An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith [e book reader pdf TXT] 📗

value both of silver and of

all other commodities.

 

But in countries almost waste, or but thinly inhabited, cattle, poultry,

game of all kinds, etc. as they are the spontaneous productions of Nature,

so she frequently produces them in much greater quantities than the

consumption of the inhabitants requires. In such a state of things, the

supply commonly exceeds the demand. In different states of society, in

different states of improvement, therefore, such commodities will represent,

or be equivalent, to very different quantities of labour.

 

In every state of society, in every stage of improvement, corn is the

production of human industry. But the average produce of every sort of

industry is always suited, more or less exactly, to the average consumption;

the average supply to the average demand. In every different stage of

improvement, besides, the raising of equal quantities of corn in the same

soil and climate, will, at an average, require nearly equal quantities of

labour; or, what comes to the same thing, the price of nearly equal

quantities; the continual increase of the productive powers of labour, in an

improved state of cultivation, being more or less counterbalanced by the

continual increasing price of cattle, the principal instruments of

agriculture. Upon all these accounts, therefore, we may rest assured, that

equal quantities of corn will, in every state of society, in every stage of

improvement, more nearly represent, or be equivalent to, equal quantities of

labour, than equal quantities of any other part of the rude produce of land.

Corn, accordingly, it has already been observed, is, in all the different

stages of wealth and improvement, a more accurate measure of value than any

other commodity or set of commodities. In all those different stages,

therefore, we can judge better of the real value of silver, by comparing it

with corn, than by comparing it with any other commodity or set of

commodities.

 

Corn, besides, or whatever else is the common and favourite vegetable food

of the people, constitutes, in every civilized country, the principal part

of the subsistence of the labourer. In consequence of the extension of

agriculture, the land of every country produces a much greater quantity of

vegetable than of animal food, and the labourer everywhere lives chiefly

upon the wholesome food that is cheapest and most abundant. Butcher’s meat,

except in the most thriving countries, or where labour is most highly

rewarded, makes but an insignificant part of his subsistence; poultry makes

a still smaller part of it, and game no part of it. In France, and even in

Scotland, where labour is somewhat better rewarded than in France, the

labouring poor seldom eat butcher’s meat, except upon holidays, and other

extraordinary occasions. The money price of labour, therefore, depends much

more upon the average money price of corn, the subsistence of the labourer,

than upon that of butcher’s meat, or of any other part of the rude produce

of land. The real value of gold and silver, therefore, the real quantity of

labour which they can purchase or command, depends much more upon the

quantity of corn which they can purchase or command, than upon that of

butcher’s meat, or any other part of the rude produce of land.

 

Such slight observations, however, upon the prices either of corn or of

other commodities, would not probably have misled so many intelligent

authors, had they not been influenced at the same time by the popular

notion, that as the quantity of silver naturally increases in every country

with the increase of wealth, so its value diminishes as its quantity

increases. This notion, however, seems to be altogether groundless.

 

The quantity of the precious metals may increase in any country from two

different causes ; either, first, from the increased abundance of the mines

which supply it; or, secondly, from the increased wealth of the people, from

the increased produce of their annual labour. The first of these causes is

no doubt necessarily connected with the diminution of the value of the

precious metals; but the second is not.

 

When more abundant mines are discovered, a greater quantity of the precious

metals is brought to market; and the quantity of the necessaries and

conveniencies of life for which they must he exchanged being the same as

before, equal quantities of the metals must be exchanged for smaller

quantities of commodities. So far, therefore, as the increase of the

quantity of the precious metals in any country arises from the increased

abundance of the mines, it is necessarily connected with some diminution of

their value.

 

When, on the contrary, the wealth of any country increases, when the annual

produce of its labour becomes gradually greater and greater, a greater

quantity of coin becomes necessary in order to circulate a greater quantity

of commodities: and the people, as they can afford it, as they have more

commodities to give for it, will naturally purchase a greater and a greater

quantity of plate. The quantity of their coin will increase from necessity;

the quantity of their plate from vanity and ostentation, or from the same

reason that the quantity of fine statues, pictures, and of every other

luxury and curiosity, is likely to increase among them. But as statuaries

and painters are not likely to be worse rewarded in times of wealth and

prosperity, than in times of poverty and depression, so gold and silver are

not likely to be worse paid for.

