markitect-main/examples/infospace-with-history/artifacts/sources/book-1-chapter-05.md

id, title, book, chapter, artifact_type

id	title	book	chapter	artifact_type
book-1-chapter-05	OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY.	1	5	content

CHAPTER V. OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY.

  Every man is rich or poor according to the degree in which he can afford
  to enjoy the necessaries, conveniencies, and amusements of human life. But
  after the division of labour has once thoroughly taken place, it is but a
  very small part of these with which a man’s own labour can supply him. The
  far greater part of them he must derive from the labour of other people,
  and he must be rich or poor according to the quantity of that labour which
  he can command, or which he can afford to purchase. The value of any
  commodity, therefore, to the person who possesses it, and who means not to
  use or consume it himself, but to exchange it for other commodities, is
  equal to the quantity of labour which it enables him to purchase or
  command. Labour therefore, is the real measure of the exchangeable value
  of all commodities.

  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 it. What
  every thing is really worth to the man who has acquired it and who wants
  to dispose of it, or exchange it for something else, is the toil and
  trouble which it can save to himself, and which it can impose upon other
  people. What is bought with money, or with goods, is purchased by labour,
  as much as what we acquire by the toil of our own body. That money, or
  those goods, indeed, save us this toil. They contain the value of a
  certain quantity of labour, which we exchange for what is supposed at the
  time to contain the value of an equal quantity. Labour was the first
  price, the original purchase money that was paid for all things. It was
  not by gold or by silver, but by labour, that all the wealth of the world
  was originally purchased; and its value, to those who possess it, and who
  want to exchange it for some new productions, is precisely equal to the
  quantity of labour which it can enable them to purchase or command.

  Wealth, as Mr Hobbes says, is power. But the person who either acquires,
  or succeeds to a great fortune, does not necessarily acquire or succeed to
  any political power, either civil or military. His fortune may, perhaps,
  afford him the means of acquiring both; but the mere possession of that
  fortune does not necessarily convey to him either. The power which that
  possession immediately and directly conveys to him, is the power of
  purchasing a certain command over all the labour, or over all the produce
  of labour which is then in the market. His fortune is greater or less,
  precisely in proportion to the extent of this power, or to the quantity
  either of other men’s labour, or, what is the same thing, of the produce
  of other men’s labour, which it enables him to purchase or command. The
  exchangeable value of every thing must always be precisely equal to the
  extent of this power which it conveys to its owner.

  But though labour be the real measure of the exchangeable value of all
  commodities, it is not that by which their value is commonly estimated. It
  is often difficult to ascertain the proportion between two different
  quantities of labour. The time spent in two different sorts of work will
  not always alone determine this proportion. The different degrees of
  hardship endured, and of ingenuity exercised, must likewise be taken into
  account. There may be more labour in an hour’s hard work, than in two
  hours easy business; or in an hour’s application to a trade which it cost
  ten years labour to learn, than in a month’s industry, at an ordinary and
  obvious employment. But it is not easy to find any accurate measure either
  of hardship or ingenuity. In exchanging, indeed, the different productions
  of different sorts of labour for one another, some allowance is commonly
  made for both. It is adjusted, however, not by any accurate measure, but
  by the higgling and bargaining of the market, according to that sort of
  rough equality which, though not exact, is sufficient for carrying on the
  business of common life.

  Every commodity, besides, is more frequently exchanged for, and thereby
  compared with, other commodities, than with labour. It is more natural,
  therefore, to estimate its exchangeable value by the quantity of some
  other commodity, than by that of the labour which it can produce. The
  greater part of people, too, understand better what is meant by a quantity
  of a particular commodity, than by a quantity of labour. The one is a
  plain palpable object; the other an abstract notion, which though it can
  be made sufficiently intelligible, is not altogether so natural and
  obvious.

