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

provisions at a time, a great part of the stock which he employs as a

capital in the instruments of his trade, or in the furniture of his shop,

and which yields him a revenue, he would be forced to place in that part of

his stock which is reserved for immediate consumption, and which yields him

no revenue. Nothing can be more convenient for such a person than to be able

to purchase his subsistence from day to day, or even from hour to hour, as

he wants it. He is thereby enabled to employ almost his whole stock as a

capital. He is thus enabled to furnish work to a greater value; and the

profit which he makes by it in this way much more than compensates the

additional price which the profit of the retailer imposes upon the goods.

The prejudices of some political writers against shopkeepers and tradesmen

are altogether without foundation. So far is it from being necessary either

to tax them, or to restrict their numbers, that they can never be multiplied

so as to hurt the public, though they may so as to hurt one another. The

quantity of grocery goods, for example, which can be sold in a particular

town, is limited by the demand of that town and its neighbourhood. The

capital, therefore, which can be employed in the grocery trade, cannot

exceed what is sufficient to purchase that quantity. If this capital is

divided between two different grocers, their competition will tend to make

both of them sell cheaper than if it were in the hands of one only ; and if

it were divided among twenty, their competition would be just so much the

greater, and the chance of their combining together, in order to raise the

price, just so much the less. Their competition might, perhaps, ruin some of

themselves; but to take care of this, is the business of the parties

concerned, and it may safely be trusted to their discretion. It can never

hurt either the consumer or the producer ; on the contrary, it must tend to

make the retailers both sell cheaper and buy dearer, than if the whole trade

was monopolized by one or two persons. Some of them, perhaps, may sometimes

decoy a weak customer to buy what he has no occasion for. This evil,

however, is of too little importance to deserve the public attention, nor

would it necessarily be prevented by restricting their numbers. It is not

the multitude of alehouses, to give the must suspicious example, that

occasions a general disposition to drunkenness among the common people; but

that disposition, arising from other causes, necessarily gives employment to

a multitude of alehouses.

The persons whose capitals are employed in any of those four ways, are

themselves productive labourers. Their labour, when properly directed, fixes

and realizes itself in the subject or vendible commodity upon which it is

bestowed, and generally adds to its price the value at least of their own

maintenance and consumption. The profits of the farmer, of the manufacturer,

of the merchant, and retailer, are all drawn from the price of the goods

which the two first produce, and the two last buy and sell. Equal capitals.

however, employed in each of those four different ways, will immediately put

into motion very different quantities of productive labour ; and augment,

too, in very different proportions, the value of the annual produce of the

land and labour of the society to which they belong.

The capital of the retailer replaces, together with its profits, that of the

merchant of whom he purchases goods, and thereby enables him to continue his

business. The retailer himself is the only productive labourer whom it

immediately employs. In his profit consists the whole value which its

employment adds to the annual produce of the land and labour of the society.

The capital of the wholesale merchant replaces, together with their

profits, the capital’s of the farmers and manufacturers of whom he purchases

the rude and manufactured produce which he deals in, and thereby enables

them to continue their respective trades. It is by this service chiefly that

he contributes indirectly to support the productive labour of the society,

and to increase the value of its annual produce. His capital employs, too,

the sailors and carriers who transport his goods from one place to another ;

and it augments the price of those goods by the value, not only of his

profits, but of their wages. This is all the productive labour which it

immediately puts into motion, and all the value which it immediately adds to

the annual produce. Its operation in both these respects is a good deal

superior to that of the capital of the retailer.

Part of the capital of the master manufacturer is employed as a fixed

capital in the instruments of his trade, and replaces, together with its

profits, that of some other artificer of whom he purchases them. Part of his

circulating capital is employed in purchasing materials, and replaces, with

their profits, the capitals of the farmers and miners of whom he purchases

them. But a great part of it is always, either annually, or in a much

shorter period, distributed among the different workmen whom he employs. It

augments the value of those materials by their wages, and by their masters’

profits upon the whole stock of wages, materials, and instruments of trade

employed in the business. It puts immediately into motion, therefore, a much

greater quantity of productive labour, and adds a much greater value to the

annual produce of the land and labour of the society, than an equal capital

in the hands of any wholesale merchant.

