An inquiry into the nature and causes of the wealth of

778

The Wealth of Nations

ably much greater. The blacks, indeed, who make the greater part

of the inhabitants, both of the southern colonies upon the conti-

nent and of the West India islands, as they are in a state of slavery,

are, no doubt, in a worse condition than the poorest people either

in Scotland or Ireland. We must not, however, upon that account,

imagine that they are worse fed, or that their consumption of ar-

ticles which might be subjected to moderate duties, is less than

that even of the lower ranks of people in England. In order that

they may work well, it is the interest of their master that they

should be fed well, and kept in good heart, in the same manner as

it is his interest that his working cattle should be so. The blacks,

accordingly, have almost everywhere their allowance of rum, and

of molasses or spruce-beer, in the same manner as the white ser-

vants; and this allowance would not probably be withdrawn,

though those articles should be subjected to moderate duties. The

consumption of the taxed commodities, therefore, in proportion

to the number of inhabitants, would probably be as great in

America and the West Indies as in any part of the British empire.

The opportunities of smuggling, indeed, would be much greater;

America, in proportion to the extent of the country, being much

more thinly inhabited than either Scotland or Ireland. If the rev-

enue, however, which is at present raised by the different duties

upon malt and malt liquors, were to be levied by a single duty

upon malt, the opportunity of smuggling in the most important

branch of the excise would be almost entirely taken away; and if

the duties of customs, instead of being imposed upon almost all

the different articles of importation, were confined to a few of the

most general use and consumption, and if the levying of those

duties were subjected to the excise laws, the opportunity of smug-

gling, though not so entirely taken away, would be very much

diminished. In consequence of those two apparently very simple

and easy alterations, the duties of customs and excise might prob-

ably produce a revenue as great, in proportion to the consump-

tion of the most thinly inhabited province, as they do at present,

in proportion to that of the most populous.

The Americans, it has been said, indeed, have no gold or silver

money, the interior commerce of the country being carried on by

a paper currency; and the gold and silver, which occasionally come

among them, being all sent to Great Britain, in return for the

commodities which they receive from us. But without gold and

silver, it is added, there is no possibility of paying taxes. We al-

ready get all the gold and silver which they have. How is it pos-

sible to draw from them what they have not?

The present scarcity of gold and silver money in America, is not

the effect of the poverty of that country, or of the inability of the

people there to purchase those metals. In a country where the

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779

Adam Smith

wages of labour are so much higher, and the price of provisions so

much lower than in England, the greater part of the people must

surely have wherewithal to purchase a greater quantity, if it were

either necessary or convenient for them to do so. The scarcity of

those metals, therefore, must be the effect of choice, and not of

necessity.

It is for transacting either domestic or foreign business, that

gold or silver money is either necessary or convenient.

The domestic business of every country, it has been shewn in

the second book of this Inquiry, may, at least in peaceable times,

be transacted by means of a paper currency, with nearly the same

degree of conveniency as by gold and silver money. It is conve-

nient for the Americans, who could always employ with profit, in

the improvement of their lands, a greater stock than they can eas-

ily get, to save as much as possible the expense of so costly an

instrument of commerce as gold and silver; and rather to employ

that part of their surplus produce which would be necessary for

purchasing those metals, in purchasing the instruments of trade,

the materials of clothing, several parts of household furniture, and

the iron work necessary for building and extending their settle-

ments and plantations; in purchasing not dead stock, but active

and productive stock. The colony governments find it for their

interest to supply the people with such a quantity of paper money

as is fully sufficient, and generally more than sufficient, for trans-

acting their domestic business. Some of those governments, that

of Pennsylvania, particularly, derive a revenue from lending this

paper money to their subjects, at an interest of so much per cent.

Others, like that of Massachusetts Bay, advance, upon extraordi-

nary emergencies, a paper money of this kind for defraying the

public expense; and afterwards, when it suits the conveniency of

the colony, redeem it at the depreciated value to which it gradu-

ally falls. In 1747, {See Hutchinson’s History of Massachusetts

Bay vol. ii. page 436 et seq.} that colony paid in this manner the

greater part of its public debts, with the tenth part of the money

for which its bills had been granted. It suits the conveniency of the

planters, to save the expense of employing gold and silver money

in their domestic transactions; and it suits the conveniency of the

colony governments, to supply them with a medium, which,

though attended with some very considerable disadvantages, en-

ables them to save that expense. The redundancy of paper money

necessarily banishes gold and silver from the domestic transac-

tions of the colonies, for the same reason that it has banished those

metals from the greater part of the domestic transactions in Scot-

land; and in both countries, it is not the poverty, but the

enterprizing and projecting spirit of the people, their desire of

employing all the stock which they can get, as active and produc-

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