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ADAM SMITHThe Wealth of
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ANINQUIRY
INTO THE
NATURE AND CAUSESOF THE
WEALTH OF NATIONS— Books I, II, III, IV and V —
Adam Smith
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Copyright © 2007 ΜεταLibrithis digital edition
ALL RIGHTS RESERVED.
No part of this digital edition may be reproduced, stored in a retrievalsystem, or transmitted, in any form, or by any means, eletronic, mech-anical, photocopying, recording, or otherwise, without the prior con-sent of the copyright holder.
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ADAM SMITHThe Wealth of
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EDITORIAL NOTE
IN this edition references are made to corresponding pages ofthe best modern edition of the Wealth of Nations: the secondvolume of The Glasgow Edition of the Works and Correspond-ence of Adam Smith [1]. These references are printed as mar-gin notes. For example, ‘G.ed.p26’ means ‘page 26 of the Glas-gow Edition’.
Smith’s own footnotes are marked with ‘[Smith]’ in boldface just before the footnote. Paragraph number are printedinside brackets on the left margin and the numbering restartsat the beginning of every section.
References to this edition can be made in this way:
Smith, Adam. An Inquiry into the Nature andCauses of the Wealth of Nations. Edited byS. M. Soares. MetaLibri Digital Library, 29th May2007.
SÁLVIO MARCELO SOARESLausanne, 29th May 2007
mailto:[email protected]
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CONTENTS
Editorial Note iii
Advertisement to the Third Edition 13
Advertisement to the Fourth Edition 14
Introduction and Plan of the Work 15
BOOK IOf The Causes of Improvement in the ProductivePowers of Labour, and of the Order According towhich Its Produce Is Naturally DistributedAmong the Different Ranks of the People 19
CHAPTER IOf the Division of Labour 20
CHAPTER IIOf the Principle which gives occasion to the Division ofLabour 31
CHAPTER IIIThat the Division of Labour is limited by the Extent ofthe Market 36
CHAPTER IVOf the Origin and Use of Money 42
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CHAPTER VOf the Real and Nominal Price of Commodities, or theirPrice in Labour, and their Price in Money 51
CHAPTER VIOf the Component Parts of the Price of Commodities 72
CHAPTER VIIOf the Natural and Market Price of Commodities 82
CHAPTER VIIIOf the Wages of Labour 94
CHAPTER IXOf the Profits of Stock 123
CHAPTER XOf Wages and Profit in the different Employments ofLabour and Stock 137
Part I. Inequalities arising from the Nature of theEmployments themselves 138
Part II. Inequalities occasioned by the Policy of Europe 162
CHAPTER XIOf the Rent of Land 194
Part I. Of the Produce of Land which always affordsRent 197
Part II. Of the Produce of Land which sometimes does,and sometimes does not, afford Rent 216
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Part III. Of the Variations in the Proportion betweenthe respective Values of that Sort of Produce whichalways affords Rent, and of that which sometimes doesand sometimes does not afford Rent 233
Digression concerning the Variations in the Value ofSilver during the Course of the Four last Centuries 236
FIRST PERIOD 236SECOND PERIOD 254THIRD PERIOD 255Variations in the Proportion between the respective Valuesof Gold and Silver 277Grounds of the Suspicion that the Value of Silver stillcontinues to decrease 284Different Effects of the Progress of Improvement upon thereal price of three different Sorts of rude Produce 285
First Sort 286Second Sort 288Third Sort 300
Conclusion of the Digression concerning the Variations inthe Value of Silver 313
Effects of the Progress of Improvement upon the realPrice of Manufactures 320
CONCLUSION of the CHAPTER 326
BOOK IIOf the Nature, Accumulation, and Employment ofStock 343
Introduction 344
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CHAPTER IOf the Division of Stock 347
CHAPTER IIOf Money considered as a particular Branch of thegeneral Stock of the Society, or of the Expense ofmaintaining the National Capital 357
CHAPTER IIIOf the Accumulation of Capital, or of Productive andUnproductive Labour 416
CHAPTER IVOf Stock Lent at Interest 441
CHAPTER VOf the Different Employment of Capitals 452
BOOK IIIOf the different Progress of Opulence in differentNations 473
CHAPTER IOf the natural Progress of Opulence 474
CHAPTER IIOf the Discouragement of Agriculture in the ancientState of Europe after the Fall of the Roman Empire 481
CHAPTER IIIOf the Rise and Progress of Cities and Towns after theFall of the Roman Empire 496
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CHAPTER IVHow the Commerce of the Towns Contributed to theImprovement of the Country 510
BOOK IVOf Systems of political Œconomy 527
Introduction 528
CHAPTER IOf the Principle of the commercial, or mercantileSystem 529
CHAPTER IIOf Restraints upon the Importation from ForeignCountries of such Goods as can be produced at Home 558
CHAPTER IIIOf the extraordinary Restraints upon the Importationof Goods of almost all Kinds from those Countries withwhich the Balance is supposed to be disadvantageous 584
Part I. Of the Unreasonableness of those Restraintseven upon the Principles of the Commercial System 584
Digression concerning Banks of Deposit, particularlyconcerning that of Amsterdam 592
Part II. Of the Unreasonableness of thoseextraordinary Restraints upon other Principles 605
CHAPTER IVOf Drawbacks 619
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CHAPTER VOf Bounties 626
Digression concerning the Corn Trade and Corn Laws 649
CHAPTER VIOf Treaties of Commerce 675
CHAPTER VIIOf Colonies 690
Part First. Of the Motives for establishing newColonies 690
Part Second. Causes of Prosperity of New Colonies 702Part Third. Of the Advantages which Europe hasderived from the Discovery of America, and from that ofa Passage to the East Indies by the Cape of Good Hope 735
CHAPTER VIIIConclusion of the Mercantile System 802
CHAPTER IXOf the Agricultural Systems, or of those Systems ofPolitical Economy which represent the Produce of Landas either the sole or the principal Source of theRevenue and Wealth every Country 828
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BOOK VOf the Revenue of the Sovereign orCommonwealth 862
CHAPTER IOf the Expenses of the Sovereign or Commonwealth 863
Part Third. Of the Expense of Defence 863Part Third. Of the Expense of Justice 885Part Third. Of the Expense of Public Works andPublic Institutions 901
Article I. Of the Public Works and Institutions forfacilitating the Commerce of the Society 902
And, first, of those which are necessary for facilitatingCommerce in general 902Of the Public Works and Institutions which are necessaryfor facilitating particular Branches of Commerce 913
Article II. Of the Expense of the Institutions for theEducation of Youth 947Article III. Of the Expense of the Institutions for theInstruction of People of all Ages 980
Part Third. Of the Expense of Supporting the Dignityof the Sovereign 1016
Conclusion of the chapter 1017
CHAPTER IIOf the Sources of the General or Public Revenue of theSociety 1020
Part Third. Of the Funds or Sources of Revenuewhich may peculiarly belong to the Sovereign orCommonwealth 1020
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Part Third. Of Taxes 1031Article I. Taxes upon Rent 1035
Taxes upon the Rent of Land 1035Taxes which are proportioned, not to the Rent, but to theProduce of Land 1046Taxes upon the Rent of Houses 1051
Article II. Taxes upon Profit, or upon the Revenue arisingfrom Stock 1061
Taxes upon as Profit of particular Employments 1068Appendix to Articles I and II. Taxes upon the CapitalValue of Land, Houses, and Stock 1076Article . Taxes upon the Wages of Labour 1084Article . Taxes which, it is intended, should fallindifferently upon every different Species of Revenue 1088
Captalization Taxes 1088Taxes upon consumable Commodities 1091
CHAPTER IIIOf Public Debts 1142
Appendix 1198
References 1203
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AN
INQUIRY
INTO THE
Nature and Causes
OF THE
WEALTH OF NATIONS
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ADVERTISEMENT11 G.ed. p8
THE first Edition of the following Work was printed in the2 [ 1 ]end of the year 1775, and in the beginning of the year 1776.Through the greater part of the Book, therefore, whenever thepresent state of things is mentioned, it is to be understoodof the state they were in, either about that time, or at some3earlier period, during the time I was employed in writing theBook. To this third Edition, however, I have made several4additions, particularly to the chapter upon Drawbacks, andto that upon Bounties; likewise a new chapter entitled, The5Conclusion of the Mercantile System; and a new article to thechapter upon the expences of the sovereign. In all these ad-ditions, the present state of things means always the state inwhich they were during the year 1783 and the beginning ofthe present year 1784.
