part of a man's wants which the produce of told, for a workman to carry nails instead of his own labour can supply. He supplies the money to the baker's shop or the ale-house. far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes, in some measure, a merchant, and the society itself grows to be what is properly a commercial society.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can But when the division of labour first began easily be re-united again; a quality which no to take place, this power of exchanging must other equally durable commodities possess, and frequently have been very much clogged and which, more than any other quality, renders embarrassed in its operations. One man, we them fit to be the instruments of commerce shall suppose, has more of a certain commo- and circulation. The man who wanted to buy dity than he himself has occasion for, while salt, for example, and had nothing but cattle another has less. The former, consequently, to give in exchange for it, must have been obwould be glad to dispose of, and the latter to liged to buy salt to the value of a whole ox, purchase, a part of this superfluity. But if or a whole sheep, at a time. He could selthis latter should chance to have nothing that dom buy less than this, because what he was the former stands in need of, no exchange can to give for it could seldom be divided without be made between them. The butcher has loss; and if he had a mind to buy more, he more meat in his shop than he himself can must, for the same reasons, have been obliged consume, and the brewer and the baker would to buy double or triple the quantity, the vaeach of them be willing to purchase a part of lue, to wit, of two or three oxen, or of two or it. But they have nothing to offer in ex-three sheep. If, on the contrary, instead of change, except the different productions of sheep or oxen, he had metals to give in extheir respective trades, and the butcher is al-change for it, he could easily proportion the ready provided with all the bread and beer quantity of the metal to the precise quantity which he has immediate occasion for. No ex- of the commodity which he had immediate occhange can, in this case, be made between casion for. them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have en- Those metals seem originally to have been deavoured to manage his affairs in such a made use of for this purpose in rude bars, manner, as to have at all times by him, be-without any stamp or coinage. Thus we are sides the peculiar produce of his own indus- told by Pliny, upon the authority of Timetry, a certain quantity of some one commodity us, an ancient historian, that, till the time of or other, such as he imagined few people Servius Tullius, the Romans had no coined would be likely to refuse in exchange for the money, but made use of unstamped bars of produce of their industry. Many different copper, to purchase whatever they had occacommodities, it is probable, were successively sion for. These rude bars, therefore, perboth thought of and employed for this pur- formed at this time the function of money. pose. In the rude ages of society, cattle are The use of metals in this rude state was atsaid to have been the common instrument of tended with two very considerable inconvenicommerce; and, though they must have been ences; first, with the trouble of weighing, and a most inconvenient one, yet, in old times, we secondly, with that of assaying them. In the find things were frequently valued according precious metals, where a small difference in to the number of cattle which had been given the quantity makes a great difference in the in exchange for them. The armour of Dio-value, even the business of weighing, with mede, says Homer, cost only nine oxen; but proper exactness, requires at least very accuthat of Glaucus cost a hundred oxen. Salt rate weights and scales. The weighing of is said to be the common instrument of com- gold, in particular, is an operation of some mirce and exchanges in Abyssinia; a species nicety In the coarser metals, indeed, where of shells in some parts of the coast of India; a small error would be of little consequence, dried cod at Newfoundland; tobacco in Vir-less accuracy would, no doubt, be necessary. ginia; sugar in some of our West India colo- Yet we should find it excessively troublesome nies; hides or dressed leather in some other if every time a poor man had occasion either countries; and there is at this day a village

in Scotland, where it is not uncommon, I am

Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the ancient Spartans, copper among the anci ent Romans, and gold and silver among all rich and commercial nations.

Plin. Hist. Nat. lib. 35, cap. 3.

certain not only the fineness, but the weight of the metal. Such coins, therefore, were received by tale, as at present, without the trouble of weighing.

than the Troyes pound. This last was not introduced into the mint of England till the 18th of Henry the VIII. The French livre contained, in the time of Charlemagne, a pound, Troyes weight, of silver of a known fineness.

