IfFrancesendsclothtoHollandandreceivesfromherspices，ofequalvalue，thelandownerwhoconsumesthesespicespaysthevalueofthemtothegrocer，whopaysthesameamounttotheclothmaker，towhomitisdueinHollandfortheclothhehassentthere。Thisisdonebybillsofexchangewhichwillbeexplainedlater。ThesetwomoneypaymentstakeplaceinFranceapartfromtherentofthelandowner，andnomoneyleavesFranceonthataccount。AllotherclassesofsocietywhoconsumeDutchspices，similarlypaythegrocer，viz。thosewholiveonthefirstrent，thatisthelandowners，payfromthisrent，andthosewholiveontheothertworentsincountryorincitypaythegrocerdirectlyorindirectlyoutofthemoneywhichconductsthecirculationoftheserents。ThegroceragainpaysthismoneytothemanufacturerforhisbilluponHolland，andnoincreaseofmoneyisneededforcirculationinthestatebecauseofforeigntradewhenthebalanceisequal。Butifitisnotequal，ifmoremerchandiseissoldtoHollandthanisboughtback，orviceversa，moneyisneededforthesurpluswhichHollandmustsendtoFranceorFrancetoHolland。ThiswillincreaseordiminishtheamountofmoneycirculatinginFrance。
Itmayevenoccurthatwhenthebalancewiththeforeignerisequaltothetradewithhimmayretardthecirculationofreadymoneyandthereforerequireagreaterquantityofmoneybyreasonofthiscommerce。
Forexample，iftheFrenchladieswhowearFrenchstuffswishtowearDutchvelvets，whicharepaidforbytheclothsenttoHolland，theywillpayforthesevelvetstothemerchantswhoimportedthemfromHolland，andthesemerchantswillpaythemanufacturersofcloth。ThemoneythuspassesthroughmorehandsthaniftheseladiestooktheirmoneytothemanufacturersofclothandcontentedthemselveswiththefabricsofFrance。Whenthesamemoneypassesthroughthehandsofseveralundertakerstherapidityofcirculationissloweddown。Butitisdifficulttomakeanexactestimateofthissortofdelaywhichdependsuponvariouscircumstances。Thus，inourpresentexample，iftheladiespaythemerchantforthevelvettoday，andthemerchantpaythemanufacturertomorrowforhisbillonHolland，ifthemanufacturerpaythewoolmerchantthenextdayandthislastpaythefarmerthedayafter，itispossiblethatthefarmerwillkeepthemoneyinhandmorethantwomonthstomakeupthequarter’srentwhichhemustpayhislandlord。Thismoneymightintwomonthshavecirculatedthroughthehandsofahundredundertakerswithoutlockingupthecirculatingmediumneededbythestate。
Afterall，theprinciplerentofthelandownermustbeconsideredtobethemostnecessaryandconsiderablebranchofthemoneyinregardtocirculation。Ifhelivesinthecityandthefarmersellsinthesamecityallhisproduceandbuysthereallthemerchandisenecessaryforcountryuse，thereadymoneymayalwaysremaininthecity。Thefarmerwillsellthereproduceexceedinghalftheoutputofhisfarm；hewillpayhislandlordinthesamecitythemoneyvalueofonethirdofhisproduceandtheresttomerchantsorundertakersformerchandisetobeconsumedinthecountry。Evenhere，however，asthefarmersellshisproduceforlumpsums，whicharesubsequentlydistributedinretailpurchases，andareagaincollectedtoserveforlumppaymentstothefarmers，thecirculationhasalwaysthesameeffect（subjecttoitsrapidity）asifthefarmertooktothecountrythemoneyreceivedforhisproduceandsentitbackagaintothecity。
Thecirculationconsistsalwaysofthis，thatthelargesumswhichthefarmerreceivesonthesaleofhisproducearesplitupindetailandthenbroughttogetheragaintomakelargepayments。Whetherthismoneygopartlyoutofthecityorremainthereentirelyitmayberegardedasthecirculatingmediumbetweencityandcountry。Allthecirculationtakesplacebetweentheinhabitantsofthestate，andtheyareallfedandmaintainedineverywayfromtheproduceofthesoilandrawmaterialsofthecountry。
Itistruethatthewool，forexample，whichisbroughtfromthecountry，whenmadeupintoclothinthecityisworthfourtimesitsformervalue。Butthisincreaseofvalue，whichisthepriceofthelabouroftheworkmenandmanufacturesinthecity，isexchangedforthecountryproducewhichservesfortheirmaintenance。
ChapterFourFurtherReflectionontheRapidityorSlownessoftheCirculationofMoneyinExchangeLetussupposethatthefarmerpays1300ouncesofsilveraquartertohislandlord，whopaysoutofiteveryweek100
ouncestothebaker，butcher，etc。andthattheseeveryweekpaythefarmerthesehundredounces，sothatthefarmercollectseveryweekasmuchmoneyasthelandlordspends。Inthiscasetherewillbeonly100ouncesinconstantcirculation，theother1200ounceswillremaininhandpartlywiththelandlordandpartlywiththefarmer。
Butitrarelyhappensthatthelandlordsspendtheirrentsinafixedandregularproportion。InLondonassoonasalandlordreceiveshisrentheputsmostofitintothehandsofagoldsmithorbanker，wholendsitatinterest，sothatthispartisincirculation。Orelsethelandlordspendsagoodpartofituponvariousthingsneedfulforhishousehold，andbeforehegetshisnextquarter’srenthewillperhapsborrowmoney。Thusthemoneyofthefirstquarter’srentwillcirculateinathousandwaysbeforeitcanbebroughttogetheragainandreplacedinthehandsofthefarmertoservetopayhissecondquarter。
Whenthetimeforpayingthissecondquarterhascomethefarmerwillsellhisproduceinlargeamounts，andthosewhobuyhiscattle，corn，hay，etc。willalreadyhavecollectedindetailthepriceofthem。Themoneyofthefirstquarterwillthushavecirculatedintherivuletsofsmalltrafficfornearlythreemonths，beforebeingcollectedbytheretaildealers，andthesewillgiveittothefarmerwhowillpayhissecondquartertherewith。Itwouldseemfromthisthatlessreadymoneythanwehavesupposedwouldsufficeforthecirculationofastate。
Bartersmadebyevaluationdonotallcallformuchreadycash。Ifabrewersuppliesaclothierwiththebeerforhisfamily，andiftheclothierinturnsuppliesthebrewerwiththeclothesheneeds，bothatthemarketpricecurrentonthedayofdelivery，theonlyreadymoneyneededbetweenthesetwotradersistheamountofthedifferencebetweenthetwotransactions。
Ifamerchantinamarkettownsendstoacorrespondentinthecitycountryproduceforsale，andifthelattersendsbacktotheformerthecitymerchandiseconsumedinthecountry，thebusinesslastingthewholeyearbetweenthesetwodealers，andmutualconfidenceleadingthemtoplacetotheiraccountstheirproduceandmerchandiseattheirrespectivemarketprices，theonlyrealmoneyneededforthiscommercewillbethebalancewhichoneowestotheotherattheendoftheyear。Eventhenthisbalancemaybecarriedforwardtothenextyear，withouttheactualpaymentofanymoney。Alltheundertakersofacity，whohavecontinuallybusinesswitheachother，maypractisethismethod。Andtheseexchangesbyvaluationseemtoeconomisemuchcashincirculation，oratleasttoaccelerateitsmovementbymakingitunnecessaryinseveralhandsthroughwhichitwouldneedtopasswithoutthisconfidenceandthismethodofexchangebyvaluation。Itisnotwithoutreasonthatitiscommonlysaidcommercialcreditmakesmoneylessscarce。
