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

plate would be the sole advantage which the world could derive from the one

event; and the dearness and scarcity of those trifling superfluities, the

only inconveniency it could suffer from the other.

Conclusion of the Digression concerning the Variations in the Value of

Silver.

The greater part of the writers who have collected the money price of things

in ancient times, seem to have considered the low money price of corn, and

of goods in general, or, in other words, the high value of gold and silver,

as a proof, not only of the scarcity of those metals, but of the poverty and

barbarism of the country at the time when it took place. This notion is

connected with the system of political economy, which represents national

wealth as consisting in the abundance and national poverty in the scarcity,

of gold and silver ; a system which I shall endeavour to explain and examine

at great length in the fourth book of this Inquiry. I shall only observe at

present, that the high value of the precious metals can be no proof of the

poverty or barbarism of any particular country at the time when it took

place. It is a proof only of the barrenness of the mines which happened at

that time to supply the commercial world. A poor country, as it cannot

afford to buy more, so it can as little afford to pay dearer for gold and

silver than a rich one ; and the value of those metals, therefore, is not

likely to be higher in the former than in the latter. In China, a country

much richer than any part of Europe, the value of the precious metals is

much higher than in any part of Europe. As the wealth of Europe, indeed, has

increased greatly since the discovery of the mines of America, so the value

of gold and silver has gradually diminished. This diminution of their

value, however, has not been owing to the increase of the real wealth of

Europe, of the annual produce of its land and labour, but to the accidental

discovery of more abundant mines than any that were known before. The

increase of the quantity of gold and silver in Europe, and the increase of

its manufactures and agriculture, are two events which, though they have

happened nearly about the same time, yet have arisen from very different

causes, and have scarce any natural connection with one another. The one has

arisen from a mere accident, in which neither prudence nor policy either had

or could have any share; the other, from the fall of the feudal system, and

from the establishment of a government which afforded to industry the only

encouragement which it requires, some tolerable security that it shall enjoy

the fruits of its own labour. Poland, where the feudal system still

continues to take place, is at this day as beggarly a country as it was

before the discovery of America. The money price of corn, however, has risen

; the real value of the precious metals has fallen in Poland, in the same

manner as in other parts of Europe. Their quantity, therefore, must have

increased there as in other places, and nearly in the same proportion to the

annual produce of its land and labour. This increase of the quantity of

those metals, however, has not, it seems, increased that annual produce, has

neither improved the manufactures and agriculture of the country, nor mended

the circumstances of its inhabitants. Spain and Portugal, the countries

which possess the mines, are, after Poland, perhaps the two most beggarly

countries in Europe. The value of the precious metals, however, must be

lower in Spain and Portugal than in any other part of Europe, as they come

from those countries to all other parts of Europe, loaded, not only with a

freight and an insurance, but with the expense of smuggling, their

exportation being either prohibited or subjected to a duty. In proportion to

the annual produce of the land and labour, therefore, their quantity must be

greater in those countries than in any other part of Europe; those

countries, however, are poorer than the greater part of Europe. Though the

feudal system has been abolished in Spain and Portugal, it has not been

succeeded by a much better.

As the low value of gold and silver, therefore, is no proof of the wealth

and flourishing state of the country where it takes place ; so neither is

their high value, or the low money price either of goods in general, or of

corn in particular, any proof of its poverty and barbarism.

But though the low money price, either of goods in general, or of corn in

particular, be no proof of the poverty or barbarism of the times, the low

money price of some particular sorts of goods, such as cattle, poultry, game

of all kinds, etc. in proportion to that of corn, is a most decisive one. It

clearly demonstrates, first, their great abundance in proportion to that of

corn, and, consequently, the great extent of the land which they occupied in

proportion to what was occupied by corn ; and, secondly, the low value of

this land in proportion to that of corn land, and, consequently, the

uncultivated and unimproved state of the far greater part of the lands of

the country. It clearly demonstrates, that the stock and population of the

country did not bear the same proportion to the extent of its territory,

which they commonly do in civilized countries ; and that society was at that

time, and in that country, but in its infancy. From the high or low money

price, either of goods in general, or of corn in particular, we can infer

only, that the mines, which at that time happened to supply the commercial

world with gold and silver, were fertile or barren, not that the country was

rich or poor. But from the high or low money price of some sorts of goods in

proportion to that of others, we can infer, with a degree of probability

that approaches almost to certainty, that it was rich or poor, that the

greater part of its lands were improved or unimproved, and that it was

either in a more or less barbarous state, or in a more or less civilized

one.

