V.

But though in establishing perpetual rents, CHA P. or even in letting very long leafes, it may be of ufe to distinguish between the real and nominal price; it is of none in buying and felling, the more common and ordinary tranfactions of human life.

At the fame time and place the real and the nominal price of all commodities are exactly in proportion to one another. The more or lefs money you get for any commodity, in the London market, for example, the more or lefs labour it will at that time and place enable you to purchase or command. At the fame time and place, therefore, money is the exact measure of " the real exchangeable value of all commodities. It is fo, however, at the fame time and place only.

Though at diftant places, there is no regular proportion between the real and the money price of commodities, yet the merchant who carries goods from the one to the other has nothing to confider but their money price, or the difference between the quantity of filver for which he buys them, and that for which he is likely to fell them. Half an ounce of filver at Canton in China may command a greater quantity both of labour and of the neceffaries and conveniences of life, than an ounce at London. A commodity, therefore, which fells for half an ounce of filver at Canton may there be really dearer, of more real importance to the man who poffeffes it there, than a commodity which fells for an ounce at London is to the man who poffeffes it at London

E 4

I.

BOOK don. If a London merchant, however, can buy at Canton for half an ounce of filver, a commodity which he can afterwards fell at London for an ounce, he gains a hundred per cent. by the bargain, juft as much as if an ounce of filver was at London exactly of the fame value as at Canton. It is of no importance to him that half an ounce of filver at Canton would have given him the command of more labour and of a greater quantity of the neceffaries and conveniences of life than an ounce can do at London, An ounce at London will always give him the command of double the quantity of all these, which half an ounce could have done there, and this is precifely what he wants.

As it is the nominal or money price of goods, therefore, which finally determines the prudence or imprudence of all purchases and fales, and thereby regulates almoft the whole bufinefs of common life in which price is concerned, we cannot wonder that it fhould have been fo much more attended to than the real price.

In fuch a work as this, however, it may fometimes be of ufe to compare the different real values of a particular commodity at different times and places, or the different degrees of power over the labour of other people which it may, upon different occafions, have given to thofe who poffeffed it. We must in this case compare, not fo much the different quantities of filver for which it was commonly fold, as the different quantities of labour which thofe different quantities of filver could have purchased.

But

V.

But the current prices of labour at diftant times CHA P. and places can fcarce ever be known with any degree of exactnefs. Thofe of corn, though they have in few places been regularly recorded, are in general better known and have been more frequently taken notice of by hiftorians and other writers. We must generally, therefore, content ourselves with them, not as being always exactly in the fame proportion as the current prices of labour, but as being the nearest approximation which can commonly be had to that proportion. I fhall hereafter have occafion to make feveral comparisons of this kind.

In the progrefs of industry, commercial nations have found it convenient to coin feveral different metals into money; gold for larger payments, filver for purchases of moderate value, and copper, or fome other coarse metal, for those of still smaller confideration. They have always, however, confidered one of thofe metals as more peculiarly the meafure of value than any of the other two; and this preference feems generally to have been given to the metal which they happened firft to make ufe of as the inftrument of commerce. Having once began to use it as their ftandard, which they must have done when they had no other money, they have generally continued to do fo even when the neceffity was not the same.

The Romans are faid to have had nothing but copper money till within five years before the firft

BOOK first Punic war*, when they firft began to coin I. filver. Copper, therefore, appears to have con

tinued always the measure of value in that republic. At Rome all accounts appear to have been kept, and the value of all eftates to have been computed, either in Affes or in Seftertii. The As was always the denomination of a copper coin. The word Seftertius fignifies two Affes and a half. Though the Seftertius, therefore, was originally a filver coin, its value was estimated in copper. At Rome, one who owed a great deal of money, was faid to have a great deal of other people's copper.

The northern nations who eftablished themfelves upon the ruins of the Roman empire, feem to have had filver money from the first beginning of their fettlements, and not to have known either gold or copper coins for feveral ages thereafter. There were filver coins in England in the time of the Saxons; but there was little gold coined till the time of Edward III. nor any copper till that of James I. of Great Britain. England, therefore, and for the fame reafon, I believe, in all other modern nations of Europe, all accounts are kept, and the value of all goods and of all eftates is generally computed in filver: and when we mean to exprefs the amount of a perfon's fortune, we feldom mention the number of guineas, but the number of pounds fterling which we fuppofe would be given for it.

In

* Pliny, lib. xxxiii. c. 3.

V.

Originally, in all countries, I believe, a legal C HA P. tender of payment could be made only in the coin of that metal, which was peculiarly confidered as the standard or measure of value. In England, gold was not confidered as a legal tender for a long time after it was coined into money. The proportion between the values of gold and filver money was not fixed by any public law or proclamation; but was left to be fettled by the market. If a debtor offered payment in gold, the creditor might either reject fuch payment altogether, or accept of it at fuch a valuation of the gold as he and his debtor could agree upon. Copper is not at prefent a legal tender, except in the change of the fmaller filver coins. In this ftate of things the diftinction between the metal which was the ftandard, and that which was not the standard, was fomething more than a nominal diftinction.

In procefs of time, and as people became gradually more familiar with the ufe of the dif ferent metals in coin, and consequently better acquainted with the proportion between their refpective values, it has in moft countries, I believe, been found convenient to afcertain this proportion, and to declare by a public law that a guinea, for example, of fuch a weight and fineness, fhould exchange for one-and-twenty fhillings, or be a legal tender for a debt of that amount. In this ftate of things, and during the continuance of any one regulated proportion of this kind, the diftinction between the metal which is the standard, and that which is not the

ftandard