（3。xii。30）3。Thelastofthethreeinconveniences，liabletoarisefromtheuseofpaper
money，is
allalterationinthevalueofthecurrency。
（3。xii。31）Thisalterationisalwaysanactofthegovernment；andisnotpeculiartopaper
money。
Wehavealreadyseen，thatthevalueofametalliccurrencyisdeterminedbythevalueofthe
metalwhichitcontains。Thatofapapercurrency，therefore，exchangeableatpleasure，eitherfor
coinsorforbullion，isalsodeterminedbythevalueorthemetalwhichcanbeobtainedforit。
Thereasonisobvious。Ifthepapershouldatanytimebereducedbelowthevalueofthemetal，
everypersonwhoheldabanknote，thelessvaluablecommodity，woulddemandforitthemore
valuablecommodity，themetal。Ifthepromisewere，asinEngland，topayanounceofgoldfor3
l。17s。10—1/2d。ofpaper，itwouldbetheinterestoftheholdersofthenotestodemandgoldin
exchange，themoment3l。17s。10—1/2d。inpaperbecameoflessvaluethananounceofgold；
thatis，themomentgoldroseabovethemintprice。
（3。xii。32）But，inthesecircumstances，itwouldbetheinterestofthosewhoissuedthenotes
to
raisetheirvaluebyreducingtheirquantity。Iftheyendeavouredtomaintainthehighquantity，
theywouldbecondemnedperpetuallytoissueandperpetuallytowithdraw；becauseeveryman
whobecamepossessedofanyoftheirnoteswouldhaveaninterestinbringingthembackagain
forgold；andoneachoftheseoccasionstheissuerswouldsustainaloss。Theywouldissuethe
notesattherateof3l。17s。10—1/2d。；thatistheywouldreceiveavalueof3l。17s。10—1/2d。
whentheyissuedthem；butwhentheyreceivedthemback，theywouldbeobligedtopayan
ounceofgold，for31。17s。10—1/2d。oftheirnotes；andthatouncemightcostthem4l。，orany
greatersum。
（3。xii。33）Ifthecurrencyweresuppliedbypaper，withoutcoins，theissuersofthepaper
could，
bylesseningitsquantity，andtherebyenhancingitsvalue，reducethepriceofgold。Suppose，by
thismeans，theyweretoreduceitto3l。perounce。Theymightfilltheircofferswithgoldatthis
price；andhavingdoneso，theymightraiseitspricebyincreasingtheirissuestillitbecamethe
interestoftheholdersoftheirnotestodemanditorthemat3l。17s。10—1/2d。Theywouldmake
aprofitof17s。10—1/2d。oneveryounceofgoldthustrafficked；andtheymightcontinually
repeattheoperation。Asimpleexpedient，however，wouldbeaneffectualsecurityagainstthis
danger。Astheobligationtosellgoldatafixedpricerendersittheinterestofthosewhoissue
papernottoincreasetheirnotesinsuchamannerastoraisegoldabovethatprice，soan
obligationonthemtobuygoldatafixedpricewouldrenderittheirinterestnottoreducethe
amountoftheirnotesinsuchamannerastosinkitbelowthatprice。Thevalueofthenotes
mightthusbekeptverysteadilyconformabletothatofthemetallicstandard。
（3。xii。34）Inthecaseofametalliccurrency，governmentcanreducethevalueofthecoins，
only
bylesseningthequantityofthepreciousmetalcontainedinthem；otherwise，assoonasit
reducedthevalueofthecoinssufficientlytoaffordamotiveformeltingthem，theywould，as
fastasissued，disappear。Inthecaseofapapercurrency，itisonlynecessaryforgovernmentto
withdrawtheobligationtopaymetalforitondemand，whenthequantitymaybeincreased，and
therebythevaluediminished，toanyamount。
（3。xii。35）Papercurrencyisissuedwithoutobligationtopayforit，intwoways：either，when
governmentistheissuer，andrendersitspaperlegaltender，withoutobligationtogivemetalfor
itinexchange；orwhenthepapercurrencyisregulatedbyonegreatestablishment，astheBank
ofEngland，andgovernmentsuspendsitsobligationtopayforitsnotes。
（3。xii。36）Theeffectsofanincreaseofthequantity，andconsequentdiminutionofthevalue
of
thecurrencyinanyparticularcountry，aretwo：first，ariseofprices；secondly，alosstoallthose
personswhobadarighttoreceiveacertainsumofmoneyof’theoldandundiminishedvalue。
（3。xii。37）Bythetermprice，Ialwaysunderstandthequantityofmoneywhichisgivenin
exchange。Analterationinthevalueofmoney，itisobvious，alterstherelativevalueofnothing
else。Allthings—bread，cloth，shoes，&；c。riseinvalueascomparedwithmoney；butnotone
of
themrisesinvalueascomparedwithanyother。
（3。xii。38）Thisdifferenceofpriceis，initself，ofnoconsequencetoanybody。Themanwho
has
goodstosellgetsmoremoneyforthem，indeed；butthismoneywillpurchasehimjustthesame
quantityofcommodities，ashewasenabledtopurchasewiththepriceheobtainedbefore。The
manwhohasgoodstopurchasehasmoremoneytogiveforthem；butheisenabledtodoso，by
gettingjustasmuchmoreforthecommoditieshehastosell。
（3。xii。39）Withrespecttothesecondeffectofadegradationinthevalueofmoney，itistobe
observed，thatthereexistsatalltimes，incivilizedcountries，anumberofobligationstopay
certainsumsofmoneytoindividuals：eitherallatonce，asdebts；orinsuccession，asannuities。
Itisveryobvious，thattheindividualwhohascontractedwithamantoreceive100l。sustainsa
losswhenthecurrencyisreducedinvalueandhereceivesnomorethan100l。Itisequally
obviousthatthepartywhohastopaythesum，isbenefittedtothesameamount。These
circumstancesarereversedwhenthealterationwhichhastakenplaceisanincreaseofthevalue。
Inthatcasethemanwhohastopaysustainstheloss；themanwhoreceivespaymentmakesthe
gain。Theselossesareevilsofgreatmagnitude，asfarasmen’sfeelingsandhappinessare
concerned；andtheyimplyagrossviolationofthoserulesfortheguardianshipofthat
happiness，whicharecomprehendedunderthetermjustice。Itis，however，nodestruction，and
consequentlynoloss，ofproperty。
（3。xii。40）Humehassupposedthatcertainothereffectsareproducedbytheincreaseofthe
quantityofmoney。Whenanaugmentationofmoneycommences，individuals，moreorfewer，go
intothemarketwithgreatersums。Theconsequenceis，thattheyofferbetterprices；andHume
affirms，thattheincreasedpricesgiveencouragementtoproducers，whoareincitedtogreater
activityandindustry，andthatanincreaseofproductionistheconsequence。
（3。xii。41）Thisdoctrineimpliesawantofclearideasrespectingproduction。Theagentsof
