Chapter II.: Value of the Report.

Doubts may well be felt as to whether it is right to publish a report of lectures which has been made by a University student. A lecturer generally finds that his apparently most Edition: current; Page: [xxii] incorruptible ideas have considerably deteriorated when they have passed through the minds and note-books of his pupils. But, after all, the doctrines of more than one of the greatest teachers of antiquity have come down to us in no other way than by means of the records left by disciples who had listened to their oral instruction. If we were to reject all that has been transmitted to us in this way, we should be left with some very considerable gaps both in philosophy and religion. In the present case we know that the disciple was both faithful and intelligent. We have most unusual means for judging of the accuracy of his work, and we find that it stands the severest tests in a manner which might be envied by a modern reporter with the advantage of shorthand. It is unnecessary to give examples here. A reader who will take the trouble to look out a few of the hundred references to the Wealth of Nations, and of the four hundred other references given in the notes, may easily satisfy himself on the point.

Granting that the report is satisfactory in itself, the further objection to its publication may be made that it is an act of impiety towards Adam Smith’s memory. It is an evasion of his last wishes, and if Black and Hutton had not honestly complied with those wishes, we should be inclined to condemn their action, even if we could not profess to regret it. Adam Smith himself, however, would not have judged harshly of disregard of wishes more than a century old. He did not trust even his good friends Black and Hutton to fulfil their solemn promise to destroy his manuscripts immediately after his death, and thirty years before he had taught the Glasgow students that ‘piety to the dead can only take place when their memory is fresh in the minds of men: a power to dispose of estates for ever is manifestly absurd.’

Moreover it is probable that if he had been acquainted with the criticisms which were to be passed upon his work, he would have withdrawn all objection to the publication of his lectures.

Du Pont de Nemours said, in his haste, of the Wealth of Nations, ‘everything that is true in this respectable but tedious work in two fat quarto volumes is to be found in Turgot’s Reflexions on the Formation and Distribution of Riches; everything added by Adam Smith is inaccurate, not Edition: current; Page: [xxiii] to say incorrect.’ At a later period he repented of this outbreak, and confessed to a certain want of knowledge of the English tongue which had prevented him from appreciating Smith’s work as he ought to have done. But down to quite recent times, if not to the present day, writers of authority have often expressed belief that the Wealth of Nations owes much to Turgot’s Réflexions. Du Pont’s learned and able biographer, as lately as 1888, permitted himself to speak of ‘the care with which’ Adam Smith ‘omits to quote’ the principal works of the physiocrats and ‘especially that of Turgot.’

For the particular accusation, indeed, that Adam Smith does not acknowledge his obligations to Turgot, there never was much foundation. He certainly does not acknowledge obligations; but had he any to acknowledge? Turgot’s book, though written in 1766, was only published six years before the Wealth of Nations, and then only in the periodical Éphémérides du Citoyen. As this was not in the Advocates’ Library at Edinburgh in 1776, and is not among the collections of Adam Smith’s books which Dr. James Bonar has catalogued, we are not justified in assuming that Adam Smith had so much as seen the work. The internal evidence is of the weakest possible character. To rely on general similarities of doctrine in such a case is childish. Such similarities are constantly found in the writings of contemporary authors who cannot possibly have been acquainted with each other’s works. The coincidence is to be explained simply by the fact that in literature, as in everything else, the same effects produce the same causes. There is surely nothing surprising in the fact that two men who have read the same books and observed the same events, should occasionally use the same arguments and arrive at the same conclusions. Something much more definite is needed, and Edition: current; Page: [xxiv] no serious attempt has ever been made to supply it by pointing out particular passages in the Wealth of Nations which appear to owe anything to the Réflexions.

Myths of this kind, however, die hard, and if the lectures had remained unknown, the statement that Adam Smith made much use of the Réflexions would probably have been repeated from text-book to text-book for at least another half-century. But as it now appears that the resemblance between the Réflexions and the lectures is just as close as that between the Réflexions and the Wealth of Nations, and as the Réflexions were not even written till after Adam Smith had ceased lecturing and had seen and conversed with Turgot, it may be supposed that the enthusiasts of plagiarism will now seek to show that instead of Smith stealing from Turgot, the truth was that Turgot stole from Smith.

But the report of the lectures does much more in regard to the Wealth of Nations than merely dispose finally of the Turgot myth. It enables us to follow the gradual construction of the work almost from its very foundation, and to distinguish positively between what the original genius of its author created out of British materials on the one hand and French materials on the other.

