89. Mr. Dodwell. See his Dissertation on Hanno's Periplus.
90. Of Wonderful Things.
91. Book vi.
92. Book iii.
93. Mons argentarius.
94. He had some share in their management.
95. See Festus Avienus.
96. Strabo, iii, towards the end.
97. He was rewarded by the senate of Carthage.
98. Freinshemius, Supplement to Livy, dec. 2, vi.
99. In the parts subject to the Carthaginians.
100. Justin, xliii. 5.
101. See Strabo, x.
102. He confirmed the liberty of the city of Amisus, an Athenian colony
which had enjoyed a popular government, even under the kings of Persia.
Lucullus having taken Sinone and Amisus, restored them to their liberty,
and recalled the inhabitants, who had fled on board their ships.
103. See what Appian writes concerning the Phanagoreans, the Amisians,
and the Synopians, in his treatise Of the War against Mithridates.
104. See Appian, in regard to the immense treasures which Mithridates
employed in his wars, those which he had buried, those which he
frequently lost by the treachery of his own people, and those which were
found after his death.
105. See Appian Of the War against Mithridates.
107. He lost at one time 170,000 men, yet he soon recruited his armies.
108. In the Considerations on the Causes of the Rise and Declension of
the Roman Grandeur.
109. As Plato has observed. Laws, iv.
110. Polybius, v.
111. See the Considerations on the Causes of the Rise and Declension of
the Roman Grandeur.
113. Leg. 5, § 2, ff. De Captivis.
114. Quæ mercimoniis publice præfuit -- Leg. 1, Cod. de natural.
115. Leg. ad barbaricum. Cod. quæ res exportari non debeant.
116. Leg. 2, Cod. de commerc. et mercator.
117. Procopius, War of the Persians, i.
118. See the Considerations on the Causes of the Rise and Declension of
the Roman Grandeur.
119. Pliny, vi. 28, and Strabo, xvi.
121. The caravans of Aleppo and Suez carry thither annually to the value
of about two millions of livres, and as much more clandestinely; the
royal vessel of Suez carries thither also two millions.
122. Book ii, p. 181, ed. 1587.
123. Book vi. 23.
124. He says, book ii, that the Romans employed a hundred and twenty
ships in that trade; and, in book xvii, that the Grecian kings scarcely
125. Book i, 2.
126. Book i, 13.
127. Our best maps place Peter's tower in the hundredth degree of
longitude, and about the fortieth of latitude.
128. Suetonius, Life of Claudius, 18; Leg. 7. Cod. Theodos. de
129. Book viii, tit. 4, § 9.
130. Toto titulo, ff. de incend, ruin. et naufrag.; Cod. de naufragiis;
Leg. 3, ff. ad leg. Cornel, de sicariis.
131. Leg. 1, Cod. de naufragiis.
132. Book xi, tit. 3, § 2.
133. See Aristotle, Politics, i. 9, 10.
134. See in Marca Hispanica, the constitutions of Aragon, in the years
1228 and 1231; and in Brussel, the agreement, in the year 1206, between
the King, the Countess of Champagne, and Guy of Dampierre.
135. Stow, Survey of London, iii, p. 54.
136. The edict passed at Baville, 4th of April, 1392.
137. In France the Jews were slaves in mortmain, and the lords their
successors. Mr. Brussel mentions an agreement made in the year 1206,
between the King and Thibaut, Count of Champagne, by which it was agreed
that the Jews of the one should not lend in the lands of the other.
138. It is known that under Philip Augustus and Philip the Long, the
Jews who were chased from France took refuge in Lombardy, and that there
they gave to foreign merchants and travellers secret letters, drawn upon
those to whom they had entrusted their effects in France, which were
139. See Nov. 83 of the Emperor Leo, which revokes the law of Basil his
father. This law of Basil is in Hermenopulus, under the name of Leo,
iii, tit. 7, § 27.
140. See the account of Pirard, part II, 15.
141. This, in the language of the ancients, is the state which founded
142. Except the Carthaginians, as we see by the treaty which put an end
to the first Punic war.
143. Polybius, iii.
144. The King of Persia obliged himself by treaty not to sail with any
vessel of war beyond the Cyanean rocks and the Chelidonean isles. --
145. Aristotle, Of Wonderful Things; Livy, dec. 2, vii.
146. Book ii, p. 170.
147. This has been already shown in a small treatise written by the
author about twenty years ago; which has been almost entirely
incorporated in the present work.
148. See Frezier, Voyages.
149. According to Lord Anson, Europe receives every year from Brazil two
millions sterling in gold, which is found in sand at the foot of the
mountains, or in the beds of rivers. When I wrote the little treatise
mentioned in the first note of this chapter, the returns from Brazil
were far from being so considerable an item as they are at present.
