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| Thursday. April. 7. 1763. - Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 5 Lectures On Jurisprudence [1762]

Edition used:

Lectures On Jurisprudence, ed. R.. L. Meek, D. D. Raphael and P. G. Stein, vol. V of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1982).

Part of: The Glasgow Edition of the Works and Correspondence of Adam Smith, 7 vols.

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| Thursday. April. 7. 1763.

Money as I observed now serves two severall purposes. It is first the measure of value. Every one tells you that the goods he has to sell are worth so many pounds, shillings, etc., as believing you know this as a measure. It is also the instrument of commerce, or medium of exchange and permutation. A shoe maker who has a mind to bye beef or bread does not offer shoes to the butcher, but converts or exchanges his shoes for money, and this again he exchanges for bread or beef. By means of money he brings his goods to market and purchases what he wants himself. I had begun to shew you how thep metalls gold and silver came to be the measure of value, for it was from thence that they came to be the instrument of commerce. When the things in commerce are so numerous that people can not easily remember the respective values, they find it necessary, as I observed, to have some common measure of the value of all. This as I observed is the commodity with which they are most familiar, whatever that be—sheep, or oxen, or any other.—When men deal | either to a small extent or in commodities of a small value, the naturall and innaccurate measures will be sufficient. In measures of length this is the case. One who should sell a few yards of coarse cloth of no great value would not be greatly a looser if he lost an inch or two on each yard by the inaccuracy of the measures, as that of a fathom measured by a mans sp<r>ead arms. These naturall measures taken from the human body are by no means accurate, varying in different persons. When therefore they dealt to a great extent, or in valuable commodities, they would naturally fall upon more accurate measure<s> which should be more certainly ascertaind; hence artificiall feet, yards, spans, paces, inches, etc. For in these more extensive exchanges a small innaccuracy often repeated will produce a great loss on the whole.—All wise men would see the necessity of this to prevent frauds and rogueries. The same was the case with regard to the measures of value, as soon as men came to be more carefull of their bargains. The naturall measures of sheep or oxen would not answer their purpose; a more precise measure was requisite, | the value of which could always be ascertain’d by its quantity. Metalls in generall are of this sort; one pound of iron or copper is pretty much of the same value as another, but in gold and silver particularly, as their fine<ne>ss is most certain[ed] and easily ascertain’d. Hence all people have used them in this manner, and came to say that such a commodity was worth so many pounds or talents of gold or silver instead of so many sheep or oxen, in the same manner as they usedq the artificiall instead of the natural fathom.—Hence also it came to be accounted the instrument of commerce. It is absolutely necessary that a market should be had in which to buy and sell commodity<s> of all sorts. Cattle from severall circumstances ceased to be fitted for this purpose. It had answered it very well in the age of shepherds. Every one had then cattle or sheep; he could take as many as he inclined for any commodity. They made an addition to his flock or herd and cost him nothing in | maintenance, asr the whole face of the earth was then one common pasture. Cattle would therefore be the most acceptable thing to every one and what every one would offer. But when land was divided amongst different proprietors, the great part of which was also employed in raising of corn, this could no longer be the case. Every one could then maintain only a certain number of cattle. Besides, there were many who could not keep cattle without a great expence, having no ground or but very little. The worker in brass or the dresser of leather could have his goods lye by him as long as he pleased at no expence; but the maintenance of an ox would be more perhaps than he could easily afford. Cattle therefore could no longer be this common measure. But it was absolutely necessary that they should have some common measure and instrument of exchange | in their stead. A weaver who wanted bread or beef of a baker or butcher could not always get them for his cloath, and they again wanting smith work could not get it for their commodities.—I want your goods but you do not want mine. We are both wanters perhaps but not of each others goods. So that there can be no exchange betwixt us unless we have some common instrument of traffick. Cattle were now laid aside. The most naturall and proper thing they could fall upon was the metall<s>, and of these gold and silver have severall advantages over the others. But any of them is pretty accurate, and we see accordingly that for a long time in the beginning of the Roman state copper was the measure of value and generall instrument of exchange, as iron was at Lacedaemon;40 the poverty of those state<s> was such that gold and silver were not introduced till the later times. The precious metalls are however [been] generally the instrument of commerce. A certain weight of them has always a certain value. The keeping a quantity of gold or silver by one costs him nothing. The<y> lose nothing | by it, which is not the case with the other metalls; and gold above all others is least corruptible. A[s] great values goes into little room, that is, a small quantity goes a great length in purchasing the necessaries of life, on account of their scarcity and beauty. Their value is not as Mr. Locke41 imagines founded on an agreement of men to put itt upon them; they have what we may call a naturall value, and would bear a high <?one> considered merely as a commodity, tho not used as the instrument of exchange. Their beauty is undoubtedly superior to that of the otheru mettalls; gold takes a finer polish than any other, and silver next to it. Besides this all instruments except those for cutting could be better <?if made> of the<m> than of any other metalls; all househould utensils, as plates, spoons, kettles, etc., et<c>. [all] with a few exceptions would be the better if made of gold or silver. As therefore they are the most beautifull, and if we except iron the most usefull, and are also the scarcest, they would naturally bear a high value and exchange for a great quantity of other commodities. Their scarcity | also fitted them for being the instrument of commerce. They therefrom have the higher price, and have therefore a great value in a small bulk by which means they are easily transported. A small quantity of silver is more easily carried about than the same value of coarse linnen or other commodity, and considerably more than iron or copper. And from thence it is that in some towns in Sweden they are obliged to carry the mony they intend to lay in their winterv provisions with to the market in a wheell barrow. As they had been already used as the measurew of value they were the more easily admitted in this way also. Every one values his own commodities in this way; whatever they be, bread, beer, or cloth, he will tell you they are worth so many pounds or shillings. No one could have any objections to accept of them, as he measured his goods by them and so also did all those he had to deall with.

