Another visitor to Scotland that year who enjoyed a talk with Smith, and has something interesting to communicate about the conversation, is William Adam, barrister and M.P., afterwards Chief Commissioner of the Jury Court in Scotland, who was a nephew of Smith’s schoolfellow and lifelong friend, Robert Adam, the architect.  William Adam was an intimate personal friend of Bentham since the days when they ate their way to the bar together and spent their nights in endless discussions about Hume’s philosophy and other thorny subjects, and when in Scotland in the summer of 1789 he met Smith, and drew the conversation to his friend Bentham’s recently published Defence of Usury.  This book, it will be remembered, was written expressly to controvert Smith’s recommendation of a legal limitation of the rate of interest, and from this conversation with Adam there seems to be some ground for thinking that the book had the very unusual controversial effect of converting the antagonist against whom it was written.  Smith’s reason for wanting to fix the legal rate of interest at a maximum just a little above the ordinary market rate was to prevent undue facilities being given to prodigals and projectors; but Bentham replied very justly that, whatever might be said of prodigals, projectors at any rate were one of the most useful classes a community could possess, that a wise government ought to do all it could to encourage their enterprise instead of thwarting it, and that the best policy therefore was to leave the rate of interest alone.  In conducting his polemic Bentham wrote as an admiring pupil towards a venerated master, to whom he said he owed everything, and over whom he could gain no advantage except, to use his own words, “with weapons which you have taught me to wield and with which you have furnished me; for as all the great standards of truth which can be appealed to in this line owe, as far as I can understand, their establishment to you, I can see scarce any other way of convicting you of an error or oversight than by judging you out of your own mouth."[357]

Smith was touched with the handsome spirit in which his adversary wrote, and candidly admitted to Adam the force of his assaults.  The conversation is preserved in a letter written to Bentham on the 4th December 1789 by another friend and fellow-barrister, George Wilson, as he apparently had the story from Adam’s own lips.

“Did we ever tell you,” writes Wilson, “what Dr. Adam Smith said to Mr. William Adam, the Council M.P., last summer in Scotland?  The Doctor’s expressions were that ’the Defence of Usury was the work of a very superior man, and that tho’ he had given him some hard knocks, it was done in so handsome a way that he could not complain,’ and seemed to admit that you were right."[358] This admission, though apparently not made in so many words by Smith, but rather inferred by Adam from the general purport of the conversation, is still not far removed from the confession so definitely reported that his position suffered some hard knocks from the assaults of Bentham.  After that confession it is reasonable to think that if Smith had lived to publish another edition of his work, he would have modified his position on the rate of interest.