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IN TME CUSTODY OF TME
BOSTON PUBLIC LIBRARY.
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THE
O R K S
OF ^
JOHN LOCKE, Efq;
VOL. II.
CONTAINING,
Some confiderations of the confequences
of the lowering of intereft, and raifmg
the value of money. In a letter fent
to a member of parliament, 1 69 1 .
Short obfervations on a printed paper,
entitled. For encouraging the coining
filver money in England, and after for
keeping it here.
Further obfervations concerning
raifing the value of money. Wherein
Mr. L o w N D E s's arguments for it, in
his late report, concerning An eflay for
the amendment of the filver coin, are
particularly examined.
Two treatifes of government. In the
former, the falfe principles and founda-
tion of Sir R o B E RT Fi L M E R, and
his followers, are detefted and over-
thrown. The latter is an efiay con-
cerning the true original, extent, and
end of civil government.
A L E T T £ R concerning toleration.
A Second letter concerning toleration.
A Th I R D letter for toleration : to the
author of the third letter concerning
toleration.
Th E reafonablenefs of Chriftianity, as
delivered in the Scriptures.
A Vindication of The reafonablenefs
of Chriftianity, from Mr. Edwards's
reflections.
A Second vindication of The rea-
fonablenefs of Chriftianity.
The Fourth Edition.
LONDON,
4?
i
%,
Prjnted for E d m u n d Pa R k e r, at the Bible and Crown, in Lombard-
'Street; Edward Symon, againft the Royal-Exchange, in Cornhill;
C H A R L^E s Hitch, at the Red-Lion, in Paternofter-Row ; and
John Pemberton, at the Golden-Buck, in Fleetftreet.
M. DCC. XL.
ADAMS
Some CONSIDERATIONS
OF THE
CONSEQUENCES
O F T H E
Lowering of Intereft,
AND
Raifing the Value
O F
MONEY.
In a Letter fent to a Member of Parliament,
Vol. II.
3
SOME
CONSIDERATIONS
O F T H E
Lowering of Intereft,
AND
RAISING the VALUE
O F
MONEY.
SIR,.
HESE 7iofwis cmcernlng coinage havwg, for the mai?:, as
you know, been put into ivriting, above twehe mo?iths fmce ; as
thoje other, concerning ijiterefi, a great deal above Jo many
years ; I put them tiow again into your hands, ijoith a liberty (fmce
you will have it Jo) to communicate them farther^ as you pleafe.
If, upon a review, you continue your favourable opinion cf them,
and nothing lefs than publifmig will fat isfy you, I mujl defire you to }-emember,
that you mi ft be anjwerable to the world, for thejlile ; which isjiich as a man writes
carelefy to his friend, when he J'eeks truth, 7iot ornament; and ftudies only to be
in the right, and to be undetjlood. I have, Jince you faw them lajl year, metivith
Jome new obje5lions in print, which I have endeavoured to remove ; and particu-
larly I have taken into conf deration a printed feet, entitled, "Remarks upon a
" paper given in to the Lords, &c." becauje one may iiaturally fuppofe, that he^
that was fo much a patron of that cauj'e, would omit nothing, that could be faidin
favour of it. To this I mufl here add, 'That I am juji now told from Holland,
" That the States, finding themfelves abiifcd by coining a va/i quantity of their
" bafe [Schillings^ money, made of their own ducatoons, and other finer Jilver,
" melted down, have put a fop to the minting of any but fine filvcr coin, till they
" Jhould fettle their mint upon a newfootT
I know the fincere love and concern, you have for your country, puts you
conflantly upon cajiing about, on all hands, for any means to ferve it ; and will
not fiffer you to overlook any thing, you conceive, may be of any the leaf uje,
though offer d you, from the meaneft capacities : you could not elje have put me upon
looking out my old papers, concerning the reducing of intereft to 4 per cent,
which have Jo long lain by, and forgotten. Upon this new Jurvey of them, I find
not my thoughts now to differ, from thoJe I had near twenty years fince : they have to
77ie fill the appearance of truth ; nor floould I otherwije venture them, Jo much as
to your fight. If my notions are wrong, 7ny intention, I amfure, is right ; and
whatever I have fail' d in, I jhall at leaf let youj'ee with what obedience I am^
Nov. 7. 1691 »
S I R,
Your moft humble fervant.
