d。
1202—12————116—
1205—12——1352—3
—134
—15—
1223—12————116—
1237—34————10—
1243—2—————6—
1244—2—————6—
1246—16————28—
1247—134———2——
125714————312—
12581———17—211—
—15—
—16—
1270416—512—1616—
68—
1286—28—9418—
—16—
TotalL3593
AveragePriceL2191
1/4
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。
d。
1287—34————10—
1288——8—3—1/4—9—
3/4
—1—
—14
—16
—18
—2—
—34
—94
1289—12——1013/41104
1/2
—6—
—2—
—108
1——
1290—16————28—
1294—16————28—
1302—4—————12—
1309—72———116
13151—————3——
13161——11064116
110—
112—
2——
131724—11965186
—14—
213—
4——
—68
1336—2—————6—
1338—34————10—
TotalL23411
1/4
AveragePriceL1188
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。d。
1339—9————17—
1349—2—————52
1359168———322
1361—2—————48
1363—15————115—
13691——12—294
14—
1379—4—————94
1387—2—————48
1390—134—1451137
—14—
—16—
1401—16————1174
1407—443/4—310—811
—34
1416—16————112—
TotalL1594
AveragePriceL159
1/3
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。d。
1423—8—————16—
1425—4—————8—
1434168———2134
1435—54————108
14391——134268
168
144014————28—
1444—44—42—84
—4—
1445—46————9—
1447—8—————16—
1448—68————134
1449—5—————10—
1452—8—————16—
TotalL12154
AveragePriceL113
1/2
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。d。
1453—54————108
1455—12————24
1457—78————154
1459—5—————10—
1460—8—————16—
1463—2——110—38
—18
1464—68————10—
148614————117—
1491—148———12—
1494—4—————6—
1495—34————5—
14971—————111—
TotalL89—
AveragePrice—141
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。d。
1499—4—————6—
1504—58————86
15211—————110—
1551—8—————2—
1553—8—————8—
1554—8—————8—
1555—8—————8—
1556—8—————8—
1557—4——1781/2—178
1/2
—5—
—8—
2134
1558—8—————8—
1559—8—————8—
1560—8—————8—
TotalL602
1/2
AveragePrice—10—
5/12
PriceoftheAverageofTheaveragePriceQuarterofthedifferentofeachYearinYearsWheatPricesofMoneyoftheXIIeachYearthesameYearpresentTimesLs。d。L。s。d。L。s。d。
1561—8—————8—
1562—8—————8—
1574216—2——2——
14—
158734————34—
1594216————216—
1595213————213—
15964—————4——
159754—412—412—
4——
15982168———2168
15991192———1192
16001178———1178
160111410———11410
TotalL2894
AveragePriceL275
1/3
PricesoftheQuarterofnineBushelsofthebestorhighestpricedWheatatWindsorMarket，onLady—dayandMichaelmas，from1595to1764，bothinclusive;thePriceofeachYearbeingthemediumbetweenthehighestPricesofthoseTwoMarketDays。
YearsYearsL。s。d。L。s。d。
1595—2001621—1104
1596—2801622—2188
1597—3961623—2120
1598—21681624—280
1599—11921625—2120
1600—11781626—294
1601—114101627—1160
1602—1941628—180
1603—11541629—220
1604—11081630—2158
1605—115101631—380
1606—11301632—2134
1607—11681633—2180
1608—21681634—2160
1609—21001635—2160
1610—115101636—2168
1611—1188
1612—22416）4000
1613—288
1614—2181/2L2100
1615—1188
1616—204
1617—288
1618—268
1619—1154
1620—1104
26）54061/2
L2169/12
WheatperWheatperYearsquarterYearsquarterL。s。d。L。s。d。
1637—2130Broughtover791410
1638—21741671—220
1639—24101672—210
1640—2481673—268
1641—2801674—388
1642—000*1675—348
1643—0001676—1180
1644—0001677—220
1645—0001678—2190
1646—2801679—300
1647—31381680—250
1648—4501681—268
1649—4001682—240
1650—31681683—200
1651—31341684—240
1652—2961685—268
1653—11561686—1140
1654—1601687—152
1655—11341688—260
1656—2301689—1100
1657—2681690—1148
1658—3501691—1140
1659—3601692—268
1660—21661693—378
1661—31001694—340
1662—31401695—2130
1663—21701696—3110
1664—2061697—300
1665—2941698—384
1666—11601699—340
1667—11601700—200
1668—200
1669—24460）15318
1670—218
L21101/3
arryoverL791410
