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An Inquiry Into The Nature And Causes Of The Wealth Of Nations - Chapter 11 continue...

1. Introduction And Plan Of The Work

2. Book 1, Chapter 1

3. Chapter 2

4. Chapter 3

5. Chapter 4

6. Chapter 5

7. Chapter 6

8. Chapter 7

9. Chapter 8

10. Chapter 8 continue

11. Chapter 9

12. Chapter 10

13. Chapter 10 continue

14. Chapter 11

15. Chapter 11 continue

16. Chapter 11 continue.

17. Chapter 11 continue..

18. Chapter 11 continue...

19. Conclusion of the Chapter 11

20. Book 2 Introduction

21. Chapter 1

22. Chapter II

23. Chapter II continue

24. Chapter II continue

25. Chapter 3

26. Chapter 4

27. Chapter 5

28. Book 3, Chapter 1

29. Chapter 2

30. Chapter 3

31. Chapter 4

32. Book 4, Chapter 1

33. Chapter 1 continue

34. Chapter 2

35. Chapter 3, Part 1

36. Chapter 3, Part 2

37. Chapter 4

38. Chapter 5

39. Chapter 5 continue

40. Chapter 6

41. Chapter 7, Part 1

42. Chapter 7, Part 2

43. Chapter 7, Part 3

44. Chapter 7, Part 3 continue

45. Chapter 8

46. Chapter 9

47. Book 5, Chapter 1, Part 1

48. Chapter 1, Part 2

49. Chapter 1, Part 3

50. Chapter 1, Part 3 continue

51. Chapter 1, Part 3 continue B

52. Chapter 1, Part 4

53. Chapter 2, Part 1

54. Chapter 2, Part 2

55. Chapter 2, Part 2 continue

56. Chapter 2, Part 2 continue B

57. Chapter 2, Part 2 continue C

58. Chapter 2, Part 2 continue D

59. Chapter 3

60. Chapter 3 continue







Conclusion of the Digression concerning the Variations in the Value of
Silver.

The greater part of the writers who have collected the money price of
things in ancient times, seem to have considered the low money price
of corn, and of goods in general, or, in other words, the high value of
gold and silver, as a proof, not only of the scarcity of those metals,
but of the poverty and barbarism of the country at the time when it took
place. This notion is connected with the system of political economy,
which represents national wealth as consisting in the abundance and
national poverty in the scarcity, of gold and silver; a system which
I shall endeavour to explain and examine at great length in the fourth
book of this Inquiry. I shall only observe at present, that the high
value of the precious metals can be no proof of the poverty or barbarism
of any particular country at the time when it took place. It is a proof
only of the barrenness of the mines which happened at that time to
supply the commercial world. A poor country, as it cannot afford to buy
more, so it can as little afford to pay dearer for gold and silver than
a rich one; and the value of those metals, therefore, is not likely to
be higher in the former than in the latter. In China, a country much
richer than any part of Europe, the value of the precious metals is much
higher than in any part of Europe. As the wealth of Europe, indeed, has
increased greatly since the discovery of the mines of America, so the
value of gold and silver has gradually diminished. This diminution of
their value, however, has not been owing to the increase of the real
wealth of Europe, of the annual produce of its land and labour, but to
the accidental discovery of more abundant mines than any that were known
before. The increase of the quantity of gold and silver in Europe, and
the increase of its manufactures and agriculture, are two events which,
though they have happened nearly about the same time, yet have arisen
from very different causes, and have scarce any natural connection with
one another. The one has arisen from a mere accident, in which neither
prudence nor policy either had or could have any share; the other,
from the fall of the feudal system, and from the establishment of a
government which afforded to industry the only encouragement which it
requires, some tolerable security that it shall enjoy the fruits of
its own labour. Poland, where the feudal system still continues to
take place, is at this day as beggarly a country as it was before the
discovery of America. The money price of corn, however, has risen; the
real value of the precious metals has fallen in Poland, in the same
manner as in other parts of Europe. Their quantity, therefore, must have
increased there as in other places, and nearly in the same proportion to
the annual produce of its land and labour. This increase of the quantity
of those metals, however, has not, it seems, increased that annual
produce, has neither improved the manufactures and agriculture of the
country, nor mended the circumstances of its inhabitants. Spain and
Portugal, the countries which possess the mines, are, after Poland,
perhaps the two most beggarly countries in Europe. The value of the
precious metals, however, must be lower in Spain and Portugal than in
any other part of Europe, as they come from those countries to all other
parts of Europe, loaded, not only with a freight and an insurance, but
with the expense of smuggling, their exportation being either prohibited
or subjected to a duty. In proportion to the annual produce of the land
and labour, therefore, their quantity must be greater in those countries
than in any other part of Europe; those countries, however, are poorer
than the greater part of Europe. Though the feudal system has been
abolished in Spain and Portugal, it has not been succeeded by a much
better.

