The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Key to Abbreviations and References
• General Introduction
• The Text and Apparatus
• Advertisement a
• Advertisement to the Fourth Edition
• Introduction and Plan of the Work
• [i] Book I: Of the Causes of Improvement In the Productive Powers of Labour, and of the Order According to Which Its Produce Is Naturally Distributed Among the Different Ranks of the People
• [i.i] Chapter I: Of the Division of Labour
• [i.ii] Chapter II: Of the Principle Which Gives Occasion to the Division of Labour
• [i.iii] Chapter III: That the Division of Labour Is Limited By the Extent of the Market 1
• [i.iv] Chapter IV: Of the Origin and Use of Money 1
• [i.v] Chapter V: Of the Real and Nominal Price of Commodities, Or of Their Price In Labour, and Their Price In Money
• [i.vi] Chapter VI: Of the Component Parts of the Price of Commodities
• [i.vii] Chapter VII: Of the Natural and Market Price of Commodities 1
• [i.viii] Chapter VIII: Of the Wages of Labour
• [i.ix] Chapter IX: Of the Profits of Stock
• [i.x.a] Chapter X: Of Wages and Profit In the Different Employments of Labour and Stock
• [i.x.b] Part I: Inequalities Arising From the Nature of the Employments Themselves
• [i.x.c] Part II: Inequalities Occasioned By the Policy of Europe
• [i.xi.a] Chapter XI: Of the Rent of Land
• [i.xi.b] Part I: Of the Produce of Land Which Always Affords Rent
• [i.xi.c] Part II: Of the Produce of Land Which Sometimes Does, and Sometimes Does Not, Afford Rent
• [i.xi.d] 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
• Digression Concerning the Variations In the Value of Silver During the Course of the Four Last Centuries
• [i.xi.e] First Period
• [i.xi.f] Second Period
• [i.xi.g] Third Period
• [i.xi.h] Variations In the Proportion Between the Respective Values of Gold and Silver
• [i.xi.i] Grounds of the Suspicion That the Value of Silver Still Continues to Decrease
• [i.xi.j] Different Effects of the Progress of Improvement Upon the Real Price of Three Different Sorts of Rude Produce
• [i.xi.k] First Sort
• [i.xi.l] Second Sort
• [i.xi.m] Third Sort
• [i.xi.n] Conclusion of the Digression Concerning the Variations In the Value of Silver
• [i.xi.o] Effects of the Progress of Improvement Upon the Real Price of Manufactures
• [i.xi.p] Conclusion of the Chapter
• [ii] Book II: Of the Nature, Accumulation, and Employment of Stock
• Introduction
• [ii.i] Chapter I: Of the Division of Stock
• [ii.ii] Chapter II: Of Money Considered As a Particular Branch of the General Stock of the Society, Or of the Expence of Maintaining the National Capital
• [ii.iii] Chapter III: Of the Accumulation of Capital, Or of Productive and Unproductive Labour
• [ii.iv] Chapter IV: Of Stock Lent At Interest
• [ii.v] Chapter V: Of the Different Employment of Capitals
• [iii] Book III: Of the Different Progress of Opulence In Different Nations
• [iii.i] Chapter I: Of the Natural Progress of Opulence
• [iii.ii] Chapter II: Of the Discouragement of Agriculture In the Antient State of Europe After the Fall of the Roman Empire 1
• [iii.iii] Chapter III: Of the Rise and Progress of Cities and Towns, After the Fall of the Roman Empire
• [iii.iv] Chapter IV: How the Commerce of the Towns Contributed to the Improvement of the Country
• [iv] Book IV: Of Systems of Political Oeconomy
• Introduction
• [iv.i] Chapter I: Of the Principle of the Commercial, Or Mercantile System 1
• [iv.ii] Chapter II: Of Restraints Upon the Importation a From Foreign Countries of Such Goods a As Can Be Produced At Home
• [iv.iii] Chapter III: Of the Extraordinary Restraints Upon the Importation of Goods of Almost All Kinds, From Those Countries With Which the Balance Is Supposed to Be Disadvantageous
• [iv.iii.a] Part I: Of the Unreasonableness of Those Restraints Even Upon the Principles of the Commercial System a
• [iv.iii.b] Digression Concerning Banks of Deposit, Particularly Concerning That of Amsterdam 1
• [iv.iii.c] Part II: Of the Unreasonableness of Those Extraordinary Restraints Upon Other Principles a
• [iv.iv] Chapter IV: Of Drawbacks
• [iv.v.a] Chapter V: Of Bounties
• [iv.v.b] Digression Concerning the Corn Trade and Corn Laws a – a

first period

1In 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 of silver, equal to about ten shillings of our present money, the price at which we find it estimated in the beginning of the sixteenth century, and at which it seems to have continued to be estimated till about 1570.

2In 1350, being the 25th of Edward III, was enacted what is called, The statute of labourers.1 In the preamble it complains much of the insolence of servants, who endeavoured to raise their wages upon their masters.2 It therefore ordains, that all servants and labourers should for the future be contented with the same wages and liveries (liveries in those times signified, not only cloaths, but provisions) which they had been accustomed to receive in the 20th year of the king, and the four preceding years; that upon this account their livery wheat should no where be estimated higher than ten–pence a bushel, and that it should always be in the option of the master to deliver them either the wheat or the money. Ten–pence a bushel, therefore, had in the 25th of Edward III, been reckoned a very moderate price of wheat, since it required a particular statute to oblige servants to accept of it in exchange for their usual livery of provisions; and it had been reckoned a reasonable price ten years before that, or in the 16th year of the king, the term to which the statute refers. But in the 16th year of Edward III, ten–pence contained about half an ounce of silver, Tower–weight, and was nearly equal to half a crown of our present money.3 Four ounces of silver, Tower–weight, therefore, equal to six shillings and eight–pence of the money of those times, and to near twenty shillings of that of the present, must have been reckoned a moderate price for the quarter of eight bushels.

