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 L162
 
 T n E 
 DOCTRINE OF EQUIVALENTS 
 
 O R 
 
 AN EXPLANATION OF THE NATURE, 
 THE VALUE, AND THE POWER 
 
 O F 
 
 MONEY 
 
 TOGETHER 
 
 WITH THEIR APPLICATION IN 
 ORGANISING 
 
 PUBLIC FINANCE 
 
 B Y 
 
 GEORGE CRAUFURD Esq. 
 
 PART THE FIRST. 
 
 ROTTERDAM^ 
 
 Printed by C. R. H A K E. 
 I 7 94.
 
 CONTENTS 
 
 O F 
 
 PART THE FIRST. 
 
 INTRODUCTION. . page i 
 
 CHAPTER I. On the proportional y or 
 relative value of different ohjeSts , be- 
 fore the introduQiion of the precious me- 
 tals , as a reprefentative Jign. . 15 
 
 CHAPTER IL On the principles , by 
 which the fpecific quantity of the pre- 
 cious metals , due to each objeCt , is 
 regulated, . . . • 41 
 
 CHAPTER in. On the effe^s of tarn- 
 tion in money, '. . . 91
 
 INTRODUCTION. 
 
 jLVlthough the davelopement of this 
 intricate fubje6l has been attended with 
 confiderable application on my part, yet 
 a great degree of attention will be re- 
 quired from my readers , in order to fup- 
 ply that want of perfpicuity, which may 
 appear in the explanation of many ab« 
 ftrufe points , and which I hope they will 
 in fome meafure attribute to the nature 
 of the enquiry. 
 
 The confideration of my incapacity to 
 do the fubjefl that juflice, which its im- 
 portance naturally claims, would indeed 
 have deterred me from publifliing tlio 
 refult of my meditations, had I not been 
 A e^*
 
 2 INTRODUCTION. 
 
 extremely follicitous of eradicating many 
 prevailing notions refpefting money , 
 which appear not only to be in themfelves 
 unfounded, but which have ferved alfo 
 to involve in confufion and obfcurity 
 every fubjefl: connected with them. 
 
 I muft confefs at the fame time , that 
 I was urged to the full inveftigation of 
 this important and much neglected fcien- 
 ce , by the defire of explaining more fully 
 thofe principles of Finance, which I pu- 
 blifhed fome years ago, and which from 
 being totally mifunderltood were not 
 much attended to. 
 
 How far this attempt to elucidate that 
 work may fucceed is uncertain , but I 
 will venture to aiTert, that it is utterly 
 impoflible, either to afcertain the firfl 
 caufes of relative value, and form the 
 fcience of political oeconomy into a com- 
 prehenfive , clear and familiar fyftem , 
 or to trace out any confiftent theory of 
 
 Fi-
 
 INTRODUCTION. 3 
 
 Finance from thofe principles of money, 
 which are laid down by Mr* Harris, Mr» 
 Hume 5 Sir James Stuart , Dr. Adam 
 Smith, or any other writer op that fub- 
 jeft. 
 
 Had any of thofe authors, who pre- 
 tended to a knowledge of the nature of 
 money, proceeded to an examination of 
 the principles, which give rife to that 
 difference, fo evidently exifting in the 
 money price of various objefts , and 
 which fufSciently indicates, that a cer- 
 tain price or quantity of money is fpe- 
 cifically or juftly due to every objeft,. 
 they would naturally have been led to 9 
 difcovery of the effecls , which enfue from 
 giving occafionally more or lefs than 
 this juft value, as well as of the fallacy 
 of their general pofition: ,, that by in* 
 „ creafing the quantity of money in any 
 „ Country J the value of every ohjeSt in mO' 
 5, ney muft alfo increafcJ^ 
 
 A a An
 
 4 INTRODUCTION. 
 
 An invefligation of this kind would 
 have (liewn to them , that the quicker & 
 flower motion or circulation of money 
 from hand to hand, which in its efFecls 
 is of the fame confequence as increafe or 
 decreafe of quantity, mull of courfe de- 
 llroy their afTumed Hypothefis, and that 
 the poilibility of an increafe or decreafe 
 of objefts to be reprefented , would in- 
 fallibly fubvert the pofition abovemen- 
 tioned, if proved to be dependent on, 
 or concomitant with the increafe or de- 
 creafe of money. By adhering therefore 
 too much to the principles of writers 
 in an earlier age, they deceived and per- 
 plexed themfelves , as well as their rea- 
 ders , and have unfortunately left the 
 fubjecl to be further explained. 
 
 I fay unfortunately, becaufe in refu- 
 ting the opinions of fuch celebrated au- 
 thors , I feel my own want of talents as a 
 writer, while it -mull be acknowledged, 
 that their fuperior abilities would have 
 
 ma-
 
 INTRODUCTION. 5 
 
 made the truth appear more confpi- 
 cuous. 
 
 I flatter myfelf however with every in- 
 dulgence from the public, as a return for 
 my Zeal in attempting to corre6l errors, 
 which have not only been received as 
 truths, but which, from the reputation 
 of their authors, and from the indiffe- 
 rence of mankind to inveftigations of 
 this nature , have been adopted as funda- 
 mental principles in the policy of ftates. 
 
 I mull at the fame time obferve , that it 
 is become of the utmofl importance in 
 the prefent flate of ihcreafing taxation , 
 to afcertain in the fulleft extent, the na- 
 ture, the value, and the power of the 
 precious metals, and I therefore consi- 
 der it incumbent on me (as profefling 
 fome knowledge of the fubjecl^ to trace 
 the origin, and progrefs of their ufe, as 
 well as their operations in fixing the mo- 
 ney value of every objeft, which human 
 A 3 In-
 
 6 INTRODUCTION. 
 
 Induftry can either obtain or produce , 
 with the caufes that contraft or extend 
 the induHrious exertions of Man , in or- 
 der to iliew the inconfiflency of the re- 
 ceived opinions, and the political errors, 
 which have refulted from the admiffion 
 of falfe principles. 
 
 It milfl doubtlefs appear very extraor- 
 dinary to men of reflexion, that no con- 
 clufive arguments, or confiflent theories 
 are to be found in any work hitherto 
 written on this important fubje6l, and 
 that every publication has been confined 
 to fome partial explanations refpe6ling 
 Indu(lry,and commerce, to fome affumed 
 and vague principles concerning money 
 as well as public credit, and to fome vain 
 attempts to reconcile contradictory ef- 
 feels, which the authors of fuch works 
 were under a neceffity of flating , and 
 with the caufes of which they were un- 
 acquainted. 
 
 This
 
 INTRODUCTION. 7 
 
 This appears evidently to be the cafe 
 even in Sir James Stuart's political oecono- 
 my ^ which fuccefsfully combats the opi- 
 nions of Mefs. Montesquieu and Hume, 
 by proving them inconfiftent in their 
 reafoning; but it unfortunately does not 
 develope any fixed principles or ideas for 
 the purpofe of obtaining more uniform 
 and comprehenfive confequences. 
 
 I mention in particular the writings of 
 Mr. Harris, Mr. Hume, Sir James Stuart, 
 and Dr. Adam Smith, becaufe they mufl ' 
 be in the recollection of every enquirer 
 into this fubjeft, and as the lafl; men- 
 tioned Gentleman's work on the Wealth 
 of Nations has met with almofl univerfal 
 applaufe on account of the perfpicuity 
 of his flyle, it becomes the more ne- 
 cellary to fliew the fallacy of his Ideas, 
 and efpecially in thofe parts of his En- 
 quiry, which either lead to an impro- 
 per , and nowife exifling dillinclion be- 
 tween Gold & Silver , by calling the lat- 
 A 4 ter
 
 8 INTRODUCTION. 
 
 ter only Jlandard^ or which tend to prove, 
 that the natural price of every commo- 
 dity increafes by the greater abundan- 
 ce of the precious metals, which is in 
 other words: ,, that Gold 6f Silver from 
 3, the circiimjiance of their greater relative 
 55 abundance compared with other objects , 
 55 lofe in their comparative value with thofe 
 ,5 objeUs'^ 
 
 I cannot indeed deny, that the preci- 
 ous metals have loft in their value within 
 this century, but this appears ,on]y in 
 the decreafed rate of Intereft, which con- 
 ftitutes their real , & I may fay only price. 
 
 It is not lefs true, that the price or 
 fpecific value in the precious metals , 
 which is really due to almoft every com- 
 modity, is much increafed during the 
 fame period, which can eafily be a'ecounted 
 for by the accumulation of taxes on va- 
 rious obje61:s, and their extenfive vibra* 
 tions on allxhQ neceflaries of life, with- 
 out
 
 INTRODUCTION. 9 
 
 out having rccourfe to the increafed quan- 
 tity of money for explaining the caufe 
 of , this enhanced value, a3 the contrai^y 
 efFe6l would infallibly have been produ- 
 ced, if an accumulation of taxes had not 
 taken place. 
 
 There would indeed be a great impro- 
 priety of exprejfwn in faying , that the fluc- 
 tuating fpecific value in money of diflTe- 
 rent objects fliould be confidered as the 
 price of the metals, becaufe experience 
 fufficiently demonltrates, that this flue 
 tuation in value is for ever partial and 
 nowife uniform on all objeds , whiclx 
 precludes the poflibility of applying it to 
 indicate a change in the general medium 
 called money; nor can the metals, when 
 reprefenting every obje6l, be confidered 
 in any other light, than as a meafure or 
 Equivalent y of which more or lefs is ulti- 
 mately required for the produdion of each 
 objeft from a combination of caufes , 
 which are to be traced in this work. 
 
 A J The
 
 lo INTRODUCTION. 
 
 The neceffity of making this diftinflion 
 between Intereft of money as its price, 
 and the fpecific quantity due to each ob- 
 jeft, when exchanged for money, as its 
 meafure , will from the nature of the in- 
 vefligation appear in a very confpicuous 
 point of view , as well as the further di- 
 ftin6lion, which I fhall make between the 
 caufe of fuch fpecific value, when enti- 
 rely independent of all taxation, and alfo 
 when combined with it, in order to flievv 
 in the clearell poffible manner the mode, 
 in which the rife & fall of interell afFeft 
 ultimately the price of every obje6l. 
 
 A very little reflexion would indeed 
 point out , chat the fall of Interefl from 
 the abundance of money admits of a di- 
 minution in the fpecific value or price of 
 all induilrious productions , to which di- 
 miniilied value the manufacturer could 
 on felling them chearfully confent without 
 injury to himfelf, while a rife of Interefl 
 from a fcarcity of money produces on 
 
 the
 
 INTRODUCTION. ii 
 
 the contrary an increafe in that fpecific 
 value, which the manufafturer could not 
 poilibly difpenfe with on difpofing of his 
 produ6iions. 
 
 But mankind do not hefitate to main- 
 tain , and all authors , who have written 
 on the fubjecl, flatter the Idea: „ that the 
 5, relative abundance of the metals tends Jim- 
 yy ply to increafe the fpecific value of every 
 5, object 9 and their relative fear city to dimi- 
 55 niflj that fpecific value on account of the 
 55 faculty 5 which the poffeffors of money 
 55 have to give more or lefs.'' 
 
 This pofition may to fuperficial enqui- 
 rers appear conclufive, but a thorough 
 inveftigation of the fubje6l will fliew its 
 fallacy 5 and that the eff'ecls 5 which they 
 point out 5 could only be temporary, be- 
 caufe in the one cafe an encouragement 
 to produce more objefls, and in the 
 other cafe a difcouragement to the pro- 
 duftion of the fame number mull neces- 
 
 fa-
 
 12 INTRODUCTION. 
 
 farily arife , as will be demonflrated in 
 explaining the principle, by which this 
 increafe or decreafe of Indullry is di- 
 refted. 
 
 It will cer^ainly not be denied, that 
 fome varying caufe direfls the promotion 
 or the deflru6lion of Induflry, indepen- 
 dent of that degree of fecurity in pro- 
 perty » which is afforded by each Go- 
 vernment, and which, by being gene- 
 rally in the fame Hate for a long pe- 
 riod , cannot in itfelf have either a pro- 
 grellive or a changeable influence on the 
 mafs of Induftry; nor can it be difpu- 
 ted, that the principle of taxing any ob- 
 je6b mufl infallibly add. to its fpecific va- 
 lue in money, which iliews the neceffity 
 of examining each caufe , and each effe6l 
 feparately, and diilin6lly before any ge- 
 neral, and pofitive conclulions refpefting 
 Finance can be admitted or univerfally 
 afllaited to.
 
 INTRODUCTION. 13 
 
 I propofe therefore to examine the 
 primitive and immutable caufes of the 
 different degrees of value attached to 
 every objefl, the principles, by which 
 the fpecific quantity of the precious me- 
 tals , to which all things are entitled , is 
 regulated; the means, by which thofe 
 proportions are always kept up, and how 
 the multiplication of objefts in each clafs 
 of Induflry originates. 
 
 I fliall alfo add fuch obfervations on 
 the writings of other authors, and on 
 the application of my own principles as 
 may appear ufeful & necelTary. 
 
 Whatever relates to money will be 
 more or lefs touched upon, and I truft 
 that the important truths, which I en- 
 deavour to explain, will fooner or later 
 be generally underftood , and bring about 
 an entire new fyftem of Policy refpec- 
 ting Finance, not only for the purpofe 
 of extending the Population, the Agri- 
 
 cul-
 
 14 INTRODUCTION. 
 
 culture, the Induflry & the Commerce 
 of Great Britain, but alfo for the flill 
 more important obje6l of diminifliing 
 the fpecific value of every thing, and 
 confequently the enormous cxpence, to 
 which the nation is become fubje6l for 
 her prote6lion in time of peace , as well 
 as for her defence in time of war, and 
 which no oeconomy can fufficiently coun- 
 teraft, becaufe the fervices required are 
 not otherwife attainable. 
 