Book XXII. Of Laws in Relation to the Use of Money
1. The Reason of the Use of Money. People who have little merchandise,
as savages, and among civilised nations those who have only two or three
species, trade by exchange. Thus the caravans of Moors that go to
Timbuctoo, in the heart of Africa, have no need of money, for they
exchange their salt for gold. The Moor puts his salt in a heap, and the
Negro his dust in another; if there is not gold enough, the Moor takes
away some of his salt, or the Negro adds more gold, till both parties
But when a nation traffics with a great variety of merchandise, money
becomes necessary; because a metal easily carried from place to place
saves the great expenses which people would be obliged to be at if they
always proceeded by exchange.
As all nations have reciprocal wants, it frequently happens that one is
desirous of a large quantity of the other's merchandise, when the latter
will have very little of theirs, though with respect to another nation
the case is directly opposite. But when nations have money, and proceed
by buying and selling, those who take most merchandise pay the balance
in specie. And there is this difference, that, in the case of buying,
the trade carried on is in proportion to the wants of the nation that
has the greatest demands; while in bartering, the trade is only
according to the wants of the nation whose demands are the fewest;
without which the latter would be under an impossibility of balancing
2. Of the Nature of Money. Money is a sign which represents the value of
all merchandise. Metal is taken for this sign, as being durable,
because it is consumed but little by use; and because, without being
destroyed, it is capable of many divisions. A precious metal has been
chosen as a sign, as being most portable. A metal is most proper for a
common measure, because it can be easily reduced to the same standard.
Every state fixes upon it a particular impression, to the end that the
form may correspond with the standard and the weight, and that both may
be known by inspection only. The Athenians, not having the use of
metals, made use of oxen, and the Romans of sheep; but one ox is not
the same as another ox in the manner that one piece of metal may be the
same as another.
A specie is the sign of the value of merchandise, paper is the sign of
the value of specie; and when it is of the right sort, it represents
this value in such a manner that as to the effects produced by it there
is not the least difference.
In the same manner, as money is the sign and representative of a thing,
everything is a sign and representative of money; and the state is in a
prosperous condition when on the one hand money perfectly represents all
things, and on the other all things perfectly represent money, and are
reciprocally the sign of each other; that is, when they have such a
relative value that we may have the one as soon as we have the other.
This never happens in any other than a moderate government, nor does it
always happen there; for example, if the laws favour the dishonest
debtor, his effects are no longer a representative or sign of money.
With regard to a despotic government, it would be a prodigy did things
there represent their sign. Tyranny and distrust make every one bury
their specie; things therefore are not there the representative of
Legislators have sometimes had the art not only to make things in their
own nature the representative of specie, but to convert them even into
specie, like the current coin. Cæsar, when he was dictator, permitted
debtors to give their lands in payment to their creditors, at the price
they were worth before the civil war. Tiberius ordered that those who
desired specie should have it from the public treasury on binding over
their land to double the value Under Cæsar the lands were the money
which paid all debts; under Tiberius ten thousand sesterces in land
became as current money equal to five thousand sesterces in silver. The
Magna Charta of England provides against the seizing of the lands or
revenues of a debtor, when his movable or personal goods are sufficient
to pay, and he is willing to give them up to his creditors; thus all the
goods of an Englishman represent money.
The laws of the Germans constituted money a satisfaction for the
injuries that were committed, and for the sufferings due to guilt. But
as there was but very little specie in the country, they again
constituted this money to be paid in goods or chattels. This we find
appointed in a Saxon law, with certain regulations suitable to the ease
and convenience of the several ranks of people. At first the law
declared the value of a sou in cattle; the sou of two tremises
answered to an ox of twelve months, or to a ewe with her lamb; that of
three tremises was worth an ox of sixteen months. With these people
money became cattle, goods, and merchandise, and these again became
Money is not only a sign of things; it is also a sign and representative
of money, as we shall see in the chapter on exchange.
3. Of ideal Money. There is both real and ideal money. Civilised nations
generally make use of ideal money only, because they have converted
their real money into ideal. At first their real money was some metal of
a certain weight and standard, but soon dishonesty or want made them
retrench a part of the metal from every piece of money, to which they
left the same name; for example, from a livre at a pound weight they
took half the silver, and still continued to call it a livre; the piece
which was the twentieth part of a pound of silver they continued to call
a sou, though it is no more the twentieth part of this pound of silver.
By this method the livre is an ideal livre, and the sou an ideal sou.
