their capital, they can place in their stock reserved
for immediate consumption, or spend upon
their subsistence, conveniencies, and amusements.
Their real wealth, too, is in proportion,
not to their gross, but to their neat revenue.
The whole expense of maintaining the fixed
capital must evidently be excluded from the
neat revenue of the society. Neither the materials
necessary for supporting their useful
machines and instruments of trade, their profitable
buildings, &c. nor the produce of the
labour necessary for fashioning those materials
into the proper form, can ever make any part
of it. The price of that labour may indeed
make a part of it; as the workmen so employed
may place the whole value of their
wages in their stock reserved for immediate
consumption. But in other sorts of labour,
both the price and the produce go to this stock;
the price to that of the workmen, the produce
to that of other people, whose subsistence, conveniencies,
and amusements, are augmented
by the labour of those workmen.
The intention of the fixed capital is to increase
the productive powers of labour, or to
enable the same number of labourers to perform
a much greater quantity of work. In a
farm where all the necessary buildings, fences,
drains, communications, &c. are in the most
perfect good order, the same number of labourers
and labouring cattle will raise a much
greater produce, than in one of equal extent
and equally good ground, but not furnished
with equal conveniencies. In manufactures,
the same number of hands, assisted with the
best machinery, will work up a much greater
quantity of goods than with more imperfect
instruments of trade. The expense which is
properly laid out upon a fixed capital of any
kind, is always repaid with great profit, and
increases the annual produce by a much greater
value than that of the support which such improvements
require. This support, however,
still requires a certain portion of that produce.
A certain quantity of materials, and the labour
of a certain number of workmen, both
of which might have been immediately employed
to augment the food, clothing, and
lodging, the subsistence and conveniencies of
the society, are thus diverted to another employment,
highly advantageous indeed, but still
different from this one. It is upon this account
that all such improvements in mechanics,
as enable the same number of workmen to
perform an equal quantity of work with
cheaper and simpler machinery than had been
usual before, are always regarded as advantageous
to every society. A certain quantity of
materials, and the labour of a certain number
of workmen, which had before been employed
in supporting a more complex and expensive
machinery, can afterwards be applied to augment
the quantity of work which that or any
other machinery is useful only for performing.
The undertaker of some great manufactory,
who employs a thousand a-year in the maintenance
of his machinery, if he can reduce
this expense to five hundred, will naturally
employ the other five hundred in purchasing
an additional quantity of materials, to be
wrought up by an additional number of workmen.
The quantity of that work, therefore,
which his machinery was useful only for performing,
will naturally be augmented, and
with it all the advantage and conveniency
which the society can derive from that work.
The expense of maintaining the fixed capital
in a great country, may very properly be
compared to that of repairs in a private estate.
The expense of repairs may frequently be necessary
for supporting the produce of the estate,
and consequently both the gross and the
neat rent of the landlord. When by a more
proper direction, however, it can be diminished
without occasioning any diminution of
produce, the gross rent remains at least the
same as before, and the neat rent is necessarily
augmented.
But though the whole expense of maintaining
the fixed capital is thus necessarily excluded
from the neat revenue of the society, it
is not the same case with that of maintaining
the circulating capital. Of the four parts of
which this latter capital is composed, money,
provisions, materials, and finished work, the
three last, it has already been observed, are
regularly withdrawn from it, and placed either
in the fixed capital of the society, or in
their stock reserved for immediate consumption.
Whatever portion of those consumable
goods is not employed in maintaining the former,
goes all to the latter, and makes a part of
the neat revenue of the society. The maintenance
of those three parts of the circulating
capital, therefore, withdraws no portion of the
annual produce from the neat revenue of the
society, besides what is necessary for maintaining
the fixed capital.
The circulating capital of a society is in this
respect different from that of an individual.
That of an individual is totally excluded from
making any part of his neat revenue, which
must consist altogether in his profits. But
though the circulating capital of every individual
makes a part of that of the society to
which he belongs, it is not upon that account
totally excluded from making a part likewise
of their neat revenue. Though the whole
goods in a merchant's shop must by no means
be placed in his own stock reserved for immediate
consumption, they may in that of other
people, who, from a revenue derived from
other funds, may regularly replace their value
to him, together with its profits, without
occasioning any diminution either of his capital
or of theirs.
Money, therefore, is the only part of the circulating
capital of a society, of which the
maintenance can occasion any diminution in
their neat revenue.