Imustagainobserve，thattherateofprofitswouldfallmuchmorerapidlythanIhaveestimatedinmycalculation:forthevalueoftheproducebeingwhatIhavestateditunderthecircumstancessupposed，thevalueofthefarmer'sstockwouldbegreatlyincreasedfromitsnecessarilyconsistingofmanyofthecommoditieswhichhadriseninvalue。Beforecorncouldrisefrom=A34to=A312hiscapitalwouldprobablybedoubledinexchangeablevalue，andbeworth=A36，000insteadof=A33，000。Ifthenhisprofitwere=A3180，or6percentonhisoriginalcapital，profitswouldnotatthattimebereallyatahigherratethan3percent；

for=A36，000at3percentgives=A3180；andonthosetermsonlycouldanewfarmerwith=A36，000moneyinhispocketenterintothefarmingbusiness。

Manytradeswouldderivesomeadvantage，moreorless，fromthesamesource。Thebrewer，thedistiller，theclothier，thelinenmanufacturer，wouldbepartlycompensatedforthediminutionoftheirprofits，bytheriseinthevalueoftheirstockofrawandfinishedmaterials；butamanufacturerofhardware，ofjewellery，andofmanyothercommodities，aswellasthosewhosecapitalsuniformlyconsistedofmoney，wouldbesubjecttothewholefallintherateofprofits，withoutanycompensationwhatever。

Weshouldalsoexpectthat，howevertherateoftheprofitsofstockmightdiminishinconsequenceoftheaccumulationofcapitalontheland，andtheriseofwages，yetthattheaggregateamountofprofitswouldincrease。Thussupposingthat，withrepeatedaccumulationsof=A3100，000，therateofprofitshouldfallfrom20to19，to18，to17percent，aconstantlydiminishingrate，weshouldexpectthatthewholeamountofprofitsreceivedbythosesuccessiveownersofcapitalwouldbealwaysprogressive；thatitwouldbegreaterwhenthecapitalwas=A3200，000，thanwhen=A3100，000；stillgreaterwhen=A3300，000；andsoon，increasing，thoughatadiminishingrate，witheveryincreaseofcapital。

Thisprogressionhoweverisonlytrueforacertaintime:thus19percenton=A3200，000ismorethan20on=A3100，000；again18percenton=A3300，000

ismorethan19percenton=A3200，000；butaftercapitalhasaccumulatedtoalargeamount，andprofitshavefallen，thefurtheraccumulationdiminishestheaggregateofprofits。Thussupposetheaccumulationshouldbe=A31，000，000，andtheprofits7percentthewholeamountofprofitswillbe=A370，000；nowifanadditionof=A3100，000capitalbemadetothemillion，andprofitsshouldfallto6percent，=A366，000oradiminutionof=A34，000willbereceivedbytheownersofstock，althoughthewholeamountofstockwillbeincreasedfrom=A31，000，000to=A31，100，000。

Therecan，however，benoaccumulationofcapital，solongasstockyieldsanyprofitatall，withoutitsyieldingnotonlyanincreaseofproduce，butanincreaseofvalue。Byemploying=A3100，000additionalcapital，nopartoftheformercapitalwillberenderedlessproductive。

Theproduceofthelandandlabourofthecountrymustincrease，anditsvaluewillberaised，notonlybythevalueoftheadditionwhichismadetotheformerquantityofproductions，butbythenewvaluewhichisgiventothewholeproduceoftheland，bytheincreaseddifficultyofproducingthelastportionofit。Whentheaccumulationofcapital，however，becomesverygreat，notwithstandingthisincreasedvalue，itwillbesodistributedthatalessvaluethanbeforewillbeappropriatedtoprofits，whilethatwhichisdevotedtorentandwageswillbeincreased。Thuswithsuccessiveadditionsof=A3100，000tocapital，withafallintherateofprofits，from20to19，to18，to17percent&c。theproductionsannuallyobtainedwillincreaseinquantity，andbeofmorethanthewholeadditionalvalue，whichtheadditionalcapitaliscalculatedtoproduce。From=A320，000itwillrisetomorethan=A339，000

andthentomorethan=A357，000andwhenthecapitalemployedisamillion，aswebeforesupposed，if=A3100，000morebeaddedtoit，andtheaggregateofprofitsisactuallylowerthanbefore，morethan=A36，000willneverthelessbeaddedtotherevenueofthecountry，butitwillbetotherevenueofthelandlordsandlabourers；theywillobtainmorethantheadditionalproduce，andwillfromtheirsituationbeenabledtoencroachevenontheformergainsofthecapitalist。Thus，supposethepriceofcorntobe=A34perquarter，andthattherefore，aswebeforecalculated，ofevery=A3720remainingtothefarmerafterpaymentofhisrent，=A3480wereretainedbyhim，and=A3240werepaidtohislabourers；whenthepriceroseto=A36perquarter，hewouldbeobligedtopayhislabourers=A3300andretainonly=A3420forprofits:hewouldbeobligedtopaythem=A3300toenablethemtoconsumethesamequantityofnecessariesasbefore，andnomore。Nowifthecapitalemployedweresolargeastoyieldahundredthousandtimes=A3720or=A372，000，000theaggregateofprofitswouldbe=A348，000，000whenwheatwasat=A34perquarter；andifbyemployingalargercapital，=A3105，000times=A3720wereobtainedwhenwheatwasatA36，or=A375，600，000，profitswouldactuallyfallfrom=A348，000，000to=A344，100，000or105，000times=A3420，andwageswouldrisefrom=A324，000，000to=A331，500，000。Wageswouldrisebecausemorelabourerswouldbeemployed，inproportiontocapital；andeachlabourerwouldreceivemoremoneywages；buttheconditionofthelabourer，aswehavealreadyshewn，wouldbeworse，inasmuchashewouldbeabletocommandalessquantityoftheproduceofthecountry。Theonlyrealgainerswouldbethelandlords；theywouldreceivehigherrents，first，becauseproducewouldbeofahighervalue，andsecondly，becausetheywouldhaveagreatlyincreasedproportionofthatproduce。

Althoughagreatervalueisproduced，agreaterproportionofwheatremainsofthatvalue，afterpayingrent，isconsumedbytheproducers，anditisthis，andthisalone，whichregulatesprofits。Whilstthelandyieldsabundantly，wagesmaytemporarilyrise，andtheproducersmayconsumemorethantheiraccustomedproportion；butthestimuluswhichwillthusbegiventopopulation，willspeedilyreducethelabourerstotheirusualconsumption。Butwhenpoorlandsaretakenintocultivation，orwhenmorecapitalandlabourareexpendedontheoldland，withalessreturnofproduce，theeffectmustbepermanent。A

greaterproportionofthatpartoftheproducewhichremainstobedivided，afterpayingrent，betweentheownersofstockandthelabourers，willbeapportionedtothelatter。Eachmanmay，andprobablywill，havealessabsolutequantity。butasmorelabourersareemployedinproportiontothewholeproduceretainedbythefarmer，thevalueofagreaterproportionofthewholeproducewillbeabsorbedbywages，andconsequentlythevalueofasmallerproportionwillbedevotedtoprofits。Thiswillnecessarilyberenderedpermanentbythelawsofnature，whichhavelimitedtheproductivepowersoftheland。

Thusweagainarriveatthesameconclusionwhichwehavebeforeattemptedtoestablish:-thatinallcountries，andalltimes，profitsdependonthequantityoflabourrequisitetoprovidenecessariesforthelabourers，onthatlandorwiththatcapitalwhichyieldsnorent。Theeffectsthenofaccumulationwillbedifferentindifferentcountries，andwilldependchieflyonthefertilityoftheland。Howeverextensiveacountrymaybewherethelandisofapoorquality，andwheretheimportationoffoodisprohibited，themostmoderateaccumulationsofcapitalwillbeattendedwithgreatreductionsintherateofprofit，andarapidriseinrent；andonthecontraryasmallbutfertilecountry，particularlyifitfreelypermitstheimportationoffood，mayaccumulatealargestockofcapitalwithoutanygreatdiminutionintherateofprofits，oranygreatincreaseintherentofland。IntheChapteronWages，wehaveendeavouredtoshewthatthemoneypriceofcommoditieswouldnotberaisedbyariseofwages，eitheronthesuppositionthatgold，thestandardofmoney，wastheproduceofthiscountry，orthatitwasimportedfromabroad。Butifitwereotherwise，ifthepricesofcommoditieswerepermanentlyraisedbyhighwages，thepropositionwouldnotbelesstrue，whichassertsthathighwagesinvariablyaffecttheemployersoflabour，bydeprivingthemofaportionoftheirrealprofits。Supposingthehatter，thehosier，andtheshoemaker，eachpaid=A310morewagesinthemanufactureofaparticularquantityoftheircommodities，andthatthepriceofhats，stockings，andshoes，rosebyasumsufficienttorepaythemanufacturerthe=A310；theirsituationwouldbenobetterthanifnosuchrisetookplace。

Ifthehosiersoldhisstockingsfor=A3110insteadof=A3100，hisprofitswouldbepreciselythesamemoneyamountasbefore；butashewouldobtaininexchangeforthisequalsum，onetenthlessofhats，shoes，andeveryothercommodity，andashecouldwithhisformeramountofsavingsemployfewerlabourersattheincreasedwages，andpurchasefewerrawmaterialsattheincreasedprices，hewouldbeinnobettersituationthanifhismoneyprofitshadbeenreallydiminishedinamount，andeverythinghadremainedatitsformerprice。ThusthenI

haveendeavouredtoshew，first，thatariseofwageswouldnotraisethepriceofcommodities，butwouldinvariablylowerprofits；andsecondly，thatifthepricesofallcommoditiescouldberaised，stilltheeffectonprofitswouldbethesame；andthatinfactthevalueofthemediumonlyinwhichpricesandprofitsareestimatedwouldbelowered。

Chapter7

OnForeignTradeNoextensionofforeigntradewillimmediatelyincreasetheamountofvalueinacountry，althoughitwillverypowerfullycontributetoincreasethemassofcommodities，andthereforethesumofenjoyments。

Asthevalueofallforeigngoodsismeasuredbythequantityoftheproduceofourlandandlabour，whichisgiveninexchangeforthem，weshouldhavenogreatervalue，ifbythediscoveryofnewmarkets，weobtaineddoublethequantityofforeigngoodsinexchangeforagivenquantityofours。IfbythepurchaseofEnglishgoodstotheamountof=A31，000，amerchantcanobtainaquantityofforeigngoods，whichhecansellintheEnglishmarketfor=A31，200，hewillobtain20percentprofitbysuchanemploymentofhiscapital；butneitherhisgains，northevalueofthecommoditiesimported，willbeincreasedordiminishedbythegreaterorsmallerquantityofforeigngoodsobtained。Whether，forexample，heimportstwenty-fiveorfiftypipesofwine，hisinterestcanbenowayaffected，ifatonetimethetwenty-fivepipes，andatanotherthefiftypipes，equallysellfor=A31，200。Ineithercasehisprofitwillbelimitedto=A3200，or20percentonhiscapital；andineithercasethesamevaluewillbeimportedintoEngland。Ifthefiftypipessoldformorethan=A31，200，theprofitsofthisindividualmerchantwouldexceedthegeneralrateofprofits，andcapitalwouldnaturallyflowintothisadvantageoustrade，tillthefallofthepriceofwinehadbroughteverythingtotheformerlevel。

Ithasindeedbeencontended，thatthegreatprofitswhicharesometimesmadebyparticularmerchantsinforeigntrade，willelevatethegeneralrateofprofitsinthecountry，andthattheabstractionofcapitalfromotheremployments，topartakeofthenewandbeneficialforeigncommerce，willraisepricesgenerally，andtherebyincreaseprofits。Ithasbeensaid，byhighauthority，thatlesscapitalbeingnecessarilydevotedtothegrowthofcorn，tothemanufactureofcloth，hats，shoes，&c。whilethedemandcontinuesthesame，thepriceofthesecommoditieswillbesoincreased，thatthefarmer，hatter，clothier，andshoemaker，willhaveanincreaseofprofits，aswellastheforeignmerchant。(19*)