As the low value of gold and silver, therefore, is no proof of the
wealth and flourishing state of the country where it takes place; so
neither is their high value, or the low money price either of goods
in general, or of corn in particular, any proof of its poverty and
barbarism.

But though the low money price, either of goods in general, or of corn
in particular, be no proof of the poverty or barbarism of the times,
the low money price of some particular sorts of goods, such as cattle,
poultry, game of all kinds, etc. in proportion to that of corn, is a
most decisive one. It clearly demonstrates, first, their great abundance
in proportion to that of corn, and, consequently, the great extent of
the land which they occupied in proportion to what was occupied by corn;
and, secondly, the low value of this land in proportion to that of corn
land, and, consequently, the uncultivated and unimproved state of the
far greater part of the lands of the country. It clearly demonstrates,
that the stock and population of the country did not bear the same
proportion to the extent of its territory, which they commonly do in
civilized countries; and that society was at that time, and in that
country, but in its infancy. From the high or low money price, either of
goods in general, or of corn in particular, we can infer only, that the
mines, which at that time happened to supply the commercial world with
gold and silver, were fertile or barren, not that the country was rich
or poor. But from the high or low money price of some sorts of goods in
proportion to that of others, we can infer, with a degree of probability
that approaches almost to certainty, that it was rich or poor, that the
greater part of its lands were improved or unimproved, and that it was
either in a more or less barbarous state, or in a more or less civilized
one.

Any rise in the money price of goods which proceeded altogether from
the degradation of the value of silver, would affect all sorts of goods
equally, and raise their price universally, a third, or a fourth, or a
fifth part higher, according as silver happened to lose a third, or a
fourth, or a fifth part of its former value. But the rise in the price
of provisions, which has been the subject of so much reasoning and
conversation, does not affect all sorts of provisions equally. Taking
the course of the present century at an average, the price of corn,
it is acknowledged, even by those who account for this rise by the
degradation of the value of silver, has risen much less than that of
some other sorts of provisions. The rise in the price of those other
sorts of provisions, therefore, cannot be owing altogether to the
degradation of the value of silver. Some other causes must be taken into
the account; and those which have been above assigned, will, perhaps,
without having recourse to the supposed degradation of the value of
silver, sufficiently explain this rise in those particular sorts of
provisions, of which the price has actually risen in proportion to that
of corn.

As to the price of corn itself, it has, during the sixty-four first
years of the present century, and before the late extraordinary course
of bad seasons, been somewhat lower than it was during the sixty-four
last years of the preceding century. This fact is attested, not only
by the accounts of Windsor market, but by the public fiars of all the
different counties of Scotland, and by the accounts of several different
markets in France, which have been collected with great diligence and
fidelity by Mr Messance, and by Mr Dupré de St Maur. The evidence is
more complete than could well have been expected in a matter which is
naturally so very difficult to be ascertained.

As to the high price of corn during these last ten or twelve years,
it can be sufficiently accounted for from the badness of the seasons,
without supposing any degradation in the value of silver.

The opinion, therefore, that silver is continually sinking in its value,
seems not to be founded upon any good observations, either upon the
prices of corn, or upon those of other provisions.

The same quantity of silver, it may perhaps be said, will, in the
present times, even according to the account which has been here given,
purchase a much smaller quantity of several sorts of provisions than it
would have done during some part of the last century; and to ascertain
whether this change be owing to a rise in the value of those goods,
or to a fall in the value of silver, is only to establish a vain and
useless distinction, which can be of no sort of service to the man who
has only a certain quantity of silver to go to market with, or a certain
fixed revenue in money. I certainly do not pretend that the knowledge
of this distinction will enable him to buy cheaper. It may not, however,
upon that account be altogether useless.

