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BOOK cannot be made till such time as the produce of

his own labour has not only been completed, but sold. A stock of goods of different kinds, therefore, must be stored up somewhere fufficient to maintain him, and to supply him with the materials and tools of his work, till such time, at least, as both these events can be brought about. A weaver cannot apply himself entirely to his peculiar bufiness, unless there is beforehand stored up fomewhere, either in his own poffeffion or in that of some other person, a stock fufficient to maintain him, and to supply him with the materials and tools of his work, till he has not only completed, but fold his web. This accumulation must, evidently, be previous to his applying his industry for so long a time to such a peculiar bufiness.

As the accumulation of stock muft, in the na. ture of things, be previous to the division of la. bour, fo labour can be more and more fubdivided in proportion only as stock is previously more and more accumulated. The quantity of materials which the same number of people can work

increases in a great proportion as .labour comes to be more and more subdivided; and as the operations of each workman are gradually reduced to a greater degree of fimplicity, a variety of new machines come to be invented for facilitating and abridging those operations. As the division of labour advances, therefore, in order to give constant employment to an equal number of workmen, an equal stock of provifions, and a greater stock of materials and tools than what would have been neceffary in a ruder Introduct. state of things, must be accumulated beforehand. But the number of workmen in every branch of business generally increases with the divifion of labour in that branch, or rather it is the increase of their number which enables them to class and subdivide themselves in this manner.


than those

As the accumulation of stock is previously necessary for carrying on this great improvement in the productive powers of labour, fo that accumulation naturally leads to this improvement. The person who employs his stock in maintaining labour, neceffarily wishes to employ it in such a manner as to produce as great a quantity of work as poffible. He endeavours, therefore, both to make among his workmen the most proper distribution of employment, and to furnish them with the best machines which he can either invent or afford to purchase. His abilities in both these respects are generally in proportion to the extent of his stock, or to the number of people whom it can employ. The quantity of industry, therefore, not only increases in every country with the increase of the stock which employs it, but, in consequence of that increase, the same quantity of industry produces a much greater quantity of work.

Such are in general the effects of the increase of stock upon industry and its productive powers.

In the following book I have endeavoured to explain the nature of stock, the effects of its accumulation into capitals of different kinds, and the effects of the different employments of


BOOK those capitals. This book is divided into five

chapters. In the first chapter, I have endeavoured to show what are the different parts or branches into which the stock, either of an indi. vidual, or of a great society, naturally divides itself. In the second, I have endeavoured to explain the nature and operation of money confidered as a particular branch of the general ftock of the society. The stock which is accu. mulated into a capital, may either be employed by the person to whom it belongs, or it may be lent to some other person. In the third and fourth chapters, I have endeavoured to examine the manner in which it operates in both these fituations. The fifth and last chapter treats of the different effects which the different employments of capital immediately produce upon the quantity both of national industry, and of the annual produce of land and labour.



WHEN the stock which a

Of the Divison of Stock.
HEN the stock which a man possesses is

no more than fufficient to maintain him for a few days or a few weeks, he feldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His 3



revenue is, in this case, derived from his labour CHA P. only. This is the state of the greater part of the labouring poor in all countries.

But when he poffeffes stock fufficient to maintain him for months or years, he naturally endeayours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this re. venue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expeets, is to afford him this revenue, is called his capital. The other is that which supplies his immediate consumption ; and which consists either, first, in that portion of his whole stock which was originally reserved for this purpose; or, secondly, in his revenue, from whatever fource derived, as it gradually comes in; or, thirdly, in such things as had been purchased by either of these in former years, and which are not yet entirely consumed; such as a ftock of clothes, household furniture, and the like. In one, or other, or all of these three articles, consists the stock which men commonly reserve for their own immediate consumption.

There are two different ways in which a capital

may be employed so as to yield a revenue or profit to its employer.

First, it may be employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his possession, or continues in the same shape. The goods of the



BOOK merchant yield him no revenue or profit till he

fells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one shape, and returning to him in another, and it is only by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore may very properly be called circulating capitals.

Secondly, it may be employed in the improvement of land, in the purchase of useful machines and instruments of trade, or in suchlike things as yield a revenue or profit without changing masters, or circulating any further. Such capitals, therefore, may very properly be called fixed capitals.

Different occupations require very different proportions between the fixed and circulating capitals employed in them.

The capital of a merchant, for example, is altogether a circulating capital. He has occafion for no machines or instruments of trade, unless his shop, or warehouse, be considered as fuch.

Some part of the capital of every master artificer or manufacturer must be fixed in the inftruments of his trade. This part, however, is very small in fome, and very great in others. A master taylor requires no other inftruments of trade but a parcel of needles. Those of the master shoemaker are a little, though but a very little, more expensive. Those of the weaver rise a good deal above thofe of the shoemaker. The far greater part of the capital of all fuch master


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