Essay on the Nature of Commerce
[Part 3 of 7]
The more Labour there is in a State the more naturally rich the
State is esteemed
In a long calculation worked out in the supplement it is shown that
the labour of 25 grown persons suffices to provide 100 others, also
grown up, with all the necessaries of life according to the European
standard. In these estimates it is true the food, clothing, housing,
etc. are coarse and rather elementary, but there is ease and plenty.
It may be assumed that a good third of the people of state are too
young or too old for daily work and that another sixth are proprietors
of land, sick, or undertakers of different sorts who do not by the
labour of their hands, contribute to the different needs of men. ...
It is true that it is of little difference in a state whether people
are accustomed to wear coarse or fine clothes if both are equally
lasting, and whether people eat nicely or coarsely if they have enough
and are in good health, since drink, food, clothing, etc. are equally
consumed whether fine or coarse, and that nothing is left in the state
of this sort of wealth. ...
It will be so especially if these people are employed in drawing from
the earth gold and silver which metals are not only durable but so to
speak permanent, which fire itself cannot destroy, which are generally
accepted as the measure of value, and which can always be exchanged
for any of the necessaries of life: and if these inhabitants work to
draw gold and silver into a state in exchange for the manufactures and
work which they produce and send abroad, their labour will be equally
useful and will in reality improve the state.
The point which seems to determine the comparative greatness of
states is their reserve stock above the yearly consumption, like
magazines of cloth, linen, corn, etc. to answer in bad years, or war.
And as gold and silver can always buy these things, even from the
enemies of the state, gold and silver are the true reserve stock of a
state, and the larger or smaller actual quantity of this stock
necessarily determines the comparative greatness of kingdoms and
If it the custom to draw gold and silver from abroad by exporting
merchandises and produce of the state, such as corn, wine, wool, etc.
this will not fail to enrich the state at the cost of a decrease of
the population; but if gold and silver be attracted from abroad in
exchange for the labour of the people, such as manufactures and
articles which contain little of the produce of the soil, this will
enrich the state in a useful and essential manner. ...
It is always the inspiration of the proprietors of land which
encourages or discourages the different occupations of the people and
the different kinds of labour which they invent.
The example of the prince, followed by his court, is generally
capable of determining the inspiration and tastes of the other
proprietors of land, and the example of these last naturally
influences all the lower ranks. A prince, then, without doubt is able
by his own example and without any constraint to give such a turn as
he likes to the labour of his subjects.
If each proprietor in a state had only a little piece of land, like
that which is usually leased to a single farmer, there would be hardly
any cities. The people would be more numerous and the state very rich
if every proprietor employed on some useful work the inhabitants
supported on his land.
But when the nobles have great landed possessions, they of necessity
bring about luxury and idleness. Whether an Abbot at the head of a
hundred monks live on the produce of several fine estates, or a
nobleman with 50 domestic servants, and horses kept only for his
service, live on these estates, would be indifferent to the state if
it could remain in constant peace.
But a nobleman with his retinue and his horses is useful to the state
in time of war; he can always be useful in the magistracy and the
keeping of order in the state in peace time; and in every case he is a
great ornament to the country, while the monks are, as people say,
neither useful nor ornamental in peace or war on this side of heaven.
If it were desired to make use of everything in a state it might be
possible, it seems, to diminish the number of mendicants by
incorporating them into the monasteries as vacancies or deaths occur
there, without forbidding these retreats to those who can give no
evidence of their skill in speculative sciences, who are capable of
advancing the practical arts, i.e. in some section of mathematics. The
celibacy of churchmen is not so disadvantageous as is popularly
supposed, as is shown in the preceding chapter, but their idleness is
Of Metals and Money, and especially of gold and silver
As land produces more or less corn according to its fertility and the
labour spent upon it, so the mines of iron, lead, tin, gold, silver,
etc. produce more or less of these metals according to the richness of
the mines and the quantity and quality of the labour spent upon them,
in digging, draining, smelting, refining, etc. Work in silver mines is
dear on account of the mortality in causes, since rarely more than
five or six years are spent in that labour.
The real or intrinsic value of metals is like everything else
proportionable to the land and labour that enters into their
production. The outlay on the land for this production is considerable
only so far as the owner of the mine can obtain a profit from the work
of the miners when the veins are unusually rich. The land needed for
the subsistence of the miners and workers, that is the mining labour,
is often the principal expense and the ruin of the proprietor.
The market value of metals, as of other merchandise or produce, is
sometimes above, sometimes below, the intrinsic value, and varies with
their plenty or scarcity according to the demand.
If the proprietors of land and the lower orders in a state who
imitate them, rejected the use of time and copper, wrongly supposing
that they are injurious to health, and if they all made use of dishes
and utensils of earthenware, these metals would be at a very low price
in the markets and the work that was carried on to extract them from
the mine would be discontinued. But as these metals are found useful,
and are employed in the service of life, they will always have a
market value corresponding to their plenty or rarity and the demand
for them; and they will always be mined to replace what is lost by
Iron is not merely serviceable for the daily use of common life but
may be said to be in a certain sense necessarily; and if the
Americans, who did not make use of it before the discovery of their
continent, had found mines of it and known how to use it, they would
doubtless have laboured to produce it at any cost.
