Adam Smith

CHAPTER VIII
POLITICS AND STUDY, 1766-76

Adam Smith, as we have seen, had begun to write his immortal book at Toulouse in the summer of 1764 “in order to pass away the time.” But even after his return to London, in November 1766, more than nine years were still to pass before the Wealth of Nations could be placed in the publisher’s hands. All this time the book was his chief occupation, and but for the light which an occasional letter throws upon his studies, the story of Smith’s life during these nine years might almost be written in as many lines. For about six months he remained in London, where he mingled with men, collected books and material for his treatise, and saw the third edition of his Theory of Moral Sentiments through the press.

In an undated letter to Strahan, who was now a partner in Millar’s publishing firm, about the title-page to this volume, the author desired to be called “simply Adam Smith, without any addition either before or behind.” He had received the honorary degree of LL.D. before leaving Glasgow, but he did not like to be called Dr. Smith, and seldom used the title. But politics, which had just taken a strange turn, soon commanded his attention; and a curious letter from Smith to Shelburne (February 12, 1767) raises for a moment the curtain that divides the spectator from the actors, and allows us to survey the scene behind which the most enlightened member of the Government was working to introduce common sense into the colonial policy of Great Britain. It was a scene, too, in the greatest political drama of Adam Smith’s lifetime, which left deep, decipherable marks on the pages of the Wealth of Nations.

While Smith was discussing the new principles with the philosophers of Paris, an active spirit of dissatisfaction had been spreading in distant communities of men. The spirit of liberty seemed to have walked forth over the face of the earth and to threaten revolutions in every part. The Georgians under the valiant Heraclius had revolted against their ignominious tribute to the Turkish seraglios. The tyrannies of a French governor had provoked insurrections in St. Domingo. The first tramp of a revolutionary march was heard in the Spanish dominions of South America; above all, the long and smouldering discontent in our own American colonies had suddenly been fanned into a blaze. But Europe, whose policy had been the source of all these woes, was for once in a peaceful mood. The Empress of Russia was busy entertaining her savants. The Swede was occupied at home, and the tall Pomeranian was content to drill. A financial crisis in France and England made the two Governments friendly; and though there were bloody feuds and insurrections in Turkey, Poland, and Spain, the historian of Europe, surveying the year 1766 and comparing it with its predecessors, marked it with a white chalk and fancied he could at last spell a drift towards peace in the hollow states and bankrupt empires of the old world. Ambition indeed seldom stoops to calculations, but the most acquisitive imperialist seeing multitudes of unemployed, food at famine prices, and manufactures at a standstill, began to wonder whether after all the conquests of the war had been worth such a price. For once the governing classes were sobered and were ready to make some grudging atonement for one of their worst blunders. The same commercial stress which constrained the French King to pacify his parliaments inclined the parliament of Great Britain to appease the colonial assemblies.

The session of 1766 was one of the longest, most momentous, and stirring within living memory. It had begun, as we have said, with sharp distress at home, and that distress had been aggravated by the disturbances in America; for the colonists, incensed by the Stamp Act, refused to pay for English goods (to the value of several millions) with which their shops and warehouses were stocked. No wonder, then, that in all parts of the realm traders and manufacturers did their best to persuade the Rockingham ministry to adopt conciliatory measures. Parliament was besieged by petitions from the merchants of London, Bristol, Lancaster, Liverpool, Hull, Glasgow, and most of the trading and manufacturing towns in the kingdom, setting forth the great damage done to their trade by the new laws and regulations made for America. They pointed out that the Stamp Act and other harassing legislation had not only sown a crop of discontent in the colonies, but had already produced many bankruptcies at home and were rapidly leading to widespread distress.

A contemporary writer of great power tells us that no matter of debate was ever more ably or learnedly handled in both Houses than the colonial policy which Lord Rockingham and his colleagues laid before Parliament. Those who denied the right of taxing the colonies cited Locke and Selden, Harrington and Puffendorf, to show that the very foundation and ultimate point in view of all government is the good of the society. They inferred from the Magna Charta and Bill of Rights, and from the whole history of our constitution, that no British subject can be taxed save by himself or his own representative; and they further quoted in support of their argument the constitutions of the Tyrian colonies in Africa, and of the Greek colonies in Asia. On this last head the supporters of the Stamp Act (Charles Townshend’s fatal measure) observed, sensibly enough, that arguments about the British colonies drawn from the colonies of antiquity were a mere useless display of learning, for the Tyrian and Greek colonies were planned on a totally different system. Besides, they said, the Romans were the first to form a regular colonial system, and Rome’s jurisdiction over her colonies was “boundless and uncontrollable.” As for Locke, Selden, and Puffendorf, they were only natural lawyers, and their refinements were little to the purpose in arguing the law and practice of a particular constitution.

The Rockinghams carried the Repeal of the Stamp Act; but the effect of this wise and generous policy was marred by a Declaratory Act for better securing the dependence of His Majesty’s dominions in America, which set forth the supremacy of Parliament over all the colonies and its right to impose taxes. At the end of July, after the conclusion of a satisfactory session, the Marquis of Rockingham was suddenly, to the surprise of the nation, ejected from office by the king, and a new ministry of strangely assorted talents, with Chatham at its head, in which Shelburne, Charles Townshend, the Duke of Grafton, and Camden were the leading figures, was pushed into office. Accordingly when Adam Smith returned to England he found not only that those commercial, fiscal, and colonial questions in which he was so deeply versed were the first questions in politics, but also that the two statesmen with whom he was most intimate occupied two of the most important posts—for Charles Townshend was Chancellor of the Exchequer, and Shelburne was a Secretary of State.

