AN INQUIRY INTO THE NATURE AND CAUSES OF

THE WEALTH OF NATIONS.

by Adam Smith

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 circumstances.

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, and 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 order, if he is frugal and industrious, may enjoy a

greater share of the necessaries and conveniencies of life than it is

possible for any savage to acquire.

The causes of this improvement in the productive powers of labour, and the

order according to which its produce is naturally distributed among the

different ranks and conditions of men in the society, make the subject of

the first book of this Inquiry.

Whatever be the actual state of the skill, dexterity, and judgment, with

which labour is applied in any nation, the abundance or scantiness of its

annual supply must depend, during the continuance of that state, upon the

proportion between the number of those who are annually employed in useful

labour, and that of those who are not so employed. The number of useful and

productive labourers, it will hereafter appear, is everywhere in proportion

to the quantity of capital stock which is employed in setting them to work,

and to the particular way in which it is so employed. The second book,

therefore, treats of the nature of capital stock, of the manner in which it

is gradually accumulated, and of the different quantities of labour which it

puts into motion, according to the different ways in which it is employed.

Nations tolerably well advanced as to skill, dexterity, and judgment, in the

application of labour, have followed very different plans in the general

conduct or direction of it; and those plans have not all been equally

favourable to the greatness of its produce. The policy of some nations has

given extraordinary encouragement to the industry of the country ; that of

others to the industry of towns. Scarce any nation has dealt equally and

impartially with every sort of industry. Since the down-fall of the Roman

empire, the policy of Europe has been more favourable to arts, manufactures,

and commerce, the industry of towns, than to agriculture, the Industry of

the country. The circumstances which seem to have introduced and

established this policy are explained in the third book.

Though those different plans were, perhaps, first introduced by the private

interests and prejudices 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 industry 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 princes 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 shew, first,

what are the necessary expenses of the sovereign, or commonwealth ; which of

those expenses 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 expenses

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.

BOOK I.

OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRlBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE.

CHAPTER I.

OF THE DIVISlON OF LABOUR.

The greatest improvements in the productive powers of labour, and the

greater part of the skill, dexterity, and judgment, with which it is

anywhere directed, or applied, seem to have been the effects of the division

of labour. The effects of the division of labour, in the general business of

society, will be more easily understood, by considering in what manner it

operates in some particular manufactures. It is commonly supposed to be

carried furthest in some very trifling ones ; not perhaps that it really is

carried further in them than in others of more importance: but in those

trifling manufactures which are destined to supply the small wants of but a

small number of people, the whole number of workmen must necessarily be

small ; and those employed in every different branch of the work can often

be collected into the same workhouse, and placed at once under the view of

the spectator.

In those great manufactures, on the contrary. which are destined to supply

the great wants of the great body of the people, every different branch

of the work employs so great a number of workmen, that it is impossible to

collect them all into the same workhouse. We can seldom see more, at one

time, than those employed in one single branch. Though in such

manufactures, therefore, the work may really be divided into a much greater

number of parts, than in those of a more trifling nature, the division is

not near so obvious, and has accordingly been much less observed.

To take an example, therefore, from a very trifling manufacture, but one in

which the division of labour has been very often taken notice of, the

trade of a pin-maker: a workman not educated to this business (which the

division of labour has rendered a distinct trade, nor acquainted with the

use of the machinery employed in it (to the invention of which the same

division of labour has probably given occasion), could scarce, perhaps, with

his utmost industry, make one pin in a day, and certainly could not make

twenty. But in the way in which this business 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 likewise peculiar trades. One man

draws out the wire; another straights it; a third cuts it; a fourth points

it; a fifth grinds it at the top for receiving the head; to make the head

requires two or three distinct operations ; to put 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 the important business of making a pin is, in

this manner, divided into about eighteen distinct operations, which, in some

manufactories, are all performed by distinct hands, though in others the

same man will sometimes perform two or three of them. I have seen a small

manufactory of this kind, where ten men only were employed, and where some

of them consequently performed two or three distinct operations. But though

they were very poor, and therefore but indifferently accommodated with the

necessary machinery, they could, when they exerted themselves, make among

them about twelve pounds of pins in a day. There are in a pound upwards of

four thousand pins of a middling size. Those ten persons, therefore, could

make among them upwards of forty-eight thousand pins in a day. Each

person, therefore, making a tenth part of forty-eight thousand pins, might

be considered as making four thousand eight hundred pins in a day. But if

they had all wrought separately and independently, and without any of them

having been educated to this peculiar business, 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 thousand

eight hundredth, part of what they are at present capable of performing, in

consequence of a proper division and combination of their different

operations.

