Adam Smith's Simplified Wealth of Nations, Book 1, Chapter 10f, Part 2: Profit and wage inequality from policy -- Corporations

Chapter 10f, Part 2: Profit and wage inequality from policy -- Corporations

72All corporations and most of corporation laws have been established to prevent this reduction of price by restraining that free competition which would most certainly occasion it.

  73 The government of towns corporate was in the hands of traders and artificers.   74 Every town draws its whole subsistence from the countryside.
  1. By the manufacturing trade or by sending back some manufactured goods to the countryside.
    • The price of such goods is increased by the wages of the town's workmen and profits of their employers.
  2. By the inland and foreign trade or by sending to the countryside some of the rude produce and manufactured goods of other provinces of the same country.
    • The price of such produce and goods are increased by the wages of the transporters and by the profits of the merchants who employ them.
Wages and profits make up the gain of both. 75 The amount of goods annually exported from the town is the price which it really pays for the materials it annually imports. 76 Everywhere in Europe, the industry of towns is more advantageous than the industry of the countryside. 77 The townspeople, being collected into one place, can easily combine. 78 The people of the countryside are dispersed in distant places and cannot easily combine.   79 Many inferior branches of country labour require much more skill and experience than most of the mechanic trades.   80 Aside from corporations and corporation laws, other regulations cause the superiority of the industry of the towns over the industry of the countryside in Europe. 81 In Great Britain, the superiority of the industry of the towns were greater in the beginning of the present century.   82 People of the same trade seldom meet together   83 A regulation which obliges all those of the same trade to enter their names and addresses in a public register, facilitates such assemblies. 84 A regulation which enables people of the same trade to tax themselves in order to provide for their poor, sick, widows and orphans renders such assemblies necessary.   85 An incorporation renders assemblies necessary.  

86 The pretence that corporations are necessary for the better government of trade has no  foundation.

87 This is how the the policy of Europe restrains the competition in some employments.
Next: Chapter 10g: Part 2: Inequalities by Policy -- Wage subsidies