Chapter 6 On the Real and Nominal Prices of Commodities, or Their Labor and Money Prices

Whether a man is poor or rich depends on the degree to which he can enjoy the necessities, conveniences and entertainments of life.But since the division of labor has been fully established, only a very small part of the goods that each person needs depends on his own labor, while the largest part has to depend on the labor of others.Therefore, whether he is poor or rich depends on how much labor he can command, in other words, how much labor he can buy.The value of a commodity which a man possesses, which he would not consume himself, but would exchange for something else, is equal to the quantity of labor which enables him to purchase or to command.Labor is therefore the true measure of the exchangeable value of all commodities.

The true price of any thing, the price actually paid for its acquisition, is the toil and trouble of obtaining it.To those who have acquired it and hope to exchange it for something else, its true value is equal to the toil and trouble which, by possessing it, it saves itself and inflicts on others.To buy things with money or goods is to buy them with labour, just as we acquire them with our own labour.Such money or goods enable us to dispense with considerable labour.They contain the value of a certain amount of labour, and we exchange them for other things which are then thought to have an equal amount of labour-value.Labor is the primary price, the price with which all goods are originally purchased.All wealth in the world was originally purchased with labor, not with gold and silver.Its value, therefore, to those who possess it, and would exchange it for some new produce, is exactly equal to the quantity of labor which it enables them to purchase or command.

Hobbes said: Wealth is power.However, those who acquired or inherited large amounts of property did not necessarily acquire or inherit civil or military political power.His property may provide him with a means of gaining power, but property alone may not give him power.The power directly afforded to him by property is purchasing power, the right to dispose of various kinds of labor or the products of various kinds of labor in the market at that time.The size of his property is exactly proportional to the size of this dominion, in other words, the size of his property is exactly proportional to the size of the quantity of other people's labor or the product of other people's labor that he can buy or have at his disposal.The exchange value of a thing must be exactly equal to the disposition of labor which it affords to its owner.

Although labor is the true measure of the exchangeable value of all commodities, the value of all commodities is not generally estimated by labor.It is often difficult to determine the proportion of two different quantities of labour.The time spent on the two different kinds of work is often not the only factor in determining this proportion, but their different degrees of difficulty and ingenuity must also be taken into account.One hour of difficult work may involve more labor than one hour of easy work; one hour of work requiring ten years of study may also involve more labor than one month of ordinary work.But exact scales of difficulty and ingenuity are not easy to find.It is true that the above-mentioned degrees of difficulty and ingenuity are generally taken into account to some extent in the exchange of the different products of different labours, but not by any exact measure, but by means of Negotiate the price to make adjustments that generally do not hurt each other.Although this is not very accurate, it is enough for daily trading.

In addition, commodities are more exchanged with commodities, and therefore more compared with commodities, and less exchanged with labor, so they are less compared with labor.It is therefore more natural to estimate the exchange value of one commodity by the quantity of another commodity which it can purchase, than by the quantity of labor which it can purchase.Moreover, it is easier to understand when we speak of a definite quantity of a particular commodity than of a definite quantity of labour.Because the former is an object that can be seen and touched, while the latter is an abstract concept.Abstract concepts, even if they can be fully understood, are not as obvious and natural as concrete objects.

But when barter has ceased and money has become the general medium of commerce, commodities are exchanged more with money than with other commodities.The butcher needs bread or ale, and instead of taking the beef or mutton directly to the bakery or tavern to exchange, he first takes the beef or mutton to the market for money, and then exchanges the money for bread or ale.The amount of money he gets from selling his beef and mutton determines the amount of bread and ale he can later buy.Therefore, in estimating the value of beef and mutton, the butcher naturally uses the amount of goods directly exchanged for beef and mutton, that is, the amount of money, and uses less of the amount of goods indirectly exchanged for beef and mutton, namely, the amount of bread and ale.It is also more proper to say that a pound of meat is worth three or fourpence than that a pound of meat is worth three or four catties of bread, or three or four quarts of ale.The exchange value of a commodity, therefore, is calculated more by the quantity of money than by the quantity of labor or other commodities for which it can be exchanged.

