Chapter I. Of Value.

or carry it out of a country (1) through the exchanges, to restore the equilibrium of trade, and which thereby raise its value in some countries and lower it in others, are the very same causes on which the local value of money would depend, if it were never imported except (2) as a merchandise, and never except directly from the mines. When the value of money in a country is permanently lowered (1) [as a medium of exchange] by an influx of it through the balance of trade, the cause, if it is not diminished cost of production, must be one of those causes which compel a new adjustment, more favorable to the country, of the equation of international demand—namely, either an increased demand abroad for her commodities, or [pg 427] a diminished demand on her part for those of foreign countries. Now, an increased foreign demand for the commodities of a country, or a diminished demand in the country for imported commodities, are the very causes which, on the general principles of trade, enable a country to purchase all imports, and consequently (2) the precious metals, at a lower value. There is, therefore, no contradiction, but the most perfect accordance, in the results of the two different modes [(1) as a medium of exchange; and (2) as merchandise] in which the precious metals may be obtained. When money [as a medium of exchange] flows from country to country in consequence of changes in the international demand for commodities, and by so doing alters its own local value, it merely realizes, by a more rapid process, the effect which would otherwise take place more slowly by an alteration in the relative breadth of the streams by which the precious metals [as merchandise] flow into different regions of the earth from the mining countries. As, therefore, we before saw that the use of money as a medium of exchange does not in the least alter the law on which the values of other