S I R,
4 Confiderations of the lowering of intereft,
s I R,
Have fo little concern In payings or receiving of " Intereft,"
that were I in no more danger to bb milled by inability and ig-
norance, than I am to be biaffed by intereft and inclination, I
might hope to give you a very perfed; and clear account, of the
confequences of a law to reduce intereft to 4 per cent. But,
fince you are pleafed to afk my opinion, I fliall endeavour
fairly to ftate this matter of Ufe, with the beft bf my fklll.
Th e firft thing to be confider'd is, " Whether the price of the hire of rao-
" ney can be regulated by Law ?" And to that I think, generally fpeaking, one
may fay, " 'tis manifeft it cannot." For, fince it's impoflible to make a law, that
fhall hinder ia man from giving away his money, or eftate, to whom he plea-
fes, it will be impoflible, by any contrivance of law, to hinder men, fkill'd in
the power they have, over their own goods, and the ways of conveying them
to others, to purchafe money to be lent them, at what rate foever their occa-
fions fliall make it neceflary for them to have it. For it is to be remembered,
that no man borrows money, or pays Ufe, out of mere pleafure : 'tis the
want of money drives men to that trouble and charge of borrowing ; and,
proportionably to this want, fo will every one have it, whatever price it coft
him. Wherein the fkilful, I fay, will always fo manage It, as to avoid the
prohibition of your Law, and keep out of its penalty, do what you can.
What then will be the unavoidable confequences of fuch a law ?
1. It will make the difficulty of borrowing and lending much greater;
whereby trade (the foundation of riches) will be obftrudted.
2. It will be a prejudice to none, but thofe who moft need afllftance and help;
I mean widows and orphans, and others uninftrudled in the arts and manage-
ment of more fkilful men ; whofe eftates lying in money, they will be hue,
eipecially orphans, to have no more profit of their money, than what " inte-
reft" the law barely allows.
3. It will mightily increafe the advantage of bankers and fcrlveners, and
other fuch expert brokers ; who flciU'd in the arts of putting out money, ac-
cording to the true and natural value, which the prefent ftate of trade, money
and debts fliall always raife intereft to, they will infallibly get what the true
Value of intereft fliall be above the legal. For, men finding the convenience
of lodging their money in hands, where they can be fure of it, at fliort warn-
ing, the ignorant and lazy will be forwardeft to put it into thefe men's hands,
who are known willingly to receive it, and where they can readily have the
whole, or a part, upon any fudden occafion, that may call for it.
4. I FEAR, I may reckon it as one of the probable confequences of fuch a
law, that it is likely to caufe great perjury in the nation ; a crime, than which
nothing is more carefully to be prevented by lawmakers, not only by penalties,
that fliall attend apparent and proved peijury, but by avoiding and lefTening, as
much as may be, the temptations to it. For Where thofe are ftrong, (as they
are, where men fliall fweai" for their own advantage) there the fear, of penalties
to follow, will have little reftrairit, efpecially if the crime be hard to be proved.
All which) I fuppofe, will happen in this cafe, where ways will be found out to
receive tnoney, upon other pretfences than for ufe, to evade the rule and ri-
gor of the law : and there will be fecret trufts and collufions amongft men,
that, though they may be fufpedted, can never be proved, without their own
confeflion. I have heard very fober and obferving perfons complain of the dan-
ger men's lives and properties are in, by the frequency and fafliionablenefs of
perjury amongft us. Faith and truth, efpecially in all occafions of attefting it,
upon the folemn appeal to heaven by an oath, is the great bond of fociety :
this it becomes the wifdom of magiftrates carefully to fupport. and render as
facred and awful. In the minds of the people, as they can. But, if ever frequen-
cy of oaths fliall make them be looked on, as formalities of law, or the cuftom
of
and raifing the value of money.
of ftraining of truth (which men's fwearing in their own cafes is apt to lead
them to) has once dipp'd men in perjury, and the guilt, with the temptation, has
ipread itfelf very wide, and made it almoft fafhionable in fome cafes, it wilt
be impoflible for the fociety (thefe bonds being diffolved) to fubfift. All muft
break in pieces, and run to confufion. That fwearing in their own cafes is apt
by degrees to lead men into as little regard of fuch oaths, as they have of their
ordinary talk, I think there is reafon to fulpedl, from what has been obferved, in
fomething of that kind. Mailers of {hips are a fort of men generally induftri-
ous and fober, and I fuppofe may be thought, for their number and rank, to
be equally honell to any other fort of men ; and yet, by the difcourfe I have
had with merchants in other countries, I find that they think, in thole parts, they
take a great liberty in their cuftom-houfe oaths, to that degree, that I remem-
ber I was once told, in a trading town beyond fea, of a mafter of a veffel,
there efteemed a fober and fair man, who yet could not hold faying, " God
forbid that a cuftom-houfe oath fhould be a fin." I fay not this to make any
refledlion upon a fort of men, that I think as uncorrupt as any other ; and
who, I am fure, oujht in England to be cherilhed and efteemed, as the moft
induftrious and moft beneficial of any of its fubjefts. But I could not forbear
to give this here, as an inftance, how dangerous a temptation it is, to bring
men cuftomarily to fwear, where they have any concernment of their own.