In the work of professors, as in many other things, a kind of atavism is often observable. A professor has rarely been a student under his immediate predecessor in the chair. While he has been obtaining experience in a less dignified post, or has been absent acquiring the honour which it is proverbially difficult for a prophet to obtain in his own country, his master has died or retired and been succeeded by a man of an intermediate generation, and probably of intermediate views, whom he very likely regards with that slight dash of contempt which men are apt to feel for those who are older than themselves, but yet not old enough to Edition: current; Page: [xxv] obtain from them the respect universally and fortunately accorded to the surviving lights of a past age and an ‘old school,’ whose virtues have become uncommon, and whose weaknesses and eccentricities, instead of annoying or disgusting, afford kindly amusement. We should do well therefore to look in Adam Smith’s work for important traces of the influence of Francis Hutcheson, who was Professor of Moral Philosophy at Glasgow from 1729 to 1746, even if Hutcheson had been but an undistinguished member of the series of professors, instead of a teacher of unusual ability and originality, to whom Adam Smith acknowledged obligations, and of whom he used warm words of praise.

In 1745 Hutcheson published in Latin a little volume entitled Philosophiae moralis institutio compendiaria libris III. ethices et iurisprudentiae naturalis elementa continens. Of this he authorised a translation, published in 1747 as A Short Introduction to Moral Philosophy in three books, containing the Elements of Ethicks and the Law of Nature. From it we may gather with sufficient accuracy what Smith was taught as a boy in the class-room at Glasgow before he left, at the age of barely seventeen, for his long stay at Oxford.

The address ‘to the students in Universities,’ which forms the preface to the work, opens thus:—

‘The celebrated division of philosophy among the ancients was into the rational or logical, the natural, and the moral. Their moral philosophy contained these parts, ethicks taken more strictly, teaching the nature of virtue and regulating the internal dispositions; and the knowledge of the law of nature. This latter contained, 1. the doctrine of private rights, or the laws obtaining in natural liberty. 2. Oeconomicks, or the laws and rights of the several members of a family; and 3. Politicks, shewing the various plans of civil government, and the rights of states with respect to each other.’

The three Books are accordingly headed: ‘The Elements of Ethicks,’ ‘Elements of the Law of Nature’ (in the Latin ‘Iurisprudentia privata’) and the ‘Principles of Oeconomicks and Politicks.’ The part of Smith’s course which eventually grew into the Theory of Moral Sentiments obviously corresponds with Book I; ‘Private Law,’ the third division of his ‘Justice,’ corresponds with Book II; while ‘Domestic Law’ and ‘Public Edition: current; Page: [xxvi] Jurisprudence,’ the first two divisions of his ‘Justice,’ correspond with Book III. The mode of treatment is very different, as Adam Smith goes into legal particularities in a way quite foreign to Hutcheson, but the main subjects treated are, roughly speaking, the same. The Law of Nations is divided in Hutcheson between chapter xv of Book II, ‘Rights arising from Damage done and the Laws of War,’ and the last two chapters of Book III, on the ‘Laws of War’ and ‘Of Treaties, and Ambassadors, and the entire dissolution of States.’ Neither Smith’s ‘Revenue’ nor his ‘Arms’ correspond to anything in Hutcheson, and nearly as much may be said of his ‘Police.’ Hutcheson has, however, a short chapter in Book II (ch. xii), ‘Concerning the Values or Prices of Goods,’ in which the causes of high and low price and the characteristics of good money are discussed.

Probably it is in this chapter that the germ of the Wealth of Nations is to be found. In writing the chapter Hutcheson simply followed Pufendorf, and he does not make its connexion with the adjoining chapters, ‘Of Oaths and Vows,’ and ‘Of the Several Sorts of Contracts,’ very distinct and obvious, so that Adam Smith may well have thought, when he began his lectures, that it would be an improvement in logical arrangement to transfer the whole to a new heading, ‘Police,’ since the regulation of prices and the creation of money by the state both came under the head of ‘Police,’ as the word was understood in his time. As he lectured year by year, however, he would be led from this by two ways towards the consideration of the question what constitutes opulence or wealth. He would perceive both that regulations which interfere with natural prices diminish plenty or opulence, and that mere additions to a nation’s stock of money do not increase its opulence, as some at least of the more extreme mercantilists really believed, and as all of them to some extent tacitly or explicitly assumed. Observing the overwhelming importance of this question, he was not the man to be deterred by considerations as to the symmetry of his general scheme of arrangement from putting it in the principal place and allowing it to introduce various subjects which cannot possibly be regarded as part of police.