Theywhoholdthisargumentagreewithme，thattheprofitsofdifferentemploymentshaveatendencytoconformtooneanother；toadvanceandrecedetogether。Ourvarianceconsistsinthis:Theycontend，thattheequalityofprofitswillbebroughtaboutbythegeneralriseofprofits；andIamofopinion，thattheprofitsofthefavouredtradewillspeedilysubsidetothegenerallevel。

For，first，Idenythatlesscapitalwillnecessarilybedevotedtothegrowthofcorn，tothemanufactureofcloth，hats，shoes，&c。unlessthedemandforthesecommoditiesbediminished；andifso，theirpricewillnotrise。Inthepurchaseofforeigncommodities，eitherthesame，alarger，oralessportionoftheproduceofthelandandlabourofEnglandwillbeemployed。Ifthesameportionbesoemployed，thenwillthesamedemandexistforcloth，shoes，corn，andhats，asbefore，andthesameportionofcapitalwillbedevotedtotheirproduction。If，inconsequenceofthepriceofforeigncommoditiesbeingcheaper，alessportionoftheannualproduceofthelandandlabourofEnglandisemployedinthepurchaseofforeigncommodities，morewillremainforthepurchaseofotherthings。Iftherebeagreaterdemandforhats，shoes，corn，&c。thanbefore，whichtheremaybe，theconsumersofforeigncommoditieshavinganadditionalportionoftheirrevenuedisposable，thecapitalisalsodisposablewithwhichthegreatervalueofforeigncommoditieswasbeforepurchased；sothatwiththeincreaseddemandforcorn，shoes，&c。

thereexistsalsothemeansofprocuringanincreasedsupply，andthereforeneitherpricesnorprofitscanpermanentlyrise。IfmoreoftheproduceofthelandandlabourofEnglandbeemployedinthepurchaseofforeigncommodities，lesscanbeemployedinthepurchaseofotherthings，andthereforefewerhats，shoes，&c。willberequired。Atthesametimethatcapitalisliberatedfromtheproductionofshoes，hats，&c。

moremustbeemployedinmanufacturingthosecommoditieswithwhichforeigncommoditiesarepurchased；andconsequentlyinallcasesthedemandforforeignandhomecommoditiestogether，asfarasregardsvalue，islimitedbytherevenueandcapitalofthecountry。Ifoneincreases，theothermustdiminish。Ifthequantityofwine，importedinexchangeforthesamequantityofEnglishcommodities，bedoubled，thepeopleofEnglandcaneitherconsumedoublethequantityofwinethattheydidbefore，orthesamequantityofwineandagreaterquantityofEnglishcommodities。Ifmyrevenuehadbeen=A31，000，withwhichI

purchasedannuallyonepipeofwinefor=A3100andacertainquantityofEnglishcommoditiesfor=A3900；whenwinefellto=A350perpipe，Imightlayoutthe=A350saved，eitherinthepurchaseofanadditionalpipeofwine，orinthepurchaseofmoreEnglishcommodities。IfIboughtmorewine，andeverywine-drinkerdidthesame，theforeigntradewouldnotbeintheleastdisturbed；thesamequantityofEnglishcommoditieswouldbeexportedinexchangeforwine，andweshouldreceivedoublethequantity，thoughnotdoublethevalueofwine。ButifI，andothers，contentedourselveswiththesamequantityofwineasbefore，fewerEnglishcommoditieswouldbeexported，andthewine-drinkersmighteitherconsumethecommoditieswhichwerebeforeexported，oranyothersforwhichtheyhadaninclination。Thecapitalrequiredfortheirproductionwouldbesuppliedbythecapitalliberatedfromtheforeigntrade。

Therearetwowaysinwhichcapitalmaybeaccumulated:itmaybesavedeitherinconsequenceofincreasedrevenue，orofdiminishedconsumption。Ifmyprofitsareraisedfrom=A31，000to=A31，200whilemyexpenditurecontinuesthesame，Iaccumulateannually=A3200morethanIdidbefore。IfIsave=A3200outofmyexpenditure，whilemyprofitscontinuethesame，thesameeffectwillbeproduced；=A3200perannumwillbeaddedtomycapital。Themerchantwhoimportedwineafterprofitshadbeenraisedfrom20percentto40percent，insteadofpurchasinghisEnglishgoodsfor=A31，000mustpurchasethemfor=A3857

2s。10d。，stillsellingthewinewhichheimportsinreturnforthosegoodsfor=A31，200；or，ifhecontinuedtopurchasehisEnglishgoodsfor=A31，000

mustraisethepriceofhiswineto=A31，400；hewouldthusobtain40

insteadof20percentprofitonhiscapital；butif，inconsequenceofthecheapnessofallthecommoditiesonwhichhisrevenuewasexpended，heandallotherconsumerscouldsavethevalueof=A3200outofevery=A31，000

theybeforeexpended，theywouldmoreeffectuallyaddtotherealwealthofthecountry；inonecase，thesavingswouldbemadeinconsequenceofanincreaseofrevenue，intheother，inconsequenceofdiminishedexpenditure。

If，bytheintroductionofmachinery，thegeneralityofthecommoditiesonwhichrevenuewasexpendedfell20percentinvalue，I

shouldbeenabledtosaveaseffectuallyasifmyrevenuehadbeenraised20percent；butinonecasetherateofprofitsisstationary，intheotheritisraised20percent-If，bytheintroductionofcheapforeigngoods，Icansave20percentfrommyexpenditure，theeffectwillbepreciselythesameasifmachineryhadloweredtheexpenseoftheirproduction，butprofitswouldnotberaised。

Itisnot，therefore，inconsequenceoftheextensionofthemarketthattherateofprofitisraised，althoughsuchextensionmaybeequallyefficaciousinincreasingthemassofcommodities，andmaytherebyenableustoaugmentthefundsdestinedforthemaintenanceoflabour，andthematerialsonwhichlabourmaybeemployed。Itisquiteasimportanttothehappinessofmankind，thatourenjoymentsshouldbeincreasedbythebetterdistributionoflabour，byeachcountryproducingthosecommoditiesforwhichbyitssituation，itsclimate，anditsothernaturalorartificialadvantages，itisadapted，andbytheirexchangingthemforthecommoditiesofothercountries，asthattheyshouldbeaugmentedbyariseintherateofprofits。

Ithasbeenmyendeavourtoshewthroughoutthiswork，thattherateofprofitscanneverbeincreasedbutbyafallinwages，andthattherecanbenopermanentfallofwagesbutinconsequenceofafallofthenecessariesonwhichwagesareexpended。If，therefore，bytheextensionofforeigntrade，orbyimprovementsinmachinery，thefoodandnecessariesofthelabourercanbebroughttomarketatareducedprice，profitswillrise。If，insteadofgrowingourowncorn，ormanufacturingtheclothingandothernecessariesofthelabourer，wediscoveranewmarketfromwhichwecansupplyourselveswiththesecommoditiesatacheaperprice，wageswillfallandprofitsrise；butifthecommoditiesobtainedatacheaperrate，bytheextensionofforeigncommerce，orbytheimprovementofmachinery，beexclusivelythecommoditiesconsumedbytherich，noalterationwilltakeplaceintherateofprofits。

Therateofwageswouldnotbeaffected，althoughwine，velvets，silks，andotherexpensivecommoditiesshouldfall50percent，andconsequentlyprofitswouldcontinueunaltered。

Foreigntrade，then，thoughhighlybeneficialtoacountry，asitincreasestheamountandvarietyoftheobjectsonwhichrevenuemaybeexpended，andaffords，bytheabundanceandcheapnessofcommodities，incentivestosaving，andtotheaccumulationofcapital，hasnotendencytoraisetheprofitsofstock，unlessthecommoditiesimportedbeofthatdescriptiononwhichthewagesoflabourareexpended。

Theremarkswhichhavebeenmaderespectingforeigntrade，applyequallytohometrade。Therateofprofitsisneverincreasedbyabetterdistributionoflabour，bytheinventionofmachinery，bytheestablishmentofroadsandcanals，orbyanymeansofabridginglaboureitherinthemanufactureorintheconveyanceofgoods。Thesearecauseswhichoperateonprice，andneverfailtobehighlybeneficialtoconsumers；sincetheyenablethemwiththesamelabour，orwiththevalueoftheproduceofthesamelabour，toobtaininexchangeagreaterquantityofthecommoditytowhichtheimprovementisapplied；buttheyhavenoeffectwhateveronprofit。Ontheotherhand，everydiminutioninthewagesoflabourraisesprofits，butproducesnoeffectonthepriceofcommodities。Oneisadvantageoustoallclasses，forallclassesareconsumers；theotherisbeneficialonlytoproducers；theygainmore，buteverythingremainsatitsformerprice。Inthefirstcasetheygetthesameasbefore；buteverythingonwhichtheirgainsareexpended，isdiminishedinexchangeablevalue。

Thesamerulewhichregulatestherelativevalueofcommoditiesinonecountry，doesnotregulatetherelativevalueofthecommoditiesexchangedbetweentwoormorecountries。

Underasystemofperfectlyfreecommerce，eachcountrynaturallydevotesitscapitalandlabourtosuchemploymentsasaremostbeneficialtoeach。Thispursuitofindividualadvantageisadmirablyconnectedwiththeuniversalgoodofthewhole。Bystimulatingindustry，byreGardingingenuity，andbyusingmostefficaciouslythepeculiarpowersbestowedbynature，itdistributeslabourmosteffectivelyandmosteconomically……while，byincreasingthegeneralmassofproductions，itdiffusesgeneralbenefit，andbindstogetherbyonecommontieofinterestandintercourse，theuniversalsocietyofnationsthroughoutthecivilizedworld。ItisthisprinciplewhichdeterminesthatwineshallbemadeinFranceandPortugal，thatcornshallbegrowninAmericaandPoland，andthathardwareandothergoodsshallbemanufacturedinEngland。

Inoneandthesamecountry，profitsare，generallyspeaking，alwaysonthesamelevel；ordifferonlyastheemploymentofcapitalmaybemoreorlesssecureandagreeable。Itisnotsobetweendifferentcountries。IftheprofitsofcapitalemployedinYorkshire，shouldexceedthoseofcapitalemployedinLondon，capitalwouldspeedilymovefromLondontoYorkshire，andanequalityofprofitswouldbeeffected；butifinconsequenceofthediminishedrateofproductioninthelandsofEngland，fromtheincreaseofcapitalandpopulation，wagesshouldrise，andprofitsfall，itwouldnotfollowthatcapitalandpopulationwouldnecessarilymovefromEnglandtoHolland，orSpain，orRussia，whereprofitsmightbehigher。

IfPortugalhadnocommercialconnexionwithothercountries，insteadofemployingagreatpartofhercapitalandindustryintheproductionofwines，withwhichshepurchasesforherownusetheclothandhardwareofothercountries，shewouldbeobligedtodevoteapartofthatcapitaltothemanufactureofthosecommodities，whichshewouldthusobtainprobablyinferiorinqualityaswellasquantity。

ThequantityofwinewhichsheshallgiveinexchangefortheclothofEngland，isnotdeterminedbytherespectivequantitiesoflabourdevotedtotheproductionofeach，asitwouldbe，ifbothcommoditiesweremanufacturedinEngland，orbothinPortugal。

Englandmaybesocircumstanced，thattoproducetheclothmayrequirethelabourof100menforoneyear；andifsheattemptedtomakethewine，itmightrequirethelabourof120menforthesametime。

Englandwouldthereforefinditherinteresttoimportwine，andtopurchaseitbytheexportationofcloth。