In every other art and manufacture, the effects of the division of labour

are similar to what they are in this very trifling one, though, in many of

them, the labour can neither be so much subdivided, nor reduced to so great

a simplicity of operation. The division of labour, however, so far as it

can be introduced, occasions, in every art, a proportionable increase of

the productive powers of labour. The separation of different trades and

employments from one another, seems to have taken place in consequence of

this advantage. This separation, too, is generally carried furthest in those

countries which enjoy the highest degree of industry and improvement; what

is the work of one man, in a rude state of society, being generally that of

several in an improved one. In every improved society, the farmer is

generally nothing but a farmer ; the manufacturer, nothing but a

manufacturer. The labour, too, which is necessary to produce any one

complete manufacture, is almost always divided among a great number of

hands. How many different trades are employed in each branch of the linen

and woollen manufactures, from the growers of the flax and the wool, to the

bleachers and smoothers of the linen, or to the dyers and dressers of the

cloth ! The nature of agriculture, indeed, does not admit of so many

subdivisions of labour, nor of so complete a separation of one business

from another, as manufactures. It is impossible to separate so entirely

the business of the grazier from that of the corn-farmer, as the trade of

the carpenter is commonly separated from that of the smith. The spinner is

almost always a distinct person from the, weaver; but the ploughman, the

harrower, the sower of the seed, and the reaper of the corn, are often the

same. The occasions for those different sorts of labour returning with the

different seasons of the year, it is impossible that one man should be

constantly employed in any one of them. This impossibility of making so

complete and entire a separation of all the different branches of labour

employed in agriculture, is perhaps the reason why the improvement of the

productive powers of labour, in this art, does not always keep pace with

their improvement in manufactures. The most opulent nations, indeed,

generally excel all their neighbours in agriculture as well as in

manufactures ; but they are commonly more distinguished by their superiority

in the latter than in the former. Their lands are in general better

cultivated, and having more labour and expense bestowed upon them, produce

more in proportion to the extent and natural fertility of the ground. But

this superiority of produce is seldom much more than in proportion to the

superiority of labour and expense. In agriculture, the labour of the rich

country is not always much more productive than that of the poor ; or, at

least, it is never so much more productive, as it commonly is in

manufactures. The corn of the rich country, therefore, will not always, in

the same degree of goodness, come cheaper to market than that of the poor.

The corn of Poland, in the same degree of goodness, is as cheap as that of

France, notwithstanding the superior opulence and improvement of the latter

country. The corn of France is, in the corn-provinces, fully as good, and in

most years nearly about the same price with the corn of England, though, in

opulence and improvement, France is perhaps inferior to England. The

corn-lands of England, however, are better cultivated than those of France,

and the corn-lands of France are said to be much better cultivated than

those of Poland. But though the poor country, notwithstanding the

inferiority of its cultivation, can, in some measure. rival the rich in the

cheapness and goodness of its corn, it can pretend to no such competition in

its manufactures, at least if those manufactures suit the soil, climate, and

situation, of the rich country. The silks of France are better and cheaper

than those of England, because the silk manufacture, at least under the

present high duties upon the importation of raw silk, does not so well suit

the climate of England as that of France. But the hardware and the coarse

woollens of England are beyond all comparison superior to those of France,

and much cheaper, too, in the same degree of goodness. In Poland there are

said to be scarce any manufactures of any kind, a few of those coarser

household manufactures excepted, without which no country can well subsist.

This great increase in the quantity of work, which, in consequence of the

division of labour, the same number of people are capable of performing, is

owing to three different circumstances ; first, to the increase of dexterity

in every particular workman ; secondly, to the saving of the time which is

commonly lost in passing from one species of work to another ; and, lastly,

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 workmen, necessarily

increases the quantity of the work he can perform; and the division of

labour, by reducing every man's business to some one simple operation, and

by making this operation the sole employment of his life, necessarily

increases very much the dexterity of the workman. A common smith, who,

though accustomed to handle the hammer, has never been used to make nails,

if, upon some particular occasion, he is obliged to attempt it, will scarce,

I am assured, be able to make above two or three hundred nails in a day, and

those, too, very bad ones. A smith who has been accustomed to make nails,

but whose sole or principal business has not been that of a nailer, can

seldom, with his utmost diligence, make more than eight hundred or a

thousand nails in a day. I have seen several boys, under twenty years of

age, who had never exercised any other trade but that of making nails, and

who, when they exerted themselves, could make, each of them, upwards of two

thousand three hundred nails in a day. The making of a nail, however, is by

no means one of the simplest operations. The same person blows the bellows,

stirs or mends the fire as there is occasion, 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 subdivided, are all of them much more simple, and the

dexterity of the person, of whose life it has been the sole business to

perform them, is usually much greater. The rapidity with which some of the

operations of those manufactures are performed, exceeds what the human hand

could, by those who had never seen them, he supposed capable of acquiring.