 THE
 
 THE 
 
 DOCTRINE -OF EQUIVALENTS 
 
 OR 
 
 AN EXPLANATION OF THE NATURE, 
 THE VALUE, AND THE 
 
 POWER OF MONEY &c. 
 
 CHAPTER I. 
 
 On the proportional or relative value of dif- 
 ferent objects before the introduction 
 of the precious metals as a re- 
 prefentative Jign. 
 
 In the firft ftages of fociety, when 
 hunting and fifliing were the only, em- 
 ployments of man , and the means of his 
 fupport, the value of every commodity 
 relative to each other was in proportion 
 
 to
 
 1 6 THE DOCTRINE OF EQUIVALENTS OR 
 
 to the labour employed in procuring 
 them. 
 
 Let us fuppofe for inftance, that the 
 taking of ten birds required no more time 
 than was necefTary to catch one hare: 
 the price of barter became then eflabli- 
 flied at the rate of one hare for ten birds. 
 
 A little experience fiiewed the different 
 degrees, and kinds of labour, which were 
 neceffary for procuring every obje6l , 
 and upon this principle a general fcale of 
 value took place. 
 
 This neceffary, and to appearance re- 
 gulated proportion, was indeed fometi- 
 mes diflurbed by a more general confump- 
 tion of one article in preference to ano- 
 ther, as we may fuppofe that fifli might 
 in many places have been preferred to 
 hares; fuch a circumflance would natu- 
 rally difcourage the hunters, and encou- 
 rage the fifliermen by the latter being 
 
 over-
 
 AN EXPLANATION OF THE NATURE, (5cC. I? 
 
 overpaid, and the former underpaid in 
 this general barter of labour againfl la- 
 bour. 
 
 Self Interefl however prompts the ge. 
 nerality of mankind to follow the mofl 
 lucrative employment , and to increafe 
 their exertions, wherever they are moft 
 wanted ; the greatefl quantity of food , 
 cloathing, and Gonveniencies for the leaft 
 trouble was at that time, as at prefent, 
 the price , or lucre to be derived from the 
 poflellion of any objecl that was much 
 wanted , and being a fufficient induce- 
 ment to alter the mode, or to increafe 
 the quantity of labour, a greater number 
 of perfons would naturally take to fifh- 
 ing, and reflore fey thofe means the ne- 
 ceflary proportions of value for keep- 
 ing up both employments. 
 
 In this manner did a tendency to dis- 
 order produce the Remedy itfelf by en- 
 couraging a greater produftion of the ob- 
 B jea
 
 1 8 THE DOCTRINE OF EQUIVALENTS OR 
 
 je6l that had been overpaid; and this un- 
 erring principle will ever continue to be 
 the groundwork of human Induflry, 
 whenever the number of obje6ls is not 
 limited by nature, as may frequently be 
 the cafe. 
 
 The precious metals derived alfo their 
 relative value from the labour employed 
 in procuring them, and were at firfl only 
 made ufe of as ornaments and utenfils. 
 
 It may be here neceflary to obferve, 
 that a contribution in kind on every pro- 
 du6lion for the purpofes of Government 
 could not in any degree alter thefe re- 
 gulated proportions, becaufe the a6l of 
 levying a twentieth , a tenth , or any other 
 moderate proportion of each man's in- 
 duflry, produced fimply the confequences 
 of diminiiliing every individuals flock 
 (whether his own production or what he 
 procured by barter) and of inducing him 
 to increafe his labour for the purpofe of 
 %^ fup-
 
 AN EXPLANATION OP THE NATURE, &C. I9 
 
 fuppljnng the deficiency, in cafe his wants 
 (hould require it. 
 
 Public contributions therefore were 
 at that time rather incentives to further 
 labour, and did not check the progrefs 
 of Induflry, as at prefent appears to be 
 the cafe from their partial exaftion and 
 complicated efFeds. 
 
 When civilifation advanced, a relative 
 value eftablilhed itfelf between mental 
 and corporeal labour folely by com- 
 petition , as there could be no fixed 
 ftandard of value between them. 
 
 This competition was however well 
 poifed by counterafting principles ; a 
 too arbitrary evaluation of the mental 
 powers was prevented by a more gene- 
 ral cultivation of the mind , while the li- 
 mited mental endowments of by far the 
 greateil number of individuals prevented 
 their being underrated. 
 
 B 51 A
 
 20 THE DOCTRINE OF EQUIVALENTS OR 
 
 A new fort of property mufl alfo have 
 arifen in an early period of fociety from 
 the cultivation of certain fpots of ground, 
 which became annually produ6^jve, and 
 to which the eflabliflied rules would not 
 apply, becaufe nature a6led her part as 
 well as labour in producing the objeds 
 required. 
 
 The more enlightened part of mankind 
 mufl at the fame time have difcovered 
 that there exilted a general inconvenien- 
 ce with a confequent impediment to the 
 further extention of Induftry from the 
 want of a medium , by which every ob- 
 ject might be more quickly exchanged, 
 and retained at its due proportion of value. 
 
 Cattle and hides were confequently firfl 
 thought of as proper intermediate figns 
 of value for the purpofe of facilitating 
 every kind of Exchange. 
 
 It may feem extraordinary, that fuch 
 
 un-
 
 AN EXPLANATION OF THE NATURE, &C. 21 
 
 unwieldy obje6ls fliould have been pre- 
 ferred to others 5 but it mufl be confidered, 
 that every thing, excepting the metals, 
 or fome objed of as fmall volume, and 
 of equal durability, would have been as 
 troublefome, that Cattle and hides were 
 obje6ls of general ufe, were eafily tran- 
 fported from one place to another, and 
 that the firft in particular had a great affi- 
 nity to land with refpeft to its naturally 
 productive powers. 
 
 The evident diilinftions, which exifled 
 between corporeal and mental labour, as 
 well as between either of them and the 
 produce of nature , made it then necelTa- 
 ry to adopt feveral new confiderations 
 in afcertaining the relative value of one 
 thing with another, and particularly when 
 both obje61:s to be exchanged had the 
 quality of annual produclion adherent 
 to their nature, in which cafe the three 
 following circumflances required a very 
 attentive inveftigation viz. 
 
 B 3 The
 
 42 THE DOCTRINE OF EQUIVALENTS OR 
 
 The labour employed or difficulty in 
 procuring by competition each obje6l; 
 the probable ratio of annual increafe from 
 its natural powers, and independent of 
 that affiftance from labour oi: other ma- 
 terials, which are required in order to 
 give its general produce; and laftly the 
 probable term of pofleffion. 
 
 All thefe confiderations might be ab- 
 folutely necefTary for afcertaining the re- 
 lative value of different objefts; in the 
 firft place, becaufe, if of the fame na- 
 ture , their quantities might differ, as 
 alio their produce, while the circumftan- 
 ce of their being naturally different (as 
 Cattle and Land) would of courfe fubjetfl 
 them to a competition value between 
 themfelves; in the fccond place, becaufe 
 the labour and other materials to be ad- 
 ded yearly in order to obtain the general 
 produce might be of different proportions ; 
 and laflly , becaufe tbe period ofpoffefTion 
 might be of longer or of fhorter duration, 
 
 Catt-
 
 AN EXPLANATION OF THE NATURE, &C. 23 
 
 Cattle for inflance ran wild, and were 
 at firft to be caught by labour, while 
 uncultivated land was to be procured 
 every where. 
 
 The latter cannot certainly be faid to 
 be created , or obtained by any particular 
 exertion or degree of labour in man (al- 
 though exchangeable againft it} , and from 
 its abundance would be of little compa- 
 rative value, as is yet the cafe in many 
 places, had not the aflemblage of many 
 individuals on one fpot of ground, and 
 the general tendency of human nature to 
 increafe in numbers, wherever the neces- 
 fary means of exiltence can be procured , 
 occafioned an almoll univerfal demand 
 for it. 
 
 Competition may therefore be faid to 
 conltitute the price of land when con- 
 fidered relative to labour, Cthe point 
 being duely afcertained to whom the foil 
 originally belongs) and to' local circum- 
 B 4 ftan-
 
 54 THE DOCTRINE OF EQUIVALENTS OR 
 
 fiances mull be farther attributed the 
 various and widely differing values for 
 the fame kind of ground. 
 
 Such competition value mufl confe- 
 quently be determined by the relative 
 quantity of land compared with the quan- 
 tity of labour or number of inhabitants, 
 and the local differences, from the ad- 
 vantages to be derived by afTembling in 
 large bodies on commodious fpots of 
 ground , compared with thofe , which arife 
 from living at a diflance or in places of 
 difficult accefs, 
 
 Thofe differences mufl naturally be very 
 great while uncultivated land is to be 
 procured, and that the produce of its cul- 
 tivation mufl be tranfported to any di- 
 ilance* 
 
 It becomes ufeful therefore to obfer- 
 ve, and to keep in view, that no jufl 
 proportion of the relative value either 
 
 of
 
 AN EXPLANATION OF THE NATURE, &C. 25 
 
 of uncultivated land, or of mental exer- 
 tions with corporeal labour is to be tra- 
 ced , as is the cafe where the lalt only is 
 employed, but there can be no doubt at 
 the fame time, that the abovementioned 
 competitions have certain bounds, beyond 
 which they cannot proceed, and which 
 depend on a variety of circumflances too 
 numerous, and complicated, to be flated 
 with any degree of precifion by the human 
 mind. 
 
 The fecond confideration of the pro- 
 bable ratio of annual increafe from its 
 natural powers meets with lefs difficulty. 
 
 Some part of the natural produce was 
 indeed always fuppofed to depend on 
 chance, or on the uncertain degree of ef- 
 fe6ls , which arife from the feafQns , and 
 which no human Induflry could provide 
 againfl , but the experience of former 
 years eftablifhed at lead data for fome cal- 
 culation , and the diflinclion between the 
 B 5 na-
 
 26 THE DOCTRINE OF EQUIVALENTS OR 
 
 natural and tbe artificial efFefls required 
 to be particularly attended to for the fol- 
 lowing reafons, viz. 
 
 Every foil has more or Icfs the power 
 of producing fpontaneoufly, but by ad- 
 ding labour and other materials to it , this 
 produce is confiderably increafed. 
 
 In one cafe f ^^ of fuch produce might 
 be attributed to natural caufes, and j^^no 
 labour, and other ingredients. 
 
 In another cafe j^^ only might be at- 
 tributed to the latter, and p^^ to the 
 former. 
 
 Thefe proportions of labour and other 
 materials remained always to be added 
 yearly, in order to obtain the general pro- 
 duce, and it became therefore neceflary 
 in the firil inllance to dedu6l fuch requi- 
 red proportions from the refpe6live va- 
 lues of annual produce, in order to afcer- 
 
 tain
 
 AN EXPLANATION OF THE NATURE, &:C. 27 
 
 tain what nature did, as it made a mate- 
 rial difference to the owners whether they 
 had in future f ^ or j^^ of the real value 
 to purchafe. 
 
 This additional labour and thofe mate- 
 rials 5 which I have been endeavouring to 
 point out as abfolutely neceifary to obtain 
 any produftion, mult however be under- 
 flood as independent of what may be fur- 
 ther added for the purpofe of increaling its 
 future fpontaneous powers , or what is cal- 
 led improving an Eflate , which gives it 
 an additional value after its produce is 
 difpofed of. 
 
 There remains then ultimately to be 
 confidered the probable term of enjoying 
 fuch produce, which depended on its li- 
 mitation by agreement , and if nowife 
 limited from that caufe, either on the 
 uncertain events of nature, in the cafes 
 of Life and Death, or on the liability 
 of Government, with its due obfervance 
 
 of
 
 28 THE DOCTRINE OF EQUIVALENTS OR 
 
 of juftice in enacling, as well as execu- 
 ting fuch laws , as were neceflary towards 
 the fecurity of property. 
 
 In order to form a clearer Idea of thefe 
 different caufes of relative value by the 
 proportion of Numbers , I fliall fuppofe , 
 that two annually productive objefts, li- 
 mited to a certain number of years , are 
 to be mutually exchanged. 
 
 One fliall be as looo in natural or com- 
 petition value 5 8 pO its pro- 
 duftive powers by nature, 
 and 2 pO more by artificial 
 exertions; in all lo pC^ 
 and JO years its duration. 
 
 The other fliall be as 1 200 in natural or 
 competition value, 7 pO an- 
 nually its produ6live powers 
 by nature , and 4 pD more its 
 artificial powers; inalli ipO. 
 and II years its duration. 
 
 The
 
 AN EXPLANATION OF THE NATURE , &C. 29 
 
 The general refult in comparative va- 
 lue of thefe varying caufes in different 
 objefts will be as 800 for the firft, to 
 924 for the lafl. 
 
 8 pO on 1000 is 80 5 miiltipied by 10 
 years is 800, 
 
 7 pO on I2C0 is 84, multiplied by 11 
 years is 924. 
 
 There might alfo arife a further di- 
 flinftion of one flocks produce being 
 inert and confumable, and the other re- 
 produftive , in which cafe the latter would 
 be further entitled to the compound ra- 
 tio of its natural produce during the term 
 of its duration, in the fame manner as 
 compound Intereft is calculated on money. 
 
