An Inquiry into the Nature and Causes of the Wealth of Nations

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About this edition

• Author: Adam Smith
• Title: An Inquiry into the Nature and Causes of the Wealth of Nations
• Edition: Methuen & Co., London, 1904–1930
• Edition language: English
• Original language: English
• Content pages: vol. I, p. 1–462; vol. II, p. 1–437
• Rights: Public domain

About the author (AI note, not from the book's text)

Adam Smith (1723–1790) was a Scottish moral philosopher and economist. He also wrote The Theory of Moral Sentiments and taught at the University of Glasgow.

In brief

National prosperity depends on the goods a society produces, not on the money it holds. Smith explains differences in living standards through labor productivity, capital accumulation, and the institutions governing their use. Specialization increases output through greater skill, less wasted time, and improved machinery, but requires markets large enough to sustain exchange. Competition influences prices and earnings, while restrictions on entry and movement protect advantages that would otherwise diminish. Rent generally reflects the surplus land can yield after production costs and ordinary profit are met. Money prices alone cannot reliably reveal changes in real wealth. Saving supplies the resources that sustain production, and sound banking can put more existing capital to work. Secure tenure encourages agricultural investment, whereas concentrated ownership and insecure tenancy can obstruct it. Towns and countryside develop through reciprocal exchange, though European institutions disrupted the order in which investment would ordinarily proceed. Foreign and colonial commerce enlarge markets, but monopolies and trade privileges divert capital and burden consumers. Colonial growth rests more on available land, secure institutions, and market access than on exclusive trading arrangements. Freer exchange nevertheless requires attention to defense and the effects of foreign restrictions. Prosperity also requires public provision for defense, justice, infrastructure, and education, with funding arrangements that reward effective service. Basic schooling can counter the intellectual damage of repetitive work. Taxes should impose predictable obligations without unnecessary collection costs or damage to production. Borrowing, by concealing the immediate expense of war, leaves enduring burdens; extending imperial taxation therefore raises the question of political representation.

Key ideas

1. Exchange enables workers to specialize, increasing production through practiced skill, fewer interruptions, and improved equipment. Specialization can extend only as far as accessible markets allow, while generally accepted money makes the necessary transactions easier. — vol. I, p. 1–38, 258–276, 355–368
2. Prices fluctuate as supply changes relative to demand from buyers able to cover customary wages, profit, and rent; competition tends to bring prices back toward that level. Expanding demand for labor lifts wages, while capital accumulation tends to reduce profits. Restrictions on occupational mobility sustain differences in returns that competition would otherwise reduce. — vol. I, p. 38–146
3. Rent usually consists of what remains available to the landlord after a tenant covers expenses and customary profit, making it a consequence rather than a cause of the product's price. Better cultivation and market access can enlarge this remainder. Changes in monetary prices must be separated from changes in real value arising from harvest conditions, demand, or mining output. — vol. I, p. 146–257
4. Specialized production requires previously accumulated food, materials, and equipment to support workers before sales generate revenue. Reliable banknotes can substitute for metal currency and release resources for productive uses. Excessive note issuance or lending for projects with delayed returns, however, exposes banks to expensive redemption demands. — vol. I, p. 258–306
5. Saving enlarges the capital that supports productive employment, while expenditure exceeding income can undermine later production unless saving elsewhere compensates. Agriculture, manufacturing, and different branches of commerce sustain unequal amounts of domestic employment. Interest tends to decline because accumulating capital intensifies competition among lenders, not simply because the supply of silver grows. — vol. I, p. 306–354
6. Agriculture and towns support each other by exchanging food and manufactured products. With secure holdings, cultivation would normally attract investment early in economic development. Europe's large estates and insecure tenancies impeded that pattern, while expanding commerce reduced landlords' reliance on retainers and eventually promoted improvements in the countryside. — vol. I, p. 355–394
7. Foreign commerce benefits a country by finding buyers for surplus production and widening the market for specialized labor, rather than by increasing its precious metals or achieving a trade surplus with a particular partner. Import restrictions, export subsidies, and controls on grain merchants commonly misdirect investment, increase costs, or hinder supplies. Defense needs and a credible prospect of removing foreign barriers can justify limited exceptions. — vol. I, p. 395–462; vol. II, p. 1–46
8. Colonial prosperity is encouraged by available land, dependable property rights, modest taxation, and extensive markets. Exclusive trading arrangements constrain colonial production and may draw the home country's capital into commerce with slower returns and smaller productive benefits. Commercial privileges more broadly favor merchants and manufacturers at consumers' expense and interfere with the allocation of labor and capital, despite claims of national benefit. — vol. II, p. 46–185
9. The growth of property and commerce increases the need for organized public financing of defense and impartial courts. Roads and other local infrastructure can often be supported by payments from their beneficiaries. Trading companies with exclusive privileges or dispersed ownership tend to administer business and public duties badly when directors face little personal cost for neglect. — vol. II, p. 186–248
10. Dependence on pupils or congregations gives teachers and clergy stronger reasons to provide useful service than guaranteed incomes or protected positions do. Public assistance for elementary education is nevertheless justified because narrowly repetitive employment can impair judgment and civic abilities. Powerful religious establishments can also impose substantial costs and acquire excessive political influence. — vol. II, p. 248–311
11. Tax burdens ultimately reach income from land, capital, or labor, and may shift away from the person initially charged. Predictable assessments, convenient payment arrangements, and inexpensive collection reduce the burden. Taxes on essential goods, arbitrary liabilities, and successive duties on trade can additionally weaken employment, investment, or exchange. — vol. II, p. 294–387
12. Government borrowing postpones the visible cost of warfare but commits later revenue to interest payments and can hinder investment. Ordinary budget surpluses are unlikely to extinguish debt when successive wars add new obligations. Broadening the tax base across the empire would therefore require a more equitable distribution of political representation. — vol. II, p. 387–437

Summary by chapter

Introduction and Plan of the Work — Introduction and Plan of the Work (vol. I, p. 1–5)

• A nation consumes what its annual labor supplies directly or obtains through trade. Supply per person depends on workers’ productivity and the share employed in useful work, with productivity apparently the stronger influence.
• The stock of capital shapes how many productive workers can be employed and how they work. National policies favor different industries, and European policy has favored towns over agriculture since the fall of the Roman Empire.
• The inquiry connects specialization to gains in productivity and skill, then examines the effects of capital and policy before turning to public spending, taxation, and debt.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (vol. I, p. 6–22)

• Specialization can be easier to see in a small workshop than in a large industry: ten pin makers dividing the operations can produce far more than they could working separately. Seasonal farm tasks allow less division of labor, which may help explain why rich countries lead poor ones by more in manufacturing than in farming.
• Repeating a task builds skill, avoids time lost switching tasks, and encourages faster machinery. Workers focused on a single operation devise some improvements, while machine makers and people devoted to observation contribute others.
• In a well-governed society, specialization and exchange spread abundance widely. Even a laborer’s ordinary coat requires the work of many producers, toolmakers, traders, and carriers.
• Specialization grows gradually from people’s tendency to exchange, not from a plan to enrich society. Bargains generally secure cooperation by offering others an advantage, and dependable exchange lets people cultivate abilities that often owe more to practice and education than to innate differences.
• The size of the market limits specialization. Sparse settlements cannot sustain narrow trades, while inexpensive water transport connects producers to distant buyers and helps industry develop near coasts and navigable rivers.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 22–38)

• Extensive inland waterways probably aided Egypt’s early development and seem to have supported prosperity in Bengal and eastern China. Separated rivers and obstructed routes limited commerce elsewhere.
• As specialized workers come to depend on exchange, barter fails whenever a seller does not want what a buyer offers. People therefore keep a widely accepted commodity available; durable, divisible metals became useful for this purpose, and public stamps reduced the trouble of weighing and testing them.
• Coin names once denoted weights of metal, but rulers reduced coins’ metal content over time. This let debtors settle earlier obligations with less silver, to creditors’ detriment.
• Usefulness differs from purchasing power: water is highly useful yet buys little, while diamonds have little practical use yet buy much. Labor is the real measure of exchange value, though differences in skill and hardship make comparisons approximate and money easier to use.
• Gold and silver change in purchasing power, whereas equal labor under ordinary conditions imposes an equal sacrifice on the worker. Goods measure labor’s real reward and money its nominal price; fixed money rents tend to lose long-term value, while corn rents preserve it better across centuries but fluctuate more from year to year.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 38–53)

• Labor measures real value across times and places. Corn is a better long-term approximation than silver, silver is more useful for year-to-year comparisons, and money measures value exactly only at one time and place.
• Commercial nations generally kept their first monetary metal as the standard, even when legal exchange rates made the distinction between metals appear nominal. In Britain, gold coin determined the value of worn silver coin; Smith therefore disputes the claim that export rules caused silver bullion’s persistent premium.
• Smith proposes adjusting the gold-to-silver rate and limiting silver’s use in settling debts to discourage profitable melting. Coinage duties might deter export, while a lasting gap between bullion and coin prices points to the coin’s condition.
• When coins contain less metal than prescribed, merchants price goods according to their average actual content rather than their stated denominations. Before capital accumulation and private landownership, exchange instead followed customary labor requirements, adjusted for difficult or time-consuming skills.
• Once owners advance wages and materials, prices must cover profit as well as labor; profit depends on the stock employed rather than merely paying for supervision. Private landownership adds rent to most prices, although some goods bear little or none, and further processing adds wages and profit.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 53–70)