Secondly, The advantage which is gained by saving the time commonly lost in

passing from one sort of work to another, is much greater than we should at

first view be apt to imagine it. It is impossible to pass very quickly from

one kind of work to another, that is carried on in a different place, and

with quite different tools. A country weaver, who cultivates a small farm,

must loose a good deal of time in passing from his loom to the field, and

from the field to his loom. When the two trades can be carried on in the same

workhouse, the loss of time is, no doubt, much less. It is, even in this

case, however, very considerable. A man commonly saunters a little in

turning his hand from one sort of employment to another. When he first

begins the new work, he is seldom very keen and hearty; his mind, as they

say, does not go to it, and for some time he rather trifles than applies to

good purpose. The habit of sauntering, and of indolent careless application,

which is naturally, or rather necessarily, 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 almost every day of his life,

renders him almost always slothful and lazy, and incapable of any 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 quantity of work which he is capable of performing.

Thirdly, and lastly, everybody must be sensible how much labour is

facilitated and abridged by the application of proper machinery. It is

unnecessary to give any example. I shall only observe, therefore, that the

invention of all those machines by which labour is to much facilitated and

abridged, seems to have been originally owing to the division of labour. Men

are much more likely to discover easier and readier methods of attaining any

object. when the whole attention of their minds is directed towards that

single object, than when it is dissipated among a great variety of things.

But, in consequence of the division of labour, the whole of every man's

attention comes naturally to be directed towards some one very simple

object. It is naturally to be expected, therefore, that some one or other of

those who are employed in each particular branch of labour should soon find

out easier and readier methods of performing their own particular work,

whenever the nature of it admits of such improvement. A great part of the

machines made use of in those manufactures in which labour is most

subdivided, were originally the invention of common workmen, who, being each

of them employed in some very simple operation, naturally turned their

thoughts towards finding out easier and readier methods of performing it.

Whoever has been much accustomed to visit such manufactures, must frequently

have been shewn very pretty machines, which were the inventions of such

workmen, in order to facilitate and quicken their own particular part of the

work. In the first fire engines {this was the current designation for steam

engines}, a boy was constantly employed to open and shut alternately the

communication between the boiler and the cylinder, according as the piston

either ascended or descended. One of those boys, who loved to play with his

companions, observed that, by tying a string from the handle of the valve

which opened this communication to another part of the machine, the valve

would open and shut without his assistance, and leave him at liberty to

divert himself with his play-fellows. One of the greatest improvements that

has been made upon this machine, since it was first invented, was in this

manner the discovery of a boy who wanted to save his own labour.

All the improvements in machinery, however, have by no means been the

inventions of those who had occasion to use the machines. Many improvements

have been made by the ingenuity of the makers of the machines, when to make

them became the business of a peculiar trade; and some by that of those who

are called philosophers, or men of speculation, whose trade it is not to do

any thing, but to observe every thing, and who, upon that account, are often

capable of combining together the powers of the most distant and dissimilar

objects. in the progress of society, philosophy or speculation becomes, like

every other employment, the principal or sole trade and occupation of a

particular class of citizens. Like every other employment, too, it is

subdivided into a great number of different branches, each of which affords

occupation to a peculiar tribe or class of philosophers ; and this

subdivision of employment in philosophy, as well as in every other business,

improve dexterity, and saves time. Each individual becomes more expert in

his own peculiar branch, more work is done upon the whole, and the quantity

of science is considerably increased by it.

It is the great multiplication of the productions of all the different arts,

in consequence of the division of labour, which occasions, in a

well-governed society, that universal opulence which extends itself to the

lowest ranks of the people. Every workman has a great quantity of his own

work to dispose of beyond what he himself has occasion for; and every other

workman being exactly in the same situation, he is enabled to exchange a

great quantity of his own goods for a great quantity or, what comes to the

same thing, for the price of a great quantity of theirs. He supplies them

abundantly with what they have occasion for, and they accommodate him as

amply with what he has occasion for, and a general plenty diffuses itself

through all the different ranks of the society.

