Itisnotsodifficulttointroduceslaveryintoastatewherelibertyisestablished；becausesucharevolutionmightbebroughtaboutbyforce，and，forthereasonsandviolence，whichmakeeverythinggivewayabove-mentioned，Imustconclude，thattheconsequencesofsucharevolutionwouldtendtoextinguish，oratleast，withoutthegreatestindustry:butweresuchprecaution，greatlytochecktheprogressofprecautionsproperlytaken；wereslaveryreducedtoatemporaryandconditionalservice，andputunderproperregulations；itmightprove，ofallothers，themostexcellentexpedientforrenderingthelowerclassesofapeoplehappyandflourishing；andforpreventingthatabusiveprocreation，fromwhichthegreatmiserytowhichtheyareexposedatpresentchieflyproceeds。Butaseverymodificationofslaveryisquitecontrarytothespiritofmoderntimes，Ishallcarrysuchspeculationsnofarther。ThusmuchI
havethoughtitnecessarytoobserve，bytheway，onlyforthesakeofsomeprincipleswhichIshallhaveoccasionafterwardstoapplytoourownoeconomyforwhere-everanynotableadvantageisfoundaccompanyingslavery，itisthedutyofamodernstatesmantofalluponamethodofprofitingbyit，withoutwoundingthespiritofEuropeanliberty。Andthishemayaccomplishinathousandways，bytheaidofgoodlaws，calculatedforcuttingofffromthelowerclassesofapeopleanyinteresttheycanhaveininvolvingthemselvesinwantandmisery，openingtothematthesametimeaneasyprogresstowardseaseandprosperity。
Herefollowsanexpositionoftheprinciples，fromwhichI
wasledtosay，inaformerchapter，thatthefailureoftheslavishformoffeudalgovernment，andtheextensiontherebygiventocivilanddomesticliberty，werethesourcefromwhichthewholesystemofmodernpolicyhassprung。
Underthefeudalform，thehigherclasseswereperhapsmorefreethanatpresent，butthelowerclasseswereeitherslaves，orunderamostserviledependence，which，astotheconsequenceofinterruptingtheprogressofprivateindustry，isentirelythesamething。
Icannotpretendtoadvance，asaconfirmationofthisdoctrine，thattheestablishmentofslaveryinourcoloniesinAmericawasmadewithaviewtopromoteagriculture，andtocurbmanufacturesinthenewworld，becauseIdonotknowmuchofthesentimentsofpoliticiansatthattime:butifitbetrue，thatslaveryhastheeffectofadvancingagriculture，andotherlaboriousoperationswhichareofasimplenature，andatthesametimeofdiscouraginginventionandingenuity；andifthemother-countryhasoccasionfortheproduceofthefirst，inordertosubsistortoemploythosewhoaretakenupathomeintheprosecutionofthelatter；thenImustconclude，thatslaveryhasbeenveryluckily，ifnotpolitically，establishedtocompasssuchanend:andtherefore，ifanycolony，whereslaveryisnotcommon，shalleverbegintorivaltheindustryofthemother-country，averygoodwayoffrustratingtheattemptwillbe，toencouragetheintroductionofslavesintosuchcolonieswithoutanyrestrictions，andtoallowittoworkitsnaturaleffect。
Havinggiventhedefinitionoftradeandindustry，asrelativetomyinquiry，Icomenowtoexaminetheirimmediateconnections，thebettertocementthesubjectofthisbook，withtheprinciplesdeducedintheformer。
Intreatingofthereciprocalwantsofasociety，andinshewinghownaturallytheirbeingsuppliedbylabourandingenuitytendstoincreasepopulationononehand，andagricultureontheother，thebettertosimplifyourideas，wesupposedthetransitiontobedirectfromthemanufacturertotheconsumer，andbothtobemembersofthesamesociety。Mattersnowbecomemorecomplex，bytheintroductionoftradeamongdifferentnations，whichisamethodofcollectinganddistributingtheproduceofindustry，bytheinterpositionofathirdprinciple。
Tradereceivesfromathousandhands，anddistributestoasmany。
Toask，whethertradeowesitsbeginningtoindustry，orindustrytotrade，islikeasking，whetherthemotionoftheheartisowingtotheblood，orthemotionofthebloodtotheheart。Boththeoneandtheother，Isuppose，areformedbysuchinsensibledegrees，thatitisimpossibletodeterminewherethemotionbegins。Butsosoonasthebodycomestobeperfectlyformed，Ihavelittledoubtoftheheart’sbeingtheprincipleofcirculation。Letmeapplythistothepresentquestion。
Amanmustfirstexist，beforehecanfeelwant；hemustwant，thatis，desire，beforehewilldemand；andhemustdemand，beforehecanreceive。Thisisanaturalchain，andfromitwehaveconcludedinBookI，thatpopulationisthecause，andagriculturetheeffect。
Byaparallelreasonitmaybealleged，thataswantsexcitetoindustry，andareconsideredasthecauseofit；andastheproduceofindustrycannotbeexchangedwithouttrade；sotrademustbeaneffectofindustry。TothisIagree:butImustobserve，thatthisexchangedoesnotconveymyideaoftrade，althoughIadmit，thatitistherootfromwhichtheothersprings；itistheseed，butnottheplant；andtrade，aswehavedefinedit，conveysanotheridea。Theworkmenmustnotbeinterrupted，inordertoseekforanexchange，northeconsumerputtothetroubleoffindingoutthemanufacturer。Theobjectoftradethereforeisnomorethananewwant，whichcallsforasetofmentosupplyit；andtradehasapowerfuleffectinpromotingindustry，byfacilitatingtheconsumptionofitsproduce。
Whilewantscontinuesimpleandfew，aworkmanfindstimeenoughtodistributeallhiswork:whenwantsbecomemoremultiplied，menmustworkharder；timebecomesprecious；hencetradeisintroduced。Theywhowanttoconsume，sendthemerchant，inamanner，totheworkmanforhislabour，anddonotgothemselves；theworkmansellstothisinterposedperson，anddoesnotlookoutforaconsumer。Letmenowtakeafamiliarinstanceofinfanttrade，inordertoshewhowitgrowsandrefines:thiswillillustratewhatIhavebeensaying。
Iwalkoutofthegatesofacityinamorning，andmeetwithfivehundredpersons，menandwomen，everyonebringingtomarketasmallparcelofherbs，chickens，eggs，fruits，&c。Itoccurstomeimmediatelythatthesepeoplemusthavelittletodoathome，sincetheycometomarketforsosmallavalue。Someyearsafterwards，Ifindnothingbuthorses，carts，andwaggons，carryingthesameprovisions。Imustthenconclude，thateitherthoseIusedtomeetbeforearenomoreinthecountry，butpurgedoff，asbeingfounduseless，afteramethodhasbeenfoundofcollectingalltheirburdensintoafewcarts；orthattheyhavefoundoutamoreprofitableemploymentthancarryingeggsandgreenstomarket。Whicheverhappenstobethecase，thischangewillpointouttheintroductionofwhatIcalltrade；towit，thiscollectingofeggs，fruit，fowl，&c。fromtwentyhands，inordertodistributeittoasmanymorewithinthewalls。Theconsequenceis，thatagreatdealoflabourissaved；thatistosay，thecartgivestimetotwentypeopletolabour，iftheyaredisposedtoit；andwhenwantsincrease，theywillbereadytosupplythem。
Wecannotthereforesay，thattradewillforceindustry，orthatindustrywillforcetrade；butwemaysay，thattradewillfacilitateindustry，andthatindustrywillsupporttrade。Boththeoneandtheotherhoweverdependuponathirdprinciple；towit，atasteforsuperfluity，inthosewhohaveanequivalenttogiveforit。Thistastewillproducedemand，andthisagainwillbecomethemainspringofthewholeoperation。
Chap。II
OfDemandThisisnonewsubject；itisonlygoingoverwhathasbeentreatedofveryextensivelyinthefirstbook，underanothername，andrelativelytoothercircumstances。Theseideasweretherekeptassimpleaspossible；heretheytakeamorecomplexform，andappearinanewdress。
Thewantsofmankindweresaidtopromotetheirmultiplication，byaugmentingthedemandforthefoodofthefreehands，who，bysupplyingthesewants，areenabledtoofferanequivalentfortheirfood，tothefarmerswhoproducedit；andasthiswayofbarteringisarepresentationoftradeinitsinfancy，itisnowonderthattrade，whengrownup，shouldstillpreservearesemblancetoit。
Demand，consideredasatermappropriatedtotrade，willnowbeusedinsteadofwants；thetermusedinthefirstbookrelativelytobartering；wemustthereforeexpect，thattheoperationsofthesameprinciple，underdifferentappellations，willconstantlyappearsimilar，ineveryapplicationwecanmakeofittodifferentcircumstances。
