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    Book II: Chapter 5

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    Chapter 18
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    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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