Chapter 14: Interest

We have only two things further to mention relating to the price of commodities:

  1. Interest
  2. Exchange

It is commonly supposed that the premium of interest depends on the value of gold and silver.

  • However, the premium of interest is regulated by the quantity of stock.
  • The plain reason is this.
  • Thus, there could be little accumulation of wealth at all.
  • What one trade lends to another is not so much to be considered as money, as commodities a#lf1647_footnote_nt525_ref.footnote-link.type-footnote[href="http://oll.libertyfund.org/titles/2621#lf1647_footnote_nt525"] | 2

  • The price of interest is entirely regulated by this circumstance.
  • If only a few were able to lend money, and many people wanted to borrow it, interest would be high.
  • But if the amount of stock on hand were so great as to enable many to lend, it must fall proportionably.
  • Chapter 15: Exchange

    Exchange is a method invented by merchants to facilitate the payment of money at a distance.

  • Between Glasgow and London it is sometimes at 2%, sometimes more, sometimes less.
  • The value of exchange is always regulated by the risk of sending money between two places.
  • Between Glasgow and London, one can easily get £100 carried for 15 or 16 shillings.
  • This is also the cause of the high price of exchange between Virginia and Glasgow.
  • In the American colonies, the currency is paper.
  • In every exchange, you must pay:
  • This is the cause of the rise of exchange.

  • Words: 2750
    Next: Chapter 16