Whetherthistermbeappliedtobarteringortotrade，itmustconstantlyappearreciprocal。IfIdemandapairofshoes，theshoemakereitherdemandsmoney，orsomethingelseforhisownuse。Topreventthereforetheambiguityofaterm，which，fromthesterilityoflanguage，istakenindifferentacceptations，accordingtothecircumstanceswhicharesupposedtoaccompanyit，Ishallendeavourshortlytoanalyzeit。
First，Demandiseverunderstoodtoberelativetomerchandize。Ademandformoney，exceptinbillsofexchange，isnevercalleddemand。Whenthosewhohavemerchandizeuponhand，aredesirousofconvertingthemintomoney，theyaresaidtooffertosale；andif，inordertofindabuyer，theylowertheirprice，then，insteadofsayingthedemandformoneyishigh，wesaythedemandforgoodsislow。
Secondly，Supposeashiptoarriveataportloadedwithgoods，withanintentiontopurchaseothersinreturn，theoperationbecomesonlydouble。Theshipofferstosale，andthedemandoftheportissaidtobehighorlow，accordingtotheheightofthepriceoffered，notaccordingtothequantitydemanded，ornumberofdemanders。Whenallissold，thentheshipbecomesdemander。andifhisdemandbeproportionallyhigherthantheformer，wesayuponthewhole，thatthedemandisforthecommoditiesoftheport；thatis，theportoffers，andtheshipdemands。ThisIcallreciprocaldemand。
Thirdly，Demandiseithersimpleorcompound。Simple，whenthedemanderisbutone，compound，whentheyaremore。Butthisisnotsomuchrelativetopersonsastointerests。Twentypeopledemandingfromthesamedeterminateinterestformbutasimpledemand；itbecomescompoundorhigh，whendifferentinterestsproduceacompetition。Itmaythereforebesaid，thatwhenthereisnocompetitionamongbuyers，demandissimple，letthequantitydemandedbegreatorsmall，letthebuyersbefewormany。Whenthereforeinthecontractofbarter，thedemandupononesideissimple，upontheothercompound，thatwhichiscompoundisconstantlycalledthedemand，theothernot。
Fourthly，Demandiseithergreatorsmall:great，whenthequantitydemandedisgreat；small，whenthequantitydemandedissmall。
Fifthly，Demandiseitherhighorlow。high，whenthecompetitionamongthebuyersisgreat；low，whenthecompetitionamongthesellersisgreat。Fromthesedefinitionsitfollows，thattheconsequenceofagreatdemand，isagreatsale；theconsequenceofahighdemand，isagreatprice。Theconsequenceofasmalldemand，isasmallsale；theconsequenceofalowdemand，isasmallprice。
Sixthly，Thenatureofdemandistoencourageindustry。andwhen，itisregularlymade，theeffectofitis，thatthesupplyforthemostpartisfoundtobeinproportiontoit，andthenthedemandiscommonlysimple。Itbecomescompoundfromothercircumstances。Aswhenitisirregular，thatis，unexpected，orwhentheusualsupplyfails；theconsequenceofwhichis，thattheprovisionmadeforthedemand，fallingshortofthejustproportion，occasionsacompetitionamongthebuyers，andraisesthecurrent，thatis，theordinaryprices。Fromthisitis，thatwecommonlysay，demandraisesprices。Pricesarehighorlowaccordingtodemand。Theseexpressionsarejust；becausethesterilityoflanguageobligesustheretoattendtocircumstanceswhichareonlyimplied。
Demandisunderstoodtobehighorlow，relativelytothecommonrateofit，ortothecompetitionbetweenbuyers，toobtaintheprovisionmadeforit。Whendemandisunderstoodtoberelativetothequantitydemanded，itmustbecalledgreatorsmall，ashasbeensaid。
Seventhly，Demandhasnotalwaysthesameeffectinraisingprices。wemustthereforecarefullyattendtothedifferencebetweenademandforthingsofthefirstnecessityforlife，andforthingsindifferent；alsobetweenademandmadebytheimmediateconsumers，andonemadebymerchants，whobuyinordertosellagain。Inbothcasesthecompetitionwillhavedifferenteffects。Thingsofabsolutenecessitymustbeprocured，letthepricebeeversogreat:consumerswhohavenoviewtoprofit，buttosatisfytheirdesires，willenterintoastrongercompetitionthanmerchants，whoareanimatedbynopassion，andwhoareregulatedinwhattheyofferbytheirprospectofgainalone。
Hencethegreatdifferenceinthepriceofgrainindifferentyears；hencetheuniformstandardofthepriceofmerchandize，attheIndiasalesandinfairsofdistribution，suchasFranckfort，Beaucaire，&c。，hence，also，theadvantagewhichconsumersfindinmakingtheirprovisionatthesametimethatmerchantsmaketheirs；hencethesuddenriseandfallinthepriceoflabouringcattleincountrymarkets，whereeveryoneprovidesforhimself。
Letwhathasbeensaidsufficeatsettingout:thisprinciplewillbemuchbetterexplainedbyitsapplicationasweadvance，thanbyalltheabstractdistinctionsIamcapabletogiveofit。
Chap。III
OfthefirstPrinciplesofbartering，andhowthisgrowsintoTradeImustnowbeginbytracingtradetoitssource，inordertoreduceittoitsfirstprinciples。
Themostsimpleofalltrade，isthatwhichiscarriedonbybarteringthenecessaryarticlesofsubsistence。Ifwesupposetheearthfreetothefirstpossessor，thispersonwhocultivatesitwillfirstdrawfromithisownfood，andthesurpluswillbetheobjectofbarter:hewillgivethisinexchangetoanyonewhowillsupplyhisotherwants。Thisashasbeensaidsupposesnaturallybothasurplusquantityoffoodproducedbylabour，andalsofreehands；forhewhomakesatradeofagriculturecannotsupplyhimselfwithallothernecessaries，aswellasfood；andhewhomakesatradeofsupplyingthefarmerswithsuchnecessariesinexchangeforhissurplusoffood，cannotbeemployedinproducingthatfood。Themorethenecessitiesofmanincrease，caterisparibus，themorefreehandsarerequiredtosupplythem；andthemorefreehandsarerequired，themoresurplusfoodmustbeproducedbyadditionallabour，tosupplytheirdemand。
Thisistheleastcomplexkindoftrade，andmaybecarriedontoagreaterorlessextent，indifferentcountries，accordingtothedifferentdegreesofthewantstobesupplied。Inacountrywherethereisnomoney，noranythingequivalenttoit，Iimaginethewantsofmankindwillbeconfinedtofewobjects；
towit，theremovingtheinconveniencesofhunger，thirst，cold，heat，danger，andthelike。Afreemanwhobyhisindustrycanprocureallthecomfortsofasimplelife，willenjoyhisrest，andworknomore:And，ingeneral，allincreaseofworkwillcease，sosoonasthedemandforthepurposesmentionedcomestobesatisfied。Thereisaplainreasonforthis。Whenthefreehandshaveprocured，bytheirlabour，wherewithaltosupplytheirwants，theirambitionissatisfied；sosoonasthehusbandmenhaveproducedthenecessarysurplusforrelievingtheirs，theyworknomore。Herethenisanaturalstopputtoindustry，consequentlytobartering。This，inthefirstbookwehavecalledthemoralimpossibilityofaugmentingnumbers。
Thenextthingtobeexamined，is，howbarteringgrowsintotrade，properlysocalledandunderstood，accordingtothedefinitiongivenofitabove；howtradecomestobeextendedamongmen；howmanufactures，moreornamentalthanuseful，cometobeestablished；andhowmencometosubmittolabour，inordertoacquirewhatisnotabsolutelynecessaryforthem。
This，inafreesociety，Itaketobechieflyowingtotheintroductionofmoney，andatasteforsuperfluitiesinthosewhopossessit。
Inancienttimes，moneywasnotwanting；butthetasteforsuperfluitiesnotbeinginproportiontoit，thespeciewaslockedup。ThiswasthecaseinEuropefourhundredyearsago。A
newtasteforsuperfluityhasdrawn，perhaps，moremoneyintocirculation，fromourowntreasures，thanfromtheminesofthenewworld。Thepooropinionweentertainoftherichesofourforefathers，isfoundeduponthemodernwayofestimatingwealth，bythequantityofcoinincirculation，fromwhichweconclude，thatthegreatestpartofthespecienowinourhandsmusthavecomefromAmerica。
Itismore，therefore，throughthetasteforsuperfluity，thaninconsequenceofthequantityofcoin，thattradecomestobeestablished；anditisinconsequenceoftradeonlythatweseeindustrycarrythingsinourdaystosohighapitchofrefinementanddelicacy。Letmeillustratethisbycomparingtogetherthedifferentoperationsofbarter，sale，andcommerce。
Whenreciprocalwantsaresuppliedbybarter，thereisnotthesmallestoccasionformoney:thisisthemostsimpleofallcombinations。
Whenwantsaremultiplied，barteringbecomesforobviousreasonsmoredifficult；uponthismoneyisintroduced。Thisisthecommonpriceofallthings:itisaproperequivalentinthehandsofthosewhofeelawant，perfectlycalculatedtosupplytheoccasionsofthosewho，byindustry，canrelieveit。Thisoperationofbuyingandsellingisalittlemorecomplexthantheformer，butstillwehaveherenoideaoftrade，becausewehavenotintroducedthemerchant，bywhoseindustryitiscarriedon。