Thegoldsmithsandpublicbankers，whosenotespasscurrentinpaymentlikereadymoney，contributealsotothespeedofcirculation，whichwouldberetardedifmoneywereneededinallthepaymentsforwhichthesenotessuffice：andalthoughthesegoldsmithsandbankersalwayskeepinhandagoodpartoftheactualmoneytheyhavereceivedfortheirnotes，theyalsoputintocirculationaconsiderableamountofthisactualmoneyasIshallexplainlaterindealingwithpublicbanks。
AllthesereflectionsseemtoprovethatthecirculationofastatecouldbeconductedwithmuchlessactualmoneythanI
havesupposednecessary；butthefollowinginductionsappeartocounterbalancethemandtocontributetotheslowingdownofthecirculation。
Iwillfirstobservethatallcountryproduceisfurnishedbylabourwhichmaypossibly，asalreadyoftensuggested，becarriedonwithlittleornoactualmoney。Butallmerchandiseismadeincitiesormarkettownsbythelabourofmenwhomustbepaidinactualmoney。Ifahousehascost100，000ouncesofsilvertobuild，allthissumorthegreatestpartofit，musthavebeenpaideveryweekinsmallamountstothebrickmaker，masons，carpenters，etc。directlyorindirectly。Theexpenseofthehumblefamilies，whoarealwaysthemostinnumberinacity，isnecessarilymadewithactualmoney。Inthesesmallexchangescredit，bookdebts，andbillscannothaveaplace。Themerchantsorretailersdemandcashforthethingstheysupply：oriftheygivecredittoafamilyforafewdaysormonthstheyrequireasubstantialmoneypayment。Acarriagebuilderwhosellsacarriagefor400ouncesofsilverinnotes，willhavetochangethemintoactualmoneytopayforallthematerialsandthemenwhohaveworkedonhiscarriageiftheyhaveworkedoncredit，or，ifhehaspaidthemalready，tostartanewone。Thesaleofthecarriagewillleavehisprofitandhewillspendthistomaintainhisfamily。Hecouldnotbesatisfiedwithnotesunlesshecanputsomethingasideorlayitoutatinterest。
Theconsumptionoftheinhabitantsofastateis，inasense，entirelyforfood。Lodging，clothing，furniture，etc。
correspondtothefoodofthemenwhohaveworkeduponthem；andinthecitiesalldrinkandfoodareofnecessitypaidforinhardcash。Inthefamiliesoflandownersinthecityfoodispaidforeverydayoreveryweek：wineintheirfamiliesispaidforeveryweekoreverymonth；hats，stockings，shoes，etc。areordinarilypaidforinactualmoney，atleastthepaymentscorrespondtocashforthemenwhohaveworkeduponthem。Allthesumswhichservetopaylargeamountsaredivided，distributed，andspreadinsmallpaymentscorrespondingtothemaintenanceoftheworkmen，manservants，etc。andallthesesumsarenecessarilycollectedandreunitedbytheundertakersandretailerswhoareemployedonthesubsistenceoftheinhabitantstomakelargepaymentswhentheybuytheproductsofthefarmers。Analehousekeepercollectsbysolsandlivresthesumshepaystothebrewer，whousesthemtopayforallthegrainandmaterialshebuysfromthecountry。Onecannotimagineanythingisboughtforreadymoneyinastate，likefurniture，merchandise，etc。thevalueofwhichdoesnotcorrespondtothemaintenanceofthosewhohaveworkeduponit。
Circulationinthecitiesiscarriedoutbyundertakersandalwayscorrespondsdirectlyorindirectlytothesubsistenceofthemenservants，workmen，etc。Itisnotconceivablethatitcanbeeffectedinsmalldetailwithoutcash。Notesmayserveascountersinlargepaymentsforacertaintime；butwhenthelargesumscometobedistributedandspreadintosmalltransactions，asisalwaysthecasesoonerorlaterinthecourseofcirculationinacity，notescannotservethepurposeandcashisneeded。
Allthisbeingpresupposed，alltheclassesinastatewhopracticesomeeconomy，saveandkeepoutofcirculationsmallamountsofcashtilltheyhaveenoughtoinvestatinterestorprofit。Manymiserlyandtimidpeopleburyandhoardcashforconsiderableperiods。
Manylandowners，undertakersandothers，alwayskeepsomecashintheirpocketsorsafesagainstunforeseenemergenciesandnottoberunoutofmoney。Ifagentlemanmakesithisremarkthatheneverhadlessthan20louisinhispocketthroughoutthewholeyear，itmaybesaidthatthispockethaskept20louisoutofcirculationforayear。Onedoesnotliketospenduptothelastsou，oneisgladnotbecompletelydenuded，andtoreceiveanewinstalmentbeforepayingevenadebtwiththemoneyonehas。
Thecapitalofminorsandofsuitorsisoftendepositedincashandkeptoutofcirculation。
Besidethelargepaymentswhichpassthroughthehandsofthefarmersinthequarterlytermsoftheyeartherearemanyothersfromoneundertakertoanotherinthesameterms，andothersatdifferenttimesfromborrowerstolendersofmoney。Allthesesumsarecollectedinretailtrade，arespreadabroadanewandcomebacksoonerorlatertothefarmer：buttheyseemtorequireamoreconsiderableamountofcashforcirculationthaniftheselargepaymentsweremadeindifferenttimesfromthosewhenthefarmersarepaidfortheirproduce。
Infinethereissogreatavarietyinthedifferentordersoftheinhabitantsofthestateandinthecorrespondingcirculationofactualmoney，thatitseemsimpossibletolaydownanythingpreciseorexactastotheproportionofmoneysufficientforthecirculation。IhaveadducedsomanyexamplesandinductionsonlytomakeitclearthatIamnotfaroutofthetruthinmyconclusion"thattheactualmoneynecessaryforthecirculationofthestatecorrespondsnearlytothevalueofthethirdofalltheannualrentsofthelandlords。"Whenthelandlordshavearentwhichamountstohalftheproduceormorethanathird，agreaterquantityofactualmoneyisneededforcirculation，otherthingsbeingequal。Whenthereisgreatconfidenceinthebanksandinbookcreditslessmoneywillsuffice，asalsowhentherapidityofcirculationisacceleratedinanyotherway。ButIshallshowlaterthatpublicbanksdonotaffordsomanyadvantagesasisusuallysupposed。
ChapterFiveOftheInequalityofthecirculationofhardmoneyinastateThecityalwayssuppliesvariousmerchandisestothecountry，andthelandownerswhoresideinthecityshouldalwaysreceivethereaboutathirdoftheproduceoftheirland。Thecountrythusowestothecitymorethanhalftheproduceoftheland。Thisdebtwouldalwaysexceedonehalfifalllandownerslivedinthecity，butasseveraloftheleastimportantliveinthecountryIsupposethatthebalanceordebtwhichcontinuallyreturnsfromthecountrytothecityisequaltohalftheproduceofthelandandispaidinthecitybyhalftheproductsofthecountrytransportedtoitandsoldtopaythisdebt。
Butallthecountrysideofastateorkingdomowesaconstantbalancetothecapital，aswellfortherentsofthemoreconsiderablelandownerswhoresidethereasforthetaxesofthestateorcrown，mostofwhicharespentinthecapital。Alltheprovincialcitiesoweaconstantbalancetothecapital，eitherforthestate，uponhousesorconsumption，orforthedifferentcommoditieswhichtheydrawfromthecapital。Ithappensalsothatseveralindividualsandlandownerswholiveintheprovincialcitiesgotospendsometimeinthecapital，forpleasure，orforthejudgmentoftheirlawsuitsinfinalappeal，orbecausetheysendtheirchildrenthitherforafashionableeducation。Consequentlyalltheseexpensesincurredinthecapitalaredrawnfromtheprovincialcities。
