them, yet when it first comes either from the ground, or from the
hands of the productive labourers, it naturally divides itself
into two parts. One of them, and frequently the largest, is, in
the first place, destined for replacing a capital, or for
renewing the provisions, materials, and finished work, which had
been withdrawn from a capital; the other for constituting a
revenue either to the owner of this capital, as the profit of his
stock, or to some other person, as the rent of his land. Thus, of
the produce of land, one part replaces the capital of the farmer;
the other pays his profit and the rent of the landlord; and thus
constitutes a revenue both to the owner of this capital, as the
profits of his stock; and to some other person, as the rent of
his land. Of the produce of a great manufactory, in the same
manner, one part, and that always the largest, replaces the
capital of the undertaker of the work; the other pays his profit,
and thus constitutes a revenue to the owner of this capital.
That part of the annual produce of the land and labour of
any country which replaces a capital never is immediately
employed to maintain any but productive hands. It pays the wages
of productive labour only. That which is immediately destined for
constituting a revenue, either as profit or as rent, may maintain
indifferently either productive or unproductive hands.
Whatever part of his stock a man employs as a capital, he
always expects is to be replaced to him with a profit. He employs
it, therefore, in maintaining productive bands only; and after
having served in the function of a capital to him, it constitutes
a revenue to them. Whenever he employs any part of it in
maintaining unproductive hands of any kind, that part is, from
that moment, withdrawn from his capital, and placed in his stock
reserved for immediate consumption.
Unproductive labourers, and those who do not labour at all,
are all maintained by revenue; either, first, by that part of the
annual produce which is originally destined for constituting a
revenue to some particular persons, either as the rent of land or
as the profits of stock; or, secondly, by that part which, though
originally destined for replacing a capital and for maintaining
productive labourers only, yet when it comes into their hands
whatever part of it is over and above their necessary subsistence
may be employed in maintaining indifferently either productive or
unproductive hands. Thus, not only the great landlord or the rich
merchant, but even the common workman, if his wages are
considerable, may maintain a menial servant; or he may sometimes
go to a play or a puppetshow, and so contribute his share towards
maintaining one set of unproductive labourers; or he may pay some
taxes, and thus help to maintain another set, more honourable and
useful indeed, but equally unproductive. No part of the annual
produce, however, which had been originally destined to replace a
capital, is ever directed towards maintaining unproductive hands
till after it has put into motion its full complement of
productive labour, or all that it could put into motion in the
way in which it was employed. The workman must have earned his
wages by work done before he can employ any part of them in this
manner. That part, too, is generally but a small one. It is his
spare revenue only, of which productive labourers have seldom a
great deal. They generally have some, however; and in the payment
of taxes the greatness of their number may compensate, in some
measure, the smallness of their contribution. The rent of land
and the profits of stock are everywhere, therefore, the principal
sources from which unproductive hands derive their subsistence.
These are the two sorts of revenue of which the owners have
generally most to spare. They might both maintain indifferently
either productive or unproductive hands. They seem, however, to
have some predilection for the latter. The expense of a great
lord feeds generally more idle than industrious people. The rich
merchant, though with his capital he maintains industrious people
only, yet by his expense, that is, by the employment of his
revenue, he feeds commonly the very same sort as the great lord.
The proportion, therefore, between the productive and
unproductive hands, depends very much in every country upon the
proportion between that part of the annual produce, which, as
soon as it comes either from the ground or from the hands of the
productive labourers, is destined for replacing a capital, and
that which is destined for constituting a revenue, either as rent
or as profit. This proportion is very different in rich from what
it is in poor countries.
Thus, at present, in the opulent countries of Europe, a very
large, frequently the largest portion of the produce of the land
is destined for replacing the capital of the rich and independent
farmer; the other for paying his profits and the rent of the
landlord. But anciently, during the prevalency of the feudal
government, a very small portion of the produce was sufficient to
replace the capital employed in cultivation. It consisted
commonly in a few wretched cattle, maintained altogether by the
spontaneous produce of uncultivated land, and which might,
therefore, be considered as a part of that spontaneous produce.
It generally, too, belonged to the landlord, and was by him
advanced to the occupiers of the land. All the rest of the
produce properly belonged to him too, either as rent for his
land, or as profit upon this paltry capital. The occupiers of
land were generally bondmen, whose persons and effects were
equally his property. Those who were not bondmen were tenants at
will, and though the rent which they paid was often nominally
little more than a quit-rent, it really amounted to the whole
produce of the land. Their lord could at all times command their
labour in peace and their service in war. Though they lived at a
distance from his house, they were equally dependent upon him as
his retainers who lived in it. But the whole produce of the land
undoubtedly belongs to him who can dispose of the labour and
service of all those whom it maintains. In the present state of
Europe, the share of the landlord seldom exceeds a third,
sometimes not a fourth part of the whole produce of the land. The
rent of land, however, in all the improved parts of the country,
has been tripled and quadrupled since those ancient times; and
this third or fourth part of the annual produce is, it seems,
three or four times greater than the whole had been before. In
the progress of improvement, rent, though it increases in
proportion to the extent, diminishes in proportion to the produce
of the land.
In the opulent countries of Europe, great capitals are at
present employed in trade and manufactures. In the ancient state,
the little trade that was stirring, and the few homely and coarse
manufactures that were carried on, required but very small
capitals. These, however, must have yielded very large profits.
