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IN THE CUSTODY OF THE

BOSTON PUBLIC LIBRARY.




SHELF N°



ADAMS



N(.\



AN



I N CL U I R Y



INTO THE



Nature and Caufes

OF THE

WEALTH OF NATIONS.

By ADAM SMITH, LL.D. and F. R. S.

Formerly ProfefTor of Moral Philofophy in the Univerfity of Glasgow.

IN TWO VOLUMES,
V O L. I^

THE SECOND EDITION.



LONDON:

PRINTED FOR W. STRAHAN; AND T. CADELL, IN THE STRAND.

MDCCLXXVIII.



CONTENTS

O F T H E

FIRST VOLUME.

Introduction and Plan of the Work —* Page i

BOOK I.

Of the Caufes of Improvement in the produdlive
Powers of Labour, and of the Order accord-
ing to which its Produce is naturally diftributed
among the different Ranks of the People 5

C H A P. I.

Of the Divl/ion of Labour — — ibid.

CHAP. II.

Of the Principle ivhith gives occafion to the divifton of Labour 16

CHAP. IV.
That the Divifion of Labour is limited by the Extent of the
Market — ■ — — 21

A 2



CONTENTS.
CHAP. IV.

Of the Origin and Ufe of Money — — Page 27

CHAP. V.

Of the real and nominal Price of Commodities, or of their
Price in Labour, and their Price in Money — 35

C H A P. VL

Of the component Parts of the Price of Commodities < — 56

CHAP. vir.
Of the natural and market Price of Commodities — 66

CHAP. viir.

Of the Wages of Labour — •— — 76

CHAP. IX.

Of the Profits of Stock — — — 108

C H A P. X.

Of Wages and Profit in the different Ejnployments of Labour
and Stock — — — — I2i

Part ift. Inequality in Wages and Profit arifing from the
Nature of the different Employments of both — i s 2

Part 2d. Inequalities occaftoncd by the Policy of Europe 147

CHAP. XI.

Of the Rent of Land — — — 179



CONTENTS.

Part ift. Of the Produce of Land 'voh'ich always affords
Rent ^ _ _ _ Page 182

Part 2(1. Of the Produce of Land zvhich fometmes does^ and
fonietimes does not, afford Rent — — 202

Part 5d. Of the Variations in the Proportion betiveen the
refpt^ive Values of that Sort of Produce ivhich always
affords Rent, and of that ivhich fometimes does^ andfometimes
does not afford Rent — — — 2ig

Digrefjion concerning the Variations in the Value of Silver du-
ring the Courfe of the Four lajl Centuries.

Firji Period —- — — 222

Second Period — • — — 240

Third Period — — — 242

Variations in the Proportion betiveen the refpeSlive Values of
Gold and Silver — — — 264

Grounds of the Stfpicion that the Value of Silver fill continues
to decreafe — .— - — 270

Different EffeSls of the Progrefs of Improvement upon the real
Price of three different Sorts of rude Produce — 271

Firjl Sort — — — — 272

Second Sort — — — — 274

Third Sort — — - — 286

Conclufon of the Digreffton concerning the Variations in the
Value of Silver — — — 29^

Effe^s of the Progrefs of Improvement upon the real Price of
Manufadures — ■ — — — 306

Conch fion of the Chapter — — — 312



CONTENTS,



B O O K II.

Of the Nature, Accumulation, and Employment of

Stock.

Introduction — — — Page 327

CHAP. I.

Of the D'wifion of Stock — — ~~ * 330

CHAP. II.

Of Money conftdered as a particular Branch of the general Stock
of the Society^ or of the Expence of inaintaming the National
Capital — — — _ 2^.1

CHAP. III.

Of the Accumidatiott of capital, or of produ^ive and unproduc-
tive Labour — — — 400

CHAP. IV.

Of Stock lent at hiterefl — — — 426

CHAP. V.

Of the different Employments of Capitals — — 437



CONTENTS.



BOOK III.

Of the different Progrefs of Opulence in different

Nations.

CHAP. I.

Of the natural Progrefs of Opulence -r- — Page 459

CHAP. II.

