in England, formerly one penny of silver was worth a day's labor, but now it is hardly worth the sixth part of a day's labor; because not less than sixpence will purchase the labor of a man for a day in any part of that kingdom; which is wholly to be attributed to the much greater plenty of money now in England than formerly. And yet perhaps England is in effect no richer now than at that time; because as much labor might be purchased, or work got done of almost any kind, for one hundred pounds then, as will now require or is now worth six hundred pounds.

In the next place let us consider the nature of banks emitting bills of credit, as they are at this time used in Hamburgh, Amsterdam, London, and Venice.

Those places being seats of vast trade, and the payment of great sums being for that reason frequent, bills of credit are found very convenient in business; because a great sum is more easily counted in them, lighter in carriage, concealed in less room, and therefore safer in travelling or laying up, and on many other accounts they are very much valued. The banks are the general cashiers of all gentlemen, merchants, and great traders in and about those cities; there they deposit their money, and may take out bills to the value, for which they can be certain to have money again at the bank at any time. This gives the bills a credit; so that in England they are never less valuable than money, and in Venice and Amsterdam they are generally worth more. And the bankers, always reserving money in hand to answer more than the common run of demands (and some people constantly putting in while others are taking out), are able besides to lend large sums, on good security, to the government or others, for a reasonable interest, by which they are paid for their care and trouble; and the money, which otherwise would have lain dead in their hands, is made to circulate again thereby among the people. And thus the running cash of the nation is, as it were, doubled; for all great payments being made in bills, money in lower trade becomes much more plentiful. And this is an exceeding great advantage to a trading country, that is not overstocked with gold and silver.*

* This passage shows, that the theory, as to the effect x>f the South American mines upon the rate of money prices and the reduction of the value of the precious metals, so elaborately set forth and reasoned out by Adam Smith, was quite a familiar notion when he was but six years old; the correctness of which, however, to the extent laid down by Franklin in this place, and afterwards by Smith, has of late years been gravely questioned by very respectable writers. — W. Phillips.

As those, who take bills out of the banks in Europe, put in money for security; so here, and in some of the neighbouring provinces, we engage our land. Which of these methods will most effectually secure the bills from actually sinking in value, comes next to be considered.

Trade in general being nothing else but the exchange of labor for labor, the value of all things is, as I have said before, most justly measured by labor. Now sup

• This is a clear and just view of the effects and utility of banks of deposit . But the application, which Franklin is about to make of it to land banks, will not be acquiesced in at this day. Every body knows, that certainty as to time of payment of bills, that pass as a circulating medium, is no less important than the certainty that they will be eventually paid. The convertibility of the fund pledged for the redemption of the bills is as material a circumstance as its sufficiency and permanency of value. Land, and immovable property generally, is less convertible than movable property, for it cannot be removed from its place to seek a market; this renders this kind of property peculiarly unfit to constitute a fund or pledge for the redemption of bills, that circulate as money. — W. Phillips.

pose I put my money into a bank, and take out a bill for the value; if this bill at the time of my receiving it, would purchase me the labor of one hundred men for twenty days, but some time after will only purchase the labor of the same number of men for fifteen days, it is plain the bill has sunk in value one fourth part. Now, silver and gold being of no permanent value, and as this bill is founded on money, and therefore to be esteemed as such, it may be that the occasion of this fall is the increasing plenty of gold and silver, by which money is one fourth part less valuable than before, and therefore one fourth more is given of it for the same quantity of labor; and, if land is not become more plentiful by some proportionate decrease of the people, one fourth part more of money is given for the same quantity of land; whereby it appears, that it would have been more profitable to me to have laid that money out in land which I put into the bank, than to place it there and take a bill for it . And it is certain that the value of money has been continually sinking in England for several ages past, because it has been continually increasing in quantity. But, if bills could be taken out of a bank in Europe on a land security, it is probable the value of such bills would be more certain and steady, because the number of inhabitants continues to be near the same in those countries from age to age.

For, as bills issued upon money security are money, so bills issued upon land, are in effect coined land.

Therefore, (to apply the above to our own circumstances) if land in this province was falling, or any way likely to fall, it would behove the legislature most carefully to contrive how to prevent the bills issued upon land from falling with it. But, as our people increase exceedingly, and will be further increased, as I have before shown, by the help of a large addition to our currency, and as land in consequence is continually rising, so, in case no bills are emitted but what are upon land security, the money-acts in every part punctually enforced and executed, the payments of principal and interest being duly and strictly required, and the principal bond fide sunk according to law, it is absolutely impossible such bills should ever sink below their first value, or below the value of the land on which they are founded. In short, there is so little danger of their sinking, that they would certainly rise as the land rises, if they were not emitted in a proper manner for preventing it . That is, by providing in the act, that payment may be made, either in those bills, or in any other bills made current by any act of the legislature of this province; and that the interest, as it is received, may be again emitted in discharge of public debts; whereby circulating, it returns again into the hands of the borrowers, and becomes part of their future payments; and thus, as it is likely there will not be any difficulty for want of bills to pay the office, they are hereby kept from rising above their first value. For else, supposing there should be emitted upon mortgaged land its full present value in bills, as in the banks in Europe the full value of the money deposited is given out in bills; and supposing the office would take nothing but the same sum in those bills in discharge of the land, as, in the banks aforesaid, the same sum in their bills must be brought in, in order to receive out the money ; in such case the bills would most surely rise in value as the land rises; as certainly as the bank bills founded on money would fall . if that money was falling. Thus, if I were to mortgage to a loan-office, or bank, a parcel of land now valued at one hundred pounds in silver, and receive for it the like sum in bills, to be paid in again at the expiration of a certain term of years, before which my land,

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rising in value, becomes worth one hundred and fifty pounds in silver; it is plain, that if I have not these bills in possession, and the office will take nothing but these bills, or else what it is now become worth in silver, in discharge of my land; I say it appears plain, that those bills will now be worth one hundred and fifty pounds in silver to the possessor; and if I can purchase them for less, in order to redeem my land, I shall by so much be a gainer.

I need not say any thing to convince the judicious that our bills have not yet sunk, though there is and has been some difference between them and silver; because it is evident, that that difference is occasioned by the scarcity of the latter, which is now become a merchandise, rising and falling, like other commodities, as there is a greater or less demand for it, or as it is more or less plenty.

Yet farther, in order to make a true estimate of the value of money, we must distinguish between money as it is bullion, which is merchandise, and as by being coined it is made a currency. For its value as a merchandise, and its value as a currency, are two distinct things; and each may possibly rise and fall in some degree independent of the other. Thus, if the quantity of bullion increases in a country, it will proportionably decrease in value; but if at the same time the quantity of current coin should decrease, (supposing payments may not be made in bullion) what coin there is will rise in value as a currency; that is, people will give more labor in manufactures for a certain sum of ready money.

In the same manner must we consider a paper currency founded on land; as it is land, and as it is a currency.

Money as bullion, or as land, is valuable by so much labor as it costs to procure that bullion or land.

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