Locke's Species: Money and Philosophy in the 1690s

Summary

John Locke intervened in two major debates in which the issue of species featured: (1) the question of whether species designations are based on real essences or only nominal essences (discussed in the Essay), and (2) the debate over the recoinage of English currency in the 1690s, in which Locke argued for a restoration of silver depleted by widescale clipping (discussed in his economic writings published between 1692–95). This article investigates Locke's position on the recoinage and considers alternative proposals in the period, including those which advocated the introduction of a ‘new species’ of money in the form of credit, based on land. Locke opened the space, philosophically, for innovations in defining money, but endorsed a narrower conception of money as silver by weight alone (not by its stamp or denomination). His rationale for doing so exposes his attachment to shared systems of measurement, intersubjective agreement and ways of stabilizing meaning by reference to external criteria (in this case, the weight of silver, a measure that functioned internationally). This suggests a pattern of attempting to constrain the nominalism that his system otherwise foregrounded.

Acknowledgments

I am grateful to Carl Wennerlind for comments on an earlier draft.

Notes

¹John Locke, An Essay concerning Human Understanding, edited by P.H. Nidditch (Oxford: Clarendon Press, 1975), III.iii.12. On nominal essences see III.iii.15–16; III.vi.2. Further references to the Essay are provided in the text, with book, chapter and section number.

²David N. Stamos, The Species Problem: Biological Species, Ontology, and the Metaphysics of Biology (Lanham, MD: Lexington Books, 2003), 41.

³See Peter R. Anstey, John Locke and Natural Philosophy (Oxford: Oxford University Press, 2011), ch. 11. For Anstey's response to Stamos, see 204–5.

⁴Charles Davenant, ‘A Memorial Concerning the Coyn of England’ [1695], in Two Manuscripts by Charles Davenant, edited by Abbott Payson Usher (Baltimore: John Hopkins Press, 1942), 48.

⁵E.g. John Briscoe, an exponent of a land bank, described the bills of credit created by his scheme as ‘being a new Species of Money’. A Discourse on the Late Funds of the Million-Act, Lottery-Act, and Bank of England (London, 1694), 30.

⁷(III.vi.37).

⁶Michael Ayers, Locke: Epistemology and Ontology, 2 vols (London: Routledge, 1991), II, 70, 72, 74 (and more generally II, 65–77).

⁸Ayers (note 6), II, 68–9.

⁹Anstey (note 3); see also Peter R. Anstey and Stephen A. Harris, ‘Locke and Botany’, Studies in History and Philosophy of Biological and Biomedical Sciences, 37 (2006), 151–71. Anstey concurs with the reading of Matthew Stuart, ‘Locke on Natural Kinds’, History of Philosophy Quarterly, 16:3 (1999), 277–96.

¹⁰Locke to William Molyneux, 20 January 1693. The Correspondence of John Locke, 8 vols, edited by E.S. de Beer (Oxford: Clarendon Press, 1976–89), IV, 626; quoted in Anstey (note 3), 205.

¹¹Locke (note 1), III.iii.12.

¹²Anstey (note 3), 207.

¹³Ayers (note 6), II, 75; Anstey (note 3), 213.

¹⁴Patrick Hyde Kelly, ‘General Introduction: Locke on Money’, in Locke on Money, 2 vols, edited by Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), Table 4 (I, 116).

¹⁵See Ming-Hsun Li, The Great Recoinage of 1696–1699 (London: Weidenfeld and Nicolson, 1963); J. Keith Horsefield, British Monetary Experiments 1650–1710 (Cambridge, MA: Harvard University Press, 1960), chs. 3–6. Key provisions of Locke's proposal were not followed in the Recoinage, including the fact that the government plan compensated holders of clipped coin and allowed for gradual demonetisation of coins, while Locke wanted them to pass immediately only by weight (not according to the stamped ‘face’ value, which no longer corresponded to the actual silver content). See Kelly (note 14), 31–3, 37, 91. On the advantages and disadvantages of this approach, see Li, 68–9.

¹⁶See D.W. Jones, War and Economy in the Age of William III and Marlborough (Oxford: Basil Blackwell, 1988).

¹⁷For an estimate that milled money amounted to 2% of the total circulation in March 1696 (including newly minted and old milled money), see Kelly (note 14), Table 1 (I, 112).

¹⁸See Kelly (note 14), I, 20–21, 25.

¹⁹The option of altering the weight and fineness of the coin attracted little support (Kelly (note 14), I, 62). Generally devaluationists did not favour this approach as their proposals had the advantage of allowing for a revaluation of the coin once the war was over. Kelly (note 14), I, 25.