3This statute is surely a better evidence of what was reckoned in those times a moderate price of grain, than the prices of some particular years which have generally been recorded by historians and other writers on account of their extraordinary dearness or cheapness, and from which, therefore, it is difficult to form any judgment concerning what may have been the ordinary price.4 There are, besides, other reasons for believing that in the beginning of the fourteenth century, and for some time before, the common price of wheat was not less than four ounces of silver the quarter, and that of other grain in proportion.

4In 1309, Ralph de Born, prior of St. Augustine’s, Canterbury, gave a feast upon his installation–day, of which William Thorn has preserved, not only the bill of fare, but the prices of many particulars. In that feast were consumed, 1st, fifty–three quarters of wheat, which cost nineteen pounds, or seven shillings and two–pence a quarter, equal to about one–and–twenty shillings and six–pence of our present money: 2dly, Fifty–eight quarters of malt, which cost seventeen pounds ten shillings, or six shillings a quarter, equal to about eighteen shillings of our present money: 3dly, Twenty quarters of oats, which cost four pounds, or four shillings a quarter, equal to about twelve shillings of our present money.5 The prices of malt and oats seem here to be higher than their ordinary proportion to the price of wheat.

5These prices are not recorded on account of their extraordinary dearness or cheapness, but are mentioned accidentally as the prices actually paid for large quantities of grain consumed at a feast which was famous for its magnificence.

6In 1262, being the 51st of Henry III, was revived an ancient statute called, The Assize of Bread and Ale,6 which, the king says in the preamble, had been made in the times of his progenitors sometime kings of England. It is probably, therefore, as old at least as the time of his grandfather Henry II, and may have been as old as the conquest. It regulates the price of bread according as the prices of wheat may happen to be, from one shilling to twenty shillings the quarter of the money of those times. But statutes of this kind are generally presumed to provide with equal care for all deviations from the middle price, for those below it as well as for those above it. Ten shillings, therefore, containing six ounces of silver, Tower–weight, and equal to about thirty shillings of our present money, must, upon this supposition, have been reckoned the middle price of the quarter of wheat when this statute was first enacted, and must have continued to be so in the 51st of Henry III. We cannot therefore be very ^a wrong in supposing that the middle price was not less than one–third of the highest price at which this statute regulates the price of bread, or than six shillings and eight–pence of the money of those times, containing four ounces of silver, Tower–weight.

7From these different facts, therefore, we seem to have some reason to conclude, that about the middle of the fourteenth century, and for a considerable time before, the average or ordinary price of the quarter of wheat was not supposed to be less than four ounces of silver, Towerweight.7

8From about the middle of the fourteenth to the beginning of the sixteenth century, what was reckoned the reasonable and moderate, that is the ordinary or average price of wheat, seems to have sunk gradually to about one–half of this price; so as at last to have fallen to about two ounces of silver, Tower–weight, equal to about ten shillings of our present money. It continued to be estimated at this price till about 1570.

9In the houshold book of Henry, the fifth earl of Northumberland, drawn up in 1512, there are two different estimations of wheat. In one of them it is computed at six–shillings and eight–pence the quarter, in the other at five shillings and eight–pence only.8 In 1512, six shillings and eight–pence contained only two ounces of silver Tower–weight, and were equal to about ten shillings of our present money.

10From the 25th of Edward III, to the beginning of the reign of Elizabeth, during the space of more than two hundred years, six shillings and eight–pence, it appears from several different statutes, had continued to be considered as what is called the moderate and reasonable, that is the ordinary or average price of wheat. The quantity of silver, however, contained in that nominal sum was, during the course of this period, continually diminishing, in consequence of some alterations which were made in the coin. But the increase of the value of silver had, it seems, so far compensated the diminution of the quantity of it contained in the same nominal sum, that the legislature did not think it worth while to attend to this circumstance.

11Thus in 1436 it was enacted, that wheat might be exported without a licence when the price was so low as six shillings and eight–pence:9 And in 1463 it was enacted, that no wheat should be imported if the price was not above six shillings and eight–pence the quarter.10 The legislature had imagined, that when the price was so low, there could be no inconveniency in exportation, but that when it rose higher, it became prudent to allow of importation. Six shillings and eight–pence, therefore, containing about the same quantity of silver as thirteen shillings and four–pence of our present money (one third part less than the same nominal sum contained in the time of Edward III.), had in those times been considered as what is called the moderate and reasonable price of wheat.

12In 1554, by the 1st and 2d of Philip and Mary;11 and in 1558, by the 1st of Elizabeth, the exportation of wheat was in the same manner prohibited, whenever the price of the quarter should exceed six shillings and eight–pence,12 which did not then contain two penny worth more silver than the same nominal sum does at present. But it had soon been found that to restrain the exportation of wheat till the price was so very low, was, in reality, to prohibit it altogether. In 1562, therefore, by the 5th of Elizabeth, the exportation of wheat was allowed from certain ports whenever the price of the quarter should not exceed ten shillings,13 containing nearly the same quantity of silver as the like nominal sum does at present. This price had at this time, therefore, been considered as what is called the moderate and reasonable price of wheat. It agrees nearly with the estimation of the Northumberland book in 1512.