Thus of the other subdivisions; and so far may this be carried that what
we call a livre shall be only a small part of the original livre or
pound, which renders it still more ideal. It may even happen that we
have no piece of money of the precise value of a livre, nor any piece
exactly with a sou, then the livre and the sou will be purely ideal.
They may give to any piece of money the denomination of as many livres
and as many sous as they please, the variation may be continual, because
it is as easy to give another name to a thing as it is difficult to
change the thing itself.
To take away the source of this abuse, it would be an excellent law for
all countries who are desirous of making commerce flourish to ordain
that none but real money should be current, and to prevent any methods
from being taken to render it ideal.
Nothing ought to be so exempt from variation as that which is the common
measure of all. Trade is in its own nature extremely uncertain; and it
is a great evil to add a new uncertainty to that which is founded on the
nature of the thing.
4. Of the Quantity of Gold and Silver. While civilised nations are the
mistresses of the world, gold and silver, whether they draw it from
among themselves, or fetch it from the mines, must increase every day.
On the contrary, it diminishes when barbarous nations prevail. We know
how great was the scarcity of these metals when the Goths and Vandals on
the one side, and on the other the Saracens and Tartars, broke in like a
torrent on the civilised world.
5. The same Subject continued. The bullion drawn from the American
mines, imported into Europe, and thence sent to the East, has greatly
promoted the navigation of the European nations; for it is merchandise
which Europe receives in exchange from America, and which she sends in
exchange to the Indies. A prodigious quantity of gold and silver is
therefore an advantage, when we consider these metals as merchandise;
but it is otherwise when we consider them as a sign, because their
abundance gives an alloy to their quality as a sign, which is chiefly
founded on their scarcity.
Before the first Punic war, copper was to silver as 960 to 1; it
is at present nearly as 731/2 to 1. When the proportion shall be as it
was formerly, silver will better perform its office as a sign.
6. The Reason why Interest was lowered one-half after the Conquest of
the Indies. Garcilasso informs us that in Spain after the conquest of
the Indies the interest, which was at ten per cent, fell to five. This
was a necessary consequence. A great quantity of specie being all of a
sudden brought into Europe, much fewer persons had need of money. The
price of all things increased, while the value of money diminished; the
proportion was then broken, and all the old debts were discharged. We
may recollect the time of the System, when everything was at a high
price except specie. Those who had money after the conquest of the
Indies were obliged to lower the price or hire of their merchandise,
that is, in other words, their interest.
From this time they were unable to bring interest to its ancient
standard, because the quantity of specie brought to Europe has been
annually increasing. Besides, as the public funds of some states,
founded on riches procured by commerce, gave but a very small interest,
it became necessary for the contracts of individuals to be regulated by
these. In short, the course of exchange having rendered the conveying of
specie from one country to another remarkably easy, money cannot be
scarce in a place where they may be so readily supplied with it by those
who have it in plenty.
7. How the Price of Things is fixed in the Variation of the Sign of
Riches. Money is the price of merchandise or manufactures. But how shall
we fix this price? or, in other words, by what piece of money is
everything to be represented?
If we compare the mass of gold and silver in the whole world with the
quantity of merchandise therein contained, it is certain that every
commodity or merchandise in particular may be compared to a certain
portion of the entire mass of gold and silver. As the total of the one
is to the total of the other, so part of the one will be to part of the
other. Let us suppose that there is only one commodity or merchandise in
the world, or only one to be purchased, and that this is divisible like
money; a part of this merchandise will answer to a part of the mass of
gold and silver; the half of the total of the one to the half of the
total of the other; the tenth, the hundredth, the thousandth part of the
one, to the tenth, the hundredth, the thousandth part of the other. But
as that which constitutes property among mankind is not all at once in
trade, and as the metals or money which are the sign of property are not
all in trade at the same time, the price is fixed in the compound ratio
of the total of things with the total of signs, and that of the total of
things in trade with the total of signs in trade also; and as the things
which are not in trade to-day may be in trade to-morrow, and the signs
not now in trade may enter into trade at the same time, the
establishment of the price of things fundamentally depends on the
proportion of the total of things to the total of signs.
Thus the prince or the magistrate can no more ascertain the value of
merchandise than he can establish by a decree that the relation 1 has to
10 is equal to that of 1 to 20. Julian's lowering the price of
provisions at Antioch was the cause of a most terrible famine.
8. The same Subject continued. The Negroes on the coast of Africa have a
sign of value without money. It is a sign merely ideal, founded on the
degree of esteem which they fix in their minds for all merchandise, in
proportion to the need they have of it. A certain commodity or
merchandise is worth three ma-coutes; another, six macoutes; another,
ten macoutes; that is, as if they said simply three, six, and ten. The
price is formed by a comparison of all merchandise with each other. They
have therefore no particular money; but each kind of merchandise is
money to the other.
