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• Introduction, By Henry Higgs
• Previous Editions, By Henry Higgs
• Essay On the Nature of Trade In General
• Part One
• Part I, Chapter I: Of Wealth
• Part I, Chapter II: Of Human Societies
• Part I, Chapter III: Of Villages
• Part I, Chapter IV: Of Market Towns
• Part I, Chapter V: Of Cities
• Part I, Chapter VI: Of Capital Cities
• Part I, Chapter VII: The Labour of the Husbandman Is of Less Value Than That of the Handicrafts-man
• Part I, Chapter VIII: Some Handicrafts-men Earn More, Others Less, According to the Different Cases and Circumstances
• Part I, Chapter IX: The Number of Labourers, Handicraftsmen and Others, Who Work In a State Is Naturally Proportioned to the Demand For Them
• Part I, Chapter X: The Price and Intrinsic Value of a Thing In General Is the Measure of the Land and Labour Which Enter Into Its Production
• Part I, Chapter XI: Of the Par Or Relation Between the Value of Land and Labour
• Part I, Chapter XII: All Classes and Individuals In a State Subsist Or Are Enriched At the Expense of the Proprietors of Land
• Part I, Chapter XIII: The Circulation and Exchange of Goods and Merchandise As Well As Their Production Are Carried On In Europe By Undertakers, and At a Risk
• Part I, Chapter XIV: The Fancies, the Fashions, and the Modes of Living of the Prince, and Especially of the Landowners, Determine the Use to Which Land Is Put In a State and Cause the Variations In the Market-prices of All Things
• Part I, Chapter XV: The Increase and Decrease of the Number of People In a State Chiefly Depend On the Taste, the Fashions, and the Modes of Living of the Proprietors of Land
• Part I, Chapter XVI: The More Labour There Is In a State the More Naturally Rich the State Is Esteemed
• Part I, Chapter XVII: Of Metals and Money, and Especially of Gold and Silver
• Part Two
• Part Ii, Chapter I: Of Barter
• Part Ii, Chapter II: Of Market Prices
• Part Ii, Chapter III: Of the Circulation of Money
• Part Ii, Chapter IV: Of Further Reflection On the Rapidity Or Slowness of the Circulation of Money In Exchange
• Part Ii, Chapter V: Of the Inequality of the Circulation of Hard Money In a State
• Part Ii, Chapter VI: Of the Increase and Decrease In the Quantity of Hard Money In a State
• Part Ii, Chapter VII: Continuation of the Same Subject
• Part Ii, Chapter VIII: Further Reflection On the Same Subject
• Part Ii, Chapter IX: Of the Interest of Money and Its Causes
• Part Ii, Chapter X: Of the Causes of the Increase and Decrease of the Interest of Money In a State
• Part Three
• Part Iii, Chapter I: Of Foreign Trade
• Part Iii, Chapter II: Of the Exchanges and Their Nature
• Part Iii, Chapter III: Further Explanations of the Nature of the Exchanges
• Part Iii, Chapter IV: Of the Variations In the Proportion of Values With Regard to the Metals Which Serve As Money
• Part Iii, Chapter V: Of the Augmentation and Diminution of Coin In Denomination
• Part Iii, Chapter VI: Of Banks and Their Credit
• Part Iii, Chapter VII: Further Explanations and Enquiries As to the Utility of a National Bank
• Part Iii, Chapter VIII: Of the Refinements of Credit of General Banks
• Richard Cantillon and the Nationality of Political Economy, By W. Stanley Jevons
• Life and Work of Richard Cantillon, By Henry Higgs
• Appendix a
• Appendix B: Bibliography

Part I, Chapter XVII

Of Metals and Money, and especially of Gold and Silver

As Land produces more or less Corn according to its fertility and the Labour spent upon it, so the Mines of Iron, Lead, Tin, Gold, Silver, etc. produce more or less of these Metals according to the richness of the Mines and the quantity and quality of the Labour spent upon them, in digging, draining, smelting, refining, etc. Work in Silver Mines is dear on account of the mortality it causes, since rarely more than five or six years are spent in that labour.