*Wantingintheaccount。Theyear1646suppliedbyBishopFleetwood。
WheatperWheatperYearsquarterYearsquarterL。s。d。L。s。d。
1701—1178Broughtover6988
1702—1961734—11810
1703—11601735—230
1704—2661736—204
1705—11001737—1180
1706—1601738—1156
1707—1861739—1186
1708—2161740—2108
1709—31861741—268
1710—31801742—1140
1711—21401743—1410
1712—2641744—1410
1713—21101745—176
1714—21041746—1190
1715—2301747—11410
1716—2801748—1170
1717—2581749—1170
1718—118101750—1126
1719—11501751—1186
1720—11701752—2110
1721—11761753—248
1722—11601754—1148
1723—11481755—11310
1724—11701756—253
1725—2861757—300
1726—2601758—2100
1727—2201759—11910
1728—21461760—1166
1729—26101761—1103
1730—11661762—1190
1731—112101763—209
1732—1681764—269
1733—184
64）129136
CarryoverL6988
L2069/32
YearsYearsL。s。d。L。s。d。
1731—112101741—268
1732—1681742—1140
1733—1841743—1410
1734—118101744—1410
1735—2301745—176
1736—2041746—1190
1737—11801747—11410
1738—11561748—1170
1739—11861749—1170
1740—21081750—1126
10）1812810）16182
L11731/5L11394/5
ANINQUIRYINTOTHENATUREANDCAUSESOFTHEWEALTHOFNATIONS
byAdamSmith1776
BOOKTWO
OFTHENATURE，ACCUMULATION，ANDEMPLOYMENTOFSTOCK
INTRODUCTION
INthatrudestateofsocietyinwhichthereisnodivisionoflabour，inwhichexchangesareseldommade，andinwhicheverymanprovideseverythingforhimself，itisnotnecessarythatanystockshouldbeaccumulatedorstoredupbeforehandinordertocarryonthebusinessofthesociety。Everymanendeavourstosupplybyhisownindustryhisownoccasionalwantsastheyoccur。Whenheishungry，hegoestotheforesttohunt;whenhiscoatiswornout，heclotheshimselfwiththeskinofthefirstlargeanimalhekills:andwhenhishutbeginstogotoruin，herepairsit，aswellashecan，withthetreesandtheturfthatarenearestit。
Butwhenthedivisionoflabourhasoncebeenthoroughlyintroduced，theproduceofaman’sownlabourcansupplybutaverysmallpartofhisoccasionalwants。Thefargreaterpartofthemaresuppliedbytheproduceofothermen’slabour，whichhepurchaseswiththeproduce，or，whatisthesamething，withthepriceoftheproduceofhisown。Butthispurchasecannotbemadetillsuchtimeastheproduceofhisownlabourhasnotonlybeencompleted，butsold。Astockofgoodsofdifferentkinds，therefore，mustbestoredupsomewheresufficienttomaintainhim，andtosupplyhimwiththematerialsandtoolsofhisworktillsuchtime，atleast，asboththeseeventscanbebroughtabout。Aweavercannotapplyhimselfentirelytohispeculiarbusiness，unlessthereisbeforehandstoredupsomewhere，eitherinhisownpossessionorinthatofsomeotherperson，astocksufficienttomaintainhim，andtosupplyhimwiththematerialsandtoolsofhiswork，tillhehasnotonlycompleted，butsoldhisweb。Thisaccumulationmust，evidently，beprevioustohisapplyinghisindustryforsolongatimetosuchapeculiarbusiness。
Astheaccumulationofstockmust，inthenatureofthings，beprevioustothedivisionoflabour，solabourcanbemoreandmoresubdividedinproportiononlyasstockispreviouslymoreandmoreaccumulated。Thequantityofmaterialswhichthesamenumberofpeoplecanworkup，increasesinagreatproportionaslabourcomestobemoreandmoresubdivided;andastheoperationsofeachworkmanaregraduallyreducedtoagreaterdegreeofsimplicity，avarietyofnewmachinescometobeinventedforfacilitatingandabridgingthoseoperations。Asthedivisionoflabouradvances，therefore，inordertogiveconstantemploymenttoanequalnumberofworkmen，anequalstockofprovisions，andagreaterstockofmaterialsandtoolsthanwhatwouldhavebeennecessaryinaruderstateofthings，mustbeaccumulatedbeforehand。Butthenumberofworkmenineverybranchofbusinessgenerallyincreaseswiththedivisionoflabourinthatbranch，orratheritistheincreaseoftheirnumberwhichenablesthemtoclassandsubdividethemselvesinthismanner。
