CHAP. III.

dustry than what land-carriage alone can af ford it, so it is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to subdivide and

THAT THE DIVISION OF LABOUR IS LIMITED improve itself, and it is frequently not till a

BY THE EXTENT OF THE MARKET.

long time after that those improvements extend themselves to the inland parts of the A broad-wheeled waggon, attend

As it is the power of exchanging that gives country. pccasion to the division of labour, so the ex-ed by two men, and drawn by eight horses, in tent of this division must always be limited by about six weeks time, carries and brings back the extent of that power, or, in other words, between London and Edinburgh near four by the extent of the market. When the mark-ton weight of goods. In about the same et is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the proluce of other men's labour as he has occasion

for.

time a ship navigated by six or eight men, and sailing between the ports of London and Leith, frequently carries and brings back two hundred ton weight of goods. Six or eight men, therefore, by the help of water-carriage, can carry and bring back, in the same time, the same quantity of goods between London and Edinburgh as fifty broad-wheeled wag. There are some sorts of industry, even of gons, attended by a hundred men, and drawn the lowest kind, which can be carried on no- by four hundred horses. Upon two hundred where but in a great town. A porter, for ex- tons of goods, therefore, carried by the cheapample, can find employment and subsistence est land-carriage from London to Edinburgh, in no other place. A village is by much too there must be charged the maintenance of a narrow a sphere for him; even an ordinary hundred men for three weeks, and both the market-town is scarce large enough to afford maintenance and what is nearly equal to him constant occupation. In the lone houses maintenance the wear and tear of four hund and very small villages which are scattered red horses, as well as of fifty great waggons. about in so desert a country as the highlands Whereas, upon the same quantity of goods of Scotland, every farmer must be butcher, carried by water, there is to be charged only baker, and brewer, for his own family. In the maintenance of six or eight men, and the such situations we can scarce expect to find wear and tear of a ship of two hundred tons ven a smith, a carpenter, or a mason, within burthen, together with the value of the supeless than twenty miles of another of the same rior risk, or the difference of the insurance trade. The scattered families that live at between land and water-carriage. Were there eight or ten miles distance from the nearest no other communication between those two of them, must learn to perform themselves a places, therefore, but by land-carriage, as no great number of little pieces of work, for goods could be transported from the one to which, in more populous countries, they the other, except such whose price was very would call in the assistance of those work- considerable in proportion to their weight, men. Country workmen are almost every- they could carry on but a small part of that where obliged to apply themselves to all the commerce which at present subsists between different branches of industry hat have so them, and consequently could give but a small much affinity to one another as to be employ- part of that encouragement which they at ed about the same sort of materials. A coun- present mutually afford to each other's intry carpenter deals in every sort of work that dustry. There could be little or no com

is made of wood; a country smith in every merce of any kind between the distant parts sort of work that is made of iron. The for- of the world. What goods could bear the mer is not only a carpenter, but a joiner, a expense of land-carriage between London and cabinet-maker, and even a carver in wood, as Calcutta? Or if there were any so precious as well as a wheel-wright, a plough-wright, a to be able to support this expense, with what cart and waggon-maker. The employments safety could they be transported through the of the latter are still more various. It is im- territories of so many barbarous nations? possible there should be such a trade as even Those two cities, however, at present carry on that of a nailer in the remote and inland parts a very considerable commerce with each other, of the highlands of Scotland. Such a work- and by mutually affording a market, give a man at the rate of a thousand nails a-day, and good deal of encouragement to each other's three hundred working days in the year, will industry. make three hundred thousand nails in the Since such, therefore, are the advantages of year. But in such a situation it would be water-carriage, it is natural that the first im impossible to dispose of one thousand, that is, provements of art and industry should be of one day's work in the year. made where this conveniency opens the whole As by means of water-carriage, a more ex-world for a market to the produce of every pensive market is opened to every sort of in-sort of labour, and that they should always he

much later in extending themselves into the inland parts of the country. The inland parts of the country can for a long time have no other market for the greater part of their goods, but the country which lies round about them, and separates them from the sea-coast, and the great navigable rivers. The extent of the market, therefore, must for a long time be in proportion to the riches and populousness of that country, and consequently their improvement must always be posterior to the improvement of that country. In our North American colonies, the plantations have constantly followed either the sea-coast or the banks of the navigable rivers, and have scarce anywhere extended themselves to any considerable distance from both.