productionarethecommoditiesthemselves，notthepriceofthem。Theyarethefoodofthe
labourer，thetoolsandmachinerywithwhichheworks，andtherawmaterialswhichheworks
upon。Thesearenotincreasedbytheincreaseofmoney：howthencantherebemore
production？ThisisademonstrationthattheconclusionofHumeiserroneous。Itmaybe
satisfactoryalsotounravelthefallacyofhisargument。
（3。xii。42）Themanwhogoesfirsttomarketwiththeaugmentedquantityofmoney，either
raises
thepriceofthecommoditieswhichhepurchases，orhedoesnot。
（3。xii。43）Ifnot，hegivesnoadditionalencouragementtoproduction。Thesupposition，
therefore，
mustbe，thathedoesraiseprices。Butexactlyinproportionasheraisesprices，hesinksthe
valueofmoney。Hethereforegivesnoadditionalencouragementtoproduction。
（3。xii。44）Itwillperhapsbesaid，byaperseveringobjector，thatthemanwhofirstgoesto
market
withtheadditionalquantityofmoney，raisesthepriceofthecommoditieswhichheimmediately
purchases：thattheproducersofthosecommoditiesarethereforeencouragedtogreaterindustry，
becausethepriceofothercommodities，namely，ofallthosewhichtheyhaveoccasionto
purchase，hasnotrisen。Butthisheisnotallowedtosay。Thefirstmanwhocamewithan
additionalquantityofmoneyintothemarkettopurchasethecommoditiesofthoseproducers，
raisedthepriceofthosecommodities。Andwhy？Becausehecamewithanadditionalquantity
ofmoney。Theygointothemarkettopurchaseanothersetofcommodities，andgowithan
additionalquantityofmoney。Theyraise，therefore，thepriceofthosecommodities。Andinthis
mannerthesuccessiongoeson。Ofallthosecommoditieswithwhichnoadditionalquantityof
moneyhasyetcomeincontactthepriceremainsunaltered。Themomentanadditionalquantity
ofmoneycomesincontactwiththem，thepriceisproportionallyraised。
（3。xii。45）Thewholeofthebusinessofanycountrymaybeconsideredaspracticallydivided
into
agreatnumberoflittlemarkets，someinoneplace，someinanother，someofonesortof
commodity，someofanother：themoney，ofcourse，distributedproportionallyamongthem。Into
eachofthesemarkets，intheordinarystateofthings，therecomes，ontheoneside，acertain
quantityofcommodities；ontheothersideacertainquantityofmoney；andtheoneisexchanged
againsttheother。Whereveranyadditiontakesplaceinthequantityofgoods，withoutany
additiontothequantityofmoney，thepricefalls，andofnecessityintheexactproportionofthe
additionwhichhasbeenmade。Ifthisisnotcleartoeveryapprehensionalready，itmaybe
renderedpalpablebyadducingasimplecase。Supposethemarkettobeaverynarrowone；of
breadsolely，ontheoneside；andmoneyontheother。Supposethattheordinarystateofthe
marketis100loavesontheoneside，and100shillingsontheother；thepriceofbread，
accordingly，ashillingaloaf。Suppose，inthesecircumstances，thatthequantityofloavesis
increasedto200，whilethemoneyremainsthesame：itisobviousthatthepriceofthebread
mustfallonehalf，ortosixpenceperloaf。Itwouldnotbeargumenttosay，thatpartofthebread
wouldnotbesold。buttakenawayunsold。Ifitistakenawayunsold，itisthesamething，with
respecttothemarket，asifithadneverbeenbrought。Theseconclusions，withrespecttoan
increaseinthequantityofcommodities，nomandisputes。Isitnotobviousthatthesome
conclusionsaretruewithrespecttoanincreaseinthequantityoftheoppositecommodity—the
money？
（3。xii。46）Alltheconsequences，therefore，ofalteringthevalueofmoney，whetherbyraising
or
depressingit，areinjurious。Thereisnosecurity，however，againstit，asitisadeedof
government，butthatwhichisthesolesecurityagainstthemisdeedsofgovernment；its
dependenceuponthepeople。Theobligationofpayingthenotesinthemetalisanecessary
security，wheretheyareissuedatpleasurebyprivatebankers。Iftheywereissuedbya
governmentstrictlyresponsibletothepeople，itwouldnotbeindispensible；forinthatcasethe
utilityofkeepinggoldatthemintprice，or，inotherwords，thecurrencyofthesamevalueasifit
wasmetallic，mightbesodistinctlyunderstood，thatitwouldnotbetheinterestofthose
intrustedwiththepowersofgovernmenttoallowittovary。
（3。xii。47）Wehavealreadyseen，intreatingofthepropertieswhichrecommendedthe
precious
metalsfortheinstrumentofexchange，thattheyarelessthanalmostanyothercommodity
subjecttofluctuationofvalue。Theyarenot，however，exemptfromchanges，partlytemporary，
andpartlypermanent。Thepermanentchangestakeplace，chieflyinconsequenceofachangein
thecostofprocuringthem。Thegreatestchangeofthiskind，recordedinhistory，isthatwhich
tookplaceonthediscoveryoftheminesofAmerica，fromwhich，withthesamequantityof
labouragreaterquantityofthemetalswasobtained。Thetemporarychangestakeplace，likethe
temporarychangesinthevalueofothercommodities，byaderangementofthebalanceof
demandandsupply。Forthepaymentoftroopsinaforeigncountry，orsubsidiestoforeign
governmentsandotheroperations，agreatquantityofgoldorsilverissometimesboughtup。and
sentoutofthecountry。Thisenhancestheprice，tillthebalanceisrestoredbyimportation。The
profitwhichmaybeacquiredoperatesimmediatelyasamotivetorestoreit。Intheinterval，
however，anadvantagemaybederivedfromapapermoneynotconvertibleimmediatelyintothe
metals。Ifconvertible，goldwillbedemanded，paperwillbediminished，andthevalueofthe
currencywillberaised。Ifnotconvertible，thecurrencymayberetainedofthesameornearlythe
samevalueasitwasbefore。This，indeed，canscarcelybedone，andtheremedyapplied，with
safety，unlesswherethewholeispaper，andgovernmenthasthesupplyinitsownhands。Inthat
casethesamenessinthequantityofthecurrency，asitwouldbeperfectlyknown，wouldbea
sufficientindexandsecurity。Ifthepriceofgoldrosesuddenlyabovethemintprice，or，inother
words，abovetherateofthebanknotes，withoutanyalterationinthequantityofthecurrency，
thesamenessinthequantityofcurrencywouldbeasufficientindexthattherisewasowingtoa
