While working on a sermon the pastor heard a knock at his office door. "Come in," he invited. A sad-looking man in threadbare clothes came in, pulling a large pig on a rope. "Can I talk to you for a minute?" asked the ma... Read more of Lessons From The Ark at Free Jokes.caInformational Site Network Informational
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Of Drawbacks
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Introduction To Stock Theory
Of The Different Employments Of Capitals
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Of The Component Part Of The Price Of Commodities
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Of The Different Employments Of Capitals








Though all capitals are destined for the maintenance of productive
labour only, yet the quantity of that labour which equal capitals
are capable of putting into motion, varies extremely according to the
diversity of their employment; as does likewise the value which that
employment adds to the annual produce of the land and labour of the
country.

A capital may be employed in four different ways; either, first, in
procuring the rude produce annually required for the use and consumption
of the society; or, secondly, in manufacturing and preparing that rude
produce for immediate use and consumption; or, thirdly in transporting
either the rude or manufactured produce from the places where they
abound to those where they are wanted; or, lastly, in dividing
particular portions of either into such small parcels as suit the
occasional demands of those who want them. In the first way are employed
the capitals of all those who undertake improvement or cultivation
of lands, mines, or fisheries; in the second, those of all master
manufacturers; in the third, those of all wholesale merchants; and in
the fourth, those of all retailers. It is difficult to conceive that
a capital should be employed in any way which may not be classed under
some one or other of those four.

Each of those four methods of employing a capital is essentially
necessary, either to the existence or extension of the other three, or
to the general conveniency of the society.

Unless a capital was employed in furnishing rude produce to a certain
degree of abundance, neither manufactures nor trade of any kind could
exist.

Unless a capital was employed in manufacturing that part of the rude
produce which requires a good deal of preparation before it can be fit
for use and consumption, it either would never be produced, because
there could be no demand for it; or if it was produced spontaneously, it
would be of no value in exchange, and could add nothing to the wealth of
the society.

Unless a capital was employed in transporting either the rude or
manufactured produce from the places where it abounds to those where it
is wanted, no more of either could be produced than was necessary
for the consumption of the neighbourhood. The capital of the merchant
exchanges the surplus produce of one place for that of another, and thus
encourages the industry, and increases the enjoyments of both.

Unless a capital was employed in breaking and dividing certain portions
either of the rude or manufactured produce into such small parcels as
suit the occasional demands of those who want them, every man would be
obliged to purchase a greater quantity of the goods he wanted than his
immediate occasions required. If there was no such trade as a butcher,
for example, every man would be obliged to purchase a whole ox or a
whole sheep at a time. This would generally be inconvenient to the rich,
and much more so to the poor. If a poor workman was obliged to purchase
a month's or six months' 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 for
immediate use and consumption, and to transport the surplus part either
of the rude or manufactured produce to those distant markets, where it
can be exchanged for something for which there is a demand at home. The
inhabitants of many different parts of Great Britain have not capital
sufficient to improve and cultivate all their lands. The wool of the
southern counties of Scotland is, a great part of it, after a long land
carriage through very bad roads, manufactured in Yorkshire, for want of
a capital to manufacture it at home. There are many little manufacturing
towns in Great Britain, of which the inhabitants have not capital
sufficient to transport the produce of their own industry to those
distant markets where there is demand and consumption for it. If there
are any merchants among them, they are, properly, only the agents of
wealthier merchants who reside in some of the great commercial cities.

When the capital of any country is not sufficient for all those
three purposes, in proportion as a greater share of it is employed in
agriculture, the greater will be the quantity of productive labour which
it puts into motion within the country; as will likewise be the value
which its employment adds to the annual produce of the land and labour
of the society. After agriculture, the capital employed in manufactures
puts into motion the greatest quantity of productive labour, and adds
the greatest value to the annual produce. That which is employed in the
trade of exportation has the least effect of any of the three.

