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Chapter 1





The great commerce of every civilized society is that carried on between the
inhabitants of the town and those of the country. It consists in the
exchange of rude for manufactured produce, either immediately, or by the
intervention of money, or of some sort of paper which represents money. The
country supplies the town with the means of subsistence and the materials of
manufacture. The town repays this supply, by sending back a part of the
manufactured produce to the inhabitants of the country. The town, in which
there neither is nor can be any reproduction of substances, may very
properly be said to gain its whole wealth and subsistence from the country.
We must not, however, upon this account, imagine that the gain of the town
is the loss of the country. The gains of both are mutual and reciprocal, and
the division of labour is in this, as in all other cases, advantageous to all
the different persons employed in the various occupations into which it is
subdivided. The inhabitants of the country purchase of the town a greater
quantity of manufactured goods with the produce of a much smaller quantity
of their own labour, than they must have employed had they attempted to
prepare them themselves. The town affords a market for the surplus produce
of the country, or what is over and above the maintenance of the cultivators
; and it is there that the inhabitants of the country exchange it for
something else which is in demand among them. The greater the number and
revenue of the inhabitants of the town, the more extensive is the market
which it affords to those of the country ; and the more extensive that
market, it is always the more advantageous to a great number. The corn which
grows within a mile of the town, sells there for the same price with that
which comes from twenty miles distance. But the price of the latter must,
generally, not only pay the expense of raising it and bringing it to market,
but afford, too, the ordinary profits of agriculture to the farmer. The
proprietors and cultivators of the country, therefore, which lies in the
neighbourhood of the town, over and above the ordinary profits of
agriculture, gain, in the price of what they sell, the whole value of the
carriage of the like produce that is brought from more distant parts ; and
they save, besides, the whole value of this carriage in the price of what
they buy. Compare the cultivation of the lands in the neighbourhood of any
considerable town, with that of those which lie at some distance from it,
and you will easily satisfy yourself bow much the country is benefited by
the commerce of the town. Among all the absurd speculations that have been
propagated concerning the balance of trade, it has never been pretended that
either the country loses by its commerce with the town, or the town by that
with the country which maintains it.

As subsistence is, in the nature of things, prior to conveniency and luxury,
so the industry which procures the former, must necessarily be prior to that
which ministers to the latter. The cultivation and improvement of the
country, therefore, which affords subsistence, must, necessarily, be prior
to the increase of the town, which furnishes only the means of conveniency
and luxury. It is the surplus produce of the country only, or what is over
and above the maintenance of the cultivators, that constitutes the
subsistence of the town, which can therefore increase only with the increase
of the surplus produce. The town, indeed, may not always derive its whole
subsistence from the country in its neighbourhood, or even from the
territory to which it belongs, but from very distant countries; and this,
though it forms no exception from the general rule, has occasioned
considerable variations in the progress of opulence in different ages and

That order of things which necessity imposes, in general, though not in
every particular country, is in every particular country promoted by the
natural inclinations of man. If human institutions had never thwarted those
natural inclinations, the towns could nowhere have increased beyond what the
improvement and cultivation of the territory in which they were situated
could support; till such time, at least, as the whole of that territory was
completely cultivated and improved. Upon equal, or nearly equal profits,
most men will choose to employ their capitals, rather in the improvement and
cultivation of land, than either in manufactures or in foreign trade. The
man who employs his capital in land, has it more under his view and command
; and his fortune is much less liable to accidents than that of the trader,
who is obliged frequently to commit it, not only to the winds and the waves,
but to the more uncertain elements of human folly and injustice, by giving
great credits, in distant countries, to men with whose character and
situation he can seldom be thoroughly acquainted. The capital of the
landlord, on the contrary, which is fixed in the improvement of his land,
seems to be as well secured as the nature of human affairs can admit of. The
beauty of the country, besides, the pleasure of a country life, the
tranquillity of mind which it promises, and, wherever the injustice of human
laws does not disturb it, the independency which it really affords, have
charms that, more or less, attract everybody; and as to cultivate the ground
was the original destination of man, so, in every stage of his existence, he
seems to retain a predilection for this primitive employment.

