An inquiry into the nature and causes of the wealth of

98

The Wealth of Nations

small towns and country villages. Grocery goods, for example, are

generally much cheaper; bread and butchers’ meat frequently as

cheap. It costs no more to bring grocery goods to the great town

than to the country village; but it costs a great deal more to bring

corn and cattle, as the greater part of them must be brought from

a much greater distance. The prime cost of grocery goods, there-

fore, being the same in both places, they are cheapest where the

least profit is charged upon them. The prime cost of bread and

butchers’ meat is greater in the great town than in the country

village; and though the profit is less, therefore they are not always

cheaper there, but often equally cheap. In such articles as bread

and butchers’ meat, the same cause which diminishes apparent

profit, increases prime cost. The extent of the market, by giving

employment to greater stocks, diminishes apparent profit; but by

requiring supplies from a greater distance, it increases prime cost.

This diminution of the one and increase of the other, seem, in

most cases, nearly to counterbalance one another; which is prob-

ably the reason that, though the prices of corn and cattle are com-

monly very different in different parts of the kingdom, those of

bread and butchers’ meat are generally very nearly the same through

the greater part of it.

Though the profits of stock, both in the wholesale and retail

trade, are generally less in the capital than in small towns and

country villages, yet great fortunes are frequently acquired from

small beginnings in the former, and scarce ever in the latter. In

small towns and country villages, on account of the narrowness of

the market, trade cannot always be extended as stock extends. In

such places, therefore, though the rate of a particular person’s profits

may be very high, the sum or amount of them can never be very

great, nor consequently that of his annual accumulation. In great

towns, on the contrary, trade can be extended as stock increases,

and the credit of a frugal and thriving man increases much faster

than his stock. His trade is extended in proportion to the amount

of both; and the sum or amount of his profits is in proportion to

the extent of his trade, and his annual accumulation in propor-

tion to the amount of his profits. It seldom happens, however,

that great fortunes are made, even in great towns, by any one regu-

lar, established, and well-known branch of business, but in conse-

quence of a long life of industry, frugality, and attention. Sudden

fortunes, indeed, are sometimes made in such places, by what is

called the trade of speculation. The speculative merchant exercises

no one regular, established, or well-known branch of business. He

is a corn merchant this year, and a wine merchant the next, and a

sugar, tobacco, or tea merchant the year after. He enters into every

trade, when he foresees that it is likely to lie more than commonly

profitable, and he quits it when he foresees that its profits are

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99

Adam Smith

likely to return to the level of other trades. His profits and losses,

therefore, can bear no regular proportion to those of any one es-

tablished and well-known branch of business. A bold adventurer

may sometimes acquire a considerable fortune by two or three

successful speculations, but is just as likely to lose one by two or

three unsuccessful ones. This trade can be carried on nowhere but

in great towns. It is only in places of the most extensive commerce

and correspondence that the intelligence requisite for it can be

had.

The five circumstances above mentioned, though they occasion

considerable inequalities in the wages of labour and profits of stock,

occasion none in the whole of the advantages and disadvantages,

real or imaginary, of the different employments of either. The na-

ture of those circumstances is such, that they make up for a small

pecuniary gain in some, and counterbalance a great one in others.

In order, however, that this equality may take place in the whole

of their advantages or disadvantages, three things are requisite,

even where there is the most perfect freedom. First the employ-

ments must be well known and long established in the

neighbourhood; secondly, they must be in their ordinary, or what

may be called their natural state; and, thirdly, they must be the

sole or principal employments of those who occupy them.

First, This equality can take place only in those employments

which are well known, and have been long established in the

neighbourhood.

Where all other circumstances are equal, wages are generally

higher in new than in old trades. When a projector attempts to

establish a new manufacture, he must at first entice his workmen

from other employments, by higher wages than they can either

earn in their own trades, or than the nature of his work would

otherwise require; and a considerable time must pass away before

he can venture to reduce them to the common level. Manufac-

tures for which the demand arises altogether from fashion and

fancy, are continually changing, and seldom last long enough to

be considered as old established manufactures. Those, on the con-

trary, for which the demand arises chiefly from use or necessity,

are less liable to change, and the same form or fabric may con-

tinue in demand for whole centuries together. The wages of labour,

therefore, are likely to be higher in manufactures of the former,

than in those of the latter kind. Birmingham deals chiefly in manu-

factures of the former kind; Sheffield in those of the latter; and

the wages of labour in those two different places are said to be

suitable to this difference in the nature of their manufactures.

The establishment of any new manufacture, of any new branch

of commerce, or of any new practice in agriculture, is always a

speculation from which the projector promises himself extraordi-

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