CHAPTER V. 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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