#WealthofTweets: Book I: The Digression on Silver

The Digression on Silver
18 Jan • 21 tweets • adamsmithworks/status/1351180142043951108

The great thing about #AdamSmith is that when he's about to go off on a 65 page tangent, he warns you. Humans, we bring you the DIGRESSIONS ON SILVER! #OhLawdHeComin #WealthOfTweets #SmithTweets

Oh King Edward III, it’s adorable that you think you can just decree that servants and laborers become permanently content with wages fixed at the rate they were at five years ago. (I.xi.e.2) #WealthOfTweets #SmithTweets

He’s already digressing, and he can’t take a minute to share the menu from that famously magnificent feast with us? (I.xi.e.4–5) #WealthOfTweets #SmithTweets

Super Important 18thC Vocab Geekery: When Smith says the price of the quarter of wheat wasn't “supposed to be < 4 oz silver” he doesn’t mean “shouldn't be.” He means “wasn't thought to be.” He’s not approving of fixed prices. (I.xi.e.7) #WealthOfTweets #SmithTweets

So. Many. Wheat. Prices. (But really, Smith is talking about how much wheat it takes to buy a quantity of silver, NOT how much silver it takes to buy a quantity of wheat.) (I.xi.e.1–14) #WealthOfTweets #SmithTweets

Is silver more expensive because demand is going up? Supply is going down? Or a mixture of both? (I.xi.e.14) #WealthOfTweets #SmithTweets

And it *was* getting more expensive, though people thought it wasn’t. They were misled for three reasons. (I.xi.e.15–16) #WealthOfTweets #SmithTweet

1. Rents were paid “in kind”(with chickens or corn instead of money) that’s called a “conversion price” which is set below market price to protect tenants. People often confuse conversion and market prices.(I.xi.e.17) # WealthOfTweets #SmithTweets

2. Slovenly and lazy copyists who don’t get the details right.[We are here for the #SmithSnark, which is some of the best snark.] (I.xi.e.18–22) #WealthOfTweets #SmithTweets

3. Assuming that because the lowest ancient price for wheat was very low, the price never got very high. In fact, the ancient market was volatile and “disorderly,” not uniformly cheap. (I.xi.e.23) #WealthOfTweets #SmithTweets

Oh hey, did you want to know all the available prices of wheat from 1202 until 1601, in 18th century money, in 12 year periods? Smith’s got your back. (I.xi.e.24) #WealthOfTweets #SmithTweets

Data shows the price of silver rising, and Smith is confused/annoyed that so many historians/economists have interpreted it as falling. (I.xi.e.24) #WealthOfTweets #SmithTweets

“It is somewhat curious that, though their opinions are so very different, their facts...should coincide so very exactly.” Could this be the first instance of an economist gobsmacked that people interpret data differently? (I.xi.e.24) #WealthOfTweets #SmithTweets

Labor is the real measure of value of silver and all commodities. But...is it, though? (I.xi.e.26) #WealthOfTweets #SmithTweets

The important thing is not to be misled into thinking that as the quantity of silver increases, the price will decrease. That’s “altogether groundless.” Demand is a thing, folks. (I.xi.e.33) #WealthOfTweets #SmithTweets

Smith keeps saying that money naturally seeks the best available price for itself. Aristotle is over here with his head exploding. (I.xi.e.34) #WealthOfTweets # SmithTweets

“When we are in want of necessaries we must part with superfluities.” THAT might be one of the best pieces of advice--financial or otherwise—we’ll ever get. (I.xi.e.38) #WealthOfTweets #SmithTweets

Ya know what? Let's just press on and do the second period of silver prices real quick. Not even Smith can go on for that long about it. (I.xi.f) #WealthOfTweets # SmithTweets

(Ok, ok, we know this is #WealthOfTweets and not #TweetsOfMoralSentiments, but didya notice that opening sentence here? Smith really likes that “How X soever Y may be” formulation.) (I.xi.f.1) #WealthOfTweets #SmithTweets

Everybody agrees that the discovery of the silver mines in America caused the value of silver to crash relative to the value of corn. Smith is about as sure of this as he ever is of anything. You can, as it were, take it to the bank. (I.xi.f.1–5) #WealthOfTweets #SmithTweets