The nations that, according to the best authenticated history, appear to have been first civilized, were those that dwelt round the coast of the Mediterranean sea. That sea, by far the greatest inlet that is known in the world, having no tides, nor consequently any waves, except such as are caused by the wind only, was, by the smoothness of its surface, as well as by the multitude of its islands, and the proximity of its neighbouring shores, extremely favourable to the infant navigation of the world; when, from their ignorance of the compass, men were afraid to quit the view of the coast, and from the imperfection of the art of ship-building, to abandon themselves to the boisterous waves of the ocean. To pass beyond the pillars of Hercules, that is, to sail out of the straits of Gibraltar, was, in the ancient world, long considered as a most wonderful and dangerous exploit of navigation. It was late before even the Phoenicians and Carthaginians, the most skilful navigators and shipbuilders of those old times, attempted it; and they were, for a long time, the only nations that did attempt it.

of this antiquity is not authenticated by any histories of whose authority we, in this part of the world, are well assured. In Bengal, the Ganges, and several other great rivers, form a great number of navigable canals, in the same manner as the Nile does in Egypt. In the eastern provinces of China, too, several great rivers form, by their different branches, a multitude of canals, and, by communicating with one another, afford an inland navigation much more extensive than that either of the Nile or the Ganges, or, perhaps, than both of them put together. It is remarkable, that neither the ancient Egyptians, nor the Indians, nor the Chinese, encouraged foreign commerce, but seem all to have derived their great opulence from this inland navigation.

The

All the inland parts of Africa, and all that part of Asia which lies any considerable way north of the Euxine and Caspian seas, the ancient Scythia, the modern Tartary and Siberia, seem, in all ages of the world, to have been in the same barbarous and uncivilized state in which we find them at present. sea of Tartary is the frozen ocean, which admits of no navigation; and though some of the greatest rivers in the world run through that country, they are at too great a distance from one another to carry commerce and communication through the greater part of it. There are in Africa nene of those great inlets, such as the Baltic and Adriatic seas in Europe, the Mediterranean and Euxine seas in both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts of that great continent; and the great rivers of Africa are at too great a distance from one another to give occasion to any considerable inland navigation. The commerce, besides, which any nation can carry on by means of a river which does not break itOf all the countries on the coast of the Me- self into any great number of branches or caditerranean sea, Egypt seems to have been the nals, and which uns into another territory be first in which either agriculture or manufac-fore it reaches the sea, can never be very contures were cultivated and improved to any siderable, because is always in the power of considerable degree. Upper Egypt extends the nations who possess that other territory to itself nowhere above a few miles from the obstruct the communication between the upNile; and in Lower Egypt, that great river per country and the sea. The navigation of breaks itself into many different canals, which, the Danube is of very little use to the differwith the assistance of a little art, seem to have ent states of Bavaria, Austria, and Hungary, afforded a communication by water-carriage, in comparison of what it would be, if ary of not only between all the great towns, but be- them possessed the whole of its course, till it tween all the considerable villages, and even falls into the Black sea. Note 4. to many farin-houses in the country, nearly in the same manner as the Rhine and the Maese do in Holland at present. The extent and easiness of this inland navigation was probably one of the principal causes of the early improvement of Egypt.

The improvements in agriculture and ma nufactures seem likewise to have been of very great antiquity in the provinces of Bengal in the East Indies, and in some of the eastern provinces of China, though the great extent

CHAP. IV.

OF THE ORIGIN AND USE OF MONEY.

