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

necessaries of life which

is given to the labourer, it has already been observed, is lower both in

China and Indostan, the two great markets of India, than it is through the

greater part of Europe. The wages of the labourer will there purchase a

smaller quantity of food: and as the money price of food is much lower in

India than in Europe, the money price of labour is there lower upon a double

account; upon account both of the small quantity of food which it will

purchase, and of the low price of that food. But in countries of equal art

and industry, the money price of the greater part of manufactures will be in

proportion to the money price of labour; and in manufacturing art and

industry, China and Indostan, though inferior, seem not to be much inferior

to any part of Europe. The money price of the greater part of manufactures,

therefore, will naturally be much lower in those great empires than it is

anywhere in Europe. Through the greater part of Europe, too, the expense of

land-carriage increases very much both the real and nominal price of most

manufactures. It costs more labour, and therefore more money, to bring first

the materials, and afterwards the complete manufacture to market. In China

and Indostan, the extent and variety of inland navigations save the greater

part of this labour, and consequently of this money, and thereby reduce

still lower both the real and the nominal price of the greater part of their

manufactures. Upon all these accounts, the precious metals are a commodity

which it always has been, and still continues to be, extremely advantageous

to carry from Europe to India. There is scarce any commodity which

brings a better price there; or which, in proportion to the quantity of

labour and commodities which it costs in Europe. will purchase or command a

greater quantity of labour and commodities in India. It is more

advantageous, too, to carry silver thither than gold; because in China, and

the greater part of the other markets of India, the proportion between fine

silver and fine gold is but as ten, or at most as twelve to one; whereas in

Europe it is as fourteen or fifteen to one. In China, and the greater part

of the other markets of India, ten, or at most twelve ounces of silver, will

purchase an ounce of gold ; in Europe, it requires from fourteen to fifteen

ounces. In the cargoes, therefore, of the greater part of European ships

which sail to India, silver has generally been one of the most valuable

articles. It is the most valuable article in the Acapulco ships which sail

to Manilla. The silver of the new continent seems, in this manner, to be one

of the principal commodities by which the commerce between the two

extremities of the old one is carried on ; and it is by means of it, in a

great measure, that those distant parts of the world are connected with one

another.

 

In order to supply so very widely extended a market, the quantity of silver

annually brought from the mines must not only be sufficient to support that

continued increase, both of coin and of plate, which is required in all

thriving countries; but to repair that continual waste and consumption of

silver which takes place in all countries where that metal is used.

 

The continual consumption of the precious metals in coin by wearing, and in

plate both by wearing and cleaning, is very sensible ; and in commodities of

which the use is so very widely extended, would alone require a very great

annual supply. The consumption of those metals in some particular

manufactures, though it may not perhaps be greater upon the whole than this

gradual consumption, is, however, much more sensible, as it is much more

rapid. In the manufactures of Birmingham alone, the quantity of gold and

silver annually employed in gilding and plating, and thereby disqualified

from ever afterwards appearing in the shape of those metals, is said to

amount to more than fifty thousand pounds sterling. We may from thence form

some notion how great must be the annual consumption in all the different

parts of the world, either in manufactures of the same kind with those of

Birmingham, or in laces, embroideries, gold and silver stuffs, the gilding

of books, furniture, etc. A considerable quantity, too, must be annually

lost in transporting those metals from one place to another both by sea and

by land. In the greater part of the governments of Asia, besides, the almost

universal custom of concealing treasures in the bowels of the earth, of

which the knowledge frequently dies with the person who makes the

concealment, must occasion the loss of a still greater quantity.

 

The quantity of gold and silver imported at both Cadiz and Lisbon (including

not only what comes under register, but what may be supposed to be smuggled)

amounts, according to the best accounts, to about six millions sterling

a-year.

 

According to Mr Meggens {Postscript to the Universal Merchant p. 15 and 16.

This postscript was not printed till 1756, three years after the publication

of the book, which has never had a second edition. The postscript is,

therefore, to be found in few copies ; it corrects several errors in the

book.}, the annual importation of the precious metals into Spain, at an

average of six years, viz. from 1748 to 1753, both inclusive, and into

Portugal, at an average of seven years, viz. from 1747 to 1753, both

inclusive, amounted in silver to 1,101,107 pounds weight, and in gold to

49,940 pounds weight. The silver, at sixty two shillings the pound troy,

amounts to � 3,4l3,43l:10s. sterling. The gold, at fortyfour guineas and a

half the pound troy, amounts to � 2,333,446:14s. sterling. Both together

amount to � 5,746,878:4s. sterling. The account of what was imported under

register, he assures us, is exact. He gives us the detail of the particular

places from which the gold and silver were brought, and of the particular

quantity of each metal, which, according to the register, each of them

afforded. He makes an allowance, too, for the quantity of each metal which,

he supposes, may have been smuggled. The great experience of this judicious

merchant renders his opinion of considerable weight.