13That in France the average price of grain was, in the same manner, much lower in the end of the fifteenth and beginning of the sixteenth century, than in the two centuries preceding, has been observed both by Mr. Duprè de St. Maur,14 and by the elegant author of the Essay on the police of grain.15 Its price, during the same period, had probably sunk in the same manner through the greater part of Europe.

14This rise in the value of silver in proportion to that of corn, may either have been owing altogether to the increase of the demand for that metal, in consequence of increasing improvement and cultivation, the supply in the mean time continuing the same as before: Or, the demand continuing the same as before, it may have been owing altogether to the gradual diminution of the supply; the greater part of the mines which were then known in the world, being much exhausted, and consequently the expence of working them much increased: Or it may have been owing partly to the one and partly to the other of those two circumstances. In the end of the fifteenth and beginning of the sixteenth centuries, the greater part of Europe was approaching towards a more settled form of government than it had enjoyed for several ages before. The increase of security would naturally increase industry and improvement; and the demand for the precious metals, as well as for every other luxury and ornament, would naturally increase with the increase of riches. A greater annual produce would require a greater quantity of coin to circulate it; and a greater number of rich people would require a greater quantity of plate and other ornaments of silver. It is natural to suppose too, that the greater part of the mines which then supplied the European market with silver, might be a good deal exhausted, and have become more expensive in the working. They had been wrought many of them from the time of the Romans.

15It has been the opinion, however, of the greater part of those who have written upon the prices of commodities in antient times, that, from the Conquest, perhaps from the invasion of Julius Caesar till the discovery of the mines of America, the value of silver was continually diminishing.16 This opinion they seem to have been led into, partly by the observations which they had occasion to make upon the prices both of corn and of some other parts of the rude produce of land; and partly by the popular notion, that as the quantity of silver naturally increases in every country with the increase of wealth, so its value diminishes as its quantity increases.

16In their observations upon the prices of corn, three different circumstances seem frequently to have misled them.

17First, In antient times almost all rents were paid in kind; in a certain quantity of corn, cattle, poultry, &c. It sometimes happened, however, that the landlord would stipulate^b , that he should be at liberty to demand ^cof the tenant,^c either the annual payment in kind, or a certain sum of money instead of it. The price at which the payment in kind was in this manner exchanged for a certain sum of money, is in Scotland called the conversion price. As the option is always in the landlord to take either the substance or the price, it is necessary for the safety of the tenant, that the conversion price should rather be below than above the average market price. In many places, accordingly, it is not much above one–half of this price. Through the greater part of Scotland this custom still continues with regard to poultry, and in some places with regard to cattle. It might probably have continued to take place too with regard to corn, had not the institution of the publick fiars put an end to it. These are annual valuations, according to the judgment of an assize, of the average price of all the different sorts of grain, and of all the different qualities of each, according to the actual market price in every different county.17 This institution rendered it sufficiently safe for the tenant, and much more convenient for the landlord, to convert, as they call it, the corn rent^d, rather at what should happen to be^d the price of the fiars of each year,^e than at any certain fixed price.18 But the writers who have collected the prices of corn in antient times, seem frequently to have mistaken what is called in Scotland the conversion price for the actual market price.19 Fleetwood acknowledges, upon one occasion, that he had made this mistake. As he wrote his book, however, for a particular purpose, he does not think proper to make this acknowledgment till after transcribing this conversion price fifteen times.20 The price is eight shillings the quarter of wheat. This sum in 1423, the year at which he begins with it, contained the same quantity of silver as sixteen shillings of our present money. But in 1562, the year at which he ends with it, it contained no more than the same nominal sum does at present.

18Secondly, They have been misled by the slovenly manner in which some antient statutes of assize had been sometimes transcribed by lazy copiers; and sometimes perhaps actually composed by the legislature.

19The antient statutes of assize seem to have begun always with determining what ought to be the price of bread and ale when the price of wheat and barley were at the lowest, and to have proceeded gradually to determine what it ought to be, according as the prices of those two sorts of grain should gradually rise above this lowest price. But the transcribers of those statutes seem frequently to have thought it sufficient, to copy the regulation as far as the three or four first and lowest prices; saving in this manner their own labour, and judging, I suppose, that this was enough to show what proportion ought to be observed in all higher prices.

20Thus in the assize of bread and ale, of the 51st of Henry III. the price of bread was regulated according to the different prices of wheat, from one shilling to twenty shillings the quarter, of the money of those times. But in the manuscripts from which all the different editions of the statutes, preceding that of Mr. Ruffhead, were printed, the copiers had never transcribed this regulation beyond the price of twelve shillings.21 Several writers, therefore, being misled by this faulty transcription, very naturally concluded that the middle price, or six shillings the quarter, equal to about eighteen shillings of our present money, was the ordinary or average price of wheat at that time.