Observe the accommodation of the most common artificer or daylabourer in a

civilized and thriving country, and you will perceive that the number of

people, of whose industry a part, though but a small part, has been employed

in procuring him this accommodation, exceeds all computation. The woollen

coat, for example, which covers the day-labourer, as coarse and rough as it

may appear, is the produce of the joint labour of a great multitude of

workmen. The shepherd, the sorter of the wool, the wool-comber or carder,

the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser,

with many others, must all join their different arts in order to complete

even this homely production. How many merchants and carriers, besides, must

have been employed in transporting the materials from some of those workmen

to others who often live in a very distant part of the country ? How much

commerce and navigation in particular, how many ship-builders, sailors,

sail-makers, rope-makers, must have been employed in order to bring together

the different drugs made use of by the dyer, which often come from the

remotest corners of the world ? What a variety of labour, too, is necessary

in order to produce the tools of the meanest of those workmen ! To say

nothing of such complicated machines as the ship of the sailor, the mill of

the fuller, or even the loom of the weaver, let us consider only what a

variety of labour is requisite in order to form that very simple machine,

the shears with which the shepherd clips the wool. The miner, the builder of

the furnace for smelting the ore the feller of the timber, the burner of

the charcoal to be made use of in the smelting-house, the brickmaker, the

bricklayer, the workmen who attend the furnace, the millwright, the forger,

the smith, must all of them join their different arts in order to produce

them. Were we to examine, in the same manner, all the different parts of his

dress and household furniture, the coarse linen shirt which he wears next

his skin, the shoes which cover his feet, the bed which he lies on, and all

the different parts which compose it, the kitchen-grate at which he prepares

his victuals, the coals which he makes use of for that purpose, dug from the

bowels of the earth, and brought to him, perhaps, by a long sea and a long

land-carriage, all the other utensils of his kitchen, all the furniture of

his table, the knives and forks, the earthen or pewter plates upon which he

serves up and divides his victuals, the different hands employed in

preparing his bread and his beer, the glass window which lets in the heat

and the light, and keeps out the wind and the rain, with all the knowledge

and art requisite for preparing that beautiful and happy invention, without

which these northern parts of the world could scarce have afforded a very

comfortable habitation, together with the tools of all the different workmen

employed in producing those different conveniencies ; if we examine, I say,

all these things, and consider what a variety of labour is employed about

each of them, we shall be sensible that, without the assistance and

co-operation of many thousands, the very meanest person in a civilized

country could not be provided, even according to, what we very falsely

imagine, the easy and simple manner in which he is commonly accommodated.

Compared, indeed, with the more extravagant luxury of the great, his

accommodation must no doubt appear extremely simple and easy ; and yet it

may be true, perhaps, that the accommodation of an European prince does not

always so much exceed that of an industrious and frugal peasant, as the

accommodation of the latter exceeds that of many an African king, the

absolute masters of the lives and liberties of ten thousand naked savages.

CHAPTER II.

OF THE PRINCIPLE WHICH GIVES OCCASION TO

THE DIVISION OF LABOUR.

This division of labour, from which so many advantages are derived, is not

originally the effect of any human wisdom, which foresees and intends that

general opulence to which it gives occasion. It is the necessary, though

very slow and gradual, consequence of a certain propensity in human nature,

which has in view no such extensive utility ; the propensity to truck,

barter, and exchange one thing for another.

Whether this propensity be one of those original principles in human nature,

of which no further account can be given, or whether, as seems more

probable, it be the necessary consequence of the faculties of reason and

speech, it belongs not to our present subject to inquire. It is common to

all men, and to be found in no other race of animals, which seem to know

neither this nor any other species of contracts. Two greyhounds, in running

down the same hare, have sometimes the appearance of acting in some sort of

concert. Each turns her towards his companion, or endeavours to intercept

her when his companion turns her towards himself. This, however, is not the

effect of any contract, but of the accidental concurrence of their passions

in the same object at that particular time. Nobody ever saw a dog make a

fair and deliberate exchange of one bone for another with another dog.