The real or intrinsic Value of Metals is like everything else proportionable to the Land and Labour that enters into their production. The outlay on the Land for this production is considerable only so far as the Owner of the Mine can obtain a profit from the work of the Miners when the veins are unusually rich. The Land needed for the subsistence of the Miners and Workers, that is the Mining Labour, is often the principal expense and the Ruin of the Proprietor.

The Market Value of Metals, as of other Merchandise or Produce, is sometimes above, sometimes below, the intrinsic Value, and varies with their plenty or scarcity according to the demand.

If the Proprietors of Land and the lower orders in a State who imitate them, rejected the use of Tin and Copper, wrongly supposing that they are injurious to health, and if they all made use of dishes and utensils of earthenware, these Metals would be at a very low price in the Markets and the Work that was carried on to extract them from the Mine would be discontinued. But as these metals are found useful, and are employed in the service of life, they will always have a Market Value corresponding to their plenty or rarity and the demand for them; and they will always be mined to replace what is lost by daily use.

Iron is not merely serviceable for the daily use of common life but may be said to be in a certain sense necessary; and if the Americans, who did not make use of it before the discovery of their Continent, had found Mines of it and known how to use it, they would doubtless have laboured to produce it at any cost.

Gold and Silver are capable of serving not only the same purpose as Tin and Copper but most of the purposes of Lead and Iron. They have this further advantage over other metals that they are not consumed by fire and are so durable that they may be esteemed permanent bodies. It is not surprising, therefore, that Men who found the other metals useful should have esteemed Gold and Silver even before they are used in exchange. The Romans prized them from the foundation of Rome and yet only used them as money 500 years later. Perhaps all other Nations did the like and only adopted these Metals as Money long after using them for other purposes. However we find from the oldest historians that from time immemorial gold and silver were used as money in Egypt and Asia, and we learn in the Book of Genesis that silver monies were made in the time of Abraham.

Let us suppose that Silver was first found in a Mine of Mount Niphates in Mesopotamia. It is natural to think that one or more Proprietors of Land, finding this metal beautiful and useful, were the first to use it, and willingly encouraged the Miner or Undertaker to extract more of it from the Mine, giving him in return for his Work and that of his Assistants so much of the Produce of the Land as they needed for their Maintenance. This Metal becoming more and more esteemed in Mesopotamia, if the large Landowners bought ewers of silver, the lower classes, according to their means or savings, might buy silver cups; and the Undertaker of the Mine, seeing a constant demand for his Merchandise, gave it without doubt a Value proportionable to its quality or weight against the other products or merchandise which he took in exchange. While everybody looked on this Metal as a precious and durable object and strove to own a few pieces of it, the Undertaker, who alone could supply it, was in a manner master to demand in exchange an arbitrary quantity of other produce and Merchandise.

Suppose now that on the further side of the River Tigris, and therefore outside Mesopotamia, a new Silver Mine is discovered, of which the veins are incomparably richer and larger than those of Mount Niphates, and that the working of this new Mine which was easily drained was less laborious than that of the first.

The Undertaker of this new Mine was naturally in a position to supply silver much cheaper than the Undertaker of Mount Niphates, and the People of Mesopotamia who wished to have pieces and objects of silver would find it more advantageous to export their Merchandise and give it to the Undertaker of the new Mine in exchange for Silver than to take it from the original Undertaker. This last, finding a smaller demand, would of necessity reduce his price; but the new Undertaker lowering his price in proportion the first Adventurer would be obliged to stop his output, and then the price of Silver in exchange for other Merchandise and Produce would be necessarily fixed by that which was put upon it at the new Mine. Silver then cost less to the People beyond Tigris than to those of Mesopotamia who had to bear the cost of a long carriage of their Merchandise and produce to obtain Silver.