The rate of interest was nowhere less than ten per cent, and
their profits must have been sufficient to afford this great
interest. At present the rate of interest, in the improved parts
of Europe, is nowhere higher than six per cent, and in some of
the most improved it is so low as four, three, and two per cent.
Though that part of the revenue of the inhabitants which is
derived from the profits of stock is always much greater in rich
than in poor countries, it is because the stock is much greater:
in proportion to the stock the profits are generally much less.
That part of the annual produce, therefore, which, as soon
as it comes either from the ground or from the hands of the
productive labourers, is destined for replacing a capital, is not
only much greater in rich than in poor countries, but bears a
much greater proportion to that which is immediately destined for
constituting a revenue either as rent or as profit. The funds
destined for the maintenance of productive labour are not only
much greater in the former than in the latter, but bear a much
greater proportion to those which, though they may be employed to
maintain either productive or unproductive hands, have generally
a predilection for the latter.
The proportion between those different funds necessarily
determines in every country the general character of the
inhabitants as to industry or idleness. We are more industrious
than our forefathers; because in the present times the funds
destined for the maintenance of industry are much greater in
proportion to those which are likely to be employed in the
maintenance of idleness than they were two or three centuries
ago. Our ancestors were idle for want of a sufficient
encouragement to industry. It is better, says the proverb, to
play for nothing than to work for nothing. In mercantile and
manufacturing towns, where the inferior ranks of people are
chiefly maintained by the employment of capital, they are in
general industrious, sober, and thriving; as in many English, and
in most Dutch towns. In those towns which are principally
supported by the constant or occasional residence of a court, and
in which the inferior ranks of people are chiefly maintained by
the spending of revenue, they are in general idle, dissolute, and
poor; as at Rome, Versailles, Compiegne, and Fontainebleu. If you
except Rouen and Bordeaux, there is little trade or industry in
any of the parliament towns of France; and the inferior ranks of
people, being elderly maintained by the expense of the members of
the courts of justice, and of those who come to plead before
them, are in general idle and poor. The great trade of Rouen and
Bordeaux seems to be altogether the effect of their situation.
Rouen is necessarily the entrepot of almost all the goods which
are brought either from foreign countries, or from the maritime
provinces of France, for the consumption of the great city of
Paris. Bordeaux is in the same manner the entrepot of the wines
which grow upon the banks of the Garonne, and of the rivers which
run into it, one of the richest wine countries in the world, and
which seems to produce the wine fittest for exportation, or best
suited to the taste of foreign nations. Such advantageous
situations necessarily attract a great capital by the great
employment which they afford it; and the employment of this
capital is the cause of the industry of those two cities. In the
other parliament towns of France, very little more capital seems
to be employed than what is necessary for supplying their own
consumption; that is, little more than the smallest capital which
can be employed in them. The same thing may be said of Paris,
Madrid, and Vienna. Of those three cities, Paris is by far the
most industrious; but Paris itself is the principal market of all
the manufactures established at Paris, and its own consumption is
the principal object of all the trade which it carries on.
London, Lisbon, and Copenhagen, are, perhaps, the only three
cities in Europe which are both the constant residence of a
court, and can at the same time be considered as trading cities,
or as cities which trade not only for their own consumption, but
for that of other cities and countries. The situation of all the
three is extremely advantageous, and naturally fits them to be
the entrepots of a great part of the goods destined for the
consumption of distant places. In a city where a great revenue is
spent, to employ with advantage a capital for any other purpose
than for supplying the consumption of that city is probably more
difficult than in one in which the inferior ranks of people have
no other maintenance but what they derive from the employment of
such a capital. The idleness of the greater part of the people
who are maintained by the expense of revenue corrupts, it is
probable, the industry of those who ought to be maintained by the
employment of capital, and renders it less advantageous to employ
a capital there than in other places. There was little trade or
industry in Edinburgh before the union. When the Scotch
Parliament was no longer to be assembled in it, when it ceased to
be the necessary residence of the principal nobility and gentry
of Scotland, it became a city of some trade and industry. It
still continues, however, to be the residence of the principal
courts of justice in Scotland, of the Boards of Customs and
Excise, etc. A considerable revenue, therefore, still continues
to be spent in it. In trade and industry it is much inferior to
Glasgow, of which the inhabitants are chiefly maintained by the
employment of capital. The inhabitants of a large village, it has
sometimes been observed, after having made considerable progress
in manufactures, have become idle and poor in consequence of a
great lord having taken up his residence in their neighbourhood.
The proportion between capital and revenue, therefore, seems
everywhere to regulate the proportion between industry and
idleness. Wherever capital predominates, industry prevails:
wherever revenue, idleness. Every increase or diminution of
capital, therefore, naturally tends to increase or diminish the
real quantity of industry, the number of productive hands, and
consequently the exchangeable value of the annual produce of the
land and labour of the country, the real wealth and revenue of
all its inhabitants.
Capitals are increased by parsimony, and diminished by
prodigality and misconduct.
Whatever a person saves from his revenue he adds to his
capital, and either employs it himself in maintaining an
additional number of productive hands, or enables some other
person to do so, by lending it to him for an interest, that is,
for a share of the profits. As the capital of an individual can
be increased only by what he saves from his annual revenue or his
annual gains, so the capital of a society, which is the same with
that of all the individuals who compose it, can be increased only
in the same manner.
