This article presents a reinterpretation of John Locke's contribution to debates about the interest rate in the seventeenth century. It suggests that his argument that England should maintain the ‘natural’ rate, rather than impose a lower rate, was motivated by his theological, moral, and social conceptions of credit and its dependence on trust. In order to solve the endemic shortage of metal coin limiting the growth of monetary exchange in England, Locke stressed that the higher, ‘natural’ rate of interest would facilitate interpersonal borrowing and lending among neighbours, allowing currency to flow more freely around the country. By contrast, while he acknowledged that institutional creditors such as goldsmith-bankers could quicken the circulation of money by issuing debt instruments like bills of exchange, he saw institutional credit as a threat to the moral community. Not only did he question how people could rationally trust financiers without any epistemic apprehension of their personal probity, but he moreover doubted whether individuals accumulating so much money were likely to act trustworthily. Finally, using an otherwise unstudied dialogue about the Bank of England, this article argues Locke extended his criticisms about the threats posted by private banks to the country's nascent system of public credit.
Marking the pinnacle of a long-running collaboration between two leading historians of early modern political economy, this is 'the first comprehensive study, in the English language, of Hume's economics ' (p.16). Its prodigious research would reward study for all historians of the eighteenth century. The authors unravel a 'unifying thread' of economics in Hume's life and thought, woven throughout his writings on money, trade, ethics, politics and history. In doing so, they uncover a depth of insight and breadth of vision that they argue would repay close attention today.The first chapter is biographical, focusing on Hume's first-hand experiences with the commercial worlds of Britain and Europe. It recounts his early employment as a clerk to a Bristol sugar merchant, where he gained practical experience in accounting and using credit instruments, before following the Scotsman's travels on the continent in a variety of secretarial, ambassadorial and administrative roles. Hume observed the prices, trades and levels of prosperity in the places he visited and regularly interacted with merchants, financiers and improvers in the metropolises of London and Paris.The next chapter is a landmark analysis of Hume's claim that the moral sciences could attain a higher degree of certainty than the physical sciences. Neither Cartesian, Leibnizian nor Newtonian metaphysics, he argued, could explain the nature of bodies or the underlying causes of physical forces. By contrast, since human beings can contemplate their own mental processes, the moral sciences could identify internal causes. Hume's 'science of man' intended to discern the uniformities in human nature that produced observable regularities in commercial society. It would follow a method of inductive inference, working gradually towards general principles from 'phenomena', which comprised empirical particulars such as the facts and quantitative data he recorded on his travels. Hume remained sceptical of the exceptionless models of François Quesnay and the physiocrats; he held a more probabilistic conception of scientific laws, and preferred thought experiments to system-building.The next two chapters explore Hume's doux commerce thesis. Chapter 3 details the conventions and institutions he deemed necessary to channel human passions towards productive and co-operative ends. Private property was the most important, since it provided the security necessary to improve land and specialise production. Markets and money were imperative to render property transferable through contractual agreements. And a government was needed to secure these conventions. Hume's History of England traced the progressive development of property, markets and money from the Tudor era, in tandem with the emergence of a government capable of securing them. Chapter 4 discusses Hume's belief that secure property and commercial expansion contributed to improvement in the arts and sciences and refinement in morals. Property engendered innovation and curiosity in practical and scientific pursuits like a...
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