111-16)

Author: Isaac Newton

Source: MINT 19/2/102-3, National Archives, Kew, Richmond, Surrey, UK

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  Response to an order to report on gold and silver coin in Britain [MINT 19/2/111-16]

<102r>

So then it appears by experience as well as by reason that silver flows to those places where its value is highest in proportion to Gold; going to all Europe from Spain & to the East Indies & China from all Europe. And its value in proportion to gold being higher in France, Holland & all Europe except spain & Portugal, then it is in England, this is a reason why it should incline to go from England into all Europe except Spain & Portugal. And so Gold is apt to abound in those places where its value is highest in proportion to silver, & for that reason abounds in Spain & is their standard money while silver goes from them as fast as it comes from America & rises & falls in its price like a commodity, being lowest upon the coming in of a plate fleet & rising in its price as it goes away & becomes scarce till the arrival of another plate fleet. And so in England where its value is higher then in any other part of the world except Spain Portugal & the West Indies by its plenty it is become the standard money of the nation while Silver flows from us as fast as it comes from Spain, & rises & falls in its price like a commodity according to the demand of the Merchant for bullion. And because there is a constant demand of bullion either for exportation or for other uses, thence it is that the value of silver is constantly higher in bullion then in coin, by 2^d or 3^d in an ounce. And this is a standing temptation to turn money into bullion rather then bullion into money. And because the value of Silver in proportion to gold is lowest where the value of Gold in proportion to Silver is highest, therefore the high price of Gold doth not

only tend to bring in Gold but also to carry away silver. And the more Gold is overvalued the faster silver will go out.

For where the price of Gold is lowest in proportion to silver there the price of Silver is highest in proportion to Gold, & on the contrary. And this makes silver flow to those places where the price of gold is lowest & from those places where the price of Gold is highest And So Because Gold is higher in Spain & Portugal then in the rest of Europe & in Europe then in the East Indies & China, therfore Silver flows from Spain into all Europe & from all Europe into the East Indies & China. And so because gold is higher in England then in the rest of Europe except Spain & Portugal, therefore silver will incline to go from England into all Europe except Spain & Portugal. And this I take to one great reason of our want of Silver

In the last year - - - be removed. For a Guinea is valued at 9 $\frac{1}{2}$ more in England then in any other part of Europe except Spain & Portugal.

<102v>

The proportion of gold to silver in Bullion is settled by the Merchant in the Markets of Europe. And according to this pr{por}tion the gold in a Guinea is worth about 20^s 9^d in Spain, 20^s 8 $\frac{1}{2}$ in France, 20^s 7 $\frac{1}{2}$ in Holland & {illeg} 7^d, 6^d 5^d or 4^d in Italy Germany Hungary & the northern kingdoms. & in England where silver in Bullion is usually valued at 5^s 4^d or 5^s 4 $\frac{1}{2}$ ^d an ounce, if it be valued at 5^s 4^d $\frac{1}{2}$ an ounce, a [a pound weight of fine Gold will be worth 14.^£w 11,^oz 18^dwt $\frac{1}{4}$ of fine silver &] a Guinea will be worth about 20^s 20^s 8.^d And when ships are lading for the East Indies & the demand raises silver in bullion to 5 6 ^d an ounce or above A Guinea at that rate will not be worth 20^s 2^d per ounce.

THat Gold may therefore beare the same proportion to silver in the Engllish moneys which Gold bullion doth to silver bullion in the Markets of Europe, a Guinea ought to be valued at no more then 20^s 9^d. And it would be better to value it at 20^s 8^d oe 20^d 6^d. But because the lowering of the Gold monies is against the interest of those who make a profit by the present value or have hoards of gold moneys, it may be better to lower it by steps & begin with taking off 6^d from the present value of the Guinea. // To do this cannot affect the course of exchange. For that course depends not on the laws of particular countries but ont he course of trade & proportional value of Gold & silver in the Markets of Europe between nation & nation which will not be allowed by the value put upon gold & silver between the kings subjects. This value at {lowe} ought to be as just as may be that the kings Subjects may not prey upon one another . And if gold be not lowered it will fall of it self so soon as the silver money begins to be so scarce that people will not give silver for gold nor make payments any longer in silver without a premium.

