Intheessayonmoneyherefutesthemercantilisterror，whichtendedtoconfounditwithwealth。"Menandcommodities，"
　　hesays，"aretherealstrengthofanycommunity。""Inthenationalstockoflabourconsistsallrealpowerandriches。"Money
　　isonlytheoilwhichmakesthemovementsofthemechanismofcommercemoresmoothandeasy。Heshowsthat，fromthe
　　domesticasdistinguishedfromtheinternationalpointofview，theabsolutequantityofmoney，supposedasoffixedamount，
　　inacountryisofnoconsequence，whilstanexcessivequantity，larger，thatis，thanisrequiredfortheinterchangeof
　　commodities，maybeinjuriousasraisingpricesanddrivingforeignersfromthehomemarkets。Hegoessofar，inoneortwo
　　places，astoassertthatthevalueofmoneyischieflyfictitiousorconventional，apositionwhichcannotbedefended;butit
　　mustnotbepressedagainsthim，ashebuildsnothingonit。Hehassomeveryingeniousobservations（since，however，
　　questionedbyJ。S。Mill）ontheeffectsoftheincreaseofmoneyinacountryinstimulatingindustryduringtheintervalwhich
　　takesplacebeforetheadditionalamountissufficientlydiffusedtoalterthewholescaleofprices。Heshowsthatthefearof
　　themoneyofanindustriouscommunitybeinglosttoitbypassingintoforeigncountriesisgroundless，andthat，undera
　　systemoffreedom，thedistributionofthepreciousmetalswhichisadaptedtotherequirementsoftradewillspontaneously
　　establishitself。"Inshort，aGovernmenthasgreatreasontopreservewithcareitspeopleanditsmanufactures;itsmoneyit
　　maysafelytrusttothecourseofhumanaffairswithoutfearorjealousy。"
　　Averyimportantservicewasrenderedbyhistreatmentoftherateofinterest。Heexposestheerroneousideaoften
　　entertainedthatitdependsonthequantityofmoneyinacountry，andshowsthatthereductionofitmustingeneralbethe
　　resultof"theincreaseofindustryandfrugality，ofartsandcommerce，"sothatitmayserveasabarometer，itslownessbeing
　　analmostinfalliblesignoftheflourishingconditionofapeople。Itmaybeobservedinpassingthatintheessaydevotedto
　　thissubjecthebringsoutaprincipleofhumannaturewhicheconomiststoooftenoverlook，"theconstantandinsatiable
　　desireofthemindforexerciseandemployment，"andtheconsequentactionofennuiinpromptingtoexertion。
　　Withrespecttocommerce，hepointstoitsnaturalfoundationinwhathassincebeencalled"theterritorialdivisionof
　　labour，"andprovesthattheprosperityofonenation，insteadofbeingahindrance，isahelptothatofitsneighbours。"Not
　　onlyasaman，butasaBritishsubject，"hesays，"IprayfortheflourishingcommerceofGermany，Spain，Italy，andeven
　　Franceitself。"Hecondemnsthe"numberlessbars，obstructions，andimpostswhichallnationsofEurope，andnonemore
　　thanEngland，haveputupontrade。"Yetonthequestionofprotectiontonationalindustryheisnotquiteatthefree—trade
　　pointofview，forheapprovesofataxonGermanlinenasencouraginghomemanufactures，andofataxonbrandyas
　　increasingthesaleofrumandsupportingoursoutherncolonies。Indeedithasbeenjustlyobservedthatthereareinhim
　　severaltracesofarefinedmercantilism，andthatherepresentsastateofopinioninwhichthetransitioniromtheoldtothe
　　newviewsisnotyetcompletelyeffected。
　　Wecannotdomorethanrefertotheessayontaxes，inwhich，amongstotherthings，herepudiatestheimptuniqueofthe
　　physiocrats，andtothatonpubliccredit，inwhichhecriticisesthe"newparadoxthatpublicencumbrancesareofthemselves
