1)
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
a)
Of the Division of Labour
·
Division
of labour is the great cause of its increased powers, as may be better
understood from a particular example,
·
such as
pinmaking.
·
The effect
is similar in all trades and also in the division of employments.
·
The
advantage is due to three circumstances,
·
(1)
improved dexteiry,
·
(2) saving
of time,
·
and (3)
application of machinery, invented by workmen,
·
or by
machinemakers and philosophers.
·
Hence the
universal opulence of a well-governed society,
·
even the
day-labourer’s coat being the produce of a vast number of workmen.
b)
Of the Principle which gives Occasion to the
Division of Labour
·
The
division of labour arises from a propensity in human nature in exchange.
·
This
propensity is found in man alone.
·
It is
encouraged by self-interest and leads to division of labour,
·
thus
giving rise to differences of talent more important than the natural
differences,
·
and
rendering those differences useful.
c)
That the Division of Labour is limited by the
Extent of the Market
·
Division
of labour is limited by the extent of the power of exchanging.
·
Various
trades cannot be carried on except in towns.
·
Water-carriage
widens the market,
·
and so the
first improvements are on the sea-coast or navigable rivers,
·
for
example among the ancient nations on the Mediterranean coast.
·
Improvements
first took place in Egypt,
·
Bengal and
China;
·
while
Africa, Tartary and Siberia, and also Bavaria, Austria and Hungary are
backward.
d)
Of the Origin and Use of Money
·
Division
of labour being established, every man lives by exchanging.
·
Difficulties
of barter lead to the selection of one commodity as money,
·
for
example, cattle, salt, shells, cod, tobacco, sugar, leather and nails.
·
Metals
were eventually preferred because durable and divisible.
·
Iron,
copper, gold and silver,
·
were at
first used in unstamped bars,
·
and
afterwards stamped to show quantity and fineness;
·
stamps to
show fineness being introduced first,
·
and
coinage to show weight later.
·
The names
of coins originally expressed their weight.
·
The next
inquiry is what rules determine exchangeable value.
·
Value may
mean either value in use or value in exchange.
·
Three
questions,
·
(1)
wherein consists the real price of commodities,
·
(2) what
are the different parts of this price, (3) why the market price sometimes
diverges from this price,
·
will be
answered in the next three chapters.
e)
Of the real and nominal Price of Commodities, or
of their Price in Labour, and their Price in Money
·
Labour is
the real measure of exchangeable value,
·
and the
first price paid for all things.
·
Wealth is
power of purchasing labour.
·
But value
is not commonly estimated by labour, because labour is difficult to measure,
·
and
commodities are more frequently exchanged for other commodities,
·
especially
money, which is therefore more frequently used in estimating value.
·
But gold
and silver vary in value, sometimes costing more and sometimes less labour,
whereas equal labour always means equal sacrifice to the labourer,
·
although
the employer regards labour as varying in value.
·
So
regarded, labour has a real and a nominal price.
·
The
distinction between real and nominal is sometimes useful in practice,
·
since the
amount of metal in coins tends to diminish,
·
and the
value of gold and silver to fall.
·
English
rents reserved in money have fallen to a fourth since 1586.
·
and
similar Scotch and French rents almost to nothing.
·
Corn rents
are more stable than money rents,
·
but liable
to much larger annual variations,
·
so that
labour is the only universal standard.
·
But in
ordinary transactions money is sufficient,
·
being
perfectly accruate at the same time and place,
·
and the
only thing to be considered in transactions between distant places.
·
So it is
no wonder that money price has been more attended to.
·
In this
work corn prices will sometimes be used.
·
Several
metals have been coined, but only one is used as the standard, and that usually
the one first used in commerce,
·
as the
Romans used copper,
·
and modern
European nations silver.
·
The
standard metal originally was the only legal tender,
·
later the
proportion between the values of the two metals is declared by law, and both
are legal tender, the distinction between them ceasing to be of importance,
·
except
when a change is made in the regulated proportion.
·
During the
continuance of a regulated proportion, the value of the most precious metal
regulates the value of the whole coinage, as in Great Britain,
·
where the
reformation of the gold coin has raised the value of the silver coin.
·
Silver is
rated below its value in England.
