and Scotland immediately cease trading
with each other, and will not the home trade of consumption be changed
for a foreign trade of consumption? But although two additional
capitals will enter into this trade, the capital of Germany and that of
France, will not the same amount of Scotch and of English capital
continue to be employed, and will it not give motion to the same
quantity of industry as when it was engaged in the home trade?

CHAPTER XXV.

ON CURRENCY AND BANKS.

It is not my intention to detain the reader by any long dissertation on
the subject of money. So much has already been written on currency, that
of those who give their attention to such subjects, none but the
prejudiced are ignorant of its true principles. I shall therefore take
only a brief survey of some of the general laws which regulate its
quantity and value.

Gold and silver, like all other commodities, are valuable only in
proportion to the quantity of labour necessary to produce them, and
bring them to market. Gold is about fifteen times dearer than silver,
not because there is a greater demand for it, nor because the supply of
silver is fifteen times greater than that of gold, but solely because
fifteen times the quantity of labour is necessary to procure a given
quantity of it.

The quantity of money that can be employed in a country must depend on
its value: if gold alone were employed for the circulation of
commodities, a quantity would be required, one fifteenth only of what
would be necessary, if silver were made use of for the same purpose.

A circulation can never be so abundant as to overflow; for by
diminishing its value, in the same proportion you will increase its
quantity, and by increasing its value, diminish its quantity.[45]

While the state coins money, and charges no seignorage, money will be
of the same value as any other piece of the same metal of equal weight
and fineness; but if the state charges a seignorage for coinage, the
coined piece of money will generally exceed the value of the uncoined
piece of metal by the whole seignorage charged, because it will require
a greater quantity of labour, or, which is the same thing, the value of
the produce of a greater quantity of labour, to procure it.

While the state alone coins, there can be no limit to this charge of
seignorage; for by limiting the quantity of coin, it can be raised to
any conceivable value.

It is on this principle that paper money circ