Let us for a moment transfer to ourselves this manner of valuing things,
and join it with ours: all the merchandise and goods in the world, or
else all the merchandise or manufactures of a state, particularly
considered as separate from all others, would be worth a certain number
of macoutes; and, dividing the money of this state into as many parts as
there are macoutes, one part of this division of money will be the sign
of a macoute.
If we suppose the quantity of specie in a state doubled, it will be
necessary to double the specie in the macoute; but if in doubling the
specie you double also the macoute, the proportion will remain the same
as before the doubling of either.
If, since the discovery of the Indies, gold and silver have increased in
Europe in the proportion of 1 to 20, the price of provisions and
merchandise must have been enhanced in the proportion of 1 to 20. But
if, on the other hand, the quantity of merchandise has increased as 1 to
2 -- it necessarily follows that the price of this merchandise and
provisions, having been raised in proportion of 1 to 20, and fallen in
proportion of 1 to 2 -- it necessarily follows, I say, that the
proportion is only as 1 to 10.
The quantity of goods and merchandise increases by an augmentation of
commerce, the augmentation of commerce by an augmentation of the specie
which successively arrives, and by new communications with
freshly-discovered countries and seas, which furnish us with new
commodities and new merchandise.
9. Of the relative Scarcity of Gold and Silver. Besides the positive
plenty and scarcity of gold and silver, there is still a relative
abundance and a relative scarcity of one of these metals compared with
The avaricious hoard up their gold and silver, for as they do not care
to spend, they are fond of signs that are not subject to decay. They
prefer gold to silver, because as they are always afraid of losing, they
can best conceal that which takes up the least room. Gold therefore
disappears when there is plenty of silver, by reason that every one has
some to conceal; it appears again when silver is scarce, because they
are obliged to draw it from its confinement.
It is then a rule that gold is common when silver is scarce, and gold is
scarce when silver is common. This lets us see the difference between
their relative and their real abundance and scarcity, of which I shall
presently speak more at large.
10. Of Exchange. The relative abundance and scarcity of specie in
different countries forms what is called the course of exchange.
Exchange is a fixing of the actual and momentary value of money.
Silver as a metal has value like all other merchandise, and an
additional value as it is capable of becoming the sign of other
merchandise. If it were no more than mere merchandise, it would lose
much of its value.
Silver, as money, has a value, which the prince in some respects can
fix, and in others cannot.
1. The prince establishes a proportion between a quantity of silver as
metal, and the same quantity as money, 2. He fixes the proportion
between the several metals made use of as money. 3. He establishes the
weight and standard of every piece of money. In fine, 4, he gives to
every piece that ideal value of which I have spoken. I shall call the
value of money in these four respects its positive value, because it may
be fixed by law.
The coin of every state has, besides this, a relative value, as it is
compared with the money of other countries. This relative value is
established by the exchange, and greatly depends on its positive value.
It is fixed by the general opinion of the merchants, never by the
decrees of the prince; because it is subject to incessant variations,
and depends on a thousand accidents.
The several nations, in fixing this relative value, are chiefly guided
by that which has the greatest quantity of specie. If she has as much
specie as all the others together, it is then most proper for the others
to regulate theirs by her standard: and the regulation between all the
others will pretty nearly agree with the regulation made with this
In the actual state of the globe, Holland is the nation we are speaking
of. Let us examine the course of exchange with relation to her.
They have in Holland a piece of money called a florin, worth twenty
sous, or forty half-sous or gros. But, to render our ideas as simple as
possible, let us imagine that they have not any such piece of money in
Holland as a florin, and that they have no other but the gros: a man who
should have a thousand florins should have forty thousand gros; and so
of the rest. Now the exchange with Holland is determined by our knowing
how many gros every piece of money in other countries is worth; and as
the French commonly reckon by a crown of three livres, the exchange
makes it necessary for them to know how many gros are contained in a
crown of three livres. If the course of exchange is at fifty-four, a
crown of three livres will be worth fifty-four gros; if it is at sixty,
it will be worth sixty gros. If silver is scarce in France, a crown of
three livres will be worth more gros; if plentiful, it will be worth
This scarcity or plenty, whence results the mutability of the course of
exchange, is not the real, but a relative, scarcity or plenty. For
example, when France has greater occasion for funds in Holland than the
Dutch of having funds in France, specie is said to be common in France
and scarce in Holland: and vice versa.