Gold and silver, like all other commodities, vary in value, are sometimes high or low, and are sometimes easy or difficult to buy.The amount of labor or other commodities that can be purchased or commanded by a certain amount of gold and silver often depends on the output of the famous gold and silver mines that have been discovered at that time.The discovery of gold and silver mountains in America in the sixteenth century reduced the value of European gold and silver to almost one-third of their original price.As less labor is required of these metals to bring them to market from the mines, the labor which can be purchased or disposed of when they are brought to market is reduced in the same degree.Moreover, although this is the biggest change in the value of gold and silver, it cannot be said to be the only change in history.We know that a measure whose quantity is constantly changing, such as a person's foot, a hand, or two arms, is by no means a correct measure of the quantity of other things; An accurate measure of commodity value.Labor, however, is a different matter.Equal amounts of labour, at all times and in all places, may be said to be of equal value to the laborer.If the laborers are all of average energy and proficiency and skill, then in labor they must sacrifice an equal amount of ease, liberty, and happiness.Whatever he buys is always equal to what he pays for.It is true that his labor sometimes buys a large quantity of goods, and sometimes only a small one, but this is a change in the value of the goods, not a change in the value of the labor that buys them.Whenever and wherever goods are difficult to obtain, or require much labor to obtain, they are dear; and those which are easy to obtain, or require little labor to obtain, are cheap.Therefore, only labor, whose value does not vary, is the last and true standard by which the value of various commodities can be estimated and compared at any time and anywhere.Labor is the real price of commodities, money is only the nominal price of commodities.

But equal amounts of labor, though always of equal value to the labourer, are now and then of a higher value to the man who employs him.The employer buys his labour, sometimes with a large quantity, sometimes with a small quantity; the price of labor, therefore, appears to him as constantly changing, as with all other goods.In his view, labor is expensive when bought in large quantities, and cheap when bought in small quantities.In fact, in the former case, the goods are cheap; in the latter case, the goods are expensive. Therefore, in popular terms, labor, like commodities, can be said to have a real price and a nominal price.The so-called real price is a definite quantity of the necessaries and conveniences of life for paid labour.The so-called nominal price is a definite amount of money that pays for labour.Whether the laborer is poor or rich, and whether his labor remuneration is bad or good, is not proportional to the nominal price of his labor, but proportional to the real price of his labor.

As far as commodities and labor are concerned, the distinction between real prices and nominal prices is not only a purely theoretical issue, but also very important in practice.The value of the same real price is often equal; but the value of the same nominal price is often very different due to changes in the value of gold and silver.Therefore, assuming that a person wants to sell land on the condition of a permanent lease, if he really wants to keep the value of the land rent permanently unchanged, he cannot fix the land rent as a certain amount of money.The value of a given amount of money is inevitably subject to two variations: first, due to the different quantities of gold and silver contained in the coinage of the same name at different ages;

Princes and nations have often considered it to their immediate advantage to reduce the amount of pure metal contained in their coinage.But they seldom considered it beneficial to increase the amount of pure metal contained in their coins.I believe that the quantity of pure metal contained in the coin of every country has been constantly decreasing, never increasing, but this variation always depreciates the value of money-rent. The discovery of mines in America lowered the value of gold and silver in Europe.It is generally conjectured (but I think there is no solid argument for this) that the value of gold and silver will gradually decline, and will probably continue to do so for a long time.On this conjecture, therefore, if the rent were not fixed in pounds of coin, but in ounces of pure silver, or silver of a certain fineness, such a variation would more likely reduce, than increase, the value of money-rent.

