Although I may often appear, in the following suppositions, to lose sight of the revenue arising from industry, and pay attention to that of the land only, we must not forget the mechanical principle, or rather the force of Nature, who, sooner or later, in spite of all the subtilty of man, keeps an exact balance between those two sources of national wealth, and causes all the revolutions of the one to be unavoidably felt by the other.
Various Causes of the Alteration in the Prices.
As long as we shall suppose, in a country standing by itself, the same products, the same consumption, the same quantity of money, the same freedom, no reason can ever be assigned for an increase or falling-off in the price of any article generally known, and of general use; but,
Second Hypothesis,
Let us suppose, that population is doubled as well as the revenue; no alteration can certainly take place in the real value of things;—that value will remain for each article, the same as it was before; that is, the sum of the labour requisite for the production of that article:[5] neither will the relative value undergo any change; the quantity of labour known, or supposed, in two different objects of a certain consumption, will remain, as at first, the sole criterion for fixing the difference of value in the one and the other. The essential relation of general correspondence between the wants, and the real resources, remaining also the same, there can likewise be no real difference in the situation of any individual whatever; if there are every where two consumers to one, the same increase will be found in the number of productors. The only palpable, and unavoidable alteration, always grievous when it is sudden, is that which, in the present hypothesis, must have taken place in the nominal value, that is to say, in the money-price of every thing; for the quantity of coin which was in circulation, being always the same in that country, standing by itself as we have supposed, and without mines, whilst the objects representing the said quantity, had successively doubled, it had been indispensable, successively, either by degrees, or by starts, to come to the point of giving for 2 in money, that which could not be given before for less than 4, or rather of denominating 4, that same quantity of money which hitherto had been denominated 2.—If you look for a precedent of the first effects of a disproportion too considerable or too rapid, between the wants and the demands, or between the mass of coin in circulation, and the number of articles to be circulated, it will be found, in the revolutions which took place in England, during the space of two years only, 1288, 1289, the quarter of wheat rose from 1s. to 2s. then to 3s. 9s. 12s. came down again to 2s. was then raised all at once to 20s. and fell at last to 16s. where it seemed to support itself for some years (see the excellent Inquiry of Mr. Smith, into the Nature and Causes of the Wealth of Nations); this is the man truly capable of dissecting, as it were, that subject, of which I can, at best, but mangle the epidermis.
Third Hypothesis.
To remedy the evil in such circumstances, how many expedients are tried, which only serve to increase it! How many avowed depredations upon pretended usurers, before the Sovereign boldly ventures to partake with them in the public execration by ordering a re-coinage, which, under the same denomination, will give but a part of the weight, or of the quality of the former coin! Yet this cannot be avoided. But by ascertaining, as we have done before, a two-fold increase in the revenue, and supposing one million and a half to have been sufficient to the circulation of the first revenue; if the Prince with his 1,500,000l. instead of a coinage of three millions, should have struck only 2,400,000l.—after some fluctuation, the balance will be restored between the price or nominal value of the negociable articles, and the quantity of money in circulation;—but what had been sold for 5 heretofore, will then go for 4; the prices will have fallen one fifth, and the circulation will be clogged:—But above all, it should be observed, that no one will be the poorer, notwithstanding the diminution of the nominal value.