In this manner money came to be the instrument of commerce, and all exchange, from being carried on by the intervention of cattle, was | carried on by the intervention of these metalls. In order to renderx them the more proper for this purpose it is necessary to ascertain two things, their weight and their fine<ne>ss. The first of these is the easiest, but even it does not want its difficulties. A balance, tho a simple machine, was not soon invented, and the Roman statera which preceded it was liable to many and great innaccuracies unless in very well skilled hands. And besides this the weighing of such valuable commodities as gold required great care and attention as well as a nice balance, and this is one great hindrance in the exchange of them. The fineness again is a matter still more difficult to be known; the alloy may be mixt both in silver and gold so as that the good coin can hardly be distinguished from the bad. This can not be known but by the hydrostaticall bance42 and not even then with great accuracy if the alloy be of lead.—The quantity being therefore not easily ascertaind without great hindrance, the exchange and the assaying being so difficult that | that is generally a trade by itself, some method was requisite to answer both of these ends that might ascertain both the quantity and fine<ne>ss of this common measure of value and instrument of commerce which was found to be so usefull. Coinage answered both of these ends. The publick finding how much money facilitated exchange and promoted commerce, which as it inriched the nation was also highly beneficiall to the government, besides that they greatly facilitated the payment of taxes, etc., it was therefore their interest to put it on the best footing. They therefore took upon them to coin money of gold and silver and put a stamp upon it, which tho it neither added to nor diminish’d the value gave every one who saw it the publick faith that it was of such a weight43 and such a fine<ne>ss. The first thing in all probability which would be ascertaind by coinage would be the fine<ne>ss, which was most difficult to be discoveredy befor the art of milling or stamping the edges was invented, and that of fitting the stamp precisely to the size of the metall, so | that the first coin would be muchz of the same nature as the Spanish ingots or pieces of eight, the stamp of which ascertains only the value as to the fine<ne>ss. The weighing, tho difficulty done with accuracy, was yet what any ordinary man was capable of. Coin however becomes most perfect when both the fine<ne>ss and the quantity are ascertaind; payments can then be made by the tail44 instead of weight, which in small summs is much more expeditious. The names of silver coins and of nominall summs of gold or silver wer<e> regulated at first by the names of the w<e>ight of certain quantities of silver, as silver was generally the standard.45 There must be but one standard as no one thing can have two values; and as silver is more frequently used it came to be the standard. The person who wants to bye a thing of small value in the market can not give out gold; the daily expensea will not allow of it. He first exchanges his gold into silver, and then changes his silver for the commodity he stands in need of. | A certain number of pieces of coin were concev’d to be in every weight. The French livre was originally the pound troys or librab of silver. This pound was that used at the city of Troy in Blank in MS.46 , a place of great resort to the merchants of all countries.—The pound English was originally a pound of silver, Tower weight, which was somewhat less than the Troy pound, and seems to have been the same with the Roman.

We may observe that tho the measures of value constantly decrease, the measures of quantity are always increasing. The English pound is but little more than 1/3 of what it was in the time of Edward 1st. The French livre is now but of ten pence value, which before in the time of Charlemagne was about 72 times that some,c being a full Troy pound. So that the measures of value have been continually shrinking. The government have found their interest in diminishing the measures of value, but have not had the same interest in diminishing the measure<s> of quantity. The dealers in | commodities would find profit by contracting these measures, but as the publick have no advantage in this there is generally a magistrate appointed to regulate and oversee the measures. And as the dealers generally contract them, these magistrates go to the safest side and rather increase them; and this has made them to grow in most countries. Our measures of length, our foot, yard, pace, et<c>. are all borrowd from the Roman, but are respectively considerably larger.

