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were gone out of the island; it is evident, that, should all the creditors at once call in their money, there would be a great scarcity of money, when that, employed in trade, must be taken out of the tradesmen's hands to pay debts; or else the debtors want money, and be exposed to their creditors, and so interest will be high. But this seldom happening, that all, or the greatest part, of the creditors do at once call for their money, unless it be in some great and general danger, is less and seldomer felt than the following, unless where the debts of the people are grown to a greater proportion; for that, constantly causing more borrowers than there can be lenders, will make money scarce, and consequently interest high. Secondly, That, which constantly raises the natural interest of money, is, when money is little, in proportion to the trade of a country. For in trade every body calls for money, according as he wants it, and this disproportion is always felt. For, if Englishmen owed in all but one million, and there were a million of money in England, the money would be well enough proportioned to the debts: but, if two millions were necessary to carry on the trade, there would be a million wanting, and the price of money would be raised, as it is of any other commodity in a market, where the merchandize will not serve half the customers, and there are two buyers for one seller.
It is in vain, therefore, to go about effectually to reduce the price of interest by a law; and you may as rationally hope to set a fixed rate upon the hire of houses, or ships, as of money. He that wants a vessel, rather than lose his market, will not stick to have it at the market-rate, and find ways to do it with security to the owner, though the rate were limited by law : and he that wants money, rather than lose his voyage, or his trade, will pay the natural interest for it; and submit to such ways of conveyance, as shall keep the lender out of the reach of the law. So that your act, at best, will serve only to increase the arts of lending, but not at all lessen the charge of the borrower: he, it is likely, shall, with more trouble, and going farther about, pay also the more for his money; unless you intend to break
in only upon mortgages and contracts already made, and (which is not to be supposed) by a law, post factum, void bargains lawfully made, and give to Richard what is Peter's due, for no other reason, but because one was borrower, and the other lender.
But, supposing the law reached the intention of the promoters of it; and that this act be so contrived, that it fixed the natural price of money, and hindered its being, by any body, lent at a higher use than four per cent., which is plain it cannot: let us, in the next place, see what will be the consequences of it.
1. It will be a loss to widows, orphans, and all those who have their estates in money, one-third of their estates ; which will be a very hard case upon a great number of people: and it is warily to be considered, by the wisdom of the nation, whether they will thus, at one blow, fine and impoverish a great and innocent part of the people, who having their estates in money, have as much right to make as much of the money as it is worth, (for more they cannot) as the landlord has to let his land for as much as it will yield. To fine men one-third of their estates, without any crime, or offence . committed, seems very hard.
2. As it will be a considerable loss and injury to the moneyed man, so it will be no advantage at all to the kingdom. For, so trade be not cramped, and exportation of our native commodities and manufactures not hindered, it will be no matter to the kingdom, who amongst ourselves gets or loses : only common charity teaches, that those should be most taken care of by the law, who are least capable of taking care for themselves.
3. It will be a gain to the borrowing merchant. For if he borrow at four per cent., and his returns be twelve per cent., he will have eight per cent., and the lender four; whereas now they divide the profit equally at six per cent. But this neither gets, nor loses, to the kingdom, in your trade, supposing the merchant and lender to be both Englishmen; only it will, as I have said, transfer a third part of the moneyed man's estate, who had nothing else to live on, into the merchant's pocket;
and that without any merit in the one, or transgression in the other. Private men's interests ought not thus to be neglected, nor sacrificed to any thing, but the manifest advantage of the public. But, in this case, it will be quite the contrary. This loss to the moneyed men will be a prejudice to trade: since it will discourage lending at such a disproportion of profit to risque; as we shall see more by and by, when we come to consider of what consequence it is to encourage lending, that so none of the money of the nation may lie dead, and thereby prejudice trade.
4. It will hinder trade. For, there being a certain proportion of money necessary for driving such a proportion of trade, so much money of this as lies still, lessens so much of the trade. Now it cannot be rationally expected, but that, where the venture is great and the gains small, (as it is in lending in England, upon low interest) many will choose rather to hoard
up their money, than venture it abroad, on such terms. This will be a loss to the kingdom, and such a loss, as, here in England, ought chiefly to be looked after: for, we having no mines, nor any other way of getting, or keeping of riches amongst us, but by trade; so much of our trade as is lost, so much of our riches must necessarily go with it; and the over-balancing of trade, between us and our neighbours, must inevitably carry away our money, and quickly leave us poor and exposed. Gold and silver, though they serve for few, yet they command all the conveniencies of life, and therefore in a plenty of them consist riches.
