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Adam smith   wealth of nations
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Adam smith wealth of nations

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  • 1. AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS by Adam Smith A PENN STATE ELECTRONIC CLASSICS SERIES PUBLICATION
  • 2. An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith is a publication of thePennsylvania State University. This Portable Document file is furnished free and without any charge ofany kind. Any person using this document file, for any purpose, and in any way does so at his or herown risk. Neither the Pennsylvania State University nor Jim Manis, Faculty Editor, nor anyone associ-ated with the Pennsylvania State University assumes any responsibility for the material contained withinthe document or for the file as an electronic transmission, in any way.An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, the Pennsylvania StateUniversity, Electronic Classics Series, Jim Manis, Faculty Editor, Hazleton, PA 18202 is a Portable Docu-ment File produced as part of an ongoing student publication project to bring classical works of litera-ture, in English, to free and easy access of those wishing to make use of them.Cover Design: Jim ManisCopyright © 2005 The Pennsylvania State UniversityThe Pennsylvania State University is an equal opportunity university.
  • 3. ContentsINTRODUCTION AND PLAN OF THE WORK .......................................................................... 8BOOK I OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATU- RALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE. .......... 10CHAPTER I OF THE DIVISION OF LABOUR ......................................................................... 10CHAPTER II OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR ..................................................................................................................................... 18CHAPTER III THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET ........................................................................................................................... 21CHAPTER IV OF THE ORIGIN AND USE OF MONEY .......................................................... 25CHAPTER V OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY ....................................................... 31CHAPTER VI OF THE COMPONENT PART OF THE PRICE OF COMMODITIES ......... 45CHAPTER VII OF THE NATURAL AND MARKET PRICE OF COMMODITIES.............. 51CHAPTER VIII OF THE WAGES OF LABOUR ........................................................................ 58CHAPTER IX OF THE PROFITS OF STOCK ........................................................................... 77CHAPTER X OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK ............................................................................................................. 86CHAPTER XI OF THE RENT OF LAND .................................................................................. 124
  • 4. BOOK II OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK ... 222INTRODUCTION ......................................................................................................................... 222CHAPTER I OF THE DIVISION OF STOCK .......................................................................... 224CHAPTER II OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF THE GEN- ERAL STOCK OF THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE NATIONAL CAPITAL ............................................................................................................ 230CHAPTER III OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE AND UNPRODUCTIVE LABOUR ................................................................................................. 270CHAPTER IV OF STOCK LENT AT INTEREST .................................................................... 286CHAPTER V OF THE DIFFERENT EMPLOYMENTS OF CAPITALS .............................. 293BOOK III OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NA- TIONS ........................................................................................................................................ 307CHAPTER I OF THE NATURAL PROGRESS OF OPULENCE ........................................... 307CHAPTER II OF THE DISCOURAGEMENT OF AGRICULTURE IN THE ANCIENT STATE OF EUROPE, AFTER THE FALL OF THE ROMAN EMPIRE............................311CHAPTER III OF THE RISE AND PROGRESS OF CITIES AND TOWNS, AFTER THE FALL OF THE ROMAN EMPIRE ......................................................................................... 321CHAPTER IV HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE IM- PROVEMENT OF THE COUNTRY ..................................................................................... 330BOOK IV OF SYSTEMS OF POLITICAL ECONOMY ...................................................... 341CHAPTER I OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM 342
  • 5. CHAPTER II OF RESTRAINTS UPON IMPORTATION FROM FOREIGN COUNTRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME .................................................. 361CHAPTER III OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS ....................................... 378Part I — Of the Unreasonableness of those Restraints, even upon the-Principles of the Commercial System. ............... 378PART II. — Of the Unreasonableness of those extraordinary Restraints, upon other Principles. ................................... 391CHAPTER IV OF DRAWBACKS ............................................................................................... 400CHAPTER V OF BOUNTIES ...................................................................................................... 405CHAPTER VI OF TREATIES OF COMMERCE ..................................................................... 437CHAPTER VII OF COLONIES .................................................................................................. 447CHAPTER VIII CONCLUSION OF THE MERCANTILE SYSTEM ................................... 522CHAPTER IX OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF PO- LITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY ................................................................................................................. 539APPENDIX TO BOOK IV .................................................................,.........................................562BOOK V OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH ............... 564CHAPTER I OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH ........ 564PART I Of the Expense of Defence .......................................................................................................................................... 564PART II Of the Expense of Justice ......................................................................................................................................... 579PART III Of the Expense of public Works and public Institutions....................................................................................... 590PART IV Of the Expense of supporting the Dignity of the Sovereign .................................................................................. 666CONCLUSION .......................................................................................................................................................................... 667
  • 6. CHAPTER II OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF THE SOCIETY .................................................................................................................................. 668PART I Of the Funds, or Sources, of Revenue, which may peculiarly belong to the Sovereign or Commonwealth ....... 668PART II Of Taxes ...................................................................................................................................................................... 676CHAPTER III OF PUBLIC DEBTS ........................................................................................... 749
  • 7. The Wealth of Nations According, therefore, as this produce, or what is purchased with AN INQUIRY INTO THE it, bears a greater or smaller proportion to the number of those who NATURE AND CAUSES are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion. OF But this proportion must in every nation be regulated by two different circumstances: first, by the skill, dexterity, and judgment THE WEALTH OF with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in NATIONS useful labour, and that of those who are not so employed. What- ever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in by that particular situation, depend upon those two circumstances. The abundance or scantiness of this supply, too, seems to de- Adam Smith pend more upon the former of those two circumstances than upon the latter. Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful INTRODUCTION AND PLAN OF THE INTRODUCTION PLAN labour, and endeavours to provide, as well as he can, the neces- WORK saries and conveniencies of life, for himself, and such of his family or tribe as are either too old, or too young, or too infirm, to go a-T HE ANNUAL LABOUR of every nation is the fund which hunting and fishing. Such nations, however, are so miserably poor, originally supplies it with all the necessaries and that, from mere want, they are frequently reduced, or at least think conveniencies of life which it annually consumes, and themselves reduced, to the necessity sometimes of directly destroy-which consist always either in the immediate produce of that labour, ing, and sometimes of abandoning their infants, their old people,or in what is purchased with that produce from other nations. 8
  • 8. Adam Smithand those afflicted with lingering diseases, to perish with hunger, employed. The second book, therefore, treats of the nature of capitalor to be devoured by wild beasts. Among civilized and thriving stock, of the manner in which it is gradually accumulated, and ofnations, on the contrary, though a great number of people do not the different quantities of labour which it puts into motion, ac-labour at all, many of whom consume the produce of ten times, cording to the different ways in which it is employed.frequently of a hundred times, more labour than the greater part Nations tolerably well advanced as to skill, dexterity, and judg-of those who work; yet the produce of the whole labour of the ment, in the application of labour, have followed very different planssociety is so great, that all are often abundantly supplied; and a in the general conduct or direction of it; and those plans have notworkman, even of the lowest and poorest order, if he is frugal and all been equally favourable to the greatness of its produce. The policyindustrious, may enjoy a greater share of the necessaries and of some nations has given extraordinary encouragement to the in-conveniencies of life than it is possible for any savage to acquire. dustry of the country; that of others to the industry of towns. Scarce The causes of this improvement in the productive powers of any nation has dealt equally and impartially with every sort of in-labour, and the order according to which its produce is naturally dustry. Since the down-fall of the Roman empire, the policy of Eu-distributed among the different ranks and conditions of men in rope has been more favourable to arts, manufactures, and commerce,the society, make the subject of the first book of this Inquiry. the industry of towns, than to agriculture, the Industry of the coun- Whatever be the actual state of the skill, dexterity, and judg- try. The circumstances which seem to have introduced and estab-ment, with which labour is applied in any nation, the abundance lished this policy are explained in the third book.or scantiness of its annual supply must depend, during the con- Though those different plans were, perhaps, first introduced bytinuance of that state, upon the proportion between the number the private interests and prejudices of particular orders of men, with-of those who are annually employed in useful labour, and that of out any regard to, or foresight of, their consequences upon the gen-those who are not so employed. The number of useful and pro- eral welfare of the society; yet they have given occasion to very dif-ductive labourers, it will hereafter appear, is everywhere in pro- ferent theories of political economy; of which some magnify theportion to the quantity of capital stock which is employed in set- importance of that industry which is carried on in towns, others ofting them to work, and to the particular way in which it is so that which is carried on in the country. Those theories have had a 9
  • 9. The Wealth of Nationsconsiderable influence, not only upon the opinions of men of learn- BOOK Iing, but upon the public conduct of princes and sovereign states. Ihave endeavoured, in the fourth book, to explain as fully and dis- CAUSES IMPRO OF THE CAUSES OF IMPROVEMENT INtinctly as I can those different theories, and the principal effects PRODUCTIVE POWERS THE PRODUCTIVE POWERS OFwhich they have produced in different ages and nations. AC- L ABOUR, AND OF THE ORDER AC- To explain in what has consisted the revenue of the great body ITS PRODUCE CORDING TO WHICH ITS PRODUCE ISof the people, or what has been the nature of those funds, which, NATURALLY DISTRIBUTED AMONG NATURALL DISTRIBUTED TURALLYin different ages and nations, have supplied their annual consump- THE DIFFERENT RANKS OF THEtion, is the object of these four first books. The fifth and last book PEOPLE.treats of the revenue of the sovereign, or commonwealth. In thisbook I have endeavoured to shew, first, what are the necessary CHAPTER Iexpenses of the sovereign, or commonwealth; which of those ex-penses ought to be defrayed by the general contribution of the LABOUR OF THE DIVISION OF LABOURwhole society, and which of them, by that of some particular partonly, or of some particular members of it: secondly, what are the T HE GREATEST IMPROVEMENTS in the productive powers ofdifferent methods in which the whole society may be made to labour, and the greater part of the skill, dexterity, andcontribute towards defraying the expenses incumbent on the whole judgment, with which it is anywhere directed, or ap-society, and what are the principal advantages and inconvenien- plied, seem to have been the effects of the division of labour. Thecies of each of those methods; and, thirdly and lastly, what are the effects of the division of labour, in the general business of society,reasons and causes which have induced almost all modern govern- will be more easily understood, by considering in what manner itments to mortgage some part of this revenue, or to contract debts; operates in some particular manufactures. It is commonly sup-and what have been the effects of those debts upon the real wealth, posed to be carried furthest in some very trifling ones; not per-the annual produce of the land and labour of the society. haps that it really is carried further in them than in others of more 10
  • 10. Adam Smithimportance: but in those trifling manufactures which are destined But in the way in which this business is now carried on, not onlyto supply the small wants of but a small number of people, the the whole work is a peculiar trade, but it is divided into a numberwhole number of workmen must necessarily be small; and those of branches, of which the greater part are likewise peculiar trades.employed in every different branch of the work can often be col- One man draws out the wire; another straights it; a third cuts it; alected into the same workhouse, and placed at once under the fourth points it; a fifth grinds it at the top for receiving the head;view of the spectator. to make the head requires two or three distinct operations; to put In those great manufactures, on the contrary, which are des- it on is a peculiar business; to whiten the pins is another; it is eventined to supply the great wants of the great body of the people, a trade by itself to put them into the paper; and the importantevery different branch of the work employs so great a number of business of making a pin is, in this manner, divided into aboutworkmen, that it is impossible to collect them all into the same eighteen distinct operations, which, in some manufactories, areworkhouse. We can seldom see more, at one time, than those all performed by distinct hands, though in others the same manemployed in one single branch. Though in such manufactures, will sometimes perform two or three of them. I have seen a smalltherefore, the work may really be divided into a much greater num- manufactory of this kind, where ten men only were employed,ber of parts, than in those of a more trifling nature, the division is and where some of them consequently performed two or threenot near so obvious, and has accordingly been much less observed. distinct operations. But though they were very poor, and there- To take an example, therefore, from a very trifling manufacture, fore but indifferently accommodated with the necessary machin-but one in which the division of labour has been very often taken ery, they could, when they exerted themselves, make among themnotice of, the trade of a pin-maker: a workman not educated to about twelve pounds of pins in a day. There are in a pound up-this business (which the division of labour has rendered a distinct wards of four thousand pins of a middling size. Those ten per-trade, nor acquainted with the use of the machinery employed in sons, therefore, could make among them upwards of forty-eightit (to the invention of which the same division of labour has prob- thousand pins in a day. Each person, therefore, making a tenthably given occasion), could scarce, perhaps, with his utmost in- part of forty-eight thousand pins, might be considered as makingdustry, make one pin in a day, and certainly could not make twenty. four thousand eight hundred pins in a day. But if they had all 11
  • 11. The Wealth of Nationswrought separately and independently, and without any of them ferent trades are employed in each branch of the linen and woollenhaving been educated to this peculiar business, they certainly could manufactures, from the growers of the flax and the wool, to thenot each of them have made twenty, perhaps not one pin in a day; bleachers and smoothers of the linen, or to the dyers and dressersthat is, certainly, not the two hundred and fortieth, perhaps not of the cloth! The nature of agriculture, indeed, does not admit ofthe four thousand eight hundredth, part of what they are at present so many subdivisions of labour, nor of so complete a separation ofcapable of performing, in consequence of a proper division and one business from another, as manufactures. It is impossible tocombination of their different operations. separate so entirely the business of the grazier from that of the In every other art and manufacture, the effects of the division of corn-farmer, as the trade of the carpenter is commonly separatedlabour are similar to what they are in this very trifling one, though, from that of the smith. The spinner is almost always a distinctin many of them, the labour can neither be so much subdivided, person from the, weaver; but the ploughman, the harrower, thenor reduced to so great a simplicity of operation. The division of sower of the seed, and the reaper of the corn, are often the same.labour, however, so far as it can be introduced, occasions, in every The occasions for those different sorts of labour returning withart, a proportionable increase of the productive powers of labour. the different seasons of the year, it is impossible that one manThe separation of different trades and employments from one should be constantly employed in any one of them. This impossi-another, seems to have taken place in consequence of this advan- bility of making so complete and entire a separation of all thetage. This separation, too, is generally carried furthest in those different branches of labour employed in agriculture, is perhapscountries which enjoy the highest degree of industry and improve- the reason why the improvement of the productive powers ofment; what is the work of one man, in a rude state of society, labour, in this art, does not always keep pace with their improve-being generally that of several in an improved one. In every im- ment in manufactures. The most opulent nations, indeed, gener-proved society, the farmer is generally nothing but a farmer; the ally excel all their neighbours in agriculture as well as in manufac-manufacturer, nothing but a manufacturer. The labour, too, which tures; but they are commonly more distinguished by their superi-is necessary to produce any one complete manufacture, is almost ority in the latter than in the former. Their lands are in generalalways divided among a great number of hands. How many dif- better cultivated, and having more labour and expense bestowed 12
  • 12. Adam Smithupon them, produce more in proportion to the extent and natural high duties upon the importation of raw silk, does not so well suitfertility of the ground. But this superiority of produce is seldom the climate of England as that of France. But the hardware andmuch more than in proportion to the superiority of labour and the coarse woollens of England are beyond all comparison supe-expense. In agriculture, the labour of the rich country is not al- rior to those of France, and much cheaper, too, in the same degreeways much more productive than that of the poor; or, at least, it is of goodness. In Poland there are said to be scarce any manufac-never so much more productive, as it commonly is in manufac- tures of any kind, a few of those coarser household manufacturestures. The corn of the rich country, therefore, will not always, in excepted, without which no country can well subsist.the same degree of goodness, come cheaper to market than that of This great increase in the quantity of work, which, in conse-the poor. The corn of Poland, in the same degree of goodness, is as quence of the division of labour, the same number of people arecheap as that of France, notwithstanding the superior opulence capable of performing, is owing to three different circumstances;and improvement of the latter country. The corn of France is, in first, to the increase of dexterity in every particular workman; sec-the corn-provinces, fully as good, and in most years nearly about ondly, to the saving of the time which is commonly lost in passingthe same price with the corn of England, though, in opulence and from one species of work to another; and, lastly, to the inventionimprovement, France is perhaps inferior to England. The corn- of a great number of machines which facilitate and abridge labour,lands of England, however, are better cultivated than those of and enable one man to do the work of many.France, and the corn-lands of France are said to be much better First, the improvement of the dexterity of the workmen, neces-cultivated than those of Poland. But though the poor country, sarily increases the quantity of the work he can perform; and thenotwithstanding the inferiority of its cultivation, can, in some division of labour, by reducing every man’s business to some onemeasure, rival the rich in the cheapness and goodness of its corn, simple operation, and by making this operation the sole employ-it can pretend to no such competition in its manufactures, at least ment of his life, necessarily increases very much the dexterity ofif those manufactures suit the soil, climate, and situation, of the the workman. A common smith, who, though accustomed torich country. The silks of France are better and cheaper than those handle the hammer, has never been used to make nails, if, uponof England, because the silk manufacture, at least under the present some particular occasion, he is obliged to attempt it, will scarce, I 13
  • 13. The Wealth of Nationsam assured, be able to make above two or three hundred nails in a impossible to pass very quickly from one kind of work to another,day, and those, too, very bad ones. A smith who has been accus- that is carried on in a different place, and with quite differenttomed to make nails, but whose sole or principal business has not tools. A country weaver, who cultivates a small farm, must loose abeen that of a nailer, can seldom, with his utmost diligence, make good deal of time in passing from his loom to the field, and frommore than eight hundred or a thousand nails in a day. I have seen the field to his loom. When the two trades can be carried on in theseveral boys, under twenty years of age, who had never exercised same workhouse, the loss of time is, no doubt, much less. It is,any other trade but that of making nails, and who, when they even in this case, however, very considerable. A man commonlyexerted themselves, could make, each of them, upwards of two saunters a little in turning his hand from one sort of employmentthousand three hundred nails in a day. The making of a nail, how- to another. When he first begins the new work, he is seldom veryever, is by no means one of the simplest operations. The same keen and hearty; his mind, as they say, does not go to it, and forperson blows the bellows, stirs or mends the fire as there is occa- some time he rather trifles than applies to good purpose. The habitsion, heats the iron, and forges every part of the nail: in forging of sauntering, and of indolent careless application, which is natu-the head, too, he is obliged to change his tools. The different op- rally, or rather necessarily, acquired by every country workmanerations into which the making of a pin, or of a metal button, is who is obliged to change his work and his tools every half hour,subdivided, are all of them much more simple, and the dexterity and to apply his hand in twenty different ways almost every day ofof the person, of whose life it has been the sole business to per- his life, renders him almost always slothful and lazy, and incapableform them, is usually much greater. The rapidity with which some of any vigorous application, even on the most pressing occasions.of the operations of those manufactures are performed, exceeds Independent, therefore, of his deficiency in point of dexterity, thiswhat the human hand could, by those who had never seen them, cause alone must always reduce considerably the quantity of workhe supposed capable of acquiring. which he is capable of performing. Secondly, The advantage which is gained by saving the time Thirdly, and lastly, everybody must be sensible how much labourcommonly lost in passing from one sort of work to another, is is facilitated and abridged by the application of proper machinery.much greater than we should at first view be apt to imagine it. It is It is unnecessary to give any example. I shall only observe, there- 14
  • 14. Adam Smithfore, that the invention of all those machines by which labour is nately the communication between the boiler and the cylinder,so much facilitated and abridged, seems to have been originally according as the piston either ascended or descended. One of thoseowing to the division of labour. Men are much more likely to boys, who loved to play with his companions, observed that, bydiscover easier and readier methods of attaining any object, when tying a string from the handle of the valve which opened this com-the whole attention of their minds is directed towards that single munication to another part of the machine, the valve would openobject, than when it is dissipated among a great variety of things. and shut without his assistance, and leave him at liberty to divertBut, in consequence of the division of labour, the whole of every himself with his play-fellows. One of the greatest improvementsman’s attention comes naturally to be directed towards some one that has been made upon this machine, since it was first invented,very simple object. It is naturally to be expected, therefore, that was in this manner the discovery of a boy who wanted to save hissome one or other of those who are employed in each particular own labour.branch of labour should soon find out easier and readier methods All the improvements in machinery, however, have by no meansof performing their own particular work, whenever the nature of been the inventions of those who had occasion to use the ma-it admits of such improvement. A great part of the machines made chines. Many improvements have been made by the ingenuity ofuse of in those manufactures in which labour is most subdivided, the makers of the machines, when to make them became the busi-were originally the invention of common workmen, who, being ness of a peculiar trade; and some by that of those who are calledeach of them employed in some very simple operation, naturally philosophers, or men of speculation, whose trade it is not to doturned their thoughts towards finding out easier and readier meth- any thing, but to observe every thing, and who, upon that ac-ods of performing it. Whoever has been much accustomed to visit count, are often capable of combining together the powers of thesuch manufactures, must frequently have been shewn very pretty most distant and dissimilar objects in the progress of society, phi-machines, which were the inventions of such workmen, in order losophy or speculation becomes, like every other employment,to facilitate and quicken their own particular part of the work. In the principal or sole trade and occupation of a particular class ofthe first fire engines {this was the current designation for steam citizens. Like every other employment, too, it is subdivided into aengines}, a boy was constantly employed to open and shut alter- great number of different branches, each of which affords occupa- 15
