JB_003_159.xml

Title: [[Recapitulation] 11 Oct. 1801]

Description: [Recapitulation]

11 Oct. 1801

Alarm

Ballance Recapitulation

3

25

Decrease of prices in any considerable and sensible degree is not desirable any more than encrease of prices

26

The an encrease produces loss to one part of the community, the other to another.

27

But the mischief which the community is exposed to suffer from encrease is beyond comparison greater than that it is exposed to suffer from decrease: for encrease, with the mischief attendant on it, has its limits.

28

The entire stoppage of the encrease of money would be productive to a certain degree of a decrease of prices

29

But the decrease capable of resulting from such a cause would never /hardly/ be considerable enough to be productive of a sensible degree of inconvenience.

30

It can no otherwise happen /be produced/ than by an encrease in the quantity of real wealth. It therefore can not outstrip the encrease in the quantity of real wealth. The encrease in the quantity of real wealth can scarcely be quick enough to produce any sensible inconvenience by encrease of

prices

30

prices: that is to produce in the compass of more[?] than an ordinary term has to run any such decrease in the prices of the products of agriculture as shall diminish in any sensible degree the means /[…?]/ of the farmer in respect of the payment of his rent.

31

It does not appear that the quantity of real wealth has more than doubled itself in the course of the last hundred years. But it must double itself before it can have produced a diminution to the amount of 50 per Cent in the quantities of money in the hands of farmers for the payment of their rents.

32

If the encrease in the population of Great Britain and Ireland is to be understood as kindled by the encrease in the quantity of subsistence capable of being raised within the local limits of the two Islands, it is impossible that the real wealth of the two Islands should ever rise to double its present amount, in any number of years, much less in another hundred years. For there remains, out of land susceptible of cultivation, double the quantity of land already brought into cultivation.

33

If therefore the quantity of real wealth were to double itself in the hundred years, the virtual income tax thus imposed on the farmers would not, if /although/ it were subject to no deductions exceed the amount of 10 per Cent: for the three rents which on the ordinary computation the farmer must and does produce it is one only that he will have to turn into money for producing the same […?] sum of money every year for paying the Landlord’s Rent: for the rest, though he will receive less money a quantity of money decreased[?] in the proportion supposed, yet as the value of it will encrease

in

33

in the same proportion, he will be no loser upon these two parts: that portion of them which is consumed by him and his family in kind included.

34

At the end of the /such/ 20 years it will not therefore have amounted to more than £3: 6 s 8 per cent upon his income: and as the encrease of the tax during that time will have been gradual, the average amount of it for each and every year of the term will be no more than £1: 13 s: 4.

35

The amount of this tax is no greater than what may be expected to receive in the time a full compensation in /from/ the improvements that will have been made in agriculture, and if it should

not

35

not receive any compensation, the amount of it /its pressure on the particular class/ is scarce worth regarding when compared either with that of the pressure to which all classes have been accustomed or with the encrease on the aggregate of the national wealth as composed of the wealth of all classes together which it must have had for its accompaniment, having had that and nothing else for its cause.

36

As it has happened, the encrease in the quantity of real wealth has been accompanied with an encrease in the quantity of money for some centuries. But this consideration is altogether an accidental one.

37

Neither, if I have been rightly informed would it be found, if we were to go back to a certain period be found a uniform or constant one, for in the history of this country there have been different periods during which prices have been upon the decrease.

38

What the encrease of real wealth really depends upon, as far as money is concerned, is the encrease in the proportion /ratio/ quantity of money employd in one way to the quantity of money employd in another way: the ratio

of

38

of the quantity employd /applied/ in paying labour employed in encreasing the quantity of stock constituting the /a/ source of real wealth, to the quantity employd in paying labour employd in drawing wealth for the purposes of quick and annual consumption from those sources.

JB_001_611v.xml

Title: [4 Novr.1800 Brouillon Paper]

Description: 4 Novr.1800

Brouillon

Paper Mischief

1*/5

* [Column 1]

Sinking Fund if a self-supporting Fund = Redemption of debt.

Provision is made by Government for the removal of the load of debt at the end

of a period of 40 or 50 years: Why not against[?] a cause of impoverishment of

([...?] partial as to classes affected) so much more powerful than national

debt?

