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A N
I N Ct U I R Y
INTO THE
NATURE AND CAUSES
\
OF THE
NATIO
B T
ADAM S M Ijr H, LL. D.
AND F.R.8. OF LONDON AND EDINBURGH:
ONE OP THE COMMISSIONERS OF HIS MAJESTY'S CUSTOMS
IN SCOTLAND ;
AND FORMERLY PROFESSOR OF MORAL PHILOSOPHY IN THE UNIVERSITY OF GLASGOW.
IN THREE VOLUMES. VOL. I.
THE FIFTH EDITION.
LONDON:
Printed for A. Strahan ; and T. Cadbll, in the Strand.
MDCCLXXXIX.
lElco-n ^^Ā«|.^.%=(
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Ā» >
ADVERTISEMENT
TO TH*E
THIRD EDITION.
rr^HE firft Edition of the following Work -^ was printed in the end of the year
1775, and in the beginning of the year
1776. Through the greater part of the Book, therefore, whenever the prefent ftate of things is mentioned, it is to be underflood of the ftate they were in, either about that time, or at fome earlier period, during the time I was employed in writing the Book, To the third Edition, however, I have made feveral additions, particularly to the chapter upon Drawbacks, and to that upon Bounties ; likewife a new chapter entitled, The Conclu^
A3 Jm
IV
ADVERTISEMENT.
fton of ibe Mercantile Syftern} and a new article to the chapter upon the expences of the fovereign. In all thefe additionB^ the
prefent Jiate of things means always the ftate in which they were during the year 1783 and the beginning of the year 1 784,
( i
ADVERTISEMENT
TO THE
FOURTH EDITION.
TN this fourth Edition I have made no al- ^ terations of any kind. I now, however, find myfelf at liberty to acknowledge my very great obligations to Mr. Henry Hope of Am- fterdam. To that Gentleman I owe the moft diftinft, as well as liberal information, con- cerning a very interefting and important fub- jed, the Bank of Amfterdam ; of which no printed account had ever appeared to me fa- tisfadtory, or even intelligible. The name of that Gentleman is fo well kAown in Europe, the information which comes from him muft ^o fo much honour to whoever has been fa- 4 voured
vi ADVERTISEMENT.
voured with it, and my vanity is fo much interefted in making this acknowledgment^ that I can no longer refufe myfelf the plea- fure of prefixing this Advertifement to this new Edition of my BookĀ»
CONTENTS
O F T H S
F I R ST VOLUME.
I
NTRODyCTION AND PlAN OF THE WORK
Page I
BOOK I.
Of the Caufes of Improvement in the pro- dudlive Powers of Labour^ and of the Order according to which its Produce is naturally diftributed among the dif- ferent Ranks of the People 6
CHAP. L
0/ the Divifion of Labour -ā ā ibid.
C H A p. II.
Of the Principle tobicb gives Occafion to the Divifion of Labour ā ā ā¢ J 9
CHAP. III.
^bat tbe Divifion of Labour is limited by tbe Extent of tbc Market ā ā a6
VIU
CONTENT $ā¢
CHAP. IV,
Of the Origin and UJe of Money Page 33
C H A P. V.
Of the real and nominal Trite of Commodities y or of their Price in Laiour, and their Price in Money .-.- _ 43
CHAP. VI.
Of the component Parts of the Price of Com^ modities ā ā ā 70
/
CHAP. VII.
Of the natural and market Price of Commodities 8 2
CHAP.' VIII. Of the Wa^es of Labour , ā 96
CHAP. IX.
Of the Profits of Stock . ā ā 133
C HAP. X.
Of Wages and Profit in the different Employ^ ments of Labour and Stock ā¢ā 1 51
Par^ I. Inequalities arijing from the Na- ture of the Employments themf elves 152
^ Part II. Inequalities occaftoned hy the Policy of Europe -^ ā ? ā ā¢ i8j
CONTENTS. m
CHAP. XI.
0/ f be Rent of Land ā . ā 'Page i2 23
Part I. 0/ the Produce of Land which aU ways affords Rent ā ā 227
Part IL Of the Produce of Land which Jometimes doesy and fome times does not ^ afford Rent ^ ā¢ ā _ _ _ 252
Part III. Of the Variations in the Propor-^ tion between the re/feSlive Values of that Sort of Produce which always affords Rent, and of that which fometimes does and fome- times does not afford Rent ā 273
Bigrejfion concerning the Variations in the Value of Silver during the Conrfe ef the Four laft Centuries.
Ā§
Firft Period ā -^ ā¢_ 27^
Second Period ā ā ā¢ā 299
Third Period ā ā ā ^oi
Variations in the Proportion htwien the re- fpeSive Values i(f Gold and Silver -^^ ^jo
<
Grounds of the Sufpicion that the Value of Silver Jiill continues to decreaje ā - ^;fi
Different E0Ā£ls of the Pro'grefs of Improvement upon the real Price of three different Sorts (if rude Produce ā ā . ^j^
CONTENT^.
FirfiSort ā ā ā Page 340
Second Sort ā ā ā 343
Third Sort ā ā ā 35$
Conclttfton of the Digrejjion concerning the Va- riations in the Value of Silver ā 373
* Ā«
EffeSIs of the Progrefs of Improvement upon the real Price of ManufaSlures ā 384
Conclufton of the Chapter -w -Ā« 2^Z
BOOK 11.
Of the Nature, Accumulation, and Employ- ment of Stock,
Ā«
Introduction ā Ā«ā 4^7
CHAP. I.
Of the Bivifton of Stock ā ā 410
CHAP. II.
Of Monef eonfidered as a particular Branch of the general Stock of the Society y or of the Expence of maintaining th( National Capital 4ft j
A N
I N Ct U I R
I N T O T H E
NATURE AND CAUSES
O F T H E
WEALTH OF NATIONS,
. ^>Ā«Ā«*Ā»n
INTRODUCTION AND PLAN OF THE WORK.
THE annual labpur of every nation is the introduft. fund which originally fupplies it with all the neceflaries and conveniencies of life which it annually confumes, and which con- fift always cither in the imnciediate produce of that labour, or in What is purchafcd with that pro- duce from other nations,
ACCORDING therefore, as this produce, or what is purchafed with it, bears a greater or fmaller proportion to the number of thofc who are to confume it, the nation will be better or worfe fupplied with all the neceflaries and conveni- encies for which it has occalion.
But this proportion muft in every nation be regulated uy two different circumftances ; firft, by the Ikill^ dexterity, and judgment with which
.V^L. I. B its
THE NATURE AND CAUSES OF
introdu^t.^ its labour is generally applied; and^ fecondly, by the proportion between the number of thofe who are employed in uleful labour, and that of thofe who are not fo employed. Whatcva- be the foil, climate, or extent of territory of any particular nation, the abundance or fcantinefs of its annual fupply muft^^ in that particular fitua- tion, depend upon thofe two circumftances.
The abundance or fcantinefs of this fupply too feems to depend more upon the former of thofe two circumftances than . upon the latter, ' Among the favage nations of hunters and fibers, every individual who is able to work, is more or lels employed in ufeful labour, and endeavours to provide,, as well as he can, the ' neceffaries and conveniencies of life, for himfelf, or fuch of his fan>ily or tribe as are either too old, or too young, or too infirm to go a huAing and fifhing. Such nations, however, are fo miferably poor, that from mere want, they are frequently reduced, or, at leaft, think themfelves I'educed, to the necef- fity fometimes of direftly destroying, and fome- times of abandoning their infants, their old peo- ple, and thofe afflidled with lingering difeafes, to perifli with hunger, or to be devoured by wild beafts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom confume the produce of teh times, frequently of a hundred times, more labour than the greater part of thofe who work 5 yet the produce of the ā¢vhole labour of the fociety is lb great, that all are often abun- dantly fupplied, and .a worknian, even of the
^ ."toweft
THE WEALTH OF NATIONS.* 3
loweft and pooreft order, if fee is frugal and in- iĀ«^^jj^ duftribus, may enjoy a greater fhare of the ne- ccflaries and conveniencies of life than it is pof- fible for any favage to acquire.
Th[Ā£ caufes of this improvenient> in the pro- duftive powers of labour, and the order, accord* ing to which its produce is naturally diftributcd among the different ranks and conditions of men in the fociety, make the fubjedl of the Firft Book of this Inquiry.
Whatever be the aftual ftate pf the fkill, dexterit)^ and judgment' with which labour is applied in any nation, the abundance or fcanti- nefs of its annual fupply muft depend, during the continuance of that ftate, upon the proportion between the number of thofe who are annually employed in ufeful labour, and that of thofe who are not fo employed. The number of ufeful and produftive labourers, it will hereafter appear, is every where in proportion to the quantity of ca- pital ftock which is employed in fetting them to work, and to tlft particular way in which it is ā fo employed. The Seqoqd Book, therefore, treats of the nature of capital ftock, of the manner in which it is gradually accumulated, and of the different quantities of labour which it puts into motion, according to the different ways irr which it is employed.
Nations, tolerably well advanced as to flcill,
dexterity, and judgment, in the application of
labour, have falldwed very different plans in the
general conduct or direftion of it ; and thofe
ā¢ plins. have not all been equally favourable to the
B 2 * greatnefs
THE NATURE AND CAUSES OF
jntro^uft^ grcatnefs of its produce. The policy of fome iiations has given extraordinary encouragement to the induftry of the country j that of others to the induftry of towns. Scarce any nation has dealt equally and impartially with every fort of induftry. Since the downfal of the Roman em- pire, the policy of Europe has been more favour- able to arts, manufaftures, and commerce, the induftry of towns; than to agriculture, the in- duftry of the country. The circumAances which feem to have introduced and eftablifhed this po- licy are explained in the Third Book, ^
Though thofe different plans were, perhaps^ -firil introduced by the private interefts and pre- judices of particular orders of men, without any regard to, or forefight of, their confequences upon the general welfare of the fociety ; yet they have given occafion* to very different theories of political oeconomy ; of which fome magnify the importance of that induftry which is carried on in towns, others of that which is carried on in the country. Thofe theories Hkve had a confi- derable influence, not only upon the opinions of men of learning, but upon the public condudt of princes and fbvereign ftates. I have endeavour- ed, in the Fourth Book, to explain, as fully and diftinftly ^s I can, thofe different theories, and the principal effefts which they have produced in different ages and nations.
To explain in what has confifted the revenue of the great body of the* people, or what has bech the nature of thofe funds, which, in different ages and nations^ have fupplied their annual confump-
t3on>
J
THE WEALTH OF NATIONS.
rion, istheobjeftofthefelFourfirftjBooks. The ^^* Fifth and laft Book treats of the revenue of the fovereign, or commonwealth. In this book I Have endeavoured to fhowj firft, what are the necefiary expences of the fovereign, or cornmon- wealth i which of thofe expences ought to be de- frayed by the general contribution of the whole fociety ; and which of them, by that of fome par- ticular part only, or of fome particular members of it : fecondly, what are the different methods in which the whole fociety may be made to con- tribute tjpivards defraying the expences incum- bent on the whole fociety, and what are the principal advantages' and inconveniencies of eacTi of thofe rriethods : and, thirdly and laftly, what are the reafons and caufes which have induced almoft all ' niodern, governments to mortgage fome part of this revenue, or to contrad debts, and what have been the effedls of thofe debts upon the real wealth, the annual produce of the land and labour of the fociety. *
B a BOOK
THE NATURE AND CAUSES OF
Book i.
*
Of the Caufes of Improvement in the produc- tive Powers of Labour, and of the Order according to which its Produce is naturally diftributed among the different Ranks of the People.
C H A p. I.
Of the Divifton of Labour.
BOOK rY^ H E greateft improvement in the produc- X tive powers of labour, and the greats: part of the (kill, dexterity, and judgment with which it is any where direftcd, of applied, feem to have been the efffefts of the divifion of la- bour.
The effefts of the divifion of labour, in the general bufinefs of fociety, will be more eafily underftood, by confidering in what manner it operates in feme particular manufa&ures. It is commonly fuppofed to be carried furtheft in fome very trifling ones; not perhaps that it really is carried further in them than in others of more importance : but in thofe trifling manufac- tures which are deftined to fupply the fmall wants of but a fmall number of people, the whole number of workmen muft neceflTarily be fmall ; and thofe employed in every difFererit branch of the work can often be collected into the fame
workhoufe.
THE WEALTH OF NATIONS. 7
I t
workhoufe, and placed at once under the view of c h a p. the Ipeftator. In tl;iofe great manufafturesj on the contrary, which are deftined to fupply the great wants of the great body of the people, every different branch of the work employs lb ' great a nunnber of workmen, that it is impoflible to colledt them all into the fame workhoufe. We can leldom fee more, at one time, than thofe em- ployed in one fingle branch. Though in fuch manufaftures, therefore, the work may really be divided into a much greater number of parts, than in thofe of a more trifling nature, the divi- fion is not near fo obvious, and has accordingly been much lefs obfervcd.
To take an example, therefore, from a very trifling manufefture ; but one in which the divi- fion of labour has been very often taken notice of, the trade of th^ pin-maker ; a workman not educated tp this bufinefs (which the divifion of labour has rendered a diftifift trade), nor ac- quainted . with the ufe of the machinery employed W it (to the invention of which the fame divi- fion of labour has probably given occafion), could fcarce, perhaps, with his utmoft induftry, make one pin in a day, and certainly could not make' twenty. But in the way in which this bufinefs is now carried on, not only the whole work is . a peculiar trade, but it is divided into a number of branches, of which the greater part are likewife peculiar trades. One man draws out the wire, another ftraights it, a third cuts it,^ a fourth points it, a fifth grinds it dt the top for receiving the head 3 to make the head requires
B 4 two
g THE NATURE AND CAUSES OF
BOOK two or three diftinft operations; to put it on, is a peculiar bufincfs, to whiten the pins is another; it is even a trade by itfelf to put them into the paper; and the important bufmefs of making a pin is, in this manner, divided into about eigh- teen diftinft operations, which, in fome manu- faftories, are all performed by diftindt hands, though in others the fame man will fometimes perform two or three of them. I have feen a fmall manufaftory of this kind where ten men only were employed, and where fome of them confequently performed two or ^ree diftindt operations. But though they were very poor, and therefore but indifferently accommodated with the neceffary machinery, they could, whea they exerted themielves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thoufand pins of a nriiddling fize. Thofe ten perfons, therefore, could make among ^hem upwards of forty-eight thoufand pins in a day. Each perfon, therefore, making a tenth part of forty-eight thoufand pins, might be confidered as making four thou- fand eight hundred pins in a day. But if they had all wrought feparately and independently, and without any of them having been educated to this peculiar bufinefs, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thou- fand eight hundredth part of what they are at prefcnt capaCle^ <jf performing, in confequence of
a proper
THE WEALTH OF NATIONS* 9
a proper divifion and combination of their differ- ^ hap. ent operations.
In every other art and manufafturc, the effeĀ£b of the divifion of labour are fimilar to what they are in this very trifling one ; though, in many of them, the labour can neither be fo much fubdi- vided, nor reduced to fo great a fimplicity of operation. The divifion of labour, however, fo far as' it can be introduced, occafions, in every art, a proportionable increafe of the produftivc powers of labour. The feparation of different trades and employments from one another, feems to have taken place, in confequence of this ad- vantage. This feparation too is generally carried furtheft in thofe countries which enjoy the highed degree of induftry and improvement ; what is the work of one man in a rude ftate of fociety, being generally that of feveral in an improved one,* In every improved fociety, the farmer is gene- rally nothing but a farmer; the manufa6turer, nothing but a manufacturer. The labouf too which is neceffary to produce any one complete manufa<Slure, is almoft always divided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufadtures, from the growers of the flax and the wool, to the bleachers and fmoothers of the linen, or to the dyers and dreff- ers of the cloth ! The nature of agriculture, in- deed, does not admit of fo many fubdivifiohs of labour, nor of fo complete a fepajation of one bufinefs from another, as manufadures. It is impoffible to feparate fo entirely, the bufinefs of
the
!ā¢ THE NATURE AND CAUSES OF
* o o K |;jjg grazier from that of the corn-farmer, as the trade of the carpenter is commonly ieparated from that of the fmith. The Ipinncr is almoft always a diftind perfbn from the weaver; but the ploughman^ the harrower> the fower of the feed, and the reaper of the corn, are often the fame. The occafions for thofe different forts of k^ur returning with the different feafons of the year, . it is impoflible that one man ihould be con- ftantly employed in any one of them. This im- pollibility of making fo complete and entire a fe- paration of all the different branches of labour employed in agriculture, is perhaps the reafon why the improvement of the produftive powers of la- bour in this ai^t, does not always keep pace with their improvement in manufaftures. The moll opulent nations, indeed, generally excel all their neighbours in agriculture as well as in manufac* tures; but they are commonly more diftin- guifhed by their fuperiority in the latter than in the former. Their lands ' are in general better cultivated, and having more labour and expence beftowed upon them, produce more in propor- tion to the extent and natural fertility of the ground. But this fuperiority of produce is fel- dom much more than in proportion to the fupe* riority of labour and expence. In agriculture, the labour of the rich country is not always much more produftive than that of the poor ; or, at leaft, it is never fo much more produftive, as it commonly is in manufactures. The corn of the rich country, therefore, will not always, in the fame degree of goQdnefs, CQme cheaper to
market
THE WEALTH OF NATIONS. it
market than that of the poor. The corn of Po^ c k a p. land^ in the fame degree of goodnefs^ is as cheap as that of France, notwithftanding the fuperior opulence and improvement of the latter countrf. The corn of France is, in the corn provinces, fully as good, and in mod years nearly about the fame price with the corn of England, though, in opulence and improvement, France is perhaps inferior to England. The corn-lands of Eng^ land, however, arc better cultivated than thofe of France, and the corn-lands of France are faid to be much better cultivated than thofe of Poland. But though the poor country, notwithftanding the inferiority of its cultivation, can, in fome meafure, rival the rich in the cheapneis and goodnefs of its corn, it can pretend to no flick competition in its manu&fhires ; at leaft if thofe manufa6lures fuit the foil, climate, and iituation of the rich country. The filks of France arc better and cheaper than thofe of England, be- cafe the filk manufadure, at leaft under the prefent high duties upon the importation of raw filk, does not fo well fuit the climate of England as that of France. But the hard-ware and the coarfe woollens of England are beyond all com- parifon fuperior to thofe of France, and much cheaper too in the fame degree of goodnefs. In Poland there are faid to be fcarce any manufac- tures of any kind, a few of thofe coarfer houfehold manufadures excepted, without which no coun- try can well fubfift.
This great increafe of the quantity of work, which, in confcquence of the divifion of labour,
9 the
tz * ITB NATURE AND CAUSES OF
B 0^0 K the fame number of people are capable of per- forming, is owing to three different clrcumftances; firft, to the increafe of dexterity in every par- ticular workman; fecondly, to the faving of the time which is commonly loft in paffing from one fpecies of work to another i and laftly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.
