maintained that prosperity is not manufactured by governments but comes from "the natural effort of every individual to better his own condition." After disposing of the mercantilists, Smith treats of the "agricultural system" of political economy, which held that the net produce of the land is the sole source of national opulence. Since economists of this school had maintained that perfect liberty is the only policy that can raise this annual produce to a maximum, Smith considered their doctrines "the nearest approximation to the truth that has yet been published upon the subject of political economy."
PUBLIC FINANCE
The fifth book treats of public finance. His chapter upon the expenses of the sovereign is the first philosophical investigation of this important subject. The second chapter presents a noteworthy treatment of the subject of taxation, and lays down the celebrated maxims which, perhaps, have been quoted oftener than any other paragraphs in economic literature. Smith was especially successful in correlating his theory of taxation with his theory of the production and distribution of wealth, while on the practical side he proposed reforms many of which were later adopted. The chapter on public debts, while unduly pessimistic, criticizes forcibly the unwise financial policies pursued by Great Britain and other countries during the eighteenth century. In his theory of the essential nature of a public debt Smith was undoubtedly correct.
"The Wealth of Nations" achieved instant success, went through five editions in the author's lifetime, and was soon translated into French, German, Italian, Spanish, and Danish. In the United States it began to be quoted by statesmen before the end of the Revolution, and an American edition was published at Philadelphia in 1789. Alexander Hamilton's state papers show the clearest evidence of his indebtedness to Smith's masterpiece. In time the book began to influence legislation, and to contribute powerfully to the removal of obsolete restrictions on industry and commerce. Its place as an economic classic is secure, and the lapse of time seems to detract nothing from its eminence.
