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provisions. It would be quite otherwise, however, in an unimproved and
uncultivated country, where the greater part of the lands could be
applied to no other purpose but the feeding of cattle, and where the
wool and the hide made the principal part of the value of those
cattle. Their interest as landlords and farmers would in this case be
very deeply affected by such regulations, and their interest as
consumers very little. The fall in the price of the wool and the hide
would not in this case raise the price of the carcase; because the
greater part of the lands of the country being applicable to no other
purpose but the feeding of cattle, the same number would still
continue to be fed. The same quantity of butcher's meat would still
come to market. The demand for it would be no greater than before. Its
price, therefore, would be the same as before. The whole price of
cattle would fall, and along with it both the rent and the profit of
all those lands of which cattle was the principal produce, that is, of
the greater part of the lands of the country. The perpetual
prohibition of the exportation of wool, which is commonly, but very
falsely, ascribed to Edward III., would, in the then circumstances of
the country, have been the most destructive regulation which could
well have been thought of. It would not only have reduced the actual
value of the greater part of the lands in the kingdom, but by reducing
the price of the most important species of small cattle, it would have
retarded very much its subsequent improvement.

The wool of Scotland fell very considerably in its price in
consequence of the union with England, by which it was excluded from
the great market of Europe, and confined to the narrow one of Great
Britain. The value of the greater part of the lands in the southern
counties of Scotland, which are chiefly a sheep country, would have
been very deeply affected by this event, had not the rise in the price
of butcher's meat fully compensated the fall in the price of wool.

As the efficacy of human industry, in increasing the quantity either
of wool or of raw hides, is limited, so far as it depends upon the
produce of the country where it is exerted; so it is uncertain so far
as it depends upon the produce of other countries. It so far depends
not so much upon the quantity which they produce, as upon that which
they do not manufacture; and upon the restraints which they may or may
not think proper to impose upon the exportation of this sort of rude
produce. These circumstances, as they are altogether independent of
domestic industry, so they necessarily render the efficacy of its
efforts more or less uncertain. In multiplying this sort of rude
produce, therefore, the efficacy of human industry is not only
limited, but uncertain.

In multiplying another very important sort of rude produce, the
quantity of fish that is brought to market, it is likewise both
limited and uncertain. It is limited by the local situation of the
country, by the proximity or distance of its different provinces from
the sea, by the number of its lakes and rivers, and by what may be
called the fertility or barrenness of those seas, lakes, and rivers,
as to this sort of rude produce. As population increases, as the
annual produce of the land and labour of the country grows greater and
greater, there come to be more buyers of fish; and those buyers, too,
have a greater quantity and variety of other goods, or, what is the
same thing, the price of a greater quantity and variety of other
goods, to buy with. But it will generally be impossible to supply the
great and extended market, without employing a quantity of labour
greater than in proportion to what had been requisite for supplying
the narrow and confined one. A market which, from requiring only one
thousand, comes to require annually ten thousand ton of fish, can
seldom be supplied, without employing more than ten times the quantity
of labour which had before been sufficient to supply it. The fish must
generally be sought for at a greater distance, larger vessels must be
employed, and more expensive machinery of every kind made use of. The
real price of this commodity, therefore, naturally rises in the
progress of improvement. It has accordingly done so, I believe, more
or less in every country.

Though the success of a particular day's fishing maybe a very
uncertain matter, yet the local situation of the country being
supposed, the general efficacy of industry in bringing a certain
quantity of fish to market, taking the course of a year, or of several
years together, it may, perhaps, be thought is certain enough; and it,
no doubt, is so. As it depends more, however, upon the local situation
of the country, than upon the state of its wealth and industry; as
upon this account it may in different countries be the same in very
different periods of improvement, and very different in the same
period; its connection with the state of improvement is uncertain; and
it is of this sort of uncertainty that I am here speaking.

In increasing the quantity of the different minerals and metals which
are drawn from the bowels of the earth, that of the more precious ones
particularly, the efficacy of human industry seems not to be limited,
but to be altogether uncertain.

The quantity of the precious metals which is to be found in any
country, is not limited by any thing in its local situation, such as
the fertility or barrenness of its own mines. Those metals frequently
abound in countries which possess no mines. Their quantity, in every
particular country, seems to depend upon two different circumstances;
first, upon its power of purchasing, upon the state of its industry,
upon the annual produce of its land and labour, in consequence of
which it can afford to employ a greater or a smaller quantity of
labour and subsistence, in bringing or purchasing such superfluities
as gold and silver, either from its own mines, or from those of other
countries; and, secondly, upon the fertility or barrenness of the
mines which may happen at any particular time to supply the commercial
world with those metals. The quantity of those metals in the countries
most remote from the mines, must be more or less affected by this
fertility or barrenness, on account of the easy and cheap
transportation of those metals, of their small bulk and great value.
Their quantity in China and Indostan must have been more or less
affected by the abundance of the mines of America.

So far as their quantity in any particular country depends upon the
former of those two circumstances (the power of purchasing), their
real price, like that of all other luxuries and superfluities, is
likely to rise with the wealth and improvement of the country, and to
fall with its poverty and depression. Countries which have a great
quantity of labour and subsistence to spare, can afford to purchase
any particular quantity of those metals at the expense of a greater
quantity of labour and subsistence, than countries which have less to
spare.

So far as their quantity in any particular country depends upon the
latter of those two circumstances (the fertility or barrenness of the
mines which happen to supply the commercial world), their real price,
the real quantity of labour and subsistence which they will purchase
or exchange for, will, no doubt, sink more or less in proportion to
the fertility, and rise in proportion to the barrenness of those
mines.

The fertility or barrenness of the mines, however, which may happen at
any particular time to supply the commercial world, is a circumstance
which, it is evident, may have no sort of connection with the state of
industry in a particular country. It seems even to have no very
necessary connection with that of the world in general. As arts and
commerce, indeed, gradually spread themselves over a greater and a
greater part of the earth, the search for new mines, being extended
over a wider surface, may have somewhat a better chance for being
successful than when confined within narrower bounds. The discovery of
new mines, however, as the old ones come to be gradually exhausted, is
a matter of the greatest uncertainty, and such as no human skill or
industry can insure. All indications, it is acknowledged, are
doubtful; and the actual discovery and successful working of a new
mine can alone ascertain the reality of its value, or even of its
existence. In this search there seem to be no certain limits, either
to the possible success, or to the possible disappointment of human
industry. In the course of a century or two, it is possible that new
mines may be discovered, more fertile than any that have ever yet been
known; and it is just equally possible, that the most fertile mine
then known may be more barren than any that was wrought before the
discovery of the mines of America. Whether the one or the other of
those two events may happen to take place, is of very little
importance to the real wealth and prosperity of the world, to the real
value of the annual produce of the land and labour of mankind. Its
nominal value, the quantity of gold and silver by which this annual
produce could be expressed or represented, would, no doubt, be very
different; but its real value, the real quantity of labour which it
could purchase or command, would be precisely the same. A shilling
might, in the one case, represent no more labour than a penny does at
present; and a penny, in the other, might represent as much as a
shilling does now. But in the one case, he who had a shilling in his
pocket would be no richer than he who has a penny at present; and in
the other, he who had a penny would be just as rich as he who has a
shilling now. The cheapness and abundance of gold and silver plate
would be the sole advantage which the world could derive from the one
event; and the dearness and scarcity of those trifling superfluities,
the only inconveniency it could suffer from the other.

