Further Considerations [7]
sends out Commodities to the value of four hundred thousand Ounces of Silver more than the Commodities we bring home from abroad cost us; there is One hundred thousand Pound every year clear gain: Which will come home in Money, be a real increase of our Wealth, and will stay here. On the other side, if upon a general balance of our whole Trade, we yearly import Commodities from other parts to the value of an hundred thousand Pound more than our Commodities exported pay for, we every Year grow an hundred thousand Pound poorer. And if, besides that, we should also import a Million in Bullion from Spain every year, yet it is not ours; it is no increase to our Wealth, nor can it stay here; but must be Exported again every grain of it with an hundred thousand Pound of our own Money to boot. I have heard it propos'd as a way to keep our Money here, that we should pay our Debts contracted beyond Seas, by Bills of Exchange. The Idleness of such a Proposition will appear, when the nature of Exchange is a little consider'd. Foreign Exchange is the paying of Money in one Country, to receive it in another. The Exchange is High, when a Man pays for Bills of Exchange above the Par. It is Low when he pays less than the Par. The Par is a certain number of pieces of the Coin of one Country, containing in them an equal quantity of Silver to that in another number of pieces of the Coin of another Country: v.g. supposing 36 Shillings of Holland to have just as much Silver in them as 20 English Shillings. Bills of Exchange drawn from England to Holland at the rate of 36 Shillings Dutch for each pound Sterling, is according to the Par. He that pays the Money here, and receives it there, neither gets nor loses by the Exchange; but receives just the same quantity of Silver in the one place, that he parts with in the other. But if he pays one pound Sterling to receive but 30 Shillings in Holland, he pays one sixth more than the Par, and so pays one sixth more Silver for the Exchange, let the Sum be what it will. The reason of High Exchange, is the buying much Commodities in any Foreign Country, beyond the value of what that Country takes of ours. This makes English Men have need of great Sums there, and this raises the Exchange or Price of Bills. For what grows more into demand, increases presently in price. Returning Money by Exchange into Foreign parts, keeps not one Farthing from going out: It only prevents the more troublesome and hazardous way of sending Money in specie forwards and backwards. Bills of Exchange more commodiously, by Scrips of Paper, even the Accounts between particular Debtors and Creditors in different Countries, as far as the Commerce between those two Places is equivalent: But where the over-ballance, on either side, demands Payment, there Bills of Exchange can do nothing; but Bullion, or Money in specie must be sent. For in a Country where we owe Money, and have no Debts, owing to us, Bills will not find Credit; but for a short time, till Money can be sent to reimburse those that paid them; unless we can think Men beyond Sea will part with their Money for nothing. If the Traders of England owe their Correspondents of Holland a hundred thousand Pound, their Accounts with all the rest of the World standing equal, and remaining so, one Farthing of this hundred thousand Pound cannot be paid by Bills of Exchange. For example, I owe a thousand Pounds of it; And to pay that, buy a Bill of N. here, drawn on John de Wit of Amsterdam, to pay P. van Lore my Correspondent there. The Money is paid accordingly, and thereby I am out of Van Lores Debt; but one Farthing of the Debt of England to Holland is not thereby paid; for N. of whom I bought the Bill of Exchange, is now as much indebted to John de Wit, as I was before to P. van Lore. Particular Debtors and Creditors are only changed by Bills of Exchange; but the Debt owing from one Country to the other, cannot be paid without real Effects sent thither to that value, either in Commodities, or Money. Where the ballance of Trade barely pays for Commodities