It may be of some use to the public, by affording an easy proof of the
prosperous condition of the country. If the rise in the price of some
sorts of provisions be owing altogether to a fall in the value of
silver, it is owing to a circumstance, from which nothing can be
inferred but the fertility of the American mines. The real wealth of the
country, the annual produce of its land and labour, may, notwithstanding
this circumstance, be either gradually declining, as in Portugal and
Poland; or gradually advancing, as in most other parts of Europe. But if
this rise in the price of some sorts of provisions be owing to a rise
in the real value of the land which produces them, to its increased
fertility, or, in consequence of more extended improvement and good
cultivation, to its having been rendered fit for producing corn; it is
owing to a circumstance which indicates, in the clearest manner, the
prosperous and advancing state of the country. The land constitutes by
far the greatest, the most important, and the most durable part of the
wealth of every extensive country. It may surely be of some use, or, at
least, it may give some satisfaction to the public, to have so decisive
a proof of the increasing value of by far the greatest, the most
important, and the most durable part of its wealth.

It may, too, be of some use to the public, in regulating the pecuniary
reward of some of its inferior servants. If this rise in the price of
some sorts of provisions be owing to a fall in the value of silver,
their pecuniary reward, provided it was not too large before, ought
certainly to be augmented in proportion to the extent of this fall. If
it is not augmented, their real recompence will evidently be so much
diminished. But if this rise of price is owing to the increased value,
in consequence of the improved fertility of the land which produces
such provisions, it becomes a much nicer matter to judge, either in what
proportion any pecuniary reward ought to be augmented, or whether
it ought to be augmented at all. The extension of improvement and
cultivation, as it necessarily raises more or less, in proportion to the
price of corn, that of every sort of animal food, so it as necessarily
lowers that of, I believe, every sort of vegetable food. It raises the
price of animal food; because a great part of the land which produces
it, being rendered fit for producing corn, must afford to the landlord
anti farmer the rent and profit of corn land. It lowers the price of
vegetable food; because, by increasing the fertility of the land, it
increases its abundance. The improvements of agriculture, too, introduce
many sorts of vegetable food, which requiring less land, and not more
labour than corn, come much cheaper to market. Such are potatoes
and maize, or what is called Indian corn, the two most important
improvements which the agriculture of Europe, perhaps, which Europe
itself, has received from the great extension of its commerce and
navigation. Many sorts of vegetable food, besides, which in the rude
state of agriculture are confined to the kitchen-garden, and raised only
by the spade, come, in its improved state, to be introduced into common
fields, and to be raised by the plough; such as turnips, carrots,
cabbages, etc. If, in the progress of improvement, therefore, the real
price of one species of food necessarily rises, that of another as
necessarily falls; and it becomes a matter of more nicety to judge how
far the rise in the one may be compensated by the fall in the other.
When the real price of butcher's meat has once got to its height (which,
with regard to every sort, except perhaps that of hogs flesh, it seems
to have done through a great part of England more than a century ago),
any rise which can afterwards happen in that of any other sort of animal
food, cannot much affect the circumstances of the inferior ranks of
people. The circumstances of the poor, through a great part of England,
cannot surely be so much distressed by any rise in the price of poultry,
fish, wild-fowl, or venison, as they must be relieved by the fall in
that of potatoes.

In the present season of scarcity, the high price of corn no doubt
distresses the poor. But in times of moderate plenty, when corn is at
its ordinary or average price, the natural rise in the price of any
other sort of rude produce cannot much affect them. They suffer more,
perhaps, by the artificial rise which has been occasioned by taxes in
the price of some manufactured commodities, as of salt, soap, leather,
candles, malt, beer, ale, etc.

Effects of the Progress of Improvement upon the real Price of
Manufactures.

It is the natural effect of improvement, however, to diminish gradually
the real price of almost all manufactures. That of the manufacturing
workmanship diminishes, perhaps, in all of them without exception. In
consequence of better machinery, of greater dexterity, and of a more
proper division and distribution of work, all of which are the natural
effects of improvement, a much smaller quantity of labour becomes
requisite for executing any particular piece of work; and though, in
consequence of the flourishing circumstances of the society, the real
price of labour should rise very considerably, yet the great diminution
of the quantity will generally much more than compensate the greatest
rise which can happen in the price.

