An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

to the annual consumption of the country beyond the

value of its own annual produce. What in the days of its prosperity had been

saved from that annual produce, and employed in purchasing gold and silver.

will contribute, for some little time, to support its consumption in

adversity. The exportation of gold and silver is, in this case, not the

cause, but the effect of its declension, and may even, for some little time,

alleviate the misery of that declension.

 

The quantity of money, on the contrary, must in every country naturally

increase as the value of the annual produce increases. The value of the

consumable goods annually circulated within the society being greater, will

require a greater quantity of money to circulate them. A part of the

increased produce, therefore, will naturally be employed in purchasing,

wherever it is to be had, the additional quantity of gold and silver

necessary for circulating the rest. The increase of those metals will, in

this case, be the effect, not the cause, of the public prosperity. Gold and

silver are purchased everywhere in the same manner. The food, clothing, and

lodging, the revenue and maintenance, of all those whose labour or stock is

employed in bringing them from the mine to the market, is the price paid for

them in Peru as well as in England. The country which has this price to pay,

will never belong without the quantity of those metals which it has occasion

for; and no country will ever long retain a quantity which it has no

occasion for.

 

Whatever, therefore, we may imagine the real wealth and revenue of a country

to consist in, whether in the value of the annual produce of its land and

labour, as plain reason seems to dictate, or in the quantity of the precious

metals which circulate within it, as vulgar prejudices suppose ; in either

view of the matter, every prodigal appears to be a public enemy, and every

frugal man a public benefactor.

 

The effects of misconduct are often the same as those of prodigality. Every

injudicious and unsuccessful project in agriculture, mines, fisheries,

trade, or manufactures, tends in the same manner to diminish the funds

destined for the maintenance of productive labour. In every such project,

though the capital is consumed by productive hands only, yet as, by the

injudicious manner in which they are employed, they do not reproduce the

full value of their consumption, there must always be some diminution in

what would otherwise have been the productive funds of the society.

 

It can seldom happen, indeed, that the circumstances of a great nation can

be much affected either by the prodigality or misconduct of individuals; the

profusion or imprudence of some being always more than compensated by the

frugality and good conduct of others.

 

With regard to profusion, the principle which prompts to expense is the

passion for present enjoyment; which, though sometimes violent and very

difficult to be restrained, is in general only momentary and occasional. But

the principle which prompts to save, is the desire of bettering our condition; a desire

which, though generally calm and dispassionate, comes with us from the womb,

and never leaves us till we go into the grave. In the whole interval which

separates those two moments, there is scarce, perhaps, a single instance, in

which any man is so perfectly and completely satisfied with his situation,

as to be without any wish of alteration or improvement of any kind. An

augmentation of fortune is the means by which the greater part of men

propose and wish to better their condition. It is the means the most vulgar

and the most obvious; and the most likely way of augmenting their fortune,

is to save and accumulate some part of what they acquire, either regularly

and annually, or upon some extraordinary occasion. Though the principle

of expense, therefore, prevails in almost all men upon some occasions, and in

some men upon almost all occasions ; yet in the greater part of men, taking

the whole course of their life at an average, the principle of frugality

seems not only to predominate, but to predominate very greatly.

 

With regard to misconduct, the number of prudent and successful undertakings

is everywhere much greater than that of injudicious and unsuccessful ones.

After all our complaints of the frequency of bankruptcies, the unhappy men

who fall into this misfortune, make but a very small part of the whole

number engaged in trade, and all other sorts of business; not much more,

perhaps, than one in a thousand. Bankruptcy is, perhaps, the greatest and

most humiliating calamity which can befal an innocent man. The greater part

of men, therefore, are sufficiently careful to avoid it. Some, indeed, do

not avoid it; as some do not avoid the gallows.

 

Great nations are never impoverished by private, though they sometimes are

by public prodigality and misconduct. The whole, or almost the whole public

revenue is, in most countries, employed in maintaining unproductive hands.

Such are the people who compose a numerous and splendid court, a great

ecclesiastical establishment, great fleets and armies, who in time of peace

produce nothing, and in time of war acquire nothing which can compensate the

expense of maintaining them, even while the war lasts. Such people, as they

themselves produce nothing, are all maintained by the produce of other men’s

labour. When multiplied, therefore, to an unnecessary number, they may in a

particular year consume so great a share of this produce, as not to leave a

sufficiency for maintaining the productive labourers, who should reproduce

it next year. The next year’s produce, therefore, will be less than that of

the foregoing ; and if the same disorder should continue, that of the third

year will be still less than that of the second. Those unproductive hands

who should be maintained by a part only of the spare revenue of the people,

may consume so great a share of their whole revenue, and thereby oblige so

great a number to encroach upon their capitals, upon the funds destined for

the maintenance of productive labour, that all the frugality and good

conduct of individuals may not be able to compensate the waste and

degradation of produce occasioned by this violent and forced encroachment.

