Draft version of Newton's memorandum on John Pollexfen's A Discourse of Trade, Coyn and Paper Credit (1697 & 1700)

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Observation's on Mr P's Reply.

1. On the Argument against Paper Credit taken from the course of the Coynage.

To shew that the Coynage has decreased since the rise & growth of paper credit Mr P. (sec. 2, 3, 4, 6, 7) justifies his assertions that there wasere coyned in silver communibus annis about 400000li ꝑ an from 1640 to 1660, 200000li from 1660 to 1680 & less then 80000li ꝑ an from 1680 to 1695. These assertions I disputed not except that I affirmed the 400000li ꝑ an to be not in silver alone but in gold & silver together. But I represented that from this decrease of the silver coynage nothing could be argued against paper credit, & that for these two reasons.

First because Mr. P. considers tnot the whole coynage of both gold & silver together wch make or wealth but that of silver alone. For ye coynage of silver from 1640 to 1660 was greater then that of gold & now it is much less & this alteration of the proportion arises not from paper credit but from the growing exportation of silver to ye Indies while or gold stays at home, or Merchants finding that silver is a better commodity in the Indies then gold.

Se{illeg}condly because the decrease of the coynage from 1640 to 1695 was not uniform, as it should seem by Mr P's representation, but had several periods of increasing & decreasing according to the vicissitudes of peace & warr abroad, all wch ought to be distinguished & considered severally before any thing can be concluded from the course of the coynage. For if the coynage in the reign of K. Cha. & K. Iames II increased wth paper credit when according to his recconing it should {illeg}have decreased, if at other times the decrease of the coynage arose from other causes then paper credit, then we must ascribe the increase to paper credit & the decrease not to paper credit tobut to those other causes, & so the argument from ye course of ye coynage against paper credit will vanish. Now the course of the coynage answe{illeg}red to the vicissitudes of peace & war abroade after this manner.

The silver coynage in the latter half of Q. Elizabeths' reign (after she had recoyned the base money of her Predecessors) & in the first five years of K. Iames I was one year wth another <612v> about 70 or 80 thousand pounds ꝑ an. Then upon a cessation of arms between ye Spaniards & Dutch it fell suddenly to less then 40 thousand pounds ꝑ {illeg}an. Afterwards upon renewing the war & making a peace between England & Spain 1629 it grew greater then ever & continued so till the end of the warr 1648, the silver Coynage being about 440000li ꝑ an & that of both gold & silver 600000li ꝑ an or above. Then upon the conclusion of peace between Spain & Holland it fell again & became but the 8th or 10th part of what it was before & continued so for the next 18 years this coynage of both gold & silver together being scarce 70000li ꝑ an till the enacting of the coynage Duty 166$\frac{\mathrm{6}}{\mathrm{7}}$ by wch & the flourishing of trade in the peacefull reigns of Cha: II & Iames II & the quick dispatch of business by paper credit notwithstanding or disadvantageous trade wth France it encreased till it became about 680000li ꝑ an. And then by the late war wth France & the consequent decay of paper credit & trade it decreased again exceedingly. This agreement between the encrease & decrease of the coynage & the state of the nation in respect of peace & war abroad shews that ye Coynage has principally depended on that state. And if paper credit hath had any effect upon the coynage it hath promoted it because both increased together till 1690 & afterwards both decreased together by ye late French warr.

By the ordinary course of trade the coynage of gold & silver in the last 17 years of K. Iames I scarce exceeded 40 or 50 thousand pounds ꝑ an. In the reign of K. Cha: I it increased to an exceed
ing height not by the ordinary course of trade but by or being in peace while or neighbours were in warr. After 16478 when that warr ceased & trade returned to its ordinary course the Coynage (without recconing the recoyning of the Harp & Cross money) became but about 6800li ꝑ an till ye rise & growth of paper credit & the enacting of the coynage Duty, & then in ye space of 23 years more by the encouragement of that Act & the encrease of trade occasioned by the quick dispatch of business by Paper credit the coynage grew ten times greater then it was before. And therefore Mr P. in his first paper set the argument in a wrong light when he represented that the coynage had decreased ever since the rise & growth of paper credit. For he there considers the Coynage alone of gold & silver together {illeg}before 1660 & the coynage of silver alone afterwards & lessens {illeg}the latter in ye reign of K. Cha. II & K. Iam. II by taking a medium between that wch preceeded the late French warr & that wch was in the warr; whereas if he had considered the whole coynage of both gold & silver till the present time, & distinguished between times of peace & warr, he would have found the argument from the Coynage <613r> because the life of their trade.

But Mr P. objects makes an Objection wch lies against all the circulating credit in England, that Paper credit inclines to luxury & luxury occasions the exportation of or money. unless it be laid up in a Bank. The For this Objection lies not only against credit upon Parliamentary funds but against credit upon land or any t{illeg}hing else but money in a Bank, be the de{illeg}posit never so safe & the security never so good. But if this be a good objection, we must reject win{illeg}e because it occasions drunkenne{illeg}ss, & all the best things because by corruption they become the worst. Rather let us suppress drunkenness, & keep or wine.

If all or Paper credit considered as a sort of riches were turned into gold, the gold would incline to luxury as the credit did before, & the luxury would export or silver. M{illeg}ust we therefore throw away the gold for fear we should want market money: Why should we not rather endeavour to grow richer by keeping or gold & only suppressing luxury?

But tho paper credit be a sort of {illeg} riches we must not use it immoderately. Like vertue it has its extremes. Too much may hurt us as well as too little. So much is best for us as suffices to lower interest, make dispatch in business, set the people on wor{illeg}k & inspire life & vigour into all the busy part of the nation too strongly to luxury. For it enriches us only amongst or selves & not in respect of forreign nations. But What proportion in respect of gold & silver is best for us is a d{illeg}d{illeg}etermination wch may be varyd with circumstances of time & must be left to experience & the wisdome of the legislative power.