Astheaccumulationofstockispreviouslynecessaryforcarryingonthisgreatimprovementintheproductivepowersoflabour，sothataccumulationnaturallyleadstothisimprovement。
Thepersonwhoemployshisstockinmaintaininglabour，necessarilywishestoemployitinsuchamannerastoproduceasgreataquantityofworkaspossible。Heendeavours，therefore，bothtomakeamonghisworkmenthemostproperdistributionofemployment，andtofurnishthemwiththebestmachineswhichhecaneitherinventoraffordtopurchase。Hisabilitiesinboththeserespectsaregenerallyinproportiontotheextentofhisstock，ortothenumberofpeoplewhomitcanemploy。Thequantityofindustry，therefore，notonlyincreasesineverycountrywiththeincreaseofthestockwhichemploysit，but，inconsequenceofthatincrease，thesamequantityofindustryproducesamuchgreaterquantityofwork。
Suchareingeneraltheeffectsoftheincreaseofstockuponindustryanditsproductivepowers。
InthefollowingbookIhaveendeavouredtoexplainthenatureofstock，theeffectsofitsaccumulationintocapitalsofdifferentkinds，andtheeffectsofthedifferentemploymentsofthosecapitals。Thisbookisdividedintofivechapters。Inthefirstchapter，Ihaveendeavouredtoshowwhatarethedifferentpartsorbranchesintowhichthestock，eitherofanindividual，orofagreatsociety，naturallydividesitself。Inthesecond，I
haveendeavouredtoexplainthenatureandoperationofmoneyconsideredasaparticularbranchofthegeneralstockofthesociety。Thestockwhichisaccumulatedintoacapital，mayeitherbeemployedbythepersontowhomitbelongs，oritmaybelenttosomeotherperson。Inthethirdandfourthchapters，I
haveendeavouredtoexaminethemannerinwhichitoperatesinboththesesituations。Thefifthandlastchaptertreatsofthedifferenteffectswhichthedifferentemploymentsofcapitalimmediatelyproduceuponthequantitybothofnationalindustry，andoftheannualproduceoflandandlabour。
CHAPTERI
OftheDivisionofStockWHENthestockwhichamanpossessesisnomorethansufficienttomaintainhimforafewdaysorafewweeks，heseldomthinksofderivinganyrevenuefromit。Heconsumesitassparinglyashecan，andendeavoursbyhislabourtoacquiresomethingwhichmaysupplyitsplacebeforeitbeconsumedaltogether。Hisrevenueis，inthiscase，derivedfromhislabouronly。Thisisthestateofthegreaterpartofthelabouringpoorinallcountries。
Butwhenhepossessesstocksufficienttomaintainhimformonthsoryears，henaturallyendeavourstoderivearevenuefromthegreaterpartofit;reservingonlysomuchforhisimmediateconsumptionasmaymaintainhimtillthisrevenuebeginstocomein。Hiswholestock，therefore，isdistinguishedintotwoparts。
Thatpartwhich，heexpects，istoaffordhimthisrevenue，iscalledhiscapital。Theotheristhatwhichsupplieshisimmediateconsumption;andwhichconsistseither，first，inthatportionofhiswholestockwhichwasoriginallyreservedforthispurpose;or，secondly，inhisrevenue，fromwhateversourcederived，asitgraduallycomesin;or，thirdly，insuchthingsashadbeenpurchasedbyeitheroftheseinformeryears，andwhicharenotyetentirelyconsumed;suchasastockofclothes，householdfurniture，andthelike。Inone，orother，orallofthesethreearticles，consiststhestockwhichmencommonlyreservefortheirownimmediateconsumption。
Therearetwodifferentwaysinwhichacapitalmaybeemployedsoastoyieldarevenueorprofittoitsemployer。
First，itmaybeemployedinraising，manufacturing，orpurchasinggoods，andsellingthemagainwithaprofit。Thecapitalemployedinthismanneryieldsnorevenueorprofittoitsemployer，whileiteitherremainsinhispossession，orcontinuesinthesameshape。Thegoodsofthemerchantyieldhimnorevenueorprofittillhesellsthemformoney，andthemoneyyieldshimaslittletillitisagainexchangedforgoods。Hiscapitaliscontinuallygoingfromhiminoneshape，andreturningtohiminanother，anditisonlybymeansofsuchcirculation，orsuccessiveexchanges，thatitcanyieldhimanyprofit。Suchcapitals，therefore，mayveryproperlybecalledcirculatingcapitals。