Letthisthirdpersonbebroughtintoplay，andthewholeoperationbecomesclear。Whatbeforewecalledwants，ishererepresentedbytheconsumer；whatwecalledindustry，bythemanufacturer；whatwecalledmoney，bythemerchant。Themerchanthererepresentsthemoney，bysubstitutingcreditinitsplace；
andasthemoneywasinventedtofacilitatebarter，sothemerchantwithhiscredit，isanewrefinementupontheuseofmoney。Themerchant，Isay，rendersmoneystillmoreeffectualinperformingtheoperationsofbuyingandselling。Thisoperationistrade:itrelievesbothpartiesofthewholetroubleoftransportation，andadjustingwantstowants，orwantstomoney。
themerchantrepresentsbyturnsboththeconsumer，themanufacturer，andthemoney。Totheconsumerheappearsasthewholebodyofmanufacturers；tothemanufacturers，asthewholebodyofconsumers；andtotheoneandtheotherclasshiscreditsuppliestheuseofmoney。Thisissufficientatpresentforanillustration。Imustnowreturntothesimpleoperationsofmoneyinthehandsofthetwocontractingparties，thebuyerandtheseller，inordertoshowhowmencometosubmittolabourinordertoacquiresuperfluities。
Sosoonasmoneyisintroducedintoacountryitbecomes，aswehavesaidabove，anuniversalobjectofwanttoalltheinhabitants。Theconsequenceis，thatthefreehandsofthestate，whobeforestoppedworking，becausealltheirwantswereprovidedfor，havingthisnewobjectofambitionbeforetheireyes，endeavour，byrefinementsupontheirlabour，toremovethesmallerinconvenienceswhichresultfromasimplicityofmanners。
People，Ishallsuppose，whoformerlyknewbutonesortofclothingforallseasons，willinglypartwithalittlemoneytoprocureforthemselvesdifferentsortsofapparelproperlyadaptedtosummerandinter，whichtheingenuityofmanufacturers，andtheirdesireofgettingmoney，mayhavesuggestedtotheirinvention。
Ishallnotherepursuethegradualprogressofindustry，inbringingmanufacturestoperfection；norinterruptmysubjectwithanyfartherobservationsupontheadvantagesresultingtoindustry，fromtheestablishmentofcivilanddomesticliberty；
butshallonlysuggest，thattheserefinementsseemmoregenerallyowingtotheindustryandinventionofthemanufacturerswhobytheiringenuitydailycontrivemeansofsofteningorrelievinginconveniences，whichmankindseldomperceivetobesuch，tillthewayofremovingthembecontrived
thantothetasteforluxuryintherich，who，toindulgetheirease，engagethepoortobecomeindustrious。
Letanymanmakeanexperimentofthisnatureuponhimself，byenteringintothefirstshop。Hewillnowheresoquicklydiscoverhiswantsasthere。Everythingheseesappearseithernecessary，oratleasthighlyconvenient；andhebeginstowonderespeciallyifheberichhowhecouldhavebeensolongwithoutthatwhichtheingenuityoftheworkmanalonehadinvented，inorderthatfromthenoveltyitmightexcitehisdesire；forwhenitisbought，heillneveroncethinkmoreofitperhaps，noreverapplyittotheuseforwhichitatfirstappearedsonecessary。
Herethenisareasonwhymankindlabourthoughnotinwant。
Theybecomedesirousofpossessingtheveryinstrumentsofluxury，whichtheiravariceorambitionpromptedthemtoinventfortheuseofothers。
Whathasbeensaidrepresentstradeinitsinfancy，orratherthematerialswithwhichthisgreatfabricisbuilt。
Wehaveformedanideaofthewantsofmankindmultipliedeventoluxury，andabundantlysuppliedbytheemploymentofallthefreehandssetapartforthatpurpose。Butifwesupposetheworkmanhimselfdisposingofhiswork，andpurchasingwithitfoodfromthefarmer，clothsfromtheclothier，andingeneralseekingforthesupplyofeverywantfromthehandsofthepersondirectlyemployedforthepurposeofrelievingit；thiswillnotconveyanideaoftrade，accordingtoourdefinition。
Tradeandcommerceareanabbreviationofthislongprocess；
aschemeinventedandsetonfootbymerchants，fromaprincipleofgain，supportedandextendedamongmen，fromaprincipleofgeneralutilitytoeveryindividual，richorpoor，toeverysociety，greatorsmall。
Insteadofapin-makerexchanginghispinswithfiftydifferentpersons，forwhoselabourhehasoccasion，hesellsalltothemerchantformoneyorforcredit；and，asoccasionoffers，hepurchasesallhiswants，eitherdirectlyfromthosewhosupplythem，orfromothermerchantswhodealwithmanufacturersinthesamewayhismerchantdealtwithhim。
Anotheradvantageoftradeis，thatindustriouspeopleinonepartofthecountry，maysupplycustomersinanother，thoughdistant。Theymayestablishthemselvesinthemostcommodiousplacesfortheirrespectivebusiness，andhelponeanotherreciprocally，withoutmakingthedistantpartsofthecountrysufferforwantoftheirlabour。Theyarelikewiseexposedtonoavocationfromtheirwork，byseekingforcustomers。
Tradeproducesmanyexcellentadvantages；itmarksouttothemanufacturerswhentheirbranchisunderoroverstockedwithhands。Ifitbeunderstocked，theywillfindmoredemandthantheycananswer:ifitbeoverstocked，thesalewillbeslow。
Intelligentmen，ineveryprofession，willeasilydiscoverwhentheseappearancesareaccidental，andwhentheyproceedfromtherealprinciplesoftrade。whichareheretheobjectofourinquiry。
Posts，andcorrespondencebyletters，areaconsequenceoftrade，bythemeansofwhichmerchantsareregularlyinformedofeveryaugmentationordiminutionofindustryineverybranch，ineverypartofthecountry。Fromthisknowledgetheyregulatethepricestheyoffer；andastheyaremany，they，fromtheprinciplesofcompetitionwhichweshallhereafterexamine，serveasacheckupononeanother。
Fromthecurrentprices，themanufacturersareaswellinformedasiftheykeptthecorrespondencethemselves:thestatesmanfeelsperfectlywherehandsarewanting，andyoungpeopledestinedtoindustry，obey，inamanner，thecallofthepublic，andfallnaturallyintosupplythedemand。
Twogreatassistancestomerchants，especiallyintheinfancyoftrade，arepublicmarketsforcollectingtheworkofsmalldealers，andlargeundertakingsinthemanufacturingwaybyprivatehands。Bythesemeansthemerchantscomeattheknowledgeofthequantityofworkinthemarket，asontheotherhandthemanufacturerslearn，bythesaleofthegoods，theextentofthedemandforthem。Thesetwothingsbeingjustlyknown，thepriceofgoodsiseasilyfixed，asweshallpresentlysee。
Publicsalesservetocorrectthesmallinconvenienceswhichproceedfromtheoperationsoftrade。Asetofmanufacturersgotalltogetherintoonetown，andentirelytakenupwiththeirindustry，aretherebyaswellinformedoftherateofthemarket，asifeveryoneofthemcarriedthitherhiswork；anduponthearrivalofthemerchant，whoreadilytakesitofftheirhands，hehasnottheleastadvantageoverthemfromhisknowledgeofthestateofdemand。Thismanbothbuysandsellsinwhatiscalledwholesalethatisbylargeparcelsandfromhimretailerspurchase，whodistributethegoodstoeveryconsumerthroughoutthecountry。Theselastbuyfromwholesalemerchantsineverybranch，thatproportionofeverykindofmerchandizewhichissuitabletothedemandoftheirborough，city，orprovince。
Thus，allinconveniencesareprevented，atsomeadditionalcosttotheconsumer，who，forreasonsweshallafterwardspointout，mustnaturallyreimbursethewholeexpence。Thedistanceofthemanufacturer，theobscurityofhisdwelling，thecapriceinsellinghiswork，arequiteremoved；theretailerhasallinhisshop，andthepublicbuysatacurrentprice。
Chap。IV
HowthePricesofGoodsaredeterminedbyTradeInthepriceofgoods，Iconsidertwothingsasreallyexisting，andquitedifferentfromoneanother；towit；therealvalueofthecommodity，andtheprofituponalienation。Theintentionofthischapteristoestablishthisdistinction，andtoshewhowtheoperationoftradeseverallyinfluencesthestandardoftheoneandtheother；thatistosay，howtradehastheeffectofrenderingfixedanddeterminate，twothingswhichwouldotherwisebequitevagueanduncertain。