And that’s it for everything interesting between 1570 and 1640 apparently. Your early modernist SmithTweeter is pouting but will proceed on apace tomorrow, to the Third Period of the Digression. (I.xi.f.1–5) #WealthOfTweets #SmithTweets

• • •

Today, we continue # AdamSmith's Digression on Silver. You have been warned. #WealthOfTweets #SmithTweets

When last we spoke, we learned that nothing interesting happened to silver prices between 1570 and 1640. Maybe people were too busy creating great literature? Anyway, Silver prices rose again between 1640 and 1700, for a lot of reasons.(I.xig.1) #WealthOfTweets #SmithTweets

War makes everything expensive, especially corn. Cornfields become battlefields, and ploughshares become swords. (Reminder: "corn" is a catch-all term for "the staple crop(s) of the population") (I.xi.g.3) #ItsAllCorn #WealthOfTweets #SmithTweets

Paying people a bounty to export corn might encourage abundance in the long term (as more people might plant) but short term, it just causes scarcity and high prices at home. (I.xi.g.4) #WealthOfTweets #SmithTweets

There’s also debasement of silver by clipping & wearing. Wearing is the natural wearing down of a coin’s size/weight through use. (I.xi.g.5) #WealthOfTweets #SmithTweets

(People would also “salt” coins by shaking them in a pouch to speed wear so they could collect the bits that fell off. We, the SmithTweeters, love early modern crime.) (I.xi.g.5) #WealthOfTweets #SmithTweets

Clipping is cutting off pieces of a coin to melt down and use. Super illegal. Happened all the time. It’s one reason modern coins have milled edges. (I.xi.g.5) https://historyhouse.co.uk/articles/coin_clipping.html #WealthOfTweets #SmithTweets

But even as the century became more peaceful and orderly, the price of silver continued to rise. The is only partially because of bounty on exporting corn (I.xi.g.7–15) #WealthOfTweets #SmithTweets

Corn, when Smith was writing, was expensive not because of the bounty on exports as much as because of bad weather.(I.xi.g.17) #WealthOfTweets #SmithTweets

(Smith gets a little biblical here when he notes that “10 years of extraordinary scarcity, besides, are not more wonderful than 10 years of extraordinary plenty.”) (I.xi.g.17) https://www.youtube.com/embed/jZDqg2pvg_c #WealthOfTweets #SmithTweets

Price of labor is rising when Smith writes because demand for labor is rising, not because silver is falling.(I.xi.g.20) #WealthOfTweets #SmithTweets

SIDE-EYE on the colonialist "savage nations" talk, Dr. Smith. (I.xi.g.26)#WealthOfTweets #SmithTweets

But his greater observation, which is the vastly increased supply of silver and increased market for all trade goods, is important even when his wording isn’t what we’d like. (I.xi.g.27–29) #WealthOfTweets #SmithTweets

(#AdamSmith calls # tea a drug. We have no idea why he’d say that. Excuse us while we brew another pot to calm our nerves.) (I.xi.g.27) #WealthOfTweets #SmithTweets

Remember that gold and silver don’t all become money for exchange. Some of it (LOTS of it) is used up for manufacturing stuff (LIKE TEA SETS) gilding books, making lace, etc. And that’s sort of “lost” to the money market.(I.xi.g.30) #WealthOfTweets #SmithTweets

More #SmithSnark! “The elegant and, sometimes, well informed Author…” (I.xi.g.33) https://ameriburn.org/public-resources/find-a-burn-center/ #WealthOfTweets #SmithTweets

Really, metal prices are impressively stable over time. And we shouldn’t worry too much about discovery of new mines or loss of metal to manufacturing. (I.xi.g.37)#WealthOfTweets #SmithTweets

And that’s it! Digression on Silver over and out! Back to….OMG IS IT REALLY A DIGRESSION IF IT’S LONGER THAN MOST OF YOUR REAL CHAPTERS?? We’llsee you tomorrow. We need more tea. #WealthOfTweets #SmithTweets

. . .