Secondly，itmaybeemployedintheimprovementofland，inthepurchaseofusefulmachinesandinstrumentsoftrade，orinsuchlikethingsasyieldarevenueorprofitwithoutchangingmasters，orcirculatinganyfurther。Suchcapitals，therefore，mayveryproperlybecalledfixedcapitals。
Differentoccupationsrequireverydifferentproportionsbetweenthefixedandcirculatingcapitalsemployedinthem。
Thecapitalofamerchant，forexample，isaltogetheracirculatingcapital。Hehasoccasionfornomachinesorinstrumentsoftrade，unlesshisshop，orwarehouse，beconsideredassuch。
Somepartofthecapitalofeverymasterartificerormanufacturermustbefixedintheinstrumentsofhistrade。Thispart，however，isverysmallinsome，andverygreatinothers。A
mastertailorrequiresnootherinstrumentsoftradebutaparcelofneedles。Thoseofthemastershoemakerarealittle，thoughbutaverylittle，moreexpensive。Thoseoftheweaverriseagooddealabovethoseoftheshoemaker。Thefargreaterpartofthecapitalofallsuchmasterartificers，however，iscirculated，eitherinthewagesoftheirworkmen，orinthepriceoftheirmaterials，andrepaidwithaprofitbythepriceofthework。
Inotherworksamuchgreaterfixedcapitalisrequired。Inagreatiron—work，forexample，thefurnaceformeltingtheore，theforge，theslitt—mill，areinstrumentsoftradewhichcannotbeerectedwithoutaverygreatexpense。Incoal—worksandminesofeverykind，themachinerynecessarybothfordrawingoutthewaterandforotherpurposesisfrequentlystillmoreexpensive。
Thatpartofthecapitalofthefarmerwhichisemployedintheinstrumentsofagricultureisafixed，thatwhichisemployedinthewagesandmaintenanceofhislabouringservants，isacirculatingcapital。Hemakesaprofitoftheonebykeepingitinhisownpossession，andoftheotherbypartingwithit。Thepriceorvalueofhislabouringcattleisafixedcapitalinthesamemannerasthatoftheinstrumentsofhusbandry。Theirmaintenanceisacirculatingcapitalinthesamemannerasthatofthelabouringservants。Thefarmermakeshisprofitbykeepingthelabouringcattle，andbypartingwiththeirmaintenance。Boththepriceandthemaintenanceofthecattlewhicharebroughtinandfattened，notforlabour，butforsale，areacirculatingcapital。Thefarmermakeshisprofitbypartingwiththem。A
flockofsheeporaherdofcattlethat，inabreedingcountry，isboughtin，neitherforlabour，norforsale，butinordertomakeaprofitbytheirwool，bytheirmilk，andbytheirincrease，isafixedcapital。Theprofitismadebykeepingthem。
Theirmaintenanceisacirculatingcapital。Theprofitismadebypartingwithit;anditcomesbackwithbothitsownprofitandtheprofituponthewholepriceofthecattle，inthepriceofthewool，themilk，andtheincrease。Thewholevalueoftheseed，too，isproperlyafixedcapital。Thoughitgoesbackwardsandforwardsbetweenthegroundandthegranary，itneverchangesmasters，andthereforedoesnotproperlycirculate。Thefarmermakeshisprofit，notbyitssale，butbyitsincrease。
Thegeneralstockofanycountryorsocietyisthesamewiththatofallitsinhabitantsormembers，andthereforenaturallydividesitselfintothesamethreeportions，eachofwhichhasadistinctfunctionoroffice。
Thefirstisthatportionwhichisreservedforimmediateconsumption，andofwhichthecharacteristicis，thatitaffordsnorevenueorprofit。Itconsistsinthestockoffood，clothes，householdfurniture，etc。，whichhavebeenpurchasedbytheirproperconsumers，butwhicharenotyetentirelyconsumed。Thewholestockofmeredwelling—housestoo，subsistingatanyonetimeinthecountry，makeapartofthisfirstportion。Thestockthatislaidoutinahouse，ifitistobethedwellinghouseoftheproprietor，ceasesfromthatmomenttoserveinthefunctionofacapital，ortoaffordanyrevenuetoitsowner。A