Itmaythereforebesaidthatallthecountrysideandallthecitiesofastateoweregularlyandannuallyabalanceordebttothecapital。Butasitisallpaidinmoneyitisevidentthattheprovincesalwaysoweconsiderablesumstothecapital；
fortheproductsandcommoditieswhichtheprovincessendtothecapitalaresoldthereformoney，andwiththismoneythedebtorbalanceinquestionispaid。
Supposenowthatthecirculationofmoneyintheprovincesandinthecapitalisequalbothinquantityofmoneyandspeedofcirculation。Thebalancewillbefirstsenttothecapitalincashandthiswilldiminishthequantityofmoneyintheprovincesandincreaseitinthecapital，andconsequentlytherawmaterialandcommoditieswillbedearerinthecapitalthanintheprovinces，onaccountofthegreaterabundanceofmoneyinthecapital。Thedifferenceofpricesinthecapitalandintheprovincesmustpayforthecostsandrisksoftransport，otherwisecashwillbesenttothecapitaltopaythebalanceandthiswillgoontillthepricesinthecapitalandtheprovincescometothelevelofthesecostsandrisks。Thenthemerchantsorundertakersofthemarkettownswillbuyatalowpricetheproductsofthevillagesandwillhavethemcarriedtothecapitaltobesoldthereatahigherprice：andthisdifferenceofpricewillnecessarilypayfortheupkeepofthehorsesandmenservantsandtheprofitoftheundertaker，orelsehewouldceasehisenterprise。
Itwillfollowfromthisthatthepriceofrawproduceofequalqualitywillalwaysbehigherinthecountryplaceswhicharenearestthecapitalthaninthosemoredistantinproportiontothecostsandrisksoftransport；andthatthecountriesadjacenttoseasandriversflowingintothecapitalwillgetabetterpricefortheirproduceinproportionthanthosewhicharedistant（otherthingsbeingequal）becausewatertransportislessexpensivethanlandtransport。Ontheotherhandtheproductsandsmallwareswhichcannotbeconsumedinthecapital，becausetheyarenotsuitableorcannotbesentthitheronaccountoftheirbulk，orbecausetheywouldbespoiledontheway，willbeinfinitelycheaperinthecountryanddistantprovincesthaninthecapital，owingtotheamountofmoneycirculatingforthemwhichismuchsmallerinthedistantprovinces。
Soitisthatnewlaideggs，game，freshbutter，woodfuel，etc。willgenerallybemuchcheaperinthedistrictofPoitou，whilstcorn，cattleandhorseswillbedeareratParisonlybythedifferenceofthecostandriskofcarriageandtheduesforenteringthecity。
Itwouldbeeasytomakeaninfinitenumberofinductionsofthesamekindtojustifybyexperiencethenecessityofaninequalityinthecirculationofmoneyinthedifferentprovincesofagreatstateorkingdom，andtoshowthatthisinequalityisalwaysrelativetothebalanceordebtwhichbelongstothecapital。
Ifwesupposethatthebalanceduetothecapitalamountstoonefourthoftheproduceofthelandofalltheprovincesofthestatethebestusethatcanbemadeofthelandwouldbetoemploythecountryborderingonthecapitaltoproducethekindsofproducewhichcouldnotbedrawnfromdistantprovinceswithoutmuchexpenseordeterioration。Thisisinfactwhatalwaystakesplace。Themarketpricesofthecapitalservingasastandardforthefarmerstoemploythelandforsuchorsuchapurposetheyusethenearest，whensuitable，formarketgardens，pasture，etc。
Sofaraspossiblemanufacturesofcloth，linen，lace，etc。oughttobesetupintheremoteprovinces；and，intheneighbourhoodofcoalminesorforest，whichareuselessbytheirdistance，manufacturesoftoolsofiron，tin，copper，etc。Inthiswayfinishedmanufacturescouldbesenttothecapitalwithmuchlesscostofcarriagethantherawmaterialstobeworkedupinthecapitalandthesubsistenceoftheartisanswhowouldworkuponthemthere。Thiswouldsaveaquantityofhorsesandwaggonerswhowouldbebetteremployedforthebenefitofthestate。Thelandwouldservetomaintainonthespotworkmenandusefulmechanics；andamultitudeofhorseswouldbesavedwhoserveonlyuponunnecessarytransport。Inthiswaythedistantlandswouldyieldhigherrentstotheproprietorsandtheinequalityofthecirculationoftheprovincesandthecapitalwouldbebetterproportionedandlessconsiderable。
Neverthelesstosetupmanufacturesinthiswaywouldneednotonlymuchencouragementandcapitalbutalsosomewaytoensurearegularandconstantdemand，eitherinthecapitalitselforinforeigncountries，whoseexportsinreturnmaybeofservicetothecapital，topayforthemerchandisewhichitdrawsfromtheseforeigncountriesorforthereturnofsilverinkind。
Whenthesemanufacturesaresetupperfectionisnotatonceattained。Ifsomeotherprovincehavethembetterorcheaperorowingtothevicinityofthecapitalortheconvenienceofaseaorrivercommunicationhavetheirtransportconsiderablyfacilitated，themanufacturesinquestionwillhavenosuccess。
Allthesecircumstanceshavetobeconsideredinsettingupamanufactory。Ihavenotproposedtotreatoftheminthisessay，butonlytosuggestthatsofaraspracticablemanufacturesshouldbesetupinprovincesdistantfromthecapital，torenderthemmoreconsiderableandtobringaboutthereacirculationofmoneylessdisproportionatetothatofthecapital。
Forwhenadistantprovincehasnomanufactoryandproducesonlyordinaryrawmaterialswithoutwatercommunicationwiththecapitalortheocean，itisastonishinghowscarcemoneyistherecomparedwiththatwhichcirculatesinthecapitalandhowlittlethebestlandsproducetotheprinceandtotheproprietorswhoresideinthecapital。
ThewinesofProvenceandofLanguedocsenttothenorthroundtheStraitsofGibraltarbylonganddifficultnavigation，afterhavingpassedthroughthehandsofseveraldealersyieldverylittletotheParisownersoftheland。
Itishowevernecessarythatthesedistantprovincesshouldsendtheirproduce，inspiteofallthedrawbacksoftransportanddistancetothecapitalorelsewhereeitherinthestateorinforeigncountriesinorderthatthereturnsshouldprovideforpaymentofthebalanceduetothecapital。Buttheseproductswouldbemostlyconsumedonthespotiftherewereworksorfactoriestopaythisbalance，inwhichcasethenumberofinhabitantswouldbemuchlarger。
Whentheprovincepaysthebalanceonlywithitsproducewhichyieldssolittleinthecapitalhavingregardtotheexpensesofdistance，itisevidentthattheproprietorlivinginthecapitalpaystheproduceofmuchlandinthecountrytoreceivelittleinthecapital。Thisarisesfromtheinequalityofmoney，andthisinequalityisowingtotheconstantbalanceduefromtheprovincetothecapital。
Atpresentifastateorkingdomwhichsuppliesallforeigncountrieswithworkofitsownmanufacturedoessomuchofthiscommercethatitdrawseveryyearaconstantbalanceofmoneyfromabroad，thecirculationwillbecomemoreconsiderabletherethaninforeigncountries，moneywillbemoreplentifulthere，andconsequentlylandandlabourwillgraduallybecomedearerthere。Itwillfollowthatinallthebranchesofcommercethestateinquestionwillexchangeasmalleramountoflandandlabourwiththeforeignerforalargeramount，solongasthesecircumstancescontinue。
