premium, or sell for somewhat more in the
market than the quantity of gold or silver currency
for which it was issued. Some people
account in this manner for what is called the
agio of the bank of Amsterdam, or for the superiority
of bank money over current money,
though this bank money, as they pretend, cannot
be taken out of the bank at the will of the
owner. The greater part of foreign bills of exchange
must be paid in bank money, that is, by
a transfer in the books of the bank, and the directors
of the bank, they allege, are careful to
keep the whole quantity of bank money always
below what this use occasions a demand
for. It is upon this account, they say, the
bank money sells for a premium, or bears an
agio of four or five per cent. above the same
nominal sum of the gold and silver currency
of the country. This account of the bank of
Amsterdam, however, it will appear hereafter,
is in a great measure chimerical.
A paper currency which falls below the value
of gold and silver coin, does not thereby
sink the value of those metals, or occasion
equal quantities of them to exchange for a
smaller quantity of goods of any other kind.
The proportion between the value of gold and
silver and that of goods of any other kind, depends
in all cases, not upon the nature and
quantity of any particular paper money, which
may be current in any particular country, but
upon the richness or poverty of the mines,
which happen at any particular time to supply
the great market of the commercial world
with those metals. It depends upon the proportion
between the quantity of labour which
is necessary in order to bring a certain quantity
of gold and silver to market, and that
which is necessary in order to bring thither a
certain quantity of any other sort of goods.
If bankers are restrained from issuing any
circulating bank notes, or notes payable to
the bearer, for less than a certain sum; and
if they are subjected to the obligation of an
immediate and unconditional payment of such
bank notes as soon as presented, their trade
may, with safety to the public, be rendered in
all other respects perfectly free. The late
multiplication of banking companies in both
parts of the united kingdom, an event by
which many people have been much alarmed,
instead of diminishing, increases the security
of the public. It obliges all of them to be
more circumspect in their conduct, and, by
not extending their currency beyond its due
proportion to their cash, to guard themselves
against those malicious runs, which the rivalship
of so many competitors is always ready
to bring upon them. It restrains the circulation
of each particular company within a
narrower circle, and reduces their circulating
notes to a smaller number. By dividing the
whole circulation into a greater number of
parts, the failure of any one company, an accident
which, in the course of things, must
sometimes happen, becomes of less consequence
to the public. This free competition,
too, obliges all bankers to be more liberal
in their dealings with their customers, lest
their rivals should carry them away. In general,
if any branch of trade, or any division
of labour, be advantageous to the public, the
freer and more general the competition, it will
always be the more so.
CHAP. III.
OF THE ACCUMULATION OF CAPITAL, OR OF
PRODUCTIVE AND UNPRODUCTIVE LABOUR.
There is one sort of labour which adds to the
value of the subject upon which it is bestowed;
there is another which has no such effect.
The former as it produces a value, may be
called productive, the latter, unproductive[30] labour.
Thus the labour of a manufacturer
adds generally to the value of the materials
which he works upon, that of his own maintenance,
and of his master's profit. The labour
of a menial servant, on the contrary, adds
to the value of nothing. Though the manufacturer
has his wages advanced to him by his
master, he in reality costs him no expense,
the value of those wages being generally restored,
together with a profit, in the improved
value of the subject upon which his labour is
bestowed. But the maintenance of a menial
servant never is restored. A man grows rich
by employing a multitude of manufacturers;
he grows poor by maintaining a multitude of
menial servants. The labour of the latter,
however, has its value, and deserves its reward
as well as that of the former. But the
labour of the manufacturer fixes and realizes
itself in some particular subject or vendible
commodity, which lasts for some time at least
after that labour is past. It is, as it were, a
certain quantity of labour stocked and stored
up, to be employed, if necessary, upon some
other occasion. That subject, or, what is the
same thing, the price of that subject, can afterwards,
if necessary, put into motion a
quantity of labour equal to that which had
originally produced it. The labour of the
menial servant, on the contrary, does not fix
or realize itself in any particular subject or
vendible commodity. His services generally
perish in the very instant of their performance,
and seldom leave any trace of value behind
them, for which an equal quantity of service
could afterwards be procured.
The labour of some of the most respectable