·
Locke’s
explanation of the high price of silver bullion is wrong.
·
If the
silver coin were reformed, it would be melted.
·
Silver
ought to be rated higher and should not be legal tender for more than a guinea.
·
If it were
properly rated, silver bullion would fall below the mint price without any
recognition.
·
A
seignorage would prevent melting and discourage exportation.
·
Fluctuations
in the market price of gold and silver are due to ordinary commercial causes,
but steady divergence from mint price is due to the state of the coin.
·
The price
of goods is adjusted to the actual contents of the coinage.
f)
Of the component Parts of the Price of
Commodities
·
Quantity
of labour is originally the only rule of value,
·
allowance
being made for superior hardship,
·
and for
uncommon dexterity and ingenuity.
·
The whole
produce then belongs to the labourer,
·
but when
stock is used, something must be given for the profits of the undertaker, and
the value of work resolves itself into wages and profits.
·
Profits
are not merely wages of inspection and direction.
·
The
labourer shares with the employer, and labour alone no longer regulates value.
·
When land
has all become private property, rent constitutes a third component part of the
price of most commodities.
·
The real
value of all three parts is measured by labour.
·
In an
improved society all three parts are generally present,
·
for
example, in corn,
·
in flour
or meal,
·
and in
flax.
·
Rent is a
smaller proportion in highly manufactured commodities.
·
A few
commodities have only two or even one of the three component parts.
·
But all
must have at least one,
·
and the
price of the whole annual produce resolves itself into wages, profits and rent,
·
which are
the only original kinds of revenue.
·
They are
sometimes confounded,
·
for
example, a gentleman farmer’s rent is called profit,
·
a common
farmer’s wages are called profit,
·
and so are
an independent manufacturer’s wages,
·
while the
rent and profit of a gardener cultivating his own land are considered earnings
of labour.
·
A great
part of the annual produce goes to the idle; the proportion regulates the
increase or diminution of the produce.
g)
Of the natural and market Price of Commodities
·
Ordinary
are average rates of wages, profit,
·
and rent
·
may be
called natural rates,
·
to pay
which a commodity is sold as its natural price,
·
or for
what it really costs, which includes profit,
·
since no
one will go on selling without profit.
·
Market
price
·
is
regulated by the quantity brought to market and the effectual demand.
·
When the
quantity brought falls short of the effectual demand, the market price rises
above the natural;
·
when it
exceeds the effectual demand the market price falls below the natural;
·
when it is
just equal to the effectual demand the market and natural price coincide.
·
It
naturally suits itself to the effectual demand.
·
When it
exceeds that demand, some of the components parts of its price are below their
natural rate;
·
when it
falls short, some of the component parts are above their natural rate.
·
Natural
price is the central price to which actual price gravitate.
·
Industry
suits itself to the effectual demand,
·
but the
quantity produced by a given amount of industry sometimes flunctuates.
·
The
fluctuations fall on wages and profit more than on rent,
·
affecting
them in different proportions according to the supply of commodities and
labour.
·
But market
price may be kept above natural for a long time,
·
in
consequence of want of general knowledge of high profits,
·
or in
consequence of secrets in manufactures,
·
which may
operate for long periods,
·
or in
consequence of scarcity of peculiar soils,
·
which may
continue for ever.
·
A monopoly
has the same effect as a trade secret,
·
the price
of monopoly being the highest which can be got.
·
Corporation
privileges, etc., are enlarged monopolies.
·
Market
price is seldom long below natural price,
·
though
apprenticeship and corporation laws sometimes reduce wages much below the
natural rate for a certain period.
·
Natural
price varies with the natural rate of wages, profit and rent.
·
Wages will
be dealt with in chapter vii.,
·
profit in
chapter ix.,
·
differences
of wages and profit in chapter x.,
·
and rent
in chapter xi.
h)
Of the Wages of Labour
·
Produce is
the natural wages of labour.
·
Originally
the whole belonged to the labourer.
·
If this
had continued, all things would have become cheaper,
·
though in
appearance many things might have become dearer.
·
This state
was ended by the appropriation of land and accumulation of stock,
·
rent being
the first deduction,
·
and profit
the second, both in agriculture,
·
and other
arts and manufacturers.
