Simplified Wealth of Nations by Adam Smith, Book 4, Chapter 1c: Money supply

Money supply

19 It is said, consumable commodities are soon destroyed, but gold and silver are more durable. 20 It is not always necessary to accumulate gold and silver to carry on foreign wars and maintain fleets and armies in distant countries. 21 A nation may purchase the pay and provisions of an army in a distant country by sending abroad:
  1. Some of its accumulated gold and silver
  2. Some of its manufactures
  3. Some of its rude produce
22 The gold and silver stored up in any country may be distinguished into three parts:
  1. The circulating money
  2. The plate of private families
  3. The money collected by many years parsimony and laid up in the prince's treasury
The Circulating Money 23 Not much can be spared from the circulating money of the country because there is seldom much redundancy. 24 The melting down of the plate of private families is a more insignificant resource in increasing the circulating money. 25 In the past, the accumulated treasures of the prince was a more lasting resource. 26 The foreign wars of the present century are perhaps the most expensive wars ever recorded. 27 The enormous cost of the recent war must have been chiefly defrayed by the exportation of British commodities and not by the exportation of gold and silver. Bullion and the Mercantile Republic 28 Besides the three kinds of gold and silver mentioned above, there is a lot of bullion alternately imported and exported for foreign trade in all great commercial countries. 29 The best commodities for export to distant countries were the finer and more improved manufactures.

30 No expensive or long foreign war could be conveniently carried on by exporting rude produce.


Next: Chapter 1d: International trade