• The price of goods, and therefore annual output, ultimately provides wages, profit, or rent. Interest, taxes, and other revenues derive from these sources, even when one person receives several kinds of income at once.
• A good’s natural price covers wages, profit, and rent at their ordinary local rates. Profit is a necessary cost because someone free to move capital elsewhere will not indefinitely accept less than the ordinary return.
• Market price rises above natural price when buyers willing to pay that price compete for insufficient supply, and falls below it when sellers compete over a surplus. Labor, land, and capital tend to move toward undersupplied markets, though variable harvests cause greater fluctuations than relatively steady manufacturing.
• Temporary price shifts chiefly affect wages and profit. Concealed gains, scarce land, monopolies, and restrictions on entry can keep prices above their natural level for longer.
• Before landownership and accumulated capital, workers received their whole output; afterward, landlords and employers took rent and profit, while independent workers could receive both wages and profit. Employers generally have the advantage in wage bargaining because they can combine and endure a stoppage more easily, while workers face tighter restraints.
• Employers generally cannot hold wages below what workers need to maintain themselves and, ordinarily, raise a family. Cantillon estimates that the poorest workers require about twice their own maintenance.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 70–85)

• Wages must support workers’ families, but growing income and capital raise them above this minimum when employers compete for more labor. North American wages exceed England’s despite its lower wealth because growth is faster and labor demand outruns the population increase encouraged by high pay.
• In a wealthy but stationary country, competition for limited jobs pushes wages toward subsistence. If funds for employment shrink, unemployment, hunger, and mortality reduce wages and population further.
• British wages appear to exceed bare subsistence: they rise in summer despite higher winter needs, remain steadier than food prices, and vary across places and periods for reasons beyond food costs. Cheaper foods and manufactured goods have increased workers’ purchasing power despite some tax-driven price rises.
• Poverty need not prevent births, but it reduces children’s chances of survival. Higher wages help families raise the workers a growing economy needs, so workers fare better during growth than during stagnation or decline; improving their lives also benefits a society in which they form the majority.
• High pay generally strengthens and motivates workers, but piecework can encourage harmful overexertion; moderate, sustained effort can preserve health and produce more over a year. Cheap food may raise wages if employers seek more workers while fewer offer their labor, whereas dear food may have the opposite effect.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 85–100)

• Cheap years tend to produce more independent workers, who often work harder because they keep their output; production records may omit what they make for home use. Labor demand and living costs jointly determine money wages, so the opposing effects of plenty or scarcity usually make wages steadier than food prices.
• Higher wages can raise prices, but growing capital improves specialization and machinery, sometimes lowering labor costs enough to offset the increase. Competition among capital owners also tends to reduce profits.
• Interest is an imperfect indicator of profit, though the two generally move together. Falling interest in England and comparisons with Scotland, France, and Holland associate abundant capital with lower returns.
• New colonies may have high wages and high profits at once because scarce capital first develops the best land while expansion outpaces labor supply. Profits fall as settlement reaches poorer land, though wages need not; new territory or trade can also temporarily lift profits by drawing capital from existing businesses.
• A general loss of capital raises profits by weakening competition, but reduces jobs and wages. Where growth is impossible, competition could depress both wages and profits; China’s trade restraints and insecure small holdings instead favor rich merchants, while weak contract enforcement or interest bans can raise lending rates.
• Profit must be calculated after allowing for losses, and interest must leave borrowers a return for their work and risk. Profit increases compound across successive production stages in a way wage increases do not, although merchants chiefly complain about wages.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 100–116)

• When people can freely change occupations, movement toward better opportunities tends to equalize their total advantages. Pleasant or respected work may therefore pay less, while unpleasant or disreputable work pays more; enthusiasm for hunting and fishing can keep earnings low.
• Higher skilled wages compensate for training costs and delayed earnings. Irregular work must pay for idle periods and uncertainty, while jobs involving valuable property or important decisions pay for trust; training and these employment conditions generally have less effect on returns to capital.
• People may enter professions despite uncertain success and inadequate average pay because they value reputation and hope for exceptional success. Performers’ earnings also compensate for the stigma of earning a living from their talents.
• People commonly overrate possible gains and underrate losses, helping explain both poorly paid dangerous work and neglected insurance. Risk raises profit, but entrants drawn by hoped-for success can prevent full compensation for it.
• Returns to capital vary less than wages, and a small owner’s apparent profit often includes pay for personal labor. Small markets can thus make retailers’ percentage returns seem high despite modest actual profit, while larger markets allow trade and credit to expand with capital; speculation can bring rapid gains or losses.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 116–131)

• Equal overall advantages require established occupations operating under normal conditions and providing workers’ principal livelihood. New trades may initially pay more and yield exceptional profits; ordinary changes in demand affect wages, while changes in commodity prices affect profits.
• Workers supported mainly by another occupation may accept low pay for spare-time work, as with Scottish cottagers and stocking knitters. London tradespeople similarly let rooms cheaply to offset costly house rents.
• European policy creates inequalities by restricting entry, encouraging too many entrants, or impeding movement. Guilds and apprenticeships limit competition, although English statutory apprenticeship rules do not cover villages and newer trades.
• Smith argues that restrictions on using one’s labor violate liberty and that long apprenticeships neither prevent fraud nor encourage diligence. Product marks could protect buyers, while paid practice could train workers at lower cost, even if it reduced established workers’ wages.
• Guild limits sustain urban prices and earnings at the countryside’s expense because towns buy rural produce with their own goods. Rural work can require more judgment than urban crafts, yet guilds and import duties favor towns; in Britain, falling urban profits eventually directed accumulated capital into farming and narrowed the gap.
• Trade associations can coordinate price increases, so law should not make their meetings easier. Customers can discipline workers better than guilds, while education funded publicly or privately can draw excessive numbers into particular professions.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 131–146)

• Publicly funded education increases the supply of clergy willing to work for little pay. Smith argues that similar competition depresses teachers’ and writers’ earnings and would affect lawyers and physicians too; he attributes later teachers’ lower pay, compared with eminent teachers in ancient Athens, chiefly to competition from publicly educated people.
• Apprenticeship rules and corporate privileges obstruct movement between trades and places. Workers in a growing trade may therefore earn high wages while those in a nearby declining trade struggle to survive.
• English settlement laws let parishes remove newcomers and make it hard for poor workers to gain a new settlement. Certificates offer some protection, but the issuing parish may refuse one and the receiving parish may insist on one; Smith links these barriers to sharp wage differences between neighboring places.
• Smith argues that legal wage ceilings tend to favor employers, whereas requiring payment in money protects workers. Where bakers hold no exclusive privileges, he expects competition to regulate bread prices better than an official rate.
• Changes in prosperity affect wages and profits generally, but Smith expects their relative levels across occupations to remain largely stable. Land rent, by contrast, is normally what remains after a tenant’s costs and ordinary farming profit, and landlords can charge it even for unimproved land or fishing access.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 146–161)

• Rent is the surplus remaining when market price covers the capital and ordinary profit needed to supply a product. Unlike wages and profit, it follows from the price rather than determining it; food-producing land ordinarily yields rent because it supports its workers, repays the farmer, and leaves a surplus.
• Fertility and proximity to buyers enlarge that surplus. Expanding cultivation makes pasture scarcer relative to corn land, raising meat prices and pasture rents, while better transport raises rents on remote land by cutting carriage costs and opening markets.
• Corn land normally sets the return to pasture, though grass can earn more near towns or where enclosed land is scarce. Better cattle feed may lower meat’s price relative to bread; gardens and ordinary vineyards can earn higher returns chiefly because they demand more investment, skill, or risk.
• Distinctive wines and colonial sugar can command unusually high rents when supply falls short of effective demand. French limits on new vineyards appear to protect exceptional profits, and European cultivation bans give tobacco growers a similar, apparently smaller advantage.
• Land producing common food generally regulates returns on other cultivated land. Rice may yield a greater surplus than corn but cannot determine rents where it will not grow; if potatoes became a European staple, their yield and low cultivation cost could support more people and raise rents on suitable farmland.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 162–177)

• Potatoes appear nourishing, but their limited storage life may prevent their adoption as a staple across all social ranks because growers risk losing unsold crops.
• Food necessarily yields some rent. Clothing and building materials yield rent only when demand raises their price above preparation and transport costs, sometimes through access to foreign buyers; improved farming frees workers to produce such goods, whose demand can expand much further than appetite for food.
• A coal mine yields rent only if output and access to buyers cover costs beyond ordinary profit. Wood prices constrain coal prices, and productive nearby mines can undercut poorer ones.
• Metals travel farther than coal, exposing mines to distant competition. Especially productive mines can lower prices until poorer mines earn no profit or rent; Smith also argues that mining taxes can make workable mines unprofitable, while privileges for discoverers override landowners’ rights.
• Precious metals and stones derive value from usefulness or beauty combined with scarcity. Their mines earn rent according to relative fertility, unlike food-producing land, whose value rests on absolute output and the demand it creates.
• Improvement generally increases demand for nonfood produce, though greater supply can reverse a rise in its relative price. Silver becomes dearer, cheaper, or unchanged against corn according to whether its supply grows more slowly than, faster than, or alongside demand.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 177–192)

