Letters And Essays Moral And Miscellaneous Expenses


It is difficult for a man to speak long of himself without vanity; therefore, I shall be short. It may be thought an instance of vanity that I pretend at all to write my life; but this Narrative shall contain little more than the History of my Writings; as, indeed, almost all my life has been spent in literary pursuits and occupations. The first success of most of my writings was not such as to be an object of vanity.

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I was born the 26th of April 1711, old style, at Edinburgh. I was of a good family, both by father and mother: my father’s family is a branch of the Earl of Home’s, or Hume’s; and my ancestors had been proprietors of the estate, which my brother possesses, for several generations. My mother was daughter of Sir David Falconer, President of the College of Justice: the title of Lord Halkerton came by succession to her brother.

My family, however, was not rich, and being myself a younger brother, my patrimony, according to the mode of my country, was of course very slender. My father, who passed for a man of parts, died when I was an infant, leaving me, with an elder brother and a sister, under the care of our mother, a woman of singular merit, who, though young and handsome, devoted herself entirely to the rearing and educating of her children. I passed through the ordinary course of education with success, and was seized very early with a passion for Edition: current; Page: [xxxiii] literature, which has been the ruling passion of my life, and the great source of my enjoyments. My studious disposition, my sobriety, and my industry, gave my family a notion that the law was a proper profession for me; but I found an unsurmountable aversion to every thing but the pursuits of philosophy and general learning; and while they fancied I was poring upon Voet and Vinnius, Cicero and Virgil were the authors which I was secretly devouring.

My very slender fortune, however, being unsuitable to this plan of life, and my health being a little broken by my ardent application, I was tempted, or rather forced, to make a very feeble trial for entering into a more active scene of life. In 1734, I went to Bristol, with some recommendations to eminent merchants, but in a few months found that scene totally unsuitable to me. I went over to France, with a view of prosecuting Edition: current; Page: [xxxiv] my studies in a country retreat; and I there laid that plan of life, which I have steadily and successfully pursued. I resolved to make a very rigid frugality supply my deficiency of fortune, to maintain unimpaired my independency, and to regard every object as contemptible, except the improvement of my talents in literature.

During my retreat in France, first at Reims, but chiefly at La Fleche, in Anjou, I composed my Treatise of Human Nature. After passing three years very agreeably in that country, I came over to London in 1737. In the end of 1738, I published my Treatise, and immediately went down to my mother and my brother, who lived at his country-house, and was employing himself very judiciously and successfully in the improvement of his fortune.

Never literary attempt was more unfortunate than my Treatise of Human Nature. It fell dead-born from the press, without reaching such distinction, as even to excite a murmur among the zealots. But being naturally of a cheerful and sanguine temper, I very soon recovered the blow, and prosecuted with great ardour my studies in the country. In 1742, I printed at Edinburgh the first part of my Essays: the work was favourably received, and soon made me entirely forget my former disappointment. I continued with my mother and brother in the country, and in that time recovered the knowledge of the Greek language, which I had too much neglected in my early youth.

In 1745, I received a letter from the Marquis of Annandale, inviting me to come and live with him in England; I found also, that the friends and family of that young nobleman were desirous of putting him under my care and direction, for the state of his mind and health required it.—I lived with him a twelvemonth. My appointments during that time made a considerable accession to my small fortune. I then received an invitation from General St. Clair to attend him as a secretary2 to his expedition, which was at first meant against Canada, but Edition: current; Page: [xxv] ended in an incursion on the coast of France. Next year, to wit, 1747, I received an invitation from the General to attend him in the same station in his military embassy to the courts of Vienna and Turin. I then wore3 the uniform of an officer, and was introduced at these courts as aid-de-camp to the general, along with Sir Harry Erskine and Captain Grant, now General Grant. These two years were almost the only interruptions which my studies have received during the course4 of my life: I passed them agreeably, and in good company; and my appointments, with my frugality, had made me reach a fortune, which I called independent, though most of my friends were inclined to smile when I said so; in short, I was now master of near a thousand pounds.5

I had always entertained a notion, that my want of success in publishing the Treatise of Human Nature, had proceeded more from the manner than the matter, and that I had been guilty of a very usual indiscretion, in going to the press too early. I, therefore, cast the first part of that work anew in the Enquiry concerning Human Understanding, which was published while I was at Turin. But this piece was at first little6 more successful than the Treatise of Human Nature. On my return from Italy, I had the mortification to find all England in a ferment, on account of Dr. Middleton’s Free Enquiry, while my performance was entirely overlooked and neglected. A new edition, which had been published at London of my Essays, moral and political, met not with a much better reception.

Such is the force of natural temper, that these disappointments made little or no impression on me. I went down in 1749, and lived two years with my brother at his country-house, for my mother was now dead. I there composed the Edition: current; Page: [xxxvi] second part of my Essays, which I called Political Discourses, and also my Enquiry concerning the Principles of Morals, which is another part of my treatise that I cast anew. Meanwhile, my bookseller, A. Millar, informed me, that my former publications (all but the unfortunate Treatise) were beginning to be the subject of conversation; that the sale of them was gradually increasing, and that new editions were demanded. Answers by Reverends, and Right Reverends, came out two or three in a year; and I found, by Dr. Warburton’s railing, that the books were beginning to be esteemed in good company. However, I had fixed a resolution, which I inflexibly maintained, never to reply to any body; and not being very irascible in my temper, I have easily kept myself clear of all literary squabbles. These symptoms of a rising reputation gave me encouragement, as I was ever more disposed to see the favourable than unfavourable side of things; a turn of mind which it is more happy to possess, than to be born to an estate of ten thousand a year.