21In the statute of Tumbrel and Pillory, enacted nearly about the same time,22 the price of ale is regulated according to every sixpence rise in the price of barley, from two shillings to four shillings the quarter. That four shillings, however, was not considered as the highest price to which barley might frequently rise in those times, and that these prices were only given as an example of the proportion which ought to be observed in all other prices, whether higher or lower, we may infer from the last words of the statute; “et sic deinceps crescetur vel diminuetur per sex denarios”. The expression is very slovenly, but the meaning is plain enough; “That the price of ale is in this manner to be increased or diminished according to every six–pence rise or fall in the price of barley”. In the composition of this statute the legislature itself seems to have been as negligent as the copiers were in the transcription of the other.23

22In an antient manuscript of the Regiam Majestatem,24 an old Scotch law book, there is a statute of assize, in which the price of bread is regulated according to all the different prices of wheat, from ten–pence to three shillings the Scotch boll, equal to about half an English quarter. Three shillings Scotch, at the time when this assize is supposed to have been enacted, were equal to about nine shillings sterling of our present money. Mr. Ruddiman seems* to conclude from this, that three shillings was the highest price to which wheat ever rose in those times, and that ten–pence, a shilling, or at most two shillings, were the ordinary prices. Upon consulting the manuscript, however, it appears evidently, that all these prices are only set down as examples of the proportion which ought to be observed between the respective prices of wheat and bread. The last words of the statute are, “reliqua judicabis secundum praescripta habendo respectum ad pretium bladi.” “You shall judge of the remaining cases according to what is above written having a respect to the price of corn.”

23Thirdly, They seem to have been misled too by the very low price at which wheat was sometimes sold in very antient times; and to have imagined, that as its lowest price was then much lower than in later times, its ordinary price must likewise have been much lower. They might have found, however, that in those antient times, its highest price was fully as much above, as its lowest price was below any thing that had ever been known in later times. Thus in 1270, Fleetwood gives us two prices of the quarter of wheat.25 The one is four pounds sixteen shillings of the money of those times, equal to fourteen pounds eight shillings of that of the present; the other is six pounds eight shillings, equal to nineteen pounds four shillings of our present money. No price can be found in the end of the fifteenth, or beginning of the sixteenth century, which approaches to the extravagance of these. The price of corn, though at all times liable to ^gvariations^g varies most in those turbulent and disorderly societies, in which the interruption of all commerce and communication hinders the plenty of one part of the country from relieving the scarcity of another.26 In the disorderly state of England under the Plantagenets, who governed it from about the middle of the twelfth, till towards the end of the fifteenth century, one district might be in plenty, while another at no great distance, by having its crop destroyed either by some accident of the seasons, or by the incursion of some neighbouring baron, might be suffering all the horrors of a famine; and yet if the lands of some hostile lord were interposed between them, the one might not be able to give the least assistance to the other. Under the vigorous administration of the Tudors, who governed England during the latter part of the fifteenth, and through the whole of the sixteenth century, no baron was powerful enough to dare to disturb the publick security.27

24The reader will find at the end of this chapter all the prices of wheat which have been collected by Fleetwood from 1202 to 1597, both inclusive, reduced to the money of the present times, and digested according to the order of time, into seven divisions of twelve years each. At the end of each division too, he will find the average price of the twelve years of which it consists. In that long period of time, Fleetwood has been able to collect the prices of no more than eighty years, so that four years are wanting to make out the last twelve years. I have added, therefore, from the accounts of Eton college, the prices of 1598, 1599, 1600, and 1601. It is the only addition which I have made. The reader will see that from the beginning of the thirteenth, till after the middle of the sixteenth century, the average price of each twelve years grows gradually lower and lower; and that towards the end of the sixteenth century it begins to rise again. The prices, indeed, which Fleetwood has been able to collect, seem to have been those chiefly which were remarkable for extraordinary dearness or cheapness; and I do not pretend that any very certain conclusion can be drawn from them. So far, however, as they prove any thing at all, they confirm the account which I have been endeavouring to give. Fleetwood himself, however, seems, with most other writers, to have believed, that during all this period the value of silver, in consequence of its increasing abundance, was continually diminishing. The prices of corn which he himself has collected, certainly do not agree with this opinion. They agree perfectly with that of Mr. Duprè de St. Maur, and with that which I have been endeavouring to explain. Bishop Fleetwood and Mr. Duprè de St. Maur are the two authors who seem to have collected, with the greatest diligence and fidelity, the prices of things in antient times. It is somewhat curious that, though their opinions are so very different, their facts, so far as they relate to the price of corn at least, should coincide so very exactly.28

25It is not, however, so much from the low price of corn, as from that of some other parts of the rude produce of land, that the most judicious writers have inferred the great value of silver in those very antient times. Corn, it has been said, being a sort of manufacture, was, in those rude ages, much dearer in proportion than the greater part of other commodities; it is meant, I suppose, than the greater part of unmanufactured commodities; such as cattle, poultry, game of all kinds, &c. That in those times of poverty and barbarism these were proportionably much cheaper than corn, is undoubtedly true. But this cheapness was not the effect of the high value of silver, but of the low value of those commodities. It was not ^hbecause^h silver would in such times purchase or represent a greater quantity of labour, but ⁱbecauseⁱ such commodities would purchase or represent a much smaller quantity than in times of more opulence and improvement. Silver must certainly be cheaper in Spanish America than in Europe; in the country where it is produced, than in the country to which it is brought, at the expence of a long carriage both by land and by sea, of a freight and an insurance. One–and–twenty pence halfpenny sterling, however, we are told by Ulloa, was, not many years ago, at Buenos Ayres, the price of an ox chosen from a herd of three or four hundred. Sixteen shillings sterling, we are told by Mr. Byron, was the price of a good horse in the capital of Chili.29 In a country naturally fertile, but of which the far greater part is altogether uncultivated, cattle, poultry, game of all kinds, &c. as they can be acquired with a very small quantity of labour, so they will purchase or command but a very small quantity.30 The low money price for which they may be sold, is no proof that the real value of silver is there very high, but that the real value of those commodities is very low.