  • 15. The Wealth of Nationstion to a peculiar tribe or class of philosophers; and this subdivision pear, is the produce of the joint labour of a great multitude ofof employment in philosophy, as well as in every other business, workmen. The shepherd, the sorter of the wool, the wool-comberimprove dexterity, and saves time. Each individual becomes more or carder, the dyer, the scribbler, the spinner, the weaver, the fuller,expert in his own peculiar branch, more work is done upon the the dresser, with many others, must all join their different arts inwhole, and the quantity of science is considerably increased by it. order to complete even this homely production. How many mer- It is the great multiplication of the productions of all the differ- chants and carriers, besides, must have been employed in trans-ent arts, in consequence of the division of labour, which occa- porting the materials from some of those workmen to others whosions, in a well-governed society, that universal opulence which often live in a very distant part of the country? How much com-extends itself to the lowest ranks of the people. Every workman merce and navigation in particular, how many ship-builders, sail-has a great quantity of his own work to dispose of beyond what he ors, sail-makers, rope-makers, must have been employed in orderhimself has occasion for; and every other workman being exactly to bring together the different drugs made use of by the dyer,in the same situation, he is enabled to exchange a great quantity of which often come from the remotest corners of the world? What ahis own goods for a great quantity or, what comes to the same variety of labour, too, is necessary in order to produce the tools ofthing, for the price of a great quantity of theirs. He supplies them the meanest of those workmen! To say nothing of such compli-abundantly with what they have occasion for, and they accommo- cated machines as the ship of the sailor, the mill of the fuller, ordate him as amply with what he has occasion for, and a general even the loom of the weaver, let us consider only what a variety ofplenty diffuses itself through all the different ranks of the society. labour is requisite in order to form that very simple machine, the Observe the accommodation of the most common artificer or shears with which the shepherd clips the wool. The miner, thedaylabourer in a civilized and thriving country, and you will per- builder of the furnace for smelting the ore the feller of the timber,ceive that the number of people, of whose industry a part, though the burner of the charcoal to be made use of in the smelting-but a small part, has been employed in procuring him this accom- house, the brickmaker, the bricklayer, the workmen who attendmodation, exceeds all computation. The woollen coat, for example, the furnace, the millwright, the forger, the smith, must all of themwhich covers the day-labourer, as coarse and rough as it may ap- join their different arts in order to produce them. Were we to 16
  • 16. Adam Smithexamine, in the same manner, all the different parts of his dress luxury of the great, his accommodation must no doubt appearand household furniture, the coarse linen shirt which he wears extremely simple and easy; and yet it may be true, perhaps, thatnext his skin, the shoes which cover his feet, the bed which he lies the accommodation of an European prince does not always soon, and all the different parts which compose it, the kitchen-grate much exceed that of an industrious and frugal peasant, as the ac-at which he prepares his victuals, the coals which he makes use of commodation of the latter exceeds that of many an African king,for that purpose, dug from the bowels of the earth, and brought the absolute masters of the lives and liberties of ten thousand na-to him, perhaps, by a long sea and a long land-carriage, all the ked savages.other utensils of his kitchen, all the furniture of his table, the knivesand forks, the earthen or pewter plates upon which he serves upand divides his victuals, the different hands employed in prepar-ing his bread and his beer, the glass window which lets in the heatand the light, and keeps out the wind and the rain, with all theknowledge and art requisite for preparing that beautiful and happyinvention, without which these northern parts of the world couldscarce have afforded a very comfortable habitation, together withthe tools of all the different workmen employed in producing thosedifferent conveniencies; if we examine, I say, all these things, andconsider what a variety of labour is employed about each of them,we shall be sensible that, without the assistance and co-operationof many thousands, the very meanest person in a civilized countrycould not be provided, even according to, what we very falselyimagine, the easy and simple manner in which he is commonlyaccommodated. Compared, indeed, with the more extravagant 17
  • 17. The Wealth of Nations CHAPTER II dental concurrence of their passions in the same object at that particular time. Nobody ever saw a dog make a fair and deliberateOF THE PRINCIPLE WHICH GIVES OC- exchange of one bone for another with another dog. Nobody ever LABOURCASION TO THE DIVISION OF LABOUR saw one animal, by its gestures and natural cries signify to an- other, this is mine, that yours; I am willing to give this for that.THIS DIVISION OF LABOUR, from which so many advantages are de- When an animal wants to obtain something either of a man, or ofrived, is not originally the effect of any human wisdom, which another animal, it has no other means of persuasion, but to gainforesees and intends that general opulence to which it gives occa- the favour of those whose service it requires. A puppy fawns uponsion. It is the necessary, though very slow and gradual, consequence its dam, and a spaniel endeavours, by a thousand attractions, toof a certain propensity in human nature, which has in view no engage the attention of its master who is at dinner, when it wantssuch extensive utility; the propensity to truck, barter, and exchange to be fed by him. Man sometimes uses the same arts with hisone thing for another. brethren, and when he has no other means of engaging them to Whether this propensity be one of those original principles in act according to his inclinations, endeavours by every servile andhuman nature, of which no further account can be given, or fawning attention to obtain their good will. He has not time, how-whether, as seems more probable, it be the necessary consequence ever, to do this upon every occasion. In civilized society he standsof the faculties of reason and speech, it belongs not to our present at all times in need of the co-operation and assistance of greatsubject to inquire. It is common to all men, and to be found in no multitudes, while his whole life is scarce sufficient to gain the friend-other race of animals, which seem to know neither this nor any ship of a few persons. In almost every other race of animals, eachother species of contracts. Two greyhounds, in running down the individual, when it is grown up to maturity, is entirely indepen-same hare, have sometimes the appearance of acting in some sort dent, and in its natural state has occasion for the assistance of noof concert. Each turns her towards his companion, or endeavours other living creature. But man has almost constant occasion forto intercept her when his companion turns her towards himself. the help of his brethren, and it is in vain for him to expect it fromThis, however, is not the effect of any contract, but of the acci- their benevolence only. He will be more likely to prevail if he can 18
  • 18. Adam Smithinterest their self-love in his favour, and shew them that it is for can buy either food, clothes, or lodging, as he has occasion.their own advantage to do for him what he requires of them. As it is by treaty, by barter, and by purchase, that we obtainWhoever offers to another a bargain of any kind, proposes to do from one another the greater part of those mutual good officesthis. Give me that which I want, and you shall have this which which we stand in need of, so it is this same trucking dispositionyou want, is the meaning of every such offer; and it is in this which originally gives occasion to the division of labour. In a tribemanner that we obtain from one another the far greater part of of hunters or shepherds, a particular person makes bows and ar-those good offices which we stand in need of. It is not from the rows, for example, with more readiness and dexterity than anybenevolence of the butcher the brewer, or the baker that we expect other. He frequently exchanges them for cattle or for venison, withour dinner, but from their regard to their own interest. We ad- his companions; and he finds at last that he can, in this manner,dress ourselves, not to their humanity, but to their self-love, and get more cattle and venison, than if he himself went to the field tonever talk to them of our own necessities, but of their advantages. catch them. From a regard to his own interest, therefore, the mak-Nobody but a beggar chooses to depend chiefly upon the benevo- ing of bows and arrows grows to be his chief business, and helence of his fellow-citizens. Even a beggar does not depend upon becomes a sort of armourer. Another excels in making the framesit entirely. The charity of well-disposed people, indeed, supplies and covers of their little huts or moveable houses. He is accus-him with the whole fund of his subsistence. But though this prin- tomed to be of use in this way to his neighbours, who reward himciple ultimately provides him with all the necessaries of life which in the same manner with cattle and with venison, till at last hehe has occasion for, it neither does nor can provide him with them finds it his interest to dedicate himself entirely to this employ-as he has occasion for them. The greater part of his occasional ment, and to become a sort of house-carpenter. In the same man-wants are supplied in the same manner as those of other people, ner a third becomes a smith or a brazier; a fourth, a tanner orby treaty, by barter, and by purchase. With the money which one dresser of hides or skins, the principal part of the clothing of sav-man gives him he purchases food. The old clothes which another ages. And thus the certainty of being able to exchange all thatbestows upon him he exchanges for other clothes which suit him surplus part of the produce of his own labour, which is over andbetter, or for lodging, or for food, or for money, with which he above his own consumption, for such parts of the produce of other 19
  • 19. The Wealth of Nationsmen’s labour as he may have occasion for, encourages every man employment as could alone give occasion to any great differenceto apply himself to a particular occupation, and to cultivate and of talents.bring to perfection whatever talent of genius he may possess for As it is this disposition which forms that difference of talents, sothat particular species of business. remarkable among men of different professions, so it is this same The difference of natural talents in different men, is, in reality, disposition which renders that difference useful. Many tribes ofmuch less than we are aware of; and the very different genius which animals, acknowledged to be all of the same species, derive fromappears to distinguish men of different professions, when grown nature a much more remarkable distinction of genius, than what,up to maturity, is not upon many occasions so much the cause, as antecedent to custom and education, appears to take place amongthe effect of the division of labour. The difference between the men. By nature a philosopher is not in genius and disposition halfmost dissimilar characters, between a philosopher and a common so different from a street porter, as a mastiff is from a grey-hound,street porter, for example, seems to arise not so much from nature, or a grey-hound from a spaniel, or this last from a shepherd’s dog.as from habit, custom, and education. When they came in to the Those different tribes of animals, however, though all of the sameworld, and for the first six or eight years of their existence, they species are of scarce any use to one another. The strength of thewere, perhaps, very much alike, and neither their parents nor play- mastiff is not in the least supported either by the swiftness of thefellows could perceive any remarkable difference. About that age, greyhound, or by the sagacity of the spaniel, or by the docility ofor soon after, they come to be employed in very different occupa- the shepherd’s dog. The effects of those different geniuses and tal-tions. The difference of talents comes then to be taken notice of, ents, for want of the power or disposition to barter and exchange,and widens by degrees, till at last the vanity of the philosopher is cannot be brought into a common stock, and do not in the leastwilling to acknowledge scarce any resemblance. But without the contribute to the better accommodation and conveniency of thedisposition to truck, barter, and exchange, every man must have species. Each animal is still obliged to support and defend itself,procured to himself every necessary and conveniency of life which separately and independently, and derives no sort of advantagehe wanted. All must have had the same duties to perform, and the from that variety of talents with which nature has distinguishedsame work to do, and there could have been no such difference of its fellows. Among men, on the contrary, the most dissimilar ge- 20
  • 20. Adam Smithniuses are of use to one another; the different produces of their CHAPTER IIIrespective talents, by the general disposition to truck, barter, andexchange, being brought, as it were, into a common stock, where THAT THE DIVISION OF LABOUR IS LIM- THAT LABOURevery man may purchase whatever part of the produce of other ITED BY THE EXTENT OF THE MARKETmen’s talents he has occasion for, AS IT IS THE POWER of exchanging that gives occasion to the divi- sion of labour, so the extent of this division must always be lim- ited 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 employ- ment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. There are some sorts of industry, even of the lowest kind, which can be carried on nowhere but in a great town. A porter, for ex- ample, can find employment and subsistence in no other place. A village is by much too narrow a sphere for him; even an ordinary market-town is scarce large enough to afford him constant occu- pation. In the lone houses and very small villages which are scat- tered about in so desert a country as the highlands of Scotland, every farmer must be butcher, baker, and brewer, for his own fam- ily. In such situations we can scarce expect to find even a smith, a 21
  • 21. The Wealth of Nationscarpenter, or a mason, within less than twenty miles of another of kind naturally begins to subdivide and improve itself, and it isthe same trade. The scattered families that live at eight or ten miles frequently not till a long time after that those improvements ex-distance from the nearest of them, must learn to perform them- tend themselves to the inland parts of the country. A broad-wheeledselves a great number of little pieces of work, for which, in more waggon, attended by two men, and drawn by eight horses, in aboutpopulous countries, they would call in the assistance of those work- six weeks time, carries and brings back between London andmen. Country workmen are almost everywhere obliged to apply Edinburgh near four ton weight of goods. In about the same timethemselves to all the different branches of industry that have so a ship navigated by six or eight men, and sailing between the portsmuch affinity to one another as to be employed about the same of London and Leith, frequently carries and brings back two hun-sort of materials. A country carpenter deals in every sort of work dred ton weight of goods. Six or eight men, therefore, by the helpthat is made of wood; a country smith in every sort of work that is of water-carriage, can carry and bring back, in the same time, themade of iron. The former is not only a carpenter, but a joiner, a same quantity of goods between London and Edinburgh as fiftycabinet-maker, and even a carver in wood, as well as a wheel-wright, broad-wheeled waggons, attended by a hundred men, and drawna plough-wright, a cart and waggon-maker. The employments of by four hundred horses. Upon two hundred tons of goods, there-the latter are still more various. It is impossible there should be fore, carried by the cheapest land-carriage from London tosuch a trade as even that of a nailer in the remote and inland parts Edinburgh, there must be charged the maintenance of a hundredof the highlands of Scotland. Such a workman at the rate of a men for three weeks, and both the maintenance and what is nearlythousand nails a-day, and three hundred working days in the year, equal to maintenance the wear and tear of four hundred horses, aswill make three hundred thousand nails in the year. But in such a well as of fifty great waggons. Whereas, upon the same quantity ofsituation it would be impossible to dispose of one thousand, that goods carried by water, there is to be charged only the mainte-is, of one day’s work in the year. As by means of water-carriage, a nance of six or eight men, and the wear and tear of a ship of twomore extensive market is opened to every sort of industry than hundred tons burthen, together with the value of the superiorwhat land-carriage alone can afford it, so it is upon the sea-coast, risk, or the difference of the insurance between land and water-and along the banks of navigable rivers, that industry of every carriage. Were there no other communication between those two 22
  • 22. Adam Smithplaces, therefore, but by land-carriage, as no goods could be trans- sea-coast, and the great navigable rivers. The extent of the market,ported from the one to the other, except such whose price was therefore, must for a long time be in proportion to the riches andvery considerable in proportion to their weight, they could carry populousness of that country, and consequently their improve-on but a small part of that commerce which at present subsists ment must always be posterior to the improvement of that coun-between them, and consequently could give but a small part of try. In our North American colonies, the plantations have con-that encouragement which they at present mutually afford to each stantly followed either the sea-coast or the banks of the navigableother’s industry. There could be little or no commerce of any kind rivers, and have scarce anywhere extended themselves to any con-between the distant parts of the world. What goods could bear the siderable distance from both.expense of land-carriage between London and Calcutta? Or if there The nations that, according to the best authenticated history,were any so precious as to be able to support this expense, with appear to have been first civilized, were those that dwelt round thewhat safety could they be transported through the territories of so coast of the Mediterranean sea. That sea, by far the greatest inletmany barbarous nations? Those two cities, however, at present that is known in the world, having no tides, nor consequently anycarry on a very considerable commerce with each other, and by waves, except such as are caused by the wind only, was, by themutually affording a market, give a good deal of encouragement smoothness of its surface, as well as by the multitude of its islands,to each other’s industry. and the proximity of its neighbouring shores, extremely favourable Since such, therefore, are the advantages of water-carriage, it is to the infant navigation of the world; when, from their ignorancenatural that the first improvements of art and industry should be of the compass, men were afraid to quit the view of the coast, andmade where this conveniency opens the whole world for a market from the imperfection of the art of ship-building, to abandon them-to the produce of every sort of labour, and that they should always selves to the boisterous waves of the ocean. To pass beyond thebe much later in extending themselves into the inland parts of the pillars of Hercules, that is, to sail out of the straits of Gibraltar,country. The inland parts of the country can for a long time have was, in the ancient world, long considered as a most wonderfulno other market for the greater part of their goods, but the coun- and dangerous exploit of navigation. It was late before even thetry which lies round about them, and separates them from the Phoenicians and Carthaginians, the most skilful navigators and 23
  • 23. The Wealth of Nationsship-builders of those old times, attempted it; and they were, for a multitude of canals, and, by communicating with one another, af-long time, the only nations that did attempt it. ford an inland navigation much more extensive than that either of Of all the countries on the coast of the Mediterranean sea, Egypt the Nile or the Ganges, or, perhaps, than both of them put together.seems to have been the first in which either agriculture or manu- It is remarkable, that neither the ancient Egyptians, nor the Indians,factures were cultivated and improved to any considerable degree. nor the Chinese, encouraged foreign commerce, but seem all toUpper Egypt extends itself nowhere above a few miles from the have derived their great opulence from this inland navigation.Nile; and in Lower Egypt, that great river breaks itself into many All the inland parts of Africa, and all that part of Asia which liesdifferent canals, which, with the assistance of a little art, seem to any considerable way north of the Euxine and Caspian seas, thehave afforded a communication by water-carriage, not only be- ancient Scythia, the modern Tartary and Siberia, seem, in all agestween all the great towns, but between all the considerable vil- of the world, to have been in the same barbarous and uncivilizedlages, and even to many farm-houses in the country, nearly in the state in which we find them at present. The sea of Tartary is thesame manner as the Rhine and the Maese do in Holland at present. frozen ocean, which admits of no navigation; and though some ofThe extent and easiness of this inland navigation was probably the greatest rivers in the world run through that country, they areone of the principal causes of the early improvement of Egypt. at too great a distance from one another to carry commerce and The improvements in agriculture and manufactures seem like- communication through the greater part of it. There are in Africawise to have been of very great antiquity in the provinces of Ben- none of those great inlets, such as the Baltic and Adriatic seas ingal, in the East Indies, and in some of the eastern provinces of Europe, the Mediterranean and Euxine seas in both Europe andChina, though the great extent of this antiquity is not authenti- Asia, and the gulfs of Arabia, Persia, India, Bengal, and Siam, incated by any histories of whose authority we, in this part of the Asia, to carry maritime commerce into the interior parts of thatworld, are well assured. In Bengal, the Ganges, and several other great continent; and the great rivers of Africa are at too great agreat rivers, form a great number of navigable canals, in the same distance from one another to give occasion to any considerablemanner as the Nile does in Egypt. In the eastern provinces of inland navigation. The commerce, besides, which any nation canChina, too, several great rivers form, by their different branches, a carry on by means of a river which does not break itself into any 24
  • 24. Adam Smithgreat number of branches or canals, and which runs into another CHAPTER IVterritory before it reaches the sea, can never be very considerable,because it is always in the power of the nations who possess that MONEY OF THE ORIGIN AND USE OF MONEYother territory to obstruct the communication between the uppercountry and the sea. The navigation of the Danube is of very little WHEN THE DIVISION OF LABOUR has been once thoroughly estab-use to the different states of Bavaria, Austria, and Hungary, in lished, it is but a very small part of a man’s wants which the pro-comparison of what it would be, if any of them possessed the duce of his own labour can supply. He supplies the far greater partwhole of its course, till it falls into the Black sea. of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. Every man thus lives by exchanging, or becomes, in some mea- sure, a merchant, and the society itself grows to be what is prop- erly a commercial society. But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of; and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to 25
  • 25. The Wealth of Nationspurchase a part of it. But they have nothing to offer in exchange, parts of the coast of India; dried cod at Newfoundland; tobacco inexcept the different productions of their respective trades, and the Virginia; sugar in some of our West India colonies; hides or dressedbutcher is already provided with all the bread and beer which he leather in some other countries; and there is at this day a village Inhas immediate occasion for. No exchange can, in this case, be made Scotland, where it is not uncommon, I am told, for a workman tobetween them. He cannot be their merchant, nor they his cus- carry nails instead of money to the baker’s shop or the ale-house.tomers; and they are all of them thus mutually less serviceable to In all countries, however, men seem at last to have been deter-one another. In order to avoid the inconveniency of such situa- mined by irresistible reasons to give the preference, for this em-tions, every prudent man in every period of society, after the first ployment, to metals above every other commodity. Metals canestablishment of the division of labour, must naturally have en- not only be kept with as little loss as any other commodity, scarcedeavoured to manage his affairs in such a manner, as to have at all any thing being less perishable than they are, but they can like-times by him, besides the peculiar produce of his own industry, a wise, without any loss, be divided into any number of parts, as bycertain quantity of some one commodity or other, such as he imag- fusion those parts can easily be re-united again; a quality whichined few people would be likely to refuse in exchange for the pro- no other equally durable commodities possess, and which, moreduce of their industry. Many different commodities, it is prob- than any other quality, renders them fit to be the instruments ofable, were successively both thought of and employed for this commerce and circulation. The man who wanted to buy salt, forpurpose. In the rude ages of society, cattle are said to have been example, and had nothing but cattle to give in exchange for it,the common instrument of commerce; and, though they must must have been obliged to buy salt to the value of a whole ox, or ahave been a most inconvenient one, yet, in old times, we find whole sheep, at a time. He could seldom buy less than this, be-things were frequently valued according to the number of cattle cause what he was to give for it could seldom be divided withoutwhich had been given in exchange for them. The armour of loss; and if he had a mind to buy more, he must, for the sameDiomede, says Homer, cost only nine oxen; but that of Glaucus reasons, have been obliged to buy double or triple the quantity,cost a hundred oxen. Salt is said to be the common instrument of the value, to wit, of two or three oxen, or of two or three sheep. If,commerce and exchanges in Abyssinia; a species of shells in some on the contrary, instead of sheep or oxen, he had metals to give in 26