I。Thefirstthingtobeknownofanymanufacturewhenitcomestobesold，is，howmuchofitapersoncanperforminaday，aweek，amonth，accordingtothenatureofthework，whichmayrequiremoreorlesstimetobringittoperfection。Inmakingsuchestimates，regardistobehadtowhat，uponanaverageonly，aworkmanofthecountryingeneralmayperform，withoutsupposinghimthebestortheworstinhisprofession；orhavinganypeculiaradvantageordisadvantageastotheplacewhereheworks。
Hencethereasonwhysomepeoplethrivebytheirindustry，andothersnot；whysomemanufacturesflourishinoneplaceandnotinanother。
II。Thesecondthingtobeknown，isthevalueoftheworkman’ssubsistenceandnecessaryexpence，bothforsupplyinghispersonalwants，andprovidingtheinstrumentsbelongingtohisprofession，whichmustbetakenuponanaverageasabove；
exceptwhenthenatureoftheworkrequiresthepresenceoftheworkmanintheplaceofconsumption；foralthoughsometrades，andalmosteverymanufacture，maybecarriedoninplacesatadistance，andthereforemayfallunderonegeneralregulationastoprices，yetotherstherearewhich，bytheirnature，requirethepresenceoftheworkmanintheplaceofconsumption；andinthiscasethepricesmustberegulatedbycircumstancesrelativetoeveryparticularplace。
III。Thethirdandlastthingtobeknown，isthevalueofthematerials，thatisthefirstmatteremployedbytheworkman；
andiftheobjectofhisindustrybethemanufactureofanother，thesameprocessofinquirymustbegonethroughwithregardtothefirst，aswithregardtothesecond:andthusthemostcomplexmanufacturesmaybeatlastreducedtothegreatestsimplicity。Ihavebeenmoreparticularinthisanalysisofmanufacturesthanwasabsolutelynecessaryinthisplace，thatI
mightafterwardswiththegreaterease，pointoutthemethodsofdiminishingthepricesofthem。
Thesethreearticlesbeingknown，thepriceofmanufactureisdetermined。Itcannotbelowerthantheamountofallthethree，thatis，thantherealvalue；whateveritishigher，isthemanufacturer’sprofit。Thiswilleverbeinproportiontodemand，andthereforewillfluctuateaccordingtocircumstances。
Henceappearsthenecessityofagreatdemand，inordertopromoteflourishiugmanufactures。
Bytheextensivedealingsofmerchants，andtheirconstantapplicationtothestudyofthebalanceofworkanddemand，alltheabovecircumstancesareknowntothem，andaremadeknowntotheindustrious，whoregulatetheirlivingandexpenceaccordingtotheircertainprofit。Icallitcertain，becauseunderthesecircumstancestheyseldomovervaluetheirwork，andbynotovervaluingit，theyaresureofasale:aproofofthismaybehadfromdailyexperience。
Employaworkmaninacountrywherethereislittletradeorindustry，heproportionshispricealwaystotheurgencyofyourwant，oryourcapacitytopay；butseldomtohisownlabour。
Employanotherinacountryoftrade，hewillnotimposeuponyou，unlessperhapsyoubeastranger，whichsupposesyourbeingignorantofthevalue；butemploythesameworkmaninaworknotusualinthecountry，consequentlynotdemanded，consequentlynotregulatedastothevalue，hewillproportionhispriceasinthefirstsupposition。
Wemaythereforeconcludefromwhathasbeensaid，thatinacountrywheretradeisestablished，manufacturesmustflourish，fromthereadysale，theregulatedpriceofwork，andcertainprofitresultingfromindustry。Letusnextinquireintotheconsequencesofsuchasituation。
Chap。V
HowforeignTradeopenstoanindustriousPeople，andtheConsequencesofittotheMerchantswhosetitonfootThefirstconsequenceofthesituationdescribedintheprecedingchapter，is，thatwantsareeasilysupplied，fortheadequatevalueofthethingwanted。
Thenextconsequenceis，theopeningofforeigntradeunderitstwodenominationsofpassiveandactive。Strangersandpeopleofdistantcountriesfindingthedifficultyofhavingtheirwantssuppliedathome，andtheeaseofhavingthemsuppliedfromthiscountry，immediatelyhaverecoursetoit。Thisispassivetrade。
Theactiveiswhenmerchants，whohaveexecutedthisplanathomewithsuccess，begintotransportthelabouroftheircountrymenintootherregions，whicheitherproduce，orarecapableofproducingsucharticlesofconsumption，propertobemanufactured，asaremostdemandedathome；andconsequentlywillmeetwiththereadiestsale，andfetchthelargestprofits。Herethenistheopeningofforeigntrade，underitstwodenominationsofactiveandpassive:butasweareatpresentconsideringtheconsequencesofthisnewstateofthingswithrespecttothemerchants，weshalltakenofarthernotice，inthisplace，ofthatdivision:itwillnaturallycomeinafterwards。
Whatthenaretheconsequencesofthisnewcommercetoourmerchants，whohavelefttheirhomesinquestofgainabroad？
Thefirstis，thatarrivinginanynewcountry，theyfindthemselvesinthesamesituation，withregardtotheinhabitants，astheworkmeninthecountryofnotrade，withregardtothosewhoemployedhim；thatis，theyproportionthepriceoftheirgoodstotheeagernessofacquiring，orthecapacityofpaying，intheinhabitants，butnevertotheirrealvalue。
Thefirstprofitsthen，uponthistrade，mustbeveryconsiderable；andthedemandfromsuchacountrywillbehighorlow，greatorsmall，accordingtothespirit，nottherealwantsofthepeople:fortheseinallcountries，ashasbeensaid，mustfirstbesuppliedbytheinhabitantsthemselves，beforetheyceasetolabour。
Ifthepeopleofthisnot-tradingcountryasweshallnowcallitbeabundantlyfurnishedwithcommoditiesusefultothetraders，theywilleasilypartwiththem，atfirst，fortheinstrumentsofluxuryandease；butthegreatprofitofthetraderswillinsensiblyincreasethedemandfortheproductionsoftheirnewcorrespondents；thiswillhavetheeffectofproducingacompetitionbetweenthemselves，andtherebyofthrowingthedemandontheirside，fromtheprinciplesIshallafterwardsexplain。Thisisperpetuallyadisadvantageintraffic:themostit；andunpolishednationsintheworldquicklyperceivetheeffectsofaretaughttoprofitofthediscovery，inspiteoftheaddressofthosewhoarethemostexpertincommerce。
Thetraderswill，therefore，beveryfondoffallinguponeverymethodandcontrivancetoinspirethispeoplewithatasteofrefinementanddelicacy。Abundanceoffinepresents，consistingofeveryinstrumentofluxuryandsuperfluity，thebestadaptedtothegeniusofthepeople，willbegiventotheprinceandleadingmenamongthem。Workmenwillevenbeemployedathometostudythetasteofthestrangers，andtocaptivatetheirdesiresbyeverypossiblemeans。Themoreeagertheyareofpresents，themorelavishthetraderswillbeinbestowinganddiversifyingthem。Itisananimalputuptofatten，themoreheeatsthesoonerheisfitforslaughter。Whentheirtasteforsuperfluityisfullyformed，whentherelishfortheirformersimplicityissophisticated，poisoned，andobliterated，thentheyaresurelyinthefettersofthetraders，andthedeepertheygo，thelesspossibilitythereisoftheirgettingout。Thepresentsthenwilldieaway，havingservedtheirpurpose；andif，afterwards，theyarefoundtobecontinued，itwillprobablybetosupportthecompetitionagainstothernations，whowillinclinetoshareoftheprofits。
If，onthecontrary，thisnot-tradingnationdoesnotaboundwithcommoditiesusefultothetraders，thesewillmakelittleaccountoftradingwiththem，whatevertheirturnmaybe；butifwesupposethiscountryinhabitedbyalaboriouspeople，who，havingtakenatasteforrefinementfromthetraders，applythemselvestoagriculture，inordertoproducearticlesofsubsistence，theywillsolicitthemerchantstogivethempartoftheirmanufacturesinexchangeforthese；andthistradewillundoubtedlyhavetheeffectofmultiplyingnumbersinthetradingnation。Butiffoodcannotbefurnished，noranyotherbranchofproductionfoundouttosupportthecorrespondence，thetasteforrefinementwillsoondieaway，andtradewillstopinthisquarter。
HaditnotbeenforthefursinthosecountriesadjacenttoHudson’sBay，andinCanada，theEuropeansneverwouldhavethoughtofsupplyinginstrumentsofluxurytothosenations；andiftheinhabitantsofthoseregionshadnottakenatastefortheinstrumentsofluxuryfurnishedtothembytheEuropeans，theyneverwouldhavebecomesoindefatigablenorsodexteroushunters。Atthesametimewearenottosuppose，thatevertheseAmericanswouldhavecometoEuropeinquestofourmanufactures。