Conclusion of the Digression concerning the Variations in the Value of
Silver.

The greater part of the writers who have collected the money price of
things in ancient times, seem to have considered the low money price
of corn, and of goods in general, or, in other words, the high value
of gold and silver, as a proof, not only of the scarcity of those
metals, but of the poverty and barbarism of the country at the time
when it took place. This notion is connected with the system of
political economy, which represents national wealth as consisting in
the abundance and national poverty in the scarcity, of gold and
silver; a system which I shall endeavour to explain and examine at
great length in the fourth book of this Inquiry. I shall only observe
at present, that the high value of the precious metals can be no proof
of the poverty or barbarism of any particular country at the time when
it took place. It is a proof only of the barrenness of the mines which
happened at that time to supply the commercial world. A poor country,
as it cannot afford to buy more, so it can as little afford to pay
dearer for gold and silver than a rich one; and the value of those
metals, therefore, is not likely to be higher in the former than in
the latter. In China, a country much richer than any part of Europe,
the value of the precious metals is much higher than in any part of
Europe. As the wealth of Europe, indeed, has increased greatly since
the discovery of the mines of America, so the value of gold and silver
has gradually diminished. This diminution of their value, however, has
not been owing to the increase of the real wealth of Europe, of the
annual produce of its land and labour, but to the accidental discovery
of more abundant mines than any that were known before. The increase
of the quantity of gold and silver in Europe, and the increase of its
manufactures and agriculture, are two events which, though they have
happened nearly about the same time, yet have arisen from very
different causes, and have scarce any natural connection with one
another. The one has arisen from a mere accident, in which neither
prudence nor policy either had or could have any share; the other,
from the fall of the feudal system, and from the establishment of a
government which afforded to industry the only encouragement which it
requires, some tolerable security that it shall enjoy the fruits of
its own labour. Poland, where the feudal system still continues to
take place, is at this day as beggarly a country as it was before the
discovery of America. The money price of corn, however, has risen; the
real value of the precious metals has fallen in Poland, in the same
manner as in other parts of Europe. Their quantity, therefore, must
have increased there as in other places, and nearly in the same
proportion to the annual produce of its land and labour. This increase
of the quantity of those metals, however, has not, it seems, increased
that annual produce, has neither improved the manufactures and
agriculture of the country, nor mended the circumstances of its
inhabitants. Spain and Portugal, the countries which possess the
mines, are, after Poland, perhaps the two most beggarly countries in
Europe. The value of the precious metals, however, must be lower in
Spain and Portugal than in any other part of Europe, as they come from
those countries to all other parts of Europe, loaded, not only with a
freight and an insurance, but with the expense of smuggling, their
exportation being either prohibited or subjected to a duty. In
proportion to the annual produce of the land and labour, therefore,
their quantity must be greater in those countries than in any other
part of Europe; those countries, however, are poorer than the greater
part of Europe. Though the feudal system has been abolished in Spain
and Portugal, it has not been succeeded by a much better.

As the low value of gold and silver, therefore, is no proof of the
wealth and flourishing state of the country where it takes place; so
neither is their high value, or the low money price either of goods in
general, or of corn in particular, any proof of its poverty and
barbarism.

But though the low money price, either of goods in general, or of corn
in particular, be no proof of the poverty or barbarism of the times,
the low money price of some particular sorts of goods, such as cattle,
poultry, game of all kinds, etc. in proportion to that of corn, is a
most decisive one. It clearly demonstrates, first, their great
abundance in proportion to that of corn, and, consequently, the great
extent of the land which they occupied in proportion to what was
occupied by corn; and, secondly, the low value of this land in
proportion to that of corn land, and, consequently, the uncultivated
and unimproved state of the far greater part of the lands of the
country. It clearly demonstrates, that the stock and population of the
country did not bear the same proportion to the extent of its
territory, which they commonly do in civilized countries; and that
society was at that time, and in that country, but in its infancy.
From the high or low money price, either of goods in general, or of
corn in particular, we can infer only, that the mines, which at that
time happened to supply the commercial world with gold and silver,
were fertile or barren, not that the country was rich or poor. But
from the high or low money price of some sorts of goods in proportion
to that of others, we can infer, with a degree of probability that
approaches almost to certainty, that it was rich or poor, that the
greater part of its lands were improved or unimproved, and that it was
either in a more or less barbarous state, or in a more or less
civilized one.

Any rise in the money price of goods which proceeded altogether from
the degradation of the value of silver, would affect all sorts of
goods equally, and raise their price universally, a third, or a
fourth, or a fifth part higher, according as silver happened to lose a
third, or a fourth, or a fifth part of its former value. But the rise
in the price of provisions, which has been the subject of so much
reasoning and conversation, does not affect all sorts of provisions
equally. Taking the course of the present century at an average, the
price of corn, it is acknowledged, even by those who account for this
rise by the degradation of the value of silver, has risen much less
than that of some other sorts of provisions. The rise in the price of
those other sorts of provisions, therefore, cannot be owing altogether
to the degradation of the value of silver. Some other causes must be
taken into the account; and those which have been above assigned,
will, perhaps, without having recourse to the supposed degradation of
the value of silver, sufficiently explain this rise in those
particular sorts of provisions, of which the price has actually risen
in proportion to that of corn.

As to the price of corn itself, it has, during the sixty-four first
years of the present century, and before the late extraordinary course
of bad seasons, been somewhat lower than it was during the sixty-four
last years of the preceding century. This fact is attested, not only
by the accounts of Windsor market, but by the public fiars of all the
different counties of Scotland, and by the accounts of several
different markets in France, which have been collected with great
diligence and fidelity by Mr Messance, and by Mr Dupr de St Maur. The
evidence is more complete than could well have been expected in a
matter which is naturally so very difficult to be ascertained.

As to the high price of corn during these last ten or twelve years, it
can be sufficiently accounted for from the badness of the seasons,
without supposing any degradation in the value of silver.