In 1751, I removed from the country to the town, the true scene for a man of letters. In 1752, were published at Edinburgh, where I then lived, my Political Discourses, the only work of mine that was successful on the first publication. It was well received abroad and at home. In the same year was published at London, my Enquiry concerning the Principles of Morals; which, in my own opinion (who ought not to judge on that subject), is of all my writings, historical, philosophical, or literary, incomparably the best. It came unnoticed and unobserved into the world.

In 1752, the Faculty of Advocates chose me their Librarian, an office from which I received little or no emolument, but which gave me the command of a large library. I then formed the plan of writing the History of England; but being frightened with the notion of continuing a narrative through a period of 1700 years, I commenced with the accession of the House of Stuart, an epoch when, I thought, the misrepresentations of faction began chiefly to take place. I was, I own, sanguine in my expectations of the success of this work. Edition: current; Page: [xxxvii] I thought that I was the only historian, that had at once neglected present power, interest, and authority, and the cry of popular prejudices; and as the subject was suited to every capacity, I expected proportional applause. But miserable was my disappointment: I was assailed by one cry of reproach, disapprobation, and even detestation; English, Scotch, and Irish, Whig and Tory, churchman and sectary, freethinker and religionist, patriot and courtier, united in their rage against the man, who had presumed to shed a generous tear for the fate of Charles I. and the Earl of Strafford; and after the first ebullitions of their fury7 were over, what was still more mortifying, the book seemed to sink into oblivion. Mr. Millar told me, that in a twelvemonth he sold only forty-five copies of it. I scarcely, indeed, heard of one man in the three kingdoms, considerable for rank or letters, that could endure the book. I must only except the primate of England, Dr. Herring, and the primate of Ireland, Dr. Stone, which seem two odd exceptions. These dignified prelates separately sent me messages not to be discouraged.

I was, however, I confess, discouraged; and had not the war been at that time breaking out between France and England, I had certainly retired to some provincial town of the former kingdom, have changed my name, and never more have returned to my native country. But as this scheme was not now practicable, and the subsequent volume was considerably advanced, I resolved to pick up courage and to persevere.

In this interval, I published at London my Natural History of Religion, along with some other small pieces: its public entry was rather obscure, except only that Dr. Hurd wrote a pamphlet against it, with all the illiberal petulance, arrogance, and scurrility, which distinguish8 the Warburtonian school. This pamphlet gave me some consolation for the otherwise indifferent reception of my performance.

In 1756, two years after the fall of the first volume, was Edition: current; Page: [xxxviii] published the second volume of my History, containing the period from the death of Charles I. till the Revolution. This performance happened to give less displeasure to the Whigs, and was better received. It not only rose itself, but helped to buoy up its unfortunate brother.

But though I had been taught by experience, that the Whig party were in possession of bestowing all places, both in the state and in literature, I was so little inclined to yield to their senseless clamour, that in above a hundred alterations, which farther study, reading, or reflection engaged me to make in the reigns of the two first Stuarts, I have made all of them invariably to the Tory side. It is ridiculous to consider the English constitution before that period as a regular plan of liberty.

In 1759, I published my History of the House of Tudor. The clamour against this performance was almost equal to that against the History of the two first Stuarts. The reign of Elizabeth was particularly obnoxious. But I was now callous against the impressions of public folly, and continued very peaceably and contentedly in my retreat at Edinburgh, to finish, in two volumes, the more early part of the English History, which I gave to the public in 1761, with tolerable, and but tolerable success.

But, notwithstanding this variety of winds and seasons, to which my writings had been exposed, they had still been making such advances, that the copy-money given me by the booksellers, much exceeded any thing formerly known in England; I was become not only independent, but opulent. I retired to my native country of Scotland, determined never more to set my foot out of it; and retaining the satisfaction of never having preferred a request to one great man, or even making advances of friendship to any of them. As I was now turned of fifty, I thought of passing all the rest of my life in this philosophical manner, when I received, in 1763, an invitation from the Earl of Hertford,9 with whom I was not in the least acquainted, to attend him on his embassy to Paris, with Edition: current; Page: [xxxix] a near prospect of being appointed secretary to the embassy; and, in the meanwhile, of performing the functions of that office. This offer, however inviting, I at first declined, both because I was reluctant to begin connexions with the great, and because I was afraid that the civilities and gay company of Paris, would prove disagreeable to a person of my age and humour: but on his lordship’s repeating the invitation, I accepted of it. I have every reason, both of pleasure and interest, to think myself happy in my connexions with that nobleman, as well as afterwards with his brother, General Conway.

Those who have not seen the strange effects10 of modes, will never imagine the reception I met with at Paris, from men and women of all ranks and stations. The more I resiled11 from their excessive civilities, the more I was loaded with them. There is, however, a real satisfaction in living at Paris, from the great number of sensible, knowing, and polite company with which that city12 abounds above all places in the universe. I thought once of settling there for life.

I was appointed secretary to the embassy; and, in summer 1765, Lord Hertford left me, being appointed Lord Lieutenant of Ireland. I was chargé d’affaires till the arrival of the Duke of Richmond, towards the end of the year. In the beginning of 1766, I left Paris, and next summer went to Edinburgh, with the same view as formerly, of burying myself in a philosophical retreat. I returned to that place, not richer, but with much more money, and a much larger income, by means of Lord Hertford’s friendship, than I left it; and I was desirous of trying what superfluity could produce, as I had formerly made an experiment of a competency. But, in 1767, I received from Mr. Conway an invitation to be Under-secretary; and this invitation, both the character of the person, and my connexions with Lord Hertford, prevented me from declining. I Edition: current; Page: [xl] returned to Edinburgh in 1769, very opulent (for I possessed a revenue of 1000 l.13 a year), healthy, and though somewhat stricken in years, with the prospect of enjoying long my ease, and of seeing the increase of my reputation.