First, the improvement of the dexterity of the workman neceffarily increafes the quantity of the work he can perform i and the divifion of labour, by reducing every man's bufmefs to fome one fimple operation, and by making this ope- ration the fole employment of his life, necefla- rily increafes very much the dexterity of the workman. A common fmith, who, though ac-- cuftomed to handle the hammer, has never been ufed to make nails, if upon fome particular oc- cafion he is obliged to attempt it, will fcarce, I am affured, be able fo make above two or three hundred nails in a day, and thofe too very bad ones. A fmith who has been accuftomed to make nails, but whofe fole or principal bufinefs has not been that of a nailer, can feldom with his utmoft diligehce make more tiian eight hundred or a thoufand nails in a day. 1 have feen feve- ral boys under twenty years of zgt who had never exercifed any other trade but that of mak- ^ing nails, and who, when they exerted them- felves, could make, each of them, upwards of two thoufand three hundred nails in a day. . The , making of a nail, however, is by no mc^ins one ^ / of
THE WEALTH OF NATIONS. ^ 13
of the fimplcft operations. The fame perfori ^ ^^^ ^* blows the bellowsj ftirs or mends the fire as there is occafk>n> heats the iron, and forges every part of the nail : In forging the head too he is obliged to change his tools. The different ope- rations into which the making of a pin, or of a metal button, is fubdivided, are all of them much more fimpfe, and the dexterity of the per- ibn, of whofe life it has been the fole bufinefs to perform them, is ufually much greater* The ra- pidity with which fome of the operations of thofe manufadures are perfornied, exceeds what the' human hand couldj^ by thofe who had never feen them, be fuppofed capable of acquiring, ^
Secoji DLY, the advantage which is gained by faving the time commonly loft in paffing from one fort of .work to another, is much greater than we fliould at firft view be apt to imagine it. It is impoflible to pafs very quickly from one kind of work to another, that is carried : on in a different place, and with quite different tools. A country weaver, Who cultivates a fmall farm, muft lofe a good deal ^of time in pafling from his loom to the field, and from the field to his loom. When the two trades can be carried on in the fame workhoufe, the lofs of time is no doubt much lefs. It is even in this cafe, however, very confidcrable. A man commonly faunters a little in turning his hand from one fort of employment to another. When he firft begins the new work ^ he is feldom very keen and hearty ; his mind, as they fay, does not go to it, and for fome time he father trifles than applies to good purpofc. The
habit
t4 THE NATURE AND CAUSES OF
a 0 0 K j^abk of fauntcring and of indolent carelefs ap- plication^ ^^ch is naturally, or rather necefla- rily acquired by every country workman who h ^ obliged to change lus work and his tools every half hour, and to apply his hand in twenty dif- ferent ways ..almoft every day of his life ; renders him almoft always flodiful and lazy, and inca^^ pabie of any vigorous application even on the moft prefling occafions. Independent, therefore, of his deficiency in point of dexterity, this caufe alone muft always reduce confiderabiy the quan- tity of work which he is capable of performing.
Thirdly, and laftly, every body muft be fen- fible how much labour is facilitated and abridged by the application of proper machinery. It is unneceflary to give any example. I fhall only ob- fcrve, therefore, that the invention of all thofe \ machines by which labour is fo much facilitated land abridged, feems to have been originally lowing to the divifion of labour. Men are much tnore likely to difcover eafier and readier me- thods of attaining any objeft, when the whole attention of their minds is diredted towards that , (ingle objeA, than when it is diflipated among a great variety of things. But in confequerice of the divifion of labour, the whole of every man's attention comes naturally to be direded towards fome one very fimple objeft. It is naturally to be expeded, therefore, that fome one or other of thofe who are employed in each particular branch of labour ihould foon find out eafier and readier methods of performing their own particular work, whcrevtr tlie nature of it admits of fuch
/ impf-oi(pment.
THE WEALTH OP NATIONS. .%j
improvement. A great part of the machines char, made ufe of in thofe mamrfa&ures in which la- bour is moft fubdivided, were originaUy riie in- ventions of common workmen, who, being each of them employed in fome very fimple operation, naturally turned their thoughts towards finding out eafier and readier methods of performing it* Whoever has been much accuftomed to vifit fuch manufaftures, muft frequently have been Ihewn very pretty machines, which were the inventions of fuch workmen, in order to facilitate and quicken their own particular part of the work. In the firft fire-engines, a boy was conftantly em- ployed to open and fhut alternately the commu- nication between the boiler and the cylinder, ac- cording as the pifton either afcended or de- fcended. One of thofe boys, who loved to play with his companions, obferved that, by tying a ftfing fix)m the handle of the valve which opened this communication to another part of the ma- chine, the valve would open and fliut without his- afliftance, and leave him at liberty to divert himfelf with his play-fellows. One of the greateft improvements that has been made upon this machine, fince it was firft invented, was in this manner the difcovcry of a boy who wanted to fave his own labour.
All the improvements in machinery, how- ever, have by no means been the inventions of thofe who had occafion to ufe the machines. Many improvements have been made by the ingenuity of the makers' of the machines, whea
to
tĀ»^ THE NATURE AND CAUSES OF
BOOK to make them became the bufinefs of a peculiar trade ; and fome by that of thofe who are called philofbphers or men of fpeculation^ whofe trade it is not to do anything, but to obferve fevery thing; and- who, upon that account, are often capable of combiaing together the powers of the moft diftant and diffimilar objefts. In, the pro- grefs of fociety, phildfophy or fpeculation be- comes, like every other employment, the prin- cipal or fole trade and occupation of a particular clafs of citizens. Like every other employment too, it is fubdivided into a great number of different branches, each of which affords occu- pation to a peculiar tribe or clafs of philofb- phers; and this fubdivifion of employment in philofophy, as well as in every other bufinefs, improves dexterity, and faves time* Each indi- vidual becomes more expert in his own peculiar branch, more work is done upon the wholfe, and the quantity of fcience is confiderably in- creafed by it.
It is the great multiplication of the produc- tions of all the different arts, in confequence of the divifion of labour, which occafions, in a well-governed fociety, that univerfal opulence which extends itfelf to the loweft ranks of the people. Every workman has a great quantity of his own work to difpofe of beyond what he himfelf has occafion for ; and every other work- man being exaftly in the fame fituation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the fame thing, for the price of a great quan- tity
THE WEALTH Ot NATIONS. 17
tity of theirs. He fupplies them abundantly chap. with what they have occafion for, and they accommodate hini as amply with what he has occafion for, and a general plenty difFufes itfelf through all the different ranks of the fociety.
Observe the accommodation of the moft com- mon artificer or day-labourer in a civilized and^ thriving country, and you will perceive that the number of people of whofe induftry a part, though but a fmall part, has been employed in procuring him this accommodation, exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarfe and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The fliepherd, the forter of the wool, the wool- comber or carder, the. dyer, the fcribbler, the Ipinner, the weaver, the fuller, the dreflet, with many others, muft all join their different arts in order to complete even this homely produftion. How many merchants and carriers, befidcs, muft have been employed in tranfporting the mate- rials from fbme of thofe workmen to others who often live in a very diflant part of the country ! how much commerce and navigation in parti- cular, how many ftiip-builders, failors, fail- makers, rope- makers, mufl have been employed in order to bring together the different drugs made ufe of by the dyer, which often come from the remotefl corners of the world ! What a variety of labour too is neceffary in order to produce the tools of the meanefl of thofe work- men ! To fay nothing of fuch complicated ma- VoL, I. C chines
i8 THE NATURE AND CAUSES OF
BOOK chines as the fhip of the failor, the mill of the fuller, or even the loom of the weaver, let us confidcr only what a variety of labour is requi- fite in order to form that very fimple machine, the (hears with which the fliepherd clips the wool. The miner, the builder of the furnace for fmelting the ore, the feller of the timber, the burner of the charcoal to be made ufe of in the fmelting- houfe, the brick-maker, the brick- layer, the workmen who attend the furnace, the mill- Wright, . the forger, the fmith, ā¢ muft all of them join their different arts in order to produce them. Were we to examine, in the fame man- ner, all the different parts of his drefs and houfelM>ld furniture, the coarfe linen Ihirt which lie wears next his Ikin, the Ihoes which cover his feet, the bed which he lies on, and all the dif- ferent parts which compqfe it, the kitchen-grate at which he prepares his' vidluals, the coals which he makes ufe of for that purpofe, dug from the bowels of the earth, and brought to him perhaps by a long fea and a long land carriage, all the other utenfils of his kitchen, all the furniture of his table, the knives and forks, the earthen or pewter plates upon which he ferves up and divides his vidbuals, the dif- ferent hands employed in preparing his bread and his beer, the glafs window which lets in the heat and the light, and keeps out the wind and the rain, with all the knowledge and art requi- fite for preparing that beautiful , and happy in- vention, without which thefe northern parts of the world could fcarce have afforded a very
comfortable
THE WEALTH OF NATIONS. 19
comfortable habitation, together with the tools chap. of all the difKjrent workmen employed in pro- ^* ducing thofe different conveniencies -, if we ex- amine, I fay, all thefe things, and confider what a variety of labour is employed about each of them, we fliall be fenfible that without the affiftance and co-operation of many thoufonds, the very meaneft perfon in a civilized country could not be provided, even according to, what we very falfely imagine, the eafy and fimple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation muft no doubt appear extremely fimple and eafy; and yet it may be true, perhaps, that the accommo- dation of an European prince does not always ib much exceed that of an induftrious and frugal peafant, as the accommodation of the latter exceeds that of many an African king, the ab- folute matter of the lives and liberties of ten thoufand naked favages.
ā¢^
CHAP. II.
Of the Principle which gives occafion to the
Divijion of Labour.
THIS divifion of labour, from which fp many advantages are derived, is not pri- j ginally the effeft of any human wifdom, which I forefees and intends that general opulence to
C 2 which
ao THE NATURE AND CAUSES OF
BOOK which it giyes occafion. It is the neceflary,
ā ^ though veiy flow and gradual, confequence of a
Vcertain propenfity in human nature which has in
view no fiich extenfive utility ; the propenfity
to truck, barter, and exchange one thing for
another.
Whether this propenfity be one of thofe original principles in human nature, of which ;no further account can be given; or whether, as feemls more probable, it be the neceflary confequence of the faculties of reafon and fpeech, it belongs not to our prefent fubjeft to enquire. It is common to all men, and to be found in no otjier race of animals, which feem to know neither this nor any other ipecies of contrafts. Two greyhounds, in running down the fame hare, have fometimes the appearance of afting in fome fort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her towards himfelf. This, however, is not the efFeft of any contraft, but of the accidental concurrence of their paf- fions in the fame objedt at that particular time. Nobody ever faw a dog make a fair and delibe- rate exchange of one bone for another with another dog. Nobody ever faw one animal by its geftures and natural cries fignify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain fomething either of a man or of another animal, it has no other means of perfuafion but to gain the favour of thofe whofe fervice it requires. A puppy fawns upon its dam, and a Ipanicl endea- vours
THE WEALTH OF NATIONS. 21
yours by a thoufand attraftions tp engage the c h a h. attention of its nnafter who is at dinner, when it wants to be fed by him. Man fometimes ufes the fanae arts with his brethren, and when he has no o^her means of engaging them to aft according to his inclinations, endieavours by every fervile and fawning attention to obtain their good will. He has not time, however, to do this upon every occafion. In civilized fociety he ftands at all times in need of the co-operation and affiftance of great multi- tudes, while his whole life is fcarce fufEcient to gain the friendihip of a few perfons. In almoft every other race of animals each in- , dividual, when it is grown up to maturity, is. ^v Nmtirely" independent, and in its natural ftate has occafion for the affiftance of no other living creature. But man has almoft conftant occa- fion for the help qf his brethren, and it is ia vain for him to expeft it from their benevolence only. He will be more likely to prevail if he can intereft their felf^love in his favour, and ftiew them that it is for their own advantage to do for him what he requires of them. Who- ever offers to another a bargain of any kind, propofes to do this : Give me that which \\ want, and you fhall have this which you want,\ is the meaning of every fuch offer i and it is in this manner that we obtain from one another the far greater part of thofe good offices which we ftand in need of. It is not from the benevo- lence of the butcher, the brewer, or the baker, that we expeft our dinner, but from their
C 3 regard.
92 THE NATURE AND CAUSES OF
BOOK regard to their own intereft. We addrels our- felves, not to their humanity but to their felf- love, and never talk to them of our own neceflities but of their advantages. Nobody but a beggar chules to depend ch^pfly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely. The charity of well-difpofed people, indeed> fupplies him with the whole fund of his liib- fiftence. But though this principle ultimately provides him with all the neceffaries of life which he has occafion for, it neither does nor can provide him with them as he has occafion for them. The greater part of his occafional wants are lupplied in the fame manner as thofe of other people, by treaty, by barter, and by purchafc. With the money which one man gives him he purchafes food. The old cloaths which another beftows upon him he exchanges for other old cloaths which fuit him better, or for lodging, or for food, or for money, with which he can buy either food, cloaths, or lodg- ing, as he has occafion.
As it is by treaty, by barter, and by purchafe,
that we obtain from one another the greater part
of thofe mutual good offices which we Hand in
need of, fo it is this fame trucking dilpofition
! which originally gives occafion to the divifion
\ of labour. In a tribe of hunters or Ihepherds
' a particular perfon makes bows and arrows, for
example, with more readinefs and dexterity than
any other. He frequently exchanges them for
catde or for venifon with his companions 3 and
he
THE WEALTH OF NATIONS. 23
A
he finds at laft that he can in this manner get c h a p,
II. more cattle and venifoh^ than if he himfelf went
to the field to catch theju. From a regard to his own intereft^ therefore, the making of. bows and arrows grows to be his chief bufinefs, and he becomes a fort of armourer. Another excels in making tlie frames and covers of their little huts or moveable houfes. He is accuftomed to be of ufc in this way to his neighbours, who re- ward him in the fame riaanner with cattle and with venifon, till at laft he finds it his intereft to dedicate himfelf entirely to this employment, and to become a fort of houfe-carpenter. In the fame manner a third becomes a fmith or a brazier \ a fourth a tanner or dreffer of hides or Ikins, the principal part of th^ clothing of favages. And thus the certainty of being able tp exchange all that furplus part of the produce of his own labour, which is over and above his own confumption, for fuch parts of the produce of other men's labour as he may have occafion for, encourages every man to apply himfelf to a particular occupation, and to cultivate and bring to perfeftion whatever talent or genius he may poflefs for that particular Ipccies of bufi- nefs.
The difference of natural talents in different men is, in reality, much lefs than we are awart of i and the very different genius which appeara to diftinguilh men of different profeffions, when grown up to maturity, is not upon many occa- fions fo much the caufe, as the effe^ of the divifion of labour. The difference between the
C 4 moft
24 THE NATURE AND CAUSES OF
BOOK moft diffimilar charafters, between a philofopher and a common ftreet porter, for example, fccms tp arife not fb much from nature, as from habit, cuftom, and education. When they came into the world, and for the firft fix or eight years of their exiftence, they were, perhaps, very much alike, and neither their parents nor playfellows could perceive any remarkable difference. About that age, or foon after, they come to be em- ployed in very different occupations. The dif- ference of talents comes then to be taken notice of) and widens by degrees, till at laft the vanity of the philofopher is willing to acknowledge fcarce any refemblance. But without the difpofition to truck, barter, and exchange, every man muft have procured to himfelf every neceffary and conveniency of life which he wanted. All muft have had the fame duties to perform, and the fame work to do, and there could have been no fuch difference of employment as could alone give occafion to any great difference of talents.
As it is this difpofition which forms that dif- ference of talents, fo remarkable among men of different profefllons, fo it is this fame difpofition which renders that difference ufeful. Many tribes of animals acknowledged to be all of the fame fpecics, derive from nature a much more remarkable diftinftion of genius, than what, antecedent to cuftom and education, appears to take place among men. By nature a philofopher' is not in genius and difppfition half fo different from a ftreet porter, as a maftiff is from a grey- hound, or a greyhound from a fpanicl, or this
laft
THE WEALTH OF NATIONS. ij
laft from a fhepherd's dog. Thofe difFerent chap. tribes of animals, however, though all of the .^_J fame Ipecies, are of fcarce any ufe to one an- other. The ftrength of the maftifF is not in the leaft fupported either by the fwiftnefs of the greyhound, or by the fagacity of the Ipaniel, or by the docility of the fhepherd's dbg. The efFefts of thofe different gcniufes and talents, for want of the power or difpofition to barter and ex- change, cannot be brought into a common ftock, and do not in the leaft contribute to the better accommodation and conyeniency of the Ipecies, Each animal is ftill obliged to fupport and de- fend itfelf, ' feparately and independendy, and derives no fort of advantage from that variety of talents with which nature has diftinguifhed its fellows. Among men, on the contrary, the moft diffimilar geniufes are of ufe to one another; the! difFerent produces of their refpedtive talents, by the general difpofition to truck, barter, and ex- change, being brought, as it were, into a com- mon ftock, where every man may purchafe what- ever part of the produce of other men's talents he has occafion for.
CHAP.
^ THE NATURE AND CAUSES OF
V'. C H A P. III.
^at the Divifion of Labour is limited by the
Extent of the Market,
S it is the power of exchanging that gives occafion to the divifion of labour, fo the extent of this divifion muft always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very fmall, no perfon can have any encourage- ment to dedicate himfeif entirely to one employ- ment, for want of the power to exchange .all that furplus part of the produce of his own labour, which is over and above his own confumption, for fuch parts of the produce of other men's labour as he has occafion for.
There are fbme forts of induftry, even of the lowefl: kind, which can be carried on no where but in a great town. A porter, for e^mple, can find employment and fubfiftencc in no other place. A village is by much too narrow a Iphere for him; even an ordinary market town is fcarce large enough to afford him conftant occupation. In the lone houfes and very fmall villages which are fcattered about in fo defert a country as the Highlands of Scotland, every farmer muft be butcher, baker and brewer for his own family. In fuch fituations we can fcarce expeĀ£t to find even a fmith, a carpenter, or a mafon, within lefs than twenty miles of another of the fame trade. The fcattered JRmilies that
live
THE WEALTH OF NATIONS. ty
live at eight or ten miles diftance from the c h a p. neareft of them, muft learn to perform them- "'* fclves a great number of little pieces of work, for which, in more populous countries, they would call in the affiftance of thofe workmen. Country workmen are almoft every where obliged to apply themfelves to all the different branches of induftry that have fo much affinity to one another as to be employed about the fame fort of materials. A country carpenter deals in every fort of work that is made of wood : a country fmith in every fort of work that is made of iron. The former is not only a carpenter, but a joiner, a cabinet maker, and even a carver in wood, as well as a wheelwright, a plough-wright, a cart and waggon maker. The employments of the latter arc ftill more various. It is impoffible there Ihould be fuch a trade as even that of a nailer in the remote and inland parts of the- Highlands of Scotland. Such a workman at the rate of a thoufand nails . a day, and three hundred working days in the year, will make three hundred thoufand nails in the year. But in fuch a fijtuation it would be impoffible to difpofe of one thoufand, that is, of one day's work in the year.
As by means of water-carriage a more exten- five market is opened to every fort of induftry than what land-carriage alone can affi^rd it, fo it is upon the fea-coaft, and along the banks of na- vigable rivers, that induftry of every kind natu- rally begins to fubdivide and improve itfelf^ and it is freq3endy not till a long time after that
^ thofe
28 THE NATURE AND CAUSES OF
/
BOOK thofe improvements extend themfelves to the in- }'_ , land parts of the country. A broad-wheeled waggon, attended by two men, and drawn by eight horfes, in about fix weeks time carries and brings back between London and Edinburgh near four ton weight of goods. In about the lame time a Ihip navigated by fix or eight men, and failing between the ports of London and Leith, frequently carriesi and brings back two hundred ton weight of goods. Six or eight men, therefore, by the help of water-carriage, can carry and bring back in the fame . time the iame quantity of goods between London and Edinburgh, as fifty broad -wheeled waggons, at- tended by a hundred men, and drawn by four hundred horfes. Upon two hundred tons of goods, therefore, carried by the cheapeft land- carriage from London to Edinburgh, there muft be charged the maintenance of a hundred men for three weeks, and both the maintenance, and, what is nearly equal to the maintenance, the wear and tear of four hundred horfes as well as of fifty great waggons. Whereas, upon the fame quantity of goods carried by water, there is to be charged only the maintenance of fix or eight men, and the wear and tear of a ftiip of two hundred tons burthen, together with the value of the fuperior rifk, or the difference of the infu- rance between land and water-carriage. Were there no other communication between thofe two places, therefore, but by land-carriage, as no goods could be tranlported from the one to the other, except fuch whofe price was very confi-
derable
THE WEALTH OF NATIONS. 29
derable in proportion to their weight, they could carry on but a fmall part of that commerce which at prefent fubfifts between them, and con- fequently could give but a fmall part of that en- couragement which they at prefent mutually alFord to each other's induftry. There could be litde or no commerce of any kind between the diftant parts of the world. What goods could bear the expence of land- carriage between Lon- don and Calcutta? Or if there were any fo pre- cious as to be able to fupport this expence, with what fafety could they be tranfported through the territories of fo many barbarous nations? Thofe two cities, however, at prefer^t carry on a very confiderable commerce with each other, and by mutually affording a market, give a good deal of encouragement to each other's induftry.