Wait. Still silver? Didn't Smith say he was talking about silver over 3 periods? OK FINE. FINE. It's fine. So the value of gold relative to silver was regulated by the mints of Europe until the Spaniards found those pesky American mines. (I.xi.h.1) #WealthOfTweets #SmithTweets

(Reminder: This is still, somehow, about RENT.) #WhatIsHappening #WealthOfTweets #SmithTweets

So anyway the American mines get found and then both gold and silver get cheaper because of ballooning supply, but silver gets cheaperer. (I.xi.h.1) #WealthOfTweets #SmithTweets

Oh hey, more #SmithSnark. Poor Mr. Meggens, he thinks that the relative price is the result of the relative quantities available, and Smith is having none of it in a book that will be widely read for centuries. (I.xi.h.3) #WealthOfTweets #SmithTweets

Look, MEGGENS. It's not like anyone thinks that because an ox costs threescore times the price of a lamb that there are threescore lambs for each ox! Guffaw! (I.xi.h.4) #SmithSnark #WealthOfTweets #SmithTweets

A bit more pleasingly counterintuitive (but still part of the Meggens smackdown): We should actually expect the overall value of the cheaper good on the market to be greater. (I.xi.h.5) #SmithSnark #WealthOfTweets #SmithTweets

Demand is greater, so more people will have it, and likely enough more to make up for the lower price compared to the more luxurious good. (I.xi.h.5) #WealthOfTweets # SmithTweets

Holy moly we're explicitly talking about rent. It's in a discussion of another way things can be cheap—it's not just relative to other things, but about whether a good can command a price sufficient to pay rent or even bring it to market. (I.xi.h.6) #WealthOfTweets #SmithTweets

Even if the price is high, a good might not be able to pay any rent to the landowner. In this case, the landowner might choose to use their own stock and labor to bring the good to market. (I.xi.h.6) #WealthOfTweets #SmithTweets

But if the price won't even cover those, it's too cheap to get to market, says Smith. Unorthodox, but OK. (I.xi.h.6)#WealthOfTweets #SmithTweets

This explains why mines containing expensive stuff, like diamonds and silver and gold, might not be mined. Especially if there's a tax, which is like rent you can't get out of paying. (I.xi.h.6) #WealthOfTweets #SmithTweets

Since we're challenging definitions anyway, Smith figures, here's another: even if there's a lot of something, it is scarce if it takes a lot of work (labor and stock) to get it. This makes a lot of sense if you're an economist. (I.xi.h.9) #WealthOfTweets #SmithTweets

And so Smith would like for you to consider that if kings would just reduce the tax (rent) on their mines, it would make the expense of exploiting more mines worthwhile and might actually increase mine-tax revenue. #PagingDrLaffer (I.xi.h.10) #WealthOfTweets #SmithTweets

Which is...OK surprisingly interesting. Better than expected. But WHY are we talking about it here? Oh, it's because Smith is (still) REALLY ANNOYED by all the people who are wrong about what's been going on with the price of silver. (I.xi.h.11–13) #WealthOfTweets #SmithTweets

Also, at some point we've gotta dismiss the supposed specialness of silver. Supply, demand, and market dynamics still affect the price and quantity in the market, subject to the discovery or exploitation of new mines. (I.xi.h.12–13) #WealthOfTweets #SmithTweets

Which is all to say that Smith does not buy the conventional wisdom that the value of silver is still decreasing. Stay tuned for tomorrow because he is really not even a little close to done with this. (I.xi.h.12–13) #WealthOfTweets #SmithTweets

. . .

Look, we aren’t complaining. We are TeamSmith. But we just want to mention, in passing, that this whole next section of #WealthOfNations is basically a Digression on the Digression on Silver. You only THINK it's about farming.(I.xi.j–m) #WealthOfTweets # SmithTweets

 And also, it's still about rent? (OK, we are complaining a little.) (I.xi.e–m) # WealthOfTweets #SmithTweets

When Smith says “rude produce” he doesn’t mean vegetables that question your life choices. He means plant and animal products that don’t need much technical processing to be useful. (I.xi.j) #WealthOfTweets #SmithTweets

There are three sorts of rude produce, and the price of each kind is affected differently by increased wealth and technology. Let’s go! (I.xi.j) #WealthOfTweets #SmithTweets