Itisthereforeowingtoourmerchants，thatthosenationsarebecomeinanydegreefondofrefinement；andthistaste，inallprobability，willnotsoonexceedtheproportionoftheproductionsoftheircountry。Fromthesebeginningsofforeigntradeitiseasytotraceitsincrease。
Onesteptowardsthis，istheestablishingcorrespondencesinforeigncountries；andthesearemoreorlessnecessaryinproportionasthecountrywheretheyareestablishedismoreorlesspolishedoracquaintedwithtrade。Theysupplythewantofposts，andpointouttothemerchantswhatproportiontheproductionsofthecountrybeartothedemandoftheinhabitantsformanufactures。Thiscommunicatesanideaofcommercetothenot-tradingnation，andtheyinsensiblybegintofixadeterminatevalueupontheirownproductions，whichperhapsborenodeterminatevalueatallbefore。
Letmetracealittletheprogressofthisrefinementinthesavages，inordertoshewhowithastheeffectofthrowingthedemanduponthetraders，andofcreatingacompetitionamongthem，fortheproductionsofthenewcountry。
Experienceshews，thatinanew-discoveredcountry，merchantsconstantlyfindsomearticleorotherofitsproductions，whichturnsouttoagreataccountincommerce；andweseethatthelongersuchatradesubsists，andthemoretheinhabitantstakeatasteforEuropeanmanufactures，themoretheirownproductionsriseintheirvalue，andthelessprofitismadebytradingwiththem，evenincaseswherethetradeiscarriedonbycompanies；
whichisaverywiseinstitutionforonereason，thatitcutsoffacompetitionbetweenourmerchants。
Thisweshallshew，initsproperplace，tobethebestmeansofkeepingpriceslowinfavourofthenation；howeveritmayworkacontraryeffectwithrespecttoindividualswhomustbuyfromthesemonopolies。
Whencompaniesarenotestablished，andwhentradeisopen，ourmerchants，bytheireagernesstoprofitofthenewtrade，betraythesecretsofit，theyenterintocompetitionforthepurchaseoftheforeignproduce，andthisraisespricesandfavoursthecommerceofthemostignorantsavages。
Someaccountforthisinadifferentmanner。Theyallegethatitisnotthiscompetitionwhichraisesprices；becausethereisalsoacompetitionamongthesavages，whichofthemshallgetthemerchandise；andthismaybesufficienttocounter-balancetheother，butinproportionasthequantityofgoodsdemandedbythesavages，asanexchangefortheproduceoftheircountry，becomesgreater，alessquantityofthisproducemustbegivenforeveryparcelofthegoods。
TothisIanswer，ThatIcannotadmitthisapparentreasontobeconsistentwiththeprinciplesoftrade，howeveringenioustheconceitmaybe。
Themerchantconstantlyconsidershisownprofitinpartingwithhisgoods，andisnotinfluencedbythereasonsofexpediencywhichthesavagesmayfind，toofferhimlessthanformerly；forwerethisprincipleofproportionadmittedgenerally，thepriceofmerchandisewouldalwaysbeatthediscretionofthebuyers。
Theobjectionherestatedisabundantlyplain；butitmustberesolvedinaverydifferentmanner。Herearetwosolutions:
First，Prices，Ihavesaid，aremadetorise，accordingasdemandishigh，notaccordingasitisgreat。Now，intheobjection，itissaid，that，inproportionasthedemandisgreat，alessproportionoftheequivalentmustgotoeveryparcelofthemerchandise；whichIapprehendtobefalse；andthisshewsthenecessityofmakingadistinctionbetweenthehighandthegreatdemand，thingsentirelydifferentintrade，andwhichcommunicatequitedifferentideas。
Secondly，Inalltradethereisanexchange，andinallexchange，wehavesaid，thereisareciprocaldemandimplied:itmustthereforebeexactlyinquiredinto，onwhichhandthecompetitionbetweenthedemandersisfound；thatistosay，onwhichhanditisstrongest；accordingtothedistinctioninthesecondchapter。
Iftheinhabitantsofthecountrybeincompetitionforthemanufactures，goodswillriseintheirpricemostundoubtedly，letthequantityoftheproducetheyhavetoofferbelargeorsmall；butsosoonasthesepricesriseabovethefaculties，ordesireofbuying，incertainindividuals，theirdemandwillstop，andtheirequivalentwillbepreventedfromcomingintocommerce。
Thiswilldisappointthetraders；andtherefore，astheirgainsaresupposedtobegreat，eitheracompetitionwilltakeplaceamongthemselves，whoshallcarryoffthequantityremaining，supposingthemtohaveseparateinterests；or，iftheyareunited，theymay，fromaviewofexpediency，voluntarilysinktheirprice，inordertobringitwithinthecompassofthefaculties，orintention，tobuyinthosewhoarestillpossessedofaportionofwhattheywant。
ItisfromtheeffectsofcompetitionamongsellersthatI
apprehendpricesarebroughtdown，notfromanyimaginaryproportionofquantitytoquantityinthemarket。Butofthismoreafterwards，initsproperplace。
Sosoonasthepriceofmanufacturesisbroughtaslowaspossible，inthenewnation；ifthesurplusoftheircommoditiesdoesnotsufficetopurchaseaquantityofmanufacturesproportionedtotheirwants，thispeoplemustbegintolabour:
forlabouristhenecessaryconsequenceofwant，realorimaginary；andbylabouritwillbesupplied。
Whenthiscomestobethecase，weimmediatelyfindtwotradingnationsinsteadofone；thebalanceofwhichtradewillalwaysbeinfavourofthemostindustriousandfrugal；asshallbefullyexplainedinanotherplace。
Letmenowdirectmyinquirymoreparticularlytowardstheconsequencesofthisnewstateofthingsproducedbycommerce，relativetothenot-tradingnation，inordertoshewtheeffectofapassiveforeigntrade。Ishallsparenopainsinillustrating，uponeveryoccasion，asIgoalong，thefundamentalprinciplesofcommerce，demand，andcompetition，evenperhapsattheexpenceofappearingtiresometosomeofmyreaders。
Chap。VI
ConsequencesoftheIntroductionofapassiveForeignTradeamongaPeoplewholiveinSimplicityandIdlenessWenowsupposethearrivaloftraders，allinoneinterest，withinstrumentsofluxuryandrefinement，ataportinacountryofgreatsimplicityofmanners，abundantlyprovidedbynaturewithgreatadvantagesforcommerce，andpeopledbyanationcapableofadoptingatasteforsuperfluities。
Thefirstthingthemerchantsdo，istoexposetheirgoods，andpointouttheadvantagesofmanythings，eitheragreeableorusefultomankindingeneral，suchaswines，spirits，instrumentsofagriculture，arms，andammunitionforhunting，netsforfishing，manufacturesforclothing，andthelike。Theadvantagesofthesearepresentlyperceived，andsuchcommoditiesareeagerlysoughtafter。Thenativesontheirsideproducewhattheymostesteem，generallysomethingsuperfluousorornamental。Thetraders，afterexaminingallcircumstances，determinetheobjectoftheirdemand，givingtheleastquantitypossibleinreturnforthissuperfluity，inordertoimpresstheinhabitantswithahighnotionofthevalueoftheirowncommodities；butasthisparsimonymaydomorehurtthangoodtotheirinterest，theyareverygenerousinmakingpresents，fromtheprinciplesmentionedabove。
Whentheexchangeiscompleted，andthetradersdepart，regretiscommonlymutual；theoneandtheotheraresorrythatthesuperfluitiesofthecountryfallshort。Areturnispromisedbythetraders，andassurancesaregivenbythenativesofabetterprovisionanothertime。
Whatarethefirstconsequencesofthisrevolution？Isitnotevident，that，inordertosupplyanequivalentforthisnewwant，morehandsmustbesettoworkthanformerly？Anditisevidentalso，thatthisaugmentationofindustrywillnotessentiallyincreasenumbers；aswassupposedtobetheeffectofitthroughthewholetrainofourreasoninginthefirstbook。
Why？Becausetheretheproduceoftheindustrywassupposedtobeconsumedathome；andhereitisintendedtobeexported。Butifwecanfindoutanyadditionalconsumptionathomeevenimpliedbythisnewtrade，Ithinkitwillhavetheeffectofaugmentingnumbers。Anexamplewillmakethisplain。
Letmesupposethesuperfluityofthiscountrytobetheskinsofwildbeasts，notproperforfood；themanufacturesoughtfor，brandy。Thebrandyissoldforfurs。Hewhohasfurs，orhewhocansparetimetohuntforthem，willdrinkbrandyinproportion:butIcannotfindoutanyreasontoconclude，fromthissimpleoperation，thatonemanmoreinthecountrymustnecessarilybefed，forIhavetakencaretosuppose，thatthefleshoftheanimalsisnotproperforfoodorthatanyaugmentationofagriculturemustofconsequenceensuefromthisnewtraffic。
Butletmethrowinacircumstancewhichmayimplyanadditionalconsumptionathome，andthenexaminetheconsequences。