Since fuch, therefore, are the advantages of water-carriage, it is natural that the firft improve- ments of art and induftry ftiould be made where this conveniency opens the whole world for a market to the produce of every fort of labour, and that they ftiould always be much later in ex- tending therhfelves into the inland parts of the country. The inland parts of the country can for a long time have no other market for the greater part of their goods, but the country which lies round about them, and feparates them from the fea-coaft, and the great navigable ri- vers. The extent of their market, therefore, muft for a long time be in proportion to thei riches and populdufnefs of that country, and con-/ fequently their improvement muft always be pofj
terior
I
3Ā« THE NATURE AND CAUSES OP
ā
BOOK tenor to the improvement of that country. In our North American colonies the plantations have conftantly followed either the fea-coafl: or the banks of the navigable rivers, and have fcarce any where extended themfclves to any confiderable diftance from both. ; The nations that, according to the beft authenticated hiftory, appear to have been firft civilized, were thofe that dwelt round the coail: of the Mediterranean fea. That fca, by far the greateft inlet that is known in the world, having no tides, nor confequendy any waves except fuch as are caufed by the wind only, was, by the fmoothnefs of its farface, as well as by the mul- titude of its iflands, and the proximity of its neighbouring fhores, extremely favourable to the infant navigation of the world -, when, from their ignorance of the compafs, men were afraid to quit the view of the coaft, and from the imper- feftion - of the art of Ihip-building, to abandon thcmfelves to the boifterous waves of the ocean. To pafs beyond the pillars of Hercules, that is, to fail out of the Streights of Gibraltar, was, in the antient world, long confidered as a mofl wonderful and dangerous exploit of navigation. It was late before even the Phenigians and Car- thaginians, the moft fkilful navigators and fhip- builders of thofe old times, attempted it, and they were for a long time the only nations that did attempt it.
Of all the countries on the coaft of the Medi- terranean fea, Egypt feems to have been the firfl
in which either agriculture or manufaftures were
cultivated
THE WEALTH OF NATIONS. 31
Cultivated and improved to any confiderable chap. degree. Upper Egypt extends itfelf nowhere above a few miles from the Nile, and in Lower Egypt that great river breaks itfelf into many different canals, which, with the afliftance of a little art, feem to have afforded a communica- tion by water-carriage, not only between all the great towns, but between all the confiderable villages, and even to many farm-houfes in the country j nearly in the lame manner as the Rhine and the Maefe do in Holland at prefent. The extent and eafinefs of this inland navigation was probably one of the principal caufes of the early improvement of Egypt.
The improvements in agriculture and manu- faftures feeni likewife to have been of very great antiquity in the provinces of Bengal in the Eaft Indies, and in fome of the eaftern provinces of China; though the great extent of this antiquity is not authenticated by any hiftories of whofe authority, we, in this part of the world, are well aflured. In Bengal the Ganges and feveral other great rivers form a great number of navigable canals in the fame manner as the Nile does in Egypt. In the Eaftern provinces of China too, feveral great rivers form, by their different branches, a multitude of canals, and by commu- nicating with one another afford an inland navi- gation much more extenfive than that either of the Nile or the Ganges, or perhaps than both of them put together. It is remarkable that neither the antient Egyptians,^ nor the Indians, nor the Chinefe, encouraged foreign commerce, but
feem
32 THE NATURE AND CAUSES OF
Ā»
BOOK feem all to have derived their great opulence
- from this inland navigation.
All the inland parts of Africa, and all that part of Afia which lies any confiderable way- north of the Euxine and Calpian feas, the antient Scythia, the modern Tartary and Siberia, feem in all ages of the world to have been in the fame barbarous and uncivilized ftate in which we find them at prefcnt. The fea of Tartary is the fro- zen ocean which admits of no navigation, and though fome of the greateft rivers in the world run through that country, they are at too great a diftance from one another to carry commerce and communication through the greater part of it. There are in Africa none of thofe great in- lets, fuch as the Baltic and Adriatic feas in Europe, the Mediterranean and Euxine feas in both Europe and Afia, and the gulphs of Arabia, Perfia, India, Bengal, and Siam, in Afia, to carry maritime commerce into the interior parts of that great continent : and the great rivers of Africa are at too great a difl:ance fi-om one ano- ther to give occafion to any confiderable inland navigation. The commerce befides which any nation can carry on by means of a river which does not break itfelf into any great number of branches or canals, and which runs into another territory before it reaches the fea, can never be very confiderable; becaufe it is always in the power of the nations who poflefs that other terri- tory to obfl:ru6t the communication between the upper country and the fea. The navigation of the Danube is of very little ufe to the difix^rent
ftates
N
THE WEALTH OP ^TIONS. 33
ftates of Bavaria, Auftria and Hungary, in com- ^ ^^^ **ā¢ parifon of what it would be if any of them pof- fefled the whole of its courfe till it falk into the Black Sea.
w
CHAP. IV.
Of the Origin and Vfe of Money.
HEN the divifion of labour has been once thoroughly eftablilhed, it is but a , very fmall part of a man's wants which the pro- duce of his own labour can fupply. He fupplies the far greater part of them by exchanguig that furplus part of the protjuce of his own labour, which is over and above his own confumption, for fuch parts of the prpduce of other men's la- bour as he has occafion for. Every man thus lives by exchanging, or becomes in fome mea- fure a merchant, and the fociety itfclf grows to be what is properly a commercial fociety.
But when the divifion of labour firft began to take place, this power of exchanging muft fre- quently have been very much clogged and em- barrailed in its operations. One man, we fhall fuppofe, has more of a certain commodity than he himfelf has occafion for, while another has lefs. The former confequently would be glad to difpofe of, and the latter to purchafe, a part of this fuperfluity. But if this latter fhould chance to have nothing that the former ftands in ijced of, no exchange can be made betwequ them.
Vol. I. D The
34; THE NATURE AND CAUSES OF
BOOK The butcher has more meat in his Ihop than he himfclf can confume, and the brewer and the baker would each of them be willing to purchafe a part of it. But they have nothing to offer in^ exchange, except the different produftions of their refpeftive trades, and the butcher is already provided with all the bread and beer which he has immediate occafipn for. No exchange can, in this cafe, be made between them. He cannot be their merchant, nor they his cuftomersj and they are all of them thus mutually lefs fervice- able to one Ā»iother. In order to avoid the in- conyeniency of fuch fituations, every prudent man irr every period of fociety, after the firft eftablilhraent of the divifion of labour, muft na- turally have endeavoured to manage his affairs in fiich a manner, as to have at all times by him, hefides the; peculiar produce of his own induftry, a certain: quantity of fome one commodity or other, fuch as he imagined few people would be likely to refufe in exchange for the produce of their induflry.
Many different commodities^ it is probable. Were fuccefTively both thought of and employed for this purpofe. In the rude agQS of fociety, cattle are faid to have been the common inftru- ment of commerce i and, though they muft have been a moft inconvenient one, yet in old times we find things were frequently valued according tp the nunaber of cattle which had been given in exchange for them. The armour of Diomede, fays Homer, coft only nine oxeni but that Qjf Glaucus coft an^ hundred oxen. Salt is faid to
be
! ^1
THE WEALtla" OJ?' NAtfONS. j^
be thd eomrhoh inWfument' of commerce? ahd ex-^ ^ ?v^^' changes ifiAbyffinia; a Ipecics' of fhclls m fomc parts^ of the coaft of India; dried cod at New- foundland; tobacco in Virginia; fiigar in {om6 of our Weft India colonies-; hides or drefled lea- ther in fome other countries; and there is at this day a' village in Scotland where it is not uncofTi7 ^ mon, i atm told, for a worknian to carry nails in- ftead of nnoney to" the baker's fhop or thfe afc- houfe.
In all cooatries, however, fneA feem at laft td have been determined by irrefiftible realbiis t6 give the preference,^ for tMs employnient, to me- tak above every other commodify* Metals can not only be kept with as little lofs as* any other coinmodity,' lcarcĀ« aiiy tiling being lefs perifh^ able th^' they aire, bat they can iikewife, >^ith^ out any lofsy be divided intfo any number of parts, as by ftifion th<yfe parts can eafily be re^ united again; a quality which no other equally dur^le . comrnoditics poflfefs, and which more than any other quality renders them fit to be the iriftrtimehts of comni^rcie tod circulation. The man v^ho wanted to buy fak, for exarfiple, and had nothing but cattle to give in exchange for it, liiuft have been obliged ā¢ to buy fait to the value of a whole ox, or a whole fh^p, at a time. He c6uld feldom buy tefs than this, becaufe what he was to give for it could feldom be di- vided without lofs ; and If he had a ndind to buy more, he muft, for the fame .reafons, have been obliged to buy double or triple the quan- tity, the value, to wit, of two or three oxen, or
Da of
36 THE NATURE AND CAUSES OP
B o o K Qf two or three fheep. If, on the contrary, in- ftead of fheep or oxen, he had metals to give in exchange for it, he could eafily proportion the quantity of the metal to the precife quantity of the commodity which he had immediate occa- fion for.
Different metals have been made ufe of by different nations for this purpofe. Iron was the common inftrument of commerce among the an- tient Spartans; copper among the antient Ro- mans; and gold and filver among all rich and commercial nations.
Those metals feem originally to have been made ufe of for this purpofe in rude bars, without any ftamp or coinage. Thus we are told by Pliny *, upon the authority of Timasus, art an- tient hiftorian, that, till the time of Servius Tul- lius, the Romans had no ā¢ coihed money, but m^e ufe of unftampcd bars of copper, to pur- chafe whatever they had occafion for. Thefe rude bars, therefore, performed at this time the function of money.
The ufe of metals in this rude ftate was at- tended with two very confiderable inconvenien- cies; firft, with the trouble of weighing; and, fecondly, with that of aflaying them. In the precious metals, where a fmall difference in the quantity makes a great difference in the value, even die bufinefs of' weighing, with proper exaft- nefe, requires at leaft very accurate weights and fcales. The weighing of gold in particular is an
^ Plin. Uifi. Nat. lib* 33. icap. ^.
operation
THE WEALTH OF NATIONS. 37
operation of fome nicety. In the coarfer metals, chap. indeed, where a fmall error would be of little confequence, lets accuracy would, no doubt, be neceffary. Yet we fhould find it exceffively troublefonae, if every tintie a poor man had oc- cafion either to buy or fell a farthing's worth of goods, he was obliged to weigh the far- thing. The operation of affaying is ftill more difficult, ftill more tedious, and, unlefs a part of the metal is fairly melted in the crucible, with proper diflblvents, any conclufion that can be drawn from it, is extrerriely uncertain. Before the inftitution of coined money, how- ever, unlefs they went through this tedious and difficult operation, people muft always have been liable to the groffeft frauds and impofitions, and inftead of a pound weight of pure filver, or pure copper, might receive in ex- change for their goods, an adulterated compofi- tion of the coarfeft and cheapeft materials, which liad, however, in their outward appearance, been inade to refcmble th6fe metals. To prevent fuch abufes, to facilitate exchanges, and thereby to encourage all forts of induftry and commerce, it has been found neceffary, in all countries that have made any confiderable advances towards improvement, to affix a public ftamp upon cer- tain quantities of fuch particular metals, ^ as were in thofe countries commonly made ufe of to pur- chafe goods. Hence the origin of coined mo- hey, and of thofe public offices called mints; inftitutions exactly of the fame nature with thofe of the aulnagers and ftampmafters of woollen
D 3 and
$B THE NATURE ANP CAUSES OF
ā
B .o o K and linen doth. All of tiysm are equally m^aM to afcert^in, by njeans pf a public ft^^nnp, the quantity and uniforni goodnefs of thoic difFereiit comoiodities when brought to qiarket.
The firft public flumps of thijs kind that w.ere a4ixe4 to the current naetals, feem in o^any cafes to have been intended to afcertgiix, what it was both moft difficult and moft important to afcer- t^in, the goodnefs or finenefs of the metal, and to have refembled the fterling mark which is. at prefent affixed to plate and bu^ of filver, or the Spanifli mark which is fometimes affixed to ingots pf gold, and . which being ftruck only vpon one fide of the piece, and not covering t^e whole furface, afcertains the finenefs, but not tjie weight of the metaj. ā¢ Abraham weighs to Ephron the four hundred ihekels of filver which he had agreed to pay for the field of Machpelah. They are faid however to be the current money> of the merchant, and yet are received by weight ^nd not by tale, in the fame manner ^$ ii^gots of gpld and bars o.f filver are nt prefent. The re- venues of the antient Saxon kings of Ā£jQ\gkod ^rje faid to have been^paid, not in money but in kind, that is, in victuals and provifions of all forts. William the conqueror introduced the cuftom of paying them in money. This mo^ey, however, was, for a long time, received at the exchequer, by weight and not by tale.
The inconvcniency and difficulty of weighing thojfe inetals with exaftnefs gave occafion to the inftitution of coins, of which the ftamp, covering entirely bpth fides of the piece and fooKtimca
the
THE WEALTH OF NATIONS. 39
the edges too, was fuppofed to afccrtain not only c h^ pĀ« the finenefs, but the weight of the metal. Such coios, tKerefore, were received by tale as at pre- fcnt, without the trouble of weighing.
The denominations of thofe coins feem ori- ginally to have expreffed the weight or quantity of metal contained in them. In the time of Servius TuUius, who firft coined money at , RonK, the Roman As or Pondo contained a Roman pound of good copper. It was divided in the fame manner as our Troyes pound, into twelve ounces, each of which contained a real ounce of good copper. The Englifh pound fterling in the time of Edward I., contained a pound. Tower weight, of filver of a known fine- nefs. The Tower pound feems to have been fomething more than the Roman pound, and fomething lefs than the Troyes pound. This laft was not introduced into the mint of England ^tilh the 1 8th of Henry VIII. The French livrĀ« contained in the time of Charlemagne a pound, Troyes weight, of filver of a known finenefs. The fair of Troyes in Champaign was at that time frequented by all the nations of Europe, and the weights and meafures of fo famous a market werc^ generally known and efteemed. The Scats money pound contained, from the time of Alexander the Firft to that of Robert Bruce, a pound of filver of the fame weight and finenefs with the Englifh pound fterling. Eng- !ilh, French, and Scots pennies too, contained all of them originally a real pennyweight of filver, the twentieth part of an .ounce, and the two-
D 4 hundred-
40 THE NATURE AND CAUSES OF
BOOK hundrcd-and-fortieth part of a pound. The Ihil- ling too feems originally to have been the deno- mination of a weight. fVhen wheat is at twelve Jhillings the quarter^ fays an antient ftatute of Henry III. then waft el bread of a farthing ftjall weigh eleven fl)illings and four pence. The pro- portion, however, between the Ihilling ^nd either the penny on the one hand, or the pound on the other, feems not to have been fo conftant and uniform as that between the penny and the pound. During the firft race of the kings of France, the French fou or fliilling appears upon different occafions to have contained five, twelve, twenty, and forty pennies. Among the antient Saxons a Ihilling appears at one time to have contained only five pennies, and it is not impro- bable that it may have been as variable among them as among their neighbours, the antient Franks. From the time of Charlemagne among the French, and from that of William the Con- queror among the Englifh, the proportion be- tween the pound, the (hilling, and the penny, feems to have been uniformly the fame as at pre- fent, though the value of each has been very dif- ferent. For in every country of the world, I believe, the avarice and injuftice of princes and fovereign ftates, abufing the confidence of their fubjefts, have by degrees diminiftied the real quantity of metal, which had been originally contained in their coins. The Roman As, in the latter ages of the Republic, was reduced to the twenty-fourth part of its original value, and, in- ftead of weighing a pQund, came to weigh only
half
THE WEALTH OF NATIONS. 41
half an ounce. The Englilh pound and penny ^ ^^ **ā¢ contain at prefent about a third only ; the Scots pound and penny about a thirty-fixth ; and the French pound and penny about a fixty-fixth part of their original value. By means of thofe operations the princes and fovereign ftates which performed them were enabled, in appearance, to pay their debts and to fulfil their engagerrtents with a fmaller quantity of filver than would otherwife have been requifite. It was indeed in appearance only; for their creditors were really defrauded of a part of what was due to them. All other debtors in the ftate were allowed the fame privilege, and might pay with the fame nominal fum of the new and debafed coin what- ever they had borrowed in the old. Such ope- rations, therefore, have always proved favourable to the debtor, and ruinous to the creditor, and have fometimes produced a greater and more univerfal revolution in the fortunes of private perfons, than could have been occafioned by a very great public calamity.
It is in this manner that money has become in all civilized nations the univerfal inftrument of commerce, by the intervention of which goods of all kinds are bought and fold, or exchanged for one another.
What are the rules which men naturally ob- ferve in exchanging them either for money or for one another, I fhall now proceed to examine. Thefe rules determine what may be called the relative or cjcchangeablc value of goods.
The
42 THE NATURE AND CAUSES OF
B OO tL Tjjb ^Qrd YALvz, it is to be ohferved. has
Mm
v^-y ā > two different meanings^ and Ibmetimes cjpveBcs the utility of fonie particular objed, and ibtne- ' times the power of purchafing other goods which the pofleffion of that objeft conveys. The one may be called " value in ufe ;" the other, " value ^' in exchange/' The things which have the greatefl value in ufe have frequently. little or no value in exchange > and on the contrary, thofe which have 'the greatefl value in exchange have frequently little or no value in ufe* Nothing is more ufeflil than water: but it will purchafe fcarce any thing; icarce any thing can be had in exchange for it. A diamond, on the con- trary, has icarce any value in ufe; but a very great quantity of odier goods may frequently be had in exchange for it.
In order to inveftigate the principles which regulate the exchangeable value of commodities, I ihall endeavour to (hew, V First, what is the real meafure of this ex-
changeable value; or, wherein confifts the real price of all commodities.
Secondly, what are the different parts of which this real price is compofed or made up.
And, laflly, what are the different circum- ftances which fometimes raife fbme or all of thefe different parts of price above, and fome- jimes fink them below their natural or ordinary rate; or, what are the caufes which fometimes hinder the market price, that is, the actual price of commodities, from coinciding exadly with ifvhat may be called their natural price,
9 I SHALL
TIffi WEALI^ OF NATIONS. 43
I s^ALL ā¬iideayaur tp eixplain, as fully wd ^ "y^^* diitindUy a$ I can, ,thole three fubjeĀ£U iq the three following chapters, for which I muft very earneftly eatreat both the patience and attention of the reader : his patience in order to examine a deitail wh^c^ rnay perhaps iia ipme places ap- pear unaeceCarily tedious; and his atitention in order to underftand what may, perhaps, afte:r the fulieft explication which I am capable of giving of it,^ appear ftiU in &>mā¬ degree obicure. I am alway3 willing to run ibme hazard of being tedioys in order to be fure that I am peHpicuous ; and after taking the i^tmoift paiins that I can to be perfpicuous, forae obfcwrky may ftill appear to remain upon a fubjeft in its own nature ex- tremely abftradtcd.
ā¢*āā¢*ā¢ā¢
CHAP. V.
Of the real and nominal F rite of Commodities^ ^r of their Price in Lai^ur, and their Price in Money.
Tr> VERY man is rich or poor according to X-^ the degree in which he can afford to enjoy the neccffaries, conveaiencies, and amufements (tf human life. But after the divifion qĀ£ labour has once thoroughly taken place, it is but a very fmall part of thefe with which a man's own la- bour can fi^pply him. The far greater part of them he muft derive from the labour of other
people,
Ā«
V
44 THE NATURE AND CAUSES OF
BOOK j}eoplc, and he muft be rich or poor according to the quantity of that labour which he can comnnand, or which he can afford to purchafe. The value of any commodity, therefore, to the perfon who poffefles it, and who means riot to ufe or confume it himfelf, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchafe or command. Labour, therefore, is the real mea- fure of the exchaogeable value of all commodities. The real price of every thing, what every thing really cofts to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dilpofe of it or exchange it for fomething elfe, is the toil and trouble which it can fave to himfelf, and which it can impofe upon other people. What is bought with money or with goods is purchafed by labour, as much, as what we acquire by the toil of our own body. That money or thofe goods indeed fave us this toil. They contain the value of a certain quantity of labour which we exchange for what is fuppofed at the time to contain the value of an equal quantity. ^ Labour was the firft price, ^ the original purchafe- money that was paid for all things. It was not by gold or by filver, but by labour, that all the wealth of the world was originally purchafed ; and its valuef to thofe who poffefs it, and who want to ex- change it for fome new produftions, is precifely equal to the quantity of labour which it can enable them to purchafe or command.
