Chap 11j: Digression, 2nd Period: 1570-1640

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 corn values were opposite.

  • Silver sunk in its real value.
  • Corn 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 corn.

  • This fact was never disputed.
  • 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 corn 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 corn scarcity.
  1. 142 The civil war, which:
    • discouraged tillage
    • interrupted commerce
    • raised corn 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.
  1. 143 The bounty on corn exportation granted in 1688.
  • The bounty was thought to have created more abundance by:
    • encouraging tillage and
    • decreasing corn prices at home.
  • Between 1688 and 1700, it produced no such effect.
    • It only raised the price of corn 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, corn exportation was banned for nine months.
  1. 144 The great debasement of the silver coin by clipping and wearing.
    • It did not cause any corn 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 corn prices.
    • But it may lower or raise its price based on the principles of a system which I will explain hereafter.
  • From 1700-1764, the average price of the quarter of nine bushels of the best wheat at Windsor market was 486 pence from the accounts of Eton College.
    • It is 126 pence or more than 25% cheaper than from 1636 to 1700.
    • It was 114 pence cheaper than from 1619 to 1635 when the discovery of the American mines produced its full effect.
    • It was 12 pence cheaper than from 1594-1619, before that discovery produced its full effect.
  • The average price of middle wheat from 1700-1764 was 384 pence the quarter of eight bushels.

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

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

Next: Book 1, Chapter 11k, Digression, Period 3: Silver Demand

Words: 927

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