ToproducethewineinPortugal，mightrequireonlythelabourof80

menforoneyear，andtoproducetheclothinthesamecountry，mightrequirethelabourof90menforthesametime。Itwouldthereforebeadvantageousforhertoexportwineinexchangeforcloth。Thisexchangemighteventakeplace，notwithstandingthatthecommodityimportedbyPortugalcouldbeproducedtherewithlesslabourthaninEngland。Thoughshecouldmaketheclothwiththelabourof90men，shewouldimportitfromacountrywhereitrequiredthelabourof100

mentoproduceit，becauseitwouldbeadvantageoustoherrathertoemployhercapitalintheproductionofwine，forwhichshewouldobtainmoreclothfromEngland，thanshecouldproducebydivertingaportionofhercapitalfromthecultivationofvinestothemanufactureofcloth。

ThusEnglandwouldgivetheproduceofthelabourof100men，fortheproduceofthelabourof80。Suchanexchangecouldnottakeplacebetweentheindividualsofthesamecountry。Thelabourof100

Englishmencannotbegivenforthatof80Englishmen，buttheproduceofthelabourof100Englishmenmaybegivenfortheproduceofthelabourof80Portuguese，60Russians，or120EastIndians。Thedifferenceinthisrespect，betweenasinglecountryandmany，iseasilyaccountedfor，byconsideringthedifficultywithwhichcapitalmovesfromonecountrytoanother，toseekamoreprofitableemployment，andtheactivitywithwhichitinvariablypassesfromoneprovincetoanotherinthesamecountry。(20*)

ItwouldundoubtedlybeadvantageoustothecapitalistsofEngland，andtotheconsumersinbothcountries，thatundersuchcircumstances，thewineandtheclothshouldbothbemadeinPortugal，andthereforethatthecapitalandlabourofEnglandemployedinmakingcloth，shouldberemovedtoPortugalforthatpurpose。Inthatcase，therelativevalueofthesecommoditieswouldberegulatedbythesameprinciple，asifoneweretheproduceofYorkshire，andtheotherofLondon:andineveryothercase，ifcapitalfreelyflowedtowardsthosecountrieswhereitcouldbemostprofitablyemployed，therecouldbenodifferenceintherateofprofit，andnootherdifferenceintherealorlabourpriceofcommodities，thantheadditionalquantityoflabourrequiredtoconveythemtothevariousmarketswheretheyweretobesold。

Experience，however，shews，thatthefanciedorrealinsecurityofcapital，whennotundertheimmediatecontrolofitsowner，togetherwiththenaturaldisinclinationwhicheverymanhastoquitthecountryofhisbirthandconnexions，andintrusthimselfwithallhishabitsfixed，toastrangegovernmentandnewlaws，checkstheemigrationofcapital。

Thesefeelings，whichIshouldbesorrytoseeweakened，inducemostmenofpropertytobesatisfiedwithalowrateofprofitsintheirowncountry，ratherthanseekamoreadvantageousemploymentfortheirwealthinforeignnations。

Goldandsilverhavingbeenchosenforthegeneralmediumofcirculation，theyare，bythecompetitionofcommerce，distributedinsuchproportionsamongstthedifferentcountriesoftheworld，astoaccommodatethemselvestothenaturaltrafficwhichwouldtakeplaceifnosuchmetalsexisted，andthetradebetweencountrieswerepurelyatradeofbarter。

Thus，clothcannotbeimportedintoPortugal，unlessitsellthereformoregoldthanitcostinthecountryfromwhichitwasimported；andwinecannotbeimportedintoEngland，unlessitwillsellformoretherethanitcostinPortugal。Ifthetradewerepurelyatradeofbarter，itcouldonlycontinuewhilstEnglandcouldmakeclothsocheapastoobtainagreaterquantityofwinewithagivenquantityoflabour，bymanufacturingcloththanbygrowingvines；andalsowhilsttheindustryofPortugalwereattendedbythereverseeffects。NowsupposeEnglandtodiscoveraprocessformakingwine，sothatitshouldbecomeherinterestrathertogrowitthanimportit；shewouldnaturallydivertaportionofhercapitalfromtheforeigntradetothehometrade；shewouldceasetomanufactureclothforexportation，andwouldgrowwineforherself。Themoneypriceofthesecommoditieswouldberegulatedaccordingly；winewouldfallherewhileclothcontinuedatitsformerprice，andinPortugalnoalterationwouldtakeplaceinthepriceofeithercommodity。Clothwouldcontinueforsometimetobeexportedfromthiscountry，becauseitspricewouldcontinuetobehigherinPortugalthanhere；butmoneyinsteadofwinewouldbegiveninexchangeforit，tilltheaccumulationofmoneyhere，anditsdiminutionabroad，shouldsooperateontherelativevalueofclothinthetwocountries，thatitwouldceasetobeprofitabletoexportit。Iftheimprovementinmakingwinewereofaveryimportantdescription，itmightbecomeprofitableforthetwocountriestoexchangeemployments；forEnglandtomakeallthewine，andPortugalalltheclothconsumedbythem；butthiscouldbeeffectedonlybyanewdistribution。ofthepreciousmetals，whichshouldraisethepriceofclothinEngland，andloweritinPortugal。TherelativepriceofwinewouldfallinEnglandinconsequenceoftherealadvantagefromtheimprovementofitsmanufacture；thatistosay，itsnaturalpricewouldfall；therelativepriceofclothwouldrisetherefromtheaccumulationofmoney。

Thus，supposebeforetheimprovementinmakingwineinEngland，thepriceofwineherewere=A350perpipe，andthepriceofacertainquantityofclothwere=A345，whilstinPortugalthepriceofthesamequantityofwinewas=A345，andthatofthesamequantityofcloth=A350；

winewouldbeexportedfromPortugalwithaprofitof=A35andclothfromEnglandwithaprofitofthesameamount。

Supposethat，aftertheimprovement，winefallsto=A345inEngland，theclothcontinuingatthesameprice。Everytransactionincommerceisanindependenttransaction。WhilstamerchantcanbuyclothinEnglandfor=A345andsellitwiththeusualprofitinPortugal，hewillcontinuetoexportitfromEngland。HisbusinessissimplytopurchaseEnglishcloth，andtopayforitbyabillofexchange，whichhepurchaseswithPortuguesemoney。Itistohimofnoimportancewhatbecomesofthismoney……hehasdischargedhisdebtbytheremittanceofthebill。Histransactionisundoubtedlyregulatedbythetermsonwhichhecanobtainthisbill，buttheyareknowntohimatthetime；andthecauseswhichmayinfluencethemarketpriceofbills，ortherateofexchange，isnoconsiderationofhis。

IfthemarketsbefavourablefortheexportationofwinefromPortugaltoEngland，theexporterofthewinewillbeasellerofabill，whichwillbepurchasedeitherbytheimporterofthecloth，orbythepersonwhosoldhimhisbill；andthuswithoutthenecessityofmoneypassingfromeithercountry，theexportersineachcountrywillbepaidfortheirgoods。

Withouthavinganydirecttransactionwitheachother，themoneypaidinPortugalbytheimporterofclothwillbepaidtothePortugueseexporterofwine；andinEnglandbythenegotiationofthesamebill，theexporteroftheclothwillbeauthorizedtoreceiveitsvaluefromtheimporterofwine。

ButifthepricesofwineweresuchthatnowinecouldbeexportedtoEngland，theimporterofclothwouldequallypurchaseabill；butthepriceofthatbillwouldbehigher，fromtheknowledgewhichthesellerofitwouldpossess，thattherewasnocounterbillinthemarketbywhichhecouldultimatelysettlethetransactionsbetweenthetwocountries；hemightknowthatthegoldorsilvermoneywhichhereceivedinexchangeforhisbill，mustbeactuallyexportedtohiscorrespondentinEngland，toenablehimtopaythedemandwhichhehadauthorizedtobemadeuponhim，andhemightthereforechargeinthepriceofhisbillalltheexpensestobeincurred，togetherwithhisfairandusualprofit。

IfthenthispremiumforabillonEnglandshouldbeequaltotheprofitonimportingcloth，theimportationwouldofcoursecease；butifthepremiumonthebillwereonly2percent，iftobeenabledtopayadebtinEnglandof=A3100，=A3102shouldbepaidinPortugal，whilstclothwhichcost=A345wouldsellfor=A350，clothwouldbeimported，billswouldbebought，andmoneywouldbeexported，tillthediminutionofmoneyinPortugal，anditsaccumulationinEngland，hadproducedsuchastateofpricesaswouldmakeitnolongerprofitabletocontinuethesetransactions。

Butthediminutionofmoneyinonecountry，anditsincreaseinanother，donotoperateonthepriceofonecommodityonly，butonthepricesofall，andthereforethepriceofwineandclothwil1bebothraisedinEngland，andbothloweredinPortugal。Thepriceofcloth，frombeing=A345inonecountryand=A350intheother，wouldprobablyfallto=A349or=A348inPortugal，andriseto=A346or=A347inEngland，andnotaffordasufficientprofitafterpayingapremiumforabilltoinduceanymerchanttoimportthatcommodity。

Itisthusthatthemoneyofeachcountryisapportionedtoitinsuchquantitiesonlyasmaybenecessarytoregulateaprofitabletradeofbarter。Englandexportedclothinexchangeforwine，because，bysodoingherindustrywasrenderedmoreproductivetoher；shehadmoreclothandwinethanifshehadmanufacturedbothforherself；andPortugalimportedclothandexportedwine，becausetheindustryofPortugalcouldbemorebeneficiallyemployedforbothcountriesinproducingwine。LettherebemoredifficultyinEnglandinproducingcloth，orinPortugalinproducingwine，orlettherebemorefacilityinEnglandinproducingwine，orinPortugalinproducingcloth，andthetrademustimmediatelycease。

NochangewhatevertakesplaceinthecircumstancesofPortugal；butEnglandfindsthatshecanemployherlabourmoreproductivelyinthemanufactureofwine，andinstantlythetradeofbarterbetweenthetwocountrieschanges。NotonlyistheexportationofwinefromPortugalstopped，butanewdistributionofthepreciousmetalstakesplace，andherimportationofclothisalsoprevented。

Bothcountrieswouldprobablyfindittheirinteresttomaketheirownwineandtheirowncloth；butthissingularresultwouldtakeplace:inEngland，thoughwinewouldbecheaper，clothwouldbeelevatedinprice，morewouldbepaidforitbytheconsumer；whileinPortugaltheconsumers，bothofclothandofwine，wouldbeabletopurchasethosecommoditiescheaper。Inthecountrywheretheimprovementwasmade，priceswouldbeenhanced；inthatwherenochangehadtakenplace，butwheretheyhadbeendeprivedofaprofitablebranchofforeigntrade，priceswouldfall。

This，however，isonlyaseemingadvantagetoPortugal，forthequantityofclothandwinetogetherproducedinthatcountrywouldbediminished，whilethequantityproducedinEnglandwouldbeincreased。Moneywouldinsomedegreehavechangeditsvalueinthetwocountries，itwouldbeloweredinEnglandandraisedinPortugal。

Estimatedinmoney，thewholerevenueofPortugalwouldbediminished；estimatedinthesamemedium，thewholerevenueofEnglandwouldbeincreased。

Thusthenitappears，thattheimprovementofamanufactureinanycountrytendstoalterthedistributionofthepreciousmetalsamongstthenationsoftheworld:ittendstoincreasethequantityofcommodities，atthesametimethatitraisesgeneralpricesinthecountrywheretheimprovementtakesplace。

Tosimplifythequestion，Ihavebeensupposingthetradebetweentwocountriestobeconfinedtotwocommodities-towineandcloth；butitiswellknownthatmanyandvariousarticlesenterintothelistofexportsandimports。Bytheabstractionofmoneyfromonecountry，andtheaccumulationofitinanother，allcommoditiesareaffectedinprice，andconsequentlyencouragementisgiventotheexportationofmanymorecommoditiesbesidesmoney，whichwillthereforepreventsogreataneffectfromtakingplaceonthevalueofmoneyinthetwocountriesasmightotherwisebeexpected。