Wealth,
THE WEALTH OF NATIONS. 45
Wealth, as Mr, Hobbes fays, is powen But ^ ^^ ^* the perlbn who either acquires, or fucceeds to a great fortune, does not neceffarily acquire or fucceed to any political power, either civil or military. His fortune may, perhaps, afford hina the means of acquiring both, but the mere pofleflipn of that fortune does not neceflarily convey to him either. The power which that pofleffion immediately and direftly conveys to him, is the power of purchafing ; a certain com- mand over all the labour, or over all the produce of labour which is then in the market. His for- tune is greater or lefs, precifely in proportion to the extent of this power; or to the quantity either of other men's labour, or, what is the fame thing, of the produce of other men's labour, which it enables, him to purchafe or command. The exchangeable value of every thing muft always be precifely equal to the extent of this power which it conveys to its owner.
But though labour be the real meafure of the exchangeable value of all commodities, it is not that by which their value is commonly eftimated. It is often difficult to afcertain the proportion between two different quantities of labour.' The time (pent in two different forts of work will not always alone deterniine this proportion. The different degrees of hardfhip eadured, and of ingenuity exercifed, muft likcwife be taken into account. There may be more labour in an hour's hard work than in two hours eafy bufinefs 5 or in an hour's application to a trade which it OQ& ten years labour to learn, thao in a
month's
1
46 THE NATURE AND CAUSES OF
ā¢
* ^j^^ month's irtdxj(try at aii ordmary aitd obvious employment. But it is not eafy to find any ac- curate meafure citlier of hardftiip or ingenuity, lit exchanging indeed the diflferent produftions of difFerertt forts of labour for one another, fome allowance is commonly made for both. It is ^djufted, however, not by any accurate meafure, but by the higgling and bargaining of the mar- feet, according to that fort of rough equality which, though not exaft, is fufficient for carrying bn the bufinefs of common life.
Every commodity befides, is more frequendy exchanged for, and thereby compared with, othci? commodities than with labour. It is more natural therefore, to eftimate its exchangeable value by the quantity of fome other commodity than by that of the labour which it can purchafe. The greater part of people too* underftand better what is meant by a quantity of a particular com- modity,^ than by a quantity of labour. The one is a plain palpable objedt; the other an abftraft notion, which, though it can be made fufEciently intelligible, is not altogether fo natural and obvious.
But when barter ceafes, and money has become the cornmon inftrument of commerce, every particular commodity is mpre frequently ex- changed ,for money than for any other commo- dity. The butcher feldom carries his beef S ,his niutton to the baker, or the brewer, in order to exchange them for bread or for beer y but he carries them to the. market, where he exchanges
them for money, and afterwards exchanges that
money
THE WEALTH OP NATIONS. 47
money for bread and for beer. The quantity ^ ^^ ^' of mpney which he gfets for them regulates too the quantity of bread and beer which he can after- wards purchafe. It is more natural and obvious ta him, dierefore, to eftimate their value by the quantity of jnoney, the commodity for which he immediately exchanges them, than by that of bread and beer, the commodities for which he can exchange them only by the intervention of toother commodity; and rather to fay that his butcher's meat is worth threepence or fourpence a pound, than that it is worth three or four pounds of bread, or three or four quarts of fmall beer. Hence it comes to pafs, that the ex- changeable value of every commodity is m\)rc frequently eftimated by the quantity of money, than by the quantity either of labour or of any other commodity which can be had in exj. change for it.
Gold and filver, however, like every other commodity, vary in their value, are fometimes cheaper and fometimes dearer, fometimes of eafier and fometimes of more difficult purchale. The quantity of labour which any particular quantity of them can purchafe or command, or the quan- tity of other goods which it will exchange for, depends always upon the fertility or barrcnnefs of the mines which happen to be known about ^e time when fuch exchanges are made. The difcovery of the abundant mines of America reduced-, in the fixteenth century, the value of gold and filver iri Europe to about a third of what it had been before; As it coft lefs labour
to
48 THE NATURE AND CAUSES OF
B 0^0 K to bring thofe metals from the mine to the
market, fo when they were brought thither they
could purchafe or command lefs labour; and
this revolution in their value, though perhaps
the greateft, is by no means the only one of
which hiftory gives fome accqunt. But as a
meafure of quantity, fuch as the natural foot,
fathom, or handful, which is continually varying
in its own quantity, can never be an accurate
meafure of the quantity of other things; fo a
commodity which is itfelf continually varying
in its own value, can never be an accurate
meafure of the value of other commodities.
Equal quantities of labour, at ^11 times and
places, may be faid to be of equal value to the
ā¢labourer. In his ordinary ftate of health, ftrength
and fpirits ; in the ordinary degree of his fkill
and dexterity, he muft always lay down the fame
portion of his eafe, his liberty, and his happi-
nefs. The price which he pays muft always be
the fame, whatever may be the quantity of goods
which he receives in return for it. Of thefe,
indeed, it may fometimes purchafe a greater and
fometimes a fmaljer quantity; but it is their
value which varies, not that of the labour which
purchafes them. At all times and places that is
dear which it is difficult to come at, or which it
cofts much labour to acquire; and that cheap
which is to be had eafily, or wth very little
labour. Labour alone, therefore, never varying
in its own value, is alone the ultimate and real
ftandard by which the value of all commodities
can at all times and places be eftimated and
compared*
THE WEALTH OF NATIONS. 49
compared. It is their real price ; money is their ^ " ^ p. nominal price only.
But though equal quantities of labour are al- ways of equal value to the labourer, yet to the perfon who employs him they appear fometimes to be of greater and fometimes of fmaller value. He purchafes them fometimes with a greater and fometimes with a fmaller quantity of goods, and to him the price of labour feems to vary like that of all other things. It appears to him dear in the one cafe, and cheap in the other. In reality, however, it is the goods which are cheap in the one cafe, and dear in the other.
In this popular fenfe, therefore, labour, like commodities, may be faid to have a real and a nominal price. Its real price may be faid to confift in the quantity of the neceffaries and con- veniences of life which are given for it; its no- minal price, in the quantity of money. The labourer is rich or poor, is well or ill rewarded, in proportion to the real, not to the nominal price of his labour.
The diftinftion between the real and the no- minal price of commodities and labour, is not a matter of mere fpeculation, but may fometimes be of confiderable ufe ia praftice. The fame real price is always of the fame value; but on account of the variations in the value of gold and filver, the fame nominal price is fometimes of very different values. When a landed eftate, therefore,^ is fold with a refervation of a perpe- tual rent, if it is intended that this rent Ihould always be of the fame value, it is of importance
Vol. I. E to
50 THE NATtTRE AND CAUSES OF
9 o o K to ^hc family in whofc favour it is referved, that it Ihould not confifl: in. a particular fum of money# Its value would in this cafe be liable to varia- tions of two different kinds ; firft, to thole which arife from the different quantities of gold and filver which are contained at different times in coin of the fame denomination;- and, fecondiy, to thpfe which arife from the different values of equal quantities of gold and filver at different times.
Princes and fovereign fiates have frequently fancied that they had a temporary interefl to di- minifh the qtvantity of pure metal contained in their coins j but they feldom have fancied that they had any to augment it. The quantity of metal contained in the coins, I believe of'^^ll nations, has, accordingly, been almoft continu- ally diminifhing, and hardly ever augmenting. Such variations therefore tend almofl always ta ^iminifh the value of a money rent.
The difcovery of the mines of America dimi- nifhed the value of gold and filver in Europe^ This diminution^ it is commonly fuppofed, though I apprehend without any certain proof, is flilP geing on gradually, and is likely to continue to- do fo for a long time.* Upon this fuppofition, dierefore, fuch variations are more likely to di- rninifh^ . than to augment the value of ar money ront, even though it fhould be ftipulated to' be paid, not in fuch a quantity of coined money ,of fuch a denomination (in fo many pounds flerling, for example), but in fo many ounces either of pure filver, or of filver of a certain- ftandard.
The-
9
THE WEALTH OP NATIONS, '51
Tni rents \Vhich have been referved in corn ^ ^^^ ^ā¢ have preferved their value much better than thofe which have been referved in money, even where the denomination of the coin has not been altefedi By the i8th of Elizabeth it was enafted. That a third of the rent of all college leafes ftiould be referved in corn/ to be paid, either in kind j or according to the current prices at th^ neareft public market. The money arifing from this corn rent, though originally but a third of the whole, is in the prefeqt times, according to Doftor Bkckftone, commonly near double of what arifes from the other two-thirds. The old money rents of colleges muft, according to this account, have funk almoft to a fourth part of their ancient value,- or are worth little more than a fourth part of the corn which they were formerly worth. But fince the reign of Philip and Mary the denomination of the EngKfh coin has undergone little or no alteration, and the fame number of pounds, fhillihgs and pence have cfiht^ncd very nearly the fame quantity of pure filver. This degradation, therefore, in the value of the money rents of colleges, has arifen alto- gether from the degradation in the value of filver.
When the degradation in the value of filver is combined with the diminution of- the quantity of it contained in the coin of the fame denomi- nation, the lofs is frequently ftill greater. In Scotland; where the denomination of the coin has undergone^ much greater alterations than it ever did in England, and in France, where it has
E 2 under-
BOOK
I.
52 THE NATURE AND CAUSED OF
undergone ftill greater than it ever did in Scot- land, fome ancient rents, originally of confider- able value, have in this manner been reduced almoft to nothing.
EoiTAL quantitiies of labour will at diftant times be purchafed more nearly with equal quantities of corn, the fubfiftence of the labourer, than with equal quantities of gold and (ilver, or per- haps of any other commodity. Equal quan- tities of corn, therefore, will, at diftant times, be more nearly of the fame real value, or enable the poflelTor to purchafe or command more nearly the fame quantity of the labour of other people. They will do this, I fay, more nearly than equal quantities of almoft any other com- modity; for even equal quantities of corn will not do it exaftly. The fubfiftence of the la- bourer, or the real price of labour, as I fliall endeavour to fhow hereafter, is very different upon different occafions; more liberal in a fo- ciety advancing to opulence, than in one that is ftanding ftill} and in one chat is ftanding ftiil^ than in one that is going backwards. Every other commodity, however, will at any particular time purchafe a greater or fmaller quantity of labour in proportion to the quantity of fubfift- ence which it can purchafe at that time. A rent therefore referved in coi^ is liable only to the variations in the quantity of labour which a certain quantity of corn can purchafe. But a rent referved in any other commodity is liable, not only to the variations in the quantity of la- bour which any particular quantity of corn can
purchafe.
i
ā r
THE WEALTH OF NATIONS. 53
purchafe, but to the variations in the quantity of ^ ^^^ ^' corn which can be purchafed by any particular quantity of that commodity.
Though the real value of a corn rent> it is to be obferved however, varies much lefs from cen- tury to century thaff that of a money rent, it varies much more from year to year. The money price of labour, as I fhall endeavour to fhow hereafter, does not fluftuate froni year to year with the money price of corn, but feems to be every where accommodated, not to the tem- porary or occafional, bu|: to the average or ordi- nary price of that neceflary of life. The average or ordinary price of corn again is regulated, as I Ihall likewife endeavour to ftiow hereafter, by the value of filver, by the richnefs or barrennefs of the mines which fupply the market with that metal, or by the quantity of labour which muft be employed, and confequcntly of corn which muft be confumed, in order to bring any parti- cular quantity of filver from the mine to the market. But the value of filver, though it fome- times varies greatly from century to century, feldom varies much ftom year to year, but fre- ^ quently continues the fame, or very nearly the fame, for half a century or a century together. The ordinary or average money price of corn, therefore, may, during fo long a period^ con- tinue the fame or very nearly the fame too, and along with it the money price of labour, pro- vided, at leaft, the fociety continues, in other refpefts, in the fame or nearly in the fame con- dition. In the mean time the temporary and
E 3 occa-
54 THE NATURE AND CAUSES OF
B o^o K occafional price of corn may frequently be dou- ble, one year, of what h had been the year be- fore, or fluftuate, for example, from five and twenty to fifty (hillings the quarter. But when corn is at the latter price, not only the nominal, but the real value. of a corn rent will be double 6f what it is when at the former, or will com- tTiand double the quantity either of labour or of the greater part of other commodities 5 the money price of labour, and along with it that of moft other things, continuing the fame during all thefe fluftgations.
Labour, therefore, it appears evidently, is the only univerfal, as well as the only accurate meafure of value, or the only ftandard by whicl^ we can compare the values of different commo- dities at all times and at all places. We cannoc cftimate, it is allqwed, the real value of different commodities from century to century by the quantities of filver which were given for them. We cannot eftimate it from year to year by the quantities of corn. By the quajitities of labour we can, with the greateft accuracy, eflimate it both from century to century and fi-om year to year. From century to. century, corn is a better meafure than filver, becaufe, from century to. century, equal quantities of corn ^ill command the fame quantity of labour moje nearly thari equal quantities of filver. Frqm year ta year, on the contrary, filver is a better meafure thaa corn, bec^fe equal quantities of it wUl more nearly command the fanpe quantity of labour.
V
But
THE WEALTft OF NATIONS* '^ ' 5j
But though in eftablifhing perpetual rents, c ft a i*. Of even in letting very long leafes, it may be of ufc to diftinguilh between real and nominal price i it is of none in buying and felling, the more common and ordinary tranfaftions of hu- man life,
At the fame time and place the real and th^ nominal price of all commodities are exaftly in proportion to one another. The more or left money you get for any commodity, in the Lon- don market,, for example, the more or lefs la- bour it will at that time and place enable you to purchafe or command. At the fame tirxie and place, therefore, money is the exaft me^fure of the real exchangeable value of all commodities. It is fo, however, at the fame time and place only.
Thouch at diftant places, there is no regulaf proportion between the real and the money price of commodities, yet the merchant who carries goods from the one to the other has nothing to confider but their money price, or the difference between the quantity of filver for which he buys them, and that for which he is likely to fell them. Half an ounce of filver at Canton in China may command a greater quantity both of labour and of the neceflaries and convenii*nces of life, than an ounce at London. A commodity, therefore, which fells for half an ounce of filver ^t Canton may there be really dearer, of wort real importance to the man who poffeffes it there, than a commodity ^hich fells for an ounce at LrOndon ig to thĀ« cnan who poffefTes- it zt Lon-
E 4 ' don.
56 ā¢ * THE NATURE AND CAUSES OF
BOOK don. If a London merchant, however, can buy at Canton for half an ounce of filver, a commo- dity which he can afterwards fell at London for an ounce, he gains a hundred per cent, by the bargain, juft as much as if an ounce of filver was at London exadtly of the fame value as at Cantoq. It is of no importance to him that half an ounce of filver at Canton would have given him the command of more labour and of a greater quantity of the neceffaries and conve- niences of life than an ounce can do at London. An ounce at London v/ill always give him the command of double the quantity of all thefe, which half an ounce could have done there, and this is precifely what he wants.
As it is the nominal or money price of goods, therefore, which finally determines the prudence or imprudence of all purchafes and fales, and thereby regulates almoft the whole bufinefs of common life in which price is concerned, we cannot wonder that it fliould have Jbeen fo much more attended to than the real price.
In -fuch a work as this, however, . it may fome- tinoies be of ufe to compare the difitrent real values of a particular commodity at different times and places, or the different degrees of power, over the labour of other people which it may, upon different occafions, have given to thofe who pofTefTed it. We muft in this cafe compare, not fo much the different quantities of filver for which it was commonly fold, as the different quantities of labour which thofe dif- ferent quantitifs^ of filver could have purchafed.
But
THE WEALTH OF NATIONS.
57
V
But the current prices of labour at diftant times ^^^ **ā¢ and places can fcarce ever be known with any degree of exaftnefs. Thofe of corn, though they have in few places been regularly re- corded, are in general better known and have been more frequently taken notice of by hifto- rians and other writers. We muft generally,^ therefore, content ourfelves with them, not as* being always exactly in the fame proportion as.' the current prices of labour, but as being the neareft approximation which can commonly be had to that proportion. I fhall hereafter halve Qccafion to make feveral comparifons of this kind.
In the progrefs of induftry, commercial na- tions have found it convenient to coin feveral different metals into moneys gold for larger pay- ments, filver for purchafes of moderate value, and copper, or fome other coarfe metal, for thofe of ftill fmaller confideration. They have always, however, confidered one of thofe metals as more peculiarly the meafure of value than any of the other two ; and this preference feems . generally to have been given to the metal which they happened firft to make ufe qf as the in- ftrument of commerce. Having once begun to ufe it as their ftandard, which they muft have 4one when , they had no other money, they have generally continued to do fo even when the ne- ceflity was not the fame.
The Romans are faid to have had nothing but copper money till within five years before the
firft
tn THE NATURE AND CAUSES OF
BOOK firft Punic war *, when they firft began to coin filvcr. Copper, therefore, appears to have con- tinued always the meafure of value in that re- public. At Rome all accounts appear to have been kept, and the value of all eftates to have been computed, ^either in ^Jej or in Sejiertiu The As was always the denomination of a copper coin* The word Sejiertius fignifies two Affes and a half* Though the SfftertiiUy therefore, was originally a filver coin, its value was eftimated in copper. At Rome, one who owed a great deal of money, was laicj to have ^ great deal of other people's copper. ' .
The northern nations who eftablifhed them-- (elves upon the ruins of the Roman empire, fecn> to have had filver money from the firft beginning of their fettlements, and not to have known cither gold or copper coins for feveral ages there- after. There were filver coins in England in the time of the Saxons; but there was little goki coined till the time of Edward III. nor any cop- per till that of Janfies I. of Great Britain^ Irx England, therefore, and for the fame reafon, I believe, in all other modern nations of Europe^i a}} accounts are kept, and the value of all goods and of all eftates is generally computed in filver ;- and when we mean to exprefs the amount of 21 perfon's fortune, we feldom mention the number of guineas, but' the number of pounds fterling. which we fuppofe would be given for it.
ā¦ PIxĀ«y, lifi, xx-xiii. c, 3.
THE WEALTH OF NATIONS. 59
Originally, in all countries, I believe, a k- ^ " ^ ^ ,gal tender 'of payment could be rnade only in the coin of that metal, which was peculiarly con- fidered as the ftandard or meafure of value. In England, gold was not confidered as a legal ten- der for a long time after it was coined into mo- ney. The prpporiion between the values. of gold and iilver money was not fixed by any public law or proclamation s but was left to be fettled by the market. If a debtor oflfcred payment ir^ gold, the creditor might either rejcdt fuch pay-* ment altogether, or accept of it at fuch a valu* ation of the gold as he and hi$ debtor could agree upon. Copper is not at prefent a legal tender, except in the change of the fmaller Elver coins. In this ftate of things the diftinftion between the metal which was die ftandard, and that which was not the ftandard, was fomething more than $, nominal diftinflion.
In proceis of time, and as people became gradually more familiar with the ufc of the dif- ferent metals in coin, and confequently better acquainted with the proportion between their re- fpeftive values, it has in moft countries, I bcw lieve, been found convenient to afcertain thw proportion, and to declare by a public law that a guinea, for exa/mple, of fuch a weight and finenefs, Ihould exchange for oner-and- twenty Ihillings, or be a legal tender for a debt of that amount. In this ftate of things, and during the pontuiuance of any one regulated proportion of this kind, the diftinftion betweea the metal which is the ftandard, and that which is- not the
ftandard^
6o THE NATURE AND CAUSES OF
BOOK ftondard* becomes little more than a nominal diftinAion.
In confequence of any change, however, in this regulated proportion, this diftinĀ£tion be- comes, or at leaft leems to become, fomething more than nominal again. If the regulated value of a guinea, for example, was either re- duced to twenty, or raifed to two-and-twenty (hillings, all accounts being kept and almoft all obligations for debt being exprefied in lilver money, the greater part of payments could in either caie be made with the fame quantity of lilver money as hctore; but would require very different quantities of gold money ; a greater in the one cafe, and a fmaller in the other. Silver would appear to be more invariable in its value than gold. Silver would appear to meafure the value of gold, and gold would not appear to meafure the value of filver. The value of gold would feem to depend upon the quantity of filver which it would exchange for^ and the value of filver would not feem to depend upon the quan- tity of gold which it would exchange for. This difference, however, would be altogether owing to the cuftom 6f keeping accounts, and of expreffing the amount of all great and fmall fums rather in filver than in gold money. One of Mr. Drummond's notes for five-and-twenty or fifty guineas would, after an alteration of this kind, be ftill payable with five-and-twenty or fifty guineas in the fame manner as before. It would, after fuch an alteration, be payable with the fame quantity of gold as before, but with
very
THE WEALTH OP NATIONS. fii
very difFerent quantities of filvcr. In the pay- ^ h^a p* ment of fuch a note, gdld would appear to be more invariable in its value than filver. Gold would appear to meafore the value of filver, and filver would not appear to meafure the value of gold. If the cuftom of keeping accounts, and of expreffing promiffory notes and other obligations for money in this manner, ihould ever beconfic general, gold, and not filver, would be con- fidered as the metal which was peculiarly the ftandard or meafure of value.