Every one knows that mines alone furnish these : but withal it is observable, that most countries, stored with them by nature, are poor : the digging and refining of these metals taking up the labour, and wasting the number of the people. For which reason the wise policy of the Chinese will not suffer the mines they have to be wrought. Nor indeed, things rightly considered, do gold and silver, drawn out of the mine, equally enrich, with what is got by trade. He that would make the lighter scale preponderate to the opposite, will not so soon do it, by adding increase of new weight to the
emptier, as if he took out of the heavier what he adds to the lighter, for then half so much will do it. Riches do not consist in having more gold and silver, but in having more in proportion than the rest of the world, or than our neighbours, whereby we are enabled to procure to ourselves a greater plenty of the conveniencies of life, than comes within the reach of neighbouring kingdoms and states, who, sharing the gold and silver of the world in a less proportion, want the means of plenty and power, and so are poorer. Nor would they be one jot the richer, if, by the discovery of new mines, the quantity of gold and silver in the world becoming twice as much as it is, their shares of them should be doubled.' By gold and silver in the world, I must be understood to mean, not what lies hid in the earth, but what is already out of the mine, in the hands and possessions of men. This, if well considered, would be no small encouragement to trade, which is a surer and shorter way to riches than any other, where it is managed with skill and industry.
In a country not furnished with mines, there are but two ways of growing rich, either conquest or commerce. By the first the Romans made themselves masters of the riches of the world; but I think that, in our present circumstances, nobody is vain enough to entertain a thought of our reaping the profits of the world with our swords, and making the spoil and tribute of vanquished nations the fund for the supply of the charges of the government, with an overplus for the wants, and equally craving luxury, and fashionable vanity of the people.
Commerce, therefore, is the only way left to us, either for riches, or subsistence: for this the advantages of our situation as well as the industry and inclination of our people, bold and skilful at sea, do naturally fit us: by this the nation of England has been hitherto supported, and trade left almost to itself, and assisted only by the natural advantages above-mentioned, brought us in plenty of riches, and always set this kingdom in a rank equal, if not superior to any of its neighbours; and would no doubt, without any difficulty, have continued
it so, if the more enlarged and better understood interest of trade, since the improvement of navigation, had not raised us many rivals; and the amazing politics of some late reigns let in other competitors with us for the sea, who will be sure to seize to themselves, whatever parts of trade our mismanagement, or want of money, shall let slip out of our hands: and when it is once lost, it will be too late to hope, by a mistimed care, easily to retrieve it again. For the currents of trade, like those of waters, make themselves channels, out of which they are afterwards as hard to be diverted, as rivers that have worn themselves deep within their banks.
Trade, then, is necessary to the producing of riches, and money necessary to the carrying on of trade. This is principally to be looked after, and taken care of. For if this be neglected, we shall in vain by contrivances amongst ourselves, and shuffling the little money we have, from one another's hands, endeavour to prevent our wants : decay of trade will quickly waste all the remainder; and then the landed-man, who thinks, perhaps, by the fall of interest to raise the value of his land, will find himself cruelly mistaken; when the money being gone, (as it will be, if our trade be not kept up) he can get neither farmer to rent, nor purchaser to buy his land. Whatsoever, therefore, hinders the lending of money, injures trade: and so the reducing of money to four per cent. which will discourage men from lending, will be a loss to the kingdom, in stopping so much of the current money, which turns the wheels of trade. But all this upon a supposition, that the lender and borrower are both Englishmen.
If the lender be a foreigner, by lessening interest from six to four, you get to the kingdom one-third part of the interest we pay yearly to foreigners, which let any one, if he please, think considerable; but then, upon lessening interest to four per cent. it is likely one of these things will happen : that either you fall the price of your native commodities, or lessen your trade, or else prevent not the high use, as you intended ; for at the time of lessening your interest, you want money for your trade, or you do not. If you do not, there is no