'Observations upon the state of the Coins of Gold and Silver' Isaac Newton c. 1,240 words The Newton Project Oxford 2016 Newton Project, University of Oxford

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 20 October 1718, c. 1,240 words. Treasury

Printed in NC, 7: 8-10.Variant clerical copy dated 22 October printed in Rigaud, Correspondence, 2: 430-34. See also the Treasury's order for this report, NC, 7: 5.

Seven-point memorandum detailing the benefits accruing to the nation since the devaluation of the guinea and arguing against raising it again.

 Copy of a request for a report on the state of the gold and silver coins of the kingdom since the reduction of 6d in a guinea [T 27/22.355] MINT 19/2/124-5, National Archives, Kew, Richmond, Surrey, UK UKSurreyKew, RichmondNational Archives MINT 19/2/124-5 20 October 1718 England English Holograph Unknown Hand Unknown Hand (1) 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 Will Scott finished transcription

Observations upon the state of the Coins of Gold & Silver.

Obs.Observation 1. Standard Gold before sixpence was taken from the Guinea was worth 3li. 19s. 9d14 per ounce at the Mint, & by taking six pence from the Guinea became worth 3li 17s 11d per ounce. And standard silver is there worth 5s 2d per ounce. But the demand for exportation hath raised both species above the price at the Mint, & thereby hath carried out all the forreign silver for many years, & began to carry out some of the forreign gold the last November, & therefore raised the price of gold for exportation above the Mint price before the sixpence was taken from the Guinea. But it never raised it to more then 4li. 0s. 6d per ounce, not kept it long at that price. For in March last, forreign gold fell down below the old Mint price, & hath ever since continued below it, being at 3li. 19s. 6d & for the most part at 3li. 19s. 0d & under. And therefore the price of forreign Gold for exportation was certainly raised the last winter by some other cause then the taking sixpence from the Guinea. And the price of Gold for exportation to forreign markets having been ever since March below the old Mint-price, that price was certainly too high.

Obs.Observation 2. The price of gold for exportation depends upon the price in forreign markets & answers to the course of exchange. When the Exchange is lowest the price of forreign gold is highest & on the contrary. And thence the coinage of gold hath of late years been greater or less accordingly as the course of Exchange hath been higher or lower. In the year 1713 the course of Exchange & the coinage grew high together. In the years 1714 & 1715 the Exchange was highest, it being (for instance) with Amsterdam from 36 to 37 skillings, & then the coinage was greatest. In the year 1716 the Exchange was only from 35 to 36 skillings with Amsterdam & proportionally with other places, & the coinage abated accordingly. In the year 1717 the Exchange with Amsterdam was only from 34 to 35.2, & the coinage abated to one half of what it had been two or three years before. And in this present year the exchange has been only from 33.10 to 34.10 till within this fortnight; & this low course of Exchange together with the discouragesement of the coinage of gold by the taking sixpence from the Guinea, hath carried out almost all the Gold imported & thereby hath had the same good effect for paying our debts abroad in gold & preserving our silver, wchwhich the Bill proposed the last Sessions of Parliament would have had if it had passed into an Act for stopping the coinage of gold. Whence those debts arose is difficult to understand without more skill in Trade then I can pretend to. But considering that a good part of the Gold imported in the years 171213, 1714, 1715 & 1716 was in French money & Ducats, I suspect that after the war with France was at an end, great quantities of gold were sent hither to pay for stocks untill the interest of stocks was lowered by Act of Parliament: & since that discouragement some forreigners have been drawing their moneys backwith the interest, & some of their stocks & some gold hath this year been sent to the Mints in France. Obs.Observation 3. The course of Exchange was as low in November last before the 6d was taken from the Guinea, as it was afterwards in February last; & both times was at the lowest, being (with Amsterdam) at 33.10. And therefore the lowness of the Exchange last winter arose, not from the taking sixpence from the Guinea, but from the debts wchwhich we had abroad before the sixpence was taken off. Which debts, if the coinage of gold had not been discouraged by taking 6d from the Guinea, might have remained unpaid till they could have been paid in silver with more advantage to silver private persons. Obs.Observation 4 124 237 Obs.Observation 4. By the payment of our debts abroad in Gold the demand for exportation hath abated ever since February last, & the exchange hath risen gradually to 35 skillings & gold hath fallen down gradually to the Mint price & begun to come to the Mint again, so that within a fortnight so much gold hath come to yethe Mint as will make above 75000li. Whence I gather that whenever the Exchange with Amsterdam is above 35 skillings it will bring gold to the Mint & would have brought gold to the Mint in the years 1713, 1714, 1715, 1716 & part of 1717 although the sixpence had been taken off before, the exchange with Amsterdam in all those years being above 35 skillings & for the most part above 36. And therefore in all the gold then coined, which was above five millions, the nation would have saved above six pence per Guinea had the sixpence been taken off before. Obs.Observation 5. The demand for exportation hath ever since the sixpence was taken from the Guinea, raised the price of silver about three times more then the price of gold & sometimes four or five times more or above. And therefore the temptation to export gold moneys hath all this year been three times less then the temptation to export silver moneys. And if this temptation hath not this year sensibly diminished the quantity of our silver moneys, it hath not much less carried out our gold moneys: And therefore all or almost all the gold wchwhich hath been exported this year hath been in forreign bullion. And by consequence the nation hath lost little or nothing by the exportation, because the bullion being forreign, went out at the same price that it came in at. Forreigners or their Agents who here receive guineas in payments, will lose above 3d per Guinea by exporting them, besides the danger they run by breaking the Law. Obs.Observation 6. Since the demand of silver for exportation hath all this year been three times greater then that of Gold, no gold would have been exported this year had it not been for the want of forreign silver; & the exportation thereof hath prevented the exportation of the same value of forreign silver as fast as it could have been procured for paying debts abroad, & in the mean time hath saved the interest of the debts paid off. Obs.Observation 7. And this expenditure hath been a further advantage to the nation by raising the course of exchange from 33.10 to 35. For when the exchange is low the nation loseth by it so much as it is under the par. And if the debts which have been paid in gold had continued till they could have been paid in silver, they would have caused the exchange to continue low. Obs.Observation 8. And to restore the sixpence to the Guinea would be to lose these advantages, & to give more by above ninepence in the Guinea for all the gold which shall be importedcoined hereafter then it is worth in forreign markets, & to revive the corrupt trade of exporting silver to buy gold abroad & importing gold to buy silver at home. Octob. 20. 1718 125