Second period (1570-1640) and Third period (1650-1700)

Second Period (1570-1640)

¹³⁵ The opinion on the progress of silver value from 1570-1640 is unanimous.

¹³⁶ From 1570 to 1640, the proportion of silver and wheat values were opposite.

• Silver sunk in its real value.
• Wheat rose in its nominal price.

Instead of 2 ounces of silver the quarter or 120 pence today, it was sold for 6 and 8 ounces of silver or 360-480 pence today.

¹³⁷ The discovery of the abundant American mines was the sole cause of the reduction of silver value relative to wheat.

During this period, most of Europe was advancing in industry and improvement. Consequently, the demand for silver had been increasing.

But the increase of the supply exceeded the demand that silver value sunk considerably.

The discovery of American mines did not have any sensible effect on the prices of things in England until after 1570, even though the Potosi mines were discovered more than 20 years before.

¹³⁸ From 1595 to 1620, the average price of the quarter of nine bushels of the best wheat at Windsor market was 498 pence from the accounts of Eton College.

The quarter of eight bushels was 442 pence. The price of the middle wheat was 392 pence or 6.33 ounces of silver.

¹³⁹ From 1621 to 1636, the average price of the best wheat at the same market was 360 pence.

The average price of the quarter of eight bushels of middle wheat was 474 pence or 7.66 ounces of silver.

Third Period (1650-1700)

¹⁴⁰ Between 1630 and 1640, the discovery of American mines reduced the value of silver.

The value of silver never sunk lower than wheat at that time. It probably began to rise before the end of the 17th century.

¹⁴¹ From 1637 to 1700, the average price of the quarter of nine bushels of the best wheat at Windsor market was 612.33 pence.

This is only 12.33 pence dearer than it had been during the 16 years before. In those 64 years, two events caused an unnatural wheat scarcity.

¹⁴² 1. The civil war

This:

• discouraged tillage
• interrupted commerce
• raised wheat prices unnaturally
• affected the entire kingdom, especially London which was supplied from far away.

In 1648, the price of the best wheat at Windsor market, was 1,020 pence.

In 1649, it was 960 pence the quarter of nine bushels. 600 pence is the average price from 1621-1636 or 16 years. The price above 600 pence for those 16 years in total is 780 pence. If divided among the 64 last years of the 17th century, it will account for that small price enhancement. [780/64 = 12.2 pence, close to 12.33] However, these are not the only high prices caused by civil wars.

¹⁴³ 2. The bounty on wheat exportation granted in 1688.

The bounty was thought to have created more abundance by:

• encouraging tillage and
• decreasing wheat prices at home.

Between 1688 and 1700, it produced no such effect. It only raised the price of wheat at home by encouraging the exportation of the surplus. It hindered the abundance of one year from compensating the scarcity of another.

The scarcity in England from 1693 to 1699 was caused by the badness of the seasons which extended through Europe. The scarcity must have been enhanced by the bounty.

In 1699, wheat exportation was banned for nine months.

¹⁴⁴ 3. The great debasement of the silver coin by clipping and wearing.

It did not cause any wheat scarcity. This evil began in the reign of Charles II and continually increased until 1695. Mr. Lowndes writes that the current silver coin was near 25% below its standard value.

The nominal market price of every commodity is regulated by the amount of silver actually in the coin and not so much by its nominal value. Therefore, this nominal sum is higher when the coin is much debased by clipping and wearing.

¹⁴⁵ In the present century, the silver coin was at its lowest standard weight than at present.

Though very much defaced, its value has been kept up by the value of the gold coin for which it is exchanged. Before the recent re-coinage, the gold coin was much defaced too. But it was less defaced than the silver coin.

On the contrary in 1695, the value of the silver coin was not kept up by the gold coin. A guinea then exchanged for 30 shillings [360 pence] of the worn and clipt silver. Before the recent gold re-coinage, the price of silver bullion was seldom higher than 67 pence an ounce. The mint price is 62 pence.

But in 1695, the common price of silver bullion was 77 pence an ounce.

This is 15 pence above the mint price.

Even before the recent gold re-coinage, the gold and silver coins was not supposed to be more than 8% below the standard value of silver bullion.

In 1695, it was supposed to be near 25% below that value. But immediately after the great re-coinage in King William’s time, most of the current silver coin was nearer to its standard weight than at present.

There was no great public calamity in the present century to discourage tillage or interrupt commerce. The bounty always unnaturally raises wheat prices. But it may lower or raise its price based on the principles of a system which I will explain hereafter.

¹⁴⁶ The value of silver rose in proportion to the value of wheat during the present century.

It probably began to rise before the end of the last century.

¹⁴⁷ In 1687, the price of the quarter of nine bushels of the best wheat at Windsor market was 302 pence This price was its lowest price since 1595.