• Wage laws, household accounts, and grain rules suggest that ordinary wheat prices fell from at least four ounces of silver per quarter around the mid-fourteenth century to about two ounces by the early sixteenth century, remaining near that level until about 1570.
• Silver may have gained value against wheat because greater security and industry increased demand for it, because mines yielded less as extraction became harder, or because both occurred.
• Evidence for a steady decline in silver’s value is unreliable when below-market rent conversions, incomplete price rules, or exceptional low prices are treated as ordinary market prices.
• Medieval grain prices varied sharply when trade was disrupted. Fleetwood’s scattered records suggest a prolonged decline but cannot establish one securely because they chiefly concern unusual years.
• Labor is the measure of real value. Wheat tends to track it more closely than livestock because wheat cultivation requires comparatively steady labor, while thinly settled land can produce more animals than buyers want.
• Richer mines increase silver supply and reduce its value, while growing wealth increases demand for coins and silver goods. From about 1570 to 1640, American mine output outgrew European demand, and wheat rose from roughly two to six or eight ounces of silver per quarter.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 192–207)

• Silver’s decline against grain appears to have ended around 1636. Civil war disrupted farming and trade, helping to explain higher grain prices later in the century.
• The 1688 export bounty could raise domestic grain prices by removing surpluses that might have covered later shortages. Worn and clipped coins could also raise prices stated in money without increasing the silver paid.
• Wheat prices fell in the following century despite the bounty’s upward pressure at a given level of cultivation. Similar falls in France suggest that silver gained value across Europe rather than that grain alone became cheaper.
• Recent expensive grain can be explained by poor seasons and interrupted Polish supplies, not necessarily by cheaper silver. Higher British money wages reflect stronger demand for labor and an improvement in real pay.
• American silver initially earned large mining profits, but greater supply pushed its value toward production cost. Growing demand probably limited that fall and may have reversed it somewhat.
• European growth, expanding American colonies, and increasing trade with the East Indies all raised demand for silver. Lower food and manufacturing prices in India, its favorable exchange for silver against gold, and the need to replace worn coin and plate encouraged shipments there.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 207–222)

• Manufacture, transport losses, and hidden hoards consume precious metals, perhaps on a scale close to annual mine output. Their large existing stocks nevertheless steady prices against changes in yearly production.
• Silver fell against gold after the American mines opened, apparently because silver deposits were relatively more plentiful. Relative prices do not, however, establish the metals’ relative market quantities.
• Silver probably exceeds gold in total quantity and value because its lower price attracts more buyers. By a different measure, Spanish gold is cheaper because its price is closer to its production cost.
• As Spanish American silver becomes harder to mine, continued production requires higher prices, lower taxes, or both. Lower taxes allow more mining and restrain price increases.
• Smith only tentatively suspects that silver has risen in value in Europe. If imports cease to grow, increasing use and loss eventually absorb them; if imports decline, stocks may shrink and silver may gain value.
• Expensive wild game and fish need not imply cheaper silver, since growing demand can greatly outstrip their limited supply. Cattle prices rise as pasture contracts but level off when cultivated feed pays; progress is slow where better cultivation also requires farmers to build herds for manure.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 222–237)

• Cheap land allows colonial cattle to graze without cultivated feed, delaying better husbandry. Feeding cattle on improved land becomes worthwhile before raising luxury animals such as deer does.
• Poultry and hogs first live cheaply on farm waste, and dairying begins with surplus milk. Higher demand can justify purpose-grown feed, cleaner dairy production, and eventually good land devoted to dairy cattle; expanded supply and better feeding may then lower some prices.
• Farmers improve land for a product only when its price covers rent, labor, other costs, and ordinary profit. Rising real prices can therefore precede the public benefit of fuller cultivation.
• Wool and hides can be sold to distant manufacturers while meat depends chiefly on nearby buyers, so their prices need not rise together. English restrictions instead lowered wool prices.
• Where cultivated land needs a sufficient return per animal, restrictions that cheapen wool or hides raise meat prices. Where land has little alternative use, they reduce cattle income instead. Larger fish markets likewise require increasingly costly fishing.
• A country’s precious-metal supply depends on its purchasing power and the uncertain richness of mines serving world trade. Changes in mine output can alter money values without changing real wealth, so expensive gold or silver does not prove that a country is poor.

Book I. Of the Causes of Improvement in the Productive Powers of Labour (continued, vol. I, p. 237–257)

• Europe acquired more precious metal through an accidental discovery, whereas its gains in farming and manufacturing followed weaker feudal control and greater security for workers. Poland, Spain, and Portugal show that more metal need not bring prosperity.
• Low prices in general reveal little about national wealth. Livestock and game that are cheap relative to grain, however, indicate extensive unimproved land and a small population relative to territory.
• Cheaper silver would raise money prices broadly, but food prices rose unevenly, and grain averaged less in the early eighteenth century than in the late seventeenth, apart from recent bad seasons.
• Cultivation can make animal foods dearer while making vegetables cheaper. Assessments of prosperity and adjustments to public pay must weigh both effects rather than treat every food-price increase as evidence of cheaper silver.
• Machinery and divided labor generally lower manufacturing costs despite higher wages, though dearer materials can offset the gain. Historical cloth prices indicate substantial declines since the fifteenth century.
• Better cultivation raises real rent through more output and higher produce prices; cheaper manufactures and more useful labor add indirect gains. Landowners and workers generally benefit from prosperity, while dealers can gain from rules that restrict competition, so their regulatory proposals warrant particular skepticism.

Book II. Of the Nature, Accumulation, and Employment of Stock (vol. I, p. 258–276)

• Divided labor requires provisions, materials, and tools to maintain workers until their products are sold. Larger stocks also make greater specialization and output possible.
• Stock held for immediate use yields no profit. Capital is stock expected to provide revenue, either by being sold as circulating capital or by remaining in its owner’s possession as fixed capital.
• An asset’s use determines its category: working cattle are fixed capital, cattle raised for sale are circulating capital, and their feed is circulating capital. Society’s stock also includes consumption goods, productive buildings and improvements, acquired skills, money, and goods awaiting sale.
• Fixed capital depends on circulating capital for its creation, repair, supplies, and workers. Land, mines, and fisheries replenish circulating stocks that ultimately support consumption.
• When property is secure, people generally use stock for consumption or profit; fear of violence from superiors may lead them to hide it for escape.
• National net revenue is annual output after capital maintenance. Money distributes goods rather than constituting that revenue, which lies in the goods it buys; economizing on machinery or replacing costly coin with paper can release productive resources.

Book II. Of the Nature, Accumulation, and Employment of Stock (continued, vol. I, p. 276–291)

• Trusted notes redeemable on demand can replace circulating gold and silver while banks retain coin for occasional withdrawals. The displaced metal can be exported for goods because the notes cannot readily circulate abroad.
• Imports consumed without production add to spending, whereas imported supplies for workers can help generate output and profit. Smith expects most imports obtained through this trade to serve productive uses.
• Capital employs workers through their supplies and maintenance, not through money itself. Replacing coin with paper can therefore increase resources available for production.
• Scottish banks expanded trade by discounting bills and providing accounts that allowed partial repayments. Merchants could consequently keep less cash idle and employ more stock in goods.
• Notes issued beyond domestic demand return for redemption and increase the cost of reserves and replenishment. Excessive trading contributed to costly overissue in both England and Scotland.
• Banks can safely advance the cash merchants would otherwise hold idle when genuine bills and regular short-term repayments restore their reserves and expose borrowers’ circumstances. Most circulating capital and long-lived fixed capital require slower repayment and should instead be financed by private lenders, with borrowers’ own capital protecting creditors.

Book II. Of the Nature, Accumulation, and Employment of Stock (continued, vol. I, p. 291–306)

• Traders whose projects exceeded their own funds and normal credit sought further bank finance. Short-term bills appealed to lenders because drawers, acceptors, and endorsers were legally liable for payment.
• Repeatedly drawing new bills to pay old ones financed no underlying debt. Interest and commissions made this expensive, while bankers failed to recover their original advances.
• Once banks recognized such bills, immediately ending discounts risked bankrupting borrowers and harming the banks. Gradual restrictions angered the projectors, but refusing further advances protected bank and public credit.
• The Ayr bank financed long-term projects and circulating bills freely, but surplus notes returned for redemption. Expensive borrowing prolonged its operations while deepening borrowers’ eventual losses.
• Loans secured by customers’ assets could not enlarge Scotland’s available lending capital and might draw it away from prudent borrowers. The Bank of England, by contrast, grew as both bank and public agent, although public duties could sometimes lead it to overissue.
• Prudent banking makes idle cash and metallic currency available for productive use without increasing total capital. Because reliance on paper exposes trade to failed banks and interrupted redemption, Smith favors a five-pound minimum note to protect small purchasers while retaining banks’ service to traders.