  • 26. Adam Smithexchange for it, he could easily proportion the quantity of the less accuracy would, no doubt, be necessary. Yet we should find itmetal to the precise quantity of the commodity which he had excessively troublesome if every time a poor man had occasionimmediate occasion for. either to buy or sell a farthing’s worth of goods, he was obliged to Different metals have been made use of by different nations for weigh the farthing. The operation of assaying is still more diffi-this purpose. Iron was the common instrument of commerce cult, still more tedious; and, unless a part of the metal is fairlyamong the ancient Spartans, copper among the ancient Romans, melted in the crucible, with proper dissolvents, any conclusionand gold and silver among all rich and commercial nations. that can be drawn from it is extremely uncertain. Before the insti- Those metals seem originally to have been made use of for this tution of coined money, however, unless they went through thispurpose in rude bars, without any stamp or coinage. Thus we are tedious and difficult operation, people must always have been li-told by Pliny (Plin. Hist Nat. lib. 33, cap. 3), upon the authority able to the grossest frauds and impositions; and instead of a poundof Timaeus, an ancient historian, that, till the time of Servius weight of pure silver, or pure copper, might receive, in exchangeTullius, the Romans had no coined money, but made use of for their goods, an adulterated composition of the coarsest andunstamped bars of copper, to purchase whatever they had occa- cheapest materials, which had, however, in their outward appear-sion for. These rude bars, therefore, performed at this time the ance, been made to resemble those metals. To prevent such abuses,function of money. to facilitate exchanges, and thereby to encourage all sorts of in- The use of metals in this rude state was attended with two very dustry and commerce, it has been found necessary, in all countriesconsiderable inconveniences; first, with the trouble of weighing, that have made any considerable advances towards improvement,and secondly, with that of assaying them. In the precious metals, to affix a public stamp upon certain quantities of such particularwhere a small difference in the quantity makes a great difference metals, as were in those countries commonly made use of to pur-in the value, even the business of weighing, with proper exactness, chase goods. Hence the origin of coined money, and of those pub-requires at least very accurate weights and scales. The weighing of lic offices called mints; institutions exactly of the same nature withgold, in particular, is an operation of some nicety In the coarser those of the aulnagers and stamp-masters of woollen and linenmetals, indeed, where a small error would be of little consequence, cloth. All of them are equally meant to ascertain, by means of a 27
  • 27. The Wealth of Nationspublic stamp, the quantity and uniform goodness of those differ- the edges too, was supposed to ascertain not only the fineness, butent commodities when brought to market. the weight of the metal. Such coins, therefore, were received by The first public stamps of this kind that were affixed to the tale, as at present, without the trouble of weighing.current metals, seem in many cases to have been intended to as- The denominations of those coins seem originally to have ex-certain, what it was both most difficult and most important to pressed the weight or quantity of metal contained in them. In theascertain, the goodness or fineness of the metal, and to have re- time of Servius Tullius, who first coined money at Rome, the Ro-sembled the sterling mark which is at present affixed to plate and man as or pondo contained a Roman pound of good copper. Itbars of silver, or the Spanish mark which is sometimes affixed to was divided, in the same manner as our Troyes pound, into twelveingots of gold, and which, being struck only upon one side of the ounces, each of which contained a real ounce of good copper. Thepiece, and not covering the whole surface, ascertains the fineness, English pound sterling, in the time of Edward I. contained a pound,but not the weight of the metal. Abraham weighs to Ephron the Tower weight, of silver of a known fineness. The Tower poundfour hundred shekels of silver which he had agreed to pay for the seems to have been something more than the Roman pound, andfield of Machpelah. They are said, however, to be the current money something less than the Troyes pound. This last was not intro-of the merchant, and yet are received by weight, and not by tale, in duced into the mint of England till the 18th of Henry the VIII.the same manner as ingots of gold and bars of silver are at present. The French livre contained, in the time of Charlemagne, a pound,The revenues of the ancient Saxon kings of England are said to have Troyes weight, of silver of a known fineness. The fair of Troyes inbeen paid, not in money, but in kind, that is, in victuals and provi- Champaign was at that time frequented by all the nations of Eu-sions of all sorts. William the Conqueror introduced the custom of rope, and the weights and measures of so famous a market werepaying them in money. This money, however, was for a long time, generally known and esteemed. The Scots money pound contained,received at the exchequer, by weight, and not by tale. from the time of Alexander the First to that of Robert Bruce, a The inconveniency and difficulty of weighing those metals with pound of silver of the same weight and fineness with the Englishexactness, gave occasion to the institution of coins, of which the pound sterling. English, French, and Scots pennies, too, containedstamp, covering entirely both sides of the piece, and sometimes all of them originally a real penny-weight of silver, the twentieth 28
  • 28. Adam Smithpart of an ounce, and the two hundred-and-fortieth part of a duced to the twenty-fourth part of its original value, and, insteadpound. The shilling, too, seems originally to have been the de- of weighing a pound, came to weigh only half an ounce. The En-nomination of a weight. “When wheat is at twelve shillings the glish pound and penny contain at present about a third only; thequarter,” says an ancient statute of Henry III. “then wastel bread Scots pound and penny about a thirty-sixth; and the French poundof a farthing shall weigh eleven shillings and fourpence”. The pro- and penny about a sixty-sixth part of their original value. By meansportion, however, between the shilling, and either the penny on of those operations, the princes and sovereign states which per-the one hand, or the pound on the other, seems not to have been formed them were enabled, in appearance, to pay their debts andso constant and uniform as that between the penny and the pound. fulfil their engagements with a smaller quantity of silver than wouldDuring the first race of the kings of France, the French sou or otherwise have been requisite. It was indeed in appearance only;shilling appears upon different occasions to have contained five, for their creditors were really defrauded of a part of what was duetwelve, twenty, and forty pennies. Among the ancient Saxons, a to them. All other debtors in the state were allowed the same privi-shilling appears at one time to have contained only five pennies, lege, and might pay with the same nominal sum of the new andand it is not improbable that it may have been as variable among debased coin whatever they had borrowed in the old. Such opera-them as among their neighbours, the ancient Franks. From the tions, therefore, have always proved favourable to the debtor, andtime of Charlemagne among the French, and from that of Will- ruinous to the creditor, and have sometimes produced a greateriam the Conqueror among the English, the proportion between and more universal revolution in the fortunes of private persons,the pound, the shilling, and the penny, seems to have been uni- than could have been occasioned by a very great public calamity.formly the same as at present, though the value of each has been It is in this manner that money has become, in all civilized na-very different; for in every country of the world, I believe, the tions, the universal instrument of commerce, by the interventionavarice and injustice of princes and sovereign states, abusing the of which goods of all kinds are bought and sold, or exchanged forconfidence of their subjects, have by degrees diminished the real one another.quantity of metal, which had been originally contained in their What are the rules which men naturally observe, in exchangingcoins. The Roman as, in the latter ages of the republic, was re- them either for money, or for one another, I shall now proceed to 29
  • 29. The Wealth of Nationsexamine. These rules determine what may be called the relative or are the causes which sometimes hinder the market price, that is,exchangeable value of goods. the actual price of commodities, from coinciding exactly with what The word VALUE, it is to be observed, has two different mean- may be called their natural price.ings, and sometimes expresses the utility of some particular ob- I shall endeavour to explain, as fully and distinctly as I can,ject, and sometimes the power of purchasing other goods which those three subjects in the three following chapters, for which Ithe possession of that object conveys. The one may be called ‘value must very earnestly entreat both the patience and attention of thein use;’ the other, ‘value in exchange.’ The things which have the reader: his patience, in order to examine a detail which may, per-greatest value in use have frequently little or no value in exchange; haps, in some places, appear unnecessarily tedious; and his atten-and, on the contrary, those which have the greatest value in ex- tion, in order to understand what may perhaps, after the fullestchange have frequently little or no value in use. Nothing is more explication which I am capable of giving it, appear still in someuseful than water; but it will purchase scarce any thing; scarce any degree obscure. I am always willing to run some hazard of beingthing can be had in exchange for it. A diamond, on the contrary, tedious, in order to be sure that I am perspicuous; and, after tak-has scarce any value in use; but a very great quantity of other ing the utmost pains that I can to be perspicuous, some obscuritygoods may frequently be had in exchange for it. may still appear to remain upon a subject, in its own nature ex- In order to investigate the principles which regulate the exchange- tremely abstracted.able value of commodities, I shall endeavour to shew, First, what is the real measure of this exchangeable value; orwherein consists the real price of all commodities. Secondly, what are the different parts of which this real price iscomposed or made up. And, lastly, what are the different circumstances which some-times raise some or all of these different parts of price above, andsometimes sink them below, their natural or ordinary rate; or, what 30
  • 30. Adam Smith CHAPTER V else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money, orOF THE REAL AND NOMINAL PRICE OF with goods, is purchased by labour, as much as what we acquireCOMMODITIES, OR OF THEIR PRICE IN by the toil of our own body. That money, or those goods, indeed, MONEYL ABOUR, AND THEIR PRICE IN MONEY save us this toil. They contain the value of a certain quantity of labour, which we exchange for what is supposed at the time toEVERY MAN IS RICH OR POOR according to the degree in which he contain the value of an equal quantity. Labour was the first price,can afford to enjoy the necessaries, conveniencies, and amusements the original purchase money that was paid for all things. It wasof human life. But after the division of labour has once thoroughly not by gold or by silver, but by labour, that all the wealth of thetaken place, it is but a very small part of these with which a man’s world was originally purchased; and its value, to those who pos-own labour can supply him. The far greater part of them he must sess it, and who want to exchange it for some new productions, isderive from the labour of other people, and he must be rich or precisely equal to the quantity of’ labour which it can enable thempoor according to the quantity of that labour which he can com- to purchase or command.mand, or which he can afford to purchase. The value of any com- Wealth, as Mr Hobbes says, is power. But the person who eithermodity, therefore, to the person who possesses it, and who means acquires, or succeeds to a great fortune, does not necessarily ac-not to use or consume it himself, but to exchange it for other quire or succeed to any political power, either civil or military. Hiscommodities, is equal to the quantity of labour which it enables fortune may, perhaps, afford him the means of acquiring both;him to purchase or command. Labour therefore, is the real mea- but the mere possession of that fortune does not necessarily con-sure of the exchangeable value of all commodities. vey to him either. The power which that possession immediately The real price of every thing, what every thing really costs to the and directly conveys to him, is the power of purchasing a certainman who wants to acquire it, is the toil and trouble of acquiring command over all the labour, or over all the produce of labourit. What every thing is really worth to the man who has acquired which is then in the market. His fortune is greater or less, preciselyit and who wants to dispose of it, or exchange it for something in proportion to the extent of this power, or to the quantity either 31
  • 31. The Wealth of Nationsof other men’s labour, or, what is the same thing, of the produce of and thereby compared with, other commodities, than with labour.other men’s labour, which it enables him to purchase or command. It is more natural, therefore, to estimate its exchangeable value byThe exchangeable value of every thing must always be precisely the quantity of some other commodity, than by that of the labourequal to the extent of this power which it conveys to its owner. which it can produce. The greater part of people, too, understand But though labour be the real measure of the exchangeable value better what is meant by a quantity of a particular commodity,of all commodities, it is not that by which their value is com- than by a quantity of labour. The one is a plain palpable object;monly estimated. It is often difficult to ascertain the proportion the other an abstract notion, which though it can be made suffi-between two different quantities of labour. The time spent in two ciently intelligible, is not altogether so natural and obvious.different sorts of work will not always alone determine this pro- But when barter ceases, and money has become the commonportion. The different degrees of hardship endured, and of inge- instrument of commerce, every particular commodity is more fre-nuity exercised, must likewise be taken into account. There may quently exchanged for money than for any other commodity. Thebe more labour in an hour’s hard work, than in two hours easy butcher seldom carries his beef or his mutton to the baker or thebusiness; or in an hour’s application to a trade which it cost ten brewer, in order to exchange them for bread or for beer; but heyears labour to learn, than in a month’s industry, at an ordinary carries them to the market, where he exchanges them for money,and obvious employment. But it is not easy to find any accurate and afterwards exchanges that money for bread and for beer. Themeasure either of hardship or ingenuity. In exchanging, indeed, quantity of money which he gets for them regulates, too, the quan-the different productions of different sorts of labour for one an- tity of bread and beer which he can afterwards purchase. It is moreother, some allowance is commonly made for both. It is adjusted, natural and obvious to him, therefore, to estimate their value byhowever, not by any accurate measure, but by the higgling and the quantity of money, the commodity for which he immediatelybargaining of the market, according to that sort of rough equality exchanges them, than by that of bread and beer, the commoditieswhich, though not exact, is sufficient for carrying on the business for which he can exchange them only by the intervention of an-of common life. other commodity; and rather to say that his butcher’s meat is worth Every commodity, besides, Is more frequently exchanged for, three-pence or fourpence a-pound, than that it is worth three or 32
  • 32. Adam Smithfour pounds of bread, or three or four quarts of small beer. Hence own value, can never be an accurate measure of the value of otherit comes to pass, that the exchangeable value of every commodity commodities. Equal quantities of labour, at all times and places,is more frequently estimated by the quantity of money, than by may be said to be of equal value to the labourer. In his ordinarythe quantity either of labour or of any other commodity which state of health, strength, and spirits; in the ordinary degree of hiscan be had in exchange for it. skill and dexterity, he must always lay down the same portion of Gold and silver, however, like every other commodity, vary in his ease, his liberty, and his happiness. The price which he paystheir value; are sometimes cheaper and sometimes dearer, some- must always be the same, whatever may be the quantity of goodstimes of easier and sometimes of more difficult purchase. The which he receives in return for it. Of these, indeed, it may some-quantity of labour which any particular quantity of them can pur- times purchase a greater and sometimes a smaller quantity; but itchase or command, or the quantity of other goods which it will is their value which varies, not that of the labour which purchasesexchange for, depends always upon the fertility or barrenness of them. At all times and places, that is dear which it is difficult tothe mines which happen to be known about the time when such come at, or which it costs much labour to acquire; and that cheapexchanges are made. The discovery of the abundant mines of which is to be had easily, or with very little labour. Labour alone,America, reduced, in the sixteenth century, the value of gold and therefore, never varying in its own value, is alone the ultimate andsilver in Europe to about a third of what it had been before. As it real standard by which the value of all commodities can at allcost less labour to bring those metals from the mine to the mar- times and places be estimated and compared. It is their real price;ket, so, when they were brought thither, they could purchase or money is their nominal price only.command less labour; and this revolution in their value, though But though equal quantities of labour are always of equal valueperhaps the greatest, is by no means the only one of which history to the labourer, yet to the person who employs him they appeargives some account. But as a measure of quantity, such as the natural sometimes to be of greater, and sometimes of smaller value. Hefoot, fathom, or handful, which is continually varying in its own purchases them sometimes with a greater, and sometimes with aquantity, can never be an accurate measure of the quantity of other smaller quantity of goods, and to him the price of labour seems tothings; so a commodity which is itself continually varying in its vary like that of all other things. It appears to him dear in the one 33
  • 33. The Wealth of Nationscase, and cheap in the other. In reality, however, it is the goods Princes and sovereign states have frequently fancied that they hadwhich are cheap in the one case, and dear in the other. a temporary interest to diminish the quantity of pure metal con- In this popular sense, therefore, labour, like commodities, may tained in their coins; but they seldom have fancied that they hadbe said to have a real and a nominal price. Its real price may be any to augment it. The quantity of metal contained in the coins, Isaid to consist in the quantity of the necessaries and conveniencies believe of all nations, has accordingly been almost continually di-of life which are given for it; its nominal price, in the quantity of minishing, and hardly ever augmenting. Such variations, therefore,money. The labourer is rich or poor, is well or ill rewarded, in tend almost always to diminish the value of a money rent.proportion to the real, not to the nominal price of his labour. The discovery of the mines of America diminished the value of The distinction between the real and the nominal price of com- gold and silver in Europe. This diminution, it is commonly sup-modities and labour is not a matter of mere speculation, but may posed, though I apprehend without any certain proof, is still go-sometimes be of considerable use in practice. The same real price ing on gradually, and is likely to continue to do so for a long time.is always of the same value; but on account of the variations in the Upon this supposition, therefore, such variations are more likelyvalue of gold and silver, the same nominal price is sometimes of to diminish than to augment the value of a money rent, evenvery different values. When a landed estate, therefore, is sold with though it should be stipulated to be paid, not in such a quantitya reservation of a perpetual rent, if it is intended that this rent of coined money of such a denomination (in so many poundsshould always be of the same value, it is of importance to the sterling, for example), but in so many ounces, either of pure silver,family in whose favour it is reserved, that it should not consist in or of silver of a certain standard.a particular sum of money. Its value would in this case be liable to The rents which have been reserved in corn, have preserved theirvariations of two different kinds: first, to those which arise from value much better than those which have been reserved in money,the different quantities of gold and silver which are contained at even where the denomination of the coin has not been altered. Bydifferent times in coin of the same denomination; and, secondly, the 18th of Elizabeth, it was enacted, that a third of the rent of allto those which arise from the different values of equal quantities college leases should be reserved in corn, to be paid either in kind,of gold and silver at different times. or according to the current prices at the nearest public market. 34
  • 34. Adam SmithThe money arising from this corn rent, though originally but a haps, of any other commodity. Equal quantities of corn, there-third of the whole, is, in the present times, according to Dr. fore, will, at distant times, be more nearly of the same real value,Blackstone, commonly near double of what arises from the other or enable the possessor to purchase or command more nearly thetwo-thirds. The old money rents of colleges must, according to same quantity of the labour of other people. They will do this, Ithis account, have sunk almost to a fourth part of their ancient say, more nearly than equal quantities of almost any other com-value, or are worth little more than a fourth part of the corn which modity; for even equal quantities of corn will not do it exactly.they were formerly worth. But since the reign of Philip and Mary, The subsistence of the labourer, or the real price of labour, as Ithe denomination of the English coin has undergone little or no shall endeavour to shew hereafter, is very different upon differentalteration, and the same number of pounds, shillings, and pence, occasions; more liberal in a society advancing to opulence, than inhave contained very nearly the same quantity of pure silver. This one that is standing still, and in one that is standing still, than indegradation, therefore, in the value of the money rents of colleges, one that is going backwards. Every other commodity, however,has arisen altogether from the degradation in the price of silver. will, at any particular time, purchase a greater or smaller quantity When the degradation in the value of silver is combined with of labour, in proportion to the quantity of subsistence which itthe diminution of the quantity of it contained in the coin of the can purchase at that time. A rent, therefore, reserved in corn, issame denomination, the loss is frequently still greater. In Scot- liable only to the variations in the quantity of labour which aland, where the denomination of the coin has undergone much certain quantity of corn can purchase. But a rent reserved in anygreater alterations than it ever did in England, and in France, where other commodity is liable, not only to the variations in the quan-it has undergone still greater than it ever did in Scotland, some tity of labour which any particular quantity of corn can purchase,ancient rents, originally of considerable value, have, in this man- but to the variations in the quantity of corn which can be pur-ner, been reduced almost to nothing. chased by any particular quantity of that commodity. Equal quantities of labour will, at distant times, be purchased Though the real value of a corn rent, it is to be observed, how-more nearly with equal quantities of corn, the subsistence of the ever, varies much less from century to century than that of a moneylabourer, than with equal quantities of gold and silver, or, per- rent, it varies much more from year to year. The money price of 35
  • 35. The Wealth of Nationslabour, as I shall endeavour to shew hereafter, does not fluctuate at the former, or will command double the quantity either of labour,from year to year with the money price of corn, but seems to be or of the greater part of other commodities; the money price ofeverywhere accommodated, not to the temporary or occasional, labour, and along with it that of most other things, continuingbut to the average or ordinary price of that necessary of life. The the same during all these fluctuations.average or ordinary price of corn, again is regulated, as I shall Labour, therefore, it appears evidently, is the only universal, aslikewise endeavour to shew hereafter, by the value of silver, by the well as the only accurate, measure of value, or the only standardrichness or barrenness of the mines which supply the market with by which we can compare the values of different commodities, atthat metal, or by the quantity of labour which must be employed, all times, and at all places. We cannot estimate, it is allowed, theand consequently of corn which must be consumed, in order to real value of different commodities from century to century bybring any particular quantity of silver from the mine to the mar- the quantities of silver which were given for them. We cannotket. But the value of silver, though it sometimes varies greatly from estimate it from year to year by the quantities of corn. By thecentury to century, seldom varies much from year to year, but quantities of labour, we can, with the greatest accuracy, estimatefrequently continues the same, or very nearly the same, for half a it, both from century to century, and from year to year. Fromcentury or a century together. The ordinary or average money century to century, corn is a better measure than silver, because,price of corn, therefore, may, during so long a period, continue from century to century, equal quantities of corn will commandthe same, or very nearly the same, too, and along with it the money the same quantity of labour more nearly than equal quantities ofprice of labour, provided, at least, the society continues, in other silver. From year to year, on the contrary, silver is a better measurerespects, in the same, or nearly in the same, condition. In the than corn, because equal quantities of it will more nearly com-mean time, the temporary and occasional price of corn may fre- mand the same quantity of labour.quently be double one year of what it had been the year before, or But though, in establishing perpetual rents, or even in lettingfluctuate, for example, from five-and-twenty to fifty shillings the very long leases, it may be of use to distinguish between real andquarter. But when corn is at the latter price, not only the nominal, nominal price; it is of none in buying and selling, the more com-but the real value of a corn rent, will be double of what it is when mon and ordinary transactions of human life. 36
