means of procuring a revenue, not only to their proprietor who
lets them for a rent, but to the person who possesses them and
pays that rent for them; such as shops, warehouses, workhouses,
farmhouses, with all their necessary buildings; stables,
granaries, etc. These are very different from mere dwelling
houses. They are a sort of instruments of trade, and may be
considered in the same light:
Thirdly, of the improvements of land, of what has been
profitably laid out in clearing, draining, enclosing, manuring,
and reducing it into the condition most proper for tillage and
culture. An improved farm may very justly be regarded in the same
light as those useful machines which facilitate and abridge
labour, and by means of which an equal circulating capital can
afford a much greater revenue to its employer. An improved farm
is equally advantageous and more durable than any of those
machines, frequently requiring no other repairs than the most
profitable application of the farmer's capital employed in
cultivating it:
Fourthly, of the acquired and useful abilities of all the
inhabitants or members of the society. The acquisition of such
talents, by the maintenance of the acquirer during his education,
study, or apprenticeship, always costs a real expense, which is a
capital fixed and realized, as it were, in his person. Those
talents, as they make a part of his fortune, so do they likewise
of that of the society to which he belongs. The improved
dexterity of a workman may be considered in the same light as a
machine or instrument of trade which facilitates and abridges
labour, and which, though it costs a certain expense, repays that
expense with a profit.
The third and last of the three portions into which the
general stock of the society naturally divides itself, is the
circulating capital; of which the characteristic is, that it
affords a revenue only by circulating or changing masters. It is
composed likewise of four parts:
First, of the money by means of which all the other three
are circulated and distributed to their proper consumers:
Secondly, of the stock of provisions which are in the
possession of the butcher, the grazier, the farmer, the
corn-merchant, the brewer, etc., and from the sale of which they
expect to derive a profit:
Thirdly, of the materials, whether altogether rude, or more
or less manufactured, of clothes, furniture, and building, which
are not yet made up into any of those three shapes, but which
remain in the hands of the growers, the manufacturers, the
mercers and drapers, the timber merchants, the carpenters and
joiners, the brickmakers, etc.
Fourthly, and lastly, of the work which is made up and
completed, but which is still in the hands of the merchant or
manufacturer, and not yet disposed of or distributed to the
proper consumers; such as the finished work which we frequently
find ready-made in the shops of the smith, the cabinet-maker, the
goldsmith, the jeweller, the china-merchant, etc. The circulating
capital consists in this manner, of the provisions, materials,
and finished work of all kinds that are in the hands of their
respective dealers, and of the money that is necessary for
circulating and distributing them to those who are finally to use
or to consume them.
Of these four parts, three- provisions, materials, and
finished work- are, either annually, or in a longer or shorter
period, regularly withdrawn from it, and placed either in the
fixed capital or in the stock reserved for immediate consumption.
Every fixed capital is both originally derived from, and
requires to be continually supported by a circulating capital.
All useful machines and instruments of trade are originally
derived from a circulating capital, which furnishes the materials
of which they are made, and the maintenance of the workmen who
make them. They require, too, a capital of the same kind to keep
them in constant repair.
No fixed capital can yield any revenue but by means of a
circulating capital. The most useful machines and instruments of
trade will produce nothing without the circulating capital which
affords the materials they are employed upon, and the maintenance
of the workmen who employ them. Land, however improved, will
yield no revenue without a circulating capital, which maintains
the labourers who cultivate and collect its produce.
To maintain and augment the stock which may be reserved for
immediate consumption is the sole end and purpose both of the
fixed and circulating capitals. It is this stock which feeds,
clothes, and lodges the people. Their riches or poverty depends
upon the abundant or sparing supplies which those two capitals
can afford to the stock reserved for immediate consumption.
So great a part of the circulating capital being continually
withdrawn from it, in order to be placed in the other two
branches of the general stock of the society; it must in its turn
require continual supplies, without which it would soon cease to
exist. These supplies are principally drawn from three sources,
the produce of land, of mines, and of fisheries. These afford
continual supplies of provisions and materials, of which part is
afterwards wrought up into finished work, and by which are
replaced the provisions, materials, and finished work continually
withdrawn from the circulating capital. From mines, too, is drawn
what is necessary for maintaining and augmenting that part of it
which consists in money. For though, in the ordinary course of
business, this part is not, like the other three, necessarily
withdrawn from it, in order to be placed in the other two
branches of the general stock of the society, it must, however,
like all other things, be wasted and worn out at last, and
sometimes, too, be either lost or sent abroad, and must,
therefore, require continual, though, no doubt, much smaller
supplies.
Land, mines, and fisheries, require all both a fixed and a
circulating capital to cultivate them; and their produce replaces
with a profit, not only those capitals, but all the others in the
society. Thus the farmer annually replaces to the manufacturer
the provisions which he had consumed and the materials which be
had wrought up the year before; and the manufacturer replaces to
the farmer the finished work which he had wasted and worn out in
the same time. This is the real exchange that is annually made
between those two orders of people, though it seldom happens that
the rude produce of the one and the manufactured produce of the
other, are directly bartered for one another; because it seldom
happens that the farmer sells his corn and his cattle, his flax
and his wool, to the very same person of whom he chooses to
purchase the clothes, furniture, and instruments of trade which
he wants. He sells, therefore, his rude produce for money, with
which he can purchase, wherever it is to be had, the manufactured
produce he has occasion for. Land even replaces, in part at
least, the capitals with which fisheries and mines are
cultivated. It is the produce of land which draws the fish from
the waters; and it is the produce of the surface of the earth
which extracts the minerals from its bowels.