And it will always be worthy the care and confideration of law-makers, to
keep up the opinion of an oath, high and facred, as it ought to be, in the minds
of the people : which can never be done, where frequency of oaths, biaffed
by intereft, has eftabliftied a negledt of them; and fiftiion (which it feldom
fails to do) has given countenance to what profit rewards.
But that law cannot keep men from taking more ufe, than you fet (the
want of money being that alone which regulates its price) will perhaps appear,
if we confider how hard it is to fet a price upon wine, or iilks, or other unnecef-
fary commodities ; but how impoflible it is to fet a rate upon vid:uals, in a time
of famine. For, money being an univerfal commodity, and as neceflary to trade
as food is to life, every body muft have it, at what rate they can get it ; and
unavoidably pay dear, when it is fcarce j and debts, no lefs than trade, have
made borrowing in faftiion. The bankers are a clear inftance of this : For
fome years fince, the fcarcity of money having made it in England worth re-
ally more than fix per cent, moft of thofe that had not the fkill to let it for
more than fix per cent, and fecure themfelves from the penalty of the law, put
it in the bankers hands, where it was ready at their call, when they had an
opportunity of greater improvement. So that the rate, you fet, profits not the
lender'^, and very few of the borrowers, who are fain to pay the price for mo-
ney, that commodity would bear, were it left free; and the gain is only to the
banker. And fhould you leflen the ufe to four per cent, the merchant or
tr.;defman, that borrows, would not have it one jot cheaper than he has now ;
but probably thefe two ill eflTedfs would follow : Firft, That he would pay dearer;
and. Secondly, That there would be lefs money left in the country, to drive the
trade. For the bankers, paying at moft but four per cent, and receiving from
fix to ten per cent, or more, at that low rate could be content to have more mo-
ney lie dead by them, than now, when it is higher: by which means there
would be lefs money ftirring in trade, and a greater fcarcity ; which would
raife it upon the borrower, by this monopoly. And what a part of our trea-
fure their fkill and management, join'd with others lazinefs, or want of fkill,
is apt to draw into their hands, is to be known by thofe vaft fums of money, they
were found to owe, at the fliutting up of the Exchequer : and though it be
very true, yet it is almoft beyond belief, that one private goldfmith of London
fliould have credit, upon his fingle fecurity, (being ufually nothing but a note,
under one of his fervant's hands) for above eleven hundred thoufand pounds at
once. The fame reafons, I fuppofe, will ftill keep on the fame trade : and,
when you have taken it down by law, to that rate, no body will think of ha-
ving more than four per cent, of the banker j though thofe, who have need of
Vol. II. B money
6 Confiderations of the lowering of intereft,
money, to employ it in trade, will not then, any more than now, get it under
five or fix, or, as feme pay, feven or eight. And if they had then, when the
law permitted men to make more profit of their money, fo large a proportion
of the cafti of the nation in their hands, who can think, but that, by this law,
it fhould be more driven into Lombard-ftreet now ? there being many now,
who lend them at four or five per cent, who will not lend to others at fix. It
would therefore, perhaps, bring down the rate of money to the borrower, and
certainly diftribute it better to the advantage of trade in the country, if the
legal ufe were kept pretty near to the natural; (by natural ufe, I mean
that rate of money, which the prefent fcarcity of it makes it naturally at, up-
on an equal diftribution of it) for then men, being licenfed by the law to take
near the full natural ufe, will not be forward to carry it to London, to put it
into the banker's hands ; but will lend it to their neighbours in the country,
where it is convenient for trade it fliould be. But, if you lefTen the rate of
ufe, the lender, whofe intereft it is to keep up the rate of money, will rather
lend it to the banker, at the legal intereft, than to the tradefman, or gentle-
man, who, when the law is broken, fliall be fure to pay the fiiU natural inte-
reft, or more ; becaufe of the ingrofling by the banker, as well as the rifque in
tranfgrefiing the law : whereas were the natural ufe, fuppofe feven per cent,
and the legal fix; firft, the owner would not venture the penalty of the law,
for the gaining one in feven, that being the utmoft his money would yield : nor
would the banker venture to borrow, where his gains would be but one per
cent, nor the money'd man lend him, what he could make better profit of le-
gally, at home. All the danger lies in this. That your trade fliould fuffer, if
your being behind-hand has made the natural ufe fo high, that your tradef-
man cannot live upon his labour, but that your rich neighbours will fo under-
fell you, that the return you make, will not amount to pay the ufe and af-
ford a livelihood. There is no way to recover from this, but by a general fru-
gality and induftry ; or by being mafters of the trade of fome commodity, which
the world muft have from you at your rate, becaufe it cannot be otherwhere
fupplied.