ButifsomeforeignerresideinthestateinquestionhewillbeinaboutthesamesituationandcircumstancesastheproprietoratPariswhohashislandindistantprovinces。
France，sincetheerectionin1646ofmanufactoriesofclothandotherworkssincesetup，appearedtotrade，atleastinpart，inthewaydescribed。SincethedecayofFrance，Englandhastakenpossessionofthistrade；andallstatesappearflourishingonlybythelargerorsmallerparttheyhaveinit。
Theinequalityofthecirculationofmoneyinthedifferentstatesconstitutestheinequalityoftheirrespectivepower，otherthingsbeingequal；andthisinequalityofcirculationisalwaysrespectivetothebalanceofforeigntrade。
Itiseasytojudgefromwhathasbeensaidinthischapterthattheassessmentbytaxesoftheroyaltithe，madebyMrdeVauban，wouldbeneitheradvantageousnorpracticable。Ifthetaxesonlandwereleviedinmoneyproportionabletotherentsoftheproprietors，itwouldbefairer。ButImustnotwanderfrommysubjecttoshowtheinconvenienceandimpossibilityofMrdeVauban’sproposal。
ChapterSixOftheincreaseanddecreaseinthequantityofhardmoneyinaStateIfminesofgoldorsilverbefoundinastateandconsiderablequantitiesofmineralsdrawnfromthem，theproprietorsofthesemines，theundertaker，andallthosewhoworkthere，willnotfailtoincreasetheirexpensesinproportiontothewealthandprofittheymake：theywillalsolendatinterestthesumsofmoneywhichtheyhaveoverandabovewhattheyneedtospend。
Allthismoney，whetherlentorspent，willenterintocirculationandwillnotfailtoraisethepriceofproductsandmerchandiseinallthechannelsofcirculationwhichitenters。
Increasedmoneywillbringaboutincreasedexpenditureandthiswillcauseanincreaseofmarketpricesinthehighestyearsofexchangeandgraduallyinthelowest。
Everybodyagreesthattheabundanceofmoneyoritsincreaseinexchange，raisesthepriceofeverything。ThequantityofmoneybroughtfromAmericantoEuropeforthelasttwocenturiesjustifiesthistruthbyexperience。
MrLockelaysitdownasafundamentalmaximthatthequantityofproduceandmerchandiseinproportiontothequantityofmoneyservesastheregulatorofmarketprice。Ihavetriedtoelucidatehisideaintheprecedingchapters：hehasclearlyseenthattheabundanceofmoneymakeseverythingdear，buthehasnotconsideredhowitdoesso。Thegreatdifficultyofthisquestionconsistsinknowinginwhatwayandinwhatproportiontheincreaseofmoneyraisesprices。
Ihavealreadyremarkedthatanaccelerationorgreaterrapidityincirculationofmoneyinexchange，isequivalenttoanincreaseofactualmoneyuptoapoint。Ihavealsoobservedthattheincreaseordecreaseofpricesinadistantmarket，homeorforeign，influencestheactualmarketprices。Ontheotherhandmoneyflowsindetailthroughsomanychannelsthatitseemsimpossiblenottolosesightofitseeingthathavingbeenamassedtomakelargesumsitisdistributedinlittlerillsofexchange，andthengraduallyaccumulatedagaintomakelargepayments。Fortheseoperationsitisconstantlynecessarytochangecoinsofgold，silverandcopperaccordingtotheactivityofexchange。Itisalsousuallythecasethattheincreaseordecreaseofactualmoneyinastateisnotperceivedbecauseitflowabroad，orisbroughtintothestate，bysuchimperceptiblemeansandproportionsthatitisimpossibletoknowexactlythequantitywhichentersorleavesthestate。
Howeveralltheseoperationspassunderoureyesandeverybodytakespartinthem。Imaythereforeventuretoofferafewobservationsonthesubject，eventhoughImaynotbeabletogiveanaccountwhichisexactandprecise。
Iconsideringeneralthatanincreaseofactualmoneycausesinastateacorrespondingincreaseofconsumptionwhichgraduallybringsaboutincreasedprices。
Iftheincreaseofactualmoneycomesfromminesofgoldorsilverinthestatetheownerofthesemines，theadventurers，thesmelters，refiners，andalltheotherworkerswillincreasetheirexpensesinproportiontotheirgains。Theywillconsumeintheirhouseholdsmoremeat，wine，orbeerthanbefore，willaccustomthemselvestowearbettercloths，finerlinen，tohavebetterfurnishedhousesandotherchoicercommodities。Theywillconsequentlygiveemploymenttoseveralmechanicswhohadnotsomuchtodobeforeandwhoforthesamereasonwillincreasetheirexpenses：allthisincreaseofexpenseinmeat，wine，wool，etc。
diminishesofnecessitytheshareoftheotherinhabitantsofthestatewhodonotparticipateatfirstinthewealthoftheminesinquestion。Thealtercationsofthemarket，orthedemandformeat，wine，wool，etc。beingmoreintensethanusual，willnotfailtoraisetheirprices。Thesehighpriceswilldeterminethefarmerstoemploymorelandtoproducetheminanotheryear：
thesesamefarmerswillprofitbythisriseofpricesandwillincreasetheexpenditureoftheirfamiliesliketheothers。Thosethenwhowillsufferfromthisdearnessandincreasedconsumptionwillbefirstofallthelandowners，duringthetermoftheirleases，thentheirdomesticservantsandalltheworkmenorfixedwage-earnerswhosupporttheirfamiliesontheirwages。Allthesemustdiminishtheirexpenditureinproportiontothenewconsumption，whichwillcompelalargenumberofthemtoemigratetoseekalivingelsewhere。Thelandownerswilldismissmanyofthem，andtherestwilldemandanincreaseofwagestoenablethemtoliveasbefore。Itisthus，approximately，thataconsiderableincreaseofmoneyfromtheminesincreasesconsumption，andbydiminishingthenumberofinhabitantsentailsagreaterexpenseamongthosewhoremain。
Ifmoremoneycontinuestobedrawnfromtheminesallpriceswillowingtothisabundancerisetosuchapointthatnotonlywillthelandownersraisetheirrentsconsiderablywhentheleasesexpireandresumetheiroldstyleofliving，increasingproportionablythewagestheirservants，butthemechanicsandworkmenwillraisethepricesoftheirarticlessohighthattherewillbeaconsiderableprofitinbuyingthemfromtheforeignerwhomakesthemmuchmorecheaply。Thiswillnaturallyinduceseveralpeopletoimportmanyarticlesmadeinforeigncountries，wherefoundverycheap：thiswillgraduallyruinthemechanicsandmanufacturersofthestatewhowillnotbemaintainthemselvestherebyworkingatsuchlowowingtothedearnessofliving。
Whentheexcessivehasdiminishedtheinhabitantsofastate，thosewhoremaintoatoolargeexpenditure，raisedproduceofthelandandthelabourofworkmentoexcessiveprices，ruinedthemanufacturesofthestatebyuseofforeignproductionsonthepartoflandlordsandmineworkers，themoneyproducedbythemineswillnecessarilygoabroadtopayfortheimports：thiswillgraduallyimpoverishthestateandrenderitinsomesortdependentontheForeignertowhomitisobligedtosendmoneyeveryyearasitisdrawnfromthemines。Thegreatcirculationofmoney，whichwasgeneralatthebeginning，ceases：
povertyandmiseryfollowandthelabouroftheminesappearstobeonlytotheadvantageofthoseemployeduponthemandtheForeignerswhoprofitthereby。
