22 Novr.1800

Paper Mischief

Brouillon II

[Column 1]

Expulsion of Cash. It is not of itself a mischief, but a good. The real evil of it is the danger of destroying the credit and value of the future[?]

[Column 2]

{Though the influx of money is itself employd in adding to the mass of productive capital, yet no real addition to such capital is thus made, since if the labour employd in making the goods by the exportation of which the money is obtained had been employd in the making goods for home consumption to the same value, a/the same quantity of money would by that means have been employd in making an addition to capital to equal amount, without adding to the national mass of money.

In Spain and Portugal, or at least in Spanish and Portuguese America, gold and silver coming in to the hands non-commercial men, in the shape of rent, and not in the hands of commercial men in the shape of capital, add nothing to capital.

[Column 3]

Wealth can not be encreased but by capital.

Productive Capital is either physically productive capital or money.

Of physically productive capital the value is not decreased by quantity—

Of money, it is.

Be the case as it may, with regard to gradual additions to money keeping par with additions to wealth i:e: with the possible addition to labour—in regard to such sudden ones as outstrip that possible addition the can be doubt of the propriety of creating[?] them.

If instead of encreasing in a greater ratio money has encreased in a less than wealth, rents must have fallen instead of rising as they have done.

But as provisions would have fallen first, and the fall could only be gradual and in proportion to the encrease of wealth, the inconveniences produced could never have been equal to those produced by the sudden additions/-crease of/in to money by paper

[Column 4]

{Enrichedness[?] of the nation—that a certain quantity of wealth requires a certain quantity of money to circulate it. as per Thornton Times 28 Novr 1800}

The quantity of money that comes into the mint[?] is the quantity of bullion that in addition to the quantity of other imported goods is equal to the quantity of home made wealth capable of being exported for the purchase of such foreign goods.

The prevailing/reigning taste determines the proportions as between home produced/made goods—foreign produced goods other than bullion—and bullion i:e: plate.

Whatever quantity of bullion has not a demand for it in the shape of plate the proportion of plate to the aggregate mass of fortunes of individuals being filled up, will come into the Mint, because in the shape of money it can force an exchange for all such articles as a man wants.

[Column 5]

Difference as between metallic money and paper.

The matter of Metallic coming in in exchange—the quantity of it is limited by the quantity of surplus produce exportable—and therefore can not make any addition to wealth more than would otherwise be made by savings.

Paper is not subject to such limitation—it may be introduced in large quantities at once and whenever it is introduced, it is introduced by capitalists—and expended in the production of capital—chiefly productive capital

But still it can produce no effect if all the capacity for labour would otherwise be employd—and if it employs it not in any more advantageous or lucrative manner than it would otherwise have been employd in.

Is it likely to be more advantageous? The onus probandi lies on the advocates for paper, considering the mischiefs proved upon it.

[Column 6]

Government, when it forbid the /re/conversion of money into bullion, undermined the value of it. The foundation of the value put upon it as money was the intrinsic value possessed by it as plate.

Absurdity of Government in sinking the value of money, by encouraging the coinage of it—i:e: giving a bounty on the conversion of it/bullion into coin.

Encrease of money is not the cause but the effect of encrease of wealth. Gold &c. is not imported in the state of money—None that is imported is converted into money till the country is stocked with plate. A stock of plate will be added to the mass of other useful wealth proportioned to the addition already made to this stock of other wealth, before any addition is made to the stock of money. But this already existing stock of money would have served as well to constitute the savings as any added portion.‡

[Column 9]

‡ The time when encrease of money encreases wealth is the time when goods are more home-made than bought. i:e: made under the superintendence of dependent stewards instead of independent and accumulating manufacturers.—But this time is long past.

[Column 7]

The quantity of money depends upon the relative quantity of bullion in proportion to the demand—viz: in proportion to the quantity of other wealth—When the plenty of bullion is such that a man can not sell it above the mint—rather than it should be idle he sells it for the mint price.

Although the influx of money should have produced a clear addition to wealth formerly, by adding to the quantity or effect of labour, yet if the addition to wealth in these respects is already brought to its maximum, the utility of additions to money has ceased.

Addition can not be made to wealth by money beyond the capacity for labour &c. unemployd—

Objection—Yes, by trade—importing the product of foreign labour—Answer—but that is purchased the produce of home labour

[Column 8]

Modes of augmentg effect of Labour

1. Division of Labour/8. Capital

2. Saving of force/labour by machinery/7. Skill

3. Operating on a large scale/9. Capital

4. Discovery of new and less expensive agents i:e: agents the obtainment of which costs less labour./2. Skill

[...?] from [...?]

5. Discovery of less expensive modes of acting—Bleaching by oxygen./4. Skill

6. Discovery of new funds of crude materials. mines, shoals of fish &c./1. Chance.

7. Applications of less expensive materials to the purposes of more expensive. Paper from Straw./3. Skill

8. Means of preservation—Curing Herrings &c. Forsyth’s growing[?] Timber. [...?] discoveries./6.Skill

9. Means of encrease of vegetables. Forsyth’s methods of pruning. 5. Skill

10. Profit by/-able exchange. Exchange of a mass of goods which cost a given quantity of labour for a mass which either cost a greater quantity, or rather would exchange again for a mass that cost a greater quantity.

[Column 9]

Rise of prices proves the existence of a mass of money beyond what has made any addition to wealth, but it does not disprove the existence of a mass that that has made an addition to wealth.

Mischief small if only metal money—because the addition—great or small would be 1. [...?] [...?]/

2. Not subject to will—therefore not susceptible of abuse

3. Therefore capable[?] of being predictd[?]/precalculated and provided for—

It would not exist, but in proportion as it outstripped the encrease of wealth—and would therefore have though not for its cause yet for its inseparable concomitant, that acceptable result.

[Column 10]

In the diffusion and accumulation of wealth, multiplication of manufacturers and merchants are necessary.

It is necessary that these should be numerous—and have large stocks—because these are the class of men by whom ‘money is habitually saved’. But it is not necessary that their stocks should have a large quantity of money to represent them.

What makes merchants rich and numerous is the variety of merchandise, which tempts the great land proprietors to spend a larger and larger portion of their incomes this way—instead of spending the whole in the maintenance of idle retainers. No savings are made upon the portion of income spent on servants and retainers. Savings will necessarily be made upon the portions spent on the purchase of manufactures and imported goods.