of metal, which had been originally contained
in their coins. The Roman as, in the latter
ages of the republic, was reduced to the
twenty-fourth part of its original value, and,
instead of weighing a pound, came to weigh
only half an ounce. The English pound and
penny contain at present about a third only;
the Scots pound and penny about a thirty-sixth;
and the French pound and penny about
a sixty-sixth part of their original value. By
means of those operations, the princes and sovereign
states which performed them were
enabled, in appearance, to pay their debts and
fulfil their engagements with a smaller quantity
of silver than would otherwise have been
requisite. It was indeed in appearance only;
for their creditors were really defrauded of a
part of what was due to them. All other
debtors in the state were allowed the same
privilege, and might pay with the same nominal
sum of the new and debased coin whatever
they had borrowed in the old. Such
operations, therefore, have always proved favourable
to the debtor, and ruinous to the
creditor, and have sometimes produced a
greater and more universal revolution in the
fortunes of private persons, than could have
been occasioned by a very great public calamity.
It is in this manner that money has become,
in all civilized nations, the universal instrument
of commerce, by the intervention of
which goods of all kinds are bought and sold,
or exchanged for one another.
What are the rules which men naturally
observe, in exchanging them either for money,
or for one another, I shall now proceed to
examine. These rules determine what may
be called the relative or exchangeable value
of goods.
The word VALUE, it is to be observed, has
two different meanings, and sometimes expresses
the utility of some particular object,
and sometimes the power of purchasing other
goods which the possession of that object conveys.
The one may be called 'value in use;'
the other, 'value in exchange.' The things
which have the greatest value in use have frequently
little or no value in exchange; and,
on the contrary, those which have the greatest
value in exchange have frequently little or
no value in use. Nothing is more useful
than water; but it will purchase scarce any
thing; scarce any thing can be had in exchange
for it. A diamond, on the contrary,
has scarce any value in use; but a very great
quantity of other goods may frequently be had
in exchange for it.
In order to investigate the principles which
regulate the exchangeable value of commodities,
I shall endeavour to shew,
First, what is the real measure of this exchangeable
value; or wherein consists the
real price of all commodities.
Secondly, what are the different parts of
which this real price is composed or made up.
And, lastly, what are the different circumstances
which sometimes raise some or all of
these different parts of price above, and sometimes
sink them below, their natural or ordinary
rate; or, what are the causes which
sometimes hinder the market price, that is,
the actual price of commodities, from coinciding
exactly with what may be called their
natural price.
I shall endeavour to explain, as fully and
distinctly as I can, those three subjects in the
three following chapters, for which I must
very earnestly entreat both the patience and
attention of the reader: his patience, in order
to examine a detail which may, perhaps, in
some places, appear unnecessarily tedious;
and his attention, in order to understand
what may perhaps, after the fullest explication
which I am capable of giving it, appear still
in some degree obscure. I am always willing
to run some hazard of being tedious, in
order to be sure that I am perspicuous; and,
after taking the utmost pains that I can to be
perspicuous, some obscurity may still appear
to remain upon a subject, in its own nature
extremely abstracted.
CHAP. V.
OF THE REAL AND NOMINAL PRICE OF COMMODITIES,
OR OF THEIR PRICE IN LABOUR, AND
THEIR PRICE IN MONEY.
Every man is rich or poor according to the
degree in which he can afford to enjoy the necessaries,
conveniencies, and amusements of
human life. But after the division of labour
has once thoroughly taken place, it is but a
very small part of these with which a man's
own labour can supply him. The far greater
part of them he must derive from the labour
of other people, and he must be rich or poor
according to the quantity of that labour
which he can command, or which he can afford
to purchase. The value of any commodity,
therefore, to the person who possesses it,
and who means not to use or consume it himself,
but to exchange it for other commodities,
is equal to the quantity of labour which it enables
him to purchase or command. Labour
therefore, is the real measure of the exchangeable
value of all commodities.
The real price of every thing, what every
thing really costs to the man who wants to acquire
it, is the toil and trouble of acquiring
it. What every thing is really worth to the
man who has acquired it and who wants to
dispose of it, or exchange it for something