Book II. Of the Nature, Accumulation, and Employment of Stock (continued, vol. I, p. 306–322)

• Discounts and lending accounts spare dealers from holding idle cash. Restricting small notes may limit individual freedom, but it protects society while leaving those banking services available.
• Notes redeemable on demand at face value need not raise prices because they replace coin. Delayed or conditional payment reduces their value; acceptance for taxes can support them, but legal-tender rules cannot force sellers to value them as coin.
• Productive labor leaves value in a saleable good. Services such as public protection and professional work may be necessary or valuable, but leave no comparable product after they are performed.
• Annual output either replaces capital or becomes profit and rent. Replaced capital maintains productive workers, while revenue can support productive or unproductive labor; a growing capital share thus tends to raise later output.
• Saving enlarges capital by directing resources to workers who replace what they consume with a profit. Industry alone does not have this effect, and spending beyond income instead draws capital from production unless others save enough to offset it.
• Towns sustained by invested capital are generally more industrious than towns sustained mainly by spending. If capital depletion lowers output, demand for money also falls, making its export a result rather than a cause of decline.

Book II. Of the Nature, Accumulation, and Employment of Stock (continued, vol. I, p. 322–339)

• Prosperity increases demand for gold and silver to circulate greater output. Wasteful spending and failed ventures instead reduce resources for productive workers, though private saving and prudence generally outweigh these losses.
• Excessive public spending on people who produce nothing can consume funds needed for future production. Private saving often offsets it but may not always do so; England advanced through continued private accumulation despite costly wars that slowed its progress.
• Spending on durable goods leaves usable wealth, is easier to reduce without embarrassment, and commonly supports more productive workers than lavish hospitality, although its purchaser may be less generous.
• A loan remains capital to the lender. A borrower using it in production can repay from profits, whereas one who consumes it must find other resources; lenders therefore usually prefer productive borrowers.
• Loans transfer command over goods rather than money itself. The same money can serve successive loans, so lendable capital depends on produce owned by people who do not use it themselves.
• As capital accumulates, competition tends to lower profits and interest. More silver alone cannot do so because a fall in its value changes money prices, not real capital or profit rates. A legal interest ceiling slightly above the safest market rate favors prudent borrowers, while a much higher one can attract wasteful borrowers; a prohibition merely adds the cost of penalty risk.

Book II. Of the Nature, Accumulation, and Employment of Stock (continued, vol. I, p. 339–354)

• An interest ceiling cannot force loans below the market rate. Land prices generally rise when interest falls, although land’s other advantages place limits on the returns buyers will accept.
• Capital can produce raw goods, manufacture them, transport them, or divide them for retail sale. Retailers preserve customers’ working capital by selling small quantities, and competition generally lowers prices.
• Equal capitals directly support the least productive labor in retail, then progressively more in wholesale trade, manufacturing, and agriculture. Agriculture also yields rent through nature’s contribution.
• Agricultural and retail capital must remain local, whereas merchants’ capital can leave and manufacturing can take place elsewhere while still benefiting producers. A country short of capital gains most by concentrating it in farming; Smith argues that protected manufacturing or export ventures would have slowed growth in the American colonies.
• Home trade replaces two domestic capitals; foreign trade for home consumption usually replaces one; carrying trade replaces foreign capitals. Slower returns from indirect foreign trade further limit the domestic work it supports.
• Exports remain useful for surpluses, but policy should not favor foreign or carrying trade over home trade. Carrying trade naturally takes up capital left after domestic needs are met, making it an effect rather than a source of wealth.

Book III. Of the Different Progress of Opulence in Different Nations (vol. I, p. 355–368)

• Exchange benefits town and countryside alike: rural produce feeds towns, manufactured goods spare rural labor, and expanding nearby markets help farmers avoid transport costs.
• Because towns depend on farm surpluses, capital naturally moves into cultivation before manufacturing and foreign trade when returns are similar. People also tend to regard land as more secure, unless institutions obstruct that order.
• Cheap land draws North American artisans into farming. Where land is unavailable, artisans produce for distant markets; foreign capital can carry away surpluses, while European institutions made commerce and manufacturing stimulate agriculture instead.
• After Rome’s fall, violence disrupted exchange and concentrated land. Primogeniture and entails preserved estates for protection but continued after that need passed, impeding improvement.
• Large landowners rarely improved estates, and enslaved workers had little incentive to produce beyond subsistence. Enslaved labor remained costly despite appearances, although profitable sugar and tobacco crops could bear that cost.
• Sharecroppers using an owner’s stock gain from larger harvests but are deterred from investing their own savings when the owner takes half the gains. Farmers using their own stock may improve leased land if tenancy is secure long enough to recover costs; English protections helped, while entails and short leases elsewhere hindered them.

Book III. Of the Different Progress of Opulence in Different Nations (continued, vol. I, p. 368–381)

• Insecure leases, compulsory services, and taxes such as France’s taille discouraged tenants from improving land; even secure farmers invested less than owners when rent absorbed their funds and low social standing deterred outside capital.
• After Rome’s fall, trading privileges and permanent grants of town revenues helped formerly dependent townspeople gain freedom and govern themselves.
• Kings gave towns defensive and governing powers because both opposed the lords. Some towns became republics where royal power failed; others gained a voice in taxation under continuing monarchies.
• Secure towns attracted industry and rural savings, while access to waterways let some prosper through distant trade despite poverty nearby. Foreign goods also created demand for local manufacture, sometimes using imported materials.
• In fertile inland districts, expensive transport left food cheap enough to support local manufactures. Their workers bought farm produce, encouraged cultivation, and could eventually supply distant markets.

Book III. Of the Different Progress of Opulence in Different Nations (continued, vol. I, p. 381–394)

• Growing towns gave farmers markets, especially nearby growers whose lower transport costs let traders pay more. Manufacturing also made bulky farm produce easier to export.
• Merchants who acquired land often improved it more effectively than country gentlemen because they were practiced in investing for profit and managing work carefully.
• Without commerce or refined manufactures, landlords spent their surplus supporting dependent tenants and retainers. That dependence gave them judicial and military power that feudal law could not remove while property relations remained unchanged.
• Foreign goods gave landlords another use for their surplus. As they spent more on themselves, they dismissed dependents; higher rents encouraged long leases under which farmers could recover improvement costs, while landlords lost some power to obstruct justice.
• Landlords’ desire for luxury and merchants’ search for profit thus helped improve much of rural Europe without intending to. Smith considers this route slower and less dependable than agriculture-led growth in North America.
• European inheritance rules and high land prices limited improvement by small owners, and English agriculture advanced slowly despite legal support. Improvements fixed in land preserved wealth more securely than movable commercial capital.

Book IV. Of Systems of Political Economy, Chapters I–III (vol. I, p. 395–409)

• Political economy seeks both to enable people to support themselves and to finance public services. Different routes to prosperity gave rise to commercial and agricultural systems.
• Money’s use in exchange and valuation encouraged its identification with wealth. Locke favored accumulating precious metals, while others defended reserves as necessary for foreign war.
• Merchants persuaded legislators to move from bans on exporting metals to policies aimed at favorable trade balances. Smith accepts that metal exports can be profitable and bans encourage smuggling, but rejects managing metal stocks or balances.
• That policy neglected domestic trade, although equal capital employed there yields more revenue and work. Demand draws in precious metals because their value makes transport easy; supposed shortages often reflect overextended traders losing money and credit.
• Money matters for what it purchases, and circulation and demand for plate determine its useful quantity. Forcing a surplus wastes resources; goods a merchant cannot sell endanger that merchant rather than the nation.
• Armies abroad need supplies that can be bought with metals, manufactured goods, or raw produce. Smith judges that Britain’s recent costly war was financed chiefly through exports of goods.

Book IV. Of Systems of Political Economy, Chapters I–III (continued, vol. I, p. 409–423)

• Merchants prefer paying foreign debts with profitable exports rather than bullion. A costly foreign war ultimately depends on annual output, especially compact manufactures that can be shipped while workers’ subsistence remains at home.
• Manufacturing can therefore finance a long war without major bullion exports, and wartime demand may sustain it despite national losses. Rulers in less commercial countries instead tend to store treasure because extraordinary aid from subjects is harder to obtain.
• Foreign trade increases real wealth by exchanging unwanted surplus for desired goods and widening markets for specialized work. Smith holds that America’s new market benefited Europe more than cheaper metals did, despite European injustice there.
• Exclusive companies curtailed the market that East Indian trade might have provided. Objections to its silver exports confused metal holdings with wealth, as did import restrictions and export incentives.
• Import barriers may help selected producers but cannot create employment beyond what available capital supports. At comparable profits, merchants tend to prefer safer domestic investment, unintentionally directing resources toward greater domestic value.
• Protecting goods that can be bought more cheaply abroad usually shifts capital away from higher-value production. Establishing a protected industry earlier does not show that total industry or revenue rises.