26Labour, it must always be remembered, and not any particular commodity or sett of commodities, is the real measure of the value both of silver and of all other commodities.31

27 But in countries almost waste, or but thinly inhabited, cattle, poultry, game of all kinds, &c. as they are the spontaneous productions of nature, so she frequently produces them in much greater quantities than the consumption of the inhabitants requires. In such a state of things the supply commonly exceeds the demand. In different states of society, in different stages of improvement, therefore, such commodities will represent, or be equivalent to, very different quantities of labour.

28In every state of society, in every stage of improvement, corn is the production of human industry. But the average produce of every sort of industry is always suited, more or less exactly, to the average consumption; the average supply to the average demand. In every different stage of improvement, besides, the raising of equal quantities of corn in the same soil and climate, will, at an average, require nearly equal quantities of labour; or what comes to the same thing, the price of nearly equal quantities; the continual increase of the productive powers of labour in an ^jimproving^j state of cultivation, being more or less counter–balanced by the continually increasing price of cattle, the principal instruments of agriculture.32 Upon all these accounts, therefore, we may rest assured, that equal quantities of corn will, in every state of society, in every stage of improvement, more nearly represent, or be equivalent to, equal quantities of labour, than equal quantities of any other part of the rude produce of land. Corn, accordingly, it has already been observed,33 is, in all the different stages of wealth and improvement, a more accurate measure of value than any other commodity or sett of commodities. In all those different stages, therefore, we can judge better of the real value of silver, by comparing it with corn, than by comparing it with any other commodity, or sett of commodities.

29Corn, besides, or whatever else is the common and favourite vegetable food of the people, constitutes, in every civilised country, the principal part of the subsistence of the labourer. In consequence of the extension of agriculture, the land of every country produces a much greater quantity of vegetable than of animal food, and the labourer every where lives chiefly upon the wholesome food that is cheapest and most abundant. Butcher’s–meat, except in the most thriving countries, or where labour is most highly rewarded, makes but an insignificant part of his subsistence:34 poultry makes a still smaller part of it, and game no part of it. In France, and even in Scotland, where labour is somewhat better rewarded than in France, the labouring poor seldom eat butcher’s–meat, except upon holidays, and other extraordinary occasions. The money price of labour, therefore, depends much more upon the average money price of corn, the subsistence of the labourer, than upon that of butcher’s–meat, or of any other part of the rude produce of land. The real value of gold and silver, therefore, the real quantity of labour which they can purchase or command, depends much more upon the quantity of corn which they can purchase or command, than upon that of butcher’s–meat, or any other part of the rude produce of land.

30Such slight observations, however, upon the prices either of corn or of other commodities, would not probably have misled so many intelligent authors, had they not been ^kinfluenced, at the same time, by^k the popular notion, that as the quantity of silver naturally increases in every country with the increase of wealth, so its value diminishes as its quantity increases. This notion, however, seems to be altogether groundless.

31The quantity of the precious metals may increase in any country from two different causes: either, first, from the increased abundance of the mines which supply it; or, secondly, from the increased wealth of the people, from the increased produce of their annual labour. The first of these causes is no doubt necessarily connected with the diminution of the value of the precious metals; but the second is not.

32When more abundant mines are discovered, a greater quantity of the precious metals is brought to market, and the quantity of the necessaries and conveniencies of life for which they must be exchanged being the same as before, equal quantities of the metals must be exchanged for smaller quantities of commodities. So far, therefore, as the increase of the quantity of the precious metals in any country arises from the increased abundance of the mines, it is necessarily connected with some diminution of their value.35

33When, on the contrary, the wealth of any country increases, when the annual produce of its labour becomes gradually greater and greater, a greater quantity of coin becomes necessary in order to circulate a greater quantity of commodities; and the people, as they can afford it, as they have more commodities to give for it, will naturally purchase a greater and a greater quantity of plate. The quantity of their coin will increase from necessity; the quantity of their plate from vanity and ostentation, or from the same reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, is likely to increase among them. But as statuaries and painters are not likely to be worse rewarded in times of wealth and prosperity, than in times of poverty and depression, so gold and silver are not likely to be worse paid for.

34The price of gold and silver, when the accidental discovery of more abundant mines does not keep it down, as it naturally rises with the wealth of every country, so, whatever be the state of the mines, it is at all times naturally higher in a rich than in a poor country. Gold and silver, like all other commodities, naturally seek the market where the best price is given for them, and the best price is commonly given for every thing in the country which can best afford it. Labour, it must be remembered, is the ultimate price which is paid for every thing,36 and in countries where labour is equally well rewarded, the money price of labour will be in proportion to that of the subsistence of the labourer. But gold and silver will naturally exchange for a greater quantity of subsistence in a rich than in a poor country, in a country which abounds with subsistence, than in one which is but indifferently supplied with it. If the two countries are at a great distance, the difference may be very great; because though the metals naturally fly from the worse to the better market, yet it may be difficult to transport them in such quantities as to bring their price nearly to a level in both. If the countries are near, the difference will be smaller, and may sometimes be scarce perceptible; because in this case the transportation will be easy. China is a much richer country than any part of Europe,37 and the difference between the price of subsistence in China and in Europe is very great. Rice in China is much cheaper than wheat is any where in Europe. England is a much richer country than Scotland; but the difference between the money–price of corn in those two countries is much smaller, and is but just perceptible. In proportion to the quantity or measure, Scotch corn generally appears to be a good deal cheaper than English; but in proportion to its quality, it is certainly somewhat dearer. Scotland receives almost every year very large supplies from England, and every commodity must commonly be somewhat dearer in the country to which it is brought than in that from which it comes. English corn, therefore, must be dearer in Scotland than in England, and yet in proportion to its quality, or to the quantity and goodness of the flour or meal which can be made from it, it cannot commonly be sold higher there than the Scotch corn which comes to market in competition with it.38