1To the Third Edition.
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ADVERTISEMENT6 G.ed. p9
TO THEFOURTH EDITION
IN this fourth Edition I have made no alterations of any kind.7 [ 1 ]I now, however, find myself at liberty to acknowledge my verygreat obligations to Mr. Henry Hope of Amsterdam. To thatGentleman I owe the most distinct, as well as liberal informa-tion, concerning a very interesting and important subject, theBank of Amsterdam; of which no printed account had ever ap-8peared to me satisfactory, or even intelligible. The name ofthat Gentleman is so well known in Europe, the informationwhich comes from him must do so much honour to whoeverhas been favoured with it, and my vanity is so much inter-ested in making this acknowledgement, that I can no longerrefuse myself the pleasure of prefixing this Advertisement tothis new Edition of my Book.
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INTRODUCTION AND PLAN OF THE9 G.ed. p10
WORK
THE annual labour of every nation is the fund which origin-10 [ 1 ]ally supplies it with all the necessaries and conveniences of lifewhich it annually consumes, and which consist always eitherin the immediate produce of that labour, or in what is pur-chased with that produce from other nations.
According therefore, as this produce, or what is purchased11 [ 2 ]with it, bears a greater or smaller proportion to the number ofthose who are to consume it, the nation will be better or worsesupplied with all the necessaries and conveniences for whichit has occasion.
But this proportion must in every nation be regulated by12 [ 3 ]two different circumstances; first, by the skill, dexterity, andjudgment with which its labour is generally applied; and,secondly, by the proportion between the number of those whoare employed in useful labour, and that of those who are not13so employed. Whatever be the soil, climate, or extent of territ-ory of any particular nation, the abundance or scantiness of itsannual supply must, in that particular situation, depend uponthose two circumstances.
The abundance or scantiness of this supply, too, seems to14 [ 4 ]depend more upon the former of those two circumstances thanupon the latter. Among the savage nations of hunters and fish-ers, every individual who is able to work, is more or less em-ployed in useful labour, and endeavours to provide, as well ashe can, the necessaries and conveniences of life, for himself, or15
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such of his family or tribe as are either too old, or too young,or too infirm to go a hunting and fishing. Such nations, how-ever, are so miserably poor that, from mere want, they arefrequently reduced, or, at least, think themselves reduced, to16the necessity sometimes of directly destroying, and sometimesof abandoning their infants, their old people, and those afflic-ted with lingering diseases, to perish with hunger, or to be de-voured by wild beasts. Among civilised and thriving nations,on the contrary, though a great number of people do not labour17at all, many of whom consume the produce of ten times, fre-quently of a hundred times more labour than the greater partof those who work; yet the produce of the whole labour of thesociety is so great that all are often abundantly supplied, and18a workman, even of the lowest and poorest order, if he is frugaland industrious, may enjoy a greater share of the necessariesand conveniences of life than it is possible for any savage toacquire.
The causes of this improvement, in the productive powers19 [ 5 ]of labour, and the order, according to which its produce is nat- G.ed. p11urally distributed among the different ranks and conditions ofmen in the society, make the subject of the First Book of thisInquiry.
Whatever be the actual state of the skill, dexterity, and20 [ 6 ]judgment with which labour is applied in any nation, theabundance or scantiness of its annual supply must depend,during the continuance of that state, upon the proportionbetween the number of those who are annually employed inuseful labour, and that of those who are not so employed. The21number of useful and productive labourers, it will hereafterappear, is every where in proportion to the quantity of capitalstock which is employed in setting them to work, and to theparticular way in which it is so employed. The Second Book,22therefore, treats of the nature of capital stock, of the manner in
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which it is gradually accumulated, and of the different quant-ities of labour which it puts into motion, according to the dif-ferent ways in which it is employed.
Nations tolerably well advanced as to skill, dexterity, and23 [ 7 ]judgment, in the application of labour, have followed very dif-ferent plans in the general conduct or direction of it; and thoseplans have not all been equally favourable to the greatness ofits produce. The policy of some nations has given extraordin-24ary encouragement to the industry of the country; that of oth-ers to the industry of towns. Scarce any nation has dealtequally and impartially with every sort of industry. Since thedownfall of the Roman empire, the policy of Europe has been25more favourable to arts, manufactures, and commerce, the in-dustry of towns; than to agriculture, the industry of the coun-try. The circumstances which seem to have introduced andestablished this policy are explained in the Third Book.
Though those different plans were, perhaps, first intro-26 [ 8 ]duced by the private interests and prejudices of particularorders of men, without any regard to, or foresight of, theirconsequences upon the general welfare of the society; yetthey have given occasion to very different theories of politicalœconomy; of which some magnify the importance of that in-27dustry which is carried on in towns, others of that which iscarried on in the country. Those theories have had a consider-able influence, not only upon the opinions of men of learning,but upon the public conduct of princes and sovereign states. I28have endeavoured, in the Fourth Book, to explain, as fully anddistinctly as I can, those different theories, and the principaleffects which they have produced in different ages and nations.
To explain in what has consisted the revenue of the great29 [ 9 ]body of the people, or what has been the nature of those fundswhich, in different ages and nations, have supplied their an-nual consumption, is the object of these Four first Books. The
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Fifth and last Book treats of the revenue of the sovereign, or G.ed. p12commonwealth. In this Book I have endeavoured to show;30first, what are the necessary expenses of the sovereign, or com-monwealth; which of those expenses ought to be defrayed bythe general contribution of the whole society; and which ofthem by that of some particular part only, or of some partic-ular members of it; secondly, what are the different methods31in which the whole society may be made to contribute towardsdefraying the expenses incumbent on the whole society, andwhat are the principal advantages and inconveniences of eachof those methods: and, thirdly and lastly, what are the reas-32ons and causes which have induced almost all modern govern-ments to mortgage some part of this revenue, or to contractdebts, and what have been the effects of those debts upon thereal wealth, the annual produce of the land and labour of thesociety.
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Book I G.ed. p13Of The Causes of Improvement
in the Productive Powers ofLabour, and of the Order
According to which Its ProduceIs Naturally Distributed Among
the Different Ranks of the People
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CHAPTER IOF THE DIVISION OF LABOUR
33
THE greatest improvement in the productive powers of labour,34 [ 1 ]and the greater part of the skill, dexterity, and judgment withwhich it is anywhere directed, or applied, seem to have beenthe effects of the division of labour.