Apoorcreature，whohasnoequivalenttoofferforfood，whoismiserable，andreadytoperishforwantofsubsistence，goesahunting，andkillsawolf；hecomestoafarmerwiththeskin，andsays；youarewellfed，butyouhavenobrandy；ifyouwillgivemealoafIwillgiveyouthisskin，whichthestrangersaresofondof，andtheywillgiveyoubrandy。But，saysthefarmer，Ihavenomorebreadthanwhatissufficientformyownfamily。
Asforthat，repliestheother，Iwillcomeanddiginyourground，andyouandIwillsettleouraccountastothesmallquantityIdesireofyou。Thebargainismade；thepoorfellowgetshisloaf，andlivesatleast；perhapshemarries，andthefarmergetsadram。Buthaditnotbeenforthisdram，thatis，thisnewwant，whichwaspurchasedbytheindustryofthispoorfellow，bywhatargumentcouldhehaveinducedthefarmertopartwithaloaf？
Ihereexcludethesentimentofcharity。Thisalone，asI
haveoftenobserved，isaprincipleofmultiplication，andifitwasadmittedhereitwouldruinallmysupposition；butastrueitis，ontheotherhand，thatcouldthepoorfellowhavegotbreadbybegging，hewouldnotprobablyhavegonea-hunting。
Herethenitappears，thattheverydawningoftrade，inthemostunpolishedcountries，impliesamultiplication。Thisisenoughtopointoutthefirststep，andtoconnectthesubjectofourpresentinquirieswithwhathasbeenalreadydiscussedinrelationtoothercircumstances。Iproceed。
Sosoonasallthefursaredisposedof，andatasteforsuperfluityintroduced，boththetradersandthenativeswillbeequallyinterestedintheadvancementofindustryinthiscountry。Manynewobjectsofprofitforthefirstwillbediscovered，whichtheproperemploymentoftheinhabitants，inreapingthenaturaladvantagesoftheirsoilandclimate，willmakeeffectual。Thetraderswillthereforeendeavourtosetonfootmanybranchesofindustryamongthesavages，andtheallurementsofbrandy，arms，andclothing，willanimatetheseinthepursuitofthem。Letmeheredigressforafewlines。
Ifwesupposeslaverytobeestablishedinthiscountry，thenalltheslaveswillbesettowork，inordertoprovidefursandotherthingsdemandedbythetraders，thatthemastersmaytherebybeenabledtoindulgethemselvesinthesuperfluitiesbroughttothembythemerchants。Whenlibertyisthesystem，everyone，accordingtohisdisposition，becomesindustrious，inordertoprocuresuchenjoymentsforhimself。
Inthefirstsupposition，itistheheadofthemasterwhichconductsthelabouroftheslave，andturnsittowardsingenuity:
inthesecond，everyheadisatwork，andeveryhandisimprovingindexterity。Wherehandsthereforeareprincipallynecessary，theslaveshavetheadvantage；whereheadsareprincipallynecessary，theadvantageliesinfavourofthefree。Setamantolabouratsomuchaday，hewillgoonataregularrate，andneverseektoimprovehismethod:lethimbehiredbythepiece，hewillfindathousandexpedientstoextendhisindustry。Thisisexactlythedifferencebetweentheslaveandthefreeman。
FromthisIaccountforthedifferencebetweentheprogressofindustryinancientandmoderntimes。Whywasapeculiumgiventoslaves，buttoengagethemtobecomedextrous？Hadtherebeennopeculiumandnolibertini，orfreemen，whohadbeentrainedtolabour，therewouldhavebeenlittlemoreindustryanywhere，thantherewasintherepublicofLycurgus，where，Iapprehend，neithertheoneortheotherwastobefound。Ireturn。
Whenoncethisrevolutionisbroughtabout；whenthosewhoformerlylivedinsimplicitybecomeindustrious。Mattersputonanewface。Isnotthisoperationquitesimilartothatrepresentedinthefifthchapterofthefirstbook？ThereIfoundthegreatestdifficulty，inshewinghowthemutualoperationsofsupplyingfoodandotherwantscouldhavetheeffectofpromotingpopulationandagriculture，amongapeoplewhoweresupposedtohavenoideaofthesystemproposedtobeputinexecution。Heretheplanappearsfamiliarandeasy。Thedifferencebetweenthemseemstoresemblethatofachild’slearningalanguagebygrammar，orlearningitbytheearinthecountrywhereitisspoken。Inthefirstcase，manythrowthebookaside，butintheothernoneeverfailofsuccess。
Ihavesaid，thatmattersputonanewface；thatistosay，wenowfindtwotradingnationsinsteadofone，withthisdifference，however，thatashithertowehavesupposedthemerchantsallinoneinterest，thecompounddemand，thatis，thecompetitionofthebuyers，hasbeen，andmuststillcontinueonthesideofthenatives。Thisisagreatprejudicetotheirinterest，butasitisnotsupposedsufficienttochecktheirindustry，nortorestraintheirconsumptionofthemanufactures，letmehereexaminealittlemoreparticularlytheconsequencesoftheprincipleofdemandinsuchasituation；foralthoughI
allow，thatitcanneverchangesides，yetitmayadmitofdifferentmodifications，andproducedifferenteffects，asweshallpresentlyperceive。
Themerchantswesupposeallinoneinterest，consequentlytherecanhenocompetitionamongthem；consequentlynocheckcanbeputupontheirraisingtheirprices，aslongasthepricestheydemandarecompliedwith。Sosoonastheyareraisedtothefullextentoftheabilitiesofthenatives，oroftheirinclinationtobuy，themerchantshavethechoiceofthreethings，whichareallperfectlyintheiroption，andthepreferencetobegiventotheoneortheotherdependsentirelyuponthemselves，anduponthecircumstancesIamgoingtopointout。
First，theymaysupportthehighdemand；thatis，notlowertheirprice；whichwillpreserveahighestimationofthemanufacturesintheopinionoftheinhabitants，andrendertheprofitsupontheirtradethegreatestpossible。Thisparttheymaypossiblytake，iftheyperceivethenativesdoublingtheirdiligence，inordertobecomeable，intime，topurchaseconsiderablecargoesatahighvalue；fromwhichsuppositionisimpliedastrongdispositioninthepeopletobecomeluxurious，sincenothingbutwantofabilitypreventsthemfromcomplyingwiththehighestdemand:butstillanothercircumstancemustconcur，toengagethemerchantsnottolowertheirprice。Thegreatproportionofthegoodstheyseekfor，inreturn，mustbefoundinthehandsofafew。Thiswillbethecaseifslaverybeestablished；forthentheremustbemanypoor，andfewrich:andtheyarecommonlytherichconsumerswhoproportionthepricetheyoffer，rathertotheirdesires，thantothevalueofthething。
Thesecondthingwhichmaybedoneis，toopenthedoortoagreatdemand；thatis，tolowertheirprices。Thiswillsinkthevalueofthemanufacturesintheopinionoftheinhabitants，andrenderprofitslessinproportion，althoughindeed，uponthevoyage，theprofitsmaybegreater。
Thisparttheywilltake，iftheyperceivetheinhabitantsdonotinclinetoconsumegreatquantitiesofthemerchandizeatahighvalue，eitherfromwantofabilitiesorinclination；andalso，iftheprofitsuponthetradedependuponalargeconsumption，asisthecaseinmerchandizeofalowvalue，andsuitedchieflytotheoccasionsofthelowersort。Suchmotivesofexpediencywillbesufficienttomakethemneglectahighdemand，andpreferagreatone；andthemore，whenthereisalikelihoodthattheconsumptionoflow-pricedgoodsinthebeginningmaybegetatasteforothersofahighervalue，andthusextendingeneralthetasteofsuperfluity。
Athirdparttobetaken，istheleastpolitic，andperhapsthemostfamiliar。Itistoprofitbythecompetitionbetweenthebuyers，andencouragetherisingofdemandaslongaspossible；
whenthiscomestoastop，tomakeakindofauction，byfirstbringingdownthepricestothelevelofthehighestbidders，andsotodescendbydegrees，inproportionasdemandsinks。Thuswemaysaywithpropriety，accordingtoourdefinitionsofdemand，thatitcommonlybecomesgreat，inproportionaspricessink。Bythisoperation，thetraderswillprofitasmuchaspossible，andselloffasmuchoftheirgoodsastheprofitswillpermit。
Isay，thisplan，inanewdiscoveredcountry，isnotpolitic，asitbothdiscoversacovetousnessandawantoffaithinthemerchants，andalsothrowsopenthesecretsoftheirtradetothosewhooughttobekeptignorantofthem。
Letmenextsuppose，thatthelargeprofitsofourmerchantsshallbediscoveredbyothers，whoarriveatthesameportsinaseparateinterest，andwhoenterintonocombinationwiththefirst，whichmightpreventthenaturaleffectsofcompetition。