Gold and silver are capable of serving not only the same purpose as
tin and copper but most of the purposes of lead and iron. They have
this further advantage over other metals that they are not consumed by
fire and are so durable that they may be esteemed permanent bodies. It
is not surprising, therefore, that men who found the other metals
useful should have esteemed gold and silver even before they are used
in exchange. The Romans prized them from the foundation of Rome and
yet only used them as money 500 years later. Perhaps all other nations
did the like and only adopted these metals as money long after using
them for other purposes. However we find from the oldest historians
that from time immemorial gold and silver were used as money in Egypt
and Asia, and we learn in the Book of Genesis that silver monies were
made in the time of Abraham. ...
Pure silver is hardly ever found in the mines. The ancients did not
know the art of refining to perfection. They always made their silver
coins of fince silver, and yet those which remain to us of the Greeks,
Romans, Jews and Asiatics are never perfectly pure. Today there is
more skill, the secret of making silver pur has been discovered. The
different methods of refining it are not part of my subject. Many
authors have treated of it, Mr Boizard among others. I will only
observe that there is a good deal of expense in refining silver and
for this reason an ounce of fine silver is generally preferred to two
ounces which contain one half of copper or other alloy. It is
expensive to separate the alloy and extract the one ounce of pure
silver which is in these two ounces, while by simple melting any other
metal can be combined with silver in any proportion desired. If copper
is sometimes used as an alloy to fine silver it is only to render it
more malleable and more suitable for the objects made of it. But in
the valuation of all silver the copper or alloy is reckoned at nothing
and only the amount of fine pure silver is considered. For this reason
an assay is always made to ascertain the amount of pure silver. ...
Usage has conferred upon gold and silver the title intrinsic value,
to designate and signify the quantity of true gold or silver contained
in a bar; but in this essay I have always used the term intrinsic
value to signify the amount of land and labour which enter into
production, not having found any term more suitable to express my
meaning. I mention this only to avoid misunderstanding. When gold and
silver are not in question the term will always hold good without any
We have seen that the metals such as gold, silver, iron, etc. serve
several purposes and have a value proportionable to the land and
labour which enter into their production. We shall see in part II of
this essay that men have been forced of necessity to employ a common
measure to find in their dealings the proportion and the value of the
products and merchandise they wished to exchange. The only question is
what product or merchandise would be most suitable for this common
measure, and whether it has not been necessity rather that fancy which
has given this preference to gold, silver and copper which are
generally in use today for this purpose.
Ordinary products like corn, wine, meat, etc. have a real value and
serve the needs of life, but they are all perishable and difficult to
be transported, and therefore hardly suitable to serve as a common
Merchandise such as cloth, linen, leather, etc. is persishable also
and cannot be subdivided without in some sort changing their value for
the service of man. Like raw produce they cost a good deal for
carriage; they even cause expense for storage, and consequently are
unsuitable for a common measure.
Diamonds and other precious stones, even if they had no instrinsic
value and were esteemed only from fancy, would be suitable for a
common measure if they were not susceptible of imitation and if they
could be divided without loss. With these defects and that of being
unserviceable in use they cannot serve as a common measure. ...
Copper alone served as money to the Romans until 484 years after the
founding of Rome, and in Sweden it is still used even in large
payments: but it is too bulky for very considerable payments, and the
Swedes themselves prefer payment in gold or silver rather than in
In the American Colonies tobacco, sugar, and cocoa have been used as
money: but these commodities are too bulky, perishable, and of unequal
quality: they are therefore hardly suitable to serve as money or a
common measure of value.
Gold and silver alone are of small volume, equal goodness, easily
transported, divisible without loss, convenient to keep, beautiful and
brilliant in the articles made of them and durable almost to eternity.
All who have used other articles as money return to these as soon as
they can get enough of them for exchange. It is only in the smallest
purchases that gold and silver are unsuitable. Gold or even silver
coins of the value of a liard or a denier would be too small to be
handled easily. It is said that the Chinese, in small transactions,
cut off little pieces with scissors from their plates of silver, and
weighed the pieces. But since their trade with Europe they have begun
to use copper for such occasions.
It is then not surprising that all countries have arrived at using
gold and silver as money or a common measure of value and copper for
small payments. Utility and need have decided them, and not fancy or
consent. Silver requires much labour and dear labour for its
production. Silver miners are highly paid because they rarely live
more than five or six years at this work, which causes a high
mortality: and so a little silver coin corresponds to as much land and
labour as a large copper coin.
Money or the common measure of value must correspond in fact and
reality in terms of land and labour to the articles exchanged for it.
Otherwise it would have only an imaginary value. If for example a
prince or a republic gave currency in the state to something which had
not such a real and instrinsic value, not only would the other states
refuse to accept it on that footing but the inhabitants themselves
would reject it when they perceived its lack of real value. When
towards the end of the first Punic War the Romans wished to give the
copper as, weighing two ounces, the same value as the as of 1 pound or
12 ounces had before, it could not long be maintained in exchange. The
history of all times shews that when princes have debased their money,
keeping it at the same nominal value, all raw produce and
manufacturers have gone up in price in proportion to the debasement of
Mr Locke says that the consent of mankind has given its value to gold
and silver. This cannot be doubted since absolute necessity had no
share in it. It is the same consent which has given and does give
every day a value to lace, line, fine cloths, copper, and other
metals. Man could subsist without any of these things, but it must not
be concluded that they have but an imaginary value. They have a value
proportionable to the land and labour which enter into their
production. Gold and silver, like other merchandise and raw produce,
can only be produced at costs roughly proportionable to the value set
upon them, and whatever man produces by labour, this labour must
furnish his maintenance. It is the great principle that one hears
every day from the mouths of the humble classes who have no part in
our speculations, and who live by their labour or their undertakings.
"Everybody must live."
End of the first part.