In reality, during the continuance of any onq regulated , proportion between the refpeclive va- lues of the different metals in coin, the value of the moft precious metal regulates the value of the v/hole coin. Twelve copper pence con- tain half a pound, avoirdupois, of copper, of not the beft quality, which, before it is coined, is feldom worth feven-pence in filver. But as by the regulation twelve fuch pence are ordered to exchange for a ftiilling, they are in the market confidered as worth a (hilling, and a fliilling can at any time, be had for them. Even before the late reformation of the gold coin of Great Bri- tain, the gold, that part of it at leaft which cir- culated in London and its neighbourhood, was in general lefs degraded below its ftandard weight than the greater part of the filver. One- and twenty worn and defaced fhillings, however, were confidered as equivalent to a guinea, which perhaps, indeed, was worn and defaced too, but feldom fo much fo. The late regulations have brought the gold coin as near perhaps to its ftandard weight as it is poflible to bring the cur- rent
6z THE NATURE ANJ) CAUS^^ OP
/
ret\t coin of any nation ; and the order, to receivei no gold at the public officeis but by weight, is likely to preferve it fo, as long as that order is enforced. The filver coin ftill continues in thā¬ fame worn and degraded ftate as before the re- formation of the gold coin* In the market, how- ever, one-and-twenty (hillings of this degraded filver coin are ftill confidered as worth a guinea of this excellent gold coin.
The reformation of the gold coin has evidently raifed the value of the filver corn which can be ex-^ changed for it.
Ii* the Englifh mint a pound weight of gold is. coined into forty-four guineas and a half, which, at one-and-twenty fhillings the guinea, is equal to forty-fix pounds fourteen ftiillings and fix- pence. An ounce of fuch gold coin, therefore, is worth 3/. 17s. 10 Id. in filver. In England no duty or feigrtoragc is paid upon the coinage, and he who carries a pound weight or an ounce weight of ftandard -gold bullion 10 the mint, gets back a pound weight or an ounce weight of gold in coin, without any deduftion* Three pounds feventeen fliillings and ten-pence, halfpenny an ounce> therefore, is faid to be the mint price of gold in England, or the quantity of gold coin which the mint gives in return for ftandard gold bullion.
Before the reforraation of the gold coin, the price of ftandard gold bullion in the market had for many years been upwards of 3 /. ^18 j. fome- times 3 /* 1 9 J. and very frequently 4 /. an ounce 5 that fum, it is probable, in the worn and de^
graded
THE WEALTH OP NATIONS.
graded gold coin, feldom containing more than an ounce of ftandard gold. Since the refornnation of the gold coin, the market price of ftandard gold bullion feldom exceeds 3 /. 17^. 7 ^. an ounce. Before the reformation of the goM coin, file market price was always more or lels above the mint price. Since that reformation, the mar- ket price has been conftantly below the mint price. But that market price is the fame whe- ther it is paid in gold or in fiiver coin. The- late reformation of the gold coin, therefore, has raifed not only the value of the gold coin, but likewife that of the fiiver coin in proportion to gold bullion, and probably too in proportion to all otlier commodities; though the price of the greater part of other commodities being influ- enced by fo many other caufes, the rife in the value either of gold or fiiver coin in proportion to tliem,' may not be fo diftinft and fenfible.
In the EngliQi mint a pound weight of ftan- dard fiiver bullion is coined into fixty-two ftiil- lings, containing, in the fame manner, a pound weight of ftandard fiiver. Five fliillings and two-pence an ounce, therefore, is faid to be the mint price of fiiver in England, or the quantity of fiiver coin which the mint gives in return for ftandard fiiver bullion. Before the reformation of the gold coin, the market price of ftandard fiiver bullion was, upon different occafions, five Ihilliogs and four-pence, five fliillings and five- pence, five fliillings and fix-pence, five fliillings and feven-pence, and very often 'five fliillings and eight-pence an ounce. Five fliillings and feven- 8 pence.
6i
64 THE NATURE AND CAUSES OF
* ^,^ ^ pence/ however, leems to have been the moft common price. Since the reformation of the gold coin, the market price of ftandard filver bullion has fallen occafionally to five ftiillings and three-pence, five ftiillings and four-pence, and five ftiillings and five-pence ^ ounce, which lafl: price it has fcarce ever exceeded. Though the market price of filver bullion has /alien con- fiderably fince the reformation of the gold coin, it has not fallen fo low as the mint price.
In the proportion between the different metals in *the Englifli coin, as copper is rated very much above its real value, fo filver is rated fome- what below it. In the market of Europe, in the French coin and in the Dutch coin, an' ounce of fine gold exchanges for about fourteen ounces of fine filver. In the Englifti coin, it exchanges for about fifteen ounces, that is, for more filver than it is worth according to the common eftimation of Europe. But as the price of copper in bars is not, even in England, raif^d by the high price of copper in Englifti coin, fo the price of filver in bullion is not funk by the low rate of filver in Englifti coin. Silver in bullion ftill preferves its proper proportion to gold; for the fame reafon that copper in bars preferves its proper propor- tion to filver.
Upon the reformation of the filver coin in the reign of William III. the price of filver bullion
fl:ill continued to be fomewhat above the mint
Ā«
price. Mr. Locke imputed this high price to the permiflion of exporting filver bullion, and to the prohibition of exporting filver coin. This
9 . permiflion
THE WEALra OP NATIONS. Ā«J
permiflion of exporting, he faid, rendered the c h a p. demand for filver bullion greater than the de- maiid for filver coin. But the number of people who want filver coin for the common ufes of buying and felling at hon^e, is furelymuch greater than that of thofe who want filver bullion dither for the ufe of exportation or for any other ufe. There fubfifts at prcfent a like permifllon of exporting gold bullion, and a like prohibition of exporting gold coins and yet the price of gold buUio^i has fallen . below the mint price* But in the Engliih coin filver was then, in the fame man- ner as now, under-crated in proportion to gold; and the gold coin (which at that time too was not (iippofed to require any reformation) regulated then, as well as now, the real value of the whole coin. As the reformation of the filver coin did not then reduce the price of filver bullion t6 the mint price, it is not very probable that a like re- formation will do fo now.
Were the filver coin brought back as near to its fi:andard weight as the gold, a guinea, it is probable, would, according to th^ prefent pro- portion, exchange for more filver in coin than it would purchaie in bullion. The filver con- taining its foil flsindard weight, there would in this cafe be a profit in melting it down, in order, firft, to fell the bullion for gol^ coin, and after- wards to exchange this gold coin Yor filver coin to be melted down in the fame manner. Some alteration in the prefent proportion feems to be the only method of preventing this inconvc- niency.
Vol. L F Th*
66 THE NATURE AND CAUSES OP
The inconvcnicncy perhaps would be Icfi if filver was rated in the coin as much above its proper proportion to gold as it is at prefent rated below it; provided it was at the fame time ^naded that filver fhould not be a Icjgal tender fcr more than the change of a guinea; in the fame manner as copper is not a legal tender for more than the change of a (hilling. No creditor could in this cafe be cheated in confequence of the high valuation of fdver in coin ; as no credi- tor can at prefent be cheated in confequence of the high valuation of copper. The bankers only^ would fuffer by this regulation. When a run comes upon them they Ibmetimes endeavour ta gain time by paying in fixpences, and they would be precluded by this regulation from this difcre- ditable method of evading immediate payment* They would be obliged in confequence to keep at all times in their coffers a greater quant;ity <jf cafh than at prefent; and though this might no doubt be a confiderable inconveniency to them^ it would at the fame time be a confiderable fecu- rity to their creditors.
Three pounds feventeen fiiillings and ten- pence halfpenny (the mint price of gold) cer- tainly does not contain, even in our ^prefent ex- cellent gold coin, more than an ounce of ftan- dard gold, and it may be thought, therefore^ fliould not purchafe more ftandard bullion* But gold in coin is oiore convenient than gold in bullion, and though, in England, the coinage is free, yet the gold which is carried in bullion to the mint, can feldom be returned in coin.to.thi?
/ owner
ThS Wealth op nations. e?
V
0#rter till after a delay of* fcveral weeks* In the ^ ^ ^ p. prefent hurry of the mint, it could not be re- turned till after a delay of feveral months. This delay is equivalent to a fmall duty, and renders gold in coin fomewhat more valuable than an equal quantity of gold in bullion. If in the Englifh coin lilver was rated according to its proper proportion to gold, the price of filver bullion would prjobably fall below the mint price even without any reformation of the filver coin; the value even of the prefent worn and defeced filver coin being regulated by the value of the excellent gold coin for which it can be changed.
A SMALL feignorage or duty upon the coinage of both gold and filver would probably incrcaie ftill more the fuperiority of thofe metals in coin above an- equal qttantity of either of them in bul- lion. The coinage would in this cafe increafe the value of the metal coined in proportion to the extent of this fmall duty ; for the fame rev fon that the lafhion increafes the value of plate in proportion to the price of that fafhion. The fuperiority of coin above bullion would prevent the melting down of the coin, and. would difcou- rage its exportation. If upon any public exi- gency it fhould become neceflary to export the coin, the greater part of it. would foon retura again of its own accord. Abroad it could fell only for its weight in bullion. At home it would buy more than that weight. There would be a profit, therefore, in bringing it home again. In France a feignorage of about eight per cent, is
F 1 impofed
6i THR NATUftE AND CAUSES OP
* 0. o K impofed upon the coin|ge, and the French coin, when exported) is faid to return home again of ifs own accord*
The occafional fluduations in the market price of gold and (ilver bullion arife from the fame caufes as the like lluduations in that of all other commodities* The frequent lofs of thofe metals from various accidents by fea and by land, the continual wafte of them in gilding and plating) in lace and embroidery^ in the wear and tear of coin, and in that of plate; require, in all countries which ppfiefs no mines of their own^ a. contmual importation,, in ocder to repair this lofs and this wafte. The merchant importc;rs, like, all other merchants, we may believe, endeavour^ as well as they can, to fuit their occafional im- portations to what, they judge, is likely to be the immediate demand. With ^ their attention^ however, . they fometimes over-do the bufinefs,, and. fometimes under-dp it. When they import more bullion. than is wanted, rather than incur the rifle and trouble of exporting it again, they are fometimqs willing to fell a part of it for fomething lefs . than the ordinary or average price. When, on the other . hand, they import leis than is wanted, they get fomething more than .this price. But when, under all thofe oc- cafional fluduations, the market price either of gold, or filver bullion continues for fevciral years together .fteadily ancj conftantly> either more or lefs above, or more or lefs below the mint price : we may be. afTurod that this Heady and confiant^ either fuperiority or inferiority of price, is the
THE WEALTH OP NATIONS. Ā«9
cfFeft of fomething in the ftate of the coin, o^^^^* which, at that time, renders a certain quantity of coin either of more value or of lefs value than the precife quantity of bullion which it ought to contain. The conftancy and fteadinefs of the effeft, fuppofes a proportionable conftancy and fteadinefs in the caufe.
The money of any particular country is, at iaiiy particular time and place, more or lefs an accurate mealure of value according as the cur- rent coin is more or lefs exadtly agreeable to its ftandard, or contains more or lefs exaftly the precife quantity of pure gold or pure filver which it ought to contain. If in England, for exam- ple, forty-four guineas and a half contained ex-. aftly a pdund weight of ftandard gold, or eleven ounces of fine gold and one ounce of alloy, the gold coin of England would be as accurate a meafure of the aftual value of goods at any par- ticular time and place as the nature of the thing would admit. Buy ifi by rubbing and wearing, forty-four guineas and a half generally contain lefs than a pound weight of ftandard gold ; the diminution, however, being greater in fome pieces than in others; the meafure of value, comes to be liable to the fame fort of uncertainty to which all other weights and meafures are com- ,monly expofed. As it rarely happens that thefe are exaftly agreeable to their ftandard, the mer- chant adjufts the price of his goods, as well as he can, not to what thofe weights and meafures ought to be, but to what, upon an average, he finds by experience they aftually are. In confe-
F 3 quencc
70
THE NATURE AND CAUSES OP
* ^iP ^ qucnce of a like diforder in the coin, the price of goods comes, in the fame manner, to be ad^ jufted, not to the quantity of pure gold or filver which the coin ou^t to contain, but to that which, upon an average, it i$ found by expe-i rience it afbually does contain.
By the money-price of goods, it is to be ob- ierved, I underitand always the quatmty of pure gold or filver for which they are fold, without any regard to the denomination of the coin, Sisc ibiUings and eight-pence^ for ei^ample, in the time of Edward I., I confider as the fame noo^ ney-price with a pound fterliqg in the prefent times ; becaufe it contained, as nearly as we cw judge, the fame quantity of pure filver.
N
CHAP, VI,
Of the component Parts of t be Price of Commodities
IN that early and rude ftate of fociety which precedes both the accumulation of ftock and the appropriation of land, the proportion be- tween the quantities of labour neceflary for ac- quiring different objefts feems to be the only circumftance which can afford any rule for ex- changing them for one another. If among a nation of hunters, for example, it ufually cods twice the labour to kill a beaver whTth it does to kill a deer, one beaver Ihould naturally ex- change
i
THE WEALTH OP NATIONS, 71
change for or be worth two deer. It is natural ^ ^ a p- that what is ufually the produce of two days or two hours labour, fhould be worth double of what is ufually the produce of one day's or pnc hour's labour.
If the one fpedes of labour fhould be rnore fevere than the other, fome allowance will natu- rally be made for this fuperior hardlhip 5 and the produce of one hour's labour in the one way may frequently exchange for that of two hours labour in the other.
Or if the one fpecies of Ubour requires an uncommon degree of dexterity and ingenuity, the efteem which men have for fuch talents, will naturally give a value to their produce, fuperior to what would be due to the time employed about it. Such talents can feldom be acquired but in confequence -of long application^ and the fuperior value of their produce may frequendy be no more than a reafonable compenfation for the time and labour which muft be Ipent in ac- quiring them. In the advanced ftate of fociety, allowances of this kind, for fuperior hardfhip and fuperior (kill, are commonly made in the wages of labour ; and fomething of the fame kind muft probably have taken place in its earlieft and rudeft
period.
In this ftate of things, the whole produce of labour belongs to the labourer ; and the quantity of labour commonly employed in acquiring or producing any commodity, is the only circum^ ftancc which can regulate the quantity of la-
F 4 bour
fz THE NATURE AUD CAUSES OP
B" o^ o K bour which It ought commonly to pwchafe, com- ^mum^mmj xmmAy OX exdiange for.
As foon as ftock- has accumulated in the hands of particular perfons^ fome of them will naturally employ it in letting to work induflrious people, whom they will fupply with materials and fub- liftencC) in order to make a profit by the faie of their work, or by what their labour adds to the value of the materials. In exchanging the com- plete manufafture either for money, for labour, or for other goods, over and above what may be fufficient to pay the price of the materials, and the wages of the workmen, fbmething muft be given for the profits of the undertaker of the work who hazards his ftock in this adventure. The value which the workmen add to the mate- rials, therefore, refolves itfelf in this cafe into two parts, of which the one pays their wages, the other ā¢the profits of their employer upon the whole ftock of materials and wages which he advanced. He could have no intereft to employ them, unlefs he expefted from the fale of their work fomething more than what was fufficient to replace his ftock to him 9 and he could have no intereft to employ a great ftock rather than a fmall one, unlefs his profits were to bear fome proportion to the extent of his ftock. ^ y' J^The' profits of ftock, it may perhaps be v-^^^^^y^ thought, are only a different name for the wages G^ i-^t A^V' I of a particular fort of labour, the labour of in- ^t-'\,^ /^. {fpeftion and direftion. They are, however, al- . 4- C\ V^' \ together difi^erent, are regulated by quite difffer-
THE WEALTH OF NATIONS. 73.
ā¢ ā ā¢ ā ' .
cnt principles, and btar no proportion to the c h a p.
quantity, the hardfhip, or the ingenuity of this ilippofcd labour of inlpeftion and direftion. They are regulated altogether by the value of ji the ftock employed, and are greater or faiallerlV in jproportion to the extent of this ftock. Let us \ fuppofe, for example, that in fome particular place, where the common annual profits of ma-' nufafturing ftock are ten per oeift, there are two different manufaftures, in each of which twenty workmen are employed at the rate of fifteen pounds a year each, or at the wpence of three hundred a year in each manufaftory. Let us fuppofe too, that the coarfe materials annually wrought up in the one coft only feven hundred pounds, while the finer materials in the other coft feven thoufand. The capital annually cm- ployed in the one will in this cafe amount only to one thoufand pounds j whereas that employed in the other will amount to feven thoufand three hundred pounds. At the rate of ten per cent, therefore, the undertaker of the one will expeft , arr yearly profit of about one hundred pounds only ; while that of the other will expeft about feven- hundred and thirty pounds. But though their profits are fo very different, their labour of infpedion and direftion may be either altogether or very nearly the fame. In many great works, almoft the whole labour of this kind is commit- ted to fome principal clerk. His wages pro- perly exprefs the value of this labour of infpec- tion and direction. Though in fettling them fome regard is had commonly, not only to his
labour
74 THE NATURE AND CAUSES OF
B o^o K labour and fl^ill, but to the truft which is re-, pofed in him, yet they never bear any regular proportion to the capital of which he overfees the management ; and the owner of this capital^ though he is thus difcharged of almoft all. la- bour, ilill expeds that his profits ihould bear a regular proportion to his capital. In the price of commodities, therefbrc, the profits of ftock conllitute a component part dkogcthtr diflS^rent from the wages of labour, and regulated by quite different principles.
In this ftate of things, the whole produce of labour does not always belong to the labourer. He muft in mod cafes fhare it with the owner jof the ftock which employs him. Neither is tbc quantity of labour commonly employed in ac- quiring or producing any commodity, the only circumftance which can regulate the quantity which it ought commonly to purchafe, commands or exchange for. An additional quantity, it is evident, muft be due for the profits of the ftock, which advanced the wages and furnifhed the ma- terials of that labour.
As foon as the land of any country has all be- come private property, the landlords, like all other men, love to jeap where they never fowed, and demand a rent even for its natural produce. The wood of the fdreft, the grafs of the fields and all the natural fruits of the earth, which, whea land was in common, coft the labourer^ only the trouble of gathering them, come, even to him, to have an additional price fixefl upon them. Kfe muft then pay for the licence to gather
themj
THE WEALTH OF NATIONS,
7$
them; wd muft ^ve up to the landlord a pordon ^ ^^ ^ā¢ gf what hi$ labour either colle<5i:s or produces. This portion^ or^ what ā¬aine$ to the fame thing, the price c^ ihi$ portion^ conftitutes the rent of land, and in the price of the greater |>art of commodities makes a third componient part.
Thc re^l value of all the different component parts of price, it miift be dbfcrved, is meafured by die quantity of labour which they can, each of them, purchafe or command. Laboiur xneafures the value not <Hily of that part of price which re* folves itfelf into labour, but of that which refohres itfetf into rent, and of that which refolves itfelf into profit.
Ik ^every fociety the price of every commodity finaUy refolves itfelf into Ibme one or other, or all of thofe three parts ; and in every improved ibciety, all the three enter more or leis, as com* ponent parts, into the price of the far greater part of commodities.
In the price of corn, for example, one part pays the rent of the landlord, another pays the wages or maintenance of the labourers and la- bouring cattle employed in producing it, and the third pays the profit of the farmer. Thefc three parts feem either immediately or ultir mately to make up the whole price of corn. A fourth part, it may perhaps be thought, is necef- fary for replacing the ftock of the farmer, or for compenfating the wear and tear of his labouring cattle, and other inftruments of hufbandry. But it muft be confidered that the price of any in-
6 ftrument
76 THE NATURE AND CAUSES OP
B O^o K ftrumcnt of huftandry, luch as a labouring horfe^ is itfelf made up of the fame three parts; the rent of the land upon which he is reared^ the la- bour of tending and rearii^ him, and the profits of the farmer who advances both the rent of this landj and the wages of this labour. Though the price of the corn, therefore^ may pay the price as well as the maintenance of the horie> the whole price iidll refdvts itfelf either imniediately or ultimately into the fame three parts of rentj labour, and profit.