The country, indeed, which has not capital sufficient for all those
three purposes, has not arrived at that degree of opulence for which it
seems naturally destined. To attempt, however, prematurely, and with an
insufficient capital, to do all the three, is certainly not the shortest
way for a society, no more than it would be for an individual, to
acquire a sufficient one. The capital of all the individuals of a nation
has its limits, in the same manner as that of a single individual, and
is capable of executing only certain purposes. The capital of all the
individuals of a nation is increased in the same manner as that of a
single individual, by their continually accumulating and adding to it
whatever they save out of their revenue. It is likely to increase the
fastest, therefore, when it is employed in the way that affords the
greatest revenue to all the inhabitants or the country, as they will
thus be enabled to make the greatest savings. But the revenue of all the
inhabitants of the country is necessarily in proportion to the value of
the annual produce of their land and labour.

It has been the principal cause of the rapid progress of our American
colonies towards wealth and greatness, that almost their whole capitals
have hitherto been employed in agriculture. They have no manufactures,
those household and coarser manufactures excepted, which necessarily
accompany the progress of agriculture, and which are the work of the
women and children in every private family. The greater part, both of
the exportation and coasting trade of America, is carried on by the
capitals of merchants who reside in Great Britain. Even the stores and
warehouses from which goods are retailed in some provinces, particularly
in Virginia and Maryland, belong many of them to merchants who reside
in the mother country, and afford one of the few instances of the retail
trade of a society being carried on by the capitals of those who are not
resident members of it. Were the Americans, either by combination, or
by any other sort of violence, to stop the importation of European
manufactures, and, by thus giving a monopoly to such of their own
countrymen as could manufacture the like goods, divert any considerable
part of their capital into this employment, they would retard, instead
of accelerating, the further increase in the value of their annual
produce, and would obstruct, instead of promoting, the progress of their
country towards real wealth and greatness. This would be still more
the case, were they to attempt, in the same manner, to monopolize to
themselves their whole exportation trade.

The course of human prosperity, indeed, seems scarce ever to have been
of so long continuance as to unable any great country to acquire capital
sufficient for all those three purposes; unless, perhaps, we give credit
to the wonderful accounts of the wealth and cultivation of China, of
those of ancient Egypt, and of the ancient state of Indostan. Even those
three countries, the wealthiest, according to all accounts, that
ever were in the world, are chiefly renowned for their superiority in
agriculture and manufactures. They do not appear to have been eminent
for foreign trade. The ancient Egyptians had a superstitious antipathy
to the sea; a superstition nearly of the same kind prevails among the
Indians; and the Chinese have never excelled in foreign commerce. The
greater part of the surplus produce of all those three countries seems
to have been always exported by foreigners, who gave in exchange for it
something else, for which they found a demand there, frequently gold and
silver.

It is thus that the same capital will in any country put into motion a
greater or smaller quantity of productive labour, and add a greater or
smaller value to the annual produce of its land and labour, according
to the different proportions in which it is employed in agriculture,
manufactures, and wholesale trade. The difference, too, is very great,
according to the different sorts of wholesale trade in which any part of
it is employed.

All wholesale trade, all buying in order to sell again by wholesale,
maybe reduced to three different sorts: the home trade, the foreign
trade of consumption, and the carrying trade. The home trade is employed
in purchasing in one part of the same country, and selling in another,
the produce of the industry of that country. It comprehends both the
inland and the coasting trade. The foreign trade of consumption is
employed in purchasing foreign goods for home consumption. The carrying
trade is employed in transacting the commerce of foreign countries, or
in carrying the surplus produce of one to another.

The capital which is employed in purchasing in one part of the country,
in order to sell in another, the produce of the industry of that
country, generally replaces, by every such operation, two distinct
capitals, that had both been employed in the agriculture or manufactures
of that country, and thereby enables them to continue that employment.
When it sends out from the residence of the merchant a certain value of
commodities, it generally brings hack in return at least an equal value
of other commodities. When both are the produce of domestic industry,
it necessarily replaces, by every such operation, two distinct capitals,
which had both been employed in supporting productive labour, and
thereby enables them to continue that support. The capital which
sends Scotch manufactures to London, and brings back English corn
and manufactures to Edinburgh, necessarily replaces, by every such
operation, two British capitals, which had both been employed in the
agriculture or manufactures of Great Britain.

