Editing John Locke (section)

====Monetary thoughts====
Locke distinguishes two functions of money: as a ''counter'' to [[Valuation (finance)|measure value]], and as a ''pledge'' to lay claim to [[good (economics)|goods]]. He believes that silver and gold, as opposed to [[Banknote|paper money]], are the appropriate currency for international transactions. Silver and gold, he says, are treated to have equal value by all of humanity and can thus be treated as a pledge by anyone, while the value of paper money is only valid under the government which issues it.

Locke argues that a country should seek a favourable [[balance of trade]], lest it fall behind other countries and suffer a loss in its trade. Since the world [[Money supply|money stock]] grows constantly, a country must constantly seek to enlarge its own stock. Locke develops his theory of foreign exchanges, by which in addition to commodity movements, there are also movements in country stock of money, and movements of capital determine [[exchange rate]]s. He considers the latter less significant and less [[Volatility (finance)|volatile]] than commodity movements. As for a country's money stock, if it is large relative to that of other countries, he says it will cause the country's exchange to rise above par, as an export balance would do.

Locke prepares estimates of the [[cash]] requirements for different economic groups ([[Land tenure|landholders]], labourers, and brokers). In each group he posits that the cash requirements are closely related to the length of the pay period. He argues the brokers—the [[Intermediary|middlemen]]—whose activities enlarge the monetary circuit and whose profits eat into the earnings of labourers and landholders, have a negative influence on both personal and the public economy to which they supposedly contribute.<ref>{{Cite web |title=Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money (Diplomatic) |url=https://www.newtonproject.ox.ac.uk/view/texts/diplomatic/MINT01863 |access-date=2 March 2024 |website=www.newtonproject.ox.ac.uk |archive-date=2 March 2024 |archive-url=https://web.archive.org/web/20240302220309/https://www.newtonproject.ox.ac.uk/view/texts/diplomatic/MINT01863 |url-status=dead }}</ref>