Adam Smith's Simplified Wealth of Nations, Book 1, Chapter 9a: Profits

Chapter 9a: Profits

1 The rise and fall in profits depend on the increasing or declining state of the society's wealth.  

2The increase of stock raises wages and lowers profit.

3 It is not easy to ascertain the average wages even in a particular place and time.   4 However, past and present average profits can be estimated from the interest of money.   5 By 1545, all interest above 10% was declared unlawful.   6 Since the time of Henry VIII, England's revenue has been advancing continually and at an accelerating rate.   7 More stock is generally needed to do business in a big town than in a rural village.   8 In Scotland, the market interest rate is higher than the legal interest rate even though the legal interest rate is the same as in England. 9 The legal interest rate in France was not always always regulated by the market rate.
Joseph Terray
Joseph Terray

France is not as rich as England.

  10 Holland is richer than England.   11 In our North American and West Indian colonies, both wages and interest, and consequently profits, are higher than in England. 12 The acquisition of new territory, or of new branches of trade, may sometimes raise profits, and with them the interest of money, even in a country fast advancing to wealth.  

Wages and Stock Are Inverse of Profits and Interest

13The capital stock of society are the funds which maintain industry.


The Effect of Maximum Population and Maximum Stocks

14 In a country which had acquired maximum riches natural to its soil, climate, and relationship with other countries, both wages and profits would be very low.

15 But no country has reached this degree of opulence.
Next: Book 1, Chapter 9B: Interest
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