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    Book I: Chapter 6

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    In that early and rude state of society which precedes both the accumulation
    of stock and the appropriation of land, the proportion between the
    quantities of labour necessary for acquiring different objects, seems to be
    the only circumstance which can afford any rule for exchanging them for one
    another. If among a nation of hunters, for example, it usually costs twice
    the labour to kill a beaver which it does to kill a deer, one beaver should
    naturally exchange for or be worth two deer. It is natural that what is
    usually the produce of two days or two hours labour, should be worth double
    of what is usually the produce of one day's or one hour's labour.

    If the one species of labour should be more severe than the other, some
    allowance will naturally be made for this superior hardship; and the produce
    of one hour's labour in the one way may frequently exchange for that of two
    hour's labour in the other.

    Or if the one species of labour requires an uncommon degree of dexterity
    and ingenuity, the esteem which men have for such talents, will naturally
    give a value to their produce, superior to what would be due to the time
    employed about it. Such talents can seldom be acquired but in consequence of
    long application, and the superior value of their produce may frequently be
    no more than a reasonable compensation for the time and labour which must be
    spent in acquiring them. In the advanced state of society, allowances of
    this kind, for superior hardship and superior skill, are commonly made in
    the wages of labour ; and something of the same kind must probably have
    taken place in its earliest and rudest period.

    In this state of things, the whole produce of labour belongs to the
    labourer; and the quantity of labour commonly employed in acquiring or
    producing any commodity, is the only circumstance which can regulate the
    quantity of labour which it ought commonly to purchase, command, or exchange

    As soon as stock has accumulated in the hands of particular persons, some of
    them will naturally employ it in setting to work industrious people, whom
    they will supply with materials and subsistence, in order to make a profit
    by the sale of their work, or by what their labour adds to the value of the
    materials. In exchanging the complete manufacture either for money, for
    labour, or for other goods, over and above what may be sufficient to pay the
    price of the materials, and the wages of the workmen, something must be given
    for the profits of the undertaker of the work, who hazards his stock in this
    adventure. The value which the workmen add to the materials, therefore,
    resolves itself in this case into two parts, of which the one pays their
    wages, the other the profits of their employer upon the whole stock of
    materials and wages which he advanced. He could have no interest to employ
    them, unless he expected from the sale of their work something more than
    what was sufficient to replace his stock to him ; and he could have no
    interest to employ a great stock rather than a small one, unless his profits
    were to bear some proportion to the extent of his stock.

    The profits of stock, it may perhaps be thought, are only a different name
    for the wages of a particular sort of labour, the labour of inspection and
    direction. They are, however, altogether different, are regulated by quite
    different principles, and bear no proportion to the quantity, the hardship,
    or the ingenuity of this supposed labour of inspection and direction. They
    are regulated altogether by the value of the stock employed, and are greater
    or smaller in proportion to the extent of this stock. Let us suppose, for
    example, that in some particular place, where the common annual profits of
    manufacturing stock are ten per cent. there are two different manufactures,
    in each of which twenty workmen are employed, at the rate of fifteen pounds
    a year each, or at the expense of three hundred a-year in each manufactory.
    Let us suppose, too, that the coarse materials annually wrought up in the
    one cost only seven hundred pounds, while the finer materials in the other
    cost seven thousand. The capital annually employed in the one will, in this
    case, amount only to one thousand pounds; whereas that employed in the other
    will amount to seven thousand three hundred pounds. At the rate of ten per
    cent. therefore, the undertaker of the one will expect a yearly profit of
    about one hundred pounds only; while that of the other will expect about
    seven hundred and thirty pounds. But though their profits are so very
    different, their labour of inspection and direction may be either altogether
    or very nearly the same. In many great works, almost the whole labour of
    this kind is committed to some principal clerk. His wages properly express
    the value of this labour of inspection and direction. Though in settling
    them some regard is had commonly, not only to his labour and skill, but to
    the trust which is reposed in him, yet they never bear any regular
    proportion to the capital of which he oversees the management ; and the
    owner of this capital, though he is thus discharged of almost all labour,
    still expects that his profit should bear a regular proportion to his
    capital. In the price of commodities, therefore, the profits of stock
    constitute a component part altogether different from the wages of labour, and
    regulated by quite different principles.

    In this state of things, the whole produce of labour does not always belong
    to the labourer. He must in most cases share it with the owner of the stock
    which employs him. Neither is the quantity of labour commonly employed in
    acquiring or producing any commodity, the only circumstance which can
    regulate the quantity which it ought commonly to purchase, command or
    exchange for. An additional quantity, it is evident, must be due for the
    profits of the stock which advanced the wages and furnished the materials of
    that labour.

