essay3 [15]
begins with this new coinage to pay the troops and the pensions. The old coinage is demonetised and received at the Mint at a lower nominal value. The King profits by the difference. But all the sums of new coinage which come from the Mint do not restore the abundance of money in circulation. The amounts kept hoarded by individuals and those sent abroad greatly exceed the nominal increase on the coinage which comes from the Mint. The cheapness of merchandise in France begins to draw thither the money of the foreigner, who finding it 50 or 60 or more per cent cheaper sends gold and silver metal to France to buy it. In this way the foreigner who sends his bullion to the Mint recoups himself easily from the tax paid there on this bullion. He finds the double advantage of the low price of the merchandise he buys, and the loss of the Mint charge falls really on the French in the sale of their merchandise to the foreigner. They have merchandise enough for several years' consumption. They resell to the Dutch, for example, the spices which they bought of them for two thirds of what they paid. All this takes place gradually, the foreigner decides to buy these merchandises from France only because of their cheapness. The balance of trade, which was against France at the time of the diminutions turns in her favour at the time of augmentation, and the King is able to profit by 20 per cent or more on all the bullion brought into France and taken to the Mint. As Foreigners now owe a trade balance to France and have not in their country coins of the new issue they must take their bullion and coins of the old issue to the Mint to obtain new coins for payment. But this trade balance which Foreigners owe to France arises only from the merchandise which they import from it at low prices. France is all round the dupe of these operations. She pays very high prices for foreign goods during the diminutions, sells them back at very low prices at the time of the augmentation to the same foreigners, sells her own merchandise at low prices which she had kept so high during the diminutions and so it would be difficult for all the money which left France during the diminutions to come back during the augmentation. If coins of the new issue are counterfeited abroad, as is nearly always the case, France loses the 20 per cent which the King has established as the Mint charge. This is so much gained for the Foreigner who profits further by the low prices of merchandise in France. The King makes a considerable profit by the Mint tax, but it costs France three times as much to enable him to make this profit. It is well understood that when there is a current balance of trade in favour of France against the foreigner the King is able to raise a tax of 20 per cent or more by a new coinage and an increase in the nominal value of coins. But if the trade balance was against France at the time of this new coinage and augmentation the operation would have no success and the King would not derive a great profit from it. The reason is that in this case it is necessary to send money continually abroad. But the old ecu is as good in foreign countries as the new. That being so the Jews and Bankers will give a premium or bonus in secret for the old coins and the individual who can sell them above the Mint price will not take them thither. At the Mint they give him only about 4 livres for his ecu, but the Banker will give him at first 4 livres 5 sols, and then 4 livres 10, and at last 4 livres 15. And this is how it may happen that an augmentation of the coinage may lack success. It can hardly happen when the raising is made after the lowerings indicated, because then the balance naturally turns in favour of France, as we have explained. The experience of the augmentation of 1726 may serve to confirm all this. The diminutions which had preceded this augmentation were made suddenly without warning, which prevented the ordinary operations of diminutions. This prevented the trade balance from turning strongly in favour of France at the augmentation