The first sort of rude produce is wild game, fishes, etc. that nature produces in limited quantities and that we don’t seem to be able to cultivate. Like truffles and...um...woodcock? (I.xi.k.i) # WealthOfTweets #SmithTweets

(Fun fact about woodcock—they poop when they fly, and this is relevant if you're gonna eat them. You can just roast 'em whole. Like you're Fergus Henderson @Mr_St_JOHN or something.) (I.xi.k.1) #WealthOfTweets #SmithTweets

Because the supply of this first sort is so limited, the price can go up pretty much without limit (assuming the society is wealthy enough). That’s why the ancient Romans could and did pay such crazy prices for rare food. (I.xi.k.1) #WealthOfTweets #SmithTweets

How crazy, you ask? Well, a peck of wheat cost the ancient Romans ~4 sestertii. So, how do you like 6000 sestertii for one white nightingale, or 8000 for one single fish? (I.xi.k.1) #WealthOfTweets #SmithTweets
(And the fish was only a surmullet anyway. They probably don’t even taste that great. Stupid Romans and their fancy food.) (I.xi.k.1) #WealthOfTweets #SmithTweets https://www.youtube.com/embed/H5ofIBw3uMM

We seem to have accidentally become a cooking show. We should probably go rest up for tomorrow. Tune in to find out why pigs are basically chickens! #WealthOfTweets #SmithTweets

We feel like @feedmedrinkme @chefjamesoakley @altonbrown @chrisbaggot @asymmetricinfo @PaulHollywood @tylercowen @Jas_Townsend @EHAudleyEnd @historecipes and @EnglishHeritage might want to get in on this discussion of #AdamSmith and #FoodHistory. Woodcock anyone? @chrisbaggott and @GuyFieri too. There must be a way to bring Roman surmullet to the American plate, right?

• • •

Today, in #WealthOfTweets, more rude produce, # AdamSmith's opinions about Scottish Cheese, and, to be perfectly honest, an irresponsible amount of poop.#WealthOfTweets #SmithTweets

The second kind of rude produce is the kind humans can produce more of in response to demand. This includes stuff like sheep, 🐄🐄, and fruits & veg that farm well. (I.xi.l.1) # WealthOfTweets #SmithTweets

We don’t bother to cultivate this stuff until we reach a certain level of wealth because it reproduces well on its own. But as we get wealthier, we want more stuff and can pay for it, so it’s profitable to herd and farm these things. (I.xi.l.1) #WealthOfTweets #SmithTweets

But unlike the wild and rare stuff, there’s a limit on the price of this kind of produce, because when the price goes higher, we make more of it, which brings the price back down.(I.xi.l.1) #WealthOfTweets #SmithTweets

(We also find more profitable uses for, say, the wild grazing land, crowd the sheep out, and then *need* to cultivate them.) (I.xi.l.2) #WealthOfTweets #SmithTweet

🐄🐄 seem to be the first kind of produce for which we can see this take effect. (Just letting you know. Smith loves 🐄🐄 almost as much as he hates monopolies. So many #CowTweets!) (I.xi.l.2) # WealthOfTweets #SmithTweets

And where there’s 🐄🐄 there’s 💩, which is really important because it’s fertilizer. (I.xi.l.3) #WealthOfTweets #SmithTweets

💩 is so important that you’d keep 🐄🐄 in part to get the fertilizer! And notice those poor folks who live too far from busy towns to get 💩 from there, and have to rely on whatever their own 🐄🐄 can provide! (I.xi.l.3) #WealthOfTweets #SmithTweets

Amount of 🐄🐄: amount of 💩: amount of cultivated land. And you need the cultivated land to feed the 🐄🐄. It’s all connected. (I.xi.l.3)https://www.youtube.com/embed/GibiNy4d4gc #CircleOfPoop #WealthOfTweets #SmithTweets

That’s why 🐄🐄 are such a sign of wealth! They are useful as food, but also as producers of 💩 fertilizer for crops, and the more & better crops you can produce, the more 🐄🐄 you can sustain. (I.xi.l.3) #WealthOfTweets #SmithTweets

This, says Smith, explains Scotland. (I.xi.l.3) #SomethingMustExplainScotland #WealthOfTweets #SmithTweets

