INTRODUCTORY NOTE

ADAM SMITH, political economist and moral philosopher, was born in Kirkcaldy, Scotland, June 5, 1723. His father, a lawyer and customs official, died before the birth of his son, who was brought up through a delicate childhood by his mother. At fourteen he was sent to the University of Glasgow, where he came under the influence of Francis Hutcheson, and in 1740 he went up to Oxford as Snell exhibitioner at Balliol College, remaining there till 1746. After leaving Oxford, he gave lectures upon English Literature and Economics, and in 1751 became professor of logic, and in 1752 of moral philosophy, at Glasgow. The reputation won by his lectures was increased by the publication, in 1759, of his "Theory of the Moral Sentiments," one result of which was his appointment as travelling tutor to the third Duke of Buccleuch. In this capacity he spent nearly three years in France, and made the acquaintance of many of the intellectual leaders of that country. Returning to Britain in the end of 1766, he lived chiefly in Kirkcaldy and London, working upon his "Wealth of Nations," which was finally published in 1776. It met with immediate success, and in a few years had taken an authoritative place with both philosophers and men of affairs. In the following year Smith was appointed a Commissioner of Customs, and took a house in Edinburgh, where he lived quietly and at ease till his death on July 17, 1790.

Political economy had been studied long before Adam Smith, but the "Wealth of Nations" may be said to constitute it for the first time as a separate science. The work was based upon a vast historical knowledge, and its principles were worked out with remarkable sanity as well as ingenuity, and skilfully illuminated by apt illustrations. In spite of more than a century of speculation, criticism, and the amassing of new facts and fresh experience, the work still stands as the best all-round statement and defence of some of the fundamental principles of the science of economics.

The most notable feature of the teaching of the "Wealth of Nations," from the point of view of its divergence from previous economic thought as well as of its subsequent influence, is the statement of the doctrine of natural liberty. Smith believed that "man's self-interest is God's providence," and held that if government abstained from interfering with free competition, industrial problems would work themselves out and the practical maximum of efficiency would be reached. This same doctrine

was applied to international relations, and Smith's working out of it here is the classical statement of the argument for free trade.

In its original form the book contained a considerable number of digressions and illustrations which the progress of knowledge and of industrial civilization have shown to be inaccurate or useless, and of these the present edition has been unburdened. This process, while greatly increasing the interest and readableness of the book, has left intact Smith's main argument, which is here offered to the reader as admittedly the best foundation for the study of political economy.

INTRODUCTION

AND PLAN OF THE WORK

THE annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations. According therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion.

But this proportion must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgment with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two cir

cumstances.

The abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter. Among the savage nations of hunters and fishers, every individual who is able to work, is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, or 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, however, are so miserably poor that, from mere want, they are frequently reduced, or, at least, think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied, and a workman, even of the lowest and poorest

6

order, if he is frugal and moreTEES DAT E a greater share of the ccessaries and conveniences a lean is possible for any savage

-o acquire.

The causes of this Irmel 1 te mative powers of labour, nd the order, aring a messly distributed among the differem rates and minus of me the society, make the schreat of the Frs Books of Loc.

Whatever be the as I he will dentering, and radgment with ach labour is appled in a 21 de adance or scantiness of gammal supply mu spend cuming the commance of that state, spod the properti serve me a chose who are annually wel bar and who are not so employed. The somber of cseful and procace lores i bereafter appear, SAT a poor ate quarry of capital stock which is eared a song men awak mo at the permir way in which it as expired. The Second Books meretre, reas of the nature of and the member a vad 13 graindly accumulated, and

ferent quences of drips in motion, according

the crews which is empored

Nanos terang wel arunced as a demerity, and judgment, 1 of liver, bre koloved very dierent plans in the genera condot a rated it and those plans have not all been komly invite to the greatness of its produce. The policy of some tacats has given tariny encouragement to the industry of the Louer as others at the industry of towns. Scarce any nation has Leat coal and mpanay with every sort of industry. Since the downsid te konn empire, the policy of Europe has been more favourDerra zenatura, and commerce, the industry of towns; than to

RSA D castry of the country. The circumstances which seem have introduced and established this policy are explained in the Third

Book

Though those diferent plans were, perhaps, first introduced by the private interests and pre-udices of particular orders of men, without any regard to, or foresight of, their consequences upon the general welfare of the society; yet they have given occasion to very different theories of political economy; of which some magnify the importance of that indusury which is carried on in towns, others of that which is carried on in the country. Those theories have had a considerable influence, not only upon the opinions of men of learning, but upon the public conduct of nces and sovereign states. I have endeavoured, in the Fourth Book, to

explain, as fully and distinctly as I can, those different theories, and the principal effects which they have produced in different ages and nations.

To explain in what has consisted the revenue of the great body of the people, or what has been the nature of those funds, which, in different ages and nations, have supplied their annual consumption, is the object of these Four first Books. The Fifth and last Book treats of the revenue of the sovereign, or commonwealth. In this book I have endeavoured to show; first, what are the necessary expences of the sovereign, or commonwealth; which of those expences ought to be defrayed by the general contribution of the whole society; and which of them, by that of some particular part only, or of some particular members of it: secondly, what are the different methods in which the whole society may be made to contribute towards defraying the expences incumbent on the whole society, and what are the principal advantages and inconveniencies of each of those methods: and, thirdly and lastly, what are the reasons and causes which have induced almost all modern governments to mortgage some part of this revenue, or to contract debts, and what have been the effects of those debts upon the real wealth, the annual produce of the land and labour of the society.