In spring 1775, I was struck with a disorder in my bowels, which at first gave me no alarm, but has since, as I apprehend it, become mortal and incurable. I now reckon upon a speedy dissolution. I have suffered very little pain from my disorder; and what is more strange, have, notwithstanding the great decline of my person, never suffered a moment’s abatement of my spirits; insomuch, that were I to name the period of my life, which I should most choose to pass over again, I might be tempted to point to this later period. I possess the same ardour as ever in study, and the same gaiety in company. I consider, besides, that a man of sixty-five, by dying, cuts off only a few years of infirmities; and though I see many symptoms of my literary reputation’s breaking out at last with additional lustre, I knew that I could have14 but few years to enjoy it. It is difficult to be more detached from life than I am at present.

To conclude historically with my own character. I am, or rather was (for that is the style I must now use in speaking of myself, which emboldens me the more to speak my sentiments); I was, I say, a man of mild dispositions, of command of temper, of an open, social, and cheerful humour, capable of attachment, but little susceptible of enmity, and of great moderation in all my passions. Even my love of literary fame, my ruling passion, never soured my temper,15 notwithstanding my frequent disappointments. My company was not unacceptable to the young and careless, as well as to the studious and literary; and as I took a particular pleasure in the company of modest women, I had no reason to be displeased with the Edition: current; Page: [xli] reception I met with from them. In a word, though most men any wise eminent, have found reason to complain of calumny, I never was touched, or even attacked by her baleful tooth: and though I wantonly exposed myself to the rage of both civil and religious factions, they seemed to be disarmed in my behalf of their wonted fury. My friends never had occasion to vindicate any one circumstance of my character and conduct: not but that the zealots, we may well suppose, would have been glad to invent and propagate any story to my disadvantage, but they could never find any which they thought would wear the face of probability. I cannot say there is no vanity in making this funeral oration of myself, but I hope it is not a misplaced one; and this is a matter of fact which is easily cleared and ascertained.


Kirkaldy, Fifeshire


Nov. 9, 1776



It is with a real, though a very melancholy pleasure, that I sit down to give you some account of the behaviour of our late excellent friend, Mr. Hume, during his last illness.

Though, in his own judgment, his disease was mortal and incurable, yet he allowed himself to be prevailed upon, by the entreaty of his friends, to try what might be the effects of a long journey. A few days before he set out, he wrote that account of his own life, which, together with his other papers, he has left to your care. My account, therefore, shall begin where his ends.

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He set out for London towards the end of April, and at Morpeth met with Mr. John Home and myself, who had both come down from London on purpose to see him, expecting to have found him at Edinburgh. Mr. Home returned with him, and attended him during the whole of his stay in England, with that care and attention which might be expected from a temper so perfectly friendly and affectionate. As I had written to my mother that she might expect me in Scotland, I was under the necessity of continuing my journey. His disease seemed to yield to exercise and change of air, and when he arrived in London, he was apparently in much better health than when he left Edinburgh. He was advised to go to Bath to drink the waters, which appeared for some time to have so good an effect upon him, that even he himself began to entertain, what he was not apt to do, a better opinion of his own health. His symptoms, however, soon returned with their usual violence, and from that moment he gave up all thoughts of recovery, but submitted with the utmost cheerfulness, and the most perfect complacency and resignation. Upon his return to Edinburgh, though he found himself much weaker, yet his cheerfulness never abated, and he continued to divert himself, as usual, with correcting his own works for a new edition, with reading books of amusement, with the conversation of his friends; and, sometimes in the evening, with a party at his favourite game of whist. His cheerfulness was so great, and his conversation and amusements run so much in their usual strain, that, notwithstanding all bad symptoms, many people could not believe he was dying. “I shall tell your friend, Colonel Edmondstone,” said Doctor Dundas to him one day, “that I left you much better, and in a fair way of recovery.” “Doctor,” said he, “as I believe you would not chuse to tell any thing but the truth, you had better tell him, that I am dying as fast as my enemies, if I have any, could wish, and as easily and cheerfully as my best friends could desire.” Colonel Edmondstone soon afterwards came to see him, and take leave of him; and on his way home, he could not forbear writing him a letter bidding him once more an eternal Edition: current; Page: [xlv] adieu, and applying to him, as to a dying man, the beautiful French verses in which the Abbé Chaulieu, in expectation of his own death, laments his approaching separation from his friend, the Marquis de la Fare. Mr. Hume’s magnanimity and firmness were such, that his most affectionate friends knew, that they hazarded nothing in talking or writing to him as to a dying man, and that so far from being hurt by this frankness, he was rather pleased and flattered by it. I happened to come into his room while he was reading this letter, which he had just received, and which he immediately showed me. I told him, that though I was sensible how very much he was weakened, and that appearances were in many respects very bad, yet his cheerfulness was still so great, the spirit of life seemed still to be so very strong in him, that I could not help entertaining some faint hopes. He answered, “Your hopes are groundless. An habitual diarrhoea of more than a year’s standing, would be a very bad disease at any age: at my age it is a mortal one. When I lie down in the evening, I feel myself weaker than when I rose in the morning; and when I rise in the morning, weaker than when I lay down in the evening. I am sensible, besides, that some of my vital parts are affected, so that I must soon die.” “Well,” said I, “if it must be so, you have at least the satisfaction of leaving all your friends, your brother’s family in particular, in great prosperity.” He said that he felt that satisfaction so sensibly, that when he was reading a few days before, Lucian’s Dialogues of the Dead, among all the excuses which are alleged to Charon for not entering readily into his boat, he could not find one that fitted him; he had no house to finish, he had no daughter to provide for, he had no enemies upon whom he wished to revenge himself. “I could not well imagine,” said he, “what excuse I could make to Charon in order to obtain a little delay. I have done every thing of consequence which I ever meant to do, and I could at no time expect to leave my relations and friends in a better situation than that in which I am now likely to leave them; I, therefore, have all reason to die contented.” He then diverted himself with inventing several jocular excuses, which Edition: current; Page: [xlvi] he supposed he might make to Charon, and with imagining the very surly answers which it might suit the character of Charon to return to them. “Upon further consideration,” said he, “I thought I might say to him, Good Charon, I have been correcting my works for a new edition. Allow me a little time, that I may see how the Public receives the alterations.” But Charon would answer, “When you have seen the effect of these, you will be for making other alterations. There will be no end of such excuses; so, honest friend, please step into the boat.” But I might still urge, “Have a little patience, good Charon, I have been endeavouring to open the eyes of the Public. If I live a few years longer, I may have the satisfaction of seeing the downfal of some of the prevailing systems of superstition.” But Charon would then lose all temper and decency. “You loitering rogue, that will not happen these many hundred years. Do you fancy I will grant you a lease for so long a term? Get into the boat this instant, you lazy loitering rogue.”

