Money is not a subject of commerce.

It is only the public which draws any advantage from the greater plenty of money.

Most people and their industry are serviceable at home and abroad, in private, and in public.

Where one nation has gotten the start of another in trade, it is very difficult for the latter to regain the ground it has lost; because of:

But these advantages are compensated somewhat by the low price of labour in poor countries.

This has made me doubt the benefit of banks and paper-credit, which are so generally esteemed advantageous to every nation.

People think that a public company should enjoy the benefit of that paper-credit.

Thus, the most advantageous bank is one that:

A public bank, by this expedient, might cut off much of the dealings of private bankers and money-jobbers.

I will return to the topic of paper credit later.

ANACHARSIS the SCYTHIAN had never seen money in his own country.

Money is nothing but the representation of labour and commodities.*

* Here is the beginning of the fork of ideas between David Hume and Adam Smith regarding the labour theory of value. Hume wrongly equates money to a representation of labour (actual), whereas Smith correctly equates it to a command of labour (potential). This difference makes Hume advocate the increase of gold, different from Smith who advocates an increase in svadharma or purpose in life (personal existential potentiality). This is why Smith is the basis of our SORAnomics and not Hume.

Since the discovery of the mines in AMERICA, industry has increased in all European nations, except in the possessors of those mines.

The high price of commodities is a necessary consequence of the encrease of gold and silver.

  • At first, no alteration is perceived.
    • By degrees, the prices rise.
    • First of one commodity, then of another.
    • Until the whole at last reaches a just proportion with the new quantity of specie in the kingdom.
  • In my opinion, it is only in this interval or intermediate situation, between the acquisition of money and rise of prices, that the encreasing quantity of gold and silver is favourable to industry.
    • When any quantity of money is imported into a nation, it is not at first dispersed into many hands.
    • but is confined to the coffers of a few persons, who immediately seek to employ it to advantage.
  • For example, a set of merchants have received returns of gold and silver for goods which they sent to CADIZ.
    • *27 They thus can employ more workers than before.
      • Those workers do not dream of higher wages, but are glad to be employed from such good paymasters.
      • If workers become scarce, the manufacturer gives higher wages.
        • But at first, he needs an increase of labour.
        • The artisan willingly submits to this so he can eat and drink better to compensate his added toil and fatigue.
          • He carries his money to market.
          • He finds every thing at the same price as before.
          • But he returns with more and better kinds for his family. (Demand based)
        • The farmer and gardener find that all their commodities are taken off.
          • They apply to raise more.
          • At the same time, they can afford to take better and more cloths from their tradesmen.
            • The price of those clothes is the same as before.
            • Their industry is only whetted by so much new gain.
      • It is easy to trace the money in its progress through the whole commonwealth.
        • It first quickens everyone's diligence before it encreases the price of labour.
  • II. Money is so scarce in some European countries that the landlord can get none from his tenants.

    The effect, that is thought to flow from scarcity of money, really arises from the manners and customs of the people

    It is an obvious maxim:

    A private soldier in the ROMAN infantry had a denarius a day, somewhat less than eightpence. The ROMAN emperors had commonly 25 legions in pay, which allowing 5000 men to a legion, makes 125,000. TACIT. Ann. lib. iv. [5.] It is true, there were also auxiliaries to the legions; but their numbers are uncertain, as well as their pay. To consider only the legionaries, the pay of the private men could not exceed 1,600,000 pounds. Now, the parliament in the last war commonly allowed for the fleet 2,500,000. We have therefore 900,000 over for the officers and other expences of the ROMAN legions. There seem to have been but few officers in the ROMAN armies, in comparison of what are employed in all our modern troops, except some SWISS corps. And these officers had very small pay: A centurion, for instance, only double a common soldier. And as the soldiers from their pay (TACIT. Ann. lib. i. [17]) bought their own cloaths, arms, tents, and baggage; this must also diminish considerably the other charges of the army. So little expensive was that mighty government, and so easy was its yoke over the world. And, indeed, this is the more natural conclusion from the foregoing calculations. For money, after the conquest of ÆGYPT, seems to have been nearly in as great plenty at ROME, as it is at present in the richest of the EUROPEAN kingdoms.
    This is the case with the bank of AMSTERDAM. b
    PLUT. Quomodo quis suos profectus in virtute sentire possit. [Plutarch, Moralia, “How a Man may become aware of his Progress in Virtue,” sec. 7.]
    [Cádiz was the Spanish seaport where bullion entered from the West Indies.]
    These facts I give upon the authority of Mons. du TOT in his Reflections politiques [ Réflexions politiques sur les finances et le commerce (1738); translated as Political Reflections upon the Finances and Commerce of France(1739)], an author of reputation. Though I must confess, that the facts which he advances on other occasions, are often so suspicious, as to make his authority less in this matter. However, the general observation, that the augmenting of the money in FRANCE does not at first proportionably augment the prices, is certainly just.By the by, this seems to be one of the best reasons which can be given, for a gradual and universal encrease of the denomination of money, though it has been entirely overlooked in all those volumes which have been written on that question by MELON, Du TOT, and PARIS de VERNEY [Joseph Paris-Duverney, Examen du livre intitulé Réflections politiques sur les finances et le commerce, par de Tott (Examination of a book entitled Political reflections upon finances and commerce, by Dutot), 1740]. Were all our money, for instance, recoined, and a penny’s worth of silver taken from every shilling, the new shilling would probably purchase every thing that could have been bought by the old; the prices of every thing would thereby be insensibly diminished; foreign trade enlivened; and domestic industry, by the circulation of a great number of pounds and shillings, would receive some encrease and encouragement. In executing such a project, it would be better to make the new shilling pass for 24 halfpence, in order to preserve the illusion, and make it be taken for the same. And as a recoinage of our silver begins to be requisite, by the continual wearing of our shillings and sixpences, it may be doubtful, whether we ought to imitate the example in King WILLIAM’S reign, when the clipt money was raised to the old standard. d
    The ITALIANS gave to the Emperor MAXIMILIAN, the nickname of POCCI-DANARI. None of the enterprises of that prince ever succeeded, for want of money. [Maximilian I became Holy Roman Emperor Elect in 1508, but because of Venetian hostility, he was unable to go to Rome for his coronation. Maximilian then joined with France, Spain, and the Pope in the League of Cambrai, whose aim was to partition the Republic of Venice. Because of his lack of money and troops, he was considered an unreliable partner in the war that followed. Pochi danari means “very few funds.”]