The capital employed in purchasing foreign goods for home consumption,
when this purchase is made with the produce of domestic industry,
replaces, too, by every such operation, two distinct capitals; but one
of them only is employed in supporting domestic industry. The capital
which sends British goods to Portugal, and brings back Portuguese goods
to Great Britain, replaces, by every such operation, only one British
capital. The other is a Portuguese one. Though the returns, therefore,
of the foreign trade of consumption, should be as quick as those of the
home trade, the capital employed in it will give but one half of the
encouragement to the industry or productive labour of the country.

But the returns of the foreign trade of consumption are very seldom
so quick as those of the home trade. The returns of the home trade
generally come in before the end of the year, and sometimes three or
four times in the year. The returns of the foreign trade of consumption
seldom come in before the end of the year, and sometimes not till after
two or three years. A capital, therefore, employed in the home trade,
will sometimes make twelve operations, or be sent out and returned
twelve times, before a capital employed in the foreign trade of
consumption has made one. If the capitals are equal, therefore, the one
will give four-and-twenty times more encouragement and support to the
industry of the country than the other.

The foreign goods for home consumption may sometimes be purchased, not
with the produce of domestic industry but with some other foreign goods.
These last, however, must have been purchased, either immediately with
the produce of domestic industry, or with something else that had been
purchased with it; for, the case of war and conquest excepted, foreign
goods can never be acquired, but in exchange for something that had been
produced at home, either immediately, or after two or more different
exchanges. The effects, therefore, of a capital employed in such a
round-about foreign trade of consumption, are, in every respect, the
same as those of one employed in the most direct trade of the same kind,
except that the final returns are likely to be still more distant,
as they must depend upon the returns of two or three distinct foreign
trades. If the hemp and flax of Riga are purchased with the tobacco
of Virginia, which had been purchased with British manufactures, the
merchant must wait for the returns of two distinct foreign trades,
before he can employ the same capital in repurchasing a like quantity of
British manufactures. If the tobacco of Virginia had been purchased, not
with British manufactures, but with the sugar and rum of Jamaica, which
had been purchased with those manufactures, he must wait for the returns
of three. If those two or three distinct foreign trades should happen
to be carried on by two or three distinct merchants, of whom the second
buys the goods imported by the first, and the third buys those imported
by the second, in order to export them again, each merchant, indeed,
will, in this case, receive the returns of his own capital more quickly;
but the final returns of the whole capital employed in the trade will be
just as slow as ever. Whether the whole capital employed in such a round
about trade belong to one merchant or to three, can make no difference
with regard to the country, though it may with regard to the particular
merchants. Three times a greater capital must in both cases be employed,
in order to exchange a certain value of British manufactures for a
certain quantity of flax and hemp, than would have been necessary, had
the manufactures and the flax and hemp been directly exchanged for one
another. The whole capital employed, therefore, in such a round-about
foreign trade of consumption, will generally give less encouragement and
support to the productive labour of the country, than an equal capital
employed in a more direct trade of the same kind.

Whatever be the foreign commodity with which the foreign goods for home
consumption are purchased, it can occasion no essential difference,
either in the nature of the trade, or in the encouragement and support
which it can give to the productive labour of the country from which
it is carried on. If they are purchased with the gold of Brazil, for
example, or with the silver of Peru, this gold and silver, like the
tobacco of Virginia, must have been purchased with something that
either was the produce of the industry of the country, or that had been
purchased with something else that was so. So far, therefore, as the
productive labour of the country is concerned, the foreign trade of
consumption, which is carried on by means of gold and silver, has
all the advantages and all the inconveniencies of any other equally
round-about foreign trade of consumption; and will replace, just as
fast, or just as slow, the capital which is immediately employed in
supporting that productive labour. It seems even to have one advantage
over any other equally round-about foreign trade. The transportation of
those metals from one place to another, on account of their small bulk
and great value, is less expensive than that of almost any other foreign
goods of equal value. Their freight is much less, and their insurance
not greater; and no goods, besides, are less liable to suffer by the
carriage. An equal quantity of foreign goods, therefore, may frequently
be purchased with a smaller quantity of the produce of domestic
industry, by the intervention of gold and silver, than by that of any
other foreign goods. The demand of the country may frequently, in this
manner, be supplied more completely, and at a smaller expense, than
in any other. Whether, by the continual exportation of those metals, a
trade of this kind is likely to impoverish the country from which it is
carried on in any other way, I shall have occasion to examine at great
length hereafter.