35The difference between the money price of labour in China and in Europe, is still greater than that between the money price of subsistence; because the real recompence of labour is higher in Europe, than in China, the greater part of Europe being in an improving state, while China seems to be standing still. The money price of labour is lower in Scotland than in England because the real recompence of labour is much lower; Scotland, though advancing to greater wealth, ^ladvances^l much more slowly than England.39^mThe frequency of emigration from Scotland, and the rarity of it from England, sufficiently prove that the demand for labour is very different in the two countries.^m The proportion between the real recompence of labour in different countries, it must be remembered, is naturally regulated, not by their actual wealth or poverty, but by their advancing, stationary, or declining condition.40

36Gold and silver, as they are naturally of the greatest value among the richest, so they are naturally of ⁿtheⁿ least value among the poorest nations. Among savages, the poorest of all nations, they are of scarce any value.

37In great towns corn is always dearer than in remote parts of the country. This, however, is the effect, not of the real cheapness of silver, but of the real dearness of corn. It does not cost less labour to bring silver to the great town than to the remote parts of the country; but it costs a great deal more to bring corn.

38 In some very rich and commercial countries, such as Holland and the territory of Genoa, corn is dear for the same reason that it is dear in great towns.41 They do not produce enough to maintain their inhabitants. They are rich in the industry and skill of their artificers and manufacturers; in every sort of machinery which can facilitate and abridge labour; in shipping, and in all the other instruments and means of carriage and commerce: but they are poor in corn, which, as it must be brought to them from distant countries, must, by an addition to its price, pay for the carriage from those countries. It does not cost less labour to bring silver to Amsterdam than to Dantzick; but it costs a great deal more to bring corn. The real cost of silver must be nearly the same in both places; but that of corn must be very different. Diminish the real opulence either of Holland or of the territory of Genoa, while the number of their inhabitants ^oremains^o the same: diminish their power of supplying themselves from distant countries; and the price of corn, instead of sinking with that diminution in the quantity of their silver, which must necessarily accompany this declension either as its cause or as its effect, will rise to the price of a famine. When we are in want of necessaries we must part with all superfluities, of which the value, as it rises in times of opulence and prosperity, so it sinks in times of poverty and distress. It is otherwise with necessaries. Their real price, the quantity of labour which they can purchase or command, rises in times of poverty and distress, and sinks in times of opulence and prosperity, which are always times of great abundance; for they could not otherwise be times of opulence and prosperity. Corn is a necessary, silver is only a superfluity.

39Whatever, therefore, may have been the increase in the quantity of the precious metals, which, during the period between the middle of the fourteenth and that of the sixteenth century, arose from the increase of wealth and improvement, it could have no tendency to diminish their value either in Great Britain, or in any other part of Europe. If those who have collected the prices of things in ancient times, therefore, had, during this period, no reason to infer the diminution of the value of silver, from any observations which they had made upon the prices either of corn or of other commodities, they had still less reason to infer it from any supposed increase of wealth and improvement.

[1 ]25 Edward III, st. 2 (1350) in Statutes of the Realm, i.311; 25 Edward III, st. 1 in Ruffhead’s edition. See also I.x.c.34n.

[2 ]See above, I.viii.13.

[3 ]Smith seems to have made most conversions to contemporary values from the conversion table in M. Folkes, A Table of English Silver Coins (London, 1745), 142, though he did not always use the exact conversion ratio. Folkes gives the following proportions of ancient to contemporary values for particular coins.

[4 ]See above, I.v.22.

[5 ]W. Fleetwood, Chronicon Preciosum, 83–5.

[6 ]The date of the statute is uncertain. If it were during the 51st of Henry III, the date should be 1266–7. Statutes of the Realm, i.199, n., discusses the uncertainty. See above, I.iv.10, I.x.c.62, and below, I.xi.e.20.

[a]far 1

[7 ]Prices of agricultural products remained fairly stable, though with a slow secular rise, from the turn of the twelfth and thirteenth centuries to the mid–fourteenth century. Fluctuations were considerable, particularly because of poor harvests, and so can affect statistical averages.

[8 ]Two separate quotations are given, but that of 5s. 8d. is probably a misprint since 118 quarters 2 bushels are reckoned to have cost £39. 8s. 4d. The Regulations and Establishment of the Household of Henry Algernon Percy, the Fifth Earl of Northumberland, at his castles of Wresill and Lekinfield in Yorkshire, begun A.D. MDXII (London, 1827), 2 and 4.

[9 ]15 Henry VI, c. 2 (1436).

[10 ]3 Edward IV, c. 2 (1463).

[11 ]1 and 2 Philip and Mary, c. 5 (1554).

