Response to an order to report on gold and silver coin in Britain Isaac Newton c. 1,877 words The Newton Project Oxford 2017 Newton Project, University of Oxford

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 21 September 1717, c. 1,877 words. Treasury

This is either a draft or a copy of Newton's holograph original, also dated 21 September 1717, T. 1/208.43, MINT01000. There is also a clerical copy in Babson College, Ms. 429. The report was first published in the Daily Courant, no. 5057 (30 December 1717) and has been frequently reprinted: in Prior, Observations, 27-32, as a House of Commons paper on 5 March 1830, in McCulloch, Select Tracts, 274-9, in Shaw, 189-95, and in NC, 6: 415-19. See also NC, 6: 407-8 (T. 27/22.200b, MINT01064,Treasury's order for this report, dated 12 August 1717), and Westfall, 837-8.

Highly detailed analysis of the gold-silver value ratio in each major European country, China, Japan and 'East India' [i.e. the Indian subcontinent], and the value of a British gold guinea under each system. Concludes that by comparison with all other countries except Spain, Britain over-values gold relative to silver, resulting in excessive export of silver and a strong incentive to melt down silver coin (since it is worth more as bullion), and hence a shortage of silver coin. Though this could be remedied in the short term by coining from silver plate, of which there is no shortage, this would only encourage the export of such silver. In time, market forces will in any case raise the value of silver relative to gold as it becomes scarcer, but [Newton's report heavily implies] government intervention to reduce the face value of the gold guinea would usefully speed the process up.

 MINT 19/2/111-16, National Archives, Kew, Richmond, Surrey, UK UKSurreyKew, RichmondNational Archives MINT 19/2/111-16 21 September 1717 England English Clerical Hand 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 MINT01000
1111

To the Rt.Right HonbleHonourable the Lords

Comrs.Commissioners of his Majesty's Treasury.

May it please YrYour Lordships

In obedience to Your Lordship's Order of Reference of the 12th August 1717, that I should lay before Your Lordships, a State of the Gold and Silver Coyns of this Kingdom, in Weight and fineness, and the value of Gold in proportion to Silver, with my observations and Opinion & what Method may be most Effectual for preventing yethe melting down or exporting the Silver Coyne: I humbly represent to Your Lordships, that a Pound Weight Troy of Gold Eleven Ounces fine & one Ounce allay, is cut into 4412 Guineas, and a Pound Weight of Silver Eleven Ounces two penny Weight fine, and 18 penny weights Allay is cut into 62 shillings, and according to this Rate, a Pound Weight of fine Gold is worth fifteen Pounds Weight Six Ounces, seventeen Penny Weights and five Grains of fine Silver, recconing a Guinea at £1: 1s: 6d in Silver Mony, but Silver in Bullion is usually worth 2d or 3d ꝑper oz.ounce2 Ounce more than in Coyne, and if at a medium Such Bullion of Standard Allay, be valued at 5s: 4d12 ꝑper ounce, a Pound Weight of fine Gold will be worth but 14llwt:– 11oz.:– 12dwt– 9grs::– of fine Silver in Bullion, And at this rate a Guinea is but worth so much Silver as would make 20s: & 8d. When ships are Loading for the East Indies the Demand of Silver for Exportation raises the Price to 5s– 6d. or 5s– 8d. per Ounce, or Above, but I consider not those extraordinary Cases.—