    As soon as the land of any country has all become private property, the
    landlords, like all other men, love to reap where they never sowed, and
    demand a rent even for its natural produce. The wood of the forest, the
    grass of the field, and all the natural fruits of the earth, which, when
    land was in common, cost the labourer only the trouble of gathering them,
    come, even to him, to have an additional price fixed upon them. He must then
    pay for the licence to gather them, and must give up to the landlord a
    portion of what his labour either collects or produces. This portion, or,
    what comes to the same thing, the price of this portion, constitutes the
    rent of land, and in the price of the greater part of commodities, makes a
    third component part.

    The real value of all the different component parts of price, it must be
    observed, is measured by the quantity of labour which they can, each of
    them, purchase or command. Labour measures the value, not only of that part
    of price which resolves itself into labour, but of that which resolves
    itself into rent, and of that which resolves itself into profit.

    In every society, the price of every commodity finally resolves itself into
    some one or other, or all of those three parts ; and in every improved
    society, all the three enter, more or less, as component parts, into the
    price of the far greater part of commodities.

    In the price of corn, for example, one part pays the rent of the landlord,
    another pays the wages or maintenance of the labourers and labouring cattle
    employed in producing it, and the third pays the profit of the farmer. These
    three parts seem either immediately or ultimately to make up the whole price
    of corn. A fourth part, it may perhaps be thought is necessary for replacing
    the stock of the farmer, or for compensating the wear and tear of his
    labouring cattle, and other instruments of husbandry. But it must be
    considered, that the price of any instrument of husbandry, such as a
    labouring horse, is itself made up of the same time parts ; the rent of the
    land upon which he is reared, the labour of tending and rearing him, and the
    profits of the farmer, who advances both the rent of this land, and the
    wages of this labour. Though the price of the corn, therefore, may pay the
    price as well as the maintenance of the horse, the whole price still
    resolves itself, either immediately or ultimately, into the same three parts
    of rent, labour, and profit.

    In the price of flour or meal, we must add to the price of the corn, the
    profits of the miller, and the wages of his servants ; in the price of
    bread, the profits of the baker, and the wages of his servants; and in the
    price of both, the labour of transporting the corn from the house of the
    farmer to that of the miller, and from that of the miller to that of the
    baker, together with the profits of those who advance the wages of that

    The price of flax resolves itself into the same three parts as that of corn.
    In the price of linen we must add to this price the wages of the
    flax-dresser, of the spinner, of the weaver, of the bleacher, etc. together
    with the profits of their respective employers.

    As any particular commodity comes to be more manufactured, that part of the
    price which resolves itself into wages and profit, comes to be greater in
    proportion to that which resolves itself into rent. In the progress of the
    manufacture, not only the number of profits increase, but every subsequent
    profit is greater than the foregoing ; because the capital from which it is
    derived must always be greater. The capital which employs the weavers, for
    example, must be greater than that which employs the spinners; because it
    not only replaces that capital with its profits, but pays, besides, the
    wages of the weavers : and the profits must always bear some proportion to
    the capital.

    In the most improved societies, however, there are always a few commodities
    of which the price resolves itself into two parts only the wages of labour,
    and the profits of stock ; and a still smaller number, in which it consists
    altogether in the wages of labour. In the price of sea-fish, for example,
    one part pays the labour of the fisherman, and the other the profits of the
    capital employed in the fishery. Rent very seldom makes any part of it,
    though it does sometimes, as I shall shew hereafter. It is otherwise, at
    least through the greater part of Europe, in river fisheries. A salmon
    fishery pays a rent ; and rent, though it cannot well be called the rent of
    land, makes a part of the price of a salmon, as well as wares and profit. In
    some parts of Scotland, a few poor people make a trade of gathering, along
    the sea-shore, those little variegated stones commonly known by the name of
    Scotch pebbles. The price which is paid to them by the stone-cutter, is
    altogether the wages of their labour ; neither rent nor profit makes an part
    of it.

    But the whole price of any commodity must still finally resolve itself into some one or other
    or all of those three parts; as whatever part of it remains after paying the rent of the land, and
    the price of the whole labour employed in raising, manufacturing, and bringing it to market,
    must necessarily be profit to somebody.