The opinion, therefore, that silver is continually sinking in its
value, seems not to be founded upon any good observations, either upon
the prices of corn, or upon those of other provisions.

The same quantity of silver, it may perhaps be said, will, in the
present times, even according to the account which has been here
given, purchase a much smaller quantity of several sorts of provisions
than it would have done during some part of the last century; and to
ascertain whether this change be owing to a rise in the value of those
goods, or to a fall in the value of silver, is only to establish a
vain and useless distinction, which can be of no sort of service to
the man who has only a certain quantity of silver to go to market
with, or a certain fixed revenue in money. I certainly do not pretend
that the knowledge of this distinction will enable him to buy cheaper.
It may not, however, upon that account be altogether useless.

It may be of some use to the public, by affording an easy proof of the
prosperous condition of the country. If the rise in the price of some
sorts of provisions be owing altogether to a fall in the value of
silver, it is owing to a circumstance, from which nothing can be
inferred but the fertility of the American mines. The real wealth of
the country, the annual produce of its land and labour, may,
notwithstanding this circumstance, be either gradually declining, as
in Portugal and Poland; or gradually advancing, as in most other parts
of Europe. But if this rise in the price of some sorts of provisions
be owing to a rise in the real value of the land which produces them,
to its increased fertility, or, in consequence of more extended
improvement and good cultivation, to its having been rendered fit for
producing corn; it is owing to a circumstance which indicates, in the
clearest manner, the prosperous and advancing state of the country.
The land constitutes by far the greatest, the most important, and the
most durable part of the wealth of every extensive country. It may
surely be of some use, or, at least, it may give some satisfaction to
the public, to have so decisive a proof of the increasing value of by
far the greatest, the most important, and the most durable part of its
wealth.

It may, too, be of some use to the public, in regulating the pecuniary
reward of some of its inferior servants. If this rise in the price of
some sorts of provisions be owing to a fall in the value of silver,
their pecuniary reward, provided it was not too large before, ought
certainly to be augmented in proportion to the extent of this fall. If
it is not augmented, their real recompence will evidently be so much
diminished. But if this rise of price is owing to the increased value,
in consequence of the improved fertility of the land which produces
such provisions, it becomes a much nicer matter to judge, either in
what proportion any pecuniary reward ought to be augmented, or whether
it ought to be augmented at all. The extension of improvement and
cultivation, as it necessarily raises more or less, in proportion to
the price of corn, that of every sort of animal food, so it as
necessarily lowers that of, I believe, every sort of vegetable food.
It raises the price of animal food; because a great part of the land
which produces it, being rendered fit for producing corn, must afford
to the landlord anti farmer the rent and profit of corn land. It
lowers the price of vegetable food; because, by increasing the
fertility of the land, it increases its abundance. The improvements of
agriculture, too, introduce many sorts of vegetable food, which
requiring less land, and not more labour than corn, come much cheaper
to market. Such are potatoes and maize, or what is called Indian corn,
the two most important improvements which the agriculture of Europe,
perhaps, which Europe itself, has received from the great extension of
its commerce and navigation. Many sorts of vegetable food, besides,
which in the rude state of agriculture are confined to the
kitchen-garden, and raised only by the spade, come, in its improved
state, to be introduced into common fields, and to be raised by the
plough; such as turnips, carrots, cabbages, etc. If, in the progress
of improvement, therefore, the real price of one species of food
necessarily rises, that of another as necessarily falls; and it
becomes a matter of more nicety to judge how far the rise in the one
may be compensated by the fall in the other. When the real price of
butcher's meat has once got to its height (which, with regard to every
sort, except perhaps that of hogs flesh, it seems to have done through
a great part of England more than a century ago), any rise which can
afterwards happen in that of any other sort of animal food, cannot
much affect the circumstances of the inferior ranks of people. The
circumstances of the poor, through a great part of England, cannot
surely be so much distressed by any rise in the price of poultry,
fish, wild-fowl, or venison, as they must be relieved by the fall in
that of potatoes.

In the present season of scarcity, the high price of corn no doubt
distresses the poor. But in times of moderate plenty, when corn is at
its ordinary or average price, the natural rise in the price of any
other sort of rude produce cannot much affect them. They suffer more,
perhaps, by the artificial rise which has been occasioned by taxes in
the price of some manufactured commodities, as of salt, soap, leather,
candles, malt, beer, ale, etc.

Effects of the Progress of Improvement upon the real Price of
Manufactures.

It is the natural effect of improvement, however, to diminish
gradually the real price of almost all manufactures. That of the
manufacturing workmanship diminishes, perhaps, in all of them without
exception. In consequence of better machinery, of greater dexterity,
and of a more proper division and distribution of work, all of which
are the natural effects of improvement, a much smaller quantity of
labour becomes requisite for executing any particular piece of work;
and though, in consequence of the flourishing circumstances of the
society, the real price of labour should rise very considerably, yet
the great diminution of the quantity will generally much more than
compensate the greatest rise which can happen in the price.

There are, indeed, a few manufactures, in which the necessary rise in
the real price of the rude materials will more than compensate all the
advantages which improvement can introduce into the execution of the
work In carpenters' and joiners' work, and in the coarser sort of
cabinet work, the necessary rise in the real price of barren timber,
in consequence of the improvement of land, will more than compensate
all the advantages which can be derived from the best machinery, the
greatest dexterity, and the most proper division and distribution of
work.

But in all cases in which the real price of the rude material either
does not rise at all, or does not rise very much, that of the
manufactured commodity sinks very considerably.

This diminution of price has, in the course of the present and
preceding century, been most remarkable in those manufactures of which
the materials are the coarser metals. A better movement of a watch,
than about the middle of the last century could have been bought for
twenty pounds, may now perhaps be had for twenty shillings. In the
work of cutlers and locksmiths, in all the toys which are made of the
coarser metals, and in all those goods which are commonly known by the
name of Birmingham and Sheffield ware, there has been, during the same
period, a very great reduction of price, though not altogether so
great as in watch-work. It has, however, been sufficient to astonish
the workmen of every other part of Europe, who in many cases
acknowledge that they can produce no work of equal goodness for double
or even for triple the price. There are perhaps no manufactures, in
which the division of labour can be carried further, or in which the
machinery employed admits of' a greater variety of improvements, than
those of which the materials are the coarser metals.

In the clothing manufacture there has, during the same period, been no
such sensible reduction of price. The price of superfine cloth, I have
been assured, on the contrary, has, within these five-and-twenty or
thirty years, risen somewhat in proportion to its quality, owing, it
was said, to a considerable rise in the price of the material, which
consists altogether of Spanish wool. That of the Yorkshire cloth,
which is made altogether of English wool, is said, indeed, during the
course of the present century, to have fallen a good deal in
proportion to its quality. Quality, however, is so very disputable a
matter, that I look upon all information of this kind as somewhat
uncertain. In the clothing manufacture, the division of labour is
nearly the same now as it was a century ago, and the machinery
employed is not very different. There may, however, have been some
small improvements in both, which may have occasioned some reduction
of price.