The fair of Troyes in Champaign

to buy or sell a farthing's worth of goods, he was obliged to weigh the farthing. The operation of assaying is still more difficult, still more tedious; and, unless a part of the metal is fairly melted in the crucible, with proper dis- The denominations of those coins seem orisolvents, any conclusion that can be drawn ginally to have expressed the weight or quan. from it is extremely uncertain. Before the tity of metal contained in them. In the time institution of coined money, however, unless of Servius Tullius, who first coined money at they went through this tedious and difficult Rome, the Roman as or pondo contained a operation, people must always have been liable Roman pound of good copper. It was dito the grossest frauds and impositions; and vided, in the same manner as our Troyes instead of a pound weight of pure silver, or pound, into twelve ounces, each of which pure copper, might receive, in exchange for contained a real ounce of good copper. The their goods, an adulterated composition of the English pound sterling, in the time of Edcoarsest and cheapest materials, which had, ward I. contained a pound, Tower weight, of however, in their outward appearance, been silver of a known fineness. The Tower made to resemble those metals. To prevent pound seems to have been something more such abuses, to facilitate exchanges, and there- than the Roman pound, and something less by to encourage all sorts of industry and commerce, it has been found necessary, in all countries that have made any considerable advances towards improvement, to affix a public stamp upon certain quantities of such particular metals, as were in those countries commonly made use of to purchase goods. Hence was at that time frequented by all the nations the origin of coined money, and of those pub- of Europe, and the weights and measures of lic offices called mints; institutions exactly so famous a market were generally known of the same nature with those of the aulnagers and esteemed. The Scots money pound conand stamp-masters of woollen and linen cloth. tained, from the time of Alexander the First All of them are equally meant to ascertain, to that of Robert Bruce, a pound of silver of by means of a public stamp, the quantity and the same weight and fineness with the Enguniform goodness of those different commo-lish pound sterling. English, French, and dities when brought to market. Scots pennies, too, contained all of them oriThe first public stamps of this kind that ginally a real penny-weight of silver, the were affixed to the current metals, seem in twentieth part of an ounce, and the two many cases to have been intended to ascertain, hundred-and-fortieth part of a pound. The what it was both most difficult and most im- shilling, too, seems originally to have been portant to ascertain, the goodness or fineness the denomination of a weight. When wheat of the metal, and to have resembled the ster-is at twelve shillings the quarter, says an ancient ling mark which is at present affixed to plate statute of Henry III. then wastel bread of a and bars of silver, or the Spanish mark which furthing shall weigh eleven shillings and fouris sometimes affixed to ingots of gold, and pence. The proportion, however, between which, being struck only upon one side of the the shilling, and either the penny on the one piece, and not covering the whole surface, as-hand, or the pound on the other, seems not to certains the fineness, but not the weight of have been so constant and uniform as that bethe metal. Abraham weighs to Ephron the tween the penny and the pound. During four hundred shekels of silver which he had the first race of the kings of France, the agreed to pay for the field of Machpelah. French sou or shilling appears upon different They are said, however, to be the current occasions to have contained tive, twelve, money of the merchant, and yet are received twenty, and forty pennies. Among the anby weight, and not by tale, in the same man- cient Saxons, a shilling appears at one time ner as ingots of gold and bars of silver are at to have contained only five pennies, and it is present. The revenues of the ancient Saxon not improbable that it may have been as varikings of England are said to have been paid, able among them as among their neighbours, not in money, but in kind, that is, in victuals the ancient Franks. From the time of Charand provisions of all sorts. William the Con- lemagne among the French, and from that of queror introduced the custom of paying them William the Conqueror among the English, in money. This money, however, was for a the proportion between the pound, the shilllong time, received at the exchequer, by ing, and the penny, seems to have been uniweight, and not by tale. formly the same as at present, though the The inconveniency and difficulty of weigh-value of each has been very different; for in ing those metals with exactness, gave occasion every country of the world, I believe, the avato the institution of coins, of which the stamp, rice and injustice of princes and sovereign covering entirely both sides of the piece, and states, abusing the confidence of their subjects, sometimes the edges too, was supposed to as- have by degrees diminished the real quantity

of metal, which had been originally contained Secondly, what are the different parts of in their coins. The Roman as, in the latter which this real price is composed or made up. ages of the republic, was reduced to the And, lastly, what are the different circumtwenty-fourth part of its original value, and, stances which sometimes raise some or all of instead of weighing a pound, came to weigh these different parts of price above, and someonly half an ounce. The English pound and times sink them below, their natural or ordipenny contain at present about a third only; nary rate; or, what are the causes which the Scots pound and penny about a thirty- sometimes hinder the market price, that is, sixth; and the French pound and penny about the actual price of commodities, from coina sixty-sixth part of their original value. By ciding exactly with what may be called their means of those operations, the princes and so- natural price. vereign states which performed them were I shall endeavour to explain, as fully and enabled, in appearance, to pay their debts and distinctly as I can, those three subjects in the fulfil their engagements with a smaller quan- three following chapters, for which I must tity of silver than would otherwise have been very earnestly entreat both the patience and requisite. It was indeed in appearance only; attention of the reader: his patience, in order for their creditors were really defrauded of a to examine a detail which may, perhaps, in part of what was due to them. All other some places, appear unnecessarily tedious; debtors in the state were allowed the same and his attention, in order to understand privilege, and might pay with the same no- what may perhaps, after the fullest explication minal sum of the new and debased coin what- which I am capable of giving it, appear still ever they had borrowed in the old. Such in some degree obscure. I am always willoperations, therefore, have always proved fa- ing to run some hazard of being tedious, in vourable to the debtor, and ruinous to the order to be sure that I am perspicuous; and, creditor, and have sometimes produced a after taking the utmost pains that I can to be greater and more universal revolution in the perspicuous, some obscurity may still appear fortunes of private persons, than could have to remain upon a subject, in its own nature been occasioned by a very great public cala- extremely abstracted.

mity.

