Hello Ida. Thanks for your question. This statement of Adam Smith should be understood in the context of his theory on the distribution of the benefits of the development of labour productive powers within commercial society. In his scheme, a 'civilized society' is divided in three orders: workers, land owners, and merchants and manufacturers. Respectively the national product is divided in three types of income: wages, rents, and profits. To put it simply, in A.Smith’s labour theory of value, the whole wealth is produced by labour, and is distributed in wages, rents, and profits. But the interests of each of these three orders do not correspond equitably to the interest of society as a whole. The interests of those who live by wages is the same with the interests of society: the growth of the productive powers of labour increases the wealth of the nation, which means that the workers (i.e. the producers of this wealth) can buy their consumption commodities in lower prices (because the increase of productivity reduce the time necessary for the production of the commodities, and so reduce their real price; so the workers can buy more goods for the same labour time, or the same amount of goods with less labour). So their interests coincide with those of society. The second order, the landowners, sees also their income (the rent) increasing when the national product increases: the improvement of the productive power reduces the prices of the manufactures, tent to raise the real rent of the land.
But the interests of the third order does not coincide with the prosperity of society: the main purpose of their activity is to raise their profits. To attain this, they tend to widen the market (which benefits also the public prosperity), and to narrow competition (which is advantageous only for them, but is quite contrary to the public interest). So, for Adam Smith, who is favorable to free commerce, but against the ‘spirit of monopoly’ of the merchants, the more competition works unimpeded, the more the prices fall, and the more the vast majority of the society prospers. And inversely, when monopolizing spirit prevails, this is directly opposite to the public interest. So, the more profit raises, the more Nation impoverish. You can find this argumentation in WN, Book I (chapter xi, part iii), and Book IV, chapter I (Of the Principle of the commercial, or mercantile System).

By: Dionysis Drosos at: 15th October, 2009