But, were this man asked to sell his farm and his other property, he probably would not give it for less than a thousand pounds, and he might get this sum for it.If so, it is ten to one that he would lay out the greater part of it in the purchase of a larger quantity of land than he before possessed, and the remainder in improving that land, so that a year or two would see him just as bare of cash as before, and twelve years afterwards, if he went on prosperously, he would still have but a trifle of ready cash, though perhaps he might truly consider his property worth two or three thousand pounds, and might not be disposed to take less for it.He could hardly therefore be called a poor man.In this part of America, as formerly over the whole of it, "the scarcity of gold and silver money is not the effect of the poverty of that country, or of the inability of the people there to purchase those metals.The scarcity of these metals is the effect of choice and not of necessity.It is convenient for the Americans, who can always employ with profit, in the improvement of their lands, a greater stock than they can easily get, to save as much as possible the expense of so costly an instrument as gold and silver; and rather to employ that part of their surplus produce which would be necessary for purchasing those metals, in purchasing the instruments of trade, the materials of clothing, several parts of household furniture, and the iron work necessary for building and extending their settlements, in purchasing, not dead stock, but active and productive stock." (50)But, though the loss of having more idle cash lying by one, than can possibly be dispensed with, must be felt most sensibly where such cash can be most profitably expended, where instruments, that is, are not far from the first orders of our series, still it must always be felt.A man will never keep two hundred pounds in his chest, if he thinks it probable that one hundred will be sufficient, because he can always make something of the other hundred.Although however, men, in such cases, must be governed by what they think probably will happen, yet, as no man can foresee with certainty what may happen, every man will now and then be wrong in his calculations, and therefore, under the suppositions we have made, every man would occasionally suffer from having too little cash, as well as at other times from having too much.
The effect of both these sorts of losses must be, to place the instruments on which they operate in orders of slower return, than they would otherwise occupy.One wishes to purchase a pair of young horses of a particular sort;for this purpose he reserves a quantity of coin equivalent to four hundred days' labor; he happens, however, not to meet with a pair that suits him for the space of six months, when he purchases two, giving for them the amount he had anticipated.It is evident, in this case, that they have really cost him, not only the four hundred days' labor, but all that in the country in which he lives, that labor would have produced, besides paying for itself, during the six months he was looking out for the bargain.
Now, as this additional outlay cannot add to the capacity of these instruments, to the strength, swiftness, beauty, and health, that is, of the animals, nor diminish their age, it must be esteemed as lessening the proportion between the return to be got from them, and the outlay expended on them, and must move them proportionally towards the orders of slower return.
Again, it may.have been that the person who at last sold the horses, may have been desirous of selling them for six months before he effected the sale, and that at the commencement of that period he may have met with an individual who would have purchased them, but not having anticipated the occurrence of so t:avorable an offer, happened not then to have the necessary cash.If we suppose them to have been merely useless to their owner during the period from thence elapsed, the service they rendered him being just sufficient to pay for their food and keep, still, this retardation in the return from the outlay in the formation of them as an instrument, also moves them so much towards the more slowly returning orders, and diminishes the activity of the accumulative principle.If the individual who raised them does not receive an additional price, proportionate to the delay, the occurrence will have a tendency to make him give up this branch of business.
Similar events taking place in the exchange of other instruments, would produce similar results, and therefore two evils would necessarily accompany the state of affairs we have supposed.There would be two drawbacks on the progress of the industry of the society, the one consisting in the expense of the circulating medium, the other in the loss arising from a deficiency in it.The two together would be in proportion to the amount of exchanges which the progress of knowledge, the strength of the principle of accumulation, and the quality of the materials within reach of the society caused to be transacted.The evil directly arising from them would be the consequent retardation of the returns from the industry of the society, an evil equivalent to a proportional diminution of these, and placing them in more slowly returning orders.The evil indirectly arising from them would be the keeping a greater or less extent of materials, without reach of the strength of the accumulative principle of the society, and the consequent nonformation, to a greater or less extent, of instruments that would otherwise have been formed.
The proportion between the two would be determined by the order to which the strength of the effective desire of accumulation, and the time which it had had to operate, had carried the formation of instruments.