These events sufficiently explain why a real statesman like Shelburne, one of the leading members of the ministry, was seeking information at the beginning of the session of 1767 upon colonial topics. It seems astonishing to us now that the Roman analogy should have so exercised the minds of practical statesmen; but Greek and Latin were the only subjects in those days with which educated members of the governing classes were sure to be familiar, and it was to these men in Parliament that political arguments were exclusively addressed. Probably Shelburne wanted classical precedents to check his colleagues from reverting to a coercive policy, and was anxious to meet the argument from Rome that had been used in the debates of the previous year. At any rate, he had asked help of Adam Smith, and received the following reply, which was more helpful than it should have been: “Within these two days I have looked over everything I can find relating to the Roman colonys. I have not yet found anything of much consequence.... They seem to have been very independent. Of thirty colonys of whom the Romans demanded troops in the second Carthaginian War, twelve refused to obey. They frequently rebelled and joined the enemies of the republic; being in some measure little independent republics, they naturally followed the interests which their peculiar situation pointed out to them.” His first studies on Roman colonisation had a decidedly whiggish complexion. Further reading led him to the juster view expressed in the Wealth of Nations, that a Roman colony was quite different from the autonomous Greek ἀποικία, “at best a sort of corporation, which, though it had the power of enacting byelaws for its own government, was at all times subject to the correction, jurisdiction, and legislative authority of the mother country.” And this explains why the Greek colonies were so much more prosperous: “As they were altogether independent of the mother city, they were at liberty to manage their own affairs in the way they judged was most suitable to their own interests.” But before the colonial debates of 1767 came on Adam Smith had left London.

On March 25th he wrote from Lower Grosvenor Street to Thomas Cadell, one of the partners in Millar’s firm, which combined bookselling with publishing, to ask him to insure four boxes of books for £200, and despatch them to Kincaid, his publisher in Edinburgh.[24] He probably stayed in London till the third of May, when the Duke of Buccleuch was married. He would then pick up his valuable parcels in Edinburgh and go on without delay to Kirkcaldy to rejoin his mother and his cousin, Miss Jane Douglas, from whom he had been separated for more than two years.

His first letter to Hume (Kirkcaldy, June 9th) describes his daily life. “My business here is study, in which I have been very deeply engaged for about a month past. My amusements are long solitary walks by the seaside. You may judge how I spend my time. I feel myself, however, extremely happy, comfortable, and contented. I never was perhaps more so in all my life.” He goes on to ask about his friends in London, and wishes to be remembered to all, particularly to Mr. Adams the architect, and to Mrs. Elizabeth Montagu. He inquires about Rousseau: “Has he gone abroad, because he cannot contrive to get himself sufficiently persecuted in Great Britain?” He also wants to know the meaning of “the bargain that your ministry have made with the India Company,” and rejoices that they have refused to prolong its charter. At the end of August Smith paid a visit to Dalkeith House to help the newly married couple to entertain their tenants and friends on the occasion of the Duke’s birthday. “The Duke and Dutchess of Buccleugh,” he wrote to Hume on September 15th, “have been here now for almost a fortnight. They begin to open their house on Monday next, and I flatter myself, will both be very agreeable to the people of this country. I am not sure that I have ever seen a more agreeable woman than the Dutchess. I am sorry that you are not here, because I am sure you would be perfectly in love with her. I shall probably be here some weeks.”

Dr. Carlyle was among the guests at Dalkeith House, and in his autobiography takes some credit to himself for the success of the proceedings. “Adam Smith,” he says, “was but ill qualified to promote the jollity of a birthday,” and but for Carlyle’s exertions the meeting might have been dissolved without even drinking the proper toasts. His conclusion is that the Duke and Duchess should have brought down a man of “more address,” and he leaves little doubt as to who that man should have been. Incidentally Dr. Carlyle has to admit that the new Duke proved a great credit to his tutor. The Buccleuch family had always been good landlords, but Duke Henry “surpassed them all as much in justice and humanity as he did in superiority of understanding and good sense.” Lord Brougham relates a story which illustrates what Carlyle meant by “want of address.” On one occasion, during dinner at Dalkeith, our philosopher broke out into a discourse on some political matters of the day, and was bestowing a variety of severe epithets on a certain statesman, when he suddenly perceived the statesman’s nearest relative sitting opposite, and stopped; but he was heard to mutter, “Deil care, deil care, it’s all true!”

After two months at Dalkeith he returned to his mother and his studies, and remained for the next six years, so far as we know, uninterruptedly at Kirkcaldy, save for an occasional visit to Edinburgh, whither he was constantly and with much importunity invited by his friend Hume. Dugald Stewart remarks that this retirement “formed a striking contrast to the unsettled mode of life he had been for some time accustomed to, but was so congenial to his natural disposition, and to his first habits, that it was with the utmost difficulty he was ever persuaded to leave it.” He was never happier than now, living with his mother in Kirkcaldy; “occupied habitually in intense study, but unbending his mind at times in the company of some of his old school-fellows, whose sober wishes’ had attached them to the place of their birth. In the society of such men Mr. Smith delighted; and to them he was endeared, not only by his simple and unassuming manners, but by the perfect knowledge they all possessed of those domestic virtues which had distinguished him from his infancy.”[25]

The High Street of Kirkcaldy contained some excellent houses, and that occupied by Smith was one of the best. It was large and substantially built, four stories high, with twenty windows facing into the High Street. It had a frontage of about fifty feet, and a garden of the same width ran back a hundred yards or more eastwards down to the sands. On either side of the garden was a high wall, and on the north side a narrow public footpath divided Smith’s garden from his neighbour’s. This quaint passage, enclosed by two high walls, is still called Adam Smith’s Close.

The house was pulled down in 1844. Robert Chambers, who saw it in the twenties, noticed a mark on the wall of Smith’s study, and was told that the philosopher used to compose standing. As he dictated to his clerk he would rub his wig sideways against the wall, and so left a mark which, says the antiquary regretfully, “remained till lately, when the room being painted anew it was unfortunately destroyed.” Hume, who had just removed to James’s Court, Edinburgh, wrote to his friend in August 1769 to tempt him from his retreat:—

“I am glad to have come within sight of you, and to have a view of Kirkaldy from my windows: but as I wish also to be within speaking terms of you, I wish we could concert measures for that purpose. I am mortally sick at sea, and regard with horror and a kind of hydrophobia the great gulf that lies between us. I am also tired of travelling, as much as you ought naturally to be of staying at home. I therefore propose to you to come hither and pass some days with me in this solitude. I want to know what you have been doing, and propose to exact a rigorous account of the method in which you have employed yourself during your retreat. I am positive you are in the wrong in many of your speculations, especially where you have the misfortune to differ from me. All these are reasons for our meeting, and I wish you would make me some reasonable proposal for that purpose. There is no habitation on the island of Inchkeith, otherwise I should challenge you to meet me on that spot, and neither of us ever to leave the place till we were fully agreed on all points of controversy.”

