An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader macos .TXT) 📕

at which late it still continues. In the greater part of the silver mines of

Peru, this, it seems, is all that remains, after replacing the stock of the

undertaker of the work, together with its ordinary profits ; and it seems to

be universally acknowledged that these profits, which were once very high,

are now as low as they can well be, consistently with carrying on the works.

The tax of the king of Spain was reduced to a fifth of the registered silver

in 1504 {Solorzano, vol, ii.}, one-and-forty years before 1545, the date of

the discovery of the mines of Potosi. In the course of ninety years, or

before 1636, these mines, the most fertile in all America, had time

sufficient to produce their full effect, or to reduce the value of silver in

the European market as low as it could well fall, while it continued to pay

this tax to the king of Spain. Ninety years is time sufficient to reduce any

commodity, of which there is no monopoly, to its natural price, or to the

lowest price at which, while it pays a particular tax, it can continue to be

sold for any considerable time together.

The price of silver in the European market might, perhaps, have fallen still

lower, and it might have become necessary either to reduce the tax upon it,

not only to one-tenth, as in 1736, but to one twentieth, in the same manner

as that upon gold, or to give up working the greater part of the American

mines which are now wrought. The gradual increase of the demand for silver,

or the gradual enlargement of the market for the produce of the silver mines

of America, is probably the cause which has prevented this from happening,

and which has not only kept up the value of silver in the European market,

but has perhaps even raised it somewhat higher than it was about the middle

of the last century.

Since the first discovery of America, the market for the produce of its

silver mines has been growing gradually more and more extensive.

First, the market of Europe has become gradually more and more extensive.

Since the discovery of America, the greater part of Europe has been much

improved. England, Holland, France, and Germany; even Sweden, Denmark, and

Russia, have all advanced considerably, both in agriculture and in

manufactures. Italy seems not to have gone backwards. The fall of Italy

preceded the conquest of Peru. Since that time it seems rather to have

recovered a little. Spain and Portugal, indeed, are supposed to have gone

backwards. Portugal, however, is but a very small part of Europe, and the

declension of Spain is not, perhaps, so great as is commonly imagined. In the

beginning of the sixteenth century, Spain was a very poor country, even in

comparison with France, which has been so much improved since that time. It

was the well known remark of the emperor Charles V. who had travelled so

frequently through both countries, that every thing abounded in France, but

that every thing was wanting in Spain. The increasing produce of the

agriculture and manufactures of Europe must necessarily have required a

gradual increase in the quantity of silver coin to circulate it ; and the

increasing number of wealthy individuals must have required the like

increase in the quantity of their plate and other ornaments of silver.

Secondly, America is itself a new market, for the produce of its own silver

mines; and as its advances in agriculture, industry, and population, are

much more rapid than those of the most thriving countries in Europe, its

demand must increase much more rapidly. The English colonies are altogether

a new market, which, partly for coin, and partly for plate, requires a

continual augmenting supply of silver through a great continent where there

never was any demand before. The greater part, too, of the Spanish and

Portuguese colonies, are altogether new markets. New Granada, the Yucatan,

Paraguay, and the Brazils, were, before discovered by the Europeans,

inhabited by savage nations, who had neither arts nor agriculture. A

considerable degree of both has now been introduced into all of them. Even

Mexico and Peru, though they cannot be considered as altogether new markets,

are certainly much more extensive ones than they ever were before. After all

the wonderful tales which have been published concerning the splendid state

of those countries in ancient times, whoever reads, with any degree of sober

judgment, the history of their first discovery and conquest, will evidently

discern that, in arts, agriculture, and commerce, their inhabitants were

much more ignorant than the Tartars of the Ukraine are at present. Even the

Peruvians, the more civilized nation of the two, though they made use of

gold and silver as ornaments, had no coined money of any kind. Their whole

commerce was carried on by barter, and there was accordingly scarce any

division of labour among them. Those who cultivated the ground, were obliged

to build their own houses, to make their own household furniture, their own

clothes, shoes, and instruments of agriculture. The few artificers among

them are said to have been all maintained by the sovereign, the nobles, and

the priests, and were probably their servants or slaves. All the ancient

arts of Mexico and Peru have never furnished one single manufacture to

Europe. The Spanish armies, though they scarce ever exceeded five hundred

men, and frequently did not amount to half that number, found almost

everywhere great difficulty in procuring subsistence. The famines which they

are said to have occasioned almost wherever they went, in countries, too,

which at the same time are represented as very populous and well cultivated,

sufficiently demonstrate that the story of this populousness and high

cultivation is in a great measure fabulous. The Spanish colonies are under a

government in many respects less favourable to agriculture, improvement, and

population, than that of the English colonies. They seem, however, to be

advancing in all those much more rapidly than any country in Europe. In a

fertile soil and happy climate, the great abundance and cheapness of land, a

circumstance common to all new colonies, is, it seems, so great an

advantage, as to compensate many defects in civil government. Frezier, who

visited Peru in 1713, represents Lima as containing between twentyfive and

twenty-eight thousand inhabitants. Ulloa, who resided in the same country

between 1740 and 1746, represents it as containing more than fifty thousand.

