Here then we may learn the fallacy of the remark, often to be met with in hiftorians, and even in common converfation, that any particular state is weak, though fertile, populous, and well cultivated, merely because it wants money. It appears, that the want of money can never injure any state within itself: For men and commodities are the real ftrength of any community. 'Tis the fimple manner of living which here hurts the public, by confining the gold and filver to few hands, and preventing its univerfal diffufion and circulation. On the contrary, industry and refinements of all kinds incorporate it with the whole state, however small its quantity may be: They digeft it into every vein, so to speak; and make it enter into every tranfaction and contract. No hand is entirely empty of it. And as the prices of every thing fall by that means, the fovereign has a double advantage: He may draw money by his taxes from every part of the state; and what he receives, goes farther in every purchase and payment.

We may infer, from a comparison of prices, that money is not more plentiful in CHINA, than it was in EUROPE three centuries ago: But what immense power is that empire pofsessed of, if we may judge by the civil and military list maintained by it? POLYBIUS* tells us, that provifions were so cheap in ITALY during his time, that in fome places the stated club at the inns was a femis a-head, little more than a farthing! Yet the ROMAN power had even then fubdued the whole known world. About a century before that period, the CARTHAGINIAN ambaffador faid, by way of raillery, that no people lived more fociably amongst themselves than the RoMANS; for that in every entertainment, which, as foreign

Lib. 2. cap. 15.

U u 2

minifters,

minifters, they received, they fill obferved the fame plate at every tablet. The abfolute quantity of the precious metals is a matter of great indifference. There are only two circumftances of any importance, viz. their gradual increase, and their thorough concoction and circulation through the state; and the influence of both these circumstances has been here explained.

In the following Effay we fhall fee an inftance of a like fallacy as that above mentioned; where a collateral effect is taken for a caufe, and where a confequence is afcribed to the plenty of money; though it be really owing to a change in the manners and customs of the people.

+ PLIN. lib. 33. cap. 11.

ESSAY IV.

OF INTEREST.

N

The

OTHING is esteemed a more certain sign of the flourifhing condition of any nation than the lowness of interest: And with reason; though I believe the cause is somewhat different from what is commonly apprehended. lowness of intereft it generally afcribed to the plenty of money. But money, however plentiful, has no other effect, if fixed, than to raise the price of labour. Silver is more common than gold; and therefore you receive a greater quantity of it for the fame commodities. But do you pay less interest for it? Interest in BATAVIA and JAMAICA is at 10 per cent. in PORTUGAL at 6; though these places, as we may learn from the prices of every thing, abound much more in gold and filver than either LONDON or AMSTERDAM.

Were all the gold in ENGLAND annihilated at once, and one and twenty fhillings fubftituted in the place of every guinea, would money be more plentiful or interest lower? No furely : We should only use filver inftead of gold. Were gold rendered as common as filver, and filver as common as copper; would money be more plentiful or interest lower? We may affuredly give the fame anfwer. Our fhillings. would then be yellow, and our halfpence white; and we should have no guineas. No other

5

other difference would ever be observed; no alteration on commerce, manufactures, navigation, or intereft; unless we imagine, that the colour of the metal is of any confequence.

Now, what is so visible in these greater variations of scarcity or abundance of the precious metals, must hold in all inferior changes. If the multiplying gold and filver fifteen times makes no difference, much lefs can the doubling or tripling them. All augmentation has no other effect than to heighten the price of labour and commodities; and even this variation is little more than that of a name. In the progress towards these changes, the augmentation may have some influence, by exciting industry; but after the prices are fettled, fuitable to the new abundance of gold and filver, it has no manner of influence.

An effect always holds proportion with its caufe. Prices have rifen about four times fince the discovery of the INDIES; and 'tis probable gold and filver have multiplied much more: But intereft has not fallen much above a half. The rate of intereft, therefore, is not derived from the quantity of the precious metals.

Money having merely a fictitious value, arifing from the agreement and convention of men, the greater or less plenty of it is of no confequence, if we confider a nation within itself; and the quantity of fpecie, when once fixed, though never fo large, has no other effect, than to oblige every one to tell out a greater number of those shining bits of metal, for cloaths, furniture, or equipage, without increafing any one convenience of life. If a man borrows money to build a house, he then carries home a greater load; because the stone, timber, lead,

lead, glass, &c. with the labour of the masons and carpenters, are represented by a greater quantity of gold and filver. But as these metals are confidered merely as representations, there can no alteration arise, from their bulk or quantity, their weight or colour, either upon their real value or their intereft. The fame interest, in all cafes, bears the fame proportion to the sum, And if you lent me so much labour and fo many commodities; by receiving five per cent. you receive always proportional la➡ bour and commodities, however represented, whether by yellow or white coin, whether. by a pound or an ounce. "Tis in vain, therefore, to look for the cause of the fall or rife of interest in the greater or lefs quantity of gold and filver which is fixed in any nation.

High intereft arifes from three circumftances: A great demand for borrowing; little riches to fupply that demand; and great profits arifing from commerce. And thefe circumftances. are a clear proof of the small advance of commerce and induftry, not of the fcarcity of gold and filver. Low intereft, on the other hand, proceeds from the three oppofite circum stances: A small demand for borrowing; great riches to fupply that demand; and small profits arifing from commerce. And these circumstances are all connected together, and proceed from the increase of industry and commerce, not of gold and filver. We shall endeavour to prove these points as fully and distinctly as poffible; and shall begin with the caufes and the effects of a great or small demand for borrowing.

When the people have emerged ever fo little from a favage ftate, and their numbers have increased beyond the original

mul