342 THE GENERAL THEORY OF EMPLOYMENT bk. vi

policy and the East India trade in the early 1620’s in England were in entire agreement on this point. Gerard Malynes stated, giving detailed reason for his assertion, that “Plentyof money decreaseth usury in price or rate” {Lex Mercatoriaand Maintenance of Free Trade, 1622). His truculent andrather unscrupulous adversary, Edward Misselden, repliedthat “The remedy for Usury may be plenty of money”(j Free Trade or the Meanes to make Trade Florish, same year).Of the leading writers of half a century later, Child, theomnipotent leader of the East India Company and its mostskilful advocate, discussed (1668) the question of how far thelegal maximum rate of interest, which he emphaticallydemanded, would result in drawing “the money” of theDutch away from England. He found a remedy for thisdreaded disadvantage in the easier transference of bills ofdebt, if these were used as currency, for this, he said, “willcertainly supply the defect of at least one-half of all the readymoney we have in use in the nation”. Petty, the other writer,who was entirely unaffected by the clash of interests, was inagreement with the rest when he explained the “natural” fallin the rate of interest from 1 o per cent to 6 per cent by theincrease in the amount of money {Political jirithmetick, 1076),and advised lending at interest as an appropriate remedy for acountry with too much “Coin” { Quantulumcunque concerningMoney, 1682).

This reasoning, naturally enough, was by no meansconfined to England . Several years later (1701 and 1706),for example, French merchants and statesmen complained ofthe prevailing scarcity of coin [disette des especes) as the causeof the high interest rates, and they were anxious to lower therate of usury by increasing the circulation of money. 1

The great Locke was, perhaps, the first to expressin abstract terms the relationship between the rate ofinterest and the quantity of money in his controversywith Petty . 2 He was opposing Petty’s proposal of amaximum rate of interest on the ground that it was asimpracticable as to fix a maximum rent for land, since“the natural Value of Money, as it is apt to yield such

1 Heckscher, Mercantilism , vol. ii. pp. 200, 201, very slightly abridged.

* Some Considerations of the Consequences of the Lowering of Interest andRaising the Value of Money, 1692, but written some years previously.