The effects of the division of labour, in the general business35 [ 2 ] G.ed. p14of society, will be more easily understood, by considering inwhat manner it operates in some particular manufactures. Itis commonly supposed to be carried furthest in some very tri-fling ones; not perhaps that it really is carried further in them36than in others of more importance: but in those trifling manu-factures which are destined to supply the small wants of but asmall number of people, the whole number of workmen mustnecessarily be small; and those employed in every different37branch of the work can often be collected into the same work-house, and placed at once under the view of the spectator. Inthose great manufactures, on the contrary, which are destinedto supply the great wants of the great body of the people, every38different branch of the work employs so great a number ofworkmen that it is impossible to collect them all into the sameworkhouse. We can seldom see more, at one time, than thoseemployed in one single branch. Though in such manufactures,therefore, the work may really be divided into a much greater39number of parts than in those of a more trifling nature, the
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division is not near so obvious, and has accordingly been muchless observed.
To take an example, therefore, from a very trifling manu-40 [ 3 ]facture; but one in which the division of labour has been veryoften taken notice of, the trade of the pin-maker; a workmannot educated to this business (which the division of labour hasrendered a distinct trade), nor acquainted with the use of the41machinery employed in it (to the invention of which the samedivision of labour has probably given occasion), could scarce,perhaps, with his utmost industry, make one pin in a day, andcertainly could not make twenty. But in the way in which this42business is now carried on, not only the whole work is a pecu-liar trade, but it is divided into a number of branches, of whichthe greater part are likewise peculiar trades. One man draws G.ed. p15out the wire, another straights it, a third cuts it, a fourth43points it, a fifth grinds it at the top for receiving, the head;to make the head requires two or three distinct operations; toput it on is a peculiar business, to whiten the pins is another;it is even a trade by itself to put them into the paper; and the44important business of making a pin is, in this manner, dividedinto about eighteen distinct operations, which, in some manu-factories, are all performed by distinct hands, though in othersthe same man will sometimes perform two or three of them. I45have seen a small manufactory of this kind where ten menonly were employed, and where some of them consequentlyperformed two or three distinct operations. But though theywere very poor, and therefore but indifferently accommodatedwith the necessary machinery, they could, when they exerted46themselves, make among them about twelve pounds of pins ina day. There are in a pound upwards of four thousand pins of amiddling size. Those ten persons, therefore, could make amongthem upwards of forty-eight thousand pins in a day. Each per-47son, therefore, making a tenth part of forty-eight thousand
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pins, might be considered as making four thousand eight hun-dred pins in a day. But if they had all wrought separately andindependently, and without any of them having been educatedto this peculiar business, they certainly could not each of themhave made twenty, perhaps not one pin in a day; that is, cer-48tainly, not the two hundred and fortieth, perhaps not the fourthousand eight hundredth part of what they are at presentcapable of performing, in consequence of a proper division andcombination of their different operations.
In every other art and manufacture, the effects of the divi-49 [ 4 ]sion of labour are similar to what they are in this very triflingone; though, in many of them, the labour can neither be somuch subdivided, nor reduced to so great a simplicity of op-eration. The division of labour, however, so far as it can be50introduced, occasions, in every art, a proportionable increaseof the productive powers of labour. The separation of differ-ent trades and employments from one another, seems to havetaken place, in consequence of this advantage. This separa-51tion too is generally carried furthest in those countries whichenjoy the highest degree of industry and improvement; whatis the work of one man, in a rude state of society, being gen-erally that of several in an improved one. In every improved52society, the farmer is generally nothing but a farmer; the man- G.ed. p16ufacturer, nothing but a manufacturer. The labour too whichis necessary to produce any one complete manufacture, is al-most always divided among a great number of hands. How53many different trades are employed in each branch of the linenand woollen manufactures, from the growers of the flax andthe wool, to the bleachers and smoothers of the linen, or tothe dyers and dressers of the cloth! The nature of agricul-ture, indeed, does not admit of so many subdivisions of labour,54nor of so complete a separation of one business from another,as manufactures. It is impossible to separate so entirely, the
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business of the grazier from that of the corn-farmer, as thetrade of the carpenter is commonly separated from that of thesmith. The spinner is almost always a distinct person from55the weaver; but the ploughman, the harrower, the sower of theseed, and the reaper of the corn, are often the same. The oc-casions for those different sorts of labour returning with thedifferent seasons of the year, it is impossible that one man56should be constantly employed in any one of them. This im-possibility of making so complete and entire a separation ofall the different branches of labour employed in agriculture,is perhaps the reason why the improvement of the product-57ive powers of labour in this art, does not always keep pacewith their improvement in manufactures. The most opulentnations, indeed, generally excel all their neighbours in agri-culture as well as in manufactures; but they are commonly58more distinguished by their superiority in the latter than inthe former. Their lands are in general better cultivated, andhaving more labour and expense bestowed upon them, producemore, in proportion to the extent and natural fertility of theground. But this superiority of produce is seldom much more59than in proportion to the superiority of labour and expense. Inagriculture, the labour of the rich country is not always muchmore productive than that of the poor; or, at least, it is never60so much more productive, as it commonly is in manufactures.The corn of the rich country, therefore, will not always, in thesame degree of goodness, come cheaper to market than that ofthe poor. The corn of Poland, in the same degree of goodness,is as cheap as that of France, notwithstanding the superior61 G.ed. p17opulence and improvement of the latter country. The corn ofFrance is, in the corn provinces, fully as good, and in mostyears nearly about the same price with the corn of England,though, in opulence and improvement, France is perhaps in-62ferior to England. The corn-lands of England, however, are
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better cultivated than those of France, and the corn-lands ofFrance are said to be much better cultivated than those of Po-land. But though the poor country, notwithstanding the inferi-63ority of its cultivation, can, in some measure, rival the rich inthe cheapness and goodness of its corn, it can pretend to nosuch competition in its manufactures; at least if those manu-factures suit the soil, climate, and situation of the rich country.64The silks of France are better and cheaper than those of Eng-land, because the silk manufacture, at least under the presenthigh duties upon the importation of raw silk, does not so wellsuit the climate of England as that of France. But the hard-65ware and the coarse woollens of England are beyond all com-parison superior to those of France, and much cheaper too inthe same degree of goodness. In Poland there are said to bescarce any manufactures of any kind, a few of those coarserhousehold manufactures excepted, without which no countrycan well subsist.
This great increase of the quantity of work, which, in con-66 [ 5 ]sequence of the division of labour, the same number of peopleare capable of performing, is owing to three different circum-stances; first, to the increase of dexterity in every particularworkman; secondly, to the saving of the time which is com-67monly lost in passing from one species of work to another; andlastly, to the invention of a great number of machines whichfacilitate and abridge labour, and enable one man to do thework of many.
First, the improvement of the dexterity of the workman ne-68 [ 6 ]cessarily increases the quantity of the work he can perform, G.ed. p18and the division of labour, by reducing every man’s business tosome one simple operation, and by making this operation thesole employment of his life, necessarily increased very much69the dexterity of the workman. A common smith, who, thoughaccustomed to handle the hammer, has never been used to
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make nails, if upon some particular occasion he is obliged toattempt it, will scarce, I am assured, be able to make above70two or three hundred nails in a day, and those too very badones. A smith who has been accustomed to make nails, butwhose sole or principal business has not been that of a nailer,can seldom with his utmost diligence make more than eighthundred or a thousand nails in a day. I have seen several boys71under twenty years of age who had never exercised any othertrade but that of making nails, and who, when they exertedthemselves, could make, each of them, upwards of two thou-sand three hundred nails in a day. The making of a nail, how-72ever, is by no means one of the simplest operations. The sameperson blows the bellows, stirs or mends the fire as there isoccasion, heats the iron, and forges every part of the nail: Inforging the head too he is obliged to change his tools. The dif-73ferent operations into which the making of a pin, or of a metalbutton, is subdivided, are all of them much more simple, andthe dexterity of the person, of whose life it has been the solebusiness to perform them, is usually much greater. The rapid-74ity with which some of the operations of those manufacturersare performed, exceeds what the human hand could, by thosewho had never seen them, be supposed capable of acquiring.
