Pin Money

Mervyn King, Governor of the Bank of England, announced last night that from next spring Adam Smith will replace Sir Edward Elgar on the £20 note.

The image will be based on James Tassie’s portrait of Smith in the Scottish National Portrait Gallery, accompanied by a scene of pin manufacturing.
One of Smith’s most famous observations in the Wealth of Nations was that, on his own, a man might make a single pin in a day, but by dividing the labour into specialist stages, a small team could produce thousands.

Not everyone’s happy with this development: Chris Dillow, for example, points out that while Smith recognised the leap in productivity a strict division of labour brought, he had mixed feelings about the social consequences:

The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.

Apparently Smith is the first Scot to appear on English money. That’s strange: wasn’t the founder of the bank of England Scottish? And the Chancellor who decided in 1997 that the bank, rather than the Government, should set interest rates?

Over at Comment is Free Victor Keegan reminds us that the Eighteenth Century Economist and Philosopher was an enemy of cartels:

“people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”.