Nor can the lowering of Gold at home affect the course of Trade abroad that course depending only on the proportional value of gold & silver in bullion between nation & nation which will not be altered by what we do at home amongst our selves. It can only take off something from the profit which may be made by bringing in gold & carying out or melting down the silver money which profit is a dammage to the publick

So then one pound weight of fine gold is worth fifteen pounds weight & of fine silver in all Euro{pa} or a little less suppose 14 & 10 or 11. And according to this rate a Guinea is worth 20^s . 8 $\frac{1}{2}$ ^d or a little less And this the value of a Guinea

So then according to the Markets of all Europe & by consequence according to the course of Exch. one pound weight of fine Gold is worth fifteen pounds weight of fine silver or fifteen pounds weight wanting two or three ounces. And a Guinea is worth 20s & 8 $\frac{1}{2}$ ^d or a penny or two less, & therefore is overvalued in our coin by about 10^d, or 11^d, And it appears by experience as well as by reason that silver will be apt to flow to those places where Gold is lowest in proportion t silver & from those places where Gold is highest. For where Gold is highest in proportion to silver there silver is lowest in proportion to gold & where Gold is lowest there is highest. For this reason Silver flows from Spain into all Europe upon the coming in of every Silver plate fleet & from all Europe to the Indies & China & Gold stays in Spain & is their standard money while silver rises & falls s a commodity And for the same reason while Gold moneys are over valued in England there is a temptation to send our silver moneys into all Europe except Spain & Portugal & to send gold from all Europe to be turned in Gold moneys in England & {w}here silver is wanted for manufacturee there is the same temptation to melt down the silver moneys rather then give 2^d or 3^d p^r ounce more for forreign silver.

In the last year of King William - be removed.

The proportion of Gold to silver in Bullion is setled by the Merchant according to the Markets of Europe & course of Exchange & will not be alter'd by what we do in England amongst our selves, The price of forreign Gold has been raised in England too high by raising the price of Guineas & the way {t}o bring down to its just value is to lower the price of the Guinea & of by this means the price of {f}orreign Gold shall be lowered, the price of forreign silver will be lowered at the same time price of the Guinea lowers the price of forreign in our own Mar ket , which has been raised too high by over valuing the Gold moneys, it will also lower the price of forreign silver & bring it nearer to 5^s 2^d per ounce which is its price in the Mint. If a pound weight of standard silver should be cut into 3.^£ 4. 6^d it would make an ounce of silver moneys worth 5^s 4 $\frac{1}{2}$ ^d & by consequence equal in value <103r> to an ounce of forreign silver & thereby take away the temptation to exporto or melt down the silver money. But there is no need of altering the standard. The same thing may be done by bringing the value of the Guinea in silver money nearer to the standard. For by the standard of England setled by the Indenture of the Mint under the broad Seal, a Guinea is coyned for 20^s {&c} in the Mint is still called a twenty shillings piece & is now raised by private interest to 1^s or above the standard. It was gradually raised by the Goldsmiths selling Guineas for 2^d a piece more then they were worth their current value to Gentlemen who wanted them upon journeys for lightness of carriage. It was private interest without regard to the publick which at first braised the price of Guineas too high were it not for private interest there would be no difficulty in bringing them down to the price which they should have by the course of trade & exchange. This price I reccon about between 20^s 8^d or 20^s 6^d. But if at present the Guinea should be reduced only to 21^s, it would bring forreign silver nearer to the Mint price & thereby diminish the temptation to export or melt down our silver money, & by the effect of such a regulation reduction, it would better appear then at present, what further reduction would be requisite to bring down forreign silver to the price of silver in coyn, or which is the same thing, to bring up the price of silver in the Coin to that of forreign silver, & thereby bring forreign silver to the Mint.

If things be let alone till silver money be a little scarcer the gold will fall of it self. For people are already unwilling to give silver for gold & will in a little time refuse to make paym^t in silver without a premium, & 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 falls of it self by the want of silver money

It may be said that there are great quantities of silver in plate & if the Plate were coined there would be no want of silve money: But I reccon that silver is safer from exportation in the form of PLate them in the form of money because of the greater value of the fashion 2 & silver together. And therefore I am not for coining the Plate till the temptation to export the silver money (which is a profit of 2^d or 3^d in the ounce) be taken away. For as often as men are necessitated to send away money for answering debts abroad they will be tempted to send away silver rather then Gold because of the profit which is almost 4 p^r cent. And for the same reason forreigners will send hither their Gold rather then their silver as often as they are necessitated to pay debts here in their own money.