dwellinghouse，assuch，contributesnothingtotherevenueofitsinhabitant;andthoughitis，nodoubt，extremelyusefultohim，itisashisclothesandhouseholdfurnitureareusefultohim，which，however，makesapartofhisexpense，andnotofhisrevenue。Ifitistobelettoatenantforrent，asthehouseitselfcanproducenothing，thetenantmustalwayspaytherentoutofsomeotherrevenuewhichhederiveseitherfromlabour，orstock，orland。Thoughahouse，therefore，mayyieldarevenuetoitsproprietor，andtherebyserveinthefunctionofacapitaltohim，itcannotyieldanytothepublic，norserveinthefunctionofacapitaltoit，andtherevenueofthewholebodyofthepeoplecanneverbeinthesmallestdegreeincreasedbyit。
Clothes，andhouseholdfurniture，inthesamemanner，sometimesyieldarevenue，andtherebyserveinthefunctionofacapitaltoparticularpersons。Incountrieswheremasqueradesarecommon，itisatradetoletoutmasqueradedressesforanight。
Upholsterersfrequentlyletfurniturebythemonthorbytheyear。Undertakersletthefurnitureoffuneralsbythedayandbytheweek。Manypeopleletfurnishedhouses，andgetarent，notonlyfortheuseofthehouse，butforthatofthefurniture。Therevenue，however，whichisderivedfromsuchthingsmustalwaysbeultimatelydrawnfromsomeothersourceofrevenue。Ofallpartsofthestock，eitherofanindividual，orofasociety，reservedforimmediateconsumption，whatislaidoutinhousesismostslowlyconsumed。Astockofclothesmaylastseveralyears:
astockoffurniturehalfacenturyoracentury:butastockofhouses，wellbuiltandproperlytakencareof，maylastmanycenturies。Thoughtheperiodoftheirtotalconsumption，however，ismoredistant，theyarestillasreallyastockreservedforimmediateconsumptionaseitherclothesorhouseholdfurniture。
Thesecondofthethreeportionsintowhichthegeneralstockofthesocietydividesitself，isthefixedcapital，ofwhichthecharacteristicis，thatitaffordsarevenueorprofitwithoutcirculatingorchangingmasters。Itconsistschieflyofthefourfollowingarticles:
First，ofallusefulmachinesandinstrumentsoftradewhichfacilitateandabridgelabour:
Secondly，ofallthoseprofitablebuildingswhicharethemeansofprocuringarevenue，notonlytotheirproprietorwholetsthemforarent，buttothepersonwhopossessesthemandpaysthatrentforthem;suchasshops，warehouses，workhouses，farmhouses，withalltheirnecessarybuildings;stables，granaries，etc。Theseareverydifferentfrommeredwellinghouses。Theyareasortofinstrumentsoftrade，andmaybeconsideredinthesamelight:
Thirdly，oftheimprovementsofland，ofwhathasbeenprofitablylaidoutinclearing，draining，enclosing，manuring，andreducingitintotheconditionmostproperfortillageandculture。Animprovedfarmmayveryjustlyberegardedinthesamelightasthoseusefulmachineswhichfacilitateandabridgelabour，andbymeansofwhichanequalcirculatingcapitalcanaffordamuchgreaterrevenuetoitsemployer。Animprovedfarmisequallyadvantageousandmoredurablethananyofthosemachines，frequentlyrequiringnootherrepairsthanthemostprofitableapplicationofthefarmer’scapitalemployedincultivatingit:
Fourthly，oftheacquiredandusefulabilitiesofalltheinhabitantsormembersofthesociety。Theacquisitionofsuchtalents，bythemaintenanceoftheacquirerduringhiseducation，study，orapprenticeship，alwayscostsarealexpense，whichisacapitalfixedandrealized，asitwere，inhisperson。Thosetalents，astheymakeapartofhisfortune，sodotheylikewiseofthatofthesocietytowhichhebelongs。Theimproveddexterityofaworkmanmaybeconsideredinthesamelightasamachineorinstrumentoftradewhichfacilitatesandabridgeslabour，andwhich，thoughitcostsacertainexpense，repaysthatexpensewithaprofit。