　　advantageous，independentofthenecessityofcontractingthem，"andobjects，perhapstooabsolutely，tothemodern
　　expedientofraisingthemoneyrequiredfornationalenterprisesbywayofloan，andsoshiftingourburdensuponthe
　　shouldersofposterity。
　　ThecharacteristicsofHume，whicharemostimportantinthehistoryofeconomicinvestigation，are（1）hispracticeof
　　bringingeconomicfactsintoconnectionwithalltheweightyinterestsofsocialandpoliticallife，and（2）histendencyto
　　introducethehistoricalspiritintothestudyofthosefacts。Headmirablyillustratesthemutualactionoftheseveralbranches
　　ofindustry，andtheinfluencesofprogressintheartsofproductionandincommerceongeneralcivilisation，exhibitsthe
　　strikingcontrastsoftheancientandmodernsystemoflife（seeespeciallytheessayOnthePopulousnessofAncient
　　Nations），andconsidersalmosteveryphenomenonwhichcomesunderdiscussioninitsrelationstothecontemporarystage
　　ofsocialdevelopment。ItcannotbedoubtedthatHumeexercisedamostimportantinfluenceonAdamSmith，whointheWealthofNations（20）callshim"byfarthemostillustriousphilosopherandhistorianofthepresentage，"andwhoesteemed
　　hischaractersohighlythat，afterafriendshipofmanyyearshadbeenterminatedbyHume’sdecease，hedeclaredhimto
　　have"approachedasnearlytotheidealofaperfectlywiseandvirtuousmanasperhapsthenatureofhumanfrailtywill
　　permit。"
　　JosiahTucker，deanofGloucester（d。1799），holdsadistinguishedplaceamongtheimmediatepredecessorsofSmith。Most
　　ofhisnumerousproductionshaddirectreferencetocontemporaryquestions，and，thoughmarkedbymuchsagacityand
　　penetration，aredeficientinpermanentinterest。InsomeoftheseheurgedtheimpolicyofrestrictionsonthetradeofIreland，
　　advocatedaunionofthatcountrywithEngland，andrecommendedtherecognitionoftheindependenceoftheUnitedStates
　　ofAmerica。Themostimportantofhisgeneraleconomicviewsarethoserelatingtointernationalcommerce。Heisanardent
　　supporteroffree—tradedoctrines，whichhebasesontheprinciplesthatthereisbetweennationsnonecessaryantagonism，
　　butratheraharmony，ofinterests，andthattheirseverallocaladvantagesanddifferentaptitudesnaturallypromptthemto
　　exchange。Hehadnot，however，gotquiteclearofmercantilism，andfavouredbountiesonexportedmanufacturesandthe
　　encouragementofpopulationbyataxoncelibacy。Dupont，andafterhimBlanqui，representTuckerasafollowerofthe
　　physiocrats，butthereseemstobenogroundforthisopinionexcepthisagreementwiththemonthesubjectofthefreedom
　　oftrade。TurgottranslatedintoFrench（1755），underthetitleofQuestionsImportantessurleCommerce，atractbyTucker
　　onTheExpediencyofaLawfortheNaturalisationofForeignProtestants。
　　In1767waspublishedSirJamesSteuart’sInquiryintothePrincipalsofPoliticalEconomy。Thiswasoneofthemost
　　unfortunateofbooks。Itwasthemostcompleteandsystematicsurveyofthescienceiromthepointofviewofmoderate
　　mercantilismwhichhadappearedinEngland。Steuartwasamanofnoordinaryabilities，andhadpreparedhimselfforhis
　　taskbylongandseriousstudy。Butthetimeforthemercantiledoctrineswaspast，andthesystemofnaturallibertywasin
　　possessionofanintellectualascendencywhichforeshadoweditspoliticaltriumph。NineyearslatertheWealthofNationswasgiventotheworld，aworkassuperiortoSteuart’sinattractivenessofstyleasinscientificsoundness。Thusthelatter