There are, indeed, a few manufactures, in which the necessary rise in
the real price of the rude materials will more than compensate all the
advantages which improvement can introduce into the execution of the
work In carpenters' and joiners' work, and in the coarser sort of
cabinet work, the necessary rise in the real price of barren timber, in
consequence of the improvement of land, will more than compensate
all the advantages which can be derived from the best machinery, the
greatest dexterity, and the most proper division and distribution of
work.

But in all cases in which the real price of the rude material
either does not rise at all, or does not rise very much, that of the
manufactured commodity sinks very considerably.

This diminution of price has, in the course of the present and preceding
century, been most remarkable in those manufactures of which the
materials are the coarser metals. A better movement of a watch, than
about the middle of the last century could have been bought for twenty
pounds, may now perhaps be had for twenty shillings. In the work of
cutlers and locksmiths, in all the toys which are made of the coarser
metals, and in all those goods which are commonly known by the name of
Birmingham and Sheffield ware, there has been, during the same period,
a very great reduction of price, though not altogether so great as in
watch-work. It has, however, been sufficient to astonish the workmen of
every other part of Europe, who in many cases acknowledge that they
can produce no work of equal goodness for double or even for triple
the price. There are perhaps no manufactures, in which the division of
labour can be carried further, or in which the machinery employed admits
of' a greater variety of improvements, than those of which the materials
are the coarser metals.

In the clothing manufacture there has, during the same period, been no
such sensible reduction of price. The price of superfine cloth, I have
been assured, on the contrary, has, within these five-and-twenty or
thirty years, risen somewhat in proportion to its quality, owing, it
was said, to a considerable rise in the price of the material, which
consists altogether of Spanish wool. That of the Yorkshire cloth, which
is made altogether of English wool, is said, indeed, during the course
of the present century, to have fallen a good deal in proportion to its
quality. Quality, however, is so very disputable a matter, that I look
upon all information of this kind as somewhat uncertain. In the clothing
manufacture, the division of labour is nearly the same now as it was
a century ago, and the machinery employed is not very different. There
may, however, have been some small improvements in both, which may have
occasioned some reduction of price.

But the reduction will appear much more sensible and undeniable, if we
compare the price of this manufacture in the present times with what it
was in a much remoter period, towards the end of the fifteenth century,
when the labour was probably much less subdivided, and the machinery
employed much more imperfect, than it is at present.

In 1487, being the 4th of Henry VII., it was enacted, that "whosoever
shall sell by retail a broad yard of the finest scarlet grained, or of
other grained cloth of the finest making, above sixteen shillings, shall
forfeit forty shillings for every yard so sold." Sixteen shillings,
therefore, containing about the same quantity of silver as
four-and-twenty shillings of our present money, was, at that time,
reckoned not an unreasonable price for a yard of the finest cloth; and
as this is a sumptuary law, such cloth, it is probable, had usually been
sold somewhat dearer. A guinea may be reckoned the highest price in the
present times. Even though the quality of the cloths, therefore, should
be supposed equal, and that of the present times is most probably much
superior, yet, even upon this supposition, the money price of the finest
cloth appears to have been considerably reduced since the end of the
fifteenth century. But its real price has been much more reduced. Six
shillings and eightpence was then, and long afterwards, reckoned the
average price of a quarter of wheat. Sixteen shillings, therefore, was
the price of two quarters and more than three bushels of wheat. Valuing
a quarter of wheat in the present times at eight-and-twenty shillings,
the real price of a yard of fine cloth must, in those times, have been
equal to at least three pounds six shillings and sixpence of our present
money. The man who bought it must have parted with the command of a
quantity of labour and subsistence equal to what that sum would purchase
in the present times.

The reduction in the real price of the coarse manufacture, though
considerable, has not been so great as in that of the fine.

