An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader macos .TXT) 📕

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, 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, 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 brickmakers, 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