WHEN the division of labour has been once thoroughly established, it is but a very small

part of a man's wants which the produce of told, for a workman to carry nails instead of
his own labour can supply. He supplies the money to the baker's shop or the ale-house.
far greater part of them by exchanging that In all countries, however, men seem at last
surplus part of the produce of his own labour, to have been determined by irresistible rea-
which is over and above his own consumption, sons to give the preference, for this employ-
for such parts of the produce of other men's ment, to metals above every other commodity.
labour as he has occasion for. Every man Metals can not only be kept with as little loss
thus lives by exchanging, or becomes, in some
measure, a merchant, and the society itself
grows to be what is properly a commercial so-
ciety.

change for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for,

Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the ancient Spartans, copper among the anci ent Romans, and gold and silver among ali rich and commercial nations.

as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can But when the division of labour first began easily be re-united again; a quality which no to take place, this power of exchanging must other equally durable commodities possess, and frequently have been very much clogged and which, more than any other quality, renders embarrassed in its operations. One man, we them fit to be the instruments of commerce shall suppose, has more of a certain commo- and circulation. The man who wanted to buy dity than he himself has occasion for, while salt, for example, and had nothing but cattle another has less. The former, consequently, to give in exchange for it, must have been obwould be glad to dispose of, and the latter to liged to buy salt to the value of a whole ox, purchase, a part of this superfluity. But if or a whole sheep, at a time. He could selthis latter should chance to have nothing that dom buy less than this, because what he was the former stands in need of, no exchange can to give for it could seldom be divided without be made between them. The butcher has loss; and if he had a mind to buy more, he more meat in his shop than he himself can must, for the same reasons, have been obliged consume, and the brewer and the baker would to buy double or triple the quantity, the va each of them be willing to purchase a part of lue, to wit, of two or three oxen, or of two or it. But they have nothing to offer in ex-three sheep. If, on the contrary, instead of change, except the different productions of sheep or oxen, he had metals to give in extheir respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have en- Those metals seem originally to have been deavoured to manage his affairs in such a made use of for this purpose in rude bars, manner, as to have at all times by him, be- without any stamp or coinage, Thus we are sides the peculiar produce of his own indus- told by Pliny•, upon the authority of Timæ try, a certain quantity of some one commodity us, an ancient historian, that, till the time of or other, such as he imagined few people Servius Tullius, the Romans had no coined would be likely to refuse in exchange for the money, but made use of unstamped bars of produce of their industry. Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are The use of metals in this rude state was atsaid to have been the common instrument of tended with two very considerable inconveni commerce; and, though they must have been ences; first, with the trouble of weighing, and a most inconvenient one, yet, in old times, we secondly, with that of assaying them. In the find things were frequently valued according precious metals, where a small difference in to the number of cattle which had been given the quantity makes a great difference in the in exchange for them. The armour of Dio- value, even the business of weighing, with mede, says Homer, cost only nine oxen; but proper exactness, requires at least very accuthat of Glaucus cost a hundred oxen. Salt rate weights and scales. The weighing of is said to be the common instrument of com- gold, in particular, is an operation of some mirce and exchanges in Abyssinia; a species nicety In the coarser metals, indeed, where of shells in some parts of the coast of India; a small error would be of little consequence, dried cod at Newfoundland; tobacco in Vir-less accuracy would, no doubt, be necessary. ginia; sugar in some of our West India colo- Yet we should find it excessively troublesome nies; hides or dressed leather in some other if every time a poor man had occasion either countries; and there is at this day a village

in Scotland, where it is not uncommon, I am

copper, to purchase whatever they had occasion for. These rude bars, therefore, per! formed at this time the function of money.

