The Wealth of Nations · Chapter
And, First, of Those Which Are Necessary for Facilitating Commerce in General explained
This chapter discusses the necessity and equitable financing of public works that facilitate commerce, such as roads, bridges, canals, and harbors.
What happens
This chapter discusses the necessity and equitable financing of public works that facilitate commerce, such as roads, bridges, canals, and harbors. Smith argues that these works should be funded by tolls or port duties proportional to usage, which ultimately benefits consumers by reducing transportation costs. He contrasts the effective local management of such works in England with the centralized, often neglectful or oppressive administration in France and Asia, emphasizing that local control is more efficient and less prone to abuse.
Themes in this chapter
Role of Government
Smith discusses the appropriate role of government in funding and managing public works, advocating for local administration and user fees over central taxation.
Free Trade and Market Competition
The chapter emphasizes how well-maintained infrastructure reduces transportation costs, enabling freer trade and benefiting consumers.
Characters to notice
- Adam Smith
Author and narrator, presenting arguments on public works and commerce.
Key passages
“When the carriages which pass over a highway or a bridge, and the lighters which sail upon a navigable canal, pay toll in proportion to their weight or their tunnage, they pay for the maintenance of those public works exactly in proportion to the wear and tear which they occasion of them.”
Charging tolls based on weight or tonnage ensures that users pay for the exact wear and tear they cause.
Smith advocates for proportional user fees as the most equitable way to fund public works.
“The person who finally pays this tax, therefore, gains by the application, more than he loses by the payment of it.”
The consumer ultimately pays the toll, but benefits from lower overall transportation costs.
Smith argues that tolls are a net benefit to the consumer because they reduce the price of goods.
“When the toll upon carriages of luxury, upon coaches, post-chaises, etc. is made somewhat higher in proportion to their weight, than upon carriages of necessary use, such as carts, wagons, etc. the indolence and vanity of the rich is made to contribute in a very easy manner to the relief of the poor.”
Higher tolls on luxury vehicles allow the wealthy to subsidize the transport of essential goods for the poor.
Smith suggests a progressive toll system that redistributes costs from the rich to benefit the poor.