general taxation; and therefore in examining the effects of a low
value of money confined to one country, we are also examining the
effects of a high price of commodities confined to one country. Indeed
Adam Smith was fully aware of the resemblance between these two cases,
and consistently maintained that the low value of money, or, as he calls
it, of silver in Spain, in consequence of the prohibition against its
exportation, was very highly prejudicial to the manufactures and foreign
commerce of Spain. "But that degradation in the value of silver, which
being the effect either of the peculiar situation, or of the political
institutions of a particular country, takes place only in that country,
is a matter of very great consequence, which, far from tending to make
any body really richer, tends to make every body really poorer. The rise
in the money price of all commodities, which is in this case peculiar to
that county, tends to discourage more or less every sort of industry
which is carried on within it, and to enable foreign nations, by
furnishing almost all sorts of goods for a smaller quantity of silver
than its own workmen can afford to do, to undersell them not only in
the foreign, but even in the home market." Vol. ii. page 278.

One, and I think the only one of the disadvantages of a low value of
silver in a country, proceeding from a forced abundance, has been ably
explained by Dr. Smith. If the trade in gold and silver were free, "the
gold and silver which would go abroad, would not go abroad for nothing,
but would bring back an equal value of goods of some kind or another.
Those goods too would not be all matters of mere luxury and expense, to
be consumed by idle people, who produce nothing in return for their
consumption. As the real wealth and revenue of idle people would not be
augmented by this extraordinary exportation of gold and silver, so would
neither their consumption be augmented by it. Those goods would,
probably the greater part of them, and certainly some part of them,
consist in materials, tools, and provisions, for the employment and
maintenance of industrious people, who would reproduce with a profit,
the full value of their consumption. A part of the dead stock of the
society would thus be turned into active stock, and would put into
motion a greater quantity of industry than had been employed before."

By not allowing a free trade in the precious metals when the prices of
commodities are ra