²⁰The prefatory later was dated 7 November 1691 and copies were available before the year's end.

²¹Kelly (note 14), I, 29. See also Sir Albert Feavearyear, The Pound Sterling: A History of English Money, 2nd ed. rev. E. Victor Morgan (Oxford: Clarendon Press, 1963): ‘The sanctity which Locke attached to the Mint weights was something new’ (148).

²²John Locke, Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money [1692], in Locke on Money, 2 vols, edited by Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), I, 312.

²³See Kelly (note 14), I, 82–3; 86–7.

²⁴John Locke, Two Treatises of Government, edited by Peter Laslett, 2nd ed. (Cambridge, 1967), II.37. Patrick Kelly points out that this derives from Locke's early writings on interest: ‘“All Things Richly to Enjoy”: Economics and Politics in Locke's Two Treatises of Government’, Political Studies, 36 (1988), 286.

²⁵Locke (note 22), I, 233.

²⁶Locke (note 24), II.36.

²⁷Locke (note 22), I, 234.

²⁸For a challenge to Locke on this point, see Nicholas Barbon, A Discourse Concerning Coining the New Money lighter (London, 1696). Locke might also have used this point to allow greater scope for a credit economy in which paper currency of one kind and another circulated. Such a possibility, opening up at this historical moment, seems not to have attracted him.

³⁰Locke (note 22), I, 308. Davenant (note 4), 46, affirmed the possibility that foreign traders could counterfeit light money ‘and thereby traffic here at ye same advantage’.

²⁹Locke (note 22), I, 307. Despite the strictness of Locke's definition it is worth bearing in mind that ostensibly ‘full weight’ hammered coins varied considerably in their actual weight (as they were worked by hand and were difficult to standardise, with heavy coins being candidates for melting down to realise the extra silver content). Even in the case of milled money, according to Isaac Newton's estimate, one quarter of the coins were sufficiently overweight to make them worth melting. See Kelly (note 14), I, 45.

³¹For the purposes of his argument, Locke implicitly denies that arbitrage is open to English nationals who remain within the country and routinely ignore the difference between the value of the coin in tale and the value as constituted by its weight in silver. In fact, English traders could have exploited the opportunity just as easily so long as they had access to markets outside the state in which to operate. Stephen Quinn, ‘Gold, Silver, and the Glorious Revolution: Arbitrage between Bills of Exchange and Bullion’, Economic History Review, 44:3 (1996), 473–90, focuses in part on the career of one such arbitrageur, the London goldsmith-banker Stephen Evance, demonstrating the potential for English exploitation of this opportunity. In terms of Locke's argument, he would have seen such a figure simply as a ‘factor’ of the foreign merchant (note 22), I, 322. Quinn's account shows that the arbitrage arrangement was complex, involving trading between gold, silver and bills of exchange. See also Larry Neal and Stephen Quinn, ‘Markets and Institutions in the Rise of London as a Financial Center in the Seventeenth Century’, in Finance, Intermediaries, and Economic Development, edited by Stanley Engerman, Philip Hoffman, Jean-Laurent Rosenthal and Kenneth L. Sokoloff (Cambridge: Cambridge University Press, 2003), 20–23.

³²Locke (note 22), I, 319.

³³‘Clip'd and unclip'd Money will always buy an equal quantity of any thing else, as long as they will without scruple change one for another’ (Locke (note 22), I, 319). In Further Considerations Concerning Raising the Value of Money [1695], in Locke on Money, 2 vols, edited by Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), II, 469, Locke was more explicit. This point indicates that Joyce Appleby is in error when she asserts that ‘It was central to Locke's argument to deny that clipped coin ever passed at face value’. ‘Locke, Liberalism, and the Natural Law of Money’, Past & Present, no. 71 (May 1976), 66 (see also 49). He knew very well that this was happening, confirmed for example in his ‘Answer to My Lord Keepers Queries’ (in Locke on Money, II, 387). Locke went on to point out that the receipt of lightweight coin by the government in payment of taxes and by landlords encouraged the public to follow suit (Further Considerations, in Locke on Money, II, 469). But he argued that such an arrangement was not viable in the long term; the fault was made plain by foreign traders, while the use of lightweight money, according to Locke's principles, was fraudulent. One may wonder, given that both parties accepted the coin by tale, not weight, whether any fraud was actually involved, but this is a different objection to Appleby's.

³⁴Locke (note 22), I, 319. Sir Richard Temple disputed Locke's account of how foreign merchants conducted business in Some Short Remarks upon Mr. Lock's Book, in Answer to Mr. Lounds (London, 1696), reprinted in William A. Shaw, Select Tracts and Documents Illustrative of English Monetary History 1626–1730 (1896; London: George Harding, 1935), 113–17. Temple argues that the foreign trader reckons profit on the basis of foreign exchange between his own currency and England's.

