Jean-Baptiste Say Quotes
I have made no distinction between the circulation of goods and of money, because there really is none.
Jean-Baptiste Say, 1767-1832, French economist and journalist, A Treatise On Political Economy: or the Production, Distribution, and Consumption of Wealth
Sourced by: Eigen's Political and Historical Quotations
This is the first major history of banks written in the United States.
Attempting to defend charges that his bank and others were engaged in monopolistic practices:
Economists they world over have differed as to how critical it was to have a money supply that is based on a gold standard or other precious metal. United States history has had a dispute over whether the money should be backed by gold or silver. Finally, under the Richard M. Nixon administration, the United States went off the gold standard and American money ever since is only backed by the ‘full faith and credit’ of the United States. Some politicians like Paul believe this is a poor policy since it allows governments to control their own money supply irrespective of their gold or silver holdings. Paul goes further than most and sees freedom itself dependent on a precious metal standard. Most politicians disagree.
At the time, there was no United States currency. Private banks in some of the states issued their own money. A dollar from Georgia might only be worth 75 cents in New York.
This was a very astute prediction. At the time, the United States gold mining production was second only to South Africa and American currency was based on the gold standard which seemed to all to be permanent. Half a century later, the U. S went off the gold standard.
The alternative would have been for the colonies to borrow English money at high interest rates and use that. Or use money from private banks (which occurred later.) Many conservatives are today a little shocked that some of the American Colonies just printed money with no backing but it worked—at least at the local level. A Boston Bank for example, would take a large commission for a Bostonian to convert Pennsylvania money into Massachusetts money. So it was not a very good system for trade between colonies and International trade. But English money was used for that. The colonists pragmatically got the “best of both worlds” and paid as little interest as they needed to. This system is essentially what we use today on a national scale with no gold or silver backing of the money.
Harvey was one of those who argued that silver and not gold should be the basis of American money. The country was growing and the amount of gold was relatively fixed; therefore money was scarce and many believed the English and American financiers were hording gold deliberately. The final solution was not a gold standard or a silver standard but what we have today—a currency backed only by the full faith and credit of the U. S.
This is the first major history of banks written in the United States.
See {583710} for his grandchild’s variation.
This is a very interesting quotation in that it is one of the first suggestions that money debasement can be caused by a lack of trust and confidence in the government rather than the percentage of precious metals in the coins.
At the time, a bank note—paper money issued be a private bank—was not backed by any gold or silver and was not insured bym the government. A bank could print as much as they wanted, so it was always worth less as the further you were from the particular issuing bank, the less you could get your bank note, because no one knew whether or not the issuing bank would redeem the note or even be in existence. So every private bank note had diminished value for the public. However, carrying gold and silver around and making change for precious metals was difficult and often impractical. So people used banknotes. The same thing happens with credit cards today. The merchant has to pay a fee to the credit card company and the bank and therefore charges us more for whatever we buy. But most consumers and merchants are willing to pay the difference to obtain the convenience of the credit card,
The very act of printing money created a debt—at the time and until the Nixon Administration which went off the gold standard—the government owed the gold or silver and the spicie—the printed money—was a promissory note.
Jean-Baptiste Say was a liberal French economist and businessman who argued in favor of competition, free trade and lifting restraints on business. He is best known for Say's law—also known as the law of markets—which he popularized. Scholars disagree on the surprisingly subtle question of whether it was Say who first stated what is now called Say's law. Moreover, he was one of the first economists to study entrepreneurship and conceptualized entrepreneurs as organizers and leaders of the economy.