Of the Dfcoiiragement of Agriculture in the antient State of
Europe after the Fall of the Roman Empire — 466

CHAP. III.

Of the Rife and Progrefs of Cities and Toivns, after the Fall of
the Roman Empire — — — 480

CHAP. IV.
Hotv the Commerce of the Towns contributed to the Improvement
of the Country — — — 494



TuhliJJjed by the fame Author,

THE

THEORY OF MORAL SENTIMENTS:

An Essay towards an Analyfis of the Principles by which

Men naturally judge concerning the Conduct and CharaQer,

firft of their Neighbours, and afterwards of themfelves.

TO WHICH IS ADDEP,

A DISSERTATION on the Origin of Language.
The Fourth Edition. Price 6 s..



ERRATA.

Vol. I. Page 241. line 17. ior thirty, read tiventy,

Vo.i-> II. 413. 1. for zs. 6d. read 3^. lo'^d.

• 520. 13. for millions, read millions *.



AN



I N Q^ U I R Y



INTO THE



NATURE AND CAUSES



OF THE



WEALTH OF NATIONS.



. INTRODUCTION AND PLAN OF THE WORK.

THE annual labour of" every nation is the fund which ori-»
ginally fupplies it with all the necefiaries and conveniencies
of life which it annually confumes, and which confift
always either in the immediate produce of that labour, or in, what
ris purciiafed with that produce from other nations.

. According therefore, as this produce, or what is purchafed
•with it, bears a greater or fmaller proportion to the number of thofe
who are to con fume it, the nation will be better or worfe fupplied
■with all the neceifaries and conveniencies for which it has occafion.

But this proportion muft in every nation be regulated by two

different circumftances ; firft, by the fkill, dexterity and judgment

:^'GL. I. B with



THE NATURE AND CAUSES OF

Introduaion. ^Jt^ whlch Its labour is generally applied ; and, fecondly, by the
proportion between the number of thofe who are employed in ufe-
ful labour, and that of thofe who are not fo employed. Whatever
be the foil, climate, or extent of territory of any particular nation,
the abundance or fcantinefs of its annual fupply muft, in that-
particular fituation, depend upon thofe two circumflances.

The abundance or fcantinefs of this fupply too feems to de-
pend more upon the former of thofe two circumflances than upon
the latter. Among the favage nations of hunters and fifliers, every
individual who is able to work, is more or lefs employed in ufeful
labour, and endeavours to provide, as well as he can» the necelTariea
and conveniencies of life, for himfelf, or fuch of his family or.
tribe as are either too old, or too young,, or too infirm to go a
hunting and fifhing. Such nations, however, are fo miferably poor,
that, from mere want, they are frequently reduced, or, at leaft,
think themfelves reduced, to the neceflity fometimes of diredly de-
ftroying, and fometimes of abandoning their infants, their old peo-
ple, and thofe afBided with lingering difeafes, to perifh with,
hunger, or to be devoured by wild beafls. 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 ten
times, frequently of a hundred times more labour than the greater
part of thofe who work ; yet the produce of the whole labour of the
fociety is fo great, that all are often abundantly fupplied, and a
workman, even of the loweft and pooreft order, if he is frugal and
induftrious, may enjoy a greater Ihare of the neceffaries and con-
veniencies of life than it is poffible for any favage to acquire.

The caufes of this improvement, in the produdive powers of
labour, and the order, according to which its produce is naturally

diftributed



THE WEALTH OF NATIONS. 5

•diftrlbuted among the different ranks and conditions of men in the l"fc^"^'""-
fociety, make the fubjed of the Firll Book of this Inquiry.

Whatever be the adual flate of the fkill, dexterity, and judg-
ment with which labour is applied in any nation, the abundance
or fcantinefs of its annual fupply muft depend, during the con-
tinuance of that flate, 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 productive
labourers, it will hereafter appear, is every where in proportion to the
quantity of capital fl:ock which is employed in fetting them to work,
and to the particular way in which it is fo employed. The Second
Book, therefore, treats of the nature of capital flock, of the man-
ner in which it is gradually accumulated, and of the different quan-
tities of labour which it puts into motion, according to the different
ways in which it is employed.