By the following February the book had made such progress that Hume was expecting to see his friend in Edinburgh for a day or two on his way to London, where Smith already talked of arranging for immediate publication. He changed his mind, however, though he went to Edinburgh in June, where with the Duke of Buccleuch and John Hallam he received the freedom of the city. In January 1772 we find the friends corresponding about Italian literature. Smith recommends Hume to read Metastasio. Hume replies that he is reading Italian prose, again reminds him of the promised visit, and refuses to take the excuse of ill-health, which he calls a subterfuge invented by indolence and love of solitude. “Indeed, my dear Smith, if you continue to hearken to complaints of this nature, you will cut yourself out entirely from human society to the great loss of both parties.”

This year was marked by a severe commercial crisis; nearly all the banks in Edinburgh came to grief, and the Duke of Buccleuch and other friends of Smith were in the greatest difficulty. In a letter to Pulteney (September 5, 1772), Smith says, though he has himself suffered no loss in the public calamities, some of his friends have been deeply concerned, and he has been much occupied about the best method of extricating them. He continues:—

“In the book which I am now preparing for the press, I have treated fully and distinctly of every part of the subject which you have recommended to me; and I intended to send you some extracts from it; but upon looking them over I find that they are too much interwoven with other parts of the work to be easily separated from it. I have the same opinion of Sir James Steuart’s book[26] that you have. Without once mentioning it, I flatter myself that any fallacious principle in it will meet with a clear and distinct confutation in mine.... My book would have been ready for the press by the beginning of this winter, but interruptions occasioned partly by bad health, arising from want of amusement and from thinking too much upon one thing, and partly by the avocations above mentioned, will oblige me to retard its publication for a few months longer.”

It appears that Pulteney had recommended the Directors of the East India Company to appoint Smith as a commissioner to examine their administration and accounts. Smith says he is much honoured and obliged: “You have acted in your old way, of doing your friends a good office behind their backs, pretty much as other people do them a bad one. There is no labour of any kind which you can impose upon me which I will not readily undertake.” He believes he is in agreement with Pulteney as to the proper remedy for the disorders of the coin in Bengal. The commission, however, was not appointed. No reforms worth mentioning were made, and the Wealth of Nations teems with severe criticisms of the Company.[27]

A month after this letter to Pulteney, Hume drafts a little programme for the completion and publication of the work, evidently in reply to one of Smith’s dilatory notes: “I should agree to your reasoning if I could trust your resolution. Come hither for some weeks about Christmas; dissipate yourself a little; return to Kirkcaldy; finish your work before autumn; go to London; print it; return and settle in this town, which suits your studious, independent turn even better than London. Execute this plan faithfully, and I forgive you.”

Before following our hero to London with the fateful manuscript, we must repeat a local tradition belonging to this period which is recorded in Dr. Charles Rogers’s Social Life in Scotland. One Sunday morning Smith, falling into an unusually profound reverie (brought on perhaps by thought upon the disorders of the Bengal currency), walked into his garden in an old dressing-gown. Instead of returning to the house, he made his way by a small path into the turnpike road, and eventually marched into the town of Dunfermline, fifteen miles from his home. The people there were flocking to church, and the bustle restored the philosopher to his wits. In April 1773, after six years of seclusion, he at last left home with his manuscript, intending no doubt to have it printed and published in the course of a few months. He broke his journey at Edinburgh, and there wrote a formal letter constituting Hume his executor:—

“As I have left the care of all my literary papers to you, I must tell you that except those which I carry along with me, there are none worth the publishing but a fragment of a great work which contains a history of the astronomical systems that were successively in fashion down to the time of Descartes. Whether that might not be published as a fragment of an intended juvenile work I leave entirely to your judgment, tho’ I begin to suspect myself that there is more refinement than solidity in some parts of it. This little work you will find in a thin folio paper book in my writing-desk in my book-room. All the other loose paper which you will find either in that desk or within the glass folding-doors of a bureau which stands in my bedroom, together with about eighteen thin paper folio books, which you will likewise find within the same glass folding-doors, I desire may be destroyed without any examination. Unless I die very suddenly, I shall take care that the Papers I carry with me shall be carefully sent to you.”

He reached London in May, and seems to have remained there until after the publication of the Wealth of Nations in March 1776. But the records of his stay are of the slightest. There is left but one important letter, a long and earnest plea against the principle of monopoly in medical education. It was to his friend Dr. Cullen. Some of the Scottish universities had been conferring medical degrees without examination on incompetent men. The Duke of Buccleuch was willing to join in a petition to Parliament to stop the mischief. Smith’s views upon the subject are highly characteristic. He considers that the Scotch universities, though of course capable of amendment, are “without exception the best seminaries of learning that are to be found anywhere in Europe.” A visitation (that is, a Royal Commission) would be the only proper means of reforming them:—

“Before any wise man, however, would apply for the appointment of so arbitrary a tribunal in order to improve what is already, upon the whole, very well, he ought certainly to know with some degree of certainty, first, who are likely to be appointed visitors, and secondly, what plan of reformation those visitors are likely to follow; but in the present multiplicity of pretenders to some share in the prudential management of Scotch affairs, these are two points which, I apprehend, neither you nor I, nor the Solicitor-General nor the Duke of Buccleugh, can possibly know anything about.”