Vendible

1. Individual

2. Aggregate

Aggregate

1. Physical—Land & Building

2. Ideal. Annuities &c.

Prefat. 1. Introd. Co-effects become[?] indexes—

When political economy is thoroughly understood and the relations between the

several phænomena/the matters of fact which constitute the subject matter of it

is clearly made out, and effects branching out from one & the same cause,

are traced to this their source each one of every such system of connectd

effects, will serve as a diagnostic and index to the rest.

By this means by means of a few [...?]/matters of fact [...?] public[?] in their

nature to be concealed, the eye of the politician may be able to penetrate into

the unknown[?] [...?] of affairs in a hostile state.

[Column 2]

Coining-Quasi

It is time to reclaim this stray prerogative which has thus long and thus

incautiously been suffered/to be [...?]/left in the hands of individuals.

The robbery committed by Bankers is peculation pro ratâ

A distinction that whether observed or no ought never to be unobserved by

criminalists, is that between peculation in toto and peculation pro ratâ. The

crime of Bankers, if it were one belongs to the latter head.

Revolution

A revolution in property—of the quiet kind—and yet setting aside the mischief of

disturbance &c little less extensive than the most turbulent ones known.

Fixed reduction of General rate of Interest.

Produces the mischief of encrease of money without the benefit.

[Column 3]

Price—measure of

The price of a particular article may rise to any degree without any addition to

the quantity of money in the country: do of all articles, not: but only in

proportion to the money.

No addition to the quantity of money would raise prices, supposing the addition

to wealth proportionable: therefore from the absolute addition to money must be

deducted the quantity equivalent to wealth, in estimating the cause and measure

of the rise.

Money Increase Ê Interest Decrease

An excess in the quantity of money serves to counter balance and check the

mischief resulting from the reduction of the rate of interest, which arises out

of the augmentation in the quantity of stock.

French Assignats

Produced the effect of money according to the price they were taken at

[Column 4]

Prices—how obtained

The quantity of money in circulation i:e: actually employd in buying can never

be worth more or less than quantity of commodities bought with/by it

The price of any sort of goods in two different years is the same thing with the

quantities of money given in the two respective years for the same quantity of

goods.

Therefore if in the second year the price of goods is double what it was in the

first) it follows and shews that the same quantity of money was in the second

year worth in goods but half of what it was in the first: if the whole of one[?]

quantity of money was worth the whole quantity of goods, the half of the money

is/was worth but the half of the goods of the same year and a given sum in the

second year was worth but half what

[Column 5]

what the same sum was worth in the first year.

A. Smith

Admitted that paper may have a tendency in a certain degree to expell cash but

not to its own amount: and so much as it fails of expelling to its own amount by

so much it must rise prices

It tends to expell cash—because as money grows cheap in the country and other

vendible commodities grow dear in proportion to what they are in other

countries, it becomes advantageous to send the money out to other countries in

exchange for goods. This is particularly the case of provisions of which the

real cost of production can not be so much diminished by machines as that of

Cloaths and furniture.

But in England this tendency is counteracted at both ends—

1. by the laws against exporting cash.

2. —against importing provisions.

[Column 6]

{A. Smith’s position is disproved to intuitive certainty by the simple fact of

the rise of prices}

What are the prices meant?

The prices given by consumers, the ultimate prices—or those given by Dealers the

intermediate or preliminary prices. or both together?

Semble the ultimate: these are what bear ration to income—so that the sum of

them is equal to the sum of income minus money saved and unemployd[?]

These ultimate prices, are the only prices felt.

The intermediate if they did not fall upon the ultimate would do no harm:—but

that is impossible.

No addition to wealth can be effected by any addition to money any otherwise

than by encreasing the proportion of enriching to impoverishing expenditure.

But in as much as fresh-inflowing paper money is added

[Column 7]

added in the first instance to capital i:e: employd in enriching expenditure,

does it not appear from hence that paper money adds something to wealth upon the

whole.

Error Sources.

{1. Case of individuals.

2. Sophistry of the language detracting from the value of paper money

3. —and of metallic money.

4. Accidental connection between encrease of money metal and paper and encrease

of wealth.}

5. Money raisable by paper which could not have been raisable without. ex. gr.

Bank of England. It is a mode of taxing without possibility of opposition to the

tax.

