Page 326: “That wealth consists in money, or in gold and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce, as well as the measure of value.” In fact, according to Smith, wealth of the individual consists in what can be purchased for money, and for a nation in the total commodity production of that country.
On page 327 he discusses how the Tartars, wealth consisted of cattle as among the Spaniards it consisted of gold and silver. “Of the two, the Tartar notion, perhaps, was the nearest to the truth.”
He then spends a fair bit of time on reasons why it is counterproductive for a nation to prohibit the exportation of specie. He does this, mostly, by dismantling the arguments in favor of such prohibitions. Then he goes into foreign trade, and how it is obvious that such trade enriches the country, but says this is only true insofar as the country is producing more of a given commodity than it can consume, which again seems reasonable, and once again hammers at the need of capitalism in general and the market of any nation in particular to constantly expand.
Page 332: “The quantity of every commodity which human industry can either purchase or produce, naturally regulates itself in every country according to the effectual demand, or according to the demand of those who are willing to pay the whole rent, labor and profits which must be paid in order to prepare and bring it to market.” Note that, here, transportation is not included as part of the price, which in my opinion is correct.
Page 334: “If the materials of manufacture are wanted, industry must stop. If provisions are wanted, the people must starve. But if money is wanted, barter will supply its place, though with a good deal of inconveniency…Upon every account, therefore, the attention of government never was unnecessarily employed, as when directed to watch over the preservation or increase of the quantity of money in any country….Money, like wine, must always be scarce with those who have neither wherewithal to buy it, nor credit to borrow it.”
Page 335: “When the profits of trade happen to be greater than ordinary, over-trading becomes a general error both among great and small dealers.” And, “Money, no doubt, makes always a part of the national capital; but it has already been shown that it generally makes but a small part, and always the most unprofitable part of it.”
Page 336: “And though goods do not always draw money so readily as money draws goods, in the long-run they draw it more necessarily than even it draws them…The man who buys, does not always mean to sell again, but frequently to use or to consume; whereas he who sells, always means to buy again.” A country needs no more gold and silver than is required to circulate commodities, plus the small amount used for decorative purposes. “…to attempt to increase the wealth of any country, either by introducing or by detaining it an unnecessary quantity of gold and silver, is as absurd as it would be to attempt to increase the good cheer of private families, but obliging them to keep an unnecessary number of kitchen utensils.”
Page 341: “The transportation of commodities, when properly suited to the market, is always attended with a considerable profit; whereas that of gold and silver is scarce ever attended with any.”
Further down, speaking of international trade, we find the interesting remark: “This bullion, as it circulates among different commercial countries in the same manner as the national coin circulates in every particular country, may be considered as the money of the great mercantile republic.” True in some sense, but it is worth noting that this bullion is, at all times, privately owned; thus a fundamental contradiction of capitalism, between private ownership and social use, even applies within the field of trade.
Page 342: “[Foreign trade] carries out that surplus part of the produce of their land and labor for which there is no demand among them, and brings back in return for it something else for which there is a demand.”
Page 343-4: “It is not by importation of gold and silver that the discovery of America has enriched Europe” but by the opening of new markets, and the expansion of the amount of raw produce. “By opening a new and inexhaustible (!) market to all the commodities of Europe, it gave occasion to new divisions of labor and improvement of art, which, in the narrow circle of the ancient commerce, could never have taken place for want of a market to take off the greater part of their produce. The productive powers of labor were improved…”
Page 344: Just want to note in passing: “But rich and civilized nations can always exchange to a much greater value with one another, than with savages and barbarians.”
and how it is obvious that such trade enriches the country, but says this is only true insofar as the country is producing more of a given commodity than it can consume, which again seems reasonable,
but is not correct. Consider: Wheatland produces enough wheat for all its inhabitants’ grain needs, and no corn. Cornland produces the corresponding amount of corn, and no wheat. According to that rule, they wouldn’t be better off if they traded; but I think everybody would have a less boring diet.
labor and profits which must be paid in order to prepare and bring it to market.” Note that, here, transportation is not included as part of the price, which in my opinion is correct.
How is “bring it to market” not transportation?
Page 342: Foreign trade uses more than that. If the local demand/supply price point is lower than the foreign one, the stuff will trade foreign (e.g. the wheat/corn example above).