But the reduction will appear much more sensible and undeniable, if we
compare the price of this manufacture in the present times with what
it was in a much remoter period, towards the end of the fifteenth
century, when the labour was probably much less subdivided, and the
machinery employed much more imperfect, than it is at present.

In 1487, being the 4th of Henry VII., it was enacted, that "whosoever
shall sell by retail a broad yard of the finest scarlet grained, or of
other grained cloth of the finest making, above sixteen shillings,
shall forfeit forty shillings for every yard so sold." Sixteen
shillings, therefore, containing about the same quantity of silver as
four-and-twenty shillings of our present money, was, at that time,
reckoned not an unreasonable price for a yard of the finest cloth; and
as this is a sumptuary law, such cloth, it is probable, had usually
been sold somewhat dearer. A guinea may be reckoned the highest price
in the present times. Even though the quality of the cloths,
therefore, should be supposed equal, and that of the present times is
most probably much superior, yet, even upon this supposition, the
money price of the finest cloth appears to have been considerably
reduced since the end of the fifteenth century. But its real price has
been much more reduced. Six shillings and eightpence was then, and
long afterwards, reckoned the average price of a quarter of wheat.
Sixteen shillings, therefore, was the price of two quarters and more
than three bushels of wheat. Valuing a quarter of wheat in the present
times at eight-and-twenty shillings, the real price of a yard of fine
cloth must, in those times, have been equal to at least three pounds
six shillings and sixpence of our present money. The man who bought it
must have parted with the command of a quantity of labour and
subsistence equal to what that sum would purchase in the present
times.

The reduction in the real price of the coarse manufacture, though
considerable, has not been so great as in that of the fine.

In 1463, being the 3rd of Edward IV. it was enacted, that "no servant
in husbandry nor common labourer, nor servant to any artificer
inhabiting out of a city or burgh, shall use or wear in their clothing
any cloth above two shillings the broad yard." In the 3rd of Edward
IV., two shillings contained very nearly the same quantity of silver
as four of our present money. But the Yorkshire cloth which is now
sold at four shillings the yard, is probably much superior to any that
was then made for the wearing of the very poorest order of common
servants. Even the money price of their clothing, therefore, may, in
proportion to the quality, be somewhat cheaper in the present than it
was in those ancient times. The real price is certainly a good deal
cheaper. Tenpence was then reckoned what is called the moderate and
reasonable price of a bushel of wheat. Two shillings, therefore, was
the price of two bushels and near two pecks of wheat, which in the
present times, at three shillings and sixpence the bushel, would be
worth eight shillings and ninepence. For a yard of this cloth the poor
servant must have parted with the power of purchasing a quantity of
subsistence equal to what eight shillings and ninepence would purchase
in the present times. This is a sumptuary law, too, restraining the
luxury and extravagance of the poor. Their clothing, therefore, had
commonly been much more expensive.

The same order of people are, by the same law, prohibited from wearing
hose, of which the price should exceed fourteen-pence the pair, equal
to about eight-and-twenty pence of our present money. But
fourteen-pence was in those times the price of a bushel and near two
pecks of wheat; which in the present times, at three and sixpence the
bushel, would cost five shillings and threepence. We should in the
present times consider this as a very high price for a pair of
stockings to a servant of the poorest and lowest order. He must
however, in those times, have paid what was really equivalent to this
price for them.

In the time of Edward IV. the art of knitting stockings was probably
not known in any part of Europe. Their hose were made of common cloth,
which may have been one of the causes of their dearness. The first
person that wore stockings in England is said to have been Queen
Elizabeth. She received them as a present from the Spanish ambassador.

Both in the coarse and in the fine woollen manufacture, the machinery
employed was much more imperfect in those ancient, than it is in the
present times. It has since received three very capital improvements,
besides, probably, many smaller ones, of which it may be difficult to
ascertain either the number or the importance. The three capital
improvements are, first, the exchange of the rock and spindle for the
spinning-wheel, which, with the same quantity of labour, will perform
more than double the quantity of work. Secondly, the use of several
very ingenious machines, which facilitate and abridge, in a still
greater proportion, the winding of the worsted and woollen yarn, or
the proper arrangement of the warp and woof before they are put into
the loom; an operation which, previous to the invention of those
machines, must have been extremely tedious and troublesome. Thirdly,
the employment of the fulling-mill for thickening the cloth, instead
of treading it in water. Neither wind nor water mills of any kind were
known in England so early as the beginning of the sixteenth century,
nor, so far as I know, in any other part of Europe north of the Alps.
They had been introduced into Italy some time before.

The consideration of these circumstances may, perhaps, in some
measure, explain to us why the real price both of the coarse and of
the fine manufacture was so much higher in those ancient than it is in
the present times. It cost a greater quantity of labour to bring the
goods to market. When they were brought thither, therefore, they must
have purchased, or exchanged for the price of, a greater quantity.

The coarse manufacture probably was, in those ancient times, carried
on in England in the same manner as it always has been in countries
where arts and manufactures are in their infancy. It was probably a
household manufacture, in which every different part of the work was
occasionally performed by all the different members of almost every
private family, but so as to be their work only when they had nothing
else to do, and not to be the principal business from which any of
them derived the greater part of their subsistence. The work which is
performed in this manner, it has already been observed, comes always
much cheaper to market than that which is the principal or sole fund
of the workman's subsistence. The fine manufacture, on the other hand,
was not, in those times, carried on in England, but in the rich and
commercial country of Flanders; and it was probably conducted then, in
the same manner as now, by people who derived the whole, or the
principal part of their subsistence from it. It was, besides, a
foreign manufacture, and must have paid some duty, the ancient custom
of tonnage and poundage at least, to the king. This duty, indeed,
would not probably be very great. It was not then the policy of Europe
to restrain, by high duties, the importation of foreign manufactures,
but rather to encourage it, in order that merchants might be enabled
to supply, at as easy a rate as possible, the great men with the
conveniencies and luxuries which they wanted, and which the industry
of their own country could not afford them.

The consideration of these circumstances may, perhaps, in some measure
explain to us why, in those ancient times, the real price of the
coarse manufacture was, in proportion to that of the fine, so much
lower than in the present times.

Conclusion of the Chapter.

I shall conclude this very long chapter with observing, that every
improvement in the circumstances of the society tends, either directly
or indirectly, to raise the real rent of land to increase the real
wealth of the landlord, his power of purchasing the labour, or the
produce of the labour of other people.