Corn rent is not so.Corn-rent, even when the coin is denominated and real, retains its original value better than money-rent.In the eighteenth year of Elizabeth, it was stipulated that two-thirds of the land rent of the domestic colleges should be paid in currency, and the remaining third should be paid in grain, or converted into currency according to the price of grain in the nearest market at that time.The money converted from corn, which formerly constituted but one-third of the whole rent, is now, according to Dr. Braxton, twice as large as the other two-thirds.The money-rent of the colleges, therefore, must have been reduced to almost a quarter of its original value, or a quarter of its original value in corn.But there has been little change in the British mint since the days of Philip and Mary; the same amount of pounds, shillings, or pence contains almost the same amount of pure silver.It follows, therefore, that the fall in the value of the money-rent of the colleges is entirely due to the fall in the price of silver. If the price of silver should fall, and the quantity of pure silver contained in the coin should at the same time decrease, the loss of money-rent would be still greater.The silver content of the Scottish coin varies much more than that of England, and that of France more than that of Scotland.The rent, therefore, which was formerly valuable in both countries, is now almost of no value at all. An equal quantity of corn, that is, the means of subsistence of the labourers, seems more likely to have purchased an equal quantity of labour, than an equal quantity of gold, silver, or other commodities, during two periods widely separated.An equal quantity of corn, therefore, is more likely to remain nearly the same in real price during two periods widely separated from each other, or, in other words, to make it more likely that those who have it will buy or command an equal quantity of the labor of others with an equal quantity of corn.I only say that equal quantities of corn are more likely to buy or command equal quantities of labour, than equal quantities of other commodities, because equal quantities of corn cannot buy or command equal quantities of labour.The means of subsistence of the labourer, that is to say, the real price of labour, varies greatly from period to period, as will be shown in the next chapter.The laborers enjoy more means of subsistence in an advanced society than in a static one, and more in a static society than in a retrogressive society.Any commodity other than corn must, at any given time, buy as much labor as it could at that time buy the means of subsistence.The rent in corn, therefore, is only affected by variations in the quantity of labor which a given quantity of corn can purchase.But rent in any other article is affected not only by variations in the quantity of labor which a given quantity of corn can buy, but also by variations in the quantity of corn which a given quantity of this article can buy for. Let us note, however, that although the real value of corn-rent changes much less from century to century than money-rent does, it does so from year to year than money-rent does. Much more.As will be shown in the next chapter, the money-price of labour, does not vary from year to year with the rise or fall of the money-price of corn.It does not seem to correspond to the temporary or accidental price of corn, but to its average or common price, which, as we shall later see, is governed by the price of silver, and by the magnitude of the output of the silver mines. the quantity of labor which must be employed in bringing the silver to market, and therefore also by the quantity of corn which must be consumed.The price of silver, though it sometimes varies greatly from century to century, seldom varies greatly from year to year, and often has the same or about the same value during fifty or a hundred years. the value of.There is, therefore, the same or nearly the same average or common money price over such a long period of time.And labor remains at the same money-price, at least where the rest of the social situation remains unchanged, or very little.It is not uncommon, however, for the temporary or accidental price of corn to double this year from last, for example, twenty-five shillings a quarter this year, and fifty shillings the next.When, however, corn has risen to fifty shillings the quarter, the nominal and real value of corn-rent, or the quantity of labor or other goods at its disposal, is twice as high as before, but in these The money-prices of labor and most other commodities remain constant while they vary. From this it follows that labor alone is the universal and correct measure of value, that is to say, only by using labor as the standard can the values ​​of commodities be compared at all times and in all places.We cannot estimate the real value of a commodity by the amount of silver for which it can be exchanged, century by century; determine the true value of the item.But the real value of a thing may be estimated with the most exactness by the quantity of labor for which it is exchanged, whether from century to century, or from year to year.From century to century, corn is a better measure than silver, because in this case an equal amount of corn is more likely than an equal amount of silver to command an equal amount of labour.Conversely, from year to year, the measure of silver is better than corn, because in this case