Meet us on:
Welcome to Read Print! Sign in with
or
to get started!
 
Entire Site
    Try our fun game

    Dueling book covers…may the best design win!

    Random Quote
    "When someone is giving you their theology, their God words, you should listen hard and be very gentle. The time to deliver your God words is when you are asked."
    More: God quotes
     

    Subscribe to Our Newsletter

    Follow us on Twitter

    Never miss a good book again! Follow Read Print on Twitter

    Book II: Chapter 3

    • Rate it:
    • 9 Favorites on Read Print
    Launch Reading Mode Next Chapter
    Chapter 16
    Previous Chapter
    CHAPTER III.

    OF THE ACCUMULATION OF CAPITAL, OR OF
    PRODUCTIVE AND UNPRODUCTIVE LABOUR.

    There is one sort of labour which adds to the value of the subject upon
    which it is bestowed ; there is another which has no such effect. The former
    as it produces a value, may be called productive, the latter, unproductive
    labour. { Some French authors of great learning and ingenuity have used
    those words in a different sense. In the last chapter of the fourth book, I
    shall endeavour to shew that their sense is an improper one.} Thus the labour
    of a manufacturer adds generally to the value of the materials which he
    works upon, that of his own maintenance, and of his master's profit. The
    labour of a menial servant, on the contrary, adds to the value of nothing.
    Though the manufacturer has his wages advanced to him by his master, he in
    reality costs him no expense, the value of those wages being generally
    restored, together with a profit, in the improved value of the subject upon
    which his labour is bestowed. But the maintenance of a menial servant never
    is restored. A man grows rich by employing a multitude of manufacturers ;
    he grows poor by maintaining a multitude or menial servants. The labour of
    the latter, however, has its value, and deserves its reward as well as that
    of the former. But the labour of the manufacturer fixes and realizes itself
    in some particular subject or vendible commodity, which lasts for some time
    at least after that labour is past. It is, as it were, a certain quantity of
    labour stocked and stored up, to be employed, if necessary, upon some other
    occasion. That subject, or, what is the same thing, the price of that
    subject, can afterwards, if necessary, put into motion a quantity of labour
    equal to that which had originally produced it. The labour of the menial
    servant, on the contrary, does not fix or realize itself in any particular
    subject or vendible commodity. His services generally perish in the very
    instant of their performance, and seldom leave any trace of value behind
    them, for which an equal quantity of service could afterwards be procured.

    The labour of some of the most respectable orders in the society is, like
    that of menial servants, unproductive of any value, and does not fix or
    realize itself in any permanent subject, or vendible commodity, which
    endures after that labour is past, and for which an equal quantity of labour
    could afterwards be procured. The sovereign, for example, with all the
    officers both of justice and war who serve under him, the whole army and
    navy, are unproductive labourers. They are the servants of the public, and
    are maintained by a part of the annual produce of the industry of other
    people. Their service, how honourable, how useful, or how necessary soever,
    produces nothing for which an equal quantity of service can afterwards be
    procured. The protection, security, and defence, of the commonwealth, the
    effect of their labour this year, will not purchase its protection,
    security, and defence, for the year to come. In the same class must be
    ranked, some both of the gravest and most important, and some of the most
    frivolous professions; churchmen, lawyers, physicians, men of letters of all
    kinds ; players, buffoons, musicians, opera-singers, opera-dancers, etc.
    The labour of the meanest of these has a certain value, regulated by the
    very same principles which regulate that of every other sort of labour; and
    that of the noblest and most useful, produces nothing which could afterwards
    purchase or procure an equal quantity of labour. Like the declamation of the
    actor, the harangue of the orator, or the tune of the musician, the work of
    all of them perishes in the very instant of its production.

    Both productive and unproductive labourers, and those who do not labour at
    all, are all equally maintained by the annual produce of the land and labour
    of the country. This produce, how great soever, can never be infinite, but
    must have certain limits. According, therefore, as a smaller or greater
    proportion of it is in any one year employed in maintaining unproductive
    hands, the more in the one case, and the less in the other, will remain for
    the productive, and the next year's produce will be greater or smaller
    accordingly ; the whole annual produce, if we except the spontaneous
    productions of the earth, being the effect of productive labour.

    Though the whole annual produce of the land and labour of every country is
    no doubt ultimately destined for supplying the consumption of its
    inhabitants, and for procuring a revenue to them; yet when it first comes
    either from the ground, or from the hands of the productive labourers, it
    naturally divides itself into two parts. One of them, and frequently the
    largest, is, in the first place, destined for replacing a capital, or for
    renewing the provisions, materials, and finished work, which had been
    withdrawn from a capital ; the other for constituting a revenue either to
    the owner of this capital, as the profit of his stock, or to some other
    person, as the rent of his land. Thus, of the produce of land, one part
    replaces the capital of the farmer ; the other pays his profit and the rent
    of the landlord ; and thus constitutes a revenue both to the owner of this
    capital, as the profits of his stock, and to some other person as the rent
    of his land. Of the produce of a great manufactory, in the same manner, one
    part, and that always the largest, replaces the capital of the undertaker of
    the work ; the other pays his profit, and thus constitutes a revenue to the
    owner of this capital.

