used as currency equally with the new, the latter were immediately taken up and melted down and exported at their value as bullion or merchandise; so that no progress whatever was made in remedying an evil which, at the time Locke wrote, had become well nigh insupportable. "The financiers of that age," says Macaulay, in his graphic picture of it, "seem to have expected that the new money, which was excellent, would soon displace the old money which was much impaired. Yet any man of plain understanding might have known that, when the State treats perfect coin and light coin as of equal value, the perfect coin will not drive the light coin out of circulation, but will itself be driven out. A clipped crown, on English ground, went as far in the payment of a tax or a debt as a milled crown. But the milled crown, as soon as it had been flung into the crucible or carried across the channel, became much more valuable than the clipped crown. It might therefore have been predicted, as confidently as any thing can be predicted which depends on the human will, that the inferior pieces would remain in the only market in which they could fetch the same price as the superior pieces; and that the superior pieces would take some form or fly to some place, in which some advantage could be derived from their superiority. "The politicians of that age, however, generally overlooked these very obvious considerations. They marvelled exceedingly that everybody should be so perverse as to use light money in preference to good money. In other words, they marvelled that nobody chose to renew the blood, to attenuate its consistency, or to remove a part of the morbific matter with which it was impregnated; and cathartics, sudorifics, and diuretics were largely administered with a similar intent. In a word, as plethora or cacochymia were the two great sources of disease, their whole therapeutic was directed to change the quantity or quality of the fluids. Nor was this murderous treatment limited to the actual period of the disease. Seven or eight annual bleedings and as many purgations, such was the common regimen the theory prescribed to assure continuance of health; and the twofold depletion, still customary, at spring and fall among the peasantry of many European countries is a remnant of the once universal practice. In Spain, every village has even now its Sangrador, whose only art of surgery is blood-letting; and he is rarely idle. The medical treatment of Louis XIII. may be quoted as a specimen of the humoral therapeutic. Within a single year, this theory inflicted on that unfortunate monarch above a hundred cathartics and more than forty bloodings. During the fifteen centuries of Humorism, how many millions of lives did medicine cost mankind?" 1 The permanence of such fallacies as the unlawfulness of interest, and the humoral theory in Medicine, will serve to lessen our astonishment at the continuance to the present time of monetary theories, equally absurd, which have never been challenged from the time they were delivered to the world by Aristotle. 1 Sir William Hamilton's "Discussions on Philosophy and Literature," American edition, pp. 246-248. to pay twelve ounces of silver when ten ounces would serve the turn. The horse at the Tower still paced his rounds. Fresh wagonloads of choice money still came forth from the mill; and still they vanished as fast as they appeared. Great masses were melted down; great masses exported; great masses hoarded: but scarcely one new piece was found in the till of a shop, or in the leathern bag which the farmer carried home from the cattle fair. In the receipts and payments of the Exchequer, the milled money did not exceed ten shillings in a hundred pounds. A writer of that age mentions the case of a merchant who, in the sum of thirty-five pounds, received only a single half-crown in milled silver. . . . "The evils produced by this state of the currency were not such as have generally been thought worthy to occupy a prominent place in history. Yet it may well be doubted whether all the misery which had been inflicted on the English nation in a quarter of a century by bad kings, bad ministers, bad parliaments, and bad judges was equal to the misery caused in a single year by bad crowns and bad shillings. Those events which furnish the best themes for pathetic or indignant eloquence are not always those which most affect the happiness of the great body of the people. The misgovernment of Charles and James, gross as it had been, had not prevented the common business of life from going steadily and prosperously on. While the honor and independence of the State were sold to a foreign power, while chartered rights were invaded, while fundamental laws were violated, hundreds of thousands of quiet, honest, and industrious families labored and traded, ate their meals and lay down to rest, in comfort and security. Whether Whigs or Tories, Protestants or Jesuits were uppermost, the grazier drove his beasts to market: the grocer weighed out his currants: the draper measured out his broadcloth: the hum of buyers and sellers was as loud as ever in the towns: the harvest-home was celebrated as joyously as ever in the hamlets: the cream overflowed the pails of Cheshire: the apple-juice foamed in the presses of Herefordshire: the piles of crockery glowed in the furnaces of the Trent; and the barrows of coal rolled fast along the timber railway of the Tyne. But when the great instrument of exchange became thoroughly deranged, all trade, all industry, were smitten as with a palsy... "Since the Revolution, the state of the currency had been repeatedly discussed in Parliament. In 1689 a committee of the Commons had been appointed to investigate the subject, but had made no report. In 1690 another committee had reported that immense quantities of silver were carried out of the country by Jews, who, it was said, would do any thing for profit. Schemes were formed for encouraging the importation and discouraging the exportation of the precious metals. One foolish bill after another was brought in and dropped. At length, in the beginning of the year 1695, the question assumed so serious an aspect that the Houses applied themselves to it in earnest. The only practical result of their deliberations, however, was a new penal law, which, it was hoped, would prevent the clipping of the hammered coin and the melting and exporting of the milled coin. It was enacted that every person who informed against a clipper should be entitled to a reward of forty pounds, that every clipper who informed against two clippers should be entitled to a pardon, and that whoever should be found in possession of silver filings or parings should be burned in the cheek with a red-hot iron. Certain officers were employed to search for bullion. If bullion were found in a house or on board of a ship, the burden of proving that it had never been part of the money of the realm was thrown on the owner. If he failed in making out a satisfactory account of every ingot he was liable to severe penalties. This Act was, as might have been expected, altogether ineffective. During the following summer and autumn, the coin went on dwindling, and the cry of distress from every county in the realm became louder and more piercing. "But, happily for England, there