A Spanish Pistole was coyned for 32 Ryales, or four PeicesPieces of Eight, Rialls commonly called PeicesPieces of Eight, and is of equall Allay, and the Sixteenth Part of the Weight thereof, And a Doppio Moeda of Portugal was coyned for ten Crusados of Silver and is of Equal Allay, and yethe sixteenth Part of the Weight thereof. Gold is therefore in Spain and Portugal of 16 times more value than Silver of equal weight, and Allay, according to their Standard, At which Rate a Guinea is worth 22s: 1d: But this high Price keep's theyrtheir Gold at Home, and carry's away theyrtheir Silver into all Europe, So that at Home they make theyrtheir Payments in Gold, & will not pay in Silver without a Premium. Vpon the commingcoming1123 Coming in of a Plate Fleet, the Premium ceases or is but small, but as theyrtheir Silver goes away and becomes scarce, the Premium encreases, & is most commonly about Six ꝑper Cent, wch.which being abated a Guinea become's worth about 20s: and 9d in Spain and Portugal. In France a Pound Weight of fine Gold is reckoned worth fifteen Pound Weight of fine Silver. In raising or falling theyrtheir Mony thrôough King's Edicts, have sometimes varyed a little from this Proportion in Excess or defect; but yethe Variations have been so little; I do not here consider them. By the Edict of May 1709 a new Pistole was coyned for four new Lewises, & is of equal Allay, & the fifteenth part of the Weight thereof, except the Errors of theyrtheir Mints. And by the same Edict, fine Gold is Valued at 15 times it's weight of fine Silver, and at this Rate a Guinea is worth 20s: and 8d12. I Consider not here the Confusion made in the Monys in France; by frequent Edicts to send them to the Mint, to give the King a Tax out of them, I consider onely the Value of Gold and Silver in proportion to one another. The Ducats of Holland Hungary4 Hungary and the Empire were lately Currt.Current in Holland among the common People in theyrtheir Markets and Ordinary Affairs at five Guilders in Specie and five Stivers, and commonly changed for so much Silver mony in three Guilder PeicesPieces, and Guilder PeicesPieces as Guineas are changed with us for 21s– 6d sterlsterling, at which rate a Guinea is worth 20s: 7d12. According to the Rates of Gold to Silver in Italy, Germany, Poland, Denmark & Sueden a Guinea is worth about 20s: & 7d: 6d: 5d: or 4d. for the Proportion varys a little in the severall Governments within those Countrys. In Swedenland, Gold is lowest in Proportion to Silver, and this has made that Kingdom which formerly was content with Copper Mony, abound of late with Silver; sent thither (I suspect) for Naval Stores. In the End of King William's Reigne and the first Year of the late Queen's, when Forreigne Coins abounded in England, I caused, a great many of them to be Assayed in the Mint, and found by the Assays that fine Gold was to fine Silver in Spain Portugal France Holland Italy Germany and yethe NorthernKingdoms1135 Northern Kingdoms in the Proportions abovementioned, the Errors of yethe Mints excepted. In China and Iapan One Pound wt.weight of fine Gold is worth but nine or ten pounds of fine Silver and in East India it is worth about twelve, And this low price of Gold in proportion to Silver carryes the silver away from all Europe, and when Ships are loading for yethe East Indies, raises the Price of Sivler in Bullion to 2d– 3d– or 4d ꝑper Ounce above the Ordinary Price as often as Ships are loading for the East Indias It is the demand for Exportation wch.which hath raised the Prices of Exportable Silver about 2d or 3d in the Ounce above that of Silver in Coyne and hath thereby created a Temptation to Export or Melt downe the Silver Coyne rather than give 2d or 3d. more for Forreign Silver, And the Demand for Exportation arises from yethe higher Value of Silver in other Places than in England in proportion to Gold, that is from yethe higher value of Gold in England than in other Places in Proportion to Silver.