In new colonies, space is so abundant that it’s not worthwhile to cultivate 🐄🐄. They can just roam free. This is why there will one day be 🐄🐄 on Mars. (I.xi.l.4) #WealthOfTweets #SmithTweets

If 🐄🐄 are the first thing that we cultivate like this, venison seems to be among the last. Deer parks are a thing, but they’re a luxury thing. (I.xi.l.6–7) # WealthOfTweets # SmithTweets

You can feed poultry more or less for free, but only up to a certain number. And the land you raise them on might be more profitably used for 🐄🐄. So the price of poultry starts to rise. (I.xi.l.8) #WealthOfTweets #SmithTweets

The price of ANY food animal is highest at the moment right before we start to cultivate land to raise it. That’s WHY we start to cultivate land to raise it. (I.xi.l.8) #WealthOfTweets #SmithTweets

Pigs are basically chickens. 🐖🐓🐄💩(I.xi.l.9) #WealthOfTweets #SmithTweets

Keeping a dairy starts as a way to use the excess milk from those all-important 🐄🐄. Butter and cheese are ways to store the value of extra milk before it spoils. They are also delicious.(I.xi.l.11) #MmmCheese #WealthOfTweets #SmithTweets

As world gets wealthier, price of butter and cheese increases and it becomes worthwhile to dedicate serious time, effort, and care to producing them. Also, they are delicious. (I.xi.l.11) #WealthOfTweets #SmithTweets

In Smith’s time, this tipping point had been reached in England, but not yet in Scotland. But look! (I.xi.l.11) #WealthOfTweets #SmithTweets


(We, the Smithtweeters, are going to see if we can get some Scottish chefs to tell us about amazing Scottish cheese that #AdamSmith is sorry to have missed.) @chefneilforbes @fredecosse @TomKitchin @AndrewFairlie1 @GordonRamsay @Continibites @McTSingh @markgreenaway @NickNairn

You can consider a nation’s land completely cultivated and improved when the price of each of these 2nd sort of produce is so high that it’s worth it to us to cultivate them. (I.xi.l.12) #WealthOfTweets #SmithTweets

This, by the way, is why (we nearly forgot!) we're still talking about land and rent! The cultivation and improvement of the land is really important, says Smith, to the economic development of a country. (I.xi.l.12) #WealthOfTweets #SmithTweets

“Gain is the end of all improvement.”(I.xi.l.12) #WealthOfTweets #SmithTweets

But you have to be smart. When the price for a type of produce isn’t high enough, it’s a waste of resources to improve land to cultivate it. Thus our failed TweetFarm. (I.xi.l.12) #WealthOfTweets #SmithTweets

And just in case you think he’s forgotten, this all connects back to silver. These changes in prices aren’t a change in the value of silver or gold. They’re a change in the supply and demand and real price of the produce. (I.xi.l.13) #WealthOfTweets #SmithTweets

Truly, @mikeroweworks has got to be an # AdamSmith fan...

Tune in tomorrow, when we, the Smithtweeters, try to get you to send us a silver tea set, and reveal the third--yes third!--sort of rude produce. #WealthOfTweets #SmithTweets

Everybody ready for more #WealthOfNations? Let's go!

The third sort of rude produce is the kind where human attempts to cultivate and improve it produce unpredictable results. Examples include wool and animal hides. (I.xi.m.1) #WealthOfTweets #SmithTweets

It seems like the price of these should rise right along with the price of meat, but Smith says “Not so fast!” (I.xi.m.3) #WealthOfTweets #SmithTweets

Because this sort of produce travels much better than meat, the market is much much larger. And we all know that more competition drives prices down. (I.xi.m.4–5) #WealthOfTweets #SmithTweets

And it all gets more complicated when government gets involved, like it did in the English wool industry. (Isn’t that always the way? You should see the forms we have to fill out to get each tweet govt. approved!) (I.xi.m.8) #WealthOfTweets #SmithTweets

Violence and artifice control price of English wool! 1. Forbidding export 2. Duty free Spanish imports 3. Irish can only export wool to England. English wool stuck as an English (not global) product, but competes w/ Spanish and Irish wool (I.xi.m.8–9) #WealthOfTweets #SmithTweets