 

The price of gold and silver, when the accidental discovery of more abundant

mines does not keep it down, as it naturally rises with the wealth of every

country; so, whatever be the state of the mines, it is at all times

naturally higher in a rich than in a poor country. Gold and silver, like all

other commodities, naturally seek the market where the best price is given

for them, and the best price is commonly given for every thing in the

country which can best afford it. Labour, it must be remembered, is the

ultimate price which is paid for every thing; and in countries where labour

is equally well rewarded, the money price of labour will be in proportion to

that of the subsistence of the labourer. But gold and silver will naturally

exchange for a greater quantity of subsistence in a rich than in a poor

country ; in a country which abounds with subsistence, than in one which is

but indifferently supplied with it. If the two countries are at a great

distance, the difference may be very great; because, though the metals

naturally fly from the worse to the better market, yet it may be difficult

to transport them in such quantities as to bring their price nearly to a

level in both. If the countries are near, the difference will be smaller,

and may sometimes be scarce perceptible ; because in this case the

transportation will be easy. China is a much richer country than any part of

Europe, and the difference between the price of subsistence in China and in

Europe is very great. Rice in China is much cheaper than wheat is any where

in Europe. England is a much richer country than Scotland, but the

difference between the money price of corn in those two countries is much

smaller, and is but just perceptible. In proportion to the quantity or

measure, Scotch corn generally appears to be a good deal cheaper than

English; but, in proportion to its quality, it is certainly somewhat dearer.

Scotland receives almost every year very large supplies from England, and

every commodity must commonly be somewhat dearer in the country to which it

is brought than in that from which it comes. English corn, therefore, must

be dearer in Scotland than in England ; and yet in proportion to its

quality, or to the quantity and goodness of the flour or meal which can be

made from it, it cannot commonly be sold higher there than the Scotch corn

which comes to market in competition with it.

 

The difference between the money price of labour in China and in Europe, is

still greater than that between the money price of subsistence; because the

real recompence of labour is higher in Europe than in China, the greater

part of Europe being in an improving state, while China seems to be standing

still. The money price of labour is lower in Scotland than in England,

because the real recompence of labour is much lower: Scotland, though

advancing to greater wealth, advances much more slowly than England. The

frequency of emigration from Scotland, and the rarity of it from England,

sufficiently prove that the demand for labour is very different in the two

countries. The proportion between the real recompence of labour in different

countries, it must be remembered, is naturally regulated, not by their

actual wealth or poverty, but by their advancing, stationary, or declining

condition.

 

Gold and silver, as they are naturally of the greatest value among the

richest, so they are naturally of the least value among the poorest nations.

Among savages, the poorest of all nations, they are scarce of any value.

 

In great towns, corn is always dearer than in remote parts of the country.

This, however, is the effect, not of the real cheapness of silver, but of

the real dearness of corn. It does not cost less labour to bring silver to

the great town than to the remote parts of the country; but it costs a great

deal more to bring corn.

 

In some very rich and commercial countries, such as Holland and the

territory of Genoa, corn is dear for the same reason that it is dear in

great towns. They do not produce enough to maintain their inhabitants. They

are rich in the industry and skill of their artificers and manufacturers, in

every sort of machinery which can facilitate and abridge labour; in

shipping, and in all the other instruments and means of carriage and

commerce: but they are poor in corn, which, as it must be brought to them

from distant countries, must, by an addition to its price, pay for the

carriage from those countries. It does not cost less labour to bring silver

to Amsterdam than to Dantzic ; but it costs a great deal more to bring corn.

The real cost of silver must be nearly the same in both places ; but that of

corn must be very different. Diminish the real opulence either of Holland or

of the territory of Genoa, while the number of their inhabitants remains the

same ; diminish their power of supplying themselves from distant countries;

and the price of corn, instead of sinking with that diminution in the

quantity of their silver, which must necessarily accompany this declension,

either as its cause or as its effect, will rise to the price of a famine.

When we are in want of necessaries, we must part with all superfluities, of

which the value, as it rises in times of opulence and prosperity, so it

sinks in times of poverty and distress. It is otherwise with necessaries.

Their real price, the quantity of labour which they can purchase or command,

rises in times of poverty and distress, and sinks in times of opulence and

prosperity, which are always times of great abundance ; for they could not

otherwise be times of opulence and prosperity.Corn is a necessary, silver is

only a superfluity.

 

Whatever, therefore, may have been the increase in the quantity of the

precious metals, which, during the period between the middle of the

fourteenth and that of the sixteenth century, arose from the increase of

wealth and improvement, it could have no tendency to diminish their value,

either in Great Britain, or in my other part of Europe. If those who have

collected the prices of things in ancient times, therefore, had, during this

period, no reason