Nations tolerably well advanced as to fkill, dexterity, and judg-
ment, in the application of labour, have followed very different
plans in the general conduct or diredlion of it ; and thofe plans
have not all been equally favourable to the greatnefs of its produce.
The policy of fome nations has given exti'aordinary encouragement
to the induflry of the country ; 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 empire*
the policy of Europe has been more favourable to arts, manufac-
tures, and commerce, the induftry of towns ; than to agriculture, the
induftry of the country. The circumftances which feem to have
introduced a«d eftablifhed this policy are explained in the Third Book.

Though thofe different plans were, perhaps, firft introduced by
the private interefts and prejudices of particular orders of men, with-

B 2 out



•4 T H. E N A T U R E A N D C A U S E S O F

Introduftion. ^ut any regard to, or forefight of, their confequences upon th*"
general welfare of the fociety ; yet they have given occafion to very
different theories of political ceconomy ; 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 have had a
confiderable influence, not only upon the opinions of men of learn-
ing, but upon the puhlic condufb of princes and fovereign Rates. I
have endeavoured, in the fourth Book, to explain, as fully and dif-
tindlly as I can, thofe different theories, and the principal effects,
■which they have produced in different ages and nations.

To explain in what has confifted the revenue of the great bbdy of
the people, or what has been the nature of thofe funds, which, in
different ages and nations, have fupplied their annual confumption,
is the objed of thefe Four firft Books. The Fifth and lafl Book
treats of the revenue of the fovereign, or commonwealth; In this .
Book I have endeavoured to {how ; firft, what are the neceffary. ex-
pences of the fovereign, or commonwealth ; which of thofe expences
ought to be defrayed by the general contribution of the whole fo-
ciety; and which of them, by that of fome particular part only, oc
of fome particular members of it : fecondly, what are the differentJ
methods in which the whole foctety may be made to contribute
towards defraying the expences incumbeat on the whole fociety,
and what are the principal advantages and inconveniencies of
each of thofe methods : and, thirdly and laflly, what are the rea-r
fons and caufes which have induced almoft all modern governments
to mortgage fome part of this revenue,, or to contrail debts, and
what have been the effedls of thofe debts upon the real wealth, the
annual produce of the land and labour of the foci etyi



BOOK



THE WE'ALTH OF NATIONS.



BOOK L

of tlie Caufes of Improvement in the producflive Powers of
Labour, and of tlie Order according to which its Pro-
duce is naturally didributcd among the different Ranks
of the. People.

C H A P. i:

Of' the Dhnjlvn of Labour.

THE greateft improvement in the produdlve powers of La- BOOK
boar, and the greater part of the fkiU, dexterity, and judg- c H a P.
anent with which it is any where directed, or applied, feem to have
been the effeds of the divifioa of labour.

The efFefts of the divifion- of labour, in the general bufinefs o€'
fociety, will be mare eafily underflood, by confidering in what
manner it operates in fome particular manufactures. It is com-
monly 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 mar^ufadlures which are.
deftined to fupply the fmall wants of but a fmall number of people,,
the whole number of workmen xnufl neceffarily be fmall ; .and tliofe,
employed in every different branch of the work can often be collededir
into the fame workhoufe, and placed at onceimder the view of the fpec—
tator. In thofe great manufadluree, 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 io great a number cf

workmen^.




THE NATURE AND CAUSES OF

workmen, that it is impoflible to colled them all into the fame work-
houfe. We can feldom fee more, at one time, than thofe employed
in one fingle branch. Though in fuch manufadures, therefore, the
work may really be divided into a much greater number of parts,
than in thofe of a more trifling nature, the divifion is not near fo
obvious, and has accordirrgly been much lefs obferved.