But, though Mr. Hume always talked of his approaching dissolution with great cheerfulness, he never affected to make any parade of his magnanimity. He never mentioned the subject but when the conversation naturally led to it, and never dwelt longer upon it than the course of the conversation happened to require: it was a subject indeed which occurred pretty frequently, in consequence of the inquiries which his friends, who came to see him, naturally made concerning the state of his health. The conversation which I mentioned above, and which passed on Thursday the 8th of August, was the last, except one, that I ever had with him. He had now become so very weak, that the company of his most intimate friends fatigued him; for his cheerfulness was still so great, his complaisance and social disposition were still so entire, that when any friend was with him, he could not help talking more, and with greater exertion, than suited the weakness of his body. At his own desire, therefore, I agreed to leave Edinburgh, where I was staying partly upon his account, and returned to my mother’s house here, at Kirkaldy, upon condition Edition: current; Page: [xlvii] that he would send for me whenever he wished to see me; the physician who saw him most frequently, Doctor Black, undertaking, in the mean time, to write me occasionally an account of the state of his health.

On the 22d of August, the Doctor wrote me the following letter:

“Since my last, Mr. Hume has passed his time pretty easily, but is much weaker. He sits up, goes down stairs once a day, and amuses himself with reading, but seldom sees any body. He finds that even the conversation of his most intimate friends fatigues and oppresses him; and it is happy that he does not need it, for he is quite free from anxiety, impatience, or low spirits, and passes his time very well with the assistance of amusing books.”

I received the day after a letter from Mr. Hume himself, of which the following is an extract.

“my dearest friend, I am obliged to make use of my nephew’s hand in writing to you, as I do not rise to-day. . . .

“I go very fast to decline, and last night had a small fever, which I hoped might put a quicker period to this tedious illness, but unluckily it has, in a great measure, gone off. I cannot submit to your coming over here on my account, as it is possible for me to see you so small a part of the day, but Doctor Black can better inform you concerning the degree of strength which may from time to time remain with me. Adieu, &c.”

Three days after I received the following letter from Doctor Black.



23d August, 1776


“dear sir, Yesterday about four o’clock afternoon, Mr. Hume expired. The near approach of his death became evident in the night between Thursday and Friday, when his disease became Edition: current; Page: [xlviii] excessive, and soon weakened him so much, that he could no longer rise out of his bed. He continued to the last perfectly sensible, and free from much pain or feelings of distress. He never dropped the smallest expression of impatience; but when he had occasion to speak to the people about him, always did it with affection and tenderness. I thought it improper to write to bring you over, especially as I heard that he had dictated a letter to you desiring you not to come. When he became very weak, it cost him an effort to speak, and he died in such a happy composure of mind, that nothing could exceed it.”

Thus died our most excellent, and never to be forgotten friend; concerning whose philosophical opinions men will, no doubt, judge variously, every one approving, or condemning them, according as they happen to coincide or disagree with his own; but concerning whose character and conduct there can scarce be a difference of opinion. His temper, indeed, seemed to be more happily balanced, if I may be allowed such an expression, than that perhaps of any other man I have ever known. Even in the lowest state of his fortune, his great and necessary frugality never hindered him from exercising, upon proper occasions, acts both of charity and generosity. It was a frugality founded, not upon avarice, but upon the love of independency. The extreme gentleness of his nature never weakened either the firmness of his mind, or the steadiness of his resolutions. His constant pleasantry was the genuine effusion of good-nature and good-humour, tempered with delicacy and modesty, and without even the slightest tincture of malignity, so frequently the disagreeable source of what is called wit in other men. It never was the meaning of his raillery to mortify; and therefore, far from offending, it seldom failed to please and delight, even those who were the objects of it. To his friends, who were frequently the objects of it, there was not perhaps any one of all his great and amiable qualities, which contributed more to endear his conversation. And that gaiety of temper, so agreeable in society, but which is so often Edition: current; Page: [xlix] accompanied with frivolous and superficial qualities, was in him certainly attended with the most severe application, the most extensive learning, the greatest depth of thought, and a capacity in every respect the most comprehensive. Upon the whole, I have always considered him, both in his lifetime and since his death, as approaching as nearly to the idea of a perfectly wise and virtuous man, as perhaps the nature of human frailty will permit.

I ever am, dear Sir,
Most affectionately your’s,

Adam Smith.



