Adam Smith on money
SMITH, ADAM. Two long autograph letters signed on money and education
Glasgow, 29 October 1759 and 3 December 1759
Two letters. 4to. 7 pages total. Excellent condition.
[with:] an early 19th-century half-length profile portrait of Adam Smith, line engraving and etching, by Robert Graves.
In this outstanding pair of letters Adam Smith writes about the economics of bills of exchange, the inculcation of financial and moral responsibility, and other matters relating to money. Smith discusses at length financial matters relating to the education of his student and charge, the son of the Earl of Shelburne.
Adam Smith was named Professor of Logic and the University of Glasgow, in 1751, and the following year he became Professor of Moral Philosophy. He remained there until 1764. During this fruitful period, Smith wrote his first book, The Theory of Moral Sentiments, published in 1759, the year he wrote these letters to Lord Shelburne. It was customary at this time for professors to take students into their houses. Smith’s most noteworthy charge was Thomas Petty-Fitzmaurice, younger son of the 1st Earl of Shelburne.
Glasgow, 3 December 1759:
“As the balance of exchange is almost always against Glasgow & in favour of London, all London bills commonly sell above Par, & this day I received ½ per cent advanced price for the two draughts”
In his letter of 3 December 1759, Adam Smith thanks Shelburne for sending two drafts, explaining how he has taken advantage of differences in exchange rates, a subject he would later address in The Wealth of Nations. He writes in part, “Your Lordship has remitted the money in the manner that is most advantageous to me. As the balance of exchange is almost always against Glasgow & in favour of London, all London bills commonly sell above Par, & this day I received ½ per cent advanced price for the two draughts you sent me …”
Smith discussed the importance of bills of exchange at great length in The Wealth of Nations, in which he observed, “The paper which was issued upon those circulating bills of exchange, amounted, upon many occasions, to the whole fund destined for carrying on some vast and extensive project of agriculture, commerce, or manufactures; and not merely to that part of it which, had there been no paper money, the projector would have been obliged to keep by him, unemployed and in ready money for answering occasional demands. The greater part of this paper was, consequently, over and above the value of the gold and silver which would have circulated in the country, had there been no paper money” (Book II). Smith later explains in The Wealth of Nations, “when a premium is paid at London for a bill upon Paris, it is said to be a sign that the debts due from London to Paris are not compensated by those due from Paris to London, but that a balance in money must be sent out from the latter place; for the risk, trouble and expence of exporting which, the premium is both demanded and given” (Book IV).
Continuing his letter to Lord Shelburne, Smith writes, “I should abuse your Lordships Generosity very grossly if I took advantage of what you are so good as to put in my Power or did not declare that I think the sum you have remitted me full compensation for all the trouble I have been at with Mr Fitzmaurice. That trouble, indeed, is very little.” He praises young Thomas’s diligence and notes, “He gives very good application and has a very great ambition to distinguish himself as a man of Learning. He seems to have a particular turn for and delight in Mechanics and Mathematics.” In fact Thomas would go on to establish a linen bleaching enterprise, inspiring a contemporary to write, “The buildings which he has erected, and the machines and apparatus which he has placed in them are really astonishing.” Still, Smith notes that Thomas’s English grammar is deficient and that “he is apt some times to blunder to a degree that I am some times at a loss to account for.”
Glasgow, 29 October 1759:
“that your son should be held to Oeconomy not that he might hoard, but that he might be able to give”
In his letter of 29 October 1759, Smith meticulously details for Shelburne his son’s expenses, praises the young man’s behavior, and addresses the role of money in matters of character. Smith apologizes for the lack of receipts for certain expenses including physicians, pocket money, books, a set of silver buckles, and “a case of mathematical instruments.” He then explains that he took Thomas on a trip to Edinburgh rather than leave him behind unsupervised. At times Smith was obliged “to sup or dine at places where it was improper to carry him.” Concerned about the company Thomas might keep in “a very dissolute town,” Smith “ordered a small entertainment at our lodgings and invited two or three young lawyers to keep him company.” Aware that Shelburne might object to the university tuition charges as “extravagant,” Smith observes, “it is the fee which is expected from all nobleman’s sons. Not above the half would be expected from any gentleman’s son.”
Smith then turns to Lord Shelburne’s “very laudible anxiety that your son should be held to Oeconomy not that he might hoard, but that he might be able to give.” He assures Shelburne that Thomas “is careful of everything upon which he sets any value, of his books, of his clothes, and will I am persuaded be so of his money, whenever he comes to have any money to manage that is worth caring for.” He concludes, “If he lives to be a man, he will, I imagine be firm, steady and resolute in an uncommon degree, … a man of severe and even of rigid morals.’
Only 193 Adam Smith letters are known, all but a handful in institutions. Smith confessed to his friend David Hume “I am as Lazy a Correspondent as you,” but Hume’s letters outnumber Smith’s by a factor of three or more. In contrast, 1600 Samuel Johnson letters survive, more than 10,000 George Washington letters are known, and Voltaire wrote more than 20,000 letters.
Of the 193 extant Adam Smith letters, 24 are known only from published sources, leaving just 169 extant manuscript letters, virtually all in institutions. Smith “almost never retained copies of letters sent. And he was not addicted to letter-writing; so that, compared with correspondence of some other notable persons, Smith’s letters were rather few and short” (Dickinson).
This is a rare opportunity to acquire two long Adam Smith letters on financial matters, representing the pinnacle of economics manuscripts.
Provenance: Bowood, home of the Earls of Shelburne.