    That part of the annual produce of the land and labour of any country which
    replaces a capital, never is immediately employed to maintain any but
    productive hands. It pays the wages of productive labour only. That which is
    immediately destined for constituting a revenue, either as profit or as
    rent, may maintain indifferently either productive or unproductive hands.

    Whatever part of his stock a man employs as a capital, he always expects it
    to be replaced to him with a profit. He employs it, therefore, in
    maintaining productive hands only ; and after having served in the function
    of a capital to him, it constitutes a revenue to them. Whenever he employs
    any part of it in maintaining unproductive hands of any kind, that part is
    from that moment withdrawn from his capital, and placed in his stock
    reserved for immediate consumption.

    Unproductive labourers, and those who do not labour at all, are all
    maintained by revenue; either, first, by that part of the annual produce
    which is originally destined for constituting a revenue to some particular
    persons, either as the rent of land, or as the profits of stock ; or,
    secondly, by that part which, though originally destined for replacing a
    capital, and for maintaining productive labourers only, yet when it comes
    into their hands, whatever part of it is over and above their necessary
    subsistence, may be employed in maintaining indifferently either productive
    or unproductive hands. Thus, not only the great landlord or the rich
    merchant, but even the common workman, if his wages are considerable, may
    maintain a menial servant; or he may sometimes go to a play or a
    puppet-show, and so contribute his share towards maintaining one set of
    unproductive labourers; or he may pay some taxes, and thus help to maintain
    another set, more honourable and useful, indeed, but equally unproductive.
    No part of the annual produce, however, which had been originally destined
    to replace a capital, is ever directed towards maintaining unproductive
    hands, till after it has put into motion its full complement of productive
    labour, or all that it could put into motion in the way in which it was
    employed. The workman must have earned his wages by work done, before he can
    employ any part of them in this manner. That part, too, is generally but a
    small one. It is his spare revenue only, of which productive labourers have
    seldom a great deal. They generally have some, however ; and in the payment
    of taxes, the greatness of their number may compensate, in some measure, the
    smallness of their contribution. The rent of land and the profits of stock
    are everywhere, therefore, the principal sources from which unproductive
    hands derive their subsistence. These are the two sorts of revenue of which
    the owners have generally most to spare. They might both maintain
    indifferently, either productive or unproductive hands. They seem, however,
    to have some predilection for the latter. The expense of a great lord feeds
    generally more idle than industrious people The rich merchant, though with
    his capital he maintains industrious people only, yet by his expense, that
    is, by the employment of his revenue, he feeds commonly the very same sort
    as the great lord.

    The proportion, therefore, between the productive and unproductive hands,
    depends very much in every country upon the proportion between that part of
    the annual produce, which, as soon as it comes either from the ground, or
    from the hands of the productive labourers, is destined for replacing a
    capital, and that which is destined for constituting a revenue, either as
    rent or as profit. This proportion is very different in rich from what it is
    in poor countries.

    Thus, at present, in the opulent countries of Europe, a very large,
    frequently the largest, portion of the produce of the land, is destined for
    replacing the capital of the rich and independent farmer ; the other for
    paying his profits, and the rent of the landlord. But anciently, during the
    prevalency of the feudal government, a very small portion of the produce was
    sufficient to replace the capital employed in cultivation. It consisted
    commonly in a few wretched cattle, maintained altogether by the spontaneous
    produce of uncultivated land, and which might, therefore, be considered as a
    part of that spontaneous produce. It generally, too, belonged to the
    landlord, and was by him advanced to the occupiers of the land. All the rest
    of the produce properly belonged to him too, either as rent for his land, or
    as profit upon this paltry capital. The occupiers of land were generally
    bond-men, whose persons and effects were equally his property. Those who were
    not bond-men were tenants at will; and though the rent which they paid was
    often nominally little more than a quit-rent, it really amounted to the
    whole produce of the land. Their lord could at all times command their
    labour in peace and their service in war. Though they lived at a distance
    from his house, they were equally dependent upon him as his retainers who
    lived in it. But the whole produce of the land undoubtedly belongs to him,
    who can dispose of the labour and service of all those whom it maintains. In
    the present state of Europe, the share of the landlord seldom exceeds a
    third, sometimes not a fourth part of the whole produce of the land. The
    rent of land, however, in all the improved parts of the country, has been
    tripled and quadrupled since those ancient times; and this third or fourth
    part of the annual produce is, it seems, three or four times greater than
    the whole had been before. In the progress of improvement, rent, though it
    increases in proportion to the extent, diminishes in proportion to the
    produce of the land.

