214 ADAM SMITH. 



to carry it on ; but as society advances, when men are 

 set to work for others and paid by their employers, 

 there goes a part of the produce to the employer, and 

 the consideration in the exchange or sale of the pro- 

 duce consists of two parts the wages of the work- 

 man, and the profits of his employer. When the la- 

 bour has been employed upon land by those who are 

 not the owners, they must pay to the owners some- 

 thing for the use of it ; and this is called rent, which 

 Dr. Smith considers as entering into the price of pro- 

 duce, together with wages and profits, that is, the time 

 of the labourers and the profits of the farmer ; so that 

 he considers wages alone, or wages and profits of 

 stock alone, or wages, profits, and rent together, as 

 entering into and composing the price of all commo- 

 dities. He also considers all prices as of two kinds 

 the natural and the actual or market price ; the for- 

 mer being that which replaces the wages paid for pro- 

 ducing the article, with the profits of the employer, 

 and in cases of agricultural produce, with the rent of 

 the landowner also ; * the other, the price as regulated 

 by the proportion between the supply and the demand 

 in the market, where it is exposed for sale or for bar- 

 ter, and which price may be either equal to, or greater, 

 or less than the natural price. 



The portion of these chapters which relates to rent 

 is now admitted to be founded upon an erroneous 

 view of that subject. Rent can never, properly speak- 

 ing, form any part of price. It has been shown, first 

 by Dr. Anderson in 1776, afterwards by Sir E. West 

 and Mr. Malthus in 1812 and 14, ignorant of Dr. 

 Anderson's discovery, that rent arises from the bring- 

 ing of inferior lands into cultivation, which makes it 



* It is proper to observe, that the peculiarity of rent was not -wholly 

 passed over by Dr. Smith. He expressly says, that while high or low 

 wages and profits are the cause of high or low prices, high or low prices 

 are the causes and not the effects of high or low rents. (Book I., chap. 

 xi., Introduction.) 



