I.

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

The other is that

But when he poffeffes ftock fufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; referving only fo much for his immediate confumption as may maintain him till this revenue begins to come in. His whole ftock, therefore, is diftinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. which fupplies his immediate confumption; and which confists either, first, in that portion of his whole ftock which was originally referved for this purpose; or, fecondly, in his revenue, from whatever fource derived, as it gradually comes in; or, thirdly, in fuch things as had been purchafed by either of thefe in former years, and which are not yet entirely confumed; fuch as a ftock of clothes, household furniture, and the like. In one, or other, or all of these three articles, confifts the stock which men commonly referve for their own immediate confumption. There are two different ways in which a capital may be employed fo as to yield a revenue or profit to its employer.

First, it may be employed in raifing, manufacturing, or purchafing goods, and felling them again with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his poffeffion, or continues in the fame fhape. The goods of the merchant

II.

BOOK merchant yield him no revenue or profit till he fells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one fhape, and returning to him in another, and it is only by means of fuch circulation, or fucceffive exchanges, that it can yield him any profit. Such capitals, therefore may very properly be called circulating capitals.

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

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

The capital of a merchant, for example, is altogether a circulating capital. He has occafion for no machines or inftruments of trade, unlefs his fhop, or warehouse, be confidered as fuch.

Some part of the capital of every mafter arti. ficer or manufacturer muft be fixed in the inftruments of his trade. This part, however, is very fmall in fome, and very great in others. A mafter taylor requires no other inftruments of trade but a parcel of needles. Thofe of the master shoemaker are a little, though but a very little, more expenfive. Thofe of the weaver rife a good deal above thofe of the fhoemaker. The far greater part of the capital of all fuch mafter artificers,

I.

artificers, however, is circulated, either in the CHA P. wages of their workmen, or in the price of their materials, and repaid with a profit by the price of the work.

In other works a much greater fixed capital is required. In a great iron-work, for example, the furnace for melting the ore, the forge, the flitt-mill, are inftruments of trade which cannot be erected without a very great expence. In coal-works, and mines of every kind, the machinery neceffary both for drawing out the water and for other purpofes, is frequently ftill more expenfive.

That part of the capital of the farmer which is employed in the inftruments of agriculture is a fixed; that which is employed in the wages and maintenance of his labouring fervants, is a circulating capital. He makes a profit of the one by keeping it in his own poffeffion, and of the other by parting with it. The price or value of his labouring cattle is a fixed capital in the fame manner as that of the inftruments of hufbandry: Their maintenance is a circulating capital in the fame manner as that of the labouring fervants. The farmer makes his profit by keeping the labouring cattle, and by parting with their maintenance. Both the price and the maintenance of the cattle which are bought in and fattened, not for labour, but for fale, are a circulating capital. The farmer makes his profit by parting with them. A flock of sheep or a herd of cattle that, in a breeding country, is bought in, neither for labour, nor for fale,

but

II.

BOOK but in order to make a profit by their wool, by their milk, and by their increase, is a fixed capital. The profit is made by keeping them. Their maintenance is a circulating capital. The profit is made by parting with it; and it comes back with both its own profit, and the profit upon the whole price of the cattle, in the price of the wool, the milk, and the increase. The whole value of the feed too is properly a fixed capital. Though it goes backwards and forwards between the ground and the granary, it never changes masters, and therefore does not properly circulate. The farmer makes his profit, not by its fale, but by its increase.

The general stock of any country or fociety is the fame with that of all its inhabitants or members, and therefore naturally divides itself into the fame three portions, each of which has a diftinct function or office.

The First, is that portion which is referved for immediate confumption, and of which the characteristic is, that it affords no revenue or profit. It confifts in the stock of food, clothes, household furniture, &c. which have been purchafed by their proper confumers, but which are not yet entirely confumed. The whole ftock of mere dwelling-houfes too fubfifting at any one time in the country, make a part of this first portion. The stock that is laid out in a house, if it is to be the dwelling-house of the proprietor, ceafes from that moment to ferve in the function of a capital, or to afford any revenue to its owner. A dwelling-house, as fuch, contributes nothing to the revenue of its inhabitant; and though it

I.

is, no doubt, extremely useful to him, it is as his C HA P. clothes and household furniture are ufeful to him, which, however, make a part of his expence, and not of his revenue. If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of fome other revenue which he derives either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby ferve in the function of a capital to him, it cannot yield any to the public, nor ferve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it. Clothes, and household furniture, in the fame manner, fometimes yield a revenue, and thereby ferve in the function of a capital to particular perfons. In countries where masquerades are common, it is a trade to let out masquerade dreffes for a night. Upholsterers frequently let furniture by the month or by the year. Undertakers let the furniture for funerals by the day and by the week. Many people let furnished houfes, and get a rent, not only for the ufe of the houfe, but for that of the furniture. The revenue, however, which is derived from fuch things, muft always be ultimately drawn from fome other fource of revenue. Of all parts of the stock either of an individual, or of a fociety, referved for immediate confumption, what is laid out in houses is most flowly confumed. A ftock of clothes may laft feveral years: a ftock of furniture half a century or a century: but a ftock