Coin

Forbidding export or melting of coin was in fact an act of Bankruptcy—stripping

the metal of its value—and reducing it to the condition of bad paper.

[Column 8]

A case might be put in which an addition to the quantity of money shall be not

merely accompanied by, but productive of an addition to wealth: and this without

any addition to prices or at least without a proportionable addition to

prices.

But the case thus put would not quadrate with the real state of things in

England.

Suppose money imported into the Scotch[?] Isles and employd[?] in fisheries.

Cases as between money and wealth.

1. Wealth encreasing money encreasing in the same proportion—No rise.

2. Wealth encreasing money encreasing in greater proportion—Rise.

3. Wealth encreasing. money encreasing but in less proportion—No rise but

fall.

4. Wealth encreasing—money decreasing—Greater fall.

[Column 9]

Cases continued

1. Wealth decreasing money decreasing in the same proportion—No fall

2. Wealth decreasing—Money decreasing in greater proportion—Rise.

3. Wealth decreasing—money decreasing but in a less proportion—No fall—but Rise.

Return of a state of things in which money should be stationary or

decreasing—

If the decrease were gradual no inconvenience would ensue—The[?] Rents would be

lowered—but prices of provisions would have been lowered first {Goods being

sold} The money as well as real price of exportable goods being lowered goods

would be exported to a larger amount or a revenue might be drawn from foreign

nations by taxes on Exports

[...?] bread basket stops.

[Column 10]

Data as between 2 points of Time 1750 & 1800

1. Quantity of wealth.

2. Quantity of money less—equal—or greater

3. Prices—higher—equal—or lower.

Known antecedently

1. Wealth/Income of 1750

2. Wealth/Income of 1800

3. Prices of 1750

4. Prices of 1800

5. Money of 1750

Known by inference

6. Money of 1800

Cases continued

1. Wealth stationary money stationary. No rise nor fall.

2. Wealth stationary—money encreasing. Rise

3. Wealth stationary money decreasing—Fall.

JB_001_611.xml

Title: [4 Novr.1800 Brouillon Paper]

Description: 4 Novr.1800

Brouillon

Paper Mischief

1*/5

* Sinking Fund if a self-supporting Fund = Redemption of debt.

Provision is made by Government for the removal of the load of debt at the end of a period of 40 or 50 years: Why not against[?] a cause of impoverishment of ([...?] partial as to classes affected) so much more powerful than national debt?

Vendible

1. Individual

2. Aggregate

Aggregate

1. Physical—Land & Building

2. Ideal. Annuities &c. Prefat. 1. Introd. Co-effects become[?] indexes— When political economy is thoroughly understood and the relations between the several phænomena/the matters of fact which constitute the subject matter of it is clearly made out, and effects branching out from one & the same cause, are traced to this their source each one of every such system of connectd effects, will serve as a diagnostic and index to the rest.

By this means by means of a few [...?]/matters of fact [...?] public[?] in their nature to be concealed, the eye of the politician may be able to penetrate into the unknown[?] [...?] of affairs in a hostile state.

Coining-Quasi It is time to reclaim this stray prerogative which has thus long and thus incautiously been suffered/to be [...?]/left in the hands of individuals.

The robbery committed by Bankers is peculation pro ratâ A distinction that whether observed or no ought never to be unobserved by criminalists, is that between peculation in toto and peculation pro ratâ. The crime of Bankers, if it were one belongs to the latter head. Revolution

A revolution in property—of the quiet kind—and yet setting aside the mischief of disturbance &c little less extensive than the most turbulent ones known.

Fixed reduction of General rate of Interest. Produces the mischief of encrease of money without the benefit. Price—measure of The price of a particular article may rise to any degree without any addition to the quantity of money in the country: do of all articles, not: but only in proportion to the money.

No addition to the quantity of money would raise prices, supposing the addition to wealth proportionable: therefore from the absolute addition to money must be deducted the quantity equivalent to wealth, in estimating the cause and measure of the rise.