　　waspredestinedtofail，andinfactneverexercisedanyconsiderabletheoreticorpracticalinfluence。Smithneverquotesor
　　mentionsit;beingacquaintedwithSteuart，whoseconversationhesaidwasbetterthanhisbook，heprobablywishedtokeep
　　clearofcontroversywithhim。（21）TheGermaneconomistshaveexaminedSteuart’streatisemorecarefullythanEnglish
　　writershavecommonlydone;andtheyrecogniseitshighmerits，especiallyinrelationtothetheoryofvalueandthesubject
　　ofpopulation。Theyhavealsopointedoutthat，inthespiritofthebestrecentresearch，hehasdweltonthespecialcharacters
　　whichdistinguishtheeconomiespropertodifferentnationsanddifferentgradesinsocialprogress。
　　ComingnowtothegreatnameofAdamSmith（1723—1790），itisofthehighestimportancethatweshouldrightly
　　understandhispositionandjustlyestimatehisclaims。Itisplainlycontrarytofacttorepresenthim，assomehavedone，as
　　thecreatorofpoliticaleconomy。Thesubjectofsocialwealthhadalwaysinsomedegree，andincreasinglyinrecenttimes，
　　engagedtheattentionofphilosophicminds。Thestudyhadevenindisputablyassumedasystematiccharacter，and，from
　　beinganassemblageoffragmentarydisquisitionsonparticularquestionsofnationalinterest，hadtakentheform，notablyin
　　Turgot’sRéflexions，ofanorganisedbodyofdoctrine。Thetruthis，thatSmithtookupthesciencewhenitwasalready
　　considerablyadvanced;anditwasthisverycircumstancewhichenabledhim，bytheproductionofaclassicaltreatise，to
　　rendermostofhispredecessorsobsolete。But，whilstalltheeconomiclaboursoftheprecedingcenturiespreparedtheway
　　forhim，theydidnotanticipatehiswork。Hisappearanceatanearlierstage，orwithoutthosepreviouslabours，wouldbe
　　inconceivable;buthebuilt，onthefoundationwhichhadbeenlaidbyothers，muchofhisownthatwaspreciousand
　　enduring。
　　EventhosewhodonotfallintotheerrorofmakingSmiththecreatorofthescience，oftenseparatehimtoobroadlyfrom
　　Quesnayandhisfollowers，andrepresentthehistoryofmodernEconomicsasconsistingofthesuccessiveriseandreignof
　　threedoctrines——themercantile，thephysiocratic，andtheSmithian。Thelasttwoare，itistrue，atvarianceinsomeeven
　　importantrespects。Butitisevident，andSmithhimselffelt，thattheiragreementsweremuchmorefundamentalthantheir
　　differences;and，ifweregardthemashistoricalforces，theymustbeconsideredasworkingtowardsidenticalends。They
　　bothurgedsocietytowardstheabolitionofthepreviouslyprevailingindustrialpolicyofEuropeanGovernments;andtheir
　　argumentsagainstthatpolicyrestedessentiallyonthesamegrounds。WhilstSmith’scriticismwasmoresearchingand
　　complete，healsoanalysedmorecorrectlythanthephysiocratssomeclassesofeconomicphenomena——inparticular
　　dispellingtheillusionsintowhichtheyhadfallenwithrespecttotheunproductivenatureofmanufacturesandcommerce。
　　Theirschooldisappearedfromthescientificfield，notmerelybecauseitmetwithapoliticalcheckinthepersonofTurgot，
　　butbecause，aswehavealreadysaid，theWealthofNationsabsorbedintoitselfallthatwasvaluableintheirteaching，whilst
　　itcontinuedmoreeffectuallytheimpulsetheyhadgiventothenecessaryworkofdemolition。
　　Thehistoryofeconomicopinioninmoderntimes，downtothethirddecadeofthenineteenthcentury，is，infact，strictly