In the price of flour or meal, we muft add to ' the price of the corn, the profits of die miller, and the wages of his fervants; in the price of bread, the profits of the baker, and . the wages of his fervants ; and in the price of both, the la- bour of tranfporting the corn from the houfe of the farmer to that of the miller, and fi-om that of the miller to that of the baker, (Dgetho- with the profits of thofe who advance the wages of that labour.
ThĀ£ price of flax refolvcs itfelf into the fame three parts as that of corn. In' the price of linen we muft add to this price the wages of the flax- drefler, of the fpinncr, of the weaver, of the bleacher, &c. together with the profits of their refpedtive employers.
As any particular commodity comes to be more manufaftured, that part of the price which refolves itfelf into wages and profit, comes to be greater in proportion to that which refolves it- felf into rent. In the progrcfs of the manufac- ture, not only the number of profits incrcafe,
byt
THE WEALTH OF NATIONS, - 77
but every fubfequcnt profit is greater than the ^ '^ ^ '^ā¢ foregoing J becaufe the capital from which it is derived muft always be greater. The capital which employs the jKcavers, for example, muft be greater than that which employs the fpin^ ners; becaufe it not only replaces that capital with its profits, but pays, befides, the wages of the weavers; and the profits muft always bear, fome proportion to the capital.
In the moft improved focieties, however, there are always a few commodities of which the price refolves itfclf into two parts only, the wages of labour, and: the profits of ftockj and a ftiH finaller number, in which it confifts altogether in the wages of labour. In the price of fea-fifh, for example, one part pays the labour of the fifliermen, and the other the profits of the capit^ employed in the fifhery. Rent very feldom makes any part of it, though it does fomerimes, as I Ihall fhew hereafter. It is otherwife, at leaft through the greater part of Eurof>e, in river fifheries. A falmon filhery pays a rent, and rent, though it ciannot well be called the rent of land, makes a part of the price of a fal- mon as well as wages and profit. In fbme parts of Scotland a few poor people make a trade of gathering, along the fea-lhore, thofe little va- riegated ftones commonly known by the name of Scotch Pebbles. The price which is paid to them by the ftone-cuttcr is altogether the wages of their labour ; neither rent nor profit make any part of it. .
But
7Ā« THE NATtJRft ANfi CAUSES OP
But the whole price of any commodity maft ftill finally refolve itfelf into fome one or other, or all of thofe three parts ; as whatever part of ic remains aiirer paying the rent of the land, and* the price of the whole labour employed in raifing, ma- nufafturing, and bringing it to market, muft nc- ceflarily be profit to fomebody.
As the price or exchj^ngeable value of every particular commodity, taken feparately, refolves itfelf into fome one or other, or all of thofe three parts ; fo that of all the commodities which com- pofe the whole annual produce of the- labour of every country, taken complexly, muft refolve itfelf into the fame three parts, and be parcelled out among difierent inhabitants of the country, either as the wages of their labour, the profits of their ftock, or the rent of their land. The whole of what is annually either coUedted or produced by the labour of every fociety, or what comes ta the fame thing, the whole price of it, is in this manner originally diftributed among fome of its different members. Wages, profit, and rent, are the three original fources of all revenue aa well as of all exchangeable value. All other revenue is ultimately derived from fome one or other of thefe.
Whoever derives his revenue from a fond which is his own, muft draw it either from his labour, from his ftock, or fi-om his land. The revenue derived fi-om labour is called wages. That derived from ftock, by the perfon who manages or employs it, is. called profit. That derived from it by the perfon who docs not em- ploy
THE ^ALTH OP NATIONS. 70
ploy it himfclfi but lends it to an<^her, is called ^ ^^^ ^* the intereft: or the ufe of money. It is the com^ penfation which the" borrower pays to the lender, for the profit which he has an opportunity of making by the ufe of the money. Part of that profit naturally belongs to the borrower, who runs the rilk and takes the trouble of employing it ; and part to ^he lender, who affords him the op- portunity of making this profit. The intereft of rnoney is always a derivative revenue, which, if it is not paid from the profit which is made by (he ufe of the money, muft be paid from feme orfier fource of revenue, unlefs perhaps the bor- rower is a Ipendchrift, who contrafts a fecond debt in order to pay the intereft of the firft. The revenue which proceeds altogether from land, is called rent, and belongs to the landlord. The revenue of the farmer is derived partly from his labour, and partly from his ftock. To him, land is only the inftrument which enables him ' to earn the wages of this labour, and to make the profits of this ftock. All taxes, and all the re- venue which is founded upon them, all falaries, penfions, and annuities of every kind, are ulti- mately derived from fome one or other of thofe three original fources of revenue, and are paid cither immediately or mediately from the wages of labour, the profits of ftock, or the rent of
land.
When thofe three different forts of revenue beloi^ to different perfons, they are readily dif- tinguiihed ; but when they belong to- the fame
they
8o > THE NATURE AND CAUSES OF
B o^ o K (hey are fometimcs confounded with one another^ at lead in common language,
A GENTLEMAN who farms a part of his own eftate, after paying the expencc of cultivation^ ihould gain both the rent of the landlord and the profit of the farmer. He is apt to denomi- nate, however, his whole gain, profit, and thus confounds rent. with profit, at leaft in common language. The greater part of our North Ame- rican and Weft Indian planters are in this iicua- tion. They farm, the greater part of them, their own eftates, and accordingly we feldom hear oĀ£ the rent of a plantationj, but frequently of ils^ profits . . V
Common farmers feldom employ any overfecr to direft the general operations of the farm. They generally too work a good deal with their own hands, as ploughmen, harrowers, &ff . What remains of the crop after paying the rent, there- fore, fliould not only replace to them their ftock. employed in cultivation, together with its ordi- nary profits, but pay them the wages which are due to them, both as labourers and overfeers. Whatever remains, however, after paying the rent and keeping up the ftock, is caBed profit. But wages evidently- make a part of it. The farmer, by faving thefe wages, muft neceflarily g^in them. Wages, therefore, arc in this cafe confounded with profit.
An independent manufafturer, who has ftock enough both to purch^fe materials, and to main-^ tain himfelf till he can carry his work to market^
fhould
ā¢the wealth of nations. 8i
ā¢ ihoiild gain both the wages of a journeyman who c n a r. works under a mafterj and the profit which that mafter makes by the fale of the journeyman's work. His whole gains, however, are com- monly called profit, and wages are, in this cale too, confounded with profit.
A GARDENER who Cultivates his own garden with his own hands, unites in his own perfon the three different charafters, of landlord, farmer, and labourer. His produce, therefore, fliould pay him the rent of the firft, the profit of the 'fecond, and the wages of the third. The whole, Rowever, is commonly confidered as the earnings of his labour. Both rent and profit are, in this cafe, confounded with wages.
As in a civilized country there are but few commodities of which the exchangeable value aHfes from labour only, rent and profit contri- buting largely to that of the far greater part of them, fo the annual produce of its labour will always be fuificient to purchafe or command a much OTeater quantity of labour than what was employla .in ' raifmg, preparing, and bringing that produce to market. If the fociety were an- nually to employ all the labour which it can annually purchafe^ as the quantity of labour would encreafe greatly every year, fo the produce of every fucceedlng year would be of vaftly greater value than that of the foregoing. But there is no country in which the whole annual produce is employed in maintaining the induftrious. The idle every where confume a great part of it 5 and according to the different proportions in which
Vol. I. & it
Ā«t THE NATURE AND CAUSES OF
B o o K it i5 annually divided between thofc two differtnt orders of people, its ordmary or average value muft either annually increafe, or diminilb, or continue the fame from one year to another.
CHAP. VII. Of the natural and Market Price of Commedities^.
THERE is in every fociety or neighbour- hood an ordinary or average rate both oT wages and profit in every different employment of labour and ftock. This rate is naturally re- gulated, as I fhall fhow hereafter, partly by the general eircumftanccs of the Ibdety, their riches Ā©r poverty, their advancing, ftationary, or de- clining condition; and partly* by the particular nature of each employment.
There is likewife in every fociety or neigh- bourhood an ordinary or average rate of rent, which is regulated too, as I ftiall fliow hereafter, partly by the general circumftances of the fociety or neighbourhood in which the land is fituated, and partly by the natural or improved fertility of the land.
These ordinary or aventge rates may be called the natural rates of wages, profit, and rent, at the time and place -in which diey commonly pre- vail.
. When the price of any commodity is neither more nor lefs than what is fufficient to pay the
4 rent
/
tHE Wealth oP nations. rj
I'Crit of the land> the wages of the labour, and' ^ h a p. the profits of the ftock employed in raifing, pre- paring, andbririging it to market, according to their natural rates, the commodity is then fold for what may be called its natural price.
The commodity is then Ibid precifely for what it is wofth, or fbr what it really cofts the perfon who brings it to market ; for though in common language what is called the prime coft of any commodity does not comprehend the profit of the perfon who is to fell it again, yet if he fells it at a price which does not allow him the ordi- nary rate of profit in his neighbourhood, he is evidently a lofer by the trade -, fince by employ- ing his ftock in fome other way he might have made that profit. His profit, befides^ is his re- venue, the proper fond of his fubfiftence. As, While he is preparing and bringing the goods to market, he advances to his workmen their wages, or their fubfiftence; fo he advances to himfel(^ in the fame manner, his own fubfiftence, which is generally fuitable to the profit which he may reaibnably expect from the fale of his goods* Unlcfs they yield him this profit, therefore, they do not repay him what they may very properly be faid to have really coft him.
Though the price, therefore, which leaves him this profit, is hot always the loweft at which a dealer may fometimes fell his goods, it is the loweft at which he is likely to fell thepi for any confiderable time ; at leaft where there is perfect liberty, or where he may change his trade as often as he pleafes.
G a The
THE NATURE AND CAUSES OP
The actual price at which any commodity is commonly fold is called its market price. It may cither be above, or below, or ^xaĀ£tly the fame with its natural price.
The market price of every particular com* modity is regulated by the proportion between the quantity which is aftually brought to market, and the demand of thofe who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which muft be paid in order to bring it thither. Such people may be called the efFeAual demanders, and their demand the efiefhial demand } iince it may be fufEcient to efieĀ£buat^ die bringing of the commodity to marketi It is different from the abfolute demand. A very poor man may be faid in fome fenfe to have a demand for a coach and fix; he might like to have it; but his demand is not an effedtual demand, as the commodity^ can never be brought to market in order to fatisfy it.
When the quantity of any commodity which is brought to market falls fhort of the efFedual demand, all thofe who are willing to pay the whole value of the rent, wages, and profit, which ihuft be paid in order to bring it thither, cannot be fupĀ« plied with the quantity which they want^ Rather than waftt it altogether, fome of them will be will- ing to give more, A competition will immedi- ately begin among them, and the market price will rife more or lefs above the natural price, ac* cording as either the greatnefs of the deficiency^ or the wealth and wanton luxury of the competi^ tors, happen to animate more or lefs the eagernefi
of
THE WEALTH OF NATIONS.. . Ā«5
of the Gompetition. Among competitors of equal ^ ^^ ^' wealth and luxury the fame deficiency will gene- rally occalion a more or lefs eager competition, according as the acquifition of the commodity happens to be of more or lefs importance to them. Hence the exorbitant price of the ne- ceflaries of life during the blockade of a town or in a famine.
ā¢ When the quantity brought to* market exceeds die effeftual demand, it cannot be all fold to thofe who are willing to pay the whole value of the rent, wages and profit, which muft be paid in order to bring it thither. Some part muft be fold to thofe who are willing to pay lefs, and the . low price which they give for it muft reduce the price of the whole. The market price will fink more or lefs below the natural price, according as the greatnefs of the excefs increafes more or iefs^ the competition of the fellers, or according as it happens to be more or lefs important to them to get immediately rid of the commo- dity. The fame excefs in the importation pf perifliable, will occafion a much greater com- petition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron.
When the quantity brought to market is juft fufficient to fupply th#.>efFeĀ£h]al demand and no more, the market pliku||Liaturally comes to Jbe either exactly, or as nearly as can be judged ofi the fame with the natural price. The whole quantity upon hand can be difpofed of for this price, and cannot be difpofed of for jnore. Th?
G 3 cpmpe^
86 THE NATURE AND CAUSES OF
BOOK competition of the different dealers obliges them all to accept of this price, but docs not oblige them, to accept of lefs.
The quantity of every commodity brought to market naturally fuits itfelf to the effeftual de- mand. It is the intereft: of all thofe who employ their land, labour, or flock, in bringing any commodity to market, that the quantity never Ihould exceed the effedtual demands and it is the intereft of all other people that it never ihould fall (hort of that demand.
If at any time it exceeds the effeftual demand, fome of the component parts of its price muft be paid below their natural rate. If It is rent, the intereft of the landlords will immediately prompt them to withdraw a part of their land ; and if it is wages or profit, the intereft of the labourers in the one cafe, and of their employers in the other, will prompt them to withdraw a part of their labour or ftock from this empl(Jy- inent. The quantity brought to market will foon be no more than fufficient tcr fupply the effectual demand. All the different parts of its price will rife to their natural rate, and the whole price to its natural price.
If, on the contrary, the quantity brought to market fhould at any time fall fhort of the effec- tual demand, fome of the component parts of its price muft rife above tl^eir natural rate. If it is rent, the intereft of all other landlords will na- turally prompt them to prepare more land for the raifing of this commodity -, if it is wages or profit, the intereft of all other labourers and
. dealers
THE WEALTH OF NATIONS ^7
dealers will foon prompt them to employ more ^ ^^ a p. labour and flock in preparing and bringing it tQ \^ 7' '^ market* The quantity brought thither will fooa be fufficient to fupply the efFeftual demand. All the different parts of its price will foon fink to their natural rate, and the whole price to its natural price.
The natural price, therefore, is, as it werel the. central price, to which the prices of all com-l modifies are continually gravitating. DifFerenn accidents may fometimes keep them fulpended a good deal above it, and fometimes force , them down even fomewhat below it. But whateven m^y be the obftacles which hinder them from^ fettling in this center of rcpofe and continuancej they are conflantly tending towards it. \
The whole quantity of induflry annually em- ployed in order to bring any commodity to market, naturally fuits itfelf in this manner to the efFcdual demand. It naturall]{r aims at bring- ing always that precife quantity thither which may be fufficient to fupply, an4 no more than fupply, that demand.
But in fome employments the farpe quantity qf induflry will in different years produce very different quantities of commodities; while in others it will produce always the fame, or very nearly the fame. The fame number of labourers in hufbandry will, in different year^, produce very different quantities of corn, wine, oil, hops, &c. But the fanfie number of fpinners and weavers will every year produce the fame or very nearly the fame quantity of linen and woollen
G 4 cloth.
88 THE NATURE AND CAUSES OF
BOOK cloth. It is only the average produce of the one fpccies of induftry which can be fuited in any refpeft to the eSedual demand ; and as its aftual produce is frequently much greater and frequently much lefs than its average produce, the quantity of the commodities brought to market will fome- times exceed a good deal, and fomeumes fall fhort 3, good deal, of the efFeftual demand. Even though that demand therefore ihould continue al- ways the fame, their market price will be liable to great fluctuations, will fometimes fall a good deal below, and fometimes rife a good deal above, their natural price. In the other fpecies of induftry, the produce of equal quantities of labour being always the ianAe, or very nearly the fame, it can be more exaĀ£tly fuited to the efFedtual demand. While that demand continues the fame, therefore, the market price of the commodities is likely to do fo too, and to be either altogether, or as nearly as can be judged of^ the fame with the natural price. That the price of linen and woollen cloth is liatble neither to fuch frequent nor to fuch great variations as the price of corn, every man's ex- pferience will inform him. The -price of the one fpecies of commodities varies only with the vari- ations in the demand : That of the other varies not only with the variations in the demand, but with the much greater and mcfre frequent varia- tions in the quantity of what is brought to mar- ket in order to fupply that demand.
The occafional and temporary fluftuations in the market price of any commodity fall chiefly upon thofe parts of its price which refolve them-
felves*
THE WEALTH OF NATIONS. 89.
ielves into wages and profit. That part which ^ " ^ p- rcfolves itfelf into rent is lefs affeded by them. A rent certain in money is not in the leaft af* fedted by them cither in its rate or in its value. A rent which confifts either in a certain propor- tion or in a certain quantity of the rude produce, is no doubt affected in its yearly value by all the occafional and temporary fliuftuations in the inarket price of that rude produce ; but it is fel- dom affedled by them in its yearly rate. In fettling the terms of the ieafe, the landlord and farmer endeavour, according to their beft judg- ment, to adjuft that rate, not to the temporary and occafional, but to the average and ordinary price of the produce.
Such fluduations affeffc both the value and the rate either of wages or of plrofit, according as the market happens to be either over- flocked or under-flocked with commodities or with la-, bour ; with work done, or with work to be done. A public mourning raifes the price of black cloth (with which the market is almofl always under-ftocked upon fuch occafions), and aug- ments the profits of the merchants who pofTds any confiderable quantity of it. It has no effect ypon the wages of the weavers. The market is under-ftocked with commodities, not with labjourj with work done/ not with work to be done. It raifes the wages of journeymen taylors. The market is here under-ftocked with labour. There is an effcftual demand for more labour, for more work to be done than can be had. It finks the price of coloured filks and cloths, and there-
by
9# THE NAtURE AND CAUSES OF
B o o K by reduces the profits of the merchants who have any confiderable quantity of them upon handĀ« It finks too the wages of the workmen employed in preparing fuch comg^iodities, for which all demand is ftopped for fix months^ perhaps for a twelvemonth. The market is here over-ftocked both with commodities and with la* hour.
But though the market price of every parti- cular commodity is in this manner continually gravitating, if one may fay fo, towards the na- tural price, yet fometimes particular accidents, fometimes natural caufes, and fometimes parti-Ā« cular regulations of police, may, in many con^- modities, keep up the market price, for a long time together, a good deal above the natural price.
When by an increafc in the eiFedtual demand, the market price of fome particular commodity happens to rife a good deal above the natural price, thofe who employ their ftocks in fupply- ing that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt fo many new rivals to employ their ftocks in the fame way, that, the efFeftual demand being fully fupplied, the market price would Ibpn be reduced to the natural price, and perhaps for fome time even below it. Jf the market is at a great diftance from the refidenci^ of thofe who fupply it, they may fometimes be able to keep the feqret for feveral years together, and may fo long enjoy their extraordinary profits without any new rivals. Secrets of this kind,
however.
THE WEALTH OF NATIONS. 91
however, it muft be acknowledged, can feldom chap. be long kept; and the extraordinary profit can laft very little longer than they are kept.
Secrets in manufaftures are capable of being longer kept than fecrets in trade. A dyer who has found the means of producing a particular /colour with nnaterials which coft only half the price of thofe commonly made ufe of, may, with good management, enjoy the advantage of his difcoVery as long as he lives, and even leave it as a legacy to his pofterity. If is extraordinary gains arife from the high price which is paid for his private labour. They properly confift in the high wages of that labour. But as they are re- peated upon every part of his ftock, and as their whole amount bears, upon that account, a regu- lar proportion to it, they are commonly confi- dered as extraordinary profits of ftock.
Such enhancements of the market price are evidently the efFefts of particular accidents, of which, however, the operation may fometimes laft for many years together.
Some natural produftions require fuch a fingu- larity of foil and fituation, that all the land in a great country, which is fit for producing them, may not be fufficient to iupply the eiFeftual demand. The whole quantity brought to mar- ket, therefore, may be difpofcd of to thofe who are willing to give more than what is fufficient to pay the rent of the land which produced them, together with the wages of the labour, and the profits of the ftock which were employed in pre- paring and bringing them (Ā» market, according
to
9s THE NATURE AND CAUSES OF
B o o K to their, natural rates. Such commodities may < .. J Ā»> continue for whole centuries together to be fold at this high price ; and that part of it which refolves itfelf into the rent of land is in this cafe the part which is generally paid above its natural rate. The rent of the lan^ which afiPords fuch fingu- lar and efteemed produftions, like the rent of fome vineyards in France of a peculiarly hap- py foil and fituation, bears no regular propor- tion to the rent of other equally fertile and equally well- cultivated land in its neighbour- hood. The wages of the labour and the pro- fits of the flock employed in bringing fuch com- modities to market, on the contrary, are fcldom out erf" their natural proportion to thofe of the other employments of labour and flock in their neighbourhood'.