·
The
independent workman gets profits as well as wages,
·
but this
case is infrequent.
·
Wages
depend on contract between masters and workmen.
·
The
masters have the advantage,
·
though
less is heard of masters’s combinations than of workmen’s.
·
But
masters cannot reduce wages below a certain rate, namely, subsistence for a man
and something over for a family.
·
Wages may
be considerably above this rate,
·
when there
is an increasing demand for labourers,
·
which is
caused by an increase of the funds destined for the payment of wages. The funds
consist of
·
surplus
revenue,
·
and
surplus stock.
·
The demand
for labourers therefore increases with the increase of national wealth.
·
High wages
are occasioned by the increase, not by the actual greatness of national wealth.
·
North
America is more thriving than England.
·
Wages are
not high in a stationary country however rich.
·
China is
not going backwards and labourers there keep up their numbers.
·
In a declining
country this would not be the case.
·
In Great
Britain wages are above the lowest rate,
·
since (1)
there is difference between winter and summer wages,
·
(2) wages
do not fluctuate with the price of provisions,
·
(3) wages
vary more from place to place than the price of provisions,
·
and (4)
frequently wages and the price of provisions vary in opposite directions, as
grain is cheaper and wages are higher in England than in Scotland;
·
and in
last century grain was dearer and wages were lower than in this;
·
while
other necessaries and conveniencies have also become cheaper.
·
High
earnings of labour are an advantage to the society.
·
Poverty
does not prevent births,
·
but is
unfavourable to the rearing of children,
·
and so
restrains multiplication,
·
while the
liberal reward of labour encourages it.
·
as the
wear and tear of the free man must be paid for just like that of the slave,
though not so extravagantly.
·
High wages
increase population.
·
The
progressive state is the best for the labouring poor.
·
High wages
encourage industry.
·
The
opinion that cheap years encourage idleness is erroneous.
·
Wages are
high in cheap years,
·
and low in
dear years,
·
so that
masters commend dear years.
·
Messance
shows that in some French manufactures more is produced in cheap years.
·
No
connexion is visible between dearness or cheapness of the years and the
variations in Scotch linen and Yorkshire woollen manufacturers.
·
The
produce depends on other circumstances, and more of it escapes being reckoned
in cheap years.
·
There is,
however, a connexion between the price of labour and that of provisions.
·
In years
of plenty there is a greater demand for labour,
·
and in
years of scarcity a less demand,
·
and the
effect of variations in the price of provisions is thus counterbalanced.
·
Increase
of wages increases prices, but the case of increased wages tends to diminish
prices.
i)
Of the Profits of Stock
·
Profits
depend on increase and decrease of wealth,
·
falling
with the increase of wealth.
·
The rate
is difficult to ascertain,
·
but may be
inferred from the rate of interest,
·
which has
fallen in England,
·
while
wealth has been increasing.
·
Profits
are lower in towns, where there is much stock, than in the country, where there
is little.
·
Interest
is higher in Scotland, a poor country, than in England.
·
So too in
France, a country probably less rich than England,
·
but lower
in Holland, which is richer than England.
·
In the
peculiar case of new colonies high wages and high profits go together, but
profits gradually diminish.
·
New
territories and trades may raise profits even in a country advancing in riches.
·
Diminution
of capital stock raises profits.
·
In a
country as rich as it possibly could be, profits as well as wages would be very
low,
·
but there
has never yet been any such country.
·
Interest
is raised by defective enforcement of contracts,
·
and by
prohibition.
·
The lowest
rate of profit must be more than enough to compensate losses,
·
and so
must the lowest rate of interest.
·
In a
country as rich as it possibly could be interest would be so low that only the
wealthiest people could live on it.
·
The
highest rate of profit would eat up all rent and leave only wages.
·
The
proportion of interest to profit rises and falls with the rate of profit.
·
Countries
with low profits can sell as cheap as those with low wages; and in reality high
profits tend to raise prices more than high wages.
j)
Of Wages and Profit in the different Employments
of Labour and Stock
·
Advantages and disadvantages tend to equality
where there is perfect liberty.
·
Actual differences of pecuniary wages and
profits are due partly to counterbalancing circumstances and partly to want of
perfect liberty.
i)
Inequalities arising from the Nature of the
Employments themselves
·
There are
five counterbalancing circumstances:
·
(1) Wages
vary with the agreeableness of the employment.
