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Adam Smith
The Wealth of Nations

Squashed down to read in about 100 minutes
"It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

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  INTRODUCTION TO The Wealth of Nations

When Adam Smith wrote The Wealth of Nations there were no economists, for he invented the science of Economics. Born in Kirkcaldy, Fife, Scotland, he became professor of logic at Glasgow in 1751, becoming professor of moral philosophy the following year. A personal friend of David Hume, his travels through Europe and his many contacts in business and government gave him the opportunity of making very detailed studies of the social forces giving rise to competition, trade, and markets. It is a remarkable achievement that, nearly 250 years on, this work, with its idea of the "invisible hand" of economic incentives, is still one of the essential basic texts of its field.


Although large by the standards of the 'Squashed Philosopher' series at 13,000 words, I've reduced Smith's monumental 383,000-word, 1000-page work to about 3.5% of its original size. Very little of his basic economic theory has been lost, but, the general theory now being so widely understood and accepted, it was not thought necessary to include anything more than a taste of the vast array of fiscal and financial data, historical examples and justifications Smith provides. However, more than a fair smattering of his fascinating asides have been retained, despite the fact that some think the source of much of his data, about pin-making for instance, to be simply anecdotal. How he obtained his information about the beauty of Irish prostitutes is not known.


Adam Smith, 1776
The Wealth of Nations

"It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

THE DIVISlON OF LABOUR: One man can scarce make one pin a day, but by men co-operating to do a specialised task each, ten men can make 48000 pins a day. It is men trying to make life easy which brings improvement, and each man has different skills. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
REAL AND NOMINAL PRICES: The cost of labour is always the same, that of maintaining the labourer. If things are scarce they get valuable, if commonplace they go cheap. This happens to money. Labour, like commodities, may be said to have a real and a nominal price.
THE PRICE OF COMMODITIES. If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally be worth two deer. Or if one species of labour requires an uncommon degree of dexterity and ingenuity, the esteem which men have for such talents, will naturally give a superior value to their produce. As soon as land became private property, the landlords, like all other men, love to reap where they never sowed. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages of the labourers, and the third pays the profit of the farmer.
THE PROFITS OF STOCK. As a land increases in prosperity, the profits of stock gradually diminish as the best lands have been all occupied. The rise of profit operates like compound interest. Our merchants complain much of the bad effects of high wages in raising the price, but they say nothing concerning the bad effects of high profits.

  The Squashed Philosophers Edition of...

The Wealth of Nations
Adam Smith
Squashed version edited by Glyn Hughes © 2011


The annual labour of every nation is the fund which supplies it with all the necessaries and conveniences of life, and which consist always either in the immediate produce of its labour, or in what is purchased with that produce from other nations.

According, therefore, as this produce bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied. But this proportion must in every nation be regulated by two circumstances: first, by the skill, dexterity, and judgment with which its labour is applied; and, secondly, by the proportion of the people who are usefully employed.

Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful labour, and endeavours to provide the necessaries of life, for himself, his family or tribe. Such nations, however, are so miserably poor, that they are frequently reduced to abandoning their infants, their old, and their sick, to perish. Among civilized and thriving nations, though a great number of people do not labour at all; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied.

The causes of this improvement in the productive powers of labour, and its distribution among the different ranks and conditions of men, make the subject of this first book.




The greatest improvements in the productive powers of labour seem to have been the effects of the division of labour.

To take an example of the trade of pin-making: a workman not educated in it could scarce make one pin in a day. But this business is divided into a number of peculiar trades. One man draws out the wire; another straights it; a third cuts it; a fourth points it; to whiten the pins is another trade; it is even a trade to put them into the paper. I have seen a small manufactory where ten men only could make upwards of forty-eight thousand pins in a day. If they had all wrought independently, they certainly could not each of them have made the four thousand eight hundredth part of that.

This great increase in the quantity of work consequence of the division of labour, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and, lastly, to the invention of machines.

Everybody must be sensible how much labour is facilitated and abridged by the application of proper machinery. In the first fire engines [= steam engines], a boy was constantly employed to open and shut the valves as the piston ascended or descended. One of those boys observed that, by tying a string from the handle of the valve to another part of the machine, the valve would open and shut without assistance, and leave him to divert himself with his play-fellows. One of the greatest improvements was thus the discovery of a boy who wanted to save his own labour.

Consider the coarse woollen coat which covers the day-labourer, the bed which he lies on, the kitchen-grate at which he prepares his victuals, the coals he uses for that purpose, the furniture of his table, we shall be sensible that, without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided for. Compared with the extravagant luxury of the great, his accommodation is extremely simple; and yet it may be true that the accommodation of an European prince does not so much exceed that of an industrious peasant, as the accommodation of that peasant exceeds that of many an African king, the absolute masters of ten thousand naked savages.


This division of labour is not originally the effect of any human wisdom. It is the necessary consequence of the propensity in human nature to truck, barter, and exchange.

Nobody ever saw a dog make a fair and deliberate exchange of a bone with another dog. In almost every other race of animals, each individual has occasion for the assistance of no other creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens, and even he purchases food in exchange for the money which one man gives him. In a tribe of hunters or shepherds, a particular person makes bows and arrows, for example, with greater dexterity than any other. He exchanges them for meat; and he finds that he can thereby get more meat than if he himself went to the field to catch it.

The difference of natural talents in different men, is, in reality, much less than we are aware of. By nature a philosopher is not in genius half so different from a street porter, as a mastiff is from a grey-hound. But the strength of the mastiff is not in the least supported by the swiftness of the greyhound. Among men, on the contrary, the most dissimilar geniuses are of use to one another; by the disposition to truck and barter, their talents are brought into a common stock, where every man may purchase part of the produce of other men's talents.


As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment.

A porter, for example, can find employment and subsistence only in a town. In the lone houses and very small villages of Scotland, every farmer must be butcher, baker, and brewer, for his own family. It is impossible there should be such a trade as even that of a nailer in the remote and inland parts of the highlands of Scotland, for in such a situation it would be impossible to dispose of one thousand, that is, of one day's work in the year.