Perhaps in the future a better opportunity might present itself. An admonition, or other irregular means of interference, was out of the question. Dr. Cullen had proposed that no person should be admitted to examination for his degrees unless he brought a certificate of his having studied at least two years in some university. Smith (who was himself at this very time, with Gibbon, attending a course given by Dr. William Hunter) objects: “would not such a regulation be oppressive upon all private teachers, such as the Hunters, Hewson, Fordyce, etc.? The scholars of such teachers surely merit whatever honour or advantage a degree can confer much more than the greater part of those who have spent many years in some universities.... When a man has learnt his lesson very well, it surely can be of little importance where or from whom he has learnt it.”

The last sentence is one that men should lay to heart. It is one of those obvious truths which few have the candour to assert and still fewer the courage to act upon. A very clever person, on reading the Wealth of Nations, complained that it seemed to be little more than a well arranged succession of truisms. Yet for the want of those truths mankind has stumbled along in the dark from the beginning. “The less you restrain trade, the more you will have.” A truism, if you like, but its denial has caused an infinitude of avoidable suffering. “If a man has learnt his lesson well, never mind about his university or his degree.” A truism, without doubt, but one that is constantly neglected and despised to the grave detriment of justice and learning.

Smith held that the effect of degrees injudiciously conferred was not very considerable. “That doctors are sometimes fools as well as other people is not in the present time one of those profound secrets which is known only to the learned.” Apothecaries and old herb-women practised physic without complaint, because they only poisoned the poor people. “And if here and there a graduated doctor should be as ignorant as an old woman, can great harm be done?” Smith rubbed in his moral about university degrees with evident relish, comparing degrees which could only be conferred on students of a certain standing to the statutes of apprenticeship and other corporation laws, which had expelled arts and manufactures from so many boroughs.

In boroughs, monopoly had made work bad and dear; in universities, it had led to quackery, imposture, and exorbitant fees. One remedy for the inconveniences of town corporations had been found in the outgrowth of manufacturing villages; and, in a similar way, the private interest of some poor professors of physic had done something to check the exorbitance of rich universities, which made a course of eleven or even sixteen years necessary before a student could become a Doctor of Law, Physic, or Divinity. The poor universities could not stipulate for residence, and sold their degrees to any one who would buy them, often without even a decent examination. “The less trouble they gave, the more money they got, and I certainly do not pretend to vindicate so dirty a practice.” Nevertheless these cheap degrees, though extremely disagreeable to graduates whose degrees had cost much time and expense, were of advantage to the public in that they multiplied doctors, and so sunk fees. “Had the Universities of Oxford and Cambridge been able to maintain themselves in the exclusive privilege of graduating all the doctors who could practise in England, the price of feeling a pulse might by this time have risen from two and three guineas, the price which it has now happily arrived at, to double or triple that sum; and English physicians might, and probably would, have been at the same time the most ignorant and quackish in the world.”[28]

This trenchant reasoning seems to have prevailed. At any rate, the idea of obtaining governmental interference was dropped. Some time afterwards, however, Dr. Cullen took an opportunity of pointing out that there is a good deal more to be said for the corporate regulation of medicine than for ordinary trade guilds. Adam Smith probably pushed his argument for free trade in medical degrees to this extreme mainly from anxiety to prevent the interference of an unwise Government in his favourite universities, though partly no doubt because he thought fraudulent competition better than none, partly again for love of maintaining a paradox. A more spacious handling of this theme is found in the Wealth of Nations, more especially in the famous tenth chapter of the first book, with its account of “Inequalities occasioned by the Policy of Europe,” and in a later criticism of universities.

During his stay in London Smith was in close intercourse with the ruling kings of art, science, and letters, as well as with some of the leading statesmen. We hear of him in January 1775 with Johnson, Burke, and Gibbon at a dinner given by Sir Joshua Reynolds. In December, Horace Walpole met him at Beauclerk’s. With Gibbon, as we have seen, he attended Dr. William Hunter’s lectures on Anatomy. Hume’s letters to him were addressed to the British Coffee House in Cockspur Street, a club kept by a clever sister of Bishop Douglas and much favoured by Scots in London, though Goldsmith, Reynolds, Garrick, and Richard Cumberland were also members. In 1775 he was elected a member of the famous Literary Club which met at the Turk’s Head in Gerrard Street. The members present on the night of his election were Gibbon, Reynolds, Beauclerk, and Sir William Jones, three of whom appear in Dean Barnard’s lines:—

The still small voice of a detractor was heard: Boswell wrote to a friend that with Smith’s accession the club had “lost its select merit.”

All this time the fatal quarrel with America was drawing near. Upon this, as upon all other economical questions, Smith was in full sympathy with Burke, “the only man I ever knew who thinks on economic subjects exactly as I do, without any previous communications having passed between us.” This compliment, as we know, was highly valued by the author of the speech on American Taxation. But Smith had another friend and counsellor for his critical chapter on the colonies and their administration. Dr. Franklin is reported to have said, that “the celebrated Adam Smith when writing his Wealth of Nations was in the habit of bringing chapter after chapter as he composed it to himself, Dr. Price, and others of the literati”; that he would then patiently hear their observations, sometimes submitting to write whole chapters anew, and even to reverse some of his propositions. Franklin’s remark has probably been inaccurately reported. We know from one of Smith’s letters that he had not a high opinion of Dr. Price as an economist; but Parton, Franklin’s biographer, justly points to the countless colonial illustrations with which the Wealth of Nations abounds, and to that intimate knowledge of American conditions which Franklin was of all men the best fitted to impart. And there is internal evidence in the text itself that the important chapter on the colonies in Book IV. was written, or at least considerably enlarged, in the years 1773 and 1774. Franklin’s papers contained problems which seemed to have been jotted down at meetings of philosophers, and no doubt Price as well as Smith would take a prominent part. At Glasgow Smith must have heard a good deal about the colonial trade; but colonial policy did not become the question of the day until after he left, and in the lectures there is nothing about the colonies. We may conjecture that the idea of devoting a large section of the book to the history and economics of colonial dominions did not strike him until after his return from France. The great debates of 1766 and of the early seventies, the intimate acquaintance with British policy and finance in large outline and in official detail, which his friendships with Burke and Franklin, with Oswald, Pulteney, and Shelburne helped him to acquire, and his eagerness to prevent war and to discredit expenditure on colonial establishments, or indeed upon any provinces which could not support themselves, conspired to make colonial policy and imperial expenditure large and imposing themes in the Wealth of Nations.