Nobody ever saw one animal, by its gestures and natural cries signify to

another, this is mine, that yours ; I am willing to give this for that. When

an animal wants to obtain something either of a man, or of another animal,

it has no other means of persuasion, but to gain the favour of those whose

service it requires. A puppy fawns upon its dam, and a spaniel endeavours,

by a thousand attractions, to engage the attention of its master who is at

dinner, when it wants to be fed by him. Man sometimes uses the same arts

with his brethren, and when he has no other means of engaging them to act

according to his inclinations, endeavours by every servile and fawning

attention to obtain their good will. He has not time, however, to do this

upon every occasion. In civilized society he stands at all times in need of

the co-operation and assistance of great multitudes, while his whole life is

scarce sufficient to gain the friendship of a few persons. In almost every

other race of animals, each individual, when it is grown up to maturity, is

entirely independent, and in its natural state has occasion for the

assistance of no other living creature. But man has almost constant

occasion for the help of his brethren, and it is in vain for him to expect

it from their benevolence only. He will be more likely to prevail if he can

interest their self-love in his favour, and shew them that it is for their

own advantage to do for him what he requires of them. Whoever offers to

another a bargain of any kind, proposes to do this. Give me that which I

want, and you shall have this which you want, is the meaning of every such

offer; and it is in this manner that we obtain from one another the far

greater part of those good offices which we stand in need of. It is not from

the benevolence of the butcher the brewer, or the baker that we expect our

dinner, but from their regard to their own interest. We address ourselves,

not to their humanity, but to their self-love, and never talk to them of our

own necessities, but of their advantages. Nobody but a beggar chooses to

depend chiefly upon the benevolence of his fellow-citizens. Even a beggar

does not depend upon it entirely. The charity of well-disposed people,

indeed, supplies him with the whole fund of his subsistence. But though

this principle ultimately provides him with all the necessaries of life

which he has occasion for, it neither does nor can provide him with them as

he has occasion for them. The greater part of his occasional wants are

supplied in the same manner as those of other people, by treaty, by barter,

and by purchase. With the money which one man gives him he purchases food.

The old clothes which another bestows upon him he exchanges for other

clothes which suit him better, or for lodging, or for food, or for money,

with which he can buy either food, clothes, or lodging, as he has occasion.

As it is by treaty, by barter, and by purchase, that we obtain from one

another the greater part of those mutual good offices which we stand in need

of, so it is this same trucking disposition which originally gives occasion

to the division of labour. In a tribe of hunters or shepherds, a particular

person makes bows and arrows, for example, with more readiness and dexterity

than any other. He frequently exchanges them for cattle or for venison, with

his companions; and he finds at last that he can, in this manner, get more

cattle and venison, than if he himself went to the field to catch them. From

a regard to his own interest, therefore, the making of bows and arrows grows

to be his chief business, and he becomes a sort of armourer. Another excels

in making the frames and covers of their little huts or moveable houses. He

is accustomed to be of use in this way to his neighbours, who reward him in

the same manner with cattle and with venison, till at last he finds it his

interest to dedicate himself entirely to this employment, and to become a

sort of house-carpenter. In the same manner a third becomes a smith or a

brazier; a fourth, a tanner or dresser of hides or skins, the principal part

of the clothing of savages. And thus the certainty of being able to exchange

all that surplus part of the produce of his own labour, which is over and

above his own consumption, for such parts of the produce of other men's

labour as he may have occasion for, encourages every man to apply himself to

a particular occupation, and to cultivate and bring to perfection whatever

talent of genius he may possess for that particular species of business.

The difference of natural talents in different men, is, in reality, much less

than we are aware of ; and the very different genius which appears to

distinguish men of different professions, when grown up to maturity, is not

upon many occasions so much the cause, as the effect of the division of

labour. The difference between the most dissimilar characters, between a

philosopher and a common street porter, for example, seems to arise not so

much from nature, as from habit, custom, and education. When they came in to

the world, and for the first six or eight years of their existence, they

were, perhaps, very much alike, and neither their parents nor play-fellows

could perceive any remarkable difference. About that age, or soon after,

they come to be employed in very different occupations. The difference of

talents comes then to be taken notice of, and widens by degrees, till at

last the vanity of the philosopher is willing to acknowledge scarce any

resemblance. But without the disposition to truck, barter, and exchange,

every man must have procured to himself every necessary and conveniency of

life which he wanted. All must have had the same duties to perform, and the

same work to do, and there could have been no such difference of employment

as could alone give occasion to any great difference of talents.

As it is this disposition which forms that difference of talents, so

remarkable among men of different professions, so it is this same

disposition which renders that difference useful. Many tribes of animals,

acknowledged to be all of the same species, derive from nature a much more

remarkable distinction of genius, than what, antecedent to custom and

education, appears to take place among men. By nature a philosopher is not

in genius and disposition half so different from a street porter, as a

mastiff is from a grey-hound, or a grey-hound from a spaniel, or this last

from a shepherd's dog. Those different tribes of animals, however, though

all of the same species are of scarce any use to one another. The strength

of the mastiff is not in the least supported either by the swiftness of the

greyhound, or by the sagacity of the spaniel, or by the docility of the

shepherd's dog. The effects of those different geniuses and talents, for

want of the power or disposition to barter and exchange, cannot be brought

into a common stock, and do not in the least contribute to the better

accommodation and conveniency of the species. Each animal is still obliged

to support and defend itself, separately and independently, and derives no

sort of advantage from that variety of talents with which nature has

distinguished its fellows. Among men, on the contrary, the most dissimilar

geniuses are of use to one another ; the different produces of their

respective talents, by the general disposition to truck, barter, and

exchange, being brought, as it were, into a common stock, where every man

may purchase whatever part of the produce of other men's talents he has

occasion for,

CHAPTER III.

THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET.

As it is the power of exchanging that gives occasion to the division of labour, so the extent of

this division must always be limited by the extent of that power, or, in other words, by the

extent of the market. When the market is very small, no person can have any encouragement

to dedicate himself entirely to one employment, for want of the power to exchange all that

surplus part of the produce of his own labour, which is over and above his own consumption,

for such parts of the produce of other men's labour as he has occasion for.

There are some sorts of industry, even of the lowest kind, which can be carried on nowhere

but in a great town. A porter, for example, can find employment and subsistence in no other

place. A village is by much too narrow a sphere for him; even an ordinary market-town is

scarce large enough to afford him constant occupation. In the lone houses and very small

villages which are scattered about in so desert a country as the highlands of Scotland, every

farmer must be butcher, baker, and brewer, for his own family. In such situations we can

scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of

another of the same trade. The scattered families that live at eight or ten miles distance from

the nearest of them, must learn to perform themselves a great number of little pieces of work,

for which, in more populous countries, they would call in the assistance of those workmen.

Country workmen are almost everywhere obliged to apply themselves to all the different

branches of industry that have so much affinity to one another as to be employed about the

same sort of materials. A country carpenter deals in every sort of work that is made of wood ;

a country smith in every sort of work that is made of iron. The former is not only a carpenter,

but a joiner, a cabinet-maker, and even a carver in wood, as well as a wheel-wright, a

plough-wright, a cart and waggon-maker. The employments of the latter are still more

various. It is impossible there should be such a trade as even that of a nailer in the remote and

inland parts of the highlands of Scotland. Such a workman at the rate of a thousand nails

a-day, and three hundred working days in the year, will make three hundred thousand nails in

the year. But in such a 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 is opened

to every sort of industry than what land-carriage alone can afford it, so it is upon the sea-coast,

and along the banks of navigable rivers, that industry of every kind naturally begins to

subdivide and improve itself, and it is frequently not till a long time after that those

improvements extend themselves to the inland parts of the country. A broad-wheeled waggon,

attended by two men, and drawn by eight horses, in about six weeks time, carries and brings

back between London and Edinburgh near four ton weight of goods. In about the same time a

ship navigated by six or eight men, and sailing between the ports of London and Leith,

frequently carries and brings back two hundred ton weight of goods. Six or eight men,

therefore, by the help of water-carriage, can carry and bring back, in the same time, the same

quantity of goods between London and Edinburgh as fifty broad-wheeled waggons, attended

by a hundred men, and drawn by four hundred horses. Upon two hundred tons of goods,

therefore, carried by the cheapest land-carriage from London to Edinburgh, there must be

charged the maintenance of a hundred men for three weeks, and both the maintenance and

what is nearly equal to maintenance the wear and tear of four hundred horses, as well as of

fifty great waggons. Whereas, upon the same quantity of goods carried by water, there is to be

charged only the maintenance of six or eight men, and the wear and tear of a ship of two

hundred tons burthen, together with the value of the superior risk, or the difference of the

insurance between land and water-carriage. Were there no other communication between

those two places, therefore, but by land-carriage, as no goods could be transported from the

one to the other, except such whose price was very considerable in proportion to their weight,

they could carry on but a small part of that commerce which at present subsists between them,

and consequently could give but a small part of that encouragement which they at present

mutually afford to each other's industry. There could be little or no commerce of any kind

between the distant parts of the world. What goods could bear the expense of land-carriage

between London and Calcutta ? Or if there were any so precious as to be able to support this

expense, with what safety could they be transported through the territories of so many

barbarous nations? Those two cities, however, at present carry on a very considerable

commerce with each other, and by mutually affording a market, give a good deal of

encouragement to each other's industry.

Since such, therefore, are the advantages of water-carriage, it is natural that the first

improvements of art and industry should be made where this conveniency opens the whole

world for a market to the produce of every sort of labour, and that they should always be

much later in extending themselves into the inland parts of the country. The inland parts of the

country can for a long time have no other market for the greater part of their goods, but the

country which lies round about them, and separates them from the sea-coast, and the great

navigable rivers. The extent of the market, therefore, must for a long time be in proportion to

the riches and populousness of that country, and consequently their improvement must always

be posterior to the improvement of that country. In our North American colonies, the

plantations have constantly followed either the sea-coast or the banks of the navigable rivers,

and have scarce anywhere extended themselves to any considerable distance from both.

