Whatever were the causes which lowered the 
value of the capital, the same must necessarily 
have lowered that of the interest, and exactly 
in the same proportion. The proportion between 
the value of the capital and that of the 
interest must have remained the same, though 
the rate had never been altered. By altering 
the rate, on the contrary, the proportion between 
those two values is necessarily altered
If L.100 now are worth no more than L.50 
were then, L.5 now can be worth no more 
than L.2, 10s. were then. By reducing the 
rate of interest, therefore, from ten to five per 
cent. we give for the use of a capital, which 
is supposed to be equal to one half of its former 
value, an interest which is equal to one 
fourth only of the value of the former interest
An increase in the quantity of silver, while 
that of the commodities circulated by means 
of it remained the same, could have no other 
effect than to diminish the value of that metal
The nominal value of all sorts of goods would 
be greater, but their real value would be precisely 
the same as before. They would be exchanged 
for a greater number of pieces of silver
but the quantity of labour which they 
could command, the number of people whom 
they could maintain and employ, would be 
precisely the same. The capital of the country 
would be the same, though a greater number 
of pieces might be requisite for conveying any 
equal portion of it from one hand to another. 
The deeds of assignment, like the conveyances 
of a verbose attorney, would be more cumbersome
but the thing assigned would be precisely 
the same as before, and could produce 
only the same effects. The funds for maintaining 
productive labour being the same, the 
demand for it would be the same. Its price 
or wages, therefore, though nominally greater
would really be the same. They would be 
paid in a greater number of pieces of silver, 
but they would purchase only the same quantity 
of goods. The profits of stock would be 
the same, both nominally and really. The 
wages of labour are commonly computed by 
the quantity of silver which is paid to the labourer
When that is increased, therefore, 
his wages appear to be increased, though they 
may sometimes be no greater than before. 
But the profits of stock are not computed by 
the number of pieces of silver with which they 
are paid, but by the proportion which those 
pieces bear to the whole capital employed
Thus, in a particular country, 5s. a-week are 
said to be the common wages of labour, and 
ten per cent. the common profits of stock; but 
the whole capital of the country being the 
same as before, the competition between the 
different capitals of individuals into which it 
was divided would likewise be the same. 
They would all trade with the same advantages 
and disadvantages. The common proportion 
between capital and profit, therefore, 
would be the same, and consequently the common 
interest of money; what can commonly 
be given for the use of money being necessarily 
regulated by what can commonly be made 
by the use of it. 
Any increase in the quantity of commodities 
annually circulated within the country
while that of the money which circulated them 
remained the same, would, on the contrary
produce many other important effects, besides 
that of raising the value of the money. The 
capital of the country, though it might nominally 
be the same, would really be augmented
It might continue to be expressed by the same 
quantity of money, but it would command
greater quantity of labour. The quantity of 
productive labour which it could maintain and 
employ would be increased, and consequently 
the demand for that labour. Its wages would 
naturally rise with the demand, and yet might 
appear to sink. They might be paid with a 
smaller quantity of money, but that smaller 
quantity might purchase a greater quantity of 
goods than a greater had done before. The 
profits of stock would be diminished, both 
really and in appearance. The whole capital 
of the country being augmented, the competition 
between the different capitals of which 
it was composed would naturally be augmented 
along with it. The owners of those particular 
capitals would be obliged to content 
themselves with a smaller proportion of the 
produce of that labour which their respective 
capitals employed. The interest of money
keeping pace always with the profits of stock
might, in this manner, be greatly diminished
though the value of money, or the quantity of 
goods which any particular sum could purchase
was greatly augmented
In some countries the interest of money 
has been prohibited by law. But as something 
can everywhere be made by the use of 
money, something ought everywhere to be 
paid for the use of it. This regulation, instead 
of preventing, has been found from experience 
to increase the evil of usury. The 
debtor being obliged to pay, not only for the 
use of the money, but for the risk which his 
creditor runs by accepting a compensation for 
that use, he is obliged, if one may say so, to 
insure his creditor from the penalties of usury
In countries where interest is permitted, the 
law in order to prevent the extortion of usury
generally fixes the highest rate which can be 
taken without incurring a penalty. This rate 
ought always to be somewhat above the lowest 
market price, or the price which is commonly 
paid for the use of money by those who 
can give the most undoubted security. If 
this legal rate should be fixed below the lowest 
market rate, the effects of this fixation 
must be nearly the same as those of a total 
prohibition of interest. The creditor will not 
lend his money for less than the use of it is 
worth, and the debtor must pay him for the 
risk which he runs by accepting the full value