An inquiry into the nature and causes of the wealth of

54

The Wealth of Nations

oil, hops, etc. But the same number of spinners or weavers will

every year produce the same, or very nearly the same, quantity of

linen and woollen cloth. It is only the average produce of the one

species of industry which can be suited, in any respect, to the

effectual demand; and as its actual produce is frequently much

greater, and frequently much less, than its average produce, the

quantity of the commodities brought to market will sometimes

exceed a good deal, and sometimes fall short a good deal, of the

effectual demand. Even though that demand, therefore, should

continue always the same, their market price will be liable to great

fluctuations, will sometimes fall a good deal below, and some-

times rise a good deal above, their natural price. In the other spe-

cies of industry, the produce of equal quantities of labour being

always the same, or very nearly the same, it can be more exactly

suited to the effectual demand. While that demand continues the

same, therefore, the market price of the commodities is likely to

do so too, and to be either altogether, or as nearly as can be judged

of, the same with the natural price. That the price of linen and

woollen cloth is liable neither to such frequent, nor to such great

variations, as the price of corn, every man’s experience will inform

him. The price of the one species of commodities varies only with

the variations in the demand; that of the other varies not only

with the variations in the demand, but with the much greater, and

more frequent, variations in the quantity of what is brought to

market, in order to supply that demand.

The occasional and temporary fluctuations in the market price

of any commodity fall chiefly upon those parts of its price which

resolve themselves into wages and profit. That part which resolves

itself into rent is less affected by them. A rent certain in money is

not in the least affected by them, either in its rate or in its value. A

rent which consists either in a certain proportion, or in a certain

quantity, of the rude produce, is no doubt affected in its yearly

value by all the occasional and temporary fluctuations in the mar-

ket price of that rude produce; but it is seldom affected by them in

its yearly rate. In settling the terms of the lease, the landlord and

farmer endeavour, according to their best judgment, to adjust that

rate, not to the temporary and occasional, but to the average and

ordinary price of the produce.

Such fluctuations affect both the value and the rate, either of

wages or of profit, according as the market happens to be either

overstocked or understocked with commodities or with labour,

with work done, or with work to be done. A public mourning

raises the price of black cloth ( with which the market is almost

always understocked upon such occasions), and augments the prof-

its of the merchants who possess any considerable quantity of it. It

has no effect upon the wages of the weavers. The market is

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55

Adam Smith

understocked with commodities, not with labour, with work done,

not with work to be done. It raises the wages of journeymen tailors.

The market is here understocked with labour. There is an effectual

demand for more labour, for more work to be done, than can be

had. It sinks the price of coloured silks and cloths, and thereby re-

duces the profits of the merchants who have any considerable quan-

tity of them upon hand. It sinks, too, the wages of the workmen

employed in preparing such commodities, for which all demand is

stopped for six months, perhaps for a twelvemonth. The market is

here overstocked both with commodities and with labour.

But though the market price of every particular commodity is

in this manner continually gravitating, if one may say so, towards

the natural price; yet sometimes particular accidents, sometimes

natural causes, and sometimes particular regulations of policy, may,

in many commodities, keep up the market price, for a long time

together, a good deal above the natural price.

When, by an increase in the effectual demand, the market price

of some particular commodity happens to rise a good deal above

the natural price, those who employ their stocks in supplying that

market, are generally careful to conceal this change. If it was com-

monly known, their great profit would tempt so many new rivals

to employ their stocks in the same way, that, the effectual demand

being fully supplied, the market price would soon be reduced to

the natural price, and, perhaps, for some time even below it. If the

market is at a great distance from the residence of those who sup-

ply it, they may sometimes be able to keep the secret for several

years together, and may so long enjoy their extraordinary profits

without any new rivals. Secrets of this kind, however, it must be

acknowledged, can seldom be long kept; and the extraordinary

profit can last very little longer than they are kept.

Secrets in manufactures are capable of being longer kept than

secrets in trade. A dyer who has found the means of producing a

particular colour with materials which cost only half the price of

those commonly made use of, may, with good management, en-

joy the advantage of his discovery as long as he lives, and even

leave it as a legacy to his posterity. His extraordinary gains arise

from the high price which is paid for his private labour. They

properly consist in the high wages of that labour. But as they are

repeated upon every part of his stock, and as their whole amount

bears, upon that account, a regular proportion to it, they are com-

monly considered as extraordinary profits of stock.

Such enhancements of the market price are evidently the effects

of particular accidents, of which, however, the operation may some-

times last for many years together.

Some natural productions require such a singularity of soil and

situation, that all the land in a great country, which is fit for pro-

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