CHAPTER IX
THE WEALTH OF NATIONS AND ITS CRITICS

In February 1776 Hume wrote to Smith: “By all accounts your book has been printed long ago, yet it has never been so much as advertised. What is the reason? If you wait till the fate of America be decided, you may wait long.” Declining health made him anxious to accelerate his friend’s return. “Your chamber in my house is always unoccupied.” In the same letter there are a few words about the war with the American colonies. The two friends were at one in condemning the war and the colonial policy which provoked it. But Smith was more deeply moved by the impending disaster, and was eagerly endeavouring to induce the Government to adopt means of conciliation before it was too late. He was therefore—so the Duke of Buccleuch had informed Hume—“very zealous” in American affairs. “My notion,” writes Hume, cool as ever where only national interests were concerned, “is that this matter is not so important as is commonly imagined. If I be mistaken, I shall probably correct my error when I see you, or read you. Our navigation and general commerce may suffer more than our manufactures. Should London fall as much in size as I have done, it will be the better. It is nothing but a hulk of bad and unclean humours.”

At last, on the 9th of March, An Inquiry into the Nature and Causes of the Wealth of Nations was published in two sumptuous quarto volumes. The price was thirty-six shillings, and the first edition, probably of a thousand copies, was sold out in six months; though the second, a reprint with some few corrections and additions, was not issued till 1778. The publishers were Strahan and Cadell. Smith is said to have received £500 for the first edition, the sum paid by the same firm to Steuart for his Principles of Political Economy (1767). The first volume of Gibbon’s History came out at the same time. Hume was immensely taken with both performances. He told Gibbon that he should never have expected such a work from the pen of an Englishman. To Smith he wrote:—

“Euge! Belle! Dear Mr. Smith,—I am much pleased with your performance; and the perusal of it has taken me from a state of great anxiety. It was a work of so much expectation, by yourself, by your friends, and by the public, that I trembled for its appearance, but am now much relieved. Not but that the reading of it necessarily requires so much attention, and the public is disposed to give so little, that I shall still doubt for some time of its being at first very popular. But it has depth, and solidity, and acuteness, and is so much illustrated by curious facts that it must at last take the public attention. It is probably much improved by your last abode in London. If you were here at my fireside, I should dispute some of your principles. I cannot think that the rent of farms makes any part of the price of the produce, but that the price is determined altogether by the quantity and the demand.”

On the publication of the book Sir John Pringle observed to Boswell that Dr. Smith, who had never been in trade, could not be expected to write well on that subject any more than a lawyer upon physic. Boswell passed this on to Johnson, who replied: “He is mistaken, sir; a man who has never been engaged in trade may undoubtedly write well upon trade, and there is nothing which requires more to be illustrated by philosophy than trade does.” Johnson added, as if he had already turned over with profit the pages of the new book, that trade promises what is more valuable than money, “the reciprocation of the peculiar advantages of different countries.” Gibbon was no less delighted than Hume with the new philosophy. “What an excellent work!” he exclaimed; “an extensive science in a single book, and the most profound ideas expressed in the most perspicuous language.” Gibbon’s judgment has been confirmed by the tribunals of Time, and the world places the Wealth of Nations in the small library of masterpieces that receives, as the years roll by, so surprisingly few accessions.

In a science like political economy, every new teacher endeavours to correct the mistakes of his predecessors, to supply their deficiencies, and generally to teach the science in its last stage of perfection. Some of Smith’s successors were themselves men of genius, and proved equal to the task of displacing their master for a few years. But those who have seen the rise and decline of Mill may well ask with Wakefield, who had seen Smith superseded by Malthus and Ricardo and M’Culloch: How is it that the Wealth of Nations, all these things notwithstanding, is still read and studied and quoted as if it had been published yesterday? How is it that British statesmen from Pitt to Gladstone should have sought authority in the same pages? After all, the question we are asking is a wider one. Why is this one of the great books of the world? We would like to say simply: It is the world’s verdict; take it or not as you like; but whether you like it or not, it stands. One cannot argue with universal consent. Still something may be due in extenuation of fame. In the first place, Adam Smith writes as one who has applied his mind to definite problems without neglecting a wider field of letters and learning. The store is rich and the steward is bounteous. So far from being an isolated study of abstract doctrines, political economy is treated from first to last as a branch of the study of mankind, a criticism of their manners and customs, of national history, administration, and law. Even when silencing a battery or throwing up a counterwork he is very seldom disputatious or doctrinal. “He appears,” says Wakefield, “to be engaged in composing not a theory, but a history of national wealth. He dwells indeed on principles, but nearly always, as it seems, for the purpose of explaining the facts which he narrates.” There is no scarecrow of thin abstractions and deterrent terminology flapping over the pages to warn men off a dismal science. The laws of wealth unfold themselves like the incidents in a well-laid plot. It was left for his successors to show how dull economics might be, and how suitable for the empty class-room of an endowed chair.

Hume, as we have seen, on reading the Wealth of Nations foretold that its curious facts would help to gain the public ear. Adam Smith was full of out-of-the-way learning. He collected stories of all the adventures in the New World, and loved to sift the wheat from the chaff of a traveller’s tale. Consequently his book abounds in oddities about his own and bygone ages, and a few of these with necessary abbreviations may be retailed:—

There is at this day a village in Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or to the alehouse.

In North America, provisions are much cheaper and wages much higher than in England. In the province of New York, common labourers earn three shillings and sixpence currency, equal to two shillings sterling a day.

Till after the middle of the fourteenth century, an English mason’s wages were much higher than those of a parish priest. In spite of a statute of Anne there are still [1776] many curacies under £20 a year.