Let us suppose that the course of exchange with Holland is at
fifty-four. If France and Holland composed only one city, they would act
as we do when we give change for a crown: the Frenchman would take three
livres out of his pocket, and the Dutchman fifty-four gros from his. But
as there is some distance between Paris and Amsterdam, it is necessary
that he who for a crown of three livres gives me fifty-four gros, which
he has in Holland, should give me a bill of exchange for fifty-four gros
payable in Holland. The fifty-four gros is not the thing in question,
but a bill for that sum. Thus, in order to judge of the scarcity or
plenty of specie, we must know if there are in France more bills of
fifty-four gros drawn upon Holland than there are crowns drawn upon
France. If there are more bills from Holland than there are from France,
specie is scarce in France, and common in Holland; it then becomes
necessary that the exchange should rise, and that they give for my crown
more than fifty-four gros; otherwise I will not part with it; and vice
Thus the various turns in the course of exchange form an account of
debtor and creditor, which must be frequently settled, and which the
state in debt can no more discharge by exchange than an individual can
pay a debt by giving change for a piece of silver.
We will suppose that there are but three states in the world, France,
Spain, and Holland; that several individuals in Spain are indebted to
France, to the value of one hundred thousand marks of silver; and that
several individuals of France owe in Spain one hundred and ten thousand
marks: now, if some circumstance both in Spain and France should cause
each to withdraw his specie, what will then be the course of exchange?
These two nations will reciprocally acquit each other of a hundred
thousand marks; but France will still owe ten thousand marks in Spain,
and the Spaniards will still have bills upon France, to the value of ten
thousand marks; while France will have none at all upon Spain.
But if Holland was in a contrary situation with respect to France, and
in order to balance the account must pay her ten thousand marks, the
French would have two ways of paying the Spaniards: either by giving
their creditors in Spain bills for ten thousand marks upon their debtors
in Holland, or else by sending specie to the value of ten thousand marks
Hence it follows that when a state has occasion to remit a sum of money
to another country, it is indifferent, in the nature of the thing,
whether specie be conveyed thither or they take bills of exchange. The
advantage or disadvantage of these two methods solely depends on actual
circumstances. We must inquire which will yield most gros in
Holland-money carried thither in specie, or a bill upon Holland for the
When money of the same standard and weight in France yields money of the
same standard and weight in Holland, we say that the exchange is at par.
In the actual state of specie the par is nearly at fifty-four gros
to the crown. When the exchange is above fifty-four gros, we say it is
high; when beneath, we say it is low.
In order to know the loss and gain of a state in a particular situation
of exchange, it must be considered as debtor and creditor, as buyer and
seller. When the exchange is below par, it loses as a debtor, and gains
as a creditor; it loses as a buyer and gains as a seller. It is obvious
it loses as debtor; suppose, for example, France owes Holland a certain
number of gros, the fewer gros there are in a crown the more crowns she
has to pay. On the contrary, if France is creditor for a certain number
of gros, the less number of gros there are in a crown the more crowns
she will receive. The state loses also as buyer, for there must be the
same number of gros to purchase the same quantity of merchandise; and
while the exchange is low, every French crown is worth fewer gros. For
the same reason the state gains as a seller. I sell my merchandise in
Holland for a certain number of gros; I receive then more crowns in
France, when for every fifty gros I receive a crown, than I should do if
I received only the same crown for every fifty-four. The contrary to
this takes place in the other state. If the Dutch are indebted a certain
number of crowns to France, they will gain; if this money is owing to
them, they will lose; if they sell, they lose; and if they buy, they
It is proper to pursue this somewhat further. When the exchange is below
par; for example, if it be at fifty instead of fifty-four, it should
follow that France, on sending bills of exchange to Holland for
fifty-four thousand crowns, could buy merchandise only to the value of
fifty thousand; and that on the other hand, the Dutch sending the value
of fifty thousands crowns to France might buy fifty-four thousand, which
makes a difference of 8/54, that is, a loss to France of more than
one-seventh; so that France would be obliged to send to Holland
one-seventh more in specie or merchandise than she would do were the
exchange at par. And as the mischief must constantly increase, because a
debt of this kind would bring the exchange still lower, France would in
the end be ruined. It seems, I say, as if this should certainly follow;
and yet it does not, because of the principle which I have elsewhere
established; which is that states constantly lean towards a balance,
in order to preserve their independency. Thus they borrow only in
proportion to their ability to pay, and measure their buying by what
they sell; and taking the example from above, if the exchange falls in
France from fifty-four to fifty, the Dutch who buy merchandise in France
to the value of a thousand crowns, for which they used to pay fifty-four
thousand gros, would now pay only fifty thousand, if the French would
consent to it. But the merchandise of France will rise insensibly, and
the profit will be shared between the French and the Dutch; for when a
merchant can gain, he easily shares his profit; there arises then a
communication of profit between the French and the Dutch. In the same
manner the French, who bought merchandise of Holland for fifty-four
thousand gros, and who, when the exchange was at fifty-four, paid for
them a thousand crowns, will be obliged to add one-seventh more in
French crowns to buy the same merchandise. But the French merchant,
being sensible of the loss he suffers, will take up less of the
merchandise of Holland. The French and the Dutch merchant will then both
be losers, the state will insensibly fall into a balance, and the
lowering of the exchange will not be attended with all those
inconveniences which we had reason to fear.