In some such way as this the second and only considerable portion of ‘Police’ assumed its present form, in which it consists Edition: current; Page: [xxvii] of, first, a discussion of the material wants of mankind and of the great cause, division of labour, which enables them to be better satisfied in a civilized than in an uncivilized nation (§§ 1-6); next, the traditional inquiry as to prices and money (§§ 7, 8) with a large appendix explaining various evil consequences of the notion that money alone constitutes opulence (§§ 9-13) and corollaries as to interest (§ 14) and exchange (§ 15); thirdly, a dissertation on the causes why opulence does not increase as fast as might be expected (§ 16); and, lastly, a description of the influence of commerce (which, in consequence of the effects of the division of labour, is the great cause of opulence) on manners (§ 17). Even the Third Part of the whole scheme, ‘Of Revenue,’ is brought in as one of the causes of the slow progress of opulence. The portion of ‘Jurisprudence’ dealing with ‘Police’ thus became, with the exception of a scrap about security and a bare mention of sanitation, an ‘Inquiry into the Nature and Causes of the Wealth of Nations.’

If the Contents of the Wealth of Nations and those of the lectures on ‘Police,’ ‘Revenue,’ and ‘Arms’ be compared, a close correspondence between them is observable. The first three chapters of the first book of the Wealth of Nations, on the division of labour, correspond with §§ 3-6 of ‘Cheapness or Plenty’ in the lectures; chapter iv, on money, corresponds with § 8, and chapters v, vi and vii, on prices, correspond with § 7; Book II, chapter iv, on stock lent at interest, corresponds with § 14; Book III, on the different progress of opulence in different nations, has practically the same subject as § 16; the first eight chapters of Book IV, on the mercantile system, treat of the same matter as §§ 9-12; Book V, on revenue, corresponds with Part III of the lectures, and also absorbs much of Part IV, ‘Of Arms.’

Looking at the question first from the side of the lectures, we see that this leaves §§ 1, 2, 13, 15 and 17 of ‘Cheapness or Plenty’ unaccounted for. It is not easy to explain why the first two sections were omitted from the Wealth of Nations, and the fact will be regretted by those who ask for a theory of consumption as a preliminary to the other parts of political economy. The explanation of the omission of § 13 is given by Adam Smith himself. It was simply that the Mississippi scheme had been ‘explained so fully, so clearly, and with so much order and distinctness by Mr. Du Verney’ that Edition: current; Page: [xxviii] it was unnecessary to give any account of it. A mere summary of Duverney’s description, however well suited for an academical lecture, could not properly appear in a great book. Exchange (§ 15) was doubtless omitted as too elementary, and § 17, on the influence of commerce on manners, finds no special place, because most of it was absorbed in Book V, chapter i. article ii. ‘Of the Expense of the Institutions for the Education of Youth.’

Turning now to the consideration of the question from the side of the Wealth of Nations, we are at once struck by the fact that not only chapter ix of Book IV, on the system of the Économistes or physiocrats, but also chapter viii of Book I, on wages, chapter ix, on profits, chapter x, on differences of wages and profits, and chapter xi, on rent, are as yet unaccounted for. Further examination shows that the main ideas and many of the illustrations of chapter viii, of chapter ix, and still more of chapter x, are contained in the section of the lectures which deal with prices, but that there is no trace whatever in the lectures of the scheme of distribution which the Wealth of Nations sets forth. The main body of Book II, ‘Of the Nature, Accumulation and Employment of Stock,’ is also entirely unaccounted for. There is nothing at all about capital in the lectures, and stock is not given an important place, while there is no mention whatever of that distinction between productive and unproductive labour which is fundamental in the Wealth of Nations, and to which a large portion of Book II is devoted.

When Adam Smith went to France he found ‘a few men of great learning and ingenuity’ whose leader had constructed an elaborate table containing an arithmetical example of ‘three sorts of expenses, their source, their advances, their distribution, their effects, their reproduction, their relation to each other, to population, to agriculture, to manufactures, to commerce, and to the general riches of a nation.’ This table was regarded by the sect with extraordinary veneration, and doubtless every possible effort was made to explain it to Adam Smith. Its three sorts of expenses are productive expenses, expenses of revenue and sterile expenses, but of these three the middle one, expenses of revenue, is almost immediately divided between the other two. Productive expenses are annual advances in Edition: current; Page: [xxix] agriculture, and sterile expenses are annual advances in other industries. The Reproduit totale, estimated at the bottom of the table, is altogether the result of the productive expenses and operations, and not at all of the sterile. It is distributed between three classes, the productive class, the sterile class and the proprietors of land.