A middling farmer in France will sometimes have 400 fowls in his yard.

Between 1339 and 1776 the price of the best English wool has fallen from 30s. to 21s. the tod, after allowing for the changes in the currency. The price of a yard of the finest cloth has fallen, after making the same allowances, from £3, 3s. 6d. to £1, 1s. since 1487.

The first person that wore stockings in England is said to have been Queen Elizabeth. She received them as a present from the Spanish Ambassador.

What was formerly a seat of the family of Seymour, is now an inn upon the Bath road. The marriage bed of James the First of Great Britain, which his Queen brought with her from Denmark as a present fit for a sovereign to make to a sovereign, was a few years ago the ornament of an alehouse at Dunfermline.

The wool of the southern counties of Scotland is, a great part of it, after a long land carriage through very bad roads, manufactured in Yorkshire, for want of a capital to manufacture it at home. In England, owing to the laws of settlement, it is often more difficult for a poor man to pass the artificial boundary of a parish than an arm of the sea or a ridge of high mountains.

There is no city in Europe in which house rent is dearer than in London, and yet I know no capital in which a furnished apartment can be hired so cheap.

At Buenos Ayres forty years ago 1s. 9½d. was the ordinary price of an ox.

A piece of fine cloth which weighs only eighty pounds, contains in it the price not only of eighty pounds weight of wool, but sometimes of several thousand weight of corn, the maintenance of the different working people, and of their immediate employers.

In the white herring fishery it has been common for vessels to fit out for the purpose of catching not the fish but the bounty. In 1759, when the bounty was at fifty shillings the ton, each barrel of sea sticks cost Government in bounties alone, £113, 15s.; each barrel of merchantable herrings £159, 7s. 6d.

The Wealth of Nations is a book to be read as it was written. More than half its nutriment and all its fascination is lost if you cut away the theory from its historical setting.[29] Osteology is fatal to economics. That is why the Wealth of Nations is far better suited to beginners than an ordinary child’s primer. But as the Lectures on Police were the author’s own first draft, the reader of these pages is already cognisant of a great part of the Wealth of Nations.

It remains to indicate some of the principal accessions to Smith’s scheme of political economy after he left Glasgow. The task has been made easy by Mr. Cannan. In the first place, the chapters on Wages, Profit, and Rent in the First Book, and on Taxation in the last, mark a wonderful development and improvement of the imperfect and rudimentary treatment accorded to these subjects in the Lectures. Then again, chapter ix. of Book IV. on the French economists and their agricultural system is entirely new. The system of the économistes is described in that chapter as one which, with all its imperfections, was perhaps the nearest approximation to the truth that had yet been published on the subject of political economy. We are told that its adherents, a pretty considerable sect, had done good service to their country by influencing in some measure the public administration in favour of agriculture. They all followed “implicitly and without any sensible variation the doctrine of Mr. Quesnai,” whose Economical Table they regarded with extraordinary veneration, ranking it with writing and money as one of the three great inventions made by mankind.

Quesnai’s Table showed three sorts of expenses: Productive expenses, Expenses of revenue, and Sterile expenses, with “their source, their distribution, their effects, their reproduction, their relation to each other, to population, to agriculture, to manufactures, to commerce, and to the general riches of the nation.” In the Wealth of Nations this idea is followed out and improved; for the author, having shown in his First Book how the average produce of labour is regulated by the skilled dexterity and judgment with which it is generally applied, shows in his Second that it is further regulated “by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed.” It would be absurd to call him a plagiarist; it would be equally absurd to deny that the French School had opened his eyes to the necessity for analysing the distribution of wealth no less carefully than its production. As the division of labour came from the Greek, so the distribution of the annual produce of wealth into wages, profit, and rent, came from the French philosophers. And we cannot forget that Quesnai’s death alone prevented Smith from dedicating his book to the inventor of the Economic Table.

Equally important from the standpoint of theory, and far more so from that of the legislator and statesman, are the chapters upon taxation. There the lectures, though they made a distinct advance upon Hume, were rudimentary. But modern ingenuity cannot improve upon the four practical maxims or canons of taxation:—

1. The subjects of every State should contribute in proportion to their respective abilities.

2. A tax should be certain, and not arbitrary.

3. A tax should be levied at the time and in the way most convenient to the taxpayer.

4. 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.

Axiomatic as these rules appear to us, in Adam Smith’s day they were new and startling: they had never been formulated or practised in any country. Smith was “the first that ever burst” upon the silent sea of taxation. He put into the hands of statesmen, who had hitherto been groping and blundering in the dark, a perfect touchstone by which to test projects old and new of raising revenue. The idea of considering the taxpayer was itself a novelty. It is true that the criterion of ability had been adopted in the Elizabethan poor-rate, but there was no other trace of it in the fiscal system of Great Britain, which was on the whole, even at that time, the best in Europe.

Smith treated taxation as one of the causes that impede the progress of wealth. It is characteristic of the man that he does not regard any tax, even the land-tax, as good in itself, but only praises it comparatively as a lesser evil. Burke himself was not a more consistent or persistent preacher of economy. Not that Smith was jealous of expenditure on roads and communication, public instruction, and other services which were plainly beneficial to the whole society, and could not be left to private enterprise. He has no pedantic objection to the State managing a business that it is capable of managing well. He mentions without disapproval that the republic of Hamburg makes money out of a lombard,[30] a wine cellar, and an apothecary’s shop. But the post-office “is perhaps the only mercantile project which has been successfully managed by every sort of Government.”

Of all taxes he most dislikes taxes upon the necessaries of life. Yet he does not deny that if, after all the proper sources of taxation have been exhausted, revenue is still required, “improper” taxes must be imposed. To preserve their land from the sea, and their republic from its enemies, the Dutch had had recourse to very objectionable taxes, and he does not blame them if they could in no other way maintain that republican form of government, which he regards as “the principal support of the present grandeur of Holland.” But he makes it very plain indeed in his last, and perhaps his greatest, chapter “Of Public Debts,” that the miseries and embarrassments of Europe are due in the main to profligate expenditure of all kinds, and especially to the immense sums wasted on wars that ought to have been avoided.