    In the opulent countries of Europe, great capitals are at present employed
    in trade and manufactures. In the ancient state, the little trade that was
    stirring, and the few homely and coarse manufactures that were carried on,
    required but very small capitals. These, however, must have yielded very
    large profits. The rate of interest was nowhere less than ten per cent. and
    their profits must have been sufficient to afford this great interest. At
    present, the rate of interest, in the improved parts of Europe, is nowhere
    higher than six per cent.; and in some of the most improved, it is so low as
    four, three, and two per cent. Though that part of the revenue of the
    inhabitants which is derived from the profits of stock, is always much
    greater in rich than in poor countries, it is because the stock is much
    greater ; in proportion to the stock, the profits are generally much less.

    That part of the annual produce, therefore, which, as soon as it comes
    either from the ground, or from the hands of the productive labourers, is
    destined for replacing a capital, is not only much greater in rich than in
    poor countries, but bears a much greater proportion to that which is
    immediately destined for constituting a revenue either as rent or as profit.
    The funds destined for the maintenance of productive labour are not only
    much greater in the former than in the latter, but bear a much greater
    proportion to those which, though they may be employed to maintain either
    productive or unproductive hands, have generally a predilection for the
    latter.

    The proportion between those different funds necessarily determines in every
    country the general character of the inhabitants as to industry or idleness.
    We are more industrious than our forefathers, because, in the present times,
    the funds destined for the maintenance of industry are much greater in
    proportion to those which are likely to be employed in the maintenance of
    idleness, than they were two or three centuries ago. Our ancestors were idle
    for want of a sufficient encouragement to industry. It is better, says the
    proverb, to play for nothing, than to work for nothing. In mercantile
    and manufacturing towns, where the inferior ranks of people are chiefly
    maintained by the employment of capital, they are in general industrious,
    sober, and thriving; as in many English, and in most Dutch towns. In those
    towns which are principally supported by the constant or occasional
    residence of a court, and in which the inferior ranks of people are chiefly
    maintained by the spending of revenue, they are in general idle, dissolute,
    and poor; as at Rome, Versailles, Compeigne, and Fontainbleau. If you except
    Rouen and Bourdeaux, there is little trade or industry in any of the
    parliament towns of France; and the inferior ranks of people, being chiefly
    maintained by the expense of the members of the courts of justice, and of
    those who come to plead before them, are in general idle and poor. The great
    trade of Rouen and Bourdeaux seems to be altogether the effect of their
    situation. Rouen is necessarily the entrepot of almost all the goods which
    are brought either from foreign countries, or from the maritime provinces of
    France, for the consumption of the great city of Paris. Bourdeaux is, in the
    same manner, the entrepot of the wines which grow upon the banks of the
    Garronne, and of the rivers which run into it, one of the richest wine
    countries in the world, and which seems to produce the wine fittest for
    exportation, or best suited to the taste of foreign nations. Such
    advantageous situations necessarily attract a great capital by the great
    employment which they afford it ; and the employment of this capital is the
    cause of the industry of those two cities. In the other parliament towns
    of France, very little more capital seems to be employed than what is
    necessary for supplying their own consumption; that is, little more than the
    smallest capital which can be employed in them. The same thing may be said
    of Paris, Madrid, and Vienna. Of those three cities, Paris is by far the
    most industrious, but Paris itself is the principal market of all the
    manufactures established at Paris, and its own consumption is the principal
    object of all the trade which it carries on. London, Lisbon, and Copenhagen,
    are, perhaps, the only three cities in Europe, which are both the constant
    residence of a court, and can at the same time be considered as trading
    cities, or as cities which trade not only for their own consumption, but for
    that of other cities and countries. The situation of all the three is
    extremely advantageous, and naturally fits them to be the entrepots of a
    great part of the goods destined for the consumption of distant places. In a
    city where a great revenue is spent, to employ with advantage a capital for
    any other purpose than for supplying the consumption of that city, is
    probably more difficult than in one in which the inferior ranks of people
    have no other maintenance but what they derive from the employment of such a
    capital. The idleness of the greater part of the people who are maintained
    by the expense of revenue, corrupts, it is probable, the industry of those
    who ought to be maintained by the employment of capital, and renders it less
    advantageous to employ a capital there than in other places. There was
    little trade or industry in Edinburgh before the Union. When the Scotch
    parliament was no longer to be assembled in it, when it ceased to be the
    necessary residence of the principal nobility and gentry of Scotland, it
    became a city of some trade and industry. It still continues, however, to
    be the residence of the principal courts of justice in Scotland, of the
    boards of customs and excise, etc. A considerable revenue, therefore, still
    continues to be spent in it. In trade and industry, it is much inferior to
    Glasgow, of which the inhabitants are chiefly maintained by the employment
    of capital. The inhabitants of a large village, it has sometimes been
    observed, after having made considerable progress in manufactures, have
    become idle and poor, in consequence of a great lord's having taken up his
    residence in their neighbourhood.