Secondly, the advantage which is gained by saving the time75 [ 7 ]commonly lost in passing from one sort of work to another, ismuch greater than we should at first view be apt to imagine it.It is impossible to pass very quickly from one kind of work toanother, that is carried on in a different place, and with quitedifferent tools. A country weaver, who cultivates a small farm,76must lose a good deal of time in passing from his loom to thefield, and from the field to his loom. When the two trades canbe carried on in the same workhouse, the loss of time is no G.ed. p19doubt much less. It is even in this case, however, very consid-77erable. A man commonly saunters a little in turning his hand
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from one sort of employment to another. When he first beginsthe new work he is seldom very keen and hearty; his mind, asthey say, does not go to it, and for some time he rather triflesthan applies to good purpose. The habit of sauntering and of78indolent careless application, which is naturally, or rather ne-cessarily acquired by every country workman who is obligedto change his work and his tools every half hour, and to applyhis hand in twenty different ways almost every day of his life;renders him almost always slothful and lazy, and incapable of79any vigorous application even on the most pressing occasions.Independent, therefore, of his deficiency in point of dexterity,this cause alone must always reduce considerably the quantityof work which he is capable of performing.
Thirdly, and lastly, every body must be sensible how much80 [ 8 ]labour is facilitated and abridged by the application of propermachinery. It is unnecessary to give any example. I shall onlyobserve, therefore, that the invention of all those machines G.ed. p20by which labour is so much facilitated and abridged, seems to81have been originally owing to the division of labour. Men aremuch more likely to discover easier and readier methods of at-taining any object, when the whole attention of their minds isdirected towards that single object, than when it is dissipated82among a great variety of things. But in consequence of thedivision of labour, the whole of every man’s attention comesnaturally to be directed towards some one very simple object.It is naturally to be expected, therefore, that some one or other83of those who are employed in each particular branch of labourshould soon find out easier and readier methods of performingtheir own particular work, wherever the nature of it admitsof such improvement. A great part of the machines made use84of in those manufactures in which labour is most subdivided,were originally the inventions of common workmen, who, be-ing each of them employed in some very simple operation, nat-
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urally turned their thoughts towards finding out easier and85readier methods of performing it. Whoever has been muchaccustomed to visit such manufactures, must frequently havebeen shown very pretty machines, which were the inventionsof such workmen, in order to facilitate and quicken their ownparticular part of the work. In the first fire-engines, a boy was86constantly employed to open and shut alternately the commu-nication between the boiler and the cylinder, according as thepiston either ascended or descended. One of those boys, wholoved to play with his companions, observed that, by tying a87string from the handle of the valve, which opened this commu-nication, to another part of the machine, the valve would openand shut without his assistance, and leave him at liberty todivert himself with his play-fellows. One of the greatest im-88provements that has been made upon this machine, since it G.ed. p21was first invented, was in this manner the discovery of a boywho wanted to save his own labour.
All the improvements in machinery, however, have by no89 [ 9 ]means been the inventions of those who had occasion to usethe machines. Many improvements have been made by the in-genuity of the makers of the machines, when to make thembecame the business of a peculiar trade; and some by that90of those who are called philosophers or men of speculation,whose trade it is, not to do any thing, but to observe everything; and who, upon that account, are often capable of com-bining together the powers of the most distant and dissimilar91objects. In the progress of society, philosophy or speculationbecomes, like every other employment, the principal or soletrade and occupation of a particular class of citizens. Likeevery other employment too, it is subdivided into a great num-92ber of different branches, each of which affords occupation to a G.ed. p22peculiar tribe or class of philosophers; and this subdivision ofemployment in philosophy, as well as in every other business,
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improves dexterity, and saves time. Each individual becomes93more expert in his own peculiar branch, more work is doneupon the whole, and the quantity of science is considerably in-creased by it.
It is the great multiplication of the productions of all the94 [ 10 ]different arts, in consequence of the division of labour, whichoccasions, in a well-governed society, that universal opulencewhich extends itself to the lowest ranks of the people. Everyworkman has a great quantity of his own work to dispose95of beyond what he himself has occasion for; and every otherworkman being exactly in the same situation, he is enabled toexchange a great quantity of his own goods for a great quant-ity, or, what comes to the same thing, for the price of a great96quantity of theirs. He supplies them abundantly with whatthey have occasion for, and they accommodate him as amplywith what he has occasion for, and a general plenty diffusesitself through all the different ranks of the society.
Observe the accommodation of the most common artificer97 [ 11 ]or day-labourer in a civilized and thriving country, and youwill perceive that the number of people of whose industry apart, though but a small part, has been employed in procuringhim this accommodation, exceeds all computation. The wool-98len coat, for example, which covers the day-labourer, as coarseand rough as it may appear, is the produce of the joint labourof a great multitude of workmen. The shepherd, the sorter ofthe wool, the wool-comber or carder, the dyer, the scribbler,99the spinner, the weaver, the fuller, the dresser, with manyothers, must all join their different arts in order to completeeven this homely production. How many merchants and car- G.ed. p23riers, besides, must have been employed in transporting the100materials from some of those workmen to others who oftenlive in a very distant part of the country! How much com-merce and navigation in particular, how many ship-builders,
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sailors, sail-makers, rope-makers, must have been employed101in order to bring together the different drugs made use of bythe dyer, which often come from the remotest corners of theworld! What a variety of labour too is necessary in order toproduce the tools of the meanest of those workmen! To saynothing of such complicated machines as the ship of the sailor,102the mill of the fuller, or even the loom of the weaver, let usconsider only what a variety of labour is requisite in orderto form that very simple machine, the shears with which theshepherd clips the wool. The miner, the builder of the fur-103nace for smelting the ore, the seller of the timber, the burnerof the charcoal to be made use of in the smelting-house, thebrick-maker, the brick-layer, the workmen who attend the fur-nace, the mill-wright, the forger, the smith, must all of them104join their different arts in order to produce them. Were weto examine, in the same manner, all the different parts of hisdress and household furniture, the coarse linen shirt which hewears next his skin, the shoes which cover his feet, the bed105which he lies on, and all the different parts which compose it,the kitchen-grate at which he prepares his victuals, the coalswhich he makes use of for that purpose, dug from the bowels ofthe earth, and brought to him perhaps by a long sea and a long106land carriage, all the other utensils of his kitchen, all the fur-niture of his table, the knives and forks, the earthen or pewterplates upon which he serves up and divides his victuals, thedifferent hands employed in preparing his bread and his beer,107the glass window which lets in the heat and the light, andkeeps out the wind and the rain, with all the knowledge andart requisite for preparing that beautiful and happy invention,without which these northern parts of the world could scarce108have afforded a very comfortable habitation, together with thetools of all the different workmen employed in producing thosedifferent conveniences; if we examine, I say, all these things,
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and consider what a variety of labour is employed about each109of them, we shall be sensible that without the assistance andco-operation of many thousands, the very meanest person ina civilised country could not be provided, even according to,what we very falsely imagine, the easy and simple manner in110which he is commonly accommodated. Compared, indeed, withthe more extravagant luxury of the great, his accommodation G.ed. p24must no doubt appear extremely simple and easy; and yet itmay be true, perhaps, that the accommodation of a Europeanprince does not always so much exceed that of an industrious111and frugal peasant, as the accommodation of the latter exceedsthat of many an African king, the absolute master of the livesand liberties of ten thousand naked savages.