·
Some very
agreeable employments are exceedingly ill paid.
·
The same
thing is true of profits.
·
(2) Wages
vary with the cost of learning the business.
·
The cost
of apprenticeship accounts for the wages of manufacturers being higher than
those of country labourers.
·
Education
for liberal professions is more costly and the pecuniary recompense
consequently higher. Profits are not much affected by this circumstance.
·
(3) Wages
vary with constancy of employment.
·
Constancy
does not affect profits.
·
(4) Wages
vary with the trust to be reposed.
·
Profits
are unaffected by trust.
·
(5) Wages
vary with the probability of success.
·
Law and
similar professions are nevertheless crowded.
·
Public
admiration makes a part of the reward of superior abilities,
·
except in
the peculiar case of players, opera-singers, &c.
·
The
greater part of men have an over-weening conceit of their abilities:
·
lotteries
show that the chance of gain is overvalued.
·
and the
moderate profit of insurers shows that the chance of loss is undervalued.
·
Young
people are particularly prone to overvalue the chance of gain and undervalue
the risk of loss.
·
For this
reason soldiers are poorly paid,
·
and
sailors not much better.
·
Dangers
which can be surmounted attract, though mere unwholesomeness repels.
·
Profits
vary with certainty of return.
·
Profits
are less unequal than wages, and their inequality is often only due to the
inclusion of wages,
·
as in the
case of the profit of an apothecary,
·
or country
grocer.
·
The
greater difference between retail and wholesale profits in town than country is
due to the same cause.
·
The lesser
rate of profit in towns yields larger fortunes, but these mostly arise from
speculation.
·
The five
circumstances thus counterbalance difference of pecuniary gains,
·
but three
things are necessary as well as perfect freedom:
·
(1) the
employments must be well known and long established,
·
since new
trades yield higher wages,
·
and higher
profits:
·
(2) the
employments must be in their natural state,
·
since the
demand for labour in each employment varies from time to time
·
and
profits fluctuate with the price of the commodity produced:
·
and (3)
the employments must be the principal employment of those who occupy them,
since people maintained by one employment will work cheap at another, like the
Scotch cotters,
·
Shetland
knitters,
·
Scotch
linen spinners,
·
and London
lodging house keepers.
ii)
Inequalities occasioned by the Policy of Europe
·
The policy
of Europe occasions more important inequalities
·
in three
ways:
·
(1) It
restricts competition in some employments,
·
principally
by giving exclusive privileges to corporations,
·
which
require long apprenticeship and limit the number of apprentices.
·
Seven
years is the usual period of apprenticeship.
·
The
Statute of Apprenticeship, which reduced it everywhere in England, has been
confined to market towns,
·
and to
trades existing when it was passed.
·
The term
varies in France,
·
and
Scotland, where the regulations are less oppressive.
·
All such
regulations are as impertinent as oppressive.
·
Long
apprenticeships are no security against bad work,
·
and do not
form young people to industry.
·
Apprenticeships
were unknown to the ancients.
·
Long
apprenticeships are altogether unnecessary.
·
Corporations
were established to keep up prices and consequently wages and profit;
·
by means
of which the towns gained at the expense of the country,
·
being
enabled to get the produce of a larger quantity of country labour in exchange
for the produce of a smaller quantity of their own,
·
as the
exports of a town are the real price of its imports.
·
That town
industry is better paid is shown by the large fortunes made in it.
·
Combination
is easy to the inhabitants of a town,
·
and
difficult to those of the country, who are dispersed and not governed by the
corporation spirit. No apprenticeship is prescribed for farming, through a
difficult art,
·
or for the
inferior branches of country labour, which require more skill than most
mechanic trades.
·
The
superiority of town industry is enhanced by other regulations, such as high
duties on foreign manufactures.
·
The
superiority has declined in Great Britain.
·
Meetings
of people in the same trade ought not to be facilitated,
·
as by
registration of traders,
·
by the
establishment of funds for the sick, widows and orphans,
·
or by
incorporation.
·
Corporations
are unnecessary, and corrupt the workmen.
·
(2) The
policy of Europe increases competition in some trades.