³⁵Locke (note 22), I, 320.

³⁶Locke (note 22), I, 322.

³⁸Locke (note 22), I, 311. This argument was repeated by a supporter of Locke's in A Review of the Universal Remedy for all Diseases Incident to Coin. With Application to our Present Circumstance. In a Letter to Mr. Locke (London, 1696), 20.

³⁷See William Lowndes, A Report containing an Essay for the Amendment of the Silver Coins (London, 1695), signed on 12 September but not printed until November 1695 (Kelly (note 14), I, 24).

³⁹Locke (note 22), I, 313.

⁴⁰ Review (note 38), 13.

⁴¹For the response of Locke's contemporary critics see Kelly (note 14); Li (note 15); Horsefield (note 15); Appleby (note 33).

⁴²Locke (note 22), I, 323.

⁴³Locke (note 22), I, 324. This scenario is in fact closer to the kinds of arbitrage that actually occurred at this time. See Quinn (note 31).

⁴⁴Locke (note 33), II, 469.

⁴⁵Locke (note 33), II, 469. For the increase in gold in circulation in England between 1693 and 1698 see Kelly (note 14), I, 66, and Table 1 (I, 112–3). See also Richard A. Kleer, ‘“The ruine of their Diana”: Lowndes, Locke, and the Bankers’, History of Political Economy, 36:3 (2004), 537, on arbitrage in gold, and 542 on the exportation of silver to buy gold overseas and reimport it.

⁴⁶Locke (note 22), I, 327.

⁴⁷Locke (note 22), I, 327–8.

⁴⁸Locke observes that there are ‘no two things in Nature, whose proportion, and use does not vary, 'tis impossible to set a standing regular price between them’ (note 22, I, 328). The rising price of gold was also caused by a shift in world gold/silver ratios. In 1692, Locke put it at 15.5:1 and in 1695 at 16:1. The ratio had begun to change in the Far East from the 1670s.

⁴⁹Locke (note 22), I, 329.

⁵⁰‘Money is the measure of Commerce, and the rate of every thing, and therefore ought to be kept (as all other measures) as steady and invariable as may be. But this cannot be, if your Money be made of two Metals, whose proportion, and consequently whose price, constantly varies in respect of one another’ (Locke (note 22), I, 326).

⁵¹Locke (note 33), II, 430.

⁵²Constantine George Caffentzis, Clipped Coins, Abused Words, & Civil Government: John Locke's Philosophy of Money (New York: Automedia, 1989).

⁵³Locke (note 33), II, 416.

⁵⁴Caffentzis (note 52), 105, 114.

⁵⁵Caffentzis (note 52), 114–5.

⁵⁶Locke is explicit about this in the Essay, III.xi.16: ‘Nor let any one object, that the names of Substances are often to be made use of in Morality, as well as those of Modes, from which will arise Obscurity. For as to Substances, when concerned in moral Discourses, their divers Natures are not so much enquir'd into, as supposed; v.g. when we say that Man is subject to Law: We mean nothing by Man but a corporeal rational Creature: What the real Essence or other Qualities of that Creature are in this Case, is no way considered. And therefore, whether a Child or Changeling be a Man in a physical Sense, may amongst the Naturalists be as disputable as it will, it concerns not at all the moral Man, as I may call him, which is this immoveable unchangeable Idea, a corporeal rational Being.’

⁵⁷Locke (note 33), II, 463.

⁵⁸Locke (note 33), II, 415.

⁵⁹On this point see Paul Guyer, ‘Locke's Philosophy of Language’, in The Cambridge Companion to Locke, edited by Vere Chappell (Cambridge: Cambridge University Press, 1994), 141.

⁶⁰Locke (note 33), II, 403.

⁶¹Locke comments in the Essay, III.xi.11: ‘The proper signification and use of Terms is best to be learned from those, who in their Writings and Discourses, appear to have had the clearest Notions, and apply'd to them their Terms with the exactest choice and fitness.’

⁶²On the advantages and disadvantages of Locke's definitional approach in economic matters, see Douglas Vickers, Studies in the Theory of Money 1690–1776 (1959; New York: Augustus M. Kelly, 1968), 52–3, 60.

⁶³Nicholas Jolley, Locke: His Philosophical Thought (Oxford: Oxford University Press, 1999), 159.

⁶⁴John Locke, ‘Of Ethick in General’, in Writings on Religion, edited by Victor Nuovo (Oxford: Clarendon Press, 2002), 13.

