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half an ounce. The English pound and penny CHA P. contain at present about a third only; the Scots pound and penny about a thirty-fixth; and the French pound and penny about a fixty-fixth part of their original value. By means of thofe operations the princes and fovereign states which performed them were enabled, in appearance, to pay their debts and to fulfil their engagements with a smaller quantity of filver than would otherwise have been requifite. It was indeed in appearance only; for their creditors were really defrauded of a part of what was due to them. All other debtors in the ftate were allowed the fame privilege, and might pay with the fame nominal fum of the new and debafed coin whatever they had borrowed in the old. Such operations, therefore, have always proved favourable to the debtor, and ruinous to the creditor, and have fometimes produced a greater and more univerfal revolution in the fortunes of private perfons, than could have been occafioned by a very great public calamity.

It is in this manner that money has become in all civilized nations the universal inftrument of commerce, by the intervention of which goods of all kinds are bought and fold, or exchanged for one another.

What are the rules which men naturally observe in exchanging them either for money or for one another, I fhall now proceed to examine. Thefe rules determine what may be called the relative or exchangeable value of goods.



The word VALUE, it is to be obferved, has two different meanings, and fometimes expreffes the utility of fome particular object, and fometimes the power of purchafing other goods which the poffeffion of that object conveys. The one may be called "value in use;" the other, "value "in exchange." The things which have the greatest value in ufe have frequently little or no value in exchange; and on the contrary, thofe which have the greatest value in exchange have frequently little or no value in ufe. Nothing is more useful than water: but it will purchase fcarce any thing; fcarce any thing can be had in exchange for it. A diamond, on the con, trary, has fcarce any value in ufe; but a very great quantity of other goods may frequently be had in exchange for it.

In order to investigate the principles which regulate the exchangeable value of commo dities, I fhall endeavour to fhew,

Firft, what is the real measure of this exchangeable value; or, wherein confists the real price of all commodities.

Secondly, what are the different parts of which this real price is compofed or made up.

And, laftly, what are the different circumftances which fometimes raife fome or all of thefe different parts of price above, and fometimes fink them below their natural or ordinary rate; or, what are the caufes which fometimes hinder the market price, that is, the actual price of commodities, from coinciding exactly with what may be called their natural price.

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I fhall endeavour to explain, as fully and CHA P. diftinctly as I can, thofe three fubjects in the three following chapters, for which I muft very earnestly entreat both the patience and attention of the reader: his patience in order to examine a detail which may perhaps in fome places appear unneceffarily tedious; and his attention in order to understand what may, perhaps, after the fulleft explication which I am capable of giving of it, appear ftill in fome degree obfcure. I am always willing to run fome hazard of being tedious in order to be fure that I am perfpicuous; and after taking the utmost pains that I can to be perfpicuous, fome obfcurity may still appear to remain upon a fubject in its own nature extremely abftracted,


Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money.



VERY man is rich or poor according to CHA P. the degree in which he can afford to enjoy the neceffaries, conveniencies, and amufements of human life. But after the divifion of labour has once thoroughly taken place, it is but a very fmall part of these with which a man's own labour can fupply him. The far greater part of them he muft derive from the labour of other people,

BOOK people, and he must be rich or poor according


to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the perfon who poffeffes it, and who means not to ufe or confume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.

The real price of every thing, what every thing really cofts to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to difpofe of it or exchange it for fomething elfe, is the toil and trouble which it can fave to himself, and which it can impofe upon other people. What is bought with money or with goods is purchased by labour, as much as what we acquire by the toil of our own body. That money or thofe goods indeed fave us this toil. They contain the value of a certain quantity of labour which we exchange for what is fuppofed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by filver, but by labour, that all the wealth of the world was originally purchased; and its value, to thofe who poffefs it, and who want to exchange it for fome new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.


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Wealth, as Mr. Hobbes fays, is power. But CHA P. the person who either acquires, or fucceeds to a great fortune, does not neceffarily acquire or fucceed to any political power, either civil or military. His fortune may, perhaps, afford him the means of acquiring both, but the mere poffeffion of that fortune does not neceffarily convey to him either. The power which that poffeffion immediately and directly conveys to him, is the power of purchafing; a certain command over all the labour, or over all the produce of labour which is then in the market. His fortune is greater or lefs, precifely in proportion to the extent of this power; or to the quantity either of other men's labour, or, what is the fame thing, of the produce of other men's labour, which it enables him to purchase or command. The exchangeable value of every thing must always be precifely equal to the extent of this power which it conveys to its owner.

But though labour be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly eftimated. It is often difficult to afcertain the proportion between two different quantities of labour. The time spent in two different forts of work will not always alone determine this proportion. The different degrees of hardship endured, and of ingenuity exercifed, muft likewife be taken into account. There may be more labour in an hour's hard work than in two hours eafy bufinefs; or in an hour's application to a trade which it coft ten years labour to learn,


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