were among her rulers some who clearly perceived that it was not by halters and branding-irons that her decaying industry and commerce could be restored to health. The state of the currency had, during some time, occupied the serious attention of four eminent men closely connected by public and private ties. Two of them were politicians who had never, in the midst of official and parliamentary business, ceased to love and honor philosophy; and two were philosophers in whom habits of abstruse meditation had not impaired the homely good sense without which even genius is mischievous in politics. Never had there been an occasion which more urgently required both practical and speculative abilities; and never had the world seen the highest practical and the highest speculative abilities united in an alliance so close, so harmonious, and so honorable as that which bound Somers and Montague to Locke and Newton.. "In whatever way the restoration of the coin might be effected, great sacrifices must be made, either by the whole community or by a part of the community. And to call for such sacrifices at a time when the nation was at war, and was already paying taxes such as, ten years before, no financier would have thought it possible to raise, was undoubtedly a course full of danger. Timorous politicians were for delay; but the deliberate conviction of the great Whig leaders was that something must be hazarded, or that every thing was lost. Montague, in particular, is said to have expressed in strong language his determination to kill or cure. If, indeed, there had been any hope that the evil would merely continue to be what it was, it might have been wise to defer till the return of peace an experiment which must severely try the strength of the body politic. But the evil was one which daily made progress, almost visible to the eye. There might have been a recoinage in 1694 with half the risk which must be run in 1696; and great as would be the risk in 1696, that risk would be doubled if the recoinage were postponed till 1698. "Those politicians whose voice was for delay gave less trouble than another set of politicians who were for a general and immediate recoinage, but who insisted that the new shilling should be worth only ninepence or ninepence halfpenny. At the head of this party was William Lowndes, Secretary of the Treasury, a most respectable and industrious public servant, but much more versed in the details of his office than in the higher parts of political philosophy. He was not in the least aware that a piece of metal with the king's head on it was a commodity of which the price was governed by the same laws which govern the price of a piece of metal fashioned into a spoon or a buckle, and that it was no more in the power of Parliament to make the kingdom richer by calling a crown a pound than to make the kingdom larger by calling a furlong a mile. He seriously believed, incredible as it may seem, that if the ounce of silver were divided into seven shillings instead of five, foreign nations would sell us their wines and their silks for a smaller number of ounces. He had a considerable following, composed partly of dull men who really believed what he told them, and partly of shrewd men who were perfectly willing to be authorized by law to pay a hundred pounds with eighty. Had his arguments prevailed, the evils of a vast confiscation would have been added to the other evils which afflicted the nation: public credit, still in its tender and sickly infancy, would have been destroyed, and there would have been much risk of a general mutiny of the fleet and army. Happily, Lowndes was completely refuted by Locke in a paper drawn up for the use of Somers. Somers was delighted with this little treatise, and desired that it might be printed. It speedily became the text book of all the most enlightened politicians in the kingdom, and may still be read with pleasure and profit."1 The proposition of Lowndes was for a recoinage of the currency with one-fifth less metal than the standard of the old coins; to raise, to use his own words, "the value of the silver in the coins to the foot of 68. 3d. in every crown, because the price of standard silver in bullion is risen to 6s. 5d. an ounce." Bullion, when purchased and paid for in the debased coins, had risen in ratio to their depreciation; in other words, five light coins were required to purchase a given weight of bullion which could have been purchased by four coins of full weight. Locke was called upon to prove, and did prove most conclusively, that equal weights of silver were equal in value to equal weights of equal fineness; and, consequently, that nothing could be gained, at home or abroad, by altering the standard, as the coins, both at home and abroad, would pass only at their value measured by weight and fineness. It would seem that the conclusions to which Locke came might have been assumed as axioms, from which he might have commenced his argument. If so, the statement of the ques 1 Macaulay's "History of England,” vol. iv. tion contains its own answer. Locke was not content with this. He prepared a pamphlet of more than a hundred pages, in which he reënforced his argument by a wealth and conclusiveness of illustration which should have put the question for ever at rest. He did, indeed, carry the government with him, but by no means the conviction of mankind. Strange as it may seem, he is, as will be hereafter shown, the only writer except Law, upon the subject of currency, who has not assumed, much less attempted to prove that two and two make five. At the time that he wrote, the Bank of England had just gone into operation, and his attention was only called to the subject of metallic money. He appears to have been the only person that has ever had any thing like correct ideas as to its nature and functions, and there can be little doubt that, had he sufficiently pursued the inquiry, he would have unfolded its true laws. He not only stands alone in the position he undertook to demonstrate, but he committed another unpardonable offence with the Schoolmen in asserting, to use the words of Adam Smith, "that gold and silver are the most solid and substantial part of the movable capital of a nation;" or, to quote the words of Locke himself, that "the only way to bring treasure into England is the well ordering of our trade; and, further, that the only way to bring silver and gold to the Mint, for the increase of our stock of money and treasure which shall stay here, is the overbalance of our whole trade. All other ways to increase our money and riches are but projects that will fail us.' The plan of relief finally adopted by the English government provided that the money of the kingdom should be recoined according to the old standard of weight and fineness; that all the pieces should be milled, and that the loss on the clipped pieces should be borne by the public. A time was fixed after which no clipped money should pass, except in payments to the government, and a later time after which it should not pass at all. To provide for the loss on the clipped coins, the Bank of England undertook, on the security of the window tax, to advance the government £1,200,000. This advance, however, afforded but a partial relief. Full relief 1 Locke's Works, vol. v. p. 253. |