Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money

John Locke (29 August 1632 – 28 October 1704), widely known as the Father of Liberalism, was an English philosopher and physician regarded as one of the most influential of Enlightenment thinkers. Considered one of the first of the British empiricists, following the tradition of Francis Bacon, he is equally important to social contract theory. His work had a great impact upon the development of epistemology and political philosophy. His writings influenced Voltaire and Rousseau, many Scottish Enlightenment thinkers, as well as the American revolutionaries. His contributions to classical republicanism and liberal theory are reflected in the American Declaration of Independence. 

Locke's theory of mind is often cited as the origin of modern conceptions of identity and the self, figuring prominently in the work of later philosophers such as Hume, Rousseau and Kant. Locke was the first to define the self through a continuity of consciousness. He postulated that the mind was a blank slate or tabula rasa. Contrary to pre-existing Cartesian philosophy, he maintained that people are born without innate ideas, and that knowledge is instead determined only by experience derived from sense perception.

Like famous Scottish philosopher David Hume, Locke also wrote about economic theory. Locke’s general theory of value and price is a supply and demand theory, which was set out in a letter to a Member of Parliament in 1691, titled Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money. Supply is quantity and demand is rent. “The price of any commodity rises or falls by the proportion of the number of buyer and sellers.” and “that which regulates the price... [of goods] is nothing else but their quantity in proportion to their rent.” Regardless of whether the demand for money is unlimited or constant, Locke concludes that as far as money is concerned, the demand is exclusively regulated by its quantity. He also investigates the determinants of demand and supply. For supply, goods in general are considered valuable because they can be exchanged, consumed and they must be scarce. For demand, goods are in demand because they yield a flow of income. 

This edition of Locke’s famous letter is specially formatted.