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

said, it may, perhaps, appear to

many people uncertain, not only whether this event has actually taken place,

but whether the contrary may not have taken place, or whether the value of

silver may not still continue to fall in the European market.

 

It must be observed, however, that whatever may be the supposed annual

importation of gold and silver, there must be a certain period at which the

annual consumption of those metals will be equal to that annual importation.

Their consumption must increase as their mass increases, or rather in a much

greater proportion. As their mass increases, their value diminishes. They

are more used, and less cared for, and their consumption consequently

increases in a greater proportion than their mass. After a certain period,

therefore, the annual consumption of those metals must, in this manner,

become equal to their annual importation, provided that importation is not

continually increasing; which, in the present times, is not supposed to be

the case.

 

If, when the annual consumption has become equal to the annual importation,

the annual importation should gradually diminish, the annual consumption

may, for some time, exceed the annual importation. The mass of those metals

may gradually and insensibly diminish, and their value gradually and

insensibly rise, till the annual importation becoming again stationary, the

annual consumption will gradually and insensibly accommodate itself to what

that annual importation can maintain.

 

Grounds of the suspicion that the Value of Silver still continues to

decrease.

 

The increase of the wealth of Europe, and the popular notion, that as the

quantity of the precious metals naturally increases with the increase of

wealth, so their value diminishes as their quantity increases, may, perhaps,

dispose many people to believe that their value still continues to fall in

the European market; and the still gradually increasing price of many parts

of the rude produce of land may confirm them still farther in this opinion.

 

That that increase in the quantity of the precious metals, which arises in

any country from the increase of wealth, has no tendency to diminish their

value, I have endeavoured to shew already. Gold and silver naturally resort

to a rich country, for the same reason that all sorts of luxuries and

curiosities resort to it ; not because they are cheaper there than in poorer

countries, but because they are dearer, or because a better price is given

for them. It is the superiority of price which attracts them; and as soon as

that superiority ceases, they necessarily cease to go thither.

 

If you except corn, and such other vegetables as are raised altogether by

human industry, that all other sorts of rude produce, cattle, poultry, game

of all kinds, the useful fossils and minerals of the earth, etc. naturally

grow dearer, as the society advances in wealth and improvement, I have

endeavoured to shew already. Though such commodities, therefore, come to

exchange for a greater quantity of silver than before, it will not from

thence follow that silver has become really cheaper, or will purchase less

labour than before ; but that such commodities have become really dearer, or

will purchase more labour than before. It is not their nominal price only,

but their real price, which rises in the progress of improvement. The rise

of their nominal price is the effect, not of any degradation of the value of

silver, but of the rise in their real price.

 

Different Effects of the Progress of Improvement upon three different sorts

of rude Produce.

 

These different sorts of rude produce may be divided into three classes. The

first comprehends those which it is scarce in the power of human industry to

multiply at all. The second, those which it can multiply in proportion to

the demand. The third, those in which the efficacy of industry is either

limited or uncertain. In the progress of wealth and improvement, the real

price of the first may rise to any degree of extravagance, and seems not to

be limited by any certain boundary. That of the second, though it may rise

greatly, has, however, a certain boundary, beyond which it cannot well pass

for any considerable time together. That of the third, though its natural

tendency is to rise in the progress of improvement, yet in the same degree

of improvement it may sometimes happen even to fall, sometimes to continue

the same, and sometimes to rise more or less, according as different

accidents render the efforts of human industry, in multiplying this sort of

rude produce, more or less successful.

 

