of any given quantity somewhat less, than it
otherwise would have been. In consequence
of the reduction in 1736, the value of silver
in the European market, though it may not
at this day be lower than before that reduction,
is, probably, at least ten per cent. lower
than it would have been, had the court of
Spain continued to exact the old tax.
That, notwithstanding this reduction, the
value of silver has, during the course of the
present century, begun to rise somewhat in the
European market, the facts and arguments
which have been alleged above, dispose me to
believe, or more properly to suspect and conjecture;
for the best opinion which I can
form upon this subject, scarce, perhaps, deserves
the name of belief. The rise, indeed,
supposing there has been any, has hitherto
been so very small, that after all that has been
said, it may, perhaps, appear to many people
uncertain, not only whether this event has actually
taken place, but whether the contrary
may not have taken place, or whether the value
of silver may not still continue to fall in
the European market.
It must be observed, however, that whatever
may be the supposed annual importation
of gold and silver, there must be a certain period
at which the annual consumption of those
metals will be equal to that annual importation.
Their consumption must increase as
their mass increases, or rather in a much
greater proportion. As their mass increases,
their value diminishes. They are more used,
and less cared for, and their consumption consequently
increases in a greater proportion
than their mass. After a certain period, therefore,
the annual consumption of these metals
must, in this manner, become equal to their
annual importation, provided that importation
is not continually increasing; which, in the
present times, is not supposed to be the case.
If, when the annual consumption has become
equal to the annual importation, the annual
importation should gradually diminish,
the annual consumption may, for some time,
exceed the annual importation. The mass of
those metals may gradually and insensibly diminish,
and their value gradually and insensibly
rise, till the annual importation becoming
again stationary, the annual consumption
will gradually and insensibly accommodate
itself to what that annual importation can
maintain.
Grounds of the suspicion that the Value of Silver
still continues to decrease.
The increase of the wealth of Europe, and
the popular action, that as the quantity of the
precious metals naturally increases with the
increase of wealth, so their value diminishes
as their quantity increases, may, perhaps, dispose
many people to believe that their value
still continues to fall in the European market;
and the still gradually increasing price
of many parts of the rude produce of land
may confirm them still farther in this opinion.
That that increase in the quantity of the
precious metals, which arises in any country
from the increase of wealth, has no tendency
to diminish their value, I have endeavoured
to shew already. Gold and silver naturally
resort to a rich country, for the same reason
that all sorts of luxuries and curiosities resort
to it; not because they are cheaper there than
in poorer countries, but because they are dearer,
or because a better price is given for them.
It is the superiority of price which attracts
them; and as soon as that superiority ceases,
they necessarily cease to go thither.
If you except corn, and such other vegetables
as are raised altogether by human industry,
that all other sorts of rude produce,
cattle, poultry, game of all kinds, the useful
fossils and minerals of the earth, &c. naturally
grow dearer, as the society advances in
wealth and improvement, I have endeavoured
to shew already. Though such commodities,
therefore, come to exchange for a greater
quantity of silver than before, it will not from
thence follow that silver has become really
cheaper, or will purchase less labour than before;
but that such commodities have become
really dearer, or will purchase more labour
than before. It is not their nominal price
only, but their real price, which rises in the
progress of improvement. The rise of their
nominal price is the effect, not of any degradation
of the value of silver, but of the rise in
their real price.
Different Effects of the Progress of Improvement
upon three different sorts of rude Produce.
These different sorts of rude produce may
be divided into three classes. The first comprehends
those which it is scarce in the power
of human industry to multiply at all. The
second, those which it can multiply in proportion
to the demand. The third, those in which
the efficacy of industry is either limited or uncertain.
In the progress of wealth and improvement,
the rent price of the first may rise
to any degree of extravagance, and seems not
to be limited by any certain boundary. That
of the second, though it may rise greatly, has,
however, a certain boundary, beyond which it
cannot well pass for any considerable time together.
That of the third, though its natural
tendency is to rise in the progress of improvement,
yet in the same degree of improvement
it may sometimes happen even to fall, some
times to continue the same, and sometimes to
rise more or less, according as different accidents
render the efforts of human industry, in
multiplying this sort of rude produce, more
or less successful.