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CHAPTER IIOF THE PRINCIPLE WHICH GIVES
112 G.ed. p25
OCCASION TO THE DIVISION OFLABOUR
THIS division of labour, from which so many advantages are113 [ 1 ]derived, is not originally the effect of any human wisdom,which foresees and intends that general opulence to whichit gives occasion. It is the necessary, though very slow andgradual consequence of a certain propensity in human nature114which has in view no such extensive utility; the propensity totruck, barter, and exchange one thing for another.
Whether this propensity be one of those original principles115 [ 2 ]in human nature, of which no further account can be given;or whether, as seems more probable, it be the necessary con-sequence of the faculties of reason and speech, it belongs notto our present subject to inquire. It is common to all men,and to be found in no other race of animals, which seem to116know neither this nor any other species of contracts. Two grey-hounds, in running down the same hare, have sometimes theappearance of acting in some sort of concert. Each turns hertowards his companion, or endeavours to intercept her when117his companion turns her towards himself. This, however, is notthe effect of any contract, but of the accidental concurrence G.ed. p26of their passions in the same object at that particular time.Nobody ever saw a dog make a fair and deliberate exchange of118
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one bone for another with another dog. Nobody ever saw oneanimal by its gestures and natural cries signify to another, thisis mine, that yours; I am willing to give this for that. When ananimal wants to obtain something either of a man or of an-119other animal, it has no other means of persuasion but to gainthe favour of those whose service it requires. A puppy fawnsupon its dam, and a spaniel endeavours by a thousand attrac-tions to engage the attention of its master who is at dinner,120when it wants to be fed by him. Man sometimes uses the samearts with his brethren, and when he has no other means of en-gaging them to act according to his inclinations, endeavours byevery servile and fawning attention to obtain their good will.121He has not time, however, to do this upon every occasion. Incivilised society he stands at all times in need of the cooper-ation and assistance of great multitudes, while his whole lifeis scarce sufficient to gain the friendship of a few persons. In122almost every other race of animals each individual, when itis grown up to maturity, is entirely independent, and in itsnatural state has occasion for the assistance of no other livingcreature. But man has almost constant occasion for the help123of his brethren, and it is in vain for him to expect it from theirbenevolence only. He will be more likely to prevail if he can in-terest their self-love in his favour, and shew them that it is for124their own advantage to do for him what he requires of them.Whoever offers to another a bargain of any kind, proposes todo this. Give me that which I want, and you shall have thiswhich you want, is the meaning of every such offer; and it is in125this manner that we obtain from one another the far greaterpart of those good offices which we stand in need of. It is notfrom the benevolence of the butcher, the brewer, or the baker, G.ed. p27that we expect our dinner, but from their regard to their own126interest. We address ourselves, not to their humanity but totheir self-love, and never talk to them of our own necessities
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but of their advantages. Nobody but a beggar chuses to de-pend chiefly upon the benevolence of his fellow-citizens. Even127a beggar does not depend upon it entirely. The charity of well-disposed people, indeed, supplies him with the whole fund ofhis subsistence. But though this principle ultimately provideshim with all the necessaries of life which he has occasion for, it128neither does nor can provide him with them as he has occasionfor them. The greater part of his occasional wants are sup-plied in the same manner as those of other people, by treaty,by barter, and by purchase. With the money which one man129gives him he purchases food. The old cloaths which anotherbestows upon him he exchanges for other old cloaths whichsuit him better, or for lodging, or for food, or for money, withwhich he can buy either food, cloaths, or lodging, as he hasoccasion.
As it is by treaty, by barter, and by purchase, that we obtain130 [ 3 ]from one another the greater part of those mutual good officeswhich we stand in need of, so it is this same trucking dispos-ition which originally gives occasion to the division of labour.In a tribe of hunters or shepherds a particular person makes131bows and arrows, for example, with more readiness and dex-terity than any other. He frequently exchanges them for cattleor for venison with his companions; and he finds at last that hecan in this manner get more cattle and venison than if he him-132self went to the field to catch them. From a regard to his owninterest, therefore, the making of bows and arrows grows to behis chief business, and he becomes a sort of armourer. Anotherexcels in making the frames and covers of their little huts or133 G.ed. p28movable houses. He is accustomed to be of use in this wayto his neighbours, who reward him in the same manner withcattle and with venison, till at last he finds it his interest todedicate himself entirely to this employment, and to become a134sort of house-carpenter. In the same manner a third becomes
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a smith or a brazier, a fourth a tanner or dresser of hides orskins, the principal part of the clothing of savages. And thusthe certainty of being able to exchange all that surplus part135of the produce of his own labour, which is over and above hisown consumption, for such parts of the produce of other men’slabour as he may have occasion for, encourages every man toapply himself to a particular occupation, and to cultivate and136bring to perfection whatever talent or genius he may possessfor that particular species of business.
The difference of natural talents in different men is, in real-137 [ 4 ]ity, much less than we are aware of; and the very differentgenius which appears to distinguish men of different profes-sions, when grown up to maturity, is not upon many occasionsso much the cause, as the effect of the division of labour. The138difference between the most dissimilar characters, between aphilosopher and a common street porter, for example, seems G.ed. p29to arise not so much from nature, as from habit, custom, andeducation. When they came into the world, and for the firstsix or eight years of their existence, they were, perhaps, very139much alike, and neither their parents nor play-fellows couldperceive any remarkable difference. About that age, or soonafter, they come to be employed in very different occupations.The difference of talents comes then to be taken notice of, and140widens by degrees, till at last the vanity of the philosopher iswilling to acknowledge scarce any resemblance. But withoutthe disposition to truck, barter, and exchange, every man must141have procured to himself every necessary and conveniency oflife which he wanted. All must have had the same duties toperform, and the same work to do, and there could have beenno such difference of employment as could alone give occasionto any great difference of talents.
As it is this disposition which forms that difference of tal-142 [ 5 ]ents, so remarkable among men of different professions, so it
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is this same disposition which renders that difference useful.Many tribes of animals acknowledged to be all of the same spe-cies, derive from nature a much more remarkable distinction143of genius, than what, antecedent to custom and education, ap- G.ed. p30pears to take place among men. By nature a philosopher isnot in genius and disposition half so different from a streetporter, as a mastiff is from a greyhound, or a greyhound froma spaniel, or this last from a shepherd’s dog. Those different144tribes of animals, however, though all of the same species, areof scarce any use to one another. The strength of the mastiffis not, in the least, supported either by the swiftness of the145greyhound, or by the sagacity of the spaniel, or by the docilityof the shepherd’s dog. The effects of those different geniusesand talents, for want of the power or disposition to barter andexchange, cannot be brought into a common stock, and do not146in the least contribute to the better accommodation ind con-veniency of the species. Each animal is still obliged to supportand defend itself, separately and independently, and derivesno sort of advantage from that variety of talents with which147nature has distinguished its fellows. Among men, on the con-trary, the most dissimilar geniuses are of use to one another;the different produces of their respective talents, by the gen-eral disposition to truck, barter, and exchange, being brought,148as it were, into a common stock, where every man may pur-chase whatever part of the produce of other men’s talents hehas occasion for.