  But when barter ceases, and money has become the common instrument of
  commerce, every particular commodity is more frequently exchanged for
  money than for any other commodity. The butcher seldom carries his beef or
  his mutton to the baker or the brewer, in order to exchange them for bread
  or for beer; but he carries them to the market, where he exchanges them
  for money, and afterwards exchanges that money for bread and for beer. The
  quantity of money which he gets for them regulates, too, the quantity of
  bread and beer which he can afterwards purchase. It is more natural and
  obvious to him, therefore, to estimate their value by the quantity of
  money, the commodity for which he immediately exchanges them, than by that
  of bread and beer, the commodities for which he can exchange them only by
  the intervention of another commodity; and rather to say that his
  butcher’s meat is worth three-pence or fourpence a-pound, than that it is
  worth three or four pounds of bread, or three or four quarts of small
  beer. Hence it comes to pass, that the exchangeable value of every
  commodity is more frequently estimated by the quantity of money, than by
  the quantity either of labour or of any other commodity which can be had
  in exchange for it.

  Gold and silver, however, like every other commodity, vary in their value;
  are sometimes cheaper and sometimes dearer, sometimes of easier and
  sometimes of more difficult purchase. The quantity of labour which any
  particular quantity of them can purchase or command, or the quantity of
  other goods which it will exchange for, depends always upon the fertility
  or barrenness of the mines which happen to be known about the time when
  such exchanges are made. The discovery of the abundant mines of America,
  reduced, in the sixteenth century, the value of gold and silver in Europe
  to about a third of what it had been before. As it cost less labour to
  bring those metals from the mine to the market, so, when they were brought
  thither, they could purchase or command less labour; and this revolution
  in their value, though perhaps the greatest, is by no means the only one
  of which history gives some account. But as a measure of quantity, such as
  the natural foot, fathom, or handful, which is continually varying in its
  own quantity, can never be an accurate measure of the quantity of other
  things; so a commodity which is itself continually varying in its own
  value, can never be an accurate measure of the value of other commodities.
  Equal quantities of labour, at all times and places, may be said to be of
  equal value to the labourer. In his ordinary state of health, strength,
  and spirits; in the ordinary degree of his skill and dexterity, he must
  always lay down the same portion of his ease, his liberty, and his
  happiness. The price which he pays must always be the same, whatever may
  be the quantity of goods which he receives in return for it. Of these,
  indeed, it may sometimes purchase a greater and sometimes a smaller
  quantity; but it is their value which varies, not that of the labour which
  purchases them. At all times and places, that is dear which it is
  difficult to come at, or which it costs much labour to acquire; and that
  cheap which is to be had easily, or with very little labour. Labour alone,
  therefore, never varying in its own value, is alone the ultimate and real
  standard by which the value of all commodities can at all times and places
  be estimated and compared. It is their real price; money is their nominal
  price only.

  But though equal quantities of labour are always of equal value to the
  labourer, yet to the person who employs him they appear sometimes to be of
  greater, and sometimes of smaller value. He purchases them sometimes with
  a greater, and sometimes with a smaller quantity of goods, and to him the
  price of labour seems to vary like that of all other things. It appears to
  him dear in the one case, and cheap in the other. In reality, however, it
  is the goods which are cheap in the one case, and dear in the other.

  In this popular sense, therefore, labour, like commodities, may be said to
  have a real and a nominal price. Its real price may be said to consist in
  the quantity of the necessaries and conveniencies of life which are given
  for it; its nominal price, in the quantity of money. The labourer is rich
  or poor, is well or ill rewarded, in proportion to the real, not to the
  nominal price of his labour.

  The distinction between the real and the nominal price of commodities and
  labour is not a matter of mere speculation, but may sometimes be of
  considerable use in practice. The same real price is always of the same
  value; but on account of the variations in the value of gold and silver,
  the same nominal price is sometimes of very different values. When a
  landed estate, therefore, is sold with a reservation of a perpetual rent,
  if it is intended that this rent should always be of the same value, it is
  of importance to the family in whose favour it is reserved, that it should
  not consist in a particular sum of money. Its value would in this case be
  liable to variations of two different kinds: first, to those which arise
  from the different quantities of gold and silver which are contained at
  different times in coin of the same denomination; and, secondly, to those
  which arise from the different values of equal quantities of gold and
  silver at different times.