N o w, I think, the natural intereft of money Is raifed two ways : firft.
When the money of a country is but little, in proportion to the debts of the
inhabitants, one amongft other. For fuppofe ten thoufand pounds were fuffi-
cient to manage the trade of Bermudas, and that the ten firft planters carried
over twenty thoufand pounds, which they lent to the feveral tradefmen and in-
habitants of the country, who living above their gains, had fpent ten thoufand
pounds of this money, and it were gone out of the ifland : 'tis evident, that,
fhould all the creditors at once call in their money, there would be a great fcar-
city of money, when that, employed in trade, muft be taken out of the tradef-
men 's hands to pay debts ; or elfe the debtors want money, and be expofed to
their creditors, and fo intereft will be high. But this feldom happening, that
all, or the greateft part, of the creditors do at once call for their money, un-
iefs it be in fome great and general danger, is lefs and feldomer felt than the fol-
lowing, unlefs where the debts of the people are grown to a greater proportion ;
for that, conftantly caufing more borrowers than there can be lenders, will make
money fcarce, and confequently intereft high. Secondly, That, which
conftantly raifes the natural intereft of money, is, when money is little, in
proportion to the trade of a country. For in trade every body calls for money,
according as he wants it, and this difproportion is always felt. For, if Eng-
liftimen owed in all but one million, and there were a million of money in
England, the money would be well enough proportioned to the debts : but, if
two millions were neceflTary to carry on the trade, there would be a million want-
ing, and the price of money would be raifed, as it is of any other commodify
in a market, where the merchandize will not ferve half the cuftomers, and
there are two buyers for one feller.
'Ti s in vain therefore, to go about effedlually to reduce the price of intereft by
a law i and you may as rationally hope to fet a fix'd rate upon the hire of
houfes,
and raffing the value of money.
houfes, or fliips, as of money. He, that wants a veffel, rather than lofe his
market, will not ftick to have it at the market-rate, and find ways to do it with
fecurity to the owner, though the rate were Umited by law : and, he that wants
money, rather than lofe his voyage, or his trade, will pay the natural inte-
refl for it; and fubmit to fuch ways of conveyance, as fhall keep the lender
out of the reach of the law. So that your ad at beft, will ferve only to in-
creafe the arts of lending, but not at all leflen the charge of the borrower : he, 'tis
likely, fhall, with more trouble, and going farther about, pay alfo the more
for his money ; unlefs you intend to break in, only upon mortgages and con-
tradls already made, and (which is not to be fuppofed) by a law, poft faftum,
void bargains lawfully made, and give to Richard what is Peter's due, for no
other reafon, but becaufe one was borrower, and the other lender.
But, fuppofing the law reach'd the intention of the promoters of it; and
that this adl be fo contriv'd, that it fixed the natural price of money, and hin-
died its being, by any body, lent at a higher ufe than four per cent, which is
plain it cannot : let us, in the next place, fee what will be the confequences of it.
1. It will be a lofs to widows, orphans, and all thofe, who have their
eftates in money, one third of their eftates ; which will be a very hard cafe up-
on a great number of people ; and it is warily to be confider'd, by the wifdom
of the nation, whether they will thus, at one blow, fine and impoverifh a great
and innocent part of the people, who having their eftates in money, have as
much right to make as much of their money as it is worth, ( for more they can-
not) as the landlord has to let his land for as much as it will yield. To fine men
one third of their eftates, without any crime, or offence committed, feems
very hard.