Besidestheimprovementsinartsandmachinery，therearevariousothercauseswhichareconstantlyoperatingonthenaturalcourseoftrade，andwhichinterferewiththeequilibrium，andtherelativevalueofmoney。Bountiesonexportationorimportation，newtaxesoncommodities，sometimesbytheirdirect，andatothertimes，bytheirindirectoperation，disturbthenaturaltradeofbarter，andproduceaconsequentnecessityofimportingorexportingmoney，inorderthatpricesmaybeaccommodatedtothenaturalcourseofcommerce；andthiseffectisproducednotonlyinthecountrywherethedisturbingcausetakesplace，but，inagreaterorlessdegree，ineverycountryofthecommercialworld。

Thiswillinsomemeasureaccountforthedifferentvalueofmoneyindifferentcountries；itwillexplaintouswhythepricesofhomecommodities，andthoseofgreatbulk，thoughofcomparativelysmallvalue，are，independentlyofothercauses，higherinthosecountrieswheremanufacturesflourish。Oftwocountrieshavingpreciselythesamepopulation，andthesamequantityoflandofequalfertilityincultivation，withthesameknowledgetooofagriculture，thepricesofrawproducewillbehighestinthatwherethegreaterskill，andthebettermachineryisusedinthemanufactureofexportablecommodities。Therateofprofitswillprobablydifferbutlittle；forwages，ortherealrewardofthelabourer，maybethesameinboth；butthosewages，aswellasrawproduce，willberatedhigherinmoneyinthatcountry，intowhich，fromtheadvantagesattendingtheirskillandmachinery，anabundanceofmoneyisimportedinexchangefortheirgoods。

Ofthesetwocountries，ifonehadtheadvantageinthemanufactureofgoodsofonequality，andtheotherinthemanufactureofgoodsofanotherquality，therewouldbenodecidedinfluxofthepreciousmetalsintoeither；butiftheadvantageveryheavilypreponderatedinfavourofeither，thateffectwouldbeinevitable。

Intheformerpartofthiswork，wehaveassumed，forthepurposeofargument，thatmoneyalwayscontinuedofthesamevalue；wearenowendeavouringtoshewthatbesidestheordinaryvariationsinthevalueofmoney，andthosewhicharecommontothewholecommercialworld，therearealsopartialvariationstowhichmoneyissubjectinparticularcountries；andinfact，thatthevalueofmoneyisneverthesameinanytwocountries，dependingasitdoesonrelativetaxation，onmanufacturingskill，ontheadvantagesofclimate，naturalproductions，andmanyothercauses。

Although，however，moneyissubjecttosuchperpetualvariations，andconsequentlythepricesofthecommoditieswhicharecommontomostcountries，arealsosubjecttoconsiderabledifference，yetnoeffectwillbeproducedontherateofprofits，eitherfromtheinfluxoreffluxofmoney。Capitalwillnotbeincreased，becausethecirculatingmediumisaugmented。Iftherentpaidbythefarmertohislandlord，andthewagestohislabourers，be20percenthigherinonecountrythananother，andifatthesametimethenominalvalueofthefarmer'scapitalbe20percentmore，hewillreceivepreciselythesamerateofprofits，althoughheshouldsellhisrawproduce20percenthigher。

Profits，itcannotbetoooftenrepeated，dependonwages；notonnominal，butrealwages；notonthenumberofpoundsthatmaybeannuallypaidtothelabourer，butonthenumberofdays'work，necessarytoobtainthosepounds。Wagesmaythereforebepreciselythesameintwocountries；theymaybeartoothesameproportiontorent，andtothewholeproduceobtainedfromtheland，althoughinoneofthosecountriesthelabourershouldreceivetenshillingsperweek，andintheothertwelve。

Intheearlystatesofsociety，whenmanufactureshavemadelittleprogress，andtheproduceofallcountriesisnearlysimilar，consistingofthebulkyandmostusefulcommodities，thevalueofmoneyindifferentcountrieswillbechieflyregulatedbytheirdistancefromthemineswhichsupplythepreciousmetals；butastheartsandimprovementsofsocietyadvance，anddifferentnationsexcelinparticularmanufactures，althoughdistancewillstillenterintothecalculation，thevalueofthepreciousmetalswillbechieflyregulatedbythesuperiorityofthosemanufactures。

Supposeallnationstoproducecorn，cattle，andcoarseclothingonly，andthatitwasbytheexportationofsuchcommoditiesthatgoldcouldbeobtainedfromthecountrieswhichproducedthem，orfromthosewhoheldtheminsubjection；goldwouldnaturallybeofgreaterexchangeablevalueinPolandthaninEngland，onaccountofthegreaterexpenseofsendingsuchabulkycommodityascornthemoredistantvoyage，andalsothegreaterexpenseattendingtheconveyingofgoldtoPoland。

Thisdifferenceinthevalueofgold，orwhichisthesamething，thisdifferenceinthepriceofcorninthetwocountries，wouldexist，althoughthefacilitiesofproducingcorninEnglandshouldfarexceedthoseofPoland，fromthegreaterfertilityoftheland，andthesuperiorityintheskillandimplementsofthelabourer。

IfhoweverPolandshouldbethefirsttoimprovehermanufactures，ifsheshouldsucceedinmakingacommoditywhichwasgenerallydesirable，includinggreatvalueinlittlebulk，orifsheshouldbeexclusivelyblessedwithsomenaturalproduction，generallydesirable，andnotpossessedbyothercountries，shewouldobtainanadditionalquantityofgoldinexchangeforthiscommodity，whichwouldoperateonthepriceofhercorn，cattle，andcoarseclothing。Thedisadvantageofdistancewouldprobablybemorethancompensatedbytheadvantageofhavinganexportablecommodityofgreatvalue，andmoneywouldbepermanentlyoflowervalueinPolandthaninEngland。If，onthecontrary，theadvantageofskillandmachinerywerepossessedbyEngland，anotherreasonwouldbeaddedtothatwhichbeforeexisted，whygoldshouldbelessvaluableinEnglandthaninPoland，andwhycorn，cattle，andclothing，shouldbeatahigherpriceintheformercountry。

TheseIbelievetobetheonlytwocauseswhichregulatethecomparativevalueofmoneyinthedifferentcountriesoftheworld；foralthoughtaxationoccasionsadisturbanceoftheequilibriumofmoney，itdoessoby。deprivingthecountryinwhichitisimposedofsomeoftheadvantagesattendingskill，industry，andclimate。

Ithasbeenmyendeavourcarefullytodistinguishbetweenalowvalue=

ofmoney，andahighvalueofcorn，oranyothercommoditywithwhichmoneymaybecompared。Thesehavebeengenerallyconsideredasmeaningthesamething；butitisevident，thatwhencornrisesfromfivetotenshillingsabushel，itmaybeowingeithertoafallinthevalueofmoney，ortoariseinthevalueofcorn。Thuswehaveseen，thatfromthenecessityofhavingrecoursesuccessivelytolandofaworseandworsequality，inordertofeedanincreasingpopulation，cornmustriseinrelativevaluetootherthings。Ifthereforemoneycontinuepermanentlyofthesamevalue，cornwillexchangeformoreofsuchmoney，thatistosay，itwillriseinprice。Thesameriseinthepriceofcornwillbeproducedbysuchimprovementofmachineryinmanufactures，asshallenableustomanufacturecommoditieswithpeculiaradvantages:fortheinfluxofmoneywillbetheconsequence；itwillfallinvalue，andthereforeexchangeforlesscorn。Buttheeffectsresultingfromahighpriceofcornwhenproducedbytheriseinthevalueofcorn，andwhencausedbyafallinthevalueofmoney，aretotallydifferent。Inbothcasesthemoneypriceofwageswillrise，butifitbeinconsequenceofthefallinthevalueofmoney，notonlywagesandcorn，butallothercommoditieswillrise。Ifthemanufacturerhasmoretopayforwages，hewillreceivemoreforhismanufacturedgoods，andtherateofprofitswillremainunaffected。Butwhentheriseinthepriceofcornistheeffectofthedifficultyofproduction，profitswillfall；forthemanufacturerwillbeobligedtopaymorewages，andwillnotbeenabledtoremuneratehimselfbyraisingthepriceofhismanufacturedcommodity。

Anyimprovementinthefacilityofworkingthemines，bywhichthepreciousmetalsmaybeproducedwithalessquantityoflabour，willsinkthevalueofmoneygenerally。Itwillthenexchangeforfewercommoditiesinallcountries；butwhenanyparticularcountryexcelsinmanufactures，soastooccasionaninfluxofmoneytowardsit，thevalueofmoneywillbelower，andthepricesofcornandlabourwillberelativelyhigherinthatcountry，thaninanyother。

Thishighervalueofmoneywillnotbeindicatedbytheexchange；

billsmaycontinuetobenegotiatedatpar，althoughthepricesofcornandlabourshouldbe10，20，or30percenthigherinonecountrythananother。Underthecircumstancessupposed，suchadifferenceofpricesisthenaturalorderofthings，andtheexchangecanonlybeatpar，whenasufficientquantityofmoneyisintroducedintothecountryexcellinginmanufactures，soastoraisethepriceofitscornandlabour。Ifforeigncountriesshouldprohibittheexportationofmoney，andcouldsuccessfullyenforceobediencetosuchalaw，theymightindeedpreventtheriseinthepricesofthecornandlabourofthemanufacturingcountry；forsuchrisecanonlytakeplaceaftertheinfluxofthepreciousmetals，supposingpapermoneynottobeused；buttheycouldnotpreventtheexchangefrombeingveryunfavourabletothem。IfEnglandwerethemanufacturingcountry，anditwerepossibletopreventtheimportationofmoney，theexchangewithFrance，Holland，andSpain，mightbe5，10，or20percentagainstthosecountries。

Wheneverthecurrentofmoneyisforciblystopped，andwhenmoneyispreventedfromsettlingatitsjustlevel，therearenolimitstothepossiblevariationsoftheexchange。Theeffectsaresimilartothosewhichfollow，whenapapermoney，notexchangeableforspecieatthewilloftheholder，isforcedintocirculation。Suchacurrencyisnecessarilyconfinedtothecountrywhereitisissued:itcannot，whentooabundant，diffuseitselfgenerallyamongstothercountries。Thelevelofcirculationisdestroyed，andtheexchangewillinevitablybeunfavourabletothecountrywhereitisexcessiveinquantity:justsowouldbetheeffectsofametalliccirculation，ifbyforciblemeans，bylawswhichcouldnotbeevaded，moneyshouldbedetainedinacountry，whenthestreamoftradegaveitanimpetustowardsothercountries。

Wheneachcountryhaspreciselythequantityofmoneywhichitoughttohave，moneywillnotindeedbeofthesamevalueineach，forwithrespecttomanycommoditiesitmaydiffer，5，10，oreven20percent，buttheexchangewillbeatpar。OnehundredpoundsinEngland，orthesilverwhichisin=A3100，willpurchaseabillof=A3100，oranequalquantityofsilverinFrance，Spain，orHolland。

Inspeakingoftheexchangeandthecomparativevalueofmoneyindifferentcountries，wemustnotintheleastrefertothevalueofmoneyestimatedincommodities，ineithercountry。Theexchangeisneverascertainedbyestimatingthecomparativevalueofmoneyincorn，cloth，oranycommoditywhatever，butbyestimatingthevalueofthecurrencyofonecountry，inthecurrencyofanother。

Itmayalsobeascertainedbycomparingitwithsomestandardcommontobothcountries。IfabillonEnglandfor=A3100willpurchasethesamequantityofgoodsinFranceorSpain，thatabillonHamburghforthesamesumwilldo，theexchangebetweenHamburghandEnglandisatpar，butifabillonEnglandfor=A3130，willpurchasenomorethanabillonHamburghfor=A3100，theexchangeis30percentagainstEngland。

