Chapter 31 - Money

Summary

MO′NEY. n.s. [monnoye, French; moneta, Latin. It has properly no plural except when money is taken for a single piece; but monies was formerly used for sums.] Metal coined for the purposes of commerce.

Money differs from uncoined silver, in that the quantity of silver in each piece of money is ascertained by the stamp it bears, which is a publick voucher. Locke.

“The dearness of every thing,” wrote philosopher and historian David Hume, “from plenty of money, is a disadvantage, which attends to an established commerce, and sets bounds to it in every country, by enabling the poorer states to undersell the richer in all foreign markets.” New forms of money were prompting anxiety:

This had made me entertain a doubt concerning the benefit of banks and paper credit, which are so generally esteemed advantageous to every nation. That provisions and labour should become dear by the encrease of trade and money, is, in many respects, an inconvenience; but an inconvenience that is unavoidable, and the effect of that public wealth and prosperity which are the ends of all our wishes.

The monetary economy

Many of David Hume’s compatriots shared his skepticism of banks, paper money, and credit, though few identified them so strongly with inflation. Those antiquarians who concerned themselves with long-term price trends more often focused their attention on the debasement of the coinage. Hume was one of the few to notice the importance of “paper money” and credit to the growth of the eighteenth-century economy. While few contemporaries would disagree with the notion that they were living in an era of rapid economic and social change, the tendency of modern historians to emphasize that change rather than the continuities with earlier periods obscures the reality that many of the salient features of the eighteenth-century economy had roots that stretched back to the Middle Ages.