　　bipartite。Thefirststageisfilledwiththemercantilesystemwhich，aswehaveshown，wasratherapracticalpolicythana
　　speculativedoctrine，andwhichcameintoexistenceasthespontaneousgrowthofsocialconditionsactingonmindsnot
　　trainedtoscientifichabits。Thesecondstageisoccupiedwiththegradualriseandultimateascendencyofanothersystem
　　foundedontheideaoftherightoftheindividualtoanunimpededspherefortheexerciseofhiseconomicactivity。Withthe
　　latter，whichisbestdesignatedasthe"systemofnaturalliberty，"weoughttoassociatethememoryofthephysiocratsas
　　wellasthatofSmith，without，however，maintainingtheirservicestohavebeenequaltohis。
　　TheteachingofpoliticaleconomywasintheScottishuniversitiesassociatedwiththatofmoralphilosophy。Smith，asweare
　　told，conceivedtheentiresubjecthehadtotreatinhispubliclecturesasdivisibleintofourheads，thefirstofwhichwas
　　naturaltheology，thesecondethics，thethirdjurisprudence;whilstinthefourth"heexaminedthosepoliticalregulations
　　whicharefoundeduponexpediency，andwhicharecalculatedtoincreasetheriches，thepower，andtheprosperityofa
　　state。"Thelasttwobranchesofinquiryareregardedasformingbutasinglebodyofdoctrineinthewell—knownpassageof
　　theTheoryofMoralSentiments（1759）inwhichtheauthorpromisestogiveinanotherdiscourse"anaccountofthegeneral
　　principlesoflawandgovernment，andofthedifferentrevolutionstheyhaveundergoneinthedifferentagesandperiodsof
　　society，notonlyinwhatconcernsjustice，butinwhatconcertspolice，revenue，andarms，andwhateverelseisthesubjectof
　　law。"ThisshowshowlittleitwasSmith’shabittoseparate（exceptprovisionally），inhisconceptionsorhisresearches，the
　　economicphenomenaofsocietyfromalltherest。Thewordsabovequotedhave，indeed，beennotunjustlydescribedas
　　containing"ananticipation，wonderfulforhisperiod，ofgeneralSociology，bothstaticalanddynamical，ananticipation
　　whichbecomesstillmoreremarkablewhenwelearnfromhisliteraryexecutorsthathehadformedtheplanofaconnected
　　historyoftheliberalsciencesandelegantarts，whichmusthaveaddedtothebranchesofsocialstudyalreadyenumerateda
　　viewoftheintellectualprogressofsociety。"Thoughtheselargedesignswerenevercarriedoutintheirintegrity，asindeed
　　atthatperiodtheycouldnothavebeenadequatelyrealised，ithasresultedfromthemthat，thougheconomicphenomena
　　formthespecialsubjectoftheWealthofNations，Smithyetincorporatedintothatworkmuchthatrelatestotheothersocial
　　aspects，incurringtherebythecensureofsomeofhisfollowers，whoinsistwithpedanticnarrownessonthestrictisolationof
　　theeconomicdomain。
　　Therehasbeenmuchdiscussiononthequestion——WhatisthescientificmethodfollowedbySmithinhisgreatwork？By
　　someitisconsideredtohavebeenpurelydeductive，aviewwhichBucklehasperhapscarriedtothegreatestextreme。He
　　assertsthatinScotlandtheinductivemethodwasunknown，thattheinductivephilosophyexercisednoinfluenceonScottish
　　thinkers;and，thoughSmithspentsomeofthemostimportantyearsofhisyouthinEngland，wheretheinductivemethod
　　wassupreme，andthoughhewaswidelyreadingeneralphilosophicalliterature，heyetthinksheadoptedthedeductive
　　methodbecauseitwehabituallyfollowedinScotland，——andthisthoughBucklemaintainsthatitistheonlyappropriate，or