    The proportion between capital and revenue, therefore, seems everywhere to
    regulate the proportion between industry and idleness Wherever capital
    predominates, industry prevails ; wherever revenue, idleness. Every increase
    or diminution of capital, therefore, naturally tends to increase or diminish
    the real quantity of industry, the number of productive hands, and
    consequently the exchangeable value of the annual produce of the land and
    labour of the country, the real wealth and revenue of all its inhabitants.

    Capitals are increased by parsimony, and diminished by prodigality and
    misconduct.

    Whatever a person saves from his revenue he adds to his capital, and either
    employs it himself in maintaining an additional number of productive hands,
    or enables some other person to do so, by lending it to him for an interest,
    that is, for a share of the profits. As the capital of an individual can be
    increased only by what he saves from his annual revenue or his annual gains,
    so the capital of a society, which is the same with that of all the
    individuals who compose it, can be increased only in the same manner.

    Parsimony, and not industry, is the immediate cause of the increase of
    capital. Industry, indeed, provides the subject which parsimony accumulates;
    but whatever industry might acquire, if parsimony did not save and store up,
    the capital would never be the greater.

    Parsimony, by increasing the fund which is destined for the maintenance of
    productive hands, tends to increase the number of those hands whose labour
    adds to the value of the subject upon winch it is bestowed. It tends,
    therefore, to increase the exchangeable value of the annual produce of the
    land and labour of the country. It puts into motion an additional quantity
    of industry, which gives an additional value to the annual produce.

    What is annually saved, is as regularly consumed as what is annually spent,
    and nearly in the same time too : but it is consumed by a different set of
    people. That portion of his revenue which a rich man annually spends, is, in
    most cases, consumed by idle guests and menial servants, who leave nothing
    behind them in return for their consumption. That portion which he annually
    saves, as, for the sake of the profit, it is immediately employed as a
    capital, is consumed in the same manner, and nearly in the same time too,
    but by a different set of people: by labourers, manufacturers, and
    artificers, who reproduce, with a profit, the value of their annual
    consumption. His revenue, we shall suppose, is paid him in money. Had he
    spent the whole, the food, clothing, and lodging, which the whole could have
    purchased, would have been distributed among the former set of people. By
    saving a part of it, as that part is, for the sake of the profit,
    immediately employed as a capital, either by himself or by some other
    person, the food, clothing, and lodging, which may be purchased with it, are
    necessarily reserved for the latter. The consumption is the same, but the
    consumers are different.

    By what a frugal man annually saves, he not only affords maintenance to an
    additional number of productive hands, for that of the ensuing year, but
    like the founder of a public work-house he establishes, as it were, a
    perpetual fund for the maintenance of an equal number in all times to come.
    The perpetual allotment and destination of this fund, indeed, is not always
    guarded by any positive law, by any trust-right or deed of mortmain. It is
    always guarded, however, by a very powerful principle, the plain and evident
    interest of every individual to whom any share of it shall ever belong. No
    part of it can ever afterwards be employed to maintain any but productive
    hands, without an evident loss to the person who thus perverts it from its
    proper destination.

    The prodigal perverts it in this manner: By not confining his expense within
    his income, he encroaches upon his capital. Like him who perverts the
    revenues of some pious foundation to profane purposes, he pays the wages of
    idleness with those funds which the frugality of his forefathers had, as it
    were, consecrated to the maintenance of industry. By diminishing the funds
    destined for the employment of productive labour, he necessarily diminishes,
    so far as it depends upon him, the quantity of that labour which adds a
    value to the subject upon which it is bestowed, and, consequently, the value
    of the annual produce of the land and labour of the whole country, the real
    wealth and revenue of its inhabitants. If the prodigality of some were not
    compensated by the frugality of others, the conduct of every prodigal, by
    feeding the idle with the bread of the industrious, would tend not only to
    beggar himself, but to impoverish his country.

    Though the expense of the prodigal should be altogether in home made, and no
    part of it in foreign commodities, its effect upon the productive funds of
    the society would still be the same. Every year there would still be a
    certain quantity of food and clothing, which ought to have maintained
    productive, employed in maintaining unproductive hands. Every year,
    therefore, there would still be some diminution in what would otherwise have
    been the value of the annual produce of the land and labour of the country.

    This expense, it may be said, indeed, not being in foreign goods, and not
    occasioning any exportation of gold and silver, the same quantity of money
    would remain in the country as before. But if the quantity of food and
    clothing which were thus consumed by unproductive, had been distributed
    among productive hands, they would have reproduced, together with a profit,
    the full value of their consumption. The same quantity of money would, in
    this case, equally have remained in the country, and there would, besides,
    have been a reproduction of an equal value of consumable goods. There would
    have been two values instead of one.