  • 36. Adam Smith At the same time and place, the real and the nominal price of all ounce of silver was at London exactly of the same value as at Can-commodities are exactly in proportion to one another. The more ton. It is of no importance to him that half an ounce of silver ator less money you get for any commodity, in the London market, Canton would have given him the command of more labour, andfor example, the more or less labour it will at that time and place of a greater quantity of the necessaries and conveniencies of lifeenable you to purchase or command. At the same time and place, than an ounce can do at London. An ounce at London will alwaystherefore, money is the exact measure of the real exchangeable give him the command of double the quantity of all these, whichvalue of all commodities. It is so, however, at the same time and half an ounce could have done there, and this is precisely what heplace only. wants. Though at distant places there is no regular proportion between As it is the nominal or money price of goods, therefore, whichthe real and the money price of commodities, yet the merchant finally determines the prudence or imprudence of all purchaseswho carries goods from the one to the other, has nothing to con- and sales, and thereby regulates almost the whole business of com-sider but the money price, or the difference between the quantity mon life in which price is concerned, we cannot wonder that itof silver for which he buys them, and that for which he is likely to should have been so much more attended to than the real price.sell them. Half an ounce of silver at Canton in China may com- In such a work as this, however, it may sometimes be of use tomand a greater quantity both of labour and of the necessaries and compare the different real values of a particular commodity atconveniencies of life, than an ounce at London. A commodity, different times and places, or the different degrees of power overtherefore, which sells for half an ounce of silver at Canton, may the labour of other people which it may, upon different occasions,there be really dearer, of more real importance to the man who have given to those who possessed it. We must in this case com-possesses it there, than a commodity which sells for an ounce at pare, not so much the different quantities of silver for which itLondon is to the man who possesses it at London. If a London was commonly sold, as the different quantities or labour whichmerchant, however, can buy at Canton, for half an ounce of silver, those different quantities of silver could have purchased. But thea commodity which he can afterwards sell at London for an ounce, current prices of labour, at distant times and places, can scarcehe gains a hundred per cent. by the bargain, just as much as if an ever be known with any degree of exactness. Those of corn, though 37
  • 37. The Wealth of Nationsthey have in few places been regularly recorded, are in general better estates to have been computed, either in asses or in sestertii. Theknown, and have been more frequently taken notice of by histori- as was always the denomination of a copper coin. The wordans and other writers. We must generally, therefore, content our- sestertius signifies two asses and a half. Though the sestertius, there-selves with them, not as being always exactly in the same proportion fore, was originally a silver coin, its value was estimated in copper.as the current prices of labour, but as being the nearest approxima- At Rome, one who owed a great deal of money was said to have ation which can commonly be had to that proportion. I shall hereaf- great deal of other people’s copper.ter have occasion to make several comparisons of this kind. The northern nations who established themselves upon the ru- In the progress of industry, commercial nations have found it ins of the Roman empire, seem to have had silver money from theconvenient to coin several different metals into money; gold for first beginning of their settlements, and not to have known eitherlarger payments, silver for purchases of moderate value, and cop- gold or copper coins for several ages thereafter. There were silverper, or some other coarse metal, for those of still smaller consider- coins in England in the time of the Saxons; but there was littleation, They have always, however, considered one of those metals gold coined till the time of Edward III nor any copper till that ofas more peculiarly the measure of value than any of the other two; James I. of Great Britain. In England, therefore, and for the sameand this preference seems generally to have been given to the metal reason, I believe, in all other modern nations of Europe, all ac-which they happen first to make use of as the instrument of com- counts are kept, and the value of all goods and of all estates ismerce. Having once begun to use it as their standard, which they generally computed, in silver: and when we mean to express themust have done when they had no other money, they have gener- amount of a person’s fortune, we seldom mention the number ofally continued to do so even when the necessity was not the same. guineas, but the number of pounds sterling which we suppose The Romans are said to have had nothing but copper money till would be given for it.within five years before the first Punic war (Pliny, lib. xxxiii. cap. Originally, in all countries, I believe, a legal tender of payment3), when they first began to coin silver. Copper, therefore, appears could be made only in the coin of that metal which was peculiarlyto have continued always the measure of value in that republic. At considered as the standard or measure of value. In England, goldRome all accounts appear to have been kept, and the value of all was not considered as a legal tender for a long time after it was 38
  • 38. Adam Smithcoined into money. The proportion between the values of gold something more than nominal again. If the regulated value of aand silver money was not fixed by any public law or proclama- guinea, for example, was either reduced to twenty, or raised totion, but was left to be settled by the market. If a debtor offered two-and-twenty shillings, all accounts being kept, and almost allpayment in gold, the creditor might either reject such payment obligations for debt being expressed, in silver money, the greateraltogether, or accept of it at such a valuation of the gold as he and part of payments could in either case be made with the same quan-his debtor could agree upon. Copper is not at present a legal ten- tity of silver money as before; but would require very differentder, except in the change of the smaller silver coins. quantities of gold money; a greater in the one case, and a smaller In this state of things, the distinction between the metal which in the other. Silver would appear to be more invariable in its valuewas the standard, and that which was not the standard, was some- than gold. Silver would appear to measure the value of gold, andthing more than a nominal distinction. gold would not appear to measure the value of silver. The value of In process of time, and as people became gradually more famil- gold would seem to depend upon the quantity of silver which itiar with the use of the different metals in coin, and consequently would exchange for, and the value of silver would not seem tobetter acquainted with the proportion between their respective depend upon the quantity of gold which it would exchange for.values, it has, in most countries, I believe, been found convenient This difference, however, would be altogether owing to the cus-to ascertain this proportion, and to declare by a public law, that a tom of keeping accounts, and of expressing the amount of all greatguinea, for example, of such a weight and fineness, should ex- and small sums rather in silver than in gold money. One of Mrchange for one-and-twenty shillings, or be a legal tender for a Drummond’s notes for five-and-twenty or fifty guineas would,debt of that amount. In this state of things, and during the con- after an alteration of this kind, be still payable with five-and-twentytinuance of any one regulated proportion of this kind, the distinc- or fifty guineas, in the same manner as before. It would, after suchtion between the metal, which is the standard, and that which is an alteration, be payable with the same quantity of gold as before,not the standard, becomes little more than a nominal distinction. but with very different quantities of silver. In the payment of such In consequence of any change, however, in this regulated pro- a note, gold would appear to be more invariable in its value thanportion, this distinction becomes, or at least seems to become, silver. Gold would appear to measure the value of silver, and silver 39
  • 39. The Wealth of Nationswould not appear to measure the value of gold. If the custom of likely to preserve it so, as long as that order is enforced. The silverkeeping accounts, and of expressing promissory-notes and other coin still continues in the same worn and degraded state as beforeobligations for money, in this manner should ever become gen- the reformation of the cold coin. In the market, however, one-eral, gold, and not silver, would be considered as the metal which and-twenty shillings of this degraded silver coin are still consid-was peculiarly the standard or measure of value. ered as worth a guinea of this excellent gold coin. In reality, during the continuance of any one regulated propor- The reformation of the gold coin has evidently raised the valuetion between the respective values of the different metals in coin, of the silver coin which can be exchanged for it.the value of the most precious metal regulates the value of the In the English mint, a pound weight of gold is coined into forty-whole coin. Twelve copper pence contain half a pound avoirdu- four guineas and a half, which at one-and-twenty shillings the guinea,pois of copper, of not the best quality, which, before it is coined, is is equal to forty-six pounds fourteen shillings and sixpence. An ounceseldom worth seven-pence in silver. But as, by the regulation, twelve of such gold coin, therefore, is worth £ 3:17:10½ in silver. In En-such pence are ordered to exchange for a shilling, they are in the gland, no duty or seignorage is paid upon the coinage, and he whomarket considered as worth a shilling, and a shilling can at any carries a pound weight or an ounce weight of standard gold bulliontime be had for them. Even before the late reformation of the gold to the mint, gets back a pound weight or an ounce weight of gold incoin of Great Britain, the gold, that part of it at least which circu- coin, without any deduction. Three pounds seventeen shillings andlated in London and its neighbourhood, was in general less de- tenpence halfpenny an ounce, therefore, is said to be the mint pricegraded below its standard weight than the greater part of the sil- of gold in England, or the quantity of gold coin which the mintver. One-and-twenty worn and defaced shillings, however, were gives in return for standard gold bullion.considered as equivalent to a guinea, which, perhaps, indeed, was Before the reformation of the gold coin, the price of standardworn and defaced too, but seldom so much so. The late regula- gold bullion in the market had, for many years, been upwards oftions have brought the gold coin as near, perhaps, to its standard £3:18s. sometimes £ 3:19s, and very frequently £4 an ounce; thatweight as it is possible to bring the current coin of any nation; and sum, it is probable, in the worn and degraded gold coin, seldomthe order to receive no gold at the public offices but by weight, is containing more than an ounce of standard gold. Since the refor- 40
  • 40. Adam Smithmation of the gold coin, the market price of standard gold bullion sevenpence, however, seems to have been the most common price.seldom exceeds £ 3:17:7 an ounce. Before the reformation of the Since the reformation of the gold coin, the market price of stan-gold coin, the market price was always more or less above the dard silver bullion has fallen occasionally to five shillings andmint price. Since that reformation, the market price has been con- threepence, five shillings and fourpence, and five shillings andstantly below the mint price. But that market price is the same fivepence an ounce, which last price it has scarce ever exceeded.whether it is paid in gold or in silver coin. The late reformation of Though the market price of silver bullion has fallen considerablythe gold coin, therefore, has raised not only the value of the gold since the reformation of the gold coin, it has not fallen so low ascoin, but likewise that of the silver coin in proportion to gold the mint price.bullion, and probably, too, in proportion to all other commodi- In the proportion between the different metals in the Englishties; though the price of the greater part of other commodities coin, as copper is rated very much above its real value, so silver isbeing influenced by so many other causes, the rise in the value of rated somewhat below it. In the market of Europe, in the Frencheither gold or silver coin in proportion to them may not be so coin and in the Dutch coin, an ounce of fine gold exchanges fordistinct and sensible. about fourteen ounces of fine silver. In the English coin, it exchanges In the English mint, a pound weight of standard silver bullion for about fifteen ounces, that is, for more silver than it is worth,is coined into sixty-two shillings, containing, in the same manner, according to the common estimation of Europe. But as the price ofa pound weight of standard silver. Five shillings and twopence an copper in bars is not, even in England, raised by the high price ofounce, therefore, is said to be the mint price of silver in England, copper in English coin, so the price of silver in bullion is not sunkor the quantity of silver coin which the mint gives in return for by the low rate of silver in English coin. Silver in bullion still pre-standard silver bullion. Before the reformation of the gold coin, serves its proper proportion to gold, for the same reason that copperthe market price of standard silver bullion was, upon different in bars preserves its proper proportion to silver.occasions, five shillings and fourpence, five shillings and fivepence, Upon the reformation of the silver coin, in the reign of Williamfive shillings and sixpence, five shillings and sevenpence, and very III., the price of silver bullion still continued to be somewhat aboveoften five shillings and eightpence an ounce. Five shillings and the mint price. Mr Locke imputed this high price to the permis- 41
  • 41. The Wealth of Nationssion of exporting silver bullion, and to the prohibition of export- ner. Some alteration in the present proportion seems to be theing silver coin. This permission of exporting, he said, rendered the only method of preventing this inconveniency.demand for silver bullion greater than the demand for silver coin. The inconveniency, perhaps, would be less, if silver was rated inBut the number of people who want silver coin for the common the coin as much above its proper proportion to gold as it is atuses of buying and selling at home, is surely much greater than present rated below it, provided it was at the same time enacted,that of those who want silver bullion either for the use of exporta- that silver should not be a legal tender for more than the change oftion or for any other use. There subsists at present a like permis- a guinea, in the same manner as copper is not a legal tender forsion of exporting gold bullion, and a like prohibition of exporting more than the change of a shilling. No creditor could, in this case,gold coin; and yet the price of gold bullion has fallen below the be cheated in consequence of the high valuation of silver in coin;mint price. But in the English coin, silver was then, in the same as no creditor can at present be cheated in consequence of themanner as now, under-rated in proportion to gold; and the gold high valuation of copper. The bankers only would suffer by thiscoin (which at that time, too, was not supposed to require any regulation. When a run comes upon them, they sometimes en-reformation) regulated then, as well as now, the real value of the deavour to gain time, by paying in sixpences, and they would bewhole coin. As the reformation of the silver coin did not then precluded by this regulation from this discreditable method ofreduce the price of silver bullion to the mint price, it is not very evading immediate payment. They would be obliged, in conse-probable that a like reformation will do so now. quence, to keep at all times in their coffers a greater quantity of Were the silver coin brought back as near to its standard weight cash than at present; and though this might, no doubt, be a con-as the gold, a guinea, it is probable, would, according to the present siderable inconveniency to them, it would, at the same time, be aproportion, exchange for more silver in coin than it would pur- considerable security to their creditors.chase in bullion. The silver coin containing its full standard weight, Three pounds seventeen shillings and tenpence halfpenny (thethere would in this case, be a profit in melting it down, in order, mint price of gold) certainly does not contain, even in our presentfirst to sell the bullion for gold coin, and afterwards to exchange excellent gold coin, more than an ounce of standard gold, and itthis gold coin for silver coin, to be melted down in the same man- may be thought, therefore, should not purchase more standard 42
  • 42. Adam Smithbullion. But gold in coin is more convenient than gold in bullion; soon return again, of its own accord. Abroad, it could sell only forand though, in England, the coinage is free, yet the gold which is its weight in bullion. At home, it would buy more than that weight.carried in bullion to the mint, can seldom be returned in coin to There would be a profit, therefore, in bringing it home again. Inthe owner till after a delay of several weeks. In the present hurry of France, a seignorage of about eight per cent. is imposed upon thethe mint, it could not be returned till after a delay of several months. coinage, and the French coin, when exported, is said to returnThis delay is equivalent to a small duty, and renders gold in coin home again, of its own accord.somewhat more valuable than an equal quantity of gold in bul- The occasional fluctuations in the market price of gold and sil-lion. If, in the English coin, silver was rated according to its proper ver bullion arise from the same causes as the like fluctuations inproportion to gold, the price of silver bullion would probably fall that of all other commodities. The frequent loss of those metalsbelow the mint price, even without any reformation of the silver from various accidents by sea and by land, the continual waste ofcoin; the value even of the present worn and defaced silver coin them in gilding and plating, in lace and embroidery, in the wearbeing regulated by the value of the excellent gold coin for which it and tear of coin, and in that of plate, require, in all countriescan be changed. which possess no mines of their own, a continual importation, in A small seignorage or duty upon the coinage of both gold and order to repair this loss and this waste. The merchant importers,silver, would probably increase still more the superiority of those like all other merchants, we may believe, endeavour, as well asmetals in coin above an equal quantity of either of them in bul- they can, to suit their occasional importations to what they judgelion. The coinage would, in this case, increase the value of the is likely to be the immediate demand. With all their attention,metal coined in proportion to the extent of this small duty, for the however, they sometimes overdo the business, and sometimessame reason that the fashion increases the value of plate in pro- underdo it. When they import more bullion than is wanted, ratherportion to the price of that fashion. The superiority of coin above than incur the risk and trouble of exporting it again, they are some-bullion would prevent the melting down of the coin, and would times willing to sell a part of it for something less than the ordi-discourage its exportation. If, upon any public exigency, it should nary or average price. When, on the other hand, they import lessbecome necessary to export the coin, the greater part of it would than is wanted, they get something more than this price. But when, 43
  • 43. The Wealth of Nationsunder all those occasional fluctuations, the market price either of liable to the same sort of uncertainty to which all other weightsgold or silver bullion continues for several years together steadily and measures are commonly exposed. As it rarely happens thatand constantly, either more or less above, or more or less below these are exactly agreeable to their standard, the merchant adjuststhe mint price, we may be assured that this steady and constant, the price of his goods as well as he can, not to what those weightseither superiority or inferiority of price, is the effect of something and measures ought to be, but to what, upon an average, he finds,in the state of the coin, which, at that time, renders a certain quan- by experience, they actually are. In consequence of a like disordertity of coin either of more value or of less value than the precise in the coin, the price of goods comes, in the same manner, to bequantity of bullion which it ought to contain. The constancy and adjusted, not to the quantity of pure gold or silver which the coinsteadiness of the effect supposes a proportionable constancy and ought to contain, but to that which, upon an average, it is found,steadiness in the cause. by experience, it actually does contain. The money of any particular country is, at any particular time By the money price of goods, it is to be observed, I understandand place, more or less an accurate measure or value, according as always the quantity of pure gold or silver for which they are sold,the current coin is more or less exactly agreeable to its standard, or without any regard to the denomination of the coin. Six shillingscontains more or less exactly the precise quantity of pure gold or and eight pence, for example, in the time of Edward I., I considerpure silver which it ought to contain. If in England, for example, as the same money price with a pound sterling in the present times,forty-four guineas and a half contained exactly a pound weight of because it contained, as nearly as we can judge, the same quantitystandard gold, or eleven ounces of fine gold, and one ounce of of pure silver.alloy, the gold coin of England would be as accurate a measure ofthe actual value of goods at any particular time and place as thenature of the thing would admit. But if, by rubbing and wearing,forty-four guineas and a half generally contain less than a poundweight of standard gold, the diminution, however, being greaterin some pieces than in others, the measure of value comes to be 44
  • 44. Adam Smith CHAPTER VI would be due to the time employed about it. Such talents can seldom be acquired but in consequence of long application, and PAR ART OF THE COMPONENT PART OF THE the superior value of their produce may frequently be no more PRICE OF COMMODITIES than a reasonable compensation for the time and labour which must be spent in acquiring them. In the advanced state of society,IN THAT EARLY and rude state of society which precedes both the allowances of this kind, for superior hardship and superior skill,accumulation of stock and the appropriation of land, the propor- are commonly made in the wages of labour; and something of thetion between the quantities of labour necessary for acquiring dif- same kind must probably have taken place in its earliest and rud-ferent objects, seems to be the only circumstance which can afford est period.any rule for exchanging them for one another. If among a nation In this state of things, the whole produce of labour belongs toof hunters, for example, it usually costs twice the labour to kill a the labourer; and the quantity of labour commonly employed inbeaver which it does to kill a deer, one beaver should naturally acquiring or producing any commodity, is the only circumstanceexchange for or be worth two deer. It is natural that what is usu- which can regulate the quantity of labour which it ought com-ally the produce of two days or two hours labour, should be worth monly to purchase, command, or exchange for.double of what is usually the produce of one day’s or one hour’s As soon as stock has accumulated in the hands of particularlabour. persons, some of them will naturally employ it in setting to work If the one species of labour should be more severe than the other, industrious people, whom they will supply with materials andsome allowance will naturally be made for this superior hardship; subsistence, in order to make a profit by the sale of their work, orand the produce of one hour’s labour in the one way may fre- by what their labour adds to the value of the materials. In ex-quently exchange for that of two hour’s labour in the other. changing the complete manufacture either for money, for labour, Or if the one species of labour requires an uncommon degree of or for other goods, over and above what may be sufficient to paydexterity and ingenuity, the esteem which men have for such tal- the price of the materials, and the wages of the workmen, some-ents, will naturally give a value to their produce, superior to what thing must be given for the profits of the undertaker of the work, 45
  • 45. The Wealth of Nationswho hazards his stock in this adventure. The value which the work- seven hundred pounds, while the finer materials in the other costmen add to the materials, therefore, resolves itself in this case into seven thousand. The capital annually employed in the one will, intwo parts, of which the one pays their wages, the other the profits of this case, amount only to one thousand pounds; whereas that em-their employer upon the whole stock of materials and wages which ployed in the other will amount to seven thousand three hundredhe advanced. He could have no interest to employ them, unless he pounds. At the rate of ten per cent. therefore, the undertaker ofexpected from the sale of their work something more than what was the one will expect a yearly profit of about one hundred poundssufficient to replace his stock to him; and he could have no interest only; while that of the other will expect about seven hundred andto employ a great stock rather than a small one, unless his profits thirty pounds. But though their profits are so very different, theirwere to bear some proportion to the extent of his stock. labour of inspection and direction may be either altogether or The profits of stock, it may perhaps be thought, are only a dif- very nearly the same. In many great works, almost the whole labourferent name for the wages of a particular sort of labour, the labour of this kind is committed to some principal clerk. His wages prop-of inspection and direction. They are, however, altogether differ- erly express the value of this labour of inspection and direction.ent, are regulated by quite different principles, and bear no pro- Though in settling them some regard is had commonly, not onlyportion to the quantity, the hardship, or the ingenuity of this sup- to his labour and skill, but to the trust which is reposed in him,posed labour of inspection and direction. They are regulated alto- yet they never bear any regular proportion to the capital of whichgether by the value of the stock employed, and are greater or smaller he oversees the management; and the owner of this capital, thoughin proportion to the extent of this stock. Let us suppose, for ex- he is thus discharged of almost all labour, still expects that hisample, that in some particular place, where the common annual profit should bear a regular proportion to his capital. In the priceprofits of manufacturing stock are ten per cent. there are two dif- of commodities, therefore, the profits of stock constitute a com-ferent manufactures, in each of which twenty workmen are em- ponent part altogether different from the wages of labour, andployed, at the rate of fifteen pounds a year each, or at the expense regulated by quite different principles.of three hundred a-year in each manufactory. Let us suppose, too, In this state of things, the whole produce of labour does notthat the coarse materials annually wrought up in the one cost only always belong to the labourer. He must in most cases share it with 46