 

According to the eloquent, and sometimes well-informed, author of the

Philosophical and Political History of the Establishment of the Europeans in

the two Indies, the annual importation of registered gold and silver into

Spain, at an average of eleven years, viz. from 1754 to 1764, both

inclusive, amounted to 13,984,185 3/5 piastres of ten reals. On account of

what may have been smuggled, however, the whole annual importation, he

supposes, may have amounted to seventeen millions of piastres, which, at 4s.

6d. the piastre, is equal to � 3,825,000 sterling. He gives the detail, too,

of the particular places from which the gold and silver were brought, and of

the particular quantities of each metal, which according to the register,

each of them afforded. He informs us, too, that if we were to judge of the

quantity of gold annually imported from the Brazils to Lisbon, by the amount

of the tax paid to the king of Portugal, which it seems, is one-fifth of the

standard metal, we might value it at eighteen millions of cruzadoes, or

fortyfive millions of French livres, equal to about twenty millions

sterling. On account of what may have been smuggled, however, we may safely,

he says, add to this sum an eighth more, or � 250,000 sterling, so that the

whole will amount to � 2,250,000 sterling. According to this account,

therefore, the whole annual importation of the precious metals into both

Spain and Portugal, mounts to about � 6,075,000 sterling.

 

Several other very well authenticated, though manuscript accounts, I have

been assured, agree in making this whole annual importation amount, at an

average, to about six millions sterling; sometimes a little more, sometimes

a little less.

 

The annual importation of the precious metals into Cadiz and Lisbon, indeed,

is not equal to the whole annual produce of the mines of America. Some part

is sent annually by the Acapulco ships to Manilla; some part is employed in

a contraband trade, which the Spanish colonies carry on with those of other

European nations; and some part, no doubt, remains in the country. The mines

of America, besides, are by no means the only gold and silver mines in the

world. They, are, however, by far the most abundant. The produce of all the

other mines which are known is insignificant, it is acknowledged, in

comparison with their’s ; and the far greater part of their produce, it is

likewise acknowledged, is annually imported into Cadiz and Lisbon. But the

consumption of Birmingham alone, at the rate of fifty thousand pounds

a-year, is equal to the hundred-and-twentieth part of this annual

importation, at the rate of six millions a-year. The whole annual

consumption of gold and silver, therefore, in all the different countries of

the world where those metals are used, may, perhaps, be nearly equal to the

whole annual produce. The remainder may be no more than sufficient to supply

the increasing demand of all thriving countries. It may even have fallen so

far short of this demand, as somewhat to raise the price of those metals in

the European market.

 

The quantity of brass and iron annually brought from the mine to the market,

is out of all proportion greater than that of gold and silver. We do not,

however, upon this account, imagine that those coarse metals are likely to

multiply beyond the demand, or to become gradually cheaper and cheaper. Why

should we imagine that the precious metals are likely to do so? The coarse

metals, indeed, though harder, are put to much harder uses, and, as they are

of less value, less care is employed in their preservation. The precious

metals, however, are not necessarily immortal any more than they, but are

liable, too, to be lost, wasted, and consumed, in a great variety of ways.

 

The price of all metals, though liable to slow and gradual variations,

varies less from year to year than that of almost any other part of the rude

produce of land: and the price of the precious metals is even less liable to

sudden variations than that of the coarse ones. The durableness of metals is

the foundation of this extraordinary steadiness of price. The corn which was

brought to market last year will be all, or almost all, consumed, long

before the end of this year. But some part of the iron which was brought

from: the mine two or three hundred years ago, may be still in use, and,

perhaps, some part of the gold which was brought from it two or three

thousand years ago. The different masses of corn, which, in different years,

must supply the consumption of the world, will always be nearly in

proportion to the respective produce of those different years. But the

proportion between the different masses of iron which may be in use in two

different years, will be very little affected by any accidental difference

in the produce of the iron mines of those two years ; and the proportion

between the masses of gold will be still less affected by any such

difference in the produce of the gold mines. Though the produce of the

greater part of metallic mines, therefore, varies, perhaps, still more from

year to year than that of the greater part of corn fields, those variations

have not the same effect upon the price of the one species of commodities as

upon that of the other.

 

Variations in the Proportion between the respective Values of Gold and

Silver.

 

Before