The difference in their accounts of the populousness of several other

principal towns of Chili and Peru is nearly the same ; and as there seems to

be no reason to doubt of the good information of either, it marks an

increase which is scarce inferior to that of the English colonies. America,

therefore, is a new market for the produce of its own silver mines, of which

the demand must increase much more rapidly than that of the most thriving

country in Europe.

Thirdly, the East Indies is another market for the produce of the silver

mines of America, and a market which, from the time of the first discovery

of those mines, has been continually taking off a greater and a greater

quantity of silver. Since that time, the direct trade between America and

the East Indies, which is carried on by means of the Acapulco ships, has

been continually augmenting, and the indirect intercourse by the way of

Europe has been augmenting in a still greater proportion. During the

sixteenth century, the Portuguese were the only European nation who carried

on any regular trade to the East Indies. In the last years of that century,

the Dutch began to encroach upon this monopoly, and in a few years expelled

them from their principal settlements in India. During the greater part of

the last century, those two nations divided the most considerable part of

the East India trade between them; the trade of the Dutch continually

augmenting in a still greater proportion than that of the Portuguese

declined. The English and French carried on some trade with India in the

last century, but it has been greatly augmented in the course of the

present. The East India trade of the Swedes and Danes began in the course of

the present century. Even the Muscovites now trade regularly with China, by

a sort of caravans which go over land through Siberia and Tartary to Pekin.

The East India trade of all these nations, if we except that of the French,

which the last war had well nigh annihilated, has been almost continually

augmenting. The increasing consumptions of East India goods in Europe is, it

seems, so great, as to afford a gradual increase of employment to them all.

Tea, for example, was a drug very little used in Europe, before the middle

of the last century. At present, the value of the tea annually imported by

the English East India company, for the use of their own countrymen, amounts

to more than a million and a half a year; and even this is not enough; a

great deal more being constantly smuggled into the country from the ports of

Holland, from Gottenburgh in Sweden, and from the coast of France, too, as

long as the French East India company was in prosperity. The consumption of

the porcelain of China, of the spiceries of the Moluccas, of the piece goods

of Bengal, and of innumerable other articles, has increased very nearly in a

like proportion. The tonnage, accordingly, of all the European shipping

employed in the East India trade, at any one time during the last century,

was not, perhaps, much greater than that of the English East India company

before the late reduction of their shipping.

But in the East Indies, particularly in China and Indostan, the value of the

precious metals, when the Europeans first began to trade to those countries,

was much higher than in Europe; and it still continues to be so. In rice

countries, which generally yield two, sometimes three crops in the year,

each of them more plentiful than any common crop of corn, the abundance of

food must be much greater than in any corn country of equal extent. Such

countries are accordingly much more populous. In them, too, the rich, having

a greater superabundance of food to dispose of beyond what they themselves

can consume, have the means of purchasing a much greater quantity of the

labour of other people. The retinue of a grandee in China or Indostan

accordingly is, by all accounts, much more numerous and splendid than that

of the richest subjects in Europe. The same superabundance of food, of which

they have the disposal, enables them to give a greater quantity of it for

all those singular and rare productions which nature furnishes but in very

small quantities; such as the precious metals and the precious stones, the

great objects of the competition of the rich. Though the mines, therefore,

which supplied the Indian market, had been as abundant as those which

supplied the European, such commodities would naturally exchange for a

greater quantity of food in India than in Europe. But the mines which

supplied the Indian market with the precious metals seem to have been a good

deal less abundant, and those which supplied it with the precious stones a

good deal more so, than the mines which supplied the European. The precious

metals, therefore, would naturally exchange in India for a somewhat greater

quantity of the precious stones, and for a much greater quantity of food

than in Europe. The money price of diamonds, the greatest of all

superfluities, would be somewhat lower, and that of food, the first of all

necessaries, a great deal lower in the one country than in the other. But

the real price of labour, the real quantity of the