Chapter 10: The Ban on coin exportation
Because of these tenets, the government banned coin exportation.
- This ban has been extremely hurtful to the country's commerce.
- Because whatever amount of money there is in any country above what is needed for circulation is merely a dead stock.
In King William’s time, there were two species of coin:
The unmilled was frequently clipped by different persons in its circulation.
The great complaint was always the scarcity of money.
- This caused frequent disorders among the people.
- The parliament ordered all the clipped money to be brought into the mint.
- The government spent about 2 million to recoin it.
- They thought it just and proper to ban the exportation of money.
- However, the merchants complained of this hardship.
- They were then allowed to export a little money.
A lot of coin was melted down and exported since coin was of no more value than bullion.
- To remedy this, the government established a common office for coining money.
- Everyone could get their gold and silver turned into coin without any expense.
- To prevent this, melting coins became a felony.
- But it is such a simple operation that the law was easily eluded.
- More coin was exported than ever.
- This could have been easily prevented by setting a price on the coinage of bullion.
- But such a regulation was never thought of.
Any regulation of the above kind is very absurd because:
Supposed the Portuguese banned exporting money by capital punishment.
- there is no fear if things be left to their free course that any nation will want money sufficient for the circulation of their commodities, and
- every ban of exportation is always ineffectual, and very often occasions the exportation of more than otherwise would be.
In general, every prohibition of this kind hurts the country's commerce.
- They have few goods to give for ours.
- Their foreign trade must cease.
- If they attempt to smuggle, the British merchant must increase the prices of his goods to reward him for his added risk in being detected.
- The Portuguese merchant would be a loser from this higher price.
- Every unnecessary accumulation of money:
- is a dead stock which could be employed in enriching the nation by foreign commerce.
- also raises the price of goods
- makes the country undersold at foreign markets.
Banning the exportation of money is really one great cause of the poverty of Spain and Portugal.
But this had a quite contrary effect.
- They gained the mines of Mexico and Peru.
- They thought they could command all Europe by the continual supplies of those mines if they could keep the money among them.
- Therefore, they banned its exportation.
Every commodity rises to an extravagant height.
- It is very unfavourable to the country if money were dammed up to an unnatural height and there is more than the circulation requires.
- Because it is impossible that the exportation of gold and silver can be totally stopped since the balance of trade must be against them.
- That is, they must buy more than they sell.
- This balance must be paid in money.
- The Portuguese pay for English cloth with an addition to its natural price, as the expense and risk of bringing it there.
- All the goods sent to Spain and Portugal are carried by ourselves and consigned to the British factors, to be disposed of by them.
This has a miserable effect on the domestic industry of those countries.
- But besides the transportation and insurance, the British merchant must be paid for the risk of having his money seized in Portugal because of the ban.
- All risk of forfeiture or penalty must lie on the goods.
A general presented to his majesty his regiment clothed in Spanish manufactures.
- This has halted their manufactures.
- Nobody ever saw Spanish cloth in any other country.
- Yet they have the best materials in the world.
- They might monopolise European trade if they had our arts.
In general, they export no manufactured commodities, except swords and armour.
- This drew the attention of the nations who trade with Spain.
- They have:
- the best steel in the world.
- only the spontaneous productions of the country, such as fruits and wines.
Similar regulations were made in Britain in King William’s time.
They coined all money brought in for nothing.
- Money was thought to constitute opulence.
- Therefore, its accumulation commanded the entire public attention.
The exportation of bullion was free.
- The expenses of coinage amounted to about £140,000, were entirely thrown away.
- Besides, great encouragement was given to exportation because, as gold and silver were coined for nothing, coined money could never be dearer than bullion.
Presently, there is a great temptation to such practices.
- So they melted down the coin and sent it abroad.
Because of this, we seldom or never see a new shilling.
- An ounce of pure silver at mint price is valued at 62 pence
- But bullion is often bought at 66 pence
- Nothing is lost in melting.
- There is a profit of 4 pence per ounce.
- It is one of the causes that silver is so scarce relative to gold.
Next: Section 2, Chapter 11