As by means of water-carriage, a more extensive market is opened to every sort of industry, so it is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to subdivide and improve itself. Six or eight men, by the help of water-carriage, can carry and bring back, in the same time, the same quantity of goods between London and Edinburgh as fifty broad-wheeled waggons, attended by a hundred men, and four hundred horses.

The nations that, according to the best authenticated history, appear to have been first civilized, were those that dwelt round the coast of the Mediterranean sea, a sea extremely favourable to the infant navigation of the world. Egypt seems to have been the first in which either agriculture or manufactures were cultivated and improved to any considerable degree by way of the inland navigation afforded by the Nile. Improvements seem likewise to have been of very great antiquity in Bengal, and in eastern China, where the Ganges, and several other great rivers afford an inland navigation.

I shall endeavour to shew; First, what is the real measure of this exchangeable value; or wherein consists the real price of all commodities. Secondly, what are the different parts of which this real price is composed or made up. And, lastly, what are the circumstances which sometimes raise these different parts of price above, and sometimes below, their natural or ordinary rate.


Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. Labour was the first price, the original purchase money that was paid for all things. But It is often difficult to ascertain the proportion between two different quantities of labour. Every commodity, besides, Is more frequently exchanged for, and thereby compared with, other commodities, than with labour. The greater part of people, too, understand better what is meant by a quantity of a particular commodity, than by a quantity of labour.

The butcher seldom carries his beef to exchange for bread or for beer; but he carries them to the market, where he exchanges them for money, and afterwards exchanges that money for bread and beer. The quantity of money which he gets for them regulates, too, the quantity of bread and beer which he can afterwards purchase.

Gold and silver, however, like every other commodity, vary in their value; are sometimes cheaper and sometimes dearer, sometimes of easier and sometimes of more difficult purchase. But equal quantities of labour, at all times and places, may be said to be of equal value to the labourer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness. Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price; money is their nominal price only.

Labour, like commodities, may be said to have a real and a nominal price. Its real price may be said to consist in the quantity of the necessaries and conveniencies of life which are given for it; its nominal price, in the quantity of money. The labourer is rich or poor in proportion to the real, not to the nominal price of his labour.

The same real price is always of the same value; but on account of the variations in the value of gold and silver, the same nominal price is sometimes of very different values. Princes and sovereign states have frequently fancied that they had an interest to diminish the quantity of pure metal in their coins; but they seldom have fancied that they had any to augment it. Likewise, the discovery of mines in America diminished the value of gold and silver in Europe. Thus diminution, it is commonly supposed, though I apprehend without any certain proof, is still going on gradually, and is likely to continue to do so for a long time.

Equal quantities of labour will, at distant times, be purchased more nearly with equal quantities of corn, the subsistence of the labourer, than with equal quantities of gold and silver. But, from year to year, silver is a better measure than corn, because equal quantities of it will more nearly command the same quantity of labour.

But half an ounce of silver at Canton in China may command a greater quantity both of labour and of the necessaries of life, than an ounce at London. Silver, too, would appear to be more invariable in its value than gold. The value of gold would seem to depend only upon the quantity of silver which it would exchange for.

The occasional fluctuations in the market price of gold and silver bullion arise from the same causes as the like fluctuations in that of all other commodities. These metals are lost in gilding, in plating and in the wear and tear of coin. The merchant importers, like all other merchants, sometimes overdo the business, and sometimes underdo it. But the money of any particular country is, at any particular time and place, more or less an accurate measure or value, according as the current coin is more or less exactly agreeable to its standard.

By the money price of goods, it is to be observed, I understand always the quantity of pure gold or silver for which they are sold, without any regard to the denomination of the coin. Six shillings and eight pence, for example, in the time of Edward I., I consider as the same money price with a pound sterling in the present times, because it contained, as nearly as we can judge, the same quantity of pure silver.


If among a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally be worth two deer. Or if one species of labour requires an uncommon degree of dexterity and ingenuity, the esteem which men have for such talents, will naturally give a superior value to their produce. In this state of things, the whole produce of labour belongs to the labourer.

As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work. The value which the workmen add to the materials, therefore, resolves itself into two parts, of which one pays their wages, the other the profits of their employer.

The profits of stock, it may perhaps be thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction. However, they bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour.

They are regulated altogether by the value of the stock employed, and are greater or smaller in proportion to the extent of this stock. Let us imagine two manufactories, each with twenty workmen each paid fifteen pounds per year. If the one establishment uses each year materials costing seven hundred pounds and the other uses finer materials costing seven thousand, then, at the rate of ten per cent, the one will expect a yearly profit of about one hundred pounds; while the other will expect about seven hundred and thirty pounds. But their labour of inspection and direction may be either altogether the same.

As soon as land became private property, the landlords, like all other men, love to reap where they never sowed. In the price of corn, for example, one part pays the rent of the landlord, another pays the wages of the labourers, and the third pays the profit of the farmer.

In the most improved societies there are always a few commodities of which the price resolves itself into only labour, and the profits of stock; and a still smaller number, in which it consists altogether in the wages of labour. In the price of sea-fish, for example, one part pays the labour of the fisherman, and the other the profits of the capital employed. In Scotland, a few poor people make a trade of gathering, along the sea-shore, variegated stones known as Scotch pebbles. The price paid to them is altogether the wages of their labour; neither rent nor profit makes an part of it. In a civilized country such cases are few, and rent and profit contribute the far greater part of costs.


There is in every society or neighbourhood an ordinary or average rate both of wages and profit in every different employment of labour and stock; and this rate is regulated partly by the general circumstances of the society, its riches or poverty, and partly by the peculiar nature of each employment.

There is also in every society or neighbourhood an ordinary or average rate of rent, which is regulated, too, by the general circumstances of the society or neighbourhood in which the land is situated, and partly by the natural or improved fertility of the land. What we may call the natural price of any commodity depends upon these natural rates of wages, profit and rent at the place where it is produced. But the actual price at which any commodity is commonly sold, is called its market price. It may either be above, or below, or exactly the same with its natural price.

The market price of every commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity.

When the quantity of any commodity which is brought to market falls short of the demand, a competition will immediately begin and the market price will rise more or less above the natural price. Hence the exorbitant price of the necessaries of life during the blockade of a town, or in a famine.

