# value-of-silver

## Definition

The purchasing power of silver as a measure of value, which Smith argues varies over time due to changes in the richness or barrenness of mines supplying the market, and the quantity of labour required to bring silver from mine to market. He notes that while the value of silver sometimes varies greatly from century to century, it seldom varies much from year to year, making it a more stable measure of value over medium time periods than annual price fluctuations would suggest.

## Source Chapter

Book 1, Chapter 5: "OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY."

## Context

Smith discusses the value of silver while explaining why it serves as a better measure of value over longer periods than annual price fluctuations would suggest. He argues that the average or ordinary price of corn, which regulates the money price of labour, is itself regulated by the value of silver, which depends on mine productivity and the labour required to extract and market the metal.

## Economic Domain

Exchange

## Smith's Original Wording

"The average or ordinary price of corn, again is regulated, as I shall likewise endeavour to shew hereafter, by the value of silver, by the richness or barrenness of the mines which supply the market with that metal."

## Modern Interpretation

The value of silver represents the historical role of precious metals as monetary standards and value measures, illustrating how commodity values can serve as anchors for broader price systems. While modern economies no longer use precious metals as monetary standards, the concept illustrates the relationship between commodity values, production costs, and broader price levels. It relates to modern discussions of commodity pricing, monetary standards, and the historical development of financial systems.