  Princes and sovereign states have frequently fancied that they had a
  temporary interest to diminish the quantity of pure metal contained in
  their coins; but they seldom have fancied that they had any to augment it.
  The quantity of metal contained in the coins, I believe of all nations,
  has accordingly been almost continually diminishing, and hardly ever
  augmenting. Such variations, therefore, tend almost always to diminish the
  value of a money rent.

  The discovery of the mines of America diminished the value of gold and
  silver in Europe. This diminution, it is commonly supposed, though I
  apprehend without any certain proof, is still going on gradually, and is
  likely to continue to do so for a long time. Upon this supposition,
  therefore, such variations are more likely to diminish than to augment the
  value of a money rent, even though it should be stipulated to be paid, not
  in such a quantity of coined money of such a denomination (in so many
  pounds sterling, for example), but in so many ounces, either of pure
  silver, or of silver of a certain standard.

  The rents which have been reserved in corn, have preserved their value
  much better than those which have been reserved in money, even where the
  denomination of the coin has not been altered. By the 18th of Elizabeth,
  it was enacted, that a third of the rent of all college leases should be
  reserved in corn, to be paid either in kind, or according to the current
  prices at the nearest public market. The money arising from this corn
  rent, though originally but a third of the whole, is, in the present
  times, according to Dr Blackstone, commonly near double of what arises
  from the other two-thirds. The old money rents of colleges must, according
  to this account, have sunk almost to a fourth part of their ancient value,
  or are worth little more than a fourth part of the corn which they were
  formerly worth. But since the reign of Philip and Mary, the denomination
  of the English coin has undergone little or no alteration, and the same
  number of pounds, shillings, and pence, have contained very nearly the
  same quantity of pure silver. This degradation, therefore, in the value of
  the money rents of colleges, has arisen altogether from the degradation in
  the price of silver.

  When the degradation in the value of silver is combined with the
  diminution of the quantity of it contained in the coin of the same
  denomination, the loss is frequently still greater. In Scotland, where the
  denomination of the coin has undergone much greater alterations than it
  ever did in England, and in France, where it has undergone still greater
  than it ever did in Scotland, some ancient rents, originally of
  considerable value, have, in this manner, been reduced almost to nothing.

  Equal quantities of labour will, at distant times, be purchased more
  nearly with equal quantities of corn, the subsistence of the labourer,
  than with equal quantities of gold and silver, or, perhaps, of any other
  commodity. Equal quantities of corn, therefore, will, at distant times, be
  more nearly of the same real value, or enable the possessor to purchase or
  command more nearly the same quantity of the labour of other people. They
  will do this, I say, more nearly than equal quantities of almost any other
  commodity; for even equal quantities of corn will not do it exactly. The
  subsistence of the labourer, or the real price of labour, as I shall
  endeavour to shew hereafter, is very different upon different occasions;
  more liberal in a society advancing to opulence, than in one that is
  standing still, and in one that is standing still, than in one that is
  going backwards. Every other commodity, however, will, at any particular
  time, purchase a greater or smaller quantity of labour, in proportion to
  the quantity of subsistence which it can purchase at that time. A rent,
  therefore, reserved in corn, is liable only to the variations in the
  quantity of labour which a certain quantity of corn can purchase. But a
  rent reserved in any other commodity is liable, not only to the variations
  in the quantity of labour which any particular quantity of corn can
  purchase, but to the variations in the quantity of corn which can be
  purchased by any particular quantity of that commodity.