When the quantity brought to market exceeds the demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages, and profit, required to bring it thither. Some part must be sold to those who are willing to pay less, and the low price which they give for it must reduce the price of all. The market price will sink below the natural price.

The quantity of every commodity brought to market thus naturally suits itself to the effectual demand. It is the interest of all those who employ their land, labour, or stock, in bringing any commodity to market, that the quantity never should exceed the effectual demand; and it is the interest of all other people that it never should fall short of that demand. The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating.

The occasional and temporary fluctuations in the market price of any commodity fall chiefly upon those parts of its price which resolve into wages and profit. A public mourning raises the price of black cloth, and augments the profits of the merchants who possess it. It has no effect upon the wages of the weavers. The market is understocked with commodities, not with labour, with work done, not with work to be done. It raises the wages of journeymen tailors. The market is here understocked with labour. There is an effectual demand for more labour, for more work to be done, than can be had. It sinks the price of coloured silks and cloths, and thereby reduces the profits of the merchants who have any considerable quantity of them upon hand. It sinks, too, the wages of the workmen employed in preparing such commodities, for which all demand is stopped for six months, perhaps for a twelvemonth. The market is here overstocked both with commodities and with labour.

But though the market is in this manner continually gravitating, if one may say so, towards the natural price; yet certain peculiarites may, in many commodities, keep up the market price a good deal above the natural price.

When, by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market, are generally careful to conceal this change. If the market is at a great distance from the residence of those who supply it, they may sometimes be able to keep the secret for several years together, and may so long enjoy their extraordinary profits without any new rivals. Secrets of this kind, however, can seldom be long kept.

A monopoly granted either to an individual or to a trading company, has the same effect as a secret in trade or manufactures. The monopolists, by keeping the market constantly understocked by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments. whether they consist in wages or profit, greatly above their natural rate.

The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken.

The market price of any particular commodity, though it may continue long above, can seldom continue long below, its natural price. The natural price itself varies with the natural rate of each of its component parts, of wages, profit, and rent; and in every society this rate varies according to their circumstances, according to their riches or poverty, their advancing, stationary, or declining condition.


In the original state of things, before the appropriation of land and the accumulation of stock, the wages of labour would have augmented with every improvement in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labour.

But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. In the long run, the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate.

A man must always live by his work, and his wages must at least be sufficient to maintain him. The demand for those who live by wages, therefore, necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth.

It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than North America. The wages of labour, however, are much higher in North America than in England. In the province of New York, common labourers earned in 1773, before the late disturbances, three shillings and sixpence a-day; ship-carpenters, ten shillings and sixpence, with a pint of rum, worth sixpence sterling. Yet the price of provisions is in North America much lower than in England so that the real command of the necessaries and conveniencies of life must be higher still.

Though the wealth of a country should be very great, yet if it has been long stationary, we must not expect to find the wages of labour very high. China has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous, countries in the world. It seems, however, to have been long stationary. The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of Canton, many thousand families have no habitation, but live in little fishing-boats upon the rivers and canals. The subsistence they find is so scanty, that they are eager to fish up the nastiest carrion; the putrid carcase of a dead dog is welcome to them as wholesome food. In all great towns, infants are every night exposed in the street, or drowned like puppies in the water. The performance of this horrid office is even said to be the business by which some people earn their subsistence.

The scanty maintenance of the labouring poor is the natural symptom that things are at a stand, and their starving condition, that they are going fast backwards.

Is an improvement in the circumstances of the lower ranks of the people to be regarded as an advantage, or as an inconveniency, to the society? The answer seems plain. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.

Poverty seems even to be favourable to generation. A half-starved Highland woman frequently bears more than twenty children, while a pampered fine lady is generally exhausted by two or three. Barrenness, so frequent among women of fashion, is very rare among those of inferior station. Luxury, in the fair sex, while it inflames, perhaps, the passion for enjoyment, seems always to weaken, and frequently to destroy altogether, the powers of generation.

The wear and tear of a slave, it has been said, is at the expense of his master; but that of a free servant is at his own expense. The wear and tear of the latter, however, is, in reality, as much at the expense of his master as that of the former. The wages paid to journeymen and servants of every kind must be such as may enable them, one with another to continue the race of journeymen and servants. I believe, that the work done by freemen comes cheaper in the end than that performed by slaves. It is found to do so even at Boston, New-York, and Philadelphia.

The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry. A plentiful subsistence increases the bodily strength of the labourer, and the comfortable hope of bettering his condition, and of ending his days, perhaps, in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low.

In cheap years it is pretended, workmen are generally more idle, and in dear times more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may render some workmen idle, cannot be well doubted; but that it should have this effect upon the greater part, or that men in general should work better when they are ill fed, seems not very probable.

It is because the demand for labour increases in years of sudden and extraordinary plenty, and diminishes in those of sudden and extraordinary scarcity, that the money price of labour sometimes rises in the one, and sinks in the other.

In a year of sudden and extraordinary plenty, there are funds in the hands of many of the employers of industry, sufficient to maintain and employ a greater number of industrious people than had been employed the year before; and this extraordinary number cannot always be had. Those masters, therefore, who want more workmen, bid against one another, in order to get them, which sometimes raises both the real and the money price of their labour.


The increase of stock, which raises wages, tends to lower profit. Profit is very fluctuating, but the progress of interest, however, may lead us to form some notion of the progress of profit.

Since the time of Henry VIII the wealth and revenue of the country have been continually advancing, the wages of labour have been continually increasing, and, in the greater part of the different branches of trade, the profits of stock have been diminishing.

In our American colonies, not only the wages of labour, but the interest of money, and consequently the profits of stock, are higher than in England. In the different colonies, the rate of interest run from six to eight percent. High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in new colonies. As the colony increases, the profits of stock gradually diminish as the best lands have been all occupied. In the greater part of our colonies, accordingly, the rate of interest has been considerably reduced during the present century.

In Bengal, money is frequently lent to the farmers at forty, fifty, and sixty per cent. Twelve per cent, is said to be the common interest of money in China, and the ordinary profits of stock must be sufficient to afford this large interest.

When the law prohibits interest altogether, it does not prevent it. The high rate of interest among all Mahometan nations is accounted for by M. Montesquieu partly from this.

