Pieces of gold and silver coined, that is stamped with a mark regulating and assuring by the authority of the magistrate the weight and fineness of each, enter largely into transactions of the former order; they make the bulk of the current coin of most countries.Supposing the whole of the exchanges of any country that are not simple barter, effected by money, and that gold and silver form the sole money, then the amount of them so employed would seem to be regulated by two circumstances.
1st.By the quantity of commodities that may exist to be exchanged.
This again must depend on the quantity of materials wrought up into instruments, and on the progress of the division of labor.As the number of instruments increase, and as from their first commencing formation, until they are exhausted, they pass through more hands, the amount of exchanges must increase.
As the number of instruments formed decreases, and as every man himself constructs a greater proportion of those necessary to supply his own wants, the amount of exchanges must diminish, and as the amount of exchanges increases, or diminishes, so must there be required a greater or less quantity of the medium through which they are transacted.
In such a state of things as we suppose, could every man see exactly beforehand the whole series of the exchanges that would present themselves to him, every prudent man would so manage his exchanges, his purchases that is, and his sales, as to provide himself with the exact amount of money necessary to effect ever] exchange that he might deem it advisable to execute.But no man can with accuracy foresee what transactions may present themselves to him, or when they may do so.The amount of possible future exchanges that may offer to any man, and the time they may occur, are exceedingly uncertain, depending on many things not to be foreknown, the operations of other individuals engaged in the formation of instruments, immediately, or remotely connected with those on which his means or industry is engaged, the course of the winds and seasons, the fortune of war, the progress of treaties, and numberless other events equally doubtful in their issues.Every man, therefore, would in such a state of things, suffer two inconveniences, he would occasionally have too much money, and occasionally too little.He would sometimes have a sum lying for a long time useless by him, and an advantageous purchase would sometimes present itself to him which he had not cash sufficient to effect.Between these two opposite evils, it would be his business to steer as safe a course as possible;he could not hope altogether to avoid them, but must be content to suffer occasionally from both.Which of the two it would be most prudent for him to run the risk of suffering from, would, I conceive, depend on another circumstance, forming the second of those that, under the suppositions we have made, regulate the amount of precious metals in circulation.
Every man must be more unwilling to run the risk of having a sum of money lying useless by him, by how much greater the amount of the returns he could have by turning it to the formation of instruments.If then, in the society of which any man is a member, instruments are not far removed from the first orders of our series, when they soonest double the expenditure of their formation, he will rather risk the inconvenience of having too little money by him, than the loss of having a sum in his coffers long unemployed, which might have been converted into instruments yielding large returns.But if, in the society of which he is a member, instruments are far removed from the first orders of our series, he will be disposed to reserve a greater amount in the hopes of making more by some advantageous bargain, than he could by expending it on the formation of any instrument.
We should expect then to find, that, in countries where either the principle of accumulation is too weak to carry instruments on to the more slowly returning orders, or where it has not yet had time to do so, money would be scarce, and that, where this principle having had time to act, its strength has carried them to the farther orders, there money would be plenty.Such will be found to be the fact.In China, gold and silver are rarely seen, in the interior traffic of the country; in Holland, they have always abounded.
In new settlements in America, where from the superabundance of materials, instruments are of very quickly returning orders, the amount of coin to be found is exceedingly small.When a man there has cash in his pocket, he finds so many things that he could with profit expend it on, that tie can scarcely refrain from doing so.
An European visiting some parts of Upper Canada, is surprised, when he comes to discover, that a few dollars is all the cash that even men comparatively rich may have lying by them.He is apt to conceive that they are poor men, and to describe the country as a poor country.In doing so, however, he does not make a correct use of words.He sees, for instance, a man who, ten years before, may have brought a sum of two hundred pounds to the place where he is now settled, without at present twenty dollars in his pocket, and who perhaps, were that sum suddenly demanded of him, might have difficulty to procure it.In one sense, then, the man is poor.
