The Ban on Coin Exportation

Because of these tenets, the government banned coin exportation.

This ban has been extremely hurtful to the country’s commerce. Because whatever amount of money there is in any country above what is needed for circulation is merely a dead stock.

In King William’s time, there were two species of coin:

• milled
• unmilled

The unmilled was frequently clipped while in circulation. This caused frequent disorders among the people. The parliament ordered all the clipped money to be brought into the mint.

The government spent about 2 million to recoin it. They thought it just and proper to ban the exportation of money. However, the merchants complained of this hardship. They were then allowed to export a little money.

The great complaint was always the scarcity of money.

To remedy this, the government established a common office for coining money. Everyone could get their gold and silver turned into coin without any expense.

A lot of coin was melted down and exported since coin was of no more value than bullion.

To prevent this, melting coins became a felony. But it is such a simple operation that the law was easily eluded. More coin was exported than ever.

This could have been easily prevented by setting a price on the coinage of bullion. But such a regulation was never thought of.

Any regulation of the above kind is very absurd because:

• there is no fear if things be left to their free course that any nation will want money sufficient for the circulation of their commodities, and
• every ban of exportation is always ineffectual, and very often occasions the exportation of more than otherwise would be.

Supposed the Portuguese banned exporting money by capital punishment. They have few goods to give for ours. Their foreign trade must cease.

If they attempt to smuggle, the British merchant must increase the prices of his goods to reward him for his added risk in being detected. The Portuguese merchant would be a loser from this higher price.

In general, every prohibition of this kind hurts the country’s commerce.

Every unnecessary accumulation of money:

• is a dead stock which could be employed in enriching the nation by foreign commerce.
• also raises the price of goods
• makes the country undersold at foreign markets.

Banning the exportation of money is really one great cause of the poverty of Spain and Portugal. They gained the mines of Mexico and Peru. They thought they could command all Europe by the continual supplies of those mines if they could keep the money among them. Therefore, they banned its exportation.

But this had a quite contrary effect.

It is very unfavourable to the country if money were dammed up to an unnatural height and there is more than the circulation requires.

Because it is impossible that the exportation of gold and silver can be totally stopped since the balance of trade must be against them. That is, they must buy more than they sell. This balance must be paid in money.

Every commodity rises to an extravagant height.

The Portuguese pay for English cloth with an addition to its natural price, as the expense and risk of bringing it there. All the goods sent to Spain and Portugal are carried by ourselves and consigned to the British factors, to be disposed of by them.

But besides the transportation and insurance, the British merchant must be paid for the risk of having his money seized in Portugal because of the ban. All risk of forfeiture or penalty must lie on the goods.

This has a miserable effect on the domestic industry of those countries.

This has halted their manufactures. Nobody ever saw Spanish cloth in any other country. Yet they have the best materials in the world. They might monopolise European trade if they had our arts.

A general presented to his majesty his regiment clothed in Spanish manufactures.

This drew the attention of the nations who trade with Spain.

In general, they export no manufactured commodities, except swords and armour.

They have:

• the best steel in the world.
• only the spontaneous productions of the country, such as fruits and wines.

Similar regulations were made in Britain in King William’s time. Money was thought to constitute opulence. Therefore, its accumulation commanded the entire public attention.

They coined all money brought in for nothing. The expenses of coinage amounted to about £140,000, were entirely thrown away. Besides, great encouragement was given to exportation because, as gold and silver were coined for nothing, coined money could never be dearer than bullion.

The exportation of bullion was free. So they melted down the coin and sent it abroad.

Presently, there is a great temptation to such practices.

An ounce of pure silver at mint price is valued at 62 pence. But bullion is often bought at 66 pence. Nothing is lost in melting. There is a profit of 4 pence per ounce.

Because of this, we seldom or never see a new shilling. It is one of the causes that silver is so scarce relative to gold.