*Plin. Hist. Nat. lib. 35, cap. S

certain not only the fineness, but the weight of the metal. Such coins, therefore, were received by tale, as at present, without the trouble of weighing.

to buy or sell a farthing's worth of goods, he was obliged to weigh the farthing. The operation of assaying is still more difficult, still more tedious; and, unless a part of the metal is fairly melted in the crucible, with proper dis The denominations of those coins seem orisolvents, any conclusion that can be drawn ginally to have expressed the weight or quan. from it is extremely uncertain. Before the tity of metal contained in them. In the time institution of coined money, however, unless of Servius Tullius, who first coined money at they went through this tedious and difficult Rome, the Roman as or pondo contained a operation, people must always have been liable Roman pound of good copper. It was dito the grossest frauds and impositions; and vided, in the same manner as our Troyes instead of a pound weight of pure silver, or pound, into twelve ounces, each of which pure copper, might receive, in exchange for contained a real ounce of good copper. The their goods, an adulterated composition of the English pound sterling, in the time of Edcoarsest and cheapest materials, which had, ward I. contained a pound, Tower weight, of however, in their outward appearance, been silver of a known fineness. The Tower made to resemble those metals. To prevent pound seems to have been something more such abuses, to facilitate exchanges, and there- than the Roman pound, and something less by to encourage all sorts of industry and com- than the Troyes pound. This last was not merce, it has been found necessary, in all introduced into the mint of England till the countries that have made any considerable ad- 18th of Henry the VIII. The French livre vances towards improvement, to affix a public contained, in the time of Charlemagne, a stamp upon certain quantities of such parti- pound, Troyes weight, of silver of a known cular metals, as were in those countries com- fineness. The fair of Troyes in Champaign monly made use of to purchase goods. Hence was at that time frequented by all the nations the origin of coined money, and of those pub- of Europe, and the weights and measures of lic offices called mints; institutions exactly so famous a market were generally known of the same nature with those of the aulnagers and esteemed. The Scots money pound conand stamp-masters of woollen and linen cloth. tained, from the time of Alexander the First All of them are equally meant to ascertain, to that of Robert Bruce, a pound of silver of by means of a public stamp, the quantity and the same weight and fineness with the Enganiform goodness of those different commo- lish pound sterling. English, French, and dities when brought to market. Scots pennies, too, contained all of them originally a real penny-weight of silver, the twentieth part of an ounce, and the two hundred-and-fortieth part of a pound. The shilling, too, seems originally to have been the denomination of a weight. When wheat is at twelve shillings the quarter, says an ancient statute of Henry III. then wastel bread of a furthing shall weigh eleven shillings and fourpence. The proportion, however, between the shilling, and either the penny on the one hand, or the pound on the other, seems not to

The first public stamps of this kind that were affixed to the current metals, seem in many cases to have been intended to ascertain, what it was both most difficult and most important to ascertain, the goodness or fineness of the metal, and to have resembled the sterling mark which is at present affixed to plate and bars of silver, or the Spanish mark which is sometimes affixed to ingots of gold, and which, being struck only upon one side of the piece, and not covering the whole surface, ascertains the fineness, but not the weight of have been so constant and uniform as that bethe metal. Abraham weighs to Ephron the tween the penny and the pound. During four hundred shekels of silver which he had the first race of the kings of France, the agreed to pay for the field of Machpelah. French sou or shilling appears upon different They are said, however, to be the current occasions to have contained five, twelve, money of the merchant, and yet are received twenty, and forty pennies. Among the anby weight, and not by tale, in the same man-cient Saxons, a shilling appears at one tim ner as ingots of gold and bars of silver are at to have contained only five pennies, and it is present. The revenues of the ancient Saxon not improbable that may have been as varikings of England are said to have been paid, able among them as among their neighbours, not in money, but in kind, that is, in victuals the ancient Franks. From the time of Charand provisions of all sorts. William the Con- lemagne among the French, and from that of queror introduced the custom of paying them William the Conqueror among the English, This money, however, was for a the proportion between the pound, the shill long time, received at the exchequer, by ing, and the penny, seems to have been uniweight, and not by tale. formly the same as at present, though the The inconveniency and difficulty of weigh-value of each has been very different; for in ing those metals with exactness, gave occasion every country of the world, I believe, the ava to the institution of coins, of which the stamp, rice and injustice of princes and sovereign covering entirely both sides of the piece, and states, abusing the confidence of their subjects, ometimes the edges too, was supposed to as-have by degrees diminished the real quantity

in money.