　　evenpossible，methodinpoliticaleconomy，whichsurelywouldhavebeenasufficientreasonforchoosingit。Thatthe
　　inductivespiritexercisednoinfluenceonScottishphilosophersiscertainlynottrue;aswillbepresentlyshown，
　　Montesquieu，whosemethodisessentiallyinductive，wasinSmith’stimestudiedwithquitepeculiarcareandregardedwith
　　specialvenerationbySmith’sfellow—countrymen。AstoSmithhimself，whatmayjustlybesaidofhimisthatthedeductive
　　bentwascertainlynotthepredominantcharacterofhismind，nordidhisgreatexcellencelieinthe"dialecticskill"which
　　Buckleascribestohim。Whatstrikesusmostinhisbookishiswideandkeenobservationofsocialfacts，andhisperpetual
　　tendencytodwellontheseandelicittheirsignificance，insteadofdrawingconclusionsfromabstractprinciplesbyelaborate
　　chainsofreasoning。Itisthishabitofhismindwhichgivesus，inreadinghim，sostrongandabidingasenseofbeingin
　　contactwiththerealitiesoflife。
　　ThatSmithdoes，however，largelyemploythedeductivemethodiscertain;andthatmethodisquitelegitimatewhenthe
　　premisesfromwhichthedeductionsetsoutareknownuniversalfactsofhumannatureandpropertiesofexternalobjects。
　　Whetherthismodeofproceedingwillcarryusfarmayindeedwellbedoubted;butitssoundnesscannotbedisputed。But
　　thereisanotherviciousspeciesofdeductionwhich，asCliffeLesliehasshown，seriouslytaintedthephilosophyofSmith——
　　inwhichthepremisesarenotfactsascertainedbyobservation，butthesameaprioriassumptions，halftheologicalhalf
　　metaphysical，respectingasupposedharmoniousandbeneficentnaturalorderofthingswhichwefoundinthephysiocrats，
　　andwhich，aswesaw，wereembodiedinthenameofthatsect。Inhisview，Naturehasmadeprovisionforsocialwell—being
　　bytheprincipleofthehumanconstitutionwhichpromptseverymantobetterhiscondition:theindividualaimsonlyathis
　　privategain，butindoingsois"ledbyaninvisiblehand"topromotethepublicgood，whichwasnopartofhisintention;
　　humaninstitutions，byinterferingwiththeactionofthisprincipleinthenameofthepublicinterest，defeattheirownend;
　　but，whenallsystemsofpreferenceorrestraintaretakenaway，"theobviousandsimplesystemofnaturallibertyestablishes
　　itselfofitsownaccord。"Thistheoryis，ofcourse，notexplicitlypresentedbySmithasafoundationofhiseconomic
　　doctrines，butitisreallythesecretsubstratumonwhichtheyrest。Yet，whilstsuchlatentpostulateswarpedhisviewof
　　things，theydidnotentirelydeterminehismethod。Hisnativebenttowardsthestudyofthingsastheyarepreservedhim
　　fromextravagancesintowhichmanyofhisfollowershavefallen。Butbesidesthis，asLesliehaspointedout，theinfluenceof
　　Montesquieutendedtocounterbalancethetheoreticprepossessionsproducedbythedoctrineofthejusnaturae。Thatgreat
　　thinker，thoughhecouldnot，athisperiod，understandthehistoricalmethodwhichistrulyappropriatetosociological
　　inquiry，yetfoundedhisconclusionsoninduction。Itistrue，asComtehasremarked，thathisaccumulationoffacts，
　　borrowedfromthemostdifferentstatesofcivilisation，andnotsubjectedtophilosophiccriticism，necessarilyremainedon
　　thewholesterile，oratleastcouldnotessentiallyadvancethestudyofsocietymuchbeyondthepointatwhichhefoundit。
　　Hismerit，aswehavebeforementioned，layintherecognitionofthesubjectionofallsocialphenomenatonaturallaws，not