A merchant may send his stock into a foreign country when the exchange
is below par without injuring his fortune, because, when it returns, he
recovers what he had lost; but a prince who sends only specie into a
foreign country which never can return, is always a loser.
When the merchants have great dealings in any country, the exchange
there infallibly rises. This proceeds from their entering into many
engagements, buying great quantities of merchandise, and drawing upon
foreign countries to pay for them.
A prince may amass great wealth in his dominions, and yet specie may be
really scarce, and relatively common; for instance, if the state is
indebted for much merchandise to a foreign country, the exchange will be
low, though specie be scarce.
The exchange of all places constantly tends to a certain proportion, and
that in the very nature of things. If the course of exchange from
Ireland to England is below par, and that of England to Holland is also
under par, that of Ireland to Holland will be still lower; that is, in
the compound ratio of that of Ireland to England, and that of England to
Holland; for a Dutch merchant who can have his specie indirectly from
Ireland, by way of England, will not choose to pay dearer by having it
in the direct way. This, I say, ought naturally to be the case; but,
however, it is not exactly so. There are always circumstances which vary
these things; and the different profit of drawing by one place, or of
drawing by another, constitutes the particular art and dexterity of the
bankers, which does not belong to the present subject.
When a state raises its specie, for instance, when it gives the name of
six livres, or two crowns, to what was before called three livres, or
one crown, this new denomination, which adds nothing real to the crown,
ought not to procure a single gros more by the exchange. We ought only
to have for the two new crowns the same number of gros which we before
received for the old one. If this does not happen, it must not be
imputed as an effect of the regulation itself, but to the novelty and
suddenness of the affair. The exchange adheres to what is already
established, and is not altered till after a certain time.
When a state, instead of only raising the specie by a law, calls it in,
in order to diminish its size, it frequently happens that during the
time taken up in passing again through the mint there are two kinds of
money -- the large, which is the old, and the small, which is the new;
and as the large is cried down as not to be received as money, and bills
of exchange must consequently be paid in the new, one would imagine then
that the exchange should be regulated by the new. If, for example, in
France, the ancient crown of three livres, being worth in Holland sixty
gros, was reduced one-half, the new crown ought to be valued only at
thirty. On the other hand, it seems as if the exchange ought to be
regulated by the old coin; because the banker who has specie, and
receives bills, is obliged to carry the old coin to the mint in order to
change it for the new, by which he must be a loser. The exchange then
ought to be fixed between the value of the old coin and that of the new.
The value of the old is decreased, if we may call it so, both because
there is already some of the new in trade, and because the bankers
cannot keep up to the rigour of the law, having an interest in letting
loose the old coin from their chests, and being sometimes obliged to
make payments with it. Again, the value of the new specie must rise,
because the banker having this finds himself in a situation in which, as
we shall immediately prove, he will reap great advantage by procuring
the old. The exchange should then be fixed, as I have already said,
between the new and the old coin. For then the bankers find it to their
interest to send the old out of the kingdom, because by this method they
procure the same advantage as they could receive from a regular exchange
of the old specie, that is, a great many gros in Holland; and in return,
a regular exchange a little lower, between the old and the new specie,
which would bring many crowns to France.
Suppose that three livres of the old coin yield by the actual exchange
forty-five gros, and that by sending this same crown to Holland they
receive sixty, but with a bill of forty-five gros, they procure a crown
of three livres in France, which being sent in the old specie to
Holland, still yields sixty gros; thus all the old specie would be sent
out of the kingdom, and the bankers would run away with the whole
To remedy this, new measures must be taken. The state which coined the
new specie would itself be obliged to send great quantities of the old
to the nation which regulates the exchange, and, by thus gaining credit
there, raise the exchange pretty nearly to as many gros for a crown of
three livres out of the country. I say to nearly the same, for while the
profits are small the bankers will not be tempted to send it abroad,
because of the expense of carriage and the danger of confiscation.
