An Inquiry into the Nature and Causes of the Wealth of NationsSmith, Adam
History
An Inquiry into the Nature and Causes of the Wealth of Nations
Smith, Adam
Economics
When, by an increase in the effectual demand, the market price of some
particular commodity happens to rise a good deal above the natural price,
those who employ their stocks in supplying that market, are generally
careful to conceal this change. If it was commonly known, their great
profit would tempt so many new rivals to employ their stocks in the same
way, that, the effectual demand being fully supplied, the market price
would soon be reduced to the natural price, and, perhaps, for some time
even below it. If the market is at a great distance from the residence of
those who supply it, they may sometimes be able to keep the secret for
several years together, and may so long enjoy their extraordinary profits
without any new rivals. Secrets of this kind, however, it must be
acknowledged, can seldom be long kept; and the extraordinary profit can
last very little longer than they are kept.
Secrets in manufactures are capable of being longer kept than secrets in
trade. A dyer who has found the means of producing a particular colour
with materials which cost only half the price of those commonly made use
of, may, with good management, enjoy the advantage of his discovery as
long as he lives, and even leave it as a legacy to his posterity. His
extraordinary gains arise from the high price which is paid for his
private labour. They properly consist in the high wages of that labour.
But as they are repeated upon every part of his stock, and as their whole
amount bears, upon that account, a regular proportion to it, they are
commonly considered as extraordinary profits of stock.
Such enhancements of the market price are evidently the effects of
particular accidents, of which, however, the operation may sometimes last
for many years together.
Public-domain text, read in full here on John Shaqi.
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