ThisisapproximatelywhathashappenedtoSpainsincethediscoveryoftheIndies。AstothePortuguese，sincethediscoveryofthegoldminesofBrazil，theyhavenearlyalwaysmadeuseofforeignarticlesandmanufactures；anditseemsthattheyworkattheminesonlyfortheaccountandadvantageofforeigners。Allthegoldandsilverwhichthesetwostatesextractfromtheminesdoesnotsupplythemincirculationwithmorepreciousmetalthanothers。EnglandandFrancehaveevenmoreasarule。
Nowiftheincreaseofmoneyinthestateproceedsfromabalanceofforeigntrade（i。e。fromsendingabroadarticlesandmanufacturesingreatervalueandquantitythanisimportedandconsequentlyreceivingthesurplusinmoney）thisannualincreaseofmoneywillenrichagreatnumberofmerchantsandUndertakersinthestate，andwillgiveemploymenttonumerousmechanicsandworkmenwhofurnishthecommoditiessenttotheforeignerfromwhomthemoneyisdrawn。Thiswillincreasegraduallytheconsumptionoftheseindustrialinhabitantsandwillraisethepriceoflandandlabour。Buttheindustriouswhoareeagertoacquirepropertywillnotatfirstincreasetheirexpense：theywillwaittilltheyhaveaccumulatedagoodsumfromwhichtheycandrawanassuredinterest，independentlyoftheirtrade。Whenalargenumberoftheinhabitantshaveacquiredconsiderablefortunesfromthismoney，whichentersthestateregularlyandannually，theywill，withoutfail，increasetheirconsumptionandraisethepriceofeverything。Thoughthisdearnessinvolvestheminagreaterexpensethantheyatfirstcontemplatedtheywillforthemostpartcontinuesolongastheircapitallasts；fornothingiseasierormoreagreeablethantoincreasethefamilyexpenses，nothingmoredifficultordisagreeablethantoretrenchthem。
Ifanannualandcontinuousbalancehasbroughtaboutinastateaconsiderableincreaseofmoneyitwillnotfailtoincreaseconsumption，toraisethepriceofeveningandeventodiminishthenumberofinhabitantsunlessadditionalproduceisdrawnfromabroadproportionabletotheincreasedconsumption。
Moreoveritisusualinstateswhichhaveacquiredaconsiderableabundanceofmoneytodrawmanythingsfromneighbouringcountrieswheremoneyisrareandconsequentlyeverythingischeap：butasmoneymustbesentforthisthebalanceoftradewillbecomesmaller。Thecheapnessoflandandlabourintheforeigncountrieswheremoneyisrarewillnaturallycausetheerectionofmanufactoriesandworkssimilartothoseofthestate，butwhichwillnotatfirstbesoperfectnorsohighlyvalued。
Inthissituationthestatemaysubsistinabundanceofmoney，consumeallitsownproduceandalsomuchforeignproduceandoverandaboveallthismaintainasmallbalanceoftradeagainsttheforeigneroratleastkeepthebalancelevelformanyyears，thatisimportinexchangeforitsworkandmanufacturesasmuchmoneyfromtheseforeigncountriesasithastosendthemforthecommoditiesorproductsofthelandittakesfromthem。
Ifthestateisamaritimestatethefacilityandcheapnessofitsshippingforthetransportofitsworkandmanufacturesintoforeigncountriesmaycompensateinsomesortthehighpriceoflabourcausedbythetoogreatabundanceofmoney；sothattheworkandmanufacturesofthisstate，dearthoughtheybe，willsellinforeigncountriescheapersometimesthanthemanufacturesofanotherstatewherelabourislesshighlypaid。
Thecostoftransportincreasesagooddealthepricesofthingssenttodistantcountries；butthesecostsareverymoderateinmaritimestates，wherethereisregularshippingtoallforeignportssothatShipsarenearlyalwaysfoundtherereadytosailwhichtakeonboardallcargoesconfidedtothemataveryreasonablefreight。
ItisnotsoinstateswherenavigationdoesnotNourish。
Thereitisnecessarytobuildshipsexpresslyforthecarryingtradeandthissometimesabsorbsalltheprofit；andnavigationthereisalwaysveryexpensive，whichentirelydiscouragestrade。
Englandtodayconsumesnotonlythegreatestpartofitsownsmallproducebutalsomuchforeignproduce，suchasSilks，Wines，Fruit，Lineningreatquantity，etc。whileshesendsabroadonlytheproduceofhermines，herworkandmanufacturesforthemostpart，anddearthoughlabourbeowingtotheabundanceofmoney，shedoesnotfailtosellherarticlesindistantcountries，owingtotheadvantageofhershipping，atpricesasreasonableasinFrancewherethesesamearticlesaremuchcheaper。
Theincreasedquantityofmoneyincirculationinastatemayalsobecaused，withoutbalanceoftrade，bysubsidiespaidtothisstatebyforeignpowers，bytheexpensesofseveralambassadors，oroftravellerswhompoliticalreasonsorcuriosityorpleasuremayinducetoresidethereforsometime，bythetransferofthepropertyandfortuneofsomeFamilieswhofrommotivesofreligiouslibertyorothercausesquittheirowncountrytosettledowninthisstate。Inallthesecasesthesumswhichcomeintothestatealwayscauseanincreasedexpenseandconsumptionthereandconsequentlyraisethepricesofallthingsinthechannelsofexchangeintowhichmoneyenters。
Supposeaquarteroftheinhabitantsofthestateconsumedailymeat，wine，beer，etc。andsupplythemselvesfrequencywithcloths，linen，etc。beforetheincreaseinmoney，butthataftertheincreaseathirdorhalfoftheinhabitantsconsumethesesamethings，thepricesofthemwillnotfailtorise，andthedearnessofmeatwillinduceseveralofthosewhoformedaquarterofthestatetoconsumelessofitthanusual。Amanwhoeatsthreepoundsofmeatadaywillmanagewithtwopounds，buthefeelsthereduction，whiletheotherhalfoftheinhabitantswhoatehardlyanymeatwillnotfeelthereduction。Breadwillintruthgoupgraduallybecauseofthisincreasedconsumption，asIhaveoftensuggested，butitwillbelessdearinproportionthanmeat。Theincreasedpriceofmeatcausesdiminishedconsumptiononthepartofasmallsectionofthepeople，andsoisfelt；buttheofasmallsectionofthepeople，andsoisfelt；buttheincreasedpriceofbreaddiminishestheshareofalltheinhabitants，andsoislessfelt。If100，000extrapeoplecometoliveinastateof10millionsofinhabitants，theirextraconsumptionofbreadwillamounttoonlypoundin100whichmustbesubtractedfromtheoldinhabitants；butwhenamaninsteadof100poundsofbreadconsumes99forhissubsistencehehardlyfeelsthisreduction。
Whentheconsumptionofmeatincreasesthefarmersaddtotheirpasturestogetmoremeat，andthisdiminishesthearablelandandconsequentlytheamountofcorn。ButwhatgenerallycausesmeattobecomedearerinproportionthanBreadisthatordinarilythefreeimportofforeigncornispermittedwhiletheimportofCattleisabsolutelyforbidden，asinEngland，orheavyimportdutiesareimposedasinotherstates。ThisisthereasonwhytherentsofmeadowsandpasturesgoupinEngland，intheabundanceofmoney，tothreetimesmorethantherentsofarableland。
ThereisnodoubtthatAmbassadors，Travellers，andFamilieswhocometosettleinthestate，increaseconsumptionthereandthatpricesriseinallthechannelsofexchangewheremoneyisintroduced。
Astosubsidieswhichthestatehasreceivedfromforeignpowers，eithertheyarehoardedforstatenecessitiesorareputintocirculation。IfwesupposethemhoardedtheydonotconcernmyargumentforIamconsideringonlymoneyincirculation。
