Chapter 12

The undervaluing of our Money by Bills of Exchange cannot decrease our treasure

January 22, 2020

The Merchant’s Exchange by Bills lets them send money from one country to another country and receive it again at certain times at agreed rates. The lender and borrower do not need to transport metal money from state to state. These Exchanges are made between man and man.

They are not contracted at the equal value of the money, according to their respective weights and fineness, because the money-sender respects the debt and the terms.

The amount of money where the exchanges are made causes undervaluing or overvaluing of moneys by Exchange.

For example, when a lot of money from London will be delivered to Amsterdam, then shall our money will be undervalued in Exchange because the recipients will suddenly have a lot of it.

They make advantage to themselves in taking the same at a lower value.

When there is a little money here to be delivered to Amsterdam, the sender will make the same advantage by overvaluing our money.

The money supply in a nation affects the prices of commodities and works in reverse in the course of exchanges.

The plenty or scarcity of money makes the price of the exchange high or low. So the over or under balance of our trade effectively causes the plenty or scarcity of money.

The balance of our trade is either=

  • general= all our yearly traffic is jointly valued.
  • particular= specific trades to foreign countries are separately considered.

The particular balance helps us find out where our money is under or overvalued in Exchange.

Our general annual exports might be of more value than our imports. The difference is paid to us in so much money.

Nervertheless, the particular trades work diversely.

If the Netherlands sells to us more than we sell to them, do the Low Country merchants=

  • gain our money to balance the account between us, and
  • undervalue our money to be delivered by exchange by the takers, since money is plentiful here?

If we sell more goods to Spain than we buy of theirs, do we=

  • bring away their treasure, and
  • overvalue our own money in the Merchant’s exchange?

People say that the undervaluing of our money by Exchange carries it out of the Kingdom. We see, daily, a lot of English Coins going overseas into the Netherlands. Our coins become useful to them to save the loss which the Dutch have in the Exchange. If £100 is deliverd to London, it will be so much undervalued, that £90 will be sufficient to repay the said £100 at Amsterdam.

They say that it is the undervaluing of our Money which causes it go overseas. I answer that it is not the undervaluing of our money in exchange, but the overbalancing of our trade that makes our money go overseas.

Let’s say that=

  • the Dutch manage all our Dutch imports which are £500,000 annually.
  • we export to the Netherlands only £400,000

The Dutch can exchange only £400,000 with the English upon the equal value of the respective Standards?

So £100,000 is the overbalance of the trade. The Dutch will send that money overseas. And the self same loss of treasure must happen if there were no exchange at all permitted= for the Dutch carrying away our mony for their wares, and we bringing in their forraign Coins for their commodities, there will be still one hundred thousand pounds loss.

The Dutch may exchange with the English for 400,000 and no more upon the equal value of the monies, because the English have no further means to satisfie.

But now suppose that because of the plenty of money of the Dutch to deliver by exchange, our money is undervalued 10%, then the Dutch must deliver £440,000 to have the Englishman’s £440,000 in the Netherlands so that there will then remain but £60,000 for the Dutch to carry out of the Realm to balance the account between them and us.

Some have supposed that the undervaluing of our money in exchange will not bring it out of the Netherlands. Rather, the undervaluing only leads to less of our money being exported, compared to when it was at the Par pro pari.

Further, let us suppose that the English Merchant carries out as much value as the Dutch Merchant brings in, whereby the means is equal between them to make their returns by exchange without carrying away of any mony to the prejudice of either State.

And yet notwithstanding the Dutch Merchant for this occasions or advantage will forsake this course of exchange, and will venture to send part of his returns in ready mony.

The answer is= the Dutch shall want just so much means in exchange with the English, who therefore shall be forced to bring in the like sum of mony from beyond the Seas, as the Dutch carried out of this Realm; so that we may plainly perceive that the monies which are carried from us within the ballance of our trade are not considerable, for they do return to us again= and we lose those monies only which are made of the over-ballance of our general trade, that is to say, That which we spend more in value in forraign wares, than we utter of our own commodities.

The contrary of this is the only means by which we get our treasure.

Gerald Malines laboured so long to make the world believe that the undervaluing of our money in exchange exhausts our treasure. His false remedy was to keep the price of Exchange by Bills at the par pro pari by a new public Authority called the Kings Royal Exchanger. It would not only be fruitless but also hurtful, as proven in this Chapter.

Comments

Avatar
No comments yet. Post a comment in the form at the bottom.

Latest Articles

Moneyless Maharlikan System to Solve Stagflation
Moneyless Maharlikan System to Solve Stagflation
Alternative to General Relativity
Alternative to General Relativity
How to Fix Russia and Ukraine
How to Fix Russia and Ukraine
How to Fix Afghanistan
How to Fix Afghanistan

All Superphysics principles in our books

The Simplified Series