  • 46. Adam Smiththe owner of the stock which employs him. Neither is the quan- labour, but of that which resolves itself into rent, and of that whichtity of labour commonly employed in acquiring or producing any resolves itself into profit.commodity, the only circumstance which can regulate the quan- In every society, the price of every commodity finally resolvestity which it ought commonly to purchase, command or exchange itself into some one or other, or all of those three parts; and infor. An additional quantity, it is evident, must be due for the prof- every improved society, all the three enter, more or less, as compo-its of the stock which advanced the wages and furnished the mate- nent parts, into the price of the far greater part of commodities.rials of that labour. In the price of corn, for example, one part pays the rent of the As soon as the land of any country has all become private prop- landlord, another pays the wages or maintenance of the labourerserty, the landlords, like all other men, love to reap where they and labouring cattle employed in producing it, and the third paysnever sowed, and demand a rent even for its natural produce. The the profit of the farmer. These three parts seem either immedi-wood of the forest, the grass of the field, and all the natural fruits ately or ultimately to make up the whole price of corn. A fourthof the earth, which, when land was in common, cost the labourer part, it may perhaps be thought is necessary for replacing the stockonly the trouble of gathering them, come, even to him, to have an of the farmer, or for compensating the wear and tear of his labouringadditional price fixed upon them. He must then pay for the li- cattle, and other instruments of husbandry. But it must be con-cence to gather them, and must give up to the landlord a portion sidered, that the price of any instrument of husbandry, such as aof what his labour either collects or produces. This portion, or, labouring horse, is itself made up of the same time parts; the rentwhat comes to the same thing, the price of this portion, consti- of the land upon which he is reared, the labour of tending andtutes the rent of land, and in the price of the greater part of com- rearing him, and the profits of the farmer, who advances both themodities, makes a third component part. rent of this land, and the wages of this labour. Though the price of The real value of all the different component parts of price, it the corn, therefore, may pay the price as well as the maintenancemust be observed, is measured by the quantity of labour which of the horse, the whole price still resolves itself, either immediatelythey can, each of them, purchase or command. Labour measures or ultimately, into the same three parts of rent, labour, and profit.the value, not only of that part of price which resolves itself into In the price of flour or meal, we must add to the price of the 47
  • 47. The Wealth of Nationscorn, the profits of the miller, and the wages of his servants; in the the wages of labour, and the profits of stock; and a still smallerprice of bread, the profits of the baker, and the wages of his ser- number, in which it consists altogether in the wages of labour. Invants; and in the price of both, the labour of transporting the corn the price of sea-fish, for example, one part pays the labour of thefrom the house of the farmer to that of the miller, and from that fisherman, and the other the profits of the capital employed in theof the miller to that of the baker, together with the profits of those fishery. Rent very seldom makes any part of it, though it doeswho advance the wages of that labour. sometimes, as I shall shew hereafter. It is otherwise, at least through The price of flax resolves itself into the same three parts as that the greater part of Europe, in river fisheries. A salmon fishery paysof corn. In the price of linen we must add to this price the wages a rent; and rent, though it cannot well be called the rent of land,of the flax-dresser, of the spinner, of the weaver, of the bleacher, makes a part of the price of a salmon, as well as wares and profit.etc. together with the profits of their respective employers. In some parts of Scotland, a few poor people make a trade of As any particular commodity comes to be more manufactured, gathering, along the sea-shore, those little variegated stones com-that part of the price which resolves itself into wages and profit, monly known by the name of Scotch pebbles. The price which iscomes to be greater in proportion to that which resolves itself into paid to them by the stone-cutter, is altogether the wages of theirrent. In the progress of the manufacture, not only the number of labour; neither rent nor profit makes an part of it.profits increase, but every subsequent profit is greater than the But the whole price of any commodity must still finally resolveforegoing; because the capital from which it is derived must al- itself into some one or other or all of those three parts; as whateverways be greater. The capital which employs the weavers, for ex- part of it remains after paying the rent of the land, and the price ofample, must be greater than that which employs the spinners; be- the whole labour employed in raising, manufacturing, and bring-cause it not only replaces that capital with its profits, but pays, ing it to market, must necessarily be profit to somebody.besides, the wages of the weavers: and the profits must always bear As the price or exchangeable value of every particular commod-some proportion to the capital. ity, taken separately, resolves itself into some one or other, or all of In the most improved societies, however, there are always a few those three parts; so that of all the commodities which composecommodities of which the price resolves itself into two parts only the whole annual produce of the labour of every country, taken 48
  • 48. Adam Smithcomplexly, must resolve itself into the same three parts, and be use of the money, must be paid from some other source of rev-parcelled out among different inhabitants of the country, either as enue, unless perhaps the borrower is a spendthrift, who contractsthe wages of their labour, the profits of their stock, or the rent of a second debt in order to pay the interest of the first. The revenuetheir land. The whole of what is annually either collected or pro- which proceeds altogether from land, is called rent, and belongsduced by the labour of every society, or, what comes to the same to the landlord. The revenue of the farmer is derived partly fromthing, the whole price of it, is in this manner originally distrib- his labour, and partly from his stock. To him, land is only theuted among some of its different members. Wages, profit, and instrument which enables him to earn the wages of this labour,rent, are the three original sources of all revenue, as well as of all and to make the profits of this stock. All taxes, and all the revenueexchangeable value. All other revenue is ultimately derived from which is founded upon them, all salaries, pensions, and annuitiessome one or other of these. of every kind, are ultimately derived from some one or other of Whoever derives his revenue from a fund which is his own, must those three original sources of revenue, and are paid either imme-draw it either from his labour, from his stock, or from his land. diately or mediately from the wages of labour, the profits of stock,The revenue derived from labour is called wages; that derived from or the rent of land.stock, by the person who manages or employs it, is called profit; When those three different sorts of revenue belong to differentthat derived from it by the person who does not employ it him- persons, they are readily distinguished; but when they belong toself, but lends it to another, is called the interest or the use of the same, they are sometimes confounded with one another, atmoney. It is the compensation which the borrower pays to the least in common language.lender, for the profit which he has an opportunity of making by A gentleman who farms a part of his own estate, after payingthe use of the money. Part of that profit naturally belongs to the the expense of cultivation, should gain both the rent of the land-borrower, who runs the risk and takes the trouble of employing it, lord and the profit of the farmer. He is apt to denominate, how-and part to the lender, who affords him the opportunity of mak- ever, his whole gain, profit, and thus confounds rent with profit,ing this profit. The interest of money is always a derivative rev- at least in common language. The greater part of our North Ameri-enue, which, if it is not paid from the profit which is made by the can and West Indian planters are in this situation. They farm, the 49
  • 49. The Wealth of Nationsgreater part of them, their own estates: and accordingly we sel- the rent of the first, the profit of the second, and the wages of thedom hear of the rent of a plantation, but frequently of its profit. third. The whole, however, is commonly considered as the earn- Common farmers seldom employ any overseer to direct the gen- ings of his labour. Both rent and profit are, in this case, confoundederal operations of the farm. They generally, too, work a good deal with wages.with their own hands, as ploughmen, harrowers, etc. What re- As in a civilized country there are but few commodities of whichmains of the crop, after paying the rent, therefore, should not the exchangeable value arises from labour only, rent and profitonly replace to them their stock employed in cultivation, together contributing largely to that of the far greater part of them, so thewith its ordinary profits, but pay them the wages which are due to annual produce of its labour will always be sufficient to purchasethem, both as labourers and overseers. Whatever remains, how- or command a much greater quantity of labour than what wasever, after paying the rent and keeping up the stock, is called profit. employed in raising, preparing, and bringing that produce toBut wages evidently make a part of it. The farmer, by saving these market. If the society were annually to employ all the labour whichwages, must necessarily gain them. Wages, therefore, are in this it can annually purchase, as the quantity of labour would increasecase confounded with profit. greatly every year, so the produce of every succeeding year would An independent manufacturer, who has stock enough both to be of vastly greater value than that of the foregoing. But there ispurchase materials, and to maintain himself till he can carry his no country in which the whole annual produce is employed inwork to market, should gain both the wages of a journeyman who maintaining the industrious. The idle everywhere consume a greatworks under a master, and the profit which that master makes by part of it; and, according to the different proportions in which itthe sale of that journeyman’s work. His whole gains, however, are is annually divided between those two different orders of people,commonly called profit, and wages are, in this case, too, con- its ordinary or average value must either annually increase or di-founded with profit. minish, or continue the same from one year to another. A gardener who cultivates his own garden with his own hands,unites in his own person the three different characters, of land-lord, farmer, and labourer. His produce, therefore, should pay him 50
  • 50. Adam Smith CHAPTER VII commodity is then sold for what may be called its natural price. The commodity is then sold precisely for what it is worth, or for NATURALOF THE NATURAL AND MARKET PRICE what it really costs the person who brings it to market; for though, OF COMMODITIES in common language, what is called the prime cost of any com- modity does not comprehend the profit of the person who is to sellTHERE IS IN EVERY SOCIETY or neighbourhood an ordinary or aver- it again, yet, if he sells it at a price which does not allow him theage rate, both of wages and profit, in every different employment ordinary rate of profit in his neighbourhood, he is evidently a loserof labour and stock. This rate is naturally regulated, as I shall shew by the trade; since, by employing his stock in some other way, hehereafter, partly by the general circumstances of the society, their might have made that profit. His profit, besides, is his revenue, theriches or poverty, their advancing, stationary, or declining condi- proper fund of his subsistence. As, while he is preparing and bring-tion, and partly by the particular nature of each employment. ing the goods to market, he advances to his workmen their wages, There is likewise in every society or neighbourhood an ordinary or their subsistence; so he advances to himself, in the same manner,or average rate of rent, which is regulated, too, as I shall shew his own subsistence, which is generally suitable to the profit whichhereafter, partly by the general circumstances of the society or he may reasonably expect from the sale of his goods. Unless theyneighbourhood in which the land is situated, and partly by the yield him this profit, therefore, they do not repay him what theynatural or improved fertility of the land. may very properly be said to have really cost him. These ordinary or average rates may be called the natural rates Though the price, therefore, which leaves him this profit, is notof wages, profit and rent, at the time and place in which they always the lowest at which a dealer may sometimes sell his goods,commonly prevail. it is the lowest at which he is likely to sell them for any consider- When the price of any commodity is neither more nor less than able time; at least where there is perfect liberty, or where he maywhat is sufficient to pay the rent of the land, the wages of the change his trade as often as he pleases.labour, and the profits of the stock employed in raising, prepar- The actual price at which any commodity is commonly sold, ising, and bringing it to market, according to their natural rates, the called its market price. It may either be above, or below, or exactly 51
  • 51. The Wealth of Nationsthe same with its natural price. Among competitors of equal wealth and luxury, the same deficiency The market price of every particular commodity is regulated by will generally occasion a more or less eager competition, accordingthe proportion between the quantity which is actually brought to as the acquisition of the commodity happens to be of more or lessmarket, and the demand of those who are willing to pay the natu- importance to them. Hence the exorbitant price of the necessariesral price of the commodity, or the whole value of the rent, labour, of life during the blockade of a town, or in a famine.and profit, which must be paid in order to bring it thither. Such When the quantity brought to market exceeds the effectual de-people may be called the effectual demanders, and their demand mand, it cannot be all sold to those who are willing to pay thethe effectual demand; since it maybe sufficient to effectuate the whole value of the rent, wages, and profit, which must be paid inbringing of the commodity to market. It is different from the ab- order to bring it thither. Some part must be sold to those who aresolute demand. A very poor man may be said, in some sense, to willing to pay less, and the low price which they give for it musthave a demand for a coach and six; he might like to have it; but his reduce the price of the whole. The market price will sink more ordemand is not an effectual demand, as the commodity can never less below the natural price, according as the greatness of the ex-be brought to market in order to satisfy it. cess increases more or less the competition of the sellers, or ac- When the quantity of any commodity which is brought to mar- cording as it happens to be more or less important to them to getket falls short of the effectual demand, all those who are willing to immediately rid of the commodity. The same excess in the impor-pay the whole value of the rent, wages, and profit, which must be tation of perishable, will occasion a much greater competition thanpaid in order to bring it thither, cannot be supplied with the quan- in that of durable commodities; in the importation of oranges, fortity which they want. Rather than want it altogether, some of them example, than in that of old iron.will be willing to give more. A competition will immediately be- When the quantity brought to market is just sufficient to sup-gin among them, and the market price will rise more or less above ply the effectual demand, and no more, the market price naturallythe natural price, according as either the greatness of the defi- comes to be either exactly, or as nearly as can be judged of, theciency, or the wealth and wanton luxury of the competitors, hap- same with the natural price. The whole quantity upon hand canpen to animate more or less the eagerness of the competition. be disposed of for this price, and can not be disposed of for more. 52
  • 52. Adam SmithThe competition of the different dealers obliges them all to accept wages or profit, the interest of all other labourers and dealers willof this price, but does not oblige them to accept of less. soon prompt them to employ more labour and stock in preparing The quantity of every commodity brought to market naturally and bringing it to market. The quantity brought thither will soonsuits itself to the effectual demand. It is the interest of all those be sufficient to supply the effectual demand. All the different partswho employ their land, labour, or stock, in bringing any com- of its price will soon sink to their natural rate, and the whole pricemodity to market, that the quantity never should exceed the effec- to its natural price.tual demand; and it is the interest of all other people that it never The natural price, therefore, is, as it were, the central price, toshould fall short of that demand. which the prices of all commodities are continually gravitating. If at any time it exceeds the effectual demand, some of the com- Different accidents may sometimes keep them suspended a goodponent parts of its price must be paid below their natural rate. If it deal above it, and sometimes force them down even somewhatis rent, the interest of the landlords will immediately prompt them below it. But whatever may be the obstacles which hinder themto withdraw a part of their land; and if it is wages or profit, the from settling in this centre of repose and continuance, they areinterest of the labourers in the one case, and of their employers in constantly tending towards it.the other, will prompt them to withdraw a part of their labour or The whole quantity of industry annually employed in order tostock, from this employment. The quantity brought to market bring any commodity to market, naturally suits itself in this man-will soon be no more than sufficient to supply the effectual de- ner to the effectual demand. It naturally aims at bringing alwaysmand. All the different parts of its price will rise to their natural that precise quantity thither which may be sufficient to supply,rate, and the whole price to its natural price. and no more than supply, that demand. If, on the contrary, the quantity brought to market should at But, in some employments, the same quantity of industry will,any time fall short of the effectual demand, some of the compo- in different years, produce very different quantities of commodi-nent parts of its price must rise above their natural rate. If it is ties; while, in others, it will produce always the same, or very nearlyrent, the interest of all other landlords will naturally prompt them the same. The same number of labourers in husbandry will, into prepare more land for the raising of this commodity; if it is different years, produce very different quantities of corn, wine, 53
  • 53. The Wealth of Nationsoil, hops, etc. But the same number of spinners or weavers will more frequent, variations in the quantity of what is brought toevery year produce the same, or very nearly the same, quantity of market, in order to supply that demand.linen and woollen cloth. It is only the average produce of the one The occasional and temporary fluctuations in the market pricespecies of industry which can be suited, in any respect, to the of any commodity fall chiefly upon those parts of its price whicheffectual demand; and as its actual produce is frequently much resolve themselves into wages and profit. That part which resolvesgreater, and frequently much less, than its average produce, the itself into rent is less affected by them. A rent certain in money isquantity of the commodities brought to market will sometimes not in the least affected by them, either in its rate or in its value. Aexceed a good deal, and sometimes fall short a good deal, of the rent which consists either in a certain proportion, or in a certaineffectual demand. Even though that demand, therefore, should quantity, of the rude produce, is no doubt affected in its yearlycontinue always the same, their market price will be liable to great value by all the occasional and temporary fluctuations in the mar-fluctuations, will sometimes fall a good deal below, and some- ket price of that rude produce; but it is seldom affected by them intimes rise a good deal above, their natural price. In the other spe- its yearly rate. In settling the terms of the lease, the landlord andcies of industry, the produce of equal quantities of labour being farmer endeavour, according to their best judgment, to adjust thatalways the same, or very nearly the same, it can be more exactly rate, not to the temporary and occasional, but to the average andsuited to the effectual demand. While that demand continues the ordinary price of the produce.same, therefore, the market price of the commodities is likely to Such fluctuations affect both the value and the rate, either ofdo so too, and to be either altogether, or as nearly as can be judged wages or of profit, according as the market happens to be eitherof, the same with the natural price. That the price of linen and overstocked or understocked with commodities or with labour,woollen cloth is liable neither to such frequent, nor to such great with work done, or with work to be done. A public mourningvariations, as the price of corn, every man’s experience will inform raises the price of black cloth ( with which the market is almosthim. The price of the one species of commodities varies only with always understocked upon such occasions), and augments the prof-the variations in the demand; that of the other varies not only its of the merchants who possess any considerable quantity of it. Itwith the variations in the demand, but with the much greater, and has no effect upon the wages of the weavers. The market is 54
  • 54. Adam Smithunderstocked with commodities, not with labour, with work done, the natural price, and, perhaps, for some time even below it. If thenot with work to be done. It raises the wages of journeymen tailors. market is at a great distance from the residence of those who sup-The market is here understocked with labour. There is an effectual ply it, they may sometimes be able to keep the secret for severaldemand for more labour, for more work to be done, than can be years together, and may so long enjoy their extraordinary profitshad. It sinks the price of coloured silks and cloths, and thereby re- without any new rivals. Secrets of this kind, however, it must beduces the profits of the merchants who have any considerable quan- acknowledged, can seldom be long kept; and the extraordinarytity of them upon hand. It sinks, too, the wages of the workmen profit can last very little longer than they are kept.employed in preparing such commodities, for which all demand is Secrets in manufactures are capable of being longer kept thanstopped for six months, perhaps for a twelvemonth. The market is secrets in trade. A dyer who has found the means of producing ahere overstocked both with commodities and with labour. particular colour with materials which cost only half the price of But though the market price of every particular commodity is those commonly made use of, may, with good management, en-in this manner continually gravitating, if one may say so, towards joy the advantage of his discovery as long as he lives, and eventhe natural price; yet sometimes particular accidents, sometimes leave it as a legacy to his posterity. His extraordinary gains arisenatural causes, and sometimes particular regulations of policy, may, from the high price which is paid for his private labour. Theyin many commodities, keep up the market price, for a long time properly consist in the high wages of that labour. But as they aretogether, a good deal above the natural price. repeated upon every part of his stock, and as their whole amount When, by an increase in the effectual demand, the market price bears, upon that account, a regular proportion to it, they are com-of some particular commodity happens to rise a good deal above monly considered as extraordinary profits of stock.the natural price, those who employ their stocks in supplying that Such enhancements of the market price are evidently the effectsmarket, are generally careful to conceal this change. If it was com- of particular accidents, of which, however, the operation may some-monly known, their great profit would tempt so many new rivals times last for many years together.to employ their stocks in the same way, that, the effectual demand Some natural productions require such a singularity of soil andbeing fully supplied, the market price would soon be reduced to situation, that all the land in a great country, which is fit for pro- 55
  • 55. The Wealth of Nationsducing them, may not be sufficient to supply the effectual de- pany, has the same effect as a secret in trade or manufactures. Themand. The whole quantity brought to market, therefore, may be monopolists, by keeping the market constantly understocked bydisposed of to those who are willing to give more than what is never fully supplying the effectual demand, sell their commodi-sufficient to pay the rent of the land which produced them, to- ties much above the natural price, and raise their emoluments,gether with the wages of the labour and the profits of the stock whether they consist in wages or profit, greatly above their naturalwhich were employed in preparing and bringing them to market, rate.according to their natural rates. Such commodities may continue The price of monopoly is upon every occasion the highest whichfor whole centuries together to be sold at this high price; and that can be got. The natural price, or the price of free competition, onpart of it which resolves itself into the rent of land, is in this case the contrary, is the lowest which can be taken, not upon everythe part which is generally paid above its natural rate. The rent of occasion indeed, but for any considerable time together. The onethe land which affords such singular and esteemed productions, is upon every occasion the highest which can be squeezed out oflike the rent of some vineyards in France of a peculiarly happy soil the buyers, or which it is supposed they will consent to give; theand situation, bears no regular proportion to the rent of other other is the lowest which the sellers can commonly afford to take,equally fertile and equally well cultivated land in its neighbourhood. and at the same time continue their business.The wages of the labour, and the profits of the stock employed in The exclusive privileges of corporations, statutes of apprentice-bringing such commodities to market, on the contrary, are sel- ship, and all those laws which restrain in particular employments,dom out of their natural proportion to those of the other employ- the competition to a smaller number than might otherwise goments of labour and stock in their neighbourhood. into them, have the same tendency, though in a less degree. They Such enhancements of the market price are evidently the effect are a sort of enlarged monopolies, and may frequently, for agesof natural causes, which may hinder the effectual demand from together, and in whole classes of employments, keep up the mar-ever being fully supplied, and which may continue, therefore, to ket price of particular commodities above the natural price, andoperate for ever. maintain both the wages of the labour and the profits of the stock A monopoly granted either to an individual or to a trading com- employed about them somewhat above their natural rate. 56