Book IV. Of Systems of Political Economy, Chapters I–III (continued, vol. I, p. 423–437)

• Easily transported foreign manufactures may threaten domestic producers when costs differ only slightly. Imported cattle and preserved meat pose less danger to British farming because transport is costly or the products compete poorly with fresh meat.
• Free corn imports would scarcely injure British farmers. A corn export bounty encourages exports in abundant years and subsequent imports in scarce ones, chiefly helping merchants; a permanent import ban would constrain population and industry to what domestic farming could supply.
• An import restraint may be warranted for defense. Britain’s Navigation Act strengthens shipping even though it reduces trade and the wealth trade could bring.
• A tariff matching a tax on the equivalent domestic product can preserve competition. Broader duties intended to offset taxes on necessities cannot be set accurately and add to consumers’ burdens.
• Retaliation is worthwhile if it is likely to remove a foreign barrier; otherwise consumers pay more without helping workers hurt by that barrier. Long-standing restraints may need gradual removal to protect manufacturers’ fixed capital, while freer access to occupations could help displaced workers find work.
• Vested interests make full liberalization unlikely. Meanwhile, policies aimed at accumulating metals also restrict imports from countries judged to have favorable trade balances, with particularly severe British restrictions on French goods.

Book IV. Of Systems of Political Economy, Chapters I–III (continued, vol. I, p. 437–451)

• Heavy reciprocal restrictions largely displaced lawful trade between Britain and France with smuggling. Even a British bilateral deficit under free trade would not rule out gains from cheaper purchases and profitable re-exports, or imply a worse overall balance.
• Customs valuations and exchange rates cannot reliably establish bilateral trade balances, since payments between two countries can settle transactions involving a third.
• Mint-based exchange calculations can misstate actual exchange when coins are worn, coinage carries a charge, or bank money trades at a premium.
• Small trading states created deposit banks so foreign bills could be settled in dependable standard money; their varied foreign coins could not be stabilized merely by reforming domestic coinage.
• The Bank of Amsterdam credited deposits according to assessed value. A bullion depositor also received a transferable receipt, but withdrawal required both that receipt and bank money; together their prices reflected the bullion’s value.
• Receipts could become prohibitively costly in a crisis, although the bank was expected to relax its withdrawal rule. It later used fixed purchase and sale rates to limit the bank-money premium, while its total reserves remained uncertain.

Book IV. Of Systems of Political Economy, Chapters I–III (continued, vol. I, p. 451–462)

• The Bank of Amsterdam earned fees and trading profits, but was founded to spare merchants unfavorable exchange. Its bank money held a stable metallic value, making exchange against less dependable ordinary coin appear favorable.
• The trade-balance doctrine mistakes incoming gold for gain. Voluntary exchange benefits both countries, usually nearly equally when each trades its own goods of equal value, whereas monopoly-driven trade commonly harms the country meant to benefit.
• If one country sells its own goods and the other re-exports foreign goods, both gain, but the first gains more because more of its capital employs domestic labor. Payment in gold does not necessarily reduce capital.
• Direct trade is preferable to indirect trade, but gold is no worse a payment than another commodity. Smith also argues that cheaper wine could encourage moderation after an initial rise in excessive drinking.
• British wine restrictions favored Portugal over France. Smith attributes such restraints to producers seeking monopolies at consumers’ expense and argues that the resulting commercial jealousy breeds hostility between nations.
• Wealthy neighbors offer larger markets despite being competitors. Nearby Britain and France would particularly benefit from faster returns on capital under open trade, but rivalry obstructs it. National capital grows when production exceeds consumption and shrinks when consumption exceeds production, whatever the trade balance.

Book IV. Of Systems of Political Economy, Chapters IV–IX (vol. II, p. 1–16)

• Refunding duties on exported domestic goods or re-exported foreign goods keeps taxes from driving capital away from trades it would otherwise enter, but does not raise exports above their untaxed level. British refunds differed by product and destination, and manufacturers resisted refunds on competing imports.
• Drawbacks can bring in revenue when some duty remains on goods that otherwise would not be imported. Under a colonial monopoly they may only reduce revenue, while concealed re-importation creates opportunities for fraud.
• Export bounties keep trades operating when sales cannot cover invested capital and ordinary profit. Without support, merchants would invest elsewhere, so the payment directs capital toward less advantageous uses.
• A favorable balance in corn trade does not prove that its bounty helps unless foreign sales also cover farming costs and ordinary profit. Smith attributes the observed decline in grain prices to other causes.
• By sending grain abroad in plentiful years and leaving less for scarce ones, the corn bounty raises domestic prices. Consumers bear both the subsidy and dearer food, potentially limiting population or employment.
• Because grain prices affect wages and other costs, the bounty raises returns mainly in money terms and disadvantages manufacturers. Corn merchants benefit from greater exports and later necessary imports, while farmers and landowners gain little beyond nominal receipts.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 16–31)

• Neither export bounties nor a protected home market raise corn’s real value, which depends on the labor it can support rather than its money price. Export bounties instead support trades that could not otherwise survive.
• Production bounties would encourage output more directly and might reduce home prices, but merchants prefer exports that remove domestic surpluses. Duties refunded on processed exports are not bounties, and small prizes for skilled workers can improve work without substantially redirecting capital.
• Fishery bounties may add ships and sailors, but Scotland’s herring payment rewarded vessel capacity rather than catches and favored unsuitable large vessels over boats without lowering home prices. Generous support still left many companies losing capital and may have drawn in inexperienced operators.
• Support for an otherwise unviable manufacture may nevertheless be justified by defense needs. In ordinary trade, an inland grain dealer profits by pacing consumption through a scarce season, without setting prices so high that stock remains at the next harvest.
• Smith argues that dispersed growers and dealers prevent a corn monopoly under free trade. He attributes famine to misguided restrictions rather than scarcity alone, while acknowledging that scarcity causes hardship.
• Hostility and laws against middlemen discouraged grain dealing, but making farmers store and retail their own crops could not remove trading profits. Specialist dealers could conduct more trade with the same capital.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 31–46)

• Farmers and manufacturers generally cannot retail as cheaply as specialist merchants. Forcing farmers to store and sell grain ties up capital needed for cultivation, whereas merchants can buy crops promptly and help farmers through losses.
• Fear of inland grain dealers is misplaced: a dealer who misjudges scarcity loses money, while an accurate judgment spreads consumption across the lean year. Inland trade matters more to cultivation and domestic supply than foreign trade does.
• Free imports can add grain and lower its money price without reducing farmers’ real income. Export freedom also supports supply indirectly by giving growers and importers a market for surpluses, though exports can worsen a home shortage when a neighboring country faces famine.
• Cross-border free trade could relieve local shortages. If other countries impose restrictions, however, a small state may need export limits; a large state faces much less of that risk.
• Imported grain carried for re-export can also feed the home market, but British duties and export bans largely prevented this trade. Smith credits Britain’s prosperity to secure enjoyment of the returns to work, not to corn laws.
• A newer corn law allowed earlier imports and some duty-free re-exports, but added an oats bounty and halted exports at prices Smith considered too low. Preferential trade treaties increase import costs for the country granting the preference.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 46–62)

• A preferential treaty can reduce a country’s gains without making trade unprofitable, since sellers must still recover capital and ordinary profit. The Methuen treaty nonetheless gave Portugal better terms than Britain.
• Portuguese gold did not make that trade uniquely valuable: Britain could use its goods to obtain what it wanted more directly, or obtain gold elsewhere if excluded from Portugal, though merchants might suffer temporary disruption. Metals were useful chiefly because they were widely accepted and easy to carry.
• If worn and full-weight coins have the same face value, melting new coins for bullion pays, so minting merely replaces coins. A moderate minting charge raises a coin’s value over its metal content and curbs melting or export, though an excessive charge could invite counterfeiting.
• Because holders can pass on a moderate minting charge through the coin’s value, it need not burden the Bank of England; it could avert substantial losses if coins became worn and ceased to be weighed.
• Greek cities established self-governing colonies when limited land could no longer sustain growing populations. Rome settled landless citizens on conquered land while retaining authority and securing uncertain provinces.
• American colonization lacked that ancient necessity. Portuguese voyages sought eastern trade, while Columbus sailed west in search of Asia and found lands whose products initially appeared unable to justify expectations of great wealth.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 63–78)

• Columbus presented Caribbean gold ornaments as signs of rich mines. Smith attributes Castile’s seizure of the islands to hopes of gold rather than its professed aim of conversion. Later Spanish ventures kept pursuing metals, although mines often lost their invested capital; substantial expected riches emerged only in Mexico and Peru.
• Colonies can grow rapidly when settlers bring established skills and laws to abundant fertile land. Low rents and taxes promote cultivation, while scarce labor commands wages that can let workers become owners.
• Greek colonies grew rapidly with abundant land and independence. Roman colonies had less of both; distance eased European colonies’ dependence, and Spanish America grew despite its rulers’ interventions.
• Brazil developed during Portuguese neglect, and its settlers expelled oppressive Dutch rulers. Elsewhere exclusive trading companies slowed, but did not necessarily halt, colonial growth.
• English North American colonies grew particularly quickly because limits on leaving land unused and easier transfers made more land available for improvement. Moderate taxes left colonists more output to employ, while Britain bore most defense costs.
• English colonies also had broader markets. Exclusive companies lowered prices received for colonial products and restricted output, while Spain’s licensed-port system raised import prices and depressed colonial sale prices, even though individual merchants could profit under either arrangement.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 78–93)