In a country which had acquired its full complement of riches, where, in every particular branch of business, there was the greatest quantity of stock that could be employed in it, as the rate of profit would be very small, so the rate of interest which could be afforded out of it would be so low as to render it impossible for any but the very wealthiest to live upon the interest of their money.

In reality, high profits tend much more to raise the price of work than high wages. The rise of profit operates like compound interest. Our merchants complain much of the bad effects of high wages in raising the price, but they say nothing concerning the bad effects of high profits; they are silent with regard to the pernicious effects of their own gains; they complain only of those of other people.


The whole of the advantages and disadvantages of the different employments of labour and stock, must, in the same neighbourhood, continually tending to equality. Yet wages and profit are everywhere in Europe extremely different. The particular consideration of those circumstances, will divide this Chapter into two parts.

PART I. Inequalities arising from the nature of the employments themselves.

The five following are the principal circumstances which, so far as I have been able to observe, make for a small pecuniary gain in some employments, and a great one in others.

First, the wages of labour vary with the ease or hardship, the honourableness or dishonourableness, of the employment. Thus in most places, a tailor earns less than a weaver. His work is much easier. A weaver earns less than a smith. His work is not always easier, but it is much cleanlier. The trade of a butcher is a brutal and odious business; but it is in most places more profitable than most trades. The most detestable of employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any other. The keeper of a tavern, who is never master of his own house, and who is exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very creditable business. But there is scarce any common trade in which a small stock yields so great a profit.

Secondly, the wages of labour vary with the easiness and cheapness, or the difficulty and expense, of learning the business. The difference between the wages of skilled labour and those of common labour, is founded upon this principle.

Thirdly, the wages of labour in different occupations vary with the constancy or inconstancy of employment.

In the greater part of manufactures, a journeyman maybe pretty sure of employment almost every day. A mason or bricklayer, on the contrary, can work neither in frost nor in foul weather. What he earns, therefore, must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments which so precarious a situation must occasion.

Fourthly, the wages of labour vary according to the small or great trust which must be reposed in the workmen.

The wages of goldsmiths and jewellers are everywhere superior to those of other workmen. We trust our health to the physician, our fortune, and sometimes our life and reputation, to the lawyer. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires.

Fifthly, the wages of labour in different employments vary according to the probability or improbability of success in them.

In the greatest part of mechanic trades success is almost certain; but very uncertain in the liberal professions. Put your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of shoes; but the counsellor at law, who, at near forty years of age, begins to make something by his profession, ought to receive the retribution of his tedious and expensive education. How extravagant soever his fees may sometimes appear, their real retribution is never equal to this.

There are some very agreeable and beautiful talents, the exercise of which for gain is considered, whether from reason or prejudice, as a sort of public prostitution. The exorbitant rewards of players, singers, etc. are founded upon those two principles.

Bankruptcies are most frequent in the most hazardous trades. The most hazardous of all trades, that of a smuggler, though, when the adventure succeeds, it is likewise the most profitable, is the infallible road to bankruptcy.

PART II. Inequalities occasioned by the Policy of Europe.

The policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance. It does this chiefly in the three following ways.

First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them, especially by the exclusive privileges of corporations. In Sheffield, no master cutler can have more than one apprentice. In Norfolk, no master weaver can have more than two, under pain of forfeiting five pounds a-month to the king.

By the Statute of Apprenticeship it was enacted, that no person should exercise any trade, craft, or mystery, unless he had previously served to it an apprenticeship of seven years at least. The property which every man has in his own labour, the original foundation of all other property, so it is the most sacred and inviolable. To hinder a poor man from employing this strength and dexterity in what manner he thinks proper, without injury to his neighbour, is a plain violation of this most sacred property.

Long apprenticeship has no tendency to form young people to industry. A young man would practice with much more diligence and attention, if from the beginning he wrought as a journeyman, being paid in proportion to the little work which he could execute. The master, indeed, would be a loser. But the public would be a gainer, the work of all artificers coming in this way much cheaper to market.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. The pretence that corporations are necessary for the better government of the trade, is without any foundation.

Secondly, by increasing the competition beyond what it naturally would be, occasions another inequality, of an opposite kind, in the whole of the advantages and disadvantages of the different employments of labour and stock.

In professions such as law and physic, if an equal proportion of people were educated at the public expense, the competition would soon be so great as to sink very much their pecuniary reward. It might then not be worth any man's while to educate his son to either of those professions at his own expense.

Thirdly, the policy of Europe, by obstructing the free circulation of labour and stock, both from employment to employment, and from place to place, occasions, in some cases, a very inconvenient inequality.

The obstruction to the free circulation of labour given by the poor laws is, so far as I know, peculiar to England. It consists in the difficulty which a poor man finds in obtaining a settlement, or even in being allowed to exercise his industry in any parish but that to which he belongs. There is scarce a poor man in England, of forty years of age, I will venture to say, who has not, in some part of his life, felt himself most cruelly oppressed by this ill-contrived law of settlements.

In ancient times, too, it was usual to attempt to regulate the profits of merchants and other dealers, by regulating the price of provisions and ether goods. The assize of bread is, so far as I know, the only remnant of this ancient usage. Where there is an exclusive corporation, it may, perhaps, be proper to regulate the price of the first necessary of life; but, where there is none, the competition will regulate it much better than any assize.


RENT, considered as the price paid for the use of land, is naturally the highest which the tenant can afford to pay. The landlord sometimes demands rent for what is altogether incapable of human improvement, as do the landlords of the sea-coasts where grows Kelp, a species of sea-weed, which, when burnt, yields an alkaline salt, useful for making glass, soap, and for several other purposes.

The rent of land, therefore, is a monopoly price. It is not all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.

PART I. Of the Produce of Land Which Always Affords Rent

The rent of land not only varies with its fertility, whatever be its produce, but with its situation. Land in the neighbourhood of a town gives a greater rent than land equally fertile in a distant part of the country. Though it may cost no more labour to cultivate the one than the other, it must always cost more to bring the produce of the distant land to market.

A corn field of moderate fertility produces a much greater quantity of food for man, than the best pasture of equal extent. Corn is an annual crop. Butcher’s-meat, a crop which requires four or five years to grow. As an acre of land, therefore, will produce a much smaller quantity of the one species of food than of the other, the inferiority of the quantity must be compensated by the superiority of the price. If it was more than compensated, more corn land would be turned into pasture; and if it was not compensated, part of what was in pasture would be brought back into corn.

