An inquiry into the nature and causes of the wealth of

48

The Wealth of Nations

corn, the profits of the miller, and the wages of his servants; in the

price of bread, the profits of the baker, and the wages of his ser-

vants; and in the price of both, the labour of transporting the corn

from the house of the farmer to that of the miller, and from that

of the miller to that of the baker, together with the profits of those

who advance the wages of that labour.

The price of flax resolves itself into the same three parts as that

of corn. In the price of linen we must add to this price the wages

of the flax-dresser, of the spinner, of the weaver, of the bleacher,

etc. together with the profits of their respective employers.

As any particular commodity comes to be more manufactured,

that part of the price which resolves itself into wages and profit,

comes to be greater in proportion to that which resolves itself into

rent. In the progress of the manufacture, not only the number of

profits increase, but every subsequent profit is greater than the

foregoing; because the capital from which it is derived must al-

ways be greater. The capital which employs the weavers, for ex-

ample, must be greater than that which employs the spinners; be-

cause it not only replaces that capital with its profits, but pays,

besides, the wages of the weavers: and the profits must always bear

some proportion to the capital.

In the most improved societies, however, there are always a few

commodities of which the price resolves itself into two parts only

the wages of labour, and the profits of stock; and a still smaller

number, in which it consists altogether in the wages of labour. In

the price of sea-fish, for example, one part pays the labour of the

fisherman, and the other the profits of the capital employed in the

fishery. Rent very seldom makes any part of it, though it does

sometimes, as I shall shew hereafter. It is otherwise, at least through

the greater part of Europe, in river fisheries. A salmon fishery pays

a rent; and rent, though it cannot well be called the rent of land,

makes a part of the price of a salmon, as well as wares and profit.

In some parts of Scotland, a few poor people make a trade of

gathering, along the sea-shore, those little variegated stones com-

monly known by the name of Scotch pebbles. The price which is

paid to them by the stone-cutter, is altogether the wages of their

labour; neither rent nor profit makes an part of it.

But the whole price of any commodity must still finally resolve

itself into some one or other or all of those three parts; as whatever

part of it remains after paying the rent of the land, and the price of

the whole labour employed in raising, manufacturing, and bring-

ing it to market, must necessarily be profit to somebody.

As the price or exchangeable value of every particular commod-

ity, taken separately, resolves itself into some one or other, or all of

those three parts; so that of all the commodities which compose

the whole annual produce of the labour of every country, taken

---

49

Adam Smith

complexly, must resolve itself into the same three parts, and be

parcelled out among different inhabitants of the country, either as

the wages of their labour, the profits of their stock, or the rent of

their land. The whole of what is annually either collected or pro-

duced by the labour of every society, or, what comes to the same

thing, the whole price of it, is in this manner originally distrib-

uted among some of its different members. Wages, profit, and

rent, are the three original sources of all revenue, as well as of all

exchangeable value. All other revenue is ultimately derived from

some one or other of these.

Whoever derives his revenue from a fund which is his own, must

draw it either from his labour, from his stock, or from his land.

The revenue derived from labour is called wages; that derived from

stock, by the person who manages or employs it, is called profit;

that derived from it by the person who does not employ it him-

self, but lends it to another, is called the interest or the use of

money. It is the compensation which the borrower pays to the

lender, for the profit which he has an opportunity of making by

the use of the money. Part of that profit naturally belongs to the

borrower, who runs the risk and takes the trouble of employing it,

and part to the lender, who affords him the opportunity of mak-

ing this profit. The interest of money is always a derivative rev-

enue, which, if it is not paid from the profit which is made by the

use of the money, must be paid from some other source of rev-

enue, unless perhaps the borrower is a spendthrift, who contracts

a second debt in order to pay the interest of the first. The revenue

which proceeds altogether from land, is called rent, and belongs

to the landlord. The revenue of the farmer is derived partly from

his labour, and partly from his stock. To him, land is only the

instrument which enables him to earn the wages of this labour,

and to make the profits of this stock. All taxes, and all the revenue

which is founded upon them, all salaries, pensions, and annuities

of every kind, are ultimately derived from some one or other of

those three original sources of revenue, and are paid either imme-

diately or mediately from the wages of labour, the profits of stock,

or the rent of land.

When those three different sorts of revenue belong to different

persons, they are readily distinguished; but when they belong to

the same, they are sometimes confounded with one another, at

least in common language.

A gentleman who farms a part of his own estate, after paying

the expense of cultivation, should gain both the rent of the land-

lord and the profit of the farmer. He is apt to denominate, how-

ever, his whole gain, profit, and thus confounds rent with profit,

at least in common language. The greater part of our North Ameri-

can and West Indian planters are in this situation. They farm, the

---