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CHAPTER IIITHAT THE DIVISION OF LABOUR
149 G.ed. p31
IS LIMITED BY THE EXTENT OFTHE MARKET
AS it is the power of exchanging that gives occasion to the di-150 [ 1 ]vision of labour, so the extent of this division must always belimited by the extent of that power, or, in other words, by theextent of the market. When the market is very small, no per-son can have any encouragement to dedicate himself entirely151to one employment, for want of the power to exchange all thatsurplus part of the produce of his own labour, which is overand above his own consumption, for such parts of the produceof other men’s labour as he has occasion for.
There are some sorts of industry, even of the lowest kind,152 [ 2 ]which can be carried on nowhere but in a great town. A porter,for example, can find employment and subsistence in no otherplace. A village is by much too narrow a sphere for him; evenan ordinary market town is scarce large enough to afford him153constant occupation. In the lone houses and very small vil-lages which are scattered about in so desert a country as theHighlands of Scotland, every farmer must be butcher, bakerand brewer for his own family. In such situations we canscarce expect to find even a smith, a carpenter, or a mason,154within less than twenty miles of another of the same trade.The scattered families that live at eight or ten miles distance
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from the nearest of them must learn to perform themselves agreat number of little pieces of work, for which, in more popu-155lous countries, they would call in the assistance of those work-men. Country workmen are almost everywhere obliged to ap- G.ed. p32ply themselves to all the different branches of industry thathave so much affinity to one another as to be employed about156the same sort of materials. A country carpenter deals in everysort of work that is made of wood: a country smith in everysort of work that is made of iron. The former is not only acarpenter, but a joiner, a cabinet-maker, and even a carver in157wood, as well as a wheel-wright, a plough-wright, a cart andwaggon maker. The employments of the latter are still morevarious. It is impossible there should be such a trade as eventhat of a nailer in the remote and inland parts of the High-158lands of Scotland. Such a workman at the rate of a thousandnails a day, and three hundred working days in the year, willmake three hundred thousand nails in the year. But in such159a situation it would be impossible to dispose of one thousand,that is, of one day’s work in the year.
As by means of water-carriage a more extensive market is160 [ 3 ]opened to every sort of industry than what land-carriage alonecan afford it, so it is upon the sea-coast, and along the banks ofnavigable rivers, that industry of every kind naturally beginsto subdivide and improve itself, and it is frequently not till a161long time after that those improvements extend themselves tothe inland parts of the country. A broad-wheeled waggon, at-tended by two men, and drawn by eight horses, in about sixweeks’ time carries and brings back between London and Ed-162inburgh near four ton weight of goods. In about the same time G.ed. p33a ship navigated by six or eight men, and sailing between theports of London and Leith, frequently carries and brings backtwo hundred ton weight of goods. Six or eight men, therefore,163by the help of water-carriage, can carry and bring back in
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the same time the same quantity of goods between Londonand Edinburgh, as fifty broad-wheeled waggons, attended bya hundred men, and drawn by four hundred horses. Upon twohundred tons of goods, therefore, carried by the cheapest land-164carriage from London to Edinburgh, there must be charged themaintenance of a hundred men for three weeks, and both themaintenance, and, what is nearly equal to the maintenance,the wear and tear of four hundred horses as well as of fifty165great waggons. Whereas, upon the same quantity of goods car-ried by water, there is to be charged only the maintenance ofsix or eight men, and the wear and tear of a ship of two hun-dred tons burden, together with the value of the superior risk,166or the difference of the insurance between land and water-carriage. Were there no other communication between thosetwo places, therefore, but by land-carriage, as no goods couldbe transported from the one to the other, except such whose167price was very considerable in proportion to their weight, theycould carry on but a small part of that commerce which atpresent subsists between them, and consequently could givebut a small part of that encouragement which they at present168mutually afford to each other’s industry. There could be littleor no commerce of any kind between the distant parts of theworld. What goods could bear the expense of land-carriagebetween London and Calcutta? Or if there were any so pre-169cious as to be able to support this expense, with what safety G.ed. p34could they be transported through the territories of so manybarbarous nations? Those two cities, however, at present carryon a very considerable commerce with each other, and by mu-170tually affording a market, give a good deal of encouragementto each other’s industry.
Since such, therefore, are the advantages of water-carriage,171 [ 4 ]it is natural that the first improvements of art and industryshould be made where this conveniency opens the whole world
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for a market to the produce of every sort of labour, and thatthey should always be much later in extending themselves into172the inland parts of the country. The inland parts of the countrycan for a long time have no other market for the greater partof their goods, but the country which lies round about them,and separates them from the sea-coast, and the great navig-173able rivers. The extent of their market, therefore, must fora long time be in proportion to the riches and populousnessof that country, and consequently their improvement must al-ways be posterior to the improvement of that country. In our174North American colonies the plantations have constantly fol-lowed either the sea-coast or the banks of the navigable rivers,and have scarce anywhere extended themselves to any consid-erable distance from both.
The nations that, according to the best authenticated his-175 [ 5 ]tory, appear to have been first civilised, were those that dweltround the coast of the Mediterranean Sea. That sea, by farthe greatest inlet that is known in the world, having no tides,nor consequently any waves except such as are caused by the176wind only, was, by the smoothness of its surface, as well asby the multitude of its islands, and the proximity of its neigh-bouring shores, extremely favourable to the infant navigationof the world; when, from their ignorance of the compass, men177were afraid to quit the view of the coast, and from the imper-fection of the art of shipbuilding, to abandon themselves to theboisterous waves of the ocean. To pass beyond the pillars ofHercules, that is, to sail out of the Straits of Gibraltar, was,178in the ancient world, long considered as a most wonderful anddangerous exploit of navigation. It was late before even thePhoenicians and Carthaginians, the most skilful navigatorsand ship-builders of those old times, attempted it, and theywere for a long time the only nations that did attempt it.
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Of all the countries on the coast of the Mediterranean Sea,179 [ 6 ]Egypt seems to have been the first in which either agricultureor manufactures were cultivated and improved to any consid- G.ed. p35erable degree. Upper Egypt extends itself nowhere above afew miles from the Nile, and in Lower Egypt that great riverbreaks itself into many different canals, which, with the as-180sistance of a little art, seem to have afforded a communica-tion by water-carriage, not only between all the great towns,but between all the considerable villages, and even to manyfarmhouses in the country; nearly in the same manner as the181Rhine and the Maas do in Holland at present. The extent andeasiness of this inland navigation was probably one of the prin-cipal causes of the early improvement of Egypt.
The improvements in agriculture and manufactures seem182 [ 7 ]likewise to have been of very great antiquity in the provincesof Bengal, in the East Indies, and in some of the easternprovinces of China; though the great extent of this antiquityis not authenticated by any histories of whose authority we, inthis part of the world, are well assured. In Bengal the Ganges183and several other great rivers form a great number of navig-able canals in the same manner as the Nile does in Egypt.In the Eastern provinces of China too, several great riversform, by their different branches, a multitude of canals, and184by communicating with one another afford an inland naviga-tion much more extensive than that either of the Nile or theGanges, or perhaps than both of them put together. It is re-markable that neither the ancient Egyptians, nor the Indians,185nor the Chinese, encouraged foreign commerce, but seem all tohave derived their great opulence from this inland navigation.
