Adam Smith's Simplified Wealth of Nations, Book 1, Chapter 11j: Rent, Digression -- Real Value

Chapter 11j, Digression: Rent - Real Value

121 "Labour, it must always be remembered, and not any particular commodity or set of commodities, is the real measure of the value both of silver and of all other commodities."

122 In thinly inhabited countries, cattle, poultry, game, etc. are frequently produced by nature.

123 In every state of society, corn is the produce of human industry.

124In every civilized country, corn or whatever is the common and favourite vegetable food of the people, constitutes the principal part of the subsistence of the labourer.

125 Such slight observations of prices would probably not have misled so many intelligent authors had they not been influenced by the popular but groundless notion that the quantity of silver naturally increases with the increase of wealth, so silver value diminishes as its quantity increases. 126 Two causes increase the quantity of precious metals:
  1. From the increased abundance of the mines which supply it
  2. From the increased wealth of the people from the increased produce of their annual labour.
127 When more abundant mines are discovered, more precious metals are brought to market. 128 When the wealth or annual produce of the labour of any country increases, more coin becomes necessary to circulate more commodities. 129 The price of gold and silver naturally rises with the wealth of every country.

Labour, it must be remembered, is the ultimate price which is paid for every thing.

130 The difference between the money price of labour in China and in Europe is still greater than the difference between the money price of subsistence. 131 Gold and silver naturally have the greatest value among the richest nations and the least value among the poorest ones. 132 In great towns, corn is always dearer than in remote parts of the country. 133 In some very rich countries, such as Holland and Genoa, corn is dear for the same reason that it is dear in great towns. 134 The increase in the quantity of the precious metals from the middle of the 14th to the 16th century arose from the increase of wealth and improvement.
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Next: Chapter 11k, Digression, Period 2 and 3