That part of the capital of any country which is employed in the
carrying trade, is altogether withdrawn from supporting the productive
labour of that particular country, to support that of some foreign
countries. Though it may replace, by every operation, two distinct
capitals, yet neither of them belongs to that particular country. The
capital of the Dutch merchant, which carries the corn of Poland to
Portugal, and brings back the fruits and wines of Portugal to Poland,
replaces by every such operation two capitals, neither of which had been
employed in supporting the productive labour of Holland; but one of
them in supporting that of Poland, and the other that of Portugal.
The profits only return regularly to Holland, and constitute the whole
addition which this trade necessarily makes to the annual produce of the
land and labour of that country. When, indeed, the carrying trade of
any particular country is carried on with the ships and sailors of that
country, that part of the capital employed in it which pays the
freight is distributed among, and puts into motion, a certain number of
productive labourers of that country. Almost all nations that have had
any considerable share of the carrying trade have, in fact, carried it
on in this manner. The trade itself has probably derived its name from
it, the people of such countries being the carriers to other countries.
It does not, however, seem essential to the nature of the trade that it
should be so. A Dutch merchant may, for example, employ his capital in
transacting the commerce of Poland and Portugal, by carrying part of the
surplus produce of the one to the other, not in Dutch, but in British
bottoms. It maybe presumed, that he actually does so upon some
particular occasions. It is upon this account, however, that the
carrying trade has been supposed peculiarly advantageous to such a
country as Great Britain, of which the defence and security depend upon
the number of its sailors and shipping. But the same capital may
employ as many sailors and shipping, either in the foreign trade of
consumption, or even in the home trade, when carried on by coasting
vessels, as it could in the carrying trade. The number of sailors and
shipping which any particular capital can employ, does not depend upon
the nature of the trade, but partly upon the bulk of the goods, in
proportion to their value, and partly upon the distance of the ports
between which they are to be carried; chiefly upon the former of those
two circumstances. The coal trade from Newcastle to London, for example,
employs more shipping than all the carrying trade of England, though the
ports are at no great distance. To force, therefore, by extraordinary
encouragements, a larger share of the capital of any country into the
carrying trade, than what would naturally go to it, will not always
necessarily increase the shipping of that country.

The capital, therefore, employed in the home trade of any country,
will generally give encouragement and support to a greater quantity of
productive labour in that country, and increase the value of its annual
produce, more than an equal capital employed in the foreign trade of
consumption; and the capital employed in this latter trade has, in both
these respects, a still greater advantage over an equal capital employed
in the carrying trade. The riches, and so far as power depends upon
riches, the power of every country must always be in proportion to
the value of its annual produce, the fund from which all taxes must
ultimately be paid. But the great object of the political economy of
every country, is to increase the riches and power of that country. It
ought, therefore, to give no preference nor superior encouragement
to the foreign trade of consumption above the home trade, nor to the
carrying trade above either of the other two. It ought neither to force
nor to allure into either of those two channels a greater share of the
capital of the country, than what would naturally flow into them of its
own accord.

Each of those different branches of trade, however, is not only
advantageous, but necessary and unavoidable, when the course of things,
without any constraint or violence, naturally introduces it.

When the produce of any particular branch of industry exceeds what the
demand of the country requires, the surplus must be sent abroad, and
exchanged for something for which there is a demand at home. Without
such exportation, a part of the productive labour of the country must
cease, and the value of its annual produce diminish. The land and labour
of Great Britain produce generally more corn, woollens, and hardware,
than the demand of the home market requires. The surplus part of them,
therefore, must be sent abroad, and exchanged for something for which
there is a demand at home. It is only by means of such exportation, that
this surplus can acquired value sufficient to compensate the labour and
expense of producing it. The neighbourhood of the sea-coast, and the
banks of all navigable rivers, are advantageous situations for industry,
only because they facilitate the exportation and exchange of such
surplus produce for something else which is more in demand there.

