An inquiry into the nature and causes of the wealth of

44

The Wealth of Nations

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 quan-

tity 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.

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45

Adam Smith

CHAPTER 

CHAPTER 

CHAPTER 

CHAPTER 

CHAPTER VI

VI

VI

VI

VI

OF 

OF 

OF 

OF 

OF THE COMPONENT P

THE COMPONENT P

THE COMPONENT P

THE COMPONENT P

THE COMPONENT PAR

AR

AR

AR

ART OF 

T OF 

T OF 

T OF 

T OF THE

THE

THE

THE

THE

PRICE OF COMMODITIES

PRICE OF COMMODITIES

PRICE OF COMMODITIES

PRICE OF COMMODITIES

PRICE OF COMMODITIES

I

N

 

THAT

 

EARLY

 and rude state of society which precedes both the

accumulation of stock and the appropriation of land, the propor-

tion between the quantities of labour necessary for acquiring dif-

ferent objects, seems to be the only circumstance which can afford

any rule for exchanging them for one another. If among a nation

of hunters, for example, it usually costs twice the labour to kill a

beaver which it does to kill a deer, one beaver should naturally

exchange for or be worth two deer. It is natural that what is usu-

ally the produce of two days or two hours labour, should be worth

double of what is usually the produce of one day’s or one hour’s

labour.

If the one species of labour should be more severe than the other,

some allowance will naturally be made for this superior hardship;

and the produce of one hour’s labour in the one way may fre-

quently exchange for that of two hour’s labour in the other.

Or if the one species of labour requires an uncommon degree of

dexterity and ingenuity, the esteem which men have for such tal-

ents, will naturally give a value to their produce, superior to what

would be due to the time employed about it. Such talents can

seldom be acquired but in consequence of long application, and

the superior value of their produce may frequently be no more

than a reasonable compensation for the time and labour which

must be spent in acquiring them. In the advanced state of society,

allowances of this kind, for superior hardship and superior skill,

are commonly made in the wages of labour; and something of the

same kind must probably have taken place in its earliest and rud-

est period.

In this state of things, the whole produce of labour belongs to

the labourer; and the quantity of labour commonly employed in

acquiring or producing any commodity, is the only circumstance

which can regulate the quantity of labour which it ought com-

monly to purchase, command, or exchange for.

As soon as stock has accumulated in the hands of particular

persons, some of them will naturally employ it in setting to work

industrious people, whom they will supply with materials and

subsistence, in order to make a profit by the sale of their work, or

by what their labour adds to the value of the materials. In ex-

changing the complete manufacture either for money, for labour,

or for other goods, over and above what may be sufficient to pay

the price of the materials, and the wages of the workmen, some-

thing must be given for the profits of the undertaker of the work,

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