 

This frugality and good conduct, however, is, upon most occasions, it

appears from experience, sufficient to compensate, not only the private

prodigality and misconduct of individuals, but the public extravagance of

government. The uniform, constant, and uninterrupted effort of every man to

better his condition, the principle from which public and national, as well

as private opulence is originally derived,is frequently powerful enough to

maintain the natural progress of things towards improvement, in spite both

of the extravagance of government, and of the greatest errors of

administration. Like the unknown principle of animal life, it frequently

restores health and vigour to the constitution, in spite not only of the

disease, but of the absurd prescriptions of the doctor.

 

The annual produce of the land and labour of any nation can be increased in

its value by no other means, but by increasing either the number of its

productive labourers, or the productive powers of those labourers who had

before been employed. The number of its productive labourers, it is evident,

can never be much increased, but in consequence of an increase of capital,

or of the funds destined for maintaining them. The productive powers of the

same number of labourers cannot be increased, but in consequence either of

some addition and improvement to those machines and instruments which

facilitate and abridge labour, or of more proper division and distribution

of employment. In either case, an additional capital is almost always

required. It is by means of an additional capital only, that the undertaker

of any work can either provide his workmen with better machinery, or make a

more proper distribution of employment among them. When the work to be done

consists of a number of parts, to keep every man constantly employed in one

way, requires a much greater capital than where every man is occasionally

employed in every different part of the work. When we compare, therefore,

the state of a nation at two different periods, and find that the annual

produce of its land and labour is evidently greater at the latter than at

the former, that its lands are better cultivated, its manufactures more

numerous and more flourishing, and its trade more extensive; we may be

assured that its capital must have increased during the interval between

those two periods, and that more must have been added to it by the good

conduct of some, than had been taken from it either by the private

misconduct of others, or by the public extravagance of government. But we

shall find this to have been the case of almost all nations, in all

tolerably quiet and peaceable times, even of those who have not enjoyed the

most prudent and parsimonious governments. To form a right judgment of it,

indeed, we must compare the state of the country at periods somewhat distant

from one another. The progress is frequently so gradual, that, at near

periods, the improvement is not only not sensible, but, from the declension

either of certain branches of industry, or of certain districts of the

country, things which sometimes happen, though the country in general is in

great prosperity, there frequently arises a suspicion, that the riches and

industry of the whole are decaying.

 

The annual produce of the land and labour of England, for example, is

certainly much greater than it was a little more than a century ago, at the

restoration of Charles II. Though at present few people, I believe, doubt of

this, yet during this period five years have seldom passed away, in which

some book or pamphlet has not been published, written, too, with such

abilities as to gain some authority with the public, and pretending to

demonstrate that the wealth of the nation was fast declining; that the

country was depopulated, agriculture neglected, manufactures decaying, and

trade undone. Nor have these publications been all party pamphlets, the

wretched offspring of falsehood and venality. Many of them have been written

by very candid and very intelligent people, who wrote nothing but what they

believed, and for no other reason but because they believed it.

 

The annual produce of the land and labour of England, again, was certainly

much greater at the Restoration than we can suppose it to have been about a

hundred years before, at the accession of Elizabeth. At this period, too, we

have all reason to believe, the country was much more advanced in

improvement, than it had been about a century before, towards the close of

the dissensions between the houses of York and Lancaster. Even then it was,

probably, in a better condition than it had been at the Norman conquest: and

at the Norman conquest, than during the confusion of the Saxon heptarchy.

Even at this early period, it was certainly a more improved country than at

the invasion of Julius Caesar, when its inhabitants were nearly in the same

state with the savages in North America.

 

In each of those periods, however, there was not only much private and

public profusion, many expensive and unnecessary wars, great perversion of

the annual produce from maintaining productive to maintain unproductive

hands; but sometimes, in the confusion of civil discord, such absolute waste

and destruction of stock, as might be supposed, not only to retard, as it

certainly did, the natural accumulation of riches, but to have left the

country, at the end of the period, poorer than at the beginning. Thus, in

the happiest and most fortunate period of them all, that which has passed

since the Restoration, how many disorders and misfortunes have occurred,

which, could they have been foreseen, not only the