Monday, 26th August, 1776


Part II, Essay III



MONEY is not, properly speaking, one of the subjects of commerce; but only the instrument which men have agreed upon to facilitate the exchange of one commodity for another. It is none of the wheels of trade: It is the oil which renders the motion of the wheels more smooth and easy. If we consider any one kingdom by itself, it is evident, that the greater or less plenty of money is of no consequence; since the prices of commodities are always proportioned to the plenty of money, and a crown in HARRY VII.'s time served the same purpose as a pound does at present. It is only the public which draws any advantage from the greater plenty of money; and that only in its wars and negociations with foreign states. And this is the reason, why all rich and trading countries from CARTHAGE to GREAT BRITAIN and HOLLAND, have employed mercenary troops, which they hired from their poorer neighbours. Were they to make use of their native subjects, they would find less advantage from their superior riches, and from their great plenty of gold and silver; since the pay of all their servants must rise in proportion to the public opulence. Our small army of 20,000 men is maintained at as great expence as a FRENCH army atwice as numerous. The ENGLISH fleet, during the late war, required as much money to support it as all the ROMAN legions, which kept the whole world in subjection, during the time of the emperors.


The greater number of people and their greater industry are serviceable in all cases; at home and abroad, in private, and in public. But the greater plenty of money, is very limited in its use, and may even sometimes be a loss to a nation in its commerce with foreigners.


There seems to be a happy concurrence of causes in human affairs, which checks the growth of trade and riches, and hinders them from being confined entirely to one people; as might naturally at first be dreaded from the advantages of an established commerce. Where one nation has gotten the start of another in trade, it is very difficult for the latter to regain the ground it has lost; because of the superior industry and skill of the former, and the greater stocks, of which its merchants are possessed, and which enable them to trade on so much smaller profits. But these advantages are compensated, in some measure, by the low price of labour in every nation which has not an extensive commerce, and does not much abound in gold and silver. Manufactures, therefore gradually shift their places, leaving those countries and provinces which they have already enriched, and flying to others, whither they are allured by the cheapness of provisions and labour; till they have enriched these also, and are again banished by the same causes. And, in general, we may observe, that the dearness° of every thing, from plenty of money, is a disadvantage, which attends an established commerce, and sets bounds to it in every country, by enabling the poorer states to undersel the richer in all foreign markets.


This has made me entertain a doubt concerning the benefit of banks and paper-credit, which are so generally esteemed advantageous to every nation. That provisions and labour should become dear by the encrease of trade and money, is, in many respects, an inconvenience; but an inconvenience that is unavoidable, and the effect of that public wealth and prosperity which are the end of all our wishes. It is compensated by the advantages, which we reap from the possession of these precious metals, and the weight, which they give the nation in all foreign wars and negociations. But there appears no reason for encreasing that inconvenience by a counterfeit money, which foreigners will not accept of in any payment, and which any great disorder in the state will reduce to nothing. There are, it is true, many people in every rich state, who having large sums of money, would prefer paper with good security; as being of more easy transport and more safe custody. If the public provide not a bank, private bankers will take advantage of this circumstance; as the goldsmiths formerly did in LONDON, or as the bankers do at present in DUBLIN: And therefore it is better, it may be thought, that a public company should enjoy the benefit of that paper-credit, which always will have place in every opulent kingdom. But to endeavour artificially to encrease such a credit, can never be the interest of any trading nation; but must lay them under disadvantages, by encreasing money beyond its natural proportion to labour and commodities, and thereby heightening their price to the merchant and manufacturer. And in this view, it must be allowed, that no bank could be more advantageous, than such a one as locked up all the money it received, and never augmented the circulating coin, as is usual, by returning part of its treasure into commerce. A public bank, by this expedient, might cut off much of the dealings of private bankers and money-jobbers; and though the state bore the charge of salaries to the directors and tellers of this bank (for, according to the preceding supposition, it would have no profit from its dealings), the national advantage, resulting from the low price of labour and the destruction of paper-credit, would be a sufficient compensation. Not to mention, that so large a sum, lying ready at command, would be a convenience in times of great public danger and distress; and what part of it was used might be replaced at leisure, when peace and tranquillity was restored to the nation.


But of this subject of paper credit we shall treat more largely hereafter. And I shall finish this essay on money, by proposing and explaining two observations, which may, perhaps, serve to employ the thoughts of our speculative politicians.c


It was a shrewd observation of ANACHARSIS the SCYTHIAN, who had never seen money in his own country, that gold and silver seemed to him of no use to the GREEKS, but to assist them in numeration and arithmetic. It is indeed evident, that money is nothing but the representation of labour and commodities, and serves only as a method of rating or estimating them. Where coin is in greater plenty; as a greater quantity of it is required to represent the same quantity of goods; it can have no effect, either good or bad, taking a nation within itself; any more than it would make an alteration on a merchant's books, if, instead of the ARABIAN method of notation, which requires few characters, he should make use of the ROMAN, which requires a great many. Nay, the greater quantity of money, like the ROMAN characters, is rather inconvenient, and requires greater trouble both to keep and transport it. But notwithstanding this conclusion, which must be allowed just, it is certain, that, since the discovery of the mines in AMERICA, industry has encreased in all the nations of EUROPE, except in the possessors of those mines; and this may justly be ascribed, amongst other reasons, to the encrease of gold and silver. Accordingly we find, that, in every kingdom, into which money begins to flow in greater abundance than formerly, every thing takes a new face: labour and industry gain life; the merchant becomes more enterprising, the manufacturer more diligent and skilful, and even the farmer follows his plough with greater alacrity and attention. This is not easily to be accounted for, if we consider only the influence which a greater abundance of coin has in the kingdom itself, by heightening the price of commodities, and obliging every one to pay a greater number of these little yellow or white pieces for every thing he purchases. And as to foreign trade, it appears, that great plenty of money is rather disadvantageous, by raising the price of every kind of labour.


