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。