ANINQUIRY

INTO THE

NATURE AND CAUSESOF THE

WEALTH OF NATIONS Books I, II, III, IV and V

Adam Smith

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EDITORIAL NOTE

IN this edition references are made to corresponding pages of the best mod-ern edition of the Wealth of Nations: the second volume of The GlasgowEdition of the Works and Correspondence of Adam Smith [1]. These refer-ences are printed as margin notes. For example, G.ed.p26 means page 26of the Glasgow Edition.

Smiths own footnotes are marked with [Smith] in bold face just beforethe footnote. Paragraph number are printed inside brackets on the leftmargin and the numbering restarts at the beginning of every section.

References to this edition can be made in this way:

Smith, Adam. An Inquiry into the Nature and Causes of theWealth of Nations. Edited by S. M. Soares. MetaLibri DigitalLibrary, 29th May 2007.

SLVIO MARCELO SOARESLausanne, 29th May 2007

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CONTENTS

Editorial Note iii

Advertisement to the Third Edition 2

Advertisement to the Fourth Edition 3

Introduction and Plan of the Work 4

BOOK IOf The Causes of Improvement in the Productive Powers ofLabour, and of the Order According to which Its Produce IsNaturally Distributed Among the Different Ranks of thePeople 7

CHAPTER IOf the Division of Labour 8

CHAPTER IIOf the Principle which gives occasion to the Division of Labour 15

CHAPTER IIIThat the Division of Labour is limited by the Extent of the Market 18

CHAPTER IVOf the Origin and Use of Money 22

CHAPTER VOf the Real and Nominal Price of Commodities, or their Price inLabour, and their Price in Money 28

CHAPTER VIOf the Component Parts of the Price of Commodities 41

CHAPTER VIIOf the Natural and Market Price of Commodities 47

CHAPTER VIIIOf the Wages of Labour 55

CHAPTER IXOf the Profits of Stock 73

CHAPTER XOf Wages and Profit in the different Employments of Labour andStock 82

Part I. Inequalities arising from the Nature of the Employmentsthemselves 83

Part II. Inequalities occasioned by the Policy of Europe 97

CHAPTER XIOf the Rent of Land 117

Part I. Of the Produce of Land which always affords Rent 119Part II. Of the Produce of Land which sometimes does, andsometimes does not, afford Rent 131

Part III. Of the Variations in the Proportion between the respectiveValues of that Sort of Produce which always affords Rent, and ofthat which sometimes does and sometimes does not afford Rent 141

Digression concerning the Variations in the Value of Silver duringthe Course of the Four last Centuries 143

FIRST PERIOD 143SECOND PERIOD 154THIRD PERIOD 155Variations in the Proportion between the respective Values of Gold andSilver 168Grounds of the Suspicion that the Value of Silver still continues todecrease 172Different Effects of the Progress of Improvement upon the real price ofthree different Sorts of rude Produce 173

First Sort 173Second Sort 175Third Sort 182

Conclusion of the Digression concerning the Variations in the Value ofSilver 190

Effects of the Progress of Improvement upon the real Price ofManufactures 194

CONCLUSION of the CHAPTER 198

BOOK IIOf the Nature, Accumulation, and Employment of Stock 211

Introduction 212

CHAPTER IOf the Division of Stock 214

CHAPTER IIOf Money considered as a particular Branch of the general Stock ofthe Society, or of the Expense of maintaining the National Capital 221

CHAPTER IIIOf the Accumulation of Capital, or of Productive and UnproductiveLabour 258

CHAPTER IVOf Stock Lent at Interest 274

CHAPTER VOf the Different Employment of Capitals 281

BOOK IIIOf the different Progress of Opulence in different Nations 294

CHAPTER IOf the natural Progress of Opulence 295

CHAPTER IIOf the Discouragement of Agriculture in the ancient State ofEurope after the Fall of the Roman Empire 299

CHAPTER IIIOf the Rise and Progress of Cities and Towns after the Fall of theRoman Empire 308

CHAPTER IVHow the Commerce of the Towns Contributed to the Improvementof the Country 317

BOOK IVOf Systems of political conomy 327

Introduction 328

CHAPTER IOf the Principle of the commercial, or mercantile System 329

CHAPTER IIOf Restraints upon the Importation from Foreign Countries of suchGoods as can be produced at Home 347

CHAPTER IIIOf the extraordinary Restraints upon the Importation of Goods ofalmost all Kinds from those Countries with which the Balance issupposed to be disadvantageous 363