It is in this manner that money has become, in all civilized nations, the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another.

What are the rules which men naturally observe, in exchanging them either for money, or for one another, I shall now proceed to examine. These rules determine what may be called the relative or exchangeable value of goods.

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object con

veys.

CHAP. V.

OF THE REAL AND NOMINAL PRICE OF COMMO-
DITIES, OR OF THEIR PRICE IN LABOUR, AND
THEIR PRICE IN MONEY.

EVERY man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's The one may be called 'value in use;' own labour can supply him. The far greater the other, 'value in exchange.' The things part of them he must derive from the labour which have the greatest value in use have fre- of other people, and he must be rich or poor quently little or no value in exchange; and, according to the quantity of that labour on the contrary, those which have the great-which he can command, or which he can afest value in exchange have frequently little or ford to purchase. The value of any commono value in use. Nothing is more useful dity, therefore, to the person who possesses it, than water; but it will purchase scarce any and who means not to use or consume it himthing; scarce any thing can be had in ex-self, but to exchange it for other commodities, change for it. A diamond, on the contrary, is equal to the quantity of labour which it enhas scarce any value in use; but a very great ables him to purchase or command. Labour, quantity of other goods may frequently be had therefore, is the real measure of the exchangein exchange for it. able value of all commodities.

In order to investigate the principles which regulate the exchangeable value of commodities, I shall endeavour to shew,

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring

First, what is the real measure of this ex-it. changeable value; or wherein consists the real price of all commodities.

What every thing is really worth to the man who has acquired it and who wants to dispose of it, or exchange it for something

Every commodity, besides, is more frequently exchanged for, and thereby compared with, other commodities, than with labour. It is more natural, therefore, to estimate its exchangeable value by the quantity of some other commodity, than by that of the labour which it can produce. The greater part of people, too, understand better what is meant by a quantity of a particular commodity, than by a quantity of labour. The one is a plain palp

else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money, or with goods, is purchased by labour, as much as what we acquire by the toil of our own body. That money, or those goods, indeed, save us this toil. They contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-able object; the other an abstract notion, which, money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally pur- But when barter ceases, and money has be chased; and its value, to those who possess it, come the common instrument of commerce, and who want to exchange it for some new every particular commodity is more frequently productions, is precisely equal to the quantity exchanged for money than for any other comof labour which it can enable them to pur-modity. The butcher seldom carries his beef chase or command.

though it can be made sufficiently intelligible, is not altogether so natural and obvious.

or his mutton to the baker or the brewer, in Wealth, as Mr Hobbes says, is power. But order to exchange them for bread or for beer; the person who either acquires, or succeeds to but he carries them to the market, where he a great fortune, does not necessarily acquire exchanges them for money, and afterwards exor succeed to any political power, either civil changes that money for bread and for beer. or military. His fortune may, perhaps, afford The quantity of money which he gets for them him the means of acquiring both; but the regulates, too, the quantity of bread and beer mere possession of that fortune does not ne- which he can afterwards purchase. It is more cessarily convey to him either. The power natural and obvious to him, therefore, to estiwhich that possession immediately and direct-mate their value by the quantity of money, ly conveys to him, is the power of purchasing the commodity for which he immediately exa certain command over all the labour, or over changes them, than by that of bread and beer, all the produce of labour which is then in the the commodities for which he can exchange market. His fortune is greater or less, pre- them only by the intervention of another comcisely in proportion to the extent of this power, modity; and rather to say that his butcher's or to the quantity either of other men's labour, meat is worth threepence or fourpence a-pound, or, what is the same thing, of the produce of than that it is worth three or four pounds of other men's labour, which it enables him to bread, or three or four quarts of small beer. purchase or command. The exchangeable va. Hence it comes to pass, that the exchangeable lue of every thing must always be precisely value of every commodity is more frequently equal to the extent of this power which it con-estimated by the quantity of money, than by veys to its owner. the quantity either of labour or of any other commodity which can be had in exchange for it.

