An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

a silver one. Their principal

merit, however, arises from their beauty, which renders them peculiarly fit

for the ornaments of dress and furniture. No paint or dye can give so

splendid a colour as gilding. The merit of their beauty is greatly enhanced

by their scarcity. With the greater part of rich people, the chief enjoyment

of riches consists in the parade of riches ; which, in their eye, is never

so complete as when they appear to possess those decisive marks of opulence

which nobody can possess but themselves. In their eyes, the merit of an

object, which is in any degree either useful or beautiful, is greatly

enhanced by its scarcity, or by the great labour which it requires to

collect any considerable quantity of it; a labour which nobody can afford to

pay but themselves. Such objects they are willing to purchase at a higher

price than things much more beautiful and useful, but more common. These

qualities of utility, beauty, and scarcity, are the original foundation of

the high price of those metals, or of the great quantity of other goods for

which they can everywhere be exchanged. This value was antecedent to,

and independent of their being employed as coin, and was the quality which

fitted them for that employment. That employment, however, by occasioning a

new demand, and by diminishing the quantity which could be employed in any

other way, may have afterwards contributed to keep up or increase their

value.

 

The demand for the precious stones arises altogether from their beauty. They

are of no use but as ornaments ; and the merit of their beauty is greatly

enhanced by their scarcity, or by the difficulty and expense of getting them

from the mine. Wages and profit accordingly make up, upon most occasions,

almost the whole of the high price. Rent comes in but for a very small

share, frequently for no share ; and the most fertile mines only afford any

considerable rent. When Tavernier, a jeweller, visited the diamond mines of

Golconda and Visiapour, he was informed that the sovereign of the country,

for whose benefit they were wrought, had ordered all of them to be shut up

except those which yielded the largest and finest stones. The other, it

seems, were to the proprietor not worth the working.

 

As the prices, both of the precious metals and of the precious stones, is

regulated all over the world by their price at the most fertile mine in it,

the rent which a mine of either can afford to its proprietor is in

proportion, not to its absolute, but to what may be called its relative

fertility, or to its superiority over other mines of the same kind. If new

mines were discovered, as much superior to those of Potosi, as they were

superior to those of Europe, the value of silver might be so much degraded

as to render even the mines of Potosi not worth the working. Before the

discovery of the Spanish West Indies, the most fertile mines in Europe may

have afforded as great a rent to their proprietors as the richest mines in

Peru do at present. Though the quantity of silver was much less, it might

have exchanged for an equal quantity of other goods, and the proprietor’s

share might have enabled him to purchase or command an equal quantity either

of labour or of commodities.

 

The value, both of the produce and of the rent, the real revenue which they

afforded, both to the public and to the proprietor, might have been the

same.

 

The most abundant mines, either of the precious metals, or of the precious

stones, could add little to the wealth of the world. A produce, of which the

value is principally derived from its scarcity, is necessarily degraded by

its abundance. A service of plate, and the other frivolous ornaments of

dress and furniture, could be purchased for a smaller quantity of

commodities ; and in this would consist the sole advantage which the world

could derive from that abundance.

 

It is otherwise in estates above ground. The value, both of their produce

and of their rent, is in proportion to their absolute, and not to their

relative fertility. The land which produces a certain quantity of food,

clothes, and lodging, can always feed, clothe, and lodge, a certain number

of people ; and whatever may be the proportion of the landlord, it will

always give him a proportionable command of the labour of those people, and

of the commodities with which that labour can supply him. The value of the

most barren land is not diminished by the neighbourhood of the most fertile.

On the contrary, it is generally increased by it. The great number of people

maintained by the fertile lands afford a market to many parts of the produce

of the barren, which they could never have found among those whom their own

produce could maintain.

 

