Political Economy [45]
the interest of money will be considerable; if, on the contrary, there is much capital in circulation, and little employment for it, interest will be very low. It must always be regulated by what is called the quantity of money offered in the market, because money is the sign of capital, though not capital itself. Far from being augmented by the magical increase of money above alluded to, capital would not even be increased by the arrival of money, in great abundance, at a particular place of trade, without losing any thing of its value in comparison with the things it purchases; and no change in the rate of interest would result from this circumstance. Nearly all the circulating capital of each manufacturer and trader is successively presented to him under the shape of money, in its return from the buyer to the seller; but the part of his funds, which a merchant actually has in money, forms, in ordinary cases, but a small portion of the capital employed in his commerce; an infinitely greater portion being kept in its original state in his own warehouses, or in those of his debtors. On the other hand, it is almost always in the power of each merchant instantaneously to augment the quantity of money at his disposal, by selling his goods at a less profit, or by discounting the debts which are owed him. In this way, he has money when he pleases, without being richer; the money, far from adding to his capital, is purchased with it. If such operations are performed at one time by several merchants in the same town, that town purchases money from its neighbours; if by a great number of French, English, or German merchants, we say that France, England, or Germany purchases money. There will, in reality, be found much more in the markets to make payments with; guineas will be much more abundant; but there will be neither more nor fewer deposits offered to lend, and the rate of interest will not be any way affected by the change. Such as are acquainted with the movements of trading places, know well that guineas may abound in them while capitals are scarce, or guineas be scarce while capitals abound. It is a gross error, then, to believe, that, in all cases, a considerable importation of the circulating medium will make the rate of interest fall, or an exportation make it rise. Money is a kind of wealth; and like any other kind of wealth, it forms part of the circulating capital. If the money imported is a gift, or a tribute; if it costs nothing to the nation, it will certainly augment its circulating capital, and must certainly contribute to lower the rate of interest on the spot; but the same sums paid to the nation in goods would equally contribute to that end. If, on the other hand, this money has been purchased with any other portion of the capital, in that case the sum total of the latter will remain the same, and the rate of interest will not be affected. Upon these principles, it is easy to see how mines of silver and gold do not enrich a nation more than any other kind of industry. The precious metals drawn from the mine are goods purchased, like all other goods, at the price of labour and capital. The opening of the mine, the construction of its galleries, the establishment of refining furnaces, require large advances, independently of the labour by which the ore is drawn from the bowels of the earth. This labour, and its fruits, may be exactly paid by the metal produced, and the state will gain by the operation, as by any other manufacture. But, in general, the profits of mines are irregular. As the head prize in a lottery seduces gamesters, an unlooked for advantage encourages miners to continue their exertions, although the usual returns be inferior to those obtained by any other kind of industry; and nearly all of them are ruined, just like gamesters, because they were at first successful. From these principles, we may also conclude, that the blame so frequently imputed to Frederic II and the Canton of Berne for having hoarded up and withdrawn from the country a large portion of the natural circulating