suddenabsorptionofthegold；which，afteratime，wouldreturn。Ifinsuchcircumstancesthe
obligationofkeepingupthevalueofthepapertothatofthegoldweresuspendedforashort
time，asufficientsecurityagainstanyconsiderablealterationinthevalueofthecurrencywould
befoundintheobligationofkeepingthequantityofitthesame；because，duringanyshort
periodoftime，therecanbenosuchdiminutionorincreaseofthequantityofbusinesstobedone
byit，astorequireanymaterialalteration。Thatinthehandsofanirresponsiblegovernmentsuch
powerofsuspensionwouldbedangerous，istrue。Butanirresponsiblegovernmentinvolvesall
kindsofdanger，andthisamongtherest。
SectionXIII。TheValueofthePreciousMetalsinEach
CountryDeterminesWhetherItShallExportorImport（3。xiii。1）Metallicmoney，ormoregenerallyspeaking，thepreciousmetals，arenothing
more，
consideredstrictly，andintheiressence，thanthatcommoditywhichisthemostgenerallybought
andsold，whetherbyindividuals，orbynations。
（3。xiii。2）Inordinarylanguage，itisimmediatelyacknowledged，thatthosecommodities
alone
canbeexported，whicharecheaperinthecountryfromwhich，thaninthecountrytowhich，they
aresent；andthatthosecommoditiesalonecanbeimported，whicharedearerinthecountryto
which，thaninthecountryfromwhich，theyaresent。
（3。xiii。3）Accordingtothisproposition，ifgoldischeaperinanyonecountry，asinEngland，
for
example，itwillbeexportedfromEngland。Again，ifgoldisdearerinEnglandthaninother
countries，itwillbeimportedintoEngland。But，bytheveryforceoftheterms，itisimplied，that
inanycountrywheregoldischeap，othercommoditiesaredear。Goldischeap，whenagreater
quantityofitisrequiredtopurchasecommodities；andcommoditiesaredear，forthesame
reason；namely，whenagreaterquantityofgoldisrequiredtopurchasethem。Whenthevalueof
gold，therefore，inEngland，islow，goldwillbeexportedfromEngland，ontheprinciplethatall
commoditieswhicharefreetoseekamarket，gofromtheplacewheretheyarecheaptothe
placewheretheyaredear。Butas，inthefactthatgoldischeap，isimpliedthecorrelativeand
inseparablefact，thatothercommodities，atthesametime，aredear，itfollows，that，whengoldis
exported，lessofothercommoditiescanbeexported；thatnocommoditiescanbeexported，ifthe
valueofgoldissolowastoraisethepriceofallofthemabovethepriceinothercountries；and
thatadiminishedquantityalonecanbeexported，ifthevalueofgoldisonlyreducedsofarasto
raisethepriceofsomeofthemabovethepriceinothercountries。
（3。xiii。4）Itisevident，therefore，thatacountrywillexportcommodities，otherthanthe
precious
metals，onlywhenthevalueofthepreciousmetalsishigh。Itisequallyevident，thatshewill
import，onlywhenthevalueofthepreciousmetalsislow。Theincrease，therefore，ofthe
quantityofthepreciousmetals，whichdiminishesthevalueofthem，graduallydiminishesand
tendstodestroythepowerofexportingothercommodities；thediminutionofthequantityofthe
preciousmetalswhichincreasestheirvalue，increases，byasimilarprocess，themotiveto
exportationofothercommodities，and，ofcourse，inastateoffreedom，thequantityexported。
SectionXIV。TheValueofthePreciousMetal，orMediumof
Exchange，WhichExportationIsNotDeterminestheSameinallCountries（3。xiv。1）Whenwespeakofthevalueofthepreciousmetal，wemeanthequantityofother
things
forwhichitwillexchange。
（3。xiv。2）Butitiswellknownthatmoneyismorevaluable，thatis，goesfartherinthe
purchase
ofcommodities，notonlyinonecountrythananother，butinonepartthananotherofthesame
country。
（3。xiv。3）InsomeofthemoredistantplacesofWales，forexample，moneyismorevaluable
than
inLondon；incommonlanguage，wesay，thatlivingismorecheap；inotherwords，commodities
maybepurchasedwithasmallerquantityofmoney：andthisstateofthingsishabitual，money
havingnotendencytogofromLondonwhereitsvalueislow，toincreaseitsquantityinWales
whereitsvalueishigh。Thisphenomenonrequiresexplanation。
（3。xiv。4）Thefactis，thatthewholeofsuchdifferenceasishabitual，andhasnotendencyto
produceatransitofthemetals，resolvesitselfintocostofcarriage。Corn，butchers’meat，and
othercommodities，whichareproducedinWales，arecheaperthaninLondon，becausethe
supplyofLondoncomesfromadistance，andtheoriginalpriceisenhancedbycostofcarriage。
ButastherearecertaincommoditieswhichthusarecheaperinWalesthaninLondon，sothere
areotherswhicharecheaperinLondonthaninWales。Suchareallthecommoditieswhichare
eithermanufacturedinLondon，orimportedintoLondonfromabroad。Justasthecornandother
commodities，whichcomefromWalestoLondon，areenhancedbythecostofcarriage；sothose
commoditieswhicharesentfromLondontoWales，aredearerinWalesthaninLondon，bythe
wholeofthecostwhichisincurredintransportingthem。Thefact，therefore，is，thatinWales
somecommoditiesarecheaper，andsomearedearer，thaninLondon；butthosewhichare
cheaperarethearticlesofprincipalimportance；theyarethenecessariesoflife，thearticlesthe
consumptionofwhichconstitutestheprincipalpartofalmosteveryman’sexpenditure。Whatis
more，theyarethearticlesthemoney—valueofwhichdeterminesthemoney—valueoflabour；
everythingwhichamanhasdoneforhim，therefore，isdonecheaperthanitisinLondon。And，
lastly，thegrosscommodities，whicharetheproduceofWales，costmuchmoreforcarriage，in
proportiontotheirvalue，thanthefinecommoditieswhicharereceivedfromLondon：thecostof
thegrosscommoditiesinLondonismuchmoreraisedabovethepriceoftheminWales，than
thepriceofthefinecommoditiesinWalesisraisedabovethepriceoftheminLondon。Thecost
ofliving，therefore，isgreaterinLondonthaninWales，forthisreason，solely，becausepeoplein
Londonpaymoreforcarriage。IfthevalueofthemetalinWalesroseeversolittleabovethat
limit，aprofitequaltothatrisewouldimmediatelyoperateasamotiveforsendingittoWales。
（3。xiv。5）Fromtwoplacesinthesamecountry，letustransfertheconsiderationtotwo
