Quotation of the Day…

by Don Boudreaux on April 21, 2012

in Adam Smith, Myths and Fallacies, Prices, Reality Is Not Optional

… is from Book IV, Chapter 5 – specifically, this quotation is found on pages 524-525 of the 1981 Liberty Fund edition – of Adam Smith’s 1776 An Inquiry Into the Nature and Causes of the Wealth of Nations:

It is the interest of the people that their daily, weekly, and monthly consumption should be proportioned as exactly as possible to the supply of the season.  The interest of the inland corn dealer is the same.  By supplying them, as nearly as he can judge, in this proportion, he is likely to sell all his corn for the highest price, and with the greatest profit; and his knowledge of the state of the crop, and of his daily, weekly, and monthly sales, enable him to judge, with more or less accuracy, how far they really are supplied in this manner.  Without intending the interest of the people, he is necessarily led, by a regard to his own interest, to treat them, even in years of scarcity, pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew.  When he foresees that provisions are likely to run short, he puts them upon short allowance.  Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniences which his crew can thereby suffer are inconsiderable in comparison of the danger, misery, and ruin to which they might sometimes be exposed by a less provident conduct.  Though from excess of avarice, in the same manner, the inland corn merchant should sometimes raise the price of his corn somewhat higher than the scarcity of the season requires, yet all the inconveniences which the people can suffer from this conduct, which effectually secures them from a famine in the end of the season, are inconsiderable in comparison of what they might have been exposed to by a more liberal way of dealing in the beginning of it.

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