Therefore a new commercial policy would not suffice. New principles of foreign and colonial policy must be introduced, and we must sweep away for ever the cobweb occasions and pretexts that had drawn us into so many futile conflicts. But he was equally anxious to promote economy in time of peace. He was alarmed at the progress of the enormous debts “which at present oppress and will in the long-run probably ruin all the great nations of Europe.” He saw that when war has once been begun, no limit can be set to expenditure. But some limit, he thought, could and should be set to debt; and therefore he pleaded for a policy of strict economy in time of peace, and pleaded so effectively that it was adopted by Pitt in the breathing-space between the American and the French wars. But for that policy, which reduced armaments to a point considered by some dangerously low, Great Britain could hardly have stood the stress and strain of her long-drawn conflict with Napoleon.

To thriftlessness in time of peace Smith attributes some of the peculiar evils that attend modern warfare. His remarks sound strangely familiar in our ears, as though they had been written by a philosopher of yesterday about the events of the day before:—

“The ordinary expense of the greater part of modern governments in time of peace being equal or nearly equal to their ordinary revenue, when war comes they are both unwilling and unable to increase their revenue in proportion to the increase of their expense. They are unwilling, for fear of offending the people, who by so great and so sudden an increase of taxes, would soon be disgusted with the war; and they are unable, from not well knowing what taxes would be sufficient to produce the revenue wanted. The facility of borrowing delivers them from the embarrassment which this fear and inability would otherwise occasion.... In great empires, the people who live in the capital, and in the provinces remote from the scene of action, feel, many of them, scarce any inconveniency from the war, but enjoy at their ease the amusement of reading in the newspapers the exploits of their own fleets and armies. To them this amusement compensates the small difference between the taxes which they pay on account of the war, and those which they had been accustomed to pay in time of peace. They are commonly dissatisfied with the return of peace, which puts an end to their amusement, and to a thousand visionary hopes of conquest and national glory.”

Indeed, he adds, the return of peace seldom relieves a nation from the greater part of the taxes imposed during the war. They are still required to pay the interest on the newly created debt.

Of all Smith’s theories, or rather opinions—for after all, the question is a mixed one of morals and expediency which cannot be answered by abstract formulas of right or rules of logic—not the least important or characteristic is his doctrine of empire and imperial expenditure. The view now cherished and practised in the great bureaucracies of Europe, and often advanced by socialists under the plausibly scientific phraseology of a theory of consumption, that national profusion is a good thing in itself, was not then propagated or defended by responsible persons. But, though thrift was on their lips, their hands were often in the public purse; and it could not be said that warnings against the outlay of national resources upon useless or mischievous objects were unneeded. Appropriately enough, the very first time, so far as we know, that the Wealth of Nations was cited in Parliament, it was cited as an authority against the policy of accumulating armaments in time of peace. In his speech on the address (November 11, 1783) Fox is reported to have said: “There was a maxim laid down in an excellent book upon the Wealth of Nations, which had been ridiculed for its simplicity, but which was indisputable as to its truth. In that book it was stated that the only way to become rich was to manage matters so as to make one’s income exceed one’s expenses. The proper line of conduct, therefore, was by a well-directed economy to retrench every current expense, and to make as large a saving during the peace as possible.”[31]

But Smith took no narrow or penurious view of national economy. He did not prize thrift for its own sake. Such a charge might possibly be brought by an unfriendly critic against Ricardo or Joseph Hume, but assuredly not against Adam Smith. Like Burke and Cobden, he valued frugality in nations as a safeguard against wrong-doing, a prime source of security and independence, and a perpetual check upon the lust of conquest and aggrandisement that so often lurks under the respectable uniform of a missionary civilisation. As he describes the discoveries of the New World and the beginnings of modern empire, a poignant epithet or a burning phrase tells the lesson of many a romantic scramble for the fleece that was so seldom golden, of many a credulous hunt for a fugitive Eldorado.

After showing that the gold and silver mines of their colonial empires had neither augmented the capital nor promoted the industry of the two “beggarly countries” of Spain and Portugal, he carefully distinguishes between the natural advantages of a colonial trade and the artificial disadvantages caused by the policy of monopoly, that is by the endeavours of the mother country to restrict that trade to her own merchants. If the governments of Europe had been content to found colonies, and see that they were well and justly administered, the full benefit of opening up new countries, and of interchanging their products, would have been felt. But unhappily every country that had acquired foreign possessions sought to engross their trade, thus injuring its own people and the colonial or subject race by checking the natural growth of commerce, and forcing it into unnatural channels. This so-called mercantilist policy was therefore just as disastrous to commerce as to morals.

“To found a great empire for the sole purpose of raising up a people of customers, may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers. Such statesmen, and such statesmen only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow-citizens, to found and maintain such an empire.”

Far worse in their results than the regular conquests of government, were the irregular acquisitions of companies formed for trading purposes; and one of the masterly chapters added to the third edition of his book (1784) traces the misery, injustice, and commercial failure which had attended the rule of the East India Company.

“It is a very singular government, in which every member of the administration wishes to get out of the country, and consequently to have done with the government, as soon as he can, and to whose interest, the day after he has left it, and carried his whole fortune with him, it is perfectly indifferent though the whole country was swallowed up by an earthquake.”

What, then, was the practical policy which Smith recommended to the British Government? It had two main ends in view. First, to pay off the debt; secondly, to lessen and gradually remove all taxes which raised the prices of articles consumed by the labouring classes, or interfered with the free course of trade. Writing as he did, in 1775, on the eve of war, his thoughts naturally turned to the colonies, then so rich and prosperous, which had contributed nothing to the income but so heavily to the expenditure and debt of the British crown.