 The joint powers of nature and of la- 
 bour may therefore be faid to have for- 
 med the component parts of every thing 
 produced, and altho' a relative value fub- 
 
 fi.
 
 so THE DOCTRINE OP EQUIVALENTS OR 
 
 filled even in an early period of fociety 
 between both upon the principles alrea- 
 dy defcribed , yet no determinate medium 
 or price could be faid to exifl, excepting 
 that of numbers for defining each. 
 
 Dr. Adam Smith has indeed endeavou- 
 red to prove, that the real price of every 
 thing is the labour employed in produ- 
 cing it. It appears however beyond a 
 poffibility of contradi6lion, that nature 
 afts her part alfo , which deflroys his Hy- 
 pothefis. 
 
 There does not even (ii^ this Hate of 
 things) appear a poffibility of tracing any 
 foundation of value in many cafes , excep- 
 ting the competition value between na- 
 ture and labour, according to their re- 
 fpeftive bounds and powers, and altho' 
 a fpecific meafure in the precious metals, 
 under the denomination of money, has 
 fmce that time been generally adopted, 
 yet fuch meafure when confidered in its 
 
 ori-
 
 AN EXPLANATION OF THE NATURE , &C. 3I 
 
 original abllraft fituation of a commodity 
 procured by labour, would Itill have been 
 fubfervient to the fame principles, did not 
 its univerfality , and confequent powers of 
 produftion called Intereil, give it a new 
 Charader , which will be further explai- 
 ned in a fubfequent Chapter. 
 
 To trace in the meantime how a com- 
 parative value was eftabliflied between 
 Land, Cattle, and other property, which 
 was annually to produce, and obje6ls, 
 which were not to produce , it is neceffa- 
 ry for me to obferve, that the foundation, 
 from whence arofe all produce whatever , 
 confifted in natural and in artificial labour, 
 reprefented by Soil , Cattle , Slaves & Free- 
 men ^ jointly or feparately, the poiTeiTors 
 of which confidered them as fo much 
 ilock in hand, whereof the annual pro- 
 duce was to be afterwards exchanged for 
 whatever their exigencies might from 
 time to time require.
 
 2 2 THE DOCTRINE OF EQUIVALENTS OR 
 
 - A produftive and an unprodudive ob- 
 ject had therefore the fame kind of origin 
 or foundation, and the relative or com- 
 petition value of every foundation was 
 afcertainable in the manner already de- 
 fined. 
 
 The produflive flocks natural or com- 
 petition value, and its confequent wflfwrflZ 
 produce, became then to be compared 
 with one years general produce of another 
 flocks natural or competition value. 
 
 Suppofe for inflance that the compe- 
 tition value of the former was looo, 
 
 8 pO annually its natural 
 produce , 2 pO its artifi- 
 cial powers; and lo years 
 its duration. 
 
 The full value mull be 8oo , or lo years 
 purchafe of So, being 8 pC on looo. 
 
 If this produce fhould however be na- 
 
 tu.
 
 AN EXPLANATION OF THE NATURE, &C. 33 
 
 turally reproduftive, the compound ratio 
 of natural produce muft Itill be added to 
 it, as before ftated. 
 
 Let the competition value then of the 
 latter , from whence the unprodu6live 
 objeft arofe, be as 1200 and 10 pO the 
 general produce. 
 
 The full value of the confumable ob- 
 jeft muit be 120, or one year's purchafe. 
 
 The power of thus converting, or ex- 
 changing an unproductive objefl by a 
 fair barter into a flock, or foundation, 
 giving an annual and independent income 
 for a certain number of years, until an 
 equal value was returned , induced indi- 
 viduals to be more induflrious, and par- 
 ticularly fo, when from the wisdom of 
 Government fecurity in property became 
 better afcertained. 
 
 It muil appear evident, that however 
 C much
 
 34 THE DOCTRINE OF EQUIVALENTS OR 
 
 much mankind were inclined to produce 
 fuch objefls only as would reproduce , yet 
 the neceffity, that muft have exifted for 
 producing confumable objefts of indis- 
 penfable ufe to each individual , would 
 at all times prevent the former being over- 
 rated when exchanged againfl the latter, 
 while there can be no doubt at the fame- 
 time from the naturally reproduflive 
 quality of many objefts, and the gene- 
 ral defire of mankind to accumulate , that 
 the mafs of flock reproducing annually 
 would continue yearly to increafe from 
 the general favings , until a compleat ma- 
 turity, or that degree of Population 6: In- 
 duftry, which any given tra6l of country 
 would admit of, had taken place. 
 
 The impediments , which often arofe to 
 this increafing principle in Indultry, 
 could formerly only be traced to the 
 want of proper proteftion, to which may 
 now be added, that of an additional quan- 
 tity of the medium of reprefentation , 
 
 which
 
 AN EXPLANATION OF THE NATURE, &C. 35 
 
 which will foon appear to be a neceflary 
 cement in every increafe. 
 
 We muft: not however from this cir- 
 cumflance lament the introduction of a 
 medium of reprefentation , as the nature 
 of a mature flate would have been very 
 different (in the cafe of its nonexiflen- 
 ce) from the phyfical impoflibility of 
 promoting the fame degree of population 
 and induftry on any given tra6l of ground, 
 without the facility which arifes from 
 fuch medium. 
 
 Before I proceed however to this new 
 order of things , which took place on the 
 introdu6lion of the metals as reprefenta- 
 tive figns, it is necefTary to recapitula- 
 te what I have faid, as I wifli to imprefs 
 very Itrongly on the minds of my rea- 
 ders the firft principles of relative value. 
 
 It has been flated above, that thofe ob- 
 
 je6i:s , which were procured by corporeal 
 
 C 2 la- 
 
 /
 
 36 THE DOCTRINE OF EQUIVALENTS OR . 
 
 labour only, were exchanged according 
 to the nature & degree of it, which each 
 required , and that any deviation from 
 fuch principle, occafioned by the defire 
 of man for one thing in preference to an- 
 other, was checked by the encouragement 
 which immediately arofe to produce more 
 of the obje6ls preferred, excepting in ca- 
 fes where nature limited the number of 
 objeds, when the competition price could 
 have no bounds fet to it. 
 
 The fame principle applied alfo in fome 
 degree to eftablifli, or at leafl to check 
 the relative value between corporeal and 
 mental labour, altho' competition was 
 the foundation of their primary value. 
 
 It has alfo been Hated, that the com- 
 parative value between uncultivated foil 
 and labour arofe from the relative quan- 
 tities of each, or given number of inha- 
 bitants on any particular tra6l of Land , 
 and that great local diftinftions arofe from 
 
 the
 
 AN EXPLANATION OF THE NATURE, &C. 37 
 
 the afTemblage of many individuals 6n 
 one fpot, and the advantages refulting 
 therefrom , compared with what might 
 be obtained in a more folitary, and diflant 
 fituation. 
 
 I have alfo mentioned, that an inter- 
 mediate fign was found neceflary , in or- 
 der to facilitate and multiply exchanges, 
 and that cattle and hides , tho' inadequa- 
 te to the obje6ls in view, were firfl adop- 
 ted for that purpofe. 
 
 My readers will further recollect that 
 three confiderations were necefTary to 
 afcertain the relative value of each fpe- 
 cies of property , which produced inde- 
 pendent incomes, viz. 
 
 The labour employed or difficulty in 
 procuring each by competition againll 
 labour , their probable annual produce 
 from natural caufes, and laflly the po- 
 fitive or probable term of years, du- 
 C 3 ring
 
 38 THE DOCTRINE OF EQUIVALENTS OR 
 
 ring which each property would be pos- 
 fefled. 
 
 The firll proceeded from the foil and 
 its natural powers, as alfo from diffe- 
 rent kinds of bodily and mental labour 
 combined together & brought to confis- 
 tency; the fecond depended on the fpe- 
 cics of objeft with the experience of its 
 naturally produ(5live powers in former 
 years, and the laft on a limitation by 
 pofitive engagement to a period of years, 
 but if unlimited , on the uncertain events 
 of nature in the cafes of Life «Sc Death , 
 or on the ftability of Government with 
 a proper adminiftration of juflice. 
 
 The further principles neceflary to trace 
 a comparative value between objefts , 
 that were to produce, and others, which 
 were not to produce, confifled in tracing 
 the comparative or competition value of 
 the flocks or foundations j from whence 
 ^ach arofe. 
 
 The
 
 AN EXPLANATION OF THE NATURE, &:C. 39 
 
 The ratio of the natural produce of 
 the producftivc Hock multiplied by the 
 term or years of its duration was then 
 to be compared with the abfolute ratio 
 afcertained to have arifen in producing 
 the confumable objeft either by nature, 
 or art. 
 
 With all thefe principles it was in the 
 power of every man to trace a relative 
 value between all things , leaving that part 
 neceflarily to chance where nature was 
 concerned , and every objeft was even 
 exchangeable with each other, without 
 the intermediate and incompetent figns 
 of Cattle & Hides; but the introdudlion 
 of the precious metals as a general medi- 
 um of reprefencation procured more com- 
 pletely the obje6l of facilitating greatly 
 and multiplying confiderably every kind 
 of exchange , while they fimplified at 
 the fame time the firft principles of rela- 
 tive value. 
 
 C 4 It
 
 4© THE DOCTRINE OF EQUIVALENTS OR 
 
 It will alfo be found that they pofles- 
 fed from their natural and acquired qua- 
 lifications the moll unbounded powers in 
 organifing public finance; their virtues 
 have however unfortunately been fomuch 
 misreprefented by mankind , as to have 
 occafioned the introduccion of the mofl 
 perplexing and dangerous theories, which 
 human ingenuity could invent. 
 
 CHAP-
 
 AN EXPLANATION OF THE NATURE, &C. 4 1 
 
 CHAPTER II. 
 
 On the principles , hy which the fpecific 
 
 quantity of the precious metals due 
 
 to each ohjetb is regulated. 
 
 I 
 
 n the preceding Chapter I have flated 
 the caufe and the nature of a relative 
 value, which fubfilled between all things ; 
 and although it appears, that when the 
 objefts to be exchanged were not of the 
 fame nature , the great principle or ground 
 work of fuch relative value was compe- 
 tition; yet it is equally evident, that this 
 competition was always counterpoifcd & 
 regulated by the intereft and induftry of 
 Individuals, from whence we may con- 
 clude that there has always been tracea- 
 ble from experience a jufl and relative 
 value for all things, excepting in thofe 
 C 5 ca.
 
 42 THE DOCTRINE OF EQUIVALENTS OR 
 
 cafes , where nature limited the number of 
 objefts. 
 
 To retain all things at that juft and 
 relative value with one another is confe- 
 quently an unerring principle, which felf 
 Interell implants in the mind of man, 
 and no human laws can fo effe^lually 
 operate to that purpofe as the natural 
 purfuit of the whole community. 
 
 It has been already obferved that the 
 metals derived originally their relative 
 value from the labour required in pro- 
 curing them , and that they were at firll 
 only made ufe of as ornaments or utenfils. 
 
 The reafons, which induced mankind 
 to adopt them as the propereft reprefen- 
 tative figns , were no doubt , becaufe they 
 were divifible to the fmallell purpofes, 
 fufficiently durable in their nature, and 
 eafily tranfported from one place to an- 
 other, 
 
 A
 
 AN EXPLANATION OF THE NATURE, &C. 43 
 
 A relative value being already eilabli- 
 flied for thefe precious metals, it is natu- 
 ral at firfl to conclude, that the fpecific 
 quantity of them to be given for any par- 
 ticular obje6l was afcertainable upon the 
 original principle of their being an unpro- 
 duftive property, procured out of the 
 foil by labour , and that there was of 
 courfe no necefiity for taking any new 
 principle of value into conlideration. 
 
 When we refleft however on the great 
 demand, which inevitably took place in 
 confequence of their adoption as a me- 
 dium of reprefentation , we lliall find no 
 difficulty in tracing the neceffity of ad- 
 mitting a new principle of value, and at 
 the fame time difcover in what manner, 
 Intereit, or annual produ6lion arofe, as 
 well as the wonderful arrangement of po- 
 wer, and profit, that enfued to every 
 community. 
 
 It is in reafoning on this point, that 
 
 all
 
 44 THE DOCTRINE OF EQUIVALENTS OR 
 
 all writers on the fubjeft of money de- 
 part from the firil principles of its infti- 
 tution as a reprefentative fign, and to 
 their imperfeft fuggeflions may be attri- 
 buted a feries of errors , which have pro- 
 duced many fuperficial, confufed, and 
 difcordant theories. 
 
 To trace then the origin of Interefl of 
 money, we have only to fuppofe, that 
 many individuals perceived a great ad- 
 vantage in the polTeifion of pieces of Cop- 
 per Silver or Gold for the purpofe of 
 Exchanging them , upon the principles al- 
 ready eftabliilied 5 for what things they 
 might want in fowing, fuperintending and 
 gathering in their yearly crops , or in 
 carrying on their manufaftories , and that 
 they were therefore willing to procure 
 a quantity of them, not in exchange againll 
 any thing, but on the fimple condition of 
 their being returned again to the pro- 
 prietor with a certain additional number , 
 (from ten to fifteen per Cent polTibly 
 
 in
 
 AN EXPLANATION OF THE NATURE, &C. 45 
 
 in thofe days) after the realifation of 
 their Crops. 
 
 It is evident, that as thofe individuals , 
 who had occafion for thefe metals , could 
 on the one hand afford to add this pre- 
 mium to the fum borrowed, on account of 
 their having been the means of extending 
 confiderably the general produce of their 
 Induflry, fo thefe metals, on the other 
 hand, were fully entitled to this new 
 confideration of annual hire , for their 
 ufe, from the generally good efFefts, which 
 they produced. 
 