Whatever increases the fertility of land in producing food, increases not

only the value of the lands upon which the improvement is bestowed, but

contributes likewise to increase that of many other lands, by creating a new

demand for their produce. That abundance of food, of which, in consequence

of the improvement of land, many people have the disposal beyond what they

themselves can consume, is the great cause of the demand, both for the

precious metals and the precious stones, as well as for every other

conveniency and ornament of dress, lodging, household furniture, and

equipage. Food not only constitutes the principal part of the riches of the

world, but it is the abundance of food which gives the principal part of

their value to many other sorts of riches. The poor inhabitants of Cuba and

St. Domingo, when they were first discovered by the Spaniards, used to wear

little bits of gold as ornaments in their hair and other parts of their

dress. They seemed to value them as we would do any little pebbles of

somewhat more than ordinary beauty, and to consider them as just worth the

picking up, but not worth the refusing to any body who asked them, They gave

them to their new guests at the first request, without seeming to think that

they had made them any very valuable present. They were astonished to

observe the rage of the Spaniards to obtain them; and had no notion that

there could anywhere be a country in which many people had the disposal of

so great a superfluity of food; so scanty always among themselves, that, for

a very small quantity of those glittering baubles, they would willingly give

as much as might maintain a whole family for many years. Could they have

been made to understand this, the passion of the Spaniards would not have

surprised them.

 

PART III. � Of the variations in the Proportion between the respective

Values of that sort of Produce which always affords Rent, and of that which

sometimes does, and sometimes does not, afford Rent.

 

The increasing abundance of food, in consequence of the increasing

improvement and cultivation, must necessarily increase the demand for every

part of the produce of land which is not food, and which can be applied

either to use or to ornament. In the whole progress of improvement, it

might, therefore, be expected there should be only one variation in the

comparative values of those two different sorts of produce. The value of

that sort which sometimes does, and sometimes does not afford rent, should

constantly rise in proportion to that which always affords some rent. As art

and industry advance, the materials of clothing and lodging, the useful

fossils and materials of the earth, the precious metals and the precious

stones, should gradually come to be more and more in demand, should

gradually exchange for a greater and a greater quantity of food ; or, in

other words, should gradually become dearer and dearer. This, accordingly,

has been the case with most of these things upon most occasions, and would

have been the case with all of them upon all occasions, if particular

accidents had not, upon some occasions, increased the supply of some of them

in a still greater proportion than the demand.

 

The value of a free-stone quarry, for example, will necessarily increase

with the increasing improvement and population of the country round about

it, especially if it should be the only one in the neighbourhood. But the

value of a silver mine, even though there should not be another within a

thousand miles of it, will not necessarily increase with the improvement of

the country in which it is situated. The market for the produce of a

free-stone quarry can seldom extend more than a few miles round about it,

and the demand must generally be in proportion to the improvement and

population of that small district ; but the market for the produce of a silver

mine may extend over the whole known world. Unless the world in general.

therefore, be advancing in improvement and population, the demand for silver

might not be at all increased by the improvement even of a large country in

the neighbourhood of the mine. Even though the world in general were

improving, yet if, in the course of its improvements, new mines should be

discovered, much more fertile than any which had been known before, though

the demand for silver would necessarily increase, yet the supply might

increase in so much a greater proportion, that the real price of that metal

might gradually fall; that is, any given quantity, a pound weight of it, for

example, might gradually purchase or command a smaller and a smaller

quantity of labour, or exchange for a smaller and a smaller quantity of

corn, the principal part of the subsistence of the labourer.

 

The great market for silver is the commercial and civilized part of the

world.

 

If, by the general progress of improvement, the demand of this market should

increase, while, at the same time, the supply did not increase in the same

proportion, the value of silver would gradually rise in proportion to that

of corn. Any given quantity of silver would exchange for a greater and a

greater quantity of corn ; or, in other words, the average money price of

corn would gradually become cheaper and cheaper.

 

If, on the contrary, the supply, by some accident, should increase, for many

years together, in a greater proportion than the demand, that metal would

gradually become cheaper and cheaper; or, in other words, the average money

price of corn would, in spite of all improvements, gradually become dearer

and dearer.

 

But if, on the other hand, the supply of that metal should increase nearly

in the same proportion as the demand, it would continue to purchase or

exchange for nearly the same quantity of corn ; and the average money price

of corn would, in spite of all improvements. continue very nearly the same.

 

These three seem to exhaust all the possible combinations of events which

can happen in the progress of improvement; and during the course of the four

centuries preceding the present, if we may judge by what has happened both

in France and Great Britain, each of those three different combinations

seems to have taken place in the European market, and nearly in the same

order, too, in which I have here set them down.

 

Digression concerning the Variations in the value of Silver during the

Course of the Four last Centuries.

 

First Period. � In 1350, and for some time before, the average price of the

quarter of wheat in England seems not to have been estimated lower than four

ounces of silver, Tower weight, equal to about twenty shillings of our

present money. From this price it seems to have fallen gradually to two

ounces