⁶⁵See Appleby (note 33), 46, with references to contemporary sources on this subject.

⁶⁶See Locke, ‘Guineas’, in Locke on Money, 2 vols, edited by Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), II, 363–4. Locke maintains that the state's continued acceptance of lightweight coin was responsible for keeping up the internal purchasing power of the depleted currency. Noted by Kelly (note 14), I, 26.

⁶⁷Barbon (note 28), 86.

⁶⁸Nicholas Barbon, A Discourse of Trade (London, 1690), 21, 26.

⁶⁹Barbon (note 28), 26–7.

⁷¹Ford (note 70), 10–11.

⁷⁰R. Ford, A Further Attempt towards the Reformation of the Coin. With Expedients for preventing the stop of Commerce during the Re-coinage, and Supplying the mint with a sufficient quantity of bullion (London, 1696), 9.

⁷²Barbon (note 28), 85. See also 94. Lowndes (note 37) made the same point in his Report, using ‘species’ in this sense (83).

⁷³Charles Davenant, Discourses on the Publick Revenues, and on the Trade of England (London, 1698), 49. See also 51, 52.

⁷⁴Locke (note 33), II, 433. Locke follows the same usage in Some Considerations (Locke (note 22), I, 306-9, 315); and in his Short Observations on a Printed Paper, Intituled, For encouraging the Coining Silver Money in England, and after for keeping it here (1695), in Locke on Money, 2 vols, edited by Patrick Hyde Kelly (Oxford: Clarendon Press, 1991), II, 353.

⁷⁵Lowndes (note 37), 109. On the ‘species’ of unclipped coins, 85–6; on species as the totality of money, 76, 83, 113; on individual coins as species, 9, 62, 71.

⁷⁶See Anne L. Murphy, The Origins of English Financial Markets: Investment and Speculation before the South Sea Bubble (Cambridge: Cambridge University Press, 2009); Carl Wennerlind, Casualties of Credit: The English Financial Revolution 1620–1720 (Cambridge, MA: Harvard University Press, 2011); Bruce G. Carruthers, City of Capital: Politics and Markets in the English Financial Revolution (Princeton: Princeton University Press, 1996). The classic works on this subject are by P.G.M. Dickson, The Financial Revolution in England: A Study in the Development of Public Credit 1688–1756 (London: Macmillan, 1967); and John Brewer, The Sinews of Power: War, Money and the English State, 1688–1783 (London: Routledge, 1989); see also the briefer but valuable study by Henry Roseveare, The Financial Revolution 1660–1760 (London: Longman, 1991). For a review across the period, see Daniel Carey, ‘An Empire of Credit: English, Scottish, Irish, and American Contexts’, in The Empire of Credit: The Financial Revolution in the British Atlantic World, 1688–1815, edited by Daniel Carey and Christopher J. Finlay (Dublin: Irish Academic Press, 2011), 1–22.

⁷⁷See Steve Pincus and Alice Wolfram, ‘A Proactive State? The Land Bank, Investment and Party Politics in the 1690s’, in Regulating the British Economy, 1660–1850, edited by Perry Gauci (Farnham, UK: Ashgate, 2011), 41–62; Dennis Rubini, ‘Politics and the Battle for the Banks, 1688–1697’, English Historical Review, 85 (1970), 693–714.

⁷⁸Horsefield (note 15), 197–200.

⁷⁹Horsefield (note 15), 201–10. Wennerlind (note 76), 120–21, cites a variety of factors in the failure, including attacks by the Bank of England on this rival scheme; the inexperience of the financial directors; and the paucity of silver coin available for investment during the Recoinage. Wennerlind traces the thinking behind the land bank in an English context to innovative proposals by Sir Cheney Culpeper and William Potter, both connected with the Hartlib Circle (73–4).

⁸⁰John Briscoe, The following Proposals for, and Accounts of, a National Land Bank, having been Printed at London (Edinburgh, 1695), 3, quoted in Wennerlind (note 76), 119.

⁸¹John Asgill, Several Assertions Proved, in Order to Create another Species of Money than Gold and Silver (London, 1696), 5. Hugh Chamberlen, likewise an advocate of creating a land bank, proposed ‘to contrive a general Credit, to be so founded upon Land, as to give it the greatest Safety and Convenience, that in its own nature it is Capable of; and to make a Credit, that should not only be a Succedaneum to Money, but in divers respects, more noble and useful, and indeed a Superior Species, indued with all the Uses and Excellence of Metaline Money, and in several Regards, exceeding the same’. The Constitution of the Office of Land-Credit (London, 1696), 2.