    The same quantity of money, besides, can. not long remain in any country in
    which the value of the annual produce diminishes. The sole use of money is
    to circulate consumable goods. By means of it, provisions, materials, and
    finished work, are bought and sold, and distributed to their proper
    consumers. The quantity of money, therefore, which can be annually employed
    in any country, must be determined by the value of the consumable goods
    annually circulated within it. These must consist, either in the immediate
    produce of the land and labour of the country itself, or in something which
    had been purchased with some part of that produce. Their value, therefore,
    must diminish as the value of that produce diminishes, and along with it the
    quantity of money which can be employed in circulating them. But the money
    which, by this annual diminution of produce, is annually thrown out of
    domestic circulation, will not be allowed to lie idle. The interest of
    whoever possesses it requires that it should be employed; but having no
    employment at home, it will, in spite of all laws and prohibitions, be sent
    abroad, and employed in purchasing consumable goods, which may be of some
    use at home. Its annual exportation will, in this manner, continue for some
    time to add something to the annual consumption of the country beyond the
    value of its own annual produce. What in the days of its prosperity had been
    saved from that annual produce, and employed in purchasing gold and silver.
    will contribute, for some little time, to support its consumption in
    adversity. The exportation of gold and silver is, in this case, not the
    cause, but the effect of its declension, and may even, for some little time,
    alleviate the misery of that declension.

    The quantity of money, on the contrary, must in every country naturally
    increase as the value of the annual produce increases. The value of the
    consumable goods annually circulated within the society being greater, will
    require a greater quantity of money to circulate them. A part of the
    increased produce, therefore, will naturally be employed in purchasing,
    wherever it is to be had, the additional quantity of gold and silver
    necessary for circulating the rest. The increase of those metals will, in
    this case, be the effect, not the cause, of the public prosperity. Gold and
    silver are purchased everywhere in the same manner. The food, clothing, and
    lodging, the revenue and maintenance, of all those whose labour or stock is
    employed in bringing them from the mine to the market, is the price paid for
    them in Peru as well as in England. The country which has this price to pay,
    will never belong without the quantity of those metals which it has occasion
    for; and no country will ever long retain a quantity which it has no
    occasion for.

    Whatever, therefore, we may imagine the real wealth and revenue of a country
    to consist in, whether in the value of the annual produce of its land and
    labour, as plain reason seems to dictate, or in the quantity of the precious
    metals which circulate within it, as vulgar prejudices suppose ; in either
    view of the matter, every prodigal appears to be a public enemy, and every
    frugal man a public benefactor.

    The effects of misconduct are often the same as those of prodigality. Every
    injudicious and unsuccessful project in agriculture, mines, fisheries,
    trade, or manufactures, tends in the same manner to diminish the funds
    destined for the maintenance of productive labour. In every such project,
    though the capital is consumed by productive hands only, yet as, by the
    injudicious manner in which they are employed, they do not reproduce the
    full value of their consumption, there must always be some diminution in
    what would otherwise have been the productive funds of the society.

    It can seldom happen, indeed, that the circumstances of a great nation can
    be much affected either by the prodigality or misconduct of individuals; the
    profusion or imprudence of some being always more than compensated by the
    frugality and good conduct of others.

    With regard to profusion, the principle which prompts to expense is the
    passion for present enjoyment; which, though sometimes violent and very
    difficult to be restrained, is in general only momentary and occasional. But
    the principle which prompts to save, is the desire of bettering our condition; a desire
    which, though generally calm and dispassionate, comes with us from the womb,
    and never leaves us till we go into the grave. In the whole interval which
    separates those two moments, there is scarce, perhaps, a single instance, in
    which any man is so perfectly and completely satisfied with his situation,
    as to be without any wish of alteration or improvement of any kind. An
    augmentation of fortune is the means by which the greater part of men
    propose and wish to better their condition. It is the means the most vulgar
    and the most obvious; and the most likely way of augmenting their fortune,
    is to save and accumulate some part of what they acquire, either regularly
    and annually, or upon some extraordinary occasion. Though the principle
    of expense, therefore, prevails in almost all men upon some occasions, and in
    some men upon almost all occasions ; yet in the greater part of men, taking
    the whole course of their life at an average, the principle of frugality
    seems not only to predominate, but to predominate very greatly.

    With regard to misconduct, the number of prudent and successful undertakings
    is everywhere much greater than that of injudicious and unsuccessful ones.
    After all our complaints of the frequency of bankruptcies, the unhappy men
    who fall into this misfortune, make but a very small part of the whole
    number engaged in trade, and all other sorts of business; not much more,
    perhaps, than one in a thousand. Bankruptcy is, perhaps, the greatest and
    most humiliating calamity which can befal an innocent man. The greater part
    of men, therefore, are sufficiently careful to avoid it. Some, indeed, do
    not avoid it; as some do not avoid the gallows.