·
It
cheapens the education of the clergy and thereby reduces their earnings;
·
so that it
is only the great benefices, etc., which support the honour of the English and
Roman Catholic Churches.
·
The same
cause, if present, would lower the reward of lawyers and physicians,
·
as it has
done that of men of letters,
·
and that
of teachers,
·
who were
much better paid in ancient times.
·
Perhaps
this cheapness of teaching is no disadvantage to the public.
·
(3) The
policy of Europe obstructs the free circulation of labour.
·
Apprenticeship
and corporation privileges obstruct circulation from employment to employment
and from place to place.
·
So that
the changes of employment necessary to equalise wages are prevented.
·
What
obstructs the circulation of labour also obstructs that of stock.
·
In England
the circulation of labour is further obstructed by the poor law.
·
Each
parish was to support its own poor under 43 Eliz., c. 2;
·
these were
determined by 13 and 14 Car. II. to be such as had resided forty days, within
which time, however, a new inhabitant might be removed.
·
Notice in
writing was required from the new inhabitant by I and James II.
·
Such
notice was to be published in church under 3 W. III.
·
There were
four other ways of gaining a settlement,
·
two of
which were impossible to all poor men,
·
and the
other two to all married men,
·
and to all
independent workmen.
·
Certificates
were invented to enable persons to reside in a parish without being immediately
removable and without gaining a settlement.
·
Certificates
were required by the new parish but refused by the old.
·
The courts
declined to force overseers to give a certificate.
·
This law
is the cause of the very unequal price of labour in England,
·
and an
evident violation of natural liberty, though tamely submitted to.
·
Wages were
anciently rated by law or by justices of peace.
·
London
taylors’s wages are still rated by law.
·
Attempts
were also made to regulate profits by fixing prices, and the assize of bread
still remains.
·
The
inequalities of wages and profits are not much affected by the advancing or
declining state of the society.
k)
Of the Rent of Land
·
Rent is
the produce which is over what is necessary to pay the farmer ordinary profit.
·
It is not
merely interest on stock laid out in improvements,
·
and is
sometimes obtained for land incapable of improvement, such as rocks where kelp
grows;
·
and for
the opportunity to fish.
·
It is
therefore a monopoly price.
·
Whether
particular parts of produce fetch a price sufficient to yield a rent depends on
the demand.
·
Some parts
are always in sufficient demand; others sometimes are and sometimes are not.
·
Wages and
profit are causes of price; rent is an effect.
·
The
chapter is divided into three parts.
i)
Of the Produce of Land which always affords Rent
·
Food can
always purchase as much labour as it can maintain.
·
Almost all
land produces more than enough food to maintain the labour and pay the profits,
and therefore yields rent.
·
The rent
varies with situation as well as with fertility.
·
Good
roads, etc., diminish differences of rent.
·
Corn land
yields a larger supply of food after maintaining labour than pasture.
·
In early
times meat is cheaper than bread,
·
but later
on it becomes dearer,
·
and
pasture yields as good a rent as corn land,
·
and
sometimes a greater one,
·
as in the
neighbourhood of a great town.
·
or all
over a populous country which imports corn, such as Holland and ancient Italy,
·
and
occasionally in a country where enclosure is unusual.
·
Ordinarily
the rent of corn land regulates that of pasture.
·
Improved methods
of feeding cattle lower meat in proportion to bread.
·
The price
of meat was higher at the beginning of the seventeenth century
·
than in
1763-4;
·
whereas
wheat was cheaper.
·
The rent
and profit of corn land and pasture regulate those of all other land.
·
The
apparently greater rent or profit of some other kinds is only interest on
greater expense,
·
as in hop,
and fruit gardens;
·
kitchen
gardens;
·
and
vineyards.
·
Land
fitted for a particular produce may have a monopoly,
·
such as
that which produces wine of a particular flavour,
·
or the
West Indian sugar colonies,
·
and in a
less degree the tobacco plantations of Virginia and Maryland.
·
So the
rent of cultivated land producing food regulates that of most of the rest,
·
and in
Europe the rent of corn land regulates that of other cultivated land producing
food.
·
If the
common food was such as to produce a greater surplus, rent would be higher:
·
for
example, rice,
·
or
potatoes.
