AS the modern state was formed,m a stupendous sum of money was spent for luxury of sovereign or for war with foreign country. If the revenues of national property were not sufficient enough to meet enormous expendditures of the modern state, the remaining financial resource was the taxation. Therefore, it has been the policy of the modern nation how to balance the revenues and expenditures. This is the so-called mercant, lism. As the economic policy is established, in principle, for tax collection, the economics may be considered to be originated from the government taxation policy. Thus the economics was considered as a subordination of the government in the past. A. Smith, however, pleaced the living of the people first and the government next, eliminating political factors from the economics. The physiocrats claimed that only agriculture is productive, and therefore the discussion and conclusion could not avoid prejudice and partiality. A. Smith observed and described impartially the national economy with the recognition in principle of the productivity of all industries and tried to explain its mechanism. At this tiem he regulated scientifically the contents of the economics. It may behis merit that he eliminated political factors from the economics and regulated its contents in scientific manner. "The Wealth of Nations" was greatly reputated in home and abroad because of his fluent, rich style with abundant quotations encoraged by external circumstances at that time. He was the advocate of abandoning the American colonies and the United States of America became independent inl 776 when "The Wealth of Nations" was published. Even after the independence of America the overseas trade of the Great Britial had not been declined at all. Consequently his calim was proved to be just and proper. A. Smith was quoted often at the Parliament and W. Pitt signed the commercial treaty with France as calimed by A. Smith. D. Ricardo and K. Marx emphasized the importance of the side of production and supply in the theory of A. Smith, while T. R. Malthus and J.M. Keynes attached the importance to the side of consumption and demand in this theory. Thes two sides are included in A. Smith, and therefore D. Ricardo and T.R. Malthus may be regarded as a brother by a different mother of A. Smith.