If therefore the superior intelligence, penetration, and activity of any merchant, giving him the power of foreseeing with greater accuracy than his brethren where vacancies are about to exist, and what will be their extent, and of discovering where the commodities proper to fill them up may most readily be found, and most easily transported to the requisite places, enables him to effect these transfers with greater facility than usual, and within less than the average time, he will receive a proportionally greater return than other merchants.On the contrary, if, from a deficiency in these qualities, any merchant attempt the transfer of commodities for which there is no vacancy, or effect the transfer of commodities for which there is a vacancy, at more than the average expense, or in more than the average time, the returns his capital yields him will be less than those usually received by the other members of the community.Mercantile energy is thus stimulated to effect all practicable exchanges with the greatest possible celerity, and at the least possible expense.The activity which is in consequence given to the process of exchange, is a circumstance exceedingly beneficial to the interests of the community.By lessening the distance between the periods of formation and exhaustion, and diminishing the expense of formation, for transport makes a part of that expense, the successful exertions of the mercantile portion of society have a powerful tendency to preserve instruments in the more quickly returning orders, and to excite the action of the accumulative principle.Our subject consequently requires us to examine somewhat more particularly the mechanism by which the business of merchants is conducted, and the mode of calculation by which it is practically regulated.Our attention too is more especially called to these, because it is from the former that the principles of the present science of political economy are derived, and on the latter that its nomenclature is founded.
The foundation of the mechanism of mercantile transactions is Money.
Gold and silver, or, as they are called, the precious metals, are more properly entitled to the appellation of money than any other thing is, because they more generally pass for money than does any thing else.Their beauty, their incorruptibility, and some other of their qualities afterwards to be considered, have, in almost every country, rendered them the means of affording much enjoyment, that is, of supplying, to a large extent, certain of the wants of man.It seems likely that these qualities, joined to the facility with which they may be transported from place to place, first made them esteemed the most desirable of all commodities that one could possess.In the very frequent revolutions and commotions that occur in the earlier ages of society, articles that do not decay, can be hid, or carried off without difficulty, and are always estimable, would naturally of all others be most coveted.They thus probably were first chiefly sought after, for the purpose of being retained, not for that of being exchanged;even yet in many countries, partly from old habits, and partly from still prevailing insecurity, they are chiefly prized as of all things, those best fit to be hoarded.But, in whatever manner their use may have been introduced, or how much soever in some countries it may be dependent on a feeling of insecurity, at present or formerly prevailing, and prompting their possessors to keep not to part with them, they are now more generally sought for, for the purpose of being immediately passed away, forming, in the shape of money, the great medium of exchange, and it is solely in the part they thus act, that we have here very briefly to consider them.
When, in the progress of society, men divide into different occupations, and each ceasing to fabricate himself all the instruments his wants require, barters the instruments or commodities he forms for those formed by others, the system of exchange, as we have seen, commences.The introduction, to a greater or less extent, of some sort of money, seems naturally to follow.
For when a man forms only one sort of instruments or commodities, it cannot at all times happen that he can exchange them with articles fabricated by other men, and necessary to supply his wants, because these other men, the farmers and possessors of what he desires, may not at the moment have occasion for what he has formed."The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it.But they have nothing to offer in exchange, except the particular productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for." (49) There are two modes by which the desired exchange may be effected.If the brewer and the baker have a commodity received by every one for all others, such as money is, they may each give the butcher a certain quantity of it for a quantity of meat, and when he requires their ale and bread, he may, in turn, send back to them also a quantity of money.Or, the butcher may be satisfied with the promise of the brewer and the baker, that, at some future time, when he has occasion for it, they will give him a quantity of ale and bread, or of something else.These two modes of effecting the object form the two systems of cash, or credit, by which all the business of every country that consists not in barter, is carried on.
