value of the annual produce circulated by means of it, it is, perhaps, impossible to determine. It has been computed by different authors at a fifth, at a tenth, at a twentieth, and at a thirtieth part of that value. But how small soever the proportion which the circulating money may bear to the whole value of the annual produce, as but a part, and frequently but a small part, of that produce, is ever destined for the maintenance of industry, it must always bear a very considerable proportion to that part."

From these various opinions it may be inferred with certainty, that the problem is not yet solved; and it ought perhaps to be considered as incapable of being solved, when we reflect that the circulation of commodities in an agricultural country is essentially different from that which takes place in a manufacturing country; that the circulation of a country which enjoys a great credit cannot be the same as that of a country whose credit is limited or circumscribed by the nature of its government or the imperfection of its legislation; and that a circulation mostly carried on with the assistance of well accredited banks has no resemblance to a circulation that derives no assistance from banks. So many circumstances and combinations, and relations so various, render the task of searching for a conjectural, probable, or barely possible proportion unnecessary, and we ought to imitate in this respect the prudent circumspection of Adam Smith.

But what are we to think of the "

very consider

* Wealth of Nations; London, 1805; vol. i. pages 454, 455.

X

able proportion" which Adam Smith supposes the amount of money must always bear to that part of the produce which is destined for the maintenance of industry? Is it true, that industry is benefited by the abundance of money and injured by its scarcity? and ought any particular attention to be paid to the complaints of people about the scarcity of money?

The extract which I have given from the work of Adam Smith, appears to authorize this opinion. But how is it to be reconciled with what he states in other parts of his work concerning the scarcity or plenty of money? On this important subject he expresses himself thus:

"No complaint is more common than that of a scarcity of money. Money, like wine, must always be scarce with those who have neither wherewithal to buy it, nor credit to borrow it.-This complaint, however, of the scarcity of money is not always confined to improvident spendthrifts: it is sometimes general through a whole mercantile town, and the country in its neighbourhood. Over-trading is the

common cause of it. Sober men, whose projects have been disproportioned to their capitals, are as likely to have neither wherewithal to buy money, nor credit to borrow it, as prodigals whose expence has been disproportioned to their revenue. Before their projects can be brought to bear, their stock is gone, and their credit with it. They run about every-where to borrow money, and every-body tells them that they have none to lend. Even such general complaints of the scarcity of money do not always prove that the usua! number of gold and silver pieces are not circulating in

the country, but that many people want those pieces who have nothing to give for them. When the profits of trade happen to be greater than ordinary, overtrading becomes a general error both among great and small dealers. They do not always send more money abroad than usual; but they buy upon credit, both at home and abroad, an unusual quantity of goods, which they send to some distant market, in hopes that the returns will come in before the demand for payment. The demand comes before the returns, and they have nothing at hand with which they can either purchase money, or give solid security for borrowing. It is not any scarcity of gold and silver, but the difficulty which such people find in borrowing, and which their creditors find in getting payment, that occasions the general complaint of the scarcity of money. To attempt to increase the wealth of any country, either by introducing or by detaining in it an unnecessary quantity of gold and silver, is as absurd as it would be to attempt to increase the good cheer of private families by obliging them to keep an unnecessary number of kitchen-utensils. It is not by the importation of gold and silver that the discovery of America has enriched Europe. By the abundance of the American mines, those metals have become cheaper. A service of plate can now be purchased for about a third part of the corn, or a third part of the labour which it would have cost in the fifteenth century. So far Europe has, no doubt, gained a real conveniency, though surely a very trifling one. The cheapness of gold and silver renders those metals rather less fit for the purposes of money than they

were before. In order to make the same purchases, we must load ourselves with a greater quantity of them, and carry about a shilling in our pocket, where a groat would have done before. It is difficult to say which is most trifling, this inconveniency or the opposite conveniency. Neither the one nor the other could have made any very essential change in the state of Europe."*

Elsewhere Adam Smith states, that "the greater part of the writers who have collected the moneyprices of things in ancient times, seem to have considered the low money-price of corn, and of goods in general, or, in other words, the high value of gold and silver, as a proof not only of the scarcity of those metals, but of the poverty and barbarism of the country at the time when it took place. This notion is connected with the system of political economy, which represents national wealth as consisting in the abundance, and national poverty in the scarcity of gold and silver. I shall only observe, that the high value of the precious metals can be no proof of the the poverty or barbarism of any particular country at the time when it took place. It is a proof only of the barrenness of the mines which happened at that time to supply the commercial world. A poor

country, as it cannot afford to buy more, so it can as little afford to pay dearer for gold and silver than a rich one; and the value of those metals, therefore, is not likely to be higher in the former than in the latter. In China, a country much richer than any part

*Wealth of Nations, vol. ii. pages 159, 160, 164, 176, 177.

of Europe, the value of the precious metals is much higher than in any part of Europe. As the wealth of Europe, indeed, has increased greatly since the discovery of the mines of America; so the value of gold and silver has gradually diminished. This diminution of their value, however, has not been owing to the increase of the real wealth of Europe, of the annual produce of its land and labour, but to the accidental discovery of more abundant mines than any that were known before. The increase of the quantity of gold and silver in Europe, and the increase of its manufactures and agriculture, are two events which, though they have happened nearly about the same time, yet have arisen from very different causes, and have scarcely any natural connection with one another. The one has arisen from a mere accident, in which neither prudence nor policy either had or could have any share; the other from the fall of the feudal system, and from the establishment of a government which afforded to industry the only encouragement which it requires, some tolerable security that it shall enjoy the fruits of its own labour. Poland, where the feudal system still continues to take place, is at this day as beggarly a country as it was before the discovery of America. The money-price of corn, however, has risen; the real value of the precious metals has fallen in Poland in the same manner as in other parts of Europe. Their quantity, therefore, must have increased there as in other places, and nearly in the same proportion to the annual produce of its land and labour. The increase of the quantity of those metals, however, has not, it seems, increased that of the