an equal amount of silver is more likely to command an equal amount of labour, than an equal amount of corn. The distinction between real and nominal prices may still be useful in setting permanent rents or in concluding long-term land leases, but it is of no use in the more common buying and selling in everyday life. At the same time and at the same place, the real price of all things is directly proportional to the nominal price.For example, the more money a commodity is sold in the London market, the greater the quantity of labor it can buy or command at that time; the less money it gets, the greater the quantity of labor it can buy or command. less.Money, therefore, is at the same time and at the same place the correct measure of the real exchange-value of all commodities.But only at the same time and in the same place. In two places far apart, the real price of the commodity is not directly proportional to the money price, and the merchant who traffics goods only considers the money price of the commodity. The difference between the amount of silver received.In the district of Canton, China, a half ounce of silver may command a greater quantity of labour, or the necessaries and conveniences of life, than may be commanded by an ounce of silver in London.A commodity, therefore, which is sold in Canton for a half ounce of silver, may actually be more valuable and more important to the owner of Calvary than for an ounce of silver in London.However, if a London merchant can buy a certain commodity in Canton for half an ounce of silver, and later sell it in London for an ounce of silver, he will gain 100% of the profit in this transaction, just like London and Canton. The price is exactly the same.It is of no importance to the merchant that a half ounce of silver in Canton can command more labor, or more necessaries and conveniences of life, than an ounce of silver in London.In London an ounce of silver always puts at his disposal twice as much labor, and the necessaries and conveniencies of life, as half an ounce of silver, which he desires. Since the propriety of all buying and selling is ultimately determined by the nominal or money-price of commodities, and by which almost all transactions in daily life are governed, it is not surprising that people pay more attention to nominal prices than to real prices. of. But, so far as this book is concerned, it is also sometimes necessary to compare the different real values ​​of particular commodities at different times and places, that is, to compare the different powers which particular commodities offer to their owners at different times over the labor of others. .We are thus comparing, not so much with the different quantities of silver which are commonly obtained for the sale of particular commodities, as with the different quantities of labor which different quantities of silver can buy.However, the time is far away, the place is far away, and the current price of labor is often impossible to know correctly.The current price of corn, though not often recorded formally, is generally better known, and more often noted by historians and writers.In general, therefore, we are content to compare the current price of corn, not because it always rises and falls in exactly the same proportion as the current price of labour, but because both generally rise in the most approximate proportion. fall.I shall make several such comparisons below. With the progress of industry, commercial nations found it convenient to use several metal coins at the same time: gold coins for large payments; silver coins for transactions of moderate value; copper coins or metal coins cheaper than copper coins for smaller transactions.Of these three metals they tend to choose one in particular as the principal measure of value.And their choice seems to be the metal that was first used as a medium of commerce.They have used it as their standard when no other currency is available, so they often use it later even if they need to change. It is said that Rome began minting silver coins within five years of the first Punic War; before that, Rome had only copper coins.So the Roman Republic seems to have continued to use copper coins as the measure of value.All Roman accounts, and all property values, were measured in asces or sesterces.Aspen has always been the name of copper coins.The word Sestus means two and a half Ass, so although Sestus was originally a silver coin, its value is often calculated in copper coins.Therefore, in Rome, a person who owed a lot was said to have borrowed a lot of other people's copper. As for those northern peoples who founded their country on the ruins of the Roman Empire, they seem to have only silver coins at the beginning of their settlement, and there are no gold or copper coins in the following years.When the Saxons came to England, England had only silver coins.Until the time of Edward III, there were only a few gold coins.After James I, there were copper coins.So, in England, and on the same ground, I believe, in other countries of modern Europe, all accounts, and the value of all goods and all property, are kept in silver.In expressing the amount of a man's property, we do not say how much it is worth in guineas, but how much it is worth in pounds of pure silver. I believe that the legal means of payment in all countries was originally only that metal coin that was specially regarded as the standard of value.In England, gold did not qualify