different
countries。Thecostoflivingishigher；inotherwords，thevalueofthepreciousmetalsislower
inEngland，thaninPoland。Thedifferencehere，also，resolvesitselfwhollyintothecostof
carriage。LetussupposethatEnglandreceivesaconsiderableportionofhersupplyofcornfrom
Poland，andsendsherthewhole，orthegreaterpart，ofherfinemanufactures：corn，itisevident，
willbedearerinEngland；butfinemanufactureswillbedearerinPoland。Forthesamereasons
thatmoney，aswehaveshown，goesfartherinWales，thaninLondon，itiseasytoseethatit
will，inthiscase，gofartherinPolandthaninEngland；inotherwords，thevalueofgoldin
PolandwillbegreaterthaninEngland，justsomuchastocompensateforthegreatercostof
carriagewhichEnglandsustains。Themomentitrisesabovethatvalue，aprofitmaybemadeby
sendingittoEngland。
SectionXV。ModeinwhichthePreciousMetal，orMediumof
Exchange，DistributesItselfAmongtheNationsoftheGlobe（3。xv。1）Inthecountryof’themines，whencegolddistributesitselftotherestoftheworld，
gold
isinrelativeplenty。Asanadditionisconstantlymakingtothequantityalreadypossessed，there
isaconstanttendencyinthegoldofthatcountrytofallinrelativevalue；inotherwords，a
constanttendencyinthepriceofotherthingstorise。Assoonasanycommoditieshaverisen
sufficientlyhightoenablethemtobeimported，theywillcomeinfromthatcountry，beitwhatit
may，fromwhich，primecostandcostofcarriagetakentogether，theycomethecheapest；and
goldwillgooutinexchange。
（3。xv。2）Bythisimportationofgoldintothatsecondcountry，itbecomesrelativelyplentiful
there，andpricesrise。Somecommodity，orcommodities，becomethereatlastsodear，thatthey
canbeimported，withprofit，fromanothercountry：commodities，asinthepreviousinstance，
comein，andgoldgoesout。Itisunnecessarytotracetheoperationfarther。Inthismannergold
proceedsfromcountrytocountry，throughthewholeconnectedchainofthecommercialworld。
（3。xv。3）Inaprecedingsectionwefound，thatitistheinterestoftwonationstoexchange
with
oneanothertwosortsofcommodities，asoftenastherelativecostofproducingthemisdifferent
inthetwocountries。Iffourquartersofcorn，forexample，and20yardsofcloth，cost，each，the
samequantityoflabourinEngland，butnotthesamequantityinPoland，itwouldbetheinterest
ofthetwocountries，theonetoproducecorn，theothertoproducecloth，andtoexchangethem
withoneanother。
（3。xv。4）Suppose，whilefourquartersofcornand20yardsofclothrequiredthesame
quantityof
labourinEngland；thatinPoland20yardsofclothrequiredtwiceasmuchlabourasfour
quartersofcorn。Inthesecircumstances，cloth，ascomparedwithcorn，wouldbetwiceasdearin
PolandasinEngland；inotherwords，fourquartersofcorn，whichinEnglandwouldbeofequal
valuewith20yardsofcloth，wouldinPolandbeequaltonomorethan10yards。Inatrafficof
thesecommodities，betweenEnglandandPoland，therewouldbeavalueof5yardsofclothto
begainedbyeachuponeveryrepetitionofthetransaction。
（3。xv。5）Supposing，aswehavedone，thatinPoland，ifsheproducedcornandclothfor
herself，
fourquartersofcornwouldhavethesamevalueas10yardsofcloth，itfollows，thatifshehad
theuseofmoney，thepriceoffourquartersofcorn，andof10yardsofcloth，wouldbethesame。
InEngland，accordingtothesupposition，thepriceoffourquartersofcornandthatof20yards
ofclothwouldbethesame。
（3。xv。6）Therearetwosupposeablecases。Thepriceofoneofthetwocommodities，cornfor
example，iseither—1。equalinthetwocountries，or—2。itisnotequal。Theillustrationofany
oneofthesecaseswillsufficeforboth。
（3。xv。7）Letussupposethat，inthetwocountries，thepriceofcornisequal。Ifitis，theprice
ofa
yardofclothmustinPolandbetwiceasgreatasitisinEngland。Inthesecircumstances，what
willhappenisobvious：thecloth，whichischeapinEngland，willgotoPoland，whereitisdear；
andthereitwillbesoldforgold，becausetherecanbenocounterimportationofcorn，which，by
supposition，isalreadyascheapinEnglandasinPoland。
（3。xv。8）Bytheimportation，inthismanner，ofEnglishclothintoPoland，goldgoesoutof
Poland，andcomesintoEngland。Theconsequenceis，thatgoldbecomesmoreplentifulin
England，lessplentifulinPoland。Fromthisfirstconsequence，asecondensues；thatprices
graduallyriseinEngland，fallinPoland：thepriceofcorn，forexample，and，alongwithit，the
priceofcloth，riseinEngland，fallinPoland。Ifwhenwesupposethetraffictobegin，theprice
ofcornineachcountryis1l。perquarter，thepriceofclothbeing，byconsequence，inPoland8
s。，inEngland4s。peryard；thesupposedexchangeofclothforgoldwillgradually，inEngland，
raisethepriceofcornabove，inPolandsinkitbelow，1l。perquarter；raisethepriceofclothin
Englandabove4s。peryard，sinkitbelow8s。peryardinPoland。Inthismanner，thepriceof
corninthetwocountriesgraduallyrecedesfromequality，thepriceofclothgradually
approachesit。Atacertainpointinthisprogress，cornbecomessodearinEngland，andcheapin
Poland，thatthedifferenceofpricewillpayforthecostofcarriage。Atthatmomentamotive
arisesfortheimportationofcornintoEngland；andpricesregulatethemselvesinsucha
manner，thatinEnglandcornisdearerthaninPoland，bytheexpenseofcarryingcorn；clothis
dearerinPolandthaninEngland，bytheexpenseofcarryingcloth，fromtheonecountrytothe
other。Atthispoint，thevalueoftheclothimportedintotheonecountry，andthatofthecorn
importedintotheother，balanceoneanother。Theexchangeisthenatpar，andgoldceasesto
pass。
（3。xv。9）Fromtheconsiderationofthesamecircumstances，itwillfartherbeseen，thatno
alterationcantakeplaceintheinterchangeofcommoditiesbetweenthetwocountries，withouta
newdistributionofthepreciousmetal；thatis，achangeintherelativequantitieswhichthey
previouslypossessed。
（3。xv。10）Letussupposethat，inEngland，somenewcommodityisproduced，whichPoland
desirestoobtain。AquantityofthiscommodityisimportedintoPoland；anditcanbepaidfor