• Competition among merchants from the mother country restrains profits when colonial trade is open to them. Colonial exports also reach foreign markets, although some goods must pass through Britain.
• Wide markets encourage colonial farming, forestry, livestock raising, and fishing. Restrictions on naval stores impede land clearing, but import bounties and exemptions from iron duties can more than compensate.
• Britain restricts colonial refined sugar, steel, hats, and woollens to protect its manufacturers. Smith considers the restrictions unjust, though cheap land and expensive labor have so far limited their practical harm.
• Duties, bounties, and refunds on re-exported goods favor selected colonial trade. Merchants secured these measures even when they harmed Britain or the colonies.
• Representative assemblies give English colonists substantial control over domestic government and restrain officials. Smith contrasts their security with other European colonies, but partly attributes the success of French sugar colonies to officials’ greater ability to protect enslaved workers from masters.
• Misguided expectations, persecution, and private initiative drove American settlement more than European state planning. Europe supplied the settlers’ education, and American markets increased European consumption and industry, but exclusive trade kept those gains below their potential.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 93–108)

• Exclusive colonial trade raises prices and limits production and consumption, particularly in the colonies. Apart from Spain and Portugal, colonial powers have also borne military costs without receiving offsetting colonial revenue.
• England gains privileged access to colonial goods, but its advantage may be relative rather than absolute: freer trade might lower even the English price of tobacco.
• Keeping foreign capital out raises colonial-trade profits and draws British capital away from other business. As that trade expands faster than British capital, commerce shifts away from European markets.
• The monopoly sustains higher profits across British trade by reducing competition. Higher prices then weaken British merchants abroad, where foreign competitors can undersell them.
• Distant trade employs less British productive labor because capital returns slowly, especially when colonists buy on extended credit. Required re-export of surplus colonial goods lengthens the route further, and some transactions support colonial or foreign labor rather than British industry.
• Reliance on one colonial market makes British commerce vulnerable. Smith favors gradual liberalization because an abrupt opening could permanently injure people committed to the trade; he nevertheless regards colonial trade itself as valuable, since a free market could absorb more British output.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 108–124)

• Free colonial trade would add a market without taking capital from established trades. Monopoly instead draws capital into trade with slower returns, reducing productive employment and future accumulation.
• Colonial demand benefits British manufacturing despite the monopoly. Smith points to Spain and Portugal to argue that monopoly alone cannot sustain manufacturing, while Britain’s trade freedoms and impartial justice help it do so.
• Higher mercantile profits draw capital away from land improvement, restrain wages and rent, and raise interest; by slowing capital growth, they may even reduce total profit income. Merchants’ greater spending can further weaken saving and influence workers to do likewise.
• Exclusive access benefits traders, while taxpayers bear the costs of colonial defense and wars without sufficient colonial revenue or military assistance. Separation and a free-trade treaty could benefit most people, but national pride and officials’ private interests make voluntary separation unlikely.
• Colonial assemblies lack the information and incentives to finance defense for the whole empire. Parliamentary demands for contributions might be fair, but Britain would still have to fund emergencies if assemblies could refuse payment.
• Parliamentary representation proportional to colonial contributions could give colonial leaders a stake in union. Smith sees this as avoiding the difficulties of Rome’s direct extension of citizenship, though prejudice on both sides obstructs it.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 124–139)

• Representation tied to colonial tax contributions could preserve the constitution’s balance and help check abuses by distant officials. If American contributions grew sufficiently, the imperial seat might eventually move there.
• Trade arising from the discoveries of America and the Cape route may benefit distant peoples, but European military superiority enabled grave injustices. Over time, commerce might spread knowledge and foster mutual restraint.
• New markets expanded European commerce without reserving all the gains for colonial powers: other countries met much colonial demand, while the powers holding monopolies paid for government and defense.
• Capital ordinarily favors nearby trades with quicker returns and more domestic employment. Unusually high profits can draw it into necessary distant trades until returns adjust, but mercantile restrictions distort that movement and send excessive capital into protected colonial trade.
• Exclusive East India companies may attract capital to trade in poor countries but deter it in rich ones, while raising prices at home. If the trade cannot survive without monopoly, a country should probably obtain the goods elsewhere; otherwise, independent merchants can conduct it.
• European settlement expanded less in Africa and Asia partly because local populations were harder to displace and exclusive companies discouraged settlers. Company rulers and servants also had incentives to protect immediate monopoly gains rather than lasting prosperity, as reported Dutch destruction of spices and English crop manipulation illustrate.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 139–154)

• Smith attributes the harm of East India Company rule to officials’ incentives to depart with their fortunes, not to defects of character. Exclusive companies burden their home countries and injure the places they govern.
• Mercantile policy restricts exports of manufacturing materials and encourages their import to benefit domestic manufacturers, yet protects domestic makers of tools against imported tools.
• Removing duties on manufacturing materials can serve the public when finances allow. Duty-free foreign linen yarn, however, lets influential manufacturers buy cheaply while exposing poor domestic spinners to competition.
• Bounties chiefly favored materials from American colonies. The assertion that colonial gains would necessarily return through trade did not justify them, and expensive American labor was expected to limit the effect of the silk bounty.
• Woollen manufacturers obtained import protection and severe restrictions on sheep and wool exports, reinforced by controls on domestic wool trade. Their claim that fine cloth required English wool was false; cheaper wool probably reduced output little because sheep farmers chiefly earned from meat, though fleece quality may have suffered.
• A wool export tax could raise revenue and aid manufacturers while hurting growers less than a ban, whose foreign price premium encourages smuggling. Similar restrictions on hides, yarn, and unfinished cloth favor finishing trades, whose concentrated manufacturers can more readily secure protection than dispersed graziers can resist it.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 154–170)

• British export duties on manufacturing materials and dyes were intended to help domestic manufacturers, but restrictions could discourage imports and raise domestic prices. A steep duty on gum senega instead promoted smuggling.
• Taxes on coal exports, bans on exporting manufacturing equipment, and penalties on artisans who took their skills abroad protected manufacturers at the expense of personal liberty.
• Smith holds that industry exists to serve consumption. Import restraints, export bounties, and colonial monopolies instead make consumers and taxpayers bear costs for producers’ benefit.
• French agricultural theorists treated farming as the sole source of wealth, partly in reaction to Colbert’s policies favoring towns through grain restrictions and taxes that discouraged farming.
• In their system, cultivation is productive because it replaces landowners’ improvements and farmers’ expenses while yielding rent. Manufacturing and trade, they argue, merely replace their costs, so their workers add to national wealth only by saving.
• The theorists still regard merchants and manufacturers as useful: specialization lets cultivators produce more, and competition lowers the prices they pay. For a landed nation, they favor free trade because affordable imports increase the value of its agricultural surplus, whose growth can eventually fund manufacturing and foreign trade.

Book IV. Of Systems of Political Economy, Chapters IV–IX (continued, vol. II, p. 170–185)

• Quesnay holds that restrictions on the free allocation of resources progressively reduce national wealth. Favoring domestic manufactures also lowers the value of farm produce and draws capital away from agriculture.
• Smith argues that people’s efforts to better their position can offset some damage from restrictions. He also rejects the claim that artisans and merchants merely consume resources: they produce saleable goods, while saving, specialization, and trade can expand output or food supplies.
• China sustains extensive manufacturing through its large, connected domestic market despite limits on foreign trade. Wider commerce, especially through Chinese ships, would likely expand production and expose makers to improvements from abroad.
• Ancient Egypt and India favored agriculture partly because rulers relied on land revenue. Limits on sea travel narrowed export markets, although inland waterways and India’s size helped sustain manufacturing.
• Greek and Roman practices restricted free workers’ access to trades. Slave labor generally cost more because enslaved people had little incentive or opportunity to devise labor-saving methods.
• Restrictions on manufacturing or foreign trade also harm farmers by raising the price of goods they buy and shrinking their home market. Smith concludes that people should be free to compete within the bounds of justice, while government supplies defense, justice, and public works that private parties cannot profitably provide.