[12 ]1 Elizabeth I, c. 11 (1558). Smith does not qualify his use of this and the previous statute. Both prohibited the export of wheat at the price he states, but 1 and 2 Philip and Mary, c. 5 allowed exports under licence and 1 Elizabeth I, c. 11 allowed exports from Norfolk and Suffolk under certain circumstances.

[13 ]5 Elizabeth, c. 5 (1562).

[14 ]Presumably Smith based his statement on an examination of the detailed examples of prices given in F. Dupré de Saint Maur’s Variations arrivées dans le prix de divers choses pendant le cours des cinq derniers siècles, printed in his Essai sur les Monnoies ou réflexions sur le rapport entre l’argent et les denrées (Paris, 1746) but separately paginated, 1–188. Dupré de Saint Maur was at one time Intendant of Basse–Guienne and also wrote the Recherches sur la valeur des Monnoies et sur le prix de grains avant et après le concile de Francfort (Paris, 1762).

[15 ]Essai sur la police générale des grains, sur leur prix et sur les effets de l’agriculture (Berlin, 1755), by C. J. Herbert. Smith mentions the Essai and Dupré’s work in Letter 115 addressed to Lord Hailes, dated 15 January 1769. The authorities cited in this letter include: William Fleetwood, Chronicum Preciosum, Messance, Recherches sur la population, Charles Smith, Three Tracts on the Corn Trade and Corn Laws (2nd ed., London, 1766) and Thomas Madox, History and Antiquities of the Exchequer of the Kings of England. From the Norman Conquest to Edward II (London, 1711).

[16 ]Smith states the contrary view at V.ii.c.5.

[b]with the tenant 1

[c–c]2–6

[17 ]See above, I.viii.34.

[d–d]at 1

[e]rather 1

[18 ]In Letter 115 addressed to Lord Hailes, dated 15 January 1769, Smith wrote that he would be obliged for a sight of Hailes’s paper upon prices as ‘I have no papers upon this subject’ apart from ‘an account of the fiars of Midlothian from 1626 & this was copied too from a printed Paper produced in a process before the Court of Session some years ago’. Smith added that he hoped to get additional information, and in particular an account from the Victualling Office, and also mentions that he had made use of certain English Acts of Parliament and some ‘Ordonnances of the french Kings’. In Letter 116 addressed to Hailes, dated 5 March 1769, Smith wrote to say that he had not yet received the paper and offered to send his servant for it. Hailes despatched the manuscript on the following day and in his accompanying letter (Letter 117) referred to ‘a Book lately published as to the prices of Corn &c. in England since the Conquest’ which he had not as yet seen. In Letter 118 addressed to Hailes, dated 12 March 1769, Smith acknowledged that the papers which he had received ‘will be of very great use to me’. On 23 May he returned the material ‘having taken a copy of that upon prices, as your Lordship permitted me to do it’. Hailes’s paper is included in the Corr. and entitled ‘Prices of Corn, Cattle &c. in Scotland from the earliest accounts to the death of James V’. It would appear from this correspondence with Hailes that Smith must have embarked on the analysis of what was to form part of the ‘Digression on Silver’ quite early.

[19 ]Examples of the conversion price are given in Hailes’s paper, for example with regard to deeds made by the Bishop of Murray (sic) for the years 1540, 1544, 1554, 1561. In 1544 it appears that the conversion price for ‘poultrie’ was 3d., and for salmon (per barrel) £2. 10s. Smith discussed the issue in Letter 118 addressed to Hailes, dated 12 March 1769, in the course of which he commented that ‘In this neighbourhood the price of good fowl, a hen, has been for many years from ten pence, to a Shilling and fifteen pence. Several years ago a friend of mine converted all the Poultry upon his estate at a Shilling. Five pence, however, is a common conversion price in a lease, the option being in the Landlord. Leases of this kind have been let within [these] two or three years.’ In this letter, Smith also adverted to the ‘extremely loose and inaccurate’ notions of our ancestors with regard to grain prices, pointing out that ‘the same nominal sum was frequently considered as the Average price both of grain and of other things’ in periods where there had been substantial alterations in the intrinsic value of the coin. See above, I.v.

[20 ]Smith is not quite accurate. Fleetwood wrote (Chronicon Preciosum, 121–2):

I would not have been weary of transcribing such Accounts as these, if I had judged the knowledge of them, any thing to your Purpose; but I perceive the Way was now, and had been so for some Years before, as well as many that follow, to settle the Price of Corn betwixt the Landlord and Tenant, without regard to what it truly was. Wheat was generally fix’d to 8s. the Quarter, and Malt and Oats at 5s. But finding it so for 20, 30, or 40 years together, you may reasonably conclude, that was not the true Market–Price, because it is not in the nature of the Thing possible, that Corn should be so long at the same stand. But yet if you take Things for 20 Years together, ’tis likely that such a Price might be equal enough, betwixt the Landlord and the Tenant, and therefore well agreed upon. Smith accepts fiars prices elsewhere, in I.viii.34. Though fiars prices were not market prices, they were based on them.

[21 ]Statutes of the Realm, i.199, n. does not confirm Smith’s view of the editions before Ruffhead. See above, I.iv.10, I.x.c.62, and I.xi.e.6.

[22 ]Statutes of the Realm, i.201, gives date as uncertain. Ruffhead attributes to 51 Henry III, st. 6. The problem is similar to that over the Assize of Bread and Ale. See above, I.iv.10.

[23 ]Statutes of the Realm, i.202, translates as, ‘And so from henceforth the Prices shall increase and decrease after the Rate of Sixpence.’