In a hop garden, a fruit garden, a kitchen garden, both the rent of the landlord, and the profit of the farmer, are generally greater than in a corn or grass field. But the moderate circumstances of gardeners may satisfy us that their great ingenuity is not commonly over-recompenced. Their delightful art is practised by so many rich people for amusement, that little advantage is to be made by those who practise it for profit; because the persons who should naturally be their best customers, supply themselves.

That the vineyard was the most valuable part of the farm, seems to be undoubted. But in France the anxiety of the proprietors of the old vineyards was such that in 1731, they obtained an order prohibiting the planting of new vineyards. The pretence of this order was the super-abundance of wine. But had this super-abundance been real, it would, without any order of council, have effectually prevented the plantation of new vineyards.

Our tobacco planters have shewn the same fear of the super-abundance of tobacco. By act of assembly they have restrained its cultivation to six thousand plants for every negro between sixteen and sixty years of age. To prevent the market from being overstocked, they have sometimes, in plentiful years, we are told, burnt a certain quantity of tobacco for every negro, in the same manner as the Dutch are said to do of spices.

The food produced by a field of potatoes is not inferior in quantity to that produced by a field of rice. Should this root ever become in any part of Europe the common and favourite vegetable food of the people, a greater surplus would remain after replacing all the stock and maintaining all the labour employed in cultivation. A greater share of this surplus too would belong to the landlord. Population would increase, and rents would rise.

In Lancashire it is pretended that bread of oatmeal is a heartier food for labouring people than wheaten bread, and I have heard the same doctrine held in Scotland. I am, however, somewhat doubtful of the truth of it. The common people in Scotland, who are fed with oatmeal, are in general neither so strong nor so handsome as the same rank of people in England, who are fed with wheaten bread. But it seems to be otherwise with potatoes. The chairmen, porters, and coal-heavers in London, and those unfortunate women who live by prostitution, the strongest men and the most beautiful women perhaps in the British dominions, are, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this root.

It is difficult to preserve potatoes, and this is, perhaps, the chief obstacle to their ever becoming the principal vegetable food of all the different ranks of the people.

PART II. Of the Produce of Land Which Sometimes Does and Sometimes Does Not, Afford Rent

HUMAN food seems to be the only produce of land which always and necessarily affords some rent to the landlord. After food, cloathing and lodging are the two great wants of mankind.

Land in its original rude state can afford the materials of cloathing and lodging to a much greater number of people than it can feed. In its improved state it can sometimes feed a greater number of people than it can supply with those materials.

But countries are populous, not in proportion to the number of people whom their produce can cloath and lodge, but in proportion to that of those whom it can feed. Food is in this manner, not only the original source of rent, but every other part of the produce of land which afterwards affords rent, derives that part of its value from the improvement of the powers of labour in producing food.

Those other parts of the produce of land, however, which afterwards afford rent, do not afford it always if the produce cannot be brought to market. Whether a coal-mine, for example, can afford any rent, depends partly upon its fertility, and partly upon its situation. A quantity of mineral sufficient to defray the expence of working, could be brought from the mine by the ordinary quantity of labour: But in an inland country without either good roads or water-carriage, this quantity could not be sold. Coals are a less wholesome fewel than wood: the expence of coals, therefore, must generally be somewhat less than that of wood.

Upon the sea-coast of a well-improved country, if coals can be had for fewel, it may sometimes be cheaper to bring timber for building from less cultivated countries, than to raise it at home. In the new town of Edinburgh, built within these few years, there is not, perhaps, a single stick of Scotch timber.

The price of coals in Westmorland or Shropshire can have little effect on their price at Newcastle; and their price in the Lionnois can have none at all. But the price of copper in Japan must have some influence upon its price at the copper mines in Europe.

The demand for precious stones arises altogether from their beauty. The poor inhabitants of Cuba and St. Domingo, when they were first discovered by the Spaniards, used to wear little bits of gold as ornaments. They seemed to value them as we would do any little pebbles of somewhat more than ordinary beauty, and to consider them as just worth the picking up, but not worth the refusing to anybody who asked them. They were astonished to observe the rage of the Spaniards to obtain them; and had no notion that there could any-where be a country in which many people had the disposal of so great a superfluity of food, so scanty always among themselves, that for a very small quantity of those glittering baubles they would willingly give as much as might maintain a whole family for many years.

PART III. Of the Variations in the Proportion Between the Respective Values of That Sort of Produce Which Always Affords Rent, and of That Which Sometimes Does and Sometimes Does Not Afford Rent

THE INCREASING abundance of food, in consequence of increasing improvement and cultivation, must necessarily increase the demand for every part of the produce of land which is not food, and which can be applied either to use or to ornament.

The value of a free-stone quarry, for example, will necessarily increase with the increasing improvement and population of the country round about it; especially if it should be the only one in the neighbourhood. But the value of a silver mine will not necessarily increase with the improvement of the country in which it is situated, for the great market for silver is the commercial and civilized part of the world.

Different Effects of the Progress of Improvement upon Three Different Sorts of Rude Produce


The first sort of rude produce of which the price rises in the progress of improvement, is that which it is scarce in the power of human industry to multiply at all. Such are the greater part of rare and singular birds and fishes, game, wildfowl and birds of passage, as well as many other things. The high price paid by the Romans, in the time of their greatest grandeur, for rare birds and fishes, may in this manner easily be accounted for. Seius gave what 66l. 13s. 4d. would purchase in the present times for a nightingale.


The second sort of rude produce of which the price rises in the progress of improvement, is that which human industry can multiply in proportion to the demand.

When the price of cattle, for example, rises so high that it is as profitable to cultivate land in order to raise food for them, as in order to raise food for man, it cannot well go higher. If it did, more corn land would soon be turned into pasture. Till the price of cattle, indeed, has got to this height, it seems scarce possible that the greater part, even of those lands which are capable of the highest cultivation, can be completely cultivated.