as legal tender long after it was minted.The proportion in the value of gold and silver coins is not fixed by law or proclamation, but depends purely on the market.Therefore, if the debtor repays the debt with gold, the creditor can refuse, otherwise, it must be calculated according to the gold price agreed by both parties.Today, copper is only used to exchange for small silver coins, and it is no longer legal tender.Therefore, in this case, the difference between standard metals and non-standard metals is not only a nominal difference. Afterwards, when people gradually became accustomed to using several kinds of coins at the same time, and became acquainted with the proportions in the value of the various coins; The weight of guineas should be exchanged for twenty-one shillings, and it was stipulated that debts of that magnitude should be paid in legal tender.In this state, the difference between the standard metal and the non-standard metal is only a nominal difference during the period when the legal ratio continues to be valid. However, when the legal ratio changes, the distinction between standard metal and non-standard metal becomes, at least it seems to me, more than a nominal distinction.For instance, where all accounts are in silver, and all debts are in silver, if the legal value of a guinea of ​​gold falls from twenty-one shillings to twenty, or rises to twenty-two In order to repay the old debt with silver coins, although it is the same as before, there is a big difference if only gold coins are used to repay.Where the guinea is less than twenty-one shillings, a greater amount of gold is required; where it exceeds twenty-one shillings, a smaller amount of gold is required.Under these circumstances, the price of silver seems less susceptible to change than the price of gold.At this time, it seems that the value of gold is measured by silver, rather than the value of silver by gold.The value of gold seems to depend upon the quantity of silver which gold can exchange; the value of silver does not seem to depend upon the quantity of gold which silver can exchange.This difference, however, arises entirely from the habit of expressing more accounts in silver coins.For example, a Drummond promissory note, if it is marked with twenty-five or fifty guineas in gold coins, can still be repaid in the same amount of gold coins as before, after the statutory ratio has been changed.At this time, if the payment is made in silver coins instead of gold coins, the amount of silver required will vary greatly with the legal ratio.As far as the payment of this promissory note is concerned, the price of gold seems to be less likely to change than the price of silver.At this time, it seems that the value of silver is measured by gold instead of gold by silver.Therefore, if the sums in books, contracts, and bonds are all expressed in gold coins, the metal that is specially regarded as the standard or measure of value should be gold instead of silver. If, among the different values ​​of the different metals, any fixed proportion were to remain constant, the value of the most costly metal would in fact govern the value of all the coins.For example, the twelvepence of the British copper coin, in constant balance (sixteen ounces is one pound), is half a pound of heavy copper, and because of the poor quality of copper, it is seldom worth sevenpence in silver coin before it is minted into copper coins.However, as the law stipulates that copper coins are exchanged for a shilling for twelve pence, they are considered to be worth a shilling in the market, and can be exchanged for a shilling at any time.That is, before the recent reformation of the gold coin, the English gold coin, at least that which circulated in and about London, was never, generally speaking, so inferior to the standard weight as the greater part of the silver coin.Twenty-one shillings of worn silver, however, are regarded as the equivalent of a guinea of ​​gold, without much wear and tear.Lately, by law, steps have been taken by the British Government to bring the gold coinage as close as possible to the standard weight, as is the common coinage of other countries.As for the government's order not to accept gold coins unless it is calculated by weight, the weight of gold coins should be kept close to the standard during the period when this order is still in effect.The silver coin was still in the same state of wear and tear as it had been before the reformation of the gold coin.In the market, however, twenty-one shillings of worn silver are still considered worth a guinea of ​​fine gold. Thus the reformation of the gold coin evidently raised the value of the silver coin which could be exchanged for the gold coin. The British Mint mints forty-four and a half guineas out of one pound of gold, which is equal to forty-six pounds, fourteen shillings and six pence, calculated on the basis that one guinea is twenty-one shillings.Therefore, a gold coin weighing one ounce is equal to three pounds, seventeen shillings, ten and a half pence in silver.England has never levied seigniorage. Standard gold bullion weighing one pound or one ounce is held in the mint, and it can be exchanged for mints weighing one pound or one ounce.Three pounds seventeen shillings ten and a halfpence an ounce, therefore, becomes what is called the mint price of gold in England, that is, the quantity of gold coins which the mint pays in exchange for standard bullion. Before