  Though the real value of a corn rent, it is to be observed, however,
  varies much less from century to century than that of a money rent, it
  varies much more from year to year. The money price of labour, as I shall
  endeavour to shew hereafter, does not fluctuate from year to year with the
  money price of corn, but seems to be everywhere accommodated, not to the
  temporary or occasional, but to the average or ordinary price of that
  necessary of life. The average or ordinary price of corn, again is
  regulated, as I shall likewise endeavour to shew hereafter, by the value
  of silver, by the richness or barrenness of the mines which supply the
  market with that metal, or by the quantity of labour which must be
  employed, and consequently of corn which must be consumed, in order to
  bring any particular quantity of silver from the mine to the market. But
  the value of silver, though it sometimes varies greatly from century to
  century, seldom varies much from year to year, but frequently continues
  the same, or very nearly the same, for half a century or a century
  together. The ordinary or average money price of corn, therefore, may,
  during so long a period, continue the same, or very nearly the same, too,
  and along with it the money price of labour, provided, at least, the
  society continues, in other respects, in the same, or nearly in the same,
  condition. In the mean time, the temporary and occasional price of corn
  may frequently be double one year of what it had been the year before, or
  fluctuate, for example, from five-and-twenty to fifty shillings the
  quarter. But when corn is at the latter price, not only the nominal, but
  the real value of a corn rent, will be double of what it is when at the
  former, or will command double the quantity either of labour, or of the
  greater part of other commodities; the money price of labour, and along
  with it that of most other things, continuing the same during all these
  fluctuations.

  Labour, therefore, it appears evidently, is the only universal, as well as
  the only accurate, measure of value, or the only standard by which we can
  compare the values of different commodities, at all times, and at all
  places. We cannot estimate, it is allowed, the real value of different
  commodities from century to century by the quantities of silver which were
  given for them. We cannot estimate it from year to year by the quantities
  of corn. By the quantities of labour, we can, with the greatest accuracy,
  estimate it, both from century to century, and from year to year. From
  century to century, corn is a better measure than silver, because, from
  century to century, equal quantities of corn will command the same
  quantity of labour more nearly than equal quantities of silver. From year
  to year, on the contrary, silver is a better measure than corn, because
  equal quantities of it will more nearly command the same quantity of
  labour.

  But though, in establishing perpetual rents, or even in letting very long
  leases, it may be of use to distinguish between real and nominal price; it
  is of none in buying and selling, the more common and ordinary
  transactions of human life.

  At the same time and place, the real and the nominal price of all
  commodities are exactly in proportion to one another. The more or less
  money you get for any commodity, in the London market, for example, the
  more or less labour it will at that time and place enable you to purchase
  or command. At the same time and place, therefore, money is the exact
  measure of the real exchangeable value of all commodities. It is so,
  however, at the same time and place only.

  Though at distant places there is no regular proportion between the real
  and the money price of commodities, yet the merchant who carries goods
  from the one to the other, has nothing to consider but the money price, or
  the difference between the quantity of silver for which he buys them, and
  that for which he is likely to sell them. Half an ounce of silver at
  Canton in China may command a greater quantity both of labour and of the
  necessaries and conveniencies of life, than an ounce at London. A
  commodity, therefore, which sells for half an ounce of silver at Canton,
  may there be really dearer, of more real importance to the man who
  possesses it there, than a commodity which sells for an ounce at London is
  to the man who possesses it at London. If a London merchant, however, can
  buy at Canton, for half an ounce of silver, a commodity which he can
  afterwards sell at London for an ounce, he gains a hundred per cent. by
  the bargain, just as much as if an ounce of silver was at London exactly
  of the same value as at Canton. It is of no importance to him that half an
  ounce of silver at Canton would have given him the command of more labour,
  and of a greater quantity of the necessaries and conveniencies of life
  than an ounce can do at London. An ounce at London will always give him
  the command of double the quantity of all these, which half an ounce could
  have done there, and this is precisely what he wants.

  As it is the nominal or money price of goods, therefore, which finally
  determines the prudence or imprudence of all purchases and sales, and
  thereby regulates almost the whole business of common life in which price
  is concerned, we cannot wonder that it should have been so much more
  attended to than the real price.

  In such a work as this, however, it may sometimes be of use to compare the
  different real values of a particular commodity at different times and
  places, or the different degrees of power over the labour of other people
  which it may, upon different occasions, have given to those who possessed
  it. We must in this case compare, not so much the different quantities of
  silver for which it was commonly sold, as the different quantities or
  labour which those different quantities of silver could have purchased.
  But the current prices of labour, at distant times and places, can scarce
  ever be known with any degree of exactness. Those of corn, though they
  have in few places been regularly recorded, are in general better known,
  and have been more frequently taken notice of by historians and other
  writers. We must generally, therefore, content ourselves with them, not as
  being always exactly in the same proportion as the current prices of
  labour, but as being the nearest approximation which can commonly be had
  to that proportion. I shall hereafter have occasion to make several
  comparisons of this kind.