InEngland=A3100maypurchaseabill，ortherightofreceivingA3101inHolland，=A3102inFrance，and=A3105inSpain。TheexchangewithEnglandis，inthatcase，saidtobe1percentagainstHolland，2percentagainstFrance，and5percentagainstSpain。Itindicatesthatthelevelofcurrencyishigherthanitshouldbeinthosecountries，andthecomparativevalueoftheircurrencies，andthatofEngland，wouldbeimmediatelyrestoredtopar，byabstractingfromtheirs，orbyaddingtothatofEngland。

Thosewhomaintainedthatourcurrencywasdepreciatedduringthelasttenyears，whentheexchangevariedfrom20to30percentagainstthiscountry，havenevercontended，astheyhavebeenaccusedofdoing，thatmoneycouldnotbemorevaluableinonecountrythananother，ascomparedwithvariouscommodities；buttheydidcontend，that=A3130

couldnotbedetainedinEngland，unlessitwasdepreciated，whenitwasofnomorevalue，estimatedinthemoneyofHamburgh，orofHolland，thanthebullionin=A3100。

Bysending=A3130goodEnglishpoundssterlingtoHamburgh，evenatanexpenseof=A35，Ishouldbepossessedthereof=A3125；whatthencouldmakemeconsenttogive=A3130forabillwhichwouldgiveme=A3100inHamburgh，butthatmypoundswerenotgoodpoundssterling?-theyweredeteriorated，weredegradedinintrinsicvaluebelowthepoundssterlingofHamburgh，andifactuallysentthere，atanexpenseof=A35，wouldsellonlyfor=A3100。Withmetallicpoundssterling，itisnotdeniedthatmy=A3130wouldprocureme=A3125inHamburgh，butwithpaperpoundssterlingIcanonlyobtain=A3100；andyetitwasmaintainedthat=A3130inpaper，wasofequalvaluewith=A3130insilverorgold。

Someindeedmorereasonablymaintained，that=A3130inpaperwasnotofequalvaluewith=A3130inmetallicmoney；buttheysaidthatitwasthemetallicmoneywhichhadchangeditsvalue，andnotthepapermoney。

Theywishedtoconfinethemeaningoftheworddepreciationtoanactualfallofvalue，andnottoacomparativedifferencebetweenthevalueofmoney，andthestandardbywhichbylawitisregulated。OnehundredpoundsofEnglishmoneywasformerlyofequalvaluewith，andcouldpurchase=A3100ofHamburghmoney……inanyothercountryabillof=A3100onEngland，oronHamburgh，couldpurchasepreciselythesamequantityofcommodities。Toobtainthesamethings，Iwaslatelyobligedtogive=A3130Englishmoney，whenHamburghcouldobtainthemfor=A3100Hamburghmoney。IfEnglishmoneywasofthesamevaluethenasbefore，Hamburghmoneymusthaveriseninvalue。Butwhereistheproofofthis?HowisittobeascertainedwhetherEnglishmoneyhasfallen，orHamburghmoneyhasrisen?thereisnostandardbywhichthiscanbedetermined。Itisapleawhichadmitsofnoproof，andcanneitherbepositivelyaffirmed，norpositivelycontradicted。Thenationsoftheworldmusthavebeenearlyconvinced，thattherewasnostandardofvalueinnature，towhichtheymightunerringlyrefer，andthereforechoseamedium，whichonthewholeappearedtothemlessvariablethananyothercommodity。

Tothisstandardwemustconformtillthelawischanged，andtillsomeothercommodityisdiscovered，bytheuseofwhichweshallobtainamoreperfectstandard，thanthatwhichwehaveestablished。Whilegoldisexclusivelythestandardinthiscountry，moneywillbedepreciated，whenapoundsterlingisnotofequalvaluewith5dwts。and3grs。ofstandardgold，andthat，whethergoldrisesorfallsingeneralvalue。

Chapter8

OnTaxesTaxesareaportionoftheproduceofthelandandlabourofacountry，placedatthedisposalofthegovernment；andarealwaysultimatelypaid，eitherfromthecapital，orfromtherevenueofthecountry。

Wehavealreadyshewnhowthecapitalofacountryiseitherfixedorcirculating，accordingasitisofamoreorofalessdurablenature。Itisdifficulttodefinestrictly，wherethedistinctionbetweencirculatingandfixedcapitalbegins；fortherearealmostinfinitedegreesinthedurabilityofcapital。Thefoodofacountryisconsumedandreproducedatleastonceineveryyear；theclothingofthelabourerisprobablynotconsumedandreproducedinlessthantwoyears；whilsthishouseandfurniturearecalculatedtoendureforaperiodoftenortwentyyears。

Whentheannualproductionsofacountrymorethanreplaceitsannualconsumption，itissaidtoincreaseitscapital；whenitsannualconsumptionisnotatleastreplacedbyitsannualproduction，itissaidtodiminishitscapital。Capitalmaythereforebeincreasedbyanincreasedproduction，orbyadiminishedunproductiveconsumption。

Iftheconsumptionofthegovernment，whenincreasedbythelevyofadditionaltaxes，bemeteitherbyanincreasedproduction，orbyadiminishedconsumptiononthepartofthepeople，thetaxeswillfalluponrevenue，andthenationalcapitalwillremainunimpaired；butiftherebenoincreasedproductionordiminishedunproductiveconsumptiononthepartofthepeople，thetaxeswillnecessarilyfalloncapital，thatistosay，theywillimpairthefundallottedtoproductiveconsumption。(21*)

Inproportionasthecapitalofacountryisdiminished，itsproductionswillbenecessarilydiminished；and，therefore，ifthesameunproductiveexpenditureonthepartofthepeopleandofthegovernmentcontinue，withaconstantlydiminishingannualreproduction，theresourcesofthepeopleandthestatewillfallawaywithincreasingrapidity，anddistressandruinwillfollow。

NotwithstandingtheimmenseexpenditureoftheEnglishgovernmentduringthelasttwentyyears，therecanbelittledoubtbutthattheincreasedproductiononthepartofthepeoplehasmorethancompensatedforit。Thenationalcapitalhasnotmerelybeenunimpaired，ithasbeengreatlyincreased，andtheannualrevenueofthepeople，evenafterthepaymentoftheirtaxes，isprobablygreateratthepresenttimethanatanyformerperiodofourhistory。

Fortheproofofthiswemightrefertotheincreaseofpopulation-totheextensionofagriculture-totheincreaseofshippingandmanufactures-tothebuildingofdocks-totheopeningofnumerouscanals，aSwellastomanyotherexpensiveundertakings；alldenotinganincreasebothofcapitalandofannualproduction。

Still，however，itiscertainthatbutfortaxationthisincreaseofcapitalwouldhavebeenmuchgreater。Therearenotaxeswhichhavenotatendencytolessenthepowertoaccumulate。Alltaxesmusteitherfalloncapitalorrevenue。Iftheyencroachoncapital，theymustproportionablydiminishthatfundbywhoseextenttheextentoftheproductiveindustryofthecountrymustalwaysberegulated；andiftheyfallonrevenue，theymusteitherlessenaccumulation，orforcethecontributorstosavetheamountofthetax，bymakingacorrespondingdiminutionoftheirformerunproductiveconsumptionofthenecessariesandluxuriesoflife。Sometaxeswillproducetheseeffectsinamuchgreaterdegreethanothers；butthegreateviloftaxationistobefound，notsomuchinanyselectionofitsobjects，asinthegeneralamountofitseffectstakencollectively。

Taxesarenotnecessarilytaxesoncapital，becausetheyarelaidoncapital；noronincome，becausetheyarelaidonincome。Iffrommyincomeof=A31，000perannum，Iamrequiredtopay=A3100，itwillreallybeataxonmyincome，shouldIbecontentwiththeexpenditureoftheremaining=A3900，。butitwillbeataxoncapital，ifIcontinuetospend=A31，000。

Thecapitalfromwhichmyincomeof=A31，000isderived，maybeofthevalueof=A310，000；ataxofonepercentonsuchcapitalwouldbe=A3100；

butmycapitalwouldbeunaffected，ifafterpayingthistax，Iinlikemannercontentedmyselfwiththeexpenditureof=A3900。

Thedesirewhicheverymanhastokeephisstationinlife，andtomaintainhiswealthattheheightwhichithasonceattained，occasionsmosttaxes，whetherlaidoncapitaloronincome，tobepaidfromincome；andthereforeastaxationproceeds，orasgovernmentincreasesitsexpenditure，theannualenjoymentsofthepeoplemustbediminished，unlesstheyareenabledproportionallytoincreasetheircapitalsandincome。Itshouldbethepolicyofgovernmentstoencourageadispositiontodothisinthepeople，andnevertolaysuchtaxesaswillinevitablyfalloncapital；sincebysodoing，theyimpairthefundsforthemaintenanceoflabour，andtherebydiminishthefutureproductionofthecountry。

InEnglandthispolicyhasbeenneglected，intaxingtheprobatesofwills，inthelegacyduty，andinalltaxesaffectingthetransferenceofpropertyfromthedeadtotheliving。Ifalegacyof=A31，000besubjecttoataxof=A3100，thelegateeconsidershislegacyasonly=A3900andfeelsnoparticularmotivetosavethe=A3100dutyfromhisexpenditure，andthusthecapitalofthecountryisdiminished；butifhehadreallyreceived=A31，000，andhadbeenrequiredtopay=A3100asataxonincome，onwine，onhorses，oronservants，hewouldprobablyhavediminished，orrathernotincreasedhisexpenditurebythatsum，andthecapitalofthecountrywouldhavebeenunimpaired。

'Taxesuponthetransferenceofpropertyfromthedeadtotheliving，'

saysAdamSmith，'fallfinally，aswellasimmediately，uponthepersonstowhomthepropertyistransferred。Taxesonthesaleoflandfallaltogetherupontheseller。Thesellerisalmostalwaysunderthenecessityofselling，andmust，therefore，takesuchapriceashecanget。

Thebuyerisscarceeverunderthenecessityofbuying，andwill，therefore，onlygivesuchapriceashelikes。Heconsiderswhatthelandwillcosthimintaxandpricetogether。Themoreheisobligedtopayinthewayoftax，thelesshewillbedisposedtogiveinthewayofprice。

Suchtaxes，therefore，fallalmostalwaysuponanecessitousperson，andmust，therefore，beverycruelandoppressive。''Stampduties，anddutiesupontheregistrationofbondsandcontractsforborrowedmoney，fallaltogetherupontheborrower，andinfactarealwayspaidbyhim。Dutiesofthesamekinduponlawproceedingsfalluponthesuitors。Theyreducetoboththecapitalvalueofthesubjectindispute。Themoreitcoststoacquireanyproperty，thelessmustbetheneatvalueofitwhenacquired。Alltaxesuponthetransferenceofpropertyofeverykind，sofarastheydiminishthecapitalvalueofthatproperty，tendtodiminishthefundsdestinedforthemaintenanceoflabour。Theyareallmoreorlessunthriftytaxes，thatincreasetherevenueofthesovereign，whichseldommaintainsanybutunproductivelabourers，attheexpenseofthecapitalofthepeople，whichmaintainsnonebutproductive。

Butthisisnottheonlyobjectiontotaxesonthetransferenceofproperty；theypreventthenationalcapitalfrombeingdistributedinthewaymostbeneficialtothecommunity。Forthegeneralprosperity，therecannotbetoomuchfacilitygiventotheconveyanceandexchangeofallkindsofproperty，asitisbysuchmeansthatcapitalofeveryspeciesislikelytofinditswayintothehandsofthose，whowillbestemployitinincreasingtheproductionsofthecountry。'Why'，asksM。Say，'doesanindividualwishtosellhisland?Itisbecausehehasanotheremploymentinviewinwhichhisfundswillbemoreproductive。Whydoesanotherwishtopurchasethissameland?Itistoemployacapitalwhichbringshimintoolittle，whichwasunemployed，ortheuseofwhichhethinkssusceptibleofimprovement。Thisexchangewillincreasethegeneralincome，sinceitincreasestheincomeoftheseparties。Butifthechargesaresoexorbitantastopreventtheexchange，theyareanobstacletothisincreaseofthegeneralincome。'Thosetaxes，however，areeasilycollected；andthisbymanymaybethoughttoaffordsomecompensationfortheirinjuriouseffects。