Gold and silver, however, like every other commodity, vary in their value; are sometimes cheaper and sometimes dearer, sometimes of easier and sometimes of more difficult purchase. The quantity of labour which any particular quantity of them can purchase or command, or the quantity of other goods which it will exchange for, depends always upon the fertility or barrenness of the mines which happen to be known about the time when such exchanges are made. The discovery of the abundant mines of America, reduced, in the sixteenth century, the value of gold and silver in Europe to about a third of what it had been before. As it cost less labour to bring those metals from the mine to the market, so, when they were brought thither, they could purchase or command less labour; and this

But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated. It is often difficult to ascertain the proportion between two different quantities of labour. The time spent in two different sorts of work will not always alone determine this proportion. The different degrees of hardship endured, and of ingenuity exercised, must likewise be taken into account. There may be more labour in an hour's hard work, than in two hours easy business; or in an hour's application to a trade which it cost ten years labour to learn, than in a month's industry, at an ordinary and obvious employment. But it is not easy to find any accurate measure either of hardship or ingenuity. In exchanging, indeed, the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate mea-revolution in their value, though perhaps the sure, but by the higgling and bargaining of the market, according to that sort of rough equality which, though not exact, is sufficient for carrying on the business of common life.

greatest, is by no means the only one of which history gives some account. But as a measure of quantity, such as the natural foot, fathom, or handful, which is continually vary

ing in its own quantity, can never be an ac- arise from the different quantities of gold and curate measure of the quantity of other things; silver which are contained at different times so a commodity which is itself continually va- in coin of the same denomination; and, serying in its own value, can never be an accu- condly, to those which arise from the different rate measure of the value of other commodi- values of equal quantities of gold and silver ties. Equal quantities of labour, at all times at different times. and places, may be said to be of equal value Princes and sovereign states have frequentto the labourer. In his ordinary state of ly fancied that they had a temporary interest health, strength, and spirits; in the ordinary to diminish the quantity of pure metal condegree of his skill and dexterity, he must al-tained in their coins; but they seldom have ways lay down the same portion of his ease, fancied that they had any to augment it. The his liberty, and his happiness. The price which quantity of metal contained in the coins, I he pays must always be the same, whatever believe of all nations, has accordingly been may be the quantity of goods which he re-almost continually diminishing, and hardly ceives in return for it. Of these, indeed, it ever augmenting. Such variations, therefore, may sometimes purchase a greater and some-tend almost always to diminish the value of a times a smaller quantity; but it is their value money rent. which varies, not that of the labour which pur- The discovery of the mines of America dichases them. At all times and places, that is minished the value of gold and silver in Eudear which it is difficult to come at, or which rope. This diminution, it is commonly supit costs much labour to acquire; and that posed, though I apprehend without any cercheap which is to be had easily, or with very tain proof, is still going on gradually, and is little labour. Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price; money is their nominal price only.

likely to continue to do so for a long time. Upon this supposition, therefore, such vari ations are more likely to diminish than to augment the value of a money rent, even though it should be stipulated to be paid, not in such a quantity of coined money of such a But though equal quantities of labour are denomination (in so many pounds sterling, always of equal value to the labourer, yet to for example), but in so many ounces, either the person who employs him they appear some- of pure silver, or of silver of a certain standtimes to be of greater, and sometimes of small-ard.

er value. He purchases them sometimes with The rents which have been reserved in a greater, and sometimes with a smaller quan-corn, have preserved their value much better tity of goods, and to him the price of labour than those which have been reserved in money, seems to vary like that of all other things. It even where the denomination of the coin has appears to him dear in the one case, and cheap in the other. In reality, however, it is the goods which are cheap in the one case, and dear in the other.

In this popular sense, therefore, labour, like commodities, may be said to have a real and a nominal price... Its real price may be said to consist in the quantity of the necessaries and conveniencies of life which are given for it; its nominal price, in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to the real, not to the nominal price of his labour.

not been altered. By the 18th of Elizabeth, it was enacted, that a third of the rent of all college leases should be reserved in corn, to be paid either in kind, or according to the current prices at the nearest public market The money arising from this corn rent, though originally but a third of the whole, is, in the present times, according to Dr. Blackstone, commonly near double of what arises from the other two-thirds. The old money rents of colleges must, according to this account, have sunk almost to a fourth part of their ancient value, or are worth little more than a fourth part of the corn which they were formerly worth. But since the reign of Philip and Mary, the denomination of the English coin has undergone little or no alteration, and the same number of pounds, shillings, and pence, have contained very nearly the same quantity of pure silver. This degradation, therefore, in the value of the money rents of colleges, has arisen altogether from the degradation in the price of silver.

The distinction between the real and the nominal price of commodities and labour is not a matter of mere speculation, but may sometimes be of considerable use in practice. The same real price is always of the same vabie; but on account of the variations in the value of gold and silver, the same nominal price is sometimes of very different values. When a landed estate, therefore, is sold with a reservation of a perpetual rent, if it is intended that this rent should always be of the When the degradation in the value of silver same value, it is of importance to the family is combined with the diminution of the quanin whose favour it is reserved, that it should tity of it contained in the coin of the same not consist in a particular sum of money. Its denomination, the loss is frequently still greatvalue would in this case be liable to variations er. In Scotland, where the denomination of of two different kinds: first, to those which the coin has undergone much greater alter