Such enhancements of the market price arc evidently the efFe6l of natural caufes which may hinder the efFedual demand from ever being fully fupplied, and which may continue, there- fore, to operate for ever.
/ A MONOPOLY granted either to an individual /or to a trading company has the fame efFe6k as a / fecret in trade or manufafturcs. The monopOr / lifls, by keeping the market conflantly under- flocked, by never fully fupplyihg thĀ« cfFedual ' demand, fell their commodities much above the natural price, and raife their emoluments, whe- ther they confift in wages or profit, greatly above their natural rate.
The price of monopoly is upon every occafioil the highcfl whichcan.be got. TJie natural price,
or
THE iiVEALTH OF NATIONS. 93
or the price of free competition, on the contram c ha p. is the loweft which can be taken, not upon ^vcA occaiion indeed, but for any confiderable timcl together. The one is upon every occafion thq higheft which can be fqueezed out of the buyers! or which, it is fuppofed, they will confent to* give : The other is the loweft which the fellers \ can commonly afford to take, and at the fame) time continue their bufinefs.
The exclufive privileges of corporations^ fta- tutes of appr^nticefliip, and all thofe laws which reftrain, in particular employments, the compe- tition to a fmaller number than might otherwiie go into them, have the fame tendency, though in a lefs degree. They are a fort of enlarged monopolies, and may frequently, for ages toge- ther, and in whole clafles of employments, keep up the market price of particular commodities above the natural price, and maintain both the wages of the labour and the profits of the (lock employed about them fomewhat above their na- tural rate.
Such enhancements of the market price may lall: as long as the regulations of police which give occafion to them.
The market price of any particular commo- dity, though it may continue long% above, caj ieldom continue long below, its natural pric< Whatever part of it was paid below the natun rate, the perfons whofe intereft it affedbed would immediately feel the lofs, and would immediately withdraw either fo much land, or fo much la- bour, or fo much ftdck, from being employed
about
94 THE NATURE AND CAUSES OP
B o^o K about it, that the quantity brought to market
J would foon be no more than fufficient to fupply thd
/ effeftual deniaftd. Its market price, therefbrej
/ would foon rife to the natural price* This at
^ leaft would be the cafe where there was perfeft
liberty.
The fame ftatutes of apprenticefhip and other corporation laws indeed, which, when a manu- fafture is in proiperity, enable the workman to raife his wages a good deal above their natural rate, fometimes oblige him, when it decays^ to let them down a good deal below it. As in the one cafe they exclude many people from his em- ployment, fo in the other they exclude him from many employments. The efFeft of fueh- regular tions, however, is not near fb durable in finking the workman's wages below, as in raifing then! above, their natural rate. Their operation in the one way may endure for many centuries, but in the other it can laft no longer than the lives of^ ibme of the workmen who were bred to the bufi- nefe in the time of its profperity. When they are gone, the number of thofe who are after-*- wards educated to the trade will naturally fuit itfelf to the efFeftual demand. The police muft be as violent as that of Indoftan or antient Egypt (where eveiy man was bound by a principle of* reUgion to follow the occupation of his father^ and was fuppofed to commit, the moft horrid facrilege if he changed it for another )i which can in any particular employment, and for feveral generations together, fmk cither the wages of
labour
\
THE WEALTH OF NATIONS. .95
labour or the profits of ftock below their natural '^ ^^^ p* rate.
This is all that I thiak ncceflary to be ob- ferved at prefent concerning the deviations, whe- ther occafional or permanent, of the market price of ccwnmodities from the natural price.
The natural price itfelf varies with the na- tural rate of each of its component parts, of wages, profit, and rent j and in every focietjr this rate varies according to their circumftanceSy according to their riches or ppverty, their ad- vancing, ftationary, or declining condition. I ihaH, in the four folbwing chapters, endeavour to explain, as fvMy and diftindly as I can, the caufes of thofe difierent variations.
First, I (hall endeavour to explain what are the circumftances which naturally determine the rate of wages, and in what manner thofe cir- cumftances are afieded by the riches or poverty^ by the advancing, ftationary, or declining ftate of the fociety.
Secondl-y, I fhall endeavour to fliow what are the circumftances which naturally determine the rate of profit, and in what manner too thofe cir- -cumffances zr't afFefted by the like variations in the ftate of the fociety.
Though pecuniary wages and prdlit are very different in the different employments of labour and ftock 5 yet a certain proportion feems coitt- itionly fo take place between both the pecuniary wages in all the different employments of labour, and the pecuniary' profits in all the different em- ployment of ftock. This proportion^ it will
appear
ā
' I
96 . THE NATURE AND CAUSES OP
* ^if '^ appear hereafter, depends partly upon the nattirt; of the different employments, and partly upon the different laws and policy of the fociety in which they arc carried oh. But though in many refpefts dependent upon the laws and- pc^cy, this proportion feems to be little affefted by the riches or poverty of that fociety ; by its advan*- cing, ftationary, or declining condition i but to remain the fame or very nearly the fame in all thofe different ftates. I fhall, jn the third place, endeavour to explain all the different circum- ftances which regulate this proportion.
In the fourth and laft place, I fhall endeavour to ibow what are the circumftances which regulate the rent of land, and which either raiie or lower the real price of all the dififerent fubftances which it produces.
<
CHAP. VIIL
Of the Wages of Labour.
THE produce of labour conftitutes the na- tural recompence or wages of labour. In that* original date of things, which pre- - cedes both the appropriation of land and thā¬ accumulation of ftock, the whole produce (rf labour belongs to the labourer. He has neither landlord nor mailer to fhare with him.
Had this ftate continued, the wages of labour would have augmented with all thofe improve- ments
V /
THE WEALTH OF NATIONS. . 97
hients in its produftive powers, to which the ^ ^^^ ^* divifion of labour gives occafioh. All things would gradually have become cheaper. They would have 'been produced by a fmaller quan- tity of labour; and as the commodities pro- duced by equal quantities of labour would natu- rally, in this ftate of things be exchanged for one another, they would have been purchased likewife with the produce of a fmalkr quan- tity.
But though all things would haVe become cheaper in reality, in appearance many things might have become dearer than before, or have , been exchanged for a greater quantity of other goods* ' Let us fuppofe, for example, that in the greater" part of employments the produdlive powers of labour had been improved to tenfold, or that a day's labour could produce ten times the quantity of work which it had done origi- nally ; but that in a particular employment they had been improve;d only to double, or that a day^s labour could, produce only twice the quan- tity of work which it had done before. In ex- changing the produce of a day's labour in the greater part of employments, for that of a day's , labour in this particular one, ten times the ori- ginal quantity of work in them would purchafe only twice the original quantity in it. Any particular quantity in it, therefore, a pound weight, for example, would appear to be five times dearer than before. In reality, however^ it would be twice as cheap. Though it re-' quired five times the quantity of other goods to Vol. I. H purchafe
9Ā« THE NATURE AND CAUSES Of
^ ^^ ^ purchafe it, it would require only half the quan^ i Ā» f tity of labour cither to purchafe or to produce it. The acquifition, therefore, would be twice as eafy as before. ,
But this original ftate of things, in which the labourer enjoyed the whole produce of his own labour, could not laft beyond the firft introduc* tion of the appropriation of land and the accu* muiation of flock. It was at an end, therefore^ long before the moft conliderable improvennents wer^ made in the productive powers of labour, and it would be to no purpofe to trace further what might have been its effe<5ts upon the rccom- p^ce or wages of labour.
As foon as land becomes private property, the landlord demands a fliare of almoft all the pro- duce which the labourer can either raife, or col- left from it. His rent makes the firft deduc- tion from the produce of the labour which is employed upon land.
It fcldom happens that the perfbn who tills the ground has wherewithal to maintain himfelf till he reaps the harvefl. His maintenance is generally advanced to him frogi the ftock of a mafter, the farmer who employs him, and who would have no intcreft to employ him, unlefs he was to fliare in the produce of his labour, or un- lefs his ftock was to be replaced to him with ar profit. This profit makes a fecond deduftion from the produce of the labour which is em- ployed upon land.
The produce of almoft all other labour is^ liable to the like deduftion of profits In all arts
and
THE WEALTH OP NATIONS. 99
and manufadures the greater part of the work- ^ ^^^ p. men ftahd in need of a mafter to advance them the materials of their work, and their wages and maintenance till it be completed. He fhares in the produce of their labour, or in the value which it adds ta the materials upon which it la bellowed i and in this (hare confifls his profit.
It ibmetimes happens, indeed, that a (ingle independent workman has ftock fufficient both to purchafc the materials of his work, and to maintain himfelf till it be completed. He is both mafter and workman, and enjoys the whole produce of his own labour> or the whole value which it adds to the materials upon which it is beftowed. It includes what are ufually two diftinft revenues, belonging to two diftinft per- sons, the profits of ftock, and the wages of la-* bour.
Such cafes, however, are not very frequent, and in every part of Europe, twenty workmen ferve under a mafter fot one that is independent ; and the wages of labour are every where under- ftood to be, what they ufually are, when the labourer is one perfon, and the owner of the ftock which employs him another.
What are the common wages of labour, de- * pends every where upon the contraft ufually made between thole two parties, whofe intcrefts are by no means the fame. The workmen delire to get as much, the mafters to give as little as poffible. The former are di^ofed to combine in order to raile, the latter in order, to lower the wages of labour.
Hz It
loo THE NATURE AND CAUSES OF
BOOK It is not, however, diificult to forefee which of the two parties mud, upon all ordinary occa- (ions, have the advantage in the dilute, and force the other into a compliance with their terms. The mailers^ being fewer in number, can combine much more eafily; and the law, befides, authorifes, or at leaft does not prohibit their combinations, while it prohibits thofe of the workmen. We have no afts of parliament jagainft combining to lower the price of work ; /but many againlt combining to raife it. In all fuch difputes the mafters can hold out much longer. A landlord, a farmer, a mailer manu* fafturer, or merchant, though they did not cm- ploy a fingle workman, could generally live a year or two upon the flocks which they have already acquired. Many workmen could not fubfift a week, few could fubfifl a month, and fcarce any a year without employment. In the long-run the workman may be as nece(&ry to his mailer . as his mailer is to him j but the ne- ceflity is not fo immediate.
We rarely hear, it has been faid, of the com- ti nations of mailers; though frequently of thofe of workmen. But whoever imagines, upon this account, that mailers rarely combine, is as igno- rant of the world as of the fubjeft. Mailers are always and every where in a fort of tacit, but conftant and uniform, combination, not to raife the wages of labour above their aftual rate. To violate this combination is every where a mofl unpopular adlion, and a fort of reproach to a mailer among his neighbours and equals. . We
feldom.
THE WEALTH OF NATIONS. ,oi
feldom, indeed, hear of this combination, be- ^ " a p.
vui,
caufe it is the ufual, and one may fay, the natu- ral ftate of things which nobody ever hears of. Mafters too fometimes enter into particular com- binations to fink the wages of labour even below this rate. Thefe are always condufted with the utmoft filence and fecrecy, .till the moment of execution, and when the workmen yield, as they fometimes do, without refiftance, though fe- verely felt by them, they are never heard of by other people. Such combinations, however, are frequently refilled by a contrary defehfive com^ bination of the worknoeni who fometimes too, without any provocation of this kinjd, combine of their own accord to raifc the price of their labour. Their ufual pretences are, fometimes the high price of provifions j fometimes the great profit which their mafters make by their work. B^it whether their combinations be oftenfive'or defenfive, they arc always abundantly heard of. In order to bring the point to a fpeedy decifion, they have always recourfe to the loudeft: cla- mour, and fometimes to the moft fliocking vio- lence and outrage. They are defperate, and a6l with the folly and ej^travagance of defperate men, who muft either ftarve, or frighten their mafters into an immediate compliance with their demands. The mafters upon thefe occafions are juft as cla- morous upon the other fide, and never ceafe to call aloud for the afliftance of the civil magi- ^ftrate, and the rigorous execution of thofe laws which have been enacted with fo much feverity againft the combinations of feryantSj, labourers,
H 3 ^r\ii
to2 THE NATURE AND CAUSES OF
^ ^j^ "^ and journeymen. The worIanen> accordingty^ cā -yā J very feldom derive any advantage from the vio- lence of thofe tumultuous combinatiQn3) which, /^iH pardy from the intserpofition of the civil magi*
ftrate, partly from the fuperior fteadinefs of the mailers, pardy from the ncceffity which the greater part of the workmen are under of fubmit- ting -for the fake of prefent fubfiftence, generally end in nothing, but the punifhment or ruin of the ringleaders.
But though in difputes with their workmen, mafters muft generally have the advantage, there is however a certain rate, below which it feems impoffible to reduce, for any confiderable time, the ordinary wages even of the lowed ipecies of labour.
A MAN muft always live by his work, and his wages muft at leaft be fufficient to maintain him. They muft even upon moft occafions be fomewhat more ; otherwifc it would be impoffible for him to bring up a family, and the race of fuch workmen could not laft beyond the firft generation. Mr. Cantillon feems, upoiiLthis ac- count, to fuppofe that the loweft fpecies of com- mon labourers muft every where earn at leaft double their own maintenance, in order that one with another they may be enabled to bring up two children ; the labour of the wife, on account of her neceffary attendance on the children, be- ing fuppofed no more than fufficient to provide for herfelf. But one-half the children born, it is computed, die before the age of man- hoods The pooreft labourers, therefore, ac- cording
r '
r
THE WEALTH OF NATIONS. loj
cording to this account, muft, one with another, ^ ^^^^ ^* attempt to rear at lead four children, in order that two may have an equal chance of living to that age. But the neceffary maintenance of four children, it is fuppofed, may be nearly equal to that of one man. The labour of an able- bodied flave, the fame author adds, is computed to be worth double his maintenance; and that of the meaneft labourer, he thinks, cannot be ^ ' worth lefs than that of an able-bodied flave. ) /^tc^ ,Thus far at leaft feems"certain, that, in order to ^ bring up a family, the labour of the hufband and wife together muft, even in the loweft Ipe- cies of common labour, be able to earn fbrne^ thing more than what is precifely neceffary for their own maintenance} but in what proportion, whether in that above mentioned, or in any other, I fhall not take upon me to determine.
There are certain circumftances, however, which fometime$ give the labourers an advan- tage, and enable them to raife their wages con- fiderably above this rate; evidently the loweft which is confiftent with common humanity.
When in any country the demand for thofc who live by wages ; labourers, journeymen, fer- . vants of every kind, is continually increafing ; when every year furniflies employment for a greater number than had been employed the year before, the workmen have no occafion to combine in order to raife their wages, The fcarcity of hands occaflons a competition among; mafters, who bid againft one another, in order to gā¬t workmen, and thus voluntarily break
H 4 through
104 THE NATURE AND CAUSES OP
through the natural combination of mailers not to
raife wages.
The demand for thofe who live by wages, it ii evident, cannot increafe but in proportion to the increafe of the funds which are deftined for the payment of wages. Thefe funds are of two kinds: firft, the revenue which is over and above what is neceflary for the maintenance j and, fecondly, the ftock which is over and above what is neceflary for the employment of their matters.
When the landlord, annuitant, or monied man, has a greater revenue than what he judges fuffi- cicnt to maintain his own family, he employs either the whole or a part of the furplus in main- taining one or more menial fervants. Increafe this furplus, and he will naturally increafe the number of thofe fervants.
When an independent workman, fuch as a weaver or fhoe-maker, has got more ftock than what is fufficient to purchafe the materials of his own work, and to maintain himfelf till he can difpofe of it, he naturally employs one or more journeymen with the furplus, in order to make a profit by their work. Increafe this furplus, and he will naturally increafe the number of his jour- neymen.
The demand for thofe who live by wages, therefore,' neceflarily increafes with the increafe of the revenue and ftock of every country, and cannot poflibly increafe without it. The increafe of revenue and ftock is the increafe of national wealth. The demand for thofe who live by
wages.
THE WEALTH OF NATIONS. 105
^wages, therefore, naturally increafes with the! ^ ha p, increafe of national wealth, and cannot pofliblyl iiicreafe without it.
^ It is not the aftual greatnefs of national! wealth, but its continual increafe, which occa- \ fions a rife in the wages of labour. It is not, accordingly, in the richeft countries, but in the moft thriving, or in thofe which are growing rich the fafteft, that the wages of labour are higheft. England is certainly, in the prefent times, a nnuch richer country than any part of North America. The wages of labour, how- ever, are much higher * in North America than in any part of England. In the province of New York, common labourers earn * three Ihillings and fixpence currency, equal to two fliillings fter- ling, a day; fhip carpenters, ten fhillings and fixpence currency, with a pint of rum worth fix- pence fterling, equal in all to fix fliillings and fixpence fterling; houfe carpenters and brick- jfayers, eight fliillings currency, equal ' to four fliillings and fixpence fterling; journeymen tay- lors, five fliillings currency, equal to about two fliillings and ten pence fterling. Thefe prices are all above the I^ondon price ; and wages arc faid to be as high in the other colonies as in New York: The price of provifions is every whefc in North America much lower than in England, A dearth has never been known there. In the worft feafons, they have always had a fufiiciency
* This was written in 1773, before the commencement of \\ (he late difturbances..
for
io6 THE NATURE AND CAUSES OF
B o o K fof themielve$9 though Ids for exportadon. If T_ ^ _p the money price of labour, therefbre, be higher than it is any where in the mother country, its real price, the real command of the neceflaries and conveniencies of life which it conveys to the labourer, muft be higher in a ftill greater pro- portion.
But though North America is not yet {o rich as England, it is much more thriving, and ad- vancing with much greater rapidity to the further ^ . ,^^-*^ acquifition of riches. The moil dccifive mark V^ ' "" / of the profperity of any country is the increafe Z*^<*x . v^f ^g number of its inhabiunts. In Great Bri-
tain, and moft other European countries, they * ā¢ are not fuppoled to double in lefs than five hun-
dred years. In the Britifh colonies in North America, it has been found, that they double in twenty or fivc-and-twenty years. Nor in the prcfent times is this increaie principally owing to the continual importation of new inhabitants, but to the great multiplication of the Ipecies,. Thofe who live to old age, it is faid, frequently fee there from fifty to a hundred, and fometimes many more, defcendants from their own body. Labour is there fo well rewarded, that a nume* rous family of children, inftead of being a bur- then, is a fburce of opulence and profperity to the parents. The labour of each child, before it can leave their houfe, is computed to be worth a hundred pounds clear gain to them. A young widow with four or five young children, who, among the middling or inferior ranks of people in Europe, would have fo litc|e chance for a
4 lā¬Con4
J
THE WEALTH OF NATIONS. 107
feoond huifoand, is there frequently courted as a ^ " .^ ''ā¢ fort of faauDjgyt The value of children is the greiteft of all encouragements to marriage. We cannot, therefore, wonder that the people in North America Ihould generally many very young. Notwithftanding the great increafe oc- cafioncd by fudi early marriages, there is a con- tinual complaint of the fcarcity of hands in North America, The demand for labourers, the funds deftined for maintaining diem, increafe, it feems, ftill fafter than they can find labourers to employ.