When the foreign goods which are thus purchased with the surplus produce
of domestic industry exceed the demand of the home market, the surplus
part of them must be sent abroad again, and exchanged for something
more in demand at home. About 96,000 hogsheads of tobacco are annually
purchased in Virginia and Maryland with a part of the surplus produce
of British industry. But the demand of Great Britain does not require,
perhaps, more than 14,000. If the remaining 82,000, therefore, could not
be sent abroad, and exchanged for something more in demand at home, the
importation of them must cease immediately, and with it the productive
labour of all those inhabitants of Great Britain who are at present
employed in preparing the goods with which these 82,000 hogsheads are
annually purchased. Those goods, which are part of the produce of the
land and labour of Great Britain, having no market at home, and being
deprived of that which they had abroad, must cease to be produced. The
most round-about foreign trade of consumption, therefore, may, upon some
occasions, be as necessary for supporting the productive labour of the
country, and the value of its annual produce, as the most direct.

When the capital stock of any country is increased to such a degree that
it cannot be all employed in supplying the consumption, and supporting
the productive labour of that particular country, the surplus part of it
naturally disgorges itself into the carrying trade, and is employed in
performing the same offices to other countries. The carrying trade is
the natural effect and symptom of great national wealth; but it does
not seem to be the natural cause of it. Those statesmen who have been
disposed to favour it with particular encouragement, seem to have
mistaken the effect and symptom for the cause. Holland, in proportion
to the extent of the land and the number of it's inhabitants, by far
the richest country in Europe, has accordingly the greatest share of the
carrying trade of Europe. England, perhaps the second richest country of
Europe, is likewise supposed to have a considerable share in it; though
what commonly passes for the carrying trade of England will frequently,
perhaps, be found to be no more than a round-about foreign trade of
consumption. Such are, in a great measure, the trades which carry
the goods of the East and West Indies and of America to the different
European markets. Those goods are generally purchased, either
immediately with the produce of British industry, or with something else
which had been purchased with that produce, and the final returns of
those trades are generally used or consumed in Great Britain. The trade
which is carried on in British bottoms between the different ports of
the Mediterranean, and some trade of the same kind carried on by British
merchants between the different ports of India, make, perhaps, the
principal branches of what is properly the carrying trade of Great
Britain.

The extent of the home trade, and of the capital which can be employed
in it, is necessarily limited by the value of the surplus produce of all
those distant places within the country which have occasion to exchange
their respective productions with one another; that of the foreign
trade of consumption, by the value of the surplus produce of the whole
country, and of what can be purchased with it; that of the carrying
trade, by the value of the surplus produce of all the different
countries in the world. Its possible extent, therefore, is in a manner
infinite in comparison of that of the other two, and is capable of
absorbing the greatest capitals.

The consideration of his own private profit is the sole motive which
determines the owner of any capital to employ it either in agriculture,
in manufactures, or in some particular branch of the wholesale or retail
trade. The different quantities of productive labour which it may put
into motion, and the different values which it may add to the annual
produce of the land and labour of the society, according as it is
employed in one or other of those different ways, never enter into
his thoughts. In countries, therefore, where agriculture is the most
profitable of all employments, and farming and improving the most direct
roads to a splendid fortune, the capitals of individuals will naturally
be employed in the manner most advantageous to the whole society. The
profits of agriculture, however, seem to have no superiority over those
of other employments in any part of Europe. Projectors, indeed, in every
corner of it, have, within these few years, amused the public with most
magnificent accounts of the profits to be made by the cultivation and
improvement of land. Without entering into any particular discussion of
their calculations, a very simple observation may satisfy us that the
result of them must be false. We see, every day, the most splendid
fortunes, that have been acquired in the course of a single life, by
trade and manufactures, frequently from a very small capital, sometimes
from no capital. A single instance of such a fortune, acquired by
agriculture in the same time, and from such a capital, has not, perhaps,
occurred in Europe, during the course of the present century. In all
the great countries of Europe, however, much good land still remains
uncultivated; and the greater part of what is cultivated, is far from
being improved to the degree of which it is capable. Agriculture,
therefore, is almost everywhere capable of absorbing a much greater
capital than has ever yet been employed in it. What circumstances in the
policy of Europe have given the trades which are carried on in towns so
great an advantage over that which is carried on in the country, that
private persons frequently find it more for their advantage to employ
their capitals in the most distant carrying trades of Asia and America
than in the improvement and cultivation of the most fertile fields in
their own neighbourhood, I shall endeavour to explain at full length in
the two following books.





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Previous: Of Stock Lent At Interest



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