  In the progress of industry, commercial nations have found it convenient
  to coin several different metals into money; gold for larger payments,
  silver for purchases of moderate value, and copper, or some other coarse
  metal, for those of still smaller consideration, They have always,
  however, considered one of those metals as more peculiarly the measure of
  value than any of the other two; and this preference seems generally to
  have been given to the metal which they happen first to make use of as the
  instrument of commerce. Having once begun to use it as their standard,
  which they must have done when they had no other money, they have
  generally continued to do so even when the necessity was not the same.

  The Romans are said to have had nothing but copper money till within five
  years before the first Punic war (Pliny, lib. xxxiii. cap. 3), when they
  first began to coin silver. Copper, therefore, appears to have continued
  always the measure of value in that republic. At Rome all accounts appear
  to have been kept, and the value of all estates to have been computed,
  either in asses or in sestertii. The as was always the denomination of a
  copper coin. The word sestertius signifies two asses and a half. Though
  the sestertius, therefore, was originally a silver coin, its value was
  estimated in copper. At Rome, one who owed a great deal of money was said
  to have a great deal of other people’s copper.

  The northern nations who established themselves upon the ruins of the
  Roman empire, seem to have had silver money from the first beginning of
  their settlements, and not to have known either gold or copper coins for
  several ages thereafter. There were silver coins in England in the time of
  the Saxons; but there was little gold coined till the time of Edward III
  nor any copper till that of James I. of Great Britain. In England,
  therefore, and for the same reason, I believe, in all other modern nations
  of Europe, all accounts are kept, and the value of all goods and of all
  estates is generally computed, in silver: and when we mean to express the
  amount of a person’s fortune, we seldom mention the number of guineas, but
  the number of pounds sterling which we suppose would be given for it.

  Originally, in all countries, I believe, a legal tender of payment could
  be made only in the coin of that metal which was peculiarly considered as
  the standard or measure of value. In England, gold was not considered as a
  legal tender for a long time after it was coined into money. The
  proportion between the values of gold and silver money was not fixed by
  any public law or proclamation, but was left to be settled by the market.
  If a debtor offered payment in gold, the creditor might either reject such
  payment altogether, or accept of it at such a valuation of the gold as he
  and his debtor could agree upon. Copper is not at present a legal tender,
  except in the change of the smaller silver coins.

  In this state of things, the distinction between the metal which was the
  standard, and that which was not the standard, was something more than a
  nominal distinction.

  In process of time, and as people became gradually more familiar with the
  use of the different metals in coin, and consequently better acquainted
  with the proportion between their respective values, it has, in most
  countries, I believe, been found convenient to ascertain this proportion,
  and to declare by a public law, that a guinea, for example, of such a
  weight and fineness, should exchange for one-and-twenty shillings, or be a
  legal tender for a debt of that amount. In this state of things, and
  during the continuance of any one regulated proportion of this kind, the
  distinction between the metal, which is the standard, and that which is
  not the standard, becomes little more than a nominal distinction.

  In consequence of any change, however, in this regulated proportion, this
  distinction becomes, or at least seems to become, something more than
  nominal again. If the regulated value of a guinea, for example, was either
  reduced to twenty, or raised to two-and-twenty shillings, all accounts
  being kept, and almost all obligations for debt being expressed, in silver
  money, the greater part of payments could in either case be made with the
  same quantity of silver money as before; but would require very different
  quantities of gold money; a greater in the one case, and a smaller in the
  other. Silver would appear to be more invariable in its value than gold.
  Silver would appear to measure the value of gold, and gold would not
  appear to measure the value of silver. The value of gold would seem to
  depend upon the quantity of silver which it would exchange for, and the
  value of silver would not seem to depend upon the quantity of gold which
  it would exchange for. This difference, however, would be altogether owing
  to the custom of keeping accounts, and of expressing the amount of all
  great and small sums rather in silver than in gold money. One of Mr
  Drummond’s notes for five-and-twenty or fifty guineas would, after an
  alteration of this kind, be still payable with five-and-twenty or fifty
  guineas, in the same manner as before. It would, after such an alteration,
  be payable with the same quantity of gold as before, but with very
  different quantities of silver. In the payment of such a note, gold would
  appear to be more invariable in its value than silver. Gold would appear
  to measure the value of silver, and silver would not appear to measure the
  value of gold. If the custom of keeping accounts, and of expressing
  promissory-notes and other obligations for money, in this manner should
  ever become general, gold, and not silver, would be considered as the
  metal which was peculiarly the standard or measure of value.