 The metals became then of courfe clas- 
 fed with that kind of property, which 
 produces annually, and from their uni- 
 verfal utility they obtained the right of 
 precedency in eftimating all things. 
 
 They indeed foon loft their original 
 principles of relative value, but the re- 
 productive power of Intereft, which they 
 
 had
 
 4(5 THE DOCTRINE OF EQUIVALENTS OR 
 
 had obtained, gave ample encouragement 
 to raife a greater quantity of them by 
 labour. 
 
 By the attra6lion alfo of this annual 
 premium , money was conflantly moving 
 from hand to hand, as every perfoh lofl 
 fo much increafe by retaining pofTeflion 
 of more than was neceflary for his daily 
 occurrences. 
 
 The mofl common obferver will per- 
 ceive that this conilant and inevitable a6li- 
 vity in the metals , enabled a fmall mafs of 
 money to transact the bufinefs ©fa great 
 community , and that each time it moved 
 was tantamount in its general eifeds to 
 doubling the quantity. 
 
 The rapidity therefore, with which 
 money moves from hand to hand , forms 
 a material part of its powers, and it con- 
 fequently becomes neceflary, to Hate every 
 principle which affeds it, before I pro- 
 ceed
 
 AN EXPLANATION OF THE NATURE , &C. 47 
 
 ceed to explain thofe caufes, which by 
 raifing or lowering the money value of 
 the objects to be reprefented , occafion 
 equally a relative fcarcity or plenty of 
 money, as if the number of obje61:s had 
 increafed or diminifhed. 
 
 It has been obferved in the preceding 
 Chapter, that fecurity in property was 
 the primary caufe of all induftrious a6li- 
 vity, and this principle applies with pe- 
 culiar propriety to the a6livity of mo- 
 ney; becaufe the Intereft of Individuals 
 requires , that whatever is exchanged for 
 money Ihould be poffeiTed , with as great 
 a degree of fecurity , as human juflice 
 can, upon general principles of policy, 
 contrive to eflablifli. 
 
 If every Government then affords a 
 different degree of fecurity in property 
 from the nature of its Laws , and from 
 the degree of juflice, which is obferved in 
 carrying them into execution , there mufl 
 
 na-
 
 48 THE DOCTRINE OF EQUIVALENTS OR 
 
 naturally exid , at all times in different 
 Countries, a confiderable variation in the 
 rapidity, with which money either circu- 
 lates from hand to hand upon fimple 
 credit , or is exchanged for other pro- 
 perty producing annually, as well as in 
 the premium demanded for its hire. 
 
 A moment of general confufion or dis- 
 credit will alfo produce a partial fufoen- 
 fion in the circulation of the reprefenta- 
 tive figns, but tranquility will reftore it 
 again , provided thofe figns have not been 
 fent out of the Country. 
 
 The high or low rate of Interell, ari- 
 fing from the relative fcarcity or plenty 
 of money , may further occafion fome 
 change in the rapidity of circulation , as 
 mankind are more or lefs difpofed to part 
 with their money, in proportion as they 
 are tempted with a high or low premium 
 for its ufe. 
 
 This
 
 AN EXPLANATION 01? THE NATURE, &C. 49 
 
 This circumftance can, however, only 
 be confidered as a trifling check to the 
 full confequences of plenty, or fcarcity 
 of money, and the two firll caufes of 
 variation require therefore only to be 
 attended to. 
 
 In forming an Idea of plenty, or fcar- 
 city of any commodity, it is in general 
 to be underllood , as meaning the quan- 
 tity of that commodity compared with 
 the, quantity of fome other obje6l, which 
 the demand for one againft the other 
 mufl afcertain, but in tracing the caufe 
 of a relative plenty, or fcarcity of money 
 x:ompared with other obje6ls, there ap- 
 pears to exift the additional confidera- 
 tions of degrees of motion, inherent to 
 the firit , 6c the fpecific , or nominal value 
 of the lafl , both which circumftancea 
 feem to have been entirely overlooked by 
 every Statesman, & Philofopher in their- 
 reafonings on that point. 
 
 D Wha-
 
 50 THE DOCTRINE OF EQUIVALENTS OR 
 
 Whatever adds therefore to the rapi- 
 dity of the circulating medium , or takes 
 off from the fpecific value of any object 
 to be reprefented, is in effe6l the fame as 
 if a greater quantity of money was pro- 
 duced, or a lefs number of objects were 
 to be reprefented, and vice verfa. 
 
 From thefe combined circumftances 
 naturally arifes the ratio of Interell, 
 or price of money , and no human 
 laws can poffibly alter it in the fmalleft 
 degree. 
 
 It becomes therefore not only an aft 
 of injuilice, but even impolitic in Go- 
 vernment 5 to fix it in any manner what- 
 ever , becaufe every perfon has a right 
 to fell his mori«y , as well as his Eftate , or 
 Houfe for whatever he can, from the fi- 
 tuation of things , obtain for it , and by 
 being a moveable property the proprietor 
 can*always contriv^e to fend it to thofe 
 Countries, where a better price is to be 
 
 ob-
 
 AN EXPLANATION OP THE NATURE, &C. 51 
 
 obtained , if he Ihould be obftru«5ted in his 
 natural rights. 
 
 The moft material principle, in the fecu- 
 rity of all pofTellions, is certainly founded 
 on this freedom to make the mofl of 
 every kind of property, and the reafo- 
 nitig of a moralift can no ways contro* 
 vert it, as the principles of money , & the 
 principles of morality, have no fort of 
 affinity 'with one another, whatever Phi- 
 lofophers may pretend to have difcove- 
 red in the vicious tendency of money, 
 as the engine of corruption , which 
 equally exilled, by means of all other pro- 
 perty, before the introduction of Gold & 
 Silver. 
 
 Laws, which limit the Interfeft of mo- 
 ney, will alfo not be complied with, if con- 
 trary to the natural fituation of things, 
 and be eafily evadeH by means of pre- 
 miums priViately 'given. 
 
 D 2 Go.
 
 52 THE DOCTRINE OF EQUIVALENTS OR ^ 
 
 Government itfelf evaded the' exifting 
 laws in raifing money for the public fer* 
 vice during the laft war, while a Court 
 of Equity thought itfelf obliged , at tjhat 
 time y to fanftion a breach of ,njoney cpn- 
 trafl betvveen man & man, becaufe the 
 law would not admit of borrowing, at 
 .the rate of luterell th^n exifting (ahove 
 5 pCO in orde^^C to pay off^^ mortgage, 
 which w:as .^raqted at a lower rate, on 
 condition; Qf,;b^i:ng redeemed atji flipu-. 
 lated.time.. , 
 
 iijt is iiiipoilible to conceive any. thing 
 more unjuil 5,Qr imp9'litic> than this mode, 
 of proceedi'ivg, firfl: in prfiyenting any Inr 
 dividual from borrowing money at any. 
 rate he pleafes, and fccondly in favoring 
 
 arbrr^ch: af,]P(5r>t!acl' bK ^ot' granting a 
 foreclofure- o'n> a mortgaged Kftate. 
 
 ,lk\Ye proprietor of mqi^y is certainly, 
 entitled to high latere^ \yh^QPver it is 
 obtainablcjif on lending it at lowlnterefl:.
 
 AN EXPLANATION OF THE NATURE, &C. 5:3- 
 
 he Itipulates at what time his right of 
 being repaid is to take place; while it is 
 evident on the contrary, that whoever has 
 occallon for the ufe of money, and has 
 the advantage of low Interefl , when mo-^ 
 ney is plenty, cannot complain of the 
 necelTicy he is Under of borrowing at high 
 Interefl, when money is fcarce. 
 
 The fundamental error in this bufinefs 
 confifts , in a pofitive and invariable law 
 being ena6led againfl what is in its natu- 
 re relative, and variable, and the futility 
 of this law is evident from the facility 
 of evading it. 
 
 The evil , howev'er, that has arifen from 
 the decifions of the Court of Chancery , 
 is a difcouragement to all loans on mort- 
 gage, becaufe it is now upon record, that 
 a Court of juftice Will not fupport a mo- 
 neylender in his jufl, and natural rights. 
 
 The pleas urged of the low Interefl 
 D 3 being
 
 54 THE DOCTRINE OF EQUIVALENTS OR 
 
 being regularly paid, and of the hardfliip 
 in not being able to borrow money at the 
 rate allowed by law, are unworthy of a 
 moment's confideration , while this law 
 can be evaded, and that low Interell is 
 not the juft price for a property, which 
 the proprietor has at that time by con- 
 traft a right to claim. 
 
 Laws for the proteftion of minors , and 
 for the conducl of Executors , & Tutors 
 are on the contrary founded in policy, 
 & juflice, and may be effeclual without 
 any limitation of Intereft, or any vio- 
 lation of natural principles. 
 
 In order then to point out the princi- 
 ples, by which the fpecific value of all 
 objefls in moirey is governed , I iliall begin 
 by flating, that all mankind agree in ex- 
 changing money for other property Tpro- 
 ducing annually) on fuch terms, as will 
 procure an income , adequate (upon due 
 confideration of all circumftances} to 
 
 the
 
 AN EXPLANATION OF THE NATURE, &C. S5 
 
 the exifling rate of Interefl, from a re- 
 lative plenty, or fcarcity of money. 
 
 The produ6live power of money, or 
 the ratio of Interefl, is confequently be- 
 come the flandard price , by which all 
 other Capitals are exchanged againfl it. 
 
 It will alfo be found to be the regu- 
 lator of the price, due to the produce of 
 all fuch Capitals, as are not limited in 
 their extent by nature. 
 
 Thefe two points contain the great 
 fecret of the operations of money in 
 fixing the price of all things, and I mult 
 therefore claim the utmofl attention , on 
 the part of my readers , to the following 
 very material explanation of the procefs , 
 to which they give rife. 
 
 With regard to the firft circumftance 
 of the ratio of Interefl being the com- 
 petition price, by which other Capitals 
 D 4 arc
 
 $6 THE DOCTRfNE OF EQUIVALENTS OR 
 
 are exchanged, it will be eafily under- 
 flood 5 when I itate that if Interefl is 
 about 4 pC^ , 25 years purchafe of the 
 Hated income of a prodii6live property 
 (fuch as public funds &c.) is the fair 
 relative value, at which to obtain fuch 
 property , and if Interefl: is about 5 
 pCS 20 j^ears purchafe, and fo on pro- 
 greflively, 
 
 I do not indeed mean to aflert by this 
 pofition, that all Capitals, whether public 
 funds , houfes. or land &c. &c. fliould 
 give the fame degree of income as money 
 will, when lent on limple fecurity, be- 
 caufe each property may have qualities, 
 which are peculiar to itfelf , and be confe- 
 quently fubjedl to great variation in price. 
 
 It may alfo not be improper to remark, 
 that the ratio of Interefl is at no time 
 fixed to any particular point, but is fub- 
 je6i: to numberlefs gradations, as well as 
 conllant variations in the average price. 
 
 Thefe
 
 AN EXPLANATION OF THE NATURE, &:C. $7 
 
 Thefe gradations arife from the colla- 
 teral circLimllances of trouble and risk 
 attending the receipt of annual income, 
 degree of fecurity, and term of pofles- 
 fing the objecl exchanged. 
 
 It is therefore improper to fhate at 
 any time a fixed ratio of Interefl, as it 
 has various prices in proportion to the 
 quality of the obje6l obtained in return 
 for money, and can only be faid to rule 
 from 3 to 3,- a 4 pCent, or from 4 to 
 4i a 5 pCent, and fo on. 
 
 I can however affirm , that every grada- 
 tion has a connexion with the average 
 ratio of Interefl , and that if certain cir- 
 cumflances warranted a difference of} pO 
 on a particular income, either higher or 
 lower than the average ratio of 3^ pCent, 
 when Interefl was at that price, there 
 would on the principles of equity and 
 relative value arife a difference of J pCent, 
 either higher or lower than the average 
 D 5 ra-
 
 58 THE DOCTRINE OF EQUIVALENTS OR 
 
 ratio of Intereftjcm that fame income ^fup- 
 pofing fuch average price to rife to 5^ pD, 
 that is to fay that the point of variation 
 mufl be in unifon with the average fcale, 
 provided nothing intervened to aiFe6l par- 
 tially that particular income. 
 
 From what I have faid refpefting the 
 acquifition of property at 25 or 20 years 
 purchafe of its income, in the cafe of 
 Interefl being about 4 or 5 per Cent, 
 it may be fuppofed , that the Capital 
 only rifes or falls, to answer the pro- 
 portional fall or rife of Interefl:, that 
 is to fay, that a c^ 100 rent in perpetuity 
 fliould fell for oC 2500 fl:erL , when Inte- 
 refl is about 4 pCent, and for ^^ 2000 
 fieri, only when Interefl; is at 5 pCent, 
 retaining thereby the income at the very 
 fame nominal value as before. 
 
 This is no doubt the procefs of nature 
 with refpe6l to all fixed and immutable 
 incomes in money , but induftrious in- 
 
 co-
 
 AN EXPLANATION OF THE NATURE, (ScC. 59 
 
 comes are of fo different a nature, that 
 thofe principles do not apply; they will 
 on the contrary appear to be regulated by 
 the ratio of Interefl in fixing their mo- 
 ney value , either higher , or lower , accor- 
 ding as it rofe or fell. 
 
 An examination into the component 
 parts of all Eflates or Capitals (money 
 excepted) will evidently prove this point, 
 by fliewing of what they confill, and 
 how they may be multiplied, or dimini- 
 ihed by a difproportion of value in fome 
 of their parts with the ratio of Intereft. 
 