the reformation of the gold coin, the price of standard gold bullion in the market was for many years above three pounds eighteen shillings, often three pounds nineteen, and more often four pounds, an ounce.But the worn four-pound gold coins of the time rarely contained more than an ounce of standard gold.After the reformation of the gold coin, the market price of standard bullion has seldom exceeded three pounds seventeen shillings sevenpence an ounce.Before the reform, its market price was always more or less higher than the mint price; after the reform, the market price was always lower than the mint price.But the market price is the same whether it is paid in gold coins or in silver coins.The recent reformation of the gold coin, therefore, has increased not only the value of gold coin, but also that of silver, in relation to gold bullion, and indeed to all other commodities.However, as the price of most other commodities is affected by many other causes, the value of gold or silver coins does not increase so much in comparison with these commodities. The English Mint minted sixty-two shillings from standard silver bullion pounds.Five shillings and twopence an ounce is, therefore, what is called the mint price of silver in England, that is, the quantity of silver coin which the mint pays in exchange for standard bullion.Before the reformation of the gold coin, the market price of an ounce of standard silver bullion was sometimes five shillings and fourpence, sometimes five shillings and fivepence, sometimes five shillings and sixpence, sometimes five shillings and sevenpence, and sometimes five shillings and sevenpence. It was five shillings and eightpence.Five shillings and sevenpence, however, seem to be the most common.After the reformation of the gold coin, the market price of standard silver bullion an ounce fell to five shillings and threepence, five shillings and fourpence, or five shillings and fivepence, and seldom exceeded five shillings and fivepence.The market price of silver bullion, however, though much lowered by the reformation of the gold coin, has never been so low as it was at the mint. Copper is valued far above its real value, and silver is therefore valued a little below its real value, as regards the relative value of the different metals in which the English mint is combined.In the European market, as far as the French and Dutch coins are concerned, an ounce of pure gold is about 14 ounces of pure silver; as far as the coins of England are concerned, an ounce of pure gold is exchanged for about 15 ounces of pure silver.That is, silver is valued less in England than in Europe generally.Even in England, however, the price of copper bullion is not raised by an overvaluation of copper in coin; nor is the price of silver bullion lower by an overvaluation of coin silver.The silver bullion remains in its proper proportion to the gold; and for the same reason the copper bullion retains its proper proportion to the silver. After William III reformed the silver coin, the price of silver bullion remained slightly above the mint price.According to Locke, this high price was the result of allowing the export of silver bullion and prohibiting the export of silver coin.He said that, to allow the export of bullion, the domestic demand for bullion must be greater than that for coin.There must, however, be a much greater number of those in the country who want silver coin for the common purchase and sale of it, than who want silver bullion for exportation or for any other purpose.Now we likewise permit the export of gold bullion and prohibit the export of gold coin, and the price of gold bullion falls below the mint price.At that time, as now, silver in coins was undervalued in comparison with gold.In those days (the gold coin was also held to be in need of reformation), as at present, it governed the real value of all coinage.As the former reformation of the silver coin was unable to bring down the price of silver bullion to the mint price, no similar reformation at present will probably be able to do so. If the silver coin could, like the gold coin, be about the same weight as the gold coin, a guinea of ​​the gold coin would buy more silver in silver than it could buy in today's parity.If the silver coins contained full gauge weight, it would be profitable to first melt the silver coins into silver bullion, then exchange the silver bullion for gold coin, and then exchange the gold coin for silver coin.To prevent this kind of trouble, it seems that the only way is to change the gold-silver ratio. As regards the proper ratio of gold to silver in coinage, if the price of silver, which is now below this ratio, is valued above this ratio, and at the same time it is prescribed that copper coins should not be used as legal tender except for shillings, and silver coins can be exchanged except for guineas. If it is not allowed to be used as legal currency, then the above-mentioned problems may be reduced.The high valuation of silver will never hurt any creditor, any more than the high valuation of copper will hurt any creditor today.Under this regulation, only the bankers suffer.When there was a run on their bank, they often paid in the smallest silver sixpence, hoping to buy time.The implementation of this rule prevents them from using this dishonorable method to avoid immediate payment.As a result they will often have to keep larger amounts of cash in the coffers.This is of course