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"the foundation of classical monetary economics"

HUME, DAVID. Political Discourses

Edinburgh: Printed by R. Fleming, for A. Kincaid and A. Donaldson, 1752

Contemporary calf, maroon leather label. Minor rubbing, head of spine slightly chipped. A near fine, untouched copy.

FIRST EDITION. This book contains all of Hume’s significant economic writings. The twelve essays include Commerce, Luxury, Money, Interest, Balance of Trade, Balance of Power, Taxes, and Public Credit. “These discourses turned the search light of rational and historical inquiry upon problems of vast interest to an age that was slowly sloughing itself out of the moribund skin of mercantilism” (Mossner).

The essays on Money and Trade “form nothing less than the foundation of classical monetary economics” (O’Brien, The Classical Economists, p. 7). In “Of the Balance of Trade” Hume criticizes the mercantilist view that restraints on international trade are necessary to prevent a nation from losing its money supply. Hume’s position, “an early anticipation of the classical view, is that owing to the effects of specie flows on price levels in trading nations, the amount of specie in each automatically tends towards an equilibrium in which its exports and imports are in balance” and that restraints on trade will fail because “specie movement from abroad will raise the nation’s prices relative to those abroad, reduce exports and increase imports, and generate a return outflow of specie” (New Palgrave). In “Of Interest” Hume attacks the mercantilist view that interest is determined by the money supply. Instead, increased money supply simply raises all prices, necessitating an offsetting increased demand for loans to finance expenditures, hereby leaving interest rates unaffected. Instead, it is the supply of real capital that determines interest rates.

“The age of Enlightenment found Hume’s economic and political observations subtle but discerning. As usual, his thought was seminal and provoked much appreciation. In short, after 1752 David Hume was read by a wider circle than could ever possibly have read his metaphysical works” (Mossner). Hume confirmed this in his autobiography, calling the Political Discourses “the only work of mine that was successful on the first publication; it was well received abroad and at home.”

Provenance: signature of Thomas Laurie dated 1752.