 It will alfo explain, in what manner 
 thisaugmentation, or diminution in their 
 quantity, will reduce or increafe their no- 
 minal value in money, as alfo that of 
 their produce, called rents. 
 
 All Eftates or Capitals, exchangeable 
 for money, are compofed of land, annu* 
 ally & perpetually producing , of produc- 
 tions
 
 6o THE DOCTRINE OF EQUIVALENTS OR 
 
 tions of land, either producing again, of 
 only ufcful for a certain time , and of 
 labour, as performed by animals or man. 
 
 Every production of Induflry is there- 
 fore an income from fome Capital, held 
 in perpetuity, for a limited time, or on 
 a life rent. 
 
 The pofTeflion of Land may be confi- 
 dered as a perpetuity; its productions, 
 which reproduce or are found ufeful in 
 building, and in manufactures &c. mull 
 peri(h in a certain time, and the value 
 of laboui' is a life rent, by being the in- 
 come for fupporting animal exiflence. 
 
 Land then taken abftra6led]y from the 
 other parts of Capital is fubjecl to the 
 competition of its quantity againll the 
 relative plenty, or fcarcity of money, 
 that is to fay, when all the land of a 
 given Country is cultivated to the high- 
 eft degree, there can be no principle to 
 
 coun-
 
 AN EXPLANATION OF THE NATURE , &C. 6l 
 
 counteraft its competition value rela- 
 tive to money, and fliould Interefl-of 
 money fall in that Hate of things from 
 5 to, 4 pGent p^ annum, a dC loo rent, 
 which in One cafe would fell for dC.2000 
 fieri, would in the other Cdfe fell for 
 ^ 2500 llefl. 
 
 While new ground however remains 
 to be cultivated, or that ground , already 
 in a Hate of cultivation, can be improved 
 by labour and other materials, there muft 
 necelTarily arife a countera6ljng caufe to 
 the proportional increafe in the money 
 price of land ,. correfponding to the dimi- 
 niihed ratio of Interefl; in the firfl place, 
 becaufe .the new ground cpmes in com- 
 petition with the old, and in the fe;cond 
 place , becaufe the addition of materials 
 and labour makes the old ground more. 
 produ6live , which is in effe6l equal to 
 an increafed quantity of Land. : 
 
 But in/admitting even for argu^ment 
 
 fa.
 
 62 THE DOCTRINE OF EQUIVALENTS OR 
 
 fake, that the full value fhould be given 
 for the land in proportion to the rate of 
 Interefl, there can be no neceffity for the 
 rent rifing alfo , in order -to do juilice to 
 all parties , as the money paid fbr the land 
 would ftill retain its proportion of in- 
 come relative to the rent of money. 
 
 The long period, indeed, for which 
 leafes are held , puts a general change in 
 the old eftabliflied rents entirely out of 
 the queflion^ tho' new leafes might admit 
 of variation. 
 
 In order to explain thefe principles 
 more fully, I ^ill" fuppofe, that an un- 
 cultivated fpot of ground would , if aflis- 
 ted by labour, and other materials, pro- 
 duce, what would fell for ^ 70 fieri, an- 
 nually, but that ^ ^o fieri, only of that 
 produce could be attributed to its natu- 
 ral powers. 
 
 - If the full value then of the natural 
 
 pro-
 
 AN EXPLANATION OF THE NATURE , &C. 63 
 
 productive power of this piece of land , 
 giving dC 50 fieri, annually, is d^ looo 
 fieri, when Interefl is about 5 pCent, 
 there would certainly be no further en- 
 couragement to cultivate that ground, 
 if the proprietor infilled on obtaining 
 dC 1250 fieri. , in cafe Interefl fell to about 
 4 pCent. 
 
 A moneyholder would however be 
 well pleafed to give c^ 1 150 fieri., if Inr 
 terefl fell to 4 pCent, as a c^ 50 rent gave 
 him in that cafe^4Ti pCent Interefl for his' 
 money, and fhould the competition ari- 
 fing from an increafed quantity of pro- 
 duce lower the price of it, and force him 
 ultimately to lower his rent (fuppofe to: 
 ^ 48^ he would flill retain more tham 
 4 pCent Interefl for the money, which 
 he had employed in the purchafe. 
 
 This argument is nowife weakened by 
 the full value of ^ 1250 fieri, being gi- 
 ven for a c^ 50 annual rent, which might 
 
 be
 
 64 THE DOCTRINE OF EQUIVALENTS OR 
 
 be immutable for a great number of 
 years, as the leafeholder remains in that 
 cafe expofed to the diminiflied money 
 value of the produce, from its quantity 
 being iilcreafed; nor will it, make any dif- 
 ference, if the original proprietor (liould 
 prefer the cultivation to the fale of the 
 new ground , as he thereby puts himfelf 
 into the fituation of a moneyholder. 
 
 It appears then, that land, confidered by 
 itfelf, will acquire an .additional nominal 
 value on a relatively greater plenty of 
 money taking place, Gho' not in the full 
 proportion of the lafl , but that the rent , 
 which belongs to its natural powers of 
 annual production has a tendency to di- 
 miniili in price , not alone in conformity 
 to the diminiflied ratio of income from 
 money, but alfo in confequence of the 
 increafing quantity of rents , until the 
 whole Country is cultivated to the highelt 
 degree. 
 
 If
 
 AN EXPLANATION OF THE NATURE, &C. 6$ 
 
 If this were not the cafe, weihould have 
 very great reafon for conlidering the in- 
 troduction of reprefentative rignS5as inju- 
 rious to the happinefs of fociety, by per- 
 petually increafing the nominal value of 
 their wants , inilead of multiplying their 
 comforts, and the public at large would 
 then have more caufe for cenfuring, than 
 for applauding , the conduct of thofe Sta- 
 tesmen, who, by commercial treaties, or 
 any other means, are conflantly aiming at 
 acquiring a greater Balance in money , on 
 their general transactions with other na- 
 tions , than they had previoufly obtained. 
 
 The fecond component part, of all Ca- 
 pitals, or Eltates, as confilting of natural 
 productions, has in a manner been already 
 fully explained : for thofe productions con- 
 flitute in fa6t the rents of land , and by 
 multiplying the one or the other, their 
 money value will naturally diminifh, with- 
 out doing any injury whatever to the 
 proprietors ; in the firfl: place becaufe 
 E they
 
 66 THE DOCTRINE OF EQUIVALENTS OK 
 
 they Hill remain in iinifon with the 
 diminiihed rent of the general reprefen- 
 tative fign ; and fecondly, becaufe every 
 confumer (including the proprietors them- 
 felves) will find his daily wants of na- 
 tural produce more cheaply fupplied. 
 
 It becomes apparent from thefe deduc- 
 tions, that by increafing either the quan- 
 tity, or the velocity of the circulating 
 medium , an increafed mafs of natural pro- 
 du6lions & artificial labour is promoted, 
 and that thofe individuals, who are ex- 
 pofed to a diminution in the money va- 
 lue of their incomes by this fuperabun- 
 dant quantity , are at the fame time fully 
 compenfated by the diminution in their 
 annual expences. 
 
 This reflexion may, perhaps, lead man- 
 kind to contemplate the chara6leriflic of 
 money, in a more favorable point of view, 
 than has hitherto been the cafe , and par- 
 ticularly , ag they cannot controvert a felf 
 
 evi-
 
 AN EXPLANATION OF THE NATURE, &C. Cq 
 
 evident propofition relative to its powers 
 viz. that by increafmg fuch mediLim (as 
 is acknowledged to facilitate and extend 
 Induflry) a correfpondent progrefs mufl 
 naturally enfue 5 if the Country be capa- 
 ble of improvement. 
 
 I come now to the laft component part 
 of all Eftates , called labour , as performed 
 by animals or man, and regulated in its 
 money value by the price of whatever 
 may be neceflary for their fupport, as 
 well as that of their helplefs ofFfpring. 
 
 Animal life is prone to increafe, where- 
 ver the means of preferving it. is to be 
 obtained, and the price of labour is ge- 
 nerally fomething above what is imme- 
 diately neceflary for fubfiftence. 
 
 The proprietor of the animal requires 
 
 fome hire for the ufe of his property, 
 
 independent of what he mufl pay for his 
 
 food, and man requires fome little fa- 
 
 E 2 vings
 
 68 THE DOCTRINE OF EQUIVALENTS OR 
 
 vings from his labour , for the future exi- 
 gencies of his family. 
 
 Should the neceflaries of life be there- 
 fore reduced in their money value, on 
 account of rents ^ and natural produce 
 having fallen in their value, from the 
 caufes above mentioned, a competition 
 amongfl the labourers for procuring, only 
 as much, as might be neceflary for their 
 food, cloathing, and conveniences, as 
 well as for their reafonable little favings, 
 would naturally reduce the price of their 
 hire. 
 
 The price of labour being of courfe a 
 necefiary, and a material part in the mo- 
 ney value of all general produ61:ions of 
 nature , from which new Capitals, or Efta- 
 tes are conftru6led, we can find no diffi- 
 culty in afcertaining, that fuch part recei- 
 ves a fenfible diminution in price from 
 a decreafe in the money value of the 
 other part called rents or natural produce. 
 
 It
 
 AN EXPLANATION OF THE NATURE , &C. 69 
 
 It is alio very evident , that rents and 
 labour form a very confiderable part 
 of all Capitals, and that their tendency 
 to decreafe in money value mull coun- 
 terafl the confequences of the increafing 
 value , in the other part called land , which 
 appears to take place on money beco- 
 ming plentier. 
 
 Capitals have , therefore , upon the 
 whole , when connefted , or arifing in any 
 degree from induilrious incomes, or natu- 
 ral produ6lions, the fame tendency to 
 fall in money value, when In terelt falls, 
 as thofe incomes or produftions have , and 
 thefe confequences are confiderably in- 
 creafed , by the a6]:ion and reaiPtion be- 
 tween the Capital, and the income, which 
 feem neceflarily and inevitably linked to- 
 gether by nature, and influence one an- 
 other for the following reafons. 
 
 The lower nominal value of the Ca- 
 pital requires lefs income in money, (over 
 E 3 and
 
 70 THE DOCTRINE OF EQUIVALENTS OR 
 
 and above the original dedu6lion , which 
 lower Interefl: demanded) and this addi- 
 tional lower income has again a tenden- 
 cy to diminifli the nominal value of the 
 Capital, and fo on repeatedly, tho' in 
 a leis degree each time , until the de- 
 creafe becomes unworthy of further at- 
 tention. 
 
 In proceeding farther , to flate the con- 
 fequences of a greater plenty of money, 
 or of lower Intereft, on the price of ma- 
 nufa6lures5 it is not alone necelFary to 
 take into confideration the diminiflied 
 value of the raw materials , as well as of 
 labour, from the very powerful caufes 
 above dated, ^but alfo, that the Capital 
 in money, employed for carrying the bu- 
 finefs into efFecl, or purchafing the raw 
 materials, will not only be lefs, but even 
 procured at a cheaper rate. 
 
 Suppofe for inftance, that a manufiic- 
 turer employs a Capital of c?C 100,000 
 
 llerl.
 
 AN EXPLANATION OF THE NATURE, &C. 7 1 
 
 fterl. in his trade, when Interell is at 
 5 pCs he will naturally expect it to 
 produce him 9 or 10 pO annually , 
 which is of courfe to be drawn out of the 
 price of his merchandize. 
 
 If Intereft then fell to about 4 pCs 
 and he continued to receive the fame 
 price for his merchandize, a threefold 
 advantage would immediately accrue to 
 him; firfl: from the diminution in the 
 money value of the raw materials, and 
 labour ; fecondly from their requiring 
 lefs Capital than before; and thirdly from 
 the fmaller Capital being obtained at a 
 lower fate of Interell; all thefe circum- 
 ftances would carry his profits much 
 beyond all principles of relative value, 
 and altho' I by no means deny his com- 
 pleat right to obtain as much as he can , 
 yet I muft beg leave to fuggefl, that if 
 the confumers indulged him in his de- 
 mands, he would be the very firll to 
 think of extending his own profitable 
 E 4 bu-
 
 72 THE DOCTRINE OF EQUIVALENTS OR 
 
 bufinefs, and if indolence, or any other 
 motive prevented him from doing it, his 
 neighbours would not fail to begin the 
 fame trade in oppofition to him, fo that 
 a fufficient Hock would at jaft be pro- 
 duced , and the price of his merchandize 
 lowered to a fcale of value, more confis- 
 tent with the effe6l , naturally refulting 
 from a diminiilied ratio of Interefl. 
 
 If on the contrary a ftill higher price 
 '(than when Interefl was at 5 pO) fliould 
 be given for his merchandize, a very ex- 
 tenfive encouragement to the progrefs 
 of manufactures would inevitably enfue, 
 and the greater abundance mufl necelTa- 
 rily produce the confequences I have 
 been pointing out viz. a reduction in 
 price more or lefs bordering on the dim'u 
 nution of Interefl. 
 
 I flatter myfelf , that I have now efla- 
 blidied the two leading principles, which 
 I have been endeavouring to prove viz. , 
 
 that
 
 AN EXPLANATION OF THE NATURE, &C. 73 
 
 that the natural relative value of all 
 things is regulated, through circuitous 
 operations, by the ratio of Intereft, and 
 that the encouragement to further indus- 
 try arifes from the market price of its 
 productions being higher, than the current 
 rate of Intereft abfolutely demands, or that 
 the principle of equivalents will juftify. 
 