All the inland parts of Africa, and all that part of Asia186 [ 8 ]which lies any considerable way north of the Euxine and G.ed. p36Caspian seas, the ancient Scythia, the modern Tartary andSiberia, seem in all ages of the world to have been in the
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same barbarous and uncivilised state in which we find themat present. The Sea of Tartary is the frozen ocean which ad-187mits of no navigation, and though some of the greatest riversin the world run through that country, they are at too great adistance from one another to carry commerce and communic-ation through the greater part of it. There are in Africa none188of those great inlets, such as the Baltic and Adriatic seas inEurope, the Mediterranean and Euxine seas in both Europeand Asia, and the gulfs of Arabia, Persia, India, Bengal, andSiam, in Asia, to carry maritime commerce into the interior189parts of that great continent: and the great rivers of Africa areat too great a distance from one another to give occasion to anyconsiderable inland navigation. The commerce besides whichany nation can carry on by means of a river which does not190break itself into any great number of branches or canals, andwhich runs into another territory before it reaches the sea, cannever be very considerable; because it is always in the powerof the nations who possess that other territory to obstruct the191communication between the upper country and the sea. Thenavigation of the Danube is of very little use to the differentstates of Bavaria, Austria and Hungary, in comparison of what192it would be if any of them possessed the whole of its course tillit falls into the Black Sea.
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CHAPTER IVOF THE ORIGIN AND USE OF
193 G.ed. p37
MONEY
WHEN the division of labour has been once thoroughly estab-194 [ 1 ]lished, it is but a very small part of a man’s wants which theproduce of his own labour can supply. He supplies the fargreater part of them by exchanging that surplus part of theproduce of his own labour, which is over and above his ownconsumption, for such parts of the produce of other men’s la-195bour as he has occasion for. Every man thus lives by exchan-ging, or becomes in some measure a merchant, and the societyitself grows to be what is properly a commercial society.
But when the division of labour first began to take place,196 [ 2 ]this power of exchanging must frequently have been verymuch clogged and embarrassed in its operations. One man,we shall suppose, has more of a certain commodity than hehimself has occasion for, while another has less. The formerconsequently would be glad to dispose of, and the latter to pur-197chase, a part of this superfluity. But if this latter should chanceto have nothing that the former stands in need of, no exchangecan be made between them. The butcher has more meat inhis shop than he himself can consume, and the brewer and the198baker would each of them be willing to purchase a part of it.But they have nothing to offer in exchange, except the differ-ent productions of their respective trades, and the butcher isalready provided with all the bread and beer which he has im-199
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mediate occasion for. No exchange can, in this case, be madebetween them. He cannot be their merchant, nor they his cus-tomers; and they are all of them thus mutually less serviceableto one another. In order to avoid the inconveniency of such200situations, every prudent man in every period of society, afterthe first establishment of the division of labour, must natur- G.ed. p38ally have endeavoured to manage his affairs in such a manneras to have at alltimes by him, besides the peculiar produce of201his own industry, a certain quantity of some one commodity orother, such as he imagined few people would be likely to refusein exchange for the produce of their industry.
Many different commodities, it is probable, were success-202 [ 3 ]ively both thought of and employed for this purpose. In therude ages of society, cattle are said to have been the commoninstrument of commerce; and, though they must have been amost inconvenient one, yet in old times we find things werefrequently valued according to the number of cattle which had203been given in exchange for them. The armour of Diomede, saysHomer, cost only nine oxen; but that of Glaucus cost an hun-dred oxen. Salt is said to be the common instrument of com-merce and exchanges in Abyssinia; a species of shells in some204parts of the coast of India; dried cod at Newfoundland; tobaccoin Virginia; sugar in some of our West India colonies; hides ordressed leather in some other countries; and there is at thisday a village in Scotland where it is not uncommon, I am told,205for a workman to carry nails instead of money to the baker’sshop or the alehouse.
In all countries, however, men seem at last to have been de-206 [ 4 ]termined by irresistible reasons to give the preference, for thisemployment, to metals above every other commodity. Metalscan not only be kept with as little loss as any other commodity, G.ed. p39scarce anything being less perishable than they are, but they207can likewise, without any loss, be divided into any number of
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parts, as by fusion those parts can easily be reunited again; aquality which no other equally durable commodities possess,and which more than any other quality renders them fit to be208the instruments of commerce and circulation. The man whowanted to buy salt, for example, and had nothing but cattle togive in exchange for it, must have been obliged to buy salt tothe value of a whole ox, or a whole sheep at a time. He could209seldom buy less than this, because what he was to give for itcould seldom be divided without loss; and if he had a mind tobuy more, he must, for the same reasons, have been obliged tobuy double or triple the quantity, the value, to wit, of two or210three oxen, or of two or three sheep. If, on the contrary, insteadof sheep or oxen, he had metals to give in exchange for it, hecould easily proportion the quantity of the metal to the precisequantity of the commodity which he had immediate occasionfor.
Different metals have been made use of by different nations211 [ 5 ]for this purpose. Iron was the common instrument of com-merce among the ancient Spartans; copper among the ancientRomans; and gold and silver among all rich and commercialnations.
Those metals seem originally to have been made use of for212 [ 6 ]this purpose in rude bars, without any stamp or coinage. Thuswe are told by Pliny1, upon the authority of Timaeus, an an-cient historian, that, till the time of Servius Tullius, the Ro-mans had no coined money, but made use of unstamped barsof copper, to purchase whatever they had occasion for. These213bars, therefore, performed at this time the function of money.
The use of metals in this rude state was attended with214 [ 7 ]two very considerable inconveniencies; first, with the troubleof weighing; and, secondly, with that of assaying them. In
1[Smith] Plin. Hist. Nat. lib. 33 cap. 3.
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the precious metals, where a small difference in the quant-ity makes a great difference in the value, even the business G.ed. p40of weighing, with proper exactness, requires at least very ac-215curate weights and scales. The weighing of gold in particu-lar is an operation of some nicety. In the coarser metals, in-deed, where a small error would be of little consequence, lessaccuracy would, no doubt, be necessary. Yet we should find it216excessively troublesome, if every time a poor man had occa-sion either to buy or sell a farthing’s worth of goods, he wasobliged to weigh the farthing. The operation of assaying isstill more difficult, still more tedious, and, unless a part of the217metal is fairly melted in the crucible, with proper dissolvents,any conclusion that can be drawn from it, is extremely uncer-tain. Before the institution of coined money, however, unlessthey went through this tedious and difficult operation, people218must always have been liable to the grossest frauds and impos-itions, and instead of a pound weight of pure silver, or pure cop-per, might receive in exchange for their goods an adulterated219composition of the coarsest and cheapest materials, which had,however, in their outward appearance, been made to resemblethose metals. To prevent such abuses, to facilitate exchanges,and thereby to encourage all sorts of industry and commerce,220it has been found necessary, in all countries that have madeany considerable advances towards improvement, to affix apublic stamp upon certain quantities of such particular metalsas were in those countries commonly made use of to purchasegoods. Hence the origin of coined money, and of those public of-221fices called mints; institutions exactly of the same nature withthose of the aulnagers and stamp-masters of woolen and linencloth. All of them are equally meant to ascertain, by means222of a public stamp, the quantity and uniform goodness of those G.ed. p41different commodities when brought to market.
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The first public stamps of this kind that were affixed to the223 [ 8 ]current metals, seem in many cases to have been intended toascertain, what it was both most difficult and most import-ant to ascertain, the goodness or fineness of the metal, and tohave resembled the sterling mark which is at present affixed224to plate and bars of silver, or the Spanish mark which is some-times affixed to ingots of gold, and which being struck onlyupon one side of the piece, and not covering the whole surface,ascertains the fineness, but not the weight of the metal. Ab-225raham weighs to Ephron the four hundred shekels of silverwhich he had agreed to pay for the field of Machpelah. Theyare said, however, to be the current money of the merchant,and yet are received by weight and not by tale, in the samemanner as ingots of gold and bars of silver are at present. The226revenues of the ancient Saxon kings of England are said tohave been paid, not in money but in kind, that is, in victualsand provisions of all sorts. William the Conqueror introducedthe custom of paying them in money. This money, however,227was, for a long time, received at the exchequer, by weight andnot by tale.