Chapter9

TaxesonRawProduceHavinginaformerpartofthisworkestablished，Ihopesatisfactorily，theprinciple，thatthepriceofcornisregulatedbythecostofitsproductiononthatlandexclusively，orratherwiththatcapitalexclusively，whichpaysnorent，itwillfollowthatwhatevermayincreasethecostofproductionwillincreasetheprice；whatevermayreduceit，willlowertheprice。Thenecessityofcultivatingpoorerland，orofobtainingalessreturnwithagivenadditionalcapitalonlandalreadyincultivation，willinevitablyraisetheexchangeablevalueofrawproduce。Thediscoveryofmachinery，whichwillenablethecultivatortoobtainhiscornatalesscostofproduction，willnecessarilyloweritsexchangeablevalue。Anytaxwhichmaybeimposedonthecultivator，whetherintheshapeofland-tax，tithes，orataxontheproducewhenobtained，willincreasethecostofproduction，andwillthereforeraisethepriceofrawproduce。

Ifthepriceofrawproducedidnotrisesoastocompensatethecultivatorforthetax，hewouldnaturallyquitatradewherehisprofitswerereducedbelowthegenerallevelofprofits；thiswouldoccasionadiminutionofsupply，untiltheunabateddemandshouldhaveproducedsuchariseinthepriceofrawproduce，astomakethecultivationofitequallyprofitablewiththeinvestmentofcapitalinanyothertrade。

Ariseofpriceistheonlymeansbywhichhecouldpaythetax，andcontinuetoderivetheusualandgeneralprofitsfromthisemploymentofhiscapital。Hecouldnotdeductthetaxfromhisrent，andobligehislandlordtopayit，forhepaysnorent。Hewouldnotdeductitfromhisprofits，forthereisnoreasonwhyheshouldcontinueinanemploymentwhichyieldssmallprofits，whenallotheremploymentsareyieldinggreater。Therecanthenbenoquestion，butthathewillhavethepowerofraisingthepriceofrawproducebyasumequaltothetax。

Ataxonrawproducewouldnotbepaidbythelandlord；itwouldnotbepaidbythefarmer；butitwouldbepaid，inanincreasedprice，bytheconsumer。

Rent，itshouldberemembered，isthedifferencebetweentheproduceobtainedbyequalportionsoflabourandcapitalemployedonlandofthesameordifferentqualities。Itshouldberememberedtoo，thatthemoneyrentofland，andthecornrentofland，donotvaryinthesameproportion。

Inthecaseofataxonrawproduce，ofaland-tax，ortithes，thecornrentoflandwillvary，whilethemoneyrentwillremainasbefore。

If，aswehavebeforesupposed，thelandincultivationwereofthreequalities，andthatwithanequalamountofcapital，180qrs。ofcornwereobtainedfromlandNo。1。

170……from……2。

160……from……3，therentofNo。1wouldbe20quarters，thedifferencebetweenthatofNo。

3andNo。1；andofNo。2，10quarters，thedifferencebetweenthatofNo。

3andNo。2；whileNo。3wouldpaynorentwhatever。

Nowifthepriceofcornwere=A34perquarter，themoneyrentofNo。1

wouldbe=A380，andthatofNo。2，=A340。

Supposeataxof8s。perquartertobeimposedoncorn；thenthepricewouldriseto=A348s。；andifthelandlordsobtainedthesamecornrentasbefore，therentofNo。1wouldbe=A388andthatofNo。2，=A344。Buttheywouldnotobtainthesamecornrent；thetaxwouldfallheavieronNo。1

thanonNo。2，andonNo。2thanonNo。3，becauseitwouldbeleviedonagreaterquantityofcorn。ItisthedifficultyofproductiononNo。3

whichregulatesprice；andcornrisesto=A348s。，thattheprofitsofthecapitalemployedonNo。3maybeonalevelwiththegeneralprofitsofstock。

Theproduceandtaxonthethreequalitiesoflandwillbeasfollows:

No。1yielding180qrs。at=A348s。perqr……=A3792

Deductthevalueof16。3or8s。perqr。on180qrs。72

Netcornproduce163。7Netmoneyproduce=A3720

No。2yielding170qrs。at=A348s。perqr……=A3748

Deductthevalueof15。4qrsat=A348s。or8s。perqr。on170qr。68

Netcornproduce154。6Netmoneyproduce=A3680

No。3yielding160qrs。at=A348s……=A3704

Deductthevalueof14。5qrs。at=A348s。or8s。perqr。on16064

Netcornproduce145。5Netmoneyproduce=A3640

ThemoneyrentofNo。1wouldcontinuetobe=A380，orthedifferencebetween=A3640and=A3720。andthatofNo。2，=A340，orthedifferencebetween=A3640and=A3680，preciselythesameasbefore；butthecornrentwillbereducedfrom20quartersonNo。1，to18。2quarters，thedifferencebetween145。5and163。7quarters，andthatonNo。2from10to9。1

quarters，thedifferencebetween145。5and154。6quarters。

Ataxoncorn，then，wouldfallontheconsumersofcorn，andwouldraiseitsvalueascomparedwithallothercommodities，inadegreeproportionedtothetax。Inproportionasrawproduceenteredintothecompositionofothercommodities，wouldtheirvaluealsoberaised，unlessthetaxwerecountervailedbyothercauses。Theywouldinfactbeindirectlytaxed，andtheirvaluewouldriseinproportiontothetax。

Atax，however，onrawproduce，andonthenecessariesofthelabourer，wouldhaveanothereffect-itwouldraisewages。Fromtheeffectoftheprincipleofpopulationontheincreaseofmankind，wagesofthelowestkindnevercontinuemuchabovethatratewhichnatureandhabitdemandforthesupportofthelabourers。Thisclassisneverabletobearanyconsiderableproportionoftaxation；and，consequently，iftheyhadtopay8s。perquarterinadditionforwheatandinsomesmallerproportionforothernecessaries，theywouldnotbeabletosubsistonthesamewagesasbefore，andtokeepuptheraceoflabourers。

Wageswouldinevitablyandnecessarilyrise；andinproportionastheyrose，profitswouldfall。Governmentwouldreceiveataxof8s。perquarteronallthecornconsumedinthecountry，apartofwhichwouldbepaiddirectlybytheconsumersofcorn；theotherpartwouldbepaidindirectlybythosewhoemployedlabour，andwouldaffectprofitsinthesamemannerasifwageshadbeenraisedfromtheincreaseddemandforlabourcomparedwiththesupply，orfromanincreasingdifficultyofobtainingthefoodandnecessariesrequiredbythelabourer。

Inasfarasthetaxmightaffectconsumers，itwouldbeanequaltax，butinasfarasitwouldaffectprofits，itwouldbeapartialtax；foritwouldneitheroperateonthelandlordnoronthestockholder，sincetheywouldcontinuetoreceive，theonethesamemoneyrent，theotherthesamemoneydividendsasbefore。Ataxontheproduceofthelandthenwouldoperateasfollows:

1st。Itwouldraisethepriceofrawproducebyasumequaltothetax，andwouldthereforefalloneachconsumerinproportiontohisconsumption。

2dly。Itwouldraisethewagesoflabour，andlowerprofits。

Itmaythenbeobjectedagainstsuchatax，1st。Thatbyraisingthewagesoflabour，andloweringprofits，itisanunequaltax，asitaffectstheincomeofthefarmer，trader，andmanufacturer，andleavesuntaxedtheincomeofthelandlord，stockholder，andothersenjoyingfixedincomes。

2dly。Thattherewouldbeaconsiderableintervalbetweentheriseinthepriceofcornandtheriseofwages，duringwhichmuchdistresswouldbeexperiencedbythelabourer。

3dly。Thatraisingwagesandloweringprofitsisadiscouragementtoaccumulation，andactsinthesamewayasanaturalpovertyofsoil。

4thly。Thatbyraisingthepriceofrawproduce，thepricesofallcommoditiesintowhichrawproduceenters，wouldberaised，andthatthereforeweshouldnotmeettheforeignmanufactureronequaltermsinthegeneralmarket。

Withrespecttothefirstobjection，thatbyraisingthewagesoflabourandloweringprofitsitactsunequally，asitaffectstheincomeofthefarmer，trader，andmanufacturer，andleavesuntaxedtheincomeofthelandlord，stockholder，andothersenjoyingfixedincomes，-itmaybeanswered，thatiftheoperationofthetaxbeunequal，itisforthelegislaturetomakeitequal，bytaxingdirectlytherentofland，andthedividendsfromstock。Bysodoing，alltheobjectsofanincometaxwouldbeobtained，withouttheinconvenienceofhavingrecoursetotheobnoxiousmeasureofpryingintoeveryman'sconcerns，andarmingcommissionerswithpowersrepugnanttothehabitsandfeelingsofafreecountry。

Withrespecttothesecondobjection，thattherewouldbeaconsiderableintervalbetweentheriseofthepriceofcornandtheriseofwages，duringwhichmuchdistresswouldbeexperiencedbythelowerclasses，-Ianswer，thatunderdifferentcircumstances，wagesfollowthepriceofrawproducewithverydifferentdegreesofcelerity；thatinsomecasesnoeffectwhateverisproducedonwagesbyariseofcorn；inothers，theriseofwagesprecedestheriseinthepriceofcorn；again，insometheeffectonwagesisslow，andinothersrapid。

Thosewhomaintainthatitisthepriceofnecessarieswhichregulatesthepriceoflabour，alwaysallowingfortheparticularstateofprogressioninwhichthesocietymaybe，seemtohaveconcededtooreadily，thatariseorfallinthepriceofnecessarieswillbeveryslowlysucceededbyariseorfallofwages。Ahighpriceofprovisionsmayarisefromverydifferentcauses，andmayaccordinglyproduceverydifferenteffects。Itmayarisefrom1st。Adeficientsupply。

2nd。Fromagraduallyincreasingdemand，whichmaybeultimatelyattendedwithanincreasedcostofproduction。

3rdly。Fromafallinthevalueofmoney。

4thly。Fromtaxesonnecessaries。

Thesefourcauseshavenotbeensufficientlydistinguishedandseparatedbythosewhohaveinquiredintotheinfluenceofahighpriceofnecessariesonwages。Wewillexaminethemseverally。

Abadharvestwillproduceahighpriceofprovisions，andthehighpriceistheonlymeansbywhichtheconsumptioniscompelledtoconformtothestateofthesupply。Ifallthepurchasersofcornwererich，thepricemightrisetoanydegree，buttheresultwouldremainunaltered；thepricewouldatlastbesohigh，thattheleastrichwouldbeobligedtoforegotheuseofapartofthequantitywhichtheyusuallyconsumed，asbydiminishedconsumptionalonethedemandcouldbebroughtdowntothelimitsofthesupply。Undersuchcircumstancesnopolicycanbemoreabsurd，thanthatofforciblyregulatingmoneywagesbythepriceoffood，asisfrequentlydone，bymisapplicationofthepoorlaws。Suchameasureaffordsnorealrelieftothelabourer，becauseitsaffectistoraisestillhigherthepriceofcorn，andatlasthemustbeobligedtolimithisconsumptioninproportiontothelimitedsupply。Inthenaturalcourseofaffairsadeficientsupplyfrombadseasons，withoutanyperniciousandunwiseinterference，wouldnotbefollowedbyariseofwages。Theraisingofwagesismerelynominaltothosewhoreceivethem；itincreasesthecompetitioninthecornmarket，anditsultimateeffectistoraisetheprofitsofthegrowersanddealersincorn。Thewagesoflabourarereallyregulatedbytheproportionbetweenthesupplyanddemandofnecessaries，andthesupplyanddemandoflabour；andmoneyismerelythemedium，ormeasure，inwhichwagesareexpressed。Inthiscasethenthedistressofthelabourerisunavoidable，andnolegislationcanaffordaremedy，exceptbytheimportationofadditionalfood，orbyadoptingthemostusefulsubstitutes。