The case has been the same with respect to our wet measures and our weights. The standard of the pound in the city of Troy was that used over all Europe; this too was considerably larger, to wit by half an ounce, than the Tower or Roman weight. This weight also has been laid aside in all commodities, unless gold and silver, and has been succeded by another called the avoirdupois weig<h>t, which according | to the meaning of the name is sometimes calld heavy weight. The caused of the introduction of this was that it had been customary to give the byer the cast of ballancing; and as this was an uncertain thing the merchants modified it to 3 ounces, and the pound came to consist of 15 oz instead of 12. But as this number would not divide so conveniently as the number twelve, as it divided only by 3 and 5, they added another ounce which made it 16, but at the same time lessend the ounce so that the avoirdupois weight is about 14 troy ounces. The measure of weight has thus been increasing, and so have all measures of quantity, tho the measure<s> of value have diminished. The pound Easterling, or that used in the Hanse towns, was agreed upon as the standard in England of weight, and this was what was called a pound of money. But the present pound is but about one third of it. The pounde troy contains 62 shillings, but as the troy pound was somewhat larger the difference is not entirely so great.47

| The necessities or frauds of the government have been the occasion of this shrinking in the measures of value. It was necessary that the government should be at the trouble and expence of coinage; no other could find their interest in it. The stamp gives it no additionall value; it merely ascertains the value. The government found it their interest to be at that expence, as money facilitated taxes and the intercourse by commerce, which as it enriched the people was beneficial to the government. A private man had no motive to undertake it. He might put his stamp upon it, as he may do still, but this will not be of any service. Besides, no one man would have such generall credit as that his word would be taken for the quantity or fine<ne>ss of the mettall. It was necessary therefore to ordain that no other should coin money besides the government, for tho the government might be honest there was great danger that a private man, as the temptation was great, might falsify the publick money, putting more alloy into it. So that the coining of money in the manner of the publick was to be considered as a fraud of the most heinous nature and a great | affront on the government. But as faith was put in the king illegible wordf government it was also necessary that all should be oblidged to accept of them. You must accept of the kings coin under the value and denomination that is put upon it, and to refuse it is an affront to the government which is liable to severall penalties. The offer of money must be considere<d> as a legall tender of payment, and it was necessary that it should be so, that whether a creditor accepted of it or not the offer of the payment in this coin should be considered as freeing him from all trouble and disquietude from the government. Any one[n]g may issue money in his own name and if it be accepted it is well; but no one is obliged to accept of it as a legall tender of payment. The power and authority of the government amongst a barbarous and unobserving people would easily pass upon them coin of a less value; and they were often tempted also to endeavour in this manner to debase its standard by giving the same quantity of silver a larger proportion of alloy, and this in the language of the Mint is | called raising the coin, as it raises the value of the quantity of silver. If out of 4 oz, which is nearly equall to 20 sh, you should coin 40 by adding moreh alloy, you debase the standard one half and double the value, as two oz then have the value of one p. sterl. This was often their interest <?where> they had but £1,000,000 in the Treasury and had occasion for 2 millions to pay off their debts, fullfill their contracts, and pay soldiers and mariners. They coin this one million into 2, debasing its standard and making the new coin resemble the old as nearly as possible; and by this means, in48 appears, they discharge all their debts. This does well enough for some time. And thus a temporary interest of the government by this fraud diminishes the measures of value.—But like all other frauds it is merely a temporary temptation, and in the whole is a loss to those who practise it. The government of England being the freeest, and the people most upon the watch, the coin is sunk not quite 1/3 of the value; in France it is reduced to less than 1/70, and more or less | in all others; in Scotland to 1/36, as the Scotsi pound was originally the pound troy. For as the Scots had the greatest intercourse with the French, their coin generally [their coin generally] kept pace with it till the time of James the 6th [time], since which it has been on the same footing with the English, which has not been altered. But still the coin is on a precarious footing, being under the management of the king and Privy Councill, as the Parliament can not legally intermeddle.— — — — —

[p]Reading doubtful

[q]Reading doubtful

[r]Reading doubtful

[40 ]Sparta. Plutarch, Life of Lycurgus, 9; cf. Pliny, Historia Naturalis, XXXIII.13.43.

[s]The last two words replace ‘small quantity’

[41 ]Civil Government, § 50.

[t]Reading doubtful

[u]‘valu’ deleted

[v]Replaces ‘month’

[w]Replaces ‘instrument’

[x]Replaces ‘ascertain’

[42 ]Reading doubtful. No doubt ‘balance’ was intended.

[43 ]Aristotle, Politics, 1257a38–41, quoted in Pufendorf, V.1.12.

[y]‘and the other’ deleted

[z]Reading doubtful

[44 ]By tale: i.e. by number, as distinguished from by weight.

[45 ]Harris, I.28; cf. II.1, note.

[a]Reading doubtful

[b]Replaces an illegible word

[46 ]Blank in MS. Troyes in Champagne.

[c]Sic

[d]Reading doubtful

[e]Replaces ‘ounce’

[47 ]Harris, I.31.

[f]Illegible word

[g]Reading doubtful

[h]Reading of last two words doubtful

[48 ]Sic. Presumably ‘it’ was intended.

[i]Reading doubtful