    Great nations are never impoverished by private, though they sometimes are
    by public prodigality and misconduct. The whole, or almost the whole public
    revenue is, in most countries, employed in maintaining unproductive hands.
    Such are the people who compose a numerous and splendid court, a great
    ecclesiastical establishment, great fleets and armies, who in time of peace
    produce nothing, and in time of war acquire nothing which can compensate the
    expense of maintaining them, even while the war lasts. Such people, as they
    themselves produce nothing, are all maintained by the produce of other men's
    labour. When multiplied, therefore, to an unnecessary number, they may in a
    particular year consume so great a share of this produce, as not to leave a
    sufficiency for maintaining the productive labourers, who should reproduce
    it next year. The next year's produce, therefore, will be less than that of
    the foregoing ; and if the same disorder should continue, that of the third
    year will be still less than that of the second. Those unproductive hands
    who should be maintained by a part only of the spare revenue of the people,
    may consume so great a share of their whole revenue, and thereby oblige so
    great a number to encroach upon their capitals, upon the funds destined for
    the maintenance of productive labour, that all the frugality and good
    conduct of individuals may not be able to compensate the waste and
    degradation of produce occasioned by this violent and forced encroachment.

    This frugality and good conduct, however, is, upon most occasions, it
    appears from experience, sufficient to compensate, not only the private
    prodigality and misconduct of individuals, but the public extravagance of
    government. The uniform, constant, and uninterrupted effort of every man to
    better his condition, the principle from which public and national, as well
    as private opulence is originally derived,is frequently powerful enough to
    maintain the natural progress of things towards improvement, in spite both
    of the extravagance of government, and of the greatest errors of
    administration. Like the unknown principle of animal life, it frequently
    restores health and vigour to the constitution, in spite not only of the
    disease, but of the absurd prescriptions of the doctor.

    The annual produce of the land and labour of any nation can be increased in
    its value by no other means, but by increasing either the number of its
    productive labourers, or the productive powers of those labourers who had
    before been employed. The number of its productive labourers, it is evident,
    can never be much increased, but in consequence of an increase of capital,
    or of the funds destined for maintaining them. The productive powers of the
    same number of labourers cannot be increased, but in consequence either of
    some addition and improvement to those machines and instruments which
    facilitate and abridge labour, or of more proper division and distribution
    of employment. In either case, an additional capital is almost always
    required. It is by means of an additional capital only, that the undertaker
    of any work can either provide his workmen with better machinery, or make a
    more proper distribution of employment among them. When the work to be done
    consists of a number of parts, to keep every man constantly employed in one
    way, requires a much greater capital than where every man is occasionally
    employed in every different part of the work. When we compare, therefore,
    the state of a nation at two different periods, and find that the annual
    produce of its land and labour is evidently greater at the latter than at
    the former, that its lands are better cultivated, its manufactures more
    numerous and more flourishing, and its trade more extensive; we may be
    assured that its capital must have increased during the interval between
    those two periods, and that more must have been added to it by the good
    conduct of some, than had been taken from it either by the private
    misconduct of others, or by the public extravagance of government. But we
    shall find this to have been the case of almost all nations, in all
    tolerably quiet and peaceable times, even of those who have not enjoyed the
    most prudent and parsimonious governments. To form a right judgment of it,
    indeed, we must compare the state of the country at periods somewhat distant
    from one another. The progress is frequently so gradual, that, at near
    periods, the improvement is not only not sensible, but, from the declension
    either of certain branches of industry, or of certain districts of the
    country, things which sometimes happen, though the country in general is in
    great prosperity, there frequently arises a suspicion, that the riches and
    industry of the whole are decaying.

    The annual produce of the land and labour of England, for example, is
    certainly much greater than it was a little more than a century ago, at the
    restoration of Charles II. Though at present few people, I believe, doubt of
    this, yet during this period five years have seldom passed away, in which
    some book or pamphlet has not been published, written, too, with such
    abilities as to gain some authority with the public, and pretending to
    demonstrate that the wealth of the nation was fast declining; that the
    country was depopulated, agriculture neglected, manufactures decaying, and
    trade undone. Nor have these publications been all party pamphlets, the
    wretched offspring of falsehood and venality. Many of them have been written
    by very candid and very intelligent people, who wrote nothing but what they
    believed, and for no other reason but because they believed it.

    The annual produce of the land and labour of England, again, was certainly
    much greater at the Restoration than we can suppose it to have been about a
    hundred years before, at the accession of Elizabeth. At this period, too, we
    have all reason to believe, the country was much more advanced in
    improvement, than it had been about a century before, towards the close of
    the dissensions between the houses of York and Lancaster. Even then it was,
    probably, in a better condition than it had been at the Norman conquest: and
    at the Norman conquest, than during the confusion of the Saxon heptarchy.
    Even at this early period, it was certainly a more improved country than at
    the invasion of Julius Caesar, when its inhabitants were nearly in the same
    state with the savages in North America.