Whenahighpriceofcornistheeffectofanincreasingdemand，itisalwaysprecededbyanincreaseofwages，fordemandcannotincrease，withoutanincreaseofmeansinthepeopletopayforthatwhichtheydesire。Anaccumulationofcapitalnaturallyproducesanincreasedcompetitionamongtheemployersoflabour，andaconsequentriseinitsprice。Theincreasedwagesarenotalwaysimmediatelyexpendedonfood，butarefirstmadetocontributetotheotherenjoymentsofthelabourer。Hisimprovedconditionhoweverinduces，andenableshimtomarry，andthenthedemandforfoodforthesupportofhisfamilynaturallysupersedesthatofthoseotherenjoymentsonwhichhiswagesweretemporarilyexpended。Cornrisesthenbecausethedemandforitincreases，becausetherearethoseinthesocietywhohaveimprovedmeansofpayingforit；andtheprofitsofthefarmerwillberaisedabovethegenerallevelofprofits，tilltherequisitequantityofcapitalhasbeenemployedonitsproduction。Whether，afterthishastakenplace，cornshallagainfalltoitsformerprice，orshallcontinuepermanentlyhigher，willdependonthequalityofthelandfromwhichtheincreasedquantityofcornhasbeensupplied。Ifitbeobtainedfromlandofthesamefertility，asthatwhichwaslastincultivation，andwithnogreatercostoflabour，thepricewillfalltoitsformerstate；iffrompoorerland，itwillcontinuepermanentlyhigher。Thehighwagesinthefirstinstanceproceededfromanincreaseinthedemandforlabour……inasmuchasitencouragedmarriage，andsupportedchildren，itproducedtheeffectofincreasingthesupplyoflabour。Butwhenthesupplyisobtained，wageswillagainfalltotheirformerprice，ifcornhasfallentoitsformerprice:toahigherthantheformerprice，iftheincreasedsupplyofcornhasbeenproducedfromlandofaninferiorquality。Ahighpriceisbynomeansincompatiblewithanabundantsupply。thepriceispermanentlyhigh，notbecausethequantityisdeficient，butbecausetherehasbeenanincreasedcostinproducingit。Itgenerallyhappensindeed，thatwhenastimulushasbeengiventopopulation，aneffectisproducedbeyondwhatthecaserequires；thepopulationmaybe，andgenerallyissomuchincreasedas，notwithstandingtheincreaseddemandforlabour，tobearagreaterproportiontothefundsformaintaininglabourersthanbeforetheincreaseofcapital。Inthiscaseare-actionwilltakeplace，wageswillbebelowtheirnaturallevel，andwillcontinueso，tilltheusualproportionbetweenthesupplyanddemandhasbeenrestored。Inthiscasethen，theriseinthepriceofcornisprecededbyariseofwages，andthereforeentailsnodistressonthelabourer。

Afallinthevalueofmoney，inconsequenceofaninfluxofthepreciousmetalsfromthemines，orfromtheabuseoftheprivilegesofbanking，isanothercausefortheriseofthepriceoffood；butitwillmakenoalterationinthequantityproduced。Itleavesundisturbedtoothenumberoflabourers，aswellasthedemandforthem；fortherewillbeneitheranincreasenoradiminutionofcapital。Thequantityofnecessariestobeallottedtothelabourer，dependsonthecomparativedemandandsupplyofnecessaries，withthecomparativedemandandsupplyoflabour；moneybeingonlythemediuminwhichthequantityisexpressed；andasneitheroftheseisaltered，therealrewardofthelabourerwillnotalter。Moneywageswillrise，buttheywillonlyenablehimtofurnishhimselfwiththesamequantityofnecessariesasbefore。

Thosewhodisputethisprinciple，areboundtoshowwhyanincreaseofmoneyshouldnothavethesameeffectinraisingthepriceoflabour，thequantityofwhichhasnotbeenincreased，astheyacknowledgeitwouldhaveonthepriceofshoes，ofhats，andofcorn，ifthequantityofthosecommoditieswerenotincreased。Therelativemarketvalueofhatsandshoesisregulatedbythedemandandsupplyofhats，comparedwiththedemandandsupplyofshoes，andmoneyisbutthemediuminwhichtheirvalueisexpressed。Ifshoesbedoubledinprice，hatswillalsobedoubledinprice，andtheywillretainthesamecomparativevalue。Soifcornandallthenecessariesofthelabourerbedoubledinprice，labourwillbedoubledinpricealso，andwhilethereisnointerruptiontotheusualdemandandsupplyofnecessariesandoflabour，therecanbenoreasonwhytheyshouldnotpreservetheirrelativevalue。

Neitherafallinthevalueofmoney，norataxonrawproduce，thougheachwillraisetheprice，willnecessarilyinterferewiththequantityofrawproduce；orwiththenumberofpeople，whoarebothabletopurchase，andwillingtoconsumeit。Itisveryeasytoperceivewhy，whenthecapitalofacountryincreasesirregularly，wagesshouldrise，whilstthepriceofcornremainsstationary，orrisesinalessproportion；

andwhy，whenthecapitalofacountrydiminishes，wagesshouldfallwhilstcornremainsstationary，orfallsinamuchlessproportion，andthistooforaconsiderabletime；thereasonis，becauselabourisacommoditywhichcannotbeincreasedanddiminishedatpleasure。Iftherearetoofewhatsinthemarketforthedemand，thepricewillrise，butonlyforashorttime；forinthecourseofoneyear，byemployingmorecapitalinthattrade，anyreasonableadditionmaybemadetothequantityofhats，andthereforetheirmarketpricecannotlongverymuchexceedtheirnaturalprice；butitisnotsowithmen；youcannotincreasetheirnumberinoneortwoyearswhenthereisanincreaseofcapital，norcanyourapidlydiminishtheirnumberwhencapitalisinaretrogradestate；and，therefore，thenumberofhandsincreasingordiminishingslowly，whilstthefundsforthemaintenanceoflabourincreaseordiminishrapidly，theremustbeaconsiderableintervalbeforethepriceoflabourisexactlyregulatedbythepriceofcornandnecessaries；butinthecaseofafallinthevalueofmoney，orofataxoncorn，thereisnotnecessarilyanyexcessinthesupplyoflabour，noranyabatementofdemand，andthereforetherecanbenoreasonwhythelabourershouldsustainarealdiminutionofwages。

Ataxoncorndoesnotnecessarilydiminishthequantityofcorn，itonlyraisesitsmoneyprice；itdoesnotnecessarilydiminishthedemandcomparedwiththesupplyoflabour；whythenshoulditdiminishtheportionpaidtothelabourer?Supposeittruethatitdiddiminishthequantitygiventothelabourer，inotherwords，thatitdidnotraisehismoneywagesinthesameproportionasthetaxraisedthepriceofthecornwhichheconsumed；wouldnotthesupplyofcornexceedthedemand?woulditnotfallinprice?andwouldnotthelabourerthusobtainhisusualportion?Insuchcase，indeed，capitalwouldbewithdrawnfromagriculture；forifthepricewerenotincreasedbythewholeamountofthetax，agriculturalprofitswouldbelowerthanthegenerallevelofprofits，andcapitalwouldseekamoreadvantageousemployment。Inregardthentoataxonrawproduce，whichisthepointunderdiscussion，itappearstomethatnointervalwhichcouldbearoppressivelyonthelabourer，wouldelapsebetweentheriseinthepriceofrawproduce，andtheriseinthewagesofthelabourer；andthatthereforenootherinconveniencewouldbesufferedbythisclass，thanthatwhichtheywouldsufferfromanyothermodeoftaxation，namely，theriskthatthetaxmightinfringeonthefundsdestinedforthemaintenanceoflabour，andmightthereforecheckorabatethedemandforit。

Withrespecttothethirdobjectionagainsttaxesonrawproduce，namely，thattheraisingwages，andloweringprofits，isadiscouragementtoaccumulation，andactsinthesamewayasanaturalpovertyofsoil；Ihaveendeavouredtoshewinanotherpartofthisworkthatsavingsmaybeaseffectuallymadefromexpenditureasfromproduction；fromareductioninthevalueofcommodities，asfromariseintherateofprofits。Byincreasingmyprofitsfrom=A31，000to=A31，200，whilstpricescontinuethesame，mypowerofincreasingmycapitalbysavingsis。increased，butitisnotincreasedsomuchasitwouldbeifmyprofitscontinuedasbefore，whilstcommoditiesweresoloweredinprice，that=A3800wouldprocuremeasmuchas=A31，000purchasedbefore。

Nowthesumrequiredbythetaxmustberaised，andthequestionsimplyis，whetherthesameamountshallbetakenfromindividualsbydiminishingtheirprofits，orbyraisingthepricesofthecommoditiesonwhichtheirprofitswillbeexpended。Taxationundereveryformpresentsbutachoiceofevils；ifitdonotactonprofit，orothersourcesofincome，itmustactonexpenditure；andprovidedtheburthenbeequallyborne，anddonotrepressreproduction，itisindifferentonwhichitislaid。Taxesonproduction，orontheprofitsofstock，whetherappliedimmediatelytoprofits，orindirectly，bytaxingthelandoritsproduce，havethisadvantageoverothertaxes；thatprovidedallotherincomebetaxed，noclassofthecommunitycanescapethem，andeachcontributesaccordingtohismeans。

Fromtaxesonexpenditureamisermayescape；hemayhaveanincomeof=A310，000perannum，andexpendonly=A3300；butfromtaxesonprofits，whetherdirectorindirect，hecannotescape；hewillcontributetothemeitherbygivingupapartorthevalueofapartofhisproduce；

orbytheadvancedpricesofthenecessariesessentialtoproduction，hewillbeunabletocontinuetoaccumulateatthesamerate。Hemay，indeed，haveanincomeofthesamevalue，buthewillnothavethesamecommandoflabour，norofanequalquantityofmaterialsonwhichsuchlabourcanbeexercised。

Ifacountryisinsulatedfromallothers，havingnocommercewithanyofitsneighbours，itcaninnowayshiftanyportionofitstaxesfromitself。AportionoftheproduceofitslandandlabourwillbedevotedtotheserviceoftheState；andIcannotbutthinkthat，unlessitpressesunequallyonthatclasswhichaccumulatesandsaves，itwillbeoflittleimportancewhetherthetaxesbeleviedonprofits，onagricultural，oronmanufacturedcommodities。Ifmyrevenuebe=A31，000perannum，andI

mustpaytaxestotheamountof=A3100，itisoflittleimportancewhetherI

payitfrommyrevenue，leavingmyselfonly=A3900，orpay=A3100inadditionformyagriculturalcommodities，orformymanufacturedgoods。If=A3100ismyfairproportionoftheexpensesofthecountry，thevirtueoftaxationconsistsinmakingsurethatIshallpaythat=A3100，neithermorenorless；andthatcannotbeeffectedinanymannersosecurelyasbytaxesonwages，profits，orrawproduce。

Thefourthandlastobjectionwhichremainstobenoticedis:Thatbyraisingthepriceofrawproduce，thepricesofallcommoditiesintowhichrawproduceenters，willberaised，andthat，therefore，weshallnotmeettheforeignmanufactureronequaltermsinthegeneralmarket。

