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only sound reconstruction of civil and economic institutions
according to the modern plan。
But like other men。 Adam Smith was a creature of his own
time； and what he has to say applies to the state of things as he
saw them。 What he describes and inquires into is that state of
things which was to him the 〃historical present〃； which always
signifies the recent past； that is to say； the past as it had
come under his observation and as it had shaped his outlook。
As it is conventionally dated； the Industrial Revolution took
effect within Adam Smith's active lifetime； and some of its more
significant beginnings passed immediately under his eyes； indeed；
it is related that he took an active personal interest in at
least one of the epoch…making mechanical inventions from which
the era of the machine industry takes its date。 Yet the
Industrial Revolution does not lie within Adam Smith's
〃historical present；〃 nor does his system of economic doctrines
make provision for any of its peculiar issues。 What he has to say
on the mechanics of industry is conceived in terms derived from
an older order of things than that machine industry which was
beginning to get under way in his own life…time； and all his
illustrative instances and arguments on trade and industry are
also such as would apply to the state of things that was passing；
but they are not drawn with any view to that new order which was
then coming on in the world of business enterprise。
The economic situation contemplated by Adam Smith as the
natural （and ultimate） state of industry and trade in any
enlightened society； conducted on sane and sound lines according
to the natural order of human relations； was of a simple
structure and may be drawn in few lines； neglecting such minor
extensions and exceptions as would properly be taken account of
in any exhaustive description。 Industry is conceived to be of the
nature of handicraft； not of the nature of mechanical
engineering； such as it has in effect and progressively come to
be since his time。 It is described as a matter of workmanlike
labor； 〃and of the skill； dexterity and judgment with which it is
commonly applied。〃 It is a question of the skilled workman and
his use of tools。 Mechanical inventions are 〃labor…saving
devices；〃 which 〃facilitate and abridge labor。〃 The material
equipment is the ways and means by manipulation of which the
workman gets his work done。 〃Capital stock〃 is spoken of as
savings parsimoniously accumulated out of the past industry of
its owner； or out of the industry of those persons from whom he
has legally acquired it by inheritance or in exchange for the
products of his own labor。 Business is of the nature of 〃petty
trade〃 and the business man is a 〃middle man〃 who is employed for
a livelihood in the distribution of goods to the consumers。 Trade
is subsidiary to industry； and money is a vehicle designed to be
used for the distribution of goods。 Credit is an expedient of the
needy； a dubious expedient。 Profits （including interest） are
justified as a reasonable remuneration for productive work done；
and for the labor…saving use of property derived from the owner's
past labor。 The efforts of masters and workmen alike are
conceived to be bent on turning out the largest and most
serviceable output of goods； and prices are competitively
determined by the labor…cost of the goods。
Like other men Adam Smith did not see into the future beyond
what was calculable on the data given by his own historical
present； and in his time that later and greater era of investment
and financial enterprise which has made industry subsidiary to
business was only beginning to get under way and only obscurely
so。 So that he was still able to think of commercial enterprise
as a middle…man's traffic in merchandise； subsidiary to a
small…scale industry on the order of handicraft； and due to an
assumed propensity in men 〃to truck； barter； and exchange one
thing for another。〃 And so much as he could not help seeing of
the new order of business enterprise which was coming in was not
rated by him as a sane outgrowth of that system of Natural
Liberty for which he spoke and about which his best affections
gathered。 In all this he was at one with his thoughtful
contemporaries。
That generation of public…spirited men went； perforce； on the
scant data afforded by their own historical present； the economic
situation as they saw it in the perspective and with the
preconceptions of their own time； and to them it was accordingly
plain that when all unreasonable restrictions are taken away；
〃the obvious and simple system of natural liberty establishes
itself of its own accord。〃 To this 〃natural〃 plan of free
workmanship and free trade all restraint or retardation by
collusion among business men was wholly obnoxious； and all
collusive control of industry or of the market was accordingly
execrated as unnatural and subversive。 It is true； there were
even then some appreciable beginnings of coercion and retardation
lowering of wages and limitation of output by collusion
between owners and employers who should by nature have been
competitive producers of an unrestrained output of goods and
services according to the principles of that modern point of view
which animated Adam Smith and his generation； but coercion and
unearned gain by a combination of ownership； of the now familiar
corporate type； was virtually unknown in his time。 So Adam Smith
saw and denounced the dangers of unfair combination between
〃masters〃 for the exploitation of their workmen； but the modern
use of credit and corporation finance for the collective control
of the labor market and the goods market of course does not come
within his horizon and does not engage his attention。
So also Adam Smith knows and denounces the use of protective
tariffs for private gain。 That means of pilfering was familiar
enough in his time。 But he spends little indignation on the
equally nefarious use of the national establishment for
safe…guarding and augmenting the profits of traders；
concessionaires； investors and creditors in foreign parts at the
cost of the home community。 That method of taxing the common man
for the benefit of the vested interests has also grown to more
formidable proportions since his time。 The constituent principles
of the modern point of view； as accepted advisedly or by
oversight by Adam Smith and his generation； supply all the
legitimation required for this larcenous use of the national
establishment； but the means of communication were still too
scant； and the larger use of credit was too nearly untried； as
contrasted with what has at a later date gone to make the
commercial ground and incentive of imperialist politics。
Therefore the imperialist policies of public enterprise for
private gain also do not come greatly within the range of Adam
Smith's vision of the future； nor does the 〃obvious and simple
system〃 on which he and his generation of thoughtful men take
their stand comprise anything like explicit declarations for or
against