    As the price or exchangeable value of every particular commodity, taken
    separately, resolves itself into some one or other, or all of those three
    parts ; so that of all the commodities which compose the whole annual
    produce of the labour of every country, taken complexly, must resolve itself
    into the same three parts, and be parcelled out among different inhabitants
    of the country, either as the wages of their labour, the profits of their
    stock, or the rent of their land. The whole of what is annually either
    collected or produced by the labour of every society, or, what comes to the
    same thing, the whole price of it, is in this manner originally distributed
    among some of its different members. Wages, profit, and rent, are the three
    original sources of all revenue, as well as of all exchangeable value. All
    other revenue is ultimately derived from some one or other of these.

    Whoever derives his revenue from a fund which is his own, must draw it
    either from his labour, from his stock, or from his land. The revenue
    derived from labour is called wages; that derived from stock, by the person
    who manages or employs it, is called profit; that derived from it by the
    person who does not employ it himself, but lends it to another, is called
    the interest or the use of money. It is the compensation which the borrower
    pays to the lender, for the profit which he has an opportunity of making by
    the use of the money. Part of that profit naturally belongs to the borrower,
    who runs the risk and takes the trouble of employing it, and part to the
    lender, who affords him the opportunity of making this profit. The interest
    of money is always a derivative revenue, which, if it is not paid from the
    profit which is made by the use of the money, must be paid from some other
    source of revenue, unless perhaps the borrower is a spendthrift, who
    contracts a second debt in order to pay the interest of the first. The
    revenue which proceeds altogether from land, is called rent, and belongs to
    the landlord. The revenue of the farmer is derived partly from his labour,
    and partly from his stock. To him, land is only the instrument which enables
    him to earn the wages of this labour, and to make the profits of this stock.
    All taxes, and all the revenue which is founded upon them, all salaries,
    pensions, and annuities of every kind, are ultimately derived from some one
    or other of those three original sources of revenue, and are paid either
    immediately or mediately from the wages of labour, the profits of stock, or
    the rent of land.

    When those three different sorts of revenue belong to different persons,
    they are readily distinguished; but when they belong to the same, they are
    sometimes confounded with one another, at least in common language.

    A gentleman who farms a part of his own estate, after paying the expense of
    cultivation, should gain both the rent of the landlord and the profit of the
    farmer. He is apt to denominate, however, his whole gain, profit, and thus
    confounds rent with profit, at least in common language. The greater part of
    our North American and West Indian planters are in this situation. They
    farm, the greater part of them, their own estates : and accordingly we
    seldom hear of the rent of a plantation, but frequently of its profit.

    Common farmers seldom employ any overseer to direct the general operations
    of the farm. They generally, too, work a good deal with their own hands, as
    ploughmen, harrowers, etc. What remains of the crop, after paying the rent,
    therefore, should not only replace to them their stock employed in
    cultivation, together with its ordinary profits, but pay them the wages
    which are due to them, both as labourers and overseers. Whatever remains,
    however, after paying the rent and keeping up the stock, is called profit.
    But wages evidently make a part of it. The farmer, by saving these wages,
    must necessarily gain them. Wages, therefore, are in this case confounded
    with profit.

    An independent manufacturer, who has stock enough both to purchase
    materials, and to maintain himself till he can carry his work to market,
    should gain both the wages of a journeyman who works under a master, and the
    profit which that master makes by the sale of that journeyman's work. His
    whole gains, however, are commonly called profit, and wages are, in this
    case, too, confounded with profit.

    A gardener who cultivates his own garden with his own hands, unites in his
    own person the three different characters, of landlord, farmer, and
    labourer. His produce, therefore, should pay him the rent of the first, the
    profit of the second, and the wages of the third. The whole, however, is
    commonly considered as the earnings of his labour. Both rent and profit are,
    in this case, confounded with wages.

    As in a civilized country there are but few commodities of which the
    exchangeable value arises from labour only, rent and profit contributing
    largely to that of the far greater part of them, so the annual produce of
    its labour will always be sufficient to purchase or command a much greater
    quantity of labour than what was employed in raising, preparing, and
    bringing that produce to market. If the society were annually to employ all
    the labour which it can annually purchase, as the quantity of labour would
    increase greatly every year, so the produce of every succeeding year would
    be of vastly greater value than that of the foregoing. But there is no
    country in which the whole annual produce is employed in maintaining the
    industrious. The idle everywhere consume a great part of it; and, according
    to the different proportions in which it is annually divided between those
    two different orders of people, its ordinary or average value must either
    annually increase or diminish, or continue the same from one year to
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