    In each of those periods, however, there was not only much private and
    public profusion, many expensive and unnecessary wars, great perversion of
    the annual produce from maintaining productive to maintain unproductive
    hands; but sometimes, in the confusion of civil discord, such absolute waste
    and destruction of stock, as might be supposed, not only to retard, as it
    certainly did, the natural accumulation of riches, but to have left the
    country, at the end of the period, poorer than at the beginning. Thus, in
    the happiest and most fortunate period of them all, that which has passed
    since the Restoration, how many disorders and misfortunes have occurred,
    which, could they have been foreseen, not only the impoverishment, but the
    total ruin of the country would have been expected from them ? The fire and
    the plague of London, the two Dutch wars, the disorders of the revolution,
    the war in Ireland, the four expensive French wars of 1688, 1701, 1742, and
    1756, together with the two rebellions of 1715 and 1745. In the course of
    the four French wars, the nation has contracted more than £145,000,000 of
    debt, over and above all the other extraordinary annual expense which they
    occasioned ; so that the whole cannot be computed at less than £200,000,000.
    So great a share of the annual produce of the land and labour of the
    country, has, since the Revolution, been employed upon different occasions,
    in maintaining an extraordinary number of unproductive hands. But had not
    those wars given this particular direction to so large a capital, the
    greater part of it would naturally have been employed in maintaining
    productive hands, whose labour would have replaced, with a profit, the whole
    value of their consumption. The value of the annual produce of the land and
    labour of the country would have been considerably increased by it every
    year, and every years increase would have augmented still more that of the
    following year. More houses would have been built, more lands would have
    been improved, and those which had been improved before would have been
    better cultivated; more manufactures would have been established, and those
    which had been established before would have been more extended ; and to
    what height the real wealth and revenue of the country might by this time
    have been raised, it is not perhaps very easy even to imagine.

    But though the profusion of government must undoubtedly have retarded the
    natural progress of England towards wealth and improvement, it has not been
    able to stop it. The annual produce of its land and labour is undoubtedly
    much greater at present than it was either at the Restoration or at the
    Revolution. The capital, therefore, annually employed in cultivating this
    land, and in maintaining this labour, must likewise be much greater. In the
    midst of all the exactions of government, this capital has been silently and
    gradually accumulated by the private frugality and good conduct of
    individuals, by their universal, continual, and uninterrupted effort to
    better their own condition. It is this effort, protected by law, and allowed
    by liberty to exert itself in the manner that is most advantageous, which
    has maintained the progress of England towards opulence and improvement in
    almost all former times, and which, it is to be hoped, will do so in all
    future times. England, however, as it has never been blessed with a very
    parsimonious government, so parsimony has at no time been the characteristic
    virtue of its inhabitants. It is the highest impertinence and presumption,
    therefore, in kings and ministers to pretend to watch over the economy of
    private people, and to restrain their expense, either by sumptuary laws, or
    by prohibiting the importation of foreign luxuries. They are themselves
    always, and without any exception, the greatest spendthrifts in the society.
    Let them look well after their own expense, and they may safely trust
    private people with theirs. If their own extravagance does not ruin the
    state. that of the subject never will.

    As frugality increases, and prodigality diminishes, the public capital, so
    the conduct of those whose expense just equals their revenue, without either
    accumulating or encroaching, neither increases nor diminishes it. Some modes
    of expense, however, seem to contribute more to the growth of public
    opulence than others.

    The revenue of an individual may be spent, either in things which are
    consumed immediately, and in which one day's expense can neither alleviate
    nor support that of another ; or it may be spent in things mere durable,
    which can therefore be accumulated, and in which every day's expense may, as
    he chooses, either alleviate, or support and heighten, the effect of that of
    the following day. A man of fortune, for example, may either spend his
    revenue in a profuse and sumptuous table, and in maintaining a great number
    of menial servants, and a multitude of dogs and horses; or, contenting
    himself with a frugal table, and few attendants, he may lay out the greater
    part of it in adorning his house or his country villa, in useful or
    ornamental buildings, in useful or ornamental furniture, in collecting
    books, statues, pictures ; or in things more frivolous, jewels, baubles,
    ingenious trinkets of different kinds; or, what is most trifling of all, in
    amassing a great wardrobe of fine clothes, like the favourite and minister
    of a great prince who died a few years ago. Were two men of equal fortune to
    spend their revenue, the one chiefly in the one way, the other in the other,
    the magnificence of the person whose expense had been chiefly in durable
    commodities, would be continually increasing, every day's expense
    contributing something to support and heighten the effect of that of the
    following day ; that of the other, on the contrary, would be no greater at
    the end of the period than at the beginning. The former too would, at the
    end of the period, be the richer man of the two. He would have a stock of
    goods of some kind or other, which, though it might not be worth all that it
    cost, would always be worth something. No trace or vestige of the expense of
    the latter would remain, and the effects of ten or twenty years' profusion
    would be as completely annihilated as if they had never existed.