⁸²Asgill (note 81), 15.

⁸³John Asgill, An Essay on a Registry, for Titles of Lands (London, 1698).

⁸⁴Asgill (note 81), 17.

⁸⁵Asgill (note 81), 22, 25, 44.

⁸⁶See Bodleian Library, Oxford, MS Locke b. 3.

⁸⁷Asgill (note 81), 61.

⁸⁸Asgill (note 81), 7.

⁸⁹Asgill (note 81), 8.

⁹⁰Published in London by Locke's printers, Awnsham and John Churchill.

⁹¹ Review (note 38), 5.

⁹² Review (note 38), 12.

⁹³ Review (note 38), 12.

⁹⁴For some discussion of this issue, see Courtney Weiss Smith, ‘A “Foundation in Nature”: New Economic Criticism and the Problem of Money in 1690s England’, The Eighteenth Century, 53:2 (2012): 209–28.

⁹⁵ Review (note 38), 16.

⁹⁶ Review (note 38), 24. As the author recognised, the scenario was just as open to ‘cunning Men amongst our selves’, the ‘Money-mongers’ with resources to melt and export coin and reimport gold from the Netherlands (23–4).

⁹⁸ Review (note 38), 32.

⁹⁷ Review (note 38), 31.

⁹⁹For a fuller discussion, see Daniel Carey, ‘John Locke, Money, and Credit’, in The Empire of Credit: The Financial Revolution in the British Atlantic World, 1688–1815, edited by Daniel Carey and Christopher J. Finlay (Dublin: Irish Academic Press, 2011), 25–51.

¹⁰⁰ Review (note 38), 32.

¹⁰¹See Sir John Clapham, The Bank of England: A History, 2 vols (Cambridge: Cambridge University Press, 1944), I, 32, 35–6. According to Horsefield (note 15), 133, the cash reserve was down to £91,000 by 30 June 1696 and fell to £45,000 by 10 November. The author of the Review dated his work 31 August 1696. Adam Smith recalled this episode in his critique of paper credit in An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols, general editors R.H. Campbell and A.S. Skinner, textual editor W.B. Todd (Oxford: Clarendon Press, 1976), II.ii.80.

¹⁰²The anonymous author of the Review does not indicate precisely which kind of Bank of England-issued notes he has in mind. The Bank's promissory notes (promising repayment on demand in specie) included running-cash notes and ‘specie notes’ issued after the start of the recoinage in 1696. The author refers to the Bank's ‘Bills and Notes’ and to ‘Bank bills, (and all other Bills of the like Nature)’ (Review (note 38), 32, 35). On these different notes, see R.D. Richards, ‘The First Fifty Years of the Bank of England (1694–1744)’, in History of the Principal Public Banks, edited by J.G. van Dillen (The Hague: Martinus Nijhoff, 1934), 220–21, 223–5, 226–7.

¹⁰³ Review (note 38), 32. The discount on Bank of England notes quickly rose to 16 per cent and reached 24 per cent by February 1697. Nicholas Mayhew, Sterling: The History of a Currency (London: Penguin, 1999), 95. The discount on notes did not disappear until the Autumn of 1697 (Horsefield (note 15), 134). In a rejoinder to the Review, an anonymous author defended the Bank's ‘delay’ in payment and pointed out that those who obtained bills did so originally by paying in either lightweight silver coin or overvalued gold, which made their insistence on repayment in full-weight money problematic. [P.H.], The Bank of England, and their Present Method of Paying, defended from the Aspersions Cast on them in a late Book, Entituled, A Review of the Universal Remedy for all of Diseases incident to Coin … In a Letter to Mr. Locke (London, 1697), 7–8. For his part, Asgill had opposed the move to make bills of credit current by act of Parliament, regarding the proposal as illegal, impractical, and as a ‘Cheat’; as a result they had no role to play in the creation of ‘another Species of Money than Gold and Silver’ (note 81, 13).

¹⁰⁴ Review (note 38), 53.

¹⁰⁵ Review (note 38), 33–4, 56–7. The author refers to the fact although the whole of the £1,200,000 subscription for the bank had been taken up in 1694, only 60% of the funds had been called in. For a contemporary defense of this arrangement, see Michael Godfrey, A Short Account of the Bank of England (London, 1695), 6.

¹⁰⁶ Review (note 38), 59.

¹⁰⁷See also a parallel comment in Essay, IV.vi.5.

¹⁰⁸James Hodges, The Present State of England, as to Coin and Publick Charges (London, 1697), 135.

¹⁰⁹Hodges (note 108), 175–6, 195.