and propose with them to purchase the stock he might at any time want of the last-mentioned article. Those individuals use no more shoes than himself, and are moreover perhaps already provided with all they require; whilst the shoemaker, it may be, wishes to purchase the article of leather, to the amount perhaps of half the produce of his labour. The leather-merchant, however, will not take his twenty-five pairs of shoes; but let him dispose of his products for money, and bring that commodity to the merchants, and they will gladly supply him with their commodities in exchange. They are not always ready to take his article of shoes, but must have money for their commodities, and when they want shoes, they will come to him, and bring money also in their turn wherewith to purchase them.

But although money be the instrument by which these exchanges are effected, it is still with the surplus produce of his labour that the industrious man really purchases every commodity, because it is with that surplus he purchases the money with which he purchases every thing else. When he gives that surplus for money, he throws it into the general stock at market, and the amount of it, by limiting the quantity of money he receives, limits the quantity of other goods he can draw out of that general stock; consequently it limits his consumption and expenditure or enjoyment of wealth, that is, his destruction of it, to the amount of that which he contributes to the consumption and enjoyment of other people. Money therefore, in short, every person requires, and uses merely as the means of enabling him to exchange his labour or his possessions, or their produce, for the necessaries, conveniences, and luxuries of life in proportion to his scale of property, or to his contributions of labour or commodities to the general stock, daily and regularly, as he requires them.

Every person therefore, in the advanced state of society, requires to keep in reserve a quantity of money greater or

smaller in proportion to the amount of his revenue, or to the extent of his transactions or exchanges,-the labourer in proportion to his wages, the non-labourer in proportion to his rent or interest, and the merchant, manufacturer, &c., in proportion to the extent of their dealings, or their sales and purchases, &c. Of these it is evident that the manufacturer will in general pass more money through his hands, in proportion to his annual income or revenue, than the land-proprietor or capitalist; the merchant still more than the manufacturer; and the banker most of all. Every one, however, must endeavour to keep a certain quantity in proportion to his ordinary outgoings or exchanges; but every one will at the same time endeavour to keep as little as possible, viz. no more than may be sufficient to serve his necessary purposes; because if he keeps more, it will lie useless beside him; whereas by employing it in trade, or lending it at interest, he is enabled to make a profit by it.

If the shoemaker, for instance, finds his cash accumulating very much upon his hands, he will observe that by taking a part of it to purchase more leather and any other materials he requires, and employing the remainder to pay the wages of an additional workman, he will get more for the finished work than the materials and wages together amount to; and with what is over, therefore, he can either increase his consumption of other commodities without diminishing his capital, or increase, if he pleases, his capital, and extend his business still farther; or, if he cannot, or does not choose to extend his business, he can lend it at interest, and what he again receives as interest he can still reinvest (though at an ultimately decreasing rate of interest) ad infinitum.

The sums therefore which must be kept in hand by every individual will thus be brought within a certain compass, and reduced to as moderate an amount as may be consistent with the conveniency and various necessities of each; and

the sum total or aggregate of all these smaller sums will make up the entire circulating medium, or whole money of ́a nation, employed in executing its whole business or exchanges, and in dealing out or distributing the whole of its wealth to every individual in his just proportion, that is, in proportion to what he contributes to the general stock.

This total sum of money which circulates, and which is employed merely as an instrument of distribution and exchange, will be great or small in proportion to the greatness or smallness of the other descriptions of wealth to be exchanged and distributed by it; to which, however, it will bear a higher ratio in poor than in rich countries; because the rapidity of circulation is greater in the latter than in the former, and the same sum of money will therefore do more work in the same time; that is, it will serve to exchange and distribute a greater quantity of other wealth in rich than in poor countries.

Thus far we have spoken of money merely as an instrument of distribution and exchange; but whatever serves this purpose must also be used as the common measure of value, and must therefore be possessed of the quality of value in itself, that is, it must be a vendible commodity; and as it must serve this additional and necessarily connected purpose, not only in all bargains or agreements immediately to be executed, but in those also of a prospective nature, which stipulate and contract for the delivery or receipt of determinate quantities or values of property at periods more or less distant, it is required that the commodity which is to serve this purpose should be comparatively uniform and steady in its own value, which it can only be by requiring at all times nearly an equal quantity of labour to produce it.

Many different commodities, it is probable, as Dr Smith

2

has observed, were successively both thought of and employed as money in the rude ages of society, and at the first establishment of the division of labour. He mentions cattle as having been used in the earliest times; and takes notice of the different articles of salt, a particular sort of shells, dried fish, tobacco, and sugar, as having been used as money in different situations and countries. But all these or any such articles must have been found very inconvenient and inadequate instruments of distribution, and were all very early superseded in all countries by the metals copper, silver, and gold, which have been found peculiarly adapted to serve both the purposes for which money is required, by the possession of the following qualities:-first, portableness, they contain a comparatively great value in small bulk, which makes it easy to carry them to market :-secondly, divisibility,-they can be divided into very minute parts without any perceptible diminution or alteration in the value of the mass, which can be easily reunited by fusion and at a small cost, and thus they can be easily proportioned without loss to the smallest quantity of any other commodity that any one may wish to acquire:-thirdly, durability, they may be kept for almost any length of time without waste or decay :-fourthly and lastly, uniformity or steadiness of value,-they are the least liable of any known commodities to any considerable or sudden variations in their value, insomuch that, for all practical and ordinary purposes, and within moderate periods of time,— perhaps we may say periods of twenty or thirty years,—they may be looked upon as invariable.

This superior steadiness of value which is found to characterize the precious metals above all other commodities, and which, combined with the other qualities above-mentioned, has caused them to be so universally used as money, and as the common measure of value, arises from the su

perior steadiness in the cost of their production above what is found in that of other commodities; or, in other words, from the quantity of labour and commodities, or capital, which must be expended in acquiring those metals at first, being always nearly the same at one time and another, which sort of expenditure constitutes the real price of all commodities, and is the foundation of all value in exchange, and as labour is the chief ingredient in the cost of production, and the only one which continues necessarily and uniformly the same in itself, it is, as I shall endeavour to prove in the following chapter, the only certain measure of that value.

CHAPTER III.

THAT LABOUR IS THE ONLY CERTAIN MEASURE OF VALUE.

As the existence of all value in exchange is wholly dependent on the necessity of some portion of human labour being

• It has been asked, "Why should gold, or corn, or labour, be the standard measure of value more than coals or iron ?" (Ricardo, Principles of Pol. Econ. chap. 20, p. 343, second edition.) The answer is simply, because the former articles are in general either more steady in their value, or of more convenient application as the standard, than the latter. Some commodity must of necessity be chosen to serve the double purpose of a measure of value and instrument of exchange; and the question being, which is the best adapted to it, there can be no hesitation about the answer as to whether coals or iron, or gold, should have the preference. As to labour, it is indeed the only certain measure, as we shall presently endeavour to demonstrate, fixed and invariable in the nature of things; but then labour is not a commodity, and cannot therefore be laid hold of, or applied as the common measure; and as to corn, it is too bulky and inconvenient as well as exceedingly variable within short periods.