 It is however necelTary for me to fta- 
 te, that there are accidental, and local 
 bounds, to probable and natural effefts; 
 as well as particular deviations from ge- 
 neral principles, to which all nature, 
 from its great complication, is fubjeft; 
 but that thefe accidental bounds, and par- 
 ticular deviations , are of no material con- 
 fequence in the general efFe6ls , and fhould 
 therefore not be kept in view by an en- 
 lightened mind : becaufe the danger of 
 obfcuring the firft, and general princi- 
 ples , would then become as great to the 
 prefent and future ages , as has evidently 
 been the cafe with the paft. 
 
 E 5 But
 
 74 THE DOCTRINE OF EC^UIVALENTS OR 
 
 But in order to remove every doubt, 
 which might flill remain in the breaft: of 
 my readers , I fliall examine the confequen- 
 ces, to which the induftrious exertions 
 of individuals are expofcd , upon a relati- 
 vely greater fcarcity of money taking 
 phce, which will form the counterpart 
 of what has been flated, with refpeft to 
 the effefls of a relatively greater plenty 
 of money, and cannot fail of producing 
 the completelt poflible conviftion , res- 
 pe6ling the truth of the one, and the 
 other. 
 
 Let us fuppofe then, that Intereft of 
 money rifes from 4 to 5 pCs and that 
 every landholder lofes in the Capital va- 
 lue of his Ellate in the proportion of 
 25 to 20 years purchafe or 7 of its for- 
 mer amount, that is to fay upon an in- 
 come of c^ 50 fieri, pr annum, JL 250 
 fieri, out of ov 1250 fieri, of its former 
 Capital value. 
 
 There
 
 AN EXPLANATION OF THE NATURE, &C. ?$ 
 
 There will in that cafe exifl: no indu- 
 cement whatever to buy, or cultivate new 
 ground, becaufe the old will not only 
 have loft confiderably in its value, but 
 will alfo, from the circumftance of its 
 being already in a ftate of cultivation , be 
 univerfally preferred. 
 
 If we calculate further the chances of 
 thofe rents , which are not fixed for any 
 diftant period, being fupported at their 
 former value , we fliall find, that the fear- 
 city of money will not admit of fo many 
 purchafers of produce at the old prices, 
 and that the market pfice of natural pro- 
 duce may on that account immediately 
 fall, notwithftanding that it might bonafide^ 
 and ought indeed to lay claim to an in- 
 creafe, if the value of the Capital was 
 not lowered in fuch a degree, as to cor- 
 refpond with the increafed ratio of In- 
 tereft. 
 
 As this decreafe of Capital value cannot 
 
 on
 
 76 THE DOCTRINE OF EQUIVALENTS OR 
 
 on all occafions enfue, a ftill greater dis- 
 couragement to cultivation mufl take 
 place, until rents not only return to their 
 old price, but even increafe in their va- 
 lue (by a negleCted cultivation') in confor- 
 mity to the principle of an Equivalent 
 increafe from money, as they, would 
 not otherwife be renewed. 
 
 This advance in the price of rents , or 
 even the power of fupporting them at 
 their former rates , cannot exiil under 
 the circumflance of a diminifhed quantity 
 of reprefentative figns, without a dimi- 
 nution in the mafs of general produc- 
 tions, from the mathematical impoflibi- 
 lity of a lelTer reprefenting a greater num- 
 ber; fuppofe for inftance that loo Gui- 
 neas reprefented loo objects at a Guinea 
 each, 80 Guineas could certainly not re- 
 prefent the fame number at the fame va- 
 lue; and therefore it follows, that a di- 
 minution either in the quantity of objefts, 
 or in their value, mufl: take place, in 
 
 or-
 
 AN EXPLANATION OP THE NATURE, &C. "IJ 
 
 order to reflore the powers of reprefen- 
 tation. 
 
 It may perhaps be thought, that an ad- 
 ditional motion in the reprefentative 
 figns would fupply the deficiency in their 
 quantity, but unfortunately there can 
 exift no motive for increafed aftivity, 
 excepting in the purchafe of Capitals, & 
 that only to a fmall degree, on account 
 of Interell being higher, asftated above. 
 
 If the accelerated movement of the re- 
 prefentative figns became equal , or nearly 
 fo in its effefts to the lofs fultained in 
 their quantity, the interefl would remain 
 at the fame rate as before, and no chan- 
 ge of confequence would be perceptible, 
 either in the price, or quantity of gene- 
 ral productions. 
 
 It mufl; be obferved alfo, that the di- 
 miniflied value of many Capitals (having 
 fixed incomes), which takes place on the 
 
 In-
 
 78 THE DOCTRINE OF EQUIVALENTS OR 
 
 Interefl of money rifing, will not fuffi- 
 ciently relieve the reprefentation of mo- 
 ney, fo as to admit of the annual pro- 
 duce of other Capitals being reprefented 
 at the fame price as before, becaufe the 
 reprefentation of Capitals is but a fmall 
 part of the duty of reprefentative figns, 
 and is confined , to the transactions of 
 thofe perfons, who are exchanging the 
 nature of their property, or to new ac- 
 quifitions of Capital, from general fa- 
 vings, while the reprefentation of inco- 
 mes calls for a daily transfer, to an im- 
 menfe amount, amongfl: producers, and 
 confumers of all articles whatever. 
 
 It fliould aifo be further recolledled , 
 that Capitals are in part productions, and 
 that fuch productions will not admit of 
 being fo much reduced in price, as to 
 correfpond (in the form of Capital) with 
 the increafed ratio of Interefl, becaufe 
 thofe parts are ultimately not to be pro- 
 cured , without their jufl value (as inco- 
 mes)
 
 AN EXPLANATION OF THE NATURE, &C. 79 
 
 mes^ be given, although land of itfelf 
 might be fubjetl to the full effe6ls of 
 competition between its quantity, and the 
 relative plenty, or fcarcity of money. 
 
 The bad efFe(5ls , therefore , which arife 
 in any fociety, from a diminution of its 
 reprefentative figns, are not only very 
 confpicuous in the neglefted cultivation 
 of its land, as well as in the diminilhed 
 quantity of its annual Induflry, but ul- 
 timately in the increafed price of annual 
 produce neceflary for the fupport of ani- 
 mal life. 
 
 This circumftance muft naturally af- 
 fe6l the price of labour, and the increa- 
 fed price of labour Cas forming a com- 
 ponent part in all general produ6lions) 
 will again reacl, and increafe the price of 
 annual produce , alfe^ling thus repeatedly 
 one another (tho' in a fmaller degree each 
 time) to the very great disadvantage of 
 the whole community. 
 
 The
 
 ^O THE DOCTRINE OF EQUIVALENTS OR 
 
 The population of a Country mufl 
 then inevitably diminifli, and altho' the 
 reduced number of Individuals may have 
 nominally higher rents from money, and 
 higher wages from. Induftry, yet their 
 expenditure will unfortunately be increa- 
 fed in the fame degree. 
 
 If we trace alfo the effecls of higher 
 Interefl of money 6n the price of manu- 
 fa6lures , we iliall find , that the Capital 
 employed mufl not only be increafed, in 
 order to purchafe the raw materials, & 
 labour , at advanced prices , but that 
 a higher annual premium mufl be paid 
 for the ufe of money , and that this 
 threefold accumulated charge mufl be 
 made good, by the higher price of the 
 objefts made. 
 
 We fliall alfo perceive, that as the higher 
 wages of the labourer5the advanced price of 
 raw materials, the increafed Interefl of mo- 
 ney, and more extenlive Capital, together 
 
 with
 
 AN EXPLANATION OF THE NATURE, &C. Si 
 
 with all their a6lions & rea6lions, muft 
 ultimately form fuch an accumulated ex- 
 penditure, towards producing the fariie 
 objefls, it would become impoffible for 
 the manufacturer to continue his bufi- 
 nefe (in the event of prices not rifing in 
 proportion to thofe increafed charges) 
 without a compleat facrifice of his rights: 
 it muft in that cafe be more for hisinterell 
 to content himfelf with the higher in- 
 come, obtainable from money, and to 
 divefl himfelf of all trouble and risk , 
 attending the profecution of bufmefs. 
 
 Which ever way, therefore, this fub- 
 jeft is confidered, the general refult will 
 always correfpond with the recapitula- 
 tion, which I (hall here make in as few 
 words, as the nature of the difcuflion 
 will admit. 
 
 Self Interefl muft in general be con- 
 fidered as the prlmum mobile of all human 
 induflry, 
 
 r This
 
 82 THE DOCTRINE OF EQUIVALENTS OR 
 
 This felf Intereft was originally grati- 
 fied, by a proper relative value being fup- 
 ported between all obje6ls, on thofe prin- 
 ciples, which have been Hated in the 
 preceding Chapter: but it is now excited 
 by the prefervation of a fuperior propor- 
 tion in their money value, either according 
 to the ratio of Intereft, if it be a produc- 
 tion , or according to its competition 
 value with money , from the relative 
 fcarcity or plenty of the one compared 
 with the other, if it be land, mental la- 
 bour, or any other obje6l, whofe quan- 
 tity is limited by nature. 
 
 Thefe diftinftions are indeed fo much 
 blended together, through a variety of cir- 
 cuitous operations, that the proportion 
 of their feparate efre6ls, or the prepon- 
 derance of either, has never been pro- 
 perly traced, or afcertained, fo as to de- 
 termine the general refult on money be- 
 coming, either plentier, or fcarcer.
 
 AN EXPLANATION OF THE NATURE, (&C. S^ 
 
 It appears, however, from the foregoing 
 invefligation , that produftions , arifing 
 either from nature, or from corporeal 
 labour, form the moft material part of all 
 Capitals , as well as of all objefts of general 
 ufe ; and although the price of land, men- 
 tal labour, or any other objeft, whofe 
 quantity is limited by nature, will be in- 
 fluenced by competition from the relative 
 plenty or fcarcity of money, yet it is very 
 evident, that they have, upon the whiole^ 
 no power to countera6l the general prin- 
 ciple, of a diminilhed ratio of Intereft 
 producing a diminution in the price of 
 almoll every obje6i:, as well as an increafe 
 in their quantity, & per contra ^ of an 
 increafed ratio of Intereft producing an 
 augmentation in the price of thofe ob- 
 je6ls , with a decreafe in their quantity* 
 
 This increafe or decreafe in the quan- 
 tity of Induftry, from an increafe or de- 
 creafe of that medium , which was intro- 
 duced for the purpofe of facilitating, and 
 F 2 of
 
 84 THE DOCTRINE OF EQUIVALENTS OR 
 
 of courfe, extending the mafs of Induftry 
 On a given fpot of ground, appears indeed 
 to be felf evident , becaufe it naturally 
 follows, that by increafing or diminifliing 
 the powers of an engine, there mufl alfo 
 arife an increafe, or decreafe in its ge- 
 neral efFeft. 
 
 The circuituoias operations of money 
 have, indeed, hitherto fo much puzzled 
 the human underflanding, that this felf 
 evident propofition has been entirely 
 overlooked: I flatter my felf , however, 
 with its being foon generally acknowled- 
 ged , that the following axioms contain the 
 whole myflery of the proceedings of mo- 
 ney , with refpe6l to increafing the quan- 
 tity of Induflry ,and diminifliing its price, 
 whenever a relatively greater plenty of 
 money occafions a diminution of Interefl, 
 and vice verfa. 
 
 A Country capable of improvement 
 in agriculture, in indufl:ry, or in popu- 
 
 Ja-
 
 AN EXPLANATION OF THE NATURE, &C. 85 
 
 lation, and enjoying fuch laws, as will fe- 
 cure to Individuals their property, miiH: 
 inevitably receive thofe improvements 
 thro' the medium of a diminifhed ratio 
 of Intereft, whenever an increafed quan- 
 tity of the reprefentative ligns are ob- 
 tained. 
 
 The market price of Induftry becomes 
 then fuperior to what the diminiflied in- 
 come from money demands, and the felf 
 Intereft of man will of courfe prompt 
 him to extend his Induftry, until the ad- 
 ditional quantity produces the efFe61: of 
 diminiiliing the price of it, to a jufter 
 proportion (on the principles of relative 
 value, or of an equivalent) with the ia-*^ 
 come from money. 
 
 If the fuperabundance of money fhould 
 induce Individuals to give more, than they 
 did (previous to the diminution of In- 
 tereft) , this aftive principle of felf Inte- 
 reft would be ftill more excited, and the 
 F 3 con-
 
 ^6 THE DOCTRINE OF EQ^UIVALENTS OR 
 
 confequences abovementioncd mult there- 
 fore ultimately take place. 
 
 A diminution in the price of articles 
 of general yfe produces alfo the fame 
 good efFe6ls on the relative plenty of 
 money, as a further increafe of reprefen- 
 tative figns , creating thus a powerful 
 & advantageous action and rea6lion be- 
 tween the lower price of thofe things, 
 and the lower Interefl from the greater 
 relative plenty of money 5 as the price of 
 one part of general produce has already 
 been proved to aft, and reaft upon the 
 other part. 
 
 Improvements in agriculture , or manu- 
 faclures , by means of Mechanism , Chy- 
 miflry &c. or in the mode of conveying 
 any thing with lefs labour from one place 
 to another, produce alfo the eifeft of 
 lowering more or lefs the price of all ar- 
 ticles, although it fliould be immediately 
 confined to one objeft, or even to a part 
 
 of
 
 AN EXPLANATION OF THE NATURE, &;C. 8? 
 
 of an objeft of general ufe, and of crea- 
 ting thus a flill greater plenty of money, 
 without even the introduftion of an ad- 
 ditional quantity of reprefentative figns ; 
 to which may be further added the con- 
 fequences of each part a6ling & rea6ling 
 upon the other, fo as to produce a ge- 
 neral and fenfible diminution in price upon 
 the whole mafs. 
 