onlyingold，becausewehavesupposedthatatthistime，thecornandcloth，respectively
imported，payforoneanother。Inthiscase，asinthatwhichIhavepreviouslyexplained，the
priceofcommoditiessoonbeginstoriseinEngland，fallinPoland。Inproportionaspricesrise
inEngland，andfallinPoland，amotiveisproducedtoimportagreaterquantityofPolishgoods
intoEngland，alessquantityofEnglishgoodsintoPoland。Andagainthebalanceisrestored。
SectionXVI。MoneyTransactionsbetweenNations—Billsof
Exchange（3。xvi。1）Themoneysofdifferentcountriesaredifferent；thatistosay，theyconsistof
different
portionsofthepreciousmetals，andgobydifferentnames。Thepoundsterling，forexample，is
themoneyofEngland，thedollaristhemoneyofcertainothercountries；thepoundsterling
containsonequantityofthepreciousmetal，thedollarcontainsalessquantity；andsoofother
varieties。
（3。xvi。2）Thepurchaseswhicharemadebyonecountryinanothercountry，are，likeother
purchases，madebymoney。IftheDutchmerchant，forexample，purchasegoodsinEngland，be
buysthematsomanypoundssterling。IftheEnglishmerchantbuysgoodsinHolland，hebuys
thematsomanyguilders。Topaythepoundsterling，theDutchmerchantmusteithersendthe
Englishmoney，oranequivalent。Thedirectequivalentisaquantityofthepreciousmetalequal
towhatiscontainedinthepoundssterlingdue。IftheDutchmerchanthasnoothermediumbut
guilders，hemustsendasmanyguildersascontainanequalquantityofthepreciousmetals。
（3。xvi。3）WhenthelanguagenowusedbythemerchantsofEuropewasestablished，a
computationwasmadeofthequantityofonecurrencywhichcontainedthesamequantityofthe
preciousmetal，asacertaingivenquantityofanother。Thiswascalledtheparofexchange。The
guildercontainednotquitesomuchofthemetalastwoshillingsEnglish；buttosimplifyour
language，letussupposethatitcontainedjustasmuch。Theparofexchangewasthen，10
guildersto1l。；or，intheabridgedlanguageofthemerchants，10。
（3。xvi。4）Thebusinessofexchange，however，betweencountryandcountry，iscarriedon，not
by
transmittingcurrency，orthemetals，but，inamuchgreaterdegree，bytheinstrumentalityof
bills。Thelanguage，whichthemerchantshaveadoptedforcarryingonthetrafficofbills，isvery
ellipticalandabridged；andbeing，inseveralrespects，notwellchosen，isasourceofobscurity
andmisapprehension。
（3。xvi。5）Thesimpletransactionisthis。ThemerchantinLondon，towhomamerchantin
Amsterdamowesasumofmoney，writesalinetothemerchantinAmsterdam，directinghimto
paythemoney。Thewritingofthislineiscalleddrawing；thelineitselfiscalledabill；andthe
personwhomthelineiswrittento，issaidtobedrawnupon。IfthemerchantinLondon，atthe
sametimethathehasmoneytoreceivefromAmsterdam，hasmoneytopayinAmsterdam，he
drawshisbilluponhisdebtorinAmsterdam，totheorderofhiscreditor；or，inotherwords，his
linewrittentothepersonwhooweshimmoneyinAmsterdam，isalinedirectinghimtopaythe
amounttothatotherpersontowhomheisindebted。Ifthesumtobereceivedisequaltothesum
tobepaid，thebilldischargesthedebt；ifitisless，itpaysasfarasitgoes，andthedifference
constitutesabalance。
（3。xvi。6）Itsohappens，inthecourseofbusiness，thattheindividualswhoimportgoodsfrom
Holland，forexample，arenotthesameindividualswhoexportgoodstoHolland。Themerchants
whoimportcorn，orbutter，ortallow，fromHolland，areonesetofmerchants；themerchants
whoexportcottonsandhardwaretoHolland，aremerchantsofanotherdescription；the
individuals，therefore，whohavemoneytoreceivefromHolland，havenothingtodowithany
paymentsinHolland；theymakeademandfortheirmoney，andexpectitshallbepaid。There
areotherindividuals，however，whohavemoneytopayinHolland，andwho，tosavethemselves
theexpenseofsendingmoney，aredesirousofobtainingfromtheindividuals，whohavemoney
toreceivefromHolland，ordersupontheirdebtors，thatis，billsdrawnuponthemforthesum。
TheEnglishexporters，whohavemoneytoreceivefromHolland，therefore，drawbills，upon
theircorrespondentsinHolland，and，withoutneedingtowaitforthereturnfromHolland，
receivethemoneyinEnglandfromtheEnglishimporters。
（3。xvi。7）TherearethustwosetsofpersonsinEngland：one，whohavemoneytoreceive
from
Holland；another，whohavemoneytosendtoHolland。Theywhohavemoneytosend，are
desirousofmeetingwiththepersonswhohavemoneytoreceive，andbillstodraw；thepersons，
again，whohavebillstodraw，andmoneytoreceive，aredesirousofmeetingwiththepersons
whohave’moneytopay，andwhowouldgiveitthemimmediately，andsavethemthedelayof
waitingthereturnfromHolland。Butthesetwosetsofmendonotalwaysknowhowtofindone
another。Thisgivesrisetoasetofmiddlemen，who，underthenameofbill—brokersand
exchangebrokers，performthefunctionofbringingthemtogether，orratheractasthemedium
betweenthem。
（3。xvi。8）Whenitsohappensthattheamount，forwhichbillsaredrawn，isthesamewith
that，
forwhichbillsarewanted；inotherwords，whenthose，whohavemoneytoreceiveabroadare
equaltothosewhohavemoneytopay；theamountofbillstobebought，andtheamounttobe
sold，willbeexactlythesame。ForeachmandesiroustopurchaseabillonHolland，therewillbe
anotherman，equallydesiroustosellone。Therewillbeneitherpremium，therefore，ontheone
side，nordiscountontheother；thebills，orinthelanguageofthemerchants，theexchange，will
beatpar。
（3。xvi。9）Whenithappens，however，thatthedebtsandcreditsarenotequal；thatEngland，
for
example，hasmoremoneytopay，thanshehastoreceive；inotherwords，hasimportedtoa
greateramountthanshehasexported，therearemorepersonswhowanttopurchasebillson
Holland，thantherearepersonstosellthem。Thosewhocannotobtainbillstodischargetheir
debtsinHollandmustsendthemetals。That，however，isanoperation，attendedwitha
considerablecost。Thereis，therefore，acompetitionforbills；andthemerchantsgiveforthem
rathermorethantheyareworth。Abill，forexample，drawnonHolland，for10，000guilders，（the