  • 56. Adam Smith Such enhancements of the market price may last as long as the ness in the time of its prosperity. When they are gone, the numberregulations of policy which give occasion to them. of those who are afterwards educated to the trade will naturally The market price of any particular commodity, though it may suit itself to the effectual demand. The policy must be as violent ascontinue long above, can seldom continue long below, its natural that of Indostan or ancient Egypt (where every man was bound byprice. Whatever part of it was paid below the natural rate, the a principle of religion to follow the occupation of his father, andpersons whose interest it affected would immediately feel the loss, was supposed to commit the most horrid sacrilege if he changed itand would immediately withdraw either so much land or no much for another), which can in any particular employment, and forlabour, or so much stock, from being employed about it, that the several generations together, sink either the wages of labour or thequantity brought to market would soon be no more than suffi- profits of stock below their natural rate.cient to supply the effectual demand. Its market price, therefore, This is all that I think necessary to be observed at present con-would soon rise to the natural price; this at least would be the case cerning the deviations, whether occasional or permanent, of thewhere there was perfect liberty. market price of commodities from the natural price. The same statutes of apprenticeship and other corporation laws, The natural price itself varies with the natural rate of each of itsindeed, which, when a manufacture is in prosperity, enable the component parts, of wages, profit, and rent; and in every societyworkman to raise his wages a good deal above their natural rate, this rate varies according to their circumstances, according to theirsometimes oblige him, when it decays, to let them down a good riches or poverty, their advancing, stationary, or declining condi-deal below it. As in the one case they exclude many people from tion. I shall, in the four following chapters, endeavour to explain,his employment, so in the other they exclude him from many as fully and distinctly as I can, the causes of those different varia-employments. The effect of such regulations, however, is not near tions.so durable in sinking the workman’s wages below, as in raising First, I shall endeavour to explain what are the circumstancesthem above their natural rate. Their operation in the one way may which naturally determine the rate of wages, and in what mannerendure for many centuries, but in the other it can last no longer those circumstances are affected by the riches or poverty, by thethan the lives of some of the workmen who were bred to the busi- advancing, stationary, or declining state of the society. 57
  • 57. The Wealth of Nations Secondly, I shall endeavour to shew what are the circumstances CHAPTER VIIIwhich naturally determine the rate of profit; and in what manner,too, those circumstances are affected by the like variations in the LABOUR OF THE WAGES OF LABOURstate of the society. Though pecuniary wages and profit are very different in the THE PRODUCE OF LABOUR constitutes the natural recompence ordifferent employments of labour and stock; yet a certain propor- wages of labourtion seems commonly to take place between both the pecuniary In that original state of things which precedes both the appro-wages in all the different employments of labour, and the pecuni- priation of land and the accumulation of stock, the whole pro-ary profits in all the different employments of stock. This propor- duce of labour belongs to the labourer. He has neither landlordtion, it will appear hereafter, depends partly upon the nature of nor master to share with him.the different employments, and partly upon the different laws and Had this state continued, the wages of labour would have aug-policy of the society in which they are carried on. But though in mented with all those improvements in its productive powers, tomany respects dependent upon the laws and policy, this propor- which the division of labour gives occasion. All things would gradu-tion seems to be little affected by the riches or poverty of that ally have become cheaper. They would have been produced by asociety, by its advancing, stationary, or declining condition, but to smaller quantity of labour; and as the commodities produced byremain the same, or very nearly the same, in all those different equal quantities of labour would naturally in this state of thingsstates. I shall, in the third place, endeavour to explain all the dif- be exchanged for one another, they would have been purchasedferent circumstances which regulate this proportion. likewise with the produce of a smaller quantity. In the fourth and last place, I shall endeavour to shew what are But though all things would have become cheaper in reality, inthe circumstances which regulate the rent of land, and which ei- appearance many things might have become dearer, than before,ther raise or lower the real price of all the different substances or have been exchanged for a greater quantity of other goods. Letwhich it produces. us suppose, for example, that in the greater part of employments the productive powers of labour had been improved to tenfold, or 58
  • 58. Adam Smiththat a day’s labour could produce ten times the quantity of work raise or collect from it. His rent makes the first deduction fromwhich it had done originally; but that in a particular employment the produce of the labour which is employed upon land.they had been improved only to double, or that a day’s labour It seldom happens that the person who tills the ground has where-could produce only twice the quantity of work which it had done withal to maintain himself till he reaps the harvest. His mainte-before. In exchanging the produce of a day’s labour in the greater nance is generally advanced to him from the stock of a master, thepart of employments for that of a day’s labour in this particular farmer who employs him, and who would have no interest toone, ten times the original quantity of work in them would pur- employ him, unless he was to share in the produce of his labour,chase only twice the original quantity in it. Any particular quan- or unless his stock was to be replaced to him with a profit. Thistity in it, therefore, a pound weight, for example, would appear to profit makes a second deduction from the produce of the labourbe five times dearer than before. In reality, however, it would be which is employed upon land.twice as cheap. Though it required five times the quantity of other The produce of almost all other labour is liable to the like de-goods to purchase it, it would require only half the quantity of duction of profit. In all arts and manufactures, the greater part oflabour either to purchase or to produce it. The acquisition, there- the workmen stand in need of a master, to advance them the ma-fore, would be twice as easy as before. terials of their work, and their wages and maintenance, till it be But this original state of things, in which the labourer enjoyed completed. He shares in the produce of their labour, or in thethe whole produce of his own labour, could not last beyond the value which it adds to the materials upon which it is bestowed;first introduction of the appropriation of land and the accumula- and in this share consists his profit.tion of stock. It was at an end, therefore, long before the most It sometimes happens, indeed, that a single independent work-considerable improvements were made in the productive powers man has stock sufficient both to purchase the materials of his work,of labour; and it would be to no purpose to trace further what and to maintain himself till it be completed. He is both mastermight have been its effects upon the recompence or wages of labour. and workman, and enjoys the whole produce of his own labour, As soon as land becomes private property, the landlord demands or the whole value which it adds to the materials upon which it isa share of almost all the produce which the labourer can either bestowed. It includes what are usually two distinct revenues, be- 59
  • 59. The Wealth of Nationslonging to two distinct persons, the profits of stock, and the wages workman, could generally live a year or two upon the stocks, whichof labour. they have already acquired. Many workmen could not subsist a Such cases, however, are not very frequent; and in every part of week, few could subsist a month, and scarce any a year, withoutEurope twenty workmen serve under a master for one that is inde- employment. In the long run, the workman may be as necessarypendent, and the wages of labour are everywhere understood to to his master as his master is to him; but the necessity is not sobe, what they usually are, when the labourer is one person, and immediate.the owner of the stock which employs him another. We rarely hear, it has been said, of the combinations of masters, What are the common wages of labour, depends everywhere though frequently of those of workmen. But whoever imagines,upon the contract usually made between those two parties, whose upon this account, that masters rarely combine, is as ignorant ofinterests are by no means the same. The workmen desire to get as the world as of the subject. Masters are always and everywhere inmuch, the masters to give as little, as possible. The former are a sort of tacit, but constant and uniform, combination, not todisposed to combine in order to raise, the latter in order to lower, raise the wages of labour above their actual rate. To violate thisthe wages of labour. combination is everywhere a most unpopular action, and a sort of It is not, however, difficult to foresee which of the two parties reproach to a master among his neighbours and equals. We sel-must, upon all ordinary occasions, have the advantage in the dis- dom, indeed, hear of this combination, because it is the usual,pute, and force the other into a compliance with their terms. The and, one may say, the natural state of things, which nobody evermasters, being fewer in number, can combine much more easily: hears of. Masters, too, sometimes enter into particular combina-and the law, besides, authorises, or at least does not prohibit, their tions to sink the wages of labour even below this rate. These arecombinations, while it prohibits those of the workmen. We have always conducted with the utmost silence and secrecy till the mo-no acts of parliament against combining to lower the price of work, ment of execution; and when the workmen yield, as they some-but many against combining to raise it. In all such disputes, the times do without resistance, though severely felt by them, they aremasters can hold out much longer. A landlord, a farmer, a master never heard of by other people. Such combinations, however, aremanufacturer, or merchant, though they did not employ a single frequently resisted by a contrary defensive combination of the 60
  • 60. Adam Smithworkmen, who sometimes, too, without any provocation of this But though, in disputes with their workmen, masters must gen-kind, combine, of their own accord, to raise tile price of their erally have the advantage, there is, however, a certain rate, belowlabour. Their usual pretences are, sometimes the high price of pro- which it seems impossible to reduce, for any considerable time,visions, sometimes the great profit which their masters make by the ordinary wages even of the lowest species of labour.their work. But whether their combinations be offensive or defen- A man must always live by his work, and his wages must at leastsive, they are always abundantly heard of. In order to bring the be sufficient to maintain him. They must even upon most occa-point to a speedy decision, they have always recourse to the loud- sions be somewhat more, otherwise it would be impossible forest clamour, and sometimes to the most shocking violence and him to bring up a family, and the race of such workmen could notoutrage. They are desperate, and act with the folly and extrava- last beyond the first generation. Mr Cantillon seems, upon thisgance of desperate men, who must either starve, or frighten their account, to suppose that the lowest species of common labourersmasters into an immediate compliance with their demands. The must everywhere earn at least double their own maintenance, inmasters, upon these occasions, are just as clamorous upon the other order that, one with another, they may be enabled to bring up twoside, and never cease to call aloud for the assistance of the civil children; the labour of the wife, on account of her necessary at-magistrate, and the rigorous execution of those laws which have tendance on the children, being supposed no more than sufficientbeen enacted with so much severity against the combination of to provide for herself: But one half the children born, it is com-servants, labourers, and journeymen. The workmen, accordingly, puted, die before the age of manhood. The poorest labourers, there-very seldom derive any advantage from the violence of those tu- fore, according to this account, must, one with another, attemptmultuous combinations, which, partly from the interposition of to rear at least four children, in order that two may have an equalthe civil magistrate, partly from the superior steadiness of the chance of living to that age. But the necessary maintenance ofmasters, partly from the necessity which the greater part of the four children, it is supposed, may be nearly equal to that of oneworkmen are under of submitting for the sake of present subsis- man. The labour of an able-bodied slave, the same author adds, istence, generally end in nothing but the punishment or ruin of the computed to be worth double his maintenance; and that of theringleaders. meanest labourer, he thinks, cannot be worth less than that of an 61
  • 61. The Wealth of Nationsable-bodied slave. Thus far at least seems certain, that, in order to what is necessary for the employment of their masters.bring up a family, the labour of the husband and wife together When the landlord, annuitant, or monied man, has a greatermust, even in the lowest species of common labour, be able to revenue than what he judges sufficient to maintain his own fam-earn something more than what is precisely necessary for their ily, he employs either the whole or a part of the surplus in main-own maintenance; but in what proportion, whether in that above- taining one or more menial servants. Increase this surplus, and hementioned, or many other, I shall not take upon me to determine. will naturally increase the number of those servants. There are certain circumstances, however, which sometimes give When an independent workman, such as a weaver or shoemaker,the labourers an advantage, and enable them to raise their wages has got more stock than what is sufficient to purchase the materi-considerably above this rate, evidently the lowest which is consis- als of his own work, and to maintain himself till he can dispose oftent with common humanity. it, he naturally employs one or more journeymen with the sur- When in any country the demand for those who live by wages, plus, in order to make a profit by their work. Increase this surplus,labourers, journeymen, servants of every kind, is continually in- and he will naturally increase the number of his journeymen.creasing; when every year furnishes employment for a greater num- The demand for those who live by wages, therefore, necessarilyber than had been employed the year before, the workmen have increases with the increase of the revenue and stock of every coun-no occasion to combine in order to raise their wages. The scarcity try, and cannot possibly increase without it. The increase of revenueof hands occasions a competition among masters, who bid against and stock is the increase of national wealth. The demand for thoseone another in order to get workmen, and thus voluntarily break who live by wages, therefore, naturally increases with the increase ofthrough the natural combination of masters not to raise wages. national wealth, and cannot possibly increase without it.The demand for those who live by wages, it is evident, cannot It is not the actual greatness of national wealth, but its con-increase but in proportion to the increase of the funds which are tinual increase, which occasions a rise in the wages of labour. It isdestined to the payment of wages. These funds are of two kinds, not, accordingly, in the richest countries, but in the most thriving,first, the revenue which is over and above what is necessary for the or in those which are growing rich the fastest, that the wages ofmaintenance; and, secondly, the stock which is over and above labour are highest. England is certainly, in the present times, a 62
  • 62. Adam Smithmuch richer country than any part of North America. The wages prosperity of any country is the increase of the number of its in-of labour, however, are much higher in North America than in habitants. In Great Britain, and most other European countries,any part of England. In the province of New York, common they are not supposed to double in less than five hundred years. Inlabourers earned in 1773, before the commencement of the late the British colonies in North America, it has been found that theydisturbances, three shillings and sixpence currency, equal to two double in twenty or five-and-twenty years. Nor in the present timesshillings sterling, a-day; ship-carpenters, ten shillings and sixpence is this increase principally owing to the continual importation ofcurrency, with a pint of rum, worth sixpence sterling, equal in all new inhabitants, but to the great multiplication of the species.to six shillings and sixpence sterling; house-carpenters and brick- Those who live to old age, it is said, frequently see there from fiftylayers, eight shillings currency, equal to four shillings and sixpence to a hundred, and sometimes many more, descendants from theirsterling; journeymen tailors, five shillings currency, equal to about own body. Labour is there so well rewarded, that a numerous fam-two shillings and tenpence sterling. These prices are all above the ily of children, instead of being a burden, is a source of opulenceLondon price; and wages are said to be as high in the other colo- and prosperity to the parents. The labour of each child, before itnies as in New York. The price of provisions is everywhere in North can leave their house, is computed to be worth a hundred poundsAmerica much lower than in England. A dearth has never been clear gain to them. A young widow with four or five young chil-known there. In the worst seasons they have always had a suffi- dren, who, among the middling or inferior ranks of people inciency for themselves, though less for exportation. If the money Europe, would have so little chance for a second husband, is thereprice of labour, therefore, be higher than it is anywhere in the frequently courted as a sort of fortune. The value of children is themother-country, its real price, the real command of the neces- greatest of all encouragements to marriage. We cannot, therefore,saries and conveniencies of life which it conveys to the labourer, wonder that the people in North America should generally marrymust be higher in a still greater proportion. very young. Notwithstanding the great increase occasioned by such But though North America is not yet so rich as England, it is early marriages, there is a continual complaint of the scarcity ofmuch more thriving, and advancing with much greater rapidity hands in North America. The demand for labourers, the fundsto the further acquisition of riches. The most decisive mark of the destined for maintaining them increase, it seems, still faster than 63
  • 63. The Wealth of Nationsthey can find labourers to employ. tion, industry, and populousness, almost in the same terms in which Though the wealth of a country should be very great, yet if it they are described by travellers in the present times. It had, per-has been long stationary, we must not expect to find the wages of haps, even long before his time, acquired that full complement oflabour very high in it. The funds destined for the payment of riches which the nature of its laws and institutions permits it towages, the revenue and stock of its inhabitants, may be of the acquire. The accounts of all travellers, inconsistent in many othergreatest extent; but if they have continued for several centuries of respects, agree in the low wages of labour, and in the difficultythe same, or very nearly of the same extent, the number of labourers which a labourer finds in bringing up a family in China. If byemployed every year could easily supply, and even more than sup- digging the ground a whole day he can get what will purchase aply, the number wanted the following year. There could seldom small quantity of rice in the evening, he is contented. The condi-be any scarcity of hands, nor could the masters be obliged to bid tion of artificers is, if possible, still worse. Instead of waiting indo-against one another in order to get them. The hands, on the con- lently in their work-houses for the calls of their customers, as intrary, would, in this case, naturally multiply beyond their employ- Europe, they are continually running about the streets with thement. There would be a constant scarcity of employment, and the tools of their respective trades, offering their services, and, as itlabourers would be obliged to bid against one another in order to were, begging employment. The poverty of the lower ranks ofget it. If in such a country the wages off labour had ever been people in China far surpasses that of the most beggarly nations inmore than sufficient to maintain the labourer, and to enable him Europe. In the neighbourhood of Canton, many hundred, it isto bring up a family, the competition of the labourers and the commonly said, many thousand families have no habitation oninterest of the masters would soon reduce them to the lowest rate the land, but live constantly in little fishing-boats upon the riverswhich is consistent with common humanity. China has been long and canals. The subsistence which they find there is so scanty, thatone of the richest, that is, one of the most fertile, best cultivated, they are eager to fish up the nastiest garbage thrown overboardmost industrious, and most populous, countries in the world. It from any European ship. Any carrion, the carcase of a dead dog orseems, however, to have been long stationary. Marco Polo, who cat, for example, though half putrid and stinking, is as welcomevisited it more than five hundred years ago, describes its cultiva- to them as the most wholesome food to the people of other coun- 64
  • 64. Adam Smithtries. Marriage is encouraged in China, not by the profitableness classes, the competition for employment would be so great in it,of children, but by the liberty of destroying them. In all great as to reduce the wages of labour to the most miserable and scantytowns, several are every night exposed in the street, or drowned subsistence of the labourer. Many would not be able to find em-like puppies in the water. The performance of this horrid office is ployment even upon these hard terms, but would either starve, oreven said to be the avowed business by which some people earn be driven to seek a subsistence, either by begging, or by the perpe-their subsistence. tration perhaps, of the greatest enormities. Want, famine, and mor- China, however, though it may, perhaps, stand still, does not tality, would immediately prevail in that class, and from thenceseem to go backwards. Its towns are nowhere deserted by their extend themselves to all the superior classes, till the number ofinhabitants. The lands which had once been cultivated, are no- inhabitants in the country was reduced to what could easily bewhere neglected. The same, or very nearly the same, annual labour, maintained by the revenue and stock which remained in it, andmust, therefore, continue to be performed, and the funds des- which had escaped either the tyranny or calamity which had de-tined for maintaining it must not, consequently, be sensibly di- stroyed the rest. This, perhaps, is nearly the present state of Ben-minished. The lowest class of labourers, therefore, notwithstand- gal, and of some other of the English settlements in the East Indies.ing their scanty subsistence, must some way or another make shift In a fertile country, which had before been much depopulated,to continue their race so far as to keep up their usual numbers. where subsistence, consequently, should not be very difficult, and But it would be otherwise in a country where the funds des- where, notwithstanding, three or four hundred thousand peopletined for the maintenance of labour were sensibly decaying. Every die of hunger in one year, we maybe assured that the funds des-year the demand for servants and labourers would, in all the dif- tined for the maintenance of the labouring poor are fast decaying.ferent classes of employments, be less than it had been the year The difference between the genius of the British constitution, whichbefore. Many who had been bred in the superior classes, not being protects and governs North America, and that of the mercantileable to find employment in their own business, would be glad to company which oppresses and domineers in the East Indies, can-seek it in the lowest. The lowest class being not only overstocked not, perhaps, be better illustrated than by the different state ofwith its own workmen, but with the overflowings of all the other those countries. 65
  • 65. The Wealth of Nations The liberal reward of labour, therefore, as it is the necessary what is necessary to maintain his family through the whole year. Aeffect, so it is the natural symptom of increasing national wealth. slave, however, or one absolutely dependent on us for immediateThe scanty maintenance of the labouring poor, on the other hand, subsistence, would not be treated in this manner. His daily subsis-is the natural symptom that things are at a stand, and their starv- tence would be proportioned to his daily necessities.ing condition, that they are going fast backwards. Secondly, the wages of labour do not, in Great Britain, fluctuate In Great Britain, the wages of labour seem, in the present times, with the price of provisions. These vary everywhere from year toto be evidently more than what is precisely necessary to enable the year, frequently from month to month. But in many places, thelabourer to bring up a family. In order to satisfy ourselves upon money price of labour remains uniformly the same, sometimesthis point, it will not be necessary to enter into any tedious or for half a century together. If, in these places, therefore, thedoubtful calculation of what may be the lowest sum upon winch labouring poor can maintain their families in dear years, they mustit is possible to do this. There are many plain symptoms, that the be at their ease in times of moderate plenty, and in affluence inwages of labour are nowhere in this country regulated by this low- those of extraordinary cheapness. The high price of provisionsest rate, which is consistent with common humanity. during these ten years past, has not, in many parts of the king- First, in almost every part of Great Britain there is a distinction, dom, been accompanied with any sensible rise in the money priceeven in the lowest species of labour, between summer and winter of labour. It has, indeed, in some; owing, probably, more to thewages. Summer wages are always highest. But, on account of the increase of the demand for labour, than to that of the price ofextraordinary expense of fuel, the maintenance of a family is most provisions.expensive in winter. Wages, therefore, being highest when this ex- Thirdly, as the price of provisions varies more from year to yearpense is lowest, it seems evident that they are not regulated by than the wages of labour, so, on the other hand, the wages ofwhat is necessary for this expense, but by the quantity and sup- labour vary more from place to place than the price of provisions.posed value of the work. A labourer, it may be said, indeed, ought The prices of bread and butchers’ meat are generally the same, orto save part of his summer wages, in order to defray his winter very nearly the same, through the greater part of the united king-expense; and that, through the whole year, they do not exceed dom. These, and most other things which are sold by retail, the 66
