Recommendations on currency regulation and devaluation of the guinea Isaac Newton c. 1,038 words The Newton Project Oxford 2017 Newton Project, University of Oxford

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 2 July 1702, c. 1,038 words. Treasury

Final version, dated 7 July 1702, in T. 1/80.105, MINT00937 (printed in Horton, Silver Pound, 264-6, in Shaw, 153-7 (where it is misdated 17 July), and in NC, 4: 388-91).

After an examination of foreign coins, it appears that gold is over-valued in England. Propose a reduction of the guinea by between 6d. and a shilling. Advise against trying to prevent the exportation of coin by legislation: 'such a standing law cramps trade & thereby may be more effectual to prevent the importation of silver then to keep in the money'. Economic measures are to be preferred. Various other suggestions for modification of the coinage, including the use of coarser material in small coins to make them more durable, and comments on trade and finance.

 MINT 19/2/78-9, National Archives, Kew, Richmond, Surrey, UK UKSurreyKew, RichmondNational Archives MINT 19/2/78-9 2 July 1702 England English Holograph MintEconomic Theory and Legislation Catalogue information compiled by Rob Iliffe, Peter Spargo & John Young Catalogue exported to teiHeader by Michael Hawkins Transcribed by Will Scott, with retrofitting from MINT00937
78226

To the RtRight HonbleHonourable Sidney Lord Godolphin LdLord High Treasurer of England.

May it please yoryour LordpLordship

According to yoryour LordpsLordships direction we have examined the values of several forreign coyns & endeavoured to inform orourselves of the values of gold in proportion to silver in several nations & considered the ways of preserving the coyn. And by the Accompts we have met with Gold is higher in England then in France by about 9d or 10d in the Guinea, then in Holland by 11d or 12d in the Guinea, then in Germany & Italy by 12d in the Guinea or above. In Spain & Portugal Gold is higher then in England by about 110dd in the Guinea. For the great quantity of silver coming from the West-Indies has brought down the price of silver in all Europe in proportion to gold & principally in Spain where the Bullion first arrives. The low price mends the market and carries silver from Spain into all Europe & from all Europe to the East-Indies & China, the Merchandt bidding more for it then it goes for among the natives. In Spain the Merchants advance about six ๊‘per cent for silver & sometimes above, at wchwhich rate a Guinea is worth about 21s. 2d14 & sometimes less. In England they advance 3d or 4d ๊‘per ounce, & at the rate of 3d ๊‘per ounce advance, a Guinea is worth but 20s. 6d16.

Gold is therefore at too high a rate in England by about 10d or 12d in the Guinea. And this tending to the decrease of the silver coyn, we humbly conceive that one way of preserving this coyn is to lower the price of gold, suppose by taking 6d, 9d or 12d from the price of the Guinea so as that gold may be of the same value in England as in the neighbouring parts of Europe. France has set us an Example for in the last war when the Lewid'or was raised there to 14 livres the Ecu was raised only to 72 sols but it is now raised to 76 sols thรดough the Lewid'or be raised only to 14 livres as before. So that Gold in respect of silver is lower in France now then in the last war in the proportion of 76 to 72 that is by above 13d12 in the Guinea. The licensing the exportation of Bullion whilst the exportation of money is prohibited seems to be another cause of the decrease of orour silver coyn. For this makes silver worth more uncoyned then coyned & thereby stops the coynage & causes the melting down of the money in private for exportation. We are humbly of opinion that care should be taken rather to set the price of money above that of Bullion & to bring Bullion through the Mint, silver being more more apt to stay with us in the usefull form of money then in the useless form of Bullion, & encreasing the coyn whilst it stay with us in the form of money. For wchwhich reason it may be better to licence the exportation of money then that of Bullion, or at least to licence the exportation of so much money as shall be coyned out of forreign Bullion: which whenever it shall be thought fit may be convenient done after some such manner as is expressed in the scheme hereunto annexed. For tThe safety & encrease of the money depends principally on the ballance of trade. If the ballance of trade be against us the money will be melted down & exported to pay debts abroad & carry on trade in spight of laws to the contrary: and if the ballance of trade be for us such laws are needless & even hurtfull to trade. If trade can be so ordered that no branch of it be detrimental to the nation the money will be safe. For which end luxury in forreign commodities should be checkt & the exportation of our own commodities promoted. If a law were made & well executed against trading with more gold & silver by any Merchant or Company of Merchants then in certain proportions to the value of the good exported, such an addition to the Act of Navigation might put Merchants upon searching out sufficient ways of vending our commodities abroad & as we humbly conceive be more effectual for preserving the coyn then the absolute prohibition of the exportation thereof. Vpon extraordinary occasions a law against exporting money may during the occasion be sometimes of advantage: but such a standing law cramps trade & thereby may be more effectual to prevent the importation of silver then to keep in the money. As for the alteration of the standard we are humbly of opinion that if the value of the several species to be hereafter coyned be diminished without changing the denomination it will occasion the melting down & recoyning the species already coyned, for the profit that may be made thereby. And if the value be encreased the people will value their gGoods by the old money already coyned in wchwhich they are to be paid and the new money of greater value (if any shall be coyned) will be pickt out for exportation, & the Importer who coyns it will lose the overvalue to the discouragement of the coynage, & in payments made by tale to forreigners the nation will also lose the overvalue. But if it be proposed to retain the value of the several species or quantity of fine silver therein & only to alter the Allay: we are humbly of opinion that if small money which by continual use wears away fast & is apt to be lost, were coyned of coarse allay as is done in several Countries abroad, provided it were well coyned to prevent counterfeiting, such money would weare longer & be less apt to be lost or melted down or exported. By small money we understand gGroats, three pences, two pences & pence, unless the penny by reason of its smalness79 smalness should be coyned of copper. All which is most humbly submitted to yoryour LordpsLordships great wisdome Mint Office. 2 Iuly, 1702.