In 1463, being the 3rd of Edward IV. it was enacted, that "no servant in
husbandry nor common labourer, nor servant to any artificer inhabiting
out of a city or burgh, shall use or wear in their clothing any cloth
above two shillings the broad yard." In the 3rd of Edward IV., two
shillings contained very nearly the same quantity of silver as four of
our present money. But the Yorkshire cloth which is now sold at four
shillings the yard, is probably much superior to any that was then made
for the wearing of the very poorest order of common servants. Even the
money price of their clothing, therefore, may, in proportion to the
quality, be somewhat cheaper in the present than it was in those ancient
times. The real price is certainly a good deal cheaper. Tenpence was
then reckoned what is called the moderate and reasonable price of a
bushel of wheat. Two shillings, therefore, was the price of two bushels
and near two pecks of wheat, which in the present times, at three
shillings and sixpence the bushel, would be worth eight shillings and
ninepence. For a yard of this cloth the poor servant must have parted
with the power of purchasing a quantity of subsistence equal to what
eight shillings and ninepence would purchase in the present times. This
is a sumptuary law, too, restraining the luxury and extravagance of the
poor. Their clothing, therefore, had commonly been much more expensive.

The same order of people are, by the same law, prohibited from wearing
hose, of which the price should exceed fourteen-pence the pair, equal
to about eight-and-twenty pence of our present money. But fourteen-pence
was in those times the price of a bushel and near two pecks of wheat;
which in the present times, at three and sixpence the bushel, would cost
five shillings and threepence. We should in the present times consider
this as a very high price for a pair of stockings to a servant of the
poorest and lowest order. He must however, in those times, have paid
what was really equivalent to this price for them.

In the time of Edward IV. the art of knitting stockings was probably not
known in any part of Europe. Their hose were made of common cloth, which
may have been one of the causes of their dearness. The first person
that wore stockings in England is said to have been Queen Elizabeth. She
received them as a present from the Spanish ambassador.

Both in the coarse and in the fine woollen manufacture, the machinery
employed was much more imperfect in those ancient, than it is in the
present times. It has since received three very capital improvements,
besides, probably, many smaller ones, of which it may be difficult
to ascertain either the number or the importance. The three capital
improvements are, first, the exchange of the rock and spindle for the
spinning-wheel, which, with the same quantity of labour, will perform
more than double the quantity of work. Secondly, the use of several very
ingenious machines, which facilitate and abridge, in a still greater
proportion, the winding of the worsted and woollen yarn, or the proper
arrangement of the warp and woof before they are put into the loom; an
operation which, previous to the invention of those machines, must have
been extremely tedious and troublesome. Thirdly, the employment of the
fulling-mill for thickening the cloth, instead of treading it in water.
Neither wind nor water mills of any kind were known in England so early
as the beginning of the sixteenth century, nor, so far as I know, in any
other part of Europe north of the Alps. They had been introduced into
Italy some time before.

The consideration of these circumstances may, perhaps, in some measure,
explain to us why the real price both of the coarse and of the fine
manufacture was so much higher in those ancient than it is in the
present times. It cost a greater quantity of labour to bring the goods
to market. When they were brought thither, therefore, they must have
purchased, or exchanged for the price of, a greater quantity.

The coarse manufacture probably was, in those ancient times, carried on
in England in the same manner as it always has been in countries where
arts and manufactures are in their infancy. It was probably a household
manufacture, in which every different part of the work was occasionally
performed by all the different members of almost every private family,
but so as to be their work only when they had nothing else to do, and
not to be the principal business from which any of them derived the
greater part of their subsistence. The work which is performed in this
manner, it has already been observed, comes always much cheaper to
market than that which is the principal or sole fund of the workman's
subsistence. The fine manufacture, on the other hand, was not, in those
times, carried on in England, but in the rich and commercial country of
Flanders; and it was probably conducted then, in the same manner as
now, by people who derived the whole, or the principal part of their
subsistence from it. It was, besides, a foreign manufacture, and must
have paid some duty, the ancient custom of tonnage and poundage at
least, to the king. This duty, indeed, would not probably be very great.
It was not then the policy of Europe to restrain, by high duties, the
importation of foreign manufactures, but rather to encourage it, in
order that merchants might be enabled to supply, at as easy a rate as
possible, the great men with the conveniencies and luxuries which they
wanted, and which the industry of their own country could not afford
them.

The consideration of these circumstances may, perhaps, in some measure
explain to us why, in those ancient times, the real price of the coarse
manufacture was, in proportion to that of the fine, so much lower than
in the present times.




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