— If Gold could be brought down so low in England or Silver in East India as to bear the same Proportion to one another in both Places, there would be no greater Demand6 Demand for Silver then for Gold to be exported to India, And if Gold were brought downe to have the same Proportion to the Silver Mony in England, which it hath to it in yethe rest of Europe, there would be no Temptation to Export Silver rather than Gold to any other part of Europe. And to Compass this last there seem's nothing more requisite than to take off about 10d or 12d from the Price again of the Guinea; But if onely six pence were taken off at Present it wou'd diminish the Temptation to Export or Melt down the Silver Coyne, and the Effect wou'd shew hereafter, better than it can appear at Present with further Reduction would be most convenient for the Publick. Those that import Gold represent that their Profit is but small, & if by Lowering the Price that Profit be taken away, these will be neither Gold nor Silver imported: But must the Nation pay 38 or 40 shillings too much for every Pound Weight of Gold imported? Must all Our Silver be Exported to enrich yethe Merchants and is there no remedy? In the last Year of K: Wms.1147 of King William's Reigne the Dollars of Scotland worth about four Shillings and Six pence halfpenny, were put away in the North of England for five Shillings, and at this Price began to flow in upon us: I gave Notice thereof to the Lords Commissioners of the Treasury, and they Ordered the Receivers of Taxes to forbear taking them at that Value, & thereby put a Stop to the MischeifMischief. At the same time the Lewis d'ores of France which were worth but seventeen shillings and three farthings a peicepiece, passed in England at Seventeen and Six pence, I gave Notice thereof to the Commissr.Commissioner of the Treasury, & his late Majesty put out a Proclamation that they should go but at 17 Shillings, & thereupon, they came to the Mint and a Million and four hundred thousand Pounds were coyned out of them, and if the Advantage of five pence farthing in a Lewis d'ore sufficed at that time to bring into England so great a Quantity of French Mony, and the Advantage of three Farthings in a Lewis d'ore to bring it to the Mint, the Advantage of nine8 Nine Pence halfpenny or above may have been sufficient to bring in the great Quantity of Gold which ha's been Coined in these last 16 Years without any Forreign Silver. Some Years ago the Portugal Moyders, were received in the West of England at 28s a peicepiece, Vpon Notice from yethe Mint ytthat they were worth onely about 27s & 7d: the Lords Commrs.Commissioners of the Treasury order'd theyrtheir Receivers of Taxes to take them for no more than 27s & 6d. Afterwards many Gentlemen in the West Sent Vp to the Treasury a Petition, that the Receivers might take them again, at 28 Shillings, and Promised to get Returns for this Mony at that Rate, alledging that when they went at 28s, theyrtheir Country was full of Gold, which they wanted very much: But the Comrs.Commissioners of the Treasury considering that at 28s the Nation would loose five pence a peicepiece rejected theyrtheir Petition. And if an Advantage to the Merchant of 5d in 28s: did pour that Mony in upon Vs, much more hath the Advantage to the Mercht.Merchant of 9d12 or 10d: in a Guinea been able to bring to the Mint great1159 Mint great Quantitys of Gold without any Forreigne Silver and may be able to do it till the Cause be removed. If things be let alone till Silver Mony be a little Scarcer the Gold will fall of it selfe, for People are allready backward in giving Silver for Gold, and will in a little time refuse to make Payments in Silver without a Premium, And this Premium will be an Abatement in the Value of the Gold, and so the Question is whether Gold shall be lowered by the Government or let alone till it fall's of it selfe for the Want of Silver Monys. It may be said that there are great Quantitys of Silver in Plate; and if the Plate were Coyned, there would be no want of Silver Mony, But I Reckon that Silver is Safer from Exportation in the Form of Plate than in the Forme of Mony, because of the greater Value of the Silver and Fashion together, and therefore I am not for Coyning yethe Plate till the Temptation to Exporting yethe Silver mony, (which is a Profit of 2d. or 3d. in yethe ounce) be taken away; For as often as men are necessitated10 necessitated to Send away Mony for answering Debts abroad, they will be tempted to send away Silver rather than Gold, because of the Profit wch.which is allmost four ꝑper Ct.Cent and for the same reason Forreigners will send hither theyrtheir Gold rather than theyrtheir Silver. All which is most humbly submitted to Your Lordship's Great Wisdom Isaac Newton Mint office } 21 Sepr. 1717 Memoriall about the high Values of Gold.—