The Wealth of Nations: A Translation into Modern English

An ISR Economic growth & performance study

Adam Smith’s The Wealth of Nations is the great pioneering study of economic growth and performance.  When first published in 1776, the factory-based Industrial Revolution was only just getting underway. However, there had been steadily rising production and incomes in Britain, the North American colonies, Holland and other countries since at least the late 17th century.

Smith uses basic theory, observation and documentary sources to analyze the nature and causes of economic advancement in general.

The book is lengthy and wide-ranging.  It examines the contributions to production of labour, land and capital.  It explains the economic importance of large buoyant markets and industrial specialization.  It also shows that national wealth does not depend on economic factors alone. For example, the favourableness or otherwise of the political-legal environment for industry and commerce is everywhere a major influence on national prosperity.

This is a moderately abridged current language version of the book – essentially translating the work into modern English to improve its readability and understandability. The translation is substantive but retains literalness and original word order and grammar as far as possible.



Editorial Foreword

Author’s Introduction


Chapter 1: Industrial Specialization

Chapter 2: The Origins of Industrial Specialization

Chapter 3: The Extent of the Market Limits Specialization

Chapter 4: The Origins and Use of Money

Chapter 5: The Real Economic and Nominal Monetary Prices of Goods

Chapter 6: Supply Prices, Production Costs and Incomes

Chapter 7: The Natural and Market Prices of Products

Chapter 8: The Wages of Labour

Chapter 9: The Profits of Capital

Chapter 10: Wages and Profits in Different Trades

Chapter 11: The Rent of Land


Chapter 1: Different Types of Capital

Chapter 2: Monetary Capital

Chapter 3: The Accumulation of Capital

Chapter 4: Capital Lent at Interest

Chapter 5: The Different Uses of Capital


Chapter 1: The Natural Process of Economic Growth

Chapter 2: The Discouragement of Agriculture in Europe after the fall of the Roman Empire

Chapter 3: Urban Growth and Manufacturing after the fall of the Roman Empire

Chapter 4: The Contribution of Urban Industry and Commerce to Rural Economies


Chapter 1: The Mercantilist Political Economic Model

Chapter 2: Restrictions on Importing Goods Capable of Domestic Production

Chapter 3: Restrictions on Imports to Correct So-called Disadvantageous Trade Balances

Chapter 4: Tax Refunds on Exports

Chapter 5: Export Subsidies

Chapter 6: Treaties of Commerce

Chapter 7: Colonies

Chapter 8: The Mercantilist System – Conclusions

Chapter 9: The Agricultural Political Economic Model – The Notion of Land as the Great Source of National Wealth


Chapter 1: Government Expenditure

Chapter 2: The Sources of General Public Revenues

Chapter 3: Public Debts

Price & specifications


First published 2015

E-book ISBN 9780906321706    

523 printed pages equivalent

Price £14.95 (British pounds 14.95)

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 Sample passages

 Nobody purposely invented industrial specialization with all its advantages for wealth creation. Rather, specialization evolved gradually – as a by-product of the natural human propensity to truck, barter and exchange one thing for another. The precise nature of that propensity and its connection to our faculties of reason and speech is beyond the scope of the present enquiry. Here, I simply note that the propensity is common to all human beings and that it is unique to humanity… (page 10)

The extent of the market or commercial exchange limits industrial-economic specialization in societies. If the market is very small, there will be little or no scope for persons to specialize in producing just one type of good or service. They will simply be unable to exchange their surpluses for the surpluses of others in large enough quantities when the requirements arise… (page 13)

 All taxes, revenue based on taxes, salaries, pensions and annuities of all kinds in societies ultimately derive from one or other of the three great original sources of economic revenue. In other words, all income is ultimately industrial-commercial income: it comes out of the wages of labour, the profits of capital and the rents of land.  As said, the three great economic revenues do not always go to different persons. They are not always readily distinguishable. Indeed, when they belong to the same person it can be hard to differentiate between them… (page 42)

 When businesses install expensive machines, they expect them to generate more than enough profits over their lifetimes to replace the capital investments. The same applies to investments in human capital or education and training. It takes time, effort and money for persons to become skilled and proficient in particular jobs. The more expensive the education and training, the more investors in human capital will expect the jobs concerned to pay premium rewards: wages, salaries and fees above the normal rates of unskilled labourers. They will expect the remuneration to cover not only the whole costs of occupational training and education but also yield at least the ordinary prof its of equivalent business investments. Because of the limited duration of people’s working lives, they will also expect investments in human capital to pay back within a reasonable time… (page 81)

 Currently in France, the law prohibits both planting new vineyards and restoring old abandoned ones. This prohibition is one of the main reasons for the high profits of the remaining French vineyards. The supposed justification of the law was a national scarcity of corn and pasture and a superabundance of wine. However, if that were the case, the market would automatically stop farmers from planting new vineyards. There would be no need for government intervention. The reduction in wine prices and profits would be a sufficient deterrent… (page 120)

 In an undeveloped country, a permanent official ban on exporting wool or hides would be the most destructive regulation imaginable. It would not only reduce the real value of most of the land in the country. It would retard general economic development – by reducing the price of the country’s most important primary product. Scottish wool prices fell considerably after the Union with England. The Union stopped Scottish wool exports from going to continental Europe and restricted them to the British market. However, the rise in the price of Scottish mutton and lamb fully compensated for the fall in the wool price. Farmers in the southern Scottish counties specialized in rearing sheep did not suffer financially… (page 160)

 The increase in the number of banks has also restricted the business market shares of individual banks. Customer dependency on any particular bank and its notes has diminished. It is possible for unexpected events and accidents to occur in banking as in any other industrial-commercial activity. However, the dividing of the banking market into smaller shares has ensured that failure by any single bank will have less damaging consequences for the national economy. Increased competition and customer choice have obliged banks to treat their consumers better – lest they go to other banks. Banking is no different from any other trade in this respect. The public always benefits from free competition and a wide choice of suppliers… page 200)