·
Wheat is
probably a better food than oats,
·
but not
than potatoes.
·
Potatoes
however, are perishable.
ii)
Of the Produce of Land which sometimes does, and
sometimes does not, afford Rent
·
The
materials of cloathing and lodging, at first super-abundant, come in time to
afford a rent.
·
For
example, hides and wool,
·
stone and
timber.
·
Population
depends on food;
·
so the
demand for the materials of cloathing and lodging is increased by greater ease
of obtaining food,
·
which thus
makes them afford rent.
·
They do
not, however, even then always afford rent:
·
for
example, some coal-mines are too barren to afford rent,
·
or too disadvantageously
situated.
·
The price
of coal is kept down by that of wood,
·
which
varies with the state of agriculture.
·
But in the
coal countries coal is everywhere much below this price.
·
The lowest
possible price is that which only replaces stock with profits.
·
Rent forms
a smaller proportion of the price of coal than of that of most other rude
produce.
·
The
situation of a metallic mine is less important than that of a coal mine,
·
metals
from all parts of the world being brought into competition.
·
Rent has therefore
a small share in the price of metals.
·
Tin and
lead mines pay a sixth in Cornwall and Scotland.
·
The silver
mines of Peru formerly paid a fifth,
·
and now
only a tenth,
·
while
profits are small.
·
Mining is
encouraged in Peru by the interest of the sovereign.
·
The gold
mines of Peru now pay only a twentieth in rent.
·
The lowest
price of the precious metals must replace stock with ordinary profits,
·
but their
highest price is determined by their scarcity.
·
The demand
for them arises from their utility and beauty:
·
and the
merit of beauty is enhanced by their scarcity.
·
The demand
for precious stones arises altogether from their beauty enhanced by their
scarcity.
·
The rent
of mines of precious metals and precious stones is in proportion to their
relative and not to their absolute fertility.
·
Abundant
supplies would add little to the wealth of the world.
·
But in
estates above ground both produce and rent are regulated by absolute fertility.
·
Abundance
of food raises the value of other produce.
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
·
The
general course of progress is for produce other than food to become dearer,
·
but there
are interruptions,
·
as in the
case of silver,
·
when new
fertile mines are discovered.
·
Silver
would grow dearer in the general progress of improvement,
·
but might
grow cheaper if some accident increased the supply for many years together:
·
or remain
stationary if demand and supply increased equally.
·
These
three things have happened during the last 400 years.
(1)
Digression concerning the Variations in the
Value of Silver during the Course of the Four last Centuries
(a)
First Period
·
From 1350
to 1570 silver gradually fell.
·
In 1350
wheat ws 4 oz. of silver per quarter,
·
and was
not less than that at the beginning of the century,
·
and for
some time before.
·
From that
it sank gradually to 2 oz. at the beginning of the sixteenth century and
remained at that till 1570.
·
The same
fall has been observed in France.
·
It may
have been due to the increase of demand for silver or to a diminution of
supply.
·
Most
writers, however, have supposed that the value of silver continually fell.
·
They have
been misled in their observations on the price of corn, (1) by confusing
conversion prices with market prices;
·
(2) by the
slovenly transcription of ancient statutes of assize;
·
or by
misunderstandings of those statutes;
·
and (3) by
attributing too much importance to excessively low prices.
·
The
figures at the end of the chapter confirm this account.
·
Sometimes
the value of silver has been measured by the price of cattle, poultry, etc. But
the low price of these things shows their cheapness, not the dearness of
silver,
·
for labour
is the real measure.
·
Cattle, poultry,
etc., are produced by very different quantities of labour at different times,
·
whereas
corn scarcely varies at all,
·
and also
regulates the money price of labour.
·
The
authors were also misled by the notion that silver falls in value as its
quantity increases.
·
Increases
of quantity arising from greater abundance of the mines is connected with
diminution of value,
·
but
increase of quantity resulting from the increased wealth of a country is not.
·
Gold and
silver are dearer in a rich country,
·
as may be
shown by comparing China with Europe and Scotland with England as to the price
of subsistence.
·
Gold and
silver are cheapest among the poorest nations.
·
The fact
that corn is dearer in towns due to its dearness there, not to the cheapness of
silver,
·
and this is
true also in Holland, Genoa, etc.