The extension of improvement and cultivation tends to raise it
directly. The landlord's share of the produce necessarily increases
with the increase of the produce.

That rise in the real price of those parts of the rude produce of
land, which is first the effect of the extended improvement and
cultivation, and afterwards the cause of their being still further
extended, the rise in the price of cattle, for example, tends, too, to
raise the rent of land directly, and in a still greater proportion.
The real value of the landlord's share, his real command of the labour
of other people, not only rises with the real value of the produce,
but the proportion of his share to the whole produce rises with it.

That produce, after the rise in its real price, requires no more
labour to collect it than before. A smaller proportion of it will,
therefore, be sufficient to replace, with the ordinary profit, the
stock which employs that labour. A greater proportion of it must
consequently belong to the landlord.

All those improvements in the productive powers of labour, which tend
directly to reduce the rent price of manufactures, tend indirectly to
raise the real rent of land. The landlord exchanges that part of his
rude produce, which is over and above his own consumption, or, what
comes to the same thing, the price of that part of it, for
manufactured produce. Whatever reduces the real price of the latter,
raises that of the former. An equal quantity of the former becomes
thereby equivalent to a greater quantity of the latter; and the
landlord is enabled to purchase a greater quantity of the
conveniencies, ornaments, or luxuries which he has occasion for.

Every increase in the real wealth of the society, every increase in
the quantity of useful labour employed within it, tends indirectly to
raise the real rent of land. A certain proportion of this labour
naturally goes to the land. A greater number of men and cattle are
employed in its cultivation, the produce increases with the increase
of the stock which is thus employed in raising it, and the rent
increases with the produce.

The contrary circumstances, the neglect of cultivation and
improvement, the fall in the real price of any part of the rude
produce of land, the rise in the real price of manufactures from the
decay of manufacturing art and industry, the declension of the real
wealth of the society, all tend, on the other hand, to lower the real
rent of land, to reduce the real wealth of the landlord, to diminish
his power of purchasing either the labour, or the produce of the
labour, of other people.

The whole annual produce of the land and labour of every country, or,
what comes to the same thing, the whole price of that annual produce,
naturally divides itself, it has already been observed, into three
parts; the rent of land, the wages of labour, and the profits of
stock; and constitutes a revenue to three different orders of people;
to those who live by rent, to those who live by wages, and to those
who live by profit. These are the three great, original, and
constituent, orders of every civilized society, from whose revenue
that of every other order is ultimately derived.

The interest of the first of those three great orders, it appears from
what has been just now said, is strictly and inseparably connected
with the general interest of the society. Whatever either promotes or
obstructs the one, necessarily promotes or obstructs the other. When
the public deliberates concerning any regulation of commerce or
police, the proprietors of land never can mislead it, with a view to
promote the interest of their own particular order; at least, if they
have any tolerable knowledge of that interest. They are, indeed, too
often defective in this tolerable knowledge. They are the only one of
the three orders whose revenue costs them neither labour nor care, but
comes to them, as it were, of its own accord, and independent of any
plan or project of their own. That indolence which is the natural
effect of the ease and security of their situation, renders them too
often, not only ignorant, but incapable of that application of mind,
which is necessary in order to foresee and understand the consequence
of any public regulation.

The interest of the second order, that of those who live by wages, is
as strictly connected with the interest of the society as that of the
first. The wages of the labourer, it has already been shewn, are never
so high as when the demand for labour is continually rising, or when
the quantity employed is every year increasing considerably. When this
real wealth of the society becomes stationary, his wages are soon
reduced to what is barely enough to enable him to bring up a family,
or to continue the race of labourers. When the society declines, they
fall even below this. The order of proprietors may perhaps gain more
by the prosperity of the society than that of labourers; but there is
no order that suffers so cruelly from its decline. But though the
interest of the labourer is strictly connected with that of the
society, he is incapable either of comprehending that interest, or of
understanding its connexion with his own. His condition leaves him no
time to receive the necessary information, and his education and
habits are commonly such as to render him unfit to judge, even though
he was fully informed. In the public deliberations, therefore, his
voice is little heard, and less regarded; except upon particular
occasions, when his clamour is animated, set on, and supported by his
employers, not for his, but their own particular purposes.

His employers constitute the third order, that of those who live by
profit. It is the stock that is employed for the sake of profit, which
puts into motion the greater part of the useful labour of every
society. The plans and projects of the employers of stock regulate and
direct all the most important operation of labour, and profit is the
end proposed by all those plans and projects. But the rate of profit
does not, like rent and wages, rise with the prosperity, and fall with
the declension of the society. On the contrary, it is naturally low in
rich, and high in poor countries, and it is always highest in the
countries which are going fastest to ruin. The interest of this third
order, therefore, has not the same connexion with the general interest
of the society, as that of the other two. Merchants and master
manufacturers are, in this order, the two classes of people who
commonly employ the largest capitals, and who by their wealth draw to
themselves the greatest share of the public consideration. As during
their whole lives they are engaged in plans and projects, they have
frequently more acuteness of understanding than the greater part of
country gentlemen. As their thoughts, however, are commonly exercised
rather about the interest of their own particular branch of business.
than about that of the society, their judgment, even when given with
the greatest candour (which it has not been upon every occasion), is
much more to be depended upon with regard to the former of those two
objects, than with regard to the latter. Their superiority over the
country gentleman is, not so much in their knowledge of the public
interest, as in their having a better knowledge of their own interest
than he has of his. It is by this superior knowledge of their own
interest that they have frequently imposed upon his generosity, and
persuaded him to give up both his own interest and that of the public,
from a very simple but honest conviction, that their interest, and not
his, was the interest of the public. The interest of the dealers,
however, in any particular branch of trade or manufactures, is always
in some respects different from, and even opposite to, that of the
public. To widen the market, and to narrow the competition, is always
the interest of the dealers. To widen the market may frequently be
agreeable enough to the interest of the public; but to narrow the
competition must always be against it, and can only serve to enable
the dealers, by raising their profits above what they naturally would
be, to levy, for their own benefit, an absurd tax upon the rest of
their fellow-citizens. The proposal of any new law or regulation of
commerce which comes from this order, ought always to be listened to
with great precaution, and ought never to be adopted till after having
been long and carefully examined, not only with the most scrupulous,
but with the most suspicious attention. It comes from an order of men,
whose interest is never exactly the same with that of the public, who
have generally an interest to deceive and even to oppress the public,
and who accordingly have, upon many occasions, both deceived and
oppressed it.