The hog, that finds his food among ordure, and greedily devours many things rejected by every other useful animal, is, like poultry, originally kept as a save-all. As long as the number of such animals, which can thus be reared at little or no expence, is fully sufficient to supply the demand, this sort of butcher’s-meat comes to market at a much lower price than any other. But when the demand rises beyond what this quantity can supply, when it becomes necessary to raise food on purpose for feeding and fattening hogs, the price necessarily rises, and becomes proportionably either higher or lower than that of other butcher’s-meat.

The business of the dairy, like the feeding of hogs and poultry, is originally carried on as a save-all. But of all the productions of land, milk is perhaps the most perishable. The dairy becomes more worthy of the farmer’s attention, and the quality of its produce gradually improves when the price at last gets so high that it becomes worth while to employ some of the most fertile and best cultivated lands in feeding cattle merely for the purpose of the dairy; and when it has got to this height, it cannot well go higher.

The lands of no country, it is evident, can ever be completely cultivated and improved, till once the price of every produce, which human industry is obliged to raise upon them, has got so high as to pay for the expence of complete improvement and cultivation. In order to do this, the price of each particular produce must be sufficient, first, to pay the rent of good corn land, as it is that which regulates the rent of the greater part of other cultivated land; and secondly, to pay the labour and expence of the farmer as well as they are commonly paid upon good corn-land; or, in other words, to replace with the ordinary profits the stock which he employs about it. This rise in the price of each particular produce, must evidently be previous to the improvement and cultivation of the land which is destined for raising it. Gain is the end of all improvement, and nothing could deserve that name of which loss was to be the necessary consequence.


The third and last sort of rude produce, of which the price naturally rises in the progress of improvement, is that in which the efficacy of human industry, in augmenting the quantity, is either limited or uncertain.

The market for butcher’s-meat is almost every-where confined to the country which produces it. The market for wool and raw hides, on the contrary, is, in the rude beginnings of improvement, very seldom confined to the country which produces them. They can easily be transported to distant countries.

In countries ill cultivated, and therefore but thinly inhabited, the price of the wool and the hide bears always a much greater proportion to that of the whole beast, than in countries where, improvement and population being further advanced, there is more demand for butcher’s-meat. Mr. Hume observes, that in the Saxon times, the fleece was estimated at two-fifths of the value of the whole sheep. In some provinces of Spain, I have been assured, the sheep is frequently killed merely for the sake of the fleece and the tallow.

In multiplying another very important sort of rude produce, the quantity of fish that is brought to market, it is likewise both limited and uncertain. It is limited by the local situation of the country, and by what may be called the fertility of its seas, lakes and rivers. As population increases, as the annual produce of the land and labour of the country grows greater and greater, there come to be more buyers of fish. But a market which, from requiring only one thousand, comes to require annually ten thousand ton of fish, can seldom be supplied without employing more than ten times the quantity of labour which had before been sufficient to supply it. The fish must generally be sought for at a greater distance, larger vessels must be employed, and more expensive machinery of every kind made use of. The real price of this commodity, therefore, naturally rises in the progress of improvement. It has accordingly done so, I believe, more or less in every country.

Effects of the Progress of Improvement upon the Real Price of Manufactures

It is the natural effect of improvement, however, to diminish gradually the real price of almost all manufactures. That of the manufacturing workmanship diminishes, perhaps, in all of them without exception. In consequence of better machinery, of greater dexterity, and of a more proper division and distribution of work, all of which are the natural effects of improvement, a much smaller quantity of labour becomes requisite for executing any particular piece of work; and though, in consequence of the flourishing circumstances of the society, the real price of labour should rise very considerably, yet the great diminution of the quantity will generally much more than compensate the greatest rise which can happen in the price.

This diminution of price has, in the course of the present and preceding century, been most remarkable in those manufactures of which the materials are the coarser metals. A watch, which about the middle of the last century could have been bought for twenty pounds, may now be had for twenty shillings. In the work of cutlers and locksmiths, and in all those goods which are commonly known by the name of Birmingham and Sheffield ware, there has been, during the same period, a very great reduction of price.

In the clothing manufacture there has, during the same period, been no such sensible reduction of price. The price of superfine cloth, I have been assured, on the contrary, has, within these thirty years, risen somewhat in proportion to its quality. But the reduction will appear much more sensible and undeniable, if we compare the price of this manufacture in the present times with what it was in a much remoter period.

In 1487, being the 4th of Henry VII. it was enacted, that "whosoever shall sell by retail a broad yard of the finest grained, above sixteen shillings, shall forfeit forty shillings for every yard." Valuing a quarter of wheat in the present times at eight-and-twenty shillings, the real price of a yard of fine cloth must, in those times, have been equal to at least three pounds six shillings and sixpence of our present money. A guinea may be reckoned the highest price in the present times.


I shall conclude this very long chapter with observing that every increase in the real wealth of the society, every increase in the quantity of useful labour employed within it, tends indirectly to raise the real rent of land.

Prices Of Wheat


Average prices each year in         money of 1776
£ - s - d
£ - s - d
0 - 12 - 0
1 - 16 - 0
0 - 12 - 0
1 - 16 - 0
0 - 3 - 4
0 - 10 - 0
0 - 2 - 0
0 - 6 - 0
1 - 4 - 0
3 - 12 - 0
0 - 2 - 0
0 - 6 - 0
0 - 2 - 0
0 - 4 - 8
0 - 8 - 0
0 - 16 - 0
0 - 7 - 8
1 - 15 - 4
1 - 0 - 0
1 - 11 - 0
1 - 0 - 0
1 - 10 - 0
0 - 8 - 0
0 - 8 - 0
1 - 17 - 8
1 - 17 - 8
Averaged prices of the quarter of nine bushels of the best
or highest priced wheat at Windsor market, on Lady Day and Michaelmas

  £ - s - d
1 - 10 - 4
2 - 4 - 8
2 - 16 - 6
2 - 5 - 0
2 - 0 - 0
1 - 17 - 0
2 - 10 - 8
1 - 16 - 6



When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it. That part which he expects is to afford him this revenue is called his capital. The other is that which supplies his immediate consumption.

There are two ways in which a capital may be employed so as to yield a revenue or profit to its employer.

First, it maybe employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. His capital is continually going from him in one shape, and returning to him in another; such capitals, therefore, may very properly be called circulating capitals.