It is fit that we should give a very clear idea of this. Mr. Bernard, or
any other banker employed by the state, proposes bills upon Holland, and
gives them at one, two, or three gros higher than the actual exchange;
he has made a provision in a foreign country, by means of the old
specie, which he has continually been sending thither; and thus he has
raised the exchange to the point we have just mentioned. In the
meantime, by disposing of his bills, he seizes on all the new specie,
and obliges the other bankers, who have payments to make, to carry their
old specie to the mint; and, as he insensibly obtains all the specie, he
obliges the other bankers to give him bills of exchange at a very high
price. By this means his profit in the end compensates in a great
measure for the loss he suffered at the beginning.
It is evident that during these transactions, the state must be in a
dangerous crisis. Specie must become extremely scarce -- 1, because much
the greatest part is cried down; 2, because a part will be sent into
foreign countries; 3, because every one will lay it up, as not being
willing to give that profit to the prince which he hopes to receive
himself. It is dangerous to do it slowly; and dangerous also to do it in
too much haste. If the supposed gain be immoderate, the inconveniences
increase in proportion.
We see, from what has been already said, that when the exchange is lower
than the specie, a profit may be made by sending it abroad; for the same
reason, when it is higher than the specie, there is profit in causing it
But there is a case in which profit may be made by sending the specie
out of the kingdom, when the exchange is at par; that is, by sending it
into a foreign country to be coined over again. When it returns, an
advantage may be made of it, whether it be circulated in the country or
paid for foreign bills.
If a company has been erected in a state with an immense number of
shares, and these shares have in a few months risen twenty or
twenty-five times above the original purchase value; if, again, the same
state established a bank, whose bills were to perform the office of
money, while the legal value of these bills was prodigious, in order to
answer to the legal value of the shares (this is Mr. Law's System), it
would follow, from the nature of things, that these shares and these
bills would vanish in the same manner as they arose. Stocks cannot
suddenly be raised twenty or twenty-five times above their original
value without giving a number of people the means of procuring immense
riches in paper: every one would endeavour to make his fortune; and as
the exchange offers the most easy way of removing it from home, or
conveying it whither one pleases, people would incessantly remit a part
of their effects to the nation that regulates the exchange. A continual
process of remittances into a foreign country must lower the exchange.
Let us suppose that at the time of the System, in proportion to the
standard and weight of the silver coin, the exchange was fixed at forty
gros to the crown; when a vast quantity of paper became money, they were
unwilling to give more than thirty-nine gros for a crown, and afterwards
thirty-eight, thirty-seven, &c. This proceeded so far, that after a
while they would give but eight gros, and at last there was no exchange
The exchange ought in this case to have regulated the proportion between
the specie and the paper of France. I suppose that, by the weight and
standard of the silver, the crown of three livres in silver was worth
forty gros, and that the exchange being made in paper, the crown of
three livres in paper was worth only eight gros, the difference was
four-fifths. The crown of three livres in paper was then worth
four-fifths less than the crown of three livres in silver.
11. Of the Proceedings of the Romans with respect to Money. How great
soever the exertion of authority had been in our times, with respect to
the specie of France, during the administration of two successive
ministers, still it was vastly exceeded by the Romans; not at the time
when corruption had crept into their republic, nor when they were in a
state of anarchy, but when they were as much by their wisdom as their
courage in the full vigour of the constitution, after having conquered
the cities of Italy, and at the very time that they disputed for empire
with the Carthaginians.
And here I am pleased that I have an opportunity of examining more
closely into this matter, that no example may be taken from what can
never justly be called one.
In the first Punic war the as, which ought to be twelve ounces of
copper, weighed only two, and in the second it was no more than one.
This retrenchment answers to what we now call the raising of coin. To
take half the silver from a crown of six livres, in order to make two
crowns, or to raise it to the value of twelve livres, is precisely the
They have left us no monument of the manner in which the Romans
conducted this affair in the first Punic war; but what they did in the
second is a proof of the most consummate wisdom. The republic found
herself under an impossibility of paying her debts: the as weighed two
ounces of copper, and the denarius, valued at ten ases, weighed twenty
ounces of copper. The republic, being willing to gain half on her
creditors, made the as of an ounce of copper, and by this means paid
the value of a denarius with ten ounces. This proceeding must have given
a great shock to the state; they were obliged therefore to break the
force of it as well as they could. It was in itself unjust, and it was
necessary to render it as little so as possible. They had in view the
deliverance of the republic with respect to the citizens; they were not
therefore obliged to direct their view to the deliverance of the
citizens with respect to each other. This made a second step necessary.
It was ordained that the denarius, which hitherto contained but ten
ases, should contain sixteen. The result of this double operation was,
that while the creditors of the republic lost one-half, those of
individuals lost only a fifth; the price of merchandise was
increased only a fifth; the real change of the money was only a fifth.