very unfavorable to the bankers, but it is a great guarantee for the interests of creditors. It is true, that three pounds seventeen shillings ten and a half pence (the mint price of gold) does not necessarily contain more than an ounce of standard gold, even in the fine gold coin of today; standard gold bullion.However, gold coins are more convenient to use than gold nuggets; in addition, although there is no fee for minting currency in the UK, it often takes several weeks before the gold nuggets are held in the mint before they can be exchanged for mints.Today's mint is busy, and it will be several months before the coins can be retrieved.This delay of time is to draw a small seigniorage, and to make the gold coin a little more valuable than its equivalent in bullion.If, therefore, the valuation of silver in the English coin could be kept in its proper proportion to gold, the price of silver bullion, without the reformation of the silver coin, could bring the price of silver bullion below the mint price; dictated by the value of fine gold coins exchanged. The imposition of a small seigniorage upon mint gold and silver coins, would still further increase the value of mint gold and silver over an equal amount of bar.The minting of money then increases the value of the metal of the coin in proportion to the tax, just as the making of gold and silver into vessels increases the value of the vessels of gold and silver in proportion to the cost of manufacture.The higher value of the mint than the bullion prevents not only its melting, but also its export.Should money be exported by some present exigency, a greater part of it will soon return to the country.Coins in foreign countries can only be sold according to the weight of bars, but at home they have a purchasing power that exceeds their weight.Therefore, it is profitable to bring the exported currency back to the country.France imposes a seigniorage of eight per cent on the coinage.It is said that the currency exported by France will automatically return to the country. The market price of gold and silver bullion varies from time to time for the same reasons as that of all other commodities.Such metals are often lost by accidents in transport by land and sea; there is constant wear and tear in gilding, gilding, bordering, and embroidery; and there is wear and tear on coins and vessels.Therefore, countries that do not own mines need a constant import of gold and silver in order to compensate for these losses and consumption.The importers of gold and silver, I believe, as well as other merchants, endeavor to make their importation fit the needs of the time.But no matter how thoughtful their consideration of supply and demand may be, they cannot avoid importing sometimes too much and sometimes too little.If more gold and silver bullion is imported than is required, they are often unwilling to run the danger and difficulty of re-exporting, but are willing to sell some of it at home at a little below the general price; , will be higher than the general price.But if, under such occasional fluctuations, the market price of gold and silver bullion should be able to remain steadily and continuously for several years a little above or a little below the mint price, we dare say that it must be Owing to some condition of the coin itself, the value of a given quantity of coin has during some years been higher or lower than the quantity of pure gold or silver which should have been contained in it.The stability and continuation of the results are only premised on the stability and continuation of the corresponding causes. How exactly the money of any country is the measure of value at a particular time and place depends on how exactly the common coin conforms to its standard, or in other words, on the quantity or quantity of pure gold contained in the coin. How exactly the amount of pure silver corresponds to the amount of pure gold or pure silver it should contain.In Great Britain, for example, if the forty-four and a half guineas happen to contain the standard gold pound, that is, eleven ounces of pure gold and one ounce of alloy, such gold coins may be regarded as all possible at a particular time and place. the correct measure of the real value of the commodity.If these forty-four and a half guineas were consumed by wear and tear, and the standard gold of which they were combined weighed less than a pound, and the wear was more or less uneven, this measure of value would inevitably be somewhat different, like other weights and measures. correct.There are very few measures and measures which are just suitable, and therefore merchants try not to adjust the prices of their commodities by what they ought to be, but by what they, by ordinary experience, think they are.Nor, where the coin is disordered, do the prices of commodities adjust, not by the quantity of pure gold or silver which the coin ought to contain, but by what the merchants generally perceive by experience to be actually in the coin. It should be noted that by the money-price of a commodity I always mean the quantity of pure gold or silver for which the commodity is sold, regardless of the name of the coin.For example, I regard the price of money of six shillings and eightpence in Edwardian times as the price of money of a pound today, because, as far as we can judge, six shillings and eightpence then are the same as today's A pound contains almost the same amount of pure silver.Chapter Six