 Trade was limited and conducted mainly by poor hawkers and peddlers travelling with their goods from place to place and fair to fair – as they still do for example in present-day Tartary. Local authorities levied various taxes (passage, pontage, lastage, stallage, etc.) on travellers and goods passing through their territories and manors. There were tax collection points at bridge crossings and at the entrance to fairs for traders wanting to set up market stalls. Eventually, kings or other superior authorities granted particular traders under their jurisdiction exemptions from such taxes. These people got the title “free traders”. They were still not free in other respects. In return for their exemption from trade taxes, they usually paid a sort of annual poll tax. (1) However, over time, the liberty and independence of town dwellers gradually increased… (page 240)

 In all countries, the real uses of gold and silver naturally limit the available quantities of these metals. Gold and silver have two main uses: as coins to circulate goods and as plate to furnish homes. In every country, the value of the commodities that the coinage circulates regulates the quantity of the coinage. If the value of those commodities increases, more will go abroad to purchase the additional gold and silver coin required to circulate them. Likewise, the numbers, wealth and tastes of private families who indulge themselves in that magnificence regulate the quantity of gold and silver plate on the market. Excessive supplies of gold and silver, pots and pans, or any other goods on the market will simply reduce the price of these items… (page 260)

 It will not be possible for exporters to sell abroad at substantial ongoing losses unless the government provides them with special subsidies. Doubtless, many businesses would benefit from subsidies that enable them to go on losing significant amounts of money. However, under normal industrial-commercial conditions their own interests soon oblige loss-making businesses to deploy their capital in other ways – or to move into markets where the sales prices do cover the supply costs and yield ordinary profits. Like other mercantilist schemes and devices, export bounties are a means of trying to force business capital into channels it would not naturally enter. The schemes are invariably costly and damaging in various ways… (page 300)

 The English East India Company has not yet established a similar destructive regime in Bengal but appears to be heading that way. For example, its officials have ordered peasants to grow opium instead of rice or other grains in order that it might reap the extraordinary profits from the opium trade. Meanwhile, individual company officials have sought to establish their own private monopolies in several branches of Indian trade – doubtless with the long-term aim restraining supplies of the goods concerned and raising prices and profits. Governments do not make good industrial-commercial companies. Likewise, companies do not make good governments or political-legal administrative institutions. In modern societies, governments draw their revenue from the incomes, wealth and trading activities of the people. The governments are not themselves profit-making industrial-commercial companies. Meanwhile, companies do not run governments or states… (page 342)

 That is a false and absurd picture of any modern national economy. In reality, manufacturing industry and trade contribute greatly to both agriculture and the general wealth of societies. They enable land proprietors and cultivators to obtain a far wider range of useful goods – and far more cheaply and easily – than they could produce themselves. No agrarian economy could function and grow without industrial manufacturing and trade. If individual rural enterprises attempted self-sufficiency in this respect, the very effort of doing so would be a major distraction from farming (and other activities)… (page 380)

 In Germany, the authority of the Church of Rome was in decline even before the Protestant Reformation began. Eventually, Protestantism fatally undermined the temporal and spiritual authority of the Roman Church across Northern Europe. In Germany, princes established Protestantism in their own dominions. In England, the national government dissolved the monasteries and effectively destroyed everything that remained of the old church’s economic base. In Scotland – where the government was weak, unpopular and unstable – the Reformation was strong enough to overturn not only the church but also the state that was attempting to support it… (page 421)

 In Britain, the bounty on corn exports raises the price of that necessity and has various other negative effects. Far from providing the government with revenue, this subsidy is a substantial public expense. The government should scrap it. The high duties on importing foreign corn in years of moderate plenty amount to a prohibition. These should go also. Meanwhile, the legal ban on importing live cattle and salted beef and pork from Europe have all the negative effects of taxes on consumer necessities while producing no revenue to the government. These and other restrictive trade policies are the products of a futile political economic doctrine and the public ought to insist on their abolition. .. (page 460)

 The liberation of the public revenue of Britain is unlikely so long as the government’s annual budget surplus of revenue over expenditure is so small (even in peacetime). Achieving and maintaining a balanced budget would entail a considerable increase in public tax revenues – or an equally large reduction in public expenditure. On the revenue side, certain tax reforms would help. The government could make land and housing rent taxes more equitable and alter the present system of customs and excise along lines previously examined. Such reforms might distribute the weight of taxation far more equally throughout the society as well as increase government revenues considerably without increasing the overall tax burden… (page 501)

 Over the years, the various colony governments have supplied the people with plenty of official paper money to transact their domestic business. In Pennsylvania and elsewhere, governments have derived revenues from lending paper money at interest to their citizens. There has been some abuse. Some governments have issued bonds to cover certain extraordinary public expenditures, printed money and subsequently redeemed the loans with the inevitably depreciated currency. (In his History of Massachusetts, Hutchinson records that the colony government in 1747 paid off most of its public debts with a 10th of the money for which it had issued bills.) However, paper money generally suits the convenience of the American colonies. It saves the people the expense of using gold and silver money in their domestic transactions – and it suits the convenience and treasuries of the colony governments who issue it. Effectively, paper money has driven gold and silver from the domestic transactions of the colonies as it has in Scotland. There have been excesses of supply of this money. However, poverty has not been the cause. The demand for money has been high. Commerce has been buoyant. The enterprise and investing spirit of the people have impelled them to put as much capital as possible to active and productive use. On top of this, extravagant politicians have latched onto money printing as an ostensibly easy means of defraying public expenditures and paying-off state debts. … (pages 507-508)