¹⁴⁸ Mr. Gregory King was an expert on wheat prices. In 1688, he estimated the average grower’s price of wheat in years of moderate plenty to be 42 pence the bushel or 336 pence the quarter. [42 pence * 8]

The grower’s price was called the contract price.

• It was the price at which a farmer contracts for a certain number of years to deliver a certain quantity of wheat to a dealer.
• This saved the farmer the expense and trouble of marketing.
• The contract price is generally lower than the average market price.

Mr. King judged 336 pence the quarter to be the ordinary contract price in years of moderate plenty. This was also the ordinary contract price in all common years.

¹⁴⁹ In 1688, the parliamentary bounty on wheat exportation was granted.

Back then, there were more country gentlemen in the legislature than now. They felt that the money price of wheat was falling.

The bounty raised it artificially to the high price as in the times of Charles I and II or 576 pence the quarter. This is 240 pence or 71.43% dearer than the contract price in times of moderate plenty [336 pence]. The price of 567 pence the quarter could only be expected in years of extraordinary scarcity. But King William’s government was not fully settled then. It could not refuse the country gentlemen because King William was then soliciting the first establishment of the annual land-tax.

¹⁵⁰ The value of silver probably rose before the end of the 17th century and continued to increase for most of the present 18th century.

The bounty must have hindered that rise from being sensible.

¹⁵¹ In plentiful years, the bounty:

• creates extraordinary wheat exportation and
• raises wheat prices.

The bounty’s purpose was to encourage tillage by keeping up the price of wheat even in the most plentiful years.

¹⁵² In years of great scarcity, the bounty was suspended.

It must have affected prices of many of those years. The extraordinary exportation which it creates in years of plenty must hinder the plenty of one year from compensating the scarcity of another.

¹⁵³ In years of plenty and scarcity, the bounty unnaturally raises wheat prices.

If during the first 64 years of the 18th century, the average price was lower than the last 64 years of the 17th century, it must have been much more lower if there were no bounty.

¹⁵⁴ But without the bounty, the state of tillage would not have been the same.

The effects of the bounty on agriculture will be explained later. For now, I will explain that this rise in silver value, in proportion to wheat value, was not peculiar to England. It happened in France during the same period and nearly in the same proportion. It was recorded by three very faithful, diligent, and laborious wheat-price collectors=

• Mr. Duprè de St. Maur,
• Mr. Messance, and
• The author of the Essay on the police of grain.

But in France until 1764, the exportation of grain was prohibited.

It is difficult to suppose that the reduction of price in one country was caused by the prohibition of exportation, while the reduction of price in another country was caused by the encouragement of exportation.

¹⁵⁵ Instead, this variation in the average money price of wheat is the effect of the gradual rise in the real value of silver in Europe, than of any fall in the real average value of wheat.

At distant periods of time, wheat is a more accurate measure of value than silver or any other commodity. After the discovery of the abundant American mines, wheat rose to 3-4 times its former money price, This change was universally ascribed to a fall in the real value of silver. If during the first 64 years of the 18th century, the average money price of wheat fell below what it was during most of the 17th century, we should in the same way impute this change, not to any fall in the real value of wheat, but to some rise in the real value of silver in Europe.

¹⁵⁶ People suspected that the real value of silver still continues to fall in Europe because of the high price of wheat during the past 10-12 years.

This high price of wheat is the effect of the extraordinary unfavourableness of the seasons. It is not permanent.

The seasons for the past 10-12 years was unfavourable through most of Europe.

• The disorders in Poland increased the scarcity in all those countries it supplies.
• Bad seasons are not a common nor a singular event.

Several examples of bad seasons can be inferred from the history wheat prices.

• 10 years of extraordinary scarcity are not more wonderful than 10 years of extraordinary plenty.

Low wheat prices from 1741 to 1750 may be set in opposition to its high price during these last 8-10 years. From 1741 to 1750, the average price of the quarter of nine bushels of the best wheat at Windsor market was only 405 4/5 pence. This is nearly 75 pence below the average price of the first 64 years of the 18th century.

During these 10 years, the average price of the quarter of eight bushels of middle wheat was only 320 pence.

¹⁵⁷ Between 1741 and 1750, the bounty must have hindered the price of wheat from naturally falling so low in the home market.

During these 10 years, the grain exported in the custom-house books was no less than 8,029,156 quarters one bushel. The bounty paid was £1,514,962. In 1749, Prime Minister Pelham observed to the House of Commons that for the preceding 3 years, a very extraordinary sum was paid as bounty for wheat exportation.

In that year, the bounty paid was no less than £324,176

It is unnecessary to observe how much this forced exportation must have raised the price of wheat above natural in the home market.