To take an example, therefore, from a very trifling manufac-
ture ; but one in which the divifion of labour has been very often
taken notice of, the trade of the pin-maker ; a workman not edu-
cated to this buHnefs (which the divifion of labour has rendered
a dlftind trade), nor acquainted with the ufe of the machinery
employed in it (to the invention of which the fame divifion of
labour has probably given occafion), could fcarce, perhaps, with his
utmofl; 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 at the top for re-
ceiving the head ; to make the head requires two or three diflind
operations; to put it on, is a peculiar bufihefs, to whiten the pins is
another ; it is even a trade by itfelf to put them into the paper ;
and the important bufinefs of making a pin is, in this manner, di-
vided into about eighteen difl:in£t operations, which in fome manu-
factories are all performed by diftin£l hands, though in others the fame
man will fometimes perform two or three of them. I -have feen a
fmall manufadory of this kind where ten men only were employed,
and where fome of them confequently performed two or three
diftindt operations. But though they were very poor, and there-
fore but indifferently accommodated with the neceffary machinery,
they could, when they exerted themfelves, make among them about

twelve



THE WEALTH OF NATIONS.

twelve pounds of pins in a day. There are in a pound upwards of
four thoufand pins of a middling fize. Thofe ten perfons, there-
fore, could make among them 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 thoufand
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 bufmefs, 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 thoufand
eight hundredth part of what they are at prefent capable of per-
forming, in confequence of a proper divifion and combination of
their, different operations.

In every other art and manufacture, the effeds 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 fub-
divided, nor reduced to fo great a firaplicity of operation. The di-
vifion of labour, however, fo far as it can be introduced, occafions
in every art, a proportionable increafe of the produdive powers of
labour. The feparation of different trades and employments from
one another, feems to have taken place, in confequence of this
advantage. This feparation too is generally carried furtheft in-
thofe countries which enjoy the higheft degree of induffry aad im-
provement ; what is the work of one man, in a rude ftate of fociety,
being generally that of feveral, in an improved one. In every im-
proved fociety, the farmer is generally nothing but a farmer ; the
manufadurer, nothing but a manufadurer. The laboui- too which
is neceffary to produce any one complete manufadure, is almoft'
always divided among a great number of hands. How many
different trades are employed in each branch of the linen and v/oollen
manufadures, from the growers of the flax. and the wool, to the

bleachers




8 T H E N A T U RiE A^^N D C A 17 S ES 'OF

BOOK :4jleachers and finoothcrs of the linen, or to the dyers and dreffers of
the cloth ! The nature of agriculture, indeed, does not admit of fo
-many fubdivifions of labour, ncr of fo complete a feparation of one
•bufinefs from another, as manufactures. It is impoflible to feparate
r£o entirely, the bufinefs of the grazier from that of the corn-farmer,
as the trade of the carpenter is commonly feparated from that of the
ffmith. The fpinner is almoft always a diftincft perfon 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 labour returning with the different feafons of
• the year, it is impolTible that one man fhould.be conftantly employ-
^ed in any one of them. This impofTibility of making fo complete
..and entire a feparation of all the different branches of labour em-
ployed in agriculture, is perhaps the reafon why the improve-
-racnt of tl^e productive powers of labour in this art, does not
.always keep pace with their improvement in manufadures. The
mofl opulent nations, indeed, generally excel all their neighbours in
-Agriculture as well as in manufadures ; but they are commonly morc
diflinguifhed by their fuperiority in the latter than in the former*
Their lands are in general better cultivated, and having more la-
«bour 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 feldom much more than in proportion to
the fuperiority of labour and expence. In agriculture, the labour
of the rich country is not always much more produdtive than that
of the poor ; or, at leaft, it is never fo much more produdive, as it
commonly is in manufadures. The corn of the rich country, there-
fore, will not always, in the fame degree of goodnefs, come cheaper
to market than that of the poor. The corn of Poland, i-n the fan>e
degree of goodnefs, is as cheap as that of France, notvvithftanding
the fuperior opulence and improvement of the latter country. The
corn of France is, in the corn provinces, fully as good, and in moil

years



THE WEALTH OF NATIONS.

