The Wealth of Nations · Chapter
Third Period explained
This chapter examines the value of silver relative to corn from 1630 to the mid-18th century, analyzing the effects of the discovery of American mines, the civil war, the bounty on corn exportation, and the debasement of coinage.
What happens
This chapter examines the value of silver relative to corn from 1630 to the mid-18th century, analyzing the effects of the discovery of American mines, the civil war, the bounty on corn exportation, and the debasement of coinage. It argues that the rise in silver's value, rather than a fall in corn's real value, explains price variations, and critiques the bounty's artificial inflation of corn prices.
Themes in this chapter
Wealth and Money
Discusses the changing value of silver as a measure of wealth and its impact on corn prices.
Role of Government
Examines the effects of the parliamentary bounty on corn exportation and government intervention in markets.
Free Trade and Market Competition
Contrasts England's bounty system with France's prohibition on grain exportation, highlighting trade policy impacts.
Characters to notice
- Gregory King
Cited for estimating the contract price of corn at 28 shillings per quarter in years of moderate plenty.
- Mr. Lowndes
Referenced regarding the debasement of silver coin by clipping and wearing in 1695.
- Mr. Duprè de St. Maur
Mentioned as one of the collectors of corn prices in France.
- Mr. Pelham
Noted for observing the extraordinary sum paid as bounty for corn exportation in 1749.
- Charles II
Referenced in relation to the high price of corn during his reign and the beginning of coin clipping.
- William III
Mentioned in the context of the government's establishment of the land-tax and the bounty on corn.
Key passages
“The bounty was an expedient to raise it artificially to the high price at which it had frequently been sold in the times of Charles I and II.”
The bounty was a tool to artificially increase corn prices to the high levels seen under Charles I and II.
Explains the purpose of the bounty on corn exportation.
“In France, till 1764, the exportation of grain was by law prohibited; and it is somewhat difficult to suppose, that nearly the same diminution of price which took place in one country, notwithstanding this prohibition, should in another be owing to the extraordinary encouragement given to exportation.”
Since France banned grain exports until 1764, it is unlikely that England's similar price drop was caused by its export bounty.
Challenges the idea that the bounty alone caused price changes.
“The high price of corn during these ten or twelve years past, indeed, has occasioned a suspicion that the real value of silver still continues to fall in the European market. This high price of corn, however, seems evidently to have been the effect of the extraordinary unfavourableness of the seasons, and ought therefore to be regarded, not as a permanent, but as a transitory and occasional event.”
Recent high corn prices might suggest silver's value is still falling, but they are actually due to bad seasons and are temporary.
Distinguishes between long-term trends and short-term fluctuations.