　　inthediscoveryofthoselaws。ButthislimitationwasoverlookedbythephilosophersofthetimeofSmith，whoweremuch
　　attractedbythesystemhefollowedoftracingsocialfactstothespecialcircumstances，physicalormoral，ofthe
　　communitiesinwhichtheywereobserved。LesliehasshownthatLordKaimes，Dalrymple，andMillar——contemporariesof
　　Smith，andthelasthispupil——wereinfluencedbyMontesquieu;andhemighthaveaddedthemoreeminentnameof
　　Ferguson，whoserespectandadmirationforthegreatFrenchmanareexpressedinstrikingtermsinhisHistoryofCivil
　　Society。（22）WeareeveninformedthatSmithhimselfinhislateryearswasoccupiedinpreparingacommentaryontheEspiritdesLois。（23）hewasthusaffectedbytwodifferentandincongruoussystemsofthought——onesettingoutfroman
　　imaginarycodeofnatureintendedforthebenefitofman，andleadingtoanoptimisticviewoftheeconomicconstitution
　　foundedonenlightenedself—interest;theotherfollowinginductiveprocesses，andseekingtoexplaintheseveralstatesin
　　whichhumansocietiesarefoundexisting，asresultsofcircumstancesorinstitutionswhichhavebeeninactualoperation。
　　Andwefindaccordinglyinhisgreatworkacombinationofthesetwomethods——inductiveinquiryontheonehand，and，on
　　theotherapriorispeculationfoundedonthe"Nature"hypothesis。Thelatterviciousproceedinghasinsomeofhisfollowers
　　beengreatlyaggravated，whilethecountervailingspiritofinductiveinvestigationhasfallenintothebackground，andindeed
　　thenecessityorutilityofanysuchinvestigationintheeconomicfieldhasbeensometimesaltogetherdenied。
　　SomehaverepresentedSmith’sworkasofsolooseatextureandsodefectiveanarrangementthatitmaybejustlydescribed
　　asconsistingofaseriesofmonographs。Butthisiscertainlyanexaggeration。Thebook，itistrue，isnotframedonarigid
　　mould，noristhereanyparadeofsystematicdivisionsandsubdivisions;andthisdoubtlessrecommendedittomenofthe
　　worldandofbusiness，forwhoseinstructionitwas，atleastprimarilyintended。Butithastherealandpervadingunitywhich
　　resultsfromasetofprinciplesandamodeofthinkingidenticalthroughoutandthegeneralabsenceofsuchcontradictionsas
　　wouldarisefromanimperfectdigestionofthesubject。
　　Smithsetsoutfromthethoughtthattheannuallabourofanationisthesourcefromwhichitderivesitssupplyofthe
　　necessariesandconveniencesoflife。Hedoesnotofcoursecontemplatelabourastheonlyfactorinproduction;butithas
　　beensupposedthatbyemphasisingitattheoutsetheatoncestrikesthenoteofdifferencebetweenhimselfontheonehand
　　andboththemercantilistsandthephysiocratsontheother。Theimprovementintheproductivenessoflabourdepends
　　largelyonitsdivision;andheproceedsaccordinglytogivehisunrivalledexpositionofthatprinciple，ofthegroundson
　　whichitrests，andofitsgreaterapplicabilitytomanufacturesthantoagriculture，inconsequenceofwhichthelatter
　　relativelylagsbehindinthecourseofeconomicdevelopment。（24）Theoriginofthedivisionoflabourhefindsinthe
　　propensityofhumannature"totruck，barter，orexchangeonethingforanother。"Heshowsthatacertainaccumulationof
　　capitalisaconditionprecedentofthisdivision，andthatthedegreetowhichitcanbecarriedisdependentontheextentof
　　themarket。Whenthedivisionoflabourhasbeenestablished，eachmemberofthesocietymusthaverecoursetotheothers