·
So no
increase of silver due to the increase of wealth could have reduced its value.
(b)
Second Period
·
No doubt
exists as to the second period,
·
silver
sank, and a quarter of corn came to be worth 6 oz. or 8 oz. of silver.
·
This was
owing to the discovery of the abundant American mines.
·
Wheat rose
at Windosr market.
(c)
Third Period
·
The effect
of the discovery of the American mines was complete about 1636.
·
From 1637
to 1700 there was a very slight rise of wheat at Windsor,
·
due to the
civil war,
·
the bounty
on the exportation of corn,
·
and the
clipping and wearing of the coin,
·
which was
then much greater than in the present century.
·
Moreover
the bounty has been long enough in existence to produce any possible effect in
lowering the price of corn.
·
Silver has
risen somewhat since the beginning of the century, and the rise began before;
·
as is
shown by Mr. King’s calculations.
·
Apart from
its effect in extending tillage, the bounty raises the price of corn, both in
times of plenty and of scarcity.
·
It is said
to have extended tillage (and so to have reduced the price), but the rise of
silver has not been peculiar to England.
·
The
alteration should be regarded as a rise of silver rather than a fall of corn.
·
The recent
high price of corn is merely the effect of unfavourable seasons.
·
The bounty
kept up the price between 1741 and 1750.
·
The sudden
change at 1750 was due to accidental variation of the seasons.
·
The rise
in the price of labour has been due to increase of demand for labour, not to a
diminution in the value of silver.
·
The
decrease in the rent and profit of mines of gold and silver.
·
has been
stayed by the gradual enlargement of the market,
·
(1) in
Europe.
·
(2) in
America itself,
·
and (3) in
the East Indies,
·
where the
value of gold and silver was, and still is, higher than in Europe.
·
The supply
of silver must provide for waste as well as increase of plate and coin.
·
Waste is
considerable.
·
Six
millions of gold and silver are imported at Cadiz and Lisbon,
·
as shown
by Magens,
·
Raynal,
·
and other
authors.
·
This is
not the whole of the annual supply, but by far the greater part.
·
Brass and
iron increase, but we do not expect them to fall in value. Why then gold and
silver?
·
In
consequence of their durability the metals, especially gold and silver, vary little
in value from year to year.
(2)
Variations in the Proportion between the
respective Values of Gold and Silver
·
After the
discovery of the American mines silver fell in proportion to gold.
·
It is
higher in the East.
·
Magens
seems to think the proportion of value should be the same as the proportion of
quantity,
·
but this
is absurd.
·
The whole
of a cheap commodity is commonly worth more than the whole of a dear one, and
this is the case with silver and gold.
·
Gold is
nearer its lowest possible price than silver.
·
Diamonds
are nearer still.
·
It may be
necessary to reduce still further the tax on silver in Spanish America.
·
The
greater cost of raising silver must lead to an increase of its price, or a
reduction of the tax upon it, or both.
·
The
reduction of the tax in the past makes silver at least 10 per cent, lower than
it would otherwise have been.
·
Silver has
probably risen somewhat in the present century.
·
The annual
consumption must at length equal the annual importation,
·
and will
then accomodate itself to changes in the importation.
(3)
Grounds of the Suspicion that the Value of
Silver still continues to decrease
·
Gold and
silver are supposed to be still falling because they are increasing in quantity
and some sorts of rude produce are rising.
·
It has
already been shown that the increase of the metals need not diminish their
value:
·
and the
rise of cattle, etc., is due to a rise in their real price, not to a fall of
silver.
(4)
Different Efforts of the Progress of Improvement
upon three different Sorts of rude Produce
·
The real price
of three sorts of rude produce rises in the progress of improvement:
(a)
First Sort
·
(1) The
sort which cannot be multiplied by human industry, such as game.
(b)
Second Sort
·
(2) The
sort which can be multiplied at will, e.g. cattle, poultry.
·
When it
becomes profitable to cultivate land to yield food for cattle, the price of
cattle cannot go higher.
·
It must go
to this height in order to secure complete cultivation.
·
Consequently
new colonies are poorly cultivated.