To account, then, for this phenomenon, we must consider, that though the high price of commodities be a necessary consequence of the encrease of gold and silver, yet it follows not immediately upon that encrease; but some time is required before the money circulates through the whole state, and makes its effect be felt on all ranks of people. At first, no alteration is perceived; by degrees the price rises, first of one commodity, then of another; till the whole at last reaches a just proportion with the new quantity of specie which is in the kingdom. In my opinion, it is only in this interval or intermediate situation, between the acquisition of money and rise of prices, that the encreasing quantity of gold and silver is favourable to industry. When any quantity of money is imported into a nation, it is not at first dispersed into many hands; but is confined to the coffers of a few persons, who immediately seek to employ it to advantage. Here are a set of manufacturers or merchants, we shall suppose, who have received returns of gold and silver for goods which they sent to CADIZ. They are thereby enabled to employ more workmen than formerly, who never dream of demanding higher wages, but are glad of employment from such good paymasters. If workmen become scarce, the manufacturer gives higher wages, but at first requires an encrease of labour; and this is willingly submitted to by the artisan, who can now eat and drink better, to compensate his additional toil and fatigue. He carries his money to market, where he finds every thing at the same price as formerly, but returns with greater quantity and of better kinds, for the use of his family. The farmer and gardener, finding, that all their commodities are taken off, apply themselves with alacrity to the raising more; and at the same time can afford to take better and more cloths from their tradesmen, whose price is the same as formerly, and their industry only whetted by so much new gain. It is easy to trace the money in its progress through the whole commonwealth; where we shall find, that it must first quicken the diligence of every individual, before it encrease the price of labour.


And that the specie° may encrease to a considerable pitch, before it have this latter effect, appears, amongst other instances, from the frequent operations of the FRENCH king on the money; where it was always found, that the augmenting of the numerary value did not produce a proportional rise of the prices, at least for some time. In the last year of LOUIS XIV. money was raised three-sevenths, but prices augmented only one. Corn in FRANCE is now sold at the same price, or for the same number of livres, it was in 1683; though silver was then at 30 livres the mark, and is now at 50. Not to mention the great addition of gold and silver, which may have come into that kingdom since the former period.


From the whole of this reasoning we may conclude, that it is of no manner of consequence, with regard to the domestic happiness of a state, whether money be in a greater or less quantity. The good policy of the magistrate consists only in keeping it, if possible, still encreasing; because, by that means, he keeps alive a spirit of industry in the nation, and encreases the stock of labour, in which consists all real power and riches. A nation, whose money decreases, is actually, at that time, weaker and more miserable than another nation, which possesses no more money, but is on the encreasing hand. This will be easily accounted for, if we consider, that the alterations in the quantity of money, either on one side or the other, are not immediately attended with proportionable alterations in the price of commodities. There is always an interval before matters be adjusted to their new situation; and this interval is as pernicious to industry, when gold and silver are diminishing, as it is advantageous when these metals are encreasing. The workman has not the same employment from the manufacturer and merchant; though he pays the same price for every thing in the market. The farmer cannot dispose of his corn and cattle; though he must pay the same rent to his landlord. The poverty, and beggary, and sloth, which must ensue, are easily foreseen.


The second observation which I proposed to make with regard to money, may be explained after the following manner. There are some kingdoms, and many provinces in EUROPE, (and all of them were once in the same condition) where money is so scarce, that the landlord can get none at all from his tenants; but is obliged to take his rent in kind, and either to consume it himself, or transport it to places where he may find a market. In those countries, the prince can levy few or no taxes, but in the same manner: And as he will receive small benefit from impositions so paid, it is evident that such a kingdom has little force even at home; and cannot maintain fleets and armies to the same extent, as if every part of it abounded in gold and silver. There is surely a greater disproportion between the force of GERMANY, at present, and what it was three centuries ago, than there is in its industry, people, and manufactures. The AUSTRIAN dominions in the empire are in general well peopled and well cultivated, and are of great extent; but have not a proportionable weight in the balance of EUROPE; proceeding, as is commonly supposed, from the scarcity of money. How do all these facts agree with that principle of reason, that the quantity of gold and silver is in itself altogether indifferent? According to that principle wherever a sovereign has numbers of subjects, and these have plenty of commodities, he should of course be great and powerful, and they rich and happy, independent of the greater or lesser abundance of the precious metals. These admit of divisions and subdivisions to a great extent; and where the pieces might become so small as to be in danger of being lost, it is easy to mix the gold or silver with a baser metal, as is practised in some countries of EUROPE; and by that means raise the pieces to a bulk more sensible and convenient. They still serve the same purposes of exchange, whatever their number may be, or whatever colour they may be supposed to have.


To these difficulties I answer, that the effect, here supposed to flow from scarcity of money, really arises from the manners and customs of the people; and that we mistake, as is too usual, a collateral effect for a cause. The contradiction is only apparent; but it requires some thought and reflection to discover the principles, by which we can reconcile reason to experience.


It seems a maxim almost self-evident, that the prices of every thing depend on the proportion between commodities and money, and that any considerable alteration on either has the same effect, either of heightening or lowering the price. Encrease the commodities, they become cheaper; encrease the money, they rise in their value. As, on the other hand, a diminution of the former, and that of the latter, have contrary tendencies.


It is also evident, that the prices do not so much depend on the absolute quantity of commodities and that of money, which are in a nation, as on that of the commodities, which come or may come to market, and of the money which circulates. If the coin be locked up in chests, it is the same thing with regard to prices, as if it were annihilated; if the commodities be hoarded in emagazines and granaries, a like effect follows. As the money and commodities, in these cases, never meet, they cannot affect each other. Were we, at any time, to form conjectures concerning the price of provisions, the corn, which the farmer must reserve ffor seed and for the maintenance of himself and family, ought never to enter into the estimation. It is only the overplus,° compared to the demand, that determines the value.