    As the one mode of expense is more favourable than the other to the opulence
    of an individual, so is it likewise to that of a nation. The houses, the
    furniture, the clothing of the rich, in a little time, become useful to the
    inferior and middling ranks of people. They are able to purchase them when
    their superiors grow weary of them ; and the general accommodation of the
    whole people is thus gradually improved, when this mode of expense becomes
    universal among men of fortune. In countries which have long been rich, you
    will frequently find the inferior ranks of people in possession both of
    houses and furniture perfectly good and entire, but of which neither the one
    could have been built, nor the other have been made for their use. What was
    formerly a seat of the family of Seymour, is now an inn upon the Bath road.
    The marriage-bed of James I. of Great Britain, which his queen brought with
    her from Denmark, as a present fit for a sovereign to make to a sovereign,
    was, a few years ago, the ornament of an alehouse at Dunfermline. In some
    ancient cities, which either have been long stationary, or have gone
    somewhat to decay, you will sometimes scarce find a single house which could
    have been built for its present inhabitants. If you go into those houses,
    too, you will frequently find many excellent, though antiquated pieces of
    furniture, which are still very fit for use, and which could as little have
    been made for them. Noble palaces, magnificent villas, great collections of
    books, statues, pictures, and other curiosities, are frequently both an
    ornament and an honour, not only to the neighbourhood, but to the whole
    country to which they belong. Versailles is an ornament and an honour to
    France, Stowe and Wilton to England. Italy still continues to command some
    sort of veneration, by the number of monuments of this kind which it
    possesses, though the wealth which produced them has decayed, and though the
    genius which planned them seems to be extinguished, perhaps from not having
    the same employment.

    The expense, too, which is laid out in durable commodities, is favourable
    not only to accumulation, but to frugality. If a person should at any time
    exceed in it, he can easily reform without exposing himself to the censure
    of the public. To reduce very much the number of his servants, to reform his
    table from great profusion to great frugality, to lay down his equipage
    after he has once set it up, are changes which cannot escape the observation
    of his neighbours, and which are supposed to imply some acknowledgment of
    preceding bad conduct. Few, therefore, of those who have once been so
    unfortunate as to launch out too far into this sort of expense, have
    afterwards the courage to reform, till ruin and bankruptcy oblige them. But
    if a person has, at any time, been at too great an expense in building, in
    furniture, in books, or pictures, no imprudence can be inferred from his
    changing his conduct. These are things in which further expense is
    frequently rendered unnecessary by former expense; and when a person stops
    short, he appears to do so, not because he has exceeded his fortune, but
    because he has satisfied his fancy.

    The expense, besides, that is laid out in durable commodities, gives
    maintenance, commonly, to a greater number of people than that which is
    employed in the most profuse hospitality. Of two or three hundred weight of
    provisions, which may sometimes be served up at a great festival, one half,
    perhaps, is thrown to the dunghill, and there is always a great deal wasted
    and abused. But if the expense of this entertainment had been employed in
    setting to work masons, carpenters, upholsterers, mechanics, etc. a quantity
    of provisions of equal value would have been distributed among a still
    greater number of people, who would have bought them in pennyworths and
    pound weights, and not have lost or thrown away a single ounce of them. In
    the one way, besides, this expense maintains productive, in the other
    unproductive hands. In the one way, therefore, it increases, in the other it
    does not increase the exchangeable value of the annual produce of the land
    and labour of the country.

    I would not, however, by all this, be understood to mean, that the one
    species of expense always betokens a more liberal or generous spirit than
    the other. When a man of fortune spends his revenue chiefly in hospitality,
    he shares the greater part of it with his friends and companions; but when
    he employs it in purchasing such durable commodities, he often spends the
    whole upon his own person, and gives nothing to any body without an
    equivalent. The latter species of expense, therefore, especially when
    directed towards frivolous objects, the little ornaments of dress and
    furniture, jewels, trinkets, gew-gaws, frequently indicates, not only a
    trifling, but a base and selfish disposition. All that I mean is, that the
    one sort of expense, as it always occasions some accumulation of valuable
    commodities, as it is more favourable to private frugality, and,
    consequently, to the increase of the public capital, and as it maintains
    productive rather than unproductive hands, conduces more than the other to
    the growth of public opulence.
    Next Chapter
    Chapter 16
    Previous Chapter
    If you're writing a Adam Smith essay and need some advice, post your Adam Smith essay question on our Facebook page where fellow bookworms are always glad to help!

    Top 5 Authors

    Top 5 Books

    Book Status
    Finished
    Want to read
    Abandoned

    Are you sure you want to leave this group?