The nations that, according to the best authenticated history, appear to have been first

civilized, were those that dwelt round the coast of the Mediterranean sea. That sea, by far the

greatest inlet that is known in the world, having no tides, nor consequently any waves, except

such as are caused by the wind only, was, by the smoothness of its surface, as well as by the

multitude of its islands, and the proximity of its neighbouring shores, extremely favourable to

the infant navigation of the world; when, from their ignorance of the compass, men were

afraid to quit the view of the coast, and from the imperfection of the art of ship-building, to

abandon themselves to the boisterous waves of the ocean. To pass beyond the pillars of

Hercules, that is, to sail out of the straits of Gibraltar, was, in the ancient world, long

considered as a most wonderful and dangerous exploit of navigation. It was late before even

the Phoenicians and Carthaginians, the most skilful navigators and ship-builders of those old

times, attempted it; and they were, for a long time, the only nations that did attempt it.

Of all the countries on the coast of the Mediterranean sea, Egypt seems to have been the first

in which either agriculture or manufactures were cultivated and improved to any considerable

degree. Upper Egypt extends itself nowhere above a few miles from the Nile; and in Lower

Egypt, that great river breaks itself into many different canals, which, with the assistance of a

little art, seem to have afforded a communication by water-carriage, not only between all the

great towns, but between all the considerable villages, and even to many farm-houses in the

country, nearly in the same manner as the Rhine and the Maese do in Holland at present. The

extent and easiness of this inland navigation was probably one of the principal causes of the

early improvement of Egypt.

The improvements in agriculture and manufactures seem likewise to have been of very great

antiquity in the provinces of Bengal, in the East Indies, and in some of the eastern provinces

of China, though the great extent of this antiquity is not authenticated by any histories of

whose authority we, in this part of the world, are well assured. In Bengal, the Ganges, and

several other great rivers, form a great number of navigable canals, in the same manner as the

Nile does in Egypt. In the eastern provinces of China, too, several great rivers form, by their

different branches, a multitude of canals, and, by communicating with one another, afford an

inland navigation much more extensive than that either of the Nile or the Ganges, or, perhaps,

than both of them put together. It is remarkable, that neither the ancient Egyptians, nor the

Indians, nor the Chinese, encouraged foreign commerce, but seem all to have derived their

great opulence from this inland navigation.

All the inland parts of Africa, and all that part of Asia which lies any considerable way north

of the Euxine and Caspian seas, the ancient Scythia, the modern Tartary and Siberia, seem, in

all ages of the world, to have been in the same barbarous and uncivilized state in which we

find them at present. The sea of Tartary is the frozen ocean, which admits of no navigation ;

and though some of the greatest rivers in the world run through that country, they are at too

great a distance from one another to carry commerce and communication through the greater

part of it. There are in Africa none of those great inlets, such as the Baltic and Adriatic seas in

Europe, the Mediterranean and Euxine seas in both Europe and Asia, and the gulfs of Arabia,

Persia, India, Bengal, and Siam, in Asia, to carry maritime commerce into the interior parts of

that great continent; and the great rivers of Africa are at too great a distance from one another

to give occasion to any considerable inland navigation. The commerce, besides, which any

nation can carry on by means of a river which does not break itself into any great number of

branches or canals, and which runs into another territory before it reaches the sea, can never

be very considerable, because it is always in the power of the nations who possess that other

territory to obstruct the communication between the upper country and the sea. The navigation

of the Danube is of very little use to the different states of Bavaria, Austria. and Hungary, in

comparison of what it would be, if any of them possessed the whole of its course, till it falls

into the Black sea.

CHAPTER IV.

OF THE ORIGIN AND USE OF MONEY.

When the division of labour has been once thoroughly established, it is but

a very small part of a man's wants which the produce of his own labour can

supply. He supplies the far greater part of them by exchanging that surplus

part of the produce of his own labour, which is over and above his own

consumption, for such parts of the produce of other men's labour as he has

occasion for. Every man thus lives by exchanging, or becomes, in some

measure, a merchant, and the society itself grows to be what is properly a

commercial society.

But when the division of labour first began to take place, this power of

exchanging must frequently have been very much clogged and embarrassed in

its operations. One man, we shall suppose, has more of a certain commodity

than he himself has occasion for, while another has less. The former,

consequently, would be glad to dispose of; and the latter to purchase, a

part of this superfluity. But if this latter should chance to have nothing

that the former stands in need of, no exchange can be made between them. The

butcher has more meat in his shop than he himself can consume, and the

brewer and the baker would each of them be willing to purchase a part of it.

