either by introducing or 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."

The plenty of gold and silver which those wish for who are intimately convinced of their influence upon labour, industry, and commerce, does not extend to a quantity useless to commerce, but simply to the quantity that commerce can employ. One has nothing common with the other; or rather, the assertion is perfectly correct, that if at the first working of the mines of America, the abundance of gold and silver exceeded the wants of labour, industry, and commerce; if it sunk the value of those metals, and had no other effect than to employ a greater quantity of money for the same operations, this excess has long since ceased to exist. The labour, industry, and commerce of nations, have long ago opened so many channels for the precious metals, that they are no longer sufficient for their wants; and it is not unjustly that people complain of the scarcity of money, nor is it without a just cause that governments have resorted to divers measures to prevent the calamities attendant on the scarcity of gold and silver.

Not that, in imitation of some authors who are fascinated by the advantages resulting from the plenty of the precious metals, I imagine it can be obtained by prohibitions, privileges, and other not less disastrous measures: but I entirely concur with those who discover the source of this plenty in foreign commerce,

and who peculiarly recommend that commerce as one of the principal sources of the wealth of modern

nations.

The example of Poland, Spain, and Portugal, which have not availed themselves of the plenty of gold and silver, and which remained poor in the midst of the prosperity of the other nations of Europe, can be of no weight here. Adam Smith himself ascribes the poverty of those countries to the vices of their governments. They prevented their sharing in the progress of the industry of other nations, which was so powerfully forwarded by the plenty of gold and silver. Their poverty, therefore, does not attest the inefficacy of gold and silver; it only shews how greatly those political writers and practical statesmen err, who fancy that a good economical system is not incompatible with a bad political system; and that a nation may grow rich in despite of the defects of its political institutions. The security of the labourer, the freedom of labour, and the protection of property, contribute more to the growth of wealth than the order, economy, and good use of the stocks which it accumulates. The best governed nation will always be the richest; just as plenty of gold and silver always will be one of the most powerful means of accelerating the progress of labour and industry.

And let it not be supposed that, according to this system, if the gold and silver mines ceased to be productive, general wealth would be arrested in its pro

* D'Avenant, Steuart, Count Verri, &c.

gress, or, at least, that wealth could not be progressiye in one nation without retrograding in the others.

As soon as a metallic currency has given the impulse to general labour, its scarcity may be remedied by credit and banks, and its plenty maintained among the labouring classes so that it may constantly afford a new aliment to their emulation, activity, and industry. These means are another benefit for which wealth is indebted to the plenty of gold and silver, as I shall endeavour to shew in the following chapter,

Let us, therefore, conclude, that in whatever light we view the question of the plenty or scarcity of metallic currency, its plenty is indispensably necessary to the progress of wealth, and that governments ought to patronize and second, with all their might, whatever can carry the abundance of the precious metals to the highest pitch which it is capable of attaining.

CHAP. VI.

Of Credit and Banks.

CREDIT is to money what money is to the produce of labour when it is exchanged. Just as money supplies the place of one of the exchanged commodities, so credit supplies the place of money. The only dif ference between the two equivalents is, that the equivalent money is real and actual, and the equivalent credit is but temporary and grounded in confidence.

Money actually hands the exchangeable value; credit only promises it. But to him who delivers his prodúce on credit, the promise of money has the same value as money, and this value in opinion, or imaginary value, maintains itself till the stipulated term of payment. If at that term the creditor pays the promised money, credit has not been a single instant without having the value of money, and has produced all its effects.

These effects are various.

The first is to operate the exchange of an existing produce for a produce which possibly may not exist at that time, and to procure an actual consumption on the faith of a future equivalent; which circumstance facilitates and accelerates the consumption of com'modities.

The second effect is to force him who consumes upon credit to labour in order to perform his promise; which circumstance is favourable to industry, and increases the sum of produce.

pre

The third effect is to circulate commodities without the assistance and intervention of gold and silver; which circumstance restricts the use of the cious metals, and insures their plenty notwithstanding the unproductiveness of the mines or the unfavcurableness of foreign commerce.

But these advantages derived from credit, and credit itself, exist only as far as money is of gold and silver, and as its monetary value is as nearly as possible equal to its exchangeable value. Any other money than that of gold and silver, of whatever materials it may be composed, whether it consists in cattle, in agricultural produce, in the productions of industry,

or even in land, will always be liable to considerable chances, to which neither creditors nor debtors will be willing to expose themselves, whatever may be the measures adopted to give it a monetary value exactly proportioned to its exchangeable value. Cattle, com, wine, hides, cloth, or any of the productions of the labour of man, vary much in themselves. A quarter. of corn may yary from one year to the other a third, a half, or even be worth double; without experiencing ang extraordinary fluctuation, the mere difference of quality may within the same place ⚫ increase or diminish its value by a fifth, or a sixth; the case is the same with wine, cattle, &c. ;. consequently the result of such a money would almost always be that the debtor would pay more or less than he has promised, or than he owes. Credit of course would not be equal to money, and consequently there could be no credit.

I am not alluding to the other advantages of a gold and silver currency over any other money, such as its incorruptibility, divisibility, homogeneity, facility of being conveyed to a distance, and every-where converted at will in any kind of merchandize: these properties must give it the preference before any other money; and it is my opinion that any other than a gold and silver currency is radically defective, and opposes an insurmountable obstacle to the progress of wealth, for the sole reason that with such a money there can be no credit, because the lender would not be sure to receive back the same value which he has lent

The case is the same when a gold and silver currency is altered in its standard and weight, and its