Letthestateofdemandamongthenativesbesupposedthesameasformerly，bothastoheightandgreatness，inconsequenceoftheoperationofthedifferentprinciples，whichmighthaveinducedourmerchantstofollowoneorotheroftheplanswehavebeendescribing；wemusthoweverstillsuppose，thattheyhavebeencarefultopreserveconsiderableprofitsuponeverybranch。
Ifwesupposetheinhabitantstohaveincreasedinnumbers，wealth，andtasteforsuperfluity，sincethelastvoyage，demandwillbefoundratherontherisinghand。Uponthearrivalofthemerchantsincompetitionwiththeformer，bothwilloffertosale；butifbothstandtothesameprices，itisverynaturaltosuppose，thattheformerdealerswillobtainapreference；as，caterisparibus，itisalwaysanadvantagetoknowandtobeknown。Thelastcomers，therefore，havenootherwaylefttocounterbalancethisadvantage，buttolowertheirprices。
Thisisanewphaenomenon:herethefallofpricesisnotvoluntaryasformerly；notconsentedtofromexpediency；notowingtoafailureofdemand，buttotheinfluenceofanewprincipleofcommerce，towit，adoublecompetition。ThisIshallnowexaminewithallthecareIamcapableof。
Chap。VII
OfdoubleCompetitionWhencompetitionismuchstrongerononesideofthecontractthanontheother，Icallitsimple，andthenitisatermsynonimouswithwhatIhavecalledcompounddemand。Thisisthespeciesofcompetitionwhichisimpliedinthetermhighdemand，orwhenitissaid，thatdemandraisesprices。
Doublecompetitionis，when，inacertaindegree，ittakesplaceonbothsidesofthecontractatonce，orvibratesalternatelyfromonetotheother。Thisiswhatrestrainspricestotheadequatevalueofthemerchandize。
IfranklyconfessIfeelagreatwantoflanguagetoexpressmyideas，anditisforthisreasonIemploysomanyexamples，thebettertocommunicatecertaincombinationsofthem，whichotherwisewouldbeinexplicable。
Thegreatdifficultyistodistinguishclearlybetweentheprinciplesofdemand，andthoseofcompetition；herethenfollowstheprincipaldifferencesbetweenthetwo，relativelytotheeffectstheyseverelyproduceinthemercantilecontractofbuyingandselling，whichIhereexpressshortlybythewordcontract。
Simpledemandiswhatbringsthequantityofacommoditytomarket。Manydemand，whodonotbuy；manyoffer，whodonotsell。
Thisdemandiscalledgreatorsmall；itissaidtoincrease，toaugmenttoswell；andisexpressedbytheseandothersynonimousterms，whichmarkanaugmentationordiminutionofquantity。Inthisspecies，twopeopleneverdemandthesamething，butapartofthesamething，orthingsquitealike。
Compounddemandistheprinciplewhichraisesprices，andnevercanmakethemsink；becauseinthiscasemorethanonedemandstheverysamething。Itissolelyapplicabletothebuyers，inrelationtothepricetheyoffer。Thisdemandiscalledhighorlow，andissaidtorise，tofall，tomount，tosink，andisexpressedbytheseandothersynonimousterms。
Simplecompetition，whenbetweenbuyers，isthesameascompoundorhighdemand，butdiffersfromitsofar，asthismayequallytakeplaceamongsellers，whichcompounddemandcannot，andthenitworksacontraryeffect:itmakespricessink，andissynonimouswithlowdemand:itisthiscompetitionwhichoverturnsthebalanceofworkanddemand；ofwhichafterwards。
Doublecompetitioniswhatisunderstoodtotakeplaceinalmosteveryoperationoftrade；itisthiswhichpreventstheexcessiveriseofprices；itisthiswhichpreventstheirexcessivefall。Whiledoublecompetitionprevails，thebalanceisperfect，tradeandindustryflourish。
Thecapitaldistinction，therefore，betweenthetermsdemandandcompetitionis，thatdemandisconstantlyrelativetothebuyers，andwhenmoneyisnottheprice，asinbarter，thenitisrelativetothatsideuponwhichthegreatestcompetitionisfound。
Wethereforesay，withregardtoprices，demandishighorlow。Withregardtothequantityofmerchandize，demandisgreatorsmall。Withregardtocompetition，itisalwayscalledgreatorsmall，strongorweak。
Competition，Ihavesaid，is，withequalpropriety，applicabletobothpartiesinthecontract。Acompetitionamongbuyersisaproperexpression:acompetitionamongsellers，whohavethemerchandize，isfullaseasilyunderstood，thoughitbenotquitesostriking，forreasonswhichanexamplewillmakeplain。
Youcometoafairwhereyoufindagreatvarietyofeverykindofmerchandize，inthepossessionofdifferentmerchants。
These，byofferingtheirgoodstosale，constituteatacitcompetition；everyoneofthemwishestosellinpreferencetoanother，andatthesametimewiththebestadvantagetohimself。
Thebuyersbegin，bycheapningateveryshop。Thefirstpriceaskedmarksthecovetousnessoftheseller；thefirstpriceoffered，thatofthebuyer。Fromthisoperation，Isay，competitionbeginstoworkitseffectsonbothsides，andsobecomesdouble。Theprincipleswhichinfluencethisoperationarenowtobededuced。
Itisimpossibletosupposethesamedegreeofeagerness，eithertobuyortosell，amongseveralmerchants；becausethedegreeofeagernessItaketobeexactlyinproportiontotheirviewofprofit；andasthismustnecessarilybeinfluencedandregulatedbydifferentcircumstances，thatbuyer，whohasthebestprospectofsellingagainwithprofit，obligeshim，whoseprospectisnotsogood，tocontenthimselfwithless；andthatseller，whohasboughttothebestadvantage，obligeshim，whohaspaiddearerforthemerchandize，tomoderatehisdesireofgain。
Itisfromtheseprinciples，thatcompetitionamongbuyersandsellersmusttakeplace。Thisiswhatconfinesthefluctuationofpriceswithinlimitswhicharecompatiblewiththereasonableprofitsofbothbuyersandsellers；for，ashasbeensaid，intreatingoftrade，wemustconstantlysupposethewholeoperationofbuyingandsellingtobeperformedbymerchants；thebuyercannotbesupposedtogivesohighapriceasthatwhichheexpectstoreceive，whenhedistributestotheconsumers，norcanthesellerbesupposedtoacceptofonesolowasthatwhichhepaidtothemanufacturer。Thiscompetitionisproperlycalleddouble，becauseofthedifficultytodetermineuponwhichsideitstands；thesamemerchantmayhaveitinhisfavouruponcertainarticles，andagainsthimuponothers；itiscontinuallyinvibration，andthearrivalofeverypostmaylessormorepulldowntheheavyscale。
Ineverytransactionbetweenmerchants，theprofitresultingfromthesalemustbeexactlydistinguishedfromthevalueofthemerchandize。Thefirstmayvary，thelastnevercan。Itisthisprofitalonewhichcanbeinfluencedbycompetition；anditisforthisreasonwefindsuchuniformityeverywhereinthepricesofgoodsofthesamequality。
Thecompetitionbetweensellersdoesnotappearsostriking，asthatbetweenbuyers；becausehewhoofferstosale，appearspassiveonlyinthefirstoperation；whereasthebuyerspresentthemselvesoneafteranother；theymakeademand，andwhenthemerchandizeisrefusedtooneatacertainprice，asecondeitheroffersmore，ordoesnotofferatall:butsosoonasanothersellerfindshisaccountinacceptingthepricethefirsthadrefused，thenthefirstentersintocompetition，providedhisprofitswilladmithisloweringthefirstprice；andthuscompetitiontakesplaceamongthesellers，untiltheprofitsupontheirtradepreventpricesfromfallinglower。
Inallmarkets，Ihavesaid，thiscompetitionisvarying，thoughinsensibly，onmanyoccasions；butinothers，thevibrationsareveryperceptible。Sometimesitisfoundstrongestonthesideofthebuyers，andinproportionasthisgrows，thecompetitionbetweenthesellersdiminishes。Whenthecompetitionbetweentheformerhasraisedpricestoacertainstandard，itcomestoastop；thenthecompetitionchangessides，andtakesplaceamongthesellers，eagertoprofitofthehighestprice。
Thismakespricesfall，andaccordingastheyfall，thecompetitionamongthebuyersdiminishes。Theystillwaitforthelowestperiod。Atlastitcomes；andthenperhapssomenewcircumstance，bygivingthebalanceakick，disappointstheirhopes。Ifthereforeiteverhappens，thatthereisbutoneinterestupononesideofthecontract，asintheexampleintheformerchapter，wherewesupposedthesellersunited，youperceive，thattheriseoftheprice，occasionedbythecompetitionofthebuyers，andevenitscomingtoastop，couldnotpossiblyhavetheeffectofproducinganycompetitionontheotherside；andtherefore，ifpricescomeafterwardstosink，thefallmusthaveproceededfromtheprudentialconsiderationsofadaptingthepricetothefacultiesofthose，who，fromtheheightofit，hadwithdrawntheirdemand。