Hoardedmoney，plate，Churchtreasures，etc。arewealthwhichthestateturnstoserviceinextremity，butareofnopresentutility。Ifthestateputsintocirculationthesubsidiesinquestionitcanonlybebyspendingthemandthisillverycertainlyincreaseconsumptionandsendupallprices。Whoeverreceivesthismoneywillsetitinmotionintheprincipalaffairoflife，whichisthefood，eitherofhimselforofsomeother，sincetothiseverythingcorrespondsdirectlyorindirectly。
ChapterSevenContinuationofthesamesubjectAsgold，silver，andcopperhaveanintrinsicvalueproportionabletothelandandlabourwhichenterintotheirproductionattheminesaddedtothecostoftheirimportationorintroductionintostateswhichhavenomines，thequantityofmoney，asofallothercommodities，determinesitsvalueinthebargainingofthemarketagainstotherthings。
IfEnglandbeginsforthefirsttimetomakeuseofgold，silver，andcopperinexchangesmoneywillbevaluedaccordingtothequantityofitincirculationproportionablytoitspowerofexchangeagainstallothermerchandiseandproduce，andtheirvaluewillbearrivedatroughlybythealtercationsofthemarkets。OnthefootingofthisestimationthelandownersandUndertakerswillfixthewagesoftheirDomesticServantsandWorkmenatsomuchadayorayear，sothattheyandtheirfamiliesmaybeabletoliveonthewagestheyreceive。
SupposenowthattheresidenceofAmbassadorsandforeigntravellersinEnglandhaveintroducedasmuchmoneyintothecirculationthereastherewasbefore；thismoneywillatfirstpassintothehandsofvariousmechanics，DomesticServants，Undertakersandotherswhohavehadashareinprovidingtheequipages，amusements，etc。oftheseForeigners；themanufacturers，farmers，andotherUndertakerswillfeeltheeffectofthisincreaseofmoneywhichwillhabituateagreatnumberofpeopletoalargerexpensethanbefore，andthiswillinconsequencesendupmarketprices。EventhechildrenoftheseUndertakersandmechanicswillembarkuponnewexpense：inthisabundanceofmoneytheirFatherswillgivethemalittlemoneyfortheirpettypleasures，andwiththistheywillbuycakesandpatties，andthisnewquantityofmoneywillspreaditselfinsuchawaythatmanywholivedwithouthandlingmoneywillnowhavesome。Manypurchaseswhichusedtobemadeoncreditwillnowbemadeforcash，andtherewillthereforebegreaterrapidityinthecirculationofmoneyinEnglandthantherewasbefore。
FromallthisIconcludethatbydoublingthequantityofmoneyinastatethepricesofproductsandmerchandisearenotalwaysdoubled。ARiverwhichrunsandwindsaboutinitsbedwillnotflowwithdoublethespeedwhentheamountofitswaterisdoubled。
Theproportionofthedearnesswhichtheincreasedquantityofmoneybringsaboutinthestatewilldependontheturnwhichthismoneywillimparttoconsumptionandcirculation。
Throughwhateverhandsthemoneywhichisintroducedmaypassitwillnaturallyincreasetheconsumption；butthisconsumptionwillbemoreorlessgreataccordingtocircumstances。Itwillbedirectedmoreorlesstocertainkindsofproductsormerchandiseaccordingtotheideaofthosewhoacquirethemoney。Marketpriceswillrisemoreforcertainthingsthanforothershoweverabundantthemoneymaybe。InEnglandthepriceofmeatmightbetripledwhilethepriceofcornwentuponlyonefourth。
InEnglanditisalwayspermittedtobringincornfromforeigncountries，butnotcattle。ForthisreasonhowevergreattheincreaseofhardmoneymaybeinEnglandthepriceofcorncanonlyberaisedabovethepriceinothercountrieswheremoneyisscarcebythecostandrisksofimportingcornfromtheseforeigncountries。
ItisnotthesamewiththepriceofCattle，whichwillnecessarilybeproportionedtothequantityofmoneyofferedformeatinproportiontothequantityofmeatandthenumberofCattlebredthere。
Anoxweighing800poundssellsinPolandandHungaryfortwoorthreeouncesofsilver，butcommonlysellsintheLondonmarketformorethan40。YetthebushelofflourdoesnotsellinLondonfordoublethepriceinPolandandHungary。
Increaseofmoneyonlyincreasesthepriceofproductsandmerchandisebythedifferenceofthecostoftransport，whenthistransportisallowed。Butinmanycasesthecarriagewouldcostmorethanthethingisworth，andsotimberisuselessinmanyplaces。Thiscostofcarriageisthereasonwhymilk，freshbutter，salads，game，etc。arealmostgivenawayintheprovincesdistantfromthecapital。
Iconcludethatanincreaseofmoneycirculatinginastatealwayscausesthereanincreaseofconsumptionandahigherstandardofexpense。Butthedearnesscausedbythismoneydoesnotaffectequallyallthekindsofproductsandmerchandise，proportionablytothequantityofmoney，unlesswhatisaddedcontinuesinthesamecirculationasthemoneybefore，thatistosayunlessthosewhoofferinthemarketoneounceofsilverbethesameandonlyoneswhonowoffertwoounceswhentheamountofmoneyincirculationisdoubledinquantity，andthatishardlyeverthecase。Iconceivethatwhenalargesurplusofmoneyisbroughtintoastatethenewmoneygivesanewturntoconsumptionandevenanewspeedtocirculation。Butitisnotpossibletosayexactlytowhatextent。
ChapterEightFurtherReflectionsonthesamesubjectWehaveseenthatthequantityofmoneycirculatinginastatemaybeincreasedbyworkingthemineswhicharefoundinit，bysubsidiesfromforeignpowers，bytheimmigrationofFamiliesofforeigners，bytheresidenceofAmbassadorsandTravellers，butaboveallbyaregularandannualbalanceoftradefromsupplyingmerchandisetoForeignersanddrawingfromthematleastpartofthepriceingoldandsilver。Itisbythislastmeansthatastategrowsmostsubstantially，especiallywhenitstradeisaccompaniedandsupportedbyamplenavigationandbyaconsiderablerawproduceathomesupplyingthematerialnecessaryforthegoodsandmanufacturessentabroad。
AshoweverthecontinuationofthisCommercegraduallyintroducesagreatabundanceofmoneyandlittlebylittleincreasesconsumption，andastomeetthismuchForeignproducemustbebroughtin，partoftheannualbalancegoesouttopayforit。Ontheotherhandthehabitofspendingincreasingtheemploymentoflabourersthepricesofmanufacturedgoodsalwaysgoup。Withoutfailsomeforeigncountriesendeavourtosetupforthemselvesthesamekindsofmanufactures，andsoceasetobuythoseofthestateinquestion；andthoughthesenewestablishmentsofcraftsandmanufacturesbenotatfirstperfecttheyslackenandevenpreventtheexportationofthoseoftheneighbouringstateintotheirowncountrywheretheycanbegotcheaper。
Thusitisthatthestatebeginstolosesomebranchesofitsprofitabletrade：andmanyofitsworkmenandmechanicswhoseelabourFallenoffleavethestatetofindmoreworkinthecountrieswiththenewmanufacture。Inspiteofthisdiminutioninthebalanceoftradethecustomofimportingvariousproductswillcontinue。Thearticlesandmanufacturesofthestatehavingagreatreputation，andthefacilityofnavigationaffordingthemeansofsendingthematlittlecostintodistantcountries，thestatewillformanyyearskeeptheupperhandoverthenewmanufacturesofwhichwehavespokenandwillstillmaintainasmallBalanceoftrade，oratleastwillkeepiteven。Ifhoweversomeothermaritimestatetriestoperfectthesamearticlesanditsnavigationatthesametimeitwillowingtothecheapnessofitsmanufacturestakeawayseveralbranchesoftradefromthestateinquestion。Inconsequencethisstatewillbegintoloseitsbalanceoftradeandwillbeforcedtosendeveryyearapartofitsmoneyabroadtopayforitsimportations。