# PRICES OF WHEAT


Year Prices/Quarter Average of different Average prices of
in each year prices in one year each year in money
of 1776

s d s d s d
1202 0 12 0 1 16 0
1205 0 12 0
0 13 4 0 13 5 2 0 3
0 15 0
1223 0 12 0 1 16 0
1237 0 3 4 0 10 0
1243 0 2 0 0 6 0
1244 0 2 0 0 6 0
1246 0 16 0 2 8 0
1247 0 13 5 2 0 0
1257 1 4 0 3 12 0
1258 1 0 0
0 15 0 0 17 0 2 11 0
0 16 0
1270 4 16 0
6 8 0 5 12 0 16 16 0
1286 0 2 8
0 16 0 0 9 4 1 8 0
Total 35 9 3
Average 2 19 1

1287 0 3 4 0 10 0
1288 0 0 8
0 1 0
0 1 4
0 1 6
0 1 8 0 3 0 0 9 1
0 2 0
0 3 4
0 9 4
1289 0 12 0
0 6 0
0 2 0 0 10 1 1 10 4
0 10 8
1 0 0
1290 0 16 0 2 8 0
1294 0 16 0 2 8 0
1302 0 4 0 0 12 0
1309 0 7 2 1 1 6
1315 1 0 0 3 0 0
1316 1 0 0
1 10 0 1 10 6 4 11 6
1 12 0
2 0 0
1317 2 4 0
0 14 0
2 13 0 1 19 6 5 18 6
4 0 0
0 6 8
1336 0 2 0 0 6 0
1338 0 3 4 0 10 0
Total 23 4 11
Average 1 18 8

1339 0 9 0 1 7 0
1349 0 2 0 0 5 2
1359 1 6 8 3 2 2
1361 0 2 0 0 4 8
1363 0 15 0 1 15 0
1369 1 0 0
1 4 0 1 2 0 2 9 4
1379 0 4 0 0 9 4
1387 0 2 0 0 4 8
1390 0 13 4
0 14 0 0 14 5 1 13 7
0 16 0
1401 0 16 0 1 17 6
1407 0 4 4
0 3 4 0 3 10 0 8 10
1416 0 16 0 1 12 0
Total 15 9 4
Average 1 5 9

1423 0 8 0 0
1425 0 4 0 0
1434 1 6 8 4
1435 0 5 4 8
1439 1 0 0
1 6 8 1 3 4 2 6 8
1440 1 4 0 2 8 0
1444 0 4 4 0 4 2 0 4 8
0 4 0
1445 0 4 6 0 9 0
1447 0 8 0 0 16 0
1448 0 6 8 0 13 4
1449 0 5 0 0 10 0
1451 0 8 0 0 16 0
Total 12 15 4
Average 1 1 3/

1453 0 5 4 0 10 8
1455 0 1 2 0 2 4
1457 0 7 8 1 15 4
1459 0 5 0 0 10 0
1460 0 8 0 0 16 0
1463 0 2 0 0 1 10 0 3 8
0 1 8
1464 0 6 8 0 10 0
1486 1 4 0 1 17 0
1491 0 14 8 1 2 0
1494 0 4 0 0 6 0
1495 0 3 4 0 5 0
1497 1 0 0 1 11 0
Total 8 9 0
Average 0 14 1

1499 0 4 0 0 6 0
1504 0 5 8 0 8 6
1521 1 0 0 1 10 0
1551 0 8 0 0 8 0
1553 0 8 0 0 8 0
1554 0 8 0 0 8 0
1555 0 8 0 0 8 0
1556 0 8 0 0 8 0
1557 0 8 0
0 4 0 0 17 8 0 17 8
0 5 0
2 13 4
1558 0 8 0 0 8 0
1559 0 8 0 0 8 0
1560 0 8 0 0 8 0
Total 6 0 2
Average 0 10 0

1561 0 8 0 0 8 0
1562 0 8 0 0 8 0
1574 2 16 0
1 4 0 2 0 0 2 0 0
1587 3 4 0 3 4 0
1594 2 16 0 2 16 0
1595 2 13 0 2 13 0
1596 4 0 0 4 0 0
1597 5 4 0
4 0 0 4 12 0 4 12 0
1598 2 16 8 2 16 8
1599 1 19 2 1 19 8
1600 1 17 8 1 17 8
1601 1 14 10 1 14 10
Total 28 9 4
Average 2 7 5


PRICES OF THE QUARTER OF NINE BUSHELS OF THE BEST OR HIGHEST
PRICED WHEAT AT WINDSOR MARKET, ON LADY DAY AND MICHAELMAS,
FROM 1595 TO 1764 BOTH INCLUSIVE; THE PRICE OF EACH YEAR
BEING THE MEDIUM BETWEEN THE HIGHEST PRICES OF THESE TWO
MARKET DAYS.

s d
1595 2 0 0
1596 2 8 0
1597 3 9 6
1598 2 16 8
1599 1 19 2
1600 1 17 8
1601 1 14 10
1602 1 9 4
1603 1 15 4
1604 1 10 8
1605 1 15 10
1606 1 13 0
1607 1 16 8
1608 2 16 8
1609 2 10 0
1610 1 15 10
1611 1 18 8
1612 2 2 4
1613 2 8 8
1614 2 1 8
1615 1 18 8
1616 2 0 4
1617 2 8 8
1618 2 6 8
1619 1 15 4
1620 1 10 4
26)54 0 6
Average 2 1 6

1621 1 10 4
1622 2 18 8
1623 2 12 0
1624 2 8 0
1625 2 12 0
1626 2 9 4
1627 1 16 0
1628 1 8 0
1629 2 2 0
1630 2 15 8
1631 3 8 0
1632 2 13 4
1633 2 18 0
1634 2 16 0
1635 2 16 0
1636 2 16 8
16)40 0 0
Average 2 10 0

1637 2 13 0
1638 2 17 4
1639 2 4 10
1640 2 4 8
1641 2 8 0
1646 2 8 0
1647 3 13 0
1648 4 5 0
1649 4 0 0
1650 3 16 8
1651 3 13 4
1652 2 9 6
1653 1 15 6
1654 1 6 0
1655 1 13 4
1656 2 3 0
1657 2 6 8
1658 3 5 0
1659 3 6 0
1660 2 16 6
1661 3 10 0
1662 3 14 0
1663 2 17 0
1664 2 0 6
1665 2 9 4
1666 1 16 0
1667 1 16 0
1668 2 0 0
1669 2 4 4
1670 2 1 8
1671 2 2 0
1672 2 1 0
1673 2 6 8
1674 3 8 8
1675 3 4 8
1676 1 18 0
1677 2 2 0
1678 2 19 0
1679 3 0 0
1680 2 5 0
1681 2 6 8
1682 2 4 0
1683 2 0 0
1684 2 4 0
1685 2 6 8
1686 1 14 0
1687 1 5 2
1688 2 6 0
1689 1 10 0
1690 1 14 8
1691 1 14 0
1692 2 6 8
1693 3 7 8
1694 3 4 0
1695 2 13 0
1696 3 11 0
1697 3 0 0
1698 3 8 4
1699 3 4 0
1700 2 0 0
60) 153 1 8
Average 2 11 0/