No equal capital puts into motion a greater quantity of productive labour

than that of the farmer. Not only his labouring servants, but his labouring

cattle, are productive labourers. In agriculture, too, Nature labours along

with man ; and though her labour costs no expense, its produce has its

value, as well as that of the most expensive workmen. The most important

operations of agriculture seem intended, not so much to increase, though

they do that too, as to direct the fertility of Nature towards the

production of the plants most profitable to man. A field overgrown with

briars and brambles, may frequently produce as great a quantity of

vegetables as the best cultivated vineyard or corn field. Planting and

tillage frequently regulate more than they animate the active fertility of

Nature; and after all their labour, a great part of the work always remains

to be done by her. The labourers and labouring cattle, therefore, employed

in agriculture, not only occasion, like the workmen in manufactures, the

reproduction of a value equal to their own consumption, or to the capital

which employs them, together with its owner’s profits, but of a much greater

value. Over and above the capital of the farmer, and all its profits, they

regularly occasion the reproduction of the rent of the landlord. This rent

may be considered as the produce of those powers of Nature, the use of which

the landlord lends to the farmer. It is greater or smaller, according to the

supposed extent of those powers, or, in other words, according to the

supposed natural or improved fertility of the land. It is the work of Nature

which remains, after deducting or compensating every thing which can be

regarded as the work of man. It is seldom less than a fourth, and

frequently more than a third, of the whole produce. No equal quantity of

productive labour employed in manufactures, can ever occasion so great

reproduction. In them Nature does nothing ; man does all ; and the

reproduction must always be in proportion to the strength of the agents that

occasion it. The capital employed in agriculture, therefore, not only puts

into motion a greater quantity of productive labour than any equal capital

employed in manufactures; but in proportion, too, to the quantity of

productive labour which it employs, it adds a much greater value to the

annual produce of the land and labour of the country, to the real wealth and

revenue of its inhabitants. Of all the ways in which a capital can be

employed, it is by far the most advantageous to society.

The capitals employed in the agriculture and in the retail trade of any

society, must always reside within that society. Their employment is

confined almost to a precise spot, to the farm, and to the shop of the

retailer. They must generally, too, though there are some exceptions to

this, belong to resident members of the society.

The capital of a wholesale merchant, on the contrary, seems to have no fixed

or necessary residence anywhere, but may wander about from place to place,

according as it can either buy cheap or sell dear.

The capital of the manufacturer must, no doubt, reside where the manufacture

is carried on ; but where this shall be, is not always necessarily

determined. It may frequently be at a great distance, both from the place

where the materials grow, and from that where the complete manufacture is

consumed. Lyons is very distant, both from the places which afford the

materials of its manufactures, and from those which consume them. The people

of fashion in Sicily are clothed in silks made in other countries, from the

materials which their own produces. Part of the wool of Spain is

manufactured in Great Britain, and some part of that cloth is afterwards

sent back to Spain.

Whether the merchant whose capital exports the surplus produce of any

society, be a native or a foreigner, is of very little importance. If he is

a foreigner, the number of their productive labourers is necessarily less

than if he had been a native, by one man only ; and the value of their

annual produce, by the profits of that one man. The sailors or carriers whom

he employs, may still belong indifferently either to his country, or to

their country, or to some third country, in the same manner as if he had

been a native. The capital of a foreigner gives a value to their surplus

produce equally with that of a native, by exchanging it for something for

which there is a demand at home. It as effectually replaces the capital of

the person who produces that surplus, and as effectually enables him to

continue his business, the service by which the capital of a wholesale

merchant chiefly contributes to support the productive labour, and to

augment the value of the annual produce of the society to which he belongs.

It is of more consequence that the capital of the manufacturer should reside

within the country. It necessarily puts into motion a greater quantity of

productive labour, and adds a greater value to the annual produce of the

land and labour of the society. It may, however, be very useful to the

country, though it should not reside within it. The capitals of the British

manufacturers who work up the flax and hemp annually imported from the

coasts of the Baltic, are surely very useful to the countries which produce

them. Those materials are a part of the surplus produce of those countries,

which, unless it was annually exchanged for something which is in demand

here, would be of no value, and would soon cease to be produced. The

merchants who export it, replace the capitals of the people who produce it,

and thereby encourage them to continue the production ; and the British

manufacturers replace the capitals of those merchants.

A particular country, in the same manner as a particular person, may

frequently not have capital sufficient both to improve and cultivate all its

lands, to manufacture and prepare their whole rude produce