Fromtheseprinciplesofcompetition，theforestallingofmarketsismadeacrime，becauseitdiminishesthecompetitionwhichoughttotakeplacebetweendifferentpeople，whohavethesamemerchandizetooffertosale。Theforestallerbuysallup，withanintentiontosellwithmoreprofit，ashehasbythatmeanstakenothercompetitorsoutoftheway，andappearswithasingleinterestononesideofthecontract，inthefaceofmanycompetitorsontheother。Thispersonispunishedbythestate，becausehehaspreventedthepriceofthemerchandizefrombecomingjustlyproportionedtotherealvalue；hehasrobbedthepublic，andenrichedhimself；andinthepunishment，hemakesrestitution。Hereoccurtwoquestionstoberesolved，forthesakeofillustration。
Cancompetitionamongbuyerspossiblytakeplace，whentheprovisionmadeismorethansufficienttosupplythequantitydemanded？Ontheotherhand，cancompetitiontakeplaceamongthesellers，whenthequantitydemandedexceedsthetotalprovisionmadeforit？
Ithinkitmayinbothcases；becauseintheoneandtheother，thereisacompetitionimpliedononesideofthecontract，andtheverynatureofthiscompetitionimpliesapossibilityofitscomingontheother，providedseparateinterestsbefounduponbothsides。But，tobemoreparticular:
First，Experienceshews，thathoweverjustlytheproportionbetweenthedemandandthesupplymaybedeterminedinfact，itisstillnexttoimpossibletodiscoveritexactly，andthereforebuyerscanonlyregulatethepricestheyoffer，bywhattheymayreasonablyexpecttosellforagain。Thesellers，ontheotherhand，canonlyregulatethepricestheyexpect，bywhatthemerchandizehascostthemwhenbroughttomarket。Wehavealreadyshewn，how，undersuchcircumstances，theseveralinterestsofindividualsaffecteachother，andmakethebalancevibrate。
Secondly，Theproportionbetweenthesupplyandthedemandisseldomotherthanrelativeamongmerchants，whoaresupposedtobuyandsell，notfromnecessity，butfromaviewtoprofit。WhatImeanbyrelativeis，thattheirdemandisgreatorsmall，accordingtoprices:theremaybeagreatdemandforgrainat35
shillingsperquarter，andnodemandatallforitat40
shillings，Isay，amongmerchants。
HereImustobserve，howessentialitis，toattendtothesmallestcircumstanceinmattersofthiskind。ThecircumstanceI
herehaveinmyeye，isthedifferenceIfindintheeffectofcompetition，whenittakesplacepurelyamongmerchantsonbothsidesofthecontract，andwhenithappens，thateithertheconsumersminglethemselveswiththemerchant-buyers，orthemanufacturers，thatis，thefurnishersminglethemselveswiththemerchant-sellers。ThiscombinationIshallillustrate，bythesolutionofanotherquestion，andthenconcludemychapterwithafewreflectionsuponthewhole。
Cantherebenocaseformed，wherethecompetitionupononesidemaysubsist，withoutapossibilityofitstakingplaceontheother，althoughthereshouldbeseparateinterestsuponboth？
Ianswer。Thecaseishardlysupposableamongmerchantswhobuyandsellwithaviewtoprofit；butitisabsolutelysupposable，andthatisall，whenthedirectconsumersarethebuyers；whenthecircumstancesofoneofthepartiesisperfectlyknown；andwhenthecompetitionissostrongupononeside，astopreventapossibilityofitsbecomingdouble，beforethewholeprovisionissoldoff，orthedemandsatisfied。Letmehaverecoursetoexamples。
Grainarrivinginasmallquantity，ataportwheretheinhabitantsarestarving，producessogreatacompetitionamongtheconsumers，whoarethebuyers，thattheirnecessitybecomesevident；allthegrainisgenerallyboughtupbeforepricescanrisesohighastocometoastop；becausenothingbutwantofmoney，thatis，animpossibilityofcomplyingwiththepricesdemandedbythemerchants，canrestrainthem:butifyousuppose，evenhere，thatpricescomenaturallytoastop；orthat，aftersometime，theyfalllower，fromprudentialconsiderations，thenthereisapossibilityofacompetitiontakingplaceamongthesellers，fromtheprinciplesabovededuced。If，onthecontrary，thestopisnotnatural，butoccasionedbytheinterpositionofthemagistrate，fromhumanity，orthelike，therewillbenocompetition，becausethentheprinciplesofcommercearesuspended；thesellersarerestrainedononeside，andtheyrestrainthebuyersontheother。Orrather，indeed，itisthemagistrate，orcompassion，whoinamannerfixestheprice，andperformstheofficeofbothbuyerandseller。
Abetterexamplestillmaybefound，inacompetitionamongsellers；whereitmaybesostrong，astorenderacommodityinamannerofnovalueatall，asinthecaseofanuncommonandunexpecteddraughtoffish，inaplaceofsmallconsumption，whennopreparationshavebeenmadeforsaltingthem。Therecanthenbenocompetitionamongthebuyers；becausethemarketcannotlast，andtheyfindthemselvesentirelymasters，togivewhatpricetheyplease，beingsurethesellersmustacceptofit，orlosetheirmerchandize。Inthefirstexample，humanitycommonlystopstheactivityoftheprincipleofcompetition；intheotheritisstoptbyacertaindegreeoffair-dealing，whichforbidstheacceptingofamerchandizefornothing。
Inproportionthereforeastherisingofpricescanstopdemand，orthesinkingofpricescanincreaseit，inthesameproportionwillcompetitionpreventeithertheriseorthefallfrombeingcarriedbeyondacertainlength:andifsuchacasecanbeput，wheretherisingofpricescannotstopdemand，northeloweringofpricesaugmentit，insuchcasesdoublecompetitiondoesnotsubsist；becausethesecircumstancesunitethemostseparateinterestsofbuyersandsellersinthemercantilecontract，andwhenupononesidethereisnoseparateinterest，therecanthenbenocompetition。
Fromwhathasbeensaid，wemayformajudgmentofthevariousdegreesofcompetition。Abooknotworthashilling，afishofafewpoundsweight，areoftensoldforconsiderablesums。Thebuyersherearenotmerchants。Whenanambassadorleavesacourtinahurry，hiseffectsaresoldforlessthanthehalfoftheirvalue:heisnomerchant，andhissituationisknown。When，atapublicmarket，therearefoundconsumers，whobuytheirprovision，ormanufacturers，whodisposeoftheirgoodsforpresentsubsistence；themerchants，whoarerespectivelyupontheoppositesideofthecontracttothese，profitoftheircompetition；andthosewhoarerespectivelyuponthesamesidewiththem，standbywithpatience，untiltheyhavefinishedtheirbusiness。Thenmatterscometobecarriedonbetweenmerchantandmerchant，andthen，Iallow，thatprofitsmayriseandfall，intheproportionofquantitytodemand；thatistosay，iftheprovisionislessthanthedemand，thecompetitionamongthedemanders，ortheriseoftheprice，willbeinthecompoundproportionofthefallingshortofthecommodity，andoftheprospectofsellingagainwithprofit。Itisthisproportionwhichregulatesthecompetition，andkeepsitwithinbounds。Itcanaffecttheprofitsonlyuponthetransaction；theintrinsicvalueofthecommoditystandsimmoveable:nothingiseversoldbelowtherealvalue；nothingiseverboughtformorethanitmayprobablybring。Imeaningeneral。Whereassosoonasconsumersandneedymanufacturersmingleintheoperation，allproportionislost。Thecompetitionbetweenthemistoostrongforthemerchants；thebalancevibratesbyjerks。Insuchmarketsmerchantsseldomappear:theprincipalobjectsthere，arethefruitsandproductionsoftheearth，andarticlesofthefirstnecessityforlife，notmanufacturesstrictlysocalled。Apoorfellowoftensells，topurchasebreadtoeat；nottopaywhathedideat，whilehewasemployedintheworkhedisposesof。Theconsumeroftenmeasuresthevalueofwhatheisabouttopurchase，bytheweightofhispurse，andhisdesiretoconsume。
Asthesedistinctionscannotbeconveyedinthetermsbywhichweareobligedtoexpressthem，andastheymustfrequentlybeimplied，intreatingofmattersrelatingtotradeandindustry，Ithoughtthebestwaywas，toclearupmyownideasconcerningthem，andtolaytheminorderbeforemyreader，beforeIenteredfartherintomysubject。
Alldifferenceofopinionuponmattersofthisnatureproceeds，asIbelieve，fromourlanguagebeinginadequatetoexpressourideas；fromourinattentioninusingterms，whichappearsynonimous，andarenotso；andfromournaturalpropensitytoinclude，undergeneralrules，thingswhichuponsomeoccasions，commonreasonrequirestobesetasunder。