The inconveniency and difficulty of weighing those metals228 [ 9 ]with exactness gave occasion to the institution of coins, ofwhich the stamp, covering entirely both sides of the piece andsometimes the edges too, was supposed to ascertain not onlythe fineness, but the weight of the metal. Such coins, there-229 G.ed. p42fore, were received by tale as at present, without the troubleof weighing.
The denominations of those coins seem originally to have230 [ 10 ]expressed the weight or quantity of metal contained in them.In the time of Servius Tullius, who first coined money at Rome,the Roman as or pondo contained a Roman pound of good cop-per. It was divided in the same manner as our Troyes pound,
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into twelve ounces, each of which contained a real ounce of231good copper. The English pound sterling, in the time of Ed-ward I, contained a pound, Tower weight, of silver, of a knownfineness. The Tower pound seems to have been somethingmore than the Roman pound, and something less than the232Troyes pound. This last was not introduced into the mint ofEngland till the 18th of Henry VIII. The French livre con-tained in the time of Charlemagne a pound, Troyes weight,of silver of a known fineness. The fair of Troyes in Cham-233paign was at that time frequented by all the nations of Europe,and the weights and measures of so famous a market weregenerally known and esteemed. The Scots money pound con-tained, from the time of Alexander the First to that of Robert234Bruce, a pound of silver of the same weight and fineness withthe English pound sterling. English, French, and Scots pen-nies, too, contained all of them originally a real pennyweightof silver, the twentieth part of an ounce, and the two-hundred-235and-fortieth part of a pound. The shilling too seems origin-ally to have been the denomination of a weight. When wheatis at twelve shillings the quarter, says an ancient statute ofHenry III. then wastel bread of a farthing shall weigh eleven236shillings and four pence. The proportion, however, between theshilling and either the penny on the one hand, or the pound onthe other, seems not to have been so constant and uniform as G.ed. p43that between the penny and the pound. During the first race237of the kings of France, the French sou or shilling appears upondifferent occasions to have contained five, twelve, twenty, andforty pennies. Among the ancient Saxons a shilling appearsat one time to have contained only five pennies, and it is not238improbable that it may have been as variable among them asamong their neighbours, the ancient Franks. From the timeof Charlemagne among the French, and from that of William
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the Conqueror among the English, the proportion between the239pound, the shilling, and the penny, seems to have been uni-formly the same as at present, though the value of each hasbeen very different. For in every country of the world, I be-lieve, the avarice and injustice of princes and sovereign states,240abusing the confidence of their subjects, have by degrees di-minished the real quantity of metal, which had been originallycontained in their coins. The Roman as, in the latter ages ofthe Republic, was reduced to the twenty-fourth part of its ori-241ginal value, and, instead of weighing a pound, came to weighonly half an ounce. The English pound and penny contain atpresent about a third only; the Scots pound and penny abouta thirty-sixth; and the French pound and penny about a sixty-242sixth part of their original value. By means of those operations G.ed. p44the princes and sovereign states which performed them wereenabled, in appearance, to pay their debts and to fulfil theirengagements with a smaller quantity of silver than would oth-243erwise have been requisite. It was indeed in appearance only;for their creditors were really defrauded of a part of what wasdue to them. All other debtors in the state were allowed thesame privilege, and might pay with the same nominal sum of244the new and debased coin whatever they had borrowed in theold. Such operations, therefore, have always proved favourableto the debtor, and ruinous to the creditor, and have sometimesproduced a greater and more universal revolution in the for-245tunes of private persons, than could have been occasioned by avery great public calamity.
It is in this manner that money has become in all civilised246 [ 11 ]nations the universal instrument of commerce, by the inter-vention of which goods of all kinds are bought and sold, orexchanged for one another.
What are the rules which men naturally observe in exchan-247 [ 12 ]ging them either for money or for one another, I shall now pro-
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ceed to examine. These rules determine what may be calledthe relative or exchangeable value of goods.
The word VALUE, it is to be observed, has two different248 [ 13 ]meanings, and sometimes expresses the utility of some par-ticular object, and sometimes the power of purchasing othergoods which the possession of that object conveys. The onemay be called ‘value in use;’ the other, ‘value in exchange.’ Thethings which have the greatest value in use have frequently249little or no value in exchange; and, on the contrary, those whichhave the greatest value in exchange have frequently little orno value in use. Nothing is more useful than water: but it will250purchase scarce any thing; scarce any thing can be had in ex- G.ed. p45change for it. A diamond, on the contrary, has scarce any valuein use; but a very great quantity of other goods may frequentlybe had in exchange for it.
In order to investigate the principles which regulate the251 [ 14 ] G.ed. p46exchangeable value of commodities, I shall endeavour to shew,
First, what is the real measure of this exchangeable value;252 [ 15 ]or, wherein consists the real price of all commodities,
Secondly, what are the different parts of which this real253 [ 16 ]price is composed or made up.
And, lastly, what are the different circumstances which254 [ 17 ]sometimes raise some or all of these different parts of priceabove, and sometimes sink them below their natural or ordin-ary rate; or, what are the causes which sometimes hinder themarket price, that is, the actual price of commodities, from co-inciding exactly with what may be called their natural price.
I shall endeavour to explain, as fully and distinctly as I can,255 [ 18 ]those three subjects in the three following chapters, for whichI must very earnestly entreat both the patience and attentionof the reader: his patience in order to examine a detail whichmay perhaps in some places appear unnecessarily tedious; and256his attention in order to understand what may, perhaps, after
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the fullest explication which I am capable of giving of it, ap-pear still in some degree obscure. I am always willing to runsome hazard of being tedious in order to be sure that I am per-257spicuous; and after taking the utmost pains that I can to beperspicuous, some obscurity may still appear to remain upona subject in its own nature extremely abstracted.
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CHAPTER VOF THE REAL AND NOMINAL
258 G.ed. p47
PRICE OF COMMODITIES, ORTHEIR PRICE IN LABOUR, AND
THEIR PRICE IN MONEY
EVERY man is rich or poor according to the degree in which he259 [ 1 ]can afford to enjoy the necessaries, conveniences, and amuse-ments of human life. But after the division of labour has oncethoroughly taken place, it is but a very small part of these withwhich a man’s own labour can supply him. The far greater part260of them he must derive from the labour of other people, and hemust be rich or poor according to the quantity of that labourwhich he can command, or which he can afford to purchase.The value of any commodity, therefore, to the person who pos-261sesses it, and who means not to use or consume it himself, butto exchange it for other commodities, is equal to the quantityof labour which it enables him to purchase or command. La-bour, therefore, is the real measure of the exchangeable valueof all commodities.
The real price of everything, what everything really costs262 [ 2 ]to the man who wants to acquire it, is the toil and trouble ofacquiring it. What everything is really worth to the man whohas acquired it, and who wants to dispose of it or exchange itfor something else, is the toil and trouble which it can save to263himself, and which it can impose upon other people. What is
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bought with money or with goods is purchased by labour asmuch as what we acquire by the toil of our own body. Thatmoney or those goods indeed save us this toil. They containthe value of a certain quantity of labour which we exchange for264 G.ed. p48what is supposed at the time to contain t