Smith seems really frustrated by the lack of historical data on the price of hides. We embrace the mystery. (I.xi.m.10) #WealthOfTweets #SmithTweets

Price of hides has definitely dropped recently, though, and this is because the tanners aren’t as good at rent-seeking as the clothiers! (I.xi.m.11) #WealthOfTweets #SmithTweets

When prices for hides and wool drop, the price of meat rises because farmers have to cover costs of land and feed. (I.xi.m.12) #WealthOfTweets #SmithTweets

Since the market for these goods is global, demand and supply in other countries controls price much more than whatever improvements we can make in overall wealth or producing hides and wool. (I.xi.m.14) #WealthOfTweets #SmithTweets

Fish are tricky too, because there’s limited water that can support each type of fish, and the amount of work and $$ that goes into traveling farther to catch more fish and get them to market is enormous. (I.xi.m.15) #FishAreTricky #WealthOfTweets #SmithTweets

Mining is basically fishing, but more so. (I.xi.m.17–21) #WealthOfTweets #SmithTweets

But (and remember we are still, OMG STILL, in the Digression on Silver) even if we discover whole new mines, they don’t really affect the price of money. They only affect trifling superfluities like how much gold and silverplate there is.(I.xi.m.21) # WealthOfTweets #SmithTweets

If you mail us a silverplated tea set we, the SmithTweeters, hereby promise not to call it a trifling superfluity. Just saying. (I.xi.m.21) #WealthOfTweets #SmithTweets

OMG, it’s the Conclusion of the Digression concerning the Variations in the Value of Silver!! (with bonus digression about 🐄🐄💩 that digressed from the digression on silver.) (I.xi.n) #WealthOfTweets # SmithTweets

We have to stop thinking about national wealth in terms of the amount of gold and silver we have. Precious metals are just one kind of commodity. (I.xi.n.1) #WealthOfTweets #SmithTweets

(And if the past 65 pages didn't convince you, says Smith, you just wait til Book IV.) (I.xi.n.1) #WealthOfTweets #SmithTweets

It's true that the quantity of silver went up and so did manufacturing and agricultural production, but it's just coincidence. New mines in America have nothing to do with good governance that encourages industry (and through it, wealth). (I.xi.n.1) #WealthOfTweets #SmithTweets

You get a clearer picture of a nation’s wealth if you look at the price of things like 🐄🐄:🌽. That can tell you how much land is cultivated, how productive that land is, etc. Gold and silver just tell you how many mines there are. (I.xi.n.2–3) #WealthOfTweets #SmithTweets

If the price of silver controlled the price of all other provisions, their prices would stay the same relative to each other. That doesn’t happen, so we know it’s not true. (I.xi.n.4) #WealthOfTweets #SmithTweets

Face it, it’s just wrong wrong wrong to think the value of silver has been dropping consistently over time. (I.xi.n.9) #WealthOfTweets #SmithTweets

Not only is it wrong, it’s a “vain and useless distinction” because changing prices could be a rise in the value of the things silver is buying or a decline in value of silver. Knowing which it is STILL won’t help you buy stuff. (I.xi.n.9) #WealthOfTweets #SmithTweets

You can, however, sometimes see that a rise in the price of provisions is spurred by real improvements in cultivation and fertility of land. That’s useful and satisfying to know! And...it's why you should care about RENT! (I.xi.n.9) # WealthOfTweets #SmithTweets

When value of silver drops and prices of provisions rise, you can also use that information to raise wages so your workers don’t suffer. (I.xi.n.10) #WealthOfTweets # SmithTweets

Meat prices go up and vegetable prices go down. 🐄🐄 produce 💩 which produces more fertile land and more veggies. It’s the circle of 💩 again! (I.xi.n.10) #CircleOfPoop #WealthOfTweets #SmithTweets

If we are worried about the poor, and we should be, we should worry more about taxing manufactured commodities than we should about the price of 🌽 OR the price of silver. (I.xi.n.11) #WealthOfTweets #SmithTweets

And we hereby conclude the conclusion of the Digression on Silver! But we’re not done yet! There are 15 more pages before the end of the chapter. Tune in tomorrow for all the hottest 18th C news about wool and wheat! (I.xi.n) #WealthOfTweets #SmithTweets