It is easy to perceive that when several Silver Mines were found and the Proprietors of Land had taken a fancy to this Metal, they were imitated by the other Classes, and that the pieces and fragments of silver, even when not worked up, were sought after eagerly, because nothing was easier than to make such articles from them as were desired, according to their quantity and weight. As this metal was esteemed at its cost value, at least, a few people who possessed some of it, finding themselves in need, could pawn it to borrow the things they wanted, and even to sell it later outright. Thence arose the custom of fixing its value in proportion to its quantity or weight as against all products and merchandise. But as silver can be combined with Iron, Lead, Tin, Copper, etc. which are not such scarce Metals and are mined at less expense, the exchange of Silver was subject to much fraud, and this caused several Kingdoms to establish Mints in order to certify by a public coinage the true quantity of silver that each coin contains and to return to individuals who bring bars or ingots of Silver to it the same quantity in coins bearing a stamp or certificate of the true quantity of Silver they contain.

The costs of these certificates or coinage are sometimes paid by the Public, or by the Prince,—the method followed in ancient times at Rome and today in England; sometimes those who take silver to be coined pay for minting as in the custom in France.

Pure Silver is hardly ever found in the Mines. The Ancients did not know the art of refining to perfection. They always made their silver coins of fine silver, and yet those which remain to us of the Greeks, Romans, Jews and Asiatics are never perfectly pure. Today there is more skill, the secret of making silver pure has been discovered. The different methods of refining it are not part of my subject. Many authors have treated of it, M. Boizard among others. I will only observe that there is a good deal of expense in refining silver and for this reason an ounce of fine silver is generally preferred to two ounces which contain one half of copper or other alloy. It is expensive to separate the alloy and extract the one ounce of pure silver which is in these two ounces, while by simple melting any other metal can be combined with silver in any proportion desired. If Copper is sometimes used as an alloy to fine silver it is only to render it more malleable and more suitable for the objects made of it. But in the valuation of all Silver the Copper or Alloy is reckoned at nothing and only the amount of fine pure silver is considered. For this reason an Assay is always made to ascertain the amount of pure silver.

Assaying is merely refining a little piece of a bar of silver, for example, to find how much pure silver it contains and to judge the whole bar by this small sample. A small portion of the bar, 12 grains for example, is cut off and nicely weighed in balances which are so accurate that a thousandth part of a grain will sometimes turn the scale. Then the sample is refined by aquafortis or by fire and the copper or alloy separated. When the Silver is pure it is weighed again in the same balance and if it then weighs 11 grains instead of 12 the Assayer says that the bar is 11 parts fine, i.e. it contains 11 parts of pure silver and 1 of copper or alloy. This will be more easily understood by those who have the curiosity to see assays carried out. There is nothing mysterious about it. Gold is assayed in the same way, with this difference only that the degrees of fineness of Gold are divided into 24 parts called Carats, since Gold is more precious; and these Carats are divided into 32 parts, while the degrees of fineness of silver are only divided into twelfths, called Deniers, and these are divided into 24 grains apiece.

Usage has conferred upon Gold and Silver the title Intrinsic Value, to designate and signify the quantity of true gold or silver contained in a bar; but in this Essay I have always used the term Intrinsic Value to signify the amount of Land and Labour which enter into Production, not having found any term more suitable to express my meaning. I mention this only to avoid misunderstanding. When Gold and Silver are not in question the term will always hold good without any confusion.

We have seen that the metals such as Gold, Silver, Iron, etc. serve several purposes and have a value proportionable to the Land and Labour which enter into their Production. We shall see in Part II of this essay that Men have been forced of necessity to employ a common measure to find in their dealings the proportion and the value of the Products and Merchandise they wished to exchange. The only question is what product or Merchandise would be most suitable for this common measure, and whether it has not been Necessity rather that Fancy which has given this preference to Gold, Silver and Copper which are generally in use today for this purpose.

Ordinary products like Corn, Wine, Meat, etc. have a real value and serve the needs of life, but they are all perishable and difficult to be transported, and therefore hardly suitable to serve as a common measure.

