changes the augmentation may have some influence by exciting industry; but after the prices are settled, suitable to the new abundance of gold and silver, it has no manner of influence.
An effect always holds proportion with its cause. Prices have risen about four times since the discovery of the Indies, and it is probable that gold and silver have multiplied much more; but interest has not fallen much above a half. The rate of interest, therefore, is not derived from the quantity of the precious metals.
Money having merely a fictitious value, arising from the agreement and convention of men, the greater or less plenty of it is of no consequence, if we consider a nation within itself; and the quantity of specie, when once fixed, though never so large, has no other effect than to oblige every one to tell out a greater number of those shining bits of metal for clothes, furniture, or equipage, without increasing any one {p41} convenience of life. If a man borrows money to build a house, he then carries home a greater load; because the stone, timber, lead, glass, etc., with the labour of the masons and carpenters, are represented by a greater quantity of gold and silver. But as these metals are considered merely as representations, there can no alteration arise from their bulk or quantity, their weight or colour, either upon their real value or their interest. The same interest, in all cases, bears the same proportion to the sum. And if you lent me so much labour and so many commodities, by receiving 5 per cent. you receive always proportional labour and commodities, however represented, whether by yellow or white coin, whether by a pound or an ounce. It is in vain, therefore, to look for the cause of the fall or rise of interest in the greater or less quantity of gold and silver which is fixed in any nation.
High interest arises from three circumstances: A great demand for borrowing; little riches to supply that demand; and great profits arising from commerce. And these circumstances are a clear proof of the small