Moreover，evenifthestateinquestioncouldkeepabalanceoftradeinitsgreaterabundanceofmoneyitisreasonabletosupposethatthisabundancewillnotarrivewithoutmanywealthyindividualsspringingupwhowillplungeintoluxury。Theywillbuypicturesandgemsfromtheforeigner，willprocuretheirsilksandrareobjects，andsetsuchanexampleofluxuryinthestatethatinspiteoftheadvantageofitsordinarytradeitsmoneywillflowabroadannuallytopayforthisluxury。Thiswillgraduallyimpoverishthestateandcauseittopassfromgreatpowerintogreatweakness。
Whenastatehasarrivedatthehighestpointofwealth（I
assumealwaysthatthecomparativewealthofstatesconsistsprincipallyintherespectivequantitiesofmoneywhichtheypossess）itwillinevitablyfallintopovertybytheordinarycourseofthings。Thetoogreatabundanceofmoney，whichsolongasitlastsformsthepowerofstates，throwsthembackimperceptiblybutnaturallyintopoverty。Thusitwouldseemthatwhenastateexpandsbytradeandtheabundanceofmoneyraisesthepriceoflandandlabour，thePrinceortheLegislatoroughttowithdrawmoneyfromcirculation，keepitforemergencies，andtrytoretarditscirculationbyeverymeansexceptcompulsionandbadfaith，soastoforestallthetoogreatdearnessofitsarticlesandpreventthedrawbacksofluxury。
Butasitisnoteasytodiscoverthetimeopportuneforthis，nortoknowwhenmoneyhasbecomemoreabundantthanitoughttobeforthegoodandpreservationoftheadvantagesofthestate，thePrincesandHeadsofRepublics，whodonotconcernthemselvesmuchwiththissortofknowledge，attachthemselvesonlytomakeuseofthefacilitywhichtheyfindthroughtheabundanceoftheirstaterevenues，toextendtheirpowerandtoinsultothercountriesonthemostfrivolouspretexts。Andallthingsconsideredtheydonotperhapssobadlyinworkingtoperpetuatethegloryoftheirreignsandadministrations，andtoleavemonumentsoftheirpowerandwealth；forsince，accordingtothenaturalcourseofhumanity，thestatemustcollapseofitselftheydobutaccelerateitsfallalittle。Neverthelessitseemsthattheyoughttoendeavourtomaketheirpowerlastallthetimeoftheirownadministration。
Itdoesnotneedagreatmanyyearstoraiseabundancetothehighestpointinastate，stillfewerareneededtobringittopovertyforlackofcommerceandmanufactures。NottospeakofthepowerandfalloftheRepublicofVenice，theHanseaticTowns，FlandersandBrabant，theDutchRepublic，etc。whohavesucceededeachotherintheprofitablebranchesoftrade，onemaysaythatthepowerofFrancehasbeenontheincreaseonlyfrom1646（whenmanufacturesofclothsweresetupthere，whichwereuntilthenimported）to1684whenanumberofProtestantUndertakersandartisansweredrivenoutofit，andthatkingdomhasdonenothingbutrecedesincethislastdate。
Tojudgeoftheabundanceandscarcityofmoneyincirculation。Iknownobettermeasurethantheleasesandrentsoflandowners。Whenlandisletathighrentsitisasignthatthereisplentyofmoneyinthestate；butwhenlandhastobeletmuchloweritshows，otherthingsbeingequal，thatmoneyisscarce。IhavereadinanEtatdelaFrancethattheacreofvineyardwhichwasletin1660nearMantes，andthereforenotfarfromthecapitalofFrance，for200livrestournoisinmoneyoffullweight，onlyletin1700for100livrestournoisinlightermoney，thoughthesilverbroughtfromtheWestIndiesintheintervalshouldnaturallyhavesentupthepriceoflandinEurope。
Theauthor[oftheEtat]attributesthisfallinrenttodefectiveconsumption。AnditseemsthathehadinfactobservedthattheconsumptionofWinehaddiminished。ButIthinkhehasmistakentheeffectforthecause。ThecausewasagreaterrarityofmoneyinFrance，andtheeffectofthiswasnaturallyafallingoffinconsumption。InthisEssayIhavealwayssuggested，onthecontrary，thatabundantmoneynaturallyincreasesconsumptionandcontributesaboveeverythingtothecultivationofland。Whenabundantmoneyraisesproducetorespectablepricestheinhabitantsmakehastetoworktoacquireit；buttheyarenotinthesamehurrytoacquireproduceormerchandisebeyondwhatisneededfortheirmaintenance。
Itisclearthateverystatewhichhasmoremoneyincirculationthanitsneighbourshasanadvantageoverthemsolongasitmaintainsthisabundanceofmoney。
Inthefirstplaceinallbranchesoftradeitgiveslesslandandlabourthanitreceives：thepriceoflandandlabourbeingeverywherereckonedinmoneyishigherinthestatewheremoneyismostabundant。Thusthestateinquestionreceivessometimestheproduceoftwoacresoflandinexchangeforthatofoneacre，andtheworkoftwomenforthatofonlyone。ItisbecauseofthisabundanceofmoneyincirculationinLondonthattheworkofoneEnglishembroiderercostsmorethanthatof10
Chineseembroiderers，thoughtheChineseembroidermuchbetterandturnoutmoreworkinaday。InEuropeoneisastonishedhowtheseIndianscanlive，workingsocheap，andhowtheadmirablestuffswhichtheysenduscostsolittle。
Inthesecondplace，therevenuesofthestatewheremoneyabounds，areraisedmoreeasilyandincomparativelymuchlargeramount。Thisgivesthestate，incaseofwarordispute，themeanstogainallsortsofadvantagesoveritsadversarieswithwhommoneyisscarce。
IfoftwoPrinceswhowaruponeachotherforthesovereigntyorconquestofastateonehavemuchmoneyandtheotherlittlemoneybutmanyestateswhichmaybeworthtwiceasmuchasallthemoneyofhisenemy，thefirstwillbebetterabletoattachtohimselfGeneralsandOfficersbygiftsofmoneythanthesecondwillbebygivingtwicethevalueinlandsandestates。Grantsoflandaresubjecttochallengeandrevocationandcannotberelieduponsowellasthemoneywhichisreceived。
Withmoneymunitionsofwarandfoodareboughtevenfromtheenemiesofthestate。Moneycanbegivenwithoutwitnessesforsecretservice。Lands，Produce，merchandisewouldnotserveforthesepurposes，notevenjewelsordiamonds，becausetheyareeasilyrecognised。Afterallitseemstomethatthecomparativepowerandwealthofstatesconsist，otherthingsbeingequal，inthegreaterorlessabundanceofmoneycirculatinginthemhicetnunc。