Any rise in the money price of goods which proceeded altogether from the

degradation of the value of silver, would affect all sorts of goods equally,

and raise their price universally, a third, or a fourth, or a fifth part

higher, according as silver happened to lose a third, or a fourth, or a

fifth part of its former value. But the rise in the price of provisions,

which has been the subject of so much reasoning and conversation, does not

affect all sorts of provisions equally. Taking the course of the present

century at an average, the price of corn, it is acknowledged, even by those

who account for this rise by the degradation of the value of silver, has

risen much less than that of some other sorts of provisions. The rise in the

price of those other sorts of provisions, therefore, cannot be owing

altogether to the degradation of the value of silver. Some other causes must

be taken into the account ; and those which have been above assigned, will,

perhaps, without having recourse to the supposed degradation of the value of

silver, sufficiently explain this rise in those particular sorts of

provisions, of which the price has actually risen in proportion to that of

corn.

As to the price of corn itself, it has, during the sixty-four first years of

the present century, and before the late extraordinary course of bad

seasons, been somewhat lower than it was during the sixty-four last years of

the preceding century. This fact is attested, not only by the accounts of

Windsor market, but by the public fiars of all the different counties of

Scotland, and by the accounts of several different markets in France, which

have been collected with great diligence and fidelity by Mr Messance, and by

Mr Dupr� de St Maur. The evidence is more complete than could well have been

expected in a matter which is naturally so very difficult to be ascertained.

As to the high price of corn during these last ten or twelve years, it can

be sufficiently accounted for from the badness of the seasons, without

supposing any degradation in the value of silver.

The opinion, therefore, that silver is continually sinking in its value,

seems not to be founded upon any good observations, either upon the prices

of corn, or upon those of other provisions.

The same quantity of silver, it may perhaps be said, will, in the present

times, even according to the account which has been here given, purchase a

much smaller quantity of several sorts of provisions than it would have done

during some part of the last century ; and to ascertain whether this change

be owing to a rise in the value of those goods, or to a fall in the value of

silver, is only to establish a vain and useless distinction, which can be of

no sort of service to the man who has only a certain quantity of silver to

go to market with, or a certain fixed revenue in money. I certainly do not

pretend that the knowledge of this distinction will enable him to buy

cheaper. It may not, however, upon that account be altogether useless.

It may be of some use to the public, by affording an easy proof of the

prosperous condition of the country. If the rise in the price of some sorts

of provisions be owing altogether to a fall in the value of silver, it is

owing to a circumstance, from which nothing can be inferred but the

fertility of the American mines. The real wealth of the country, the annual

produce of its land and labour, may, notwithstanding this circumstance, be

either gradually declining, as in Portugal and Poland ; or gradually

advancing, as in most other parts of Europe. But if this rise in the price

of some sorts of provisions be owing to a rise in the real value of the land

which produces them, to its increased fertility, or, in consequence of more

extended improvement and good cultivation, to its having been rendered fit

for producing corn; it is owing to a circumstance which indicates, in the

clearest manner, the prosperous and advancing state of the country. The land

constitutes by far the greatest, the most important, and the most durable

part of the wealth of every extensive country. It may surely be of some use,

or, at least, it may give some satisfaction to the public, to have so

decisive a proof of the increasing value of by far the greatest, the most

important, and the most durable part of its wealth.

It may, too, be of some use to the public, in regulating the pecuniary

reward of some of its inferior servants. If this rise in the price of some

sorts of provisions be owing to a fall in the value of silver, their

pecuniary reward, provided it was not too large before, ought certainly to

be augmented in proportion to the extent of this fall. If it is not

augmented, their real recompence will evidently be so much diminished. But

if this rise of price is owing to the increased value, in consequence of the

improved fertility of the land which produces such provisions, it becomes a

much nicer matter to judge, either in what proportion any pecuniary reward

ought to be augmented, or whether it ought to be augmented at all. The

extension of improvement and cultivation, as it