Book V. Of the Revenue of the Sovereign or Commonwealth (vol. II, p. 186–201)

• Hunters can support themselves at war, while shepherds can bring their herds and households; neither arrangement needs much public funding. Shepherds, however, can gather much larger and more threatening forces.
• Farmers with little commerce can serve unpaid during short campaigns between sowing and harvest, but fixed homes prevent whole communities from moving to war. As manufacturing expands, artisans lose income when they leave work, and longer campaigns require public support.
• Busy farmers and artisans have little time to practice warfare. Government must therefore require occasional militia training or maintain people whose principal occupation is soldiering.
• Firearms make collective discipline more important than individual skill. Regular practice gives standing armies an advantage over militias, although prolonged campaigns can give militias comparable discipline; Smith uses Macedonia and Rome’s changing military fortunes to illustrate the importance of sustained training.
• Standing armies can defend developed states and establish order in less settled regions. They threaten liberty when commanders’ interests oppose constitutional government, whereas secure rulers may tolerate dissent.
• Defense grows costlier when publicly supported troops replace self-supporting warriors. Firearms add expense for equipment, ammunition, transport, and training.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 202–217)

• Gunpowder increased the cost of defense, but expensive firearms favored wealthy, developed nations and thereby helped civilization survive and spread.
• As valuable property accumulates, government becomes necessary to protect owners: an attack on property can bring lasting gain, unlike most attacks on persons or reputations. Among shepherds, concentrated wealth creates dependents and prominent families whose chiefs acquire military and judicial authority.
• Early rulers received gifts for hearing cases and income from fines, which encouraged biased or delayed judgments. Taxation later made fixed judicial salaries possible; regulated court fees could also support diligent judges if they did not reward prolonged proceedings.
• Judges need protection against executive control of their dismissal and salaries. The sovereign should also supply beneficial works that private parties cannot profitably provide, although commercial infrastructure can often be financed by its users.
• Tolls tied to vehicle weight or boat capacity can reflect wear, and cheaper transport may more than repay consumers for them. User funding also discourages building works where commerce cannot support them.
• Canal owners have reason to maintain their works because neglect stops traffic. Road owners might still collect tolls on damaged roads, so road tolls need trustees, whose management can nevertheless be abused.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 217–233)

• Turnpike tolls reportedly exceed repair costs even where work is poor. Inexperience may explain some weak oversight, but turning the surplus into state revenue risks higher charges on bulky goods and poorer consumers, with no reliable way to make government spend the proceeds on repairs.
• French central administration favors prominent roads over smaller ones. Claims of superior Asian works are doubtful, although rulers who depend directly on land produce have stronger reasons to improve transport.
• Works that benefit one district are better financed and managed locally: general funding charges nonbeneficiaries, while local abuses tend to be smaller and easier to correct.
• Where foreign trade requires forts or consuls, moderate charges on the trade should pay for them, with proceeds controlled by the executive rather than merchant companies.
• Regulated companies admit qualified merchants who trade with their own capital, but tend to restrict competition; the Turkey Company did so despite later legal reforms. An African company received public funds for forts, yet rules against monopoly and accounting requirements did not give its directors enough incentive or oversight to maintain them well.
• Joint-stock companies pool investors’ capital, and shareholders can sell their shares while risking only their investment. That attracts large funds, but directors handling others’ money may be less vigilant than partners, especially when shareholders seldom supervise them.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 233–248)

• Joint-stock companies trading abroad tend toward wasteful management. The Royal African Company failed against private traders despite the tax those traders paid, and debt eventually brought its dissolution.
• The Hudson’s Bay Company benefited from prepared cargoes, a small market that discouraged rivals, and few proprietors able to supervise modest capital. Its profits were probably ordinary.
• The South Sea Company lost money in Spanish American and whaling ventures. Its agents blamed Spanish oppression, but Smith chiefly attributes the losses to their own waste and misconduct.
• The East India Company struggled against private competition, yet that competition lowered English prices and encouraged production through greater demand. Despite territorial revenues, the company accumulated debt; parliamentary reform could not make proprietors attentive rulers when appointments mattered more to them than subjects’ welfare.
• A temporary monopoly can repay merchants for opening a risky trade, but trade should then open and government should take over necessary forts. A permanent monopoly raises prices and excludes other merchants.
• Without monopoly, joint-stock companies struggle to match private merchants in changing foreign markets. They can succeed in rule-governed services such as banking, insurance, canals, and urban water supply when exceptional public utility requires more capital than a partnership can provide; directors’ partiality may instead misdirect companies established to promote particular manufactures.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 248–264)

• Student fees can pay for teaching, while local endowments can support schools without general public revenue. Fixed salaries weaken teachers’ incentive to teach diligently when their income no longer depends on pupils’ approval.
• University colleagues may tolerate neglect by salaried teachers. External supervisors can enforce attendance but cannot reliably assess teaching quality.
• Degree requirements, restricted scholarships, and limits on changing colleges or tutors bring students to teachers regardless of merit. Such restraints weaken competition even when students pay fees.
• College discipline can shield teachers from student dissatisfaction. Smith argues that worthwhile lectures rarely need compulsory attendance and that subjects taught privately are generally taught better.
• European universities began chiefly to train clergy, making Latin necessary for church services; Greek and Hebrew entered study later, partly amid disputes about biblical translation. Theological priorities expanded speculation about spirits at the expense of observation and turned moral instruction toward asceticism.
• Better-endowed universities were generally slower to improve. Smith partly links the practice of sending English youths abroad to universities’ declining reputation, though early travel often weakens useful habits. Greek civic education included music and military exercise, but Roman morals without comparable music cast doubt on its moral value.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 264–279)

• Roman judges could be blamed personally for unjust rulings, unlike members of large Greek courts; reliance on earlier decisions also helped Roman law become more systematic.
• Teachers who must attract pupils have stronger incentives to teach than those protected by public salaries or graduation privileges. Without such protection, instruction would respond to demand, as Smith argues women’s education does.
• Repetitive work can diminish workers’ judgment, initiative, sociability, and courage. More varied work preserves those abilities, though it seldom produces highly refined understanding.
• Because ordinary people begin work early and have little leisure, they need more public help with education than the wealthy. Cheap local schools could teach basic skills if teachers still depended partly on pupils.
• Governments could encourage basic learning through rewards or entry examinations for trades. Smith also points to Greek and Roman exercise institutions as a way to maintain military readiness and possibly reduce reliance on a standing army.
• Smith regards ignorance and cowardice as public harms beyond their effects on defense: education can improve political judgment and resistance to superstition and faction. He argues that voluntary support makes religious teachers diligent, while equal treatment of small sects could restrain their power and foster tolerance.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 279–294)

• Small sects commonly insist on strict conduct because members distrust excess and monitor one another. For otherwise unnoticed city residents, membership supplies a reputation that can be lost through expulsion.
• Learning requirements for professional and public advancement could counter superstition, while respectable public amusements could ease the severity and gloom that foster it.
• Without an established religion, a ruler need only stop religious groups from oppressing each other. An established clergy can instead threaten the ruler unless appointments give him influence over its members.
• Medieval clergy gained power from papal control of appointments and from estates, tithes, hospitality, and charity that secured dependents and popular loyalty. Commerce weakened that power by allowing clergy to spend on themselves, making tenants more independent through leases, and reducing charity.
• As clerical power waned, rulers recovered influence over senior appointments, particularly in France and England. Reformation preachers gained support through strict conduct, persuasive preaching, and criticism of established clergy, but rulers allied with Rome resisted them.
• Ruler-controlled appointments in Lutheran and English churches generally favored civil peace. Calvinist parish elections encouraged faction until patronage replaced them, while the near-equal standing of Presbyterian clergy generally made learning and conduct routes to advancement.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 294–311)

• Moderate, fairly equal clerical incomes encourage respectable conduct and ties to congregations. They also leave leading scholars available to universities, whereas wealthy churches draw scholars away from teaching.
• Church revenue generally competes with defense spending, apart from revenue from particular estates. Scotland and Protestant Swiss churches meet religious needs cheaply, while excessive clerical pay can encourage neglect and weaken authority.
• Defense and the sovereign’s dignity should be financed by general contributions; dignity costs more in wealthy societies and monarchies. Courts, local services, roads, and instruction can instead be paid for by their direct beneficiaries.
• Public revenue can come from sovereign-owned capital or land, or from people’s incomes. Rulers usually manage trade poorly, though postal services can succeed because they require little capital and provide prompt, predictable returns.
• Public lending earns interest but foreign loans risk confiscation in wartime. Pennsylvania’s interest-bearing paper depended on demand for currency, public credit, and restrained issuance; lacking that restraint, other colonies suffered disorder.
• Modern state costs exceed likely public land rents, and centralized ownership can depress output. Selling crown land could improve cultivation and tax receipts while reducing debt, leaving taxes to fund most spending. Whatever their stated target, taxes ultimately draw on rent, profit, or wages; clear liabilities curb abuse by collectors.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 311–326)

• Taxes should fall due when payment is convenient and should add as little as possible to the burden beyond the revenue raised. Collection costs, lost industry, evasion penalties, and intrusive enforcement can greatly increase that burden.
• A fixed land assessment is predictable, cheap, and does not discourage improvement, but changes in rent make it unequal. Shifts in silver’s value or coin standards can also disadvantage either landlords or the state.
• A tax tied to actual rent adjusts more fairly to change, provided registered leases limit uncertain assessments and temporary exemptions protect landlords’ improvements. Higher charges on renewal payments and restrictive rents could discourage practices that damage cultivation.
• Land surveys cost money and soon become unequal unless repeatedly revised, which may trouble taxpayers more than it helps. Taxes on produce instead fall on landlords through lower rent, taking a greater share of rent from poorer land when the same share of output is charged.
• Produce taxes discourage expensive improvements and crops. They may give rulers a reason to improve roads, but collection in kind invites abuse; money payments valued at market prices retain a link to output.
• House rent includes a return on building capital and a payment for location. A tax paid initially by tenants ultimately falls on occupants and groundowners, not builders, whose returns tend back toward the normal level.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 326–341)