[24 ]In Letter 119, addressed to Lord Hailes, dated 16 May 1769, Smith agreed that the Regiam Majestatem had probably been written at a time ‘posterior to Richard 2nd.’ and that the work was not intended to be a record of original statutes, being rather ‘the composition of some private man, who meant to describe the great outlines of the Laws and customs of his Country, which he supposed, or had been told by tradition, were first introduced by some antient and famous king of the name of Malcolm; either Malcolm McKenneth or Malcolm Canmore; the former just as probably as the latter.’ Hailes’s position had been established in An Examination of Some of the Arguments for the High Antiquity of Regiam Majestatem (Edinburgh, 1769).

In Letter 120, addressed to Hailes, dated 23 May 1769, Smith also showed that he was familiar with Sir John Skene’s translation from the Latin: Regiam Majestatem. The Auld Laws and Constitutions of Scotland. Faithfullie collected furth of the Register, and other auld authentick Bukes, from the Dayes of King Malcolme the Second untill the Time of King James the First (Edinburgh, 1609). Smith refers to the Regiam Majestatem in LJ (A) i.137 in connection with the Scots Law on inheritance. In LJ (A) ii.48 Smith also cites ‘our old book, the Regiam majestatem’ in considering the law of contract.

[ff* ]See his preface to Anderson’s Diplomata Scotiae.f [James Anderson, Selectus diplomatum et numismatum Scotiae thesaurus, ed. T. Ruddiman (Edinburgh, 1739), 82. In translation, T. Ruddiman, An Introduction to Mr. James Anderson’s Diplomata Scotiae (Edinburgh, 1782), 228, though Ruddiman records, 174, that a boll of corn sold for 18s. Scots in 1435 and for 30s. Scots in 1438.]

[25 ]Fleetwood was aware of this danger. He quoted from Antiq. Britan in Vita Joh. Pecham that ‘provisions were so scarce that parents did eat their own children’, but adds he hopes be need not be believed ‘’tis only an Expression of the greatest Want imaginable’ (Chronicon Preciosum, 78–9).

[g–g]variation 4–6

[26 ]Smith comments on feudal anarchy at III.ii.7, III.iv.9; cf. III.i.3 and V.iii.1.

[27 ]Regional variations in prices in England were declining in the thirteenth and fourteenth centuries. N. S. B. Gras, The Evolution of the English Corn Market from the Twelfth to the Eighteenth Century (London, 1915).

[28 ]Inaccuracy and the variety of conclusions reached on the basis of the same information may help to explain Smith’s lack of faith in political arithmetic as stated at IV.v.b.30. In his section on ‘Prix des grains en Angleterre’, Dupré de Saint Maur uses Fleetwood’s figures (Essai sur les monnoies, 183–8). His statistics, and those of Smith in the Appendix to Book I, are normally identical. In Letter 119, addressed to Hailes, dated 16 May 1769, Smith commented on ‘The Discrepancies which your Lordship has taken notice of in the prices of several different things’ as being similar to those which ‘occur in the antient Coutumes of many different provinces of france. Mr Du Pré de Saint Maur has tortured his brain to reconcile them and make them all consistent.’

[h–h]that 1

[i–i]that 1

[29 ]‘Without doubt the wheat of Chili is the finest in the world, and the fruits are all excellent in their kinds. Beef and Mutton are so cheap, that you may have a good cow for three dollars, and a fat sheep for two shillings. Their horses are extraordinary good; and though some of them go at a great price, you may have a very good one for four dollars, or about eighteen shillings of our money.’ (J. Byron, Narrative of the Hon. John Byron, containing an Account of the Great Distresses suffered by himself and his companions on the Coast of Patagonia from the Year 1740 until their Arrival in England 1746 (London, 1780), 226.)

[30 ]See above, I.xi.b.7. Smith comments on the long–run trends in prices of this kind in I.xi.l.

[31 ]See above, I.v.1.

[j–j]improved 5–6

[32 ]Smith comments on the falling price of meat at I.xi.b.19 and I.xi.1.8.

[33 ]See above, I.v.15.

[34 ]It is stated below, V.ii.k.15, that butcher’s meat is nowhere a necessary of life; Cf. I.xi.b.41. Smith discusses the relationship between wages and the price of corn in I.viii.

[k–k]agreeable to 1

[35 ]Cf. Harris, Essay, i.68: ‘. . . the value of a given quantity or sum of money, in any country, will be less or more, according as the sum total, or the whole quantity of money in currency, is greater or less, in proportion to the whole of the commodities of that country, exchangeable for money.’

[36 ]See above, I.v.i.

[37 ]The same point is made below, I.xi.n.1, and above, I.viii.24.

[38 ]The same point is made at I.viii.33.

[l–l]advancing 1–5

[39 ]The same point is made at I.ix.8.

[m–m]2–6

[40 ]See above, I.viii.

[n–n]2–6

[41 ]See above, I.xi.b.12 and IV.ix.37.

[o–o]remain 2

[ff* ]See his preface to Anderson’s Diplomata Scotiae.f [James Anderson, Selectus diplomatum et numismatum Scotiae thesaurus, ed. T. Ruddiman (Edinburgh, 1739), 82. In translation, T. Ruddiman, An Introduction to Mr. James Anderson’s Diplomata Scotiae (Edinburgh, 1782), 228, though Ruddiman records, 174, that a boll of corn sold for 18s. Scots in 1435 and for 30s. Scots in 1438.]

[f]2–6