An inquiry into the nature and causes of the wealth of

38

The Wealth of Nations

they have in few places been regularly recorded, are in general better

known, and have been more frequently taken notice of by histori-

ans and other writers. We must generally, therefore, content our-

selves with them, not as being always exactly in the same proportion

as the current prices of labour, but as being the nearest approxima-

tion which can commonly be had to that proportion. I shall hereaf-

ter 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 cop-

per, or some other coarse metal, for those of still smaller consider-

ation, 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 com-

merce. Having once begun to use it as their standard, which they

must have done when they had no other money, they have gener-

ally 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, there-

fore, 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 ru-

ins 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 ac-

counts 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

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39

Adam Smith

coined into money. The proportion between the values of gold

and silver money was not fixed by any public law or proclama-

tion, 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 ten-

der, 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 some-

thing more than a nominal distinction.

In process of time, and as people became gradually more famil-

iar 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 ex-

change for one-and-twenty shillings, or be a legal tender for a

debt of that amount. In this state of things, and during the con-

tinuance of any one regulated proportion of this kind, the distinc-

tion 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 pro-

portion, 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 quan-

tity 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 cus-

tom 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

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