- And it appears by experience as well as by reason that silver flows from those places where its value is lowest in proportion to Gold as from Spain to all Europe & from all Europe to East India China & Japan: And that gold is most plentiful in those places in which its value is highest in proportion to silver as in Spain: And that Gold is over valued in England, the Guinea being valued at 21^s 6^d which is 10^d or 12^d above the price which it ought to have by the course of Trade & exchange. // And this seems to me one reason of the plenty of Gold moneys & scarcity of silver moneys in this Island, & why Gold moneys will still increase & silver moneys decrease untill Gold be brought down to the value which it ought to have by the course of Trade & Exchange. For by valuing Gold too high, the value of silver in bullion hath been also raised in proportion so as to be worth 2^d or 3^d per ounce more uncoyned then it is worth in coyn. For the proportion of gold to silver in bullion is settled by the course of trade & exchange so that the one cannot be raised without raising the other nor lowered without lowering the other. The high price of gold in proportion to silver is the same thing with the low price of silver in proportion to gold, & this low price creates a demand of silver for exportation to better markets, & this demand raises the price of exportable silver above the price of silver in coyn. And therefore the high price of gold tends to carry out our silver. And on the contrary: if the value of gold were too low it would tend to carry out gold to better Markets & bring in silver. And if it were the same in proportion to silver which it is in the course of Trade & Exchange it would keep our gold silver

<103v>

Upon the coming in of a plate fleet, the premium ceases or is but small but as their silver goes away & becomes scarce the premium increses & is most commonly about six per cent. Which being abated, a Guinea becomes worth about 20^s 9^d in Spain & Portugal

But silverin bullion exportable is usually worth more then in coyn by 2^d or 3^d per ounce. And of at a medium such bullion fine elven oz {illeg} be valued at 5^s 4.^d $\frac{1}{2}$ per ounce, a pound weight of fine gold will be worth but 14^lb 11^oz 12.^dwt 9^gr of fine silver in bullion. And at this rate a Guinea is worth but 20^s 8^d. And this I reccon the value thereof according to the course of exchange when forreign silver of standard allay is at 5^s 4 $\frac{1}{2}$ per ounce. When ships are lading to the East Indies the demand of silver for exportation may raise the prise to 5^s 6^d or 8^d p^r ounce or above but I considered not those extraordingy cases.

The proportion of Gold to silver in bullion is setled by the Merchant according to the Mercats of Europe & course of exchange & will not be altered by what wee do in England amongst our selves. It will not be altered by lowering the price of the Guinea. The value of forreign Gold in England having been raised too high by raising the value of the Guinea in our silver moneys the way to lower it is to lower the value of the Guinea in our silver moneys, & if this will lower the price of forreign Gold in proportion to our silver moneys it will also lower the price of forreign silver in proportion to our silver moneys & bring it nearer to the price of silver in the Mint For the proportional value of forreign Gold to forreign silver is setled by the trade & course of exchange between nation & nation & will not be altered by what we do amonst o^er selves - [And by bringing the price of forreign silver nearer to the price of silver in o^er coyn,] in England alone. And what I here call the lowering the value of the Guinea is more truly the raising the prise of our silver money in propor so that 20^s & 6^d or 8^d in such money may be amongst our selves as well as abroad of the same value with a Guinea & by consequence worth so much forreign silver as in the course of Trade & Exchnage is equal in value to a Guinea.

So then by the course of Trade & Exchange beween nation & nation in all Europe fine Gold is to fine silver as 14 $\frac{4}{5}$ or 15 to one & a Guinea at the same rate is worth between 20^s 5^d & 20^s 8 $\frac{1}{2}$ ^d, except in the extraordinary cases when a plate fleet is just arrived in Spain or ships are lading for the East Indi{es} which cares I do not here consider. And silver goes to those places where gold is of the lowest value in proportion to silver.

The Guinea having been raised to 21^s 6^d which is 10^d or 12^d too much, & thereby the value of forreign Gold being raised as much in proportion to silver moneys in England, the way to lower the values of forreign Gold in proportion to these monies is to lower the price of a Guinea. And if this will lower the price of forreign Gold in proportion to our silver moneys it will also lower the price of forreign silver in proportion to the same moneys, & it nearer to the price of silver in the Mint