　　forthesupplyofmostofhiswants;amediumofexchangeisthusfoundtobenecessary，andmoneycomesintouse。The
　　exchangeofgoodsagainsteachotheroragainstmoneygivesrisetothenotionofvalue。Thiswordhastwomeanings——that
　　ofutility，andthatofpurchasingpower;theonemaybecalledvalueinuse，theothervalueinexchange。Merelymentioning
　　theformer，Smithgoesontostudythelatter。What，heasks，isthemeasureofvalue？whatregulatestheamountofone
　　thingwhichwillbegivenforanother？"Labour，"Smithanswers，"istherealmeasureoftheexchangeablevalueofall
　　commodities。""Equalquantitiesoflabour，atalltimesandplaces，areofequalvaluetothelabourer。"（25）"Labouralone，
　　therefore，nevervaryinginitsownvalue，isalonetheultimateandrealstandardbywhichthevalueofallcommoditiescanat
　　alltimesandplacesbeestimatedandcompared。Itistheirrealprice;moneyistheirnominalpriceonly。"Money，however，is
　　inmen’sactualtransactionsthemeasureofvalue，aswellasthevehicleofexchange;andthepreciousmetalsarebestsuited
　　forthisfunction，asvaryinglittleintheirownvalueforperiodsofmoderatelength;fordistanttimes，cornisabetter
　　standardofcomparison。Inrelationtotheearliestsocialstage，weneedconsidernothingbuttheamountoflabouremployed
　　intheproductionofanarticleasdeterminingitsexchangevalue;butinmoreadvancedperiodspriceiscomplex，and
　　consistsinthemostgeneralcaseofthreeelements——wages，profit，andrent。Wagesaretherewardoflabour。Profitarisesas
　　soonasstock，beingaccumulatedinthehandsofoneperson，isemployedbyhiminsettingotherstowork，andsupplying
　　themwithmaterialsandsubsistence，inordertomakeagainbywhattheyproduce。Rentarisesassoonasthelandofa
　　countryhasallbecomeprivateproperty;"thelandlords，likeallothermen，lovetoreapwheretheyneversowed，and
　　demandarentevenforitsnaturalproduce。"Ineveryimprovedsociety，then，thesethreeelementsentermoreorlessintothe
　　priceofthefargreaterpartofcommodities。Thereisineverysocietyorneighbourhoodanordinaryoraveragerateof
　　wagesandprofitineverydifferentemploymentoflabourandstock，regulatedbyprinciplestobeexplainedhereafter，asalso
　　anordinaryoraveragerateofrent。Thesemaybecalledthenaturalratesatthetimewhenandtheplacewheretheyprevail;
　　andthenaturalpriceofacommodityiswhatissufficienttopayfortherentoftheland，（26）thewagesofthelabour，andthe
　　profitofthestocknecessaryforbringingthecommoditytomarket。Themarketpricemayriseaboveorfallbelowthe
　　amountsofixed，beingdeterminedbytheproportionbetweenthequantitybroughttomarketandthedemandofthosewho
　　arewillingtopaythenaturalprice。Towardsthenaturalpriceasacentrethemarketprice，regulatedbycompetition，
　　constantlygravitates。Somecommodities，however，aresubjecttoamonopolyofproduction，whetherfromthepeculiarities
　　ofalocalityorfromlegalprivilegetheirpriceisalwaysthehighestthatcanbegot;thenaturalpriceofothercommoditiesis
　　thelowestwhichcanbetakenforanylengthoftimetogether。Thethreecomponentpartsorfactorsofpricevarywiththe
　　circumstancesofthesociety。Therateofwagesisdeterminedbya"dispute"orstruggleofoppositeinterestsbetweenthe
　　employerandtheworkman。Aminimumrateisfixedbytheconditionthattheymustbeatleastsufficienttoenableaman
　　andhiswifetomaintainthemselvesand，ingeneral，bringupafamily。Theexcessabovethiswilldependonthe
