The Wealth of Nations · Chapter
Digression Concerning the Variations in the Value of Silver During the Course of the Four Last Centuries explained
Smith concludes his digression on silver's value, arguing that high or low money prices of goods in general do not indicate national wealth or poverty, but rather the fertility of silver mines.
What happens
Smith concludes his digression on silver's value, arguing that high or low money prices of goods in general do not indicate national wealth or poverty, but rather the fertility of silver mines. He distinguishes between price changes due to silver's value and those due to land improvement, using examples from China, Poland, Spain, and Portugal. He critiques the notion that silver's value is continuously falling, citing evidence from corn prices in England, Scotland, and France, and attributes recent high corn prices to bad seasons rather than silver degradation.
Themes in this chapter
Wealth and Money
Smith argues that the value of gold and silver does not determine national wealth, using examples of China, Poland, Spain, and Portugal.
Historical Development of Society
Smith contrasts the fall of the feudal system in Europe with its persistence in Poland, linking to economic progress.
Social Class and Inequality
Discusses the impact of silver value changes on the pecuniary reward of inferior servants and the wealth of landowners.
Characters to notice
- Adam Smith
Author and narrator of the digression, analyzing the value of silver and its relation to national wealth.
- The Chinese
Cited as an example of a country where the value of precious metals is higher than in Europe, despite greater wealth.
- Mr. Duprè de St. Maur
Mentioned as a collector of French market price data used to support Smith's argument on corn prices.
- Mr. Meggens
Referenced indirectly as 'Mr. Messance' (likely a variant), who collected French market data.
Key passages
“The high value of the precious metals can be no proof of the poverty or barbarism of any particular country at the time when it took place. It is a proof only of the barrenness of the mines which happened at that time to supply the commercial world.”
High precious metal values indicate scarce mines, not national poverty.
Smith refutes the common notion linking high silver value to national poverty.
“The increase of the quantity of gold and silver in Europe, and the increase of its manufactures and agriculture, are two events which, though they have happened nearly about the same time, yet have arisen from very different causes, and have scarce any natural connection with one another.”
Europe's metal supply growth and economic growth are coincidental, not causally linked.
Smith separates the effects of American mine discoveries from the rise of industry and agriculture.
“Poland, where the feudal system still continues to take place, is at this day as beggarly a country as it was before the discovery of America. The money price of corn, however, has risen; the real value of the precious metals has fallen in Poland, in the same manner as in other parts of Europe.”
Poland's silver value fell like elsewhere, but its economy remained poor due to feudalism.
Smith uses Poland to show that falling silver value does not cause economic improvement.