First Sort. - The first sort of rude produce, of which the price rises in the

progress of improvement, is that which it is scarce in the power of human

industry to multiply at all. It consists in those things which nature

produces only in certain quantities, and which being of a very perishable

nature, it is impossible to accumulate together the produce of many

different seasons. Such are the greater part of rare and singular birds and

fishes, many different sorts of game, almost all wild-fowl, all birds of

passage in particular, as well as many other things. When wealth, and the

luxury which accompanies it, increase, the demand for these is likely to

increase with them, and no effort of human industry may be able to increase

the supply much beyond what it was before this increase of the demand. The

quantity of such commodities, therefore, remaining the same, or nearly the

same, while the competition to purchase them is continually increasing,

their price may rise to any degree of extravagance, and seems not to be

limited by any certain boundary. If woodcocks should

become so fashionable as to sell for twenty guineas a-piece, no

effort of human industry could increase the number of those brought to

market, much beyond what it is at present. The high price paid by the

Romans, in the time of their greatest grandeur, for rare birds and fishes,

may in this manner easily be accounted for. These prices were not the

effects of the low value of silver in those times, but of the high value of

such rarities and curiosities as human industry could not multiply at

pleasure. The real value of silver was higher at Rome, for sometime before,

and after the fall of the republic, than it is through the greater part of

Europe at present. Three sestertii equal to about sixpence sterling, was the

price which the republic paid for the modius or peck of the tithe wheat of

Sicily. This price, however, was probably below the average market price,

the obligation to deliver their wheat at this rate being considered as a tax

upon the Sicilian farmers. When the Romans, therefore, had occasion to order

more corn than the tithe of wheat amounted to, they were bound by

capitulation to pay for the surplus at the rate of four sestertii, or

eightpence sterling the peck; and this had probably been reckoned the

moderate and reasonable, that is, the ordinary or average contract price of

those times; it is equal to about one-and-twenty shillings the quarter.

Eight-and-twenty shillings the quarter was, before the late years of

scarcity, the ordinary contract price of English wheat, which in quality is

inferior to the Sicilian, and generally sells for a lower price in the

European market. The value of silver, therefore, in those ancient times,

must have been to its value in the present, as three to four inversely ;

that is, three ounces of silver would then have purchased the same quantity

of labour and commodities which four ounces will do at present. When we

read in Pliny, therefore, that Seius {Lib.X,c.29.} bought a white

nightingale, as a present for the empress Agrippina, at the price of six

thousand sestertii, equal to about fifty pounds of our present money ; and

that Asinius Celer {Lib. IX,c. 17.} purchased a surmullet at the price of

eight thousand sestertii, equal to about sixty-six pounds thirteen shillings

and fourpence of our present money ; the extravagance of those prices, how

much soever it may surprise us, is apt, notwithstanding, to appear to us

about one third less than it really was. Their real price, the quantity of

labour and subsistence which was given away for them, was about one-third

more than their nominal price is apt to express to us in the present times.

Seius gave for the nightingale the command of a quantity of labour and

subsistence, equal to what � 66:13: 4d. would purchase in the present times

; and Asinius Celer gave for a surmullet the command of a quantity equal to

what � 88:17: 9d. would purchase. What occasioned the extravagance of those

high prices was, not so much the abundance of silver, as the abundance of

labour and subsistence, of which those Romans had the disposal, beyond what

was necessary for their own use. The quantity of silver, of which they had

the disposal, was a good deal less than what the command of the same

quantity of labour and subsistence would have procured to them in the

present times.

 

Second sort. - The second sort of rude produce, of which the price rises in

the progress of improvement, is that which human industry can multiply in

proportion to the demand. It consists in those useful plants and animals,

which, in uncultivated countries, nature produces with such profuse

abundance, that they are of little or no value, and which, as cultivation

advances, are therefore forced to give place to some more profitable

produce. During a long period in the progress of improvement, the quantity

of these is continually diminishing, while, at the same time, the demand for

them is continually increasing. Their real value, therefore, the real

quantity of labour which they will purchase or command, gradually rises,

till at last it gets so high as to render them as profitable a produce as

any thing else which human industry can raise upon the most fertile and best

cultivated land. When it has got so high, it cannot well go higher. If it

did, more land and more industry would soon be employed to increase their

quantity.

 

When the price of cattle, for example, rises so high, that it is as

profitable to cultivate land in order to raise food for them as in order to

raise food for man, it cannot well go higher. If it did, more corn land

would soon be turned into pasture. The extension of tillage, by diminishing

the quantity of wild pasture, diminishes the quantity of butcher’s meat,

which the country naturally produces without labour or cultivation; and, by

increasing the number of those who have either corn, or, what comes to the

same thing, the price of corn, to give in exchange for it, increases the

demand. The price of butcher’s meat, therefore, and, consequently, of

cattle, must gradually rise, till it gets so high, that it becomes as

profitable to employ the most fertile and best cultivated lands in raising

food for them as in raising corn. But it must always be late in the progress

of improvement before tillage can be so far extended as to raise the price

of cattle to this height ; and, till it has got to this height, if the

country is advancing at all, their price must be continually rising. There

are, perhaps, some parts of Europe in which the price of cattle has not yet

got to this height. It had not got to this height in any part of Scotland

before the Union. Had the Scotch cattle been always confined to the market

of Scotland, in a country in which the quantity of land, which can be

applied to no other purpose but the feeding of cattle, is so great in

proportion to what can be applied to other purposes, it is scarce possible,

perhaps, that their price could ever