Part I. Of the Unreasonableness of those Restraints even upon thePrinciples of the Commercial System 363

Digression concerning Banks of Deposit, particularly concerningthat of Amsterdam 368

Part II. Of the Unreasonableness of those extraordinary Restraintsupon other Principles 376

CHAPTER IVOf Drawbacks 385

CHAPTER VOf Bounties 390

Digression concerning the Corn Trade and Corn Laws 404

CHAPTER VIOf Treaties of Commerce 420

CHAPTER VIIOf Colonies 430

Part First. Of the Motives for establishing new Colonies 430Part Second. Causes of Prosperity of New Colonies 437Part Third. Of the Advantages which Europe has derived fromthe Discovery of America, and from that of a Passage to the EastIndies by the Cape of Good Hope 457

CHAPTER VIIIConclusion of the Mercantile System 498

CHAPTER IXOf the Agricultural Systems, or of those Systems of PoliticalEconomy which represent the Produce of Land as either the sole orthe principal Source of the Revenue and Wealth every Country 514

BOOK VOf the Revenue of the Sovereign or Commonwealth 535

CHAPTER IOf the Expenses of the Sovereign or Commonwealth 536

Part Third. Of the Expense of Defence 536Part Third. Of the Expense of Justice 549Part Third. Of the Expense of Public Works and Public Institutions 559

Article I. Of the Public Works and Institutions for facilitating theCommerce of the Society 560

And, first, of those which are necessary for facilitating Commerce ingeneral 560Of the Public Works and Institutions which are necessary for facilitat-ing particular Branches of Commerce 566

Article II. Of the Expense of the Institutions for the Education of Youth 587Article III. Of the Expense of the Institutions for the Instruction ofPeople of all Ages 608

Part Third. Of the Expense of Supporting the Dignity of theSovereign 629

Conclusion of the chapter 630

CHAPTER IIOf the Sources of the General or Public Revenue of the Society 632

Part Third. Of the Funds or Sources of Revenue which maypeculiarly belong to the Sovereign or Commonwealth 632

Part Third. Of Taxes 639Article I. Taxes upon Rent 641

Taxes upon the Rent of Land 641Taxes which are proportioned, not to the Rent, but to the Produce ofLand 648Taxes upon the Rent of Houses 651

Article II. Taxes upon Profit, or upon the Revenue arising from Stock 657Taxes upon as Profit of particular Employments 661

Appendix to Articles I and II. Taxes upon the Capital Value of Land,Houses, and Stock 666Article . Taxes upon the Wages of Labour 671Article . Taxes which, it is intended, should fall indifferently uponevery different Species of Revenue 674

Captalization Taxes 674Taxes upon consumable Commodities 676

CHAPTER IIIOf Public Debts 707

Appendix 741

References I

AN

INQUIRY

INTO THE

Nature and Causes

OF THE

WEALTH OF NATIONS

ADVERTISEMENT1 G.ed. p8

THE first Edition of the following Work was printed in the end of the1 [ 1 ]year 1775, and in the beginning of the year 1776. Through the greaterpart of the Book, therefore, whenever the present state of things is men-tioned, it is to be understood of the state they were in, either about thattime, or at some earlier period, during the time I was employed in writingthe Book. To this third Edition, however, I have made several additions,particularly to the chapter upon Drawbacks, and to that upon Bounties;likewise a new chapter entitled, The Conclusion of the Mercantile System;and a new article to the chapter upon the expences of the sovereign. Inall these additions, the present state of things means always the state inwhich they were during the year 1783 and the beginning of the presentyear 1784.

1To the Third Edition.

ADVERTISEMENT G.ed. p9TO THE

FOURTH EDITION

IN this fourth Edition I have made no alterations of any kind. I now, how-2 [ 1 ]ever, find myself at liberty to acknowledge my very great obligations toMr. Henry Hope of Amsterdam. To that Gentleman I owe the most dis-tinct, as well as liberal information, concerning a very interesting and im-portant subject, the Bank of Amsterdam; of which no printed account hadever appeared to me satisfactory, or even intelligible. The name of thatGentleman is so well known in Europe, the information which comes fromhim must do so much honour to whoever has been favoured with it, andmy vanity is so much interested in making this acknowledgement, that Ican no longer refuse myself the pleasure of prefixing this Advertisement tothis new Edition of my Book.

INTRODUCTION AND PLAN OF THE WORK G.ed. p10

THE annual lab