The other consequences are obvious.
The Romans then conducted themselves with greater prudence than we, who
in our transactions involved both the public treasure and the fortunes
of individuals. But this is not all: their business was carried on
amidst more favourable circumstances than ours.
12. The Circumstances in which the Romans changed the Value of the
Specie. There was formerly very little gold and silver in Italy. This
country has few or no mines of gold or silver. When Rome was taken by
the Gauls, they found only a thousand-weight of gold And yet the
Romans had sacked many powerful cities, and brought home their wealth.
For a long time they made use of none but copper money; and it was not
till after the peace with Pyrrhus that they had silver enough to coin
money: they made denarii of this metal of the value of ten ases,
or ten pounds of copper. At that time the proportion of silver was to
that of copper as 1 to 960. For as the Roman denarius was valued at ten
ases, or ten pounds of copper, it was worth one hundred and twenty
ounces of copper; and as the same denarius was valued only at one-eighth
of an ounce of silver, this produced the above proportion.
When Rome became mistress of that part of Italy which is nearest to
Greece and Sicily, by degrees she found herself between two rich nations
-- the Greeks and the Carthaginians. Silver increased at Rome; and as
the proportion of 1 to 960 between silver and copper could be no longer
supported, she made several regulations with respect to money, which to
us are unknown. However, at the beginning of the second Punic war, the
Roman denarius was worth no more than twenty ounces of copper; and
thus the proportion between silver and copper was no longer but as 1 to
160. The reduction was very considerable, since the republic gained
five-sixths upon all copper money. But she did only what was necessary
in the nature of things, by establishing the proportion between the
metals made use of as money.
The peace which terminated the first Punic war left the Romans masters
of Sicily. They soon entered Sardinia; afterwards they began to know
Spain; and thus the quantity of silver increased at Rome. They took
measures to reduce the denarius from twenty ounces to sixteen, which
had the effect of putting a nearer proportion between the silver and
copper; thus the proportion, which was before as 1 to 160, was now made
as 1 to 128.
If we examine into the conduct of the Romans, we shall never find them
so great as in choosing a proper conjuncture for performing any
13. Proceedings with respect to Money in the Time of the Emperors. In
the changes made in the specie during the time of the republic, they
proceeded by diminishing it: in its wants, the state entrusted the
knowledge to the people, and did not pretend to deceive them. Under the
emperors, they proceeded by way of alloy. These princes, reduced to
despair even by their liberalities, found themselves obliged to degrade
the specie; an indirect method, which diminished the evil without
seeming to touch it. They withheld a part of the gift and yet concealed
the hand that did it; and, without speaking of the diminution of the
pay, or of the gratuity, it was found diminished.
We even still see in cabinets a kind of medals which are called plated,
and are only pieces of copper covered with a thin plate of silver.
This money is mentioned in a fragment of the 77th book of Dio.
Didius Julian first began to debase it. We find that the coin of
Caracalla had an alloy of more than half; that of Alexander Severus
of two-thirds; the debasing still increased, till in the time of
Gallienus nothing was to be seen but copper silvered over.
It is evident that such violent proceedings could not take place in the
present age; a prince might deceive himself, but he could deceive nobody
else. The exchange has taught the banker to draw a comparison between
all the money in the world, and to establish its just value. The
standard of money can be no longer a secret. Were the prince to begin to
alloy his silver, everybody else would continue it, and do it for him;
the specie of the true standard would go abroad first, and nothing would
be sent back but base metal. If, like the Roman Emperors, he debased the
silver without debasing the gold, the gold would suddenly disappear, and
he would be reduced to his bad silver. The exchange, as I have said in
the preceding book, has deprived princes of the opportunity of
showing great exertions of authority, or at least has rendered them
14. How the Exchange is a Constraint on despotic Power. Russia would
have descended from its despotic power, but could not. The establishment
of commerce depended on that of the exchange, and the transactions were
inconsistent with all its laws.
In 1745 the Czarina made a law to expel the Jews, because they remitted
into foreign countries the specie of those who were banished into
Siberia, as well as that of the foreigners entertained in her service.
As all the subjects of the empire are slaves, they can neither go abroad
themselves nor send away their effects without permission. The exchange
which gives them the means of remitting their specie from one country to
another is therefore entirely incompatible with the laws of Russia.
Commerce itself is inconsistent with the Russian laws. The people are
composed only of slaves employed in agriculture, and of slaves called
ecclesiastics or gentlemen, who are the lords of those slaves; there is
then nobody left for the third estate, which ought to be composed of
mechanics and merchants.
15. The Practice of some Countries in Italy. They have made laws in some