of the labour which must be employed about those things, is varied in the same manner and in the same proportion with the price of such things as are necessary to supply our real wants; and of such, labour as is of real use. Things of this sort will be dearer, as the taste for them runs higher, that is, as their supposed usefulness is greater, or as they are more difficult to be procured; that is, as the want of them is more felt; and the difficulty of procuring them will be greater, as the quantity of them which can be had is less, or as there are more persons who want them at the same time.

Grotius, amongst other circumstances which increase the price of things, reckons the trouble or expense of the merchant who procures them; for which, he says, allowance is to be made in the price of the goods so procured. But these two circumstances are not distinct from what have been mentioned already, and may easily be resolved into one or other of them. If the merchant is at any expense besides paying wages to those who are employed in procuring them, which wages are the price of labour; such expense is a part of the original purchase money, which he paid for them. And to say that allowance is to be made to him for expenses of this sort, is no more than saying, that as he buys dearer he must sell dearer. But what makes him buy dearer, unless it is either the usefulness of the goods, or the difficulty of procuring them, which difficulty depends upon their scarcity, or upon the demand that there is for them? so that at last, if the price of his goods is high, it is for one of the reasons already assigned.

XVII. None of these particulars, upon which the Fair price is the price of things or of labour depends, can be reduced to market price. any mathematical certainty. It is impossible to determine with exactness the comparative degree of their usefulness, or of their scarcity, or of the demand that there is for them. The price therefore neither of goods nor of labour can be so precisely settled as to allow of no latitude. No one can say that this, or that, is so exactly what they are worth, that if the seller takes more, he takes too much; or if the buyer gives less, he gives too little. The general rule of price is what we call the market price, by which we mean the price that men, in that place, at that time, and in those circumstances, are commonly willing, and have been used to give. But this is a very lax rule; and the price of things, or of labour, when adjusted by it, may well admit of these three degrees, the highest price, the lowest price, and the moderate or middle price.

Civil laws, indeed, frequently interpose, and fix the price both of goods and of labour: and when their price is thus fixed, whatever exceeds that measure is too much, and whatever falls short of it is too little.

XVIII. There are some extraordinary circumstances, Extraordinary cirwhich may reasonably allow us to fix a higher price cumstances allow upon our goods, than the market price. But even these to exceed the marextraordinary circumstances may be reduced to one of ket price. the principles already mentioned, the usefulness, under which I include the imaginary as well as the real uses, the scarcity, or the de

mand.

These principles appear in numberless shapes; and in whatever shape they appear, they vary the price of goods. You have goods

which you want to dispose of, and which I have no occasion for; but, to oblige you, I am willing to buy them. It is plain, then, both that they are of no great use to you, because you desire to part with them, and that they are of no great use to me, by the supposition of my having no occasion for them. In this situation, I expect to buy them at a lower price than ordinary; and the reason why I should buy them so, is the small use of them either to the buyer or the seller.

You have goods which are very useful to you, and which would likewise be particularly useful to me: and you sell me these goods merely to oblige me. There is, by the supposition, some extraordinary usefulness of the goods, both to the buyer and the seller; and upon this account, you set an extraordinary price upon them.

You have an estate which came to you from your ancestors, and this circumstance makes you fond of it; the possession of it gives you more pleasure than if you had acquired it any other way. A particular fondness of this sort is, indeed, but an imaginary usefulness; but it is such an one that, if I want to buy the estate, you have no reason to part with it, unless I am willing to give you a higher price than you would have asked otherwise, or than the estate would have been worth, between buyer and seller, if it had not been attended with this circumstance.

If you could have made any particular advantage of your goods by keeping them yourself, or if you shall suffer any particular damage by parting with them; then, besides the ordinary price, you expect to have this advantage or this damage made up to you; and upon this account you ask an extraordinary price for your goods. Here again the price is raised by the particular usefulness of the goods to you.

It is some loss to you if I delay the payment of the purchase money, when I buy your goods: for till the payment is made you have no use of the money. Such delay of payment therefore is a reason for your selling your goods dearer than if I had made prompt payment. Money paid some time hence is not so useful to you as money paid just now would be: what therefore is wanting in the usefulness of money so paid, must be made up in the quantity of it.

of money.