Merchandise such as Cloth, Linen, Leather, etc. is perishable also and cannot be subdivided without in some sort changing their Value for the service of Man. Like raw produce they cost a good deal for carriage; they even cause expense for storage, and consequently are unsuitable for a common measure.

Diamonds and other precious stones, even if they had no intrinsic value and were esteemed only from fancy, would be suitable for a common measure if they were not susceptible of imitation and if they could be divided without loss. With these defects and that of being unserviceable in use they cannot serve as a common measure.

Iron, which is always useful and fairly durable would not serve badly in default of a better. It is consumed by fire, and is too bulky owing to its quantity. It was used from the time of Lycurgus till the Peloponnesian War: but as its value was necessarily based intrinsically, or in proportion to the Land and Labour which entered into its production, a great quantity of it was needed for small value. It is curious that its quality was spoiled by Vinegar to make it useless for service and to keep it for exchange only. Thus it could serve the austere Spartans alone, and could not continue to do so even with them as soon as they extended their communication with other countries. To ruin the Spartans it needed only to find rich Iron Mines, to make Money like theirs, and to draw in exchange their products and Merchandise whilst they could get nothing from abroad for their spoiled iron. At that time they did not concern themselves with any foreign trade, but only with War.

Lead and Tin have the same disadvantage of bulk as iron and are consumable by fire, but in case of need they would not do badly for exchange if copper were not more suitable and durable.

Copper alone served as money to the Romans until 484 A.U.C., and in Sweden it is still used even in large payments: but it is too bulky for very considerable payments, and the Swedes themselves prefer payment in gold or silver rather than in Copper.

In the American Colonies Tobacco, Sugar, and Cocoa have been used as Money: but these commodities are too bulky, perishable, and of unequal quality: they are therefore hardly suitable to serve as money or a common measure of value.

Gold and Silver alone are of small volume, equal goodness, easily transported, divisible without loss, convenient to keep, beautiful and brilliant in the articles made of them and durable almost to eternity. All who have used other articles as Money return to these as soon as they can get enough of them for exchange. It is only in the smallest purchases that gold and silver are unsuitable. Gold or even silver coins of the value of a liard or a denier would be too small to be handled easily. It is said that the Chinese, in small transactions, cut off little pieces with scissors from their plates of silver, and weighed the pieces. But since their trade with Europe they have begun to use copper for such occasions.

It is then not surprising that all Countries have arrived at using gold and silver as money or a common measure of value and copper for small payments. Utility and Need have decided them, and not Fancy or Consent. Silver requires much Labour and dear Labour for its production. Silver Miners are highly paid because they rarely live more than five or six years at this work, which causes a high mortality: and so a little silver coin corresponds to as much Land and Labour as a large copper coin.

Money or the common measure of Value must correspond in fact and reality in terms of Land and Labour to the articles exchanged for it. Otherwise it would have only an imaginary Value. If for example a Prince or a Republic gave currency in the State to something which had not such a real and intrinsic value, not only would the other States refuse to accept it on that footing but the Inhabitants themselves would reject it when they perceived its lack of real value. When towards the end of the first Punic War the Romans wished to give the copper as, weighing two ozs., the same value as the as of 1 lb. or 12 oz. had before, it could not long be maintained in exchange. The History of all times shews that when Princes have debased their money, keeping it at the same nominal value, all raw produce and manufacturers have gone up in price in proportion to the debasement of the coinage.

Mr Locke says that the consent of Mankind has given its value to Gold and Silver. This cannot be doubted since absolute Necessity had no share in it. It is the same consent which has given and does give every day a value to Lace, Linen, fine Cloths, Copper, and other Metals. Man could subsist without any of these things, but it must not be concluded that they have but an imaginary value. They have a value proportionable to the Land and Labour which enter into their Production. Gold and Silver, like other merchandise and raw produce, can only be produced at costs roughly proportionable to the value set upon them, and whatever Man produces by Labour, this Labour must furnish his maintenance. It is the great principle that one hears every day from the mouths of the humble classes who have no part in our speculations, and who live by their Labour or their Undertakings. "Everybody must live."

End of the first Part.

PART TWO