(3.xiv.3) In some of the more distant places of Wales, for example, money is more valuablethan in London; in common language, we say, that living is more cheap; in other words, commoditiesmay be purchased with a smaller quantity of money: and this state of things is habitual, moneyhaving no tendency to go from London where its value is low, to increase its quantity in Waleswhere its value is high. This phenomenon requires explanation.
(3.xiv.4) The fact is, that the whole of such difference as is habitual, and has no tendency toproduce a transit of the metals, resolves itself into cost of carriage. Corn, butchers' meat, andother commodities, which are produced in Wales, are cheaper than in London, because thesupply of London comes from a distance, and the original price is enhanced by cost of carriage.
But as there are certain commodities which thus are cheaper in Wales than in London, so thereare others which are cheaper in London than in Wales. Such are all the commodities which areeither manufactured in London, or imported into London from abroad. Just as the corn and othercommodities, which come from Wales to London, are enhanced by the cost of carriage; so thosecommodities which are sent from London to Wales, are dearer in Wales than in London, by thewhole of the cost which is incurred in transporting them. The fact, therefore, is, that in Walessome commodities are cheaper, and some are dearer, than in London; but those which arecheaper are the articles of principal importance; they are the necessaries of life, the articles theconsumption of which constitutes the principal part of almost every man's expenditure. What ismore, they are the articles the money-value of which determines the money-value of labour;every thing which a man has done for him, therefore, is done cheaper than it is in London. And,lastly, the gross commodities, which are the produce of Wales, cost much more for carriage, inproportion to their value, than the fine commodities which are received from London: the cost ofthe gross commodities in London is much more raised above the price of them in Wales, thanthe price of the fine commodities in Wales is raised above the price of them in London. The costof living, therefore, is greater in London than in Wales, for this reason, solely, because people inLondon pay more for carriage. If the value of the metal in Wales rose ever so little above thatlimit, a profit equal to that rise would immediately operate as a motive for sending it to Wales.
(3.xiv.5) From two places in the same country, let us transfer the consideration to twodifferent countries. The cost of living is higher; in other words, the value of the precious metals is lowerin England, than in Poland. The difference here, also, resolves itself wholly into the cost ofcarriage. Let us suppose that England receives a considerable portion of her supply of corn fromPoland, and sends her the whole, or the greater part, of her fine manufactures : corn, it is evident,will be dearer in England; but fine manufactures will be dearer in Poland. For the same reasonsthat money, as we have shown, goes farther in Wales, than in London, it is easy to see that itwill, in this case, go farther in Poland than in England; in other words, the value of gold inPoland will be greater than in England, just so much as to compensate for the greater cost ofcarriage which England sustains. The moment it rises above that value, a profit may be made bysending it to England.
Section XV. Mode in which the Precious Metal, or Medium ofExchange, Distributes Itself Among the Nations of the Globe (3.xv.1) In the country of' the mines, whence gold distributes itself to the rest of the world,gold is in relative plenty. As an addition is constantly making to the quantity already possessed, thereis a constant tendency in the gold of that country to fall in relative value; in other words, aconstant tendency in the price of other things to rise. As soon as any commodities have risensufficiently high to enable them to be imported, they will come in from that country, be it what itmay, from which, prime cost and cost of carriage taken together, they come the cheapest; andgold will go out in exchange.
(3.xv.2) By this importation of gold into that second country, it becomes relatively plentifulthere, and prices rise. Some commodity, or commodities, become there at last so dear, that theycan be imported, with profit, from another country : commodities, as in the previous instance,come in, and gold goes out. It is unnecessary to trace the operation farther. In this manner goldproceeds from country to country, through the whole connected chain of the commercial world.
(3.xv.3) In a preceding section we found, that it is the interest of two nations to exchangewith one another two sorts of commodities, as often as the relative cost of producing them is differentin the two countries. If four quarters of corn, for example, and 20 yards of cloth, cost, each, thesame quantity of labour in England, but not the same quantity in Poland, it would be the interestof the two countries, the one to produce corn, the other to produce cloth, and to exchange themwith one another.
(3.xv.4) Suppose, while four quarters of corn and 20 yards of cloth required the samequantity of labour in England; that in Poland 20 yards of cloth required twice as much labour as fourquarters of corn. In these circumstances, cloth, as compared with corn, would be twice as dear inPoland as in England; in other words, four quarters of corn, which in England would be of equalvalue with 20 yards of cloth, would in Poland be equal to no more than 10 yards. In a traffic ofthese commodities, between England and Poland, there would be a value of 5 yards of cloth tobe gained by each upon every repetition of the transaction.