Advantages by XIX. In bartering, where goods are to be comthe introduction pared immediately with goods, there is more difficulty in adjusting the price, than in buying and selling with money: because in such bartering the value of the goods on both sides is to be estimated. Whereas in buying and selling for money, the value of the money is already settled, and nothing is to be estimated but the comparative value of this standard, and the goods which are to be purchased. My meaning is, that such goods as are not frequently exchanged for one another, will be uncertain in their price: but money, which is in constant commerce, and is exchanged every day for goods of all sorts, will by such use have its comparative value so well settled, that we may without much difficulty, upon every occasion, not only determine how much goods we ought to receive in exchange for how much money, but may apply it as a common standard or measure to compare the value of goods of one sort with the value of goods of another sort. This we may reckon as one of the advantages arising from the introduction of money: the constant use of it in exchange makes it a standard of price by which the comparative

value of goods is more readily adjusted than it could have been otherwise.

A second advantage arising from the introduction of money is, that by the help of it we may commonly procure such things as we want: whereas, if all our riches consisted in goods, though we had great plenty of one sort, we might want those of another sort, without being able to get them in exchange. I might have great plenty of corn; but if I had occasion for sheep or oxen, though you had plenty of them, you might not be willing to barter them for my corn: because you might have more corn of your own already, than you wanted. In the meantime you might have occasion for wine, and would be glad to exchange your sheep or oxen for it, if I had any. But as I have none, I am forced to keep my own corn, and cannot procure for it what I want, and what, if I had any goods which would suit your convenience, you would supply me with: in the meantime you are subject to the same inconvenience; if they, who have wine to spare, have no occasion for sheep or oxen. This inconvenience is remedied by the use of a current standard, which all men are ready to take, one of another. Though you would not part with your sheep or oxen for my corn, because you do not want it; yet you will readily part with them for my money, as you know, that they who would not let you have wine for sheep or oxen, will let you have it for this money, which they can pass off again in the same manner, and procure in exchange for it such things as they

want.

A third advantage arising from the introduction of money is, that it lies in a little compass, and is therefore better fitted for commerce than bulky goods would be. I have great numbers of cattle, and should be willing to exchange them, if I could, for wine: but no person near me has any to dispose of; perhaps none is produced in the country where I live. If then I would have it, I must go from home for it: and it would be vast trouble, if indeed it was possible, to drive or convey my cattle to such a distance. But money lies in a less compass, and is easily carried from place to place: it will therefore make the exchange much easier to me. Though I could not convey my cattle so far, I can get money for them nearer home, and can easily convey the money to the place where I want to make the purchase of wine.

As it is one advantage arising from the introduction of money, that a great value lies in a narrow compass; so we may reckon it a fourth advantage, that we can reduce it into parts, which are of small value, much more readily than we can most sorts of goods. I have more horses than I want, but have occasion for a sheep, which is worth much less than any one of my horses. I cannot therefore get what I want, but at a great disadvantage: because I have nothing to give in exchange for it, but what vastly exceeds it in value. The introduction of money has removed this inconvenience. Though I could not divide the horse so as to give no more than the sheep is worth, yet I can, when I have sold him, divide the money and procure what I want, without giving

too much for it.

A fifth advantage arising from the introduction of money is, that we may keep it more easily than we could have kept most sorts of moveable goods. When we have taken it in exchange, there is no danger of its wasting or perishing in our hands, before we shall have occasion to

part with it again. Cattle would die; fruit would rot; corn or wine would spoil: but money may be kept for any length of time without being the worse for it.

proper materials

for money.

Metals the most XX. If the advantages which I have been mentioning, were proposed in the introduction of money, we may easily determine what materials are the most proper to make it of. As it is designed to be the standard of price, a common measure, by which to compare the several values of other things with one another; the materials of which it is made, should be as steady as possible, in their own value; the usefulness of them, their scarcity, and the demand for them, should be as little liable to variation, as may be.

