An Inquiry into the Nature and Causes of the Wealth of Nations - Adam Smith (ebooks children's books free .TXT) 📗
- Author: Adam Smith
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by tale,
The inconveniency and difficulty of weighing those metals with exactness,
gave occasion to the institution of coins, of which the stamp, covering
entirely both sides of the piece, and sometimes the edges too, was supposed
to ascertain 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.
The denominations of those coins seem originally to have expressed the
weight or quantity of metal contained in them. In the time of Servius
Tullius, who first coined money at Rome, the Roman as or pondo contained a
Roman pound of good copper. It was divided, in the same manner as our Troyes
pound, into twelve ounces, each of which contained a real ounce of good
copper. The English pound sterling, in the time of Edward I. contained a
pound, Tower weight, of silver of a known fineness. The Tower pound seems to
have been something more than the Roman pound, and something less 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 was at that time frequented by all the nations of
Europe, and the weights and measures of so famous a market were generally
known and esteemed. The Scots money pound contained, from the time of
Alexander the First to that of Robert Bruce, a pound of silver of the same
weight and fineness with the English pound sterling. English, French, and
Scots pennies, too, contained all of them originally a real penny-weight of
silver, the twentieth part of an ounce, and the two hundred-and-fortieth
part of a pound. The shilling, too, seems originally to have been
the denomination of a weight. “When wheat is at twelve shillings the quarter,”
says an ancient statute of Henry III.” then wastel bread of a farthing shall
weigh eleven shillings and fourpence”. The proportion, however, between the
shilling, and either the penny on the one hand, or the pound on the other,
seems not to have been so constant and uniform as that between the penny and
the pound. During the first race of the kings of France, the French sou or
shilling appears upon different occasions to have contained five, twelve,
twenty, and forty pennies. Among the ancient Saxons, a shilling appears at
one time to have contained only five pennies, and it is not improbable that
it may have been as variable among them as among their neighbours, the
ancient Franks. From the time of Charlemagne among the French, and from that
of William the Conqueror among the English, the proportion between the
pound, the shilling, and the penny, seems to have been uniformly the same as
at present, though the value of each has been very different ; for in every
country of the world, I believe, the avarice and injustice of princes and
sovereign states, abusing the confidence of their subjects, have by degrees
diminished the real quantity of metal, which had been originally contained
in their coins. The Roman as, in the latter ages of the republic, was
reduced to the twenty-fourth part of its original value, and, instead of
weighing a pound, came to weigh only half an ounce. The English pound and
penny contain at present about a third only ; the Scots pound and penny
about a thirty-sixth ; and the French pound and penny about a sixty-sixth
part of their original value. By means of those operations, the princes and
sovereign states which performed them were enabled, in appearance, to pay
their debts and fulfil their engagements with a smaller quantity of silver
than would otherwise have been requisite. It was indeed in appearance only ;
for their creditors were really defrauded of a part of what was due to them.
All other debtors in the state were allowed the same privilege, and might
pay with the same nominal sum of the new and debased coin whatever they had
borrowed in the old. Such operations, therefore, have always proved
favourable to the debtor, and ruinous to the creditor, and have sometimes
produced a greater and more universal revolution in the fortunes of private
persons, than could have been occasioned by a very great public calamity.
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 conveys.
The one may be called ‘ value in use ;’ the other, ‘value in exchange.’ The
things which have the greatest value in use have frequently little or no
value in exchange ; and, on the contrary, those which have the greatest
value in exchange have frequently little or no value in use. Nothing is more
useful than water ; but it will purchase scarce any thing; scarce any thing
can be had in exchange for it. A diamond, on the contrary, has scarce any
value in use; but a very great quantity of other goods may frequently be had
in exchange for it.
In order to investigate the principles which regulate the exchangeable value
of commodities, I shall endeavour to shew,
First, what is the real measure of this exchangeable value; or wherein
consists the real price of all commodities.
Secondly, what are the different parts of which this real price is composed
or made up.
And, lastly, what are the different circumstances which sometimes raise some
or all of these different parts of price above, and sometimes sink them
below, their natural or ordinary rate; or, what are the causes which
sometimes hinder the market price, that is, the actual price of commodities,
from coinciding exactly with what may be called their natural price.
I shall endeavour to explain, as fully and distinctly as I can, those three
subjects in the three following chapters, for which I must very earnestly
entreat both the patience and attention of the reader : his patience, in
order to examine a detail which may, perhaps, in some places, appear
unnecessarily tedious; and his attention, in order to understand what may
perhaps, after the fullest explication which I am capable of giving it,
appear still in some degree obscure. I am always willing to run some hazard
of being tedious, in order to be sure that I am perspicuous; and, after
taking the utmost pains that I can to be perspicuous, some obscurity may
still appear to remain upon a subject, in its own nature extremely
abstracted.
CHAPTER V.
OF THE REAL AND NOMINAL PRICE OF COMMODITIES, 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 own labour can supply him. The
far greater part of them he must derive from the labour of other people, and
he must be rich or poor according to the quantity of that labour which he
can command, or which he can afford to purchase. The value of any commodity,
therefore, to the person who possesses it, and who means not to use or
consume it himself, but to exchange it for other commodities, is equal to
the quantity of labour which it enables him to purchase or command. Labour
therefore, is the real measure of the exchangeable value of all commodities.
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 it. 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 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 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 purchased;
and its value, to those who possess it, and who want to exchange it for some
new productions, is precisely equal to the quantity of’ labour which it can
enable them to purchase or command.
Wealth, as Mr Hobbes says, is power. But the person who either acquires, or
succeeds to a great fortune, does not necessarily acquire or succeed to any
political power, either civil or military. His fortune may, perhaps, afford
him the means of acquiring both; but the mere possession of that fortune
does not necessarily convey to him either. The power which that possession
immediately and directly conveys to him, is the power of purchasing a
certain command over all the labour, or over all the produce of labour which
is then in the market. His fortune is greater or less, precisely in
proportion to the extent of this power, or to the quantity either of other
men’s labour, or, what is the same thing, of the produce of other men’s
labour, which it enables him to purchase or command. The exchangeable value
of every thing must always be precisely equal to the extent of this power
which it conveys to its owner.
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 measure, 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.
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
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