Without the assistance of some artificers, indeed, the cultivation of land
cannot be carried on, but with great inconveniency and continual
interruption. Smiths, carpenters, wheelwrights and ploughwrights, masons and
bricklayers, tanners, shoemakers, and tailors, are people whose service the
farmer has frequent occasion for. Such artificers, too, stand occasionally
in need of the assistance of one another; and as their residence is not,
like that of the farmer, necessarily tied down to a precise spot, they
naturally settle in the neighbourhood of one another, and thus form a small
town or village. The butcher, the brewer, and the baker, soon join them,
together with many other artificers and retailers, necessary or useful for
supplying their occasional wants, and who contribute still further to
augment the town. The inhabitants of the town, and those of the country, are
mutually the servants of one another. The town is a continual fair or
market, to which the inhabitants of the country resort, in order to exchange
their rude for manufactured produce. It is this commerce which supplies the
inhabitants of the town, both with the materials of their work, and the
means of their subsistence. The quantity of the finished work which they
sell to the inhabitants of the country, necessarily regulates the quantity
of the materials and provisions which they buy. Neither their employment nor
subsistence, therefore, can augment, but in proportion to the augmentation
of the demand from the country for finished work ; and this demand can
augment only in proportion to the extension of improvement and cultivation.
Had human institutions, therefore, never disturbed the natural course of
things, the progressive wealth and increase of the towns would, in every
political society, be consequential, and in proportion to the improvement
and cultivation of the territory of country.

In our North American colonies, where uncultivated land is still to be had
upon easy terms, no manufactures for distant sale have ever yet been
established in any of their towns. When an artificer has acquired a little
more stock than is necessary for carrying on his own business in supplying
the neighbouring country, he does not, in North America, attempt to
establish with it a manufacture for more distant sale, but employs it in the
purchase and improvement of uncultivated land. From artificer he becomes
planter ; and neither the large wages nor the easy subsistence which that
country affords to artificers, can bribe him rather to work for other people
than for himself. He feels that an artificer is the servant of his
customers, from whom he derives his subsistence; but that a planter who
cultivates his own land, and derives his necessary subsistence from the
labour of his own family, is really a master, and independent of all the

In countries, on the contrary, where there is either no uncultivated land,
or none that can be had upon easy terms, every artificer who has acquired
more stock than he can employ in the occasional jobs of the neighbourhood,
endeavours to prepare work for more distant sale. The smith erects some sort
of iron, the weaver some sort of linen or woollen manufactory. Those
different manufactures come, in process of time, to be gradually subdivided,
and thereby improved and refined in a great variety of ways, which may
easily be conceived, and which it is therefore unnecessary to explain any

In seeking for employment to a capital, manufactures are, upon equal or
nearly equal profits, naturally preferred to foreign commerce, for the same
reason that agriculture is naturally preferred to manufactures. As the
capital of the landlord or farmer is more secure than that of the
manufacturer, so the capital of the manufacturer, being at all times more
within his view and command, is more secure than that of the foreign
merchant. In every period, indeed, of every society, the surplus part both
of the rude and manufactured produce, or that for which there is no demand
at home, must be sent abroad, in order to be exchanged for something for
which there is some demand at home. But whether the capital which carries
this surplus produce abroad be a foreign or a domestic one, is of very
little importance. If the society has not acquired sufficient capital, both
to cultivate all its lands, and to manufacture in the completest manner the
whole of its rude produce, there is even a considerable advantage that the
rude produce should be exported by a foreign capital, in order that the
whole stock of the society may be employed in more useful purposes. The:
wealth of ancient Egypt, that of China and Indostan, sufficient1y
demonstrate that a nation may attain a very high degree of opulence, though
the greater part of its exportation trade be carried on by foreigners. The
progress of our North American and West Indian colonies, would have been
much less rapid, had no capital but what belonged to themselves been
employed in exporting their surplus produce.

According to the natural course of things, therefore, the greater part of
the capital of every growing society is, first, directed to agriculture,
afterwards to manufactures, and, last of all, to foreign commerce. This
order of things is so very natural, that in every society that had any
territory, it has always, I believe, been in some degree observed. Some of
their lands must have been cultivated before any considerable towns could be
established, and some sort of coarse industry of the manufacturing kind must
have been carried on in those towns, before they could well think of
employing themselves in foreign commerce.

But though this natural order of things must have taken place in some degree
in every such society, it has, in all the modern states of Europe, been in
many respects entirely inverted. The foreign commerce of some of their
cities has introduced all their finer manufactures, or such as were fit for
distant sale; and manufactures and foreign commerce together have given
birth to the principal improvements of agriculture. The manners and customs
which the nature of their original government introduced, and which remained
after that government was greatly altered, necessarily forced them into this
unnatural and retrograde order.

Adam Smith

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