• A house-rent tax generally bears more heavily on rich households because they spend a larger share of income on housing. Empty houses should be exempt, while owner-occupied houses should be assessed at their likely rent.
• A ground-rent tax falls on landowners rather than raising house rents. Ground rent can bear a special tax because it often arises without the owner’s effort, unlike ordinary land rent, which may reward management.
• Hearth and window taxes avoid direct rent assessments but can charge poorer households more than richer ones. The window tax tends to reduce rents, even where growing demand raises them overall.
• Profit includes both interest on capital and payment for an employer’s risk and work. A tax on the latter is ultimately passed on through lower land rent, higher consumer prices, or lower interest.
• Capital is difficult to measure and can leave the country, making interest hard to tax directly. Governments therefore use low estimates or, where trust permits, taxpayers’ own declarations.
• Taxes on particular trades usually reach consumers through prices; a uniform charge can also drive out small dealers and strengthen larger ones. France’s personal taille makes farming assessments arbitrary, while farmers’ limited ability to restrict supply shifts their tax to landlords as leases renew and equipment-based assessments discourage cultivation.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 341–356)

• A servants tax chiefly affects the middle ranks. Taxes on profits in particular occupations cannot change interest rates, though a broad tax on income from capital may fall on interest.
• Transfers at death and land sales are visible enough to tax directly. Because loans are often concealed, governments instead tax their documents or registration.
• Transfer duties reduce capital value and divert resources from productive labor. Sale taxes usually burden sellers, while duties on loan documents burden borrowers.
• If demand for labor and food prices stay unchanged, a wage tax raises gross wages by more than the tax. Consumers ultimately bear the resulting increase in manufacturing costs, while landlords bear it in agriculture; reduced labor demand can obscure these effects.
• Taxes on professional fees likewise tend to raise fees, but public-office salaries can generally bear a tax. Poll taxes based on estimated income are arbitrary, rank-based ones are unequal, and those imposed on poorer people operate like wage taxes.
• Consumption taxes reach income through spending. Taxes on goods required by local standards for even the poorest respectable households raise subsistence costs and wages, ultimately burdening consumers or landlords; taxes on goods one can forgo without disgrace need not raise wages and may encourage frugality.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 356–372)

• Luxury taxes chiefly affect buyers. Taxes on necessities instead raise wages and manufacturing prices, leaving landlords and wealthier consumers to bear much of the burden, often with added costs.
• British duties on salt, leather, soap, and candles increase poor households’ costs and wages. A coastal coal duty likewise makes fuel more expensive where it is already costly.
• Necessity taxes at least bring in revenue, whereas corn export bounties and import restrictions cause similar harm without doing so. Smith reports that much heavier bread taxes elsewhere damaged manufacturing.
• Annual charges suit durable goods such as coaches. Licensing rapidly consumed goods would make light users pay disproportionately, prevent payment in small installments, weaken restraint in purchasing, and risk distress.
• Excise duties generally apply to a few widely used goods, chiefly luxuries. Customs shifted from taxes on merchants toward a system favoring exports and restricting imports; prohibitions and high duties can then suppress trade, encourage smuggling, and reduce receipts.
• Smith considers limiting customs to a few common imports, using supervised warehouses, and setting duties to raise revenue rather than secure monopolies. Cheaper necessities and materials would aid manufacturing, while taxes on commonly purchased luxuries could raise substantial revenue without increasing wages or reducing labor demand as necessity taxes do.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 372–387)

• Families brewing beer privately avoid duties paid by commercial brewers, giving wealthier households cheaper beer than poorer buyers. Smith proposes a higher malt tax in place of beer and ale duties, while keeping spirits from becoming cheaper.
• Against Dr. Davenant, Smith argues that maltsters could pass on a higher tax and that cheaper beer would likely increase demand for barley. Barley land earns no monopoly return that such a tax could diminish.
• Road and waterway tolls intended for maintenance should follow bulk or weight; charges based on value obstruct domestic trade. Transit duties on foreign goods may raise revenue without harming local industry.
• Luxury taxes can be predictable, paid as purchases occur, and avoided by not buying. Collection costs, lost industry, smuggling penalties, and intrusive inspections nevertheless make them costly relative to their revenue.
• A tax repeated at every sale, such as Spain’s Alcavala, hinders trade and distant production through repeated charges and inspections. Local alternatives make a similar Neapolitan tax less damaging.
• Britain’s largely uniform taxes leave internal trade relatively free, unlike differing provincial taxes in France and parts of Italy. Contracting tax collection to private farmers costs the state their profit, and their demands for tougher enforcement tend to make tax laws harsher.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 387–403)

• Tax farmers who also monopolize a good profit from both privileges. France’s salt monopoly is especially burdensome because people must buy a required quantity and smuggling faces harsh punishment.
• Smith proposes replacing France’s taille and capitation with more vingtièmes, making commodity taxes uniform across provinces, and collecting them directly. He argues that this could preserve revenue with less expense and hardship, though favored interests resist it.
• France raises less revenue per person than Britain while imposing greater tax oppression. Holland’s heavy necessity taxes reportedly hurt industry, though wars and the cost of keeping land from the sea help explain them.
• Where there are few commercial luxuries or investments, wealthy people and rulers tend to save. Commerce weakens rulers’ saving habits; when war requires immediate spending, they borrow before new taxes can yield enough revenue, relying on merchants’ circulating capital and confidence in government.
• Governments move from borrowing without pledged revenue to assigning particular taxes to creditors. Repeated loans exhaust taxes intended to repay principal, encouraging perpetual funding that pays interest without a fixed repayment date.
• Perpetual funding supplies more money immediately but postpones the release of revenue. Interest reductions helped create a fund intended for repayment that also enabled fresh borrowing; transferable perpetual payments attract lenders more than declining term annuities, while tontines delay relief because survivors inherit payments.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 403–418)

• English merchant lenders prefer transferable perpetual payments, while French lenders less concerned with heirs prefer life annuities. Smith attributes the difference to lenders’ interests, not governments’ willingness to repay.
• Borrowing pays for war with limited immediate tax increases, hiding its cost from people far from the fighting. Taxes introduced during war then continue to service the resulting debt.
• Funds established through interest reductions are often diverted to peacetime spending. Britain’s debt rose much more during wars than it fell during peace, making substantial repayment from ordinary revenue unlikely.
• Public loans do not create national capital: creditors can replace what they lend by buying existing capital from others, while government spending diverts the original capital from productive work.
• Funding allows more private saving during war than immediate taxation, but taxes sufficient to pay war costs would end with peace, reveal the full expense, and tend to shorten wars. Debt service also discourages land improvement and can drive capital owners abroad, so payments to creditors are not harmless domestic transfers.
• Smith finds few large national debts fully repaid. Increasing coins’ nominal value disguises default and harms private as well as public creditors; Rome’s revaluation favored debtors, while concealed debasement provokes greater outrage than an open change.

Book V. Of the Revenue of the Sovereign or Commonwealth (continued, vol. II, p. 418–437)

• Reallocating existing taxes might raise revenue without increasing most people’s burden, but probably could not stop debt rising in another war. Taxation across the empire could raise more only if accompanied by proportionate representation.
• Land and stamp taxes could be extended to Ireland and the colonies alongside common customs rules that permit free trade. Excise rules would need adjustment for colonial products and household brewing.
• Smith estimates that £6.25 million a year could repay debt, with payments increasing as interest declined. Removing taxes on necessities and manufacturing materials could increase demand for labor and taxable consumption.
• Revenue per person would differ with poverty and smuggling, which simpler malt and customs duties could limit. Colonial scarcity of gold instead reflects the use of paper money to release capital for productive investment.
• Colonial trade can obtain gold and silver when needed, and tobacco sometimes settles debts. Irregular payments arise chiefly when planters extend cultivation beyond their means, not from the size of monetary trade balances.
• Ireland and America could fairly contribute to debts incurred partly for their defense. If further revenue cannot be obtained, Britain should cease paying for colonies that provide neither taxes nor military forces. The appendix counts export premiums, salt-duty relief, and forgone domestic duties in the cost of herring bounties, but excludes export duties that might never have been collected.

How to apply it

• Secure tenants' ability to retain the benefits of improvements when seeking to encourage investment in cultivation.
• Keep bank lending tied to transactions with prompt repayments when issuing notes redeemable in coin, rather than financing projects whose returns lie far in the future.
• Remove commercial privileges that redirect capital and raise consumer costs, while allowing limited exceptions where defense or a credible removal of foreign barriers warrants them.
• Charge beneficiaries for roads and other local works where practical, and connect funding to incentives for proper maintenance.
• Support elementary schooling where repetitive employment threatens workers' judgment and civic abilities.
• Make tax liabilities predictable, payments convenient, and collection economical when raising public revenue, and link any extension of imperial taxation to political representation.

Quotes

“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.” — vol. I, p. 7

“The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it.” — vol. I, p. 60

“It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country.” — vol. I, p. 303

“On the contrary, when they are secure of enjoying the fruits of their industry, they naturally exert it to better their condition and to acquire not only the necessaries, but the conveniencies and elegancies of life.” — vol. I, p. 377

“No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord.” — vol. I, p. 419

“The exclusive trade of the mother countries tends to diminish, or, at least, to keep down below what they would otherwise rise to, both the enjoyments and industry of all those nations in general, and of the American colonies in particular.” — vol. II, p. 93

“But upon the impartial administration of justice depends the liberty of every individual, the sense which he has of his own security.” — vol. II, p. 214

“Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the state.” — vol. II, p. 311