To us at the present day the table, with its tangle of zigzag lines, appears an almost childish toy, and its recent republication by the British Economic Association excited very little interest. Nevertheless, in the fact that it attempts to give a comprehensive view of the total results of the industry of a year, it marks an enormous advance in economic theory, and we can easily imagine that an acute mind like Adam Smith’s would immediately grasp its importance. To accept it as it stood he was not prepared, but he adopted the point of view of its author, and accordingly we find in the Wealth of Nations something which is absent from the lectures, namely, a definite conception of labour set in motion by a particular kind of expenditure and producing an aggregate annual produce which is ‘distributed’ into several large categories. The particular kind of expenditure which sets productive labour in motion is identified with the laying out of capital stock. It is assumed that all labour set in motion by this laying out of capital produces vendible objects, and argued that all such labour, and no other, is properly called productive. This new doctrine forms the main body of Book II, ‘Of the Nature, Accumulation, and Employment of Stock’ in the Wealth of Nations.

If the theory were thoroughly believed in, it would appear that Book II ought logically to have been placed first. According to the Introduction and Plan, the average produce per head of population ‘must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgement with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour and that of those who are not so employed.’ These two circumstances are evidently in the wrong order. We ought to consider what proportion of the population is employed in useful labour before we consider how skilfully and dexterously they work. Edition: current; Page: [xxx] ‘The number of useful and productive labourers,’ we are assured, ‘is everywhere in proportion to the quantity of capital stock which is employed in setting them to work, and to the particular way in which it is so employed,’ and if this be so, an economic treatise ought surely to begin with a dissertation on capital. But Adam Smith had already, in his lectures, begun his treatment of the subject with his dissertation on the productive powers of labour, and had incidentally treated of stock in store not as something indispensable before labour can be set in motion, but merely as something required ‘after the ages of hunting and fishing,’ or ‘when manufactures were introduced’ and ‘a great deal of time’ required. It would have been astonishing if he had been willing to relegate his own excellent disquisition on the division of labour to the second place, and consequently no surprise need be felt that capital is treated only in the second Book, in spite of the adoption of the view of the Tableau as to its function in governing the amount of productive labour.

It has always been obvious that in spite of the mention of the problem of distribution in the title of Book I of the Wealth of Nations, ‘Adam Smith’s theory of distribution, instead of being made one of the main subjects of the Book, is inserted in the middle of the chapter on prices as a mere appendage or corollary of his doctrine of prices’. By way of explaining the discrepancy, it was possible to conjecture that ‘in all probability the Book existed in a fairly complete form before Adam Smith became acquainted with the physiocratic doctrine,’ and that when that event took place ‘he may very well have thought that his theory of prices and his observations on wages, profit and rent made a very good theory of what the physiocrats called “distribution,” and thus have been led to affix the present title of the Book and to interpolate the passage about the whole produce being parcelled out and distributed as wages, profit and rent’. This conjecture Edition: current; Page: [xxxi] is now shown to be substantially correct. The dissertations on the division of labour, money, prices, and the causes of the differences of wages in different employments, evidently existed very nearly in their present form before Adam Smith went to France, and the scheme of distribution, on the other hand, was wholly absent. It is plain that Smith acquired the idea of the necessity of a scheme of distribution from the physiocrats, and that he tacked his own scheme (very different from theirs) on to his already existing theory of prices.

Besides thus elucidating the composition of the Wealth of Nations, the lectures serve to settle the doubtless far less important but still interesting question of the nature of Adam Smith’s proposed work on Justice, or that portion of jurisprudence not dealt with in the Wealth of Nations.

Millar, in the account of the Glasgow lectures quoted above, says that Smith intended to give to the public the substance of the third part of his course, the lectures on Justice, and that he mentioned this intention in the conclusion of the Theory of Moral Sentiments. Turning to the passage referred to, which is the same in the sixth as in the first edition, we find Adam Smith first condemning casuistry, and then declaring that the two useful parts of moral philosophy are ethics and jurisprudence. ‘Every system of positive law,’ he says, ‘may be regarded as a more or less imperfect attempt towards a system of natural jurisprudence, or towards an enumeration of the particular rules of justice.’ But, owing to various difficulties which he enumerates, the attempt is never perfectly successful. ‘The reasonings of lawyers upon the different imperfections and improvements of the laws of different countries’ might have been expected to ‘have led them to aim at establishing a system of what might properly be called natural jurisprudence, or a theory of the general principles which ought to run through and be the foundation of the laws of all nations.’ However, ‘it was very late in the world before any such general system was thought of, or before the philosophy of law was treated by itself and Edition: current; Page: [xxxii] without regard to the particular institutions of any one nation.’

