March 9, 1776, 250 years ago: An Inquiry into the Nature and Causes of the Wealth of Nations, by Scottish economist and philosopher Adam Smith, is published in London by Strahan and Cadell. Just 3 weeks earlier, they had published Volume I of The History of the Decline and Fall of the Roman Empire, by Edward Gibbon. The Wealth of Nations, as this book's title is usually shortened to, becomes the biggest-selling work of economics in history.
Adam Smith's date of birth is unknown, but he was recorded as having been baptized on June 5, 1723, in Kirkcaldy, Fife, Scotland, so it is generally accepted that he was born in Kirkcaldy a few days earlier, perhaps only one day.
His father, also named Adam Smith, was a Scottish Writer to the Signet (a senior solicitor), advocate and prosecutor (judge advocate), and also served as comptroller of the customs in Kirkcaldy. Smith's mother was born Margaret Douglas. Two months before Smith was born, his father died, leaving his mother a widow.
The father must have left the mother a good deal of money, because the son was able to attend the Burgh School of Kirkclady, described by a Smith biographer as "one of the best secondary schools of Scotland at that period." He entered the University of Glasgow at the age of 14, and graduated at 17. He moved on to Oxford University, and, based on his later writings, found it unsatisfying, learning more from the books in the Bodleian Library than from the professors.
In 1748, he began lecturing at the University of Edinburgh. Two years later, he met a literary and philosophical hero of his, David Hume. Smith would join Hume as a leading figure of what became known as the Scottish Enlightenment, and both are now featured in statues on the front of the Scottish National Portrait Gallery in Edinburgh.
In 1759, Smith published The Theory of Moral Sentiments, with writings that would shock people who only know him as "the father of capitalism":
The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.
The success of this book allowed him to assume a tutoring position that facilitated travel throughout Europe, where he encountered intellectual figures of his era. In response to the prevailing policy of safeguarding national markets and merchants through the reduction of imports and the augmentation of exports, a practice that came to be known as mercantilism, Smith laid the foundational principles of classical free-market economic theory.
In 1776, he published The Wealth of Nations. In it, he developed the concept of division of labor, and expounded upon how "rational self-interest" and competition can lead to economic prosperity.
He laid out a system of political economy with the famous metaphor of the "invisible hand" regulating the marketplace through individual self-interest. He provided a comprehensive analysis of different economic aspects: The accumulation of stock, price determination, and the flow of labor, capital and rent. The book contained Smith's critique of mercantilism, and of high taxes on luxury goods. For these reasons, he and his book upheld as exemplars by economic conservatives.
But the book also contained things to which liberals could point. He criticized the slave trade, with which Britain and its colonies, including the soon-to-be United States, were then heavily involved. He also denounced monopolies, advocating for free competition and open markets.
He made the point that transportation of goods makes economies possible, and points out that the strongest nations had the strongest economies, because they had the best transportation: Access to the sea, including through wide harbors and wide rivers.
It explained why it could be predicted, though he did not do so, that New York would surpass London as the leading city in the world over the next 150 years. What Smith also could not have predicted was the rise of railroads, which helped both Britain and America more than the rest of the world; and the development of air travel and transport.
In other words, Smith had unwittingly predicted the rise of vast fortunes through railroad companies, but also the development of the suburbs of major cities that the railroads would develop, allowing the creation of a vast middle class, especially in the English-speaking world. And he unwittingly predicted how farm products could more easily get to the cities, making even agriculture a prosperous profession for a smart farmer.
In other words, Smith showed that increasing demand was the way to make an economy grow, not increasing supply. The supply-side economists of the late 20th Century totally misread him.
The book's 1st edition sold out in 6 months, causing William Strahan, publisher of both Smith and Gibbon, to write to a friend, "What you say of Mr. Gibbon's and Dr. Smith's book is exactly just. The former is the most popular work; but the sale of the latter, though not near so rapid, has been more than I could have expected from a work that requires much thought and reflection (qualities that do not abound among modern readers) to peruse to any purpose."
And to university professor and Enlightenment philosopher Adam Ferguson, Gibbon wrote, "What an excellent work is that with which our common friend Mr. Adam Smith has enriched the public! An extensive science in a single book, and the most profound ideas expressed in the most perspicuous language."
In 1778, Smith was appointed to a post as Commissioner of Customs in Scotland. From 1787 to 1789, he occupied the honorary position of Lord Rector of the University of Glasgow. He died on July 17, 1790, in Edinburgh, after what is described only as "a painful illness." He was 67 years old. He never married, and is not known to have had any children.