Smith would have liked the British Government to renounce its authority over the colonies, and so not only relieve the revenue from a serious annual drain, but at the same time convert the Americans from turbulent and fractious subjects to the most faithful, affectionate, and generous allies. But seeing that neither people nor government would brook such a mortification, he suggested that to save the situation they should try, by a scheme of union, to break up the American confederacy and reconstitute the empire on a fair basis. Let us give, he said, to each colony which will detach itself from the general confederacy a number of representatives in parliament proportionate to its contribution, and so open up a new and dazzling object of ambition to the leading men of each colony. If this or some other method were not fallen upon of conciliating the Americans, it was not probable that they would voluntarily submit, and “they are very weak who flatter themselves that, in the state to which things have come, our colonies will be easily conquered by force alone.” The leaders of the Congress had risen suddenly from tradesmen and attorneys to be statesmen and legislators of an extensive empire “which seems very likely to become one of the greatest and most formidable that ever was in the world.” Nay, if the union he suggested as an alternative to peaceful and friendly parting were constituted, he predicted that in the course of little more than a century the empire would draw more revenue from America than from the mother country; and “the seat of the empire would then naturally remove itself to that part of the empire which contributed most to the general defence and support of the whole.” It was such a scheme as this that Burke ridiculed when he pictured “a shipload of legislators” becalmed in mid-Atlantic.

As a politician Smith was doubtless attracted by the prospect of introducing a strong democratic and republican strain into parliament, though he pretends to think that the balance of the constitution would not be affected. He points out also that the constitution would be completed by such a union, and was imperfect without it, for “the assembly which deliberates and decides concerning the affairs of every part of the empire, in order to be properly informed, ought certainly to have representatives from every part of it.”[32] In the last chapter of the Wealth of Nations he describes the project as at worst “a new Utopia, less amusing, certainly, but no more useless and chimerical than the old one,” and shows how the British system of taxation might be extended along with representation in parliament to the colonies in such a way as to produce a great addition to the imperial revenue and a large permanent surplus for the redemption of debt. In this way the debt could be discharged in a comparatively short period, and as revenue would be continually released, the most oppressive taxes could be gradually reduced and remitted. By this prescription “the at present debilitated and languishing vigour of the empire” might be completely restored. Labourers would soon be enabled to live better, to work cheaper, and to send their goods cheaper to market. Cheapness would increase demand, and the increased demand for goods would mean an increased demand for the labour of those who produced them. This again would tend both to raise the numbers and improve the circumstances of the labouring poor. Lastly, as the consuming power of the community grew, there would be a growth in the revenue from all those articles of consumption which remained subject to taxation.

The plan of an imperial parliament and imperial taxation could not be realised. Smith himself saw that the economic and constitutional objections were great, though “not unsurmountable.” Upon one point, however, he was clear. If it were impracticable to extend the area of taxation, recourse must be had to a reduction of expenditure; and the most proper means of retrenchment would be to put a stop to all military outlay in and on the colonies. If no revenue could be drawn from the colonies, the peace establishments “ought certainly to be saved altogether.” Yet the peace establishments were insignificant compared with what wars for the defence of the colonies had cost. But for colonial wars the national debt would have been paid off. It was urged that the colonies were provinces of the British Empire:—

“But countries which contribute neither revenue nor military force towards the support of the empire, cannot be considered as provinces. They may perhaps be considered as appendages, as a sort of splendid and showy equipage of the empire. But if the empire can no longer support the expence of keeping up this equipage, it ought certainly to lay it down; and if it cannot raise its revenue in proportion to its expence, it ought, at least, to accommodate its expence to its revenue. If the colonies, notwithstanding their refusal to submit to British taxes, are still to be considered as provinces of the British Empire, their defence in some future war may cost Great Britain as great an expence as it ever has done in any former war. The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine; a project which has cost, which continues to cost, and which, if pursued in the same way as it has been hitherto, is likely to cost, immense expence, without being likely to bring any profit: for the effects of the monopoly of the colony trade, it has been shewn, are, to the great body of the people, mere loss instead of profit. It is surely now time that our rulers should either realise this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or that they should awake from it themselves, and endeavour to awaken the people. If the project cannot be completed, it ought to be given up. If any of the provinces of the British Empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.”

With these ever-memorable and resounding words he ends the great Inquiry, not vaguely admonishing some shadowy cosmopolis of economic men, but straightly beckoning his own countrymen and their rulers off the broad way of wantonness and mischief to the harder paths of an inglorious but fruitful economy.

The reader of this little volume will not expect or desire an excursus upon the multitudinous treatises, critical and apologetical, that have sprung out of the Wealth of Nations. The vitality of the book may be measured by the numbers of its detractors and defenders. Among the former the modern historical school of Germany claims notice; for has not its distinguished and erudite leader, Professor Schmoller, placed Adam Smith somewhere below Galiani, Necker, Hoffmann, Thünen, and Rümelin?

Perhaps the reason why economists of the modern historical school so often fail as valuers of men and books, is that they are enjoined by the very laws of their existence to be “learned”; and “learning” requires that obscure and deservedly forgotten writers should be rediscovered and magnified at the expense of surviving greatness. Too many modern critics of “Smithianismus,” instead of attending to the author’s own works and so penetrating his philosophy, seek him elsewhere, rummage in the literature of the period, overhaul every book, good, bad, or indifferent, characterise it in the text, and place its title-page and date in a footnote. Such labour, however useful to others, is apt to destroy the perspective and warp the judgment.

A man who snares facts is of all men the most likely to be caught in a theoretical trap. Here is an example. In 1759 Adam Smith wrote a book on moral sentiments which he founded on the natural instinct of sympathy. In 1776 he wrote a book on economic sentiments, which he derived from self-love or the desire of man to improve his position. Upon these facts the following theory is built up by the historical school of Germany:—

“Smith was an Idealist as long as he lived in England under the influence of Hutcheson and Hume. After living in France for three years, and coming into close touch with the materialism that prevailed there, he returned a Materialist. This is the simple explanation of the contrast between his Theory (1759), written before his journey to France, and his Wealth of Nations (1776), composed after his return.”[33]