 If we trace the reverfe of thefe ope- 
 rations , (as far as concerns the in- 
 creafe of Interell} on money becoming 
 relatively fcarcer , we are immediately led 
 to perceive, that the income from mo- 
 ney becomes higher in proportion, than 
 the exilling price of Induftry gives , and 
 that a difcouragement will enfue, until 
 the quantity of produce is unfortunately 
 reduced to fuch a degree, as to admit of 
 purchafers at a price, in proportion to 
 the increafed income from money. 
 
 This efFecl of a diminution in the quan- 
 F 4 ti-
 
 S8 THE DOCTRINE 0¥ EQUIVALENTS OR 
 
 tity of Induftry would be flill more con- 
 fiderable, if the fcarcity of money occa- 
 fioned a flill lefs price to be paid for thofe 
 productions of Indullry , than was previ- 
 oufly the cafe, and a further evil would 
 arife from the principle of all component 
 parts of Induftry acting, & rea6ting upon 
 each other, while the higher money value 
 of all objefts muft alfo occafion a relatively 
 greater fcarcity of money, without any 
 further diminution in the number of re- 
 prefentative figns. 
 
 To fum up the whole ; it appears , that 
 a greater plenty of money, by lowering 
 Intereft, becomes a very aflive and power- 
 ful engine in lowering the price, and in- 
 creafing the quantity of induftry , and po- 
 pulation, on a given fpot, if well gover- 
 ned, and capable of improvement; that 
 meliorations, which the ingenuity of man 
 is for ever contriving in agriculture, in 
 manLffa6tures,in chymiftry,and in the mo- 
 de of conveying goods from one place to 
 
 an-
 
 AN EXPLANATION OF THE NATURE ,^0. 89 
 
 another, produce alfo the efFe 61 of lowe- 
 ring the price of Induflry , and thereby 
 occafion a further relatively greater 
 plenty of money , with all its happy con>- 
 fequences , without an increafed quantity 
 of reprefentative figns being introduced. 
 
 It appears alfo per contra j that a grea- 
 ter fcarcity of money, and confequent in- 
 creafe of Interelt, is an a<5live and power- 
 ful engine in augmenting the price, but 
 diminiiliing the quantity of induflry, & 
 population , and altho' no improvements 
 are likely to be loft, fo as to occafion 
 the reverfe of what the invention of 
 thofe improvements produced, yet fome- 
 thing analogous (in efFefl at Icaft) has ari- 
 fen in the political adminiftration of all 
 focieties , by the introdu6lion of money 
 taxes, which has produced much confu- 
 fion in feveral ftates , and which will be 
 fatal to many more , if thofe , who govern 
 the different Empires in Europe, do not 
 lay afide the prejudices of their educa- 
 F 5 tion,
 
 $0 THE DOCTRINE OF EQUIVALENTS OR 
 
 tion, and abandon the unimportant dis- 
 cuffions of mere forms of finance, to make 
 way for the thorough invelligation of its 
 principles , as well as of the baneful efFefts 
 of taxes, which the following Chapter will 
 fully develope, while the fucceding one 
 will point out the antidote againft the 
 pernicious tendency of their nature. 
 
 CHAP-
 
 AN EXPLANATION OF THE NATURE, &C. 91 
 
 CHAPTER III. 
 
 On the effe^s of taxation in money, 
 
 X he preceding Chapters will, I hope, 
 have fufficiently explained the principles 
 of relative value , which fo evidently 
 fubfills between every object and money, 
 as well as the general efFefts , which 
 arife from a relative plenty or fcarcity 
 of money, independent of thofe, which 
 may further accrue from taxation. 
 
 An examination into the nature, and 
 efFefts, of money taxes will, however, 
 throw a new light on every fyllem of 
 public finance , which the human under- 
 Handing has hitherto developed , and 
 will probably urge either the prefent or 
 
 the
 
 92 'THE DOCTRINE OF EQUIVALENTS OR 
 
 the future generation to confider , if there 
 be not a more confiftent plan of relief to 
 be traced, than that of increafing the evil 
 of taxation by creating a finking fund. 
 
 I have already ftated, that when taxes 
 were levied in kind, & that all things 
 were exchanged againfl: each other, no 
 inconvenience whatever arofe to fociety 
 at large, as every man gave a propor- 
 tion of what his labour produced. 
 
 It induced him indeed to be more in- 
 duftrious, as the furplus might otherwife 
 not be fufficient, either for his imme- 
 diate wants, or for his plans of annual 
 faving. 
 
 This motive, it mufl be owned, con- 
 tinues flill to operate on the mind of 
 man , whenever any new tax is levied in 
 money ; but the uncertainty of getting 
 his additional labours, reprefented by ad- 
 ditional figns , is perpetually thwarting his 
 
 111-
 
 AN EXPLANATION OF THE NATURE, &C. 95 
 
 ultimate views; for, without this increa- 
 fed power of reprefentation , his additio- 
 nal labour is not only loll, but even a 
 part of his ordinary efforts is politively 
 abforbed by the reprefentation of the 
 tax ; and from thence refults the inevita- 
 ble neceffity of felHng his extraordinary, 
 & ordinary labour for a lefs fum , than 
 he previoufly obtained for the laft. 
 
 To prove this, we need only analyfe 
 the nature and effefts of a tax , whether 
 it is confidered , in the light of Intereft 
 on money , raifed for the public fervice , 
 or as an annual expenditure for the peace 
 eflablifliment. 
 
 If confidered as Intereft, it is then a 
 part of the money yalue of an annual 
 produce, taxed for that purpofe, and of 
 courfe, the annual reprodu6lion of a new 
 money Capital, added to that, which 
 was previoufly neceiTary towards produ- 
 cing the object taxed. 
 
 This
 
 ^4 THE DOCTRINE OF EQUIVALENTS OR 
 
 This being the cafe, it is impoffible 
 for that object to be produced at the 
 fame price as before, nor could the per- 
 fon, who gave his money, ^be fecdred 
 in his annual income, if this additional 
 value (equal to the tax) was not abfo- 
 lutely linked to the objeft, folely & in- 
 dependently for his ufe, as the Intereft 
 of the Capital he had furniilied. 
 
 It would be ridiculous to urge, that 
 the producer of the objefl taxed could 
 relinquifli a part of the preexilling value 
 for the benefit of the moneylender, as 
 that Idea would militate againit the prin- 
 ciple , of a juil value being due to all 
 things , fo fully eflabliilied in the preceding 
 Chapters; and experience fufficiently pro- 
 ves, that the producer always exa6ls more, 
 than the tax levied on him, which will 
 be further explained on tracing the pro- 
 grefs of the Evil. 
 
 If we confider alfo the tax, as a pro- 
 
 vi-
 
 AN EXPLrANATTON OF THE NATURE, &C. 95 
 
 vifion for the peace eflablifhment , it 
 then becomes equally a part of the mo- 
 ney value of an annual produce , for the 
 purpofe of purchafmg, fome other income 
 or produ6lion , annually neceflary for 
 the fupport of the ftate; iliould there- 
 fore the obje6l taxed not be immediately 
 raifed, in its nominal value, in a fuperior 
 degree even to the part required, the 
 , reproduftion of it muft foon ceafe, and 
 the whole fyflem of taxation would in 
 this cafe , as well as in that , of being 
 an annual Interell to the moneylender, 
 become a mere fiflion. 
 
 This matter may be brought very clear- 
 ly to the comprehenfion of any man, 
 by fuppofing the tax to be as two, while 
 the previous coft of the objeft, confide- 
 red as an income from a Capital, fliould 
 alfo have been as two. 
 
 To continue the objeft in that cafe at 
 its former price, muft annihilate either 
 
 the
 
 96 THE DOCTRINE OF EQUIVALENTS OR 
 
 the firil cofl, or the tax, to the detri- 
 ment of the producer, or of the public 
 fervice. 
 
 The flating this cafe in a le'fs llrong de- 
 gree will by no means alter the principle, 
 and be equally intelligible to enlightened 
 minds, nor will it be necellary to add, 
 that the contrary effeft muft be produ- 
 ced, whenever a tax is taken off, as it 
 diminiilies the capital employed in pro- 
 ducing the object relieved, whether fuch 
 tax exifled for Interefl on money raifed, 
 or was levied to exchange againll fome 
 other produce, wanted annually by the 
 ftate. 
 
 I iliall now proceed, to ftate the ag- 
 gravation of the evil complained of; firll 
 by obferving, that the producer of the 
 objefl taxed claims a profit on the tax, 
 in proportion to the income he receives 
 from the other Capitals , employed in his 
 bufmefs; and fecondly by recurring to the 
 
 prin-
 
 AN EXPLANATION OF THE NATURE, &C. pf 
 
 principle of the additional price of one pro- 
 dii6lion afting immediately upon others, 
 & reading afterwards upon each other, 
 particularly if the obje6l taxed fnould 
 be neceffary to human exiftence. 
 
 This principle a6ls fo imperceptibly, 
 yet at the fame time fo powerfully, in 
 raifmg the price of all objefts, that it 
 may not be unneceflary to flate a cafe 
 in point, by fuppofing the materials, of 
 which cloathing is made, to be taxed, at 
 the very fame time with the materials, 
 from which fnoes are manufafturcd. 
 
 The Taylor makes the Shoemaker pay 
 dearer for his Cloaths, and the Shoema- 
 ker equally makes the Taylor pay dearer 
 for his Shoes; of courfe both feel them- 
 felves taxed by each other in their wea- 
 ring apparel, confiderably beyond what 
 Government levied (*), and both have 
 
 again 
 
 (*) Not nlone as a profit on the tax, but alfo 
 
 G on
 
 98 THE DOCTRINE OF EQUIVALENTS OR 
 
 again recourfe to raifing their price, tho' 
 in a lefs degree each time, adling and 
 reacting in this manner upon the wants 
 of each other, until the degree of increa- 
 fing price becomes fo fmall, as not to be 
 worthy of further notice. 
 
 It may be asked what mode of taxa- 
 tion does the leafl prejudice in the man- 
 ner above defcribed. 
 
 To this it can only be answered, that 
 taxes laid on luxuries do lefs mifchief in 
 increafing the price of all things, than 
 thofe laid on the neceflaries of life; but 
 that all Capitation taxes, or whatever even 
 may be clalTed under that denomination , 
 come nearer to the original plan of ta- 
 king the tax in kind , than any other 
 mode, that can be adopted; becaufe it 
 then levies a part of each perfon's pro- 
 
 fits, 
 
 on nccoiint of p neceflary nrticle being increafed ia 
 price, although made by themfelves.
 
 AN EXPLANATION OF THE NATURE , &C. 99" 
 
 fits, and of courfe upon the laft flage 
 of their produdlions , which confiderably 
 diminiilies the aftion & readion of one 
 thing upon another. 
 
 It mull however be allowed, that no 
 tax (which can be denominated a Capita- 
 tion) will ever fall impartially & accor- 
 ding to the faculty of each individual, 
 which occafions its being generally re- 
 probated; but as partial evil often pro- 
 duces general good, Nations would do 
 well to give the preference to that fyftem 
 of taxation, becaufe (however partially 
 the advantages might be diflributed) every^ 
 individual would reap fome benefit by 
 it, and to the community at large a very 
 confiderable increafe of profperity would 
 enfue. 
 
 If we take into confideration the mul- 
 titude of taxes impofed in Great Britain 
 within this Century, and the accumula- 
 ted evil confequences , which have en- 
 G 2 fued
 
 100 THE DOCTRINE OF EQUIVALENTS OR 
 
 fued on the price of all articles, we fliall 
 be nowife at a lofs, to account for the 
 great increafe of expence, to which all 
 ranks of people are expofed. 
 
 We may on the contrary be furprifed, 
 that Great Britain iliouid have continued 
 yearly to increafe in her population , & 
 Induftry, under fuch an accumulating op- 
 preflion; and that many articles of gene- 
 ral ufe fhould flill be obtainable at a mo- 
 derate price. 
 
 This will however not appear fo ex- 
 traordinary , when we recur to the good 
 efFccls of decreafing Interefl on money, 
 and of improvements in cultivation, in 
 conveyance from place to place, in me- 
 chanism, and in Chymiflry, with all their 
 favorable aclions and readions, fo fully 
 developed in the preceding pages. 
 
 A great part of the annual importa- 
 tions of Gold and Silver, from the mines 
 
 of
 
 AN EXPLANATION OF THE NATURE, &C. lOI 
 
 of South America, are naturally drawn into 
 Great Britain from Spain and Portugal, 
 either dire6lly, or circuitoufly from a 
 General Balance due to our trade with 
 foreign nations, or as the purchafe mo- 
 ney of our public funds , in which Fo- 
 reigners think it advifeable to lay out a 
 part of their annual favings. 
 
 This increafe of reprefentative figns 
 has of courfe provided, not only for the 
 increafing mafs of Induflry, which has 
 annually arifen , but alfo for the increafed 
 prices from taxation ; while thofe increa- 
 fed prices have on the other hand been 
 confiderably checked by the good efFe61:s 
 of the lower ratio of Intereft, as well as 
 by the daily improvements in cultiva- 
 tion, in conveyance from place to place, 
 in mechanism and in chymiflry, which 
 have tended to tine production of many 
 objefts with much lefs materials and la- 
 bour. 
 