Money Increase Ê Interest Decrease

An excess in the quantity of money serves to counter balance and check the mischief resulting from the reduction of the rate of interest, which arises out of the augmentation in the quantity of stock. French Assignats

Produced the effect of money according to the price they were taken at

Prices—how obtained

The quantity of money in circulation i:e: actually employd in buying can never be worth more or less than quantity of commodities bought with/by it

The price of any sort of goods in two different years is the same thing with the quantities of money given in the two respective years for the same quantity of goods.

Therefore if in the second year the price of goods is double what it was in the first) it follows and shews that the same quantity of money was in the second year worth in goods but half of what it was in the first: if the whole of one[?] quantity of money was worth the whole quantity of goods, the half of the money is/was worth but the half of the goods of the same year and a given sum in the second year was worth but half what

what the same sum was worth in the first year. A. Smith

Admitted that paper may have a tendency in a certain degree to expell cash but not to its own amount: and so much as it fails of expelling to its own amount by so much it must rise prices It tends to expell cash—because as money grows cheap in the country and other vendible commodities grow dear in proportion to what they are in other countries, it becomes advantageous to send the money out to other countries in exchange for goods. This is particularly the case of provisions of which the real cost of production can not be so much diminished by machines as that of Cloaths and furniture. But in England this tendency is counteracted at both ends— 1. by the laws against exporting cash.

2. —against importing provisions. {A. Smith’s position is disproved to intuitive certainty by the simple fact of the rise of prices} What are the prices meant?

The prices given by consumers, the ultimate prices—or those given by Dealers the intermediate or preliminary prices. or both together? Semble the ultimate: these are what bear ration to income—so that the sum of them is equal to the sum of income minus money saved and unemployd[?]

These ultimate prices, are the only prices felt.

The intermediate if they did not fall upon the ultimate would do no harm:—but that is impossible.

No addition to wealth can be effected by any addition to money any otherwise than by encreasing the proportion of enriching to impoverishing expenditure.

But in as much as fresh-inflowing paper money is added

added in the first instance to capital i:e: employd in enriching expenditure, does it not appear from hence that paper money adds something to wealth upon the whole.

Error Sources. {1. Case of individuals. 2. Sophistry of the language detracting from the value of paper money

3. —and of metallic money.

4. Accidental connection between encrease of money metal and paper and encrease of wealth.}

5. Money raisable by paper which could not have been raisable without. ex. gr. Bank of England. It is a mode of taxing without possibility of opposition to the tax.

Coin

Forbidding export or melting of coin was in fact an act of Bankruptcy—stripping the metal of its value—and reducing it to the condition of bad paper. A case might be put in which an addition to the quantity of money shall be not merely accompanied by, but productive of an addition to wealth: and this without any addition to prices or at least without a proportionable addition to prices.

But the case thus put would not quadrate with the real state of things in England.

Suppose money imported into the Scotch[?] Isles and employd[?] in fisheries.

Cases as between money and wealth.

1. Wealth encreasing money encreasing in the same proportion—No rise. 2. Wealth encreasing money encreasing in greater proportion—Rise. 3. Wealth encreasing. money encreasing but in less proportion—No rise but fall.

4. Wealth encreasing—money decreasing—Greater fall.

Cases continued

1. Wealth decreasing money decreasing in the same proportion—No fall 2. Wealth decreasing—Money decreasing in greater proportion—Rise. 3. Wealth decreasing—money decreasing but in a less proportion—No fall—but Rise.

Return of a state of things in which money should be stationary or decreasing—

If the decrease were gradual no inconvenience would ensue—The[?] Rents would be lowered—but prices of provisions would have been lowered first {Goods being sold} The money as well as real price of exportable goods being lowered goods would be exported to a larger amount or a revenue might be drawn from foreign nations by taxes on Exports

[...?] bread basket stops.

Data as between 2 points of Time 1750 & 1800

1. Quantity of wealth.

2. Quantity of money less—equal—or greater 3. Prices—higher—equal—or lower. Known antecedently

1. Wealth/Income of 1750

2. Wealth/Income of 1800

3. Prices of 1750

4. Prices of 1800 5. Money of 1750

Known by inference

6. Money of 1800

Cases continued

1. Wealth stationary money stationary. No rise nor fall.

2. Wealth stationary—money encreasing. Rise

3. Wealth stationary money decreasing—Fall.