  In reality, during the continuance of any one regulated proportion between
  the respective values of the different metals in coin, the value of the
  most precious metal regulates the value of the whole coin. Twelve copper
  pence contain half a pound avoirdupois of copper, of not the best quality,
  which, before it is coined, is seldom worth seven-pence in silver. But as,
  by the regulation, twelve such pence are ordered to exchange for a
  shilling, they are in the market considered as worth a shilling, and a
  shilling can at any time be had for them. Even before the late reformation
  of the gold coin of Great Britain, the gold, that part of it at least
  which circulated in London and its neighbourhood, was in general less
  degraded below its standard weight than the greater part of the silver.
  One-and-twenty worn and defaced shillings, however, were considered as
  equivalent to a guinea, which, perhaps, indeed, was worn and defaced too,
  but seldom so much so. The late regulations have brought the gold coin as
  near, perhaps, to its standard weight as it is possible to bring the
  current coin of any nation; and the order to receive no gold at the public
  offices but by weight, is likely to preserve it so, as long as that order
  is enforced. The silver coin still continues in the same worn and degraded
  state as before the reformation of the cold coin. In the market, however,
  one-and-twenty shillings of this degraded silver coin are still considered
  as worth a guinea of this excellent gold coin.

  The reformation of the gold coin has evidently raised the value of the
  silver coin which can be exchanged for it.

  In the English mint, a pound weight of gold is coined into forty-four
  guineas and a half, which at one-and-twenty shillings the guinea, is equal
  to forty-six pounds fourteen shillings and sixpence. An ounce of such gold
  coin, therefore, is worth £ 3:17:10½ in silver. In England, no duty or
  seignorage is paid upon the coinage, and he who carries a pound weight or
  an ounce weight of standard gold bullion to the mint, gets back a pound
  weight or an ounce weight of gold in coin, without any deduction. Three
  pounds seventeen shillings and tenpence halfpenny an ounce, therefore, is
  said to be the mint price of gold in England, or the quantity of gold coin
  which the mint gives in return for standard gold bullion.

  Before the reformation of the gold coin, the price of standard gold
  bullion in the market had, for many years, been upwards of £3:18s.
  sometimes £ 3:19s, and very frequently £4 an ounce; that sum, it is
  probable, in the worn and degraded gold coin, seldom containing more than
  an ounce of standard gold. Since the reformation of the gold coin, the
  market price of standard gold bullion seldom exceeds £ 3:17:7 an ounce.
  Before the reformation of the gold coin, the market price was always more
  or less above the mint price. Since that reformation, the market price has
  been constantly below the mint price. But that market price is the same
  whether it is paid in gold or in silver coin. The late reformation of the
  gold coin, therefore, has raised not only the value of the gold coin, but
  likewise that of the silver coin in proportion to gold bullion, and
  probably, too, in proportion to all other commodities; though the price of
  the greater part of other commodities being influenced by so many other
  causes, the rise in the value of either gold or silver coin in proportion
  to them may not be so distinct and sensible.