·
Cattle are
the first of this second sort of rude produce to bring in the price necessary
to secure cultivation,
·
and
venison is the last;
·
other
things are intermediate,
·
such as
poultry,
·
hogs,
·
milk,
butter and cheese.
·
The rise
of price, being necessary for good cultivation, should be regarded with satisfaction.
·
It is due
not to a fall of silver but to a rise in the real price of the produce.
(c)
Third Sort
·
(3) The
sort of regard to which the efficacy of industry is limited or uncertain,
·
e.g. wool
and hides, which are appendages to other sorts of produce.
·
Wool and
hides in early times have a larger market open to them than butcher’s-meat.
·
In thinly
inhabited countries the wool and hide are more valuable in proportion to the
carcase.
·
In the
progress of improvement the wool and hide should rise, though not so much as
the carcase.
·
But in
England wool has fallen since 1339.
·
This has
been caused by artificial regulations.
·
The real
price of hides at present is somewhat lower than in the fifteenth century,
·
but their
average price during the present century is probably higher.
·
They are
not so easily transported as wool,
·
and
tanners have not been so much favoured by legislation as clothiers.
·
Regulations
which sink the price of wool or hides in an improved country raise the price of
meat,
·
but not in
an unimproved country.
·
The Union
sank the price of Scotch wool, while it raised the price of Scotch meat.
·
The
efficacy of industry in increasing wool and hides is both limited and
uncertain.
·
The same
thing is true of fish, which naturally rise in the progress of improvement.
·
The
connexion of success in fishing with the state of improvement is uncertain.
·
In
increasing minerals the efficacy of industry is not limited but uncertain.
·
The
quantity of the precious metals in a country depends on its power of purchasing
and the fertility of the mines.
·
So far as
it depends on the former circumstance the real price is likely to rise with
improvement;
·
so far as
it depends on the latter circumstance the real price will vary with the
fertility of the mines,
·
which has
no connexion with the state of industry.
(5)
Conclusion of the Digression concerning the
Variations in the Value of Silver
·
The high
value of the precious metals is no proof of poverty and barbarism,
·
but the
low price of cattle, poultry, game, &c., is a proof of poverty of
barbarism.
·
A rise of
price due entirely to degradation of silver would affect all goods equally, but
corn has risen much less than other provisions,
·
and has
indeed been somewhat lower in 1701-64 than in 1637-1700
·
while its
recent high price has been due only to bad seasons.
·
The
distinction between a rise of prices and a fall in the value of silver is not
useless:
·
it affords
an easy proof of the prosperity of the country,
·
and may be
of use in regulating the wages of the inferior servants of the state.
·
The poor
are more distressed by the artificial rise of some manufactures than by the
natural rise of rude produce other than corn.
(6)
Effects of the Progress of Improvement upon the
real Price of Manufactures
·
But the
natural effect of improvement is to diminish the price of manufactures.
·
In a few
manufactures the rise in the price of raw material counter-balances improvement
in execution,
·
but in
other cases price falls considerably.
·
Since 1600
this has been most remarkable in manufactures made of the coarser metals.
·
Clothing has
not fallen much in the same period,
·
but very
considerably since the fifteenth century.
·
Fine cloth
has fallen to less than one-third of its price in 1487,
·
and coarse
cloth has fallen to less than one half of its price in 1463.
·
Hose have
fallen very considerably since 1463,
·
when they
were made of common cloth.
·
The
machinery for making cloth has been much improved,
·
which
explains the fall of price.
·
The coarse
manufacture was a household one,
·
but the
fine was carried on in Flanders by people who subsisted on it, and was subject
to customs duty,
·
which
explains why the coarse was in those times lower in proportion to the fine.
(7)
Conclusion of the Chapter
·
Every
improvement in the circumstances of society raises rent.
·
Extension
of improvement and cultivation raises it directly,
·
and so
does the rise in the price of cattle, &c.
·
Improvement
which reduce the price of manufactures raise it indirectly,
·
and so
does every increase in the quantity of useful labour employed.
·
The
contrary circumstances lower rent.
·
There are
three parts of produce and three original orders of society.
·
The
interest of the proprietors of land is inseparably connected with the general
interest of the society.
·
So also is
that of those who live by wages,
·
but the
interest of those who live by profit has not the same connexion with the
general interest of the society.
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