 G 3 Thefe
 
 I02 THE DOCTRINE OF EQ^UIVALENTS OR 
 
 Thefe circumllances will, however, not 
 juflify any unneceflary extenfion in the 
 number of taxes, becaufe it produces the 
 inevitable confequence of diminifhing the 
 produce of preexifting taxes, or at leafl 
 of checking their natural increafe, and 
 of keeping the price of all obje6ls higher 
 than they would otherwife have been : 
 for the increafing quantity of reprefenta- 
 tive figns are not allowed by fuch aggra- 
 vation to produce their full efFe6l in the 
 redudion of Interefl , in the increafe 
 of Induftry, and in the decreafe of its 
 price. 
 
 It may be urged, that notwithilanding 
 all my alTertions refpefting the accumu- 
 lated evils of taxation , our progrefs in In- 
 dullry has been aflonifhing fince the year 
 1785, while the accumulation of taxes 
 fince the year 1783 is almofl as great, as 
 during any other period. 
 
 The answer to this is, that the in- 
 
 crea-
 
 AN EXPLANATION OF THE NATURE, d:C. IG3 
 
 creafe of paper money has alfo been 
 greater during that time , than any for- 
 mer period, but how far that fyftem of 
 increafmg reprefentative figns was con- 
 ftrufled upon proper principles, the com- 
 mercial disailers of the year 1793 will 
 fufficiently explain. 
 
 The unfortunate lituation of France 
 has, however, thrown a greater quantity 
 of Gold and Silver into other Countries; 
 and we may therefore hope, that a part 
 of the lofs lately fuftained, by the anni- 
 hilation of a great mafs of paper money, 
 will be fupplied in Bullion from abroad, 
 and prevent, in fome degree, the bad ef- 
 fe6ls, which Great Britain had to appre- 
 hend in her future revenue, from this di- 
 minution in her reprefentative figns. 
 
 As the great increafe of money,' with 
 
 its attendant good confequences on the 
 
 revenue fince the year 1784, has been 
 
 improperly attributed to the wisdom of 
 
 G 4 ad-
 
 I04 THE DOCTRINE OF EQUIVALENTS OR 
 
 adminiflration , and that the bad efFefts 
 of its decreafe will now be equally at- 
 tributed 5 with as little propriety, folely to 
 the war with France (*), it becomes ne- 
 cefTary for me to flate, that the whole 
 money fyflem is in a manner entirely 
 foreign to the adminiflration of public 
 affairs, and that its particular fituation 
 refpe6ling quantity mud be regulated by 
 the Intereft, and operations of Indivi- 
 duals, as well as by their confidence in 
 one another, which is very often carried 
 beyond all bounds in Great Britain, and 
 
 af- 
 
 (*) Notwitlificnding that krge fums bnve been ex- 
 pended by our armies abrond, yet a Balnnce is flill 
 coming into Grent Britain , by fuch expenditure being 
 returned on loan in the purchafe o^ flock. After the 
 peace of 1783 the contrary happened, as Foreigners 
 called for their money, by felling out of the funds ^ 
 which threatened the indudry & the revenues of Great 
 Britain with ruin, until the revived importation of 
 Gold & Silver from Mexico & Peru fpread its benign 
 influence over Europe , and enabled Foreigners to 
 fend back the fums prcvioufly v^anted.
 
 AN EXPLANATION OF THE NATURE, &C. I05 
 
 after producing confpicuous advantages 
 to the community at large, ends in great 
 individual diflrefs , and diminiflies for 
 fome time the public revenue. 
 \ 
 
 But if Miniflers have no right to inter- 
 fere in forcing a greater importation of 
 Gold and Silver, as well as in increaling, 
 or diminiihing, the confidence between 
 man and man, on 'which paper money 
 is principally founded , and that they 
 mufl fubmit to every temporary evil 
 that arifes from the want of additional 
 figns in coin, or from a diminution of 
 paper money , from which their opera- 
 tions had been deriving confiderable ad- 
 vantages, they are certainly bound to 
 examine with attention, and to promote 
 with becoming zeal, any plan, which is 
 found to produce the permanent, and folid 
 advantages of diminiiliing the price, and 
 extending the mafs of Induftry, without 
 the affiftance even of additional reprefen- 
 tative figns. 
 
 G 5 The
 
 106 THE DOCTRINE OF EQUIVALENTS OR 
 
 The firfl Itep towards this objeft can on- 
 ly be founded on their dereliction of every 
 Idea of a finking fund, which fo evident- 
 ly tends to increafe the annual expences 
 of the public, as well as of individuals, 
 and checks the growing mafs of Induflry. 
 
 The progreflive, and accumulating , bad 
 confequences of both thefe circumftan- 
 ces are fo very confpicuous, that it will 
 almoll be needlefs to add, that no future 
 good , from ultimately taking off taxes , 
 equal to the finking fund , as well as to the 
 amount of Inter ejl redeemed^ can compen- 
 fate for thofe evils. 
 
 The amount of the finking fund taxes 
 could 5 certainly ,/ro772 the fir Ji moment have 
 been defifled from, and, for the Interefi 
 redeemed , we have in return a much grea- 
 ter annual expenditure, with its perma- 
 nent confequences X*) 5 and a lefs mafs 
 
 of 
 
 (*) Greater loans during wsr.
 
 AN EXPLANATION OF THE NATURE, &C. IC7 
 
 of Induftry , as well as a fufpenfion in its 
 powers of progrefTive & compound in- 
 creafe, during the term of this fatal ope- 
 ration. 
 
 Nothing can be alledged in its favor, 
 as the advantages propofed are rendered 
 nugatory, from the immediate, and per- 
 manent efFefls of taxes in money; and 
 it may not be improper alfo to recolle6l, 
 that if the unnecefTary taxes check the 
 progrefs of the neceflary ones, the taki.ng 
 off thofe taxes, which now produce near 
 two millions p^ annum to the finking fund, 
 mufl inevitably make the other taxes 
 more produ6live, and give immediately by 
 natural means that financial refource, and 
 powerful income to the ftate, which is 
 now cruelly, but in vain, attempted by 
 a finking fund. 
 
 It appears then, that the bad confe- 
 quences, which arife from taxes in mo- 
 ney are fourfold ; firfl: by raifing the no- 
 mi-
 
 I08 THE DOCTRINE OF EQUIVALENTS OR 
 
 minal value of the objed: taxed ; fecond- 
 ly by the adiion and rea6lion of the in- 
 creafed price of that objeft upon others 
 of general ufe; thirdly by thofe combi- 
 ned efFe6ls of increafed nominal value 
 on all obje6ls inevitably abforbing a grea- 
 ter quantity of the exiiling reprefenta- 
 tive figns , which mud create a relatively 
 greater fcarcity; and fourthly and laflly, 
 by a further action , and reaction between 
 the Interell of money and the price of 
 all obje6ls, in conformity to the above- 
 mentioned operations of the Taylor , and 
 the Shoemaker. 
 
 It is evident alfo, that no human re- 
 gulations can poflibly alter thefe procee- 
 dings of nature , which cannot fail to 
 diminifli the exifling mafs of induflry & 
 population. 
 
 The counteraction which may arife 
 from the circumflances of an influx of 
 money, or of improvements of any fort, 
 
 muft
 
 AN EXPLANATION OF THE NAtURE, &C. I09 
 
 muft be confidered as a diflinft opera- 
 tion, producing different effefts, which 
 would have been fully developed, if other 
 deftruclive principles had not taken place 
 at the fame time. 
 
 Pernicious principles cannot certainly 
 claim any merit from a mitigation of evil, 
 when it arifes from other falutary cau- 
 fes ; for we mult keep in recolle6lion , that 
 the effeft is exa6lly the fame , whether 
 the exilling mafs of Induflry is pojitively 
 diminillied, and the price of all things 
 really increafed, by adopting a falfe fyltem, 
 or that fuch effe6ls are only negativdy 
 produced, by abforbing what would other- 
 wife have created a greater increafe of 
 that Induflry , and a decreafe in its price. 
 
 To be confident then, we mufl alfo 
 admit, that the plan of taking off money 
 taxes, will produce fourfold good confe- 
 quences; firlt by diminiiliing the nominal 
 value of the objeft relieved ; fecondly by 
 
 the
 
 / 
 
 no THE DOCTRINE OF EQUIVALENTS OR 
 
 the adion and reaclion of the diminiilied 
 price of that obje6l upon others of ge- 
 neral ufe ; thirdly by thefe combined 
 good eifecls of decreafed nominal value 
 on all obje6ls demanding a lefs quantity 
 of the exifting reprefentative figns, by 
 which means a greater plenty of money 
 is produced; and fourthly and laflly by 
 the aclion and reaclion between Interefl 
 of nioney, and the price of all obje6ls, 
 which muil confiderably reduce the price 
 of both, and inevitably augment the ge- 
 neral mafs of Indullry and population. 
 
 A counteraflion to thefe happy confe- 
 quences may indeed arife from feme other 
 circumilances , fuch as an exportation of 
 the metals, annihilation of paper money, 
 or partial commotions in the Empire; 
 but it will be fome confolation in that 
 cafe to think , that the effect is either 
 annihilated or mitigated by the falutary 
 confequences, which arife from taking 
 off taxes. 
 
 Whoe-
 
 AN EXPLANATION OF THE NATURE, &C. Ill 
 
 Whoever doubts my reafoning upon 
 the fubje6i: , and attempts to eflablifli 
 other principles , refpecting the operation 
 of money taxes, mufl inevitably fall into 
 every fort of inconfiftency, and iliould 
 any perfon proceed fo far, as to fay, 
 that money taxes do no mifchief , it will 
 be incumbent on him to explain , why any 
 attempt is ever made, ultimately to get 
 rid of fome , by means of a finking fund. 
 
 If he lliould on the contrary allow, 
 that fome evil arifes from them , it be- 
 hoves him in that cafe, to explain the na- 
 ture, and extent of it; in order that 
 mankind may be able to form fome judg- 
 ment, whether the immediate evil, from 
 creating a finking fund by an excefs of 
 taxation y is not greater, than any future 
 good, which is expe6led from it. 
 
 I am indeed fully convinced, that a 
 permanent, and annually increafing evilo/ 
 great magnitude is generated by fuch excefs^ 
 
 and
 
 1 1 2 THE DOCTRINE OF EQUIVALENTS OK 
 
 and that the ultimate good, which is fup- 
 pofed to enfue, is perfe6lly delufive. 
 
 Having no power, however, to alter the 
 prefent unfortunate fyftem , and feeing 
 the general indifference to any enquiry 
 into the merits, or demerits of it, lean 
 only ferioufly lament, that neither the 
 wisdom of our anceltors, nor the en- 
 lightened underftandings of the prefent 
 age, have fufficiently dire6led their ef- 
 forts, to the comprehenfion , or to the 
 explanation of this very important fub- 
 jea. 
 
 Much has indeed been written on In- 
 duftry, on commerce, and on particular 
 forms of finance, and taxation; but the 
 elementary principles of all thefe have 
 been misunderllood, and the fubje6l has 
 even been thought unworthy the notice of 
 elevated minds, as well as too fpecula- 
 tive to be traced with any degree of ac- 
 curacy. 
 
 Hovv
 
 AN EXPLANATION OF THE NATURE, &C. II3 
 
 How far the fuppofitions of thofe , 
 who negle6l the fcience, or the errors of 
 thofe, who have miflaken the principles, 
 are jullifiable , I muft leave to my readers 
 to determine. 
 
 The accumulation of taxes, for the pur- 
 pofe of redeeming public annuities, being 
 thus reprobated as ineffeftual , and at the 
 fame time , as cruel and oppreffive , I fiiall 
 probably be accufed of deflroying every 
 hope of redemption from the great mafs , 
 with which the nation is burdened, and 
 it therefore becomes me to point out 
 fome other remedy. 
 
 The following Chapter will, I flatter 
 myfelf, unfold the efficient refources of 
 every Hate, and iliew by the clearefl: ma- 
 thematical demonflration , as well as by 
 the application of eflabliOied pradice, that 
 all public annuities carry naturally (upon 
 the principle of an equivalent value being 
 returned) their extinction along with them , 
 H whe-
 
 114 THE DOCTRINE OF ECJUIVALENTS OR 
 
 whether created for a limited number of 
 years, or granted in perpetuity, and in 
 that cafe fubje6l to be redeemed, when- 
 ever Government can fubllitute a new 
 creation on more favorable terms for 
 the public. 
 
 My readers will then perceive, that 
 any attempt to redeem annuities by means 
 of new taxes, becomes in fad a double, 
 nay even a triple reimburfement, and by 
 thus adding gratuitoufly to the public 
 burthens, produces the very contrary ef- 
 feft to what is intended. 
 
 The wonderful financial refources of 
 every llatc, not yet matured in popula- 
 tion and induflry, as well as the pofli- 
 bility of rendering thofe of an infant 
 ftate indefinite, mull naturally arife to 
 our view, from an examination of the 
 nature and power of money, combined 
 with thofe principles of equivalent value, 
 which fo evidently form the ground work 
 
 of
 
 AN EXPLANATION OP THE NATURE, &C. 11^ 
 
 of every transaction, or exchange, be- 
 tween man and man. 
 
 The particular application of thofe 
 principles mud, however, be more or 
 lefs regulated by the circumftances of the 
 moment, which will of courfe produce 
 frequent alterations in the fecondary plans 
 of finance, fuch as the extent of annuities 
 to be granted , the change in their form, 
 and the modification of particular taxes. 
 
 The relief, to be procured for a coun- 
 try compleatly matured, muft further de- 
 pend on the additional knowledge of the 
 nature , and extent of its public annui- 
 ties, as well as of its taxes, and annual 
 expenditure , in order to lighten each 
 by new modifications. 
 
 The political exiflence of fuch a coun- 
 try may5l)y thofe means, be confiderably 
 prolonged, although profperity cannot be 
 expefted in any great degree. 
 
 End of the Firjl Part,