  In the English mint, a pound weight of standard silver bullion is coined
  into sixty-two shillings, containing, in the same manner, a pound weight
  of standard silver. Five shillings and twopence an ounce, therefore, is
  said to be the mint price of silver in England, or the quantity of silver
  coin which the mint gives in return for standard silver bullion. Before
  the reformation of the gold coin, the market price of standard silver
  bullion was, upon different occasions, five shillings and fourpence, five
  shillings and fivepence, five shillings and sixpence, five shillings and
  sevenpence, and very often five shillings and eightpence an ounce. Five
  shillings and sevenpence, however, seems to have been the most common
  price. Since the reformation of the gold coin, the market price of
  standard silver bullion has fallen occasionally to five shillings and
  threepence, five shillings and fourpence, and five shillings and fivepence
  an ounce, which last price it has scarce ever exceeded. Though the market
  price of silver bullion has fallen considerably since the reformation of
  the gold coin, it has not fallen so low as the mint price.

  In the proportion between the different metals in the English coin, as
  copper is rated very much above its real value, so silver is rated
  somewhat below it. In the market of Europe, in the French coin and in the
  Dutch coin, an ounce of fine gold exchanges for about fourteen ounces of
  fine silver. In the English coin, it exchanges for about fifteen ounces,
  that is, for more silver than it is worth, according to the common
  estimation of Europe. But as the price of copper in bars is not, even in
  England, raised by the high price of copper in English coin, so the price
  of silver in bullion is not sunk by the low rate of silver in English
  coin. Silver in bullion still preserves its proper proportion to gold, for
  the same reason that copper in bars preserves its proper proportion to
  silver.

  Upon the reformation of the silver coin, in the reign of William III., the
  price of silver bullion still continued to be somewhat above the mint
  price. Mr Locke imputed this high price to the permission of exporting
  silver bullion, and to the prohibition of exporting silver coin. This
  permission of exporting, he said, rendered the demand for silver bullion
  greater than the demand for silver coin. But the number of people who want
  silver coin for the common uses of buying and selling at home, is surely
  much greater than that of those who want silver bullion either for the use
  of exportation or for any other use. There subsists at present a like
  permission of exporting gold bullion, and a like prohibition of exporting
  gold coin; and yet the price of gold bullion has fallen below the mint
  price. But in the English coin, silver was then, in the same manner as
  now, under-rated in proportion to gold; and the gold coin (which at that
  time, too, was not supposed to require any reformation) regulated then, as
  well as now, the real value of the whole coin. As the reformation of the
  silver coin did not then reduce the price of silver bullion to the mint
  price, it is not very probable that a like reformation will do so now.

  Were the silver coin brought back as near to its standard weight as the
  gold, a guinea, it is probable, would, according to the present
  proportion, exchange for more silver in coin than it would purchase in
  bullion. The silver coin containing its full standard weight, there would
  in this case, be a profit in melting it down, in order, first to sell the
  bullion for gold coin, and afterwards to exchange this gold coin for
  silver coin, to be melted down in the same manner. Some alteration in the
  present proportion seems to be the only method of preventing this
  inconveniency.

  The inconveniency, perhaps, would be less, if silver was rated in the coin
  as much above its proper proportion to gold as it is at present rated
  below it, provided it was at the same time enacted, that silver should not
  be a legal tender for more than the change of a guinea, in the same manner
  as copper is not a legal tender for more than the change of a shilling. No
  creditor could, in this case, be cheated in consequence of the high
  valuation of silver in coin; as no creditor can at present be cheated in
  consequence of the high valuation of copper. The bankers only would suffer
  by this regulation. When a run comes upon them, they sometimes endeavour
  to gain time, by paying in sixpences, and they would be precluded by this
  regulation from this discreditable method of evading immediate payment.
  They would be obliged, in consequence, to keep at all times in their
  coffers a greater quantity of cash than at present; and though this might,
  no doubt, be a considerable inconveniency to them, it would, at the same
  time, be a considerable security to their creditors.

  Three pounds seventeen shillings and tenpence halfpenny (the mint price of
  gold) certainly does not contain, even in our present excellent gold coin,
  more than an ounce of standard gold, and it may be thought, therefore,
  should not purchase more standard bullion. But gold in coin is more
  convenient than gold in bullion; and though, in England, the coinage is
  free, yet the gold which is carried in bullion to the mint, can seldom be
  returned in coin to the owner till after a delay of several weeks. In the
  present hurry of the mint, it could not be returned till after a delay of
  several months. This delay is equivalent to a small duty, and renders gold
  in coin somewhat more valuable than an equal quantity of gold in bullion.
  If, in the English coin, silver was rated according to its proper
  proportion to gold, the price of silver bullion would probably fall below
  the mint price, even without any reformation of the silver coin; the value
  even of the present worn and defaced silver coin being regulated by the
  value of the excellent gold coin for which it can be changed.