  • 66. Adam Smithway in which the labouring poor buy all things, are generally fully in affluence where it is highest.as cheap, or cheaper, in great towns than in the remoter parts of Fourthly, the variations in the price of labour not only do notthe country, for reasons which I shall have occasion to explain correspond, either in place or time, with those in the price of pro-hereafter. But the wages of labour in a great town and its visions, but they are frequently quite opposite.neighbourhood, are frequently a fourth or a fifth part, twenty or Grain, the food of the common people, is dearer in Scotlandfive-and—twenty per cent. higher than at a few miles distance. than in England, whence Scotland receives almost every year veryEighteen pence a day may be reckoned the common price of labour large supplies. But English corn must be sold dearer in Scotland,in London and its neighbourhood. At a few miles distance, it falls the country to which it is brought, than in England, the countryto fourteen and fifteen pence. Tenpence may be reckoned its price from which it comes; and in proportion to its quality it cannot bein Edinburgh and its neighbourhood. At a few miles distance, it sold dearer in Scotland than the Scotch corn that comes to thefalls to eightpence, the usual price of common labour through the same market in competition with it. The quality of grain dependsgreater part of the low country of Scotland, where it varies a good chiefly upon the quantity of flour or meal which it yields at thedeal less than in England. Such a difference of prices, which, it mill; and, in this respect, English grain is so much superior to theseems, is not always sufficient to transport a man from one parish Scotch, that though often dearer in appearance, or in proportionto another, would necessarily occasion so great a transportation of to the measure of its bulk, it is generally cheaper in reality, or inthe most bulky commodities, not only from one parish to an- proportion to its quality, or even to the measure of its weight. Theother, but from one end of the kingdom, almost from one end of price of labour, on the contrary, is dearer in England than in Scot-the world to the other, as would soon reduce them more nearly to land. If the labouring poor, therefore, can maintain their familiesa level. After all that has been said of the levity and inconstancy of in the one part of the united kingdom, they must be in affluencehuman nature, it appears evidently from experience, that man is, in the other. Oatmeal, indeed, supplies the common people inof all sorts of luggage, the most difficult to be transported. If the Scotland with the greatest and the best part of their food, whichlabouring poor, therefore, can maintain their families in those parts is, in general, much inferior to that of their neighbours of theof the kingdom where the price of labour is lowest, they must be same rank in England. This difference, however, in the mode of 67
  • 67. The Wealth of Nationstheir subsistence, is not the cause, but the effect, of the difference most usual day-wages of common labour through the greater partin their wages; though, by a strange misapprehension, I have fre- of Scotland were sixpence in summer, and fivepence in winter.quently heard it represented as the cause. It is not because one Three shillings a-week, the same price, very nearly still continuesman keeps a coach, while his neighbour walks a-foot, that the one to be paid in some parts of the Highlands and Western islands.is rich, and the other poor; but because the one is rich, he keeps a Through the greater part of the Low country, the most usual wagescoach, and because the other is poor, he walks a-foot. of common labour are now eight pence a-day; tenpence, some- During the course of the last century, taking one year with an- times a shilling, about Edinburgh, in the counties which borderother, grain was dearer in both parts of the united kingdom than upon England, probably on account of that neighbourhood, andduring that of the present. This is a matter of fact which cannot in a few other places where there has lately been a considerable risenow admit of any reasonable doubt; and the proof of it is, if pos- in the demand for labour, about Glasgow, Carron, Ayrshire, etc.sible, still more decisive with regard to Scotland than with regard In England, the improvements of agriculture, manufactures, andto England. It is in Scotland supported by the evidence of the commerce, began much earlier than in Scotland. The demand forpublic fiars, annual valuations made upon oath, according to the labour, and consequently its price, must necessarily have increasedactual state of the markets, of all the different sorts of grain in with those improvements. In the last century, accordingly, as wellevery different county of Scotland. If such direct proof could re- as in the present, the wages of labour were higher in England thanquire any collateral evidence to confirm it, I would observe, that in Scotland. They have risen, too, considerably since that time,this has likewise been the case in France, and probably in most though, on account of the greater variety of wages paid there inother parts of Europe. With regard to France, there is the clearest different places, it is more difficult to ascertain how much. Inproof. But though it is certain, that in both parts of the united 1614, the pay of a foot soldier was the same as in the presentkingdom grain was somewhat dearer in the last century than in times, eightpence a-day. When it was first established, it wouldthe present, it is equally certain that labour was much cheaper. If naturally be regulated by the usual wages of common labourers,the labouring poor, therefore, could bring up their families then, the rank of people from which foot soldiers are commonly drawn.they must be much more at their ease now. In the last century, the Lord-chief-justice Hales, who wrote in the time of Charles II. com- 68
  • 68. Adam Smithputes the necessary expense of a labourer’s family, consisting of six workman, but according to the easiness or hardness of the mas-persons, the father and mother, two children able to do some- ters. Where wages are not regulated by law, all that we can pretendthing, and two not able, at ten shillings a-week, or twenty-six to determine is, what are the most usual; and experience seems topounds a-year. If they cannot earn this by their labour, they must shew that law can never regulate them properly, though it hasmake it up, he supposes, either by begging or stealing. He appears often pretended to do so.to have enquired very carefully into this subject {See his scheme The real recompence of labour, the real quantity of the neces-for the maintenance of the poor, in Burn’s History of the Poor saries and conveniencies of life which it can procure to the labourer,Laws.}. In 1688, Mr Gregory King, whose skill in political arith- has, during the course of the present century, increased perhaps inmetic is so much extolled by Dr Davenant, computed the ordi- a still greater proportion than its money price. Not only grain hasnary income of labourers and out-servants to be fifteen pounds a- become somewhat cheaper, but many other things, from whichyear to a family, which he supposed to consist, one with another, the industrious poor derive an agreeable and wholesome variety ofof three and a half persons. His calculation, therefore, though dif- food, have become a great deal cheaper. Potatoes, for example, doferent in appearance, corresponds very nearly at bottom with that not at present, through the greater part of the kingdom, cost halfof Judge Hales. Both suppose the weekly expense of such families the price which they used to do thirty or forty years ago. The sameto be about twenty-pence a-head. Both the pecuniary income and thing may be said of turnips, carrots, cabbages; things which wereexpense of such families have increased considerably since that formerly never raised but by the spade, but which are now com-time through the greater part of the kingdom, in some places more, monly raised by the plough. All sort of garden stuff, too, has be-and in some less, though perhaps scarce anywhere so much as come cheaper. The greater part of the apples, and even of the on-some exaggerated accounts of the present wages of labour have ions, consumed in Great Britain, were, in the last century, im-lately represented them to the public. The price of labour, it must ported from Flanders. The great improvements in the coarserbe observed, cannot be ascertained very accurately anywhere, dif- manufactories of both linen and woollen cloth furnish the labourersferent prices being often paid at the same place and for the same with cheaper and better clothing; and those in the manufactoriessort of labour, not only according to the different abilities of the of the coarser metals, with cheaper and better instruments of trade, 69
  • 69. The Wealth of Nationsas well as with many agreeable and convenient pieces of house- well fed, clothed, and lodged.hold furniture. Soap, salt, candles, leather, and fermented liquors, Poverty, though it no doubt discourages, does not always pre-have, indeed, become a good deal dearer, chiefly from the taxes vent, marriage. It seems even to be favourable to generation. Awhich have been laid upon them. The quantity of these, however, half-starved Highland woman frequently bears more than twentywhich the labouring poor an under any necessity of consuming, is children, while a pampered fine lady is often incapable of bearingso very small, that the increase in their price does not compensate any, and is generally exhausted by two or three. Barrenness, sothe diminution in that of so many other things. The common frequent among women of fashion, is very rare among those ofcomplaint, that luxury extends itself even to the lowest ranks of inferior station. Luxury, in the fair sex, while it inflames, perhaps,the people, and that the labouring poor will not now be con- the passion for enjoyment, seems always to weaken, and frequentlytented with the same food, clothing, and lodging, which satisfied to destroy altogether, the powers of generation.them in former times, may convince us that it is not the money But poverty, though it does not prevent the generation, is ex-price of labour only, but its real recompence, which has augmented. tremely unfavourable to the rearing of children. The tender plant Is this improvement in the circumstances of the lower ranks of is produced; but in so cold a soil, and so severe a climate, soonthe people to be regarded as an advantage, or as an inconveniency, withers and dies. It is not uncommon, I have been frequently told,to the society? The answer seems at first abundantly plain. Ser- in the Highlands of Scotland, for a mother who has born twentyvants, labourers, and workmen of different kinds, make up the far children not to have two alive. Several officers of great experiencegreater part of every great political society. But what improves the have assured me, that, so far from recruiting their regiment, theycircumstances of the greater part, can never be regarded as any have never been able to supply it with drums and fifes, from allinconveniency to the whole. No society can surely be flourishing the soldiers’ children that were born in it. A greater number ofand happy, of which the far greater part of the members are poor fine children, however, is seldom seen anywhere than about a bar-and miserable. It is but equity, besides, that they who feed, clothe, rack of soldiers. Very few of them, it seems, arrive at the age ofand lodge the whole body of the people, should have such a share thirteen or fourteen. In some places, one half the children dieof the produce of their own labour as to be themselves tolerably before they are four years of age, in many places before they are 70
  • 70. Adam Smithseven, and in almost all places before they are nine or ten. This tion of labourers, as may enable them to supply that continuallygreat mortality, however will everywhere be found chiefly among increasing demand by a continually increasing population. If thethe children of the common people, who cannot afford to tend reward should at any time be less than what was requisite for thisthem with the same care as those of better station. Though their purpose, the deficiency of hands would soon raise it; and if itmarriages are generally more fruitful than those of people of fash- should at any time be more, their excessive multiplication wouldion, a smaller proportion of their children arrive at maturity. In soon lower it to this necessary rate. The market would be so muchfoundling hospitals, and among the children brought up by par- understocked with labour in the one case, and so much overstockedish charities, the mortality is still greater than among those of the in the other, as would soon force back its price to that proper ratecommon people. which the circumstances of the society required. It is in this man- Every species of animals naturally multiplies in proportion to ner that the demand for men, like that for any other commodity,the means of their subsistence, and no species can ever multiply necessarily regulates the production of men, quickens it when itbe yond it. But in civilized society, it is only among the inferior goes on too slowly, and stops it when it advances too fast. It is thisranks of people that the scantiness of subsistence can set limits to demand which regulates and determines the state of propagationthe further multiplication of the human species; and it can do so in all the different countries of the world; in North America, inin no other way than by destroying a great part of the children Europe, and in China; which renders it rapidly progressive in thewhich their fruitful marriages produce. first, slow and gradual in the second, and altogether stationary in The liberal reward of labour, by enabling them to provide better the last.for their children, and consequently to bring up a greater number, The wear and tear of a slave, it has been said, is at the expense ofnaturally tends to widen and extend those limits. It deserves to be his master; but that of a free servant is at his own expense. Theremarked, too, that it necessarily does this as nearly as possible in wear and tear of the latter, however, is, in reality, as much at thethe proportion which the demand for labour requires. If this de- expense of his master as that of the former. The wages paid tomand is continually increasing, the reward of labour must neces- journeymen and servants of every kind must be such as may en-sarily encourage in such a manner the marriage and multiplica- able them, one with another to continue the race of journeymen 71
  • 71. The Wealth of Nationsand servants, according as the increasing, diminishing, or station- state, while the society is advancing to the further acquisition,ary demand of the society, may happen to require. But though the rather than when it has acquired its full complement of riches,wear and tear of a free servant be equally at the expense of his that the condition of the labouring poor, of the great body of themaster, it generally costs him much less than that of a slave. The people, seems to be the happiest and the most comfortable. It isfund destined for replacing or repairing, if I may say so, the wear hard in the stationary, and miserable in the declining state. Theand tear of the slave, is commonly managed by a negligent master progressive state is, in reality, the cheerful and the hearty state toor careless overseer. That destined for performing the same office all the different orders of the society; the stationary is dull; thewith regard to the freeman is managed by the freeman himself. declining melancholy.The disorders which generally prevail in the economy of the rich, The liberal reward of labour, as it encourages the propagation,naturally introduce themselves into the management of the former; so it increases the industry of the common people. The wages ofthe strict frugality and parsimonious attention of the poor as natu- labour are the encouragement of industry, which, like every otherrally establish themselves in that of the latter. Under such differ- human quality, improves in proportion to the encouragement itent management, the same purpose must require very different receives. A plentiful subsistence increases the bodily strength ofdegrees of expense to execute it. It appears, accordingly, from the the labourer, and the comfortable hope of bettering his condition,experience of all ages and nations, I believe, that the work done by and of ending his days, perhaps, in ease and plenty, animates himfreemen comes cheaper in the end than that performed by slaves. to exert that strength to the utmost. Where wages are high, ac-It is found to do so even at Boston, New-York, and Philadelphia, cordingly, we shall always find the workmen more active, diligent,where the wages of common labour are so very high. and expeditious, than where they are low; in England, for example, The liberal reward of labour, therefore, as it is the effect of in- than in Scotland; in the neighbourhood of great towns, than increasing wealth, so it is the cause of increasing population. To remote country places. Some workmen, indeed, when they cancomplain of it, is to lament over the necessary cause and effect of earn in four days what will maintain them through the week, willthe greatest public prosperity. be idle the other three. This, however, is by no means the case It deserves to be remarked, perhaps, that it is in the progressive with the greater part. Workmen, on the contrary, when they are 72
  • 72. Adam Smithliberally paid by the piece, are very apt to overwork themselves, great desire of relaxation, which, if not restrained by force, or byand to ruin their health and constitution in a few years. A carpen- some strong necessity, is almost irresistible. It is the call of nature,ter in London, and in some other places, is not supposed to last in which requires to be relieved by some indulgence, sometimes ofhis utmost vigour above eight years. Something of the same kind ease only, but sometimes too of dissipation and diversion. If it ishappens in many other trades, in which the workmen are paid by not complied with, the consequences are often dangerous andthe piece; as they generally are in manufactures, and even in coun- sometimes fatal, and such as almost always, sooner or later, bringtry labour, wherever wages are higher than ordinary. Almost every on the peculiar infirmity of the trade. If masters would alwaysclass of artificers is subject to some peculiar infirmity occasioned listen to the dictates of reason and humanity, they have frequentlyby excessive application to their peculiar species of work. occasion rather to moderate, than to animate the application ofRamuzzini, an eminent Italian physician, has written a particular many of their workmen. It will be found, I believe, in every sort ofbook concerning such diseases. We do not reckon our soldiers the trade, that the man who works so moderately, as to be able tomost industrious set of people among us; yet when soldiers have work constantly, not only preserves his health the longest, but, inbeen employed in some particular sorts of work, and liberally paid the course of the year, executes the greatest quantity of work.by the piece, their officers have frequently been obliged to stipu- In cheap years it is pretended, workmen are generally more idle,late with the undertaker, that they should not be allowed to earn and in dear times more industrious than ordinary. A plentiful sub-above a certain sum every day, according to the rate at which they sistence, therefore, it has been concluded, relaxes, and a scantywere paid. Till this stipulation was made, mutual emulation, and one quickens their industry. That a little more plenty than ordi-the desire of greater gain, frequently prompted them to overwork nary may render some workmen idle, cannot be well doubted; butthemselves, and to hurt their health by excessive labour. Excessive that it should have this effect upon the greater part, or that men inapplication, during four days of the week, is frequently the real general should work better when they are ill fed, than when theycause of the idleness of the other three, so much and so loudly are well fed, when they are disheartened than when they are incomplained of. Great labour, either of mind or body, continued good spirits, when they are frequently sick than when they arefor several days together is, in most men, naturally followed by a generally in good health, seems not very probable. Years of dearth, 73
  • 73. The Wealth of Nationsit is to be observed, are generally among the common people years of both servants and journeymen frequently sink in dear years.of sickness and mortality, which cannot fail to diminish the pro- Masters of all sorts, therefore, frequently make better bargainsduce of their industry. with their servants in dear than in cheap years, and find them In years of plenty, servants frequently leave their masters, and more humble and dependent in the former than in the latter. Theytrust their subsistence to what they can make by their own indus- naturally, therefore, commend the former as more favourable totry. But the same cheapness of provisions, by increasing the fund industry. Landlords and farmers, besides, two of the largest classeswhich is destined for the maintenance of servants, encourages of masters, have another reason for being pleased with dear years.masters, farmers especially, to employ a greater number. Farmers, The rents of the one, and the profits of the other, depend veryupon such occasions, expect more profit from their corn by main- much upon the price of provisions. Nothing can be more absurd,taining a few more labouring servants, than by selling it at a low however, than to imagine that men in general should work lessprice in the market. The demand for servants increases, while the when they work for themselves, than when they work for othernumber of those who offer to supply that demand diminishes. people. A poor independent workman will generally be more in-The price of labour, therefore, frequently rises in cheap years. dustrious than even a journeyman who works by the piece. The In years of scarcity, the difficulty and uncertainty of subsistence one enjoys the whole produce of his own industry, the other sharesmake all such people eager to return to service. But the high price it with his master. The one, in his separate independent state, isof provisions, by diminishing the funds destined for the mainte- less liable to the temptations of bad company, which, in large manu-nance of servants, disposes masters rather to diminish than to in- factories, so frequently ruin the morals of the other. The superior-crease the number of those they have. In dear years, too, poor ity of the independent workman over those servants who are hiredindependent workmen frequently consume the little stock with by the month or by the year, and whose wages and maintenancewhich they had used to supply themselves with the materials of are the same, whether they do much or do little, is likely to be stilltheir work, and are obliged to become journeymen for subsis- greater. Cheap years tend to increase the proportion of indepen-tence. More people want employment than easily get it; many are dent workmen to journeymen and servants of all kinds, and dearwilling to take it upon lower terms than ordinary; and the wages years to diminish it. 74
  • 74. Adam Smith A French author of great knowledge and ingenuity, Mr Messance, deed, appear to have declined very considerably. But in 1756, an-receiver of the taillies in the election of St Etienne, endeavours to other year or great scarcity, the Scotch manufactures made moreshew that the poor do more work in cheap than in dear years, by than ordinary advances. The Yorkshire manufacture, indeed, de-comparing the quantity and value of the goods made upon those clined, and its produce did not rise to what it had been in 1755,different occasions in three different manufactures; one of coarse till 1766, after the repeal of the American stamp act. In that andwoollens, carried on at Elbeuf; one of linen, and another of silk, the following year, it greatly exceeded what it had ever been be-both which extend through the whole generality of Rouen. It ap- fore, and it has continued to advance ever since.pears from his account, which is copied from the registers of the The produce of all great manufactures for distant sale must nec-public offices, that the quantity and value of the goods made in all essarily depend, not so much upon the dearness or cheapness ofthose three manufactories has generally been greater in cheap than the seasons in the countries where they are carried on, as upon thein dear years, and that it has always been; greatest in the cheapest, circumstances which affect the demand in the countries whereand least in the dearest years. All the three seem to be stationary they are consumed; upon peace or war, upon the prosperity ormanufactures, or which, though their produce may vary some- declension of other rival manufactures and upon the good or badwhat from year to year, are, upon the whole, neither going back- humour of their principal customers. A great part of the extraor-wards nor forwards. dinary work, besides, which is probably done in cheap years, never The manufacture of linen in Scotland, and that of coarse enters the public registers of manufactures. The men-servants, whowoollens in the West Riding of Yorkshire, are growing manufac- leave their masters, become independent labourers. The womentures, of which the produce is generally, though with some varia- return to their parents, and commonly spin, in order to maketions, increasing both in quantity and value. Upon examining, clothes for themselves and their families. Even the independenthowever, the accounts which have been published of their annual workmen do not always, work for public sale, but are employedproduce, I have not been able to observe that its variations have by some of their neighbours in manufactures for family use. Thehad any sensible connection with the dearness or cheapness of the produce of their labour, therefore, frequently makes no figure inseasons. In 1740, a year of great scarcity, both manufactures, in- those public registers, of which the records are sometimes pub- 75
  • 75. The Wealth of Nationslished with so much parade, and from which our merchants and the hands of many of the employers of industry, sufficient to main-manufacturers would often vainly pretend to announce the pros- tain and employ a greater number of industrious people than hadperity or declension of the greatest empires. been employed the year before; and this extraordinary number Through the variations in the price of labour not only do not cannot always be had. Those masters, therefore, who want morealways correspond with those in the price of provisions, but are workmen, bid against one another, in order to get them, whichfrequently quite opposite, we must not, upon this account, imag- sometimes raises both the real and the money price of their labour.ine that the price of provisions has no influence upon that of labour. The contrary of this happens in a year of sudden and extraordi-The money price of labour is necessarily regulated by two circum- nary scarcity. The funds destined for employing industry are lessstances; the demand for labour, and the price of the necessaries than they had been the year before. A considerable number ofand conveniencies of life. The demand for labour, according as it people are thrown out of employment, who bid one against an-happens to be increasing, stationary, or declining, or to require an other, in order to get it, which sometimes lowers both the real andincreasing, stationary, or declining population, determines the the money price of labour. In 1740, a year of extraordinary scar-quantities of the necessaries and conveniencies of life which must city, many people were willing to work for bare subsistence. In thebe given to the labourer; and the money price of labour is deter- succeeding years of plenty, it was more difficult to get labourersmined by what is requisite for purchasing this quantity. Though and servants. The scarcity of a dear year, by diminishing the de-the money price of labour, therefore, is sometimes high where the mand for labour, tends to lower its price, as the high price of pro-price of provisions is low, it would be still higher, the demand visions tends to raise it. The plenty of a cheap year, on the con-continuing the same, if the price of provisions was high. trary, by increasing the demand, tends to raise the price of labour, It is because the demand for labour increases in years of sudden as the cheapness of provisions tends to lower it. In the ordinaryand extraordinary plenty, and diminishes in those of sudden and variations of the prices of provisions, those two opposite causesextraordinary scarcity, that the money price of labour sometimes seem to counterbalance one another, which is probably, in part,rises in the one, and sinks in the other. the reason why the wages of labour are everywhere so much more In a year of sudden and extraordinary plenty, there are funds in steady and permanent than the price of provisions. 76