Though the wealth of a country fhould be very great, yet if it has been long ftationary, wc muft not CKpeft to find the wages of kbour very high in it. The funds dcftined for the payment of wages, the revenue and^ftock of its inhabit- ants, may be of the greateft extent ; but if they have continued for feveral centuries of the fame, or very nearly of the fame extent, the number of labourers employed every year could eafily fupply, and even more than fupply, the number wanted the following year. There could feldom be any fcarcity of hands, nor could the mafters^ be obiged to bid againft one another in order to get them. The hands, on the contrary, would, in this cafe, naturally multiply beyond their em- ployment. There would be a conftant fcarcity of employment, and the labourers would be obliged to bid againft one another in order to get it. If in fuch a country the wages of labour had ever been more than fufficient to maintain the. labourer, and to enable him to bring up a
family.
r 4
io8 THE NATURE AND CAUSES OF
BOOK ^imily, the competition of the labourers and the intereft of the mafters would loon reduce them to this lowed rate which is conGftent with com- mon humanity. China has been long one of the richeft, that is, one of the moft fertile, bcft cul- tivated, moil induftrious, and moft populous countries in the world. It feems, however, to have been long ftationary. Marco Polo, who vifited it more than five hundred years ago, de- fcrjbes its cultivation, induftry, and populouf- nefs, almoft in the fame terms in which they are defcribed by travellers in the prefent times. It had perhaps, even long before his time, ac- quired that fijU complement of riches which the nature of its laws and inftitutions permits it to acquire. The accounts of all travellers, incon- fiftent in many other refpefts, agree in the low wages of labour, and in the difficulty which a labourer finds in bringing up a family in China. If by digging the ground a whole day he can get what will purchafe a fmall quantity of rice in the evening, he is contented. The condition of ar- tificers is, if poffible, ftill worfe. Infteid of waiting indolently in their work-houfes, for the calls of their cuftomers, as in Europe, they are continually running about the ftreets with the tools of their refpeftive trades, offering their fervice, and as it were begging employment. The poverty of the lower ranks of people in China far furpafles that of the moft beggarly nations in Europe. In the neighbourhood of Canton many hundred, it is commonly faid, many thoufand families have no habitation on
the
HAP. VIU.
THE WEALTH OF NATIONS, lOg
the land, but live conftantly in little fifhirig badts ^ upon the rivers and canals. The fubfiftenee which they find there is fo fcanty that they are eager to fifh up the naftieft garbage thrown over- board from any European (hip. Any carrion, the carcafe of a dead dog or cat;^ for example, though half putrid and ftinking, is as welcome to them as the moft wholefome food to the people of other countries. Marriage is encou- raged in China, not by the profitablenefs of chil- dren, but by the liberty of deftroying them. In all great towns feveral are every night expofed in the ftreet, or drowned like puppies in the water. The performance of this horrid office is even faid to be the avowed bufinefs by which fome ā¢people earn their fubfiftenee. -jcr,-. , .ā ā¢ ā ā¢ .. :
China, however, though it may perhaps ftand ftill, does not feem to go backwards. Its towns are no- where deferted by their inhabitants. The lands which had once been cultivated, are no- where neglefted. The fame, or very nearly the fame, annual labour muft therefore continue to be performed, and the funds deftined for maintain- ing it muft not, confequently, be fenfibly di- minilhed. The loweft clafs of labourers, there- fore, notwithftanding their fcanty fubfiftenee, muft fome way or another make fliift to continue their race fo far as to keep up their ufual num- bers.
' But it would be otherwife in a country where the funds deftined for the maintenance of labour were fenfibly decaying. Every year the demand for fervants and labourers would, in all the dif- ferent
110 THE NATURE AND CAUSES OP
BOOK ferent claflfes of employments^ be Icfe than ic had been the year before. Many who had been bred in the fuperior clailes, not beir^ able to find employment in their own bufinefe, would be glad to feek it in the loweft. The lowcft clafe being not only overftocked with its own work- men, but with the overflowings of all the other clafles, the competition for empk>yment would be fo great in it, as to reduce the wages of la- bour to the mdl miferable and fcanty fubfiftence of the labourer. Many would not be able v> find employment even upon thefe hard terms, but -would either ftarve, or be driven to feek a ibbfiftcnce either by begging, or by the per- petration perhaps of the greateft enormities. Waat, famine, and mortality, would immediately prevail in that clafs, and from thence extend therofelves to all the fuperior clafles, till the number of inhabitants in the country was re- duced to what could eafily be maintained by the revenue and ftock which remained in it, and which had efcaped either the tyranny or calamity which had deftroycd the reft. This perhaps is nearly the prefent ftate of Bengal, and of feme other of the Englilh fetdements in the Eaft Indies. In a fertile country which had before been much depopulated, where fuhfiftence, cpn- lĀ£quently> Ihould not be very difficult, "and where, notwithftanding, three or four hundred thoufend people die of hunger in one year, we may be affured that the funds deftincd for the maintenance of the labouring poor are faft de- caying. The di25:rence Ijetween die genius of
the
THE WEALTH OF NATIONS. iti
the Britifli conftitution which protefts and go- ' ^ " ^ p. vcrns North America, and that of the mercantile company which oppreffes and domineers in the Eaft Indies, cannot perhaps be better illuftrated than by the different ftate of thofe countries,
The liberal reward of labour, therefore, as it is the neceflary efFeft, fb it is the nattiral fymp- tom of increafing national wealth. ^ The fcanty maintenance of the labouring poor, on the other hand,- is the natural fymptom that things are at a itand, and their ftarving condition that they are going faft backwards.
In Great Britain the wages of labour feem,- in the prefent times, to be evidently more thaa what is precifely neceflary to enable the labourer to bring up a family. In order to fatisfy our- felves upon this point it will not be neceflary to- enter into any tedious or doubtful calculation of what may be the lowcft fum upon whrch it is pofllble to do this. There are many plain fymp- toms that the wages of labour are no-where in this country regulated by this loweft rate which is confiflent with common humanity.
First, in almoft every part of Great Britain there is a diftinftion, even in the loweft fpecies of labour, between fummer and winter wages. Summer wages are always highqfl>^'TKton ac- count of the extraordinary expence ofibKelr^theY^^^-^-^i maintenance of a family is moft expenfive in winter. Wages, therefore, being higheft when this expence is loweft, it feems evident that they ' are noc regulated by what is neceflary for this A: CXfcncc; but by the quantity and fuppofedi^^
valuc-^
112 THE NATURE AND CAUSES OF
BOOK value of the work. A labourer, it may be fafd
indeed, ought to fave part of his fummer wages in order to defray his winter expencej and that through the whole year they do not exceed what is neceflary to maintain his family throu^ the whole year. A Have, however, or one abfb- lutely dependent on us for immediate fubfift-* ence, would not be treated in this manner. His daily fubfiftence would be proportioned to his daily neceffities.
Secondly, the wages of labour do not in Great Britain fluftuate with the price of provi- fions. Thefe vary every-where from year to year, frequently from month to monCh^ But lA many places the money price of labour remains uniformly the fame fometimes for half a century together. If in thefe places, therefore, the la- bouring poor can maintain their families in dear years, they muft be at their eafe in times of mo- derate plenty, and in affluence in thofe of extra- ordinary cheapnefs. The high price of provi- fions during thefe ten years paft has not in many parts of the kingdom been accompanied with any fenfible rife in the money price of labour. It has, indeed, in fome^ owing probably more to the increafe of the demand for labour, than to that of the price of provifions.
Thirdly, as the price of provifions varies more from year to year than the Wages of Jabour, fo, on the other hand, the wages of labour vary more from place to place' thairihe price of pro- vifions. The prices of bread and butcher's meat are generally the fame, or very nearly the fame,
through.
CHAP, VIII.
^HE WEALtH Of NATIONS. 113
through the greater part of the united kingdom. Thefe and moft other things which are fold by retail, the way in which the labouring poor buy all things, are generally flilly as cheap or cheaper in great towns than in the remoter parts of the country, for reafons which I fhall have occafion to explain hereafter. But the wages of labour in a great town and its neighbourhood are fre- quently a fourth or a fifth part, twenty or five-^ and-twenty percent, higher than at a few miles difi- tance. Eighteen pence a day may be reckoned the common price of labour in London and its neighbourhood. At a few miles diftance it falls to fourteen and fifteen pence. Ten pence may be reckoned its price in Edinburgh and Its neigh- bourhood. At a few miles diftance it falls to eight pence, the ufual price of common labour through the greater part of the low country of Scotland, where it varies a good deal lefs than in England. Such a difference of prices, which it feeiVis is not always fuflicient to tranfport a man from one parifh to another, would necefla- rily occafion fo great a tranfportation of the moft bulky commodities, not only from one parifli to another, but from one end of the kingdom, al- moft from one end of the world to the other, as would foon reduce them more nearly to a level- After all that has been Hiid of the levity and in- conftancy of human nature, it appears evidently from experience that a man is of all forts of lug-f gage the moft difficult to be tranfported. If th^ labouring poor, therefore, can maintain their families in thofe parts of the kingdom where the Vol. I. I price
114 THE NATURE AND CAUSES OF
^^i^ ^ price of labour is lowc^ they muft be in affluence where it is higheft.
Fourthly, the variations in the price of la* bour not only do not correipond cither in place or time with thofe in the price of provifionSj but they are frequently quite oppofite.
Grain, the food of the conunon people, is dearer in Scotland than in En^and, whence Scodand receives almoU every year very large fupplies. But Englifh corn muft h? fold dearer in Scotland, the country to which it is brought, than in England, the country from which ic comes; and in proportion to its quality it can- not be fold dearer in Scotland than the Scotch corn that comes to the fame market in compe- tition with it. The quality of grain depends chiefly upon the quantity of flour or meal which it yields at the mill, and in this reipedt Englifli grain is fo much fuperior to the Scotch, that, though often dearer in appearance, or in propor- tion to the mcafure of its bulk, it is generally cheaper in reality, or in proportion to its quality, or even to the meafure of its weight. The price of labour, on the contrary, is dearer in England than in Scodand. If the labouring poor, there- fore, can maintain their families in the one part of the united kingdom, they muft be in affluence in the other. Oatmeal indeed fupplies the common people in Scotland with the greateft and the beft part of their food, which is in general much inferior to that of their neighbours of the fame rank in England. This difference, however, in the mode of their fubfiftence is not the caufe, j
but!
wmmmmm
THE WEALtH OP NATIONS.
It?
but the efFeft, of the difference in their wages! ; ^ " ^ p. though, by a ftrange ixiifapprehenfion, I have frequently heard it reprefented as the caufe. It is not be^aufe one man keeps a coach while his neighbour walks a- foot, that the one 03 rich and the other poor ; but becaufe the one is rich he keeps a coach, and becaufe the other is poor he Walks a-foot. .^^
During the courfe of theiaft century, taking one year with another, grain was dearer in both parts of the united kingdonf than during that of' the prefent. This is a matter of faft which can- not now admit of any reafonable doubt ; and the proof of it is, if poffible, ftill more decifive with regard to Scotland than wirfi regard to England. It is in Scotland fupported by the evidence of the public fiars, annual valuations made upon oath, according to the aftual ftate of the mar- kets, of all the different forts of grain in every different county of Scotland* If fuch direft proof Could require any collateral evidence to confirm it, I would obferve that this has likewife been the cafe in France, and probably in moft other parts of Europe. With regard to France there is the clearefl proof. But though it is certain that in both parts of the united kingdom grain was fomewhat dearer in the laft century than in the prefent, it is equally certain that labour was much cheaper. If the labouring poor, there- fore, CQuld bring up their families then, they muft be much more at their eafe now. In the Jaft century, the mofl ufual day-wages of com- mon labour through the greater part of Scotland
1 2 were
,,6 THE NATURE AND CAUSES OP
BOOK vvere fixpence in fummer and five-pence in win-^ ter. Three ihillings a week, the fame price very nearly, ftill continues to be paid in fortie parts^ of the Highlands and Weftern Iflands. Through the greater part of the low country the mod ufual wages of common labour are now eight- pence a day; ten-pence, fometimes a {hilling about Edinburgh, in the counties which border upon England, probably on account of that neighbourhood, and in a few other places where there has lately been a confiderable rife in the demand for labour, about Glafgow, Carron, Ayr-fhire, &c. In England the improvements of agriculture, manufadtures and commerce be- gan much earlier than in Scotland. The de- mand for labour, and confequently its price> muft neceffarily "have increafed with thofe im- provements. In the laft century, accordingly, as well as in the prefent, the wages of labour were higher in England than in Scotland. They have rifen too confiderably fince that time, though, on account of the greater variety of wages paid there in different places, it is more difEcult to afcertain how much. In 1614, the pay of a foot foldier was the fame as in the pre- fent times, eight pence a day. When it was firft eftabllfiied it would naturally be regulated by the ufual wages of common labourers, the rank of people from which foot foldiers are commonly drawn. Lord Chief Juftice Halerf, who wrote in the time of Charles II. computes the neceflary expence of a labourer's family, confifting of fix perfons, the father and mother, two children able
to
THE WEALTH OF NATIONS. 117
to do fomething, and two- not able, at ten fhil- ^ " ^ i>. Kngs a week, or twenty-fix pounds a year. If they cannot earn this by their labour, they muft make it up, he fuppofes, either by begging or ftealing. He appears to have enquired very carefully into this fubje6t^. In 1688, Mr. Gre- gory King, whofe Ikill in political arithmetic is fo much extolled by Doftor Davenant, computed the ordinary income of labourers and out-fervants to be fifteen pounds a year to a family, which he foppofed to confift, one with another, of three and a half perfons. His calculation, therefore, though different in appearance, correfponds very nearly at bottom with that of judge Hales. J3oth fuppofe the weekly expence of fuch families to be about twenty pence a head. Both the pecu- niary income and expence of fuch families have increafcd confiderably fince that time through the greater part of the kingdom -, in fome places more, and in fome left ; though perhaps fcarce any where fo much as fome exaggerated accounts of the prefent wages of labour have lately reprefented them to the public. The price of labour, it muft be obferved, cannot be afcer- tained very accurately any where, difiirent prices being often paid at the fame place and for the fame fort of labour, not only according to the difierent abilities of the workmen, but according to the eafinels or hardnefs of the mafters. Where wages are not regulated by law, all that we can
* See his fcheme for the 'maintenance of the Poor, in ]J urn's Hiftory of the Poor-laws.
I 3 pretend
ā i8 THE NATURE AND CAUSES OP
^ ^j ^ "^ pretend to determine is what arc the moft ufual 5 and experience ieems to Ibovr that law can never regulate them properly, though it has often pre<- tended to do foĀ»
ThĀ£ real recompence of labour, the real quan- tity of the neceflaries and conveniencies of life which it can procure to the labourer, has, during the courie of the prefent century, increaied per- haps in a ftill greater proportion than its money price. Not only grain has become fbmewhat cheaper, but many other things, from which the induilrious poor derive an agreeable and whole- fome variety of /ood, have become a great deal cheaper. Potatoes, for example, do not at pre- fent, through the greater p^rt of the kingdomj^ coft half the price which they ufed to do thirty or forty years ago. The fame thing may be faid of turnips, carrots, cabbages ; things which were formerly never raifed but by the fpade, but which are now commonly raifed by the plough. All fort of garden fluff too has, become cheaper. The greater part of the apples and even of the onions confumed in Great Britain were in the laft century imported from Flanders. The great im- provements in the coarfer manufactures of both linen and woollen cloth furnilh the labourers with cheaper and better cloathing ; and thofe in the ma- nufaftures of the coarfer metals, with cheaper and better inftruments of trade, as well as with many agreeable and convenient pieces of houlhold fur- niture. Soap, fait, candles, leather, and fer- mented liquors, have, indeed, become a good deal dearer; chiefly froni the taxes which have
been
THE WJgALTH OF NATIONS. ' n?
been kid upon them. The quantity of thefe, ^ ^^1^^ ^' however, which the labouring poor ^ are under any neceffity of confuming> is fo very fmall, that the increafe in their price does not compenfate the diminution in that of fo many other things. The common complaint that; luxury extends itfelf even to the loweft ranks of the people, and that the labouring poor will not now be contented with the fame food, cloathing and lodging which fatisfied them in former times, may convince lis that it is not the money price of labour onlyi but itĀ§ real recompence, which* has aug- mented.
Is this improvement in the circumftances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the fo- ciety ? The anfwer feems at firft fight abundantly plain. Servants, labourers and workmen of dif- ferent kinds, make up the far greater part of every great political fociety. But what improves the circumftances of the greater part can never be regarded as jin inconveniency to the whole. No fociety can furely be flourifhing and happy, of which the far greater part of the members are poor and miferable. It is but equity, be- fidcs, that they who fcjsd, cloath and lodge the whole body of the people, Ihould have fuch ^ fliare of the produce of their own labour as tcr be thcmfelves tolerably well fed, cloathed and lodged.
Poverty, though it no doubt difcourages, does not always prevent marriage. It feems even to be favourable to geperation. A half-ftarved
I 4 Highland
m
up THE NATURE AND CAUSES OF
^ ^ 9^ ^1 Highland woman frcqucndy bears more tha^ twenty children^ while a"" pampered fine lady is I 1 1 often incapable of bearing any, and is generally ' ''exhaufted by two or three. Bamennefs, {o fre- quent among women of fafliion, is very rano among thoie of inferior ftation. Luxury in tJie fair fex, while it inflames perhaps the paffion for enjoynient, feems always to weaken, and fine- quently to deftroy altogether, the powers of ge-. aeration, :
But poverty, though it does not prevent the generation, is extremely unfavourable to the rear- ing of children. The tender plant is produced^ but in fo cold a foi], and fo fevere a climate, ibon withers and dies. It is not uncommon, I have been frequently told, in the Highlands of Scot- land for a mother who has borne twenty children not to have two alive. Several officers of great experience have affured me, that fo far from re- cruiting their regiment, they have never been able to fupply it with drums and fifes fi'om all the foldiers children that were borri in it. A greater number of fine children, however, is feldom fcen any where than about a barrack of foldiers. Very few of them, it feems, arrive at the age of thirteen or fourteen. In fome places one half the children born die before they are four years of age -, in many places before they are feven; and in almoft all places before they are nine or ten. This great mortality, however, will every where be found . chiefly among the children of the common people, who cannot afibrd to fend them with the fame (;are as thof^
of
THE WEALTH OF NATIONS. i2r
of better ftation. Though their marriages are ^ h a p. generally niorc fruitful than thofe of people of falhion, a fnaaller proportion of their children arrive at nnaturity. In foundling hofpitals, and among the children brought up by parilh cha- rities, the mortality is ftill greater than among thofe of the common people.
EvjERY fpecies of animals naturally multiplies in proportion to the means of their fubfiftence, and no fpecies can ever multiply beyond it. But in civilized fociety it is only among the inferior ranks of people that, the fcantinefs of fubfiftence can fet limits to the further multiplication of the human fpecies j and it can do fo in no other way . than by deftroying a great part of the children which their fruitful marriages produce.
The liberal reward of labour, by enabling them to provide better for their children, and confequently to bring up a greater number, na- turally tends to widen and extend thofe limits. It delcrves to be remarked too, that it neceflarily does this as nearly as poffible in the proportion which the demand for labour requires. If this demand is continually increafing, the reward of labour muft neceffarily encourage in fuch a manner the marriage and multiplication of la- bourers, as may enable them to fupply that con- tinually increafing demand by a continually in- / creafing population. If the reward Ihould at any
time be lefs than what was requifite for this pur- pofe, the deficiency of hands would foon raife it ; and if it ftiouW at any time be more, their cxceffivc multiplication would foon lower it t6
this
122 THE NATURE AND CAUSES OF
BOOK this necefiary rate. The market would be fiĀ» much under-ftocked wich labour in die one cafe^ and {o much over-ftocked in die odier^ as would loon force back its price to that propter rate which the drcumftances of the ibciety required. It is in this manner that the demand for men, like that for any other commodity, neceflarily regulates the produ&ion of men ; quickens it when it goes on too flowly, and ftops it when it advances too faft. It is this demand which r^ulates and deter- mines the date of pr(^>agation in all the different countries of the world, in North America, in Europe, and in China; which renders it rapidly IM'Ogreflive in the firft, flow and gradual in the iecond, and altogether ftationary in the lafl:.
The wear and tear of a flave, it has been laid, is at the expence of his mailer ; but that of a free iervant is at his own expence. The wear an4 tear of the latter, however, is, in reality, as much at the expence of his mailer as that of the former. The wages pjdd to journeymen and lervants of every kind muft be fuch as may enable them, one with another, to continue the race of journeymen and iervants, according as the increaiing, diminiihing, or ilationary demand of the fociety may happen to require. But though the wear and tear of a free fervant be equally at the expence of his mailer, it generally coils him much Icfs than that of a flave. The fund deilined for replacing or repairing, if I may fay fo, the wear and tear of the flave, is com- monly managed by a negligent mailer or carelefs overfeer. That deilined for performing the
fame
THE WEALTH OF NATIONS. 123
fame office with regard to the free man, is ma- ^ ^ a p. naged by the free man himfelf. The diforders which generally prevail in the oeconomy of the rich^ naturally introduce themfelves into the managepnent of the former : The ftrift frugality and parfimonious attention of the poor 'as natu- rally eftablifh themfelves in that of the latter. Under