1701 1 17 8
1702 1 9 6
1703 1 16 0
1704 2 6 6
1705 1 10 0
1706 1 6 0
1707 1 8 6
1708 2 1 6
1709 3 18 6
1710 3 18 0
1711 2 14 0
1712 2 6 4
1713 2 11 0
1714 2 10 4
1715 2 3 0
1716 2 8 0
1717 2 5 8
1718 1 18 10
1719 1 15 0
1720 1 17 0
1721 1 17 6
1722 1 16 0
1723 1 14 8
1724 1 17 0
1725 2 8 6
1726 2 6 0
1727 2 2 0
1728 2 14 6
1729 2 6 10
1730 1 16 6
1731 1 12 10 1 12 10
1732 1 6 8 1 6 8
1733 1 8 4 1 8 4
1734 1 18 10 1 18 10
1735 2 3 0 2 3 0
1736 2 0 4 2 0 4
1737 1 18 0 1 18 0
1738 1 15 6 1 15 6
1739 1 18 6 1 18 6
1740 2 10 8 2 10 8
10) 18 12 8
1 17 3

1741 2 6 8 2 6 8
1742 1 14 0 1 14 0
1743 1 4 10 1 4 10
1744 1 4 10 1 4 10
1745 1 7 6 1 7 6
1746 1 19 0 1 19 0
1747 1 14 10 1 14 10
1748 1 17 0 1 17 0
1749 1 17 0 1 17 0
1750 1 12 6 1 12 6
10) 16 18 2
1 13 9

1751 1 18 6
1752 2 1 10
1753 2 4 8
1754 1 13 8
1755 1 14 10
1756 2 5 3
1757 3 0 0
1758 2 10 0
1759 1 19 10
1760 1 16 6
1761 1 10 3
1762 1 19 0
1763 2 0 9
1764 2 6 9
64) 129 13 6
Average 2 0 6





BOOK II.

OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK.

INTRODUCTION.

In that rude state of society, in which there is no division of
labour, in which exchanges are seldom made, and in which every man
provides every thing for himself, it is not necessary that any stock
should be accumulated, or stored up before-hand, in order to carry on
the business of the society. Every man endeavours to supply, by his
own industry, his own occasional wants, as they occur. When he is
hungry, he goes to the forest to hunt; when his coat is worn out, he
clothes himself with the skin of the first large animal he kills: and
when his hut begins to go to ruin, he repairs it, as well as he can,
with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced,
the produce of a man's own labour can supply but a very small part of
his occasional wants. The far greater part of them are supplied by the
produce of other men's labour, which he purchases with the produce,
or, what is the same thing, with the price of the produce, of his own.
But this purchase cannot be made till such time as the produce of his
own labour has not only been completed, but sold. A stock of goods of
different kinds, therefore, must be stored up somewhere, sufficient to
maintain him, and to supply him with the materials and tools of his
work, till such time at least as both these events can be brought
about. A weaver cannot apply himself entirely to his peculiar
business, unless there is before-hand stored up somewhere, either in
his own possession, or in that of some other person, a stock
sufficient to maintain him, and to supply him with the materials and
tools of his work, till he has not only completed, but sold his web.
This accumulation must evidently be previous to his applying his
industry for so long a time to such a peculiar business.

As the accumulation of stock must, in the nature of things, be
previous to the division of labour, so labour can be more and more
subdivided in proportion only as stock is previously more and more
accumulated. The quantity of materials which the same number of people
can work up, increases in a great proportion as labour comes to be
more and more subdivided; and as the operations of each workman are
gradually reduced to a greater degree of simplicity, a variety of new
machines come to be invented for facilitating and abridging those
operations. As the division of labour advances, therefore, in order to
give constant employment to an equal number of workmen, an equal stock
of provisions, and a greater stock of materials and tools than what
would have been necessary in a ruder state of things, must be
accumulated before-hand. But the number of workmen in every branch of
business generally increases with the division of labour in that
branch; or rather it is the increase of their number which enables
them to class and subdivide themselves in this manner.

As the accumulation of stock is previously necessary for carrying on
this great improvement in the productive powers of labour, so that
accumulation naturally leads to this improvement. The person who
employs his stock in maintaining labour, necessarily wishes to employ
it in such a manner as to produce as great a quantity of work as
possible. He endeavours, therefore, both to make among his workmen the
most proper distribution of employment, and to furnish them with the
best machines which he can either invent or afford to purchase. His
abilities, in both these respects, are generally in proportion to the
extent of his stock, or to the number of people whom it can employ.
The quantity of industry, therefore, not only increases in every
country with the increase of the stock which employs it, but, in
consequence of that increase, the same quantity of industry produces a
much greater quantity of work.

Such are in general the effects of the increase of stock upon industry
and its productive powers.

In the following book, I have endeavoured to explain the nature of
stock, the effects of its accumulation into capital of different
kinds, and the effects of the different employments of those capitals.
This book is divided into five chapters. In the first chapter, I have
endeavoured to shew what are the different parts or branches into
which the stock, either of an individual, or of a great society,
naturally divides itself. In the second, I have endeavoured to explain
the nature and operation of money, considered as a particular branch
of the general stock of the society. The stock which is accumulated
into a capital, may either be employed by the person to whom it
belongs, or it may be lent to some other person. In the third and
fourth chapters, I have endeavoured to examine the manner in which it
operates in both these situations. The fifth and last chapter treats
of the different effects which the different employments of capital
immediately produce upon the quantity, both of national industry, and
of the annual produce of land and labour.



CHAPTER I.

OF THE DIVISION OF STOCK.

When the stock which a man possesses is no more than sufficient to
maintain him for a few days or a few weeks, he seldom thinks of
deriving any revenue from it. He consumes it as sparingly as he can,
and endeavours, by his labour, to acquire something which may supply
its place before it be consumed altogether. His revenue is, in this
case, derived from his labour only. This is the state of the greater
part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or
years, he naturally endeavours to derive a revenue from the greater
part of it, reserving only so much for his immediate consumption as
may maintain him till this revenue begins to come in. His whole stock,
therefore, is distinguished into two parts. That part which he expects
is to afford him this revenue is called his capital. The other is that
which supplies his immediate consumption, and which consists either,
first, in that portion of his whole stock which was originally
reserved for this purpose; or, secondly, in his revenue, from whatever
source derived, as it gradually comes in; or, thirdly, in such things
as had been purchased by either of these in former years, and which
are not yet entirely consumed, such as a stock of clothes, household
furniture, and the like. In one or other, or all of these three
articles, consists the stock which men commonly reserve for their own
immediate consumption.

