Note 699 — Chapter V

This letter, which I have referred to in my first volume, p. 229, was published, for, I believe, the first time, in 1846, in Burton's Life and Correspondence of Hume, vol. ii. p. 486. It is, however, very difficult to determine what Adam Smith's opinion really was upon this subject, and how far he was aware that rent did not enter into price. In one passage in the Wealth of Nations (book i. chap. vi. p. 21) he says of wages, profit, and rent, ‘in every society, the price of every commodity finally resolves itself into some one or other, or all of those three parts; and in every improved society, all the three enter, more or less, as component parts, into the price of the far greater part of commodities.’ But in book i. chap. xi. p. 61, he says, ‘High or low wages and profit are the causes of high or low price; high or low rent is the effect of it.’ This latter opinion we now know to be the true one; it is, however, incompatible with that expressed in the first passage. For, if rent is the effect of price, it cannot be a component of it.