Secondly, it may be employed in the improvement of land, in the purchase of useful machines and instruments of trade, or in such like things as yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals.

The general stock of any country or society is the same with that of all its inhabitants or members; and, therefore, naturally divides itself into three portions.

The first is that portion which is reserved for immediate consumption, and which affords no revenue or profit.. The whole stock of mere dwelling-houses, if it is the dwelling-house of the proprietor, ceases from that moment to serve in the function of a capital.

The second is the fixed capital that affords a revenue without circulating. It consists chiefly of all useful machines and instruments of trade, all profitable buildings, of the improvements of land, and of the acquired and abilities of all the inhabitants and members of the society.

The third and last of the three portions into which the general stock of the society naturally divides itself, is the circulating capital, of which the characteristic is, that it affords a revenue only by circulating or changing masters. It is composed of four parts.

First, of the money, by means of which all the other three are circulated and distributed.

Secondly, of the stock of provisions from the sale of which a profit may be expected.

Thirdly, of the materials which are not yet made up into articles.

Fourthly, of work made up and completed, but not yet disposed of to the proper consumers

In all countries where there is a tolerable security, every man of common understanding will endeavour to employ whatever stock he can command, in procuring either present enjoyment or future profit. In those unfortunate countries where men are continually afraid of the violence of their superiors, they frequently bury or conceal a great part of their stock. This is said to be a common in Turkey, Indostan, and in most of Asia, and seems to have been a common practice among our ancestors during the violence of the feudal government.


The whole expense of maintaining the fixed capital must evidently be excluded from the neat revenue of the society. Neither the materials necessary for supporting useful machines and instruments of trade, their profitable buildings, etc. nor the produce of the labour necessary for fashioning those materials into the proper form, can ever make any part of it.

Every saving, therefore, in the expense of maintaining the fixed capital, which does not diminish the productive powers of labour, must increase the annual produce of land and labour, the real revenue of every society. The substitution of paper in the room of gold and silver money replaces a very expensive instrument of commerce with one much less costly. Circulation comes to be carried on by a new wheel, which it costs less both to erect and to maintain than the old one.



The great commerce of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of rude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply, by sending back a part of the manufactured produce to the inhabitants of the country. Compare the cultivation of the lands in the neighbourhood of any considerable town, with that of those which lie at some distance from it, and you will easily satisfy yourself how much the country is benefited by the commerce of the town.

As subsistence is, in the nature of things, prior to conveniency and luxury, so the industry which procures the former, must necessarily be prior to that which ministers to the latter. According to the natural course of things, therefore, the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and, last of all, to foreign commerce. But this natural order has, in all the modern states of Europe, been in many respects entirely inverted.


When the German and Scythian nations overran the western Roman empire, the towns became deserted, and the country was left uncultivated. But no part of the country was left without a proprietor. When land, like moveables, is considered as the means of subsistence and enjoyment, the natural law of succession divides it among many; but when land was considered as the means of power and protection, it was thought better that it should descend undivided to one.

In ancient Europe, the occupiers of land were, almost all, slaves, though of a milder kind than among the Greeks and Romans, or in our West Indian colonies. They were supposed to belong directly to the land, and could, therefore, be sold with it. They could marry, with the consent of their master; and he could not afterwards dissolve the marriage by selling the man and wife to different persons. If he maimed or murdered them, he was liable only to some small penalty. They were not, however, capable of acquiring property. This species of slavery still subsists in Russia, Poland, Hungary, and parts of Germany.

But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property can have no other interest but to eat as much and to labour as little as possible. Whatever work he does beyond that can be squeezed out of him by violence only.

The pride of man makes him love to domineer, and wherever the law allows it, he will prefer the service of slaves to that of freemen. The late resolution of the Quakers in Pennsylvania, to set at liberty all their negro slaves, may satisfy us that their number cannot be very great.

To the slave cultivators of ancient times, gradually succeeded a species of farmers, known in France as metayers. The proprietor furnished them with the seed, cattle, and instruments of husbandry. The produce was divided equally between the proprietor and the farmer. Such tenants, being freemen, are capable of acquiring property; and with it a plain interest that the whole produce should be as great as possible.

To that species of tenantry succeeded, though by very slow degrees, farmers, properly so called, who cultivated the land with their own stock, paying a rent to the landlord. The farmers, too, were anciently, bound to perform a great number of services to the landlord, and to pay public taxes. Under such discouragements, little improvement could he expected from the occupiers of land.


The increase and riches of commercial and manufacturing towns contributed to the improvement and cultivation of the countries to which they belonged, in three different ways:

First, by affording a great and ready market for the rude produce of the country.

Secondly, the wealth acquired by the inhabitants of cities was frequently employed in purchasing such lands as were to be sold, of which a great part would frequently be uncultivated. Merchants are commonly ambitious of becoming country gentlemen, and, when they do, they are generally the best of all improvers.

Thirdly, and lastly, commerce and manufactures gradually introduced order and good government, and with them the liberty and security of individuals



Political economy proposes; first, to enable the people to provide a revenue or subsistence for themselves; and, secondly, to supply the state or commonwealth with a revenue sufficient for the public services.


That wealth consists in money, or in gold and silver, is a popular notion. A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver is supposed to be the readiest way to enrich it. For some time after the discovery of America, the first inquiry of the Spaniards, when they arrived upon any unknown coast, used to be, if there was any gold or silver to be found in the neighbourhood?

In consequence of those popular notions, all the different nations of Europe have studied, though to little purpose, every possible means of accumulating gold and silver. Spain and Portugal, the proprietors of the principal mines, have either prohibited their exportation under the severest penalties, or subjected it to a considerable duty. The like policy anciently took place both in France and England.

The quantity of every commodity naturally regulates itself in every country according to the demand, and no commodities regulate themselves more easily or more exactly than gold and silver, on account of their small bulk, great value and their easy transport from one place to another. Yet, when the quantity of gold and silver imported into any country exceeds the demand, no vigilance of government can prevent their exportation. The real inconvenience, which is commonly called 'scarcity of money,' is not a shortness in the medium of exchange, but is a weakening and diminution of credit, due to over-trading.