years nearly about the fame price with the corn of England,
though, in opulence and improvement, France is perhaps in-
ferior to England. The corn-lands of England, however, are 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 culti-
vation, can, in fome meafure, rival the rich in the cheapnefs and
goodnefs of its corn, it can pretend to no fuch competition in its
manufadures ; at leaft if thofe manufadtures fuit the foil, climate,
and fituation of the rich country. The filks of France are better
and cheaper than thofe of England, becaufe the filk manufadure,
at leaft under the prefent high duties upon the importation of raw fillc,
does not fo well fuit the climate of England as that of France. But the
hardware and the coarfe woollens of England are beyond all compa-
rifon fuperior to thofe of France, and much cheaper too in the fame
degree of goodnefs. In Poland there are faid to be fcarce any manu-
fadtures of any kind, a few of thofe coarfer houfhold manufadtures
excepted, without which no country can well fubfift.

This great increafe of the quantity of work, which, in confe-
quence of the divifion of labour, the fame number of people are
capable of performing, is owing to three different circumftances ;
firft, to the increafe of dexterity in every particular workman;
fecondly, to the faving of the time which is commonly loft in pafling
from one fpeciesof work to another; 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 v?orkman ne-
ceflTarily increafes the quantity of the work he can perform, and
the divifion of labour, by reducing every man's bufinefs to fome
one fmiple operation, and by making this operation the fole em-
ployment of his life, neceflarily increafes very much the dexterity

Vol. I. C .of





10 THENATURE AND CAUSES OF

of the workman. A common fmith, who, though accuftomed to
handle the hammer, has never been ufed to make nails, if upon
fome particular occafion he is obliged to attempt it, will fcarce, I
am affured, be able to make above two or three hundred nails in
a day, and thofe too very bad ones. A fmith who has been accuf-
tomed to make nails, but whofe fole or principal bufmefs has not
been that of a nailer, can feldom . with his utmoft diligence make
more than eight hundred or a thoufand nails in a day. I have
feen feveral boys under twenty years of age who had never exer-
cifed any other trade but that of making nails, and who, when
they exerted themfelves, could make, each of them, upwards of
two thoufand three hundred nails in a day. The making of a
nail, however, is by no means one of the fimpleft operations. The
fame perfon blows the bellows, ftirs or mends the fire as there is
occafion, heats the iron, and forges every part of the nail: In
forging the head too he is obliged to change his tools. The different
operations into which the making of a pin, or of a metal button,
is fubdivided, are all of them much more fimple, and the dexterity
of the perfon, of whofe life it has been the fole bufinefs to perform
them, is ufually much greater. The rapidity with which fome of
the operations of thofe manufaftures are performed, exceeds what
the human hand could, by thofe who had never feen them, be fup-
pofed capable of acquiring.

Secondly, the advantage which is gained by faving the time
commonly loft in paffmg from one fort of work to another, is
much greater than we fliould at firft view be apt to imagine it.
It is impoffible to pafs very quickly from one kind of work to an-
other, that [is carried on in a different place, and with quite differ-
ent 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 car-
ried



THE WEALTH OF NATIONS. n

rled on in the fame workhoufe, the lofs of time is no doubt much Chap.
iefs. It is even in this cafe, however, very confiderable. 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 rather trifle^ than applies to good
purpofe. The habit of fauntering and of indolent carelefs ap-
plication, which is naturally, or rather neceflarily acquired by
every country workman who is obliged to change his work and
his tools every half hour, and to apply his hand in twenty different
ways almoft every day of his life ; renders him almoft always floth-
ful and lazy, and incapable of any vigorous application even on
the moft prefling occafions. Independent, therefore, of his de-
ficiency in point of dexterity, this caufe alone muft always reduce
confiderably the quantity of work which he is capable of perform-
ing.

Thirdly, and laftly, every body muft be fenfible how much
labour is facilitated and abridged by the application of proper ma-
chinery. It is unneceiTary to give any example. I fhall only ob-
ferve, therefore, that the invention of all thofe machines by which
labour is fo much facilitated and abridged, feems to have been
originally owing to the divifion of labour. Men are much more
likely to difcover eafier and readier methods of attaining any obje
when the whole attention of their minds is diredled towards that
fingle objedl, than when it is diffipated among a great variety of



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