An inquiry into the nature and causes of the wealth of

34

The Wealth of Nations

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 com-

modities 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 con-

tained 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 di-

minishing, 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 sup-

posed, though I apprehend without any certain proof, is still go-

ing 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.

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35

Adam Smith

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 Scot-

land, 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 man-

ner, 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, per-

haps, of any other commodity. Equal quantities of corn, there-

fore, 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 com-

modity; 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 quan-

tity of labour which any particular quantity of corn can purchase,

but to the variations in the quantity of corn which can be pur-

chased by any particular quantity of that commodity.

Though the real value of a corn rent, it is to be observed, how-

ever, 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

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