of metal, which had been originally contained Secondly, what are the different parts of in their coins. The Roman as, in the latter which this real price is composed or made up. ages of the republic, was reduced to the And, lastly, what are the different circumtwenty-fourth part of its original value, and, stances which sometimes raise some or all of instead of weighing a pound, came to weigh these different parts of price above, and someonly half an ounce. The English pound and times sink them below, their natural or ordipenny contain at present about a third only; nary rate; or, what are the causes which the Scots pound and penny about a thirty-sometimes hinder the market price, that is, sixth; and the French pound and penny about the actual price of commodities, from coina sixty-sixth part of their original value. By ciding exactly with what may be called their means of those operations, the princes and so- natural price. vereign states which performed them were I shall endeavour to explain, as fully and enabled, in appearance, to pay their debts and distinctly as I can, those three subjects in the fulfil their engagements with a smaller quan- three following chapters, for which I must tity of silver than would otherwise have been very earnestly entreat both the patience and requisite. It was indeed in appearance only; attention of the reader: his patience, in order for their creditors were really defrauded of a to examine a detail which may, perhaps, in part of what was due to them, All other some places, appear unnecessarily tedious; debtors in the state were allowed the same and his attention, in order to understand privilege, and might pay with the same no- what may perhaps, after the fullest explication minal sum of the new and debased coin what- which I am capable of giving it, appear still ever they had borrowed in the old. Such in some degree obscure. I am always willoperations, therefore, have always proved fa- ing to run some hazard of being tedious, in vourable to the debtor, and ruinous to the order to be sure that I am perspicuous; and, creditor, and have sometimes produced a after taking the utmost pains that I can to be greater and more universal revolution in the perspicuous, some obscurity may still appear fortunes of private persons, than could have to remain upon a subject, in its own nature been occasioned by a very great public cala- extremely abstracted. Notes 5, 6.

mity.

It is in this manner that money has become, in all civilized nations, the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another.

What are the rules which men naturally observe, in exchanging them either for money, or for one another, I shall now proceed to examine. These rules determine what may be called the relative or exchangeable value of goods.

CHAP. V.

OF THE REAL AND NOMINAL PRICE OF COMMO-
DITIES, OR OF THEIR PRICE IN LABOUR, AND
THEIR PRICE IN MONEY.

EVERY man is rich or poor according to the The word VALUE, it is to be observed, has degree in which he can afford to enjoy the ne two different meanings, and sometimes ex- cessaries, conveniencies, and amusements of presses the utility of some particular object, human life. But after the division of labour and sometimes the power of purchasing other has once thoroughly taken place, it is but a goods which the possession of that object con- very small part of these with which a man's veys. The one may be called value in use;' own labour can supply him. The far greater the other, value in exchange.' The things part of them he must derive from the labour which have the greatest value in use have fre- of other people, and he must be rich or poor quently little or no value in exchange; and, according to the quantity of that labour on the contrary, those which have the great- which he can command, or which he can af est value in exchange have frequently little or ford to purchase. The value of any commono value in use. Nothing is more useful dity, therefore, to the person who possesses it, than water; but it will purchase scarce any and who means not to use or consume it himthing; scarce any thing can be had in ex-self, but to exchange it for other commodities, change for it. A diamond, on the contrary, is equal to the quantity of labour which it enhas scarce any value in use; but a very great ables him to purchase or command. Labour quantity of other goods may frequently be had therefore, is the real measure of the exchange in exchange for it. able value of all commodities.

In order to investigate the principles which regulate the exchangeable value of comm> dities, I shall endeavour to shew,

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring First, what is the real measure of this ex-it. What every thing is really worth to the changeable value; or wherein consists the man who has acquired it and who wants to real price of all conimodities. dispose of it, or exchange it for something