　　circumstancesofthecountryandtheconsequentdemandforlabour——wagesbeinghighwhennationalwealthisincreasing，
　　lowwhenitisdeclining。Thesamecircumstancesdeterminethevariationofprofits，butinanoppositedirection;theincrease
　　ofstock，whichraiseswages，tendingtolowerprofitthroughthemutualcompetitionofcapitalists。"Thewholeofthe
　　advantagesanddisadvantagesofthedifferentemploymentsoflabourandstockmust，inthesameneighbourhood，beeither
　　perfectlyequalorcontinuallytendingtoequality";ifonehadgreatlytheadvantageovertheothers，peoplewouldcrowd
　　intoit，andthelevelwouldsoonberestored。Yetpecuniarywagesandprofitsareverydifferentindifferentemployment——
　　eitherfromcertaincircumstancesaffectingtheemployments，whichrecommendordisparagetheminmen’snotions，orfrom
　　nationalpolicy，"whichnowhereleavesthingsatperfectliberty。"HerefollowsSmith’sadmirableexpositionofthecauses
　　whichproducetheinequalitiesinwagesandprofitsjustreferredto，apassageaffordingampleevidenceofhishabitsofnice
　　observationofthelessobvioustraitsinhumannature，andalsooftheoperationbothoftheseandofsocialinstitutionson
　　economicfacts。Therentoflandcomesnexttobeconsidered，asthelastofthethreeelementsofprice。Rentisamonopoly
　　price，equal，nottowhatthelandlordcouldaffordtotake，buttowhatthefarmercanaffordtogive，"Suchpartsonlyofthe
　　produceoflandcancommonlybebroughttomarket，ofwhichtheordinarypriceissufficienttoreplacethestockwhich
　　mustbeemployedinbringingthemthither，togetherwiththeordinaryprofits。Iftheordinarypriceismorethanthis;the
　　surpluspartwillnaturallygototherentoftheland。Ifitisnotmore，thoughthecommoditymaybebroughttomarket，it
　　canaffordnorenttothelandlord，Whetherthepriceisorisnotmoredependsonthedemand。""Rent，therefore，entersinto
　　thepriceofcommoditiesinadifferentwayfromwagesandprofits。Highorlowwagesandprofitarethecausesofhighor
　　lowprice;highorlowrentistheeffectofit。"
　　Rent，wages，andprofits，astheyaretheelementsofprice，arealsotheconstituentsofincome;andthethreegreatordersof
　　everycivilisedsociety，fromwhoserevenuesthatofeveryotherorderisultimatelyderived，arethelandlords，thelabourers，
　　andthecapitalists。Therelationoftheinterestsofthesethreeclassestothoseofsocietyatlargeisdifferent。Theinterestof
　　thelandlordalwayscoincideswiththegeneralinterest:whateverpromotesorobstructstheonehasthesameeffectonthe
　　other。Soalsodoesthatofthelabourer:whenthewealthofthenationisprogressive，hiswagesarehigh;theyarelowwhen
　　itisstationaryorretrogressive。"Theinterestofthethirdorderhasnotthesameconnectionwiththegeneralinterestofthe
　　societyasthatoftheothertwo;……itisalwaysinsomerespectsdifferentfromandoppositetothatofthepublic。"
　　Thesubjectofthesecondbookis"thenature，accumulation，andimprovementofstock。"Aman’swholestockconsistsof
　　twoportions——thatwhichisreservedforhisimmediateconsumption，andthatwhichisemployedsoastoyieldarevenueto
　　itsowner。Thislatter，whichishis"capital，"isdivisibleintothetwoclassesof"fixed"and"circulating。"Thefirstissuchas
　　yieldsaprofitwithoutpassingintootherhands。Thesecondconsistsofsuchgoods，raised，manufactured，orpurchased，as
　　aresoldforaprofitandreplacedbyothergoods;