histofthought1

Mercantilism andfreedom in Englandfrom the Civil War to 1750 321his pamphlet into a Discourse About Trade (1690), an anonymous bookreprinted three years later as A New Discourse of Trade, with Child's nameblazoned on the title page. It was the New Discourse that was to make suchan excessive impression on eighteenth century thinkers. In addition to therenewed arguments for lower interest, the Discourse and the New Discourseadded more apologetics for the East India line on trade and on monopolies.In response, John Locke's new political patron, now that Shaftesbury haddied, Sir John Somers, MP, apparently asked Locke to expand his 1668 paperto refute Child's and other proponents of the 4 per cent bill. Locke respondedthe following year with his expanded book, Some Considerations of theConsequences of the Lowering of Interest and Raising the Value of Money(1692) which brought Locke's previously unpublished arguments into publicdebate. Locke's work may have been influential in the 4 per cent bill onceagain being killed in the House of Lords.The latter part of Locke's Considerations was devoted to the great recoinagecontroversy, into which England had been plunged since 1690. In that year,England's basic money stock of silver coins had deteriorated so far, due toerosion and coin-clipping, and the contrast of these inferior 'hammered'coins to the newer, uneroded and unclipped 'milled' coins was so great, thatGresham's law began to operate intensely. People either circulated the overvaluederoded coins and hoarded the better ones, or else passed the poorcoins at their lower weight rather than at their face value. By 1690 the olderhammered coins had lost approximately one-third of their worth compared totheir face value.It was increasingly clear that the Mint had to offer recoinage into the newsuperior coins. But at what rate? Mercantilists, who tended to be inflationist,clamoured for debasement, that is, recoinage at the lighter weight, devaluatingsilver coin and increasing the supply of money. In the meanwhile, themonetary problem was aggravated by a burst of bank credit inflation createdby the new Bank of England, founded in 1694 to inflate the money supplyand finance the government's deficit. As the coinage problem came to a headin that same year, William Lowndes (1652-1724), secretary of the treasuryand the government's main monetary expert, issued a 'Report on the Amendmentof Silver Coin' in 1695 calling for accepting the extant debasement, andfor officially debasing the coinage by 25 per cent, lightening the currencyname by a 25 per cent lower weight of silver. In his Considerations, Lockehad denounced debasement as deceitful and illusionist: what determined thereal value of a coin, he declared, was the amount of silver in the coin, and notthe name granted to it by the authorities. Debasement, Locke warned in hismagnificently hard-money discussion, is illusory and inflationist: if coins, forexample, are devalued by one-twentieth, 'when men go to market to buy anyother commodities with their new, but lighter money, they will find 20s of