Tho' Interest were at 3 per cent in Holland, and continued at 6in Scotland; if Money were to be had equal to the Demands at 6, the Advantages we have for Trade, which the Dutch have not, would enable us to extend Trade to its other Branches, notwithstanding the difference of Interest.
If Money in Scotland were equal to the Demands at 6 per cent, the Dutch could not trade so cheap in Herring; The Hinderances of that Trade being the Consequences of the Scarcity of Money. The Materials for carrying on the Fishing are cheaper in Holland, but the cheapness of Victualling alone would ballance that. And the Dearth of these Materials, as of other Forreign Goods, coming from the scarcity of Money; that being remeded, these Materials, and other Forreign Goods that are not the Product of Holland would be sold as cheap in Scotland.
Exchange, is when a Merchant exports to a greater Value than he Imports, and has Money due Abroad; Another importing to a greater value than he exported, has occasion for Money abroad: This last by paying in Money to the other, of the Weight and Fineness with that is due him, or to that Value, saves the Trouble, Hazard, and Expense, to himself of offending Money out, to the other of bringing Money home, and to both the Expense of Re-coyining.
So long as Forreign Trade, and Expense kept equal, Exchange was at the Par: But when a People imported for a greater Value, or had other Occasions Abroad, more than their Export, and the Expense of Forreigners among them would ballance; there was a necessity of sending out the Ballance in Money or Bullion, and the Merchant or Gentleman who owed, or had occasion for Money abroad, to save the Trouble, Expense and Hazard of sending it out, gave so much per cent to another, as the Trouble, Expense and Hazard was valued at. Thus Exchange rose above the Par, and became a Trade.
Mr Mun on Trade Page 100, says, The Exchange being against a Nation, is of advantage to that Nation. and supposes, if a 100 lib. at London is worth no more than 90 lib. of the same Money at Amsterdam, the Dutch to send 500000 lib. of Goods to England, and the English 400000 lib. of Goods to Holland; It follows, that the Money due the English at Amsterdam, will ballance 440000 lib. due to the Dutch at London: So 60000 lib. pays the Ballance. Mr Mun does not consider, that the Dutch Goods worth 500000 lib. when Exchange was at the Par, are worth at London 555555 l. when 90 lib. at Amsterdam is worth a 100lib. at London. And the 400000 lib. of English Goods in Holland, are only worth 360000 lib. that Sum being equal by Exchange to 400000 lib.
in England. So in place of Englands having an Advantage of 40000 lib.
as he alledges by the Exchange being against her: She pays 95555 lib.
more, than if Exchange had been at the Par.
When Exchange is above the Par, it is not only payed for the Sums due of ballance, but affects the whole Exchange to the Place where the Ballance is due. If the Ballance is 20000 lib. and the Sums Exchanged by Merchants who have Money abroad, with others who are owing, or have ocasion for Money there, be 60000 lib. the Bills for the 60000 lib.
are sold at or near the same Price,with the 20000 lib. of Ballance.
It likewise affects the Exchange to Countries where no Ballance is due (Ex.) If the Exchange betwixt Scotland and Holland is 3 per cent above the Par against Scotland, betwixt England and Holland at the Par, tho' no ballance is due by Scotland to England, yet the Exchange with England will rise; For, a 100 lib. in England remitted to Scotland by Holland, will yield 103 lib. So betwixt Scotland and England it may be supposed to be had at 2 per cent, being less Trouble than to remit by Holland.
Goods are sold to Forreigners, according to the first Cost. (Ex.)If Goods worth a 100 lib. in Scotland, are worth 130 lib. in England,these Goods will be exported, 30 per cent being suppos'd enough for the Charges and Profit. If the Price of these Goods lower in Scotland from a 100 lib. to 80, the Price in England will not continue at a 130; It will lower proportionably, for either Scots Merchants will undersel one another, or English Merchants will export these Goods themselves. So if they rise in Scotland from 100 lib. to 120; they will rise proportionalby in England, unless the English can be serv'd with these Goods cheaper from other places, or can supply the use of them with Goods of another kind. This being supposed, it follows that, By so much as Exchange is above the Par, so much all Goods exported are sold cheaper, and all Goods imported are sold dearer than before. (Ex.) If a Merchant send Goods yearly to England first Cost, Charges and Profit 6000 lib. Money in England of the same Standard with Money in Scotland, and no Ballance due; But a Ballance due to Holland, raising the Exchange 3 per cent above the par to Holland, and affecting the Exchange to England 2 per cent 5882 lib. 7 sh. in England pays the Goods, that Sum by Exchange being equal to 6000 lib.
in Scotland. so that a Ballance due to Holland, by raising the Exchange to other Countries, occasions a Loss to Scotland of 17 lib.
13 sh. on the vlaue of 6000 lib. of Goods sent to England.
English Goods are sold so much dearer. (Ex.) If an English Merchant send Goods yearly to Scotland, first Cost, Charges and Profit 6000 lib. 6120 lib. must be payed for these Goods in Scotland, being only equal to 6000 lib. in England. If the Exchange had been at the Par, the Scots Goods sent to England would have sold 117 lib. 13 sh.
more, and the English Goods sent to Scotland 120 lib. less.
Thus to all Places with whom Exchange is above the Par, Goods sent out are sold so much less, and Goods brought from thence are sold so much dearer, as the Exchange is above the Par; whether sent out, or brought in, by Scots or Forreign Merchants.