  A small seignorage or duty upon the coinage of both gold and silver, would
  probably increase still more the superiority of those metals in coin above
  an equal quantity of either of them in bullion. The coinage would, in this
  case, increase the value of the metal coined in proportion to the extent
  of this small duty, for the same reason that the fashion increases the
  value of plate in proportion to the price of that fashion. The superiority
  of coin above bullion would prevent the melting down of the coin, and
  would discourage its exportation. If, upon any public exigency, it should
  become necessary to export the coin, the greater part of it would soon
  return again, of its own accord. Abroad, it could sell only for its weight
  in bullion. At home, it would buy more than that weight. There would be a
  profit, therefore, in bringing it home again. In France, a seignorage of
  about eight per cent. is imposed upon the coinage, and the French coin,
  when exported, is said to return home again, of its own accord.

  The occasional fluctuations in the market price of gold and silver bullion
  arise from the same causes as the like fluctuations in that of all other
  commodities. The frequent loss of those metals from various accidents by
  sea and by land, the continual waste of them in gilding and plating, in
  lace and embroidery, in the wear and tear of coin, and in that of plate,
  require, in all countries which possess no mines of their own, a continual
  importation, in order to repair this loss and this waste. The merchant
  importers, like all other merchants, we may believe, endeavour, as well as
  they can, to suit their occasional importations to what they judge is
  likely to be the immediate demand. With all their attention, however, they
  sometimes overdo the business, and sometimes underdo it. When they import
  more bullion than is wanted, rather than incur the risk and trouble of
  exporting it again, they are sometimes willing to sell a part of it for
  something less than the ordinary or average price. When, on the other
  hand, they import less than is wanted, they get something more than this
  price. But when, under all those occasional fluctuations, the market price
  either of gold or silver bullion continues for several years together
  steadily and constantly, either more or less above, or more or less below
  the mint price, we may be assured that this steady and constant, either
  superiority or inferiority of price, is the effect of something in the
  state of the coin, which, at that time, renders a certain quantity of coin
  either of more value or of less value than the precise quantity of bullion
  which it ought to contain. The constancy and steadiness of the effect
  supposes a proportionable constancy and steadiness in the cause.

  The money of any particular country is, at any particular time and place,
  more or less an accurate measure or value, according as the current coin
  is more or less exactly agreeable to its standard, or contains more or
  less exactly the precise quantity of pure gold or pure silver which it
  ought to contain. If in England, for example, forty-four guineas and a
  half contained exactly a pound weight of standard gold, or eleven ounces
  of fine gold, and one ounce of alloy, the gold coin of England would be as
  accurate a measure of the actual value of goods at any particular time and
  place as the nature of the thing would admit. But if, by rubbing and
  wearing, forty-four guineas and a half generally contain less than a pound
  weight of standard gold, the diminution, however, being greater in some
  pieces than in others, the measure of value comes to be liable to the same
  sort of uncertainty to which all other weights and measures are commonly
  exposed. As it rarely happens that these are exactly agreeable to their
  standard, the merchant adjusts the price of his goods as well as he can,
  not to what those weights and measures ought to be, but to what, upon an
  average, he finds, by experience, they actually are. In consequence of a
  like disorder in the coin, the price of goods comes, in the same manner,
  to be adjusted, not to the quantity of pure gold or silver which the coin
  ought to contain, but to that which, upon an average, it is found, by
  experience, it actually does contain.

  By the money price of goods, it is to be observed, I understand always the
  quantity of pure gold or silver for which they are sold, without any
  regard to the denomination of the coin. Six shillings and eight pence, for
  example, in the time of Edward I., I consider as the same money price with
  a pound sterling in the present times, because it contained, as nearly as
  we can judge, the same quantity of pure silver.