  • 76. Adam Smith The increase in the wages of labour necessarily increases the CHAPTER IXprice of many commodities, by increasing that part of it whichresolves itself into wages, and so far tends to diminish their con- PROFIT OFITS STOCK OF THE PROFITS OF STOCKsumption, both at home and abroad. The same cause, however,which raises the wages of labour, the increase of stock, tends to THE RISE AND FALL in the profits of stock depend upon the sameincrease its productive powers, and to make a smaller quantity of causes with the rise and fall in the wages of labour, the increasinglabour produce a greater quantity of work. The owner of the stock or declining state of the wealth of the society; but those causeswhich employs a great number of labourers necessarily endeavours, affect the one and the other very differently.for his own advantage, to make such a proper division and distri- The increase of stock, which raises wages, tends to lower profit.bution of employment, that they may be enabled to produce the When the stocks of many rich merchants are turned into the samegreatest quantity of work possible. For the same reason, he trade, their mutual competition naturally tends to lower its profit;endeavours to supply them with the best machinery which either and when there is a like increase of stock in all the different tradeshe or they can think of. What takes place among the labourers in carried on in the same society, the same competition must pro-a particular workhouse, takes place, for the same reason, among duce the same effect in them all.those of a great society. The greater their number, the more they It is not easy, it has already been observed, to ascertain what arenaturally divide themselves into different classes and subdivisions the average wages of labour, even in a particular place, and at aof employments. More heads are occupied in inventing the most particular time. We can, even in this case, seldom determine moreproper machinery for executing the work of each, and it is, there- than what are the most usual wages. But even this can seldom before, more likely to be invented. There me many commodities, done with regard to the profits of stock. Profit is so very fluctuat-therefore, which, in consequence of these improvements, come to ing, that the person who carries on a particular trade, cannot al-be produced by so much less labour than before, that the increase ways tell you himself what is the average of his annual profit. It isof its price is more than compensated by the diminution of its affected, not only by every variation of price in the commoditiesquantity. which he deals in, but by the good or bad fortune both of his 77
  • 77. The Wealth of Nationsrivals and of his customers, and by a thousand other accidents, to interest. This prohibition, however, like all others of the same kind,which goods, when carried either by sea or by land, or even when is said to have produced no effect, and probably rather increasedstored in a warehouse, are liable. It varies, therefore, not only from than diminished the evil of usury. The statute of Henry VIII. wasyear to year, but from day to day, and almost from hour to hour. To revived by the 13th of Elizabeth, cap. 8. and ten per cent. contin-ascertain what is the average profit of all the different trades carried ued to be the legal rate of interest till the 21st of James I. when iton in a great kingdom, must be much more difficult; and to judge was restricted to eight per cent. It was reduced to six per cent.of what it may have been formerly, or in remote periods of time, soon after the Restoration, and by the 12th of Queen Anne, towith any degree of precision, must be altogether impossible. five per cent. All these different statutory regulations seem to have But though it may be impossible to determine, with any degree been made with great propriety. They seem to have followed, andof precision, what are or were the average profits of stock, either in not to have gone before, the market rate of interest, or the rate atthe present or in ancient times, some notion may be formed of which people of good credit usually borrowed. Since the time ofthem from the interest of money. It may be laid down as a maxim, Queen Anne, five per cent. seems to have been rather above thanthat wherever a great deal can be made by the use of money, a below the market rate. Before the late war, the government bor-great deal will commonly be given for the use of it; and that, wher- rowed at three per cent.; and people of good credit in the capital,ever little can be made by it, less will commonly he given for it. and in many other parts of the kingdom, at three and a-half, four,Accordingly, therefore, as the usual market rate of interest varies and four and a-half per cent.in any country, we may be assured that the ordinary profits of Since the time of Henry VIII. the wealth and revenue of thestock must vary with it, must sink as it sinks, and rise as it rises. country have been continually advancing, and in the course ofThe progress of interest, therefore, may lead us to form some no- their progress, their pace seems rather to have been gradually ac-tion of the progress of profit. celerated than retarded. They seem not only to have been going By the 37th of Henry VIII. all interest above ten per cent. was on, but to have been going on faster and faster. The wages ofdeclared unlawful. More, it seems, had sometimes been taken be- labour have been continually increasing during the same period,fore that. In the reign of Edward VI. religious zeal prohibited all and, in the greater part of the different branches of trade and manu- 78
  • 78. Adam Smithfactures, the profits of stock have been diminishing. The common rate of profit, therefore, must be somewhat greater. It generally requires a greater stock to carry on any sort of trade The wages of labour, it has already been observed, are lower inin a great town than in a country village. The great stocks em- Scotland than in England. The country, too, is not only muchployed in every branch of trade, and the number of rich competi- poorer, but the steps by which it advances to a better condition,tors, generally reduce the rate of profit in the former below what it for it is evidently advancing, seem to be much slower and moreis in the latter. But the wages of labour are generally higher in a tardy. The legal rate of interest in France has not during the coursegreat town than in a country village. In a thriving town, the people of the present century, been always regulated by the market ratewho have great stocks to employ, frequently cannot get the num- {See Denisart, Article Taux des Interests, tom. iii, p.13}. In 1720,ber of workmen they want, and therefore bid against one another, interest was reduced from the twentieth to the fiftieth penny, orin order to get as many as they can, which raises the wages of from five to two per cent. In 1724, it was raised to the thirtiethlabour, and lowers the profits of stock. In the remote parts of the penny, or to three and a third per cent. In 1725, it was again raisedcountry, there is frequently not stock sufficient to employ all the to the twentieth penny, or to five per cent. In 1766, during thepeople, who therefore bid against one another, in order to get administration of Mr Laverdy, it was reduced to the twenty-fifthemployment, which lowers the wages of labour, and raises the prof- penny, or to four per cent. The Abbé Terray raised it afterwards toits of stock. the old rate of five per cent. The supposed purpose of many of In Scotland, though the legal rate of interest is the same as in those violent reductions of interest was to prepare the way forEngland, the market rate is rather higher. People of the best credit reducing that of the public debts; a purpose which has sometimesthere seldom borrow under five per cent. Even private bankers in been executed. France is, perhaps, in the present times, not so richEdinburgh give four per cent. upon their promissory-notes, of a country as England; and though the legal rate of interest has inwhich payment, either in whole or in part may be demanded at France frequently been lower than in England, the market rate haspleasure. Private bankers in London give no interest for the money generally been higher; for there, as in other countries, they havewhich is deposited with them. There are few trades which cannot several very safe and easy methods of evading the law. The profitsbe carried on with a smaller stock in Scotland than in England. of trade, I have been assured by British merchants who had traded 79
  • 79. The Wealth of Nationsin both countries, are higher in France than in England; and it is lar branches of it are so; but these symptoms seem to indicateno doubt upon this account, that many British subjects chuse sufficiently that there is no general decay. When profit dimin-rather to employ their capitals in a country where trade is in dis- ishes, merchants are very apt to complain that trade decays, thoughgrace, than in one where it is highly respected. The wages of labour the diminution of profit is the natural effect of its prosperity, or ofare lower in France than in England. When you go from Scotland a greater stock being employed in it than before. During the lateto England, the difference which you may remark between the war, the Dutch gained the whole carrying trade of France, of whichdress and countenance of the common people in the one country they still retain a very large share. The great property which theyand in the other, sufficiently indicates the difference in their con- possess both in French and English funds, about forty millions, itdition. The contrast is still greater when you return from France. is said in the latter (in which, I suspect, however, there is a consid-France, though no doubt a richer country than Scotland, seems erable exaggeration ), the great sums which they lend to privatenot to be going forward so fast. It is a common and even a popular people, in countries where the rate of interest is higher than inopinion in the country, that it is going backwards; an opinion their own, are circumstances which no doubt demonstrate the re-which I apprehend, is ill-founded, even with regard to France, but dundancy of their stock, or that it has increased beyond what theywhich nobody can possibly entertain with regard to Scotland, who can employ with tolerable profit in the proper business of theirsees the country now, and who saw it twenty or thirty years ago. own country; but they do not demonstrate that that business has The province of Holland, on the other hand, in proportion to decreased. As the capital of a private man, though acquired by athe extent of its territory and the number of its people, is a richer particular trade, may increase beyond what he can employ in it,country than England. The government there borrow at two per and yet that trade continue to increase too, so may likewise thecent. and private people of good credit at three. The wages of capital of a great nation.labour are said to be higher in Holland than in England, and the In our North American and West Indian colonies, not only theDutch, it is well known, trade upon lower profits than any people wages of labour, but the interest of money, and consequently thein Europe. The trade of Holland, it has been pretended by some profits of stock, are higher than in England. In the different colo-people, is decaying, and it may perhaps be true that some particu- nies, both the legal and the market rate of interest run from six to 80
  • 80. Adam Smitheight percent. High wages of labour and high profits of stock, been considerably reduced during the course of the present cen-however, are things, perhaps, which scarce ever go together, ex- tury. As riches, improvement, and population, have increased, in-cept in the peculiar circumstances of new colonies. A new colony terest has declined. The wages of labour do not sink with the prof-must always, for some time, be more understocked in proportion its of stock. The demand for labour increases with the increase ofto the extent of its territory, and more underpeopled in propor- stock, whatever be its profits; and after these are diminished, stocktion to the extent of its stock, than the greater part of other coun- may not only continue to increase, but to increase much faster thantries. They have more land than they have stock to cultivate. What before. It is with industrious nations, who are advancing in the ac-they have, therefore, is applied to the cultivation only of what is quisition of riches, as with industrious individuals. A great stock,most fertile and most favourably situated, the land near the sea- though with small profits, generally increases faster than a smallshore, and along the banks of navigable rivers. Such land, too, is stock with great profits. Money, says the proverb, makes money.frequently purchased at a price below the value even of its natural When you have got a little, it is often easy to get more. The greatproduce. Stock employed in the purchase and improvement of difficulty is to get that little. The connection between the increasesuch lands, must yield a very large profit, and, consequently, af- of stock and that of industry, or of the demand for useful labour,ford to pay a very large interest. Its rapid accumulation in so prof- has partly been explained already, but will be explained more fullyitable an employment enables the planter to increase the number hereafter, in treating of the accumulation of stock.of his hands faster than he can find them in a new settlement. The acquisition of new territory, or of new branches of trade,Those whom he can find, therefore, are very liberally rewarded. may sometimes raise the profits of stock, and with them the inter-As the colony increases, the profits of stock gradually diminish. est of money, even in a country which is fast advancing in theWhen the most fertile and best situated lands have been all occu- acquisition of riches. The stock of the country, not being suffi-pied, less profit can be made by the cultivation of what is inferior cient for the whole accession of business which such acquisitionsboth in soil and situation, and less interest can be afforded for the present to the different people among whom it is divided, is ap-stock which is so employed. In the greater part of our colonies, plied to those particular branches only which afford the greatestaccordingly, both the legal and the market rate of interest have profit. Part of what had before been employed in other trades, is 81
  • 81. The Wealth of Nationsnecessarily withdrawn from them, and turned into some of the the wages of labour, so it raises the profits of stock, and conse-new and more profitable ones. In all those old trades, therefore, quently the interest of money. By the wages of labour being low-the competition comes to be Jess than before. The market comes ered, the owners of what stock remains in the society can bringto be less fully supplied with many different sorts of goods. Their their goods at less expense to market than before; and less stockprice necessarily rises more or less, and yields a greater profit to being employed in supplying the market than before, they can sellthose who deal in them, who can, therefore, afford to borrow at a them dearer. Their goods cost them less, and they get more forhigher interest. For some time after the conclusion of the late war, them. Their profits, therefore, being augmented at both ends, cannot only private people of the best credit, but some of the greatest well afford a large interest. The great fortunes so suddenly and socompanies in London, commonly borrowed at five per cent. who, easily acquired in Bengal and the other British settlements in thebefore that, had not been used to pay more than four, and four East Indies, may satisfy us, that as the wages of labour are veryand a half per cent. The great accession both of territory and trade low, so the profits of stock are very high in those ruined countries.by our acquisitions in North America and the West Indies, will The interest of money is proportionably so. In Bengal, money issufficiently account for this, without supposing any diminution frequently lent to the farmers at forty, fifty, and sixty per cent. andin the capital stock of the society. So great an accession of new the succeeding crop is mortgaged for the payment. As the profitsbusiness to be carried on by the old stock, must necessarily have which can afford such an interest must eat up almost the wholediminished the quantity employed in a great number of particular rent of the landlord, so such enormous usury must in its turn eatbranches, in which the competition being less, the profits must up the greater part of those profits. Before the fall of the Romanhave been greater. I shall hereafter have occasion to mention the republic, a usury of the same kind seems to have been common inreasons which dispose me to believe that the capital stock of Great the provinces, under the ruinous administration of their procon-Britain was not diminished, even by the enormous expense of the suls. The virtuous Brutus lent money in Cyprus at eight-and-fortylate war. per cent. as we learn from the letters of Cicero. The diminution of the capital stock of the society, or of the In a country which had acquired that full complement of richesfunds destined for the maintenance of industry, however, as it lowers which the nature of its soil and climate, and its situation with 82
  • 82. Adam Smithrespect to other countries, allowed it to acquire, which could, there- it might do with different laws and institutions. In a country, too,fore, advance no further, and which was not going backwards, where, though the rich, or the owners of large capitals, enjoy aboth the wages of labour and the profits of stock would probably good deal of security, the poor, or the owners of small capitals,be very low. In a country fully peopled in proportion to what enjoy scarce any, but are liable, under the pretence of justice, to beeither its territory could maintain, or its stock employ, the compe- pillaged and plundered at any time by the inferior mandarins, thetition for employment would necessarily be so great as to reduce quantity of stock employed in all the different branches of busi-the wages of labour to what was barely sufficient to keep up the ness transacted within it, can never be equal to what the naturenumber of labourers, and the country being already fully peopled, and extent of that business might admit. In every different branch,that number could never be augmented. In a country fully stocked the oppression of the poor must establish the monopoly of thein proportion to all the business it had to transact, as great a quan- rich, who, by engrossing the whole trade to themselves, will betity of stock would be employed in every particular branch as the able to make very large profits. Twelve per cent. accordingly, isnature and extent of the trade would admit. The competition, said to be the common interest of money in China, and the ordi-therefore, would everywhere be as great, and, consequently, the nary profits of stock must be sufficient to afford this large interest.ordinary profit as low as possible. A defect in the law may sometimes raise the rate of interest con- But, perhaps, no country has ever yet arrived at this degree of siderably above what the condition of the country, as to wealth oropulence. China seems to have been long stationary, and had, prob- poverty, would require. When the law does not enforce the per-ably, long ago acquired that full complement of riches which is formance of contracts, it puts all borrowers nearly upon the sameconsistent with the nature of its laws and institutions. But this footing with bankrupts, or people of doubtful credit, in bettercomplement may be much inferior to what, with other laws and regulated countries. The uncertainty of recovering his money makesinstitutions, the nature of its soil, climate, and situation, might the lender exact the same usurious interest which is usually re-admit of. A country which neglects or despises foreign commerce, quired from bankrupts. Among the barbarous nations who over-and which admits the vessel of foreign nations into one or two of ran the western provinces of the Roman empire, the performanceits ports only, cannot transact the same quantity of business which of contracts was left for many ages to the faith of the contracting 83
  • 83. The Wealth of Nationsparties. The courts of justice of their kings seldom intermeddled In a country which had acquired its full complement of riches,in it. The high rate of interest which took place in those ancient where, in every particular branch of business, there was the great-times, may, perhaps, be partly accounted for from this cause. est quantity of stock that could be employed in it, as the ordinary When the law prohibits interest altogether, it does not prevent rate of clear profit would be very small, so the usual market rate ofit. Many people must borrow, and nobody will lend without such interest which could be afforded out of it would be so low as toa consideration for the use of their money as is suitable, not only render it impossible for any but the very wealthiest people to liveto what can be made by the use of it, but to the difficulty and upon the interest of their money. All people of small or middlingdanger of evading the law. The high rate of interest among all fortunes would be obliged to superintend themselves the employ-Mahometan nations is accounted for by M. Montesquieu, not ment of their own stocks. It would be necessary that almost everyfrom their poverty, but partly from this, and partly from the diffi- man should be a man of business, or engage in some sort of trade.culty of recovering the money. The province of Holland seems to be approaching near to this The lowest ordinary rate of profit must always be something state. It is there unfashionable not to be a man of business. Neces-more than what is sufficient to compensate the occasional losses sity makes it usual for almost every man to be so, and customto which every employment of stock is exposed. It is this surplus everywhere regulates fashion. As it is ridiculous not to dress, so isonly which is neat or clear profit. What is called gross profit, com- it, in some measure, not to be employed like other people. As aprehends frequently not only this surplus, but what is retained for man of a civil profession seems awkward in a camp or a garrison,compensating such extraordinary losses. The interest which the and is even in some danger of being despised there, so does an idleborrower can afford to pay is in proportion to the clear profit man among men of business.only. The lowest ordinary rate of interest must, in the same man- The highest ordinary rate of profit may be such as, in the pricener, be something more than sufficient to compensate the occa- of the greater part of commodities, eats up the whole of whatsional losses to which lending, even with tolerable prudence, is should go to the rent of the land, and leaves only what is sufficientexposed. Were it not, mere charity or friendship could be the only to pay the labour of preparing and bringing them to market, ac-motives for lending. cording to the lowest rate at which labour can anywhere be paid, 84
  • 84. Adam Smiththe bare subsistence of the labourer. The workman must always profit may, in the price of many commodities, compensate thehave been fed in some way or other while he was about the work, high wages of labour, and enable those countries to sell as cheap asbut the landlord may not always have been paid. The profits of their less thriving neighbours, among whom the wages of labourthe trade which the servants of the East India Company carry on may be lower.in Bengal may not, perhaps, be very far from this rate. In reality, high profits tend much more to raise the price of The proportion which the usual market rate of interest ought to work than high wages. If, in the linen manufacture, for example,bear to the ordinary rate of clear profit, necessarily varies as profit the wages of the different working people, the flax-dressers, therises or falls. Double interest is in Great Britain reckoned what the spinners, the weavers, etc. should all of them be advanced twopencemerchants call a good, moderate, reasonable profit; terms which, a-day, it would be necessary to heighten the price of a piece ofI apprehend, mean no more than a common and usual profit. In linen only by a number of twopences equal to the number of peoplea country where the ordinary rate of clear profit is eight or ten per that had been employed about it, multiplied by the number ofcent. it may be reasonable that one half of it should go to interest, days during which they had been so employed. That part of thewherever business is carried on with borrowed money. The stock price of the commodity which resolved itself into the wages, would,is at the risk of the borrower, who, as it were, insures it to the through all the different stages of the manufacture, rise only inlender; and four or five per cent. may, in the greater part of trades, arithmetical proportion to this rise of wages. But if the profits ofbe both a sufficient profit upon the risk of this insurance, and a all the different employers of those working people should be raisedsufficient recompence for the trouble of employing the stock. But five per cent. that part of the price of the commodity which re-the proportion between interest and clear profit might not be the solved itself into profit would, through all the different stages ofsame in countries where the ordinary rate of profit was either a the manufacture, rise in geometrical proportion to this rise of profit.good deal lower, or a good deal higher. If it were a good deal The employer of the flax dressers would, in selling his flax, requirelower, one half of it, perhaps, could not be afforded for interest; an additional five per cent. upon the whole value of the materialsand more might be afforded if it were a good deal higher. and wages which he advanced to his workmen. The employer of In countries which are fast advancing to riches, the low rate of the spinners would require an additional five per cent. both upon 85
  • 85. The Wealth of Nationsthe advanced price of the flax, and upon the wages of the spin- CHAPTER Xners. And the employer of the weavers would require alike five percent. both upon the advanced price of the linen-yarn, and upon PROFIT OF WAGES AND PROFIT IN THE DIF-the wages of the weavers. In raising the price of commodities, the EMPLOYMENTS LABOUR FERENT EMPLOYMENTS OF LABOURrise of wages operates in the same manner as simple interest does STOCK AND STOCKin the accumulation of debt. The rise of profit operates like com-pound interest. Our merchants and master manufacturers com- THE WHOLE OF THE ADVANTAGES and disadvantages of the differentplain much of the bad effects of high wages in raising the price, employments of labour and stock, must, in the sameand thereby lessening the sale of their goods, both at home and neighbourhood, be either perfectly equal, or continually tendingabroad. They say nothing concerning the bad effects of high prof- to equality. If, in the same neighbourhood, there was any employ-its; they are silent with regard to the pernicious effects of their ment evidently either more or less advantageous than the rest, soown gains; they complain only of those of other people. many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This, at least, would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was per- fectly free both to choose what occupation he thought proper, and to change it as often as he thought proper. Every man’s inter- est would prompt him to seek the advantageous, and to shun the disadvantageous employment. Pecuniary wages and profit, indeed, are everywhere in Europe extremely different, according to the different employments of labour and stock. But this difference arises, partly from certain 86
  • 86. Adam Smithcircumstances in the employments themselves, which, either re- is much easier. A journeyman weaver earns less than a journey-ally, or at least in the imagination of men, make up for a small man smith. His work is not always easier, but it is much cleanlier.pecuniary gain in some, and counterbalance a great one in others, A journeyman blacksmith, though an artificer, seldom earns soand partly from the policy of Europe, which nowhere leaves things much in t