An inquiry into the nature and causes of the wealth of

40

The Wealth of Nations

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 gen-

eral, 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 propor-

tion 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 avoirdu-

pois 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 circu-

lated in London and its neighbourhood, was in general less de-

graded below its standard weight than the greater part of the sil-

ver. 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 regula-

tions 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 consid-

ered 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 En-

gland, 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 refor-

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41

Adam Smith

mation 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 con-

stantly 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 commodi-

ties; 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 stan-

dard 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 pre-

serves 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 permis-

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