10，000guildersbeing，bysupposition，equalto1，000l。）willbewillinglypurchasedfor
somethingmorethan1，000l。Inthiscase，theexchangeissaidtobeinfavourofHolland，and
againstEngland。ItisagainstEngland，becauseinHolland，whenbillsaredrawnuponEngland，
therearemorepeoplewhohavebillstosell，thanpeoplewhohaveanyoccasiontobuy。Thereis
acompetition，therefore，amongthepeoplewhowishtosell，andthepricefalls。Abillon
Englandfor1000l。，insteadofsellingfor10，000guilders，willsellforsomethingless。This，itis
evident，isadiscouragementtotheDutchmerchantwhoexportsgoodstoEngland。Itisalsoa
discouragementtotheEnglishmerchantwhoimportsgoodsfromHolland，andwho，inaddition
tothe10，000guilders，whichhisgoodshavecost，mustpaysomethingmorethan1000l。，or
10，000guilders，forabilltopaythem。Ontheotherhand，thereisanencouragementtothe
Englishmerchant，whoexportsgoodstoHolland，inasmuchashereceivesforhisbillof10，000
guildersonHolland，rathermorethan1，000l。，whichisthevalueofhisgoods；beis，therefore，
stimulated，bythisincreaseofprofit，toincreasethequantityofhistrade。
（3。xvi。10）Itisveryeasytosee，whatisthelimittothisvariationinthepriceofbills，called
in
thelanguageofmerchants，theexchange。Themotivetothepurchaseofabillistheobligationof
payingadebt。Themerchant，however，onwhomitisincumbenttopayadebtinHolland，can
payitwithoutabill，bysendingthemetal。Tosendthemetalisattendedwithacertaincost。Ifhe
canobtainthebillwithoutpayingbeyondthiscost，hewillpurchasethebill。Thiscost，therefore，
istheutmostamountofthepremiumwhichhewillpayforabill，andthelimittotheriseofits
price。Asthecostofsendingthemetal，whichisagreatvalueinasmallbulk，isnever
considerable，theexchangecannevervaryfrompartoaconsiderableamount。
（3。xvi。11）Itiswellknownincommerce，howabalanceistransferredfromonecountryto
another，bymeansofbillsofexchange。
（3。xvi。12）IfabalanceisduebyEnglandtoHolland，andbyHamburghtoEngland，the
holderof
abillatAmsterdamfor1，000l。uponEngland，willnotsendhisbilltoEngland，whereitwill
fetchhimonly1，000l。，；ifbysendingittoHamburgh，itwillfetchhimsomethingmore；（i。e。）if
hehasadebttopayatHamburgh，whenbillsuponEnglandarethereatapremium，orifthe
premiumwillexceedthecostoftransportingthegoldfromHamburghtoAmsterdam。Adebt，
whichEnglandowedtoHolland，isthuspaidbyacreditwhichithadatHamburgh。InEngland，
themerchantswhohaveimportedfromHolland，payforthegoodswhichtheyhaveimported，by
payingthemerchants，whohaveexportedtoHamburgh，forthegoodswhichtheyhaveexported。
（3。xvi。13）Sucharethetransactionsbetweencountryandcountry，bymeansofbillsof
exchange
；andsuchisthelanguageinwhichtheyareexpressed。Therearetwostatesofthings，inwhich
theseoperationstakeplace：TheFirst，whenthecurrencyofbothcountriesremainsthesameas
atthetimewhentheparofexchangewasoriginallycomputed；when10guildersofHolland，for
example，containedasmuchofthepreciousmetalas1l。sterling；andtheparofexchange，of
course，wassaidtobe10：TheSecond，whentherelativevalueofthetwocurrenciesdoesnot
remainthesame；as，forexample，when1l。，insteadofbeingequalto10guilders，becomes
equalto12，ortonomorethan8。
（3。xvi。14）Ifwesupposethequantityofthepreciousmetalinthepoundsterlingtobe
diminished
insuchadegree，thatitcontainsnogreaterquantitythanthatwhichiscontainedin8guilders，
theparofexchange，inthiscase，wouldreallybe8，insteadof10。Themerchants，however，from
thetimeatwhichtheparofexchangeappearstohavebeenoriginallycomputed，neveraltered
theirlanguage。Iftheparofexchangebetweentheguilderandthepoundsterlingwas10，it
continuedtobecalled10，thoughtherelativevalueorthecurrenciesmightbechanged；though
thepoundsterling，forexample，mightbecomeequalto8guildersonly，insteadof10。
Notwithstandingthisthevalueofthebillswasregulatedaccordingtotherealvalueofthe
currencies；abillforsomanypoundssterlingwasnotwhensuchachangetookplaceequaltoa
billforasmanytimes10guilders，butforasmanytimes8。Astheparofexchange，however，
stillwascalled10，thoughreally8，theexchangewassaidtobeagainstEngland，inthe
proportionof10to8，or20percent。This20percent。ofunfavourableexchangewasaltogether
nominal；forwhentherewasthis20percent。ofdiscountontheEnglishbill，theexchangewas
reallyatpar。Thelanguage，therefore，wasimproperanddeceptiousbutif，insuchcase，itis
borneinmind，that20percent。againstEnglandmeansthesameaspar，itwillthenbeeasyto
seethateverythingwhichwedemonstrated，intheprecedingpages，astruewithrespecttothe
par，will，inthiscase，betruewithrespecttothe20percent。Everythingwhichraisesthe
exchangeabovepar，accordingtotheproperlanguage，makesitasmuchlessthan20，according
totheim。proper；everythingwhichreducesitbelowpar，accordingtotheproper，makesitas
muchmorethan20，accordingtotheimproper。Alltheeffectswhichfollowfromwhatiscalled
theriseabove，orfallbelowpar，intheonecase，followfromthesamethings，butcalledby
differentnames，intheother。Onthis，therefore，Ihavenooccasiontoenlarge。
（3。xvi。15）Whenthecurrenciesoftwocountriesaremetallic，achangeintheirrelativevalue
beyondthefluctuationswhicharelimitedbytheexpenseoftransmitingthemetals，and
continuallycorrectedbytheirtransmission，canonlyhappenbyachangeintherelativequantity
ofthemetaltheycontain；therebeingchecks，aswehavealreadyseen，whichpreventany
considerabledifferencebetweenthevalueofametalliccurrencyandthatofthemetalwhichit
containsThereis，however，anothercase，namely，thatofapapermoney，notconvertibleintothe
metallic。Thisrequirestobeconsideredbyitself。
（3。xvi。16）Letusresumetheformersupposition，thatthepoundsterlingcontainsasmuchof
the
preciousmetalas10guilders；andletussupposethatapapermoney，notpayableinthemetals，
isissuedinEngland，insuchquantity，thatapoundinthatmoneyisreduced20percent。below
