The contribution of world-renowned 18th century philosopher and economist, Adam Smith, has been acknowledged on the new-design £20 banknote the Bank of England introduced into circulation this week (13 March).

Bank of England Governor, Mervyn King, said, "It is such a pleasure to recognise Adam Smith's contribution to the understanding of society and its development. Smith's insights into human nature, the organisation of society, the division of labour and the advantages of specialisation remain at the heart of economics.

"As the central bank for the United Kingdom, the Bank of England is in a privileged position to acknowledge the enduring contribution of its most talented citizens over their lifetime to the advancement of society. Our choice of Adam Smith reflects the keen importance we attach to that position and the place of the notes themselves as a record of Britain's heritage."

The image of Adam Smith used on the note is based on a likeness of the portrait of him by James Tassie, held in the Scottish National Portrait Gallery.

Adam Smith is regarded as one of the fathers of modern economics. In 1759, while a professor at Glasgow University, he published The Theory of Moral Sentiments, the work that established his academic reputation. After leaving Glasgow, Smith devoted much of his time to producing his second major work, An Inquiry into the Nature and Causes of the Wealth of Nations, which was published in 1776. Born in Kirkcaldy in 1723, Smith died in Edinburgh in 1790.

His two great works focused on observing and explaining society. In The Theory of Moral Sentiments, Smith sought to explain why some practices were traditionally referred to as moral and right. The book was an explanation of human nature and of the organization of society. The Wealth of Nations was an explanation of the trade and co-operation that were, and still are, the basis for industry and commerce.

The central theme of The Wealth of Nations is the division of labour. In the famous example of a pin factory, Smith explained how co-operation between workers in the factory to divide tasks between them raised their combined output. He went on to explain how, by trading with others, both at home and abroad, we could specialise our own production and society as a whole would benefit from higher incomes and standards of living. The banknote depicts the division of labour in the pin factory, with a caption based on The Wealth of Nations: "and the great increase in the quality of work that results".

Martin Shannon (m.shannon@admin.gla.ac.uk)

First published: 14 March 2007