2. As it will be a confiderable lofs and injury to the money'd man, fo it
will be no advantage at all to the kingdom. For fo trade be not cramp'd, and
the exportation of our native commodities and manufadlures not hindred, it
will be no matter to the kingdom, who amongft ourfelves gets, or lofes : only
common charity teaches, that thofe fliould be moft taken care of, by the law,
who are leaft capable of taking care for themfelves.
3. It will be a gain to the borrowing merchant. For if he borrow at four
per cent, and his returns be twelve per cent, he will have eight per cent, and the
lender four : whereas now they divide the profit equally at fix per cent. But
this neither gets, nor lofes, to the kingdom, in your trade, fuppofing the mer-
chant and lender to be both Englifhmen : only it will, as I have faid, transfer
a third part of the money'd man's eftate, who has nothing elfe to live on, into
the merchant's pocket ; and that without any merit in the one, or tranfgreflion
in the other. Private men's interefts ought not thus to be negledled, nor facri-
ficed to any thing, but the manifeft advantage of the publick. But, in this
cafe, it will be quite the contrary. This lofs to the money'd men will be a pre-
judice to trade : fince it will difcourage lending at fuch a difproportion of pro-
fit, to rifque ; as we fliall fee more by and by, when we come to confider of
what confequence it is to encourage lending, that fo none of the money of the
nation may lie dead, and thereby prejudice trade.
4. I T will hinder trade. For, there being a certain proportion of money,
neceflary for driving fuch a proportion of trade, fo much money of this, as lies
ftill, leffens fo much of the trade. Now it cannot be rationally expefted, but
that where the venture is great, and the gains fmall, (as it is in lending in
England, upon low intereft) many will chufe rather to hoard up their money,
than venture it abroad, on fuch terms. This will be a lofs to the kingdom, and
fuch a lofs as, here in England, ought chiefly to be looked after : for, we ha-
ving no mines, nor any other way of getting, or keeping of riches amongft us,
but by trade, fo much of our trade as is loft, fo much of our riches muft necef-
firily go with it ; and the over-balancing of trade, between us and our neigh-
bours, muft inevitably carry away our money, and quickly leave us poor, and
expofed. Gold and filver, though they ferve for few, yet they command all
the conveniencies of life, and therefore in a plenty of them confifts riches.
3 Every
8 Confiderations of the lowering of intereft,
Eve RY one knows that mines alone furnifli thefe : but withal 'tis obfervable,
that moft countries, ftored with them by nature, are poor. The digging and re-
fining of thefe metals taking up the labour, and wafting the number of the
people. For which reafon the wife policy of the Chinefe will not fuffer the
mines, they have, to be wrought. Nor indeed, things rightly confidered, do
gold and filver, drawn out of the mine, equally enrich, with what is got by
trade. He, that would make the lighter fcale preponderate to the oppofite,
will not fo foon do it, by adding increafe of new weight lo the emptier, as if
he took out of the heavier what he adds to the lighter, for then half fo much
will do it. Riches do not confift in having more gold and filver, but in having
more in proportion than the reft of the world, or than our neighbours, where-
by we are enabled to procure to ourfelves a greater plenty of the conveniencies of
life, than comes within the reach of neighbouring kingdoms and ftates, who,
fharing the gold and filver of the world in a lefs proportion, want the means
of plenty and power, and fo are poorer. Nor would they be one jot the
richer, if, by the difcovcry of new mines, the quantity of gold and filver in
the world becoming twice as much, as it is, their fliares of them ftiould be
doubled. By gold and filver in the world, I muft be underftood to mean, not
what lies hid in the earth ; but what is already out of the mine, in the hands
and pofleftions of men. This, if well confider'd, would be no fmall encou-
ragement to trade, which is a furer and fhorter way to riches, than any other,
where it is managed with fkill and induftry.
In a country not fiirniflied with mines, there are but two ways of growing
rich, either conqueft, or commerce. By the firft the Romans made themfelves
mafters of the riches of the world j but I think that, in our prefent circum-
ftances, no body is vain enough to entertain a thought of our reaping the pro-
fits of the world with our fwords, and making the fpoil and tribute of van-
quiftied nations, the fiind for the fupply of the charges of the government,
with an overplus for the wants, and equally craving luxury, and faftiionable
vanity of the people.
Commerce, therefore, is the only way left to us, either for riches, or
fubfiftence : for this the advantages of our fituation, as well as the induftry and
inclination of our people, bold and fkilfiil at fea, do naturally fit us : by this
the nation of England has been hitherto fupported, and trade left almoft to it