thevalueofthemetalcontainedinapoundsterling；itiseasytoseethatabillfor100l。sterling，
inthiscase，isofthesamevalueexactlyasabillfor100l。sterlingwhenthecurrencywas
degradedbylosing20percent。ofitsmetal。Abillfor100l。inbothcases，isequalnotto100
times10guilders，but100times8guilders。Thereasonis，thatthebillwillinEnglandbuyonly
asmuchofthemetalasiscontainedin100times8guilders。Itwillexchange，therefore，of
course，onlyforabillof800guilders。
（3。xvi。17）Thefactsmaybeexpressedintheformofageneralrule。Thevalueofabill
drawn
uponanycountryisequal，whenitarrives，toallthepreciousmetalwhichthemoneyforwhich
itisdrawncanpurchaseinthemarket：abillfor100l。，forexample，isequaltoallthemetal
whichitcanpurchase，whetheritisthesamequantitywhichwouldbepurchasedby100l。，
sterling，orless。Towhateveramounttheportionwhichitcanpurchaseislessthanwhatcould
bepurchasedby100l。ofthecoins，thepapermoneyisdegradedbelowwhatwouldbethevalue
ofthecoins，iftheycirculatedinitsstead。Theexchange，therefore，againstanycountry，can
neverexceedtheamountoftwosums；First，thedifferencebetweenthevalueofthedegraded
andtheundegradedcurrencyorthatbetweenthenominalamountofthecurrency，andthe
quantityofthepreciousmetalwhichitcanpurchase；secondly，theexpenseofsendingthemetal，
whenpurchased。Itthusappears，howperfectlyunfoundedistheopinionofthose（andsome
politicaleconomistsofgreateminenceareincludedinthenumber）whoconceivethatthereal，
notmerelythenominal，exchange，mayexceedtheexpenseoftransmittingthepreciousmetals。
Theysay，thatwhen，bysomeparticularcause，agreatabsorptionofthepreciousmetalshas
takenplace，creatingascarcityinconsequenceofwhichgoodsmustbesentfromthecountry
whereitisscarce，tobringitbackfromthecountrieswhereitabounds，bills，drawnbythe
countryinwhichitisscarce，uponthecountrieswhereitabounds，maybearapremium，equalto
thecostofsendinggoodswhichmayfetchintheforeignmarketthevalueofthebill；andthis，in
certaincases，maygreatlyexceedthecostofsendingthepreciousmetals。
（3。xvi。18）Ifthefactsaretraced，theanswerwillbeseentobeconclusive。
（3。xvi。19）Whentheexchangebetweentwocountries（callthemAandB）isatpar，itis
implied，
thattheexportsandimportsofbothareequal：thateachreceivesfromtheotherasmuchasit
sends。InthiscasethegoodswhichAsendstoBmustbesomuchcheaperinAthantheycanbe
madeinB，thattheycantherebesoldwithalltheadditionrequiredonaccountofthecostof
carriage：inlikemannerthegoodswhichBsendstoAmustbesomuchcheaperinB，thatthe
costofcarriageiscoveredbythepricewhichtheyfetchinA。Thiscostofcarriage，itisobvious，
doesnotaffecttheexchange，anymorethananiteminthecostofproduction。
（3。xvi。20）Next，letusobservewhathappens，whenthestateoftheexchangeisdisturbed。
Letus
supposethatademandissuddenlycreatedinA，forthemeansofmakingpaymentsinB，greatly
beyondthevalueoftheformerexportations。ThedemandforbillsonBisconsequently
increasedbeyondthesupply，andthepricerises。Thequestionis，whatisthelimittothatrisein
thepriceofbills？Atfirstitisevidenttheriseofpriceislimitedtothecostofsendingthe
preciousmetal。Asthemetal，however，departs，thevalueofitrises。Ifthecurrencyispaper，and
itsvaluestationary，thegoldwillrise，andriseequally，bothincurrencyandcommodities。The
finalquestion，then，is，whatisthelimittotheriseinthevalueofgold？
（3。xvi。21）Beforethepremiumonthebillscommenced，goodsinAweresocheap，thata
portionofthemcouldbesenttoB，andsold，withalltheadditionofthecostofcarriage，andof
coursewiththeordinaryprofitsofstock。Thewholeofthepremiumonthebills，therefore，isan
additiontotheordinaryprofitsofstock。
（3。xvi。22）IfAbetakenforEngland，andBforthecontinentofEurope，thecasewillbe，that
Englishgoods，whentheinterchangeisatpar，goabroad，andaresoldatapricewhichincludes
bothprofitsandcostofcarriage；whenthepremiumonbillsrisesonlysohighastoequalthe
costofsendingbullion，itistothatextentanadditionalprofitonthesendingofgoods。
（3。xvi。23）Itisevidentthat，inproportionasthispremiumshouldrise，itwouldnotonly
enhance
themotivetoincreasetheexportationofthegoodswhichcouldbeexportedwithaprofitbefore
theriseofthebills，butthatitwouldrendermanyotherkindsofgoodsexportable，whichbefore
couldnotbeexported。Thus，whentheexchangewasatpar，therewerecertainkindsofgoodsin
England，which，afterpayingcostofcarriage，couldbesoldabroadwithaprofit；therewere
certainotherkindswhich，onaccountoftheirhighpriceinEngland，couldnotbethusexported；
somemightthusbe1percent。toohightobeexported，others2percent。toohigh，others3per
cent。，andsoon。Itisobviousthatapremiumof1percent。onbillswouldenablethefirstkindto
beexported；apremiumof2percent。wouldenablethesecond；andapremiumof10percent。
wouldenabletwoorthreekindstobeexported，whichcouldnothavebeenexportedbefore。As
thecounteroperationwouldbeofthesamekindandthesamepower，viz。topreventthe
importationofforeigngoodsintoEngland，exportationwouldbeexceedinglyincreased，
importationnearlyprevented。Thetwooperationstogetherwouldbesopowerful，thatanygreat
deviationfromtherealparofexchangecouldneverbeoflongduration。Adeviationequaltothe
costofsendingthepreciousmetal，permanentcircumstancesmightrenderpermanent。If
England，forexample，senteveryyearalargeamountofthepreciousmetaltoIndia，and
receiveditfromHamburgh，theexchangewouldbetotheextentofthecostofsendingthe
metals，permanentlyfavourablewithHamburgh，unfavourablewithIndia。
（3。xvi。24）Ifbillsofexchangewerealwaysdrawnforsomuchweightofgold，thecase
wouldbe
simple。SupposeabillinLondondrawnuponParisfor100ouncesofgold，nomanwouldpay
forthatbillmoregoldbeyondthe100ouncesthanthecostofsendingthe100ounces。Hemight
purchasethe100ouncesatonetimewith390l。ofcurrency，atanotherwith410l。ofcurrency，