Secondly, money is intended to be current amongst all those who have any intercourse of commerce with one another, so that any person will readily take it in exchange for such goods as he can spare; because he knows beforehand, that others will take it in like manner of him again: for this reason the materials that it is made of, should be such, as in the opinion of those who have such intercourse, have some usefulness, and consequently some value, either real or imaginary. Paper or leather, or any thing else, which has no such intrinsic value, either real or imaginary, will be current no farther than the credit of the person goes who vents them, and makes himself answerable to take them at any time in exchange: nor will they be current even so far, unless he makes himself answerable likewise to exchange them for what will be current with every body. Suppose a man to circulate bills which were payable by him upon demand, but were to be paid when demanded, in corn, or in wool: those bills would not be current as far as his credit would go: all persons, who might otherwise be ready to trust him, would not be willing to take such bills in exchange: no one indeed would take them, who might possibly not be able to exchange them with any body besides the first drawer of the bills: because no one would care to be forced to take corn or wool, at a time when perhaps he may have no occasion for any, or may not know how to dispose of any, if he had it. If those bills were payable in money by the drawer, then indeed such bills will pass with all persons who know they may depend upon his promise to take them again. Such is the necessity that the current exchange amongst private persons should be carried on with such materials as have, in themselves, some real or imaginary value. The authority of civil government will reach something farther; it will be able to circulate useless materials in common exchange, as far as its jurisdiction extends. The subjects of the same government, in their contracts with one another, may be forced by the laws, or where the government has the right of coining, and will vent only base money; they may be forced by the necessity of the case, to take such money in the course of their common dealings. But then foreigners who are not under the same jurisdiction, nor under the same necessity, will not take their money; because it is worth nothing to them. Nor will such foreigners take bills upon the credit even of the government, unless those bills are payable in such materials as are worth something in themselves, and such too as they can circulate again upon account of some intrinsic value, either real or imaginary. Since a third advantage, proposed by the use of money is, that what will fetch many goods in exchange may lie in a narrow compass, the

materials of which it is made, should be such as have in themselves a high value, either upon account of their great usefulness, or their great scarcity. Such materials as have both these qualities, would not be proper for the purpose. A sufficient quantity of what is very useful, if it is likewise very scarce, could not be spared from the common occasions of life to be applied to the sole purpose of exchange: because as much as is applied to this purpose becomes useless to other purposes. And certainly such materials as have only the quality of great usefulness, but are at the same time very plentiful, will be of too small value to answer this design of introducing money, which we are now speaking of. The best materials therefore are such as have little real usefulness in themselves, and have their chief intrinsic value given them by some imaginary usefulness only; such as mankind can do very well without, but such as common opinion has made them desirous of having. Materials of this sort may be spared from the common uses of life to make money of. And if their value is raised very high by the scarcity of them, such a quantity of them as will lie in a narrow compass, will fetch many goods in exchange. A fourth advantage, designed by the introduction of money, is, that it may be reduced into such small parts as to be exchanged without disadvantage for things of small value. It is proper, therefore, to use materials of different sorts, some of greater, some of lesser value: because as the last mentioned use of money requires that some should be made out of very dear materials, though the same materials might be made into pieces, some greater and some lesser, yet the lesser pieces would either be of too great value to be exchanged upon fair terms for cheap goods, or else they would be so small as to be in danger of being lost.

The fifth advantage proposed by the introduction of money, is, that it will keep without wasting or spoiling; so that he who takes it in exchange, is in no danger of having it perish in his hands. And in view to this advantage it is plainly requisite that money should be made of such materials as will not easily wear out, and as are not subject to perish or to be damaged by keeping.

*Metals, some of them at least, as gold or silver, will answer most of these purposes. Their intrinsic usefulness is not very great at any time; so that there is no danger of any such variations in this usefulness at different times, as will make their value uncertain; and the plenty or scarcity of them is at all times much the same, unless some very unlikely or unforeseen accident, such as the discovery of the West Indies, should make an alteration: and as the value of them is imaginary rather than real, the demand for them will commonly be much the same. But then this imaginary value being almost universal, they will be readily current every where in exchange for goods. And as it is high at the same time, a small quantity of them will bear a great price, or what is worth much will lie in a narrow compass. As this high value arises from opinion and scarcity, rather than from any real usefulness of them; what is wanted to carry on commerce may be made into money, without depriving mankind, in any degree, of what they want to use for the purposes of common life. And we may

Grotius, Lib. II. Cap. XII. § XVII.