The produce of land, mines, and fisheries, when their
natural fertility is equal, is in proportion to the extent and
proper application of the capitals employed about them. When the
capitals are equal and equally well applied, it is in proportion
to their natural fertility.
In all countries where there is tolerable security, every
man of common understanding will endeavour to employ whatever
stock he can command in procuring either present enjoyment or
future profit. If it is employed in procuring present enjoyment,
it is a stock reserved for immediate consumption. If it is
employed in procuring future profit, it must procure this profit
either staying with him, or by going from him. In the one case it
is fixed, in the other it is a circulating capital. A man must be
perfectly crazy who, where there is tolerable security, does not
employ all the stock which he commands, whether be his own or
borrowed of other people, in some one or other of those three
ways.
In those unfortunate countries, indeed, where men are
continually afraid of the violence of their superiors, they
frequently bury and conceal a great part of their stock, in order
to have it always at hand to carry with them to some place of
safety, in case of their being threatened with any of those
disasters to which they consider themselves as at all times
exposed. This is said to be a common practice in Turkey, in
Indostan, and, I believe, in most other governments of Asia. It
seems to have been a common practice among our ancestors during
the violence of the feudal government. Treasure-trove was in
those times considered as no contemptible part of the revenue of
the greatest sovereigns in Europe. It consisted in such treasure
as was found concealed in the earth, and to which no particular
person could prove any right. This was regarded in those times as
so important an object, that it was always considered as
belonging to the sovereign, and neither to the finder nor to the
proprietor of the land, unless the right to it had been conveyed
to the latter by an express clause in his charter. It was put
upon the same footing with gold and silver mines, which, without
a special clause in the charter, were never supposed to be
comprehended in the general grant of the lands, though mines of
lead, copper, tin, and coal were as things of smaller
consequence.
CHAPTER II
Of Money considered as a particular Branch of the general Stock
of the Society, or of the Expense of maintaining the National
Capital
IT has been shown in the first book, that the price of the
greater part of commodities resolves itself into three parts, of
which one pays the wages of the labour, another the profits of
the stock, and a third the rent of the land which had been
employed in producing and bringing them to market: that there
are, indeed, some commodities of which the price is made up of
two of those parts only, the wages of labour, and the profits of
stock: and a very few in which it consists altogether in one, the
wages of labour: but that the price of every commodity
necessarily resolves itself into some one, or other, or all of
these three parts; every part of it which goes neither to rent
nor to wages, being necessarily profit to somebody.
Since this is the case, it has been observed, with regard to
every particular commodity, taken separately, it must be so with
regard to all the commodities which compose the whole annual
produce of the land and labour of every country, taken complexly.
The whole price or exchangeable value of that annual produce must
resolve itself into the same three parts, and be parcelled out
among the different inhabitants of the country, either as the
wages of their labour, the profits of their stock, or the rent of
their land.
But though the whole value of the annual produce of the land
and labour of every country is thus divided among and constitutes
a revenue to its different inhabitants, yet as in the rent of a
private estate we distinguish between the gross rent and the net
rent, so may we likewise in the revenue of all the inhabitants of
a great country.
The gross rent of a private estate comprehends whatever is
paid by the farmer; the net rent, what remains free to the
landlord, after deducting the expense of management, of repairs,
and all other necessary charges; or what, without hurting his
estate, he can afford to place in his stock reserved for
immediate consumption, or to spend upon his table, equipage, the
ornaments of his house and furniture, his private enjoyments and
amusements. His real wealth is in proportion, not to his gross,
but to his net rent.
The gross revenue of all the inhabitants of a great country
comprehends the whole annual produce of their land and labour;
the net revenue, what remains free to them after deducting the
expense of maintaining- first, their fixed, and, secondly, their
circulating capital; or what, without encroaching upon their
capital, they can place in their stock reserved for immediate
consumption, or spend upon their subsistence, conveniencies, and
amusements. Their real wealth, too, is in proportion, not to
their gross, but to their net revenue.
The whole expense of maintaining the fixed capital must
evidently be excluded from the net revenue of the society.
Neither the materials necessary for supporting their useful
machines and instruments of trade, their profitable buildings,
etc., nor the produce of the labour necessary for fashioning
those materials into the proper form, can ever make any part of
it. The price of that labour may indeed make a part of it; as the
workmen so employed may place the whole value of their wages in
their stock reserved for immediate consumption. But in other
sorts of labour, both the price and the produce go to this stock,
the price to that of the workmen, the produce to that of other
people, whose subsistence, conveniences, and amusements, are
augmented by the labour of those workmen.
The intention of the fixed capital is to increase the
productive powers of labour, or to enable the same number of
labourers to perform a much greater quantity of work. In a farm
where all the necessary buildings, fences, drains,
communications, etc., are in the most perfect good order, the
same number of labourers and labouring cattle will raise a much
greater produce than in one of equal extent and equally good
ground, but not furnished with equal conveniencies. In
manufactures the same number of hands, assisted with the best
machinery, will work up a much greater quantity of goods than
with more imperfect instruments of trade. The expense which is
properly laid out upon a fixed capital of any kind, is always
repaid with great profit, and increases the annual produce by a