‘Grotius,’ Adam Smith concludes, ‘seems to have been the first who attempted to give the world anything like a system of those principles which ought to run through and be the foundation of the laws of all nations; and his treatise of the laws of war and peace, with all its imperfections, is perhaps at this day the most complete work that has yet been given upon this subject. I shall in another discourse endeavour to give an account of the general principles of law and government and of the different revolutions they have undergone in the different ages and periods of society, not only in what concerns justice, but in what concerns police, revenue and arms, and whatever else is the object of law. I shall not, therefore, at present enter into any further detail concerning the history of jurisprudence.’

In the Preface to the sixth edition of the Moral Sentiments, published in 1790, after quoting from this passage the promise of ‘another discourse,’ Adam Smith says—

‘In the Enquiry concerning the Nature and Causes of the Wealth of Nations, I have partly executed this promise; at least so far as concerns police, revenue and arms. What remains, the theory of jurisprudence, which I have long projected, I have hitherto been hindered from executing by the same occupations which had till now prevented me from revising the present work.’

It has always appeared somewhat strange that the publication of the Wealth of Nations should have been regarded by Adam Smith as a partial fulfilment of a promise to give an account of the general principles of law and government and of the different revolutions they have undergone in the different ages and periods of society in what concerns police, revenue and arms, even when we remember the wide sense then borne by the word ‘police.’ Nor has it been altogether clear how the Wealth of Nations fitted into the ‘history of jurisprudence.’

The report clears up every difficulty. The lectures included in it are obviously the third and fourth part of the moral philosophy course described by Millar, and they are also the draft of the ‘account of the general principles of law and government’ or ‘history of jurisprudence’ contemplated as a future work by Adam Smith when he wrote the last page of the Moral Sentiments in 1759. Part I, ‘Of Justice,’ with perhaps the fifth part, entitled ‘Of the Laws of Nations,’ is the third Edition: current; Page: [xxxiii] part in Millar’s description of the whole course, and is also the ‘account of the general principles of law and government in what concerns justice’ mentioned in 1759 ‘and the theory of jurisprudence’ mentioned in 1790. Parts II, III and IV ‘Of Police, Revenue and Arms,’ are the fourth part in Millar’s description of the course; serving as the first draft of the Wealth of Nations, they induced Adam Smith to say that he had fulfilled his promise as regards police, revenue and arms, though no one unacquainted with the lectures would have described the Wealth of Nations as a treatise on those three subjects in that order.

It does not seem probable that Adam Smith ever made much progress with the projected work on Justice. Mackenzie, if Rogers reports him correctly, seems to have believed that the manuscripts which were burnt by Black and Hutton consisted of this book in a nearly completed condition. Before he came that evening, he says, Adam Smith, with the assistance of Dr. Black, ‘had burnt sixteen volumes in manuscript on Jurisprudence—the sum of one course of his lectures at Glasgow, as was the Wealth of Nations of another; but these had not received his last corrections, and from what he had seen he had formed a mean opinion of posthumous publications in general.’ Little importance, however, need be attached to this, since, according to Rogers, Mackenzie also described Adam Smith, an only child, as ‘an affectionate brother,’ and stated that he died ‘a few hours after’ the supper, though he lived as a matter of fact for six days. After the publication of the Wealth of Nations he must have had far greater distractions than before, and his official duties at the Board of Customs must have occupied a portion of his time. In November, 1785, after mentioning a new edition of the Moral Sentiments, he wrote: ‘I have likewise two other great works upon the anvil; the one is a sort of Philosophical History of all the different branches of Literature, of Philosophy, Poetry and Eloquence; the other is a sort of theory and History of Law and Government.’ He had, it thus appears, failed to concentrate his energies on one work, and he could only say of the two that ‘the materials of both are in a great measure collected, and Edition: current; Page: [xxxiv] some part of both is put into tolerable good order.’ That he did indeed ‘struggle violently’ against ‘the indolence of old age,’ which he felt ‘coming fast upon’ him, we can well believe, but the failure of his health which took place soon afterwards forbids the supposition that he could have done much more before his death in 1790. It is therefore unlikely that the unfinished work ever consisted of very much more than those parts of the lectures on Justice which were not incorporated in the Wealth of Nations. What these parts were the reader has now the opportunity of judging for himself.