butthatwouldbeentirelyowingtochangesintherelativevalueofthecurrencyandthegold。
Thesechanges，itissaid，mayincertaincircumstances，takeplacefromariseinthevalueofthe
gold，thecurrencyremainingofthesamevalue。Thisimpliesthatgoldcanbecomemore
valuableinonecountrythanintheneighbouringcountries；inEngland，forexample，thanonthe
Continent。ButthisitcannotdowithoutincreasingtheexportsinEngland，anddiminishing，
almosttonothing，theimports。Supposetheriseinthevalueofgoldtobe1percent。，2percent。，
ortoamountto10percent。；atthislastratethegoodswhichcouldbesentabroadwiththe
ordinaryprofit，couldbenowsentabroadwith10percent。morethantheordinaryprofit，while
alltheotherkindsofgoods，those1percent。，those2percent。，those3percent。，4percent。5
percent。，andsoon，toodeartohavebeensentbefore，wouldnowallbesent；atthesametime
thatthecounteroperationwouldbeequallystrongtopreventforeigngoodsfrombeing
imported。Thesearethenecessaryeffectsofahighvalueofgoldinonecountryascompared
withothercountries；andtheyareevidentlysuchastorenderitimpossiblethatahighvalueof
thepreciousmetalinonecountry，comparedwiththeneighbouringcountries，caneverinastate
offreedombeoflongduration。
SectionXVII。BountiesandProhibitions（3。xvii。1）UnderthistitleIincludeallencouragementsanddiscouragements，ofwhatsoever
sort，
theobjectofwhichis，tomakemoreorlessofproductionorexchangetoflowincertain
channels，thanwouldgointothemofitsownaccord。
（3。xvii。2）Theargument，onthissubject，Itrust，willbeclearandconclusive，withouta
multiplicityofwords。
（3。xvii。3）Ifitshouldappear，thatproductionandexchangefallintothemostprofitable
channels，
whentheyareleftfreetothemselves；itwillnecessarilyfollowthat，asoftenastheyarediverted
fromthosechannels，byexternalinterpositionsofanysort，sooftentheindustryofthecountryis
madetoemployitselflessadvantageously（3。xvii。4）Thatproductionandexchangedo，whenlefttothemselves，fallintothemost
profitable
channels，isclearbyaveryshortdemonstration。
（3。xvii。5）Thecasesofproductionandofexchangerequiretobeconsideredseparately；for，
in
thecaseofproduction，thereishardlyanydifferenceofopinion。Ifacountryhadnocommercial
intercoursewithothercountries，andemployedthewholeofitsproductivepowersexclusively
forthesupplyofitsownconsumption，nothingcouldbemoreobviouslyabsurd，thantogive
premiumsfortheproductionofonesetofcommodities，andopposeobstructionsofanysortto
theproductionofanother；Imean，intheviewofPoliticalEconomy，or，onaccountof
production：forifanycountryopposesobstructionstocertaincommodities，asspirituous
liquors，becausetheuseofthemishurtful；thisregardsmorality，andhas，foritsend，toregulate
notproduction，butconsumption。Whereveritisnotintendedtolimitconsumption，itseems
admitted，eveninpractice，thatthedemandwillalwaysregulatethesupply，inthemannerin
whichthebenefitofthecommunityisbestconsulted。Themoststupidgovernmentshavenot
thoughtofgivingapremiumforthemakingofshoes，orimposingapreventivetaxuponthe
productionofstockings，inordertoenrichthecountrybymakingagreaterquantityofshoes，and
alessquantityofstockings。Withaviewtotheinternalsupply，itseemstobeunderstoodthat
justasmanyshoes，andjustasmanystockings，shouldbemade，asthereisademandfor。Ifa
differentpolicywerepursued；ifapremiumwerebestowedupontheproductionofshoes，atax
orotherburthenimposedupontheproductionofstockings，theeffectwouldonlybe，thatshoes
wouldbeaffordedtothepeoplecheaper，andstockingsdearer，thantheyotherwisewouldbe：
thatthepeoplewouldbebettersuppliedwithshoes，worsesuppliedwithstockings，thanthey
wouldhavebeen，ifthingshadbeenlefttotheirnaturalcourse，thatis，ifthepeoplehadbeen
lefttoconsultfreelytheirownconvenience，inotherwords，ifthegreatestquantityofbenefit，
fromtheirlabour，hadbeenallowedtobeobtained。
（3。xvii。6）Allthatregulationofindustry，therefore，theobjectofwhichhasbeen，toincrease
the
quantityofonesortofcommodities，lessenthequantityofanother，hasbeendirectedtothe
purposeofregulatingtheexchangeofcommoditieswithforeigncountries；ofincreasing，or
diminishing，mostcommonlydiminishing，thequantityofcertaincommodities，whichwouldbe
receivedfromabroad。
（3。xvii。7）Nowitiscertain，ashasbeenalreadyabundantlyproved，thatnocommodity，
which
canbemadeathome，willeverbeimportedfromaforeigncountry，unlessitcanbeobtainedby
importationwithasmallerquantityoflabour，thatis，cost，thanitcouldbeproducedwithat
home。Thatitisdesirabletohavecommoditiesproducedwithassmallacostoflabouras
possibleseemstobenotonlycertain，butadmitted。Thisistheobjectofalltheimprovements
thatareaimedatinproduction，bythedivisionanddistributionoflabour，byrefinedmethodsof
cultureappliedtotheland，bytheinventionofmorepotentandskilfulmachines。Itseems，
indeed，tobeaselfevidentproposition，thatwhateverthequantity，whichanationpossessesof
themeansofproduction，themoreproductivetheycanpossiblyberendered，somuchthebetter；
forthisisneithermorenorlessthansaying，thattohave，alltheobjectswedesire，andtohave
themwithlittletrouble，isgoodformankind。
（3。xvii。8）Notonlyisitcertain，thatinastateoffreedomnocommodity，whichcanbemade
at
home，willeverbeimported，unlessitcanbeimportedwithalessquantity，orcost，oflabour
thanitcouldbeproducedwithathome；but，whateveristhecountryfromwhichitcanbe
obtainedwiththesmallestcostoflabour，tothatrecoursewillbehadforobtainingit；and
whateverthecommodity，bytheexportationofwhich，itcanbeobtainedwiththesmallest
quantityofhomelabour，thatisthecommodity，whichwillbeexportedinexchange。This
results，soobviously，fromthelawsoftrade，asnottorequireexplanation。Itisnomorethan
saying，thatthemerchants，iflefttothemselves，willalwaysbuyinthecheapestmarket，andsell
inthedearest。