ItremainstomentiontwoothermethodsofincreasingtheamountofmoneyinactivecirculationinastateThefirstiswhenUndertakersandprivateindividualborrowmoneyfromtheirforeigncorrespondentsainterest，orindividualsabroadsendtheirmoneyintothestatetobuysharesorgovernmentstocksthere。ThisoftenamountstoveryconsiderablesumsuponwhichthestatemustannuallypayinteresttotheseforeignersThesemethodsofincreasingthemoneyinthestatemakeitmoreabundantthereanddiminishtherateofinterest。BymeansofthismoneytheUndertakersinthestatefinditpossibletoborrowmorecheaplytosetpeopleonworkandtoestablishmanufactoriesinthehopeofprofit。TheArtisansandallthosethroughwhosehandsthismoneypasses，consumemorethantheywouldhavedoneiftheyhadnotbeenemployedbymeansofthismoney，whichconsequentlyincreasespricesjustasifitbelongedtothestate，andthroughtheincreasedconsumptionorexpensethuscausedthepublicrevenuesderivedfromtaxesonconsumptionareaugmented。Sumslenttothestateinthiswaybringwiththemmanypresentadvantages，buttheendofthemisalwaysburdensomeandharmful。Thestatemustpaytheinteresttotheforeignerseveryyear，andbesidesthisisatthemercyoftheforeignerswhocanalwaysputitintodifficultywhentheytakeitintotheirheadstowithdrawtheircapital。Itwillcertainlyarrivethattheywillwanttowithdrawitatthemomentwhenthestatehasmostneedofit，aswhenpreparationsforwarareinhandandahitchisfeared。Theinterestpaidtotheforeignerisalwaysmuchmoreconsiderablethantheincreaseofpubicrevenuewhichhismoneyoccasions。Theseloansofmoneyareoftenseentopassfromonecountrytoanotheraccordingtotheconfidenceofinvestorsinthestatestowhichtheyaresent。Buttotellthetruthitmostcommonlyhappensthatstatesloadedwiththeseloans，whohavepaidheavyinterestonthemformanyyears，fallatlengthbybankruptcyintoinabilitytopaythecapital。Assoonasdistrustisawakenedthesharesorpublicstocksfall，theforeignshareholdersdonotliketorealisethematalossandprefertocontentthemselveswiththeinterest，hopingthatconfidencewillrevive。Butsometimesitneverrevives。Instateswhichdeclineintodecaytheprincipalobjectofministersisusuallytorestoreconfidenceandsoattractforeignmoneybyloansofthiskind。Forunlesstheministryfailstokeepfaithandtoobserveitsengagementsthemoneyofthesubjectswillcirculatewithoutinterruption。Itisthemoneyoftheforeignerswhichhasthepowerofincreasingthecirculatingcurrencyinthestate。
Buttheresourceoftheseborrowingswhichgivesapresenteasecomestoabadendandisafireofstraw。Toreviveastateitisneedfultohaveacaretobringabouttheinfluxofanannual，aconstantandarealbalanceoftrade，tomakeflourishingbyNavigationthearticlesandmanufactureswhichcanalwaysbesentabroadcheaperwhenthestateisinalowconditionandhasashortageofmoney。Merchantsarefirsttobegintomaketheirfortunes，thenthelawyersmaygetpartofit，thePrinceandthefarmersoftherevenuegetashareattheexpenseofthese，anddistributetheirgracesastheyplease。
Whenmoneybecomestooplentifulinthestate，luxurywillinstalitselfandthestatewillfallintodecay。
Suchisapproximatelythecirclewhichmayberunbyaconsiderablestatewhichhasbothcapitalandindustriousinhabitants。Anableministerisalwaysabletomakeitrecommencethisround。Notmanyyearsareneededtoseeittriedandsucceed，atleastatthebeginningwhichisitsmostinterestingposition。Theincreasedquantityofmoneyincirculationwillbeperceivedinseveralwayswhichmyargumentdoesnotallowmetoexaminenow。
Asforstateswhichhavenotmuchcapitalandcanonlyincreasebyaccidentsandconjunctureitisdifficulttofindmeanstomakethemflourishbytrade。NoministerscanrestoretheRepublicsofVeniceandHollandtothebrilliantsituationfromwhichtheyhavefallen。ButastoItaly，Spain，France，andEngland，howeverlowtheymaybefallen，theyarealwayscapableofbeingraisedbygoodadministrationtoahighdegreeofpowerbytradealone，provideditbeundertakenseparately，forifallthesestateswereequallywelladministeredtheywouldbegreatonlyinproportiontotheirrespectivecapitalandtothegreaterorlessindustryoftheirpeople。
ThelastmethodIcanthinkoftoincreasethequantityofmoneyactuallycirculatinginastateisbyviolenceandarmsandthisisoftenblendedwiththeothers，sinceinallTreatiesofPeaceitisgenerallyprovidedtoretainthetradingrightsandprivilegeswhichithasbeenpossibletoderivefromthem。Whenastateexactscontributionsormakesseveralotherstatestributarytoit，thisisaverysuremethodofobtainingtheirmoney。Iwillnotundertaketoexaminethemethodsofputtingthisdeviceintopractice，butwillcontentmyselfwithsayingthatallthenationswhohaveflourishedinthiswayhavenotfailedtodecline，likestateswhohavenourishedthroughtheirtrade。TheancientRomansweremorepowerfulinthiswisethanalltheotherpeoplesweknowof。YetthesesameRomansbeforelosinganinchofthelandoftheirvaststatesfellintodeclinebyluxuryandbroughtthemselveslowbythediminutionofthemoneywhichhadcirculatedamongthem，butwhichluxurycausedtopassfromtheirgreatEmpireintoorientalcountries。
SolongastheluxuryoftheRomans（whichdidnotbegintillafterthedefeatofAntiochus，KingofAsiaaboutA。U。C。
564）wasconfinedtotheproduceofthelandandlabourofallthevastestatesoftheirdominion，thecirculationofmoneyincreasedinsteadofdiminishing。Thepublicwasinpossessionofalltheminesofgold，silver，andcopperintheEmpire。TheyhadthegoldminesofAsia，Macedonia，AquilaeaandtherichminesbothofgoldandsilverofSpainandothercountries。Theyhadseveralmintswheregold，silverandcoppercoinswerestruck。
TheconsumptionatRomeofallthearticlesandmerchandisewhichtheydrewfromtheirvastProvincesdidnotdiminishthecirculationofthecurrency，anymorethanpictures，statuesandjewelswhichtheydrewfromthem。Thoughthepatricianslaidoutexcessiveamountsfortheirfeastsandpaid15，000ouncesofsilverforasinglefish，allthatdidnotdiminishthequantityofmoneycirculatinginRome，seeingthatthetributeoftheProvincesregularlybroughtitback，tosaynothingofwhatPraetorsandGovernorsbroughtthitherbytheirextortions。TheamountsannuallyextractedfromtheminesmerelyincreasedthecirculationatRomeduringthewholereignofAugustus。Luxurywashoweveralreadyonaverygreatscale，andtherewasmucheagernessnotonlyforcuriositiesproducedintheEmpirebutalsoforjewelsfromIndia，pepperandspices，andalltheraritiesofArabia，andthesilkswhichwerenotmadewithrawmaterialsoftheEmpirebegantobeindemandthere。ThemoneydrawnfromtheminesstillexceededhoweverthesumssentoutoftheEmpiretobuyallthesethings。NeverthelessunderTiberiusascarcityofmoneywasfelt。ThatEmperorhadshutupinhisTreasury2milliardsand700millionsofsesterces。Torestoreabundanceofcirculationhehadonlytoborrow300millionsonthemortgageofhisestates。CaligulainlessthanoneyearspentallthistreasureofTibetiusafterhisdeath，anditwasthenthattheabundanceofmoneyincirculationwasatitshighestinRome。Thefuryofluxurykeptonincreasing。InthetimeofPliny，thehistorian，therewasexportedfromtheEmpire，asheestimated，atleast100millionsofsestercesannually。Thiswasmorethanwasdrawnfromthemines。UnderTrajanthepriceoflandhadfallenbyone-thirdormore，accordingtotheyoungerPliny，andmoneycontinuedtodecreaseuntilthetimeoftheEmperorSeptimusSeverus。ItwasthensoscarceatRomethattheEmperormadeenormousgranaries，beingunabletocollectlargetreasureforhisenterprises。ThustheRomanEmpirefellintodeclinethroughthelossofitsmoneybeforelosinganyofitsestates。Beholdwhatluxurybroughtaboutandwhatitalwayswillbringaboutinsimilarcircumstances。