There are two different ways in which a capital may be employed so as
to yield a revenue or profit to its employer.

First, it maybe employed in raising, manufacturing, or purchasing
goods, and selling them again with a profit. The capital employed in
this manner yields no revenue or profit to its employer, while it
either remains in his possession, or continues in the same shape. The
goods of the merchant yield him no revenue or profit till he sells
them for money, and the money yields him as little till it is again
exchanged for goods. His capital is continually going from him in one
shape, and returning to him in another; and it is only by means of
such circulation, or successive changes, that it can yield him any
profit. Such capitals, therefore, may very properly be called
circulating capitals.

Secondly, it may be employed in the improvement of land, in the
purchase of useful machines and instruments of trade, or in such like
things as yield a revenue or profit without changing masters, or
circulating any further. Such capitals, therefore, may very properly
be called fixed capitals.

Different occupations require very different proportions between the
fixed and circulating capitals employed in them.

The capital of a merchant, for example, is altogether a circulating
capital. He has occasion for no machines or instruments of trade,
unless his shop or warehouse be considered as such.

Some part of the capital of every master artificer or manufacturer
must be fixed in the instruments of his trade. This part, however, is
very small in some, and very great in others, A master tailor requires
no other instruments of trade but a parcel of needles. Those of the
master shoemaker are a little, though but a very little, more
expensive. Those of the weaver rise a good deal above those of the
shoemaker. The far greater part of the capital of all such master
artificers, however, is circulated either in the wages of their
workmen, or in the price of their materials, and repaid, with a
profit, by the price of the work.

In other works a much greater fixed capital is required. In a great
iron-work, for example, the furnace for melting the ore, the forge,
the slit-mill, are instruments of trade which cannot be erected
without a very great expense. In coal works, and mines of every kind,
the machinery necessary, both for drawing out the water, and for other
purposes, is frequently still more expensive.

That part of the capital of the farmer which is employed in the
instruments of agriculture is a fixed, that which is employed in the
wages and maintenance of his labouring servants is a circulating
capital. He makes a profit of the one by keeping it in his own
possession, and of the other by parting with it. The price or value of
his labouring cattle is a fixed capital, in the same manner as that of
the instruments of husbandry; their maintenance is a circulating
capital, in the same manner as that of the labouring servants. The
farmer makes his profit by keeping the labouring cattle, and by
parting with their maintenance. Both the price and the maintenance of
the cattle which are bought in and fattened, not for labour, but for
sale, are a circulating capital. The farmer makes his profit by
parting with them. A flock of sheep or a herd of cattle, that, in a
breeding country, is brought in neither for labour nor for sale, but
in order to make a profit by their wool, by their milk, and by their
increase, is a fixed capital. The profit is made by keeping them.
Their maintenance is a circulating capital. The profit is made by
parting with it; and it comes back with both its own profit and the
profit upon the whole price of the cattle, in the price of the wool,
the milk, and the increase. The whole value of the seed, too, is
properly a fixed capital. Though it goes backwards and forwards
between the ground and the granary, it never changes masters, and
therefore does not properly circulate. The farmer makes his profit,
not by its sale, but by its increase.

The general stock of any country or society is the same with that of
all its inhabitants or members; and, therefore, naturally divides
itself into the same three portions, each of which has a distinct
function or office.

The first is that portion which is reserved for immediate consumption,
and of which the characteristic is, that it affords no revenue or
profit. It consists in the stock of food, clothes, household
furniture, etc. which have been purchased by their proper consumers,
but which are not yet entirely consumed. The whole stock of mere
dwelling-houses, too, subsisting at anyone time in the country, make a
part of this first portion. The stock that is laid out in a house, if
it is to be the dwelling-house of the proprietor, ceases from that
moment to serve in the function of a capital, or to afford any revenue
to its owner. A dwelling-house, as such, contributes nothing to the
revenue of its inhabitant; and though it is, no doubt, extremely
useful to him, it is as his clothes and household furniture are useful
to him, which, however, make a part of his expense, and not of his
revenue. If it is to be let to a tenant for rent, as the house itself
can produce nothing, the tenant must always pay the rent out of some
other revenue, which he derives, either from labour, or stock, or
land. Though a house, therefore, may yield a revenue to its
proprietor, and thereby serve in the function of a capital to him, it
cannot yield any to the public, nor serve in the function of a capital
to it, and the revenue of the whole body of the people can never be in
the smallest degree increased by it. Clothes and household furniture,
in the same manner, sometimes yield a revenue, and thereby serve in
the function of a capital to particular persons. In countries where
masquerades are common, it is a trade to let out masquerade dresses
for a night. Upholsterers frequently let furniture by the month or by
the year. Undertakers let the furniture of funerals by the day and by
the week. Many people let furnished houses, and get a rent, not only
for the use of the house, but for that of the furniture. The revenue,
however, which is derived from such things, must always be ultimately
drawn from some other source of revenue. Of all parts of the stock,
either of an individual or of a society, reserved for immediate
consumption, what is laid out in houses is most slowly consumed. A
stock of clothes may last several years; a stock of furniture half a
century or a century; but a stock of houses, well built and properly
taken care of, may last many centuries. Though the period of their
total consumption, however, is more distant, they are still as really
a stock reserved for immediate consumption as either clothes or
household furniture.

The second of the three portions into which the general stock of the
society divides itself, is the fixed capital; of which the
characteristic is, that it affords a revenue or profit without
circulating or changing masters. It consists chiefly of the four
following articles.

First, of all useful machines and instruments of trade, which
facilitate and abridge labour.

Secondly, of all those profitable buildings which are the means of
procuring a revenue, not only to the proprietor who lets them for a
rent, but to the person who possesses them, and pays that rent for
them; such as shops, warehouses, work-houses, farm-houses, 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, inclosing, 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
and 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 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 brick-makers, etc.

Fourthly, and lastly, of the work which is made up and completed, but
which is still in the hands of the merchant and 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 maybe 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 depend 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.

Lands, mines, and fisheries, require all both a fixed and 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 he 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
chuses 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 a 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 by staying with him, or by going
from him. In the one case it is a fixed, in the other it is a
circulating capital. A man must be perfectly crazy, who, where there
is a tolerable security, does not employ all the stock which he
commands, whether it 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 or
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 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
these 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 those three parts; every part of it which goes neither to rent nor
to wages, being necessarily profit to some body.

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

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