By restraining, either by duties, or by prohibitions, the importation of such goods from foreign countries as can be produced at home, the monopoly of the home market is secured. Thus the prohibition of importing either live cattle or salt provisions from foreign countries, secures to the graziers of Great Britain the monopoly of the home market for butcher's meat. That such a monopoly frequently gives great encouragement to that industry which enjoys it, cannot be doubted. But whether it tends to increase the general industry of the society, or to give it the most advantageous direction, is not so evident.

The general industry of the society can never exceed what the capital of the society can employ. As the number of workmen that can be kept in employment by any particular person must bear a proportion to his capital, so the number of those that can be continually employed in a great society must bear a proportion to the whole capital of the society, and never can exceed that proportion.

As every individual endeavours so to direct his industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

What is prudence in the conduct of every private family, can scarce be folly In that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry. The general industry of the country being always in proportion to the capital which employs it, will not thereby be diminished.


To lay extraordinary restraints upon the importation of goods from those particular countries with which the balance of trade is supposed to be disadvantageous, is an expedient by which the commercial system proposes to increase the quantity of gold and silver.

One example from many may suffice to show their lack of effectiveness. The inhabitants of the wine countries are in general the soberest people of Europe; witness the Spaniards or Italians. People are seldom guilty of excess in what is their daily fare. Nobody affects the character of liberality and good fellowship, by being profuse of a liquor which is as cheap as small beer.

When a French regiment comes from the northern provinces, where wine is dear, to be quartered in the southern, where it is very cheap, the soldiers, I have heard, are at first debauched by the cheapness and novelty of good wine; but after a few months residence, the greater part of them become as sober as the rest of the inhabitants.

Were the duties upon foreign wines, and the excises upon malt, beer, and ale, to be taken away all at once, it might likewise occasion in Great Britain a temporary drunkenness among the middling and inferior ranks, which would probably be soon followed by a permanent and almost universal sobriety.

However, nations have been taught that their interest consisted in beggaring all their neighbours, and to consider their gain as its own loss. Commerce, which ought naturally to be a bond of union and friendship, has become the most fertile source of discord and animosity. In every country it always is the interest of the great body of the people, to buy whatever they want of those who sell it cheapest. The proposition is so manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind.


When European settlers first established colonies in America and the West Indies, they carried with them a superior knowledge of agriculture and useful arts, so that the progress of the colonies in wealth, population, and improvement, has accordingly been very great.

The greater part of the colonies have been established first by monopoly companies with exclusive rights to trade goods between them and the mother country. But the monopoly of the colony trade has operated upon the employment of the capital of Great Britain merely to divert some part of it from a trade with a neighbouring, to a more distant country.

If the manufactures of Great Britain have been advanced by the colony trade, it has not been by means of the monopoly, but in spite of the monopoly. The monopoly of the colony trade, like all the other mean and malignant expedients of the mercantile system, depresses the industry of all other countries, but chiefly that of the colonies, without in the least increasing that of the country in whose favour it is established.

To found a great empire for the sole purpose of raising up a people of customers, may at first sight, appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers, but extremely fit for a nation whose government is influenced by shopkeepers.


Though the encouragement of exportation, and the discouragement of importation, are the two great engines by which the mercantile system proposes to enrich every country, yet, with regard to some particular commodities, it seems to follow an opposite plan: to discourage exportation, and to encourage importation.

The exportation of the materials of manufacture is sometimes discouraged by absolute prohibitions, and sometimes by high duties. By the 8th of Elizabeth, chap. 3, the exporter of sheep, was for the first offence, to forfeit all his goods for ever, to suffer a year's imprisonment, and then to have his left hand cut off in a market town, upon a market day, to be there nailed up; and for the second offence, to be adjudged a felon, and to suffer death accordingly.

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, whose interest has been entirely neglected; but the producers, whose interest has been so carefully attended to.




The first duty of the sovereign, that of protecting the society from the violence and invasion, can be performed only by means of a military force. The art of war, as it is certainly the noblest of all arts, so, it necessarily becomes one of the most complicated.

The state can make provision for public defence by a militia, where citizens of military age are obliged to join in some measure the trade of a soldier to whatever other trade or profession they may happen to carry on. Or, it may employ a certain number of citizens as a standing army. A militia is the less expensive, but a standing army is by far the more efficient defence.

The second duty of the sovereign, is that of protecting every member of the society from the injustice or oppression of every other member of it by establishing and maintaining courts of law and officers.

The third and last duty of the sovereign is that of erecting and maintaining institutions and works advantageous to society, chiefly for facilitating the commerce of the society, such as the making and maintaining of roads and for the education of youth.

The public endowments of schools and colleges have necessarily diminished application in the teachers. It is the interest of every man to live as much at his ease as he can; and in the university of Oxford, the greater part of the professors have, for these many years, given up altogether even the pretence of teaching. The teacher, instead of explaining a science to his pupils, may read some book upon it; or, what would give him less trouble, make them interpret it to him, and by making an occasional remark, may then flatter himself that he is giving a lecture. The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the ease of the masters.

In England, it becomes every day more the custom to send young people to travel in foreign countries. A young man, who goes abroad at seventeen, and returns home at one-and-twenty, returns four years older; and it is very difficult not to improve a good deal in four years. In other respects, he commonly returns more conceited, unprincipled, and incapable of any serious application.

Were there no public institutions for education, no system, no science, would be taught, for which there was not some demand. A private teacher could never then find his account in any useless and pedantic heap of sophistry and nonsense. But though the common people cannot be so well instructed as people of rank and fortune; for a very small expense, the public can facilitate even those bred to the lowest occupations the essential parts of education, to read, write, and account.


The revenue which must defray the expense of defending the society and of supporting the dignity of the chief magistrate, and all other necessary expenses of government, may be drawn, either from some fund which belongs to the sovereign or commonwealth, independent of the revenue of the people; or from the revenue of the people.

The expense of government to the individuals of a great nation, is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim, consists what is called the equality or inequality of taxation.

2. The tax which each individual is bound to pay, ought to be certain and not arbitrary.
3. Every tax ought to be levied at the time, or in the manner, in which it is most convenient for the contributor.
4. Every tax ought to be so contrived, as both to take out and to keep out of the pockets of the people as little as possible.

Adam Smith
Smith's grave in Canongate Churchyard, Edinburgh

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