To apply these principles, we must consider, that, in the first and more uncultivated ages of any state, ere fancy has confounded her wants with those of nature, men, content with the produce of their own fields, or with those rude improvements which they themselves can work upon them, have little occasion for exchange, at least for money, which, by agreement, is the common measure of exchange. The wool of the farmer's own flock, spun in his own family, and wrought by a neighbouring weaver, who receives his payment in corn or wool, suffices for furniture and cloathing. The carpenter, the smith, the mason, the tailor, are retained by wages of a like nature; and the landlord himself, dwelling in the neighbourhood, is content to receive his rent in the commodities raised by the farmer. The greater part of these he consumes at home, in rustic hospitality: The rest, perhaps, he disposes of for money to the neighbouring town, whence he draws the few materials of his expence and luxury.


But after men begin to refine on all these enjoyments, and live not always at home, nor are content with what can be raised in their neighbourhood, there is more exchange and commerce of all kinds, and more money enters into that exchange. The tradesmen will not be paid in corn; because they want something more than barely to eat. The farmer goes beyond his own parish for the commodities he purchases, and cannot always carry his commodities to the merchant who supplies him. The landlord lives in the capital, or in a foreign country; and demands his rent in gold and silver, which can easily be transported to him. Great undertakers, and manufacturers, and merchants, arise in every commodity; and these can conveniently deal in nothing but in specie. And consequently, in this situation of society, the coin enters into many more contracts, and by that means is much more employed than in the former.


The necessary effect is, that, provided the money encrease not in the nation, every thing must become much cheaper in times of industry and refinement, than in rude, uncultivated ages. It is the proportion between the circulating money, and the commodities in the market, which determines the prices. Goods, that are consumed at home, or exchanged with other goods in the neighbourhood, never come to market; they affect not in the least the current specie; with regard to it they are as if totally annihilated; and consequently this method of using them sinks the proportion on the side of the commodities, and encreases the prices. But after money enters into all contracts and sales, and is every where the measure of exchange, the same national cash has a much greater task to perform; all commodities are then in the market; the sphere of circulation is enlarged; it is the same case as if that individual sum were to serve a larger kingdom; and therefore, the proportion being here lessened on the side of the money, every thing must become cheaper, and the prices gradually fall.


By the most exact computations, that have been formed all over EUROPE, after making allowance for the alteration in the numerary° value or the denomination, it is found, that the prices of all things have only risen three, or at most, four times, since the discovery of the WEST INDIES. But will any one assert, that there is not much more than four times the coin in EUROPE, that was in the fifteenth century, and the centuries preceding it? The SPANIARDS and PORTUGUESE from their mines, the ENGLISH, FRENCH, and DUTCH, by their AFRICAN trade, and by their interlopers in the WEST INDIES, bring home about gsix millions a year, of which not above a third goes to the EAST-INDIES. This sum alone, in ten years, would probably double the ancient stock of money in EUROPE. And no other satisfactory reason can be given, why all prices have not risen to a much more exorbitant height, except that which is derived from a change of customs and manners. Besides that more commodities are produced by additional industry, the same commodities come more to market, after men depart from their ancient simplicity of manners. And though this encrease has not been equal to that of money, it has, however, been considerable, and has preserved the proportion between coin and commodities nearer the ancient standard.


Were the question proposed, Which of these methods of living in the people, the simple or refined, is the most advantageous to the state or public? I should, without much scruple, prefer the latter, in a view to politics at least; and should produce this as an additional reason for the encouragement of trade and manufactures.


While men live in the ancient simple manner, and supply all their necessaries from domestic industry or from the neighbourhood, the sovereign can levy no taxes in money from a considerable part of his subjects; and if he will impose on them any burthens, he must take payment in commodities, with which alone they abound; a method attended with such great and obvious inconveniencies, that they need not here be insisted on. All the money he can pretend to raise, must be from his principal cities, where alone it circulates; and these, it is evident, cannot afford him so much as the whole state could, did gold and silver circulate throughout the whole. But besides this obvious diminution of the revenue, there is another cause of the poverty of the public in such a situation. Not only the sovereign receives less money, but the same money goes not so far as in times of industry and general commerce. Every thing is dearer, where the gold and silver are supposed equal; and that because fewer commodities come to market, and the whole coin bears a higher proportion to what is to be purchased by it; whence alone the prices of every thing are fixed and determined.


Here then we may learn the fallacy of the remark, often to be met with in historians, and even in common conversation, that any particular state is weak, though fertile, populous, and well cultivated, merely because it wants money. It appears, that the want of money can never injure any state within itself: For men and commodities are the real strength of any community. It is the simple manner of living which here hurts the public, by confining the gold and silver to few hands, and preventing its universal diffusion and circulation. On the contrary, industry and refinements of all kinds incorporate it with the whole state, however small its quantity may be: They digest it into every vein, so to speak; and make it enter into every transaction and contract. No hand is entirely empty of it. And as the prices of every thing fall by that means, the sovereign has a double advantage: He may draw money by his taxes from every part of the state; and what he receives, goes farther in every purchase and payment.


We may infer, from a comparison of prices, that money is not more plentiful in CHINA, than it was in EUROPE three centuries ago: But what immense power is that empire possessed of, if we may judge by the civil and military establishment maintained by it? POLYBIUS tells us, that provisions were so cheap in ITALY during his time, that in some places theh stated price for a meal at the inns was a semis a head, little more than a farthing! Yet the ROMAN power had even then subdued the whole known world. About a century before that period, the CARTHAGINIAN ambassador said, by way of raillery, that no people lived more sociably amongst themselves than the ROMANS; for that, in every entertainment, which, as foreign ministers, they received, they still observed the same plate at every table. The absolute quantity of the precious metals is a matter of great indifference. There are only two circumstances of any importance, namely, their gradual encrease, and their thorough concoction and circulation through the state; and the influence of both these circumstances has here been explained.