But they have nothing to offer in exchange, except the different productions

of their respective trades, and the butcher is already provided with all the

bread and beer which he has immediate occasion for. No exchange can, in this

case, be made between them. He cannot be their merchant, nor they his

customers ; and they are all of them thus mutually less serviceable to one

another. In order to avoid the inconveniency of such situations, every

prudent man in every period of society, after the first establishment of the

division of labour, must naturally have endeavoured to manage his affairs in

such a manner, as to have at all times by him, besides the peculiar produce

of his own industry, a certain quantity of some one commodity or other, such

as he imagined few people would be likely to refuse in exchange for the

produce of their industry. Many different commodities, it is probable, were

successively both thought of and employed for this purpose. In the rude ages

of society, cattle are said to have been the common instrument of commerce ;

and, though they must have been a most inconvenient one, yet, in old times,

we find things were frequently valued according to the number of cattle

which had been given in exchange for them. The armour of Diomede, says

Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen. Salt is

said to be the common instrument of commerce and exchanges in Abyssinia ; a

species of shells in some parts of the coast of India ; dried cod at

Newfoundland; tobacco in Virginia; sugar in some of our West India colonies;

hides or dressed leather in some other countries; and there is at this day a

village In Scotland, where it is not uncommon, I am told, for a workman to

carry nails instead of money to the baker's shop or the ale-house.

In all countries, however, men seem at last to have been determined by

irresistible reasons to give the preference, for this employment, to metals

above every other commodity. Metals can not only be kept with as little loss

as any other commodity, scarce any thing being less perishable than they

are, but they can likewise, without any loss, be divided into any number of

parts, as by fusion those parts can easily be re-united again; a quality

which no other equally durable commodities possess, and which, more than any

other quality, renders them fit to be the instruments of commerce and

circulation. The man who wanted to buy salt, for example, and had nothing

but cattle to give in exchange for it, must have been obliged to buy salt to

the value of a whole ox, or a whole sheep, at a time. He could seldom buy

less than this, because what he was to give for it could seldom be divided

without loss; and if he had a mind to buy more, he must, for the same

reasons, have been obliged to buy double or triple the quantity, the value,

to wit, of two or three oxen, or of two or three sheep. If, on the contrary,

instead of sheep or oxen, he had metals to give in exchange for it, he could

easily proportion the quantity of the metal to the precise quantity of the

commodity which he had immediate occasion for.

Different metals have been made use of by different nations for this

purpose. Iron was the common instrument of commerce among the ancient

Spartans, copper among the ancient Romans, and gold and silver among all

rich and commercial nations.

Those metals seem originally to have been made use of for this purpose in

rude bars, without any stamp or coinage. Thus we are told by Pliny (Plin.

Hist Nat. lib. 33, cap. 3), upon the authority of Timaeus, an ancient

historian, that, till the time of Servius Tullius, the Romans had no coined

money, but made use of unstamped bars of copper, to purchase whatever they

had occasion for. These rude bars, therefore, performed at this time the

function of rnoney.

The use of metals in this rude state was attended with two very considerable

inconveniences ; first, with the trouble of weighing, and secondly, with

that of assaying them. In the precious metals, where a small difference in

the quantity makes a great difference in the value, even the business of

weighing, with proper exactness, requires at least very accurate weights and

scales. The weighing of gold, in particular, is an operation of some nicety

In the coarser metals, indeed, where a small error would be of little

consequence, less accuracy would, no doubt, be necessary. Yet we should find

it excessively troublesome if every time a poor man had occasion either to

buy or sell a farthing's worth of goods, he was obliged to weigh the

farthing. The operation of assaying is still more difficult, still more

tedious ; and, unless a part of the metal is fairly melted in the crucible,

with proper dissolvents, any conclusion that can be drawn from it is

extremely uncertain. Before the institution of coined money, however, unless

they went through this tedious and difficult operation, people must always

have been liable to the grossest frauds and impositions; and instead of a

pound weight of pure silver, or pure copper, might receive, in exchange for

their goods, an adulterated composition of the coarsest and cheapest

materials, which had, however, in their outward appearance, been made to

resemble those metals. To prevent such abuses, to facilitate exchanges, and

thereby to encourage all sorts of industry and commerce, it has been found

necessary, in all countries that have made any considerable advances towards

improvement, to affix a public stamp upon certain quantities of such

particular metals, as were in those countries commonly made use of to

purchase goods. Hence the origin of coined money, and of those public

offices called mints;