Inthefirstplace，cornandallhomecommoditiescouldnotbemateriallyraisedinpricewithoutaninfluxofthepreciousmetals；forthesamequantityofmoneycouldnotcirculatethesamequantityofcommodities，athighasatlowprices，andthepreciousmetalsnevercouldbepurchasedwithdearcommodities。Whenmoregoldisrequired，itmustbeobtainedbygivingmore，andnotfewercommoditiesinexchangeforit。Neithercouldthewantofmoneybesuppliedbypaper，foritisnotpaperthatregulatesthevalueofgoldasacommodity，butgoldthatregulatesthevalueofpaper。Unlessthenthevalueofgoldcouldbelowered，nopapercouldbeaddedtothecirculationwithoutbeingdepreciated。Andthatthevalueofgoldcouldnotbelowered，appearsclear，whenweconsiderthatthevalueofgoldasacommoditymustberegulatedbythequantityofgoodswhichmustbegiventoforeignersinexchangeforit。Whengoldischeap，commoditiesaredear。

andwhen。goldisdear，commoditiesarecheap，andfallinprice。Nowasnocauseisshewnwhyforeignersshouldselltheirgoldcheaperthanusual，itdoesnotappearprobablethattherewouldbeanyinfluxofgold。

Withoutsuchaninfluxtherecanbenoincreaseofquantity，nofallinitsvalue，noriseinthegeneralpriceofgoods。(22*)

Theprobableeffectofataxonrawproduce，wouldbetoraisethepriceofrawproduce，andofallcommoditiesinwhichrawproduceentered，butnotinanydegreeproportionedtothetax；whileothercommoditiesinwhichnorawproduceentered，suchasarticlesmadeofthemetalsandtheearths，wouldfallinprice:sothatthesamequantityofmoneyasbeforewouldbeadequatetothewholecirculation。

Ataxwhichshouldhavetheeffectofraisingthepriceofallhomeproductions，wouldnotdiscourageexportation，exceptduringaverylimitedtime。Iftheywereraisedinpriceathome，theycouldnotindeedimmediatelybeprofitablyexported，becausetheywouldbesubjecttoaburthenherefromwhichabroadtheywerefree。Thetaxwouldproducethesameeffectasanalterationinthevalueofmoney，whichwasnotgeneralandcommontoallcountries，butconfinedtoasingleone。IfEnglandwerethatcountry，shemightnotbeabletosell，butshewouldbeabletobuy，becauseimportablecommoditieswouldnotberaisedinprice。Underthesecircumstancesnothingbutmoneycouldbeexportedinreturnforforeigncommodities，butthisisatradewhichcouldnotlongcontinue；anationcannotbeexhaustedofitsmoney，forafteracertainquantityhasleftit，thevalueoftheremainderwillrise，andsuchapriceofcommoditieswillbetheconsequence，thattheywillagainbecapableofbeingprofitablyexported。Whenmoneyhadrisen，therefore，weshouldnolongerexportitinreturnforgoods，butweshouldexportthosemanufactureswhichhadfirstbeenraisedinprice，bytheriseinthepriceoftherawproducefromwhichtheyweremade，andthenagainloweredbytheexportationofmoney。

Butitmaybeobjected'thatwhenmoneysoroseinvalue，itwouldrisewithrespecttoforeignaswellashomecommodities，andthereforethatallencouragementtoimportforeigngoodswouldcease。Thus，supposeweimportedgoodswhichcost=A3100abroad，andwhichsoldfor=A3120

here，weshouldceasetoimportthem，whenthevalueofmoneyhadsoriseninEngland，thattheywouldonlysellfor=A3100here:this，however，couldneverhappen。Themotivewhichdeterminesustoimportacommodity，isthediscoveryofitsrelativecheapnessabroad:itisthecomparisonofitspriceabroadwithitspriceathome。Ifacountryexportshats，andimportscloth，itdoessobecauseitcanobtainmoreclothbymakinghats，andexchangingthemforcloth，thanifitmadetheclothitself。Iftheriseofrawproduceoccasionsanyincreasedcostofproductioninmakinghats，itwouldoccasionalsoanincreasedcostinmakingcloth。If，therefore，bothcommoditiesweremadeathome，theywouldbothrise。One，however，beingacommoditywhichweimport，wouldnotrise，neitherwoulditfall，whenthevalueofmoneyrose；forbynotfalling，itwouldregainitsnaturalrelationtotheexportedcommodity。Theriseofrawproducemakesahatrisefrom30to33

shillings，or10percent:thesamecauseifwemanufacturedcloth，wouldmakeitrisefrom20s。to22s。peryard。Thisrisedoesnotdestroytherelationbetweenclothandhats；ahatwas，andcontinuestobe，worthoneyardandahalfofcloth。Butifweimportcloth，itspricewillcontinueuniformlyat20s。peryard，unaffectedfirstbythefall，andthenbytheriseinthevalueof，money。whilsthats，whichhadrisenfrom30s。to33s。，willagainfallfrom33s。to30s。，atwhichpointtherelationbetweenclothandhatswillberestored。

Tosimplifytheconsiderationofthissubject，Ihavebeensupposingthatariseinthevalueofrawmaterialswouldaffect，inanequalproportion，allhomecommodities；thatiftheeffectononeweretoraiseit10percent，itwouldraiseall10percent；butasthevalueofcommoditiesisverydifferentlymadeupofrawmaterialandlabour；assomecommodities，forinstance，allthosemadefromthemetals，wouldbeunaffectedbytheriseofrawproducefromthesurfaceoftheearth，itisevidentthattherewouldbethegreatestvarietyintheeffectsproducedonthevalueofcommodities，byataxonrawproduce。Asfarasthiseffectwasproduced，itwouldstimulateorretardtheexportationofparticularcommodities，andwouldundoubtedlybeattendedwiththesameinconveniencethatattendsthetaxingofcommodities；itwoulddestroythenaturalrelationbetweenthevalueofeach。Thusthenaturalpriceofahat，insteadofbeingthesameasayardandahalfofcloth，mightonlybeofthevalueofayardandaquarter，oritmightbeofthevalueofayardandthreequarters，andthereforeratheradifferentdirectionmightbegiventoforeigntrade。Alltheseinconvenienceswouldprobablynotinterferewiththevalueoftheexportsandimports；

theywouldonlypreventtheverybestdistributionofthecapitalofthewholeworld，whichisneversowellregulated，aswheneverycommodityisfreelyallowedtosettleatitsnaturalprice，unfetteredbyartificialrestraints。

Althoughthentheriseinthepriceofmostofourowncommodities，wouldforatimecheckexportationgenerally，andmightpermanentlypreventtheexportationofafewcommodities，itcouldnotmateriallyinterferewithforeigntrade，andwouldnotplaceusunderanycomparativedisadvantageasfarasregardedcompetitioninforeignmarkets。

Chapter10

TaxesonRentAtaxonrentwouldaffectrentonly；itwouldfallwhollyonlandlords，andcouldnotbeshiftedtoanyclassofconsumers。Thelandlordcouldnotraisehisrent，becausehewouldleaveunalteredthedifferencebetweentheproduceobtainedfromtheleastproductivelandincultivation，andthatobtainedfromlandofeveryquality。Threesortsofland，No。1，2，and3，areincultivation，andyieldrespectivelywiththesamelabour，180，170，and160quartersofwheat；butNo。3paysnorent，andisthereforeuntaxed:therentthenofNo。2cannotbemadetoexceedthevalueoften，norNo。1，oftwentyquarters。Suchataxcouldnotraisethepriceofrawproduce，becauseasthecultivatorofNo。3

paysneitherrentnortax，hewouldinnowaybeenabledtoraisethepriceofthecommodityproduced。Ataxonrentwouldnotdiscouragethecultivationoffreshland，forsuchlandpaysnorent，andwouldbeuntaxed。IfNo。4weretakenintocultivation，andyielded150quarters，notaxwouldbepaidforsuchland；butitwouldcreatearentoftenquartersonNo。3，whichwouldthencommencepayingthetax。

Ataxonrent，asrentisconstituted，woulddiscouragecultivation，becauseitwouldbeataxontheprofitsofthelandlord。Thetermrentofland，asIhaveelsewhereobserved，isappliedtothewholeamountofthevaluepaidbythefarmertohislandlord，apartonlyofwhichisstrictlyrent。Thebuildingsandfixtures，andotherexpensespaidforbythelandlord，formstrictlyapartofthestockofthefarm，andmusthavebeenfurnishedbythetenant，ifnotprovidedbythelandlord。Rentisthesumpaidtothelandlordfortheuseoftheland，andfortheuseofthelandonly。Thefurthersumthatispaidtohimunderthenameofrent，isfortheuseofthebuildings，&c。，andisreallytheprofitsofthelandlord'sstock。Intaxingrent，asnodistinctionwouldbemadebetweenthatpartpaidfortheuseoftheland，andthatpaidfortheuseofthelandlord'sstock，aportionofthetaxwouldfallonthelandlord'sprofits，andwould，therefore，discouragecultivation，unlessthepriceofrawproducerose。Onthatland，fortheuseofwhichnorentwaspaid，acompensationunderthatnamemightbegiventothelandlordfortheuseofhisbuildings。Thesebuildingswouldnotbeerected，norwouldrawproducebegrownonsuchland，tillthepriceatwhichitsoldwouldnotonlypayforalltheusualoutgoings，butalsothisadditionaloneofthetax。Thispartofthetaxdoesnotfallonthelandlord，noronthefarmer，butontheconsumerofrawproduce。

Therecanbelittledoubtbutthatifataxwerelaidonrent，landlordswouldsoonfindawaytodiscriminatebetweenthatwhichispaidtothemfortheuseoftheland，andthatwhichispaidfortheuseofthebuildings，andtheimprovementswhicharemadebythelandlord'sstock。Thelatterwouldeitherbecalledtherentofhouseandbuildings，oronallnewlandtakenintocultivation，suchbuildingswouldbeerected，andimprovementswouldbemadebythetenant，andnotbythelandlord。Thelandlord'scapitalmightindeedbereallyemployedforthatpurpose；itmightbenominallyexpendedbythetenant，thelandlordfurnishinghimwiththemeans，eitherintheshapeofaloan，orinthepurchaseofanannuityforthedurationofthelease。Whetherdistinguishedornot，thereisarealdifferencebetweenthenatureofthecompensationswhichthelandlordreceivesforthesedifferentobjects；

anditisquitecertain，thatataxontherealrentoflandfallswhollyonthelandlord，butthatataxonthatremunerationwhichthelandlordreceivesfortheuseofhisstockexpendedonthefarm，falls，inaprogressivecountry，ontheconsumerofrawproduce。Ifataxwerelaidonrent，andnomeansofseparatingtheremunerationnowpaidbythetenanttothelandlordunderthenameofrentwereadopted，thetax，asfarasitregardedtherentonthebuildingsandotherfixtures，wouldneverfallforanylengthoftimeonthelandlord，butontheconsumer。

Thecapitalexpendedonthesebuildings，&c。，mustaffordtheusualprofitofstock；butitwouldceasetoaffordthisprofitonthelandlastcultivated，iftheexpensesofthosebuildings，&c。，didnotfallonthetenant；andiftheydid，thetenantwouldthenceasetomakehisusualprofitsofstock，unlesshecouldchargethemontheconsumer。

Chapter11

TithesTithesareataxonthegrossproduceoftheland，and，liketaxesonrawproduce，fallwhollyontheconsumer。Theydifferfromataxonrent，inasmuchastheyaffectlandwhichsuchataxwouldnotreach；andraisethepriceofrawproduce，whichthattaxwouldnotalter。Landsoftheworstquality，aswellasofthebest，paytithes，andexactlyinproportiontothequantityofproduceobtainedfromthem；tithesarethereforeanequaltax。

Iflandofthelastquality，orthatwhichpaysnorent，andwhichregulatesthepriceofcorn，yieldasufficientquantitytogivethefarmertheusualprofitsofstock，whenthepriceofwheatis=A34perquarter，thepricemustriseto=A348s。beforethesameprofitscanbeobtainedafterthetithesareimposed，becauseforeveryquarterofwheatthecultivatormustpayeightshillingstothechurch，andifhedoesnotobtainthesameprofits，thereisnoreasonwhyheshouldnotquithisemployment，whenhecangettheminothertrades。

【推荐阅读】幽幽深宫，醒来一梦似千年，重生于下堂妃身躯中的她，将如何手刃仇人? 点击阅读