In the following Essay we shall see an instance of a like fallacy as that above mentioned; where a collateral effect is taken for a cause, and where a consequence is ascribed to the plenty of money; though it be really owing to a change in the manners and customs of the people.

Notes for this chapter


[Henry (or Harry) VII was king of England from 1485 to 1509. For an analysis of the monetary theory that Hume develops in this essay and its relation to other views of his time, see Rotwein, David Hume: Writings on Economics, pp. liv-lxvii. Hume's broad purpose here is to oppose mercantilist views that tended to identify wealth with money and thus to encourage policies aimed at increasing the quantity of a nation's bullion or money. Hume argues for the general principle that an abundant quantity of money does not increase a state's domestic happiness and may sometimes even harm it. He undertakes to reconcile this principle with evidence that an increase in the supply of money can be a beneficial stimulus to industry at certain stages of economic development and that a wide distribution of money is favorable to the collection of revenues.]


[Hume refers here to the War of the Austrian Succession (1740-48), which Great Britain entered to prevent French hegemony in Europe and to protect her commercial and colonial empire by establishing naval supremacy over France. In 1746, Hume accompanied an expeditionary force under General James St. Clair in an attack on the French coast. Hume describes the expedition, for which he received a commission as Judge-Advocate, in a manuscript known as the "Descent on the Coast of Brittany." See Mossner, The Life of David Hume (Edinburgh: Nelson, 1954), pp. 187-204.]


A private soldier in the ROMAN infantry had a denarius a day, somewhat less than eightpence. The ROMAN emperors had commonly 25 legions in pay, which allowing 5000 men to a legion, makes 125,000. TACIT. Ann. lib. iv. [5.] It is true, there were also auxiliaries to the legions; but their numbers are uncertain, as well as their pay. To consider only the legionaries, the pay of the private men could not exceed 1,600,000 pounds. Now, the parliament in the last war commonly allowed for the fleet 2,500,000. We have therefore 900,000 over for the officers and other expences of the ROMAN legions. There seem to have been but few officers in the ROMAN armies, in comparison of what are employed in all our modern troops, except some SWISS corps. And these officers had very small pay: A centurion, for instance, only double a common soldier. And as the soldiers from their pay (TACIT. Ann. lib. i. [17]) bought their own cloaths, arms, tents, and baggage; this must also diminish considerably the other charges of the army. So little expensive was that mighty government, and so easy was its yoke over the world. And, indeed, this is the more natural conclusion from the foregoing calculations. For money, after the conquest of ÆGYPT, seems to have been nearly in as great plenty at ROME, as it is at present in the richest of the EUROPEAN kingdoms.


This is the case with the bank of AMSTERDAM.b


PLUT. Quomodo quis suos profectus in virtute sentire possit. [Plutarch, Moralia, "How a Man may become aware of his Progress in Virtue," sec. 7.]


[Cádiz was the Spanish seaport where bullion entered from the West Indies.]


These facts I give upon the authority of Mons. du TOT in his Reflections politiques [Réflexions politiques sur les finances et le commerce (1738); translated as Political Reflections upon the Finances and Commerce of France (1739)], an author of reputation. Though I must confess, that the facts which he advances on other occasions, are often so suspicious, as to make his authority less in this matter. However, the general observation, that the augmenting of the money in FRANCE does not at first proportionably augment the prices, is certainly just.

By the by, this seems to be one of the best reasons which can be given, for a gradual and universal encrease of the denomination of money, though it has been entirely overlooked in all those volumes which have been written on that question by MELON, Du TOT, and PARIS de VERNEY [Joseph Paris-Duverney, Examen du livre intitulé Réflections politiques sur les finances et le commerce, par de Tott (Examination of a book entitled Political reflections upon finances and commerce, by Dutot), 1740]. Were all our money, for instance, recoined, and a penny's worth of silver taken from every shilling, the new shilling would probably purchase every thing that could have been bought by the old; the prices of every thing would thereby be insensibly diminished; foreign trade enlivened; and domestic industry, by the circulation of a great number of pounds and shillings, would receive some encrease and encouragement. In executing such a project, it would be better to make the new shilling pass for 24 halfpence, in order to preserve the illusion, and make it be taken for the same. And as a recoinage of our silver begins to be requisite, by the continual wearing of our shillings and sixpences, it may be doubtful, whether we ought to imitate the example in King WILLIAM'S reign, when the clipt money was raised to the old standard.d


The ITALIANS gave to the Emperor MAXIMILIAN, the nickname of POCCI-DANARI. None of the enterprises of that prince ever succeeded, for want of money. [Maximilian I became Holy Roman Emperor Elect in 1508, but because of Venetian hostility, he was unable to go to Rome for his coronation. Maximilian then joined with France, Spain, and the Pope in the League of Cambrai, whose aim was to partition the Republic of Venice. Because of his lack of money and troops, he was considered an unreliable partner in the war that followed. Pochi danari means "very few funds."]


[Hume uses West Indies broadly to refer to Central and South America. The exploration and conquest of the new world after Christopher Columbus's discovery of the West Indies islands off the Atlantic coast of America in 1492 led, in the next century, to a tremendous increase in the supply of precious metals in Europe. Hume's point is that the increase of prices has not kept pace with the increase in coin